Panama Covid-19 update – if you are a man the weekend lock down starts at 1900 today, next allowed out on Tuesday…and no escape anytime soon, as the ban on international flights – due to end on 22 July – is extended to 21 August. Mind you, the airline I would use is not offering any flights before October! And, perhaps depressingly, the press reports that police have detained more than 1,000 people in the last 4 days for breaching the curfew order.
The daily statistics show another depressing figure, with 38 fatalities being a new high and taking the total to date to 1,038. Meanwhile, another 1,035 new cases mean that there are currently 22,566 active cases, with 1,284 people hospitalised and 620 more in the requisitioned hotels.
17 July 2020
DUTY OF CARE OWED TO OVERSEAS WHISTLEBLOWER
On 13 July, DAC Beachcroft published an article about what it describes as an interesting case in which a UK parent company was held to owe a duty of care to provide a safe professional working environment to an employee of its overseas member company. This included protecting the employee against pure economic loss (his future loss of earnings and future employment prospects) when he blew the whistle on misconduct discovered during audit. This was now well-known case where an employee of E&Y member office in Dubai discovered that a Dubai metals trader was involved in coating gold bullions in silver and subsequently declaring them as gold in Dubai to evade Moroccan export controls (a form of money laundering). The article says that the court’s incremental extension of the duty of care filled a lacuna in the law.
https://www.dacbeachcroft.com/en/gb/articles/2020/july/duty-of-care-owed-to-overseas-whistleblower/
UK SUPREME COURT ISSUES GROUND-BREAKING COMPANY LAW DECISION
On 16 July, Littleton published an article about a decision which overturned a string of previous Court of Appeal and High Court decisions. It is said that such was the significance of the case, and the contentiousness of the issues involved, that it was heard before a 7-justice bench with judgment only being delivered 14 months after oral argument before the Supreme Court. The main question was whether there was a principle against reflective loss barring claims by a creditor of a company against a director of that company in circumstances where the company itself had claims against the same director in respect of the same loss. It is said to be a principle of English company law that where a person commits a wrong against both a shareholder and the latter’s company which causes the company loss then the shareholder cannot bring a claim in respect of any resultant diminution in the value of the shareholder’s shares or distributions from the company – and such share-value losses are irrecoverable as a matter of law. The article explains the rationale behind the principle. It says that the new ruling from the Supreme Court is one of the most important company and commercial law decisions of the last 30 years. The majority of the Court considered that the principle was not based on preventing double-recovery, the law having separate mechanisms to deal with that, and that thus it did not bar the claims of the Claimant in the case, which was not a shareholder and brought its claims as a creditor. However, the article concedes that it remains to be seen how double-recovery should be prevented where the company law principle is not engaged.
https://littletonchambers.com/supreme-court-issues-ground-breaking-company-law-decision/
DO WTO RULES REALLY NOT REGULATE ‘FOREIGN SUBSIDIES’?
On 22 June, an article from Linklaters considers a statement made by the European Commission in its White Paper targeting ‘foreign subsidies’, that WTO law offers no recourse against subsidies granted by countries to companies operating in other jurisdictions. The normal interpretation of the WTO rules is that subsidies only apply when granted within the territory of the country granting the subsidy – so they might not apply to products or service from a company in country A, where the subsidy originates from country B (e.g. from a company in, or government of, a non-EU country that is the ultimate owner or controller of the company). The Commission would intend to frame legislation to address the problems created by such subsidies, and the article concedes that there are arguments, even if untested, that ‘foreign subsidies’ are not unregulated by WTO law, both in relation to goods and services and, if so, the Commission may have more options for targeting these subsidies than it has currently envisaged.
The White Paper, dated 17 June, is at –
https://ec.europa.eu/competition/international/overview/foreign_subsidies_white_paper.pdf
EU COURT DECISIONS ON IRAN SANCTIONS CASES – ONE UPHELD, ONE LISTING ANNULLED
On 17 July, the EU Sanctions Blog reported that the EU General Court has –
- upheld the listing of Ocean Capital Administration Group, a subsidiary of the Islamic Republic of Iran Shipping Line (IRISL), and 31 other subsidiaries; and
- annulled the listing of Neda Industrial Group, an Iranian electrical utility supplier, because the listing information was out of date.
UBS WILL NO LONGER BE ABLE TO CONTEST CLIENT DATA SENT TO FRANCE TAX AUTHORITIES
On 15 July, Reuters reported that Switzerland’s Federal Administrative Court had upheld a decision to revoke UBS’s position as a party to the arrangements over what information to send to France. Previously, the Swiss Federal Tax Administration allowed UBS to inspect the files and inform the bank of all final decisions related to 40,000 UBS bank accounts requested by France. UBS could also challenge the respective final decisions on what details to send.
SHIPOWNERS FACE RECYCLING CONSTRAINTS AS EU REGULATIONS LIMIT OPTIONS
On 17 July, Seatrade Maritime News reported that it has been said that EU ship recycling regulations are limiting shipowners’ recycling options, particularly for large vessels. Repeated are warnings that EU Regulations, imposed on the owners of vessels with certain links to the European trading bloc, will mean few recycling options for many owners, particularly those of larger vessels including Capesize bulkers, very large ore carriers, big tankers and large container ships.
GERMAN INDUSTRY WARNS NORD STREAM 2 SANCTIONS BY US MEAN ‘SERIOUS STRESS’ FOR TRANSATLANTIC PARTNERSHIP
On 17 July, Clean Energy Wire reported that the Federation of German Industries warned that the sanctions against companies participating in the Nord Stream 2 project, as threatened by the US government, amount to “serious stress” for the transatlantic partnership, saying that the threatened sanctions create major legal uncertainty and investment risks for about 120 companies from 12 countries that are involved in the project, and that European customers could face rising gas prices as a consequence.
2 BRITISH COLUMBIA RESIDENTS AND 2 COMPANIES FACE $6.3 MILLION IN PENALTIES FOR PONZI FRAUD
On 17 July, Wealth Professional reported that the British Columbia Securities Commission has ordered 2 individuals (Todd Norman John Bezzasso and Wei Kai Liao, aka Kevin Liao) and 2 companies (Bezzaz Holdings Group Ltd and Nexus Global Trading Ltd) were found guilty of taking millions of dollars from scores of investors through a Ponzi scheme.
NIGERIA LOST $3 BILLION TO GOLD SMUGGLING IN 7 YEARS
On 17 July, Business Ghana reported that the President has said that Nigeria “lost” about 97 tonnes of gold illegally smuggled out of the country in the 7 years up to 2018.
BAHRAIN FINES IRANIAN BANKS ON MONEY LAUNDERING CHARGES
On 17 July, the Saudi Gazette reported that Bahrain’s High Criminal Court has sentenced 3 officials of Iran-owned Future Bank to 5 years in jail and fined each with up to $2.65 million in 2 money-laundering cases. The court also fined Future Bank and 3 other banks and ordered the confiscation of the illegal transfer amounts. The cases involved an Iranian plot involving several entities, including some sanctioned internationally for funding terrorism, to carry out financial transactions while evading scrutiny.
FORMER SÃO PAULO GOVERNOR ALCKMIN CHARGED WITH CORRUPTION AND MONEY LAUNDERING
On 17 July, the Rio Times reported that he was the target of investigation by the Federal Police, which alleges the existence of a cartel in two public works projects.
ITALIAN NGO GRANTED ANOTHER EXTENSION TO UN SANCTIONS EXEMPTIONS
On 17 July, NK Pro reported that Agrotec SpA had faced difficulties delivering agricultural machinery to DPRK farms, which the article says underscores aid groups’ ongoing struggle to bring items into the country.
https://www.nknews.org/pro/italian-ngo-granted-another-extension-to-un-sanctions-exemptions/
EXCHANGE CONTROL REGULATIONS AND IMPORT CONTROLS
On 4 June, the UK Customs Academy blog carried a post concerned with controls imposed by governments on the purchase and/or sale (and movement out of the country) of currency. The intention of the controls is to help countries stabilise their economies by putting limits in particular on the outflow of currency out of a country. Too high an outflow of currency could result in the country not having enough money to fund its own essential services such as health, energy and transport. Those will longer memories might remember that the UK had such controls, abolished by the incoming Thatcher Government in 1979. Import controls (and, of course, exports) can be part of exchange control regulations. The post says that, for an exporter who wants to get paid for their exports exchange control regulations and import controls introduce a further element of payment risk. In addition to the risk of the buyer not paying there is additionally the risk of the country not paying, or paying late, as a result of exchange control regulations.
https://www.ukcustomsacademy.co.uk/2020/06/04/exchange-control-regulations-and-import-controls/
FOREIGN INVESTMENT IN FRANCE: NEW RULES IN FRANCE FROM JULY 2020
On 17 July, Bird & Bird published a briefing saying that foreign investments in France, or relating to companies incorporated under French law do not require any administrative authorisation, except when the planned investment relates to certain activities and is made by certain investors. It should be noted that the procedure was recently amended and raises some questions. Finally, COVID-19 has led to serious changes in the control of foreign investment. This new regime is line with the requirements adopted by the EU in March.
BRAZIL EXPORTS TO EU PRODUCED ON ILLEGALLY CLEARED LAND
On 17 July, EurActiv reported that a new report claims that around 20% of beef and soybean exports from Brazil to the EU is produced on land that was illegally deforested, according to a report published in Science magazine. Between 18% and 22% – possibly more – of annual exports from Brazil to the EU are the fruit of illegal deforestation, it is claimed.
DUTCH ACCOUNTANT “UNCOVERS FRAUD BEHIND SYRIA RESCUE ORGANISATION WHITE HELMETS”
On 17 July, NL Times reported that an accountant discovered that the leaders of Mayday Rescue, the Dutch foundation behind the White Helmets rescue organisation in Syria, used money intended for a rescue operation for their own bonuses instead. James Le Mesurier, the founder of the White Helmets, died in an apparent suicide in Istanbul days after this discovery.
3M FILES 18 LAWSUITS OVER ALLEGED UNLAWFUL N95 MASK SALES
On 17 July, AP reported that 3M in the US, the largest global producers of the N95 mask, says it has investigated 4,000 reports of fraud, counterfeiting and price gouging in connection with the product and filed 18 lawsuits as a result.
https://apnews.com/f6f7ca233d85ef59cc89396b1e0779ba
INDONESIA: COAL MINING COMPANY LOOKS TO ACQUIRE A LUCRATIVE COAL MINE AMID AN ALLEGED BRIBERY CASE IMPLICATING THE MINE’S FORMER OWNER
On 17 July, the Jakarta Post reported that state-owned PT Bukit Asam (PTBA) has expressed a desire to acquire a lucrative coal mine in Tuhup, Central Kalimantan, to increase and diversify its coal reserves, amid an alleged bribery case implicating the mine’s former owner, PT Asmin Koalindo Tuhup (AKT). The founder of AKT’s parent company, Samin Tan, was named a corruption suspect in a case concerning the mine.
TENNIS MATCH-FIXING: 2 OFFICIALS SUSPENDED AND FINES IMPOSED
On 17 July, e-Gaming Review reported that a suspended Belarusian umpire and Greek tennis tournament director issued with fines totalling $16,000. The Tennis Integrity Unit (TIU) has fined and suspended the match officials over alleged match-fixing and betting offences.
CAPE VERDE ATTORNEY GENERAL APPROVED ALEX SAAB MORAN EXTRADITION TO US
On 17 July, Kenneth Rijock reported in his blog that Cape Verde had approved the extradition of the Colombian to the US to face money laundering charges in Miami.
https://rijock.blogspot.com/2020/07/cape-verde-attorney-general-approved.html
FREIGHT TRANSPORT ASSOCIATION (FTA) CONFIRMS NAME CHANGE TO LOGISTICS UK
On 17 July, Lloyds Loading List reported that the FTA in the UK originally planned the change to take place earlier in the year but postponed it during the COVID-19 crisis, with the new name to operate from 27 July.
DISAPPEARING INK AS NEW TOOL FOR LOW-LEVEL GRAFT IN RUSSIA
On 17 July, OCCRP reported that a Moscow city lawmaker said she discovered how contracts are being rigged by officials who use disappearing ink to adjust prices of infrastructure and other works and line their pockets with the difference.
https://www.occrp.org/en/daily/12773-disappearing-ink-as-new-tool-for-low-level-graft-in-russia
US CUSTOMS AT PORT OF MOBILE INTERCEPTS $120,000 IN UNAPPROVED SANITARY WIPES
On 17 July, NBC 15 reported that US Customs and Border Protection officers at the Area Port of Mobile recently intercepted more than $120,000 worth of mislabelled and unregistered disinfectant wipes. They were in a container of 843 boxes containing 20,016 bottles of disinfectant wipes that bore no approved markings from neither the FDA nor EPA.
US CUSTOMS AND BORDER PROTECTION BOUGHT ACCESS TO NATIONWIDE CAR TRACKING SYSTEM
On 17 July, the Vice.com website reported that CBP purchased access to a commercial database that allows the agency to look up the historical location of vehicles nationwide without a warrant. This is said to illustrate a trend by which law enforcement agencies turn to the commercial sector for access to data rather than collecting it themselves, and shows that little-regulated private surveillance networks are being used by the government.
CONTINUANCE OF UNINCORPORATED FOREIGN LIMITED PARTNERSHIPS IN JERSEY
On 17 July, Appleby published an article saying that new regulations, designed to provide a clear statutory process to allow for the continuance of unincorporated foreign limited partnerships into Jersey, have passed through the Jersey States Assembly and became effective from 17 July.
SOUTH AFRICA: HAWKS POUNCE ON ETHEKWINI OFFICIALS INVESTIGATED FOR GRAFT
On 17 July, the Times Live reported that a Hawks national task team have conducted search and seizure operations at the homes of eThekwini municipal officials alleged to be involved in fraud, corruption and money laundering valued at $12 million. which followed allegations of the awarding of tenders by the municipality without following due processes. eThekwini is the municipality which includes Durban.
US CONSIDERING CONTROLS ON ADVANCED SURVEILLANCE SYSTEMS AND OTHER ITEMS OF HUMAN RIGHTS CONCERN
A Notice from the Bureau of Industry and Security on 17 July invites comments by 15 September on the list of items on the Export Administration Regulations’ (EAR) Commerce Control List (CCL) that are controlled for crime control and detection (CC) reasons to promote human rights throughout the world, to inform the agency’s decisions in updating (including additions and removals) items controlled for CC reasons on the CCL, as well as the related licensing requirements for such items.
IRISH MALE MODEL ALLEGEDLY CAUGHT AT AIRPORT WITH €180,000 IN HAND LUGGAGE SET TO BE EXTRADITED TO NORTHERN IRELAND
On 16 July, the Irish Independent reported that Mark Adams, 40, was stopped at Belfast International Airport while attempting to get a flight to Spain in May 2018. It is also said that he had booked 497 international flights into or out of the UK between 2014-18 and, on 64 occasions, the outward and return flights were within a matter of hours. He had said that he should not be extradited to Northern Ireland due to Brexit, but the High Court has ruled that he should be removed to Northern Ireland under an European Arrest Warrant.
NEW RULE EXPANDS US GOVERNMENT CONTRACTING BAN ON TARGETED CHINESE TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SUPPLIERS
A Client Alert from Wilmer Hale on 17 July advised that from 13 August, US federal government agencies will be prohibited from issuing new contracts or extending or renewing existing contracts to entities that use certain telecommunications and video surveillance equipment and services from 5 targeted Chinese suppliers – Huawei Technologies, ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology and Dahua Technology. Huawei, Hangzhou Hikvision, and Dahua are already designated on Commerce Department Entity List, which bans exports of goods and technologies subject to the US Export Administration Regulations, and Huawei and ZTE have been designated by the Federal Communications Commission as presenting unacceptable security risks.
BIDEN-SANDERS UNITY TASK FORCE RELEASES RECOMMENDATIONS ON CANNABIS
On 17 July, an article from Foley Hoag LLP was concerned with the recommendations of the Tas Force which recently previewed a framework for federal cannabis regulation under a Biden administration, and ranging from climate change to criminal justice reform to healthcare. The article says that the recommendations reaffirms the widely-held belief among Democrats that the federal government should decriminalise cannabis and take affirmative steps to erase the scars of past criminal convictions arising from cannabis use. However, it says that the recommendations provide scant details on implementation, and do not feature any policies on medicinal cannabis, nor do they address how this more permissive federal posture might (or should) lead to greater banking access for the cannabis industry.
https://www.jdsupra.com/legalnews/biden-sanders-unity-task-force-releases-54796/
ADDITION OF ‘INSTRUMENTALITY OF FOREIGN GOVERNMENT’ FACTORS TO FCPA GUIDANCE
On 17 July, an article from Thomson Reuters is concerned with the recent update to the FCPA guidance, saying that one significant change is the more robust discussion of what constitutes an “instrumentality of a foreign government”. The article argues that it is usually easy to identify when one is dealing with a government agency or department. But the term “instrumentality” is intentionally broad and adaptable (and some have argued that it is excessively so). It may include state-owned or state-controlled enterprises that employ people with business titles like vice-president and director, instead of government titles like minister or secretary.
https://www.jdsupra.com/legalnews/doj-and-sec-add-instrumentality-of-43862/
BILL SOARS FOR IRANIAN-AMERICAN AVIATION MAGNATE AFTER LOSING FRAUD CASE
On 17 July, The National in UAE reported that Iranian-American aviation tycoon Farhad Azima faces a bill of more than $8 million after losing a bitter fraud and bribery legal battle with the sovereign wealth fund of Ras al Khaimah. He was told he had 6 weeks to pay the bulk of the funds after a judge told him he had given evidence “which I found to be dishonest”. The case was part of a broader battle centred on reputed losses of some $2 billion while aviation company RAK Investment Authority was under the control of Khater Massaad, a Swiss-Lebanese citizen and a close associate of Mr Azima, and who is currently said to be in Saudi Arabia but has been found him guilty of financial crimes in the UAE in absentia.
US PROSECUTORS HAVE SECURED A GUILTY PLEA FROM A CO-FOUNDER OF THE CENTRA TECH ICO FRAUD
On 17 July, Coindesk reported that Sohrab Sharma, 29, has admitted that he and partners Raymond Trapani and Robert Farkas lied about their purportedly crypto-backed financial product’s partnerships, licences and leadership as it ripped off investors for $25 million. He also forfeited 10,000 in ethereum ($2,329,200). The trio touted celebrity endorsements and flashy investor promises while promoting their partnership at the height of the 2017 ICO bubble.
https://www.coindesk.com/third-centra-tech-founder-pleads-guilty-to-ico-fraud
SEC CRACKS DOWN ON ANOTHER PONZI SCHEME – IIG
On 17 July, Finance Magnates reported that the co-founder and chief investment officer of International Investment Group LLC (IIG), which specialised in trade finance loans, has been charged by the SEC for operating a Ponzi scheme that mainly targeted SME.
https://mondovisione.com/media-and-resources/news/sec-files-fraud-charges-against-co-founder-of-iig/
US: STOLEN KUWAITI MONEY WENT TO BEVERLY HILLS LAND GRAB
On 17 July, Courthouse News reported that federal authorities have moved to seize a hillside property in Beverly Hills, a private jet, a yacht and several other assets they say were purchased by a former Kuwaiti military official using over $100 million in embezzled public funds, which involved money taken from the Kuwait MoD that was sent to an attaché office in London.
https://www.courthousenews.com/feds-say-stolen-kuwaiti-money-went-to-beverly-hills-land-grab
ZIMBABWE ACCUSES BIGGEST MOBILE PHONE OPERATOR OF MONEY LAUNDERING
On 17 July, BNN Bloomberg reported that police have accused Econet Wireless Ltd, the country’s dominant mobile phone company, of money laundering, demanded a list of its subscribers and issued a search warrant against it. The move escalates a clash between the government and company whose money transfer service facilitates the bulk of transactions. The government has said it plans to force Econet’s Ecocash unit to use a government-run money-transfer platform.
https://www.bnnbloomberg.ca/zimbabwe-accuses-biggest-mobile-phone-firm-of-money-laundering-1.1467163
WHAT THE UK’S NEW SANCTIONS REVEAL ABOUT US-UK RELATIONS
On 17 July, an article in Lawfare says that many foreign policy analysts have speculated about how Brexit might affect the “special relationship” between the US and UK on matters ranging from NATO to trade, but less attention has been paid to how Brexit might affect US-UK relations in the sanctions space. Perhaps a UK free from EU rules would be better positioned to match, and amplify, US policy and leaders from both countries have suggested as much. But they may not be coordinating their sanctions policies to the extent their leaders suggest, e.g. they do not appear to be coordinating on China sanctions. There is a considerable amount of convergence between the UK’s new list and the corresponding US sanctions list. However, discrepancies are apparent and the article considers the reasons for the variance. It also says that events following the release of the new UK list further suggest US-UK sanctions coordination hasn’t fully materialised.
https://www.lawfareblog.com/what-britains-new-sanctions-reveal-about-us-uk-relations
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