16th September 2019
ISRAEL’S BLACK CUBE SAID TO HAVE UNCOVERED WIDESPREAD CORRUPTION IN PANAMA
On 5th September, the Times of Israel reported that Panama’s La Prensa newspaper revealed recordings of attorney telling agents from private intelligence firm that top judges in the country could be bribed and were like a ‘mafia’. It said that agents working for the private Israeli intelligence company Black Cube uncovered alleged corruption in Panama’s justice system that included bribes to top judges. It is said that the investigation focused on attorney Janio Lescure, who had litigated several of suspect cases. It is reported that Black Cube agents posing as shady Russian businessmen contacted Lescure and told him of their plans to bring women to Panama for prostitution purposes, and they lured him to a meeting in Spain which they recorded.
POLAND: 2 UKRAINIANS DETAINED AT LARGE-SCALE AMBER SMUGGLING OPERATION IN POLAND
On 15th September, 112 UA reported that 6 people were arrested in a special operation in Warsaw, including 2 citizens of Ukraine, who were claiming they were claiming to be the officers of the intelligence services.
RECENT DEVELOPMENTS IN ENGLISH FREEZING INJUNCTIONS
On 12th September, law firm HFW published a briefing saying that recent English court judgments have provided interesting developments in 3 areas:
- Widening the scope of those able to bring an application for a freezing injunction – when faced with a dissolved company applying for the continuation of a freezing injunction against its accountant;
- Setting out the importance of oral submissions when applying for a freezing injunction; and
- Confirming when a director’s legal expenses will fall within the “ordinary and proper course of business”.
The briefing looks at each of these in turn and provides a practical conclusion on what parties now need to have in mind when seeking or defending a freezing injunction.
POLITICAL RISK IS AT A POST-WORLD WAR II HIGH: IS YOUR ORGANISATION PREPARED?
On 15th August, EY published a paper posing this question. It says that the complexity of the geopolitical environment, challenges to globalisation, and shifting “rules of the game” around global economic integration and expansion present significant systemic risks that are challenging for global companies to navigate. The authors set out to explore the relationship between political risk, corporate performance and political risk management, and they say that they found that political risk is at a post-WW2 high, rising threat levels have serious implications across the enterprise, the study of political risk is fragmented and organisations may need to rethink how they manage political risk. On political risk, for example, at a national level, populist sentiment is growing, with recent research from Deutsche Bank showing support for populism at its highest since the time leading up to WW2. The paper concludes that strategic management of political risk can help to protect company value and increase growth opportunities.
RUSSIA: CHANGES TO CURRENCY CONTROL REGULATIONS
On 13th September, Noerr LLP published an article on what it described as notable changes in the Russian currency control legislation. The changes include exemptions from repatriation obligations, reporting on accounts opened with foreign non-banking organisations and the less restrictive regime of use of foreign accounts by Russian residents. The changes take effect from 1st January. Amongst the changes explained are an exemption from the repatriation rules for certain cross-border trade contracts (in roubles only), and express permission for Russian residents to open accounts at foreign finance institutions other than banks – though they must declare such accounts to Russian tax authorities, and are generally obliged to report on payments through such accounts. Another notable change concerns an entitlement to credit money received from non-residents to their accounts opened with foreign banks located in the territory of a member state of OECD or FATF, provided that this foreign state performs the exchange of information provided in the relevant OECD Convention.
ECONOMIC DURESS: WILL ENGLISH LAW ASSIST A PARTY WHO ENTERS INTO A CONTRACT AS A RESULT OF A LAWFUL THREAT OF CAUSING ECONOMIC HARM?
Vedder Price PC published an article posing this question on 12th September, saying that there was some uncertainty as to the circumstances in which a contract may be avoided for economic duress. It refers to a recent Court of Appeal case that addresses the point. The article concludes that the court’s decision reinforces the fundamental importance of ensuring contractual clarity and certainty as a matter of English law, but that the courts will not normally intervene unless a party has acted unlawfully or lawfully but out of bad faith, and without such unlawful or bad faith action parties cannot expect the courts to remedy a bad deal.
INDONESIA BAN ON THE EXPORT OF NICKEL
A blog post from Baker McKenzie on 9th September said that Indonesia has announced that it would ban exports of nickel from the country from 1st January, bringing forward such a measure from 2022, and applying the ban to all different types of nickel, rather than just nickel ore with certain percentages. The ban is said to be expedite smelter building in Indonesia. The post points out that the country already regulates the export of certain specified products – bauxite (the raw material for aluminium), for example, and other raw materials and by-products, such as tin ore, and other metals.
BRITISH COLUMBIA: COURT ORDERS RETURN OF $2 MILLION OF SEIZED CASH
KYC 360 on 16th September reported that a Supreme Court judge in the province has ruled that an interim freeze of assets in the province’s biggest money laundering case was done improperly, and has ordered the release of $2 million in cash to the accused. A freeze had been imposed on the cash, a $2 million house, casino chips, gift cards and jewellery. In the case, married couple Caixan Qin and Jian Jun Zhu are accused of running an underground bank called Silver International that allegedly laundered as much as $220 million a year.
HELICOPTER ENGINES A SOURCE OF CONFUSION IN AVIATION FINANCE
On 12th September, Gowling WLG published an article saying that the confusion stems from the way helicopter engines are defined under the Cape Town Convention, i.e. the Convention on International Interest in Mobile Equipment and the Protocol Thereto on Matters Specific to Aircraft Equipment. Amazingly perhaps, helicopter engines are not explicitly defined as such in the Cape Town Convention. The official line is that, when not fitted, a helicopter engine is an “aircraft engine”, but when installed becomes a component or accessory to a helicopter. The article says that it is not possible to register an international interest with regard to a helicopter engine while it is installed on a “helicopter”, so how can creditors ensure that their interests are adequately protected once the engine is removed? The article suggests some solutions.
PHILIPPINES: LAW ENFORCEMENT ARREST WILDLIFE TRADER WHO EVADED CAPTURE FOR YEARS
Illicit Trade on 15th September reported that wildlife trade monitoring network Traffic has revealed that police in the Philippines have arrested a major illicit wildlife trader who had evaded authorities in the country for a number of years, and who is said to have had traded wildlife online without the required permits. Investigators also seized several animals, including 3 Peregrine Falcons, 2 Eclectus Parrots, 6 African Spurred Tortoises and 2 Green Iguanas.
ISLE OF MAN UPDATES ITS BREXIT INFORMATION
GLOBAL TRADE PROTECTION AND THE ROLE OF NON‑TARIFF BARRIERS
On 16th September, an article on VOX, the CEPR Policy Portal, says that research shows that that trade protection had in fact started much before the Trump Administration took office and imposed tariff changes, in the form of non-tariff barriers (NTB). An empirical analysis reveals that the average trade dampening effect of such barriers is comparable to that of trade defence instruments such as anti-dumping duties. However, it says that this negative effect can be mitigated by free trade agreements. It says that, over the past 3 years, there has been a steady increase in international anti-trade rhetoric around the world, resulting in a real trade conflict between leading economies. It concludes by saying that analysis demonstrates the importance of exploiting new data on NTB to reveal the significant protectionist impact of non-standard trade policies. It also proposes that the WTO should shift its focus towards multilateral agreements that aim at limiting the use of NTB to avoid the increase in hidden protectionism that might otherwise result in lower levels of trade.
CYPRUS TO ABOLISH SHIPPING REGISTRATION FEES
Hellenic Shipping News on 16th September reported that Cyprus plans to abolish initial ship registration fees in a bid to boost the Cypriot registry’s competitiveness and attract more vessels, according to the Deputy Minister for Shipping. The Cypriot registry already ranks 11th in the world with 1,100 ships and a 24.4 million tonnes.
MALTA: CUSTOMS DEPARTMENT AML TEAM SEIZED OVER €1 MILLION CASH SINCE NOVEMBER 2018
On 16th September, the Malta Independent reported that the Customs Department has launched its Anti-Money Laundering Team, comprised of 9 officials, specialising in the control and investigation of undeclared cash movement, achieving 48 positive cases in 10 months, resulting in the collective discovery of €1,052,436.
FIRST EUROPEAN COURT JUDGMENT ON DAMAGES FOR IMPOSED EU SANCTIONS
On 16th September, the EU Sanctions blog reported that the ECJ had upheld a claimant’s appeal against the decision of the EU General Court to reject the claimant’s claim for €2.5 million damages resulting from its designation in 2010 under the EU’s Iran sanctions. This is said to be the first case involving the test for damages resulting from EU sanctions being imposed. The claimant is a German company, HTTS Hanseatic Trade Trust & Shipping GmbH, formed in March 2009 by a N Bateni, who is the sole shareholder and director, and which is a shipping agent and technical manager of vessels. It was designated in 2010 for alleged connections to Iranian shipping line, IRISL. Despite relisting HTTS, in 2013 IRISL itself was delisted by order of the General Court on the ground that the matters advanced by the Council did not justify the listing of IRSL and, consequently, could not justify the adoption or continuation of restrictive measures against the other shipping companies which had been listed on the basis of their connections with IRISL. The EU Council had rejected the application for compensation from HTTS.
THE EBOLA VIRUS IS WINNING IN EASTERN DRC
On 12th September, a Commentary from the Center for Strategic and International Studies says that the current Ebola outbreak was first declared on August 1st 2018, though it is believed to have begun months earlier in April 2018. More than a year has now passed, and the Commentary says that although the virus fortunately is not a runaway contagion, it is winning. The opportunity for early, swift, concerted action has come and gone. It says that, for the first time since the discovery of the virus, there is the real possibility that Ebola in eastern DRC may become endemic, circulating indefinitely within the population. That raises the spectre of multiple, concurrent Ebola outbreaks in the future.
CRYPTO FIRMS ASSESS HOW TO COMPLY WITH AML STANDARDS
On 16th September, the Wall Street Journal reported that the cryptocurrency industry is rushing to comply with new AML standards published by FATF in June that require exchanges and other businesses to share information about their customers. The goal of the so-called travel rule for data on movements is designed to help law enforcement track suspicious activity. It is said that one has a decentralised industry, and the crypto cash businesses do not have the infrastructure in place to send customer data to each other.
SEC CLOSES FOREIGN BRIBERY PROBE INTO CIENA TELECOMMUNICATIONS
On 16th September, the Wall Street Journal reported that the SEC has closed its FCPA case involving Ciena Corporation, the DoJ having closed its investigation in December 2018. The investigations trace back to a voluntary disclosure that Ciena made in 2017 in respect of “questionable payments” allegedly made in connection with a customer in SE Asia.
UK: EXPORT CONTROL TRAINING BULLETIN – SEPTEMBER TO DECEMBER 2019
On 16th September, the Department of International Trade published the latest bulletin of training events on strategic export controls which are aimed at exporting and trading companies of all sizes, from the sole trader to the multinational.
LUFTHANSA LIFTS CARGO BAN IMPOSED OVER LITHIUM BATTERY INCIDENT
On 16th September, Loadstar reported that Lufthansa had advised that its ban on 3 companies over an ‘incident’ involving dangerous goods has been lifted. The incident involved a shipper apparently mistakenly mislabelling a package involving lithium ion batteries. Loadstar says that Lufthansa Cargo sent a team to the relevant warehouse operations in Hong Kong, and checked the compliance protocol. Once satisfied that the correct procedures were in place, it revoked its ban immediately.
INTERVIEW WITH ALEX WELLERSTEIN ON NUKEMAP VR
On 16th September, the Bulletin of the Atomic Scientists carried an interview with the creator of the NUKEMAP tool. NUKEMAP enabled you to see what the effect of a nuclear weapon on a given target – perhaps your home town. A new version involves a virtual reality experience, in order to help people visualise and personalise the effects of a nuclear weapon.
NUKEMAP itself is available at –
BREXIT: NEW WAYS TO DECLARE MERCHANDISE IN BAGGAGE
In its “Brexit Special” Agent Update newsletter of 16th September, HMRC asked: “Are you or your clients planning to travel to or from EU countries after the UK leaves the EU? And if so, will be carrying small amounts of goods for trade or business use in your baggage or small vehicle?”
It warns that there would be new ways to declare them as ‘merchandise in baggage’ (MiB). MiB means commercial goods intended for trade or business use, carried in your luggage or a small motor vehicle. For example, if you buy jewellery on a trip to the EU and bring it back in your suitcase to sell in the UK – this would be classed as MiB.
The article refers one to a HMRC news release last updated on 28th August –
EU TAX TRANSPARENCY TOOLS PROVE EFFECTIVE IN THE FIGHT AGAINST TAX EVASION AND TAX AVOIDANCE
On 16th September, a report from the EU Commission claims that tax transparency rules on the automatic exchange of information between Member States are delivering added value when it comes to countries’ ability to crack down on tax avoidance. The EU says that the evaluation shows that Member States now receive considerably more information that can help fight tax fraud, evasion and avoidance and are still in the process of finding the most efficient ways to use the data. The report also details the evolution of EU measures – from mutual assistance to administrative co-operation: 1977-2011; the evolution of administrative co-operation during 2011-2018
OPENING OF SRI LANKA’S TALLEST TOWER MARRED BY CORRUPTION ALLEGATION
On 16th September, Reuters reported that the grand opening of Sri Lanka’s tallest tower was mired in controversy when the President said one of the Chinese companies – Aerospace Long-March International Trade Co. Ltd (ALIT), a Chinese company chosen as one of the main contractors – contracted to work on the project had disappeared with $11 million of state funds.
ESTONIA: CORRUPTION TRIAL OF TALLINN EX-MAYOR AND FORMER CENTRE PARTY CHAIRMAN EDGAR SAVISAAR TO CONTINUE NEXT MONTH
On 16th September, ERR reported that at the first hearing next month, parties to the trial will be able to present further applications and evidence, and the trial should then continue later that month.
CYPRUS: MAJORITY OF PEP FAILED TO FILE TAX RETURNS ON TIME
On 16th September, the Cyprus Mail reported that a little more than half of individuals designated as Politically Exposed Persons (PEPs) failed to file their tax returns on time, a report by the Audit Office has shown. Of 154 PEP, 84 filed their paperwork outside the allotted deadline.
TURKMENISTAN TRADE MINISTER JAILED ON CORRUPTION CHARGES AFTER FIRING
On 16th September, Rferl reported that Turkmenistan’s minister of trade and foreign economic ties, Amandurdy Ishanov, has been sentenced to an unspecified prison term on corruption charges just days after being dismissed from his post. He publicly confessed to various corruption-linked unrelated crimes on September 13th. He said he committed various corruption-related crimes in recent years along with a well-known businessman Charymukhammed Kulov and leaders of several state-owned industrial facilities.
UK ADMITS “INADVERTENT BREACHES” OF UNDERTAKING GIVEN TO COURT RE DEFENCE EXPORTS TO SAUDI ARABIA
A letter published by the Department for International Trade on 16th September and addressed to the Chairman of Parliamentary Committees on Arms Export Controls contains an admission that the Court of Appeal had been advised of 2 “inadvertent breaches” of the undertaking given to the Court by the Secretary of State in the Order of the Court dated 20th June, that the Department would not “grant any new licences for the export of arms or military equipment to Saudi Arabia for possible use in the conflict in Yemen”. It also contains an admission that also drawn the Court’s attention was a further export licence recently issued, which is not a breach of the undertaking given to the Court but is inconsistent with the broader commitment made to Parliament on 20th June by the then Secretary of State that the Department would not grant licences to Saudi Arabia or its Coalition partners for the export of arms and military equipment that might be used in the conflict in Yemen.
IRAN “OIL FOR GOLD” SCANDAL ACCUSED APPEARS IN COURT IN TEHRAN
On 16th September, Kenneth Rijock reports, with photos, that Alireza Monfared, accused with others in the theft of billions of dollars of Iran’s illicit oil profits, and who has been in Iranian custody since January, 2017, appeared in public recently, for the first time. Despite apparently having a Dominica diplomatic passport, he was detained in the Dominican Republic, by Iranian agents, and transported to Iran via Havana and Moscow.
US: FORMER CREDIT UNION MANAGER GETS JUST 1 DAY IN PRISON FOR MONEY LAUNDERING AND BRIBERY IN PUBLIC CORRUPTION CASE
Baker McKenzie on 16th September reported that Kevin M Biederman, a former business development manager for the Philadelphia Federal Credit Union, has been sentenced to just 1 day in prison for his role in helping Pennsylvania public officials, including an elected judge, launder money. He also received a 30-month supervisory release and small fine. It is not clear why he received such a light sentence.
UK: LABOUR PARTY EYES PRIVILEGE REFORM TO HIT TAX AVOIDANCE “ENABLERS”
On 16th September, Legal Futures reported that the Shadow Chancellor has said that the Labour Party will look at the role of privilege in hindering the criminal prosecution of professionals advising on tax avoidance, and said that he was drawing up plans for Labour’s manifesto against the “enablers” of tax avoidance, including the big accountancy firms. He also said that part of the problem is that the people advising HMRC on tax laws (or consulted on proposed laws) are the very people “that then go off and advise on how to avoid the tax that they are designing”.
CANADA TIGHTENS FRAUD AND CORRUPTION CONTROLS ON GOVERNMENT PROCUREMENT
On 16th September, Dentons published an article about changes to Government Contracts Regulations which affect all suppliers engaged in the federal contracting process and establish rules for federal government bid solicitation and contracts. The changes include that all bidders and contractors must now declare that, throughout the solicitation process, they have not committed certain offences related to fraud or corruption.
US: DoJ CHARGES 2 FORMER PRECIOUS METALS TRADERS WITH MARKET MANIPULATION
On 16th September, it was announced that 2 current precious metals traders and 1 former trader in the New York offices of a US bank have been charged in an indictment for their alleged participation in a racketeering conspiracy and other federal crimes in connection with the manipulation of the markets for precious metals futures contracts, which spanned over 8 years and involved thousands of unlawful trading sequences. Those named are Gregg Smith, 55; Michael Nowak, 45; and Christopher Jordan, 47.
OVER $352 MILLION AML FINES HANDED OUT GLOBALLY IN THE LAST 4 MONTHS
On 16th September, a release on Mondo Visione reported on an analysis of AML-related penalties handed down between 1st May and 31st August. The Encompass Corporation says that 20 AML penalties were handed down globally, totalling over $352.5 million – compared to 4 fines totalling $707 million in the same period in 2018; the largest monetary fine was $336 million and the average was $18.5 million; 7 fines given out were for $1 million or over.
IRAN SEIZES ANOTHER OIL TANKER IN GULF FOR ALLEGEDLY SMUGGLING FUEL
Hellenic Shipping News on 16th September reported that Iran’s Revolutionary Guards have reportedly seized a vessel in the Gulf for allegedly smuggling 250,000 litres of diesel fuel to UAE.
JUVENTUS FOOTBALL CLUB ‘ULTRAS’ LEADERS ARRESTED OVER ALLEGED TICKETING RACKET
On 16th September, the Guardian and others reported that 12 leaders of the club’s hardcore “ultra” football fan groups have been arrested on suspicion of criminal association, money laundering, violence and aggravated extortion in connection with ticket sales.
US CUSTOMS SEEKS TO EXPAND E-COMMERCE PILOT PROGRAMME PARTICIPATION
On 16th September, American Shipper reports that, according to the Express Association of America, additional industry participants in US Customs and Border Protection’s Section 321 pilot will “enhance” the agency’s capability to target illicit products. The pilot began on 22nd August and runs for a year, and involves the collection of advance data related to e-commerce shipments with import values of less than the $800 de minimis.
FORMER COGNIZANT EXECUTIVE SETTLES FCPA BRIBERY CASE WITH SEC
On 16th September, Law.com reported that the ex-COO for Cognizant Technology Solutions Corporation, a global tech services company accused of bribing government officials in India to fast-track a construction project, has reached a settlement agreement with the SEC. Sridhar Thiruvengadam agreed to pay a $50,000 civil penalty and co-operate with investigators as part of a settlement offer.
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