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Ray Nagin, former New Orleans mayor, convicted of federal corruption charges

Ray Nagin, former New Orleans mayor, convicted of federal corruption charges | Global Corruption | Scoop.it

Ray Nagin, the former two-term mayor of New Orleans indicted after he left office, was convicted Wednesday of 20 federal corruption charges for illegal dealings with city vendors, dating back to 2004. A jury delivered its verdict just before 1 p.m., after six hours of deliberations that followed a nine-day trial.

Nagin, 57, joins a list of Louisiana elected officials convicted of misdeeds while in office, but he is New Orleans' first mayor to be convicted of public corruption. Under federal sentencing guidelines, he could face a 20-year prison term, possibly more, lawyers have said.

In a case that relied heavily on the testimony of businessmen-turned-convicts -- and a paper trail that showed money changing hands and lucrative city contracts doled out -- prosecutors described a public official "on the take." Nagin was an opportunist who pursued businessmen under pressure to get government work, targeting them to line his own pockets, prosecutors said.

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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.
- Gerald E. Caiden
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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 | Scoop.it

*** Key findings from PwC's 17th Annual Global Economic Crime Survey

*** Cyber crime: the Achilles heel of the business world
*** Ukraine’s $19-billion question of debt and corruption

*** FBI announces campaign to crack down on public corruption

*** Ukraine’s $19-billion question of debt and corruption

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World Bank Report 2007-2013

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World Bank Report 2007-2013
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Whistleblower suit says health plan cheated government out of more than $1 billion

Whistleblower suit says health plan cheated government out of more than $1 billion | Global Corruption | Scoop.it

Valdez accuses the health plans of “rampant fraud,” alleging they overcharged Medicare $300 million to $350 million a year from 2007 through 2010. He claims that Aveta Chief Executive Officer Richard Shinto fired him “in retaliation for his outspoken opposition to these illegal practices.” Valdez filed the lawsuit in Santa Ana, California, in April 2011, but it remained under court seal until February of this year. The case is pending.

In a May 23 statement to the Center for Public Integrity, the health plans called Valdez a “former disgruntled employee” and added that the company “categorically denies the allegations in the former employee’s lawsuit and is highly confident that it will prevail in the case.”

Valdez is a veteran health care executive and consultant who headed the California regional office of the U.S. Department of Health and Human Services from 2001 through 2003 under President George W. Bush. He also was a health policy adviser to Republican Mitt Romney during the 2012 presidential race.

Valdez said in court papers that he served as president of MSO of Puerto Rico, also owned by a subsidiary of Aveta, for eight months until his dismissal in December 2010. MSO worked with local doctors to coordinate coverage for some 230,000 elderly and disabled people then enrolled in those two Aveta-related Medicare Advantage health plans. In a press release touting his hire, Aveta said Valdez would enhance medical care while “effectively managing healthcare costs.”

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Why the first 48 hours in a fraud investigation are so important

Why the first 48 hours in a fraud investigation are so important | Global Corruption | Scoop.it

The first 48 hours of an investigation are critical.

Most forensic and investigation professionals have heard of an investigation, one that became protracted or involved rework that wasted time and resources. Others can tell of investigations that failed in their objective of uncovering and assembling the full, reliable, and objective understanding of the facts needed for decision making by business executives, directors, external auditors, regulators, and investors. Still others can point to pitfalls, such as those related to engagement structure and evidence handling, that increased the investigation-related time and cost over and above what might have been necessary in the circumstances.

Consider the following scenario:

Bill, the CEO, sits in his office, exhausted. The company’s Form 10-K has been delayed and cannot be filed until the financial statements are finalized and the audit completed. The external auditors keep raising questions about what started as a small internal investigation.

When the issues initially arose they seemed to be simple problems, but the investigation now seems to be much more complicated. In an effort to resolve the issues quickly, Bill had directed the company’s internal people look into all the issues. As more information became known, it was decided that they needed an independent investigation conducted by lawyers and forensic specialists. These investigators seemed to cover all the same ground again, and more.

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China: Stimulus, Corruption and Reform

China: Stimulus, Corruption and Reform | Global Corruption | Scoop.it

One thing which appears to be clear is that reform is linked to China’s ongoing corruption investigations.  Again looking at PetroChina, it is fair to say that the reform plan was somehow impacted by corruption investigations into the company. The thinking goes that if President Xi Jinping is able to remove high ranking officials under the guise of corruption, it allows him to push forward reforms that those same individuals were blocking.

Of course, there are many other possible motivations for the corruption crackdown other than pushing forward reform, including consolidation of political power (something I wrote about here) and, of course, actuallydealing with corruption. Bill Bishop, author of the Sinocism China Newsletter, outlines the major questions regarding the corruption campaignhere.

Pulling all of these points together, we can conclude that China needs stimulus because reform has slowed, and for reform to accelerate, we need more progress on the corruption campaign.

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Cuba prosecutes Canadian after he denounced corruption - company

Cuba prosecutes Canadian after he denounced corruption - company | Global Corruption | Scoop.it

Cy Tokmakjian was arrested in 2011 and held for nearly 2-1/2 years before being charged after his company was caught up in a crackdown on corruption by President Raul Castro...

 

Cuba has prosecuted and is likely to send Canadian businessman Cy Tokmakjian to prison after he denounced corruption in the Havana government's awarding of contracts, his company said on Monday.

"Cy Tokmakjian spoke out against corruption as it was clear the company was losing contracts to others for unexplained reasons. It's possible this outspokenness led to what is now happening," Lee Hacker, vice president of finance for the company, said in a statement on Monday.

Tokmakjian and two other Canadian citizens from his transportation company, the Tokmakjian Group, which has done business in Cuba for 22 years, stood trial on charges of bribery and other economic crimes in June.

A verdict and sentencing in the closely watched case are expected soon.

Cuban prosecutors are seeking a 15-year prison term for Tokmakjian and 12 years each for his managers, fellow Canadians Claudio Vetere and Marco Puche. All three have maintained their innocence, and the company has said it fears the outcome was predetermined.

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Retired U.S. Navy commander pleads guilty in bribery scandal

Retired U.S. Navy commander pleads guilty in bribery scandal | Global Corruption | Scoop.it

A retired U.S. Navy commander pleaded guilty to federal conspiracy charges on Thursday in connection with a wide-ranging corruption investigation of a Singapore-based defense contractor.

Edmond Aruffo, the 45-year-old former manager of Glenn Defense Marine Asia's operations in Japan, pleaded guilty in U.S. District Court in San Diego to a single count of conspiracy to commit bribery as part of a plea agreement with prosecutors.

He is the seventh defendant charged in the bribery scandal and the fourth to plead guilty in the high-profile case.

"There is an old navy saying: Not self but country," U.S. Justice Department Assistant Attorney General Leslie Caldwell said. "Edmond Aruffo instead put self before country when he stole from the U.S. Navy as part of a massive fraud and bribery scheme that cost the U.S. Navy more than $20 million."

Prosecutors accuse the maritime services firm, led by Malaysian businessman Leonard Glenn Francis, of bribing Navy officials to get information on ship movements and competing contracts and filed inflated invoices in contracts worth millions of dollars at ports across Asia.

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Immigration agents accused of database abuse; cartels make corruption easy

Immigration agents accused of database abuse; cartels make corruption easy | Global Corruption | Scoop.it

At least a half-dozen federal immigration agents have come under investigation since 2012 for snooping into law enforcement databases — computer misconduct ranging from “self queries” to accusations that one of them tried to use the databases to warn drug smugglers if they were under investigation...

 

Border analyst James Phelps, a professor at Angelo State University, estimates that as many as 300 law enforcement officers are under investigation for corruption near the border. He also said that having an insider with access to a law enforcement computer makes it easier to lure the next corrupt officer.

“How do you corrupt someone like that? It’s real easy,” Mr. Phelps said. “You offer them more money in a weekend than they make in an entire year.”

“If you can get a hold of a person’s driver’s license, you can find out everything — the works,” he said. “If the cartels can identify an agent by name and find out where they live, they can come and make an offer,” Mr. Phelps said. “Take our money and turn a blind eye, or we kill your mom. Down in Mexico, the cartels have no problem doing that, and that’s where you have a lot of agents fail.”

 

 

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El contable de Nóos admite que hubo corrupción

El contable de Nóos admite que hubo corrupción | Global Corruption | Scoop.it

Nacional/ El que fuera contable del Instituto Nóos, Marco Antonio Tejeiro, ha confesado a la Fiscalía Anticorrupción los delitos que se le imputan, y ha reconocido que Iñaki Urdangarin y Diego Torres emplearon esa entidad para cometer diversos delitos de corrupción.

El antiguo contable ha alcanzado un acuerdo con el fiscal Pedro Horrach en el que admite que por orden de Urdangarin y Torres, su cuñado, facturó servicios a costes muy superiores a los reales, desvió fondos a través del entramado empresarial de los socios para ocultarlos al fisco y realizó contratos ficticios.

 

Horrach ha acudido a mediodía al despacho del juez instructor del caso, José Castro, para informarle de la confesión de Tejeiro en lo que ha sido el primer encuentro entre ambos tras su enfrentamiento público por la imputación de la infanta Cristina. Ambos han coincidido en que la entrevista, que se ha prolongado unos 15 minutos, ha sido "cordial".

En un escrito de ocho páginas dirigido a la Fiscalía Anticorrupción de Baleares, Marco Antonio Tejeiro, expresa su voluntad de contribuir al "esclarecimiento de los hechos objeto de investigación" y hace una relación de una veintena de prácticas delictivas de las que tuvo conocimiento.
Describe que Torres, esposo de su hermana Ana María, y Urdangarin organizaron un entramado de sociedades "que operaban realmente en el mercado como si fueran una sola".

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Aquino Opponent Enrile Arrested Over Philippine Graft Indictment

Aquino Opponent Enrile Arrested Over Philippine Graft Indictment | Global Corruption | Scoop.it

Senator Juan Ponce Enrile, 90, surrendered at the national police headquarters in Quezon City, greater Manila yesterday following his indictment last month on charges he stole at least 172.8 million pesos of congressional funds from 2004 to 2010. His former chief aide and co-accused, lawyer Gigi Reyes, also turned herself in.

Enrile was one of the central officials in the martial-law administration of the late dictator Ferdinand Marcos and has been in government for almost five decades. Critics of the president have said he is pursuing selective prosecution and protecting allies embroiled in a kickback scheme that allegedly benefited at least 120 sitting and former legislators.

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S.African financial watchdog begins audit after ex-CFO accused of graft | Reuters

 South Africa's financial services regulator is carrying out an internal audit in response to allegations that its former chief financial officer extorted money from a local business by threatening to scrutinise its books.

The Financial Services Board (FSB) said Dawood Seedat, who was its CFO for more than eight years, stepped down shortly after local media reported the allegations two weeks ago.

Media reports said Africa Cash & Carry had paid Seedat 12 million rand ($1.12 million) so that he would not shut the firm down through audits by the FSB and the Revenue Service.

The wholesaler paid in different tranches and the final instalment of 2 million rand was secretly filmed, the reports said.

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Secretive agency leads most intense anti-corruption effort in modern Chinese history

Secretive agency leads most intense anti-corruption effort in modern Chinese history | Global Corruption | Scoop.it

Xi’s anti-corruption campaign has gone farther than any in the country’s modern history...

 

No sign identifies the drab beige building off a busy thoroughfare in downtown Beijing. There is nothing to indicate that within its walls lies the most feared agency in China for members of the Communist Party.

The institution has an obscure name — the Central Commission for Discipline Inspection. But in the year and a half since Xi Jinping became China’s leader, it has become his main weapon in an anti-corruption campaign that has gone further than any other in the country’s modern history.

The campaign is meant to clean up the party’s image — so soiled by graft that some leaders fear public contempt could threaten their grip on power. It also appears aimed at consolidating Xi’s power. He has used the commission to weaken rival factions and, more broadly, to warn off anyone who might challenge his agenda.

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James Metts Is Accused of Accepting Bribes

James Metts Is Accused of Accepting Bribes | Global Corruption | Scoop.it

James R. Metts, the state’s longest-serving sheriff, is accused of accepting money from a restaurant mogul to free workers arrested and sent to the county jail he controlled...

 

A June 17 grand jury indictment accuses Sheriff James R. Metts, Lexington County’s top law enforcement official since 1972, of accepting cash bribes from Gregorio M. Leon, a 47-year-old restaurant mogul whose family founded the first San Jose restaurant in the state in the late 1980s. In exchange for the cash, Sheriff Metts, who pleaded not guilty this week, is alleged to have freed restaurant workers arrested in an initiative against illegal immigration and sent to the county jail he controlled.

Both men are well-known figures here: Sheriff Metts, 68, was once sympathetically portrayed by the actor William Devane in a made-for-TV movie based on a notorious local murder case. Mr. Leon hosts a large tailgate barbecue at the University of South Carolina’s home football games in nearby Columbia, the state capital.

Federal authorities have indicated that the investigation is continuing. The shock has reverberated among the leadership of this conservative, populous and politically powerful county.

 


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Serious Fraud Office Annual Report 2013-14

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New Data on World Bank Sanctions: The Office of Suspension and Debarment releases its first report

New Data on World Bank Sanctions: The Office of Suspension and Debarment releases its first report | Global Corruption | Scoop.it

OSD’s new report covers the first six fiscal years of its operation. It has several key findings: In 95% of sanctions cases, OSD determined that there was sufficient evidence to support at least one of the claims made by INT. It rejected 5% of cases in their entirety. OSD referred 38% of cases back to INT based on a determination that there was insufficient evidence to support one or more of the accusations made. OSD found insufficient evidence on all claims related to 13% of Respondents included in cases (some cases involve multiple Respondents, which accounts for apparent discrepancies in the numbers above). On average, OSD takes 60 days to make an evidentiary determination in a case. OSD renders a new determination, on average, once every ten days. In 40% of cases, Respondents appeal the case to the Sanctions Board. Settlements account for a considerable percentage of cases – almost 30% in FY 2011, 22% in FY 2012, and 23% in FY 2013. While INT investigations require significant time to complete, they have steadily grown shorter. In FY 2008 and 2009, they commonly lasted up to three years, or longer. In FY 2011 and 2012, it was more common to see investigations completed in less than two years. 86% of cases and settlements received by OSD are based on fraud, 14% on corruption, and 9% on collusion (some cases include more than one type of sanctionable practice). When considering the types of fraud at issue in sanctions cases, there are about the same amount of cases involving forged third party documents, like bank guarantees, manufacturer’s certificates, and performance or experience documentation (105 cases), as there are of other forms of fraud, like false invoices or payment certifications, misrepresentation or omission regarding a conflict or an agent, or misrepresentation regarding past performance (99 cases). - See more at: http://fcpamericas.com/english/enforcement/data-world-bank-sanctions-office-suspension-debarment-releases-report/#sthash.ACzhiBnN.dpuf

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Center Township CFO's spending history examined after his arrest - Indianapolis Star

Center Township CFO's spending history examined after his arrest - Indianapolis Star | Global Corruption | Scoop.it

Before Alan S. Mizen was accused of embezzling taxpayer money, his job was to sniff out embezzlers.

The former Center Township chief financial officer who was arrested July 1 worked years earlier for the Indiana State Board of Accounts. His job? Audit government agencies to ensure that public officials are not misusing the people's money. In 2000, he was instrumental in exposing a Madison County clerk who stole about $235,000 in taxpayer money.

The 56-year-old Zionsville resident now finds himself on the opposite end of the equation. Federal prosecutors say he embezzled a little more than $340,000 from Center Township, much of the money earmarked to help the township's poor.

In June 2010, Mizen set up a PNC bank account and deposited a check for $343,541.08 drawn from the township's federal program funds, a criminal complaint says. He used the accounting system at the Center Township trustee's office to create a false invoice indicating that he had written the check to the "Treasurer of the State," the complaint says.

He then moved the money into several personal accounts and spent it over the next two years on items such as a car, tuition, cruises and jewelry, prosecutors allege.

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Ex-New Orleans mayor Ray Nagin sentenced to 10 years

Ex-New Orleans mayor Ray Nagin sentenced to 10 years | Global Corruption | Scoop.it

ormer New Orleans mayor Ray Nagin, the businessman-turned-politician who became the worldwide face of the city after Hurricane Katrina, was sentenced to 10 years in prison Wednesday.

Nagin, 58, was ordered to report to federal prison Sept. 8. Nagin, also ordered to pay restitution of $82,000, was found guilty Feb. 12 of fraud, bribery and related charges involving crimes that took place before and after Katrina devastated the city in August 2005.

Nagin, based on sentencing guidelines, had faced a possible sentence of 12 to 30 years.

A jury convicted Nagin of accepting hundreds of thousands of dollars in bribes -- money, free vacation trips and truckloads of free granite for his family business -- from businessmen who wanted work from the city or Nagin's support for various hurricane recovery projects.

Prosecutors asked the court to send Nagin to prison for a long time. They argued that he was found guilty of 20 of 21 counts in the indictment, and that he participated in and orchestrated a years-long conspiracy to enrich himself and his family.

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Atlanta News: Ex-Atlanta lawyer charged with fraud

Atlanta News: Ex-Atlanta lawyer charged with fraud | Global Corruption | Scoop.it

An Atlanta lawyer who earlier this year surrendered his law license amid an investigation into possible financial misconduct has been arrested on charges of securities fraud and conspiracy to commit fraud.

Hendrickx Toussaint was arrested July 3 in DeKalb County, according to a news release from the Alabama Securities Commission. The arrest came more than five months after the Georgia Supreme Court accepted Toussaint’s voluntarily surrender of his law license.

According to a Jan. 21 court ruling, Toussaint once served as an escrow agent for companies seeking to acquire, rehabilitate and resell 36 residential properties. Between July 2009 and April 2010, he conducted more than 60 counter transactions from his trust account involving the funds and failed to keep complete records of the transactions. Though he had not been charged at the time of the court’s ruling, he was the subject of a federal criminal investigation, The Atlanta Journal-Constitution reported.

In the latest case, a Madison County, Ala., grand jury indictment alleges Toussaint and others fraudulently solicited investor funds to be used in a managed gold “buy-sell” program. Toussaint was not registered with the Alabama Securities Commission to legally conduct securities business in Alabama, according to the commission’s release.

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In Bulgaria, Corruption and Mistrust Turn Promise Into Pain

In Bulgaria, Corruption and Mistrust Turn Promise Into Pain | Global Corruption | Scoop.it

Bank runs and political instability have cast a shadow on the future of the European Union’s poorest member state...

 

For many here, Bulgaria’s problems stem from ties between some businesspeople and the increasingly unpopular Socialist-led government of Prime Minister Plamen Oresharski, who took office little more than a year ago but has agreed to hold early elections on Oct. 5. The current government is expected to resign by the end of the month, and an interim cabinet will preside until the new government is elected.

The bank runs only deepened the disillusionment among foreign investors and within the multinational business community. And they shook confidence in the ability of the Bulgarian National Bank — the central bank — to supervise the country’s financial system and called into question its status as one of the few government institutions that functioned reasonably well.

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Fraud is Ageless

Fraud is Ageless | Global Corruption | Scoop.it

Today’s “Fraud of the Day” is based on an article entitled “Buffalo Woman Pleads Guilty to Social Security Fraud” published in The Buffalo News on June 19, 2014.
A 79-year-old Buffalo widow, though legitimately getting Social Security death benefits after the deaths of her two husbands, pleaded guilty Thursday to using false names and identification documents to defraud the system out of an additional $101,150.95 for over a decade.
Bernice Robinson pleaded guilty before U.S. Magistrate Judge Leslie G. Foschio to the theft of public money, a charge for which she could get a prison term of up to ten years and a fine of up to $250,000 when her sentencing is scheduled later this year. Assistant U.S. Attorney Kathleen A. Lynch said Robinson’s fraud dated from October 1998 through April 2011 when Social Security Administration agents finally established her criminal activity.

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Chairman of everything

Chairman of everything | Global Corruption | Scoop.it

CHINA’S president appears to have killed two eagles with one arrow in bringing down one of the nation’s highest-ranking military men. On June 30th General Xu Caihou was stripped of his Communist-Party membership and handed over to prosecutors on corruption charges. State media said he took money and other loot in exchange for arranging promotions. Until last year, General Xu was one of the two dozen most powerful men in the country.

His fall helps consolidate Xi Jinping’s control over the army and at the same time burnishes his credentials as an anti-corruption crusader. The party announced the expulsion of six more figures this week, including a former vice-minister, a former senior manager at a state-owned oil firm and a former head of a government watchdog. All of them were connected to Zhou Yongkang, until 2012 the head of state security and formerly one of China’s nine most powerful men. In a separate announcement, the party dismissed Wan Qingliang, a rising star who was party boss of Guangzhou, one of China’s largest cities.


It is possible Mr Xi is merely grappling with the far-reaching corruption that his predecessors, Hu Jintao and Jiang Zemin, often spoke about as a mortal threat to the party’s rule but failed to stem. But there are hints he is up to more. Many of the figures already ensnared have close ties to the previous leaders.
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Accountant confesses in Spanish royal corruption scandal

Accountant confesses in Spanish royal corruption scandal | Global Corruption | Scoop.it

The accountant of the King of Spain's brother-in-law has made a detailed written confession laying out how Inaki Urdangarin allegedly embezzled millions of euros through his non-profit organisation Noos Foundation, a Spanish court said on Thursday.

The confession is the latest development in an embarrassing and drawn-out corruption investigation which threatens to hold back the royal family's attempts to rebuild its reputation following last month's coronation of King Felipe VI.

Urdangarin, 46, a former Olympic handball player, is accused of using his connections to win public contracts putting on events through his Noos Foundation and embezzling millions of euros in public funds through the organisation.

The state prosecutor handed over to Palma Examining Magistrate Jose Castro a written account from Urdangarin's accountant, Marco Antonio Tejeiro, detailing criminal acts he had allegedly committed, the Supreme Court of the Balearic Islands said.



Leer más:  Accountant confesses in Spanish royal corruption scandal - court - EcoDiario.es  http://ecodiario.eleconomista.es/internacional/noticias/5913752/07/14/Accountant-confesses-in-Spanish-royal-corruption-scandal-court.html#Kku8ScbrNsVO9WDt

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GSK accused of playing down bribery allegations - Telegraph

GSK accused of playing down bribery allegations - Telegraph | Global Corruption | Scoop.it

Peter Humphrey was hired by GSK to identify culprit behind a covert sex tape of company's former China boss...

 

The British investigator hired by GlaxoSmithKline months before it became embroiled in a major bribery scandal in China has accused the company of concealing the full extent of the allegations it faced.

Peter Humphrey, who was subsequently arrested in China accused of illegally purchasing personal information and is now facing trial, said he felt "cheated" by the drug maker, according to the FT.

Mr Humphrey conducted an investigation for GSK months before it was publically accused of spending as much as £320m bribing doctors and officials in China to win sales.

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RSA Uncovers Boleto Fraud Ring in Brazil - Speaking of Security - The RSA Blog and Podcast

RSA Uncovers Boleto Fraud Ring in Brazil - Speaking of Security - The RSA Blog and Podcast | Global Corruption | Scoop.it
Through a coordinated investigation effort spanning three continents, RSA Research has uncovered details of a substantial malware fraud ring that is operating with significant effectiveness to infiltrate one of Brazil’s most popular payment methods - the Boleto. Based on evidence gleaned from this fraud investigation, RSA Research calculates the Boleto malware or "Bolware" fraud ring has generated 495,753 potentially fraudulent Boletos transactions over a two-year period valued in excess of $3.75 Billion USD (R$ 8.57 Billion).
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Ecuador Wins Appeal to Sue Ex-Filanbanco Owners in Miami

Ecuador Wins Appeal to Sue Ex-Filanbanco Owners in Miami | Global Corruption | Scoop.it

 

Ecuador can pursue a lawsuit seeking to recover hundreds of millions of dollars the country claims was fraudulently drained by the owners of Filanbanco SA who later moved to Miami, a Florida appeals court ruled.

Today’s ruling overturns a lower-court decision that sided with William and Roberto Isaias, and returned the case for further proceedings. The lower court erred in granting the Isaias brothers an “extraterritoriality exception” to the practice of U.S. courts respecting government acts pursued by another sovereign nation, the appeals court said.

“The record demonstrates genuine issues of fact regarding the allegedly remaining indebtedness of the Isaiases to the republic,” the appeals court ruled. “The Isaiases did not make a conclusive showing” in the lower court that the actions of Ecuadorian banking authorities were “confiscatory acts strictly based on politics, revolution or regime change.”

 

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Dollars for despots

Dollars for despots | Global Corruption | Scoop.it

THE long-running scuttlebutt about the size of the fines to be paid by BNP Paribas for years of intentionally evading American sanctions on doing business with Cuba, Iran and the Sudan finally ended after the market closed on June 30th: regulators announced a $8.9 billion fine and a guilty plea to criminal charges.

It is by far the largest fine for sanctions ever and the settlement included an unprecedented additional requirement that BNP suspend for a year its clearing operations in dollars, a vital business for a bank involved in cross-border trade.  And yet, for all that—the vast penalty, the constraint on operation—the settlement will surely be faulted for lacking one element in particular: a single charge against an individual.

The bank’s executives were not entirely left untouched. New York’s Department of Financial Services (DFS), which was part of the settlement, says 13 executives were sacked or left the bank because of the investigation, including the former chief operating office, the head of compliance and the head of ethics and compliance for North America. Nearly three-dozen other employees were disciplined.

Still, the 35-page statement of facts released by America’s Department of Justice outlines numerous schemes to evade rules that rested heavily on decisions by individuals, and endorsements from senior executives of an illicit strategy. The section on Sudan is particularly scathing: it notes that the bank’s own compliance department had raised concerns about doing business with a government that “has hosted Osama bin Laden” and resisted the United Nation’s intervention in Dafur,  “a humanitarian catastrophe.”

BNP’s operations were enormously important to Sudan. In 2006, according to the statement of facts, letters of credit provided by BNP’s Geneva office represented one quarter of all exports and a fifth of imports. For all three countries, more than $190 billion in transactions were concealed in the decade between 2002 and 2012, the DFS says.

Methods used by BNP to avoid detection included stripping out any reference to sanctioned countries from transfers and using deliberately complex, circuitous methods to  channel money through other banks. Senior bank executives endorsed the scheme because of the lucrative relationship the bank had with Sudan, according to the Justice Department. A whistleblower had provided it with information as early as 2006. Still, the illicit relationship with Sudan did not end for another year.

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