4 February 2020
AIRBUS BRIBERY SCANDAL TRIGGERS NEW PROBES WORLDWIDE
On 3 February, Reuters reported on the fallout from the settlement between Airbus and US, UK and French authorities, with investigations launched in countries aggrieved at being dragged into the increasingly political row. Prosecution documents agreed by Airbus detailed a global network of agents or middlemen in transactions across the group’s business and run from a cell in Paris, and with an annual budget estimated by Reuters to be between €200 million and €300 million. Meanwhile the Wall Street Journal on 3 February reported that the deal signals a new level of collaboration between law-enforcement agencies in countries that previously may have viewed each other more as competitors than partners. Close coordination among prosecutors was a boon to Airbus, allowing it to efficiently resolve its legal cases in several countries, according to a lawyer for the company. It is said that, in France, such an approach wouldn’t have been possible before 2016, when the country adopted Sapin II, that brought its approach to anti-corruption enforcement more in line with standards set by OECD.
MYSTERIOUS NEW RANSOMWARE TARGETS INDUSTRIAL CONTROL SYSTEMS
On 3 February, Wired reported that a malware has surfaced that uses specific knowledge of control systems to target them with a far blunter, and more familiar, tactic: kill the target’s software processes, encrypt the underlying data, and hold it hostage – a piece of code called Snake or EKANS, which they now believe is specifically designed to target industrial control systems, the software and hardware used in everything from oil refineries to power grids to manufacturing facilities.
NIGERIA SUSPENDING OPERATIONS OF SECURE ANCHORAGE
On 4 February, Seatrade Maritime News reported that a private initiative used by merchant ships for protection from piracy has been suspended, and vessels will have to anchor at national ports covered a by a new integrated maritime security infrastructure. It is noted that the waters off Nigeria and in West Africa saw a sharp surge in pirate kidnappings from merchant vessels in the last few months of 2019.
BITCOIN IS ‘PROPERTY’ AND CAN THEREFORE BE SUBJECT OF A PROPRIETARY INJUNCTION
On 3 February, RPC published a briefing saying that, following recent case law on the matter, the High Court in London has found that bitcoin can be ‘property’ and can therefore be the subject of a proprietary injunction, and it adopted the detailed analysis of the issue providing a far more detailed judicial basis for the finding than found in previous cases. The bitcoins at the heart of this case were part of a ransom payment paid to a hacker who installed malware on a company’s IT systems.
DANISH POLICE HAVE SEIZED LONDON MANSION OF A MULTIMILLIONAIRE BRITISH BUSINESSMAN ACCUSED OF DEFRAUDING DANISH TAXPAYERS OF £1.5 BILLION
On 4 February, KYC 360 reported that Sanjay Shah is a former hedge fund boss who lives in Dubai, and whose £14.7 million property near Hyde Park had been expropriated. It is reported that the tax authority says it was deceived into paying multiple refunds to British agents in 2012-15 and at least £800 million ended up in Solo Capital, Mr Shah’s hedge fund which closed in 2016.
TURKISH BANK HALKBANK WINS REPRIEVE IN US PROSECUTION OVER IRAN SANCTIONS
On 4 February, Bloomberg reported that a federal appeals court has granted a temporary halt in the prosecution of the Turkish lender over sanctions violation charges while it weighs other requests by the bank. Prosecutors have deemed the bank a fugitive from justice, asking a judge to hold it in contempt and impose fines until it begins answering the charges.
UK BANKS TO TACKLE FRAUD BY INTRODUCING EXTRA CHECKS ON TRANSFERS
On 3 February, Kinglsey Napley published an article saying that, from 31 March, the UK’s 6 largest banking groups will start checking whether the name entered on a bank transfer matches the names of the recipient bank account – Confirmation of Payee (CoP). It is hoped the move will combat transfer scams and errors and make it less likely customers’ money ends up in the wrong hands.
SAUDI ARMS SHIP FACES GROWING OPPOSITION IN EUROPEAN PORTS
On 3 February, Hellenic Shipping News reported that lawsuits, protests and other actions are planned in several European ports to oppose the return of a Saudi Arabian state-owned cargo ship that Amnesty International has said has ferried tens of millions of dollars’ worth of arms to fuel its war in Yemen. The Bahri Yanbu is due to visit 5 European ports beginning on 2 February, before continuing its onward voyage to Saudi Arabia.
HOW DO SWISS ARMS END UP IN CONFLICT ZONES?
On 4 February, Swissinfo reported that Swiss weapons have been found in war-torn Yemen and have been used by Saudi Arabia in the Yemen conflict, according to recent media reports. How, it asks, is it possible that such arms find their way from neutral Switzerland? Swiss companies exported last year government-approved war materiel worth $510 million to 64 countries – ranked 13th in the world for exports of major conventional weapons in 2018. The article briefly explained the licensing process, and then says where some Swiss products have been reported. While Swiss arms exports have been falling in recent years from a peak in 2011, and companies have been lobbying for relaxation of rules, campaigners have also gathered enough signatures to force a popular referendum vote on an initiative that would tighten the rules.
TRINIDAD SCRAPS OFFSHORE GAS FIELD DEAL WITH VENEZUELA BLAMING US SANCTIONS
On 4 February, Offshore Engineer reported that Trinidad and Tobago has cancelled an agreement with Venezuela for the joint development of LNG field straddling their maritime border because of US sanctions on Venezuela’s state energy company, PDVSA.
TRADE-BASED MONEY LAUNDERING: GAO REPORT STRESSES ENFORCEMENT CHALLENGES
On 3 February, Ballard Spahr published an article about the Government Accountability Office report published on 29 January. This report had been commissioned in 2019 following TBML being recognised as one of the most commonly-used and most difficult to detect type of money laundering in the 2018 Money Laundering National Risk Assessment. The report claims that the increase in TBML is due, ironically in part, to improved compliance by US financial institutions AML/CFT requirements.
UK ESTATE AGENTS ADMIT AML FAILINGS
On 4 February, Property Wire reported that two thirds of estate agents think they don’t meet the HMRC’s AML rules, auctioneering and conveyancing firm iamproperty has found. 46% of estate agents surveyed were found to believe that AML regulations are equally understood and implemented by agencies across the country, though 80% think they fully understand the regulations.
UN SAYS THAT AL-QAEDA MAINTAINS ‘CLOSE AND MUTUALLY BENEFICIAL’ TIES WITH TALIBAN
On 2 February, Homeland Security Today reported that a report by the UN Analytical Support and Sanctions Monitoring Team, which is responsible for tracking terrorist groups, claims Al-Qaeda continues to have “close and mutually beneficial” relations with the Taliban despite the latter group’s holding talks with US negotiators in Doha to broker a peace deal.
UNDERSEA CABLES: THE RISK TO NATIONAL SECURITY
On 31 January, Homeland Security Today carried an article about a report from C4ISRNET that says that 98% of all international voice, data, video and internet traffic is through these submarine cables. The backbone of the international telecommunications system and fundamental to both the international financial system and the world’s global infrastructure at large. So, it says, when it comes to these undersea cables, any tampering or destruction at the hands of either a malign state actor or terrorist organisation could cause billions of dollars’ worth of economic damage in a short amount of time.
ROCKS AND RICHES: HOW CRACK COCAINE AFFECTED AMERICA
On 4 February, The Crime Report carried an interview with David Farber, Professor of History at the University of Kansas, whose new book places the crack cocaine epidemic in the context of America’s economic transformation during the 1980s and 1990s.
UK QUARTERLY TERRORIST ASSET SEIZURE REPORT TO SEPTEMBER 2019
The EU Sanctions Blog on 4 February reported on the release of the latest statistics for asset seizures under the counter-terrorism regime in the UK. This shows less than £100,000 being frozen across dozens of accounts.
UK: DIGITAL SERVICES TAX
On 4 February, the House of Commons Library published a briefing paper which discusses the background to the UK Government’s proposals, announced in the 2018 Budget, to introduce a Digital Services Tax from April 2020, in the context of wider concerns as to the challenge of taxing digital businesses and moves to agree reforms to the international tax system.
TAX AVOIDANCE AND TAX EVASION
On 4 February, the House of Commons Library produced an updated briefing paper which provides an introduction to the issue of tax avoidance, looking in detail at the development of “follower notices” and “accelerated payments”, before discussing the current UK Government’s approach.
FEMALE GENITAL MUTILATION: RESOURCE PACK
On 4 February, the Home Office in the UK published an updated resource pack containing FGM guidance, case studies and support materials for local authorities, professional services and specialist voluntary organisations. It points out that FGM is illegal in the UK. Anyone who commits FGM faces up to 14 years in prison, a fine, or both. Anyone found guilty of failing to protect a girl from risk of FGM faces up to 7 years in prison, a fine, or both.
ISRAEL: KNESSET PANEL VOTES TO GRANT IMMUNITY TO FORMER MINISTER HAIM KATZ
On 4 February, the Times of Israel reported that the Knesset House Committee has voted to grant Likud’s Haim Katz parliamentary immunity from a criminal probe into charges of fraud and breach of trust. A former welfare minister, he is facing charges for allegedly advancing a Bill on corporate bond repayment pushed by a financial consultant who was also a close friend and financial adviser to Katz himself, and which benefited him financially once it became law. Katz is also accused of concealing those conflicts of interest.
BULGARIA’S PRESIDENT BLASTS GOVERNMENT OVER ‘LACK OF WILL’ TO FIGHT GRAFT
On 4 February, Rferl reported that Bulgarian President Rumen Radev has accused the centre-right government of endangering the survival of the country by failing to tackle endemic corruption amid a scandal over water shortages.
NEW LAW IN GERMANY REQUIRES RECEIPTS TO BE ISSUED AT BUSINESSES NO MATTER HOW SMALL THE TRANSACTION
On 4 February, NPR reported that a new law has taken effect in Germany that requires receipts to be issued at businesses such as restaurants, bakeries, hairdressers, no matter how small the transaction. The so-called “cash register law” is meant to increase transparency and prevent tax fraud. The article illustrates the story with a photo of Kassenbon Krapfen — receipt doughnuts, made as a protest and being pastries slathered with pink icing and then topped with a receipt made of fondant, tax included.
BOSNIA AND HERZEGOVINA’S PARLIAMENT DISCUSSING THE APPOINTMENT OF A POLITICIAN TO A COMMISSION TO MONITOR AND SUPERVISE THE COUNTRY’S ANTI-GRAFT AGENCY – BUT WHOM THE US GOVERNMENT HAS BLACKLISTED FOR CORRUPTION
On 4 February, the Sarajevo Times reported that Bosnian Serb Nikola Spiric is among 6 people nominated to supervise the work of the Agency for the Prevention of Corruption and Coordination of the Fight against Corruption (APIK). This is despite the fact that he (and his immediate family) has been designated by the US State Department since September 2018 for alleged involvement in “significant corruption or gross violations of human rights”, and is thus barred from travelling to the US.
AIR ASIA CEO AND CHAIRMAN STEP DOWN TO ALLOW BRIBERY PROBE
The Telegraph in India in its 5 February edition reported that, in the wake of the Airbus bribery settlement, AirAsia Group’s Tony Fernandes has denied a now-defunct Formula 1 racing team formerly co-owned by him had any links to a bribery scandal involving the Malaysian airline’s only aircraft supplier, Airbus, as he stepped aside as CEO of Asia’s biggest budget airline for at least 2 months. Chairman Kamarudin Meranun also stepped down along with Fernandes, though both will remain advisers.
GARDAÍ INVESTIGATING €4 MILLION FRAUD INVOLVING 109 SUSPECT MORTGAGE APPLICATIONS
The Irish Examiner on 4 February reported an arrest having been made in respect of suspected mortgage fraud.
US FEDERAL RESERVE BARS FORMER GOLDMAN SACHS EXECUTIVE FOR ROLE IN 1MDB SCANDAL
On 4 February, Reuters reported that a former Goldman Sachs Group Inc executive had been permanently barred from the banking industry over his role in Malaysia’s multi-billion-dollar 1MDB corruption scandal. Andrea Vella was co-head of Goldman’s Asia investment bank in 2012 and 2013 and had failed to pass on information he had about Malaysian financier Low Taek Jho’s involvement in 3 bond offerings that Goldman underwrote for Malaysia’s sovereign wealth fund.
SOUTH AFRICA: JUDGE ISSUES ARREST WARRANT FOR JACOB ZUMA
On 4 February, Deutsche Welle reported that a judge had issued an arrest warrant for former President Zuma after he failed to appear in court to face charges of corruption.
WELSH FRAUDSTER USED CASH FROM $7.8 MILLION SCAM TO FUND LAVISH DUBAI LIFESTYLE
North Wales Live on 4 February reported that Michael Kinane (formerly Ravindra Chathurangana Sarathchandra from Sri Lanka), a former Shell garage boss, jailed for a $7.8 million money laundering fraud, used some of the cash to fund a lavish lifestyle in Dubai and Australia. He has been jailed after admitting being part of a plot, uncovered by the FBI and North Wales Police, to target a London-based pharmaceutical investment company and a US-based investment company.
HMRC POWERS AND SAFEGUARDS EVALUATION – URGENT CALL FOR EVIDENCE
On 3 February, the Chartered Institute of Taxation issued a call for members to submit their experience and complete a questionnaire – designed to inform a report due to be delivered to the Financial Secretary at HM Treasury in April. The powers and safeguards involved include the General Anti-Abuse Rule (GAAR), cross-border information exchange and corporate criminal offences.
CANADIAN APPEALS COURT RULES THAT WIDOW OF PALESTINIAN TERRORIST CANNOT RECOVER ON HIS LIFE INSURANCE POLICY
In his blog on 4 February, Kenneth Rijock reported that the Ontario Court of Appeals has held that the widow of a Palestinian terrorist may not recover upon his life insurance policy, due to the fact that her husband failed to disclose his violent terrorist history when applying for coverage. He had been a Palestinian PFLP terrorist who participated in the hijacking of an El Al airliner in Athens, Greece in 1984. He later emigrated to Canada, but failed to disclose his criminal history and terrorist past on his application; but was later deported to Lebanon. After he died of cancer, his widow sought to recover on a life insurance policy.
UK: IMPORTANT NEW COURT OF APPEAL DECISION ON LEGAL ADVICE PRIVILEGE
A briefing from Littleton Chambers says that a Court of Appeal decision on 28 January on legal advice privilege will be of significant interest to litigators and non-litigators alike. It will be, it says, particularly important for those responsible for disclosure reviews within litigation, and to organisations with in-house lawyers. Such was the significance of the issues at play that the Law Society sought, and was granted, leave to intervene in the appeal. The Chambers conclude that the decision helpfully draws together many threads from the various previous authorities. It provides useful direction on several important issues which frequently arise in practice and where authoritative guidance has been lacking. However, it says, at the same time, the decision appears likely to increase the burden on those tasked with determining whether documents fall to be disclosed within the litigation process. The decision makes it more difficult for a party to withhold inspection of documents, it is said.
DUBAI LAUNCHES CROSS-BORDER E-COMMERCE CUSTOMS DUTY PLATFORM
An article from Out-Law on 4 February says that development of a cross-border e-commerce customs duty platform in Dubai demonstrates the fast pace at which the Dubai authorities have addressed changes to the way trade is taking place both regionally and globally, from an economic and tax perspective. It launched a blockchain platform to facilitate e-commerce export transactions through couriers, which was completed in September 2019. The second phase will facilitate e-commerce import, declaration consolidation and automated refunds, and reduce fees and charges in addition to bringing logistics companies on to the platform.
POLICE ARREST 26 MEMBERS OF GANG THAT SMUGGLED 900 AFRICAN MIGRANTS INTO SPAIN BY SPEEDBOAT
Illicit Trade on 4 February reported that Spanish police have arrested 26 suspected members of an organised immigration crime gang that used speedboats to traffic migrants from Algeria and Morocco to the coastal cities of Almería and Cádiz.
US COUNTERVAILING DUTY ASSESSMENTS ON IMPORTS TO CONSIDER CURRENCY SUBSIDIES
American Shipper on 4 February reported that the US Commerce Department has published a final rule that will allow the agency to take into account what it deems to be unfair currency subsidies when imposing countervailing duties on imported products. US law defines a countervailing subsidy as a financial contribution from a government or public entity that provides a specific benefit to an overseas producer or exporter. Countervailing duties, (aka anti-subsidy duties) are trade import duties imposed under WTO rules intended to neutralise the negative effects of subsidies.