8th July 2019
IRANIAN SCIENTIST ACCUSED OF VIOLATING US SANCTIONS
The Japan Times on 8th July reported that when professor Masoud Soleimani arrived in the US 9 months ago, to continue research at the famous Mayo Clinic, federal authorities armed with a secret indictment arrested him on charges that he had violated trade sanctions by trying to have biological material brought to Iran. He remains in detention. Soleimani – who works in stem cell research, hematology and regenerative medicine – and 2 of his former students – Mahboobe Ghaedi and Maryam Jazayeri (who live in the US – are accused of conspiring and attempting to export biological materials from the US to Iran without authorisation. Their lawyers argue that no specific licence was required because the proteins are medical materials and that taking them to Iran for non-commercial purposes doesn’t amount to exporting goods.
TURKISH DEALINGS COULD HAMPER GVC’S US BETTING HOPES
Casino News on 8th July referred to a Sunday Times report concerning Isle of Man-based GVC, owners of Ladbrokes Coral. It says that GVC disposed of its Turkish operation to complete the Ladbrokes Coral purchase in 2017, but the Sunday Times claims that the head of GVC is one of 3 people to whom GVC offloaded its operations in Turkey, as Dochanoris Limited – a country where gambling is banned. The website says that it is understood that the operator’s boss will now have to answer before US gambling regulators for his link to the current owners of GVC’s Turkish business, and that this could seriously threaten the company’s bid to enter the Nevada and US, a betting market with huge growth potential – the company having been approved in Nevada, but placed on probation for 2 years.
BVI COMMERCIAL COURT DISCHARGES FREEZING ORDERS DUE TO LACK OF RISK OF DISSIPATION, DELAY AND NON-DISCLOSURES
Harneys on 3rd July published a briefing saying that the judge in the hearing found there was no evidence of a real risk of dissipation of assets. He clarified that while in most cases the sole issue on dissipation will be whether assets pass in the ordinary course of business, the strict test is whether the dissipation is unjustified. This was relevant here as while the transfers may not have been in the ordinary course of business, in light of new US sanctions involving Russia at play they may have been justifiable – the transfer of shares in order avoid the impact of US sanctions was not an unjustified dissipation of assets. He also found a number of non-disclosures by an applicant at an ex parte hearing that were serious enough to warrant discharging the freezing orders in their own right. It was also held that the 6-month delay between applying for the asset disclosure orders and the freezing orders would tip the balance against continuing them.
THE RISKS OF RUSHING INJUNCTION APPLICATIONS
On 5th July, Harneys published an article saying that a recent English High Court decision has highlighted the risks of prematurely issuing applications for injunctive relief, a decision which will be of importance in all common law jurisdictions.
LISTING JERSEY HOLDING COMPANIES AND WHY USE THEM
On 30th June, Ogier published an article which looks at why Jersey companies continue to be popular as listing vehicles and why it is likely we will see more international businesses choosing a Jersey holding company to lead them to market.
EU LISTS NEW LIST OF CONTACT DETAILS FOR COMPETENT AUTHORITIES FOR PURPOSES OF TERRORISM-RELATED AND OTHER SANCTIONS
EU Regulation 2019/1163/EU contained a revised list of the contact details of competent authorities, and for notification of the European Commission.
JUDGE IN BRITAIN’S AUTONOMY CIVIL FRAUD TRIAL ISSUES A COURTROOM WARNING TO US PROSECUTORS NOT TO ‘UPSET’ WITNESSES IN THE UK WHO ARE THEMSELVES CHARGED WITH CRIMINAL OFFENCES ABROAD
The Law Society Gazette on 8th July reported that the judge presiding over Britain’s biggest civil fraud trial has issued a courtroom warning to US prosecutors not to ‘upset’ witnesses in the UK who are themselves charged with criminal offences abroad. The $5 billion High Court case between Hewlett Packard and Mike Lynch, founder of software business Autonomy, was brought over Lynch’s allegedly fraudulent statement of Autonomy’s performance before its $11 billion buyout by HP in 2011. Both Lynch and former CFO Hussain were also charged with fraud in the US; Hussain has been found guilty but he is appealing, but US prosecutors announced a fresh batch of charges against Lynch and other ex-Autonomy personnel.
EU WIRE TRANSFER REGULATION, SANCTIONS AND MONEY LAUNDERING
On 19th June, the EU published a report on the application of Chapter IV of Regulation (EU) 2015/847 on information accompanying transfers of funds. Aka “The Wire Transfer Regulation”, Regulation 2015/847/EU, together with Directive (EU) 2015/8492 on preventing the use of the financial system for money laundering or terrorist financing, constitute a modernised regulatory framework to fight abuses of the financial market, ensuring its safety and integrity and promoting the highest standards for AML/CFT. The key objective of the EU Regulation is to make fund transfers more transparent, thereby facilitating the prevention, detection and investigation of money laundering and terrorist financing. For this purpose, the Regulation imposes a set of obligations on payment service providers with regard to the information on payers and payees that has to accompany transfers of funds. The EU Commission finds the implementation by Member States of Chapter IV of the Regulation to be of an overall satisfactory quality, with an engagement of national competent authorities in supervisory activities regarding both the Regulation and the AML/CFT Directive. It also says that, because of the often cross-border nature of money laundering and terrorist financing, it is of utmost importance that the legal obligation of national supervisory authorities to co-operate and co-ordinate their actions, as provided for by the Regulation, is both correctly implemented and effectively applied in all Member States.
UN RAPPORTEUR CALLS FOR MORATORIUM ON SPYWARE SALES
World ECR reported that sales of surveillance software should be paused until a human rights-compliant safeguards regime is in place, according to David Kaye, the United Nations Special Rapporteur on freedom of opinion and expression has advised. The advice is contained in a June report on the surveillance industry and its interference with human rights. The report says that the focus on exports by means of the Wassenaar Arrangement is an imperfect proxy for addressing the central problem: the use of such technologies to target lawful expression, dissent, reporting and other examples of the exercise of human rights.
The report is available at –
FURTHER CONSULTATION ON CHANGES TO AUSTRALIAN RULES FOR FOREIGN FINANCIAL SERVICE PROVIDERS
On 5th July, Allen & Overy published a briefing saying that, on 3rd July, the Australian Securities & Investments Commission (ASIC) released a further consultation paper in respect of its revised proposal for Foreign Financial Service Providers (FFSP). An FFSP is a person who provides financial services to Australian Wholesale (institutional) clients who either rely on existing “equivalency relief ” (typically those whose domestic or home jurisdictions and regulators are listed in the briefing), or rely on the existing “limited connection to Australia” relief contained in ASIC Class Order 03/824.
HOMICIDE KILLS FAR MORE PEOPLE THAN ARMED CONFLICT, SAYS NEW STUDY
On 8th July, the UN Office on Drugs and Crime reported that some 464,000 people across the world were killed in homicides in 2017, surpassing by far the 89,000 killed in armed conflicts in the same period, according to the Global Study on Homicide 2019. The Global Study on Homicide seeks to shed light on gender-related killings, lethal gang violence and other challenges, to support prevention and interventions to bring down homicide rates. Organised crime alone was responsible for up to 19 per cent of all homicides in 2017. Since the start of the 21st Century, organised crime killed about as many people as all armed conflicts across the world combined. It also points out that the 2017 average global homicide rate masks dramatic regional variations.
SWITZERLAND LIFTS RE-EXPORT BAN ON AIR-DEFENCE COMPONENTS TO SAUDI ARABIA
On 5th July, Janes.com reported that repaired spare parts and “assembly elements” of air-defence systems can once more be re-exported from Switzerland to Saudi Arabia, the Swiss Federal Department of Economic Affairs, Education, and Research (EAER) announced on 4th July, lifting the prohibition imposed in October – as apparently there was no legal basis for the ban.
BAN ON DIRECT RUSSIA-GEORGIA FLIGHTS COMES INTO FORCE
Rferl on 8th July reported that a decree banning direct flights between Russia and Georgia, issued by President Putin in response to anti-Russia protests in Tbilisi, came into effect on July 8th, and it also “recommends” that Russia travel agencies stop selling package tours to Georgia for as long as the flight ban remains in place. Georgia has been a popular tourist destination for Russians and more than 1.6 million Russian tourists visited Georgia in 2018, with about 10% of the entire annual income generated by Georgia’s tourism sector.
THE US: SILENCERS AND GUN CONTROL – CURRENT AND POSSIBLE CONTROLS
An interesting blog post from Bryen’s Blog last month said that in the US there are some important gaps in gun law coverage. One of them concerns silencers – which are not illegal, though you need a special licence to have one (that is, if you don’t make your own, which I recall seeing George Clooney doing in some movie…). The blog’s author, Stephen Bryen, points out that silencers are regulated under a law passed in 1934 called the National Firearms Act (NFA, which also covered weapons include machine guns, short-barrelled rifles, short-barrelled shotguns (or “sawn-off” shotguns), any other concealable weapons (other than pistols or revolvers), as well as explosive devices like hand grenades, missiles and poison gas weapons. The NFA is administered by the Bureau of Alcohol, Tobacco and Firearms (ATF), part of the Department of Justice (and, I think, the agency Elliot Ness worked for, and not the FBI).
UK INSOLVENCY SERVICE RECENT CASES
3 news releases from the Insolvency Service focus on recent cases –
- A Sevenoaks second-hand car dealer has been disqualified for mis-selling luxury vehicles and misappropriating £77,000 worth of customer’s funds;
- An Ilford distribution boss disqualified for 11 years after £275,000 of IT equipment bought on credit went missing; and
- An Altrincham-based recruitment boss has been disqualified for 9 years after he was discovered acting as a director while banned from doing so.
NEW CHECKLIST TO HELP DUTCH BANKS DETECT FRAUD
On 8th July, NL Times reported that the Dutch government has asked its FIU to create a checklist for use by institutions. It is said to contain 72 instructions and guidelines to help them detect a suspicious transaction.
ALLEGED RINGLEADER INDICTED IN CASE OF GEORGIANS SMUGGLED INTO ISRAEL
On 8th July, the Times of Israel reported that the alleged leader of a group that smuggled hundreds of Georgians through Ben Gurion Airport had been charged. David Cohen, 44, is named as head of a group that included employees at the airport – the smuggled persons being given airport uniforms.
ACCOUNTANT FROM SOUTH WALES ORDERED TO PAY BACK £680,000 FROM FRAUD
Accountancy daily on 8th July reported that an accountant from South Wales who stole more than £1.7 million while working for the government of Bermuda has been ordered to repay thousands in compensation. Jeffrey Bevan had laundered more than £1.74 million from the government over 2 years, funnelling the money into property purchases in the UK.
MONTENEGRO: DRAFT SECRECY LAW WOULD FUEL CORRUPTION, CRITICS WARN
An article from OCCRP on 8th July quoted activists saying that Montenegro should scrap draft legislation that would allow the government to hide information about public spending, as such a law would open the door for corruption and undermine the country’s EU membership negotiations.
PRAGUE PROSECUTOR CHARGED FOR CORRUPTION IN DRINK-DRIVING CASES
On 8th July, Radio Praha reported that charges have been filed against Pavel Suchánek, a Prague prosecutor for allegedly taking bribes in 2013 from a former judge, who is now in prison on corruption charges.
NEW INTERNATIONAL CONVENTION TO HELP BUSINESSES ENFORCE FOREIGN JUDGMENTS
An article from Out-Law on 8th July reported that a new international convention aimed at making it easier to enforce court judgments across jurisdictions has been adopted. It has the potential to impact the choices businesses make when deciding to litigate. It says that the new Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Judgments Convention), adopted by delegates of the Hague Conference on Private International Law (HCCH) on 2nd July, could be a game changer. It explains that the “Judgments Convention” regulates recognition and enforcement of judgments in civil and commercial matters, with some exceptions including in relation to the carriage of goods, defamation, intellectual property and certain antitrust matters – though these limitations do not apply in cases where they concern only a preliminary question or in which the topics were raised as a defence. The article also says that the success of the Judgments Convention will be decided by whether states are willing to give up parts of their sovereignty in favour of an easier recognition and enforcement of judgments. The earlier Choice of Court Convention of 2005 failed to achieve the desired change. To date, apart from the member states of the EU, it is only in effect in Mexico, Montenegro and Singapore.
KEEPING SPORT SAFE AND FAIR: 3.8 MILLION DOPING SUBSTANCES AND FAKE MEDICINES SEIZED WORLDWIDE
A news release from Europol on 8th July advised that 33 countries, Interpol, the Joint Research Centre (JRC), OLAF of the EU, the World Anti-Doping Agency (WADA) joined forces in the Europol-coordinated Operation Viribus for a massive crackdown on the trafficking of doping materials and counterfeit medicines. The news release says that, over the last 20 years, the worldwide trade in anabolic substances has increased significantly. The trade in doping substances is normally decentralised and highly flexible, open to anyone willing to order online or travel to producing countries and buy the substances in bulk from legitimate manufacturers. Shutting down underground labs was one of the main objectives of the operation: 9 were detected and closed in European countries and almost 24 tonnes of raw steroid powder were seized. Operation Viribus also focused on doping checks during sports events, 1,357 checks (blood and urine tests) have been carried out in some of the participating countries. Trends said to have been noted included –
- wholesalers are importing huge amounts of steroids to feed the illegal market;
- non-professional athletes, bikers and body-builders are buying small parcels of steroids, mainly from Asia or eastern Europe to traffic them to gyms;
- the increased use of social media for advertisement, promotion and sale of anabolic products;
- small organised crime groups are investing in illegal labs and selling the doping substances;
- continuous growth of unauthorised and unregulated online pharmacies, also on the dark-web; and
- a larger use of rechargeable credit cards and cryptocurrencies to perform transactions.
FRENCH ANTI-CORRUPTION AGENCY ANNUAL REPORT
On 8th July, Clifford Chance published a briefing saying that, on 21st June, the Agence Française Anticorruption (AFA), the French anti-corruption agency in charge of monitoring corporate compliance programmes published its annual report providing key figures on audits conducted in 2018. Clifford Chance says that while the first annual report in 2018 provided only high-level information, this second report gives a good overview of the AFA’s expectations of anti-bribery programmes. The report says that 47 audits were undertaken, including 4 as part of the enforcement of conventions judiciaires d’intérêt public (French-style deferred prosecutions agreement). The AFA has received 303 alerts about suspicions of corruption, influence peddling or non-compliance with obligations set by Article 17 of the Sapin II Law. The report highlights the deficiencies emphasised by the AFA.
HUMAN RIGHTS CLAUSES IN EU TRADE AGREEMENTS
A briefing paper from the EU Parliament Research Service on 8th July says that the practice of linking human rights with trade liberalisation has gained ground among many trade partners. Not only the EU, but also other important trade powers, such as the US and Canada, embed human and labour-rights provisions in their new trade agreements. It explains that the main mechanism for incorporating human rights into the EU’s bilateral agreements consists of an ‘essential elements’ human rights clause that enables one party to take appropriate measures in case of serious breaches by the other party, and it also covers democratic principles and often the rule of law. This briefing focuses exclusively on the EU’s bilateral and regional free trade agreements. EU unilateral human and labour rights provisions in trade arrangements are addressed in a separate briefing. A forthcoming EPRS paper will provide more information about labour rights (many of which also form part of the human rights enshrined in international conventions) in EU bilateral agreements.
REPORT SAYS ALMOST THREE-QUARTERS OF CRYPTO BUSINESSES IN UK ARE FORCED TO BANK OVERSEAS
A release on Mondo Visone on 8th July reported that a survey of cryptoasset businesses conducted by CryptoUK, the self-regulatory trade body for the sector in the UK, has found that almost three-quarters of crypto businesses are forced to bank overseas, largely due to the difficulties of opening a bank account in the UK.
SANCTIONS COMMITTEE OF FRENCH ANTI-CORRUPTION AGENCY FIRST-EVER HEARING TO CONSIDER A COMPANY THAT IS FACING POSSIBLE SANCTIONS FOR FAILING TO IMPLEMENT AN EFFECTIVE ANTI-CORRUPTION COMPLIANCE PROGRAMME
A post on the FCPA Blog on 8th July reported on this hearing. It reminds one that France’s Sapin II law adopted at the end of 2016 imposed an obligation on certain large companies to establish and implement an anti-corruption compliance programme, and allows the imposition of sanctions even if no there has been no actual or alleged corruption-related misconduct. The post highlights 3 points that appear particularly worth noting about this first Sanctions Committee proceeding –
- the AFA Sanctions Committee is composed of independent professional judges, with the AFA being a party to the proceeding;
- proceedings are administrative in nature, not criminal, and the Committee is not responsible for determining whether any bribery was committed; and
- proceedings were initiated because the AFA considered that the company did not have any proper compliance programme – but the Sanctions Committee will, however, base its decision on the compliance programme existing as of the date of the hearing; in this case, 18 months after the inspection.