BIG Corrup$ion

2012 BIG Corrup$ion

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Articles and Opinion on BIG Corrup$ion from 2012

2012 NEWS




2012 - The year of bank fraud

Notable accusations, admissions and settlements in 2012:

Bank of America: the US Justice Department is seeking $1 billion in fines for troubled loans sold to Fannie and Freddie; MBIA’s lawsuit against Countrywide, which was disastrously acquired by BofA, rolls on; BofA is one of five banks participating in the $25 billion national mortgage settlement.

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.

Bank of New York Mellon: a subsidiary paid $210 million to 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 billion in revenue.

Barclays: $450 million settlement in the Libor scandal; also fined by the FSA for mis-sold interest rate hedges.

BBVA: settled overdraft suit for $11.5 million.

Citigroup: settled CDO lawsuit for $590 million; one of five banks participating in the $25 billionnational mortgage settlement; paid $158 million to settle charges it “defaulted the government into insuring” risky mortgages.

Credit Suisse: sued by NY state for allegedly deceiving investor in the sale of MBS.

Deutsche Bank: settled a DOJ mortgage suit for $202 million; FHFA fraud case is ongoing.

Goldman Sachs: FHFA fraud case is ongoing; after a ruling by federal appeals court, a class action lawsuit over MBS will go forward.

Crédit Agricole: sued by CDO investors two times.

HSBC: settled money laundering charges for $1.9 billion; set aside $1 billion for future settlements related to mis-selling loan insurance and interest rate hedges in the UK; Libor settlement still to be reached.

ING: settled charges that it violated sanctions against Iran, Cuba, etc. for $619 million.

JP Morgan Chase: being sued by NY state for MBS issued by Bear Stearns; class action lawsuitand criminal probe over failed derivatives trades in its Chief Investment Office; one of five banks participating in the $25 billion national mortgage settlement.

Mitsubishi UFJ: paid an $8.6 million fine for violating US sanctions on Iran, Sudan, Myanmar and Cuba.

Morgan Stanley: fined $5 million for improper investment banking influence over research during Facebook’s IPO.

Royal Bank of Scotland: $5.37 billion shareholder lawsuit related to 2008 rights issuance; set aside $650 million to cover claims it mis-sold payment protection products; also fined by the FSA for mis-sold interest rate hedges.

Santander: fined by the FSA for mis-sold interest rate hedges.

Société Générale: rogue trader Jerome Kerviel loses appeal his appeal 3-year sentence for trades that generated $6.5 billion in losses.

Standard Chartered: $340 million fine 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 million for lack of CDO disclosure.

UBS: $1.5 billion Libor fine and two traders criminally charged; rogue trader responsible for $2.3 billion loss found guilty of false accounting.

Wells Fargo: Federal lawsuit over mortgage foreclosure practices ongoing; paid $175 million over mortgage bias claims; one of five banks participating in the $25 billion national mortgage settlement.

Looking back makes the outlook for corruption fighting bright

Just consider 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’s research 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 the UN Global Compact, to the Extractive 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 in Brazil right 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 like Global Witness andProPublica, 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.

2012 A record year for corporate criminal fines

Top Ten Corporate Criminal Fines

1.  BP – $1.256 billion (environmental and related offenses) (2012)

2.  Pfizer – $1.2 billion (marketing offenses) (2009)

3.  GlaxoSmithKline – $956 million (marketing offenses) (2012)

4.  Eli Lilly – $515 million (marketing offenses) (2009)

5.  AU Optronics – $500 million (antitrust) (2012)

6.  Abbott Laboratories – $500 million (marketing offenses) (2012)

7.  Hoffman-LaRoche – $500 million (antitrust) (1999)

8.  Yakazi – $470 million (antitrust) (2012)

9.  Siemens – $450 million (FCPA) (2009)

10. Halliburton/KBR – $402 million (FCPA) (2008)

The biggest anti-corruption story of 2012

 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.

The Walmart Corruption Scandal: Watershed Moment for Mexico?

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.

BRAZIL: Changing the Code on Corruption

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 difference hinged 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.

CASE STUDY: Inducing Honesty, Changing Norms: Government Ethics in Brazil, 1995-2004 (PDF,1.3MB)

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.

Quebec story of the year: The corruption inquiry

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...


Azerbaijani President Aliyev Named Corruption's 'Person Of The Year'

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.

The BIG Corruption in Small Gifts

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. 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.

Sunlight Foundation's 2012 Annual Report in Video


The BIG Corruption in Small Gifts

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. 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.

Surveys: Fraud, corruption and crime stand to impede Mexico's economic growth

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.

Bernie Madoff Sent A Letter To CNBC On Christmas Eve

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."

Chinese Officials Find Misbehavior Now Carries Cost

“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 Anti-Corruption Toolkit: No Flowers, Expensive Booze or "Empty Talk"

China’s new leadership, which was introduced to the world in mid-November and is helmed by Communist Party chief Xi 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. 

In China, Government Corruption Prompts Unexpected Criticism From Policemen

Weibo Anti-corruption Thrives in China

China's Clever 'Anti-Corruption' Campaign

The New York Times optimistically suggests that new Chinese leaders are demonstrating seriousness in the struggle against that country's notorious corruption...
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.

Hamid Karzai Says Americans Made Afghanistan One Of The Most Corrupt Countries On Earth

"The BIG corruption is in transactions and contracts
 involving  outsiders in Afghanistan... these contracts are
given to senior government officials or their relatives,"

President 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.

IBM Contends With Angry Judge in Bribery Case

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 and Anti-Corruption in Cambodia

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.

Former Singapore banker arrested in U.S. over Olympus fraud

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 of Japan to 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 George Venizelos.

BOTSWANA: Ten "commandments" of fighting corruption

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?

Corruption in India Inc alarmingly high

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 by The 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 again.

Corruption in Brazil: As the historic trial of those guilty of a legislative votes-for-cash scheme draws to a close, Brazilians digest the verdict

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 behind bars. 

In Russia, unheeded cries of corruption

 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 decades.

First Black Court Chief Confronts Corruption in Brazil

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 of Brazil’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 President Luiz 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.

Russians still forced to pay bribes, despite corruption fight

The headline-grabbing charges of high-level official misconduct began 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 of Defense 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 Russian Public 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.

Madoff's brother jailed over Ponzi fraud

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.

Meet The Madoff Victims That Profited From Their Investment

It could be likened to the legal version of winning the lottery – a group of investors in Bernard Madoff’s $65 billion Ponzi 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 to legally realize a sizeable 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.

SEC Charges Eli Lilly and Company with FCPA Violations

The 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.

Libor Manipulation Cost Fannie Mae, Freddie Mac $3 Billion, Watchdog Says

Libor manipulation 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...

UBS traders charged, bank fined $1.5 billion in Libor scandal

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 rates.

UBS Libor Traders Face U.S. Criminal Charges

UBS: So Admitting Fraud and Bribery as a Megabank Means $1.5 Billion?

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 that 36 UBS bankers were “implicated” in Libor, which meant that some of them may be 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.

UBS most active political contributor AFTER the election!

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 settlement with the U.S., British and Swiss governments for trying to manipulate a key interest rate used to price borrowing around the world. The bank’s $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...The UBS PAC favored 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 UBS Libor-Fraud E-mails Are a Gift for Regulators

By their chat, UBS employees exposed their scam

Are Bank Regulators Now Encouraging Fraud?

Financial Services Authority Report on UBS Libor Manipulation (PDF, 40 pp.)

Postal employees stole millions in federal checks

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.

New Report Finds Crime, Corruption, and Tax Evasion at Near-Historic Highs in 2010

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 and 2010

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.


The report, “Illicit Financial Flows from Developing Countries: 2001-2010,” is GFI’s annual update on the amount of money flowing out of developing economies via crime, corruption and tax evasion, and it is the first of GFI’s reports to include data for the year 2010.


Co-authored by GFI Lead Economist Dev Kar and GFI Economist Sarah 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 Director Raymond 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 outflows.”

How Wal-Mart Used Payoffs to Get Its Way in Mexico

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.

Related Video from NYT (1 1/2 minutes)

Wal-Mart seen facing sizable fines in U.S. bribery probe

Russian protest leader Navalny faces new fraud charge

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 in Moscow, 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 President Vladimir Putin and what the opposition describe as rigged parliamentary elections.

RUSSIA: Corruption, corruption, corruption

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 made headlines when 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

 Corruption in higher education is popularly considered to be 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.


Auditors' secret report reveals how millions flowed to President Zuma

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.

Download Forensic Audit Report (PDF, 500 pp.)


Patronage just part of South African politics

The universalism of the anti-corruption movement

"...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."

Senior HSBC Bankers Need To Face Jail For Their Bank's Role In Laundering Drugs Money; Fining The Bank Won't Work

 HSBC, announced 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.

Zambia lost US$8.8 billion in illicit financial outflows from 2001-2010

$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.

Receiver, liquidators end fight over Stanford assets

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.

Rolls-Royce mired in China corruption probe

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.

Is Corruption in China 'Out of Control'? A Comparison with the U.S. In Historical Perspective

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.

Chinese Official Known As The 'Druggie Governor' Goes On Trial For Massive Bribery And Voracious Opium Use

Yang Hongwei, the former governor of Chuxiong Yi autonomous prefecture in south-west China, 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, Go Kunming, 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".

China Corruption Blotter


  • 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 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

Anti-corruption storm sweeps across China

The Libor conundrum: How the world throws out the rate used around the world

“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,” said Peter 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 fromMadrid to Manhattan.

WalMart And The Indian Allegations Of Bribery

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 in India. 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:

"The 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."

Will Brazil's 'Mensalao' corruption trial bring change?

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.

MENSALAO: Brazil's Lula knew about vote buying scheme - newspaper

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.

U.K. Fraud Agency Makes First Arrests Over Libor-Rigging

A former Citigroup Inc. trader is among three people held in the first U.K. arrests as part of global probes into tampering with the London interbank offered rate, according to two people familiar with the matter...The other two men arrested worked at brokerage firm RP 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 lender UBS 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 by Barclays Plc, the U.K.’s second-biggest bank, to settle claims it attempted to manipulate Libor.

HSBC to Pay Record $1.9b U.S. Penalty

The U.K.-based 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.

Madoff Scandal Still Haunts Victims

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.

They labor for unions in a tangled Madoff case

Google Revenues Sheltered in No-Tax Bermuda Soar to $10 Billion

Google Inc. avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell 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, the European 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.


NEW UNDP STUDY: International Comparative Analysis of Anti-Corruption Legislation: Lessons on Sanctioning and Enforcement Mechanisms for Viet Nam - Executive Summary

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.

Download full UNDP study (PDF, 67 pp.)

What is about China's Anti-Corruption Drive?


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.

Watches, mistresses on show as China highlights graft

Lurid reports of Chinese officials sporting luxury watches or promoting theirtwin mistresses are 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 the vice party head of Sichuan province and a former deputy mayor of the manufacturing hub of Shenzhen.

How Corruption Is Strangling U.S. Innovation

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's Republic, 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."

On "Madoff Day," Think About How to Avoid Becoming a Victim of Fraud

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 was in a class by itself. And then, a short time afterward, some of the brokers who had been selling fraudulent certificates of deposit for R. Allen Stanford began 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.

In Brazil, Corruption Trial Winds Down as Anti-Impunity Efforts Continue

Sentencing in Brazil’s largest corruption trial in history ended on November 28, wrapping up a phase of a landmark case that gripped the country. The Supreme Court convicted 25 of 37 defendants withsentences totaling 282 years in jail and fines of up to $10.7 million. The trial forms part of a larger effort by the judicial system and President Dilma Rousseff’s administration 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.

The so-called mensalão case, or big allowance, resulted from a congressional 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 of watchdog group Contas 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, told O Globo that the case “inaugurated a new phase of [Brazil’s] young democracy.” He added: “From the case emerges a country better prepared to assume the role it deserves of a political and economic power.” 

How Wal-Mart got a foot in the door of the retail market

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. The 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.

India Government Agency Probes Wal-Mart Investments

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.

"Walmart and Bharti have hoodwinked the government"

Walmart's investment in India scrutinised

Off with Their Heads: Has Vladimir Putin lost control of his "corruption crackdown"?

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 Cribs with episodes of COPS. 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. That schadenfreude is part of the point. Purges are meant to be popular.

But 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, police claim to have found an obscure military bureaucrat, Alexander Yelkin, in possession of around $9 million in cash and four Bregnet watches. 

A bottle of "liquid razor blades" is no longer the Chinese bribe of choice

A uniquely Chinese version of the Corruption Perception Index

A 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 of baijiu (“white alcohol”), a popular grain liquor, and it can cost up to ¥1 million ($160,635) for a vintage bottle. (CBS anchor Dan Rather reportedly described 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 only 1 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 priced baijiu brands, which conveniently happens to be called Xi Jiu. Xi seems to be driving the anti-corruption message home by banning red 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%.

Rural China's rubbish revolution: Villagers band against corruption

Fight corruption by system reform

Can Anti-Corruption Laws Help Combat Terrorists, Tyrants and their Corporate Supporters?

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. As New 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.

Finland's hidden corruption

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.

Slovenia prime minister on trial in bribery scandal, two mayors under investigation

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 first started 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.

Mistresses - China's New Corruption Warriors

In the past week, two corruption cases have been exposed, not by the Central 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' collective human flesh search efforts, 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 in China.

China corruption czar hears calls for transparency



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 broke.

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.

China takes anti-corruption drive to Macau's casino halls

Growing Beyond: a place for integrity Ernst & Young 12th Global Fraud Survey

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.

SEC Accuses Big Four Chinese Affiliates of Blocking Fraud Probes

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 from investigators.

Deloitte Touche Tohmatsu CPA 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, said Paul Gillis, professor at Peking University’s Guanghua School of Management

Walmart's ride to India gets bumpier

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

Anti-bribery law found eight US firms in violation long before Wal-Mart started probing

At 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 (around Rs.90 crore today) to settle bribery-related offences spread over six years in India, Thailand and South Korea.

Indian Govt must carry out thorough probe on Walmart: UNI Global Union

Walmart de Mexico Largely Pardoned From Bribery Accusations

Corruption the killer in China rail crash: family

"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...

Kremlin Anti-Corruption Drive Gathering Pace

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 Yelena Skrynnik.

• 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 budget ongoing.

• Investigations 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 Moscow property management department was caught taking a bribe.

"This makes for a total of almost 10 corruption-related events, many involving senior government officials as well as one important Duma anti-corruption initiative,"

Putin's Anti-Corruption Campaign May Backfire

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.

Why Putin's Anti-Corruption Campaign Might Be Spinning Out of Control

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 "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."

Corruption more likely in secrecy jurisdictions, Parliament told

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.

CPA sentenced to prison in massive fraud scheme

A certified public accountant was sentenced Friday in Virginia to 54 months in prison in a half-billion-dollar fraud scheme affecting more than 3,500 victims throughout the United States and abroad, the Justice Department said.

U.S. Attorney Neil MacBride in Virginia said Jorge Luis Castillo, 57, of New Jersey, was sentenced by U.S. District Judge John A. Gibney, who also ordered three years of supervised release and the payment of $43.5 million in forfeiture fees.

Castillo pleaded guilty in November 2011 to one count of conspiring to commit mail and wire fraud. He had served as an “outside auditor” for Provident Capital Indemnity Ltd. (PCI), where he formerly was employed.
“As a licensed accountant, 
Mr. Castillo used his expertise to create fraudulent financial statements out of whole cloth,” said Mr. MacBride. “Many elderly investors relied on Mr. 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 by U.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, and Vanier said 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," 

Behind Every Corrupt Chinese Official Is A Woman Who's Not His Wife

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.

China's sex tape scandal: Zhu Ruifeng on Lei Zhengfu 'sting'

Indebted Dragon: The Ponzi Scheme Driving China's Construction Economy

In Indebted 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.

Indebted Dragon: The Risky Strategy Behind China's Construction Economy

CHINA: Lonely fight against graft

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."

Nothing has changed in Japan Inc. since Olympus saga

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."

Germany Falling Behind in Fight against Corruption

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 out Germany for 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."

AUSTRALIA: States differ in their approaches to fighting corruption

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.

Bribes Provide Companies Few Benefits, Study Finds

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.

Russians profit from Britain's offshore secrecy

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 is Rinat Akhmetov, the richest man in theUkraine. From a base in the coal-mining Donetsk region, 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.


USA Union Corruption 2012: Big Labor's Federal Rap Sheet

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.

Forensic Audit Says Kabul Bank Began as "Ponzi Scheme"

Kabul Bank became 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-concealed Ponzi 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 for Afghanistan’s central bank by the Kroll 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 seized the bank in August 2010 and the theft was revealed.

Princelings profit from Chinese corruption

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 for Goldman Sachs before joining one of the local private equity firms, Boyu. The daughter of Wang Yang, governor of Guangdong province, works for Deutsche 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.

Brazil's Rousseff scrambles to contain latest scandal

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.

Brazil's New Corruption Scandal Further Hurts Former President Lula's Reputation

Among 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 in Congress for 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.

Wal-Mart tight-lipped on closure reports as bribery probe is expanded

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.

New corruption scandal rocks Brazilian government

Brazilian President 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

Global Corporate Fraud is Down, Data Theft a Stubborn Threat

In 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 annual Global Fraud Survey from 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.

Philippine Media tackle issue of corruption

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.
The 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

unethical and 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.”

Corruption in media

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.

Aquino urges media to address its own corruption

Questions mount for Deloitte over relationship with Autonomy

Deloitte 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 work. 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.

Special Report: How gaming Libor became business as usual


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.

All expenses paid: the full scale of British MPs' lavish globetrotting revealed

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 Pays $8.9 Million After Finding Corrupt Payments

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. The Aberdeen-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

India Anti-corruption probe: Why we should feel sorry for Walmart

Walmart's reporting to the US authorities of possible wrongdoing by its joint venture with Bhartiin India highlights the power of governance and law enforcement in America. Within our country, 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 curb 
corruption around 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 stall 
foreign direct investment in 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. 

Wal-Mart's India Venture Suspends Executives amid Internal Bribery Probe

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. 

Wal-Mart's India joint venture suspends executives

Mexico Wal-Mart bribery probe yields no evidence yet: watchdog

Russia's Latest Matryoshka-Doll Corruption Scandal

First, Putin fired his 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 member Andrei Piontkovsky told 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, police searched the apartments of investor Konstantin Malofeev and his erstwhile business partner, Alexander Provotorov, who is now head of  the state-controlled communications behemoth OAO Rostelecom. 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 still stuck with the cameras, which no one now needs.

Russia: Corruption Case Grows

A former Defense Ministry official inRussia has 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 President Vladimir V. Putin’s decision earlier this month to dismiss the defense minister, Anatoly E. Serdyukov. 

Former Russian Defence Ministry official charged with fraud

Iraq cancels $4.2bn Russian arms deal over 'corruption'

How Putin Is Turning Russia Into One Big Enron

China's challenge with corruption

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 time around.
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. 

China targets bank executives' perks in anti-corruption drive

China will ban executives from state-owned banks and 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 in China. They also come amid growing public anger over widespread graft. China is sensitive to anything that raises suspicions of corruption...

Growing Concerns in China about Inequality, Corruption

Sentencing of accountant wraps up vast fraud prosecution

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 Castillo of 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.

Tragedy as medical student son of Bernie Madoff's accountant shoots himself dead - as his father waits to be sentenced for hiding $65billion fraud

  • Jeremy Friehling was found dead from a self-inflicted gunshot wound on Thursday
  • Friends had become concerned after he made erratic comments on Facebook
  • His father, David Friehling, pleaded guilty in 2009 to helping Bernie Madoff conceal his infamous $65billion Ponzi scheme
  • Madoff's own son Mark committed suicide in 2010 on the second anniversary of his father's arrest

FBI: Operation Universal Money Fast - Putting the Brakes on Health Care Fraud

The Medicare Fraud Strike Force, established in 2007 in
Miami to put a full-court press on health care fraud in South
Florida, is a joint effort of the Departments of Justice and
Health and Human Services. A multi-agency team of federal,
state, and local investigators and prosecutors fights these
frauds through the use of Medicare data analysis and other
investigative techniques. Since its creation, strike force
operations have charged more than 1,250 defendants who
have collectively billed the Medicare program for more than
$3 billion.

Chevron Files Ethics Complaint Against N.Y. State Comptroller

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.

GlaxoSmithKline settles fraud case for $3 billion

British drug-maker GlaxoSmithKline settled a federal fraud case by agreeing to pay $3 billion in fines, and pleading guilty to criminal charges over how it sold medications.

Two Former Stanford Executives Convicted of Fraud

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.

Former Croat PM Jailed for Corruption

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.

US Securities and Echange Commission Rocked By Lurid Sex-and-Corruption Lawsuit

In a salacious 77-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 a history of 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 the Bernie Madoff case and the...Stanford Financial Ponzi scandal, 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 victims...

Startup electric car company accuses Energy Department of corruption

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 is granted.

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.

HP Is Asking For A 'Criminal' Investigation Into Shady Accounting From The Company It Bought For $11 Billion

Hewlett Packard announced an $8.8 billion writedown due largely to accounting fraud at Autonomy, which it bought for $11.1 billion last year..."

UBS trader jailed for seven years after being found guilty of UK's biggest-ever fraud and losing Swiss bank £1.4bn

A UBS 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.


Corruption will lead to collapse of party, warns Xi Jinping

China’s 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) over the 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 Xi Warns Party of Corruption Scourge

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!"

Corruption drives calls for reform in China

The claims about Premier Wen Jiabao's hidden family assets prompted Beijing to block The 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.

Diamond Foods: When Accounting Goes Wrong

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. But Diamond Foods is 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 that claim. 

EU halts Afghan judicial aid over corruption

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 where in lieu of physical or circumstantial evidence, Afghan authorities rely heavily upon confessions for convictions...

Embezzlement, Scam Shatter Venerable Vanguard Foundation

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-old Bay 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 sentenced in a federal court to 22 years in prison. In exchange for the testimony that put Cohen behind bars, Hari Dillon, Vanguard’s president, pleaded guilty to 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.

Prosecutor: Embezzlement Plea a Warning to Others

"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...

Crundwell had 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


FOREX Ponzi Scammer Hit With Major Prison Sentence

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 in New 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.

Stanford Receiver Sues Greenberg and Hunton Firms, Says Lawyer's Work Helped $7B Ponzi Scheme

A court-appointed 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...

US Seizes Ex-Taiwan Leader's Manhattan Condo, Virginia House

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 spent more than two years trying 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 the U.S.

With Anti-Corruption Drive, Kremlin Looks to Seize Navalny's "Trump Card"

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 Minister Anatoly 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.

Xi's challenge is to stamp out corruption in China

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.

UK anti-fraud chief sees Libor update in New Year

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. Other banks remain under investigation in Europe, the United States, Canada and Japan, 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.

Political corruption in Brazil: A blow against impunity

Brazil's mensalão trial has brought many historic moments and 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.

Mexico's incoming president proposes anti-corruption commission

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.

Walmart discloses new anti-corruption probes

Walmart said an internal probe into potential violations of anti-corruption law had extended to Brazil, China and India as 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 of bribes paid to secure new store permits in Mexico had extended to three other big emerging markets.

Investigating allegations of corrupt practice in India: Walmart

European aerospace and defence group(EADS) launches external review of corruption rules

European aerospace and defence group EADS has launched an external review of its anti-corruption rules as it faces ongoing investigations in Austria, Britain and Germany. 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 and Germany said 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.

Corruption and Abuse of Power Infest Honduras Presidential Race

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).

Ex-Croat Prime Minister at corruption trial: I'm no criminal

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. 

BP to pay record fine; 2 to face charges

Largest Criminal Penalty in U.S. History
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, a source 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 the leak...two BP employees face manslaughter charges over the death of 11 people in the explosion of the Deepwater Horizon oil rig that triggered the massive spill. The largest previous corporate criminal penalty assessed by the Department of Justice was the $1.2 billion fine imposed on drug maker Pfizer in 2009.

Attorney General Eric Holder Speaks at the BP Press Conference

Corruption Holding Peru Back from Being a Developed Country - Comptroller General

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 to state 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 and other 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.

New Corruption Trial Ordered for Peru's Fujimori

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.

Prison Authorities Reject Fujimori's Request for Radio Interview

Congressional Report Blames Corzine for MF Global's Collapse

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.


US Justice Dept. Issues Guidance on Foreign Bribes

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. The 120-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.

Click here to read 120 pp. "Resource guide to the Foreign Corrupt Practices Act"

In Bribery Law, the Watchword Is Uncertainty

Nigeria: N29 Billion Fraud Allegation

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. 

Chinese Reformer handed anti-corruption role

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 Chinese leaders posed the greatest threat to the survival of the ruling Communist Party, and even of the state.

Corruption in Military Poses a Test for China

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...

...the depth of graft and brazen profiteering in the People’s Liberation Army poses a delicate problem for the new leader, one that Colonel Liu and others have warned could undermine the status of the Communist Party...the arrest of General Gu was probably just another example of sporadic efforts against big names in the army rather than a concerted campaign

China's local officials want asset disclosure as anti-corruption tool

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 corruption.

China's Illicit Flows Are "Big Issue" for Money Laundering

Banks 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.”

China's corruption syndrome

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. 

Controller admits he cooked books for Bernard Madoff

Irwin 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

Brazilians dare to hope crackdown on corruption is real

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 spy chief, Mohammed al-Dahabi, gets 13 years on corruption charges

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

Australia Drops Cambodian Bribery Allegations

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.”


MoneyGram settles fraud allegations

Payment services company MoneyGram International Inc said it reached a $100 million settlement with U.S. authorities related to suspected fraudulent transactions by some agents. The 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 fraud.

Ex-Goldman trader's fraud caused $118 million loss: U.S. regulator

U.S. regulators on Thursday accused a former Goldman Sachs Group Inc trader of defrauding the Wall Street bank of $118 million in a scheme of fabricated trades and fake entries.

10 years later, justice in fraud scheme

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 mortgage fraud deals and calculated the losses at $5,16 million.

German firm to pay $125M in Le-Nature's fraud case

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

Anti-corruption court acquits Uganda ministers of Shs14 Billion Chogm money

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. 


Bank of America $1 Billion Whistleblower Also Faced Fraud Claims

The whistle-blower helping the U.S. government mount a $1 billion fraud lawsuit against Bank 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 by assets, 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. 

Afghan corruption, and how the U.S. facilitates it

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:

  • "The 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 did not 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.


Government crackdown on money laundering to cost banks billions

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.

SATYAM: Apply anti-graft legislation to the corporates as well

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 warns money-laundering fines could top $1.5bn

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

Irish Ex-Billionaire Is Jailed for Failing to Disclose Assets

 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 collapse

Royal Bank of Scotland prepared to settle complaints of Libor manipulation

...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.

Feds: Corruption rife at Dulles Rail board

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. The final 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.

Anti-Corruption Activist Targets Indian Company

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 2000 the 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.

Germany, a safe haven for money laundering

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).

GAO: Doctors' "self-referrals" cost Medicare more than $100M

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-referralsdoctors 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.

Iraqi audit indicates money laundering, US says

Iraqi 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.

Iraqi corruption at all-time post-invasion high

Corruption in 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.

"This peremptory 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.

Uganda told to repay 4m euros in aid funds after fraud

UGANDA is 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 Patrick Amama 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 investigation continues.

Next Fifteen shares fall amid internal fraud investigation

PR group delays results after it notifies FBI about alleged
fraud at  Bite PR, whose clients include Microsoft, Nokia and Sony

"In the final stages of the audit, Next 15 has learned that it has been

 the victim  of a complex fraud involving a senior member of the

finance team in its Bite North America subsidiary, and as a result the

company has chosen to delay its results pending a full investigation,

which it expects to be completed in the next four weeks," the company

said. Next Fifteen said that it has informed the FBI

and is working with BDO, its external auditors, as well as hiring

investigations firm Kroll to carry out a full forensic investigation of all

the activities within this part of the business.

Barclays hit by fresh U.S. investigations

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.

Barclays Faces U.S. Anti-Corruption Probe

Barclays faces huge fine and charges of rudeness

Greece chases 'corrupt' Siemens executives

Photo: DPAGreek 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.

Fooled by Ponzi (and Madoff)- How Bernard Madoff Made Off with My Money

I 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.

"Corruption in the judiciary threatens the rule of law and protection for human rights," warns UN expert

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.

19 Audit Firms Face PCAOB Disciplinary Proceedings

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 much headway... “Unfortunately, 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 review activities in connection with audits of areas involving a high degree of judgment, management estimation and the application of complex accounting literature.”

Corruption Takes Center Stage in Greek-Euro Crisis

The Greek government, under international pressure to attack rampant domestic corruption, acted on Monday by hauling an investigative journalist into court. Costas Vaxevanis faces trial for having published the 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"

Nigeria: U.S.$180 Million Halliburton Scandal - Two Ex-Heads of State Battle Jonathan

Following 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.

Federal Government Sues Bank of America for Fraud: Fannie Mae and Freddie Mac Want Actuals and Exemplary Damages From Countrywide "Hustle" Scheme. Bank of America Says Nope.

The federal government has sued the second-biggest bank in the country, Bank of America Corp.,  in United States District Court for the Southern District of New York for fraud. That's right: fraud, which brings with it the possibility of punitive (exemplary) damages, which under the federal False Claims Act are set at treble ( three times) the amount of actual damages incurred...The federal government is alleging in its civil lawsuit that it wants the defendant, Bank of America, to cover the damages that FNMA (Fannie Mae) and Freddie Mac (FMCC) incurred from buying home loans that were later found to less than stellar, leaving the taxpayers holding the bag for the bad mortgages...

(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...

 Countrywide's people worked to erase the checkpoints which would have sounded the alarm that the home loan being analyzed might not be on the up and up.   Countrywide also handed out bonuses to those employees who made the most home loans. Which meant more loans were made...those speedy quick home loans ended up with an alleged "defect rate" of around 40%...this abnormally high bad loan rate was not shared with  Fannie Mae and Freddie Mac.  A material misrepresentation that hurt Fannie Mae and Freddie Mac which has now become part of this fraud action. The Hustle continued into 2009, after Bank of America had bought out Countrywide.  Accordingly, the Complaint is arguing that Bank of America is liable for the Hustle Fraud damages not only as the successor to Countrywide but because BofAm did the Hustle, too.

Breaking Down Bank of America's "Brazen" Mortgage Fraud Allegations

Corruption of Gandhi and Bhutto Dynasties in South Asia

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.

Ernst & Young Warns British Film, TV Biz On Corruption And Bribery Risks Abroad

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.”

Berlusconi's Tax Fraud: Using Offshore Accounts To Make $349M On U.S. TV And Movie Rights

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 to Italian media.  Berlusconi has two rights of appeal and, given his 76 years of age, it is unlikely that he will do any time.

Anti-corruption crusader rattles India's political class

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 and businessthat 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," 

As Corruption Risk Rises in Emerging Markets, Confidence in Diligence Programs Lags: Deloitte Survey

 Most executives (71 percent) say compliance and integrity-related risks in emerging markets increased during the past two years, yet they lack confidence in their companies' diligence programs, according to Deloitte's latest Look Before You Leap survey.  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 34 percent 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).

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Cluick here to download a copy of the Look Before You Leap research report

Bank of America Fraud Charge Shows Need for Sustainable Banking

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:

  1. It provides a safe and secure place for investors to deposit surplus cash and earn interest.
  2. It 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.
  3. It does all this efficiently, 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.)
  4. It does all this reliably, meaning it doesn't depend on bailouts and doesn't disrupt the rest of the economy.

Our banking system does not pass the test of sustainability.

Madoff Has Met His Match: Mortgage Fraud Crime of the Century

The recent $1 billion suit against Bank of America/Countrywide alleging that the bank sold defective loans to Fannie Mae and Freddie Mac is 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 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 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 nearly 30,000...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 to Wall Street hurried 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.



In rite of SKorean politics, corruption scandals surround President Lee's family

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.”

Italy's Berlusconi sentenced to jail for tax fraud

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.

Australia Reserve Bank: "Bribery on global scale"

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 by The 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.

The Curse of Corruption in Europe's East

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.

Boehringer Settles Fraud Charges for $95M

Boehringer Ingelheim will 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.

Ex-UBS Trader Takes Stand for First Time at Fraud Trial

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 the summer of 2011 that exposed UBS to losses that may have escalated to as much as $12 billion while on the ETF trading desk.

Nine more banks added to Libor probe

Nine of the world’s biggest banks are facing increased scrutiny from US state prosecutors probing alleged attempts to manipulate the lending gauge known as Libor. Eric Schneiderman, New York attorney-general, and George Jepsen, Connecticut attorney-general, have sent subpoenas to Bank of America, Bank of Tokyo Mitsubishi UFJ, Credit Suisse, Lloyds Banking Group, Rabobank, Royal Bank of Canada, Société Générale, Norinchukin Bank and West LB as they investigate whether the banks participated in any schemes to rig the London interbank offered rate, a person familiar with the matter said. The financial groups join Deutsche Bank, Citigroup, JPMorgan Chase, Royal Bank of Scotland, Barclays, HSBC and UBS to increase the number of banks under examination by the two state prosecutors to 16.


Mortgage Fraud: The Surprises in the $1 Billion Bank Suit

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 lenders started going belly up in mid-2006, and by mid-2007, investors had lost their appetite for 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 and Freddie Mac. The suit charges that Bank of America kept the Hustle going through 2009.

Fraud: Medicare vs. Walmart

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 recent large fraud case against 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.

Wal-Mart reorganizes compliance department

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 Sued for $1 Billion by U.S. Over Mortgages

Bank of America Corp. sold defective residential mortgage loans to Fannie Mae and Freddie Mac that 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.

BofA employees could face charges in U.S. fraud case: prosecutor

French efforts against foreign bribery criticised

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.

How to Put an End to Bank Bashing

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.

Justice 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.

Too many Australian, New Zealand companies face corruption risk with "blissful ignorance"

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.


Recession dampens effort to stem corporate corruption

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...

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Africa's wealth floods offshore as corrupt leaders, corporations use banks to hide fortunes

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 left behind,

Florida Corruption: Sad State of Ethics

The Florida 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.

In 2009, 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.

Corzine, banks push to end MF Global fraud lawsuit

Jon Corzine's lawyers say allegations that he fraudulently ran MF Global Holdings Ltd make "no sense" and that a lawsuit seeking to hold him and others responsible for the