OTHER THINGS YOU MAY HAVE MISSED – JUNE 16

Panama Covid-19 update – the media reports that more than 50 health care workers from the Rafael Hernández de David regional hospital, Chiriquí, who more than 2 weeks ago received the second dose of the Pfizer vaccine , are infected with Covid-19. Meanwhile, more areas are facing the 10 pm curfew, including the Colon district, with a few (including the Chiriqui province, badly affected recently by an upsurge in infections) are to have a total lockdown on Sundays from this coming weekend.

https://panatimes.com/new-restrictive-measures-implemented-in-various-sectors-of-the-country

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16 JUNE 2021

CHINESE DREDGERS ARE STEALING TAIWAN, BIT BY BIT

On 16 June, Nikkei Asia reported that sand dredgers spend hours pumping up tons of sand from the ocean floor around the Matsu archipelago, which is just 20 km from the mainland Chinese coast, but is administered by Taiwan.  It is part of China’s “grey zone” tactic, hybrid warfare aimed at wearing down, intimidating or provoking the enemy without firing a single shot.

https://asia.nikkei.com/Spotlight/The-Big-Story/Line-in-the-sand-Chinese-dredgers-are-stealing-Taiwan-bit-by-bit

FOR YEARS, US ARMY HID AND DOWNPLAYED EXTENT OF FIREARMS LOSS

On 16 June, Military.com reported that the US Army has hidden or downplayed the extent to which its firearms disappear, significantly understating losses and thefts even as some weapons are used in street crimes. The pattern of secrecy and suppression dates back nearly a decade.  Army officials cited information that suggests only a couple of hundred firearms vanished during the 2010s, but internal memos that AP obtained show losses many times higher.

https://www.military.com/daily-news/2021/06/16/years-us-army-hid-downplayed-extent-of-firearms-loss.html

THE COLLAPSE OF THE SFO’S PROSECUTION OF FORMER SERCO EXECUTIVES: LESSONS FOR CORPORATES

On 15 June, an article from Herbert Smith Freehills LLP says that in April the SFO fraud prosecution of 2 former directors of Serco Geografix Limited collapsed.  It offered no evidence against the defendants, after it became apparent that the SFO had failed to disclose to the defendants certain relevant materials, rendering it unsafe for the prosecution to proceed.  The article says that this is an example of the challenges with disclosure in complex fraud cases such as this, which will typically involve the production of hundreds of thousands of documents.  However, the case also provides some interesting lessons for corporates and their directors when considering whether to enter into Deferred Prosecution Agreement negotiations with prosecuting authorities.  The article details the lessons to be learned.  These include the tension between the statement of facts agreed between a corporate and the prosecutor as part of a DPA on the one hand, and the indictments subsequently preferred in respect of individuals on the other, and reignites the debate over whether DPA are an appropriate means of penalising corporates in circumstances where the SFO has not obtained convictions against individuals in respect of the same events. 

https://hsfnotes.com/fsrandcorpcrime/2021/06/15/the-collapse-of-the-sfos-prosecution-of-former-serco-executives-lessons-for-corporates/#page=1

EU SANCTIONS: GUIDANCE RE NON-DESIGNATED ENTITIES THAT ARE CONTROLLED BY DESIGNATED INDIVIDUALS OR ENTITIES AND PROVIDES USEFUL GUIDANCE ON RELATED DUE DILIGENCE REQUIREMENTS

On 11 June, an article from Mayer Brown is concerned with an Opinion from the European Commission on 8 June which followed requests received from a National Competent Authority.  While based on the EU restrictive measures in view of the situation in Ukraine, it is relevant for all asset freeze measures imposed by the EU.  The Opinion provides welcome clarifications on the scope of application of the EU’s asset freeze measures and the expected due diligence requirements for EU operators, including banks – and economic operators subject to EU sanctions laws should stand ready to reinforce, where needed, their due diligence and compliance processes.

https://www.mayerbrown.com/en/perspectives-events/publications/2021/06/financial-sanctions-due-diligence-requirements-stressed-by-european-commission

But –

DESIGNATION OF AN ORGANISATION OR INDIVIDUAL AS A SANCTIONS TARGET SHOULD AVOID IMPINGING ON A THIRD PARTY’S RIGHTS AS MUCH AS POSSIBLE

An article from Out-Law on 16 April is about an EU Commission Opinion of 2 June regarding the sanctions regime that targets individuals and entities in the Central African Republic (CAR).  It stressed that a third party still has rights relating to pre-designation contracts and the commission said it was for this reason that exceptions and derogations are normally made when assets are frozen. Provided that all the conditions in the derogation are met, the consent of the sanctions target is not required to release the funds and consent is not a prequalification to the grant of that derogation.

https://www.pinsentmasons.com/out-law/news/sanctions-designations-not-affect-enforcement-pre-existing-third-party-rights

https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/210602-frozen-funds-features-central-african-republic-opinion_en.pdf

CHINESE-CANADIAN BUSINESSMAN’S $70 MILLION DEAL WITH NEW ZEALAND POLICE OVER FROZEN ASSETS

On 15 June, the New Zealand Herald reported that wealthy Canadian businessman Edward Gong has agreed to pay millions of dollars to the New Zealand government in the largest ever settlement made under the Criminal Proceeds (Recovery) Act since the law came into effect in 2009.  3 years ago, the bank accounts of Xiao Hua Gong in New Zealand were frozen as part of a global investigation into his finances. He had denied his success and influence was gained from an alleged $202 million pyramid scheme selling medicines in China, and he was arrested in Canada and charged with fraud and money laundering in December 2017.   9 months before his arrest in Canada, a High Court judge in New Zealand granted freezing orders over his assets in New Zealand.

https://www.nzherald.co.nz/nz/chinese-canadian-businessman-xiao-hua-gong-cuts-record-breaking-70m-deal-with-new-zealand-police-over-frozen-assets/NWKJI4TEPYMI5CGR3J37XJZGPI/

EU CORRUPTION MONITOR 2021

Transparency International says that from conflicts of interest in awarding government contracts to undue influence by business on politics, from bribes to the use of personal connections when accessing public services, corruption takes many forms across the EU. Its new survey shows that 62% of over 40,000 survey participants believe that government corruption is a big problem in their country.

https://www.transparency.org/en/gcb/eu/european-union-2021

and

CENTRAL AND EASTERN EUROPE CITIZENS BELIEVE CORRUPTION IS GROWING

On 15 June, Balkan Insight reported that a new report by Transparency International says that almost a third of EU citizens “think corruption is getting worse in their country and almost half say their government is doing a bad job at tackling corruption”.  In the countries surveyed in Central and South-East Europe, the percentages are even higher. 

https://balkaninsight.com/2021/06/15/central-eastern-europe-citizens-believe-corruption-is-growing-report/

AUSTRAC SEEKS INPUT TO DEVELOP NEW REPORTING SYSTEMS

On 15 June, Regulation Asia reported that AUSTRAC says it will be undertaking a systems transformation programme over the next 4 years to replace ‘AUSTRAC Online’ and transform the way regulated businesses interact and report to the Australian AML/CFT regulator.  It has asked reporting entities to submit comments on any system or reporting issues that can be improved to help it develop its new systems.

https://www.regulationasia.com/austrac-seeks-input-to-develop-new-reporting-systems/

REDFOXTROT – CYBER ESPIONAGE ACTIVITY ATTRIBUTED TO A SUSPECTED CHINESE STATE-SPONSORED THREAT ACTIVITY GROUP

A report says that Recorded Future’s Insikt Group has identified ties between a suspected Chinese state-sponsored threat activity group tracked as RedFoxtrot and the Chinese military intelligence apparatus, People’s Liberation Army (PLA) Unit 69010, located in Ürümqi, Xinjiang.  The report is said to provides a rare glimpse into PLA cyber espionage operations.

https://go.recordedfuture.com/redfoxtrot-insikt-report

DATA PROTECTION: EUROPEAN COMMISSION LAUNCHES PROCESS FOR ADOPTION OF GDPR ADEQUACY DECISION FOR SOUTH KOREA

On 16 June, a news release from the EU advised on the adoption of a decision that the data protection framework in South Korea meets the requirements of GDPR for the purposes of transfers of personal data.

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_2964

EUROPEAN COMMISSION WELCOMES PROVISIONAL AGREEMENT ON EU ROAD CHARGING RULES

On 16 June, the Commission welcomes agreement on new road-charging rules (the Eurovignette Directive). The revised rules introduce CO2 emission-based tolling for heavy-duty vehicles across the EU, a key pillar of the EU commitment to reaching climate neutrality by 2050.  Once the provisional agreement is formally approved by Parliament and Council, the Directive will enter into force on the 20th day after its publication.

https://ec.europa.eu/commission/presscorner/detail/en/MEX_21_3026

SOUTH AFRICA: MAHATMA GANDHI’S GREAT-GRANDDAUGHTER SENTENCED TO 7 YEARS IN PRISON IN CONNECTION WITH A FORGERY CASE

On 16 June, Logically reported that Ashish Lata Ramgobin has been sentenced to 7 years in prison for fraud, forgery, and fabrication. 

https://www.logically.ai/factchecks/library/6e496cbc

ARMS TRAFFICKER VIKTOR BOUT MAY BE SWAPPED FOR AMERICAN IN JAIL IN RUSSIA

In his blog on 15 June, Kenneth Rijock reproduced a release from a US law firm stating that the judge who presided over the trial of Viktor Bout in 2010 has said it would be appropriate to swap Bout for Paul Whelan, a US citizen arrested in Russia in 2018 for alleged espionage.

https://rijock.blogspot.com/2021/06/will-there-be-russo-american-prisoner.html

CHINA–UKRAINE–US TUG OF WAR OVER UKRAINIAN AERO-ENGINE COMPANY

On 16 June, an article from RUSI was concerned with Motor Sich, a leading Ukrainian company is being drawn into the global confrontation between China and the US.  China was attempting to purchase one of the ‘crown jewels’ of Ukraine’s military-industrial complex inherited from the former USSR – Motor Sich, the biggest manufacturer of aircraft engines in Eurasia.  Since 2014 Motor Sich was banned from trading with Russia and sought new markets, including China.  The US became concerned about China’s interest in Motor Sich in 2015.  Motor Sich had taken out a $100 million, 10-year loan from the China Development Bank and default on the loan would have led to China acquiring Motor Sich.  The prospects of Motor Sich technology falling into Beijing’s hands became a concern to the US in 2017.  Ukraine had little choice but to give in to US pressure to overturn the sale of Motor Sich to China because of the need for US diplomatic and security support, and in January this year the Ukraine government imposed sanctions on Chinese and BVI-registered persons and entities alleged to have been seeking to purchase Motor Sich, effectively banning the sale.

https://rusi.org/commentary/china-ukraine-us-and-tug-war-ukrainian-crown-jewel

EU COMMISSION AND OLAF HAVE DEVELOPED A NEW ANTI-FRAUD KNOWLEDGE AND RESOURCE CENTRE

On 16 June, EU Neighbours reported a new tool designed to prevent fraud and any other illegal activities affecting the EU’s financial interests and to ensure that EU Funds are spent well to achieve the best impact on citizens’ lives. The website gives concrete examples from EU Member States, presents tools that have proven to be effective, explains how to reproduce and apply good practices and share knowledge, and connects practitioners.

https://www.euneighbours.eu/en/east/stay-informed/news/eu-funds-anti-fraud-knowledge-and-resource-centre

https://ec.europa.eu/antifraud-knowledge-centre/index_en 

GREEK CAPTAGON BUST LEADS TO A CRIMINAL GANG AND THE PORT AT THE HEART OF SYRIA’S BOOMING NEW DRUG TRADE

On 16 June, an article from OCCRP says that, in late 2018, Greek authorities busted a freighter carrying over $100 million worth of cannabis and Captagon, evidence of a booming Mediterranean drug trade fuelled by Syria’s civil war.  It says that an investigation into the vessel revealed a network of criminals associated with the shipment — with connections to the Assad family, a gang in Libya, and UK-registered shell companies.  It is said that the shipment was allegedly destined for a smuggling gang in eastern Libya.  The owner of the vessel has connections to a cousin of Bashar Al-Assad and convictions in Italy for smuggling stolen cars and yachts.

https://www.occrp.org/en/investigations/greek-captagon-bust-leads-to-a-criminal-gang-and-the-port-at-the-heart-of-syrias-booming-new-drug-trade

ITALIAN CUSTOMS AND DINOSAUR EGG TRAFFICKERS

On 15 June, the AV Club reported that Customs agents at Milan Bergamo Airport recently discovered a fossilised Shunosaurus egg that was being illegally shipped from Malaysia with “a certification of origin of dubious authenticity, issued by a body which subsequently [was found to be] non-existent”.  Authorities believe the egg was en route from China.

https://www.avclub.com/italian-customs-refuse-to-let-dinosaur-egg-traffickers-1847100876

EU COURT CONFIRMS DATA PROTECTION REGULATOR CAN INVESTIGATE IF NOT ITS LEAD SUPERVISORY AUTHORITY

On 16 June, an article from Out-Law says that EU data protection law provides scope for national regulators to act unilaterally to address concerns they have about the cross-border personal data processing undertaken by multinational businesses, and there are circumstances in which data protection regulators that are not the “lead supervisory authority” for a business can legitimately pursue legal action against those companies under the GDPR – despite the GDPR ‘one stop shop’ mechanism of regulation and enforcement.

https://www.pinsentmasons.com/out-law/news/ruling-confirms-possibility-of-parallel-gdpr-investigations

CUBA ADMITS TO WILDLIFE TRAFFICKING PROBLEM

On 15 June, Insight Crime reported a new wildlife trafficking law which covers “mammals, birds, bees, reptiles, fish, mollusks, crustaceans and amphibians”, but with warnings that penalties are too light.  It appears that the majority of wildlife trafficked from the island are birds, including parrots, and snails. Cuban grassquits, endemic birds with a swirl of bright yellow around their necks and backs, have been smuggled to the US.

https://insightcrime.org/news/cuba-quietly-admits-to-wildlife-trafficking-problem/

WORLD ELDER ABUSE AWARENESS DAY – NEW US RESOURCE INTENDED TO ASSIST SECURITIES FIRMS IN IMPLEMENTING THE TRAINING REQUIREMENTS OF THE SENIOR SAFE ACT

On 16 June, a release on Mondo Visione advised that, in recognition of World Elder Abuse Awareness Day, the SEC, the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) announced a new resource intended to assist securities firms in implementing the training requirements of the Senior Safe Act.  The training programme, “Addressing and Reporting Financial Exploitation of Senior and Vulnerable Adult Investors,” can be used by firms to train associated persons on how to detect, prevent, and report financial exploitation of senior and vulnerable adult investors.

https://www.nasaa.org/industry-resources/senior-issues

https://mondovisione.com/media-and-resources/news/sec-nasaa-and-finra-offer-free-resource-to-securities-firms-to-assist-in-detec/

ADVISER TO COSTA RICA PRESIDENT RESIGNS AMID GROWING BRIBERY SCANDAL

On 15 June, Thomson Reuters reported that a top adviser to Costa Rican President Carlos Alvarado resigned after judicial officials said he was under investigation for his alleged role in a bribery scheme that has ensnared officials and top businessmen.

https://news.trust.org/item/20210614233315-b5et0/

THE ROLE AND RESPONSIBILITIES OF GATEKEEPERS IN THE FIGHT AGAINST ILLICIT FINANCIAL FLOWS: A UNIFYING FRAMEWORK

The World Economic Forum has issued this briefing saying that the Unifying Framework is a value‑based self‑regulatory framework for private sector intermediaries who are strategically positioned to prevent or interrupt illicit financial flows – collectively referred to as “gatekeepers”. The framework consists of 5 core practices and is intended to realize 3 fundamental principles.  It explains who the gatekeepers are, as well as the details of the framework.

https://www3.weforum.org/docs/WEF_Gatekeepers_A_Unifying_Framework_2021.pdf 

PODCAST: USING UNIVERSITIES TO LAUNDER REPUTATIONS

In the latest TRACE podcast, John Heathershaw of the University of Exeter discusses the working paper he co-authored for the National Endowment for Democracy: “Paying for a World Class Affiliation: Reputation Laundering in the University Sector of Open Societies”.  He shows how vulnerable universities are to abuse by kleptocrats seeking to shape the conversation, often quite subtly, about their governments and their legacies. This research was undertaken for NED and under the Global Integrity Anti-Corruption Evidence project.

https://www.traceinternational.org/resources-podcast

UK: LOOTED ARTEFACTS WITHDRAWN FROM AUCTION AFTER APPEAL BY ETHIOPIA 

On 16 June, the Guardian reported that Busby auctioneers in Bridport, Dorset, had withdrawn a leather-bound Coptic bible and a set of horn beakers from a sale on 17 June after the Ethiopian embassy in London discovered the items – which were taken during the Battle of Maqdala in 1868 – and wrote to the auction house.

https://www.theguardian.com/world/2021/jun/16/looted-artefacts-withdrawn-from-uk-auction-after-ethiopia-appeal

US: INVESTIGATION RESULTS IN GUILTY PLEAS IN MAIL FRAUD, AGGRAVATED IDENTITY THEFT SCHEME CASE

On 7 June, a news release from US Immigration and Customs Enforcement advised that 2 Dominican Republic citizens have pleaded guilty to using stolen personal identification information to obtain high-end electronic devices, such as cell phones, laptop computers, tablets and watches.

https://www.ice.gov/news/releases/hsi-el-paso-investigation-results-guilty-pleas-mail-fraud-aggravated-identity-theft

G7 NEW GLOBAL INFRASTRUCTURE INITIATIVE

On 15 June, an article from the Center for International and Strategic Studies said that G7 leaders meeting in the UK England, on 11-13 June agreed on a new initiative to support global infrastructure investment, launched as global needs rise and China’s Belt and Road Initiative (BRI) pulls back.  It says that the White House has issued a detailed factsheet dubbing the initiative “Build Back Better World (B3W)”. 

https://www.csis.org/analysis/g7s-new-global-infrastructure-initiative

https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/12/fact-sheet-president-biden-and-g7-leaders-launch-build-back-better-world-b3w-partnership/

https://www.consilium.europa.eu/media/50443/eu-us-summit-joint-statement-15-june-final-final.pdf

WHITE HOUSE UNVEILS PLAN TO FIGHT DOMESTIC TERRORISM

On 15 June, TeleSur carried an article saying that the National Strategy for Countering Domestic Terrorism plan outlines steps recommended by national security officials and advisers into one blueprint on how to more effectively identify domestic extremists in the country after years of heightened focus on foreign terrorists. 

https://www.telesurenglish.net/news/White-House-Unveils-Plan-to-Fight-Domestic-Terrorism-20210615-0020.html

https://www.lawfareblog.com/sea-change-counterterrorism

CHINA’S ECONOMY: 40 YEARS OF SOARING EXPORTS

https://www.visualcapitalist.com/chinas-economy-40-years-of-soaring-exports/

NIGERIA: FORMER BANK MANAGING DIRECTOR JAILED FOR FRAUD

On 16 June, the People’s Gazette reported that Francis Atuche, former MD of Bank PHB (now the Keystone Bank), has been sentenced to 6 years in prison.  The bank’s former CFO, Ugo Anyanwu, was also sentenced to 4 years imprisonment.

https://gazettengr.com/just-in-ex-bank-md-atuche-sentenced-to-six-years-in-jail

US CONVICTS RUSSIAN FOR MALWARE ‘CRYPTING’ SERVICES

On 16 June, Rferl reported that Russian national Oleg Koshkin has been found guilty with operating a “crypting” service that helped hackers infect computers around the world with malware.  Koshkin, 41 and formerly of Estonia, reportedly operated websites that offered to make intrusive software like “botnets, remote-access trojans, keyloggers, credential stealers and cryptocurrency miners” virtually undetectable.

https://www.rferl.org/a/us-convicts-russian-malware-crypting-services/31311450.html

SOUTH TEXAS MAN INDICTED FOR MANUFACTURING ‘GHOST GUNS’ DESTINED FOR MEXICAN DRUG CARTEL

On 15 June, a news release from US Immigration & Customs Enforcement advised that a federal grand jury had returned a 3-count indictment charging a South Texas man for selling illegally manufactured and unregistered firearms suppressors destined for a Mexican drug cartel.  William Scotts Simms, 73, was indicted for aiding and abetting the attempt to illegally export a silencer, possession of 11 unregistered machine guns and possession of an unregistered silencer. 

https://www.ice.gov/news/releases/south-texas-man-indicted-manufacturing-ghost-guns-destined-mexican-drug-cartel

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EMBATTLED SOUTH SUDANESE MINISTER THREATENS LAWSUIT AGAINST KENYA OVER SEIZURE OF $460,000

On 16 June, the Sudan Post reported that South Sudan minister of Cabinet Affairs, Martin Elia Lomuro, has threatened to sue the Asset Recovery Agency of Kenya over fraud and money laundering allegation after his bank account was frozen. The High Court of Kenya has frozen the bank accounts of the South Sudanese minister over the transfer of more than $460,000 2016-2020.

https://www.sudanspost.com/embattled-minister-lomuro-threatens-lawsuit-against-kenya-over-seizure-of-460000/

Any modest contributions for my time and ongoing expenses are welcomed!  I have a page, where contributions start as low as $3, at https://www.buymeacoffee.com/KoIvM842y

ITALY SAYS IT HAS BUSTED CHINA MONEY LAUNDERING, EUROPEAN METALS SCAM

On 16 June, Yahoo News reported that Italian police said that they had broken up a complex money laundering operation and an illegal metal recycling business that had enabled criminals to transfer huge amounts of illicit cash between Italy and China.  The 3-year investigation, coordinated by the anti-mafia prosecutor’s office in the city of Trieste, showed the enormous lengths gangs were having to go to in order to clean ill-gotten gains, police said.  The case unveiled a network of companies that between 2013 and 2021 sold around 150,000 tonnes of scrap metal, including copper, brass and aluminium, that came from various sources, circumventing environmental norms and evading taxes on deals estimated to be worth some €300 million.

https://uk.news.yahoo.com/italy-says-busts-china-money-171654276.html

https://www.scmp.com/news/world/europe/article/3137574/italy-says-it-has-broken-china-money-laundering-operation-and

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OFAC: NON-SDN CHINESE MILITARY-INDUSTRIAL COMPLEX COMPANIES (NS-CMIC) LIST UPDATES

On 16 June, OFAC advised of changes made to the entries relating to AVIATION INDUSTRY CORPORATION OF CHINA LTD (aka AVIC) and CNOOC LIMITED.

https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20210616

Any modest contributions for my time and ongoing expenses are welcomed!  I have a page, where contributions start as low as $3, at https://www.buymeacoffee.com/KoIvM842y