7th September 2018
FRANCE SAYS IT MUST USE FEWER US PARTS IN ITS WEAPONS SYSTEMS TO AVOID US SANCTIONS
Street Insider on 6th September quoted the French Defence Minister as saying that France must cut its dependence on US components in its weapons systems to minimise the ability of the US to block its arms exports. US export control laws can be used to limit European weapons sales if even small components come from US suppliers.
NEW RUSSIA SANCTIONS: ALL BARK AND NO BITE?
On 7th September, Arent Fox published an article about the State Department sanctions of 8th August against the Russian government under the CBW Act, and which came into force on 27th August. It says that the Act requires the implementation of 5 initial sanctions. However, the State Department has waived the application of some of these sanctions in the interest of national security. The article provides a summary of the effect of the CBW Act and waivers available which allow for the licensing of exports for various purposes. It seems that, so far, many of the restrictions that could be imposed by the Act have been waived. For example, licences can be issued on a case-by-case basis –
- where in support of government space co-operation and commercial space launches, even where defence equipment and services or equipment on the US Munitions List are involved;
- for the safety of civil fixed-wing passenger aviation; and
- for space flight (i.e. government space co-operation and commercial space launches).
In summary, the article concludes that the sanctions will affect only exports of national security items to Russian state-owned and state-funded enterprises and should not affect exports to passenger aviation and space flight, even if for Russian state-owned and state-funded enterprises. There is the possibility of additional sanctions being imposed after a further 3 months, but to date the effect on commercial business with Russia should, it concludes, be limited.
“MASSIVE” HAUL OF SMUGGLED BEER SEIZED AT DUBLIN PORT
Dublin Live on 6th September reported that 24,000 litres of smuggled beer was seized by revenue officers at Dublin Port, following the search of a foreign-registered truck that had arrived from Liverpool. The UK driver was questioned and both the trailer and the smuggled beer were seized.
HONG KONG CUSTOMS TO USE ANTI-GANG LAWS AGAINST SMUGGLING OF ENDANGERED SPECIES
Business Times in China on 7th September reported a South china Morning Post story that customs authorities are looking to prosecute these criminals through organised crime laws. This decision came as the volume of endangered wildlife products seized at border checkpoints and cargo terminals continue to rise. In fact, in the past 8 months, the number having already surpassed the whole of last year. Experts and conservationists have been vocal about putting all wildlife-related under the Organised and Serious Crimes Ordinance, which is also known as the OSCO. This would reportedly help authorities pinpoint the “kingpins” rather than just going after “mules”.
CHINESE NATIONALS ACCUSED OF SMUGGLING 70 KG OF MARIJUANA IN LUGGAGE INTO JAPAN FROM CANADA
Tokyo Reporter on 7th September reported that police have arrested 2 Chinese nationals over the alleged smuggling of nearly 70 kg of marijuana into Japan from Canada. According to police, the contraband was inside vacuum-packed bags wrapped in clothing placed in 3 suitcases. This seizure is the largest from the luggage of a passenger arriving at the airport concerned since a service for international routes began in 2010.
ECHR OBLIGES ARMENIA TO PAY €3,400 IN URANIUM SMUGGLING CASE
Panorama in Armenia reported on 6th September that the European Court of Human Rights had held that there had been a violation of the right to a fair trial and the right to obtain attendance and examination of witnesses in the case of an Armenian national, Garik Dadayan, charged with aiding and abetting the smuggling of enriched uranium into Georgia in 2010, and who was convicted essentially on the basis of the smugglers’ witness statements to the Georgian authorities. The Georgian authorities had refused the transfer of the smugglers themselves to Armenia pending the criminal proceedings against them in Georgia. Hence the ECHR concluded that the hearings were not fair because key witnesses were never heard.
FORMER UN SECRETARY GENERAL’S NEPHEW SENTENCED IN US FOR BRIBE SCHEME
Swissinfo on 6th September reported that the nephew of Former UN Secretary-General Ban Ki-moon, Joo Hyun “Dennis” Bahn, a South Korean citizen living in the US, has been sentenced to 6 months in prison for a bribery scheme that he thought would result in the sale of a Vietnamese building complex to a Qatari sovereign wealth fund. Bahn said he believed he was paying a $500,000 bribe to an official at Qatar’s sovereign wealth fund through a middleman, New York fashion designer and blogger Malcolm Harris. In reality, Bahn said, Harris had no connection with any Qatari official and kept the money. Harris pleaded guilty to money laundering and wire fraud in June and was sentenced to 3½ years in prison in October.
CAYMAN ISLANDS IN SPOTLIGHT AHEAD OF FLORIDA SENATE ELECTIONS
Caribbean News Now on 6th September reported that outgoing Florida governor and US Senate hopeful, Republican Rick Scott, has been linked to the territory along with his wife in a series of hedge fund investments exceeding $60 million in value, with earnings from those investments totalling some $2.9 million alone, through a blind trust, managed by a New York trustee who is a former business associate of the governor.
FORMER HEAD OF THE LONDON UNIT OF UNION BANK OF NIGERIA ARRESTED LAST YEAR AS PART OF A BRIBERY PROBE
On 6th September, Bloomberg and others reported that Maurice Phido was detained by police in May 2017, was released on bail after his arrest and went back to Nigeria. Nigel Kirby, the deputy director of the NCA’s economic crime unit, hinted at the arrest and said that the case is being evaluated by prosecutors after a 7-month investigation found possible corruption. Union Bank referred questions about the case to Phido, who no longer works at the bank. He was CEO at the London unit to May 2017.
EU ADMITS AML RULES INEFFICIENT, PREPARES FOR IMPROVED SUPERVISION
EurActiv on 7th September carried a report saying as recent scandals proved that new AML rules fall short of monitoring financial flows, the EU is leaning towards stepping up the supervision and enforcement of its legislation. It says that the EU Commission launched a working group last May to improve the co-operation between authorities in this field and its conclusion was clear: the supervision and enforcement of the rules needs to be strengthened.
PERSONAL SERVICE COMPANIES AND IR35
On 6th September, the House of Commons Library published a briefing paper saying that the ‘IR35’ rules to prevent the exploitation of personal service companies for tax avoidance were introduced in April 2000, following a long and contentious consultation exercise. This legislation remains unpopular among freelancers who use this corporate form to provide services. This paper looks at recent debate on how these rules might be reformed and wider concerns about the use of employment intermediaries to avoid tax. In April 2000 the Labour Government introduced new rules for the tax treatment of personal service companies in the light of concerns that this corporate form was being exploited to avoid tax; this legislation is often referred to as ‘IR35’, after the number of the Budget press notice which first announced this measure.
AYRSHIRE FARMER CHEATED OUT OF THOUSANDS IN MACHINERY ‘GHOSTING’ SCAM
Agriland on 7th September reported that NFU Scotland said the convincing scam left the affected business thousands of pounds out of pocket. The farmer had agreed to buy a new machine from a machinery dealer and was negotiating, through phone calls and emails, a finance agreement with the bank. Halfway through the negotiation, the contact at the bank apparently replied to the email conversation with “revised” account details. This type of scam is referred to as “ghosting” where the scammer has hacked an email account, removed the banker from the conversation and started mimicking emails from the bank.
DUTCH CAUGHT WITH 300 KG OF COCAINE ON YACHT NEAR MALLORCA
Customs Today on 7th September reported that 4 Dutch and a German were caught with 300 kg of cocaine on a yacht near Mallorca. They were arrested by the Spanish authorities. One of the Dutch is said to be the main suspect in a large money laundering investigation, and search in the Netherlands saw 38 buildings seized, as well as 5 kg of gold, gold jewellery, a Harley Davidson motorcycle, expensive watches, administration and €82 thousand in cash. The man drew the police’s attention when he bought the pleasure yacht in 2016, without it being clear how he could afford it.. The drugs originated in Colombia.
UK: STRONGER CONSUMER PROTECTIONS PROPOSED FOR REMOTE GAMBLING
Out-Law on 6th September published an article saying that online gambling companies would have to verify the ages and identities of their customers before allowing them to deposit funds or place bets under proposals put forward by the Gambling Commission. The Commission has proposed making changes to its licence conditions which would require operators to complete age verification checks before allowing customers to deposit money, place bets or access play-for-free versions of gambling games. They would also be required to verify the customer’s identity, including name, address, date of birth and email address, and that the name associated with the customer’s payment method matches the name on the account.
UK AND US LAW ENFORCEMENT SIGN AN INTELLIGENCE-SHARING AGREEMENT TO TACKLE FEMALE GENITAL MUTILATION (FGM)
On 7th September, the National Police Chiefs’ Council reported that the agreement will see various US agencies (including the FBI and Department of Homeland Security) and UK agencies (including NPCC and Border Force) share intelligence about travel patterns between the UK and US and other parts of the world where victims may be taken for the procedure. They will share intelligence about trends in the practice and information on live cases as well as jointly debriefing cases to build both countries’ knowledge of FGM and learn lessons from each other.
SERBIAN WEAPONS USED IN YEMEN CONFLICT ZONE
Balkan Insight on 3rd September reported claims that new pictures show Serbian weapons being used in the Yemeni conflict on both sides. It says that, in recent months, Serbian weapons have been spotted on both sides in Yemen conflict – in the hands of Saudi-backed fighters and with the Houthi troops – although Serbia officially does not export arms to UN-embargoed Yemen.
LEGAL PROFESSIONAL PRIVILEGE AFTER ENRC
On 7th September, Eversheds Sutherland produced a timely and useful summary brief on LPP – legal advice privilege and litigation privilege, the background to the ENRC case, and practical recommendations.
INDONESIA’S INDEPENDENT CORRUPTION FIGHTERS INTENSIFY THEIR WAR
VoA on 6th September reported that Indonesia’s independent Corruption Eradication Commission, known as the KPK, has named 41 local councillors from the east Java city of Malang as suspects in a major bribery scandal, leaving just 4 in office. Around half of the cases investigated by the KPK involve bribery, and VoA says this latest case epitomises the nature of local corruption in Indonesia, which has proliferated with the political decentralisation of the country since 1998. The KPK was founded in 2002. This was 4 years after Suharto’s 31 years in power that were characterised by rampant cronyism and corruption, to the extent he was once named by Forbes as the world’s most corrupt leader of all time. However, in recent years the KPK has faced regular public criticism from prominent parliamentarians, as well as crippling budget cuts, which critics say are politically motivated.
POLICE RAID OFFICES OF TOP FRENCH ELECTRICAL FIRMS IN CORRUPTION PROBE
EurActiv on 7th September reported that the offices of 4 of France’s largest electrical goods’ companies – Legrand, Rexel, Sonepar and Schneider Electric – were raided by police on suspicion of cartel pricing and corruption as part of an investigation opened in June.
TAX AVOIDANCE: A GENERAL ANTI-ABUSE RULE (GAAR)
On 7th September, the House of Commons Library published a briefing paper which says that UK tax law is specifically targeted rather than purposive: in tackling the exploitation of loopholes in the law, governments have legislated against individual avoidance schemes as and when these have come to light. This briefing looks at the case that has been made recently for a general anti-avoidance rule, and the Coalition Government’s introduction of a ‘narrower’ General Anti-Abuse Rule in 2013. It has been suggested that a ‘General Anti-Avoidance Rule’ might dissuade the most egregious efforts to avoid tax, encourage taxpayers and legal counsel to redirect their energies to more productive activities and allow the authorities to simplify the law without fear of it being systematically undermined.
SUSPENDED SENTENCE FOR MAN WHO BUILT ILLEGAL FUEL PLANT IN TYRONE SHED
The Belfast telegraph on 7th September reported that HMRC officers discovered the laundering plant in June 2017 in a shed owned by Barry McGirr, 43, at his home address, along with 400 litres of residue – the by-product of the laundering process. McGirr was sentenced to 4 months in prison, suspended for 2 years.
ECB CALLS FOR EU AGENCY TO COMBAT MONEY LAUNDERING
Reuters on 7th September reported that European Central Bank board member Benoit Coeure has said that Europe needs a single agency to tackle money laundering, after recent cases at EU banks have exposed gaps in the bloc’s ability to prevent financial crime. The idea of a common agency is included in a preliminary plan drawn up by EU regulators to tighten the EU’s defence against money laundering.
COCAINE SMUGGLING IS CORRUPTING ANTWERP POLITICS, SAYS MAYOR
Customs Today on 7th September reported that the scale of cocaine smuggling at the port of Antwerp – through which half of Europe’s supply of the drug reportedly passes – is so vast that corruption of local politics is inevitable, the city’s mayor has said. Bart De Wever has been mayor since 2013.
DEUTSCHE BANK CAN FORCE MONACO BILLIONAIRE TO RETURN TO UK
Law 360 on 7th September reported that the Court of Appeal in London has ruled that Deutsche Bank AG can serve an order on Monaco-based billionaire, Alexander Vik, compelling him to return to the UK for questioning over his assets or face prison for contempt of court. The Court of Appeal ruled that Deutsche Bank AG could have permission to serve a committal order overseas. The bank is pursuing $300 million owed by the entrepreneur.
REPUBLIC OF CONGO OIL OBTAINED BREAKING LOCAL LAW AND INVOLVING BRIBERY
OCCRP on 7th September carried an article about allegations of how a scheme was devised to obtain oil from the Republic of Congo (not the DRC, but its smaller neighbour). It is said to have involved Gunvor, a giant crude oil trader, and Maxime Gandzion, a former executive at the French oil company Total who had become a special adviser to Congolese President Denis Sassou-Nguesso. It says that between September 2010 and June 2012, the company raked in about $ 2.2 billion from 22 tankers of crude it was able to purchase from Congo. In 2011, more than 20% of the company’s global profits — $327.9 million — came straight from that impoverished tropical country. However, it is said that this was not only illegal under Congolese law, but also involved corrupt payments. It also says that this was not the first time Guvnor and Gandzion had been linked. Years before, Gandzion had introduced Gunvor to Semlex, a Belgian biometric data company that would prove vital in what appeared to be a significant African oil deal in Cote d’Ivoire for the oil trader. It is claimed that, behind a veil of shell companies and offshore accounts, Semlex largely oversaw the payment of $48 million, after which Gunvor won favourable trade deals in 3 African countries.
TOUGHER EU PAYMENT FRAUD PENALTIES MOVE ONE STEP CLOSER
Out-Law on 7th September published an article saying that new rules to better protect EU citizens against non-cash payment fraud, including tougher penalties for fraudsters, have been backed by a committee of the European Parliament. The changes, if approved by the European Parliament and EU Council, will update EU fraud rules to better reflect the growth of digital payments and address the “gaps and differences” in the laws of different EU Member States that can “hamper prevention, detection and punishment” of these crimes, according to the Civil Liberties Committee.
CHINA’S ENVIRONMENTAL CAMPAIGNS WILL CONTINUE TO TRANSFORM INDUSTRY AND DISRUPT SUPPLY CHAINS
Control Risks on 7th September published an article saying that Vice-Premier Han Zheng on 29th August called on environmental authorities to avoid shutting down environmentally compliant companies during enforcement campaigns. The article recommends that the shift in environmental and industrial policy implementation demands that companies understand how their business relationships, and their supply and distribution chains fit into the new order. Incorporating environmental compliance in the reputational due diligence of business partners is essential for avoiding disruptions. Understanding – and being able to regularly verify – suppliers’ environmental compliance is also key to more quickly responding to disruptions linked to closures in a specific regional area, industry or chemical parks.
UNFAIR TRADING PRACTICES IN THE FOOD SUPPLY CHAIN
On 7th September, the EU Parliament Research Service published a briefing paper saying that to strengthen the position of smaller operators (farmers) in the food supply chain, in April 2018 the European Commission presented a proposal for a Directive on unfair trading practices. In the European Parliament, a report is due to be voted on in the Committee on Agriculture and Rural Development in October, while in the Council of the EU a revised Presidency text is being examined.