21st September 2018
WRIGGLE ROOM? WHAT AMOUNTS TO THE “ORDINARY AND PROPER COURSE OF BUSINESS” EXCEPTION IN FREEZING ORDERS
Harneys Offshore on 21st September published an article about a recent decision of the High Court in London in PJSC Commercial Bank PrivatBank v Kolomoisky. PrivatBank claimed that in breach of Ukrainian law the defendants had misapplied the bank’s assets for their own benefit and a world-wide freezing order had been made which contained exceptions and made specific provision for the trading and non-trading companies controlled by Kolomoisky. Assets could be disposed of in the ordinary and proper course of business subject to prior notification. In the proceedings, the bank challenged certain transactions involving non-trading companies (including companies registered in the BVI) and questioned whether they fell under the exception. The court had to interpret what “in the ordinary and proper court of business” meant and whether the exception applied to what Kolomonsky had sought to do.
UAE RE-AFFIRMS COMMITMENTS TO DEVELOPING NUCLEAR PROGRAMME TO HIGHEST SAFETY STANDARDS
Urudu Point on 20th September reported that, addressing the 62nd session of the IAEA General Conference, the UAE Permanent Representative to the IAEA said that the UAE is of the view that nuclear power as a clean source of energy is an important factor to meet growing energy demand and to achieve sustainable development goals, and is currently in the commissioning phase of its nuclear power programme, with construction of the first Unit at Barakah NPP now completed. He said that, in line with the UAE policy and commitments to develop the programme to the highest standards of safety, security, non-proliferation and transparency, the country had hosted 10 major IAEA peer review missions to date.
AUSTRALIA TO SEND URANIUM SHIPMENT TO INDIA IN “NEAR FUTURE”
The Eurasian Times in India on 20th September reported that while both the countries had signed a civil nuclear deal in 2014 to promote the supply of uranium to India, the exports of uranium are banned in the country as it is not a member of the Non-proliferation Treaty (NPT). However, already, it was said, some samples were sent to the Indian authorities for testing.
CHINA RAISES PUBLIC AWARENESS ON COMBATING FOSSIL SMUGGLING
ECNS in China on 21st September reported on an exhibition in central China’s Henan Province of fossils including a dinosaur embryo that was excavated in Henan in 1993, but taken out of the country and only returned to China in 2013. Another exhibit was sold at an auction in the US for $420,000 and was only returned to China after 5 years of efforts. To combat smuggling, China has implemented regulations on the excavation, collection, as well as import and export control of fossils. More than 10,000 fossils are said to have been returned to China.
ITALIAN NAVY VESSEL SMUGGLED CIGARETTES FROM LIBYA
The Local in Italy on 20th September reported that the Italian Navy confirmed that a naval vessel was used to smuggle 3,600 cartons of cigarettes, weighing 700 kg, while returning from a mission to stop migrants from travelling from Libya to Europe. The vessel had spent 3½ months in the port of Tripoli on an assistance mission with the Libyan coastguard to intercept and rescue migrant boats in the Mediterranean. The cigarettes had been discovered after a routine check when the boat docked in Brindisi on July 16th.
DNA ANALYSIS HELPS IDENTIFY AFRICA’S MAJOR IVORY SMUGGLERS
RTE and others on 20th September reported that researchers in the US have used DNA analysis to reveal that there are 3 major exporters who are illegally smuggling the largest amounts of ivory out of African ports. A previous study in 2015 used DNA analysis on ivory tusks to identify 2 major poaching hot spots in Africa. Now scientists sampled 38 seizures made between 2006 and 2015 and using information from these researchers, allied to other information, were able to identify 3 large cartels responsible for ivory shipments out of Africa 2011-2014 when trafficking was peaking. Mombasa in Kenya, Entebbe in Uganda and Lomé in Togo were found to be the ports from where the shipments were originating.
PAKISTAN DIDN’T SUFFICIENTLY ACT AGAINST LET, JEM IN 2017, SAYS US
New Kerala in India on 21st September reports that the US State Department in its annual Country Reports on Terrorism for 2017 says that Pakistan did not take sufficient action against groups such as LeT and JeM in 2017, which continued to operate, train, organise and raise funds in the region. UN-listed entities — including Lashkar-e-Taiba (LeT) and its affiliates — were not effectively prohibited from raising funds in Pakistan, nor being denied financial services. Though Pakistan’s National Action Plan to combat terrorism sought to ensure that no armed militias are allowed to function in the country, several terrorist groups focused on attacks outside of the country and continued to operate from Pakistani soil in 2017, it is said in the report. The report acknowledged that Pakistan’s laws technically comply with international AML/CFT standards
SRI LANKA REMAINED VULNERABLE TO MONEY LAUNDERING AND TERRORIST FINANCING
The Daily Mirror in Sri Lanka on 21st September reported that the US State Department in its annual Country Reports on Terrorism for 2017 said that Sri Lanka remained vulnerable to money laundering and terrorist financing although it is neither an important regional financial centre nor a preferred centre for money laundering. The report noted that the country had been placed on the FATF “grey list” but had agreed to an action plan to address several vulnerabilities, including improving mutual legal assistance, issuing CDD rules for designated non-financial businesses and persons, and enhancing risk-based supervision.
TEXAS COURT REJECTS “SPACE TOURISM” CASE INVOLVING ISLE OF MAN COMPANY
The SE Texas Record on 20th September reported that Japanese investor, Takafumi Horie, the billionaire founder of Internet service provider LDH, had filed suit against Houston attorney, Arthur Dula. In 2005, they had met with Russian officials to discuss a “space tourism” business, to be conducted through an Isle of Man company, Excalibur Almaz. Dula was the CEO of the company. Horie, through his company Space Dream, agreed to purchase 75% of Excalibur’s shares for $49 million and became Excalibur’s majority shareholder before the end of 2005. However, in 2006, Horie was arrested for securities fraud in Japan, following which his shareholding was reduced and placed under the control of a third-party trustee. Subsequently, Horie sued Dula for breach of trust and fraud, alleging that Dula was his attorney and that Dula used the funds Horie invested in Excalibur to purchase 4 Almaz spacecraft capsules and 2 space stations without disclosing that the purchase contract prohibited any modification of the hardware – and that consequently, the spacecraft could not be modified to be returned to flight. The trial court initially denied a motion to dismiss from Dula, but he then came back with a motion for summary judgment, which was granted, leading to Horie’s appeal. On 18th September, the appeal court affirmed the trial court’s judgment dismissing Horie’s claims without prejudice.
DEFERRED PROSECUTION AGREEMENTS AND “ADEQUATE PROCEDURES”
On 20th September, law chambers 6KBW published an article following the new SFO Director’s comments about the availability of DPA in the context of a defence of ‘adequate procedures’. It says that there is a critical distinction to be drawn between compliance procedures at the time of the alleged offending (which goes to the commission of an offence), and those in place at the time of an SFO investigation (which goes to the availability of a DPA).
GERMAN BUSINESSES LEAD EXODUS OUT OF IRAN
Deutsche Welle on 21st September that while German businesses in Iran have been preparing for months for the sanctions, the outflow of firms is not slowing down. It says that the focus is on so-called “bottleneck sectors” — areas where there is little or no way to avoid a US connection, including aviation, banking, insurance, shipping and logistics, with the focus on banking, and this means many German companies are caught in the crosshairs. Many of Germany’s biggest businesses are working with Iran, as are hundreds of the country’s medium-sized firms and Germany remains Iran’s biggest trading partner. In 2015, when Iran deal was reached, German exports grew 27%. In 2017, German exports to Iran were worth an estimated $3.5 billion.
ISRAELI POLICE DROP CORRUPTION PROBE INTO UN ENVOY
i24 on 21st September reported that Israeli police said that they closed a corruption investigation into the country’s Ambassador to the UN, Danny Danon, citing insufficient evidence. The probe was launched after an Israeli TV station aired interviews, documents and emails it said showed that he gave lucrative taxpayer-funded jobs in to associates in order to induce them to vote for him in the primaries of the ruling Likud party.
OVERVIEW OF EU VAT PROPOSALS CURRENTLY OR RECENTLY UNDER SCRUTINY
On 5th September, the House of Commons EU Scrutiny Committee’s 36th Report included, in the section on EU VAT Reform: implications of Brexit, a schedule containing details of current or recent proposals to amend EU VAT.
DOES PRESIDENT PUTIN CONTROL OR IS HE CONTROLLED BY THE RUSSIA’S SECURITY SERVICES, THE SILOVIKI?
On 21st September, ETH Zurich published a research paper in which Michael Rochilz first looks at whether President Putin controls or is controlled by the Russia’s security services, the Siloviki, noting a shift in Putin’s worldview to one more in line with the siloviki. VA Nomokonov and VV Filippov then analyse the role of the shadow state and crime in Russia, tracing its increasing influence on political, economic and legal affairs. The edition also includes a book review by Robert Orttung on Peter Reddaway’s recent book on Putin’s symbiotic relationship with the siloviki.
NEW YORK GOVERNOR’S CUOMO’S FORMER RIGHT-HAND MAN GETS 6 YEARS FOR BRIBERY
On 20th September, Law 360 reported that a federal judge has jailed Joe Percoco, Cuomo’s former top aide, with a 6-year prison term for taking bribes in exchange for helping allies in the energy and real estate sectors with state projects.
VAT FRAUD HAULIER DELIVERED TO JAIL IN NORTHERN IRELAND
On 21st September, Accountancy Daily reported that a husband and wife team from County Tyrone who ran a haulage company have been given jail sentences for a £194,000 VAT fraud following an HMRC investigation. Mark Lyons ran Lyons Haulage Ltd with his wife, Janet.
E-BULK: SUBMITTING MULTIPLE APPLICATIONS FOR DBS CHECKING
On 21st September, the Home Office published a news release providing updated guidance on using the e-bulk system for making multiple applications to the Disclosure and Barring Service, including how to register. The e-bulk service allows DBS customers to submit multiple electronic applications for DBS certificates and receive the results electronically. DBS processes requests for, and issues, DBS checks for England, Wales, the Channel Islands and the Isle of Man, making considered decisions regarding whether an individual should be barred from engaging in regulated activity with children, adults or both, in England, Wales and Northern Ireland and maintaining the children’s and adults’ barred lists.
EU: VAT GAP: FREQUENTLY ASKED QUESTIONS
On 21st September, the EU published a list of FAQ on the VAT Gap – the overall difference between the expected VAT revenue and the amount actually collected. The accompanying news release says that EU Member States still losing almost €150 billion in revenues according to new figures.
UNEXPECTED, UNREPORTED, AND SO FAR UNEXPLAINED EMISSIONS OF CFC-11
On 13th September, the Bulletin of the Atomic Scientists published an article about investigations into the cause of the recently discovered increase in the chlorofluorocarbon (CFC) known as CFC-11 — one of the most potent chemicals causing dangerous holes to form in the ozone layer of the Earth’s stratosphere. It reports that initially 18 rogue factories in China were said to have been using CFC-11 in the manufacture of the spray foam insulation material that they were putting into refrigerators and buildings. They were doing this even though this substance was banned under the Montreal Protocol — which China had signed back in the 1980s. However, it says, things may not be all that clear-cut. Other offending factories, and other sources of these synthetic compounds, may still be out there. The reasons for these suspicions: the numbers don’t add up, and it’s not clear that all of the CFC are coming from East Asia. Another puzzling question raised concerns the absence of CFC-12 emissions, which have not been increasing alongside CFC-11, although this chemical is unavoidably produced at the same time. China has now announced a special campaign to identify any illegal CFC-11 production, and local authorities have already filed charges against two of the firms found to be producing CFC-11 and CFC-12.
ANGOLA DROPS GRAFT CHARGES AGAINST EX-ARMY CHIEF
News 24 in South Africa reported that Angolan prosecutors dropped corruption charges against a former army chief of staff, Geraldo Sachipengo Nunda, who was sacked in April by President Joao Lourenco as he moved to shake up his predecessor’s administration because of a lack of evidence “proving criminal conduct”, according to the Supreme Court. 8 other accused, including a spokesperson for the ruling party, 4 Thai nationals, a Canadian and an Eritrean were placed under house arrest in connection to a $50 billion fraud and their trials are expected to begin before the end of the month.
EUROPOL SEIZE 2.2 MILLION KG ILLICIT FUEL IN OPERATION ACROSS 23 EU STATES
ERR in Estonia on 21st September reported that a joint operation conducted in 23 EU Member States, including Estonia, Latvia and Lithuania, and targeting organised crime groups involved in fuel fraud led to the arrest of 25 suspects thus far and the seizure of 2.2 million kg of illicit fuel. It said that, to ensure the fuel was not subject to excise regime once on the market, the criminals involved produced a mixture of primarily gas oil and other added compounds to modify the final physical features of the product.
ZIMBABWE AIRWAYS $70 MILLION SCANDAL PROBED
Zimbabwe Today on 21st September reported that the Zimbabwe Anti-Corruption Commission (Zacc) has launched an investigation into the controversial Zimbabwe Airways (ZimAirways) deal where the airline controversially purchased 2 Boeing 777 planes for $18,5 million and $16,5 million in a probe that has sucked in former president Robert Mugabe’s son-in-law Simba Chikore and ex-transport minister Joram Gumbo.
RUSSIA LAUNCHES INTERNATIONAL MANHUNT FOR SPACE CONTRACTOR REPORTEDLY HIDING IN US
The Moscow Times on 21st September reported that Russian investigators have launched an international manhunt for Sergei Slastikhin, the head of a bankrupt construction company, Inzherniye Sistemy, contracted by the country’s space agency who is accused of large-scale fraud and is believed to be hiding abroad. He was charged with fraud in August and placed on an international wanted list in September. His company is said to have held contracts for several Roscosmos Federal Space Agency sites and he reportedly had access to state secrets.
AUSTRALIAN REGULATOR GOES AFTER FRAUDULENT ICO AND CRYPTO ASSET FUNDS TARGETING SMALL INVESTORS
Cryptoglobe on 21st September reported that the Australian Securities and Investments Commission (ASIC) has disclosed its record of regulatory actions against ICO and crypto asset funds that aim to defraud retail investors by providing them with false information and unrealistic promises, while preventing them from accessing investor protections and guarantees by operating without registering with relevant government bodies.
BOOKIE WORKER RAKED IN £40,000 RUNNING STING-STYLE BETTING SCAM ON FINISHED RACES
The Daily Record reported on 21st September that Gavin Thomson discovered a flaw in Coral’s computer system that allowed him to place bets after the race was over.
UK: 5 YEARS FOR MAN WHO RAN FORGERY FACTOR
On 21st September, an NCA news release reported that Ukrainian national Sergiy Mykhaylov, 38, who manufactured and supplied counterfeit identity documents on a national scale has been jailed for over 5 years. He was arrested in June 2018 by NCA surveillance officers outside his workplace in Hackney. He used his home in Stratford as a forgery factory set up with computers and printers capable of producing tens of thousands of documents, and ran an online business through which he received orders and would post the forged documents to customers all over the UK. In total, officers recovered over 3,000 completed identity documents, 3,500 passport style photos and 300 Construction Skills Certificate Scheme (CSCS) cards, as well as 40,000 bank cards and £15,000 in cash.
GAMBLING BROUGHT IN $261 BILLION TO THE US ECONOMY IN 2017
Calvin Ayre reported on 21st September that the American Gaming Association (AGA) has released figures for the year 2017, showing that the gambling industry contributed $261.4 billion in business sales to the US economy in 2017, a 9.5% increase from 2014.
INTERNATIONAL EXPERTS MEET ON ELECTRONIC MUTUAL LEGAL ASSISTANCE
A news release from Interpol on 21st September reported that the first phase of a project to determine the legal feasibility of electronically transmitting mutual legal assistance exchanges (e-MLA) concluded on 13th September 2018 following a 2-day working group hosted by INTERPOL. The study is said to have found that existing legislation, at both the domestic and international level, is capable of supporting the legal basis for such electronic transmission.
SCOTTISH COURT OF SESSION ASKS CJEU WHETHER BREXIT CAN LEGALLY BE REVERSED
Monckton Chambers on 21st September reported that the Inner House of the Court of Session in Scotland has decided to make a reference to the CJEU for a preliminary ruling on the question of whether the UK can withdraw the notification of its intention to leave the EU under Article 50 TEU. The petition was brought by Andy Wightman MSP and others. On 5th June the Outer House of the Court of Session refused to make a reference to the CJEU on the basis that the question of revocation of the Article 50 notice was hypothetical. However, in the new decision, the Inner House (the Scottish appeal court) has unanimously held that the issue is not hypothetical and should be answered by the CJEU.
SWISS BANKERS ASSOCIATION GUIDELINES ON OPENING CORPORATE ACCOUNTS FOR BLOCKCHAIN COMPANIES
On 21st September, Mondo Visione carried a notice from the SBA saying that it welcomes this trend and takes a positive view of the high market momentum, as it boosts Switzerland’s attractiveness as a financial centre. It says that, with the growth of blockchain companies, their demand for corporate accounts with banks in Switzerland has also risen. Opening an account poses various challenges for banks, because the new blockchain technologies can also be associated with risks, especially in relation to money laundering. Switzerland has strict laws and due diligence requirements in place governing financial transactions. Banks must therefore carry out careful checks when opening an account. SBA set up an internal working group involving member banks and also the Crypto Valley Association (CVA), and the guidelines are the fruits of this work.
ROMANIAN WOMAN PLEADS GUILTY IN US TO HACKING OF METROPOLITAN POLICE DEPARTMENT SURVEILLANCE CAMERAS
A news release from the DoJ on 20th September reported that Eveline Cismaru, a citizen of Romania, has pleaded to federal charges stemming from her role in a conspiracy to illegally access approximately 126 computers associated with Metropolitan Police surveillance cameras in London and to use those computers in connection with a scheme to distribute ransomware in January 2017.