5 February 2020
BRAZIL’S ODEBRECHT AGREES TO EXTEND MONITORING FOR ANOTHER 9 MONTHS
On 4 February, the Wall Street Journal reported that Brazilian construction giant Odebrecht SA has agreed to extend the monitoring and other terms of its plea agreement with the US DoJ for almost 9 months. Odebrecht pleaded guilty in 2016 to a criminal charge of allegedly conspiring to violate the FCPA. As part of a deal with the DoJ, the company agreed to a monitor being appointed, with monitoring due to end this month. However, US prosecutors said the company had failed to fulfil obligations under the agreement, failed to adopt recommendations made by the monitor and failed to implement a compliance and ethics programme designed to prevent and detect violations of certain anti-corruption laws. The monitoring is extended to November.
US AND JERSEY SIGN $300 MILLION ABACHA LOOT REPATRIATION DEAL WITH NIGERIA
On 5 February, KYC 360 reported that the US and Jersey have agreed with Nigeria to repatriate more than $300 million in funds stolen by former military ruler General Sani Abacha. Abacha ruled Nigeria, Africa’s biggest oil producer, from 1993 until his death in 1998. The funds were reportedly laundered through the US banking system and then held in bank accounts in Jersey in the name of Doraville Properties Corporation, a BVI company, and in the name of Sani Abacha’s son. It also notes that the Swiss government in 2017 said it would return to Nigeria about $321 million in assets seized from Abacha’s family via a deal signed with the World Bank.
BREXIT: AN OVERVIEW OF THE KEY PROVISIONS OF THE EUROPEAN UNION (WITHDRAWAL AGREEMENT) ACT 2020
On 31 January, Allen & Overy published an article providing a brief summary of this Act, which received Royal Assent in the UK on 23 January. This Act gives effect to the Withdrawal Agreement (including the transitional or implementation period provided for in the Withdrawal Agreement) by amending the European Union (Withdrawal) Act 2018, the key UK statute on Brexit. The article says that the effect of the Act is that it will be business as usual from a legal perspective in the vast majority of cases for the duration of the implementation period. However, there is no clarity as to the legal regime that will apply following the end of that period.
US STANDS BY THE CHEMICAL WEAPONS CONVENTION
On 4 February, the Federation of American Scientists posted a message saying that while the Trump Administration has retreated from negotiated arms control agreements in many areas, the US is still committed to the CWC, which generally prohibits the production and use of chemical weapons. It says that the State Department has certified to Congress that the Australia Group (an international agreement on control of dual-use items) “remains a viable mechanism for limiting the spread of chemical and biological weapons-related materials and technology”.
SPANISH BILLIONAIRE’S JAIL TERM DOUBLED OVER ‘SMUGGLED’ PICASSO
Al Jazeera on 4 February reported that Jaime Botin, 83, billionaire member of the Santander banking dynasty who tried to smuggle a Pablo Picasso masterpiece out of Spain in his luxury yacht 5 years ago has had his jail term doubled to 3 years and fine increased from €54.4 million to €91.7 million. It is said that prosecutors noticed a technical error in the original sentence last month.
POST-BREXIT DAY: WHERE DOES THE ART MARKET STAND NOW?
On 4 February, a post on the Art Law & More blog from Boodle Hatfield reviewed the position of a post-Brexit British art market. As well as the UK becoming a ‘third country’ for imports from the EU subject to new licences, tariffs and paperwork; exports not being covered by EU legislation; and says that the debate over ARR (Artists’ Resale Rights: royalties paid to artists when their work is resold) remains open-ended. It also mentions potential problems with the free movement of workers.
NIGERIAN CUSTOMS FIND $8 MILLION IN CASH ON BUS AT AIRPORT
On 5 February, Swissinfo reported that Nigerian authorities seized $8 million in cash stashed in 6 plastic bags on a bus at the international airport in Lagos. Large seizures of cash and goods are not uncommon in Nigeria, and last year, authorities seized $40 million worth of jewellery and a customised gold iPhone belonging to a former oil minister, while in 2017 the anti-fraud unit said it had seized $43.4 million in cash from a Lagos apartment.
TAKING/EXPORTING MERCHANDISE FROM THE UK IN YOUR BAGGAGE
On 5 February, HMRC published updated information on the Merchandise in Baggage process where commercial goods (for trade or business use) are removed from the UK and a commercial transport operator does not carry them for you, and you’re travelling from the UK carrying goods in your baggage.
Information on imports using the Merchandise in Baggage process is at –
EU IMPOSE SANCTIONS ON 2 TURKS OVER CYPRUS DRILLING
On 5 February, EU Observer reported that, despite pressure from Cyprus, the measures will not affect Turkish companies. However, it says, they do signal further escalation between the EU and Turkey on the illegal drilling in Cyprus’ waters.
BULGARIA WARNS SERBIA OVER REFUSAL TO EXTRADITE BANKER
On 5 February, EurActiv reported that Bulgaria’s chief prosecutor has written letters to the European institutions to complain about Serbia’s refusal to extradite a banker held responsible for what is considered Bulgaria’s theft of the century. Tzvetan Vassilev, the infamous owner of Corporate Commercial Bank (CCB, also known as Corpbank), has lived in Serbia since the bank went bankrupt in 2014.
UK: CONSULTATION ON POLICE POWERS INVOLVING PRE-CHARGE BAIL
On 5 February, the Home Office launched a public consultation as part of a review of pre-charge bail legislation. The consultation closes on 29 April. The notice explains that an individual who has been arrested by the police but who has not yet been charged can be released on pre-charge bail or released without bail while the investigation continues. Pre-charge bail means the individual under investigation is released from police custody, with or without conditions, while officers continue their investigation. A 2017 Act introduced reforms, including a presumption against pre-charge bail unless necessary and proportionate; and • clear statutory timescales and processes for the initial imposition and extension of bail, including the introduction of judicial oversight for the extension of pre-charge bail beyond 3 months.
‘ANTIQUATED’ FRAUD LAWS THWARTING JUSTICE, SAYS SFO DIRECTOR
On 5 February, the Law Society Gazette reported comments of the Director of the SFO in which she has criticised the UK’s ‘antiquated fraud laws’, claiming evidential standards are stuck in the 19th Century and hinder convictions. She called for an overhaul of legislation.
UK TECH GIANT FOUNDER ARRESTED OVER US EXTRADITION
On 5 February, the BBC and others reported that Mike Lynch, founder of UK software company Autonomy has submitted himself for arrest as part of an extradition process brought by the US over charges of conspiracy and fraud. He sold the company to US computer giant Hewlett Packard for $8.4 billion in 2011, but faces allegations that he fraudulently inflated the value of Autonomy before the sale. He had been released on bail of £10 million.
MONTANA BROKER FOR SWISS COMPANY FOUND GUILTY IN MULTIMILLION-DOLLAR FRAUD SCHEME
On 5 February, a news release from the US DoJ advised that a Montana man has been found guilty for his role as a broker for a Swiss company involved in a multimillion-dollar international fraud scheme. Sean Finn, 51, was found guilty of 1 count of conspiracy to commit wire fraud and securities fraud, 4 counts of wire fraud and 4 counts of securities fraud. Finn conspired with others in the US and Switzerland to promote investments and loan instruments that he knew to be fictitious and involving a Swiss company known as Malom Group AG (whose name stood for “Make A Lot Of Money”).
SENIOR ARMENIAN OFFICIAL HELD FOR BRIBERY
On 5 February, Azatutyun reported that the head of the Armenian government’s Urban Development Committee, Vahagn Vermishian, has been arrested for allegedly taking bribes from real estate developers.
BULGARIAN JUDGE DENIED ENTRY TO US OVER ALLEGED CORRUPTION’
On 5 February, ABC News reported that the US State Department has barred a Bulgarian Specialized Criminal Court Judge Andon Mitalov from entering the US because of the foreign jurist’s alleged involvement in “significant corruption”. His wife and daughter of also are also barred. A State Department statement says that Mitalov was involved in corrupt acts that undermined the rule of law and severely compromised the independence of democratic institutions in Bulgaria.
BELGIUM: COURT CONVICTS GOLD REFINERY TONY GOETZ OF MONEY LAUNDERING
On 5 February, Reuters reported that Alain and Sylvain Goetz, 2 brothers from a Belgian gold refinery have been found guilty by a court in Antwerp of money laundering and fraud and given 18-month suspended jail sentences. It is said that the judgment comes as investigators and states increase pressure on refineries to make sure illegally mined or traded gold does not enter the market. It is said that they set up a fraudulent system in 2010 and 2011 for customers to sell gold anonymously in Antwerp for cash, creating the basis for black-market trade. The Tony Goetz refinery had paid more than €1 billion in cash for gold and made around €9.2 million in illegal capital gains, it is reported. The refinery was fined €99,000.
US: “FLASHY” GAMBLER PLEADS GUILTY TO $9.6 MILLION WIRE FRAUD SCHEME
On 5 February, the Chicago Sun Times reported that Robert Gorodetsky has pleaded guilty to a $9.6 million wire fraud scheme that could land him in prison for 5 years or more. He was the subject of a profile in USA Today in 2017 in which he was described as possibly “America’s leading sports bettor”. In 2019, his Instagram account was described as one of “Top 5 Sports Betting Instagram Accounts You Need to Follow Today”. However, it has emerged that Gorodetsky has now admitted he swindled millions of dollars out of a single investor between 2014 and 2018.
UK: TRANSPOSITION FIFTH ANTI-MONEY LAUNDERING DIRECTIVE
On 5 February, HM Treasury published the opinion of the Parliamentary Regulatory Policy Committee on HM Treasury’s impact assessment of the transposition of the Fifth Anti-Money Laundering Directive.
UK: COURT DISMISSES UNEXPLAINED WEALTH ORDER APPEAL BY ZAMIRA HAJIYEVA
On 5 February, a news release from the NCA advised that the Court of Appeal has dismissed an appeal by Zamira Hajiyeva – the wife of jailed Azerbaijani banker Jahangir Hajiyev – to discharge the Unexplained Wealth Order made against her. The appeal dismissed is for a UWO that requires Mrs Hajiyeva to explain how she and her husband could afford to buy their large house in Knightsbridge. A second UWO relates to the purchase of a golf club in Berkshire.
US: SANCTIONS EVADERS USED 2 ST KITTS CBI PASSPORTS TO FACILITATE $115 MILLION SCHEME IN SWITZERLAND
On 5 February, Kenneth Rijock in his blog reported on a case before the courts in the US and involving a Canadian-resident Iranian, highlighting mention in the indictment that “On or about 2010, CC-1 and CC-2, incorporated two entities outside Iran using St. Kitts passports and a Dubai, United Arab Emirates address, for the purpose of, inter alia, receiving US Dollar payments related to the Venezuela project”.
BLOW TO FUEL FRAUDSTERS: 59 ARRESTS IN EUROPE
On 5 February, a news release from Europol advised that law enforcement authorities from 23 EU Member States struck a blow at organised crime groups involved in fuel fraud by arresting 59 individuals in a year-long operation. The operation, led by Hungarian and Slovak authorities, began in early 2019, based on intelligence on the modus operandi, routes, types of products and economic operators involved in this particular type of fuel fraud. The news release says that fuel fraud is a growing phenomenon and typically involves “base-oil fraud”, also known as “designer fuel fraud”. This requires relevant expertise and is usually only available from trained chemists. Designer fuel is a mixed product, which in some cases is exempt from tax in the EU. To avoid that the fuel is subject to excise regime once on the market, criminals produce a mixture of gas oil and other added compounds to modify the final physical features of the product, and they can sell it in the black market.
MYANMAR OPIUM CULTIVATION DROPS AGAIN AS THE REGIONAL DRUG ECONOMY CONTINUES TO EVOLVE
On 5 February, the UN Office on Drugs and Crime reported that opium poppy cultivation in Myanmar declined a further 11% in 2019. Decreases were observed in all areas except one, where cultivation increased slightly, with Shan State, which accounts for 85% of cultivation in Myanmar, dropped 14%. A UNODC representative said that it would continue to work with Myanmar and communities in Shan to assist the transition from opium to sustainable economic alternatives.
HUGE HIT TO ILLEGAL IPTV DISTRIBUTORS IN BULGARIA
A news release from Europol on 5 February advised that it had supported a massive crackdown on illegal Internet protocol TV (IPTV) distributors in an operation executed by the Bulgarian authorities. This has been Bulgaria’s third successful operation, supported by Europol against illegal IPTV distributors in the past year. The investigation targeted 6 companies active in the Bulgarian cities of Sofia and Varna and the region of Burgas.
SELF-INCRIMINATION PROTECTION AND PROCEDURE IN TRANSATLANTIC CIVIL CASES
On 5 February, a briefing blog from Corker Bining considers self-incrimination protection generally under English law in criminal investigations and its application to witnesses in civil cases who face a risk of incrimination either in the UK or overseas. It considers the use of “compelled testimony” in proceedings in the US, there being no equivalent to the compulsory interview powers in the US that are now a common feature of English criminal law. The article goes on to consider obtaining information in the UK for use in civil proceedings in the US and the risks of self-incrimination. It concludes that great care is needed to ensure that witnesses are fully aware of their rights under both US and UK law when faced with giving evidence either in UK civil proceedings or in response to cross-border mutual assistance requests in civil or criminal cases.
HARVARD PROFESSOR ARRESTED: WHAT UNIVERSITIES CAN DO TO PROTECT US NATIONAL SECURITY WHILE PROMOTING AN OPEN ACADEMIC ENVIRONMENT
On 5 February, Paul Hastings published an article in the light of the arrest of Havard professor Charles Lieber in connection with his ties to China. It says the issues raised are not new, citing a previous case where an academic received a 4-year sentence for sharing data with Chinese students – but says that the new enforcement environment raises difficult questions for universities and other research institutions. The article provides brief descriptions of the most recent arrests and outline steps universities and research institutions can take to support their learning ecosystems while complying with US law and national security regulations.
SERBIA COMPLETES WORK ON DRAFT AML STRATEGY
On 5 February, Tanjug in Serbia reported that work on Serbia’s draft national AML/CFT strategy is complete and the document will now be sent to institutions for review and is due to be adopted by the government shortly.
4 DEAD AND 3 KIDNAPPED IN WEST AFRICAN PIRATE ATTACK
On 4 February, Insurance Marine News reported that a Nigerian-flagged hopper dredger was boarded by pirates after a firefight that resulted in 4 deaths. It was attacked while operating just offshore and 4 military armed guards were killed and 2 injured, with 3 foreign crewmembers (2 Russian nationals and 1 Indian) were abducted. 5 other crewmembers were left behind.