5th December 2018
US INDICTS 4 IN PANAMA PAPERS TAX EVASION SCHEME
NHK and many others on 5th December reported that the US DoJ has indicted 4 people in connection with tax evasion schemes revealed by a massive leak of documents known as the Panama Papers. They have been charged with wire and tax fraud, money laundering and other offences. The indicted include a lawyer and a client of Panama-based law firm Mossack Fonseca, which was at the centre of the scandal that came to light in 2016. The accused include 2 German investment managers. Charged in the indictment were German investment manager Dirk Brauer; 81-year-old German national Harald Joachim von der Goltz, a Mossack Fonseca client; Richard Gaffey, an accountant from Massachusetts; and Ramses Owens, a Panamanian attorney who worked for Mossack Fonseca. 3 of the men are under arrest, but authorities say Owens remains at large. According to the indictment, the men helped US taxpayers evade taxes by using undisclosed foreign accounts and shell companies in places like the BVI, Hong Kong and Panama. One sample case cited in the indictment concerns “Client-1” who had evaded income taxes for years, using accounts on the Isle of Man and in Hong Kong.
ALLEGED CHINESE ATTEMPT TO OBTAIN US SATELLITE TECHNOLOGY
The Wall Street Journal on 4th December carried an article about a satellite said to have been funded by Chinese state money, according to corporate records, court documents and people close to the project; and that about $200 million flowed to the satellite project from a state-owned Chinese financial firm in a complex deal that used offshore companies to channel China’s money to Boeing. It says that US laws effectively prohibits exporting satellite technology to China, and hence its satellites lag far behind those made in the US. However, current and former US officials, and people close to the start-up company involved, called Global IP, fear the satellite could ultimately be used by China’s government or military once in space, or its technology reverse-engineered. Details of the satellite deal began to emerge in the course of a legal dispute between founders of the start-up company and the state-owned Chinese company that provided financing, China Orient Asset Management Co. Global IP agreed to receive China Orient’s money through an intermediary, the founders said, and a Shanghai-born businessman set up a company in the BVI.
ITALIAN COURT RULES GETTY MUSEUM MUST RETURN A PRIZED BRONZE
The New York Times on 4th December reported that Italy’s highest court has ordered that a centerpiece of the Getty Villa’s art collection, a prized bronze sculpture more than 2,000 years old, should be returned to Italy in a ruling that could lead to a trans-Atlantic transfer or a diplomatic stand-off. The bronze was retrieved from Adriatic waters by Italian fishermen in 1964. After a decade-long legal battle, Italy’s Court of Cassation has ruled that the statue should be confiscated and brought back to Italy, rejecting the Getty’s appeal. Under a 1939 Italian law, when antiquities and archaeological works are discovered in that country, the authorities must be notified and the artefacts are not allowed to leave Italy without an export licence.
COUNTERFEIT GOODS IN THE US
On 4th December, an article in the Epoch Times reported that in 2015, criminals smuggled into the US counterfeit and pirated goods worth between $58 billion and $118 billion, according to a report update by the Commission on the Theft of American Intellectual Property. 87% of counterfeit goods seized in the US came from China, according to the report. The article details some of the methods used to disguise the counterfeits, or to avoid those involved being caught.
See also NBC New York report on the seizure of $1.7 million worth of fake Nike trainers in New York, destined for California and from China.
59 ARRESTS IN GREEK GOLD SMUGGLING CASE
Neoskosmos on 5th December reported that a gold-smuggling business that had been operating for at least 3 years, trafficking melted gold and silver to the Turkish black markets, has finally been busted to light with 59 people found to have close ties to the organisation arrested. Pawn shops (owned by a Greek TV personality) would buy the jewellery which would then be melted down and transferred over the border via tourist buses.
UGANDANS IMPLICATED IN US MONEY LAUNDERING CASE INVOLVING ALLEGED BRIBERY TO GET OIL EXPLORATION CONCESSIONS
The Observer in Uganda on 5th December reported that during the trial of Patrick Ho for allegedly bribing Chad’s President Idriss Deby to get oil blocks rights and for bribing President Yoweri Museveni and his Foreign minister Sam Kutesa, ANOTHER Ugandan was also implicated. Ho allegedly paid the bribes to secure lucrative oil rights in Chad on behalf of giant energy conglomerate CEFC China Energy Co, a private Shanghai-based company. CEFC also had investments in Uganda. Senegal’s former foreign minister, who was well connected to several African presidents, has seen bribery charges against him dropped and he will now testify against Ho.
VIJAY MALLYA OFFERS TO REPAY 100% OF “PUBLIC MONEY” AS EXTRADITION FIGHT CONTINUES
On 5th December, the Times of India reported that fugitive businessman, fighting extradition to India from the UK on fraud charges, has appealed to Indian banks to accept repayment of the money alleged fraudulently obtained.
FUTURE OF SHIP RECYCLING IN THE EU
An article from Fenech & Fenech on 5th December provides a brief outline of the requirements of the EU Regulation 1257/2013 on Ship Recycling which, with respect to new vessels, will enter into full effect on 31st December. It obliges EU-flagged vessels to conduct dismantling operations in European Commission-approved ship-recycling facilities.
ASSET FREEZING AND FORFEITURE UNDER THE CRIMINAL FINANCES ACT: HOW BANK ACCOUNTS ARE TARGETED
An article from Rahman Ravelli on 4th December outlines the sweeping new freezing and forfeiture powers given to the authorities by the Criminal Finances Act 2017.
OFAC SETTLEMENT WITH COBHAM HOLDINGS INC FOR DEFICIENT SCREENING SOFTWARE
An article from Paul Weiss on 29th November was concerned with the near $90,000 settlement agreement with Virginia-based Cobham Holdings Inc, a global provider of technology and services in aviation, electronics, communications, and defence, on behalf of its former subsidiary, Aeroflex/Metelics Inc. It says that the apparent violations appear to have been caused by Metelics’s (and Cobham’s) reliance on deficient third-party screening software. The article says that, despite the relatively low settlement amount, this case provides a few key lessons for other businesses – including a rare involvement of the “50% rule”, rather than those actually on the SDN List.
DUTCH POLICE RAID ‘DOZENS’ OF HOMES IN EUROPEAN MAFIA CRACKDOWN
Dutch News on 5th December reported that Dutch police were carrying out raids on homes at several locations in the Netherlands morning as part of a Europe-wide campaign against a Calabrian mafia organisation, Ndrangheta. The operation, code named ‘Pollino’, is the result of an intensive joint investigation that started in 2016 and has been co-ordinated at European level. A 2012 police report showed the Ndrangheta could have as many as a hundred active members in the Netherlands.
CHINA HAS SENTENCED 2 RINGLEADERS OF AN ONLINE LOTTERY SCAM TO LIFE IN PRISON
Calvin Ayre on 4th December reported that China has sentenced 2 ringleaders of an online lottery scam to life in prison, while dozens of other suspects received shorter but still harsh sentences. The ring had bases of operation in China’s Guangdong province, as well as in Indonesia and Fiji. Some 77 members of the ring were repatriated from Fiji as part of the 2017 crackdown.
3 US-BASED MEN INDICTED FOR VIOLATING IRAN SANCTIONS IN CONNECTION WITH MULTI-MILLION-DOLLAR CONTRACTS TO PROVIDE SUPPLIES AND LOGISTICAL SUPPORT TO US TROOPS IN AFGHANISTAN
On 5th December, the European Sanctions Blog reported that the US DoJ has announced that 3 US-based men have been indicted on charges including the violation of US sanctions on Iran in connection with contracts worth $8 billion and $984 million to provide supplies and logistical support to US troops in Afghanistan.
GERMANY ARRESTS RUSSIAN FOR SMUGGLING 12 MILLION CIGARETTES
Customs Today on 3rd December reported that German police say they have arrested a Russian man in Kiel suspected of smuggling some 12 million cigarettes into the country over 2 years. A statement said that he is accused of smuggling the cigarettes into Germany between 2009 and 2011.
ENGLAND AND WALES PILOT CAN MAKE DISCLOSURE ‘MORE INTELLIGENT, TAILORED’
Out-Law on 5th December published an article which says that businesses need to fully understand the impact of a 2-year pilot of a new disclosure regime in the Business and Property Courts in England and Wales that starts on 1st January. It says that the pilot offers real opportunity to make disclosure a more intelligent, tailored process which imposes a more proportionate burden on businesses involved in litigation; and businesses can help maximise the benefits of the pilot by embracing it fully.
ECUADOR VICE-PRESIDENT REMOVED, ACCUSED OF TAKING KICKBACKS FROM AIDE
Baker McKenzie on 4th December reported that Ecuador’s President Lenin Moreno has suspended his vice president, Maria Alejandra Vicuna, who faces allegations that as a congresswoman she took kickbacks from a staff member. The president’s running mate, Jorge Glas, was stripped of vice-president duties after he was jailed and later convicted of orchestrating a plot to demand millions of dollars in bribes from Brazilian construction giant Odebrecht during the leftist government of President Rafael Correa. Both he and Moreno served as Correa’s vice president.
UN GUIDANCE NOTE ON LIBYAN SANCTIONS PAYMENT OF REASONABLE PROFESSIONAL FEES, REIMBURSEMENT OF LEGAL SERVICES EXPENSES, FEES OR SERVICE CHARGES FOR ROUTINE HOLDING AND MAINTENANCE OF FROZEN FUNDS
On 4TH December, the relevant sanctions committee adopted an Implementation Assistance Notice entitled “Guidance to Member States on the correct application of the provisions of the resolutions regarding the payment of management fees on frozen assets”. This confirmed that the payment of reasonable professional fees and reimbursement of incurred expenses associated with the provision of legal services or fees or service charges for routine holding and maintenance of frozen funds may be made from frozen funds when determined by Member State to be necessary and after notification by the Member State to the Sanctions Committee and in the absence of a negative decision by the Committee – fees appropriated without notification would constitute non-compliance with the assets freeze measures.
POLAND ARRESTS 22 SUSPECTS IN €68 MILLION EU FUND ‘FRAUD’
EU Observer on 5th December reported that Polish anti-fraud squad, CBSP, has arrested 22 people in dawn raids on homes and offices around the country on a group suspected of defrauding €68 million from EU funds. The group allegedly obtained 118 bogus EU-funded loans for purchases of specialist IT equipment for 89 different companies between 2017 and 2018.
BRAZILIAN PROSECUTORS CLAIM GLENCORE, TRAFIGURA, VITOL BRIBED PETROBRAS STAFF
On 5th December, Reuters reported that Brazil prosecutors alleged that trading giants Vitol, Trafigura and Glencore paid over $30 million in bribes to employees at state-owned oil company Petroleo Brasileiro SA in return for business – the latest finding of the country’s sweeping “Car Wash” investigation, which has uncovered the largest corruption scheme in Brazil in decades.
CHINESE FRAUDSTER IN LONDON JAILED FOR £8.5 MILLION MONEY LAUNDERING OPERATION
The Evening Standard on 5th December reported that a fraudster known as The Boss has been jailed for 7 years. Wei Han, 36, shopped for designer goods, sent his daughter to a £3,500-a-term private school and drove a £73,000 Bentley from the criminal profits. The Chinese national told the taxman he earned £1,100 a year but had a £48,000 Maserati and a £39,000 Mercedes at his £5,600-a-month rented Chelsea home, as well as thousands of pounds worth of jewellery and watches. He and Jie Huang, 25, used couriers to collect criminal cash and pay it into third-party accounts, then transferring it into Chinese currency.
A PRIMER ON CANADIAN SANCTIONS LEGISLATION
On 5th December, Blake Cassels & Graydon LLP published a briefing which provides an overview of the key elements of the Canadian sanctions legislation and related prohibitions and obligations as of December 4th.
VENEZUELA COASTAL STATE OF ANZOÁTEGUI COULD BE HOT NEW DRUG TRAFFICKING ROUTE
Insight Crime on 5th December published an article saying that Venezuelan authorities seized 6 major drug shipments during the month of November in the eastern state of Anzoátegui, potentially indicating an increase in drug flow through the coastal area due to gangs seeking alternate routes to export substances coming from Colombia.
POLICE CLAIM ‘MAFIA’ GAMBLING GIANT CLOSED BY UK SIMPLY MOVED TO MALTA
The Evening Standard on 5th December published an article saying that in 2009, Italian and British authorities closed a £100 million betting firm operating out of west London. Paradisebet – by the time of the arrests, nothing more than an empty shell stuffed with debts – was accused by prosecutors of hiding the ill-gotten gains of the Martiradonnas, a family linked to the Sacra Corona Unita crime syndicate from the city of Bari. However, what was not reported was that the Martiradonnas were later acquitted in the Italian courts and their gambling empire simply moved to Malta. Now Vito Martiradonna, 70, and his 3 sons, Michele, 49, Francesco, 45, and Mariano, 37, have been arrested in Italy on charges of money laundering, fraudulent gambling activities and of “aiding a mafia-type association”. It appears the operation effectively reappeared as a Maltese company, Centurionbet – and on paper, the Martiradonnas had no affiliation with the new owner, and have previously denied being involved.
PODCAST: UPDATE: THE UK BRIBERY ACT AND ENFORCEMENT TRENDS
In the latest TRACE podcast, speaking at the TRACE European Forum, Michelle de Kluyver of Addleshaw Goddard provides a comprehensive and insightful update on the UKBA and recent enforcement trends in the UK.
TAHITI VETERAN POLITICIAN GASTON FLOSSE AND HIS SON REGINALD CHARGED FOR ALLEGED FRAUDULENT PARIS PROPERTY ARRANGEMENT
Radio New Zealand on 5th December reported that media reports said the former president had been charged with complicity in attempted corruption while Reginald Flosse has been charged with attempted corruption. They had been detained for allegedly forging management papers for a house which Flosse sold in Paris in 2010 for more than $6 million. Flosse owed more than $2 million to the state following a conviction for running a phantom job scam.
EX-HONG KONG OFFICIAL PATRICK HO FOUND GUILTY OF US CORRUPTION CHARGES
Reuters on 5th December reported that the former Hong Kong government official has been found guilty of US charges that he took part in a scheme to bribe officials in Chad and Uganda in exchange for contracts for a Chinese energy company.
RUSSIA ASKS ITALY TO DROP CHARGES AGAINST FORMER AMBASSADOR IN NIGERIA GRAFT CASE
Reuters on 5th December reported that Ednan Tofik ogly Agaev, a former Russian ambassador in Colombia, is charged with international corruption in a case revolving around the 2011 purchase by oil majors Eni and Shell of Nigeria’s OPL 245 oilfield. Milan prosecutors allege bribes totalling around $1.1 billion were paid to win the licence to explore the field.
AUSTRIA CLEARS GERMAN WHO IMPORTED DAMAGED EUROS FROM CHINA
The BBC reported on 5th December that a German man arrested in Austria for alleged fraud after trying to convert thousands of old and damaged euro coins imported from China has been acquitted. The €1 and €2 coins were collected from scrapped cars and washing machines sent to China from Western countries. He was detained in Austria earlier this year after police found 117 kg of the coins, worth €15,000, in his car. He said that because the euro coins were not used as currency in China, he could purchase large quantities by weight at a fraction of their value and return to convert them for notes at Austrian banks using coin-counting machines. An Austrian court has now ruled that his actions were not illegal.