Global Corruption
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Corruption often not punished – Auditor General

Corruption often not punished – Auditor General | Global Corruption |

“Irregular expenditure… still is a major problem,” he said on the sidelines of the Institute of Internal Auditors’ forum at Emperors Palace.

“A larger part of that problem is about deviations from supply chain management processes, among others… That is a reflection of a lack of proper and strong internal controls.”

He said one of the key problems was that there was very little or slow movement in addressing the findings from previous audits.

This was evident because findings in the 2012/13 general report was “evidence and pronouncements” that have been around in the general report for the last five to 10 years.

“It brings back the question of how much more needs to be exposed for there to be action,” said Makwetu.

“I think the point is — once the consequences that come with somebody who has not done the right thing are in place, over a period of time we might start seeing some of these things disappear.”

Makwetu said he could not specify about alleged corruption in municipalities until the report from his office is released.

CEO of the Institute of Internal Auditors SA Claudelle Von Eck said more rules and regulations were needed to fight corruption.
She said not enough was being done and those often charged with corruption are not the leaders.

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Global Corruption
Corruption is a particularly viral form of cancer. It is caught here and there but it reappears somewhere else as soon as vigilance is relaxed. It is not eliminated, just driven underground. The corrupt merely suspend their operations temporarily. It lingers, hovering always in the background for its next opportunity.<br>                                                                         - Gerald E. Caiden <br>
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Corruption Eruption E-Magazine > > > "On Planet Corruption every day a new Eruption"

Corruption Eruption E-Magazine >   >  >            "On Planet Corruption every day a new Eruption" | Global Corruption |

*** Rampant corruption of Putin’s Russia is just devastating
*** The Double Sting - A power struggle between Russia’s rival security agencies.
*** People smuggling: how it works, who benefits and how it can be stopped
*** Latin America’s Anti-Corruption Crusade

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The Dark Side of Globalization

The Dark Side of Globalization | Global Corruption |

In too many countries around the world, criminals have built great empires on laundered funds to infiltrate and corrupt government institutions.

"In this shadowy, illegal economy," said David M. Luna of the State Department’s Bureau of International Narcotics and Law Enforcement Affairs, "traffickers and narcotics kingpins act as CEOs and venture capitalists while they build their empires of destruction."  (Voice of America Editorial)

 Theses illicit activities have taken over a significant chunk of the world economy. According to various international organizations, the illegal economy accounts for 8 to 15 percent of the world gross domestic product, and in many developing countries it may account for higher percentages in their economies. The World Trade Organizations estimates that the value of counterfeit and pirated goods alone is equivalent to some 7 percent of the world's merchandise.

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USA: SEC Charges Florida Investment Adviser and His Company With Defrauding Investors

USA:  SEC Charges Florida Investment Adviser and His Company With Defrauding Investors | Global Corruption |
The Securities and Exchange Commission today announced fraud charges against Florida-based investment adviser Arthur F. Jacob and his company, Innovative Business Solutions LLC, for allegedly deceiving clients over a period of at least five years.
In an order instituting administrative proceedings the SEC Enforcement Division alleges that from at least mid-2009 through July 2014:

Jacob and IBS misrepresented the risks and profitability of investments he purchased for investment advisory clients.  Jacob was informed of investment risks of certain exchange traded funds but failed to disclose these risks to clients and told them that the investment strategy he used was safe, carried low or no risk, and would produce predictable profits.
Jacob concealed from clients his disciplinary history, which included being disbarred as a lawyer for misappropriating client funds and other professional misconduct. 
Jacob and IBS were not registered with the SEC or any state as investment advisers and Jacob falsely told clients that he and IBS were not required to register as an investment adviser.
Jacob gave false information to a brokerage firm about the advisory services he and IBS provided so that he could retain trading authorization over clients’ accounts and continue to receive advisory fees for managing the accounts.
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USA: Virginia Businessman Sentenced to 88 Months in Prison for Role in Bribery Scheme Involving Government Contracts - Department of Justice

USA: Virginia Businessman Sentenced to 88 Months in Prison for Role in Bribery Scheme Involving Government Contracts - Department of Justice | Global Corruption |
Young N. Cho, aka Alex Cho, 43, of Great Falls, Virginia, has been sentenced to 88 months in prison on federal charges stemming from a bribery scheme in which he paid millions of dollars in bribes to corrupt public officials from the U.S. Army Corps of Engineers in return for lucrative government contracts.

Cho pleaded guilty in September 2011 in the U.S. District Court for the District of Columbia to a two count information that charged one count of conspiracy to commit bribery, money laundering and to defraud the United States and one count of bribery.  He was sentenced on Oct. 8, 2015, by the Honorable Emmet G. Sullivan.  Judge Sullivan also ordered Cho to pay $7,656,073 restitution to the U.S. Army Corps of Engineers and pay a forfeiture money judgment of $6,884,948.  Following his prison term, Cho will be placed on three years of supervised release.

The sentencing was announced today by Acting U.S. Attorney Vincent H. Cohen Jr. for the District of Columbia; Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office; Special Agent in Charge Thomas Jankowski of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Inspector General Peggy E. Gustafson, for the Small Business Administration (SBA); Special Agent in Charge Robert E. Craig, Jr. of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS) and Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

In addition to Cho, 19 other individuals and one corporation, Nova Datacom LLC, have pleaded guilty to federal charges.  The investigation uncovered the largest domestic bribery and bid-rigging scheme in the history of federal contracting cases.  Overall, participants in the scheme stole over $30 million in government money through fictitious invoices and conspired to steer a nearly $1 billion government contract to a favored government contractor.  To date, through forfeiture, restitution, and civil settlements, the U.S. Attorney’s Office has been able to recover over $30 million of the stolen money.

“Alex Cho was at the center of a cash-for-contracts scheme that robbed the American taxpayer of $30 million,” said Acting U.S. Attorney Cohen.  “Cho is just one of 20 crooked contractors, government officials and other middlemen who have pled guilty as part of this investigation.  His prison sentence is proof that the temptation to cheat the system by paying off corrupt government employees is not worth it.” 

“More than six years after initiating one of the largest procurement fraud cases in history, this sentence demonstrates that the FBI and our law enforcement partners have a long memory when it comes to holding accountable those who engage in bribes and kickbacks,” said Assistant Director in Charge Abbate.  “The FBI will continue to diligently work to protect the integrity of our government by pursuing those who seek to violate the system through corruption.”

“SBA’s preferential contracting programs are designed to help eligible individuals achieve the American dream of running a successful business,” said Inspector General Gustafson.  “The defendant's actions of bribing government officials and committing fraud in order to obtain government contracts hurt every small business owner who is hoping that SBA can help them achieve that dream.  I want to thank our law enforcement partners for their dedication and the U.S. Attorney's Office for its leadership throughout this investigation.”

“Manipulations of the Department of Defense procurement process will not be tolerated,” said Special Agent in Charge Craig.  “This sentencing demonstrates the vigilance and ongoing commitment by DCIS and its partner agencies to hold accountable individuals who attempt to bypass federal contracting laws.”
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Brazil auditors rejects Rousseff budgetary accounts - BBC News

Brazil auditors rejects Rousseff budgetary accounts - BBC News | Global Corruption |
A Brazilian audit court has ruled that President Dilma Rousseff broke the law in managing last year's budget.
The government was accused of borrowing money illegally from state banks to make up for budget shortfalls.
The opposition says the ruling by the Federal Accounts Court - which reports to Congress - paves the way for impeachment proceedings against Ms Rousseff.
She was re-elected less than a year ago but has record low popularity ratings.
The Brazilian government says it would challenge Wednesday's ruling in the Supreme Court.
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TelexFree trustee says alleged fraud swells to $3 billion, 1 million participants

TelexFree trustee says alleged fraud swells to $3 billion, 1 million participants | Global Corruption |
The trustee in the TelexFree Inc. bankruptcy case said the scope of the alleged fraud is even wider than previously reported, with millions of customer accounts and more than $3 billion invested across virtually every country in the world.

In filings at federal court in Boston made late Wednesday, trustee Stephen B. Darr said at least 1 million participants opened 11 million accounts in two years through TelexFree’s Marlborough office. Darr also stated his finding that the operation was a “massive Ponzi/pyramid scheme,” a determination that will have an impact on who gets money back.

In a Ponzi scheme, new investors’ money is used to pay off earlier investors. Darr’s finding means that, as in the Bernard Madoff scandal, only people who can show they lost money will receive payments.

“Net winners,” or people who reaped profits but believed they were owed more, will not receive money, according to Darr’s filings.

TelexFree allegedly attracted participants with the sale of cheap Internet phone service. In Massachusetts, the company allegedly targeted large numbers of Brazilian and Dominican immigrants. But in reality, the company made the vast portion of its money by encouraging members to open accounts with an investment of $1,425, with promises of large returns if they got other people to sign up and posted Internet ads, prosecutors say.

Prosecutors previously estimated the fraud at $1 billion. The number of participants could be as high as 1.7 million, Darr has said.
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Corruption Currents: U.N. Launches Audit in Bribery Case

Corruption Currents: U.N. Launches Audit in Bribery Case | Global Corruption |
The U.N. launched an audit into funds linked to the bribery scandal. Prosecutors warned of further arrests and charges. (AFP, Reuters)

Romania is considering legalized bribery to keep its doctors. (Washington Times)

Three more people were arrested in Greece for allegedly paying bribes to secure arms deals. (Greek Reporter)

Testimony has begun in a corruption and bribery case involving an Iranian businessman. (Today’s Zaman)

A judge in Milan ordered Italian firm Saipem SPM.MI -0.06% to stand trial for alleged bribery in Algeria. (PetroGlobal News)

Companies that don’t bribe should be rewarded, according to a Malaysian minister. (Rakyat Post)

Indonesia’s KPK named a new suspect in its bribery probe of Innospec. (Jakarta Globe)

The question of defining “conspiracy” in a bribery case came before the U.S. Supreme Court. (Huffington Post)

In local politics: An anti-corruption watchdog in Australia found that the mayor of Perth failed to disclose gifts. (Guardian)


U.K. spies can hack into smartphones with a text message, according to Edward Snowden. (AFP)

Matthew Keys, a journalist, was convicted of hacking after posting login credentials from a former employer to an Anonymous forum. (Politico)

Money Laundering:

Deutsche Bank AGDBK.XE -1.39% was sued by two employees who were fired amid an investigation into possible money laundering at its Russian unit. (Bloomberg)

Metalor rejected allegations of money laundering and the purchase of illegal gold raised by a Swiss non-government organization. (Swissinfo)

Nigeria widened its probe into oil corruption by arresting the chairman of a local firm. His lawyer and a company spokesman couldn’t be reached. (DW, Independent, Reuters)

One Nigerian governor declared that money laundering will soon be history. The president warned the corrupt that their time was up. (Leadership, AFP)

Anti-money laundering compliance requires collaboration with the cybersecurity team, experts say. (Thomson Reuters)
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UN to audit its dealings with entities tied to alleged bribe scheme

UN to audit its dealings with entities tied to alleged bribe scheme | Global Corruption |
United Nations Secretary-General Ban Ki-moon has ordered an audit of all dealings the organisation had with two entities that are the subjects of a U.S. bribery probe, a U.N. spokesman said on Thursday.

Ban asked the Office of Internal Oversight Services to audit all of the U.N.'s interactions with the Global Sustainability Foundation and the Sun Kian Ip Group, as well as the use of any funds received from them, spokesman Stephane Dujarric said.

Speaking to reporters at U.N. headquarters, Dujarric said Ban was "committed to ensuring that funds received from such private entities were handled properly, according to relevant U.N. rules and regulations."

There "will be no tolerance for any corruption at the United Nations or in the name of the United Nations," he added.

In a complaint filed in federal court in New York on Tuesday, U.S. prosecutors said more than US$1.3 million in bribes were received from Chinese businessmen, including billionaire Macau real estate developer Ng Lap Seng.

John Ashe, a former U.N. ambassador from Antigua and Barbuda who was president of the U.N. General Assembly from 2013 to 2014, was one of six people charged and arrested.

Prosecutors said some of the bribes were arranged through Sheri Yan, chief executive officer of a New York-based organisation, and Heidi Park, its finance director, who were also arrested.
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Ex-Chicago Public Schools Leader Charged With Corruption

Ex-Chicago Public Schools Leader Charged With Corruption | Global Corruption |
The former CEO of Chicago Public Schools will plead guilty in an indictment that alleges she was involved in a scheme to steer $20 million worth of no-bid contracts to education companies in exchange for bribes and kickbacks, her attorney said Thursday.

Barbara Byrd-Bennett, who resigned earlier this year as leader of the nation's third-largest school district, "takes full responsibility for her conduct," Chicago-based lawyer Michael Scudder said in a statement. Scudder said Byrd-Bennett would plead guilty and will continue to cooperate with the government, including testifying if called upon to do so.

Byrd-Bennett, who was appointed by Mayor Rahm Emanuel in 2012, stepped down about four months ago amid a federal investigation into a contract between the district and SUPES Academy, a training academy where she once worked as a consultant.

Byrd-Bennett, 66, is charged with several counts of mail and wire fraud that each carry maximum 20-year prison sentences. U.S. attorney Zachary Fardon said the indictment accuses her of "abusing her power to line her own pockets and those of her co-defendants."

SUPES Academy and a related company, Synesi Associates LLC, are also charged, as are their owners, Gary Soloman and Thomas Vranas. Both men are charged with bribery and conspiracy to defraud, along with mail and wire fraud.

The two men are accused of placing money into the accounts of two of Byrd-Bennett's relatives, referred to as Relatives A and B in the indictment, that at one point each had $127,000. The indictment also alleges that Solomon and Vranas promised Byrd-Bennett a job after she left CPS, and that part of the agreed-to bribes would be disguised as a lucrative signing bonus.

The indictment alleges that one email from Solomon to Byrd-Bennett said, "If you only join for the day, you will be the highest paid person on the planet for that day." In another email, he allegedly said: "When this stint at CPS is done and you are ready to re re re retire, we have your spot waiting for you."
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World: U.N. Says It Can’t Probe Graft Scandal

World: U.N. Says It Can’t Probe Graft Scandal | Global Corruption |
The United Nations said it hasn’t launched an internal investigation into allegations by U.S. prosecutors that a former General Assembly president and others engaged in a bribery scheme, fueling criticism that the international body isn’t doing enough to weed out corruption.

The U.N. on Wednesday said that it was “studying the complaints” and would cooperate with U.S. authorities but the organization didn’t have the mandate or power to investigate individuals or entities that weren’t considered staff or part of the official U.N. umbrella, said Stéphane Dujarric, a spokesman for the secretary-general.

Diplomats aren’t legally bound to U.N. ethical codes and follow the laws of their home countries, Mr. Dujarric and other U.N. officials said. The U.N.’s internal watchdog, Office of Internal Oversight Services, can audit and investigate only U.N. staff members, they said.
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USA: Campaign finance and legalized bribery

USA: Campaign finance and legalized bribery | Global Corruption |

Today’s Supreme Court blesses oligarchy with the similarly warped logic that property can be entitled to the constitutional rights of a person. In time Citizens United will be tossed in the dumpster too.

Undoing the harm this ruling has done already and continues to do should not need to involve warfare but could very well require a constitutional amendment if the Supreme Court in the fairly near future does not come to its senses and overturn Citizens United before a 28th amendment is ratified. How this all plays out and how promptly this inevitable outcome is brought about largely depends on legal creativity bordering on hubris.

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Women charged in UN bribery case were donors to Rep. Calvert

Women charged in UN bribery case were donors to Rep. Calvert | Global Corruption |
Two women arrested Tuesday morning and charged in federal court with laundering money from Chinese businessmen each tried to give a California GOP lawmaker the maximum contributions allowed by law last year, Federal Election Commission records show.
Jason Gagnon, communications director for Rep. Ken Calvert (R-Calif.), whose campaign and leadership PAC received the checks, said the $10,200 the congressman’s committees ultimately received will be donated to a charity organization after OpenSecrets Blog inquired about the donors on Wednesday.
The women, Heidi Piao and Shiwei Yan, are charged in connection with an alleged bribery scheme involving a former president of the United Nations General Assembly and Ng Lap Seng, a Macau-based billionaire who himself was arrested in Queens, N.Y. on Sept. 19. In that case, Ng and an assistant allegedly agreed to lie to federal customs agents about the true purpose of $4.5 million dollars in cash they’d carried into the U.S. since 2013.
If some of this sounds vaguely familiar, that’s because Ng played a key role in the campaign finance scandal surrounding the 1996 presidential election. According to investigators, Ng was the source of more than $1 million sent to a central figure in the scandal, Charlie Trie, who gave much of the money to the Democratic National Committee. Ng has also been linked to organized crime in Macau, including its infamous triads, as well as to casino billionaire and Republican megadonor Sheldon Adelson.
Piao and Yan — both U.S. citizens who reside in China, according to the complaint — made six contributions to Calvert on May 30, 2014, records show. The two used different aliases and two different sets of addresses, employers and occupations. They split the $20,400 in reported donations between Calvert’s campaign committee and leadership PAC, Eureka PAC. Yan had also given Calvert $5,300 since 2002, federal records show.
Yan’s checks in May 2014, however, didn’t clear, according to Gagnon. The campaign and PAC ultimately received $10,200 from sPiao that day, he said.
One of the women’s employers closely matches the description of a nonprofit mentioned, but not by name, in the complaint. That nonprofit, according to the complaint, began paying roughly $20,000 per month to the former U.N. General Assembly president, John Ashe, in August 2013 for his services as the group’s “honorary chairman.” In return, prosecutors allege, Ashe helped a Chinese security company sign a lucrative memorandum of understanding with officials in Antigua, his home country, and facilitated their business elsewhere.
There was no mention of the contributions to Calvert in the complaint. But the press release about the case detailed the pair’s involvement in the alleged U.N. bribery scheme: Along with Ng and two others, Piao and Yan “arranged for the transmission and laundering of over $1 million of bribery money from sources in China,” according to the press release. Ashe, the U.N. official, allegedly “received $800,000 in bribes from various Chinese businessmen arranged through Yan and Piao,” the release reads.
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USA: Is corruption costing DeKalb County?

USA: Is corruption costing DeKalb County? | Global Corruption |

"Whispers and allegations of corruption iin DeKalb County date back more than a decade, and include accusations of kickback schemes, pay-to-play agreements, and improper contracting.  The most recently-elected CEO and a resigned county commissioner are both serving prison time. 
The most recent allegations involve a corruption report ordered by interim CEO Lee May, who hired a pair of independent investigators to look into any possible waste or fraud in DeKalb County. 
The report delivered in the last week of September outlines "corrosive and widespread misconduct," according to its author, former Attorney General Mike Bowers.  It is filled with lists of how staffers spent money on everything from food to florists, from televisions to toll fines.  May stopped that purchasing card program last summer, after the allegations of abuse first came to light.  His spending is also questioned, although his office has shown paperwork that personal purchases made on a trip to Hawaii were paid for with May's own credit card, not the county card.  
May is holding a series of town hall meetings across DeKalb County to hear from voters.  He calls the report "laughable."  Governor Deal, meanwhile, has asked the Georgia Bureau of Investigation to review the report by Bowers. 
The DeKalb County Chamber of Commerce has noted the headlines. 
"Any alleged corruption is not good for business in DeKalb County," says Chamber President Katerina Taylor.  "And in order for us to be a successful, thriving business county with thriving businesses, we have to find some resolutions." 

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Finance Uncovered Investigation: MTN's Mauritian Billions - Finance Uncovered

Finance Uncovered Investigation: MTN's Mauritian Billions - Finance Uncovered | Global Corruption |
The Finance Uncovered global network of investigative reporters have today published a cross-border investigation into South African telecoms giant MTN exposing how billions of rand from its subsidiaries in Ghana, Nigeria and Uganda have been shifted to a shell company in the small island tax haven of Mauritius.
The two year investigation spanning five countries was published today in South Africa’s Mail and Guardian, the Ugandan Observer and Ghana Business News.

A report in Nigeria will follow shortly.

MTN’s Offshore Payments
The reporting team discovered MTN revenue producing companies operating in Ghana, Nigeria, Uganda and Cote d’Ivoire made substantial payments to offshore companies in Dubai and Mauritius. These payments were counted as a cost of business for the operating companies, lowering their profits and potential tax bill.

The enormous sums were purportedly for management and technical services performed on behalf of these companies, as well as royalty payments for the use of the MTN brand. In Ghana, these payments accounted for more than 9% of the turnover of the company.

African journalists in Ghana, Nigeria and Uganda working with Finance Uncovered discovered that 55% of management and technical fee payments are directed towards MTN International, a company based in Mauritius. The Mauritius company has no staff and is little more than a post box. The remaining 45% was routed to MTN Dubai, where the company employs 115 staff who provide shared services to the group.

MTN told reporters that MTN International remunerates companies in South Africa for management services performed on behalf of the company. They were unable to answer why the payments were made to Mauritius first.

Company documents published by MTN said that money in MTN Mauritius was used to repay external debts of the MTN group and dividends, rather than pay for management services.

But after further questions were put to MTN, the company was forced to admit that not all of the revenue was passed onto South Africa. The company refused to disclose how much it kept in Mauritius.

The company said that MTN I is resident in South Africa for tax purposes and the Mauritian entity gives no tax benefit to the company.

MTN in Africa
Our revelations are particularly sensitive given the sheer size of MTN. The South African listed firm is the largest cell phone company in Africa with 227,503,000 subscribers worldwide. Almost one in four mobile phones in Africa are part of the MTN network a total of 161m.

This means MTN is the largest company in many of the countries in which it operates. It is also frequently one of the largest taxpayers in African countries so they are particularly vulnerable to profit shifting by the company.

Game over?
Our investigation has established that a number of African countries have now challenged the offshore payments made by MTN. Authorities in Nigeria and Ghana have frozen payments and the Ugandan Authorities has placed a large tax bill on the company for management fees paid over a 6 year period.
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US SEC Charges Former Executives With Accounting Fraud and Other Accounting Failures

US SEC Charges Former Executives With Accounting Fraud and Other Accounting Failures | Global Corruption |
The Securities and Exchange Commission today charged two former top executives at OCZ Technology Group Inc. for accounting failures at the now-bankrupt seller of computer memory storage and power supply devices. 
In a complaint filed in the Northern District of California, the SEC alleges that OCZ’s former CEO Ryan Petersen engaged in a scheme to materially inflate OCZ’s revenues and gross margins from 2010 to 2012.  It separately charged OCZ’s former chief financial officer Arthur Knapp for certain accounting, disclosure, and internal accounting controls failures at OCZ.  Knapp agreed to settle the SEC’s charges without admitting or denying the allegations against him.  The SEC’s litigation continues against Petersen.

“CEOs and CFOs are responsible for reporting accurate financial information,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement.  “When those high-level executives participate in accounting fraud and failures, as we allege Petersen and Knapp have done, they will be held accountable.”   

The SEC’s complaints allege that:

Petersen’s scheme included mischaracterizing sales discounts as marketing expenses and having employees create false documentation to conceal the scheme, channel-stuffing OCZ’s largest customer by shipping more goods than the customer could sell in the normal course of business, and concealing large product returns from OCZ’s finance department and OCZ’s auditor so that those returns would not be recorded in OCZ’s books and records.
OCZ filings that Petersen signed and certified portrayed the company in a way that was a far cry from its true operational and financial condition.
Petersen personally profited from his misstatements by selling shares of OCZ stock and receiving a bonus during the period when OCZ’s public filings contained inflated financial results.
Knapp instituted or maintained policies that caused OCZ to record transactions in a manner that was not in accordance with U.S. generally accepted accounting principles.  These policies included reclassifying costs of goods sold as research and development expenses without sufficient basis for doing so, failing to capitalize labor and overhead costs in OCZ’s inventory costs, recognizing revenues upon product shipment rather than upon delivery of the product to OCZ’s customers, and understating OCZ’s accruals for product returns.
As CFO, Knapp had responsibility for OCZ’s internal accounting controls and procedures.  Nevertheless, he failed to implement sufficient internal accounting controls to prevent OCZ from misclassifying sales discounts as marketing expenses and significantly overstating its revenues and gross profits.
The SEC charged Petersen with violating the antifraud, certification, books and records, internal controls, and clawback provisions of the federal securities laws.  It also charged him with lying to accountants and aiding and abetting OCZ’s violations of the reporting, books and records and internal controls provisions.  The complaint seeks a permanent injunction, payment of his allegedly ill-gotten gains plus prejudgment interest, a civil penalty, an officer and director bar, and forfeiture of Petersen’s stock sales profits and bonus.

The SEC charged Knapp with violating certain antifraud provisions, and the certification, and internal controls provisions, and with aiding and abetting OCZ’s violations of the reporting, books and records, and internal controls provisions.
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USA: SEC Halts $32 Million Scheme That Promised Riches From Amber Mining

USA: SEC Halts $32 Million Scheme That Promised Riches From Amber Mining | Global Corruption |
The Securities and Exchange Commission today announced it has filed fraud charges and obtained asset freezes against the operator of a worldwide pyramid scheme that falsely promised investors would profit from a venture purportedly backed by the company’s massive amber holdings.
California resident Steve Chen and 13 California-based entities, including USFIA Inc., are at the center of the alleged scheme, the SEC said in a complaint filed in federal court in Los Angeles.  According to the SEC’s complaint, USFIA and Chen’s other entities have raised more than $32 million from investors in and outside the U.S. since at least April 2013.  The SEC’s complaint alleges that Chen and his companies misled investors about a lucrative initial public offering for USFIA that never happened and about claims to own or control amber deposits worth billions of dollars.

The Hon. R. Gary Klausner of the U.S. District Court for the Central District of California on Monday granted the SEC’s request for an asset freeze and the appointment of Thomas Seaman as the temporary receiver over USFIA and the other entities.  In addition to the temporary relief, the SEC is seeking preliminary and permanent injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and civil penalties. The complaint, which had been filed under seal, alleges that the defendants violated the registration and antifraud provisions of the federal securities laws and SEC antifraud rules.

“We allege that the defendants’ false claims of riches that investors would realize from USFIA’s amber mining activity never materialized,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.  “In reality, as alleged in the complaint, the defendants were operating a fraudulent pyramid scheme that left many investors with nothing.” 

According to the SEC’s complaint, Chen falsely promoted USFIA as a legitimate multi-level marketing company that owns several large and valuable amber mines in Argentina and the Dominican Republic.  Investors were told that they could profit by investing in amounts ranging from $1,000 to $30,000, and earn larger returns based on the number of investors they brought into the program.  The SEC further alleges that beginning in September 2014, the defendants claimed to have converted existing investors’ holdings into “Gemcoins,” which they said was a virtual currency secured by the company’s amber holdings.  In reality, the SEC complaint alleges that Gemcoins are worthless.
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Insurance Broker Sentenced for Fraud

Insurance Broker Sentenced for Fraud | Global Corruption |

More than 800 commercial trucking companies in nearly a dozen states paid Atlanta-area insurance broker John Paul Kill approximately $3.7 million in premiums from 2013 to mid-2014 to purchase insurance that protected their livelihoods: their cargo and the trailers that carried it.

There was only one problem—for the most part, Kill didn’t purchase the insurance requested by his customers. Investigators with Georgia’s Insurance Commissioner’s Office discovered that Kill pocketed the premiums for his personal use.

Once Georgia officials realized the extent of Kill’s activities—millions of dollars in stolen premiums from customers in multiple jurisdictions—the office requested the assistance of the FBI. And as a result of the ensuing joint investigation, Kill pled guilty in federal court earlier this year to the nationwide cargo insurance scam. This past August, he was sentenced to four years in a federal prison and was also ordered to pay $1.23 million in restitution to his victims.

The victims of John Paul Kill’s insurance fraud scheme were commercial trucking companies, but anyone—public, private, and/or commercial enterprises, as well as regular citizens—can be victimized by insurance fraudsters. 

How did the scheme work?
In 2013, Kill, through his company, Appeals Insurance Agency (AIA)—which was actually housed in the basement of his home—began offering cargo insurance. He advertised his services mostly through word of mouth and by making cold calls to commercial trucking companies. Kill would solicit insurance agents to write policies for trucking companies and then, in his capacity as a broker, would claim to “bind” the policies written for those companies to recognized insurance companies, including Lloyd’s of London. In the insurance industry, binding coverage serves as an official agreement between the insurance provider and the insured party to provide insurance coverage.

For a small percentage of his clients, Kill bound cargo insurance policies through insurance companies that actually offered less extensive coverage than what the trucking companies thought they had purchased. But most of his clients received no policies at all—despite the premium payments they paid to Kill.

In addition to using the premiums sent to him by the trucking companies for his own benefit, Kill used a portion of the funds to pay off insurance claims that were filed with his office. Since most of his customers had no actual insurance coverage, he paid their claims so he wouldn’t raise their suspicions—he wanted to prolong the life of his illegal scheme for as long as possible.

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Costa Rica; The Money Laundering Capital of the World

Costa Rica; The Money Laundering Capital of the World | Global Corruption |
Costa Rica is failing to effectively enforce the rules, resulting in a moderate level of prevention in combating money laundering and terrorist financing says the report by the Financial Action Task Force Latin America (Gafilat).
During the last two days, the I Congreso de Prevención de Lavado de Activos y Financiamiento al Terrorismo (First Congress on the Prevention of Money Laundering and Financing of Terrorism), organized by the Asociación Bancaria Costarricense (ABC) – Costa Rican Banking Association, took place in San Jose.
The ABC’s aim to regulate and strengthen monitoring systems in the country.
“Aware of the vulnerability of the Central American region we are looking at strengthening of the monitoring systems through predictive modeling and data mining so that financial institutions to anticipate unusual or suspicious activities,” Daniel Bañados, chairman of the organizing committee, told ACAN/EFE.
Among the main topics to discussed in the forum included reducing the use of cash as payment, strengthen remittance sector and corporate criminal law and the prevention of money laundering.
“Financial institutions are not immune, and we must work to strengthen the system. Both Costa Rica and the region are vulnerable for their geographical location, between the drugs produced in South America and the movement of funds,” said Bañados.
Bañados assures that Costa Rica has not been directly linked to criminal activities related to terrorist financing, however, important the country be prepared.
From the executive summary of the report
1. This report summarizes the Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF)
measures in place in Costa Rica as of the date of the on-site visit (January 19- 30, 2015). It analyzes the level of compliance with the 40 Recommendations of the Financial Action Task Force (FATF) and the level of effectiveness of the AML/CTF system in Costa Rica, and issues recommendations on how to strengthen some aspects of the system.
2. In general terms, Costa Rica has a number of legal and regulatory tools and structures that enable Costa Rica to fight against ML/TF. Notwithstanding that, some technical deficiencies were identified that should be addressed in order to ensure a strong AML/CTF system.
3. Costa Rica has conducted the National Risk Diagnosis of Money Laundering and the Terrorsit Financing (RD-ML/TF) and, in general terms, Costa Rica presents an appropriate level of understanding of its Money Laundering (ML) risks, highlighting that in its development, an appropriate level of coordination and cooperation was observed between the relevant authorities and the private sector.
4. The country is in the process of developing a National Strategy aimed at implementing policies and activities based on the risks identified, including measures and resource allocation to address and mitigate the ML/TF risks. These are part of the action plan being developed as part of said Strategy. As to the level of understanding of the risks associated to terrorist financing (TF), Costa Rica has a low risk level of TF, mainly because terrorism is not considered a direct threat to the country.
5. The financial intelligence generated by the Financial Intelligence Unit (FIU) of the Costa Rican Institute on Drugs (ICD in Spanish) is used by the competent authorities in ML investigations, although the usefulness of said financial intelligence could be increased with a greater feedback by the authorities using it. The creation of the financial intelligence by the FIU uses different databases that provide added value to the STRs received by reporting entities, however, it is limited by the lack of information provided by Designated Non-Financial Professions and Activities (DNFBPs). In the case of TF, there was not enough evidence to evaluate the use of the financial intelligence associated to this offense, since there are no cases related with this behavior.
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Have Sacked Minister For Corruption, Announces Arvind Kejriwal on Live TV

Have Sacked Minister For Corruption, Announces Arvind Kejriwal on Live TV | Global Corruption |
Arvind Kejriwal, the Chief Minister of Delhi, today called a press conference to announce that he was sacking a minister caught asking for bribe. "I will not even spare my son, Manish Sisodia or anyone else if he is corrupt," he declared.

Asim Ahmed Khan, 38, who was minister for food and environment, has been replaced by Imran Hussain. Stating that all the evidence against Mr Khan had been "assessed and analysed", Mr Kejriwal also said he would ask for a CBI inquiry.

Mr Khan had been accused of "nexus with a builder," Mr Kejriwal said, playing an audio recording of what he said was part of a one-hour conversation between the minister and the builder.

"The public trusts us as honest politicians. We are here not for power. So we will not spare our own ministers, MLAs, officers," added Mr Kejriwal, whose Aam Aadmi Party came to power in February on the back of its promise to root out corruption.

This is the second major change in the six-member Kejriwal cabinet in the last eight months, and is seen as a move to preempt a controversy when many AAP lawmakers are confronting allegations.

In June, Jitender Tomar resigned as law minister after he was accused of faking his college degree. He was replaced by Kapil Mishra, who, within two months, was replaced as law minister by Deputy Chief Minister Manish Sisodia.

Mr Kejriwal emphasized that he had acted against his minister without any prompting. "Nobody brought this matter to us, the media was not aware of this," he said.
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Brazil court hits Rousseff again, fueling impeachment talk

Brazil court hits Rousseff again, fueling impeachment talk | Global Corruption |
"The accounts are not a condition where they can be approved. We recommend their rejection," the lead judge, Augusto Nardes, said after the court's panel voted unanimously.

The government says it did nothing illegal and that it was merely juggling funds in line with previous practices.

The court's ruling, which next goes to Congress, was likely to give powerful impetus to Rousseff's congressional opponents, led by the scandal-plagued speaker of the lower house, Eduardo Cunha, who has repeatedly threatened to push for impeachment.

Late Tuesday, another judicial body, the electoral court, or TSE, ruled in favor of probing alleged illegalities in Rousseff's 2014 re-election campaign.

That ruling will not immediately lead to sanctions, instead opening the door to a messy legal and political battle that in theory could result in Rousseff's narrow 2014 victory being declared invalid -- and new elections being organized.

Especially worryingly for Rousseff was that one of the allegations in the complaint brought to the TSE by the opposition PSDB party was that some donations to the president's re-election coffers were linked in part to the massive Petrobras corruption scandal shaking the country.

Rousseff chaired Petrobras, the state oil giant, during the main period of the kickback and political payoff scandal that cost the company more than 2 billion in 2014.
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Greek General Inspector: Corruption Costs the Country 33 Bln Euros Each Year

Greek General Inspector: Corruption Costs the Country 33 Bln Euros Each Year | Global Corruption |
“Corruption is widespread in the Greek society and in order to combat it, political will – that does not exist – is required,” General Inspector of Public Administration Leandros Rakintzis was quoted as saying.

Rakintzis continued by stating corruption costs Greece 33 billion euros every year. Therefore, provided that corruption did not exist for 10 years, Greece’s debt would have been eliminated.

However, he said that the corruption cost has been reduced as a result of the economic crisis. For example, before the memoranda, doctors demanded up to 5,000 euros from their patients, while the relevant amount has been reduced to 300 euros.

He also referred to “sinful” public works such as the Sparta motorway. The contractor received the total amount of the work’s budget (17 million euros), but the road was never constructed and the country is now under threat to pay a high fine to the EU.

Rakintzis argued that in order to tackle corruption the people’s attitude should change adding the need for political will. “The government announced that they will crackdown on corruption, but nothing has been done so far,” he underlined.
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World Bank confirms probe into corruption scandal involving Hitachi | Shanghai Daily

The World Bank has acceded to a request to investigate the alleged unlawful activity in influencing the awarding of contracts by South African state-run electricity utility Eskom to Japanese Hitachi Ltd, it was announced on Wednesday.

World Bank Integrity Vice President, Leonard McCarthy has confirmed that the bank is looking into the matter and assessing "whether World Bank funds were put at risk due to the actions of the parties identified in the US Securities and Exchange Commission (SEC) civil action,"the opposition Democratic Alliance (DA) said.

Last Wednesday, the DA urged the World Bank to investigate the corruption scandal surrounding Hitachi and Chancellor House, a front-company of the ruling African National Congress (ANC).

Under a deal with Eskom, Hitachi was to provide boilers for the Medupi and Kusile power stations in South Africa.

Hitachi agreed to pay 19 million U.S. dollars to the SEC to settle charges of corrupt payments to ANC's Chancellor House, according to the DA.

The contracts were subsequently paid for with a loan provided by the World Bank to Eskom, with the effect that World Bank funds ended up in ANC coffers, the DA alleges.

The DA says the World Bank is suspected of effectively bankrolling the ANC through their share in Hitachi via Chancellor House.

The Hitachi tender has cost South Africa dearly. The failure by Hitachi to deliver on their contractual obligations has been one of the underlying reasons for the length delay in brining Medupi online, resulting in countless job losses and cost the economy billions in lost revenue due to prolonged load shedding, according to the DA.
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Brazil - Federal Court of Accounts Rejects Government's 2014 Finances for Fiscal Maneuvering

Brazil - Federal Court of Accounts Rejects Government's 2014 Finances for Fiscal Maneuvering | Global Corruption |
President Dilma Rousseff had her government finances for 2014 unanimously rejected by the Federal Court of Accounts (TCU) on Wednesday (7). The court ruled that the President did not adhere to the Constitution and other laws regarding public spending.

Although there will be no immediate consequences for Rousseff, her political situation becomes yet more complicated.

The impeachment request under analysis today in the lower house of Congress is based in part upon the government's fiscal maneuvering, which was cited by the TCU as one of the reasons the accounts were rejected.

The government did everything to postpone the judgement, but it could not get the session suspended in the Supreme Court. It also tried and failed to get the TCU to replace the minister Augusto Nardes, who brought the case, accusing him of bias.

The TCU acts like external auditors who analyze financial statements of companies, checking that the government adhered to legislation in administering its revenues and expenses.

The TCU's conclusion will be sent to Congress, which will decide whether or not to approve the government's statement of accounts.

The opposition will use this rejection to argue that the President should be impeached for breaking the law.
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U.N. examines donations from foundation tied to alleged bribe scheme

U.N. examines donations from foundation tied to alleged bribe scheme | Global Corruption |
The United Nations said on Wednesday it was examining how donations were used from a foundation linked to several of six people charged by U.S. authorities in an alleged bribery scheme tied to a former president of the U.N. General Assembly.
U.S. prosecutors filed a complaint in federal court in New York on Tuesday, outlining how more than $1.3 million in bribes were received from Chinese businessmen, including billionaire Macau real estate developer Ng Lap Seng.
Prosecutors said some of the bribes were arranged through Sheri Yan, chief executive officer of a New York-based organization, and Heidi Park, its finance director, who were also arrested. Central to the complaint was former president of the General Assembly John Ashe of Antigua and Barbuda.
The organization was not named, but the Global Sustainability Foundation website lists Yan and Park as holding those positions.
U.N. spokesman Stephane Dujarric told reporters that the donations to the United Nations from the foundation were being scrutinized by the U.N. office for south-south cooperation, which he said was the recipient of the donations.
"They are taking a very close review at all of the relationships with this foundation," he said. "They are taking an active look, and I think we'll look as deeply as possible into the money, where it went and what it was used for."
"We are continuing to study the complaint that was released yesterday," he said, adding that he believed the U.N. office for south-south cooperation received about $1.5 million from the foundation.
Dujarric said on Tuesday that U.N. Secretary-General Ban Ki-moon was "shocked and deeply troubled" by the allegations. The U.N. had not previously been informed of the probe, he said, but would cooperate if contacted.
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Andres Oppenheimer: Latin America’s top problem is corruption

Andres Oppenheimer: Latin America’s top problem is corruption | Global Corruption |
When Peruvian-born Nobel Prize winner Mario Vargas Llosa told me in a public interview in front of 300 newspaper editors last weekend that “corruption is the biggest threat to Latin American democracies,” my first reaction was to think that it was an exaggeration. But, on second thought, he may be right.

At first, when Vargas Llosa made that comment during the interview at the annual meeting of the Inter American Press Association in Charleston, South Carolina, I thought that other problems — such as Latin America’s excessive dependence on commodity exports, drug-related violence, lack of competitiveness, and dismal education and innovation standards — are just as serious problems for the region as corruption.

But Vargas Llosa’s explanation, citing the case of Brazil, made a convincing case that — at least in the short run — corruption may be the region’s No. 1 problem.

“Brazil’s case is very interesting because Brazil was a country that seemed to have taken off, that looked like an emerging power. And suddenly, what is it that put an end to that, and set Brazil backwards? It’s corruption, which peaked during a government that the rest of the world was seeing as a model government, that of (Luiz Inácio) Lula da Silva,” he said.

Brazil wasn’t hit by a devastating economic blow from abroad, nor suffered a natural disaster. Its economy collapsed this year amid a growing political scandal over the national Petrobras oil company’s kickbacks to leading ruling party politicians. The $800 million scandal, which took place during Lula’s presidency, when current President Dilma Rousseff was a member of the Petrobras board, has triggered massive protests across the country.

“Today, investors are fleeing,” Vargas Llosa said. “They don’t want to invest a cent in Brazil. And it’s because of corruption.”
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How India is fighting corruption—using the very people who pay bribes

"...if people-power is going to work, then three things need to be apparent. Firstly, if citizens are going to be empowered to take decisions that help weed out corrupt practices, then governments and local authorities need to be willing to cede power to them. They need to be happy for citizens to genuinely get involved, take decisions—and then act on them. Authorities, in other words, need to limit their own power—not something that too many politicians in states with significant petty corruption (and states where democracy may not be seen as particularly significant anyway) are generally inclined to do.
You need to have patience, to realise that changing deep-rooted processes takes time and then to be clear about what you would regard success to be.
Secondly, citizen empowerment tends to work best when it develops organically. Indeed, that happened with all of the above examples. That needs a fair bit of stickability on behalf of the those involved.

Finally, the programmes have to be well-designed and organised in such a way as to enable them to have long-term futures. Don’t, in other words, expect too much too soon and do make sure that the goals are both achievable and measurable. You need to have patience, to realise that changing deep-rooted processes takes time and then to be clear about what you would regard success to be."

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