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China's Battle Against Corruption Gets Serious - The Globalist

China's Battle Against Corruption Gets Serious - The Globalist | Global Corruption |

In his determined efforts to fight corruption, China’s President Xi Jinping is following the textbook to the letter. His guru could well be Professor Robert Klitgaard, now at Claremont Graduate University in California.

As the distinguished South African academic has written, there are three rules to be followed in a successful campaign against corruption:

1. “Put the fight against corruption at the center of creating a new government.”

2. “Create a core of qualified well-paid government leaders.”

3. “Demonstrate that impunity is over by frying some big fish.”

And this is where the current news is so encouraging. Few fish (although Xi and the Chinese press prefer to say “tiger”) are bigger in China than Zhou Yongkang. The Chinese official media has reported that the 71-year-old Zhou has been arrested. He is now being investigated by the government’s anti-corruption agency, the Central Commission for Discipline Inspection.

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From around the web

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 |

*** 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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Kenyatta Suspends All Govt Officials Named In Corruption

Kenyatta Suspends All Govt Officials Named In Corruption | Global Corruption |

President Uhuru Kenyatta has ordered top officials in government who have been adversely mentioned in corruption to step aside pending investigation.
The officials include Cabinet Secretaries, Principal Secretaries and Chief Executives of state corporations. The President made the order in his State of the Nation address to Parliament on Thursday.
Kenyatta’s stern directive came after he received a report from the country’s Anti-Corruption Commission, which contained a catalogue of allegations of high-level corruption touching on all arms and levels of Government.
The Commission he said had reported that it was under siege because of the nature of the cases they are currently investigating.
“I hereby direct that all Officials of the National and County governments that are adversely mentioned in this report, whether you are a Cabinet Secretary, Principal Secretary, or Chief Executive of a state institution, to immediately step aside pending conclusion of the investigations of the allegations against them,” stated the president.
“The investigating authority must ensure that the Director of Public Prosecutions has received the subject files without delay.”
A number of officials in various ministries are listed in the report, whose names were not yet out by press time.
Kenyatta received a standing ovation upon the declaration. His speech was described by especially opposition politicians as the best he had ever made.
“Let me reiterate that it is not my place to determine the guilt or otherwise of any of the people mentioned in the said report or any other. However, the time has come to send a strong signal to the country that my administration will accept nothing less than the highest standard of integrity from those that hold high office,” added the president.

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Justine Greening: Global Law Summit - Speeches - GOV.UK

Justine Greening: Global Law Summit - Speeches - GOV.UK | Global Corruption |
Law is a codification of power. Sometimes we’re asking people who have power to give it up – and allow the system, the rules, to manage things, and if you’ve not had that before, if the power systems have always favoured you - then placing your trust in rules rather than relationships is a real leap of faith and ultimately of leadership.

But, as no one understands better than this audience, ultimately the rule of law is the foundation stone of a country’s social, political and economic development.

That’s why it matters to DFID, the next set of development goals this panel session will shortly be discussing and that’s why I’m here today. Because I believe the experts that are here in this room, and more broadly across the legal profession, are of invaluable service in that debate and in many of the countries DFID works with.

I want to take this opportunity to call on you to work with us to promote the rule of law and justice around the world.

DFID’s rule of law programmes
Much of our work is already wide ranging, covering the rule of law for society, for politics, for economies.

Britain is helping poor and vulnerable groups, particularly women and girls, to access justice.

For example we are helping millions of women in Bangladesh resolve their grievances on issues such as dowry and maintenance. We’re also testing community policing models to help women and girls at risk of violence in Nigeria.

Today I’m announcing a £500,000 fund that DFID is setting up to work with organisations with very different ideas to help find new and better ways to support vulnerable girls and women access their rights - through legal advocacy, education and strategic litigation.

DFID also has a growing number of programmes to improve the legal, regulatory and institutional environment in which businesses operate in developing countries.

We have programmes focused on making the business environment simpler and more transparent in places like Somalia.

And in Rwanda, DFID has supported around 3 million people, a large proportion of them women, to gain formal rights to their land.

And we also focus on supporting countries to tackle corruption, whether by enabling citizens to report on the quality of their public services or by supporting countries to build effective and fair tax regimes.

We’re working here in the UK with the Crown Prosecution Service and the Metropolitan Police on the recovery of stolen assets for developing countries.

DFID-funded Anti-Corruption Units do world-leading work helping countries get back what is rightfully theirs and bringing the perpetrators to justice.

So far over 150 cases of overseas bribery have been investigated by these units and over £120 million has restrained, recovered and returned through their work.
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Daily Corruption News: 24 March 2015

Daily Corruption News: 24 March 2015 | Global Corruption |
Greece: The Greek tech revolution: meet the citizens battling corruption
The Guardian (TI mention)

“A few years ago the local tax office sent a bill to my grandfather. The problem was that he had passed away 20 years ago.’’ Like many of her compatriots, 47-year-old unemployed Maria (not her real name), from Athens, has many stories to tell about the inefficiency of the Greek state.


Global: Emotions could offer novel way to fight corruption

Botswana: Botswana minister blames corruption for rampant poaching in Africa

Guatemala: Acción Ciudadana presenta solicitud de antejuicio contra Roxana Baldetti (Acción Ciudadana calls for Roxana Baldetti’s impeachment)
El Periódico (TI mention)

Malawi: IMF approves $18 mln aid to Malawi after commitment to fight corruption

Romania: Romanian prosecutors find gold, Renoir painting in minister's safe

Senegal:  Senegal ex-leader calls rally after son's graft conviction
Agence France-Presse
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China's Fragile Evolution

China's Fragile Evolution | Global Corruption |
the anti-corruption campaign is one element in a broader evolutionary process driven by the realization that the transition between China's former economic model (based on low-cost exports and investment-led construction) and new economic model (based on domestic consumption, services and high value-added manufacturing) will entail five to 10 years of immense social, economic and political strain. Simply put, the old model, whose legitimacy rested on the promise of ever-rising material prosperity and stability, is no longer viable.
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From EY Megatrends 2015

From EY Megatrends 2015 | Global Corruption |

As cyber threats continue to multiply, it is becoming harder to safeguard data, intellectual property, and personal information

Rapid digitization and rising connectivity of people, devices and organizations expand vulnerabilities for cybercriminals to exploit. As cyber risks increase, organizations will need to mount concerted and sustained efforts to secure digital assets and protect confidential information.

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Daily Corruption News: 23 March 2015

Senegal: Senegal former president's high-flying son jailed for graft
Agence France-Presse

Karim Wade, the high-flying son of former Senegal president Abdoulaye Wade bidding to follow his father to the top office, was sentenced Monday to six years in prison in a deeply divisive graft case.


Global: Germany's Bilfinger announces probe into possible Brazil 2014 World Cup bribes
Deutsche Welle

China: China charges former senior energy executive with graft

Nigeria: Ex-antigraft crusader faces a Nigerian paradox
Wall Street Journal

Turkey: TGC official says 60 journalists faced legal cases since graft probe
Today’s Zaman

US: Prosecution of senator in 2008 looms over Menendez case
New York Times


Global: The global extraction industry has become hallmarked by plundering, violence and political corruption
The Guardian

Dominican Republic: Urge trasformar la Policía Nacional (Urge to transform the National Police)
Acento (TI mention)

UK: How corrupt is Britain?
Huffington Post (TI mention)
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A feisty Pope Francis slams corruption, unemployment in Naples

A feisty Pope Francis slams corruption, unemployment in Naples | Global Corruption |
Addressing the crowds in Naples' notorious outskirts of Scampia, Pope Francis gave a verbal slap to corrupt leaders who exploit local laborers, charging that they “cannot claim to be Christian.”

Speaking off the cuff during his one-day trip to the city March 21, the Pope also warned that every person is capable of being corrupt, and that no one should feel exempt from this temptation.

“If we close the door to migrants, if we take job and dignity away from people, this is called corruption. And all of us are capable of being corrupt, none of us can say 'I will never be corrupt,'” the Pope said.

Pope Francis added that human nature always contends with a strong pull “to slide toward easy business, toward the wrongdoings, toward crime, toward the exploitation of people.”

“How much corruption is in the world! If we hear this word, it’s a bad word, since a corrupt thing is a rotten thing. If we find the corpse of an animal, it's rotten, and it stinks… and corruption stinks, the man who let corruption inside of him is corrupt, and so he stinks.”
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USA: Ernst & Young Agrees To Pay $4 Million Over Lobbying Violations

A national accounting firm has agreed to pay $4 million to settle charges by the Securities and Exchange Commission that the firm violated rules relating to lobbying activities while claiming to be an independent auditor.

In the settlement, Washington Council EY, a unit of Ernst & Young, agreed to pay $4,071,925.98 including disgorgement, interest, and civil penalty. The settlement details the House and Senate lobbying activities of the firm, including letters, meetings, and draft legislation.

The summary of the settlement stated,

“These proceedings arise out of certain legislative advisory services provided by Washington Council EY (“WCEY”), which has been part of EY since 2000.

“Prior to 2009, certain conduct related to WCEY’s provision of legislative advisory services violated the independence rules with respect to two of EY’s SEC-registrant audit clients. For example, WCEY sent letters urging passage of bills to congressional staff on behalf of one of its clients (hereinafter, “Client A”). These bills were important to Client A’s business interests. In another instance, WCEY asked congressional staff to insert into a bill a provision favorable to Client A. For another audit client (hereinafter, “Client B”), WCEY attempted to persuade congressional offices to withdraw their support for legislation detrimental to that client’s business interests. In addition, WCEY worked closely with congressional staff in drafting an alternative bill more favorable to Client B. WCEY also marked up a draft of the alternative bill, inserting specific language written by Client B, and sent the mark-up to congressional staff.

“Despite providing the services described herein, EY repeatedly represented that it was “independent” in audit reports issued on Client A’s and Client B’s financial statements, which were included or incorporated by reference in public filings with the Commission.

“By doing so, EY violated Rule 2-02(b)(1) of Regulation S-X and caused Client A and Client B to violate Section 13(a) of the Exchange Act and Rule 13a-1 thereunder. EY’s conduct also constituted improper professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice.”
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5 Things to Know About China’s Fugitive Problem

5  Things to Know About China’s Fugitive Problem | Global Corruption |

1 Funds Are Fleeing
Sweetheart deals, embezzlement and bribery are legacies of China’s enormous wealth creation over the past three decades, and Beijing says it’s been too easy for criminals to abscond overseas with their cash. China now leads the world in the export of illicit funds, with more than $1.25 trillion draining out of the country in the decade to 2012, according to Global Financial Integrity, a Washington-based advocacy group. The Chinese Academy of Social Sciences once estimated China’s economic fugitives number as many as 18,000; Beijing alleges the U.S., Canada and Australia are top destinations.
China now leads the world in the export of illicit funds, with more than $1.25 trillion draining out of the country in the decade to 2012.

2 Follow the Property
Experts say corrupt money likely plays at least some role in helping inflate property prices in markets like California and New York. Foreign investment in U.S. property almost doubled to $22 billion in the year to March 2014, with Chinese cash accounting for nearly a quarter of the money foreign buyers spent on U.S. real estate last year, the National Association of Realtors says. Though most of the money is perfectly legitimate, anecdotal reports indicate suspected fraudsters are parking at least some of their money in real estate.

3 New Diplomatic Dance
China’s president wants the U.S. and other countries to help. But the last time the U.S. acted on a Chinese extradition request was in 2004. Sino-U.S. cooperation is usually confined to one-off deals. Some Western politicians are reluctant to extradite suspects back to China because they worry the fugitives won’t get a fair trial or could face execution.
The last time the U.S. acted on a Chinese extradition request.

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Adventist Health System to Pay $5.4 Million to Resolve False Claims Act Allegations US Department of Justice

Adventist Health System to Pay $5.4 Million to Resolve False Claims Act Allegations US  Department of Justice | Global Corruption |
Adventist Health System Sunbelt Healthcare Corporation (Adventist) has agreed to pay $5,412,502 to resolve claims that it violated the False Claims Act by providing radiation oncology services to Medicare and TRICARE beneficiaries that were not directly supervised by radiation oncologists or similarly qualified persons, the Department of Justice announced today.  Adventist is a non-profit healthcare organization operating a large network of hospitals in the South and the Midwest, and doing business in Florida as Florida Hospital.         

“Today’s settlement demonstrates our continued vigilance to ensure that federal health care beneficiaries receive the highest quality of patient care,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “It is critical that health care providers adequately supervise the services they provide to their patients.”

Radiation oncology services provided to patients served by Medicare and TRICARE, the Department of Defense’s health care program, must be directly supervised by a radiation oncologist or similarly qualified personnel.  The United States alleged that, from Jan. 1, 2010, through Dec. 31, 2013, Adventist violated this supervision requirement for radiation oncology services provided to federal health care program beneficiaries at several Florida locations, including in Altamonte Springs, Daytona Beach, Deland, Kissimmee, Orange City, Orlando, Palm Coast and Winter Park.  These services included radiation simulation, dosimetry, radiation treatment delivery and devices, and intensity-modulated radiation therapy.

“Medicare and TRICARE patients deserve high quality health care,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We will not tolerate providers recklessly cutting corners, particularly when furnishing such critical medical services as radiation oncology.”

The settlement partially resolves allegations made in a qui tam lawsuit under the False Claims Act filed in Tampa, Florida, by Dr. Michael Montejo, a radiation oncologist and former employee of Florida Oncology Network P.A., a radiation oncology group.  The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  Dr. Montejo will receive $1,082,500 as his share of the recovery. 

“Providing proper supervision of radiation oncology services is an important requirement in federal health care programs such as Medicare,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General.  “Our agency will continue to hold health care providers accountable for meeting the requirements in these taxpayer-funded programs.”
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Departments of Justice and Health and Human Services Announce Over $27.8 Billion in Returns from Joint Efforts to Combat Health Care Fraud - US Department of Justice

Departments of Justice and Health and Human Services Announce Over $27.8 Billion in Returns from Joint Efforts to Combat Health Care Fraud - US Department of Justice | Global Corruption |
More than $27.8 billion has been returned to the Medicare Trust Fund over the life of the Health Care Fraud and Abuse Control (HCFAC) Program, Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Sylvia M. Burwell announced today.  The government’s health care fraud prevention and enforcement efforts recovered $3.3 billion in taxpayer dollars in Fiscal Year (FY) 2014 from individuals and companies who attempted to defraud federal health programs, including programs serving seniors, persons with disabilities or those with low incomes.  For every dollar spent on health care-related fraud and abuse investigations in the last three years, the administration recovered $7.70.  This is about $2 higher than the average return on investment in the HCFAC program since it was created in 1997.  It is also the third highest return on investment in the life of the program. 

“As the innovative and collaborative work of the Health Care Fraud and Abuse Control Program proceeds, more taxpayer money is being recovered, more criminals are facing justice, and more fraud is being punished, prevented and deterred,” said Attorney General Eric Holder.  “The extraordinary return on investment we've obtained speaks to the skill, the tenacity, and the inspiring success of the hardworking men and women fighting on behalf of the American people.  And with these outstanding results, we are sending the unmistakable message that we will not waver in our mission to pursue fraud, to protect vulnerable communities, and to preserve the public trust.”

“Eliminating fraud, waste and abuse is a top priority for the Department of Health and Human Services,” said HHS Secretary Sylvia Burwell.  “These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health care fraud and prevent future fraud and abuse.  New enrollment screening techniques and computer analytics are preventing fraud before money ever goes out the door.  And together with the continued support of Congress and our partners at the Department of Justice, we’ve cracked down on tens of thousands health care providers suspected of Medicare fraud – all of which are helping to extend the life of the Medicare Trust Fund.”

The recoveries announced today reflect a two-pronged strategy to combat fraud and abuse.  Under new authorities granted by the Affordable Care Act, the administration continues to implement programs that move away from “pay and chase” to preventing health care fraud and abuse in the first place.  In addition, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), run jointly by the HHS Office of the Inspector General and the Justice Department, is changing how the federal government fights certain types of health care fraud.  These cases are being investigated through "real-time" data analysis in lieu of a prolonged subpoena and account analyses, resulting in significantly shorter periods of time between fraud identification, arrest and prosecution.
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Corruption Currents: Dilma’s War on Corruption

Corruption Currents: Dilma’s War on Corruption | Global Corruption |

Brazil President Dilma Rousseff declared war on corruption amid the Petrobras scPBR -7.07%andal, unveiling a package of new anti-graft measures. (Reuters, LA Times, AP)

A deep look at SNC-Lavalin 'sSNCAF +2.74% fallen star, Richard Ben-Aissa, is here. (Financial Post)

Richard Bistrong is interviewed by the publisher of CCI. The FCPAmericas blog explains U.S. sanctions on Venezuela. Mike Volkov has a pet peeve. Tom Fox continues a series on SEC enforcement of the FCPA. The FCPAProfessor reacts to the extension of Biomet’s settlement. The FCPA Blog looks at oversight in Rio.


A Chinese military organization formally acknowledged that Beijing’s military and intelligence community have units for attacking computer networks. (Daily Beast)

The cyber bills in Congress are starting to multiply. Privacy advocates aren’t happy about the amendments to the Senate’s bill. (The Hill, National Journal, The Hill)

Germany’s vice chancellor said the U.S. threatened Berlin over a potential asylum offer to Edward Snowden. (The Intercept)

The convicted Silk Road operator told his mom: A life sentence is a death sentence. (Al Jazeera)

Operators of a darknet enterprise made off with $12 million worth of bitcoin in what is being called an “exit scam.” (Guardian)
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China's anti-corruption crackdown reaches U.S.

China's anti-corruption crackdown reaches U.S. | Global Corruption |
China's sweeping anti-corruption crackdown has reached the other side of the globe.
Beijing believes at least 150 corrupt Chinese officials have fled to America, according to state media, and has sent U.S. authorities a list of the "priority cases" it is targeting.

Since coming to power, Chinese President Xi Jinping has launched a massive anti-corruption campaign that has netted hordes of government officials and company executives. Critics say Xi is simply cleaning house and removing opponents, but the crackdown has continued to widen.
A new effort launched last year -- dubbed "Operation Foxhunt" -- is targeting rich Chinese suspected of economic crimes who have fled abroad. China is trying to recover their illicit assets.
The U.S. State Department confirmed Wednesday that China has sent lists of suspects to the U.S. China has also agreed to hand over more evidence on priority cases to help U.S. officials track them down, then prosecute or deport them.
"We continue to encourage China to provide strong evidence and intelligence to ensure that our law enforcement agencies can properly investigate and prosecute cases related to the alleged corruption," U.S. State Department spokeswoman Jen Psaki said on Wednesday.
Neither Beijing nor Washington have given details about the list of targets, though at least one Chinese citizen has already been arrested in the U.S. with China's help, according to the Department of Justice.
Related: Chinese snap up fine art for use in laundering schemes
Last week, Shilan Zhao, the ex-wife of a former Chinese official, was arrested in Washington state, on charges of immigration fraud and money laundering, the U.S. Department of Justice said in a statement.
Zhao and her ex-husband, Jianjun Qiao, were charged with fraudulently obtaining visas through a popular immigrant investor program known as EB-5.
The Department of Justice also claims that the couple bought property in the U.S. with money laundered through a massive grain storage facility in China, where Qiao served as director for 13 years. Qiao remains at large, and is still being sought by U.S. authorities, according to the DOJ.
While the U.S. doesn't have an extradition treaty with China, the State Department said it can still return fugitives to China. "We must be satisfied that an individual extradited from the United States to another country would receive a fair trial and not be subject to torture or other forms of mistreatment in that country," Psaki said.
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USDOJ: US Attorney's Office - District of Connecticut

A federal jury in New Haven has found former governor JOHN G. ROWLAND guilty of all seven counts of an indictment related to his efforts to conceal the extent of his involvement in two federal election campaigns.  The trial began on September 3 and the jury returned its verdict this afternoon.  ROWLAND, 57, of Middlebury, served as governor of Connecticut from 1995 to 2004, and in the U.S. House of Representatives from 1985 to 1991.

“Americans will not tolerate corrupt conduct in the electoral process,” stated First Assistant U.S. Attorney Michael J. Gustafson.  “Lies and deception can never be accepted as politics as usual in Connecticut.  All voters have a right to know the truth when they cast their ballots.  I want to acknowledge the diligent work of the U.S. Postal Inspectors, who expertly investigated this scheme, and our trial team, who did an exemplary job in prosecuting this case. Together, these dedicated public servants have stood up for transparency, a vital piece of our electoral process.”

“The verdict in this case should give the public a sense that justice does prevail,” stated Shelly A. Binkowski, Inspector in Charge for the Boston Division of the U.S. Postal Inspection Service.  “Public officials are not immune from the law.  The two-year commitment by Postal Inspectors conducting this investigation was an enormous undertaking and truly a team effort with the U.S. Attorney’s Office.  Postal Inspectors have a long history of protecting the public from complex fraud schemes.  We have the skills and expertise to ensure that anyone who commits a crime with this level of dishonesty and deceit be prosecuted and punished to the fullest extent of the law.”

According to evidence introduced during the trial, in approximately October 2009, ROWLAND devised a scheme to work for the campaign of a candidate seeking election to the U.S. House of Representatives from Connecticut’s Fifth Congressional District during the 2009 and 2010 election cycle, and to conceal from the Federal Election Commission (“FEC”) and the public that he would be paid to perform that work.  To make the illegal arrangement appear legitimate, ROWLAND drafted a sham consulting contract pursuant to which he would purportedly perform work for a separate corporate entity owned by the candidate.

During the 2011 and 2012 election cycle, another candidate, Lisa Wilson-Foley, was seeking election to the U.S. House of Representatives from Connecticut’s Fifth Congressional District.  Wilson-Foley’s husband, Brian Foley, owns a Connecticut nursing home company and a number of other related companies, including a real estate company.  ROWLAND conspired with Wilson-Foley, Foley and others to conceal from the FEC and the public that ROWLAND was paid money in exchange for services he provided to Wilson-Foley’s campaign.

As part of the scheme, ROWLAND proposed to Wilson-Foley and Foley that he be hired to work on the campaign.  In order to retain ROWLAND’s services for the campaign while reducing the risk that his paid campaign role would be disclosed to the public, ROWLAND, Wilson-Foley and Foley agreed that ROWLAND would be paid by Foley to work on the campaign.  ROWLAND, Foley and others then created and executed a fictitious contract outlining an agreement purportedly for consulting services between ROWLAND and the law offices of an attorney who worked for Foley’s nursing home company.  Foley made regular payments to ROWLAND for his work on behalf of Wilson-Foley’s campaign and routed those payments from his real estate company through the law offices of the attorney.  ROWLAND provided nominal services to Foley’s nursing home company in order to create a “cover” that he was being paid for those nominal services when, in fact, he was being paid in exchange for his work on behalf of Wilson-Foley’s campaign.

Between September 2011 and April 2012, ROWLAND was paid approximately $35,000 for services rendered to Wilson-Foley’s campaign.  The payments originated with Foley and constituted campaign contributions, but were not reported to the FEC in violation of federal campaign finance laws.

The jury found ROWLAND guilty of two counts of falsification of records in a federal investigation, a charge that carries a maximum term of imprisonment of 20 years on each count, one count of conspiracy, a charge that carries a maximum term of imprisonment of five years, two counts of causing false statements to be made to the FEC, a charge that carries a maximum term of imprisonment of five years on each count, and two counts of causing illegal campaign contributions, a charge that carries a maximum term of imprisonment of one year on each count.
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Fake IRS agents steal $349K in Michigan

Fake IRS agents steal $349K in Michigan | Global Corruption |
Michiganians have lost nearly $349,000 to scammers posing as Internal Revenue Service agents demanding overdue tax payments, according to federal investigators.

Michigan is No. 13 when the states are ranked by the amount of money lost by victims in the phone fraud scam. At least 88 individuals have fallen for the fraudulent pitch at a combined cost of $348,729 since 2013, according to figures from the Treasury Inspector General for Tax Administration.

Nationwide, 3,112 victims lost a total $15.6 million to the ruse. The Treasury Inspector General’s office has received more than 400,000 reports of contacts associated with the scam.

The Michigan Attorney General’s Office this month advised consumers that the IRS will never contact consumers directly through email or with a phone call, so any calls or emails claiming to be from the IRS are fraudulent. It usually will start with a letter.

“Con artists take advantage of tax season at the expense of Michigan taxpayers,” AG Bill Schuette said in a statement. “This time of year can be stressful enough for families without having to worry that their personal information may be stolen.”

J. Russell George, the IRS inspector general, said last week real agents don't demand payment by debit card, credit card or wire transfer.
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All The Queen's Horses: Documentary of USA's Largest Municipal Fraud

All The Queen's Horses: Documentary of USA's Largest Municipal Fraud | Global Corruption |

Recent global research shows that the world loses more than $3.5 trillion annually due to fraud. According to the Association of Certified Fraud Examiners, the world’s largest anti-fraud organization, one of the three most common sectors where fraud is prevalent is the government sector. Massive government sector fraud can quickly change the face of any community, going from a cohesive group of citizens one day, to an apathetic community that adopts a culture of acceptance of fraudulent behavior of elected officials the next day. Survey research also shows that senior level employees in government are more likely to engage in fraud in comparison to any other industry. In the U.S., government sector fraud is commonplace ranging from small towns like Bell, California, to large cities like Miami, Florida, but the largest U.S. municipal fraud happened in the small Midwestern town of Dixon, IL, by their city comptroller Rita Crundwell. Crundwell, committed the largest municipal fraud in American history when she stole $53 million and remained undetected for 20 years until her arrest in April 2012.

Crundwell was a quarter-horse enthusiast who used the budget of Dixon, Ill. as her personal piggy bank for decades. Despite earning an $80,000 annual salary, she owned more than 400 quarter horses. She owned boats, expensive jewelry, and real estate and was known for her extravagant parties. Unbeknownst to city residents, Crundwell’s extravagant life was all at their expense. Think of all of the police cars, bridges, teacher salaries and playgrounds that could have been paid for with $53 million. She began working for the city as a student at Dixon High School in 1970. After graduating from high school she was promoted and moved into a finance role. In 1983, she was named treasurer and comptroller. Among her responsibilities were the preparation of the city’s budget and the handling of day-to-day financial operations. Her fraud scheme began on Dec. 18, 1990, when she opened a secret bank account in the name of the City of Dixon. She was the only one with access to this account. She began transferring funds from city accounts into her secret account in 1991. Her first transfer was $181,000. These transfers continued for 20 years. All this took place while the city of Dixon struggled to meet its debt obligations, forcing the city to make painful service cuts, layoffs and to forgo raises for its municipal employee for more than a decade. Crundwell pleaded guilty and was sentenced to 19 ½ years in prison on Feb. 14, 2013.

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Former Bechtel Executive Sentenced to 42 Months in Prison and Ordered to Forfeit $5.2 Million in Connection with Kickback Scheme | OPA | Department of Justice

Former Bechtel Executive Sentenced to 42 Months in Prison and Ordered to Forfeit $5.2 Million in Connection with Kickback Scheme | OPA | Department of Justice | Global Corruption |

The former principal vice president of Bechtel Corporation and general manager of a joint venture operated by Bechtel and an Egyptian utility company was sentenced today to 42 months in prison for accepting $5.2 million in kickbacks to manipulate the competitive bidding process for state-run power contracts in Egypt.

Asem Elgawhary, 73, of Potomac, Maryland, pleaded guilty on Dec. 4, 2014, to mail fraud, conspiracy to commit money laundering, and obstruction and interference with the administration of the tax laws.  In imposing sentence today, U.S. District Judge Deborah K. Chasanow of the District of Maryland also ordered Elgawhary to forfeit $5.2 million.

From 1996 to 2011, Elgawhary was assigned by Bechtel—a U.S. corporation engaged in engineering, construction and project management—to be the general manager at Power Generation Engineering and Services Company (PGESCo), a joint venture between Bechtel and Egypt’s state-owned and state-controlled electricity company, known as EEHC.  PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform power projects for EEHC.  According to his plea agreement, Elgawhary admitted to accepting a total of $5.2 million from three power companies, which they paid to secure a competitive and unfair advantage in the bidding process.  One of the power companies, Alstom S.A., together with a Swiss subsidiary, pleaded guilty on Dec. 22, 2014, to violations of the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay bribes to foreign officials, including Elgawhary, in various countries.  

As Elgawhary admitted in his plea agreement, he attempted to conceal the kickback scheme by routing the payments through various off-shore bank accounts, including Swiss bank accounts, under his control.  Elgawhary also sent various documents and “Representation Letters” to Bechtel executives and members of the PGESCo Board of Directors, falsely certifying that he had no knowledge or suspicion of any fraud at PGESCo, and that there were no possible violations of law or regulations that should have been considered for disclosure in PGESCo’s financial statements.  Elgawhary also admitted that, in a further attempt to conceal the scheme, he made misrepresentations to counsel for Bechtel when he was interviewed in April 2011.

Elgawhary further admitted to obstructing and interfering with tax laws by failing to report any of the kickback payments as income for the tax years 2008 through 2011 and providing false information about foreign bank accounts.

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Daily Corruption News: 20 March 2015

Sri Lanka: Sri Lanka says Rajapaksa officials stashed over $2 billion in Dubai

Sri Lankan investigators have located more than $2 billion (£1.4 billion) that was secretly transferred to accounts in Dubai by figures close to the administration of former president Mahinda Rajapaksa, the government said on Thursday.


Global: Tunisia asks to join HSBC case to get embezzled Ben Ali cash

Australia: Australia named 'major money launderer' in US government report
The Age

China: China investigates provincial environment official for graft

Czech Republic: Anti-corruption police raid Czech ministry
The Prague Post

Egypt: Egypt Mubarak-era minister Adly cleared in last case

Greece: OECD troubled by Greece’s lack of focus on bribery
Wall Street Journal

India: India students caught 'cheating' in exams in Bihar

Zimbabwe: Zimbabwe's small businessmen improvise, steal to get power
Reuters (TI mention)
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Super PAC Men: How Political Consultants Took a Texas Oilman on a Wild Ride

Super PAC Men: How Political Consultants Took a Texas Oilman on a Wild Ride | Global Corruption |



"The head of a Texas oil dynasty joined the parade of wealthy political donors, aiming to flip the Senate to Republicans. By the time consultants were done with him, the war chest was drained and fraud allegations were flying.

Even within the free-wheeling world of U.S. campaign finance, Vote2ReduceDebt stands out as a cautionary tale for donors, activists and voters.

Since the Supreme Court helped open the gates with the Citizens United ruling, unprecedented millions have flowed into super PACs, groups that can accept political donations of unlimited dollar amounts.

But, as Davis discovered, federal election laws do little to ensure these contributions are used as donors intended.

In addition to escaping donation limits, no rules prevent the people running super PACs from using contributions to hire themselves or companies owned by their relatives and other insiders.

The story of Vote2ReduceDebt is an egregious example of what can happen in the absence of such controls, but similar scenarios have played out on a smaller scale at dozens of PACs in the last three election cycles.

Vote2ReduceDebt collapsed amid allegations of faked campaign events, destroyed records, fabricated expenses, contracts routed to cronies and a plot to siphon the Texas oilman’s money to a reality TV show. The characters in the melee include a former top Republican strategist, a onetime TV news anchorman, a peanut-truck magnate with dreams of becoming a NASCAR star and a refugee from an infamous Washington corruption scandal.

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600 Indian high school students expelled for cheating on exams

600 Indian high school students expelled for cheating on exams | Global Corruption |
The incident has received widespread attention after Indian television footage showed parents and friends of students scaling the outer walls of school buildings to pass cheat sheets to students inside taking exams.

More than 1.4 million 10th graders are taking the tests at more than 1,200 high schools across the state. They face tremendous pressure because they must pass the exams to continue their education.

Recommended: How well do you know India? Take the quiz.
Teachers and state education department officials supervising the examination caught hundreds of students who had smuggled in text books or scraps of paper for cheating.

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"It's virtually impossible to conduct fair examinations without the cooperation of parents," said P.K. Shahi, Bihar's education minister. He said it was not possible to monitor the 6 million parents and others who accompany the students to the examination centers.
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Brazil President Announces Anti-Corruption Measures

Brazil President Announces Anti-Corruption Measures | Global Corruption |
President Dilma Rousseff announced a series of anti-graft measures on Wednesday in the wake of Sunday's massive nationwide rallies calling for her impeachment and protesting rampant corruption in Latin America's largest country.

"We have the duty and obligation to fight impunity and corruption," Rousseff said a nationally broadcast speech.

Rousseff announced the measures the same day a poll showed that her approval rating had plummeted to a new low. The survey by the Datafolha polling institute showed that the president's popularity dropped even among Brazil's poorest, where her support has been always been strong.

Among the measures Rousseff announced were the criminalization of slush funds used to finance election campaigns, the seizure of assets of people found guilty of corruption, and the requirement that government officials have no record of crimes.

"This is a decisive step to expand the government's capacity and power to prevent and combat corruption and impunity," Rousseff said.

Sunday's protest marches were sparked by anger over a sprawling corruption case involving Petrobras, Brazil's state-owned oil company.

Federal prosecutors say they've uncovered Brazil's biggest graft case yet in a kickback scheme at Petrobras, with at least $800 million in bribes paid by construction and engineering firms to politically appointed former executives at the oil company, all in exchange for winning inflated contracts.

Investigators say some of the money was funneled back to the campaign coffers of the Workers' Party and its allies. Dozens of congress members and some former executive branch officials, including two former chiefs of staff to Rousseff, are under investigation.
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Cardiac Monitoring Company to Pay $6.4 Million for Alleged Overbilling of Government Health Care Programs - US Department of Justice

Cardiac Monitoring Company to Pay $6.4 Million for Alleged Overbilling of Government Health Care Programs - US Department of Justice | Global Corruption |
BioTelemetry Inc., a heart monitoring company headquartered in Malvern, Pennsylvania, has agreed to pay $6.4 million to resolve allegations made under the False Claims Act (FCA) that its subsidiary, CardioNet, overbilled Medicare and other federal health programs for Mobile Cardiac Outpatient Telemetry (MCOT) services when those services were not reasonable or medically necessary, the Justice Department announced today.

“Billing for a higher-level service that is not necessary to treat a patient’s condition to receive higher reimbursement from federal health care programs will not be tolerated,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”

“Today’s settlement is another example of how we will act to stop abusive billing practices and hold companies accountable for conduct that raises everyone’s healthcare costs,” said Acting U.S. Attorney Annette L. Hayes for the Western District of Washington.  “This settlement should send a message to all providers: do not misuse federal billing systems to improperly gouge the healthcare system upon which so many Americans rely.”

An MCOT monitor provides real-time, outpatient cardiac monitoring.  MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient’s heart, including any irregular rhythms or other cardiac event, and transmits data to CardioNet’s diagnostic center using cell phone technology.  Traditional, less expensive event monitors only download patient data periodically over a landline.
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Financial Fraud Scheme in Hollywood

Financial Fraud Scheme in Hollywood | Global Corruption |
The owners of Gigapix Studios told investors they had a sure thing: They were going to make an animated version of the Wizard of Oz called OZ3D, and those who got in on the ground floor—and the company’s imminent public offering—could make a killing.

Unfortunately, the film was a bigger fairy tale than investors bargained for, and approximately 730 people lost millions of dollars. For some, the investment represented their life savings.

“Potential investors were told, ‘You’re going to make so much money that your kids and grandkids won’t want for anything,’” said Special Agent Eric Potocek, who investigated the case out of our Los Angeles Division. “In the end, the movie was never made, and it is unlikely investors will ever get anything back.”

Between the film and the impending public offering, the two principal fraudsters behind Los Angeles-based Gigapix raised some $21 million over a seven-year period beginning in 2006. Of the $8 million raised for the movie, only 5 percent of that amount went toward actually producing a film. The rest was used to pay big salaries, commissions, overhead for a fancy office, and other expenses.

Christopher Blauvelt, 59, and David Pritchard, 67, were convicted in 2014 on a series of federal charges including mail fraud, wire fraud, and offering unregistered securities for sale. Last month, Blauvelt was sentenced to eight years in prison, and Pritchard received a five-year term.

Blauvelt founded Gigapix in 2002 and brought Pritchard on as a partner four years later. The two hired telemarketers to solicit potential investors, who were told that Gigapix was a blockbuster animation company waiting to happen—similar to Pixar Animation Studios—and that Gigapix was developing projects expected to generate huge profits when the company went public.

The telemarketers—known as “fronters”—used marketing lists to cold call potential investors and worked from scripts touting the supposed merits of Gigapix. When victims expressed an interest in investing, they were turned over to “closers” who collected their money. Two of the company’s closers were also convicted in the fraud.

While soliciting money for Gigapix and OZ3D, the defendants told lies and half-truths, suggesting that the company was financially successful and investors would receive high returns on their investments in less than 18 months. They claimed that investments carried little or no risk.

Some of the victims were “savvy investors,” Potocek noted, and perhaps could afford to lose what they risked. But many victims—referred by friends or other investors and who lived far away from Hollywood—were susceptible to the sales pitch and the lure of being part of the film business.
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The Secretary Who Helped Bring Down Bernie Madoff

Eleanor Squillari, longtime secretary to convicted Ponzi schemer Bernie Madoff, talks to HuffPost Live about the takedown of her former boss, her role in the investigations against him and the new documentary, "In God We Trust," that reveals it all.
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