Notable accusations, admissions
and settlements in 2012:
of America:the US Justice Department is seeking$1 billionin
fines for troubled loans sold to Fannie and Freddie; MBIA’s lawsuit againstCountrywide, which was disastrously acquired
by BofA, rolls on; BofA is one of five banks participating in the$25 billionnational
Bank of China:the families of Israeli students killed in a 2008 terrorist attack are suing the
BOC for $1 billion“intentionally
and recklessly” handling money for terrorist groups.
New York Mellon:a subsidiary paid$210 millionto
settle claims it advised clients to invest in Bernie Madoff’s ponzi scheme; the DOJ continues to investigate possible
overcharges for currency trades that it says generated$1.5 billionin
Citigroup:settled CDO lawsuit for$590 million; one of five banks participating in the$25 billionnational mortgage settlement; paid$158 millionto
settle charges it “defaulted the government into insuring” risky mortgages.
Credit Suisse:sued by NY state for allegedly deceiving investor in thesale of MBS.
HSBC:settled money laundering charges for$1.9 billion; set aside$1 billionfor
future settlements related to mis-selling loan insurance and interest rate hedges in the UK; Libor settlement still to be
charges that it violated sanctions against Iran, Cuba, etc. for$619 million.
Générale:rogue trader Jerome Kerviel loses appeal his appeal 3-year
sentence for trades that generated$6.5 billionin
paid to NY state department of financial services for allegedly hiding the identity of customers in transactions with Iran
and drug cartels;$327 millionpaid to the Federal Reserve and US Treasury’s
anti-money laundering unit.
State Street:fined$5 millionfor
lack of CDO disclosure.
fine and two traders criminally charged; rogue trader responsible for$2.3 billionloss
found guilty of false accounting.
as we enter Transparency International’s 20th anniversary year that my short-list of retrospective developments includes:
Twenty years ago there was no international civil society movement dedicated to fighting
corruption. Today Transparency International has 100 national chapters; the Partnership for Transparency Fund has completed
over 200 projects; there are hundreds of NGOs across the world – operating at national and municipal levels –
fighting corruption. Their cumulative impact is enormous.
Twenty years ago there were very few academics specialising in this field. Now 5,000 people
subscribe to Transparency International’sresearch network.
Twenty years ago there was not a single anti-corruption international convention. Today, there
are regional conventions; there is the OECD Anti-Bribery Convention and the United Nations Convention against Corruption.
The Group of 20 (G20), at its last two summits, released “Anti-Corruption Action Plans.”
Two decades ago there was not a single development agency that was willing to discuss the
corruption issue publicly. Today, all of them declare that anti-corruption is a priority. Key public-private-NGO partnerships
have emerged, from theUN Global Compact, to theExtractive Industries Transparency Initiative, to COST.
Twenty years ago, there was not a single head of a government that I can recall who was
ousted and then imprisoned because of corruption. Very few politicians anywhere saw great risk in looting their national treasuries.
Today, as we are seeing inBrazilright
at this very moment, politicians are no longer so safe. Nor are corporations, as a record number of prosecutions are
now being seen of firms that bribe foreign government officials, as there is a greater level of exchanges of information
and evidence between prosecutors in different countries than ever before, and as even the biggest banks are now facing charges
for money laundering, aiding tax evaders, and manipulating key interest rates. The rallying call of “no impunity”
is spreading rapidly across the globe.
Twenty years ago we did not have the internet and mass email and social media and the tools
to disseminate anti-corruption news. Today, the scale of reporting about corruption is large; the distribution of news about
corruption is wider than ever across the globe through the internet; and, the expertise of investigative reporters is high.
Organisations likeGlobal WitnessandProPublica, and others like them in a rising number of countries,
are exposing corruption as never before.
Most importantly, the courage of so many individuals over these last 20 years has produced
a level of mass public engagement for justice, against corruption and against illegitimate governments on an unprecedented
scale from Tunisia and Egypt, to India and Iran, to Russia and Wall Street. People power against corruption is a reality.
The new US Magnitsky Act targets travel and economic sanctions
against those responsible for the jailing and death of Russian lawyer Sergei Magnitsky. For decades the US has been looking
for a legal way to punish foreign kleptocrats. The Magnitsky Act is the answer.
The immediate aim is to hold people in Russia accountable for
what happened to Magnitsky. After he uncovered a $230 million tax fraud apparently orchestrated by mobsters and government
officials, he was detained without trial. After a year in custody, he died in jail.
The FCPA only reaches bribe payers and not bribe takers. A newer law, Presidential Proclamation 7750, enacted by George W. Bush in 2004, allows the State Department to deny U.S. visas to kleptocrats and their cronies
-- but only in secret, never naming those targeted. And the DOJ's more recent Kleptocracy Asset Recovery Initiative uses cumbersome
asset forfeitures against crooked foreign leaders but doesn't impose any punishment on the individuals themselves.
The Magnitsky Act -- passed with overwhelming bi-partisan support
in Congress -- fills the legal gaps. It requires naming publicly the Russian kleptocrats implicated in Magnitsky's death,
it bans them from entering the United States, and it streamlines the legal process to freeze their U.S. assets.
Senator John McCain, a co-sponsor...talked about plans to go
global with the new law. Next year, he said, he expects Congress to expand the law to reach kleptocrats anywhere.
The Magnitsky Act is now a model for anti-kleptocracy legislation,
backed by Washington's political will to lead the global fight against corruption and impunity. The similarities to December
1977 and enactment of the FCPA are many. That makes the Magnitsky Act the biggest anti-corruption story of 2012.
Admittedly, many local governments in Mexico work with a dysfunctional
system of rules and procedures. However, the news reports about Walmart's dubious actions make an important contribution.
They chip away at the commonly held notion that foreign corporations dealing in emerging markets are the helpless victims
of corrupt functionaries. But these news articles have one key limitation -- they do not answer the question: What can be
done to protect developing countries' bureaucracies from corruption's reach?...
President Peña must give life to his anti-corruption agenda. There are 19
stores, including one that can be seen from the top of the archeological wonder and UNESCO World Heritage site, Teotihuacan,
that were constructed because Wamart paid bribes. Peña Nieto's commitment to good governance will be tested and measured by
how many of these stores are in fact demolished. Decisive action will effectively demonstrate that bribes are neither the
grease for the wheels of bureaucracy nor the mortar for irregular constructions.
In February 2001, Brazilian newspapers noted something different
in Rio de Janeiro's annual Carnival celebration: The public officials who traditionally populated corporate boxes were no
longer present. In the past, these high-profile officials received VIP treatment, with private beer companies paying for their
airfare, meals, and reserved seating. The differencehinged on Brazil's year-old Public Ethics Commission. A few months earlier, the commission had published a rule that
clarified what gifts, if any, senior civil servants could accept, deeming numerous perks unacceptable because they could bias
politically-sensitive decisions. The rule irked powerful
individuals in the private and public sectors. The media exposed three officials who flouted the rule by accepting box seats
owned by Brahma beer. The commission reviewed their cases, requested explanations, and issued warnings that discouraged future
violations. After the officials apologized, they promised, in writing, to obey the rule in the future. The rule and its enforcement
earned public support, with one newspaper survey indicating a 98% approval rating. Senior officials now had to think twice
before accepting such perks.
Abstract: During the 1990s, conflict of interest scandals
in Brazil weakened public trust in civil servants and rendered many competitive processes like procurement, privatization
and employment inefficient and ineffective. In 1999, President Fernando Henrique Cardoso created a Public Ethics Commission
to confront these problems. Led by João Geraldo Piquet Carneiro, a Brazilian lawyer, the commission developed and implemented the Code of Conduct for Senior Government
Officials. Piquet first focused on the upper echelons of the civil service— public sector managers and highly visible
presidential appointees. For the first time in Brazilian politics, specific rules set public standards on conflicts of
interest. Within 10 days of taking office, senior civil servants had to agree in writing to adhere to the code and submit
forms detailing personal and family assets. Piquet and his team developed procedures for detecting and addressing violations. The
commission avoided a backlash by walking a tightrope between being a watchdog and working with senior civil servants to help
separate personal and public interests. By the end of Piquet’s tenure in 2004, the commission had set a precedent. According
to interviewees, norms in the upper echelons of Brazil’s federal government had changed, and senior government officials
no longer had an assumed impunity. However, critics noted that the commission’s success hinged on presidential
support, as the commission lost much of its momentum under the administration of Cardoso’s successor, President Luiz
Inácio Lula da Silva.
In fewer than 12 months, the political
landscape in Quebec has transformed, in no small part due to the fallout of testimony the Charbonneau commission and raids
by the province's anti-corruption unit...Three mayors have stepped down from their posts, city employees have been suspended
and the commission has shed light on an alleged kick back scheme that inflated contracts, siphoning millions from the public
purse. Among the dozens of documents and videos presented before the commission was tape of construction bosses — who
were securing multi-million dollar contracts with the city — meeting with known members of the Montreal Mafia at the
café that acted as the Rizzuto clan's social headquarters...In total, UPAC executed 450 search warrants and made 49 arrests
in 2012. Among those arrested were construction magnate Tony Acurso, charged with fraud and conspiracy, the former mayor of
Mascouche, Richard Marcotte, and the former head of Montreal's executive committee, Frank Zampino...
The Organized Crime and Corruption Reporting Project (OCCRP),
based in Sarajevo and Bucharest, has awarded the crown to Azerbaijani President Ilham Aliyev. The group, which specializes in reporting on corruption in the region stretching
from Eastern Europe to Central Asia, also gave out some "honorable" mentions. They went to alleged Kosovo-born cigarette and
drugs smuggler Naser Kelmendi, Montenegrin Prime Minister Milo Djukanovic, Russian President Vladimir Putin, politically connected
Serbian entrepreneur Miroslav Miskovic, longtime Uzbek President Islam Karimov, and wanted Serbian drugs smuggler Darko Saric.
The informal list was determined by representatives of the 15 international media organizations that make up the OCCRP. It
is aimed at highlighting the intrepid and often courageous reporting that is needed to expose corruption in these notoriously
opaque countries. The OCCRP gave the nod to Aliyev, citing extensive reports and "well-documented evidence" that "the Aliyev
family has been systematically grabbing shares of the most profitable businesses" in Azerbaijan for many years.
Giveaways, gifts, freebies, premiums, promos, tchotchkes,
swag. Every year around this time, it pours in: the pens with corporate logos, the canisters of flavored popcorn, the iTunes
gift cards, the boxes of chocolate, the pocket calendars, the shipments of fresh fruit. It’s the annual ritual in which financial companies say “thank
you” to the people on the other side of their trades, to clients, to journalists. No one seems to be bothered very much by the exchange of small gifts. But you should be. There is overwhelming evidence that
small gifts have a big influence on the behavior of the recipients. A new study from a leading behavioral economist, Ulrike Malmendier
of the University of California, Berkeley, finds that “small gifts may [create] a stronger reciprocal effect than large
gifts,” making the recipients feel even more indebted to the giver. “Thus, not only might size limits be ineffective
in reducing the influence of gift giving…they may even be counterproductive.” Numerous studies among doctors have come to the same conclusion.
Giveaways, gifts, freebies, premiums, promos, tchotchkes,
swag. Every year around this time, it pours in: the pens with corporate logos, the canisters of flavored popcorn, the iTunes
gift cards, the boxes of chocolate, the pocket calendars, the shipments of fresh fruit. It’s the annual ritual in which financial companies say “thank
you” to the people on the other side of their trades, to clients, to journalists. No one seems to be bothered very much by the exchange of small gifts. But you should be. There is overwhelming evidence that
small gifts have a big influence on the behavior of the recipients. A new study from a leading behavioral economist, Ulrike Malmendier
of the University of California, Berkeley, finds that “small gifts may [create] a stronger reciprocal effect than large
gifts,” making the recipients feel even more indebted to the giver. “Thus, not only might size limits be ineffective
in reducing the influence of gift giving…they may even be counterproductive.” Numerous studies among doctors have come to the same conclusion.
Mexico ranks second only to China in financial losses to crime, corruption and tax evasion
over the last decade, according to one of a new series of studies that concur that criminality is a major obstacle to Mexico's
economic growth. Mexico saw an estimated $476 billion leave the country through corruption, criminal activity or sale of illegal
goods between 2001 and 2010, a distant second behind China with $2.7 trillion, according to the Washington-based Global Financial
Integrity. Nearly half of the multinational companies in the Annual Global Fraud Survey from the private security and risk-management
firm Kroll said they feel vulnerable to corruption in Mexico, the highest percentage for any country next to India...The Kroll
report notes that under former President Felipe Calderon, 83 people were convicted of money-laundering, "a tiny number given
the size and extent of the problem." A third report released this month shows that Mexican businesses lost $9 billion in 2011
to insecurity and crime. The study released last week by the National Institute of Statistics and Geography, the country's
census bureau, said more than one third of 27,000 companies surveyed were victims of crime in 2011. Six out of 10 companies
did not report the crime to Mexican authorities.
Before confessing four years ago this month to the largest
investment scam in U.S. history, Madoff was prominent in the financial community. He served as a non-executive chairman of
the NASDAQ, and his firm was once among the largest market makers on Wall Street.
"(O)ne would be led to believe that with the recent
spate of insider trading prosecution that insider trading is a new development," Madoff writes. "This is false. It has been
present in the market forever, but rarely prosecuted. The same can be said
of front running of orders."
“The anticorruption storm has begun,” People’s
Daily, the party mouthpiece, wrote on its Web site this month. The flurry of revelations suggests that members of China’s new leadership may be more serious
than their predecessors about trying to tame the cronyism, bribery and debauchery that afflict state-run companies and local
governments, right down to the outwardly dowdy neighborhood committees that oversee sanitation. Efforts began just days after
Xi Jinping, the newly appointed Communist Party chief and China’s incoming president, warned that failing to curb corruption
could put the party’s grip on power at risk. “Something
has shifted,” said Zhu Ruifeng, a Beijing journalist who has exposed more than a hundred cases of alleged corruption
on his Web site, including the lurid exertions of Mr. Lei. “In the past, it might take 10 days for an official involved
in a sex scandal to lose his job. This time he was gone in 66 hours.”
China’s new leadership, which was introduced to the world in mid-November
and is helmed by Communist Party chiefXi Jinping, has made combating the country’s endemic corruption one of its publicly
stated missions. In late December, Xinhua, China’s state news agency enumerated a list of eight don’ts to fit
these more austere times. Floral displays and welcome mats for official delegations are now prohibited, according to regulations
from the Political Bureau of the Chinese Communist Party’s Central Committee. So are clusters of waving schoolchildren
dispatched to greet visiting dignitaries. State employees traveling overseas should keep an eye on the size of their entourages.
Closing roads or otherwise disrupting traffic to smooth a government official’s journey will no longer be tolerated...
Not to be outdone by the Communist Party, the Central Military Commission, which supervises the People’s
Liberation Army, issued 10 regulations of its own, including the banning of alcohol from its receptions.
An alternative hypothesis was suggested to me years ago by a veteran China-watcher. "The Chinese
would like you to think, 'Official so-and-so was exposed for corruption, and then lost power.' It would be more accurate if
you understand that 'Office so-and-so lost power - and was therefore exposed for corruption.' " New leaders bring new followers,
with new demands. Corrupt old cadres are replaced, but not the corrupt system.
"The BIG corruption is in transactions and contracts
in Afghanistan... these contracts are
given to senior government
officials or their relatives,"
Hamid Karzai on Saturday blamed foreigners for most of
the corruption in Afghanistan...More than
11 years after a US-led invasion led to billions of dollars in aid flowing into one of the world's poorest countries, Afghanistan
ranks among the most corrupt nations in the world. The issue has been brought into focus by the Kabul Bank scandal, which
saw the nation's once-biggest lender pushed to the point of collapse by a fraud running into hundreds of millions of dollars...
In the Kabul Bank scandal, Afghanistan's biggest for years,
a foreign-funded inquiry reported recently that a staggering $900 million fraud had ruined the bank and top politicians had
dictated who should be prosecuted over the theft.
What was supposed to have been a straightforward settlement of old bribery
charges with the U.S. Securities and Exchange Commission has for IBM turned into a peculiar battle of wills with
a U.S. District Court Judge. Last year,
you may remember, Big Blue agreed to a $10 million fine to the SEC to settle a civil lawsuitcharging that it paid bribes to
government officials in China andSouth Korea during a period from 1998 to 2009. Now the judge reviewing the settlement is demanding some onerous reporting
requirements that the company says are too burdensome, according to a Bloomberg report. And the SEC is taking its side.
Judge Richard Leon, who has been reviewing the case for 22 months,
says he wants IBM to report on a significantly wider range of issues, some of which aren’t connected to the substance
of the original bribery complaint against it. Most
of the time, judges sign off on these settlements. Companies come clean and agree to show that they’re staying clean
by not doing what they’ve been accused of. But apparently Leon’s blood is up over this. He has told IBM that he
wants annual reports on its compliance with the Foreign Corrupt Practices Act, the law that governs bribery overseas, and
he wants the reports to cite all potential accounting violations. IBM has so far agreed only to report on matters related
to bribery, which is what the original complaint is about.
Corruption continues to be systematic
in Cambodia, and links-in with a number of issues, chief of which is
access to valuable natural resources and human rights abuses. Many rural residents and civil society activists are locked in a fight with government over the
allocation of large land concessions to exploit minerals, timber, and water
resources, often encroaching on settlements and villages. Cambodian
authorities, in turn, are increasingly resorting to violence to quash
the protests. Land concessions tend to be awarded in shady circumstances
to international conglomerates and/or local businesses that often act
as front companies for tycoons or politicians. The Cambodian NGO
Licadho estimates that approximately 2.1 million hectares (roughly the area
of Wales) has been transferred to private developers. This is
often done at the expense of local residents who are rarely compensated as well as
the environment (Cambodia is experiencing high deforestation rates due
to illegal logging, hydropower projects, large-scale agro-industrial ventures and
entertainment complexes). A recent report by the U.N’s special
rapporteur on Human Rights claimed there is no evidence that
revenues from land concessions are used to alleviate poverty.
A former Singapore banker was arrested
in Los Angeles on Thursday and accused of helping "liquidate" hundreds of millions of dollars in an accounting fraud at Olympus
Corp, one of the biggest corporate scandals in Japan's history.
Chan Ming Fon, a one-time bank vice president, is the latest former executive and the first
from outside ofJapanto
become ensnared in the $1.7 billion accounting cover-up at the camera and medical equipment maker. The company has admitted it used improper accounting to conceal
massive investment losses under a scheme that began in the 1990s. Court papers in the United States said Chan was paid $10 million by Olympus or entities controlled
by Olympus for his role in the fraud. The case against Chan was filed in a federal court in New York. "The defendant had a direct role in the secret liquidation
of hundreds of millions of dollars of Olympus investments. He then waged a six-year campaign to conceal that misdeed by lying,
certifying to auditors that the investments still existed years after liquidation," said FBI Assistant Director-in-Charge
The line between corruption and capitalism
(especially booty capitalism) based on the unpaid workers' surplus labour time is a very fine one. Capitalism, in many
ways, is a system of legalised theft. In the under-developed world where the economy is in the hands of foreign companies
crude forms of wealth accumulation are common as the petty-bourgeoisie takes advantage of its access to state power to try
and build its own economic base...Nearly every independent newspaper you pick up,
week in and week out, carries a damning story about how highly placed individuals are always caught with fingers in the till. Tragically these are public
'servants' or officers charged with the onerous responsibility of stewardship over our national
coffers and resources! The question is how can we eradicate this cancer?
Corporate corruption in India is not just about
bribing bureaucrats to bypass laws; it's about accounting frauds, kickbacks and cybercrime, says Bhupesh Bhandari.
One of the arguments against opening up multi-brand retail to multinational corporations
is that MNCs resort to corrupt practices
without remorse. Walmart has become the face of that evil.Detractors have linked together three disclosures: one, made in November, that
the retailer is probing a possible violation of the Foreign Corrupt Practices Act (of the United States) in India; two, made
earlier in the month,that it has spent
$25 million since 2008 on lobbying in the US, which includes gaining "enhanced market access in India"; and three, that Walmart
bribed local bureaucrats in Mexico, as alleged byThe
New York Times.Straightforward and gullible
Indians are a worried lot; the deceit of the East India Company is still fresh on their minds. Wolves are at our doors once
SO RARELY has political corruption led to punishment in Brazil
that there is an expression for the way scandals peter out. They “end in pizza”, with roughly the same convivial
implication as settling differences over a drink. But a particularly brazen scandal has just drawn to a surprisingly disagreeable
close for some prominent wrongdoers. The supreme-court trial of themensalão(big
monthly stipend), a scheme for buying votes in Brazil’s Congress that came to light in 2005, ended on December 17th.
Of the 38 defendants, 25 were found guilty of charges including corruption, money-laundering and misuse of public funds. Many
received stiff sentences and large fines. The supreme court must still write its report on the trial, and hear appeals—though
it is unlikely to change its mind. So in 2013 Brazilians should be treated to an unprecedented sight: well-connected politicos
This month’s scandal in Russia concerns Alexander
Provotorov, head of the state telecommunications corporation Rostelekom. Provotorov is being investigated with others over
his acts as a partner in Marshall Capital, a private equity firm, and the default of one of its subsidiaries on a $225 million
loan. These matters are complex, long running ‑ and puzzling. Provotorov was an ally of Putin, who in the past year
has launched an anti-corruption campaign. The Russian watcher Brian Whitmore of Radio Free Europe picks up on the confusion in Moscow’s top ranks
when he asks, “Is it an anti-graft campaign? A purge of the elite? Or the
start of a clan war?” Whatever: Among citizens, corruption produces disgust, mirrored increasingly in popular newspapers
like Moskovsky Komsomolets, a Moscow tabloid, as well as on websites read by the young. According to a poll by the
non-governmental Russian research organization, Levada Center, the number of people who believe that bureaucrats work mainly
for their own enrichment has grown from 3 percent to almost 30 percent in the past two
Joaquim Barbosa once pored over law
tomes while working nights as a typesetter to pay for college. Now he is rewriting them -- and the history books as well --
as the first black chief justice ofBrazil’s Supreme Court and the presiding judge in a
landmark corruption case. Barbosa,
58, rocketed to celebrity for his role in a trial that convicted close aides of former PresidentLuiz Inacio Lula da Silva, who appointed him to the top court in 2003. In a country
where few politicians are ever tried for corruption and virtually none go to jail, Barbosa led the way in arguing that Lula’s
aides stole public money, used it to bribe lawmakers and should be punished with lengthy prison terms.
The headline-grabbing charges of high-levelofficial misconductbegan a few weeks ago, and President Vladimir
Putin recently said that the battle would certainly extend to the everyday bribes that average people pay to keep their lives
running smoothly...Russians consistently cite corruption as one of their nation’s worst problems,
so they might have been heartened at the investigations
ofDefense Ministryexecutives accused of siphoning off $215 million in property scams, agriculture officials
blamed for defrauding the government of $1.3 billion, reports that $200 million has gone missing from the space industry,
and more...A poll by the RussianPublic Opinion Research Center found that
citizens were widely aware of the latest investigations but divided about the motivation, with 45 percent saying that the
reason was an internal fight at the top and an equal number deciding that Putin was following through on campaign promises
to fight corruption.
Peter Madoff has
been sentenced to ten years in prison for doctoring financial books during his brother's multi-billion dollar Ponzi scheme.
Laura Taylor Swain, US District Court judge, sentenced Madoff on Thursday and ordered the forfeiture of $143.1b which she
said would seal his "financial ruination". "To take his story at face value, he knew that the business operation was a little
bit crooked, and he was content to go along with that," said Swain. Madoff pleaded guilty in June to charges of conspiracy
to commit securities fraud while serving as the chief compliance officer and senior managing director at his brother's firm.He
previously denied knowledge of the Ponzi scheme until shortly before his brother was arrested, accepted "full responsibility"
for his actions at the hearing."I am deeply ashamed of my conduct," said Madoff.
It could be likened to the legal version of winning the lottery – a group
of investors in Bernard Madoff’s $65 billionPonzi scheme, once on the brink of having their $141 million claim denied and instead facing a $28 million clawback
lawsuit, now stand to not only recover their initial investment but tolegallyrealize asizeable profit from the largest Ponzi scheme in history. But such a remarkable outcome- indeed,
the first in memory – was not typical, and is due in large part to a clever legal strategy featuring multiple parties,
multiple lawsuits, and, of course, deep pockets.
Securities and Exchange Commission today charged Eli Lilly and Company with violations of the Foreign Corrupt Practices Act
(FCPA) for improper payments its subsidiaries made to foreign government officials to win millions of dollars of business
in Russia, Brazil, China, and Poland. The
SEC alleges that the Indianapolis-based pharmaceutical company’s subsidiary in Russia used offshore “marketing
agreements” to pay millions of dollars to third parties chosen by government customers or distributors, despite knowing
little or nothing about the third parties beyond their offshore address and bank account information. These offshore entities
rarely provided any services and in some instances were used to funnel money to government officials in order to obtain business
for the subsidiary. Transactions with offshore or government-affiliated entities did not receive specialized or closer review
for possible FCPA violations. Paperwork was accepted at face value and little was done to assess whether the terms or circumstances
surrounding a transaction suggested the possibility of foreign bribery.
cost Fannie Mae and Freddie Mac more than $3 billion, according to an estimate by a government watchdog, who recommends the
government-owned mortgage giants sue the big banks. That estimate and legal advice were made in a private report by Steve
Linick, the inspector general for the Federal Housing Finance Agency, the regulator for Fannie and Freddie, which were taken
over by the U.S. government during the financial crisis. The report...was in a memorandum prepared by the FHFA watchdog's
staff and delivered to FHFA Acting Director Edward DeMarco on Nov. 2...“We conducted a preliminary analysis of potential
Libor-related losses at Fannie and Freddie and shared that with FHFA, recommending that they conduct a thorough review of
the issue," Kristine Belisle, a spokeswoman for the FHFA inspector general, said...
U.S. prosecutors charged two former UBS traders on Wednesday with taking part in a multi-year scheme to manipulate Libor and other benchmark interest rates,
making them the first individuals to be criminally accused in the international scandal. Earlier on Wednesday, the Swiss bank admitted to fraud and bribery in connection
with efforts to rig the interest rates and agreed to pay $1.5 billion in fines to regulators in the United States, UK and
Switzerland. The charges against the two traders,
Tom Hayes and Roger Darin, resulted from a broad investigation into the activities of more than a dozen banks in the setting
of prices for Libor and related rates.
In settling with U.S., UK and
Swiss authorities, UBS not only paid one of the largest fines ever imposed on a bank, its Japanese subsidiary pleaded guilty
to one U.S. criminal count of fraud relating to manipulation of benchmark rates, including the yen Libor. The Japanese subsidiary is where authorities allege much of the manipulation
of interest rates occurred, as employees of the bank looked to profit on derivatives trades linked to the rates.
UBS is the second large international
bank to reach a settlement with U.S. and UK authorities, and other settlements are expected to follow in the next few months.
In June Barclays Plc agreed to pay $453 million in fines to settle allegations its employees attempted to manipulate Libor
Even though the Rothschild Press/Reuters article writes that ”
. . . senior managers at the Swiss bank directed dealers to keep Libor submissions low during the financial crisis to make
the bank look stronger”, which involved at least 45 people at UBS and of course ” . . . never detected by compliance
staff,despite five audits“, the news is that regulators/prosecutors are
going after a few traders? Thus far,
the limp wristed regulator and prosecutor crowd stated that36 UBS bankers were “implicated” in Libor, which meant that some of themmaybe subject to criminal charges and now, we have the story that senior management
were actively involved and compliance looked the other way, numerous times? The story is not adding up, because the obvious
implication written up by Reuters is that executives and everyone around them knew about this crime syndicate, probably directed
encouraged, and helped plan it.
The most active political action committee in the weeks after the election
belonged to the U.S. subsidiary of Swiss banking giant UBS AG. The company gave $122,000 in the three weeks following Election
Day, the latest period for which information is available...UBS
has been ramping up its political giving in the past few years at the time that it has been sharply criticized, and even penalized,
in Washington. UBS announced Wednesday that it has agreed to pay a$1.5 billion settlementwith
the U.S., British and Swiss governments for trying to manipulate a key interest rate used to price borrowing around the world.
$122,000 in contributions from Nov. 7 through Nov. 26 are more than twice the $51,500 given by the second-most-active PAC,
belonging to the Credit Union National Association...TheUBS PACfavored Democrats, giving $26,000 to 10
party members of the House Financial Services Committee, including Reps. Gregory W. Meeks (N.Y.) and Michael E. Capuano (Mass.).
The former supervisor at an Atlanta mail distribution
facility, a coworker and four others pled guilty this month to stealing $3 million in U.S. Treasury checks, including veterans
benefits, tax refunds and Social Security checks. By the time authorities figured out the scheme, the small theft ring
had stolen or cashed 1,300 federal checks, officials said. And the Georgia workers aren't alone. Between April and September
of this year, 171 Postal Service employees were arrested for theft, willful delay or destruction of mail, according to a new
report by the USPS inspector general.
Illicit Financial Outflows Cost Developing World $859 Billion in
2010, Rebounding Rapidly from Financial Crisis
Nearly $6 Trillion Stolen from Poor Countries in Decade between 2001
Crime, corruption, and tax evasion cost the developing
world $858.8 billion in 2010, just below the all-time high of $871.3 billion set in 2008—the year preceding the global
financial crisis. The findings are part of a new study released today by Global Financial Integrity (GFI), a Washington-based
research and advocacy organization.
Co-authored by GFI Lead EconomistDev Karand
GFI EconomistSarah Freitas, the study is the first by GFI to incorporate a new,
more conservative, estimate of illicit financial flows, facilitating comparisons with previous estimates from GFI updates.
“Astronomical sums of dirty money
continue to flow out of the developing world and into offshore tax havens and developed country banks,” said GFI DirectorRaymond Baker. “Regardless of the methodology, it’s
clear: developing economies are hemorrhaging more and more money at a time when rich and poor nations alike are struggling
to spur economic growth. This report should be a wake-up call to world leaders that more must be done to address these harmful
The Times has now picked up
where Wal-Mart’s internal investigation was cut off, traveling to dozens of towns and cities in Mexico, gathering tens
of thousands of documents related to Wal-Mart de Mexico permits, and interviewing scores of government officials and Wal-Mart
employees, including 15 hours of interviews with the former lawyer, Sergio Cicero Zapata. The Times’s examination reveals that Wal-Mart de Mexico was not the reluctant victim of a corrupt culture
that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather,
Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited.
It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes
to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.
Through confidential Wal-Mart
documents, The Times identified 19 store sites across Mexico that were the target of Wal-Mart de Mexico’s bribes. The
Times then matched information about specific bribes against permit records for each site. Clear patterns emerged. Over and
over, for example, the dates of bribe payments coincided with dates when critical permits were issued. Again and again, the
strictly forbidden became miraculously attainable. Thanks
to eight bribe payments totaling $341,000, for example, Wal-Mart built a Sam’s Club in one of Mexico City’s most
densely populated neighborhoods, near the Basílica de Guadalupe, without a construction license, or an environmental permit,
or an urban impact assessment, or even a traffic permit. Thanks to nine bribe payments totaling $765,000, Wal-Mart built a
vast refrigerated distribution center in an environmentally fragile flood basin north of Mexico City, in an area where electricity
was so scarce that many smaller developers were turned away.
Alexei Navalny has been charged
with fraud and money laundering - the second criminal case against Russia's prominent opposition leader. He and his brother
Oleg are accused of embezzling 55m roubles (£1.1m; $1.8m) in 2008-11 while working in a mail transporting business.
Mr Navalny, 36, described the latest charges as "complete nonsense". The charges were announced on the eve of an opposition
rally inMoscow, which has been banned by the authorities. In July,
Mr Navalny was charged with embezzlement over a timber deal. He described that case as "absurd". The anti-corruption campaigner,
who has since been ordered not to leave the country, has suggested the charges are aimed at discrediting him. He has led a
number of mass protests this year against Russian PresidentVladimir Putinand
what the opposition describe as rigged parliamentary elections.
Russia’s pervasive corruption leaves few stones unturned,
and the country’s highly regarded university sector is most certainly not immune. Just a few weeks ago, Mikhail Basharatyan,
the deputy dean of the faculty of World Politics at the elite Moscow State University madeheadlineswhen he was caught accepting a 30,000 EUR
bribe for a PhD admission. The scandal followed on just a year after another MSU professor was taped receiving 35,000 EUR
from a student.
Russia’s higher education
institutions are popularly assumed to be among the most corrupt in the country. Augusto Come considers how the perceptions
and realities of corruption in education will eventually impact Russia’s youngest generations
inhigher education is popularly considered tobe endemic; and while no one can argue
it is exclusively Russian phenomenon, the practice here does stand alone in terms of both scale and nature. If bribery in
the West has the shape of an elite discipline, then in Russia it is a sport for all.
An auditors' report lays bare how a range of benefactors funded a reckless
president's lifestyle by more than R7-million.
The report exposes the president as a "kept politician" - a financial freeloader who accepted
money and favours on a routine and increasingly extravagant basis not only from his so-called financial adviser, Schabir Shaik,
but also from other benefactors, including Nelson Mandela. Running to about 500 pages, the "draft" report - although it is
understood to be the final version - is based on tens of thousands of documents Scorpions investigators had seized from Shaik,
Zuma and others.
"...corruption is hardly a new issue in China, Russia, India, Slovenia, Azerbaijan
or anywhere else. Why has it come to the forefront of so many political struggles right now? As The Economist argues this
week, the internationalization of the anti-corruption movement might explain some of the change. Pressure on corrupt politicians
and businessmen now comes not only from within their own societies but also from authorities enforcing America’s Foreign
Corrupt Practices Act or Britain’s Bribery Act; from voluntary but rapidly growing industry groups, including the International
Corporate Governance Network and the Extractive Industries Transparency Initiative; from activists such as Global Witness
and Open Oil; and from campaigners in the mold of Bill Browder, the businessman who persuaded the U.S. Senate last week to
pass the Magnitsky Act, a law that denies American visas to Russian officials responsible for the torture and murder of a
Russian lawyer, Sergei Magnitsky, who uncovered a massive tax fraud. Transparency International, once a small, quixotic organization,
publishes an annual corruption index, which is now scoured anxiously by leaders around the globe."
that it will pay $1.9 billion (£1.2 billion) to settle allegations that it laundered money for drugs cartels, terrorists and
pariah states. During approximately the same period that HSBC failed to check whether the dollars it was shipping from Mexico to
the US were drugs money, 47,000 people died at the hands of Mexican drugs traffickers. “Fines alone
are not going to change banks’ behaviour: the chances of being caught are relatively small and the potential profits
from accepting dodgy clients are too big. Fines are seen as a cost of doing business,” said Rosie Sharpe,
campaigner at Global Witness. “Instead, regulators should hold senior bankers legally responsible for their banks’
money laundering performance. At the very least, senior bankers should be prevented from working in the industry, akin
to the way in which doctors can be struck off. Bonuses should be clawed back, and, in the most serious cases, senior
bankers should face jail,” said Sharpe.
$8.8 billion left Zambia in illicit financial flows between 2001 and 2010. Of that,
$4.9 billion can be attributed to trade misinvoicing, which is a type of trade fraud used by commercial importers
and exporters around the world. This is a very serious problem. Zambia’s GDP was $19.2 billion in 2011. Its per-capita
GDP was $1,413. Its government collected a total of $4.3 billion in revenue. It can’t afford to be hemorrhaging illicit
capital in such staggering amounts.
The parties "reached
an agreement in principle that, if finalized and approved by the relevant authorities," would result in coordination of victim
claims, increased information sharing and cooperation on asset recovery, Wide and Dickson said in an e-mailed statement. An
estimated 20,000 investors were defrauded of more than $7 billion through a Ponzi scheme that Stanford created around bogus
certificates of deposit sold by Antigua-based Stanford International Bank Ltd. Stanford, 63, was convicted in March of leading
the fraud and stealing more than $2 billion to finance a lavish lifestyle and an array of money-losing ventures, ranging from
Caribbean resort developments to cricket tournaments. He is serving a 110-year sentence in a federal prison in Florida as
he appeals his conviction and sentence.
Aircraft engine maker Rolls-Royce may face prosecution
over allegations of corruption in China, Indonesia and other international markets. The company, which began life as a luxury
carmaker, also provides power systems and services to the defense, marine and energy industries. It said it was cooperating
fully with the U.K."s Serious Fraud Office in an investigation into activities involving intermediaries. "The consequence
of these disclosures will be decided by the regulatory authorities," Rolls-Royce said in a statement. "It is too early to
predict the outcomes, but these could include the prosecution of individuals and of the company." Rolls-Royce shares fell
2% in early trade in London. Another British defense contractor, BAE Systems, paid over $400 million in fines in 2010 related
to corruption investigations in central Europe, the Middle East and Africa. China and Indonesia have both lost ground in their
efforts to tackle corruption over the past 12 months, according to a survey published this week by Transparency International.
The anti-graft campaign group's 2012 index ranked China 80 out of 176 countries, down from 75 in 2011. Indonesia was ranked
118, down from 100 in 2011. The index is based on perceptions of corruption in the public sector. China's outgoing president
Hu Jintao warned last month that failure to tackle corruption could prove fatal to the Communist Party and the state. Rolls-Royce
said it would appoint a senior independent figure to lead a review of the company's current procedures. "I want to make it
crystal clear that neither I nor the Board will tolerate improper business conduct of any sort and will take all necessary
action to ensure compliance," Chief Executive John Rishton said.
Abstract: This paper compares corruption
in China over the past 15 years with corruption in the U.S. between 1870 and 1930, periods that are roughly comparable in
terms of real income per capita. Corruption indicators for both countries and both periods are constructed by tracking corruption
news in prominent U.S. newspapers. Several robustness checks confirm the reliability of the constructed corruption indices
for both countries. The comparison indicates that corruption in the U.S. in the early 1870s — when it’s real income
per capita was about $2,800 (in 2005 dollars) — was 7 to 9 times higher than China’s corruption level in 1996,
the corresponding year in terms of income per capita. By the time the U.S. reached $7,500 in 1928— approximately equivalent to China’s real income per capita in 2009
— corruption was similar in both countries. The findings imply that, while corruption in China is an issue that merits
attention, it is not at alarmingly high levels, compared to the U.S. historical experience. The paper further argues that
the corruption and development experiences of both the U.S. and China appear to be consistent with the “life-cycle”
theory of corruption — rising at the early stages of development, and declining after modernization has taken place.
Hence, as China continues its development process, corruption will likely decline.
Yang Hongwei, the former governor of Chuxiong
Yi autonomous prefecture in south-westChina, was in the dock on Thursday accused of
taking some 10.11 million yuan (£1m) in bribes and using the money to purchase 17 properties in Yunnan province and six in
Melbourne, Australia. Mr Yang – dubbed the "druggie governor" by Chinese media - was toppled in April 2011 following
allegations of corruption and living an "indecent life". Mr Yang was also accused of having a penchant for "Kaku", a potent
mix of herbs and opium.After he was ejected from office, GoKunming, a local blog, attributed his downfall to the "voracious
consumption of alcohol, drugs, women and bribes" and claimed he was known for his "superlative drinking abilities".
74-year-old female general manager
of Shanghai’s Gongxin Engineering Construction Supervision Centre Co Ltd, given life sentence for corruption involving
over $7.4 million.
Taiwan Nantou county mayor summoned
along with...seven people, most of them county officials.Investigators found a tea leaf can in magistrate's office containing
$10,306...alleged kickbacks in the case amount to approximately $343,540.
Former manager of Foshan City (Guangdong Province)
Chancheng District Postal Bank Major Accounts Department, sentenced to death for illegally collecting deposits from 198 clients
amounting to $212 million.
Shenzhen Shajing Street Party Working Committee
secretary charged for taking bribes totaling $3.2 million.
Shenzhen policeman sentenced to 14 years in prison
for embezzling $452,800
“The reality about Libor is that
it’s so broadly used on trillions of dollars of contracts that we can’t just decide to throw it out and start
from scratch,” saidPeter Shapiro, managing director of the Swap Financial Group. “It’s
best to figure out how to make it better and less vulnerable to manipulation.” No one knows precisely how widely the world uses Libor, officially called the London
interbank offered rate. But most analysts estimate it determines rates for hundreds of trillions of dollars’ worth of
derivatives as well as tens of trillions in lending to businesses and consumers fromMadridtoManhattan.
There are Indian allegations that WalMart has
been engaged in bribery over access to the Indian market. This is a difficult allegation on two counts. Firstly, that a large
foreign company might be bribing has very strong political connotations inIndia. Secondly access to that grocery and retail market
is jealously guarded on (perhaps misplaced) social grounds. So that the allegations have been made, and at least party believed,
is a serious problem:
Indian Government has reacted furiously after it emerged that Wal-Mart has spent $25 million in lobbying fees to persuade
the country to loosen restrictions on direct foreign investment in the retail industry."
When, four months ago, Brazil's Supreme Court began to judge one of the largest political
scandals in the country's recent history, many wondered if the trial could really deliver a decisive blow against corruption.
As the case approaches its end, a total of 25 out of 37 defendants have been convicted, some of them key political figures.
There is still room for those who were convicted to appeal, but few think the court will change its ruling and absolve them.
It has led some to say that the culture of impunity in Brazil for those who abuse their power and influence may be drawing
to an end.
Former Brazilian President Luiz Inacio Lula da Silva knew about
and used funds from a far-reaching vote-buying scheme to pay for personal expenses, according to testimony by a convicted
former consultant to the ruling Workers' Party. The testimony, reported on Tuesday by the Estado de S.Paulo newspaper, was
given in September to Brazil's attorney general's office by Marcos Valerio, an advertising executive recently convicted as
a bagman in the scheme.
Valerio also testified that an aide to the former president made
veiled threats when the scandal erupted in efforts to keep him quiet, the newspaper said. According to the report, Valerio
gave the testimony voluntarily in a bid to reduce his sentence after he and 24 other former Lula aides and associates were
convicted in a landmark trial heard by Brazil's Supreme Court. Though he still received a stiff 40-year prison sentence, the
circumstances of Valerio's testimony are likely to cast doubt on his claims. Among other crimes, Valerio was convicted for
handling the money used in the scheme, which involved payoffs to legislators in exchange for Congressional support.
The trial exposed crimes at the core of the administration of
Brazil's beloved former president and was hailed as a sign that the country is growing less tolerant of the corruption long
rife in local, state, and national politics.
Inc. trader is among three people held in the first U.K. arrests as part of global probes into tampering with theLondoninterbank
offered rate, according to two people familiar with the matter...The other two men arrested worked at brokerage firmRP Martin Holdings Ltd., according to one of the people and a third person
familiar with the investigation, who also requested anonymity...Global authorities are investigating claims that more than
a dozen banks altered submissions used to set benchmarks such as Libor to profit from bets on interest-rate derivatives or
make the lenders’ finances appear healthier. Swiss lenderUBS is expected
to face a fine as early as this week that may surpass the record 290 million pounds ($466.6 million) paid in June byBarclays Plc, the U.K.’s second-biggest bank, to settle claims it attempted
to manipulate Libor.
banking company is expected to forfeit nearly $1.3 billion as part of a deferred prosecution agreement, the largest-ever U.S.
forfeiture for a bank, according to people briefed on the agreement between HSBC and multiple U.S. agencies. The deal includes
a civil fine of more than $650 million, according to these people. As part of the agreement, the bank will admit to violating the Bank Secrecy Act, the Trading
with the Enemy Act and other U.S. laws intended to prohibit money laundering, a government official said.
The Ponzi scheme
was exposed four years ago Tuesday. The fraud wiped out an estimated $17 billion in principal, destroyed life savings, derailed
retirements and, in a few cases, ended lives. So
far, Mr. Madoff himself remains the only person connected to the fraud to receive a prison sentence, and he is serving a 150-year
term. His brother, Peter Madoff, pleaded guilty in June to falsifying records and conspiracy. He denied knowing about the
Ponzi scheme and is set to be sentenced Dec. 20. Two
former back-office employees, two computer programmers and former Chief Operating Officer Daniel Bonventre have been accused
of various actions that facilitated the fraud. The employees have pleaded not guilty, and a trial is set for October. Meanwhile,
Mr. Madoff's victims are deep into sentences of their own.
Inc. avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermudashell company, almost double the total from three years before, filings show. By
legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google
cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total
pretax profit in 2011. Last week, theEuropean Union’s executive body, the European Commission, advised
member states to create blacklists of tax havens and adopt anti-abuse rules. Tax evasion and avoidance, which cost the EU
1 trillion euros ($1.3 trillion) a year, are “scandalous” and “an attack on the fundamental principle of
fairness,” Algirdas Semeta, the EC’s commissioner for taxation, said...Google’s
overall effective tax rate dropped to 21 percent last year from about 28 percent in 2008. That compares with the average combined
U.S. and state statutory rate of about 39 percent.
This policy research paper undertakes a comparative analysis
of the legal frameworks of anti-corruption (AC) laws and sanctioning and enforcement practices in five jurisdictions
(Australia, Hong Kong, Indonesia, Singapore and South Africa). The purpose is to identify lessons that Viet Nam can learn
in reforming its AC laws (ACLs). Most jurisdictions that have adopted a special-purpose ACL have included in it
details of the nature of the crimes, penalties for those crimes and special measures to recover the proceeds of corruption.
Three of the five jurisdictions in this study have adopted harsh and extraordinary measures to facilitate recovery
of ‘illicit assets’. These have been applied with good effect. Close coordination between criminal investigations
and disciplining of public officials is a feature of the successful jurisdictions, with strict codes-of-conduct rigorously
applied providing an important supplement to the criminal proceedings. Establishment of a powerful, stand-alone ACA with extraordinary
powers for criminal investigations is the practice in all but one of the jurisdictions.
At the time when some China skeptics are busy explaining their skepticisms over the pledges
made during the 18th National Congress of the Chinese Communist Party CCP Beijing has surprised us in its own way again Days
after the once-in-a-decade leadership transition in the CCP the government seat in Zhongnanhai has displayed
unparallel urgency and determination unseen in the previous administration in implementing the long-delayed reforms in China
As like the past party congress the decades-old problem of widespread corruption has been brought to the fore again within
the leaders’ statements in the highest party occasion last month However there are notable two differences that set
aside the recent party congress from its forerunners First is the unusually strong tone on the issue of corruption by the
outgoing Chinese president himself Hu Jintao The fact that such statement as “reform or risks the collapse of the party
and the state” is being shouted by a cautious and cool-headed leader as Hu marked a departure from the previous settings
where such remarks are regularly made instead by the Chinese premier Wen Jiabao Then not long after the end of the party congress
the incoming China’s president and the new party secretary Xi Jinping delivered another speech at a CCP politburo “learning
session” in which capturing Hu’s statement reiterated again the threat of corruption toward the future of the
party and the country while calling for all party cadres to strictly obey the party constitution and “reject all unhealthy
trends and influences” a reference to corruption.
Lurid reports of Chinese officials sportingluxury watchesor
promoting theirtwin mistressesare
being hailed by state media as proof of a corruption crackdown -- but real reforms remain a distant prospect. Less than a
month after Xi Jinping ascended to China’s most powerful post as head of the Communist Party and proclaimed the scourge
of graft an existential threat to the ruling organisation and the country, official outlets are striving to show action is
being taken. Several senior Chinese officials have been placed under investigation, including thevice party headof
Sichuan province and a former deputy mayor of the manufacturing hub of Shenzhen.
I believe the US is facing a much more serious
problem, one that has simply not been talked about at all: corruption. But this isn't the overt, "bartering of government
favors in return for private kickbacks" corruption. Instead, this type of corruption has actually been legalized. And it is
strangling both US competitiveness, and the ability for US firms to innovate. The corruption to which I am referring is the
phenomenon of money in politics. Lawrence Lessig'sRepublic, Lost, details many of the distortions that occur as a result of all the money sloshing around
in the political system: how elected representatives are being forced to spend an ever-increasing amount of their time chasing
donors for funds, for example, as opposed to chasing citizens for votes. Former congressman and CIA director Leon Panetta
described it as "legalized bribery"; something which has just "become part of the culture of how this place operates."
Four years ago this week,Marc S. Dreier, a high-flying lawyer, was arrested and later charged
withdefrauding his clients of $700 million. A few days later,Bernard L. Madoff’s fraud was uncovered. Totaling an
estimated $65 billion, Mr. Madoff’s fraud wasin a class by itself. And then, a short time afterward, some
of the brokers who had been selling fraudulent certificates of deposit forR. Allen Stanfordbegan
to turn on him; he was arrested in February 2009 and laterconvicted of a $7 billion fraud. These schemes collapsed with the economy in 2008.
But on their anniversaries, it may be a good time to ask whether you have done all you can to lower your risk of being caught
up in a similar fraud. Call it Madoff Day (celebrated on Dec. 11, the day of his arrest). Protecting yourself against fraud,
or simply bad advice, is easier said than done. The most common advice is to make sure your money is held by an independent
custodian or firm whose job is to keep your money safe.
Sentencing in Brazil’slargest corruption trialin
history ended on November 28, wrapping up a phase of a landmark case that gripped the country. The Supreme Courtconvicted25
of 37 defendants withsentences totaling282
years in jail and fines of up to $10.7 million. The trial forms part of a larger effort by thejudicial systemandPresident Dilma Rousseff’sadministration
to curb corruption and to combat impunity. Other developments—such as sackings following new corruption allegations
and government attempts to recuperate embezzled funds—also point to this undertaking.
or big allowance, resulted from acongressional vote-buying scandalduring former President Luiz Inácio Lula
da Silva’s first administration in 2005. With high-profile convictions—including Lula’s former chief
of staff, a former Worker’s Party president, and an acting São Paulo congressman—the historic case means government
officials are likely to go to jail. “The trial was a watershed that will hopefully lead to a less corrupt Brazil,”
said Gil Castelo Branco, secretary general ofwatchdog groupContas
Abertas. “The conviction of several important people has sent a clear signal that things are beginning to change, that
Brazilians are fed up with corruption.” Eduardo Eugênio Gouvêa Vieira, head of Rio de Janeiro’s industrial
federation, toldO Globothat the case “inaugurated
a new phase of [Brazil’s] young democracy.” Headded: “From the case emerges a country better prepared
to assume the role it deserves of a political and economic power.”
Wal-Mart Stores Inc prepared
its entry into India's supermarket sector in 2010 with a $100 million investment into a consultancy with no employees, no
profits and a scant $14,000 in revenue.
company, called Cedar Support Services, might have been a more obvious selection four months earlier: it began its corporate
life as Bharti Retail Holdings Ltd, according to documents filed with India's Registrar of Companies. The Cedar investment is now the focus of an investigation
by India's financial crimes watchdog into whether Wal-Mart broke foreign direct investment rules by putting money into a retailer
before the government threw open the sector to global players. Wal-Mart said it was in compliance with India's FDI guidelines, and had followed all procedures.
It said the central government had sought "information and clarification", which Wal-Mart has provided.
An Indian government agency is investigating allegations that Wal-Mart Stores Inc. (WMT) violated legal restrictions on foreign investment in the retail industry, Trade Minister Anand Sharma said. The government received complaints alleging Wal-Mart invested in the retail
industry before a September decision to loosen rules, Sharma told parliament today. Wal-Mart is “in compliance with
India’s laws,” Arti Singh, a company spokeswoman, said in an e-mailed statement. India’s central bank has referred the matter to the Directorate of Enforcement,
an agency that investigates violations of rules relating to foreign investment, for further probes, the minister said. He
didn’t say who filed the complaints. The investigation
adds to Wal-Mart’s troubles in India, where it recently suspended some workers at its joint venture, Bharti Walmart
Pvt., as it examines potential violations of U.S. anti-bribery laws.
Over the past
month, a surreal new element has come to dominate Russia's nightly news. At times it feels like some sort of hybrid reality
show, as if the Kremlin's propaganda men have started splicing episodes of MTV Cribswith episodes ofCOPS. The entrancing new genre was born from the purge that President Vladimir Putin
launched in October -- the first anti-corruption campaign he has ever attempted -- and it has made for excellent television.
Viewers have been treated to commando
raids on posh apartments, seized boxes of diamonds and gold, stacks of bribe money being fed by police into counting machines
that look about ready to burst. Perhaps most satisfying of all, for the millions of workaday Russians watching at home, has
been the sight of once-mighty bureaucrats groveling for sympathy, clemency, or bail. Thatschadenfreudeis part of the point.
Purges are meant to be popular.
six weeks into this one, its initiator has found himself in the bind of his career. By allowing state TV to cover all the
gory details of the bureaucratic bloodletting, Putin's government seems to have only reminded Russians just how shameless
and pervasive corruption has become. In one case, policeclaim to have foundan
obscure military bureaucrat, Alexander Yelkin, in possession of around $9 million in cash and four Bregnetwatches.
uniquely Chinese version of the Corruption Perception Index
drop in the share price of Moutai, the high-end liquor elites offer as “gifts,” is a signal that investors may
be taking seriously China’s promise to crack down on corruption. Moutai is the country’s top luxury brand ofbaijiu(“white alcohol”), a popular grain liquor,
and it can cost up to ¥1 million ($160,635) for a vintage bottle. (CBS anchor Dan Rather reportedlydescribed it in the 1970s as tasting like “liquid razor blades”.)
It has long been a staple bribe used in elite political and business circles. In 1989, Chinese Youth News called the liquor,
also known as Maotai, an ”all-purpose grease” for bribing bureaucrats and party cadres. Past
surveys have shown that roughly only1 in 100 of Moutai drinkers bought the liquor themselves. Up to now, investors have been dubious about government promises to root out graft.
Back in March, when outgoing premier Wen Jiabao vowed to stop government officials from spending extravagantly on high-end liquor, shares in Kweichow Moutai, the company
that makes it, fell only slightly. As it became clear that Xi Jinping was slated to be China’s new president, the company
started promoting one of its more modestly pricedbaijiubrands, which conveniently happens to be called Xi Jiu.
Xi seems to be driving the anti-corruption
message home by banningred carpet treatment for Chinese officials as his first major policy move. And this time the market
seems to be taking him more seriously. Shares in Kweichow Moutai began falling shortly before the mid-November party congress
when Xi was anointed China’s new head, and are down about 20%.
Throughout history, official corruption has been a catalyst for revolutions from eighteenth
century France to the twentieth century Philippines to the present day Middle East. Relevantly, longstanding corruption helped
spark the popular support for prior regime changes in Cuba in 1959 and Iran in 1979.
Significantly, today's widespread availability of technology has only accelerated citizens'
access to information and the potential contagion of change. Every online and smart device user is a potential witness and
judge. On an increasingly global basis, digital "vigilantes" already bypass non-democratic regimes to engage in "massive
collaboration" to incite change by "outing" corrupt officials and their activities. Indeed, evidence of corruption and fraud
virally linked though mobile phones, smart devices and social communities (such as Twitter, Facebook, YouTube and Wikileaks)
was a central catalyst to the organized dissent that led the recent Arab Spring revolutions in Tunisia, Egypt, Libya and Syria,
and helped inspire popular protests in Iran in 2009-10. AsNew York Timescolumnist
Howard Beck noted about a digital world in which judgments are rendered in 140 character blasts -- "[T]here is no room for
nuance and little use for patience."
A new "teachable" moment is at hand concerning corruption and its growing relevancy to effective
efforts in combating expanding threats to global security. Enforcement of anti-corruption measures should continue to rise
in tandem with traditional methods of isolating rogue regimes, most notably sanctions, export controls and diplomacy. As anti-corruption
enforcement grows in innovative ways, international businesses must continue to ensure that their controls are sufficiently
robust to avoid becoming complicit, even unintentionally, with these regimes and the threats they pose. Indeed, U.S and international
anti-corruption efforts are quickly becoming enforcement's newest utilitarian "edge-of-the-wedge" to extend the global reach
and range of non-military options against transnational threats to world security.
Recently, there have been three cases of alleged corruption in Finland that have challenged
the consensus on our country’s low corruption rates. This has shaken citizens’ understanding on what is acceptable
and what is not, and contributed to our understanding of what might be called “structural corruption,” the non-transparent
ways of doing business in Finland or put more directly, cronyism.
Several thousand people were out in
the streets again Monday in the small, crisis-hit Alpine state, rejecting the "corrupt elite" after thousands took to the
streets last week in the biggest outburst in decades of public discontent that has seriously shaken the country once considered
an example of smooth transition from communism to market economy...the protests firststarted
in the second-largest city of Maribor last week where citizens had been furious for months at Mayor Franc Kangler, who is
under investigation by anti-graft authorities in a suspicious consulting deal.
In the past week, two corruption cases
have been exposed, not by theCentral Commission for Discipline Inspection of the
Communist Party of China (CCP), but by the mistresses or second wives
of the corrupted officials...The fact that a large number of corruption cases in China have been exposed through sex videotapes
by mistresses or second wives and netizens' collectivehuman flesh searchefforts,
have prompted a lot of discussion online. Some praise the mistresses for standing up against corruption, whilst some criticize
the CCP and the government for not taking the leading role to fight corruption...We have to admit that in all these years, the second wives have become the
deadly weapon against corrupt officials. So far numerous corruption cases have been exposed by second wives. Or we can say
that 99% of the corrupt officials have second wives. Statistics show that among the corruption cases from Guangzhou, Shenzhen,
Zhuhai, 100% have second wives. So the army of mistress and second wives has a lot of potential in fighting against corruption
China’s ruling elite should be forced to disclose their
assets, according to proposals put to the new anti-corruption czar, it was reported Monday as news of another graft scandal
Pressure on the Communist Party to combat corruption has intensified after a traumatic
year marked by embarrassing revelations of top-level corruption and power abuse. Several top scholars met Friday with Wang
Qishan, who was appointed head of the ruling Communist Party’s top anti-corruption body this month, to put forward proposals
on fighting graft, the state run Global Times reported. Zhou Shuzhen, a professor at Beijing’s People’s University,
called for “a system to publish details of official’s assets as soon as possible”, the report said, adding
that Zhou recommended officials first disclose their property assets. Others also urged greater transparency in government
and an end to privileges for top officials.
Our 12th Global Fraud Survey's findings are, unfortunately,
a further cause for concern. They suggest that bribery, corruption and fraud remain widespread. At the same time, many countries
are strengthening their enforcement regimes, for example the UK, with the introduction of the Bribery Act, and India, with
a range of proposed anti-bribery/anti-corruption (ABAC) legislation. As regulatory activity intensifies, the risk of external
scrutiny of corporate activity also increases. Senior management must do more to ensure that they and their companies are
not found wanting should their activities come under the spotlight. Bribery and corruption remain pervasive. On a global basis,
39% of respondents reported that bribery or corrupt practices occur frequently in their countries. The challenge is even greater
in rapid-growth markets, where a majority of respondents believe these practices are common.
U.S. regulators probing potential fraud by China-based
companies increased pressure on their auditors by formally accusing affiliates of Big Four firms of withholding documents
Deloitte Touche TohmatsuCPA
Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd. have refused to cooperate
with accounting investigations into nine companies whose securities are publicly traded in the U.S., the Securities and Exchange
Commission said in an administrative order yesterday.BDO China Dahua Co.was
also named by the SEC in the action.
The auditors claim Chinese
law prevents them from assenting to the SEC’s demands, hindering U.S. efforts to probe allegations of fraud that have
wiped 61 percent from a gauge of Chinese and Hong Kong stocks traded in North America since January 2011. Failure to reach
an agreement on cross-border access to records may prompt U.S. regulators to seek to deregister the firms, saidPaul Gillis, professor atPeking University’sGuanghua School of Management
Bharti Walmart, the 50:50 ‘cash-and-carry’
venture between Walmart, the world’s largest retailer, and Bharti Enterprises, has asked five of its executives not
to come to work for some days. The reason: Experts are probing allegations of corruption in the company. Bharti Walmart hasn’t
disclosed what it is, nor has it named the executives who have been suspended. What is clear is that there has been a violation
of the Foreign Corrupt Practices Act (FCPA) of 1977, in the United States, which makes it illegal for American companies to
pay bribes anywhere in the world. While announcing its quarterly results earlier this month, Walmart stated it had extended
its internal probe into potential violations of the anti-corruption law to Brazil, China and India. Walmart claims it has
spent more than $35 million on its global FCPA compliance review efforts over the past 18 months
least eight American companies operating in India were found to have violated the US law that prohibits bribing foreign government
officials to further their business interests, long before Wal-Mart Stores Inc., the world’s biggest retailer, started
probing suspected violations of the statute by some executives at its local unit. In the last of those eight cases, in July
2011, distiller Diageo Plc paid $16 million (aroundRs.90 crore today) to settle bribery-related offences spread over six years in India, Thailand
and South Korea.
"Corruption killed my parents -- the rapid expansion (of the railway network) and the 'business
as usual' system in China where bribes are a way to conduct business," he told AFP in an interview in Shanghai. "I have no
personal qualms with that guy," he said, referring to Liu. "It's the system. The signal system went into operation without
testing and that only happens when bribes are paid." Nearly 200 people were injured in the crash, among them his older brother...
A major anti-corruption
campaign is under way in Russia, yet despite making corruption the defining issue of the Russian story, it
has been left to investment banks to report on its progress. Nearly all the international press picked
up on the dismissal of Defense Minister Anatoly Serdyukov after an investigation uncovered 3 billion
rubles' ($97m) worth of stealing from state-owned military contractor Oboronservis. The scandal rapidly expanded,
with a deputy minister placed under house arrest and the sums involved rising to at least 10 billion rubles.
However, all the international reports picked up on Serdyukov's extramarital affair and saw the real cause
of his sacking in the fact that his father-in-law is very senior in Gazprom. The growing tide of investigations
has led some leading investment banks — rather than the press — to say that a major anti-corruption
drive has begun...
Other events that
were also picked up by Morgan Stanley in a note the same day including:
• The State
Duma passed new regulation that will more strictly monitor the incomes and expenses of all government officials —
this initiative was pushed by Medvedev back in March.
• The CEO
of MRSK center was dismissed on the back of the noise related to possible wrongdoings in the procurement
function of the company. There are noises around the potential fraud case related to former Agriculture Minister
• The general
director of Roskosmos has stepped down on the back of the Glonass fraud scandal.
• The head
of Rosavtodor was dismissed with investigations related to the potential misuse of the federal road construction
related to budget misallocation at this summer's APEC summit are ongoing, with the first arrest happening recently.
• The head
of the contractual department of the Moscowproperty management department was caught taking
"This makes for a
total of almost 10 corruption-related events, many involving senior government officials as well as one important Duma
Putin is a reluctant
crusader against corruption. He knows that the benefits from a tough anti-corruption campaign come at a price
he might ill afford to pay. It proves that opposition leaderAlexei Navalnywas right all along. Russia is drowning in government
corruption, and fighting it is the opposition's positive agenda. It shows that the mass protests in Moscow
have pressured the authorities hard enough to sacrifice some of their own to prevent people from protesting
in the streets. It also further discredits the system Putin has built. In much the same way that the anti-corruption
campaigns against Communist Party bosses during Soviet leaderMikhail Gorbachev's perestroika helped undermine the legitimacy
of the Soviet system, the current flurry of corruption exposОs cast a pall over Putin's rule.
The campaign against corruption -- which Putin may have intended to be a
public relations trick, a purge of the ruling elite of disloyal elements, or both -- is perilously close to spinning out of
control with unpredictable consequences. "What happened largely indicates the beginning of ferment within Russia's ruling
class, an escalation of the fight for resources and of uncontrollable conflicts that the Kremlin is unable to regulate without
damaging its own reputation," Stanovaya wrote in Politcom.ru. "Wars of all against all are being waged and their causes
have absolutely nothing to do with the Kremlin's intentions and are most likely developing in spite of the regime's priorities."
So-called offshore secrecy jurisdictions make corruption more
likely and have greatly contributed to the global financial crisis, MPs have been told. Daniel Balint-Kurti, a campaign leader
at Global Witness, told a parliamentary committee hearing into money laundering and tax evasion in the Crown Dependencies
earlier this week that secrecy jurisdictions had allowed companies and countries to build up unsustainable debt. He said that
the UK's Crown Dependencies and Overseas Territories had some of the "worst" secrecy jurisdictions. "Around the world
offshore secrecy makes corruption more likely," he said.
A certified public accountant was sentenced Friday
54 months in prison in a half-billion-dollar fraud scheme affecting more than 3,500 victims throughout theUnited Statesand
abroad, theJustice Departmentsaid.
guilty in November 2011 to one count of conspiring to commit mail and wire fraud. He had served as an “outside auditor”
forProvident Capital Indemnity Ltd. (PCI), where he formerly was employed. “As
a licensed accountant,Mr. Castilloused
his expertise to create fraudulent financial statements out of whole cloth,” saidMr. MacBride. “Many elderly investors relied onMr. Castillo’s credibility as an outside auditor before entrusting
their life savings in this fraud scheme.
“Accountants and auditors are the gatekeepers of our
financial system and are entrusted with the critical role of protecting the public from fraud,” he said. “Today’s
sentence will hopefully send a strong message to those in the accounting profession that they will be held responsible when
they break that trust by facilitating or participating in fraud.”
The allegations of massive
fraud have implications for all Americans. The alleged fraud would have involved Medicare and Medicaid patients, whose medicine
is paid for byU.S.taxpayers.
Vainer and Barbir said the alleged fraud schemes they discovered were going on at the company's clinics all across the country
-- at the time, about 2003 through 2010, more than 1,800 -- with tens of thousands of patients. It was enormous, they claim,
it was all a deliberate strategy coordinated by the company. "It was just a scheme in order to fraudulently increase and maximize
and boost the Medicare revenue, Medicare payment, so therefore fraudulently increase their revenue," he said...Plaintiffs'
attorneys claim DaVita made as much as $800 million over-billing the government, "It's not just the taxpayers that are
the victims here, it's the health care system,"
Having at least one “ernai”, a Chinese way of calling
a mistress, the “second wife,”, has become a must among Chinese officials. “A man without a mistress is
useless. A man with two or three mistresses is a VIP. A man with five or six lovers is an animal,” sums up the current
view on the topic, the Central News Agency reported. Of course, having an extra-marital relationship is a wildcard for any
public figure. When giving discipline courses to Communist party cadres, a Guangdong official from the Central Discipline
Inspection Commission drew attention to the “woman issue” of Chinese officials by using the example of Xu Qiyao,
the former Director of the Construction Department of Jiangsu Province. He kept 140 mistresses and used to boast that among
them were a mother and her daughter. He bragged about this as “killing two birds with one stone. The Global Times
added that the mistresses often become officials’ own personal time bombs because of jealousy when the official has
drifted off to another lover, or because their demands haven’t been satisfied...According to official statistics from
Guangzhou, Shenzhen and Zhuhai, among the investigated officials alleged of taking bribes, nearly 100% of them have at least
one mistress. “This means that in Chinese officialdom their mistresses have formed a mighty team of anti-corruption
busters," the Global Times wrote, quoting the Gongshi Net, a Chinese website for China’s pro-reform movement.
InIndebted Dragon, Professor Lynette Ong from the University of Toronto discusses
how the Chinese economy relies on land as collateral to borrow money while paying the interest on the loans by selling and
leasing the land.Ong notes this makes China susceptible to two problems:
a real estate bubble and political instability stemming from displaced farmers who land has been taken from them. The
subtitle to Ong's article is "The Risky Strategy Behind China's Construction Economy".
I suggest "Ponzi Scheme" is a more apt description than "Risky Strategy". Let's take a closer look.
On the surface, China has secured a measure of international
help in this anti-corruption fight by starting to cooperate with the International Association of Anti-Corruption Authorities
(IAACA) and TI a decade ago. However, most exchanges are low-key and cautious, as many officials do not believe the international
NGOs are purely here to help. "Just as some in the West are biased against China, China has prejudice and bias toward the
West too," Ren Jianming, a professor from the School of Public Policy and Management at Beihang University, told the Global
Times. Through Ren's work in China's cooperation with TI and IAACA, he sees this international cooperation as a helpful
platform rather than foreign intervention, calling it a chance for China to show its efforts and seek help to deal with this
pernicious issue. Ten years ago, almost all TI staff viewed China as a country with a poor human rights record and virtually
no social organizations, recalls Liao Ran, a senior program coordinator with the organization. As the only Chinese employee
at TI, Liao tried to persuade his international colleagues that China was worth working with. "To engaging with China, it
is not easy to find the right way. But if we did't go there, we had already got lost," he told them. However, many government
officials in China viewed this as a "humiliation" and showed no interest in cooperation. Zhao Zenghui, a Shanghai discipline
inspection official, reportedly stated at a meeting that some government officials called for caution before working with
TI as it might have "a hidden motive."
When CEO-turned-whistleblower Michael Woodford exposed a $1.7
billion cover-up of losses at Olympus, he was forced to flee from Japan, fearing for his life, as the scandal sent shockwaves
through the country's tight-knit corporate world...
But almost a year after he was forced out of the company he had
served since the 1980s, Woodford says no lessons have been learned from the scandal by corporate Japan. "Nothing has changed,"
he said..."Japan is losing it," said Woodford. "The companies and country can't change. They just can't change themselves.
It's desperately sad."
The German government is failing to
tighten up laws that crack down on illegal party funding and bribing parliamentarians, say anti-corruption watchdogs at the
Council of Europe. In a compliance report, they single outGermanyfor
having made no progress on implementing reforms...On Wednesday, GRECO's commission published its "Interim Compliance Report
on Germany" assessing whether the country has implemented recommended reforms of its laws on political party funding and the
bribery of members of parliament. A year ago, GRECO found that only four of 20 recommendations had been implemented. And nothing
has happened since then..."No
progress has been achieved," GRECO said in the report. It added that it was instructing its president to write a letter to
the German representative at the Council "drawing his attention to the non-compliance with the relevant recommendations and
the need to take determined action with a view to achieving tangible progress as soon as possible."
South Australia: INDEPENDENT Commission Against Corruption set to be established by the middle of next year,
overseen by an independent commissioner appointed for a seven-year term. The new ICAC will answer only to State Parliament
via an annual reporting requirement and will not be directed in any way by the government. It will be exempt from investigation
by the Ombudsman and from Freedom of Information applications and hold closed hearings, with any reports of hearings including
who is giving evidence subject to heavy penalties. The commissioner will be notified of all complaints involving allegations
of corruption in public agencies. The Police Commissioner will be required to report any allegations of police corruption
to the ICAC. It will have in-house investigative staff able to tap telephones and use listening devices.
Companies that bribe their way to contracts under-perform for up
to three years before and after winning the work for which the bribe was paid, according to new academic research. Companies
gained an average of $7 of benefit for every dollar they paid, but the benefit disappeared the higher the level of the bribe
recipient within the government, according to the study, which was conducted by Cambridge University Professor Raghavendra
Rau. “If you bribe a Head of State the amount
you get from the contract is subsumed by the value of the bribe itself because the Head of State extracts all the value of
the bribe,” Rau said in a news release. When
high-level government officials are bribed, the value derived from the bribe is close to zero, Rau said. But, conversely paying
smaller bribes to lower-level officials is less likely to ensure that a contract is won, according to Rau.
The UK's approach has attracted many post-Soviet billionaires,
including some on the run.Britain's friendly regime of offshore secrecy has tempted an
extraordinary array of post-Soviet billionaires to descend on London, sometimes to the sound of gunfire...
Undoubtedly the most flamboyant post-Soviet beneficiary of Britain's offshore secrecy regime
isRinat Akhmetov, the richest man in theUkraine. From a base in the coal-miningDonetskregion, he has personally acquired industrial
assets estimated to be worth £11bn. He shifted £136m out of the former Soviet republic in 2007, in order to buy the most expensive
flat sold in London, at One Hyde Park.
America’s labor unions have amassed quite a federal
rap sheet in 2012. According to theJustice Department, union officials nationwide have been arrested for
or convicted of embezzlement, extortion, bribery, racketeering, money laundering, fraud, and witness tampering so far this
year. Te article presents summaries of 12 different criminal actions taken against union officials so far this
year. Note that these are federal cases, and therefore exclude any criminal activity prosecuted at the local or state levels.
Afghanistan’s largest financial institution by offering the promise of modern banking to people who had never had a
saving or checking account. What it really dealt in was modern theft: “From its very beginning,” according to
a confidential forensic audit of Kabul Bank, “the bank was a well-concealedPonzi scheme.”
Afghan and American officials had for
years promoted Kabul Bank as a prime example of how Western-style banking was transforming a war-ravaged economy. But the
audit, prepared this year forAfghanistan’s central bank by theKroll investigative firm, gives new details of how the bank instead was
institutionalizing fraud that reached into the hundreds of millions of dollars and obliterated Afghans’ trust after
regulators finally seizedthe bank in August 2010and
the theft was revealed.
The most common form
of protection for otherwise vulnerable entrepreneurs is in the form of an investment from one of the private equity firms
in which the princelings figure prominently. The most well known of these is, of course, New Horizon Capital, the firm started
in 2005 by the son of then vice-premier Mr Wen. While he is no longer running his investment firm day to day, he still has
links to it (and investors in it include many foreign banks)...From abroad, observers
prefer to believe that this dynamic is purely domestic. But foreigners may also be affected. For one thing, they employ the
princelings. Mr Wen’s daughter Lily worked for Lehman Brothers, Jiang Zemin’s grandson Adrian worked forGoldman Sachsbefore joining one of the
local private equity firms, Boyu. The daughter of Wang Yang, governor of Guangdong province, works forDeutsche Bank. The daughter of Chen Yuan, head of China Development Bank and himself the son
of Chen Yun, one of the most venerable of the princelings, worked for Morgan Stanley before attending Harvard Business School...In addition to employing the princelings, the foreign firms also deploy them. When a foreign bank asked for
a piece of the equity in a potash deal in southeast Asia, the Hong Kong private equity firm approached agreed because “you
don’t say no to a princeling”, according to one executive at the fund...
Admittedly, relationship hires are not always indefensible, although
it would be naive to think that the princelings’ family ties are never a factor. Many of the princelings have had the
best education and therefore boast the qualifications to justify their hiring.
Brazilian President Dilma Rousseff is scrambling to contain fallout
from a corruption scandal involving government officials linked to her mentor and predecessor Luiz Inacio Lula da Silva that
has given her political opponents fresh ammunition. The new scandal, which comes two weeks after the conviction of top Lula
aides in Brazil's biggest-ever political corruption trial, could delay government decisions over airport upgrades and other infrastructure projects that are badly needed to make the world's sixth-largest economy more efficient. It is not, however, expected to significantly dent Rousseff's popularity or her chances for re-election
in 2014, since the details of the scandal are complex and the individuals directly implicated so far are outside her inner
circle. Police raided government offices in Brasilia and Sao Paulo on Friday and seized computers and data. Six people, including directors of two regulatory agencies, were arrested for using their government positions
and contacts to sell approvals and favorable reports to businessmen.
those under investigation is the former personal secretary of ex-president Luiz Inácio Lula da Silva, Rosemary de Noronha,
who has headed the regional office of the presidency in São Paulo since 2005. The bribery scandal erupted on the heels of Brazil's biggest political corruption trial
that sentenced some of Lula's closest aides to prison terms for buying support inCongressfor his minority Workers' Party government after taking office in 2003. Rousseff, Lula's chosen successor, was not affected by the
vote-buying scandal and she has built on his popularity by gaining a reputation for not tolerating corruption. But the ruling
Workers' Party was rocked by the scandal which tarnished Lula's legacy even though he was not implicated. The new corruption case could further hurt the standing of
Lula, who remains Brazil's most influential politician. Friday's
arrests included two brothers who were recommended for positions in the federal government by Lula's former secretary Noronha,
Paulo Rodrigues Vieira, director of the National Water Agency, and Rubens Carlos Vieira, director for airport infrastructure
at Brazil's Civil Aviation Agency. Police
accused the brothers of recruiting second-tier government employees who would be open to bribery, while a third brother also
under arrest, Marcelo Rodrigues Vieira, contacted businessmen willing to pay for false or speeded-up approvals.
As Wal-Mart Stores Inc expanded its internal bribery probe to developing
markets including China, the world's largest retailer refused to comment on recent reports that the company will close 100
stores that are not making money...Wal-Mart said that there is no correlation between the slowdown in the development strategy
in the Chinese market and the extension of the internal probe in developing markets beyond the company's Mexican unit to Brazil,
China and India...With 370 stores as of March, Wal-Mart's sales in 2011 ranked fourth in China among the top 100 foreign-chain
retailers, according to the China Chain Store & Franchise Association. The retail giant temporarily closed 13 stores in
Chongqing last year over a pork-labeling probe. Compliance with the law in developing economies is crucial for foreign retailers,
which are supposed to have higher management levels than their local rivals, said Zhao Ping, deputy director of the consumption
and economic research department of the Chinese Academy of International Trade and Economic Cooperation.
Dilma Rousseff, moving quickly to nip a new scandal in the bud, ordered the dismissal on Saturday of government officials
allegedly involved in a bribery ring, including the country's deputy attorney general. Federal police raided government offices
in Brasilia and Sao Paulo on Friday and arrested six people for running an influence peddling ring that sold government approvals
to businessmen in return for bribes. Among those under investigation are the former personal secretary of ex-president Luiz
Inacio Lula da Silva, Rosemary de Noronha, who has headed the regional office of the presidency in Sao Paulo since 2005. The
bribery scandal erupted on the heels of Brazil's biggest political corruption trial that sentenced some of Lula's closest
aides to prison terms for buying support in Congress for his minority Workers' Party government
a year when many companies adopted a host of new anticorruption measures, global fraud levels also dipped, according to a
new executive survey that also shows corporations facing a rising tide of insider threats. The sixth annualGlobal Fraud Surveyfrom
Kroll Advisory Solutions polled 839 senior executives around the world. “The most striking result of this year’s
survey is that there has been notable decline in the level of fraud overall,” according to the authors. “The proportion
of companies reporting that they were affected by at least one incidence of fraud in the past year had dropped for the second
year in a row, from 75 percent to 61 percent.” The drop paid off on the bottom line, too. On average, the cost
of fraud to companies fell from 2.1 percent of revenues to 0.9 percent. At the same time, the survey noted that more
companies are adopting risk mitigation and compliance measures when it comes to the U.S. Foreign Corrupt Practices Act and
the UK Bribery Act.
The news media industry is engaged in a deep and painful self-analysis as
it tackles an issue that is not openly talked about—corruption in its ranks.
Philippine news media opened its ninth annual conference in Tagaytay on Friday, with more than 70 journalists from print,
radio, television and Internet-based news organizations taking an honest and a critical look at media corruption, its causes
and impact on national life...Philippine Inquirer president Sandy Prieto-Romualdez, representing
the print industry, said
corrupt practices should have no place in the news media, particularly in the print media, which is already faced with numerous
challenges amid a rapidly changing media landscape as a result of the “death spiral” of newspapers in Europe
and North America. She noted that from its long experience, the print media industry has come up with certain remedies for
corruption such as “gift policies, correction boxes, performance reports, assessment and ombudsmen.”
In the past, it was taboo to talk about corruption
in our ranks. It was a secret that was kept because media organizations were supposed to be untouchable. Thankfully, this
has changed. Recently, 4 columnists who wrote identical columns opposing the sin tax were exposed. They appeared to be copying
from a common source, quotes and all. When a member of this “quartet” was asked why this happened,
one of them said they play golf regularly and share materials. A former PR staff of a conglomerate told me that
he used to write column feeds. These are inputs given to columnists who accept payments. In return, they support
government policies that will benefit it, using material prepared by the PR staff. These feeds are also used to
demolish enemies of the corporation, for example, those who advocate legislation inimical to its interest. Corruption
is a never-ending problem in the media. These take many forms, including accepting bribes, doing PR work, and soliciting favors.
Steps have been taken to stop this toxic disease. Corrupt journalists have been fired. Codes of conducts have been
strictly implemented. But not all media organizations are cleaning up. To fight corruption, we should
be accountable just as we demand accountability from the people we cover. This is long overdue.
faced more questions over its relationship with the software firm at the eye of a storm over alleged "accounting improprieties"
yesterday, as a shareholder adviser said it had repeatedly raised concerns over the fees racked up by the auditor for other
PIRC, which advises pension
funds investing £1.5trn in total, said that Autonomy had "raised a number of red flags" regarding corporate governance. Hewlett-Packard
bought the Cambridge-based firm for $10.3bn (£6.5bn) last year, but the US giant wrote off $8.8bn on Tuesday, accusing its
former management of inflating the value of the firm and a "wilful" effort to mislead.
By the mid-2000s, manipulating Libor to profit
on Eurodollar futures and other derivatives had become standard operating procedure among banks in a position to do so, according
to people familiar with the market. In at least three instances, Barclays traders sought to manipulate Libor in the key months
when Eurodollar futures contracts settled in 2006, according to the CFTC and U.S. Justice Department inquiries into trading
at the bank. The tactic was so ingrained in Barclays' New York trading operation that new recruits adopted it with apparent
ease and alacrity. Ryan Reich - 15 years old when Engel sent her letter to regulators - had been with Barclays just a year
when, in July 2007, he sent an email that the U.S. Justice Department says became a key piece of evidence in its investigation
and subsequent settlement with Barclays.
Backbench MPs have gone on more
than £1.5m of trips with all expenses paid by foreign governments, pressure groups and companies in little over two years,
The Independent can reveal. Several MPs have spent months out of the country on foreign trips, sometimes while Parliament
is sitting, while many of those funding the visits have a vested interest in lobbying MPs. After the trips, a significant
number of MPs have made speeches in the House of Commons supporting the political positions of the governments and countries
they have visited. The Independent's analysis reveals that 242 MPs have declared "fact-finding missions" and visits
worth an average £6,500 to countries including Sri Lanka, China and former Soviet States since the last election.
Abbot Group Ltd., a Scottish oil- services
company owned by private-equity investors, will pay 5.6 million pounds ($8.9 million) in a civil settlement after discovering
it had benefited from corrupt payments. TheAberdeen-based drilling company will repay profit from a contract
entered into in 2006 between an overseas unit and an unidentified oil and gas company, the Crown Office,Scotland’s prosecution service, said today
Walmart's reporting to the US authorities of possible wrongdoing by its joint venture withBhartiin
India highlights the power of governance
and law enforcement in America. Within ourcountry, this company could have paid millions of dollars in bribes with no fallout whatsoever. While the US's Foreign Corrupt Practices Act (FCPA) is laudable and should
in theory help curbcorruptionaround
the world where American companies do business, it will probably do the reverse. The likes of Walmart, the world's largest
retailer, will be at a distinct disadvantage against local rivals who will continue to bribe their way into reaching milestone
number of stores. In effect, this will stallforeign direct investmentin retail, a move desired by politicians of various hues, giving them dual cause for celebration.
Firstly, they would have protected the trader community and secondly, the "foreign hand" that sought to stop bribing will
be shown its proper place. The benefits to farmers from higher prices and lower perish of produce and to customers from
more competitive rates and a wider range of products will be blocked by corruption in India.
American retail giant Wal-Mart's Indian joint venture has suspended the
Chief Financial Officer (CFO) and other senior executives, as global investigations into bribery allegations begin. The launch
of store openings in the county has also been delayed. The company is conducting an internal investigation into possible violations
of the US Foreign Corruption Practice Act (FCPA), which prevents American firms from bribing foreigners for the benefit of
businesses abroad. The company conducted a similar probe into its Mexican arm and is also making inquires in Brazil and China.
In India, Wal-Mart is operating through a 50-50 joint venture with Bharti Enterprises. "We are committed to conducting a complete
and thorough investigation. Wal-Mart and Bharti have suspended a few associates pending the outcome of the investigation,"
the company said in a statement.
defense minister,Anatoly Serdyukov, and large-scale theft was allegedly uncovered in the
Glonass navigation-satellite program and the Regional Development Ministry. Some commentators quickly decided this was mere
window dressing to counter the corruption-fighting crusade of popular blogger Alexey Navalny, who in October received the
most votes in an Internet-based election to the anti-Putin opposition's Coordinating Council. “Navalny's activity irritated the government, and if
an initiative is seen as threatening, one needs to take it over,” Coordinating Council memberAndrei Piontkovskytold
the newspaper Noviye Izvestia. “I think the ruling elite has decided to ride the corruption issue so that no one could
play that field without an official sanction." When the Russian repressive machine really gets going, it's not easy to slow it down. On
Nov. 20, policesearchedthe
apartments of investorKonstantin Malofeevand
his erstwhile business partner, Alexander Provotorov, who is now head of the state-controlled communications behemoth
OAORostelecom. The holding company controls all kinds of valuable assets, from old-fashioned long-distance
operators to mobile and Internet providers. It also receives the juiciest government orders when it comes to telecommunications
infrastructure. This year, for example, it was on the receiving end of a 16 billion-ruble ($533 million) contract for web
cameras, networks and servers needed to broadcast the March 2012 presidential election from every polling station in Russia
in real time. Rostelecom filled the rush order, and millions of Russians logged on to watch the unprecedented show. The government-controlled
company is stillstuckwith
the cameras, which no one now needs.
A former Defense Ministry official inRussiahas
been charged with embezzling more than $12 million while working for a private military contractor, the federal Investigative
Committee announced Friday. The former official, Yevgeniya Vasilyeva, has emerged as a central figure in PresidentVladimir V. Putin’s decision earlier this monthto dismiss the defense minister, Anatoly E. Serdyukov.
China's leaders have been decrying corruption - and
doing very little about it - for decades. But some corruption experts say there may be reason for a little more hope this
Turning talk into action, however, will be a tall
order in a country where gift-giving is a pillar of traditional culture, a single political party has a stranglehold on power,
and bribery is pervasive from top to bottom of society. Some 668,000 party members have been punished for corruption in the
past five years, according to official figures that represent only the tip of the iceberg, experts say...The most likely first step, most corruption watchers here agree, is some
kind of “sunshine law” obliging officials to declare their income and assets, although it is unclear how credibly
such declarations might be verified.
ban executives from state-ownedbanksand financial companies from spending extravagantly on cars and houses,
state news agency Xinhua said, in Beijing's latest effort to clamp down on corruption and official waste.
The 12 regulations, issued jointly by the Ministry of Finance,
the Ministry of Supervision and the National Audit Office, come after Communist Party chief Xi Jinping warned that the party
risks major unrest and the collapse of its rule if corruption is allowed to run wild inChina. They also come amid growing public anger over widespread graft. China is sensitive to anything that raises suspicions
An accountant who faked an audit for a Costa Rican company
will be sentenced this month, ending the prosecution of a massive insurance fraud scheme that claimed thousands of victims
worldwide and served as a cautionary tale for investors looking for a sure thing in a turbulent market. Jorge Luis Castilloof
Hackettstown, N.J., pleaded guilty last year to conspiring to commit mail and wire fraud. When he is sentenced Nov. 30, he
will become the ninth and last person sent to prison in Virginia for a $670 million scam that robbed investors of their retirement
nest eggs and gave a black eye to the "life settlement" industry...
The conspirators ranged from a Richmond securities salesman
to the principals of two businesses that were taken down by the government's investigation: Houston-based A&O, which used
investor funds to buy life insurance policies from insured people at less than face value and then collected the benefits
when those people died, and Provident Capital Indemnity, the Costa Rican firm that sold bonds purportedly backing investments
in A&O and other life settlement companies. According to court papers and trial testimony, investors enticed by "guaranteed"
returns of up to 15 percent cashed out 401Ks and other retirement funds to buy shares of the life insurance policies. But
rather than safeguard those funds, company leaders squandered them on sprawling houses, sports cars, diamond jewelry and other luxuries.
Chevron Corp. (CVX) is seeking an ethics investigation
of New York State Comptroller Thomas DiNapoli as well as current and past members of his staff for violations of the New York
Public Officers Law.The company, in a complaint filed before the New York State Joint Commission on Public Ethics, alleged
that the comptroller and his staff breached their fiduciary and ethical duties...
Chevron alleged that the plaintiffs' supporters have
contributed more than $60,000 and other political benefits to Mr. DiNapoli's campaign. In return, the comptroller allegedly
used his public office to take actions on behalf of the plaintiffs, such as sponsoring shareholder resolutions and making
public statements against Chevron that were explicitly intended to pressure the company to settle the lawsuit.
Two former associates
of R. Allen Stanford have been convicted of fraud for trying to help the imprisoned Texas financier conceal a $7 billion Ponzi
scheme. Prosecutors in Houston say 70-year-old Gilbert Lopez Jr. and 40-year-old Mark Kuhrt were both convicted Monday of
conspiracy to commit wire fraud and nine counts of wire fraud. Each count carries a maximum 20 years in prison.
A court has found
former Croatian Prime Minister Ivo Sanader guilty on corruption charges and has sentenced him to 10 years in prison. The 59-year-old,
who served as prime minister from 2004 to 2009, is the highest ranking former official tried for graft in Croatia which has
pledged to root out corruption as it becomes a European Union member in 2013.
In a salacious77-page
complaint...David Weber, the former chief investigator
for the SEC Inspector General's office, accuses the SEC of retaliating against Weber for coming forward as a whistleblower.
According to this lawsuit, Weber was made a target of intramural intrigues at the agency (which has ahistoryof
such retaliation) after he came forward with concerns...Weber claims that in recent years, while the SEC Inspector General's
office has been attempting to investigate the agency's seemingly-negligent responses in such matters as theBernie Madoff caseand
the...Stanford Financial Ponziscandal,
two of the IG office's senior officials – former Inspector General David Kotz and his successor, Noelle Maloney –
were sleeping together. Weber also claims that Kotz was also having an affair with a lawyer representing a key group of Stanford
San Francisco-based startup XP Technology is building
a lawsuit against the Department of Energy, charging it with “corruption and negligence” in the way it has handled
the approval of applications for loans meant to support the production of fuel-efficient automobiles.
XP has designed a radical concept for a battery
and hydrogen fuel-cell powered electric car constructed of a rigid frame. It has body panels made from expanded foam that’s
wrapped in a flexible material similar to the air bags used to protect NASA’s Pathfinder probe as it bounced to a safe
landing on Mars in 1997.
The company says the compact car would weigh around
1,500 pounds -- less than half of similarly sized electric vehicles, like the Nissan Leaf -- making it very energy efficient.
Small, removable cartridges would allow owners to quickly swap them for fully charged ones, or carry them into their homes
to recharge, eliminating the need to utilize the types of streetside and garage-based charging stations that conventional
electric cars rely on...
To date, the $25 billion ATVM program has approved
just four loan guarantees for Ford, Nissan, Tesla and Fisker, totaling approximately $8.5 billion. XP alleges those awards
were the product of a poorly documented process rife with political cronyism and manipulation, and not based purely on merit.
XP manager Scott Douglas Redmond says his company
has several witnesses and more than 5,000 documents to back up its claims that it will reveal during a trial, if one
Hewlett-Packard leveled serious
accusations against a software company it bought last year, saying it would take a $8.8 billion write-down after it claimed
Autonomy's leadership misrepresented its performance.
trader was today sentenced to seven years in jail after being found guilty of the UK's biggest ever fraud when he lost £1.4bn
for his Swiss employer...At one point during his run of losses, rising star City
trader Kweku Adoboli, 32, stood to run up losses of $12 billion (£7.5 billion) for UBS. Detective Chief Inspector Perry Stokes, who led the probe into what Adoboli had done, said the he was one of
the most sophisticated fraudsters he had come across. Ghanaian-born Adoboli exceeded his multimillion-pound trading limits and
failed to hedge trades, allegedly faking records to cover his tracks at the Swiss bank's London office.
He admitted the losses but claimed he was pressured by staff to take risks, culminating in bad
deals which wiped £2.8 billion off the bank's share value when they were discovered. The jury at Southwark Crown Court, in London, convicted him of one count of fraud linked to the £1.4 billion
loss. Adoboli was later found guilty by a majority verdict of a second fraud charge but acquitted of the four other outstanding false accounting charges between October 2008
and September last year.
new Communist chief Xi Jinping has warned that corruption has the potential not only to destabilise the party but also bring
about the collapse of the country. Xi told a closed door meeting of members of the new Politburo of the Communist Party
of China (CPC) overthe
weekend that rampant corruption in other countries had recently brought about large-scale unrest and collapse of governments.Referring to an old Chinese proverb, Xi said: “Things must first rot, before worms grow.”
Without taking the name of any country, or directly
referring to Arab Spring phenomenon, Xi said that in recent years a number of regimes collapsed because of a “long-term
accumulation of contradictions” of which corruption was a “very important reason.” Xi said that large number
of facts revealed if the problem of corruption becomes increasingly severe it will lead to the ruin of the party and the country.
China's new leader
Xi Jinping is highlighting corruption as a scourge that could bring down the Communist Party, though he has yet to offer any
specific new proposals to stop it. In a weekend speech that was carried Monday by the official Xinhua News Agency, Xi told
the new 25-member Politburo that the party must be vigilant against graft, noting that corruption in other countries in recent
years has prompted major social unrest and the collapse of governments. "The large number of facts tells us that if the problem
of corruption becomes increasingly severe, it will lead to the ruin of the party and the country!"
The claims about Premier Wen Jiabao's hidden family assets prompted Beijing to blockThe
New York Times'English and Chinese websites, but many viewers scaled the
Great Firewall to find the news. Ironically, this revelation yielded little applause and harvested mostly disbelief and indignation
among Chinese readers in and out of the country. Such reactions not only reflect the political reality of today's China but
also provide important clues about its social transition. The story claimed members of Wen's family had utilised their status
to amass huge fortunes in an official-take-all society. Discussing possible corruption among top leaders' families is taboo
in China, but this article explored the subject at length in public, putting all corrupt Chinese officials on notice that,
under the keen lens of the international media, there is no safe haven.
Not many companies can bounce back
in a short time from an accounting scandal that results in the ousting of its chief executive officer and CFO, a Securities
and Exchange Commission investigation, and tarnished relationships with its key product suppliers. ButDiamond Foodsis
attempting to do just that. Plagued
by improper accounting for payments made to walnut growers, the San Francisco, California-based snack maker this week restated its financial results from 2010 and 2011, and filed its results for
the first three quarters of 2012, which had also been delayed by the preparation of the restatements. The results showed a
reduction in income before taxes of $39.5 million in fiscal 2011 and $17.0 million in fiscal 2010 from what was previously
reported. Diamond Foods acknowledged
that it accounted for certain payments to walnut growers in the wrong fiscal periods...
At the heart of the
investigation was the question of whether Diamond senior management adjusted the accounting for the grower payments on
purpose to increase profits for a given period. But the internal probe concluded that there was not enough evidence to state
The EU recently suspended $25m in aid for the justice system which critics say is plagued by mismanagement...A lack of proper training, technology and manpower has created a situation wherein lieu of physical or circumstantial evidence,
Afghan authorities rely heavily upon confessions for convictions...
The Vanguard Public Foundation was once a social justice leader
in one of the country’s most active nonprofit scenes. The organization funded San Francisco’s massive Iraq War
protests in 2003 and financed the first battered women’s shelter in the state. But its last cause was lining the pockets
of a Belvedere millionaire. The 40-year-oldBay Area foundation officially shut
down last year after falling victim to an elaborate financial scam by Israeli entrepreneur Samuel “Mouli” Cohen.
Cohen swindled more than $30 million from Vanguard donors. In April, he was sentencedin
a federal court to 22 years in prison. In exchange for the testimony that put Cohen behind bars, Hari Dillon, Vanguard’s
president, pleaded guiltyto
money laundering and wire fraud. Dillon’s sentencing is set for December. The criminal convictions for Cohen, 54, and
Dillon, 64, represent the denouement for the foundation after years of infighting and suspicion among its members over its
finances. A derelict board of directors stood by as Vanguard crumbled. Now, former staff and board members are coming to grips
with the facts of Vanguard’s demise.
"one of the most significant abuses of public
trust ever seen in Illinois."
A federal prosecutor said Wednesday that a small-town
Illinois bookkeeper's admission that she embezzled more than $50 million should serve as a warning for other public officials...former Dixon comptroller Rita Crundwell pleaded guilty Wednesday to siphoning public money into a secret account while
overseeing finances in President Ronald Reagan's boyhood home and spending it on a lavish lifestyle that included a nationally
known horse-breeding operation...
worked for the city about 100 miles west of Chicago since she was 17 and started to oversee public finances in the 1980s.
The town's residents are largely lower-middle class, working at factories and grain farms. Prosecutors say that they came
to trust her with the town's finances, but she began stealing money in 1990 to support her extravagant way of life. Authorities
say Crundwell bought luxury homes and vehicles and spent millions on her horse-breeding operation, RC Quarter Horses LLC,
which produced 52 world champions in exhibitions run by the American Quarter Horse Association. Her scheme unraveled when
a co-worker filling in during Crundwell's vacation stumbled upon her secret bank account
According to federal prosecutors and regulators, between August 2004 and June 2009, Jeffery
Lowrance, 50, and others at his direction fraudulently solicited investments for a foreign exchange (“Foreign”)
trading program. Among the alleged material misrepresentations was the profitability of the Forex trading of First Capital
Savings & Loan, Ltd., an organization which Lowrance incorporated in 2007 inNew Zealand — he owned First Capital and served as its chairman and chief executive officer.
The Feds further alleged that Lowrance had fraudulently misstated the expected return on and risk involved with Forex investments
and the use of funds raised from investors.
receiver representing victims of a $7 billion Ponzi scheme for which former billionaire R. Allen Stanford is now serving a
110-year prison term has sued two well-known law firms. In a federal suit filed Thursday in Dallas that seeks class action
status, receiver Ralph Janvey and several individual investors allege that an attorney, who was formerly a partner of both
Greenberg Traurig and Hunton & Williams during the 20 years that he served as outside counsel for Stanford Financial Group,
performed legal work that helped Stanford perpetrate the fraud...
For the family of ex-Taiwanese President
Chen Shui-bian, it’s no longer the properties they bought through a British Virgin Islands shell company in 2008 worth
a combined value of about $2.1 million. According to court documents, the properties — a Manhattan condo and property
in Keswick, Va. — were bought with bribe money. Prosecutors spentmore than two yearstrying
to seize the real estate. The U.S. Justice Department said late Wednesday that both properties were forfeited to the U.S.
government as part of its Kleptocracy Asset Recovery Initiative, which targets the spoils of stolen state assets parked in
When PresidentVladimir Putinwas asked in an interview last month about anti-corruption
lawyerAlexei Navalny, he indicated that he thought opposition
leaders had achieved little of substance...But over the last two weeks, the Kremlin has indicated that it knows
the value of Navalny's anti-corruption campaigns, initiating an apparent drive of its own that experts
say could have unpredictable consequences for the ruling elite. Following the dismissal of Defense MinisterAnatoly Serdyukovon Nov. 6 amid a fraud scandal at a defense
agency, allegations have surfaced regarding the misuse of billions of rubles connected to the implementation
of the Glonass navigation system and the ambitious Asia-Pacific Economic Cooperation summit.
Hu sounded the alarm again on the opening day of
the congress, saying corruption could ruin both the party and the nation.The offspring of both Hu and Wen are extremely wealthy.
It is no secret in China that relatives of senior party members invariably rise to hold key positions at state-run companies,
and central and local governments. Those in power realize that this inequality could imperil one-party rule, but they are
seemingly incapable of taking action to address the challenge. Even as far back as the National Congress held 10 years ago,
when Jiang Zemin stepped down as general secretary to be succeeded by Hu, Jiang warned that corruption is self-destructive.
Despite a shared sense of crisis among party leaders, they are stymied in their efforts to stamp out corruption.Xi is one
of the so-called princelings, a reference to the offspring of ranking party members, and has led a life of relative ease since
his childhood.And yet, precisely because of his background, Xi may be able to rein in fellow princelings who flaunt their
elite-ism, which serves only to perpetuate corruption. Unless he eradicates this evil that plagues Chinese society, Xi realizes
that the very foundation of one-party rule could be endangered.
David Green, the man tasked with restoring
faith in Britain's much-maligned fraud fighting agency, expects "significant developments" in the New Year in a global probe
into banker attempts to rig key benchmark lending rates.
Green, who has overhauled the Serious Fraud Office (SFO) since taking the helm in April, said the
key to success in the "hugely challenging" investigation into the manipulation of the London interbank offered rate (Libor)
lay in maintaining focus...
Libor, which underpins around $550 trillion of
loans and financial contracts, burst into the headlines in June when Barclays (BARC.L) was fined a record $450 million for allowing traders to rig it and its euro cousin Euribor and for low-balling rates
during the 2007/08 credit crunch. Otherbanksremain under investigation in Europe, the United States, Canada andJapan, while UK and U.S. regulators stand accused of either
condoning or failing to stop manipulation as the financial crisis brought banks to their knees four years ago.
Brazil's mensalãotrialhas brought many historic momentsand this week saw one more: an impeccably well-connected politico getting such a long prison sentence that even the
best lawyer will struggle to save him from doing time. On November 12th José Dirceu, who served as chief of staff for former
president Luiz Inácio Lula da Silva from 2003 to 2005, was sentenced to ten years and ten months in jail for his part in the
huge vote-buying scheme. Two other prominent members of the Workers' Party (PT) also received stiff sentences: Delubio Soares,
its former treasurer, got eight years and 11 months in prison, and José Genoino, its former president, six years and 11 months.
President-elect Enrique Peña Nieto announced
Wednesday that he will soon send to Mexico's Congress a pair of bills to create a National Anti-corruption Commission and
to shift responsibility for public safety back to the interior ministry. Peña Nieto said that both proposals seek to improve the effectiveness of the public administration and fight
corruption "at all levels of government." He explained
that the reform will mean the disappearance of the Public Administration Secretariat,whose
functions will be divided among the new anti-corruption commission and other departments.
internal probe into potential violations of anti-corruption law had extended to Brazil, China andIndiaas it
reported quarterly profits in line with market expectations and sales growth that fell short. The world’s biggest retailer
by sales said on Thursday that investigations that began with allegations ofbribes paid to secure new store permits in Mexicohad extended
to three other bigemerging markets.
European aerospace and defence group
EADS has launched an external review of its anti-corruption rules as it faces ongoing investigations in Austria, Britain andGermany. EADS said on Thursday it had hired ETHIC Intelligence,
a certification agency it said specialised in "anti-corruption compliance programmes", pledging to make the findings public...Public prosecutors in Austria andGermanysaid this month they had searched several EADS sites in Germany in an
investigation into whether bribes were made as part of a sale of Eurofighter jets to Austria. Investigations have been ongoing
since 2011 and involve suspicions of bribery, money-laundering and fraud, they said.
We must ask how is it possible that otherwise intelligent constituencies
choose so poorly? One reason is that they lack in balanced information about their candidates and leaders. In Latin America
the press is frequently afraid of reporting negative material about powerful people running for office (for good reason, since
scores of honest reporters have been and continue to be killed while investigating wrongdoing).
Croatia's high-profile corruption trial of former
Prime Minister Ivo Sanader has ended with the prosecution urging the maximum sentence of 15 years in prison and the former
leader insisting he is innocent...Sanader is the
highest-ranking former official tried for alleged graft in Croatia, which has pledged to fight corruption ahead of joining
the European Union in 2013.
Oil giant BP has agreed to pay the largest criminal
penalty in U.S. history for the 2010 oil spill in the Gulf of Mexico, asource close to the case confirmed to CBS News...BP will plead guilty to obstruction for lying to Congress for its statements on the size of
BP employees face manslaughter charges over the death of 11 people in the explosion of theDeepwater Horizon oil rig that triggered the massive spill.
The largest previous corporate criminal penalty assessed by theDepartment
of Justice was the $1.2 billion fine imposed on drug maker Pfizer in 2009.
Peru’s red-hot economic growth might not
be enough to lift the country out of its underdevelopment status, as corruption is draining it of the economic gains, Comptroller
General Fuad Khoury said. “The economic losses from corruption are stopping development,” said Khoury, according
tostate news agency Andina. “They are so grave that we could remain in the
condition of an emerging country or even underdeveloped for the rest of the century.” Khoury, who was speaking at an
international anti-corruption conference, said the annual losses from corruption could have been used to build hospitals,
roads andother basic services that the Andean country
is lacking. Corruption, which is widespread in Peru, reached a pinnacle in the 1990s during the administration of Alberto
Fujimori. Transparency International has ranked the Fujimori administration as one of the most corrupt in the 20th century.
Fujimori and his shadowy spy chief, Vladimiro Montesinos, set up a network of corruption by bribing opposition politicians,
judges and media owners, and blackmailing where bribes were refused. Fujimori is believed to have stolen about $600 million
from the Peruvian state during his 10 year term, which was also marred by human rights crimes that have landed him in prison.
More recently, politicians from a variety of different parties have been charged with corruption.
Peru's jailed former President Alberto Fujimori
faces trial for allegedly misappropriating nearly $50 million in public funds to bankroll a group of tabloids that lobbied
for his re-election during his final years in office.
Republican members of a Congressional panel outlined a withering critique of Mr. Corzine’s
19-month tenure at the firm. Mr. Corzine, a former Democratic senator and governor from New Jersey, resigned as MF Global’s
chief executive last fall after the firm raided customer accounts during a futile fight for its life. While the Republican
report avoided pinning blame on Mr. Corzine for the missing customer money, sidestepping whether a crime was committed, it
argued that his fixation with risk positioned him as a central player in the firm’s collapse.
With billions of dollars in potential fines and foreign investment
in the balance, the Justice Department and the Securities and Exchange Commission on Wednesday released long-awaited guidance
on how prosecutors interpret and enforce a federal anticorruption law that bans American businesses from bribing officials
overseas. The120-page “resource guide” to the Foreign
Corrupt Practices Actlays out the government’s understanding of and
standard practices for the 1977 law. The statute sat largely dormant for decades, but a recent explosion of enforcement has
struck terror into corporate boardrooms, leading to large fees for compliance lawyers and enormous fines and settlements paid
to the government. The detailed guidance
— including numerous case studies illustrating what would and would not be considered a violation of the law —
is particularly important because cases of foreign corrupt practices rarely get adjudicated. Corporations are generally inclined
to settle potential cases without a trial because being indicted can cripple a business.
A civil society organisation-Anti-Corruption Network- recently
stirred the hornet's nest with a sweeping allegation that the Ministry of Niger Delta Affairs was enmeshed in a N29 billion
fraud purportedly involving some non-existent projects in some communities of Burutu Local Government of Delta State...the canalisation /river training
of Foupolo-Bolou Ndoro Creek in Burutu, Delta State was awarded to First Marine & Engineering Services Limited on February
2, 2011 at a cost of N2.3 billion with a 15 per cent mobilisation (N355million) paid, adding that so far, the project has
attained 40 per cent completion.The contractor, Orubebe disclosed, is currently being owed N661,692.409- a situation, which warranted the intervention
of the contractor's bankers-First Bank, culminating in a meeting where he apprised them of the financial challenges facing
the ministry and efforts to pay next year as adequate budgetary provision has been made in the 2013 budget. Other projects
cited in the alleged fraud by the Melaye group were the canalisation at Odoubou, Ogbabagbene, Burutu, Delta State as well
as the land reclamation/shoreline protection project at Ogbabagbene, also in Burutu.
CHINA'S top economic reformer, Wang Qishan, has been charged
with tackling corruption within the ruling Communist Party, with the lesser-known party chief of Tianjin, Zhang Gaoli, set
to take over day-to-day management of the world's second-largest economy...In
his speech at Beijing's Great Hall of the People, Mr Xi repeated warnings by the outgoing Mr Hu and Premier Wen Jiabao that
corruption among Chineseleaders posed the greatest threat
to the survival of the ruling Communist Party, and even of the state.
Earlier this year, a powerful army official gave
an emotional speech describing corruption as a “do-or-die struggle,” and days later, according to widely published
accounts, a prominent general, Gu Junshan, a deputy director of the logistics department, was arrested on suspicion of corruption.
He now awaits trial. The general is reported to have made huge profits on illicit land deals and given more than 400 houses
intended for retired officers to friends. Those excesses may be mere trifles compared with the depth of the overall corruption,
the speech by Gen. Liu Yuan, an associate of the new party leader,Xi Jinping, suggested...
of graft and brazen profiteering in the People’s Liberation Army poses a
delicateproblem for the new leader, one that ColonelLiu and others have warned could undermine
the status of the Communist Party...thearrest of General Gu was probably
just another example of sporadic efforts against big names in the army rather than a concerted campaign
Recognizing that there are limits to what can be
achieved through direct crackdowns, local governments have been seeking novel ways to curb corruption. In 2010, the central
party leadership delivered a list of 52 "Thou Shalt Nots" for senior party and government officials all the way down to the
"county" level of local administration. Among the rules: do not accept goods or invitations to banquets and trips; do not
profit from insider information; do not appropriate public buildings for personal use; do not use taxpayers' money to send
your relatives abroad to study. Figures show a continuous rise in officially acknowledged cases of corruption, from 128,000
in 2008 to 137,000 in 2011. In other words, there has been little improvement since Hu warned, five years ago, during the
last National Congress: "Strong punishment and prevention of corruption determine whether the public supports us or not; they
decide the life or death of the party." Meanwhile, there is deep distrust of judiciary institutions tasked with regulating
face a risk from money laundering in China because of large flows of illicit money, weak controls and the difficulties of
screening names, said a new report from research and consulting firm Celent...Money laundering is “a big issue” in southern China, Celent said, because of the
informal nature of capital flows there. “Money changers, institutions and individuals who act as remittance agencies
enable money transfers between counterparties in China and Hong Kong, often in violation of foreign exchange regulations,”
it said. With increased international
exposure to the yuan as its use grows in commerce and finance, the report urged regulators and financial institutions, “to
step up efforts to curb money laundering activities.”
Six decades after Mao Zedong's triumph,
there are signs corruption is seriously undermining the Communist Party's legitimacy. The fast-growing Chinese middle class
is emboldened and using the internet to vent its anger. In such circumstances, Mr Hu and Mr Xi could hardly have avoided an
issue the party leadership would doubtless prefer to see swept under the carpet. Confronting it, however, is no easy matter.
Doing so challenges long-entrenched interest groups. We wait to see whether Mr Xi will be prepared to reinvigorate the reforms
promised when Mr Hu assumed power 10 years ago.
Lipkin, 74, pleaded guilty in Manhattan federal court to charges of conspiracy to commit securities fraud, falsifying records,
making false filings with the Securities and Exchange Commission and falsifiying statements on documents required by the Employee
Retirement Income Security Act...Lipkin worked at Bernard L. Madoff Investment Securities from 1964 to 1998. He was the first
person to work at BLMIS who was not a family member. Lipkin maintained the company financial records and statements in his
capacity as controller of BLMIS. He admitted that he cooked the BLMIS books to hide Madoff's Ponzi scheme
Some Brazilians, jaded by decades of scandals in
Brasília in which the perpetrators seemed to act with impunity, are suddenly daring to hope that the old ways of doing business
may finally be changing in the vast emerging-market nation. Those convicted in the Mensalão include former top lieutenants
of former president Luiz Inácio Lula da Silva...Among the institutional reforms, Brazil has introduced the ficha limpa, or
“clean slate” law, which prevents people convicted of crimes from running for public office. A law that also prevented
the Supreme Court from trying federal politicians without prior approval from Congress has been revoked. On the enforcement
side, the role of the Supreme Court and independent public prosecutors, envisaged in Brazil’s 1988 post-dictatorship
constitution as a check and balance on the executive, is beginning to take effect.
Jordan's former head of intelligence was handed a 13-year jail sentence today on charges of
corruption...An Amman court found Mohammed al-Dahabi, brother to the former prime minister, guilty of embezzling public finances,
money laundering, and abuse of office during his 2005-2008 term
The Australian Federal Police (AFP) has closed an investigation
into suspicious payments to officials in Cambodia by the world’s largest mining company BHP Billiton, according to a
report released by the Organization for Economic Cooperation and Development (OECD). Although the report, released last month,
does not directly name the firm involved, the description of the case in the study closely resembles an announcement made
by Australia’s BHP in 2010 that it was the target of a U.S. investigation reportedly concerning payments made to the
Cambodian government. The OECD report states that instead of conducting a domestic investigation, the firm simply referred
the matter to another agency despite identifying evidence that could have led to convictions of its staff under Australian
foreign bribery laws. The firm is referred to in the report as “company Z.” “In 2010, the company announced
that it had disclosed to U.S. authorities evidence that it had uncovered possible foreign bribery…. Based on material
received from the U.S., the [AFP] identified suspicious transactions that had been recorded as legitimate business payments,”
the OECD report states. But after consulting with U.S. authorities and the Australian Securities and Investment Commission
(ASIC), Australian police decided against an investigation because the ASIC said the company had already “documented
the suspicious payments and disclosed them to the market,” the report says. The OECD expressed concern in the report
that the level of foreign bribery enforcement is extremely low in Australia and recommended that police “take sufficient
steps to ensure that foreign bribery allegations are not prematurely closed.”
services company MoneyGram International Inc said it reached a $100 million settlement with U.S. authorities related to suspected
fraudulent transactions by some agents.
settlement, which also involves the appointment of an independent compliance monitor, tipped the company to a third-quarter
loss of $54.8 million. The $100 million
will be available to victims of the consumer fraud scams perpetrated through MoneyGram agents, the company said. MoneyGram, which has 284,000 global money transfer agent locations
in 196 countries and territories, said it has created two new executive-level positions for enhancing efforts to combat consumer
Jim Hoffman, 53, pleaded guilty in February to money laundering and tax evasion,
and Teresa Hoffman, also 53, pleaded guilty to tax evasion...Hoffman had owned a dairy operation in southern Minnesota in the 1990s and financed its
operations by defrauding an Iowa bank and by stealing employment taxes he'd withheld from its workers. Next, he systematically
stole the equity from large numbers of vulnerable people facing foreclosure. He went on to operate a complex fraud scheme
involving the now defunct Lake Elmo real estate company Avidigm Capital Group Inc., inflicting huge losses on investors and
lenders. Then he committed mortgage fraud schemes that led to his indictment. FBI special agent Eileen Rice conducted an exhaustive review
of his mortgagefraud deals and
calculated the losses at $5,16 million.
The federal government stands to get $15 million and bilked lenders will receive another $110
million in an agreement reached by a firm that sold equipment to defunct Latrobe bottler Le-Nature's Inc.
In the agreement, negotiated by U.S. Attorney David Hickton's office and announced Thursday,
Krones Aktiengesellschaft and Wisconsin-based U.S. subsidiary Krones Inc. admit no criminal liability. The company issued
a statement saying it signed on "to eliminate the continued uncertainty and risk associated with the U.S. legal proceedings"
and prevent distractions
Justice Mugamba noted that lately,
it has become fashionable by government bodies like the Inspectorate of Government to present weak cases before courts when
they cannot secure conviction. He said such cases waste time, resources and they erode the credibility of prosecution agencies.
“Clearly, the evidence assembled by the prosecution...shows nowhere that the accused persons are culpable,”...He
said no prema facie case has been made out against the accused.
whistle-blower helping the U.S. government mount a $1 billion fraud lawsuit againstBank of America Corp.
was himself accused of fraud by an investor in a financing company he co-founded, and now works atFannie Mae, one of two entities he
claims the bank defrauded. Edward O’Donnell sued Bank of America, the second-biggest U.S. lender byassets, in
February under the False Claims Act, saying the bank’s Countrywide Financial unit, where he once worked, issued defective
mortgages and sold them to Fannie Mae and Freddie Mac. Last month, the Justice Department joined his suit, making it the first
time the U.S. has accused a bank of fraud over loans sold to the two government-sponsored mortgage- finance companies. To
make the case, the U.S. may have to confront its whistle-blower’s own tangled history.
When it comes to corruption in Afghanistan, the
time may be now for the United States to look in the mirror and see what lessons can be learned from contracting out parts
of that war. On Sept. 30, Afghan President Hamid Karzai told CBS’s “60 Minutes” that the corruption wracking
his government and its people has been at a level “not ever before seen in Afghanistan.”
In the 1980s, when the Soviets ran the country,
the government was “not even 5 percent as corrupt,” Karzai said.
“ The Soviets didn’t give contracts
to the relatives, brothers and the kin of the influential and high ups,” he said. “The Americans did, and they
continue to do, but we get blamed for it.”...
Center for Strategic and International Studies report, “How America
Corrupted Afghanistan” excepts:
fact is that we are at least as much to blame for what has happened as the Afghans, and we have been grindingly slow to either
admit our efforts or correct them.”
“We can probably
do more to fight the worst causes of Afghan corruption by changing our own actions than by any amount of effort to encourage
Afghan anti-corruption drives.”
“U.S. and foreign contractors poured money
into a limited number of Afghan powerbrokers who set up companies that were corrupt and didnot perform.. . .In many cases, they also paid off insurgents to let them operate,”
There may be a history of corruption in Afghanistan, but the United States is continuing to
create tempting, rich, new targets such as fuel, and apparently enough Americans are willing to join in the illegal action.
Banks are facing heightened investigation and steeper penalties from federal
regulators and prosecutors for failure to comply with anti-money-laundering laws, an enforcement trend that may shave billions
of dollars off bank balance sheets...HSBC is one of several banks, including Citigroup and Standard Chartered, being investigated
by the government for allegedly allowing millions of dollars from drug traffickers, terrorists or countries under sanctions
to illegally move through the U.S. financial system. While some of these investigations have been in the works for years,
banking attorneys say the level of scrutiny coming from the government has intensified.
Comptroller and Auditor-General of India Vinod
Rai was right in describing the Satyam scam of 2009 as a defining event in India’s corporate history. The scam exposed
the immense possibilities of corruption a corporate body can indulge in. As admitted by Satyam chief Ramalinga Raju, the company
falsified its accounts to the tune of millions of dollars and when the Satyam bubble burst, thousands of shareholders
of the company were badly hit. It was against this none-too-pleasing backdrop that the CAG argued at the 11th All India Lokayukta
Conference on Saturday that the private sector should not be exempted from the purview of Lokayukta-like institutions.
HSBC is braced for fines from the US authorities of at least
$1.5bn (£940m) – one of the largest in the financial services industry – for laundering billions of dollars, and
warned on Monday that the final penalties could be even greater. The scale of the potential cost of the revelations contained
in a US Senate report, which showed how billions of dollars were laundered
into the US for drug barons and terrorists, came as the bank set aside an additional $800m in the third quarter on top of the $700m set aside at the half year
Ireland jailed the former billionaire Sean Quinn on Friday
for failing to disclose assets he was hiding abroad, completing the fall from grace of the richest man in Ireland’s
“Celtic Tiger” boom. Mr. Quinn, whose 4 billion euro ($5.2 billion) business empire collapsed after a disastrous
investment in the now failed Anglo Irish Bank, is the first major player jailed in connection with the country’s economic
...the taxpayer bailed-out bank, which reported losses
of $2.2 billion in the third quarter, has set aside $2.7 billion for compensating customers as settlements for several complaints,
including fraudulent sales of complicated interest hedges. The bank could expect to shell out more than the $460 million.
Federal investigators said Thursday that the region's airports
authority is afflicted by a "culture of favoritism" that led to widespread nepotism, mismanagement and questionable contracting
practices at an agency overseeing the $6 billion Dulles Rail project, one of the largest public works projects in the country.
report from the Department of Transportation's Office of Inspector General shows that Metropolitan Washington Airports Authority
senior staff picked favorites among contractors, including one firm that got a contract even though it was charging 234 percent
more than some other bidders. Authority staff took lavish gifts from vendors and skirted personnel rules to get family and
friends jobs, inspectors found during a yearlong investigation. Nearly two-thirds of authority contracts worth more than $200,000 were awarded
without full competition, violating the agency's own rules, investigators said. Five contracts worth $6 million were awarded
with no competitive bidding at all.
India’s biggest business group
became the latest target of the anti-corruption activist Arvind Kejriwal on Wednesday, when he accused Reliance Industries
of colluding with the federal government to profit from a contract to drill for natural gas...Mr. Kejriwal alleged that in 2000the
B.J.P.-led coalition government Reliance Industries, which is led by Mukesh Ambani, favorable terms to extract gas from the
Krishna-Godavari Basin off India’s east coast.He also accused the current
Congress-led government of removing a minister who questioned the contract’s term.
Money laundering as an organized crime is increasingly becoming a problem in Germany, says a new
report by the Federal Criminal Police Office (BKA). But fighting money launderers has proven to be difficult. About 13,000 cases of suspected money laundering were reported last
year; in half of the cases, authorities later confirmed their initial suspicions. That's a record high since 1993, when Germany's Anti-Money Laundering Act
came into effect. From then on, banks had to report large transactions to the Federal Financial Supervisory Authority (BaFin).
Patients are at risk and Medicare
is wasting money because of doctors who refer patients to facilities they own, the Government Accountability Office (GAO)
said...GAO found a steep rise in the number of self-referrals — doctors
ordering tests at facilities where they or their family members have a financial stake. Critics argue that self-referral leads
to wasteful spending because doctors will order unnecessary tests just to collect a payment from Medicare...In
2010, doctors who self-referred made 400,000 more referrals than they would have if they didn't have a financial interest
in ordering more tests, GAO said. The added referrals cost Medicare roughly $109 million.
auditors believe as much as $800 million in US dollars is being sent out of the country illegally each week, draining it of
hard currency, according to a report by American inspectors released Tuesday. The findings point to widespread money laundering
and could focus further attention on oversight at Iraq’s central bank, which is at the heart of an investigation into
alleged financial wrongdoing involving its former governor and other top officials. The US special inspector general for Iraq
reconstruction said in a report that auditors in Baghdad fear up to 80 percent of an estimated $1 billion leaving the country
weekly lacks proper documentation. The American watchdog said Iraq’s top auditor, Abdul-Basit Turki, disclosed the findings
about the extent of the alleged money laundering to American officials last month.
Iraq is at an all-time high and several other major indicators of progress in the country are on a downward trend, according
to a new U.S. government report.
Earlier this month,
the Iraqi government fired Central Bank of Iraq (CBI) Governor Sinan al-Shabibi amid allegations of corruption, a move that
is both a symptom and a consequence of increased corruption in Iraq and also a possible power grab by Iraqi Prime Minister
Nuri al-Maliki, according to the report, published Tuesday by the Office of the Special Inspector General for Iraq Reconstruction.
and constitutionally questionable move occurred as an audit of the CBI's foreign currency auctions surfaced. The audit purportedly
found that perhaps 80% of the $1 billion purchased at weekly CBI-managed auctions was tied to illegal transactions, with the
funds subject to those transactions potentially lost abroad to money laundering," the report reads.
considering paying back the €4m of Irish aid funds that ended up in a bank account operated by officials from the prime
minister's office. Irish Ambassador Anne Webster and her counterparts from the other countries affected by the €12m
fraud met the Ugandan government yesterday. Prime Minister PatrickAmama Mbabazi, who says he didn't pocket any of the aid, apologised
on behalf of his government. He said he was determined to apply full sanctions, including prosecution, against those implicated
in the fraud. Mr Mbabazi said the country's criminal investigation division was very involved from outset. In addition to
two senior officials being charged, one of whom is the principal accountant, 17 have been suspended without pay while the
Barclays, already rocked by an interest rate rigging scandal,
unveiled new U.S. regulatory investigations into the bank's financial probity on Wednesday and said its profit was hit by
charges for mis-selling insurance...Following investigations in the UK over its dealings with Qatari investors, Barclays said
the Department of Justice and Securities and Exchange Commission were probing whether its relationships with third parties
who help it win or retain business are compliant with U.S. laws. The bank is under investigation by Britain's financial regulator
and fraud prosecutor into payments to Qatari investors after it raised billions of pounds from the Gulf state five years ago
to save it from taking a taxpayer bailout.
Greek prosecutors are planning to issue international warrants for 11 Siemens executives, though their cases have already
been closed by German courts. The execs say they will appeal to the European Court of Human Rights...The Greek judiciary is pursuing the executives of the German
technology giant - including former CEO Heinrich von Pierer - on charges of bribing Greek politicians and public officials
to win lucrative contracts. But
since the cases have already been dealt with by German courts - either through convictions or settlements - the executives
say that an international arrest warrant would impinge on their human rights.
suspect that one reason why psychologists and other social scientists have avoided studying gullibility is because it is affected
by so many factors, and is so micro-context dependent that it is impossible to predict whether and under what circumstances
a person will behave gullibly. A related problem is that the most catastrophic examples of gullibility (such as losing one’s
life savings in a scam) are low frequency behaviors that may only happen once or twice in one’s lifetime. While as a
rule I tend to be a skeptic about claims that seem too good to be true, the chance to invest in a Madoff-run fund was one
case where a host of factors — situational, cognitive, personality and emotional — came together to cause me to
put my critical faculties on the shelf.
The United Nations Special Rapporteur on the independence of judges and
lawyers, Gabriela Knaul, warned today that the existence of corruption in the judiciary remains a daunting challenge in many
countries, and urged world governments to place the independence of judges, prosecutors and lawyers at the centre of their
policies to prevent and fight corruption and to strengthen the rule of law and human rights.
The Sarbanes-Oxley Act does not allow
the PCAOB to publicly reveal its disciplinary proceedings against firms throughout the whole process of charging, hearings,
initial decision, and appeal, enabling firms that engage in misconduct to drag out the proceedings for years. While legislation
has been introduced in both chambers of Congress to make the disciplinary proceedings public, the bill has failed to make
PCAOB inspections continue to find serious audit deficiencies in public company audits on a regular basis. Among areas of
specific concern are problems related to professional skepticism, tone at the top, and supervision...Our inspection results identified a number
of significant audit deficiencies in more complex or subjective areas where a greater degree of supervision and review would
be expected, such as the auditing of management estimates, goodwill and indefinite-lived intangible assets, and income taxes...The
inspection observations suggested the possibility that more attention needed to be devoted to supervision and reviewactivities in connection with audits of areas involving
a high degree of judgment, management estimation and the application of complex accounting literature.”
Greek government, under international pressure to attack rampant domestic corruption, acted on Monday by hauling an investigative
journalist into court. Costas Vaxevanisfaces trialfor
names of 2,059 Greeks who have accounts at the HSBC bank in Switzerland. Greece is in the midst of a massive financial crisis, which is a prime cause
of a European economic debacle that has contributed to a slowing of global growth. Corruption has been at the heart of the
Greek tragedy. Tax evasion was a prime reason why Greek governments for years falsified the national budget accounts to hide
a rapidly rising budget deficit. The euro crisis started when the truth emerged in December 2009 and it was evident that Greece
had no way to finance its debt mountain on its own. Vaxevanis' crime is that he published the "Lagarde List"
the directive by President Goodluck Jonathan that the investigative report into the $180 million Halliburton bribery scandal
be re-opened and the major culprits re-arrested, Vanguard gathered that this has resulted in a fall out between two former
heads of state and President Jonathan. The two former heads of state (names withheld) were said to have been found in the
investigative report to have benefitted from the sharing of the Halliburton bribe money using fronts who have already confessed
that they were only fronting for their principals.
(It) started with Countrywide, whose mortgages
Bank of America bought in 2008. What the complaint alleges is that Countrywide came up with a profitable scheme to get
more people into mortgages that is being called the "Hustle." The Countrywide Hustle debuted in 2007 and worked like
a charm, apparently...
2013 will be an important year for both India and Pakistan, as
the ruling parties in both the nations will have to pass the 'acid test' of election in the same year, while their political
opponents are on much advantageous position because of both the ruling party's unlimited involvements in corruption, nepotism
and various forms of political, financial and otherwise offenses. In India, the ruling Indian National Congress is visibly
at the gunfire of the media, when Robert Bhadra, the son-in-law of Sonia Gandhi and husband of Priyanka Gandhi is caught in
massive financial crime. According to Indian media, In 2007, Robert Vadra was a middle-of-the-road businessman with all the
prospects of an exporter of brass who had not managed to export much, but had the contacts to grow at a pace that power can
propel. He set up three companies, with mother Maureen as director. There was Blue Breeze Trading Pvt Ltd, whose state objective
was "business of services and hiring of air charters", even though there was no evidence that it actually chartered any planes.
Sky Light Hospitality Pvt Ltd was set up to "carry on business as hoteliers" and Sky Light Realty was incorporated to make
an entry into real estate. His flagship company remained Artex, set up in 1997, the year he married Priyanka Gandhi...the
Bhuttos are also in no better position. Pakistani voters are already angry at the rogue regime of controversial person Asif
Ali Zardari and his entire 'gang', while the image of the Pakistan Peoples Party is under real threat with the exposure of
'wrong' lifestyle of Bilawal Bhutto Zardari and his hidden romance with Hina Rabbani Khar.
Earlier this month, the UK’s Serious Fraud Office said
it would toughen its stance on bribery, meaning criminal penalties could become more commonplace.
Today, Ernst & Young warns that the next front for enforcers could be the British film and television industries as companies
increasingly work in emerging markets, and says the business should “heed corruption and bribery risks in financing
and making films abroad.” The report notes that “In the U.S., enforcers have begun to ask questions of studios
about potential bribery of foreign officials showing the extent of filmmaking’s exposure to such risks.”
A Milanese court sentenced former Italian Prime Minister Silvio Berlusconi to 4 years in
jail and suspended him from public service for 3 years for tax fraud on Friday. Mediaset, the country’s largest TV broadcaster which was founded by Berlusconi and remains
under his control, bought U.S. movie and TV rights at a bloated price from Il Cavaliere’s own holding company, netting
him more than €270 million ($349 million), according toItalian media. Berlusconi has two rights of appeal and, given his 76 years of age, it is unlikely
that he will do any time.
From a shabby house in one of New
Delhi's grimmest suburbs, a mild-mannered former tax official has launched a salvo of accusations of corruption involving
some of India's most powerful people, rocking the political establishment.
In quick succession, Arvind Kejriwal has publicly leveled charges of shady dealings against
the son-in-law of ruling Congress party chief Sonia Gandhi, the outgoing law minister and the leader of the main opposition
party. His claims, carried live and endlessly raked over by breathless 24/7 television news networks, tap into popular outrage
over the deep-rooted corruption in Indian politics, government andbusinessthat is often endured but rarely confronted in so public a manner, even by the media. "Our purpose is to tell the people
that every single political party is corrupt. They are in collusion with each other, they protect each other,"
Most executives (71 percent) say compliance and integrity-related
risks inemerging marketsincreased during the past two years, yet they lack confidence
in their companies' diligence programs, according to Deloitte's latestLook Before You Leapsurvey. When entering into mergers
or acquisitions, just 38 percent of executives indicate that they are extremely or very confident that their company has effective
processes to identify and mitigate compliance and integrity risks, while 34percent have the same level of
confidence for Greenfield investments. In third party relationships, respondents similarly lack confidence in controls when
engaging vendors (40 percent) and third party agents (36 percent).
Read more here: http://www.sacbee.com/2012/10/29/4945844/as-corruption-risk-rises-in-emerging.html#storylink=cpy
Read more here: http://www.sacbee.com/2012/10/29/4945844/as-corruption-risk-rises-in-emerging.html#storylink=cpy
Sustainability, in a broad sense, means managing our economy so that the
current generation can meet its needs without destroying the ability of future generations to get their needs met.
A sustainable banking system has four key characteristics:
provides a safe and secure place for investors to deposit surplus cash and earn interest.
provides a place where businesses can borrow to get started or to grow, and consumers can borrow for sound investments such
as buying a house or car.
does all thisefficiently, meaning that the portion of money that is
siphoned off between the borrower and lender is as small as it can reasonably be to get the job done. (A truly competitive
market would lead to this result.)
does all thisreliably, meaning it doesn't depend on bailouts and doesn't
disrupt the rest of the economy.
Our banking system doesnotpass the test of sustainability.
The recent $1 billionsuitagainstBank of America/Countrywide alleging that the bank sold
defective loans toFannie MaeandFreddie Macis
but a small piece of this unraveling series of financial flim-flams, which rival most scams because of its pervasive nature
and involvement of thousands of financial institutions and intermediaries...mortgage fraud ...combined easy money, greed and
securitizing that avarice all over the world. It was based on the myth that home prices don’t decline and quick profits
could be had by nearly anyone...it may prove to be the mother of all swindles because it nearly took down
the world’s largest financial system...Starting in 2006, the FBI got wind of some 7,500 suspicious mortgage activities. By 2008, that
figure doubled and peaked in the second quarter of last year at nearly30,000...these reports were the proverbial tip of the iceberg,
because they only looked at the problem from one step in the process.Here’s what else was going on, although we don’t have any hard numbers:
Mortgage Foreclosure “Rescues.”
Companies would set up shop to promise defaulting homeowners that they could halt the foreclosure process. They’d
fleece the hapless homeowner for a steep fee, then move on.
Appraisal Scams. Individuals would hire crooked appraisers to under-appraise a home, obtain a mortgage,
then sell it at a much-higher price.
Securitization Swindles. This may be the biggest scam of all. Junk mortgages were bundled, given
the highest credit ratings, then sold to investors in vehicles like collateralized mortgage obligations. These “sub-prime
loans” are still on the books of some of our largest banks, Fannie Mae and Freddie Mac.
Robo-Signing. Banks eager to sell loans toWall Streethurried
the process along by creating automated, illegitimate pipelines. State attorneys general settled with the banks on this issue,
although no one seems to have been prosecuted for these crimes and it’s done little to stem the foreclosure wave.
Predatory Lending. Low-income areas were targeted by rapacious brokers and bankers to sell mortgages
and home-equity loans with high rates and fees to people who couldn’t afford them.
With four months left in office, President Lee Myung-bak, who campaigned
on an anti-corruption platform, is watching his only son and an elder brother come under fire for alleged irregularities in
funding Lee’s retirement home. Another brother was arrested on separate allegations he took bribes from bankers...
Another Lee brother, Lee Sang-deuk, was arrested
in July after a court approved a warrant on allegations he took half a million dollars in bribes from two detained bankers
with the intent of using his influence to help the bankers avoid punishment. Enraged protesters threw eggs at the brother,
grabbing his tie and jostling him as he entered court. President Lee apologized after his brother’s arrest, calling
recent corruption scandals involving family and aides “heartbreaking.”
An Italian court on Friday sentenced former prime minister Silvio Berlusconi to four years
in jail for tax fraud in connection with the purchase of broadcasting rights by his Mediaset television company...
The four-time prime minister and other Mediaset
executives stood accused of inflating the price paid for TV rights via offshore companies controlled by Berlusconi, and skimming
off part of the money to create illegal slush funds. The
investigation focused on television and cinema rights that Berlusconi's holding company Fininvest bought via offshore companies
from U.S. groups for 470 million euros between 1994 and 1999.
THE global bribery campaign of a Reserve Bank company engulfed more than a dozen countries,
according to explosive police evidence aired in court.
"I haven't seen a country which involves an agent where they [Securency] did not commit bribery,"
said Federal Agent Rohan Pike, testifying yesterday in the committal of eight former executives from Securency and its sister
company Note Printing Australia. He also told the court he believed criminal activity continued "under the watch" of former
Reserve Bank assistant governor and company chairman Bob Rankin as late as May 2009, when allegations were revealed byThe Age.
Senior executives have been charged over dealings in three countries - Malaysia, Vietnam and
Indonesia - between 1999 and 2006.
But Mr Pike, who led the federal police investigation, yesterday suggested the extent of the
scandal was far greater. The court has previously been shown a 2007 Securency document outlining 17 countries with agents:
Bangladesh, India, Angola, Botswana, Dubai, Madagascar, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Uganda, China,
Argentina, Uruguay, Chile and Nigeria.
Across Eastern and Central Europe and the Balkans,
countries are experiencing a surge of instability that, analysts say, stems almost in equal parts from endemic corruption
and the sometimes ham-fisted efforts to combat it in the context of bitter political rivalries.
pay the federal government $95 million to settle charges that it improperly marketed off-label uses for four of the company’s
drugs. The U.S. Department of Justice is accusing Boehringer of paying kickbacks to doctors to induce them to prescribe
the four drugs—the stroke-prevention drug Aggrenox, the chronic obstructive pulmonary disease (COPD) drugs Atrovent
and Combivent, and the hypertension drug Micardis. Boehringer and DoJ have also settled charges that the company caused false
claims to be submitted to government health programs as a result of its actions.
Adoboli, now 32,
is accused of booking fake hedges to hide the risk of trades, causing the Swiss bank a $2.3 billion trading loss -- the largest
unauthorized trading loss in U.K. history. He was charged in September of last year with two counts each of fraud and false
accounting. Today prosecutors added two more false accounting charges covering claims Adoboli created an account where he
parked trading profits to cover future losses on the ETF desk. He has pleaded not guilty...Ruwan Weerasekera, chief operating officer of securities
at UBS’s investment bank, testified Oct. 9 that Adoboli booked tens of thousands of real and fake trades during thesummer of 2011 that exposed UBS to losses that may have escalated
to as much as $12 billion while on the ETF trading desk.
Two things are striking about this case. First, the Hustle wasn’t for subprime loans—it was for
prime loans. Perhaps even more surprising is that Countrywide got the Hustle going in August 2007, when the party was already
over. Subprime lendersstarted going belly upin mid-2006,
and by mid-2007, investors hadlost their appetitefor mortgage-related
securities. While the subprime
bubble was still growing, Countrywide could easily sell low-quality loans into the voracious private market for bonds backed
by mortgages. Once that market went away, Countrywide created the Hustle to ramp up its origination of prime loans that could
be sold to Fannie Mae andFreddie Mac. The suit charges that Bank of America kept the Hustle going
How large is fraud against Medicare? It runs about$60 billion a year. How large is fraud committed against the Walmart company? I do not know, but whatever
it is, it is far, far smaller than $60 billion a year. A large fraud against Walmart reported recently was a $13 million credit
card and gift card fraud. A recentlarge fraud caseagainst Medicare was $430 million. Earlier
this year, there was another large case of $452 million against Medicare...I think that we can safely say that Walmart's fraud losses are infinitesimal compared to Medicare's,
or,alternatively, we can say that Medicare's fraud losses are gargantuan.
The Department of Justice and the Securities and
Exchange Commission are investigating Walmart for violations of the Foreign Corrupt Practices Act, which prohibits improper
payments to foreign officials for a business advantage. Both agencies have made FCPA enforcement a priority in recent years,
collecting about $503 million in financial penalties in 2011 alone. The company has said it is cooperating with the probes.
So far, Wal-Mart has spent more than $30 million on the global review, according to the memo. The company has previously disclosed
$50 million in separate expenses on the Walmex investigation. More than 300 lawyers and accountants at Greenberg Traurig LLP
and KPMG have logged more than 79,000 hours reviewing Wal-Mart's operations in 27 countries, according to the memo. Both firms
were subsequently retained to help Wal-Mart make changes at its Mexico unit.
Bank of America Corp.sold
defective residentialmortgage loanstoFannie MaeandFreddie Macthat
later defaulted, the U.S. government said in a $1 billion fraud lawsuit against the bank. The U.S. Justice Department filed a civil complaint today
in Manhattan federal court, claiming that Countrywide Financial and its parent Bank of America generated and sold Fannie Mae
and Freddie Mac thousands of defective mortgage loans. Bank of America acquired Countrywide in 2008.
The lawsuit is the first by the Justice Department
to allege fraud over mortgage loans sold to the two entities, U.S. Attorney Preet Bharara in Manhattan said today in a statement
announcing the suit, which covers conduct from 2007 to 2009. “The
fraudulent conduct alleged in today’s complaint was spectacularly brazen,” Bharara said. “Through a program
aptly named ‘the Hustle,’ Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with
the bill.” The government claims
in the complaint that Bank of America “systematically removed every check” in the issuance of mortgages and then
sold the “flawed” mortgages to the government.
The OECD criticised France on Tuesday for meagre efforts to crack down on businesses bribing
foreign officials, accusing it of a lacklustre response to cases of corruption by French companies discovered abroad. An OECD
working group said it "is seriously concerned that despite the very significant role of French companies in the international
economy, only 33 foreign bribery proceedings have been initiated" since France joined the international convention against
bribing foreign officials in 2000. The OECD working group said it "is particularly concerned by the lacklustre response of
the French authorities in relation to companies sanctioned by other" countries under the anti-bribery convention.
The blasts at bankers as being corrupt are not about to subside. Recent
high-profile allegations against some of the largest banks, from charges of interest rate manipulation, to breaking U.S. sanctions
on Iran, to vast money-laundering schemes, are just a taste of what is to come. Never before have there been so many investigations
by such a multitude of official agencies in the U.S. and abroad of the possible malfeasance of bankers.
must be done. Wrongdoers must be punished. But the constant bank-bashing is unhealthy. It damages moral within the targeted
institutions, undermines public trust in our financial system and promotes levels of litigation and a kind of regulatory zeal
that, I believe, does more harm than good.
A bribery scandal involving the Reserve Bank of Australia was one
of the most spectacular of a string of wake-up calls Australian and New Zealand companies received in the past three years
that exposure to corruption has become a risk worth paying attention to. Following a two-year investigation, Australian authorities
in July 2011 cracked down on two banknote printing companies partly or fully owned by the Reserve Bank of Australia...According
to a Deloitte survey of 390 senior executives...forty-four per cent of the respondents
who worked for companies with offshore operations had either limited or no working knowledge of applicable domestic or foreign
anti-bribery laws, and 48% did not have a formal policy or compliance programme in place to manage corruption risk.
Last year, prosecutors in the US, Germany, Switzerland and the
UK continued to crack down on companies that bribe foreign public officials to get lucrative contracts abroad, the global
watchdog group Transparency International reported. But most of the 39 countries that have joined the Organisation for Economic
Co-operation and Development’s anti-corruption effort in the past 15 years did nothing or not enough to stop corruption
in international business transactions last year...
Bonny Island off the west
coast of Africa was the last place many slaves saw before being hauled to the New World. Centuries ago, corrupt African leaders
and Western traders became business partners. A few Africans made fortunes; Western interests found cheap labor. And 12 million
people lost their freedom.
Today the slave trade is gone
from Bonny Island in Nigeria, replaced by gas liquefaction plants and pipelines stretching from a great reserve of fossil
fuels.But the story has not changed much: Some African leaders are selling off what is most valuable — this time oil,
not people — while pocketing huge bribes and leaving their citizens destitute, the Department of Justice says. Bonny
Island’s symbolism strikes at the heart of how modern banking has lost its way, according to many who follow the developing
world. With the help of multinational banks, money in this modern rip-off disappears into a black hole of tax havens, secret
accounts and shell companies, while Western aid groups gather dimes and quarters to try to repair the damage that’s
Commission on Ethics and a new government-watchdog group are calling for...progress in this state, and it appears they finally
have support from legislative leaders. Incoming state Senate President Don Gaetz and House Speaker Will Weatherford said Tuesday
that they'll make campaign-finance-and-ethics reform high priorities in next year's legislative session. It's about time.
The Legislature has not adopted serious ethics legislation since the 1970s, and it shows.
former House Speaker Ray Sansom resigned during an investigation of his efforts to steer millions of tax dollars to a state
college that later hired him at a six-figure salary. The grand jury that looked into Sansom's dealings issued a scathing report
on legislative corruption, citing loopholes in ethics laws and failure to hold lawmakers accountable. Yet, the corruption
has extended to all levels of government. From 2000 to 2010, Florida led the nation in federal-public-corruption convictions
with 781, according to the U.S. Department of Justice.