9th April 2018
AUSTRALIAN PARLIAMENT TO PROBE LINKS TO ILLEGAL IVORY TRADE
VoA on 8th April reported that a parliamentary inquiry in Australia is investigating whether the domestic and legal trade in ivory is contributing to the deaths of thousands of African elephants each year. MPs are investigating if lax regulations are allowing recently poached ivory to be passed off as antiques in Australia. It is illegal to import ivory into Australia, but there are concerns black market ivory is being smuggled into the country.
AMERICAN PLEADS GUILTY TO MONEY LAUNDERING OFFENCES IN SINGAPORE
Yahoo News on 9th April reported that a US national David John Plate, 53, has pleaded guilty in to money laundering offences in a case involving a fake investment scheme that originated in the US. According to court papers, Plate claimed he was the director or CEO of Singapore-registered Aglobal Management Pte Ltd. However, records from the Accounting and Corporate Regulatory Authority show that the sole director of Aglobal was Plate’s accomplice, Sandrasegaran Vasimuthu. Sandrasegaran was a figurehead director who would follow Plate’s instructions regarding the receipt and remittance of money to and from the company’s bank account. The victim was Lamar Mary Holladay, an American country music singer-songwriter.
UK: WHAT DOES “SIGNIFICANT CONTROL” OVER A COMPANY MEAN?
On 5th April, Ashfords LLP published an article about the requirement to keep a register of persons with significant control (PSC) over the company. The article explains what “significant control” means.
PRIVATE PROSECUTIONS AND CRIMINAL CAUTIONS
Kingsley Napley on 5th April published an article explaining that whilst a police caution might be a proportionate outcome in many cases, the acceptance of a caution by the offender does not present an absolute bar to a private prosecution being brought, citing a recent case in London, where out-of-court disposal (i.e. the caution) did not satisfy the hotel group or the employee involved in an alleged assault. The hotel group sought a summons, which magistrates refused, and the hotel group then sought judicial review. The High Court ruled that the existence of a simple caution administered by the police or the CPS is not in itself a bar to a private prosecution being brought, but it may be an abuse of process for a private prosecution to be brought if an assurance was given to a defendant in the course of the caution that there will be no prosecution at all, or some other good reason exists. However, only a positive or express assurance to a defendant would suffice.
RESEARCHERS TO BOYCOTT SOUTH KOREAN UNIVERSITY OVER AI WEAPONS WORK
Defence Web reported on 6th April that over 50 top Artificial Intelligence researchers based in 30 countries announced a boycott of KAIST, South Korea’s top university, after it opened what they called an AI weapons lab with one of South Korea’s largest companies. KAIST, which opened the centre in February with Hanwha Systems, one of 2 South Korean makers of cluster munitions, responded within hours, saying it had “no intention to engage in development of lethal autonomous weapons systems and killer robots.”
INDIA CANCELS BAN ON 2 ISRAELI ARMS COMPANIES
The Middle East Monitor on 9th April reported that India has cancelled a ban on the Israel Aerospace Industries (IAI) and the Rafael Advanced Defence Systems Ltd, having blacklisted the companies and barred making arms deals with them over bribery charges since a 2006 case involving offering bribes to Indian officials in exchange for securing arms deals. However, India continued pursue arms deals with them and signed a missile deal in 2017.
SOUTH KOREA: PROSECUTION INDICTS FORMER PRESIDENT LEE MYUNG-BAK
On 9th April, KBS Radio reported that the former president was detained late last month on 16 charges, including bribery, tax evasion, embezzlement, abuse of authority and leaking of presidential records. He is accused of pocketing bribes from businesses and the state spy agency, and embezzling from auto parts company DAS, which he allegedly owns.
UK: JOINT ACTION NEEDED ON THREAT TO NATIONAL LOTTERY FUNDING FOR GOOD CAUSES
On 5th April, a House of Commons Public Accounts Committee report finds that since 2012 Camelot has made profits well in excess of what was envisaged in the original 2009 licence, whilst returns for good causes have dropped, by 15% in 2016–17 compared to the previous year.
OCEAN FREIGHT MUST TACKLE ‘THE CRIMINALITY OF CARGO MISDECLARATION’
Lloyds Loading List on 6th April reported that with serious fires reported on containerships roughly every 60 days, the ocean freight sector needs to tackle “the criminality of misdeclaration” of the hazardous materials often associated with causing or exacerbating what can turn into fatal events, insurance specialist TT Club now argues. While a lack of knowledge about the hazardous nature of the commodities being packed into a container may be the case in a minority of circumstances, or poorly packed material not correctly treated given its dangerous characteristics, but it says that there is too much evidence that dangerous cargoes are misdeclared due to a premeditated attempt to avoid the added costs and complexity that accrue from transporting such consignments by land or sea in compliance with regulations.
UK INTRODUCES BAN ON EUROMILLIONS BETTING
iGB on 6th April reported that a ban on UK consumers betting on EuroMillions lottery draws came into force on 6th April.
CANADA: FORMER COMPANY VP ACCUSED OF BRIBING LIBYAN OFFICIALS WILL GO TO TRIAL
On 6th April, the Montreal Gazette reported that a Quebec Superior Court judge has ruled that the delay was not unreasonable for former SNC-Lavalin vice-president Sami Abdellah Bebawi, who was first charged in the case in 2014, as he awaited trial on charges alleging he bribed Libyan government officials. Bebawi faces 8 charges including an allegation he defrauded the Libyan government and other government organisations, including the Management and Implementation Authority of the Great Man Made River Project, between 2001 and 2009. The charge involves a $58 million contract SNC-Lavalin was awarded in 2001 to restore a 26 kmkilometre pipeline to transport water to Benghazi and other parts of Libya. Another charge alleges Bebawi bribed “one, or many, public agents” in the Libyan government between 2001 and 2008. He is also accused of being in possession of more than $26 million, between 2001 and 2012, while knowing the money was “obtained or came from, directly or indirectly, the perpetration” of crimes like fraud and bribery.
THE “FACES OF FRAUD” SURVEY REPORT
Banking Tech on 9th April offered a free downloadable report which documents how leaders in the banking and security industries are preparing for fraud. It says that roughly 250 banking/security leaders participated in this Vasco and Ismg survey, which was conducted to determine the top forms of fraud afflicting financial organizations in 2017, the biggest gaps in organizations’ efforts to detect and prevent fraud, and what organisations are doing to counter the surge in mobile exploits.
SOLICITORS STRUCK OFF FOR ROLE IN MAJOR MOTOR INSURANCE FRAUD
Legal Futures on 9th April reported that 2 solicitors have been struck off for their role in an insurance fraud that cost victims £426,000. Nadir Suleman and Aadiel Salya were the first solicitors caught by the City of London Police Insurance Fraud Enforcement Department (IFED) and were jailed for 4 years and 2 years respectively for conspiracy to defraud by false representation.
CHINA BANS EXPORTS OF 32 ‘DUAL-USE’ ITEMS TO NORTH KOREA
On 9th April, Yonhap News in South Korea reported that China has banned exports of 32 items to North Korea that could be converted for use in developing WMD, Beijing’s commerce ministry has said. The “dual-use” items are mostly equipment, software and technologies. They include particle accelerators and centrifuges, and the export ban is in line with UN SCR 2375 adopted in September in the wake of the North’s 6th nuclear test.
AUSTRALIA: ANTI-BRIBERY LAW REFORMS: WHAT TO EXPECT
On 9th April, Dentons carried a briefing saying that on 28th March, the Senate Economics References Committee released its report into foreign bribery. The inquiry was referred by the Senate to the Senate Economics References Committee on 24 June 2015 to examine Australia’s historically poor record in investigating and prosecuting foreign bribery and make recommendations to strengthen Australia’s foreign bribery framework, and improve its anti-foreign bribery compliance and enforcement response to match its international comparators by strengthening its legal framework against foreign bribery and building a culture of integrity and compliance. It says that businesses should take note of the potential changes in this space, as the report contains numerous recommendations which could have significant compliance consequences for individuals and corporations. One major change recommended by the report was to support the introduction of a new foreign bribery offence where a corporation fails to prevent foreign bribery, currently before Parliament in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017. The report made 2 other recommendations which would broaden the scope of foreign bribery offences and the establishment of 2 new disclosure requirements for businesses. The report recommended introducing a deferred prosecution agreement scheme for corporations.
GAZPROM CEO MILLER SAYS PROUD OF INCLUSION ON US SANCTIONS LIST
EurActiv on 9th April carried an article reporting that the CEO of Russia’s Gazprom , Alexei Miller, has said that he was proud of having been included on a new US sanctions list and that the company’s policies were right.
UK SOUGHT TO DAMPEN PRAISE FOR SFO IN OECD BRIBERY REVIEW
M Lex on 5th April reported claims that UK government officials tried to influence the OECD to tone down praise of its own fraud agency, the Serious Fraud Office, ahead of announcing plans last year to incorporate it into the NCA. The intervention came 2 months before Prime Minister Theresa May set out the planned merger — an idea the government has since abandoned. At a meeting in March 2017, UK government officials suggested the OECD’s corruption working group should alter the wording in a draft report on the SFO’s performance in combatting corruption, MLex understands. It is unclear whether the OECD took the suggestions on board.
UK LOOKING INTERNATIONALLY TO TACKLE PUBLIC SECTOR FRAUD
On 9th April, Civil Service World reported that the UK hosted the first International Public Fraud Symposium. And in an article, Mark Cheeseman, deputy director, public sector fraud at the Cabinet Office, explains how the event came about, and what his team learnt from their international colleagues at the event that brought together representatives from Australia, New Zealand, Canada, the UK and US to share their expertise and experience in fighting fraud in the public sector.
THE GUPTA TEMPLE
News 24 carried an article on 9th April claiming that a temple, built in honour of the Gupta brothers’ late father, Shiv, was erected in their home town of Saharanpur using money laundered through several of the Gupta brothers’ Indian and Dubai companies. The temple was one of several properties raided by Indian authorities earlier this year. This article is intended as the first of a multi-part investigation into how the Gupta family laundered money using companies set up in Dubai and India, freeing them up to fund the temple’s construction. It quotes discussions with KPMG in 2014 on how to shift money offshore from South Africa “to be utilised as religious donations (as part of funding to build the temple in the vicinity of your home town in India) as well as for business purposes”. The article shows how the funds were allegedly channelled through trusts and apparently third parties, and the use of back-to-back payments, with the true source of the funding would be hidden behind several layers of transactions, and with companies are either under the direct control of Gupta family members, or their close associates. In February, the Hawks police unit in South Africa arrested 8 people in connection with the scandal, and among those charged with fraud, theft and money laundering were those described as Gupta lieutenants. Legal action continues in both South Africa and Dubai.
ISLE OF MAN TURNS TO BLOCKCHAIN TO PROTECT E-GAMING SECTOR FROM FRAUD
Computer World on 9th April reported how in August 2017, the Isle of Man granted the world’s first reputable licence for a blockchain lottery. The Qanta lottery is developed on Ethereum technology and drawn autonomously by a decentralised RNG. It uses smart contracts to sell tickets, select winners and pay out prizes in cryptocurrency. The licence was provided by the Gambling Supervision Commission, as the regulator believes blockchain provides a transparent system that can reduce the risk of fraud. The article says that the time between winning money and getting your hands on the cash gives thieves numerous opportunities to get there first, but a blockchain lottery reduces the risks in traditional currencies by cryptographically storing data on a decentralised structure and picking winning numbers in an autonomous system that is extremely difficult to manipulate.
4 ENTREPRENEURS DETAINED IN ‘NDRANGHETA OPERATION
ANSA on 9th April reported that assets worth over €50 million were seized as Carabinieri police detained 4 well-known Reggio Calabria entrepreneurs who are suspected of being linked to clans of the southern region’s ‘Ndrangheta mafia.
FORMER ISRAELI PRIME MINISTER OLMERT SEEKS PARDON FROM PRESIDENT
On 9th April, the Jerusalem Post reported that former PM Ehud Olmert formally requested a pardon from President Reuven Rivlin. For the past decade, Olmert has also fought a high-profile legal battle that resulted in his serving 16 months of a 27-month sentence for fraud and bribery, culminating in his release last July.
LIVE SHEEP EXPORT UNDER FIRE AFTER SHEEP FOOTAGE IN AUSTRALIA
SBS News on 9th April that the independent regulator of livestock exports will face a review after shocking revelations of animal cruelty on an Australian-owned ship. The industry is under pressure after whistleblower video footage emerged showing dozens of distressed sheep struggling to breathe while dead animals are thrown over the side of the boat in August 2017. The animals were being supplied to Middle East customers.
HEAD OF DRUG SMUGGLING GANG SOUGHT BY NCA AFTER JUMPING BAIL
A news release from NCA said that investigators are appealing for information to trace the head of an organised crime group who disappeared before standing trial for drugs offences. Richard Wakeling, 51, from Brentwood, was sentenced in his absence to 11 years in prison for orchestrating the attempted importation of liquid amphetamine with a street value of around £8 million in April 2016. NCA officers began their investigation after plastic drums carrying the liquefied drugs were discovered by Border Force on a truck as it attempted to board a train through the Channel Tunnel in 2016. The entire importation was set up by Wakeling, who was in touch with drug suppliers in Belgium and the Netherlands, and evidence showed similar journeys previously, and officers believe the group had organised previous importations before the April 2016 seizure.
FRENCH CEO CHARGED FOR SHADY DEALS IN NAMIBIA
OCCRP on 9th April reported that corruption charges against former head of French energy conglomerate Areva in regards to a corporate acquisition have also revealed potential illicit payments made to a Namibian mining company and the country’s president. Sebastian de Montessus is reported as having been charged in late March along with 3 other company employees for allegedly overvaluing the 2007 sale of the Canadian mining company UraNim to conceal its falling market value among other shady dealings in Central Africa. The charges list embezzlement, bribery of foreign officials, and breach of trust for the group’s conduct in the transaction and related projects in Namibia, South Africa, and the Central African Republic.
GUATEMALA: CORRUPT BUSINESSMEN FUND ROADS AND SCHOOL AS PART OF PUNISHMENT
On 9th April, OCCRP reported that a court in Guatemala has ordered 9 businessmen convicted of paying bribes for public contracts to pay for the construction of several roads and a school as part of their punishment. They had pleaded guilty to bribing former Minister of Communications, Alejandro Sinibaldi (who is still at large), and apart from paying for the constructions, they will each have to serve 5 years in prison and pay over $67,000 dollars in fines.
ILLEGAL NETWORK USED CRYPTOCURRENCIES AND CREDIT CARDS TO LAUNDER MORE THAN €8 MILLION FROM DRUG TRAFFICKING
On 9th April, a news release from Europol reported on Operation Tulipan Blanca, which was co-ordinated by Europol and conducted by the Spanish Guardia Civil with the support of the Finnish authorities and Homeland Security Investigation in the US. It has seen 11 arrests and 137 individuals investigated. The gang laundered money obtained by other organised crime groups, who made their money selling drugs, by using credit cards and cryptocurrencies. The criminals based in Spain were contacted by drug traffickers to launder money obtained from their illegal activities. They picked up the illicit proceeds in cash, which were then split into small quantities to be deposited into hundreds of third bank accounts (aka smurfing) and arranged the transfer of criminal money back to the drug dealers in Colombia. The gang also used Bitcoin and other cryptocurrencies, as well as 174 bank accounts.
THE WORLD’S CHEAPEST PLACES FOR DRUGS, BOOZE AND CIGARETTES
On 9th April, Bloomberg carried a feature claiming that drugs, drinks and cigarettes are most affordable in Luxembourg, but that in Japan, New Zealand and Australia the “vice basket” was most expensive. Announcing the annual Bloomberg Global Vice Index, it said that the cost of maintaining a drugs, booze and cigarettes habit got a lot more expensive in the US last year, rising the most of almost anywhere in the world.
TAIWAN ANNOUNCED PLANS TO CLOSE DOMESTIC IVORY MARKET BY 2020
On 9th April, Traffic, the wildlife trade monitoring network, reported that Taiwan is the latest country to announce plans to close its domestic ivory market pursuant to in what is a global move towards shutting down ivory markets worldwide.
LARGEST-EVER DRUGS BUST IN NORWAY
On 9th April, News in English in Norway reported that a in the Summer of 2017 a large truck from the Netherlands was stopped in a routine border control and found to be carrying narcotics valued at around $13 million – the biggest single drug seizure in Norway. The semi-trailer was carrying 32 crates of the plastic clogs known as Crocs. The drugs included 430 kg of hash, 23 kg of marijuana, 40 kg of amphetamines, 12 kg of heroin and 2 kg of cocaine, bound for the Norwegian market. The stop took place last summer at the southern border crossing between Sweden and Norway at Svinesund, but it’s only been revealed now so as not to jeopardise the investigation into its origins.
CHINESE MAFIA CAUGHT GROWING BLACK MARKET CANNABIS THROUGHOUT CALIFORNIA
Epoch Times on 9th April reported that the Chinese mafia is allegedly growing marijuana in California homes to sell on the black market. A 2-day operation that concluded on April 4th resulted in over 100 homes throughout the state being seized by the DoJ.
CHAOS IN EVIDENCE DISCLOSURE IN UK
On 9th April, law firm Corker Binning carried an article about problems with disclosure in the courts in England and Wales. It says that a key issue that has emerged in the recent cases is management of electronically stored data. Almost every suspect in a criminal investigation has one or more phones or other electronic device, as do many important witnesses. Each device may contain thousands of critical messages, emails, documents, photos and geographic data. It says that problems start at the very outset of an investigation before disclosure to the defence is considered, with insufficient resources nationwide to forensically examine digital devices, including mobile phones. Once the proceedings are underway, in respect of digital material specifically, investigators and prosecutors are guided by the Attorney General’s 2011 Supplementary Guidelines on Digitally Stored Material, which sets out how the task of meaningfully scheduling the contents of a digital device should be managed but the article says that a suitable strategy is needed by which useful data from electronic devices can be located, reviewed and shared. The article also refers to a 2015 Court of Appeal Practice Note, saying that the essence of the conclusions drawn by the Court was that there cannot be a ‘one size fits all’ method of approaching the disclosure task in each case. The article then sets out 3 changes in practice that the author feels are required.
UNEXPLAINED WEALTH ORDERS EXPLAINED
On 9th April, Corker Binning produced a briefing explaining these orders, the first of which were granted on 28th February.
UK ACCOUNTING WATCHDOG TO BITE HARDER WITH £10 MILLION FINES
KYC 360 on 9th April reported that the Financial Reporting Council (FRC) said that it has accepted the findings of a study in November by former judge Christopher Clarke, which recommended much bigger fines for serious misdeeds by the world’s biggest accountants. Larger fines are part of the FRC’s push to bolster its credibility after being heavily criticised by lawmakers for being too slow to take on the big accountants caught up in company scandals. The record amount agreed by a tribunal so far is £5.1 million for PwC over its audit of RSM Tenon.
THE CONTEXT, IMPLICATIONS AND LEGALITY OF THE LATEST US/CHINA TARIFFS
HFW on 9th April published a briefing consider the US and Chinese trade tariff moves, effects and implications (and potential implications). It says that, although some are calling the recent events a “trade spat” and not a “trade war”, concerns among commodities traders remain high, especially following the counter-measures imposed by China.
WHITE HOUSE SLAMS HOUTHIS FOR ATTACK ON COMMERCIAL SHIPPING
On 5th April, Homeland Security Today reported that the White House slammed the Iran-backed Houthi rebels in Yemen for threatening critical shipping lanes with their rocket attack on an oil tanker off of Yemen’s key port city Al Hudaydah. Following the tanker attack, Saudi Arabia sent a letter to the UN Secretary-General Antonio Guterres and the UN Security Council asking that the port be placed under international supervision as they try to protect international navigation through the strait and the Red Sea.
ENFORCEMENT OF NEW US AML RULE WILL START SLOWLY, REGULATORS SAY
The Wall Street Journal on 9th April reported that regulators in the US said they won’t immediately crack down on financial institutions once a new AML rule takes effect next month. The rule requires financial institutions to identify the true owners of companies when they open bank accounts. It will get a light enforcement touch in the early days after the May 11th start date, regulatory officials said at an AML compliance conference. The rule was in the works since 2012; and it was finalised 4 years later.
ALLEGED ANGOLAN FRAUD SCHEME AIMED TO TAKE $1.5 BILLION
Reuters on 9th April reported that people involved in an alleged scheme to defraud Angola’s government laid out plans to secure as much as $1.5 billion, the finance ministry said, 3 times the amount previously mentioned by authorities. Prosecutors have presented initial charges relating to the case against the former governor of the central bank, Valter Filipe da Silva, and José Filomeno dos Santos, the son of the former Angolan president.
NAMIBIA PRESIDENT DENIES GRAFT IN NUCLEAR DEAL
News 24 in South Africa on 9th April reported that Namibian President Hage Geingob has strongly denied corruption accusations stemming from a French anti-corruption probe centred on the purchase of Canadian mining company Uramin by French nuclear giant Areva. Now known as Orano, Areva group spent $2.22 billion to acquire Uramin and its uranium mines in Namibia, South Africa and Central African Republic, but operations at the mines proved to be more tougher than expected and the investment turned into a financial disaster. Areva made provisions for a $1.8 billion writedown at the end of 2011, roughly the price of the initial transaction.
LIBYAN INVESTMENT AUTHORITY FILES LAWSUIT IN LONDON COURT AGAINST JP MORGAN CHASE BANK FOR FRAUD
The Libyan Express on 9th April reported that Libya’s sovereign wealth fund has filed a lawsuit against JPMorgan Chase in a London court, a spokesman for the Libyan Investment Authority (LIA) said but details of the lawsuit were not disclosed and a spokeswoman for JPMorgan declined to comment. The LIA has previously brought lawsuits against 2 other investment banks in London courts, relating to trades carried out during the rule of Muammar Gaddafi, losing against Goldman Sachs in 2016, but securing nearly €1 billion from Société Generale in 2017.
VET IS FOUND GUILTY OF HELPING GANG MEMBERS SELL MORE THAN 4,500 ILLEGALLY BRED PUPPIES BY ISSUING FALSE PAPERWORK FOR THE DOGS
The Mail Online on 9th April reported that Daniel Doherty, 49, from London, who ran 2 Uxbridge surgeries and charged £16 per dog for false papers, pocketed more than £75,000 during the 6-year scam and has been convicted of conspiracy to commit fraud. He provided health checks and vaccination cards stating the pups were healthy. Buyers said dogs contracted diseases against which they should have been protected.
MOSCOW’S FEUD WITH WEST DRIVES RICH RUSSIAN EMIGRANTS BACK TO RUSSIA
OCCRP on 9th April carried an article saying that Russia’s deteriorating relationship with the West and stricter checks of money origins in the UK have forced many rich Russian emigrants to consider returning to their homeland. Russian businessmen living in Europe have started buying elite properties in and around Moscow end of last year and the trend stretched throughout the first 3 months of 2018, which saw a 21% increase in requests for property offers.
SEC CHARGES TEXAS COMPANIES AND PRINCIPALS FOR ALLEGED PONZI SCHEME
On 9th April, Mondo Visione reported that the SEC had charged 2 Texas companies and their principals in a $2.4 million Ponzi scheme and in a related, $1.4 million offering fraud targeting retirees. The SEC’s complaint alleges that, from 2010 to 2017, Clifton E. Stanley ran a Ponzi scheme through his retirement planning and real estate investment business, The Lifepay Group LLC. Stanley is alleged to have lured at least 30 elderly victims to invest approximately $2.4 million of their retirement savings with baseless promises and claims of outsized investment returns.