18th June 2018
CHINESE FISHING COMPANY FINED FOR SMUGGLING FISH INTO LIBERIA
Front Page Africa on 18th June reported that Chinese fishing company, Africa Zhong Sheng Hai, has been fined $50,000 by the National Fisheries and Aquaculture Authority (NaFAA) for allegedly smuggling a whole consignment of 132.277 tons of fish on the Liberian Market without an import permit from the Fisheries Authority.
DIRECTOR IN NEW ZEALAND LINKED TO SUSPECT COMPANIES WAS SUBJECT TO GUERNSEY BAN
Radio New Zealand on 18th June revealed that British-born company director Matt Butterfield of Denton Morrell, central to an RNZ investigation into alleged money-laundering involved Azerbaijani funds – part of Project Daphne, a multi-country journalist collaboration to carry on the work of murdered Maltese journalist Daphne Cauana Galizia, was banned from operating as a fiduciary in Guernsey for 5 years in 2010 shortly before starting work as a trust and company lawyer in New Zealand. He was not required to declare the Guernsey order in New Zealand because company law there only asks about people banned in New Zealand and Australia.
UK POLICE SEARCH FOR €7.5 MILLION LINKED TO JAILED KINAHAN ASSOCIATE
The Irish Independent on 18th June reported that the NCA in the UK was seeking to track down €7.5 million in Kinahan drugs money linked to jailed associate James Mulvey from Birmingham, the cousin of murdered Gerard ‘Hatchet’ Kavanagh. Mulvey has just been convicted in a €77 million cocaine and cannabis smuggling case in the UK, where his haulage company was used to smuggle the drugs. A partner and cousin, Dubliner Gerard ‘Hatchet’ Kavanagh, was shot dead in Spain in September, 2014.
CYBERCRIME HITS IRISH FIRMS AT RECORD LEVELS
On 18th June, the Irish Examiner carried an article saying that a PWC bi-annual survey of business crime has said that half of Irish businesses were victims of economic crime in the past 2 years, with cybercrime hitting record levels and doubling global levels and with 61% experiencing cybercrime. Cybercrime has overtaken asset misappropriation for the first time. Phishing was the most prominent technique for targeted cyber attacks, followed by malware.
MANAGER OF CHINA’S BIGGEST SHIPBUILDER IS UNDER INVESTIGATION BY ANTI-CORRUPTION AGENCY
Maritime Executive on 17th June reported that Sun Bo, the general manager of China Shipbuilding Industry Corporation, is under investigation by the Communist Party of China’s Central Commission for Discipline Inspection (CCDI). Sun is not the first CSIC official to come under scrutiny in recent years. CSIC, the world’s largest shipbuilder, is one of 2 giant Chinese state-owned shipbuilding conglomerates.
CHINESE INSURANCE REGULATOR ADMITS GUILT IN GRAFT CASE
KYC 360 on 18th June reported that China’s former chief insurance regulator, Xiang Junbo, has pleaded guilty to taking bribes over 12 years in exchange for helping people obtain loans, promotions and other favours.
GUIDES TO EU CUSTOMS AND FISCALIS PROGRAMMES
On 12th June, EU Business produced useful, short guides to the Customs and Fiscalis programmes of the EU. These contain proposed measures to make tax and customs cooperation between Member States better and more efficient. The Customs programme is said to support the essential co-operation between customs authorities across the EU and protects the financial and economic interests of the EU and its Member States. The Fiscalis programme is an EU co-operation programme that enables national tax administrations to create and exchange information and expertise. It helps Member States to develop and run major trans-European IT tax systems, as well as establishing networks of officials across the EU.
HMRC WINS £50 MILLION ‘PROJECT BLUE’ TAX CHALLENGE
Accountancy Daily reported on 15th June that HMRC has claimed victory in the Supreme Court in a long running battle which will see property developers pay £50 million of stamp duty land tax (SDLT) on the purchase of the former Chelsea Barracks in London more than 10 years ago. HMRC’s case was that the anti-avoidance provisions in section 75A of the Finance Act 2003, as introduced by the Finance Act 2007, created a charge to SDLT in the case.
£33 BILLION UK TAX GAP SHOWS AVOIDANCE ACTIVITY IN DECLINE
On 15th June, Accountancy Daily reported on the latest HMRC figures that show an estimated £33 billion tax gap in the UK tax gap in 2016-17, amounting to 5.7% of total theoretical tax liabilities and the same level the previous year, with small businesses responsible for 41% of the tax not collected. Of the total tax gap, it reports, which is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid, £13.5 billion is down to income tax, NI and capital gains tax owing, and £11.7 billion to VAT.
EU BLACKLIST THREAT TO THE US
On 14th June, Greenspoon Marder published an article saying that the EU has given the US an ultimatum – update the Foreign Account Tax Compliance Act (FATCA) to comply with the EU Common Reporting Standard (CRS) by the end of 2018 or be blacklisted as an abusive tax haven. FATCA legislation is said to be missing an important aspect of the CRS minimum standards – reciprocity.
NEW ANTI-CORRUPTION LEGISLATION TO IMPACT CORPORATES OPERATING IN IRELAND
On 14th June, law firm Arthur Cox published an article saying that new anti-corruption legislation has been signed into Irish law, but has not yet been brought into effect. The introduction of new corruption-related offences and tough penalties in the Criminal Justice (Corruption Offences) Act 2018 is expected to have a significant impact on corporates and other organisations operating in Ireland. The new anti-corruption legislation was one of the several measures proposed by the Government in its White Collar Crime Package of November 2017. A table details the key offences and penalties involved in the Act.
SUMMARY OF THE SANCTIONS AND ANTI-MONEY LAUNDERING ACT 2018
On 18th June, the European Sanctions Blog has produced a short and sweet summary of the content of this new UK Act which sets up a whole new framework for UK sanctions.
NEW UK CUSTOMS SYSTEM SET FOR AUGUST LAUNCH
Lloyds Loading List on 15th June reported that with the phased launch from August of HMRC’s Customs Declaration Service (CDS) system to replace the current ‘computer system (CHIEF) for submitting customs declarations in the UK, forwarders are being advised to review what changes may be needed to use CDS successfully.
THE INSTITUTIONAL ARCHITECTURE OF EU ANTI-FRAUD AGENCIES AND MEASURES
The EU Parliamentary Research Service has produced for June 2018 an in-depth analysis of the framework of EU institutions involved in combating fraud in the EU. 10 EU authorities are specifically dedicated or entitled to carry out tasks concerned with detecting and countering fraudulent behaviour – OLAF; the European Commission; the European Parliament (and specifically the Committee on Budgetary Control); the European Council (of ministers); the European Court of Auditors; Eurojust; Europol; the European Court of Justice; the EU Ombudsman; and the European Public Prosecutor’s Office.
WTO ANNUAL REPORT 2018
The World Trade Organisation has published its annual report which provides a comprehensive account of the WTO’s activities in 2017 and early 2018. It contains a brief overview of 2017 and more in-depth accounts of the WTO’s various areas of activity over the past 12 months. Spotlights highlight major WTO events and activities, including the 11th WTO Ministerial Conference held in Buenos Aires.
Also available is a helpful, short guide on the role of the WTO –
REVISING PACE CODES C, H, E AND F: OUTCOME OF CONSULTATION
On 18th June, the Home Office published the outcome of its consultation on revisions to various codes of practice under the Police and Criminal Evidence Act 1984 (PACE). It says that the revised codes C, H, E and F were laid before Parliament on 21st May together with a draft order and an explanatory memorandum (there are correction slips for errors detected in Codes C and H after this). The order will bring the revised codes into operation 21 days after it is made following approval by Parliament. The original consultation ran to 6th December. The revised codes and the correction slips are provided. Code C concerns the detention, treatment and questioning of persons detained under PACE, Code H concerns persons detained under the terrorism provisions, Code E concerns the audio recording of interviews with suspects, and Code F concerns the visual recording of interviews with suspects.
SPOTLIGHT ON ROMANIA’S “SHADOW STATE” AND ANTI-CORRUPTION WOES
Romania Insider on 18th June references a New York Times article which looks at the recent protest organized by Romania’s ruling coalition against the “shadow state” in the wider context of the country’s fight against corruption. The article also looks at the challenges faced by the chief anti-corruption prosecutor, who the Justice Minister wanted sacked (but the President refused).
Meanwhile, Romania’s anti-fraud department (DLAF), in its annual report for 2017, said it had found 150 cases of EU funds fraud in 2017 and notified the National Anti-corruption Directorate (DNA) in 147 of these cases. Over 520 people were involved in these frauds, which had a financial impact of €45.8 million. The biggest single fraud case involved €12.3 million and the largest number of cases were related to agriculture fund frauds (57%).
MASTERMIND SMUGGLER INVOLVED IN 2015 MIGRANT CRISIS ARRESTED IN GREECE
Europol on 18th June reported that one of most prolific migrant smugglers along the Western Balkan route was arrested in Athens on 12th June. The suspect, a Syrian national, was apprehended in Athens together with an accomplice who is involved in document fraud. The unnamed main suspect, based in Hungary, was involved in the transport of migrants in 2015 and 2016. At that time, he was under investigation in different EU Member States for facilitating several smuggling incidents between Hungary and Germany.
LAW ENFORCEMENT IN UK STRUGGLES WITH ELECTRONIC EVIDENCE CHALLENGES
Echoing the recent BBC Radio “File on 4” documentary, the Law Society Gazette on 18th June reports on what it describes as a devastating series of disclosure failures by police and prosecutors reveals they have yet to get to grips with the explosion in electronic evidence as complainants, witnesses and suspects increasingly live their lives through their smartphone. The DPP had taken a battering at the recent Justice Select Committee hearing over ‘systemic’ disclosure failings, as the CPS revealed that dozens of sex cases had been stopped because evidence had been withheld from defence lawyers. A key theme in many of the recent cases has been the failure to disclose text, emails or social media messages which have subsequently undermined the prosecution case – but privacy campaigners have also complained that police forces are increasingly using technology which enables them to extract data from phones, including conversations on encrypted apps, emails, text messages, photographs, passwords and internet searches – without a warrant.
COMPLAINT ABOUT HUMAN RIGHTS IN DRC; OUTCOME OF COMPLAINT TO UK AUTHORITIES
On 18th June, Gowling WLG carried an article referring to a 2013 complaint to the National Contact point (NCP) established in the UK under the OECD Guidelines on voluntary standards for responsible business conduct by multinational enterprises (MNE) by an NGO called RAID regarding the conduct of the Eurasian Natural Resources Corporation (ENRC) in the Democratic Republic of Congo (DRC). The NCP is staffed by the officials from the UK Department for International Trade and is not a statutory body, has no legal powers to require any party to provide information to it, or any power to compel an MNE to take, or refrain from taking, any action where a complaint is upheld. Instead it offers recommendations to improve adherence to the Guidelines. However, the article does conclude that the Guidelines are considered to be the most comprehensive set of government-backed recommendations on responsible business conduct today and as such have significant value. Additionally, the work of the NCP cannot be overlooked given its role in highlighting and publicising human rights issues that can arise through the action of MNE and providing recommendations to remediate those issues.
In 2016, the NCP published its findings that ENRC was not meeting its obligations under the Guidelines to address the impact of its activities and business relationships in the specific case examined. Recommendations were issued, and in April 2018 a follow-up statement was published by the NCP. There were (as one might expect) many inconsistencies between the accounts presented by the parties, ENRC and the NGO, to the NCP. The article does say that evidence seemed to show that the company had not actually taken steps following the Final Statement in 2016 until prompted to do so by requests for information for the follow-up statement. The article mentions that the community affected seemed to have seen little real change, despite the complaint, and concludes that, although publicity can be an important driver to commercial action in order for this to be effective, in the UK at least, a lot more would need to be done to publicise the work of the NCP and its determinations.
KAZAKH BUSINESSMAN ORDERED TO PROVIDE MORE INFORMATION ON SOURCE OF LITIGATION FUNDING IN UK
On 18th June, Out-Law carried an article reporting that Ilyas Khrapunov, a Kazakh businessman, has been ordered by the High Court in London to provide “full and proper disclosure” about how he is funding his defence of a claim by BTA Bank. The article starts by reminding one that parties to litigation are not usually required to disclose their source of legal funding, but respondents to a standard form freezing order must disclose “where the money is to come from” before spending any money on legal expenses; and describes the ruling as a helpful example of the balancing exercise which the Court performs when considering applications for wider disclosure of a respondent’s source of funding. Khrapunov is currently subject to worldwide freezing order. Earlier in 2018, BTA successfully argued that multiple breaches of the order were a form of contempt of court and capable of constituting the ‘unlawful means’ part of an action of ‘conspiracy to injure by unlawful means’. Khrapunov told the bank that his mother was funding his legal costs, but the bank believed that she was doing so using funds deriving from assets of his co-defendant (his father-in-law and former chairman of BTA), in breach of the order and it therefore applied for an order for further disclosure.
SPANISH PROSECUTOR: UK IS NOT FIGHTING RUSSIAN ORGANISED CRIME AT ALL
OCCRP on 18th June carried remarks by Spanish prosecutor Jose Grinda who was reported as saying that there are links between UK politicians and oligarchs and that the country is full of “oligarchs that have taken dirty money, taken money from a criminal organisation”. He referred to a case where, despite an Interpol arrest warrant, British authorities failed to arrest Russian-Israeli businessman Michael Cherney, who Spanish authorities believe is the leader of one of Russia’s most infamous crime groups, the Izmailovskaya.
SOUTH AFRICA EXPORTED R4.5 BILLION WORTH OF WEAPONRY IN 2017
Defence Web on 18th June reported that the South African defence industry exported R4.5 billion worth of military equipment in 2017, up from R4.2 billion in 2016, according to the National Conventional Arms Control Committee (NCACC). Exports were said to include armoured personnel carriers, 40 mm guns, mortars, machine guns, missiles, bombs, rockets, ammunition, electronics, countermeasures, software and sensors.
SOMALIA AND ETHIOPIA TO INVEST IN RED SEA PORTS TO ATTRACT INVESTMENT
Defence Web on 18th June reported that Somalia and Ethiopia will jointly invest in 4 seaports to attract foreign investment to the countries, another move in a tussle for access to ports along one of the world’s strategic waterways. The Horn of Africa’s Red Sea coastline extending north of Somalia through Djibouti and Eritrea toward the critical Suez Canal is already dotted with ports owned or run by countries locked in a regional struggle: the UAE and its ally Saudi Arabia on one side and Turkey which backs Qatar on the other.
HOW CORRUPTION HAS DAMAGED ARMENIA’S ENVIRONMENT
A video report on France 24 on 18th June reported that at the heart of the protest movement was anger over widespread corruption. Open-cast mining has left scars on the country’s beautiful landscape. Corruption allowed developers to flaunt environmental regulations and locals’ rights.
GOVERNMENT AND LAW ENFORCERS DRAW UP ACTION PLAN TO COMBAT SMUGGLING AT CUSTOMS
Interfax Ukraine on 18th June reported on a general action plan aimed at effectively combating smuggling and shadow schemes at customs. The plan itself has not yet been revealed.
ESTONIAN SUPREME COURT UPHOLDS VERDICT IN TRAILBLAZING PRIVATE SECTOR BRIBERY CASE
EER in Estonia on 18th June reported that the Estonian Supreme Court has upheld a decision of the Circuit Court which found businessman Teet Jarvet guilty of soliciting a bribe, in a case which has been described as one of the first private sector corruption cases to have been heard at any Estonian court. He was found guilty in July 2017 at the County Court level, the lowest tier court, for attempting, together with a colleague, to elicit a bribe of €50,000 whilst overseeing reconstruction work at a vocational training centre.
LOUTH MAN WANTED IN UK OVER ALLEGED CIGARETTE SMUGGLING TO CHALLENGE EXTRADITION OVER BREXIT
The Irish Examiner on 18th June reported that an Irishman wanted in the UK for his alleged role in the smuggling of cigarettes and tobacco by an “organised crime gang”, is expected to challenge his extradition to the UK on a legal point related to Brexit. Stephen Watters, 50, was arrested on a European Arrest Warrant and he is alleged to have been involved with an organised crime gang operating in the north west of England and the Republic of Ireland in 2014/2015. The gang were allegedly involved in the illegal importation and distribution of “non-UK duty paid tobacco products” and the “laundering of monies earned from that fraud,” the warrant states.
UK FAST FOOD SHOP OWNER BEAT SLAVE WORKERS AND PAID THEM WITH FOOD SCRAPS AND CHEAP ALCOHOL
Illicit Trade on 8th June reported that a fast food restaurant owner from the north of England has been jailed for 8½ years after being found guilty of forcing vulnerable alcoholics to work for little or no pay. Harjit Bariana compelled his victims to toil in slave-like conditions for up to 13 hours a day in exchange for scraps of food, alcohol and drugs, and he confiscated the men’s clothing and shoes in a bid to prevent them from fleeing. He was jailed after previously being convicted at Newcastle Crown Court of 6 modern slavery offences against 4 people and of supplying diazepam.
INDIAN POLICE DISRUPT PLOT TO SMUGGLE KETAMINE AND OPIUM TO CANADA IN COOKING WOKS
Illicit Trade on 18th June reported that police in India have arrested members of a drug smuggling gang who attempted to traffic opium and horse tranquiliser ketamine to Canada in Indian cooking pots. A Canadian national of Indian-origin was among 4 people detained. The gang is said to have planned to use courier services to traffic drugs to Canada in the traditional cooking equipment with the narcotics were neatly packed in 7 double-layered cauldrons which had been soldered together.
US PUBLISHES AMENDED ROUGH DIAMONDS CONTROL REGULATIONS
On 18th June, the US Treasury published details of amendments to the rough diamond regulations, clarifying reporting requirements and defining rough diamond packaging requirements and Kimberley Process voided certificates.
Rough diamonds are diamonds in their natural state, as they were removed from the ground and prior to undergoing the polishing process. Since 2002, the Kimberley Process Certification Scheme (KPCS) has been in place for movements of rough diamonds. Countries participating in the KPCS are expected to prohibit the importation of rough diamonds from, and the exportation of rough diamonds to, non-participants and to require that shipments of rough diamonds from or to a participant source be controlled through the KPCS. For more information on the KPCS and US controls see –
HOW US COMPANIES CAN PREPARE FOR NEW FOREIGN INVESTMENT RULES
Corporate Counsel on 18th June carried an article saying that US companies should be prepared for restrictions on Chinese investment and export of technology to Chinese persons to come into force prior to or alongside the passage of any legislation as part of the administration’s response to China on trade issues. It says that changes to the jurisdiction and procedures of the Committee on Foreign Investment in the United States (CFIUS) appear likely this year, and changes that would significantly expand the number and types of transactions subject to national security review, as well as establish new controls on the export of technology.
PROPOSED SALE OF NORTHERN AEROSPACE LIMITED – UK PUBLIC INTEREST INTERVENTION
On 18th June, the UK Department of Business, Energy and Industrial Strategy (BEIS) intervened in the proposed acquisition of Northern Aerospace Ltd by a wholly-owned subsidiary of Shaanxi Ligeance Mineral Resources, a Chinese company. The public interest intervention notice, made on national security grounds followed representations received from the Secretary of State for Defence. Now the Competition and Markets Authority (CMA) will prepare a report on the competition and national security aspects of the proposed transaction, and it has until 13th July to complete and submit this report to the Secretary of State for BEIS. Northern Aerospace is a leading supplier of precision machined parts to the aerospace industry with sites in the UK and Poland.
FORMER ARKANSAS STATE SENATOR SENTENCED TO PRISON FOR WIRE FRAUD, MONEY LAUNDERING, AND BANK FRAUD
The DoJ issued a news release on 18th June reporting that former Arkansas State Senator Jake C Files was sentenced to 18 months in prison for orchestrating a scheme to obtain approximately $46,500 in state government funds through fraudulent means and for obtaining approximately $56,700 in loan proceeds, also through fraudulent means.
LATVIA INVESTIGATORS HAND CENTRAL BANK GOVERNOR BRIBERY CASE TO PROSECUTORS
Reuters on 18th June reported that Latvia’s anti-corruption body had asked prosecutors to launch a prosecution against a Bank of Latvia official following a bribery investigation where he is suspected of soliciting and accepting a bribe of at least €100,000. He denies any wrongdoing.
FORMER ISRAELI CABINET MINISTER CHARGED WITH SPYING FOR IRAN
Bloomberg on 18th June reported that Gonen Segev, a former Israeli cabinet minister with a history that included attempted drug smuggling and credit-card fraud, as well as serving as energy and infrastructure minister more than 2 decades ago, has been charged with spying for Iran.
UK FACTSHEET: CANNABIS FOR MEDICINAL USE
In the light of the recent, and ongoing, Billy Caldwell case, the Home Office blog has issued this factsheet on the classification, scheduling and licensing of cannabis.
EX-TRUCKING COMPANY EXECUTIVES CHARGED WITH ACCOUNTING FRAUD IN US
Law 360 on 18th June reported that 2 former Roadrunner Transportation Systems Inc executives had been charged by the DoJ with running a complex accounting and securities fraud scheme that resulted in more than $245 million in losses for shareholders who invested in the publicly traded trucking company.