23rd April 2019
MALTA: NEW GUIDELINES ON THE VAT TREATMENT OF YACHT LEASING
On 22nd April, Deguara Farrugia, advocates, published an article explaining the February guidelines issued by the Maltese authorities, and which primarily relate to the use and enjoyment by lessees of yachts within and outside EU territorial waters and the manner in which such use and enjoyment is to be determined.
FOLLOWING THE UKRAINE ELECTION, MONEY LAUNDERING PROBES FOR POROSHENKO’S ALLIES
KYC 360 on 22nd April reported that Ukraine’s top prosecutor has formally summoned several allies of the nation’s outgoing President Petro Poroshenko over allegations of embezzlement and money laundering. Meanwhile, the winner of the election also faces new questions linked to the financial scandals. One of the president-elect’s biggest backers, oligarch Ihor Kolomoisky, is the subject of a financial crime investigation, including by the FBI. In addition, OCCRP said Kolomoisky and another oligarch used their ownership of Ukraine-based PrivatBank to funnel $5.5 billion in funds stolen from the institution through its Cyprus-based subsidiary.
EXILED CONGO OPPOSITION LEADER’S FRAUD CONVICTION OVERTURNED
KYC 360 on 22nd April reported that an appeals court has overturned a conviction of exiled Congolese opposition leader Moise Katumbi for real estate fraud, ruling that the trial court had been pressured by former President Joseph Kabila’s government.
EUROPEAN COUNCIL ADOPTS NEW RULES FOR THE DELIVERY AND THE MANAGEMENT OF WASTE FROM SHIPS
On 15th April, Deberti Jacchia in Italy reported about a new EU Directive which proposes to reduce marine litter by 30% by 2020 for the 10 most common types of litter found on beaches, as well as for fishing gear found at sea. The Directive aims at ensuring the smooth operation of maritime traffic by improving the availability of adequate port reception facilities and increasing their delivery of waste. An appropriate waste reception and handling plan must be in place and implemented for each port, and Member States shall ensure the availability of port reception facilities adequate to meet the need of the ships normally using the port.
CORRUPTION AND BRIBERY OFFENCES IN IRELAND
On 25th March, Irish law firm, Arthur Cox, published an article about corruption and bribery offences.
RECENT WTO DECISION COULD PROVIDE BLUEPRINT FOR INVESTOR CLAIMS AGAINST US GOVERNMENT
On 22nd April, Greenberg Traurig published an article about a landmark ruling that could have significant implications for US tariffs on imports of steel and aluminium (and potentially other things), a WTO Dispute Settlement Body Panel published a decision concerning the national security exception in the General Agreement on Tariffs and Trade (GATT) is not self-judging. The Panel found both the treaty and international law permitted the Panel to inquire whether the party invoking the national security exception acted in good faith, and rejected arguments made by Russia and the US (that the national security exception in GATT was entirely “self-judging” and therefore not subject to substantive review. It says that the decision is significant because the Trump Administration has repeatedly invoked national security to justify its steel and aluminium tariffs; and those tariffs are presently subject to a number of challenges at the WTO, on the grounds that the tariffs were not actually imposed because of national security concerns.
SOLICITOR SUSPENDED AFTER CANNABIS FARM FOUND IN HER HOME
The Law Society Gazette on 23rd April reported that a solicitor from Lancashire whose husband grew cannabis in her family home – which resulted in her conviction in March 2018 for permitting production – has been suspended from practice for 6 months.
RUSSIA MOVES TO TACKLE TAX EVASION WITH NEW LEGISLATION
Customs Today on 22nd April reported that lawmakers in Russia’s State Duma adopted in 3 readings a Bill allowing for new opportunities for the Federal Tax Service (FTS) to challenge companies using preferential tax rates under international agreements. It says that companies that enjoy benefits under agreements on avoidance of double taxation will be obliged to explain the economic meaning of the operations. The new mechanism to combat tax evasion will work from 2020, and 71 double tax treaties will change.
SECURING NUCLEAR WEAPONS AND MATERIALS WORLDWIDE: EXPANDED FUNDING NEEDED FOR A MORE AMBITIOUS APPROACH
On 19th April, the Belfer Center published a policy brief saying that the Trump Administration budget request for programmes to reduce the dangers of nuclear theft and terrorism is too small to implement the ambitious approach that is needed. The US Congress should, it argues, increase funding in this critical area; direct the administration to develop and implement a comprehensive plan for improving security for nuclear weapons and materials worldwide; and exert expanded oversight of this effort. The brief highlights the importance of ongoing nuclear security work; describes the evolving budget picture; and outlines recommendations for congressional action.
HUMAN SMUGGLING FROM CENTRAL AMERICA TO THE US – WHAT IS KNOWN OR KNOWABLE ABOUT SMUGGLERS’ OPERATIONS AND REVENUES?
A research paper from the RAND Corporation finds that human smugglers operating along routes from Central America to the US range from independent operators, to ad hoc groups, to loose or more formal networks, such as transnational criminal organisations; there is little evidence that drug trafficking organised crime groups engage directly in human smuggling, but they do control primary smuggling corridors; a preliminary estimate of revenues to all types of smugglers, from smuggling migrants from Guatemala, Honduras, and El Salvador, ranged from about $200 million to about $2.3 billion in 2017; and a preliminary estimate of taxes paid to drug trafficking organised crime groups by migrants from the same 3 countries ranged from $30 million to $180 million in 2017. It makes recommendations for how the Department of Homeland Security might use findings from this research to target human smuggling, allocate resources, and improve data collection.
DEMISE CHARTERS AND THE CREATION OF A PAPER REALITY
On 22nd April, an article from law firm Dentons examined the proof of demise charter by the demise charterer, proof by a third party claimant when arresting a ship, and evidentiary differences in litigation and arbitration. This follows a recent case in the Singapore High Court highlighting difficulties that may sometimes be encountered in proving the factual and legal status of a bareboat or demise charterer. A demise charter is one where a ship owner leases its vessel to the charterer for a period of time during which the whole use and management of the vessel passes to the charterer, and the charterer pays all expenses for the operation and maintenance of the vessel (aka a bareboat charter).
“CRYPTOCURRENCIES FINANCING RUSSIA’S ‘HYBRID’ WARS”
An article from Real Clear Defense reports that Myrotvorets, a controversial independent Ukrainian website that claims to track persons threatening Ukraine’s security, has called on the authorities in Kyiv to investigate Russia’s alleged use of cryptocurrencies (via the WEX digital currency exchange platform) to fund subversive activities potentially in support of one of the candidates in Ukraine’s presidential run-off election. It says that the news sheds light on Moscow’s apparent use of digital currencies to fund its ongoing “hybrid” (New Generation) war against Ukraine and possibly in other conflicts.
US AND EU PUBLISH LISTS OF PRODUCTS THAT MAY BE SUBJECT TO RETALIATORY TARIFFS
On 22nd April, King & Spalding published an article saying that, as a consequence of the longstanding disputes over aircraft subsidies allegedly supplied to Boeing and Airbus, the US and EU have published preliminary lists of products that could face billions of dollars in retaliatory tariffs.
NORTH KOREAN MISADVENTURES IN UGANDA
On 28th March, NK News carried an article which looks at a failed construction project from 2011, a few attempts at insurance fraud, and the 4 lawsuits (at least one of which is still unfolding – the Ugandan government has an ongoing lawsuit with MKP) that resulted when everything went wrong. The key players are Malaysia-Korea Partners (MKP – a construction company formed between the DPRK-controlled Mansudae Overseas Projects and a group of Malaysian businessmen. Construction projects across the developing world have served as a significant source of revenue for North Korea) and the Ugandan National Housing and Construction Company (NHCC – formed in 1964 by the Ugandan government with a mandate to finance and build housing within Uganda). The author of the article suggests that neither the NHCC nor MKP ever intended to complete the project: the plan from the start being to over-insure a project, rip off a few insurance companies, and walk away with a few million dollars.
US: IS OPIOID BATTLE SHIFTING TO DRUG DISTRIBUTORS?
The Crime Report on 22nd April reported that a US Attorney and the DEA are finishing an investigation that appears likely to result in the first criminal case involving a major opioid distributor, Rochester Drug Cooperative, one of the 10 largest. It says that the New York Times says that this indicates a move targeting distributors — companies that act as middlemen, trucking medications of all kinds from vast warehouses to hospitals, clinics and drugstores – amid a growing realisation that the financial muscle driving the spread of prescription opioids in the US.
UK GOVERNMENT PUBLISHES NEW ACTION PLAN TO IMPROVE POLICE FORENSICS
On 23rd April, the Home Office announced a 13-point action plan to improve police forensics designed to improve public confidence, support the criminal justice system, and ensure the quality and stability of forensics provision. The action plan is published alongside the findings of a Home Office commissioned review into the provision of forensic services in policing, such as DNA and fingerprint evidence. The findings are that urgent action is required to make the current system sustainable.
LONDON METAL EXCHANGE (LME) TO BAN METAL TAINTED BY CHILD LABOUR OR CORRUPTION
On 23rd April, Reuters reported that the LME could ban or delist brands that are not responsibly sourced by 2022 under an initiative launched to help root out metal tainted by child labour or corruption. All LME brands would by the end of 2020 undertake a “Red Flag assessment” based on guidelines set by OECD. Brands would be forced to publish fully all of their supply-chain information by 2024, the LME said.
REMITTANCES – THE FLYWHEEL OF THE GLOBAL ECONOMY
Forbes magazine has published an article saying that peer-to-peer (P2P) money transfers across borders, or remittances in the short form, are arguably the world’s most important international cashflow. During the 2008 global financial crisis, all cross-border cashflows declined precipitously, while remittances held their course. It warns that a disproportionate money control system, however, makes remittances up to 10 times more costly to send than domestic transfers greatly depressing the net amount of remittance flows reaching their intended recipients and beneficiaries. As an example, it says that, of the $150 billion sent from the US by a more than a 45 million strong diaspora population, the annual average outbound sum is a mere $3,300. It also points out that in some countries the number of people without a bank account is high, in Egypt for example, at 85%.
UKRAINE IMPOSES SANCTIONS AGAINST THE COMPANY THAT PARTICIPATED IN SEIZURE OF UKRAINIAN SAILORS
The Inform Napalm website on 23rd April reported that Yuvas-Trans LLC and its affiliates have been added to the Ukraine’s sanctions list – and that Yuvas-Trans LLC provided its vessels to block the passage of Ukrainian military ships under the arch of the Kerch bridge on November 25th.
LARNACA MUNICIPAL SECRETARY JAILED FOR CORRUPTION
The Cyprus Mail reported on 23rd April that the Larnaca municipal secretary, Lefteris Empedocles, 57, has been sentenced to 5 years in prison for corruption in connection with taking money to sort out building code infractions.
UK QUIETLY SIGNS UP TO EU CRIMINAL JUSTICE MEASURES
The Law Society Gazette on 23rd April reported that the UK has quietly signed up to 4 sets of measures involving criminal justice co-operation with the EU – improvements to Eurodac (a centralised database containing the fingerprint data of asylum seekers and illegal border crossers); changes to Eurojust (the co-operation unit for investigations and prosecutions); to take part in the adoption and application of changes made to the European Criminal Records Information System (ECRIS); and to apply the Prüm Convention, an inter-government treaty on cross-border cooperation, particularly in combatting terrorism and cross-border crime.
CEO OF INDONESIAN STATE ELECTRICITY UTILITY PLN HAS BEEN NAMED A SUSPECT IN A GRAFT CASE
Baker McKenzie reported on 23rd April that Sofyan Basir, the chief executive of Indonesian state electricity utility Perusahaan Listrik Negara (PLN), has been named a suspect in a graft case related to a power project. 2 politicians have been given jail sentences for their role in the case.
HOW SHOULD A FORENSIC ACCOUNTANT APPROACH A CONFISCATION CASE?
On 23rd April, Bartfields Forensic Accountants published an article about confiscation proceedings under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. It asks should a forensic accountant focus on the benefit and available amount asserted in the prosecutor’s section 16 statement – or consider the wider aspects of the proceedings? It cautions that the danger of focusing only on the section 16 statement is that the forensic accountant may fail to appreciate the importance of relevant matters which are not referred to within that statement.
US ARMS SALES TRENDS: RHETORIC VERSUS REALITY
An infographic from the Security Assistance Monitor, at the Center for International Policy summarises the key findings of an April 2019 Security Assistance Monitor report. It points out the realities of the benefits of US arms sales – not as many jobs are created in the US as President Trump might have you believe, says the Center, and that new research shows just 0.002% of US jobs are tied to arms exports.
RUSSIAN CORPORATE BRIBERY ENFORCEMENT STATISTICS
On 23rd April, a blog post on the FCPA Blog looks at the official year-end statistics for corporate bribery enforcement in Russia in 2018, which the author of the post says are once again aimed at demonstrating the country’s tough stance on fighting corruption. The statistics were published on March 21st by the Russian general prosecutor’s office. There were 487 investigations against legal entities for bribery, resulting in the conviction of 439 entities and total penalty payments of $10.7 million. It says that there are more than 1,700 entities on a list maintained by general prosecutor’s office. All entities convicted of bribery are prohibited from bidding in state procurement tenders for a period of 2 years from the date of conviction (excluding tenders of state-owned companies). The post highlights the targeting almost exclusively of small and mid-scale bribery in day-to-day business. It also comments that a new trend is that public prosecutors assess whether companies have implemented anti-corruption measures required by the law when prosecuting them for corporate bribery. The post concludes that enforcement risks are highest in case of small and mid-scale bribery (which is the most prevalent in practice); the main liability risk is not the penalty payment but going onto the public register of offenders; and taking anti-corruption measures can be a defence.