1st August 2019
CHINESE BILLIONAIRE INDICTED ON CHARGES OF EVADING NEARLY $2 BILLION IN ALUMINIUM TARIFFS
The Wall Street Journal on 31st July reported that an indictment, which was reached in May but not unsealed until July, accuses Liu Zhongtian, founder of Chinese aluminium giant China Zhongwang Holdings Inc. The indictment alleges that scheme involved the company’s headquarters in Liaoning, China, ports in Los Angeles and a remote desert in Mexico, and that began in 2008 and has continued to the present day.
MOZAMBIQUE TO FIGHT FOR EXTRADITION OF FORMER FINANCE MINISTER OVER DEBT SCANDAL
KYC 360 on 1st August reported that Mozambique is to fight for the extradition from South Africa of former finance minister Manuel Chang, who the US is seeking to put on trial. He has been in custody in South Africa since his arrest in December at the request of the US for his alleged involvement in $2 billion of fraudulent borrowing. A new justice minister and a Mozambique civil society organisation have applied to the courts to have his extradition set aside, whilst the Mozambique government is now said to bring a counter application in favour of Chang’s extradition to Mozambique. The US charges relate to loans obtained from Credit Suisse and Russia’s VTB bank that were guaranteed by the Mozambican government.
IRISH SUPREME COURT REASSERTS TRADITIONAL DISCOVERY TESTS
An article from Maples on 19th July reported that a landmark decision by Chief Justice Clarke, the Irish Supreme Court has reasserted the traditional legal tests for granting discovery orders, and put the onus squarely on the requested party to demonstrate that any alleged compliance with a discovery request would be too onerous. The decision overturns the Irish Court of Appeal’s judgment in the same case. The article notes that, although the decision is the definitive statement of the current law in the area, further developments are expected when the Review Group on the Administration of Civil Justice, chaired by the President of the High Court, issues its recommendations for anticipated wide-ranging reform of civil procedure in the Irish Courts.
THE SERCO DEFERRED PROSECUTION AGREEMENT: A LESSON IN PRAGMATISM
On 29th July, Greenberg Traurig published an article about the DPA between the SFO and Serco Geografix Limited, a now-dormant subsidiary of Serco Limited, and which marks the end of a 6-year investigation which started in November 2013 when the MoJ reported concerns about its contract with the latter for the supply of electronic monitoring equipment, i.e. ankle tags, used to monitor individuals accused or convicted of criminal offences. The article says that the judgment raises some interesting points of law and practice, and considers the facts and analyse it, the first under new SFO Director Lisa Osofsky – for example, how a dormant company is able to pay significant financial penalties and costs and satisfy positive obligations to improve internal procedures.
NIGERIA: SUPPRESSION OF PIRACY AND OTHER MARITIME OFFENCES ACT 2019
On 31st July, Akabogu & Associates in Nigeria provided an examination of this new Act which is intended to address the issues of piracy and armed robbery at sea which Nigeria has grappled with in recent times. While some of the principles embodied in the act are understandably untested in the Nigerian courts, it says, the Act is undoubtedly a solid framework for dealing with sea piracy and other unlawful acts at sea. It gives effect to the relevant provisions of several international conventions already ratified by Nigeria, clarifies that sea piracy is properly defined in Nigerian law and gives the Federal High Court exclusive jurisdiction to determine matters of armed robbery and other unlawful acts at sea.
FREIGHT FORWARDERS AND THE US EXPORT ADMINISTRATION REGULATIONS (EAR)
Torres Law published an article on 31st July saying that, hitherto, the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR), which govern exports of sensitive products and technologies from the US meant that all parties to an export transaction, including freight forwarders, are subject to the same rules, and as such must be cognisant of their requirements including destination controls, licence exceptions or exemptions, and export classifications and licensing. However, it reports on the case where the FedEx Corporation has openly challenged the Bureau of Industry and Security’s jurisdiction to enforce the EAR with respect to actions taken by freight forwarders, Fedex saying that the actions of BIS violate the company’s constitutional due process rights under the Fifth Amendment; and that, in enforcing the regulations, BIS exceeds its authority under the Export Control Reform Act. Whilst saying that it is monitoring the case, the law firm points out that the US Government is traditionally granted broad latitude by the courts for the enforcement and application of laws and regulations promulgated in the interest of national security, like the EAR.
ITALY: TEMPORARY ADMISSION FOR YACHTS
On 1st August, an article from Arnone & Sicomo examined the issue of temporary admission (temporary importation)for yachts in Italy – saying that, in Italian law, it can be linked to the crime of customs smuggling and to violation of financial (tax) regulations. It looks at the potential offences that may be involved. It notes that while recreational craft and fishing vessels flying the flag of a EU-country are not subject to any limitations, non-European recreational craft and fishing vessels are subject to the Geneva Convention of 1956 on temporary admission/importation and to the Istanbul Convention of 1993. It goes on to look at the temporary admission arrangements for non-EU yachts, noting that those imported for repair, maintenance etc can qualify for import VAT relief.
FORMER US GRAIN TRADER PLEADS GUILTY TO WIRE FRAUD AND MONEY LAUNDERING
On 31st July, World Grain reported that a US grain trader accused of defrauding at least 60 farmers, grain elevators and grain brokers for more than $11 million has pleaded guilty to federal charges of wire fraud and money laundering. Hunter Hanson, 22, said that he “got overwhelmed” in his grain trading business.
UK: DETAILS OF DELIBERATE TAX DEFAULTERS
On 31st July, HMRC published the latest list containing the details of deliberate tax defaulters who have received penalties either for deliberate errors in their tax returns, or deliberately failing to comply with their tax obligations; and where HMRC has carried out an investigation and the person has had imposed one or more penalties for deliberate defaults, and those penalties involve tax of more than £25,000. However, their information will not be published if the person earns the maximum reduction of the penalties by fully disclosing details of the defaults.
HUNGARY MUST ENFORCE ITS FOREIGN BRIBERY OFFENCE AGAINST COMPANIES, INCLUDING FOREIGN SUBSIDIARIES
A news release from the OECD on 1st August said that it is concerned that Hungary has not commenced any foreign bribery investigations or prosecutions in over 9 years. This is despite the companies operating in the country having significant exposure to export-related risks of the bribery of foreign public officials. This includes foreign subsidiaries of multinational enterprises (MNE) that use Hungary as a manufacturing base and re-export goods to other markets. To avoid Hungary becoming a safe harbour for MNE with subsidiaries in Hungary that commit bribery abroad, the authorities must overcome their reluctance to enforce relevant criminal legal provisions and assign responsibility to detect and investigate such bribery. This followed an evaluation of the country’s implementation of the OECD Anti-Bribery Convention.
The report is available at –
YORK WOMAN WANTED OVER £1 BILLION VAT FRAUD
Minster FM News in Yorkshire reported on 1st August that law enforcement is searching for a woman from York suspected of being involved in a £1 billion money laundering scheme. Panitzke, 45, is wanted by HMRC and is accused of laundering for a crime group involved in VAT fraud and absconded in May 2013 before her trial finished.
MALTA: LOCAL BUSINESSMAN ACQUITTED OF VAT FRAUD AFTER 19 YEARS
Malta Today on 1st August reported that a Maltese businessman has been cleared of fraud and tax evasion in a 19-year case. Joseph Farrugia had been accused in 2000 of falsifying invoices issued to Ceiling Systems Limited from Fujitsu General (Euro) Gmbh in Germany and Brooker Air Sales of England in order to evade VAT, and knowingly undervaluing goods in his customs declaration and defrauding the government of VAT. Farrugia had told the police that he might have been defrauded by one of his employees.
UK COMPANIES HOUSE CONSULTATION AND ITS RELEVANCE FOR KYC AND CDD
On 1st August, an article from Finextra looked at the public consultation announced by Companies House in May 2019: “Corporate transparency and register reform”, about some of these changes involved under the 5th EU AML Directive. It says that they might not only improve the register’s data, but also its utility and reliability in relation to KYC and CDD. It stresses the importance of register data in KYC and CDD, saying that the Panama Papers and the Russian Laundromat cases have shown that information about a company and its key individuals is essential to identifying those who may be seeking to conceal their identity or the illicit activities they engage in. It also refers to other requirements, such as the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS), which require financial institutions to collect, validate and report tax residency information for new and existing customers (individuals and entities). It says that the consultation proposes several changes that aim to increase the transparency of UK corporate entities and help combat economic crime. Some of the proposals are relevant for those financial institutions who refer to the register’s data as part of their KYC and CDD activities.
COUSIN OF CHINESE PRESIDENT ACCUSED OF ORGANISED CRIME
On 31st July, OCCRP reported that Australian news outlets allege the Chinese president’s cousin was a part of an organised crime ring with ties to the Australian casino chain Crown. It is said that Ming Chai, the cousin of President Xi Jinping, was aboard a luxury jet in 2016 that was targeted by Australian authorities for money laundering. Chai is said to have been a guest of Tom Zhou, who has been implicated in a large casino scandal, and is accused of extortion by the Chinese government – if Zhou steps foot in China, according to the report, he will be arrested immediately.
MISSILE LAUNCHER FOUND IN US MAN’S LUGGAGE AT AIRPORT
The BBC reported on 29th July, that airport security officers have confiscated a missile launcher from a passenger’s checked-in luggage in Maryland. The man said he worked for the military and that the launcher was a souvenir from Kuwait.
CHINA’S FORMER ‘SUPER BANK’ CHIEF FACES CORRUPTION PROBE
Baker McKenzie reported on 1st August that Hu Huaibang, who was chairman of China Development Bank (CDB), a state lender known as “Beijing’s super bank”, is being investigated for “a serious disciplinary violation”. He is the latest in an already long line of heavyweight financial officials toppled by Beijing’s anti-corruption campaign.
GAFILAT PLENARY APPROVES REPORTS ON NICARAGUA, PANAMA AND DOMINICAN REPUBLIC
On 31st July, the FATF-style regional body for Latin America reported on the outcome of its latest Plenary in Paraguay in July. It approved reports of reassessment of technical compliance in Nicaragua, Panama and the Dominican Republic – with these reports having been sent to FATF. It also approved changes to mutual evaluation procedures and modifications of FATF standards. An update of the MoU for co-operation and exchange of information between FIU in GAFILAT was approved. The European Commission was accepted with observer status. The Plenary also undertook work on measures to improve and strengthen regional co-operation in monitoring the cross-border transportation of cash and bearer negotiable instruments.
POKKA SINGAPORE UNDER INVESTIGATION FOR ALLEGED NORTH KOREA EXPORTS
On 1st August, NK News reported that the Singapore company that produces drinks from the famous Pokka Sapporo beverage company of Japan is under investigation for suspected sanctions violations. A Cypriot distributor is said to have claimed that he was asked to increase orders to cloak DPRK sales. The case is said to show the “increasingly blunt” nature of UN sanctions, with tinned Pokka drinks apparently widely available at hotel shops etc in North Korea.
OSAMA BIN LADEN’S SON AND HEIR SAID TO BE DEAD
NBC News reported on 1st August that the US States has obtained intelligence that the son and potential successor of Al-Qaeda leader Osama bin Laden is dead. It is said that officials would not provide details of how he died or if the US played a role in his death, but that the death occurred in the past 2 years, said the officials, with confirmation only recently.
RUSSIA DELIVERED MILITARY EQUIPMENT THROUGH HUNGARIAN AIRSPACE
Hungary Today on 30th July reported that, after Romania refused, Russia used the Hungarian airspace to deliver armoured vehicles for Serbia.
CRIMINAL ASSETS BUREAU DETAIN 10 VEHICLES IN WEST DUBLIN CAR DEALERSHIP FOR SUSPECTED TAX BREACHES
Dublin Live on 1st August reported that it is believed that CAB are targeting dealerships who they suspect are involved in passing through drug money.
NEW EU DIRECTIVE PROVIDES FOR ONLINE COMPANY FORMATION
On 1st August, Out-Law published an article saying that a newly-finalised EU Directive will ensure that limited liability companies can be set up and registered online from any EU Member State.
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