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Lloyds not off hook yet after $370 million Libor fines | Reuters

Lloyds not off hook yet after $370 million Libor fines | Reuters | Global Corruption |

Lloyds Banking Group could face further punishment after agreeing to pay fines totalling $370 million (217.80 million pounds) for its part in a global interest rate rigging scandal and for attempting to manipulate fees for a government lending scheme to help banks.

The settlement is the seventh joint penalty handed out by American and British regulators in connection with the attempted manipulation of the London interbank offered rate, or Libor, and other similar benchmarks used to price around $450 trillion of financial products worldwide.

But it is the first penalty for attempting to fix so-called "repo" rates to reduce fees for a taxpayer-backed scheme set up by the Bank of England to support British banks during the 2008 financial crisis.

This special liquidity scheme (SLS), launched in 2008, was an attempt to free up banks' balance sheets and boost confidence in the financial system. It enabled banks to exchange hard-to-trade mortgage assets for government bills.

Bank of England Governor Mark Carney said in a July 15 letter to Lloyds' chairman Norman Blackwell the attempted manipulation could lead to criminal action against those involved.

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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 |

*** 10 members of Congress took trip secretly funded by foreign government


*** Guatemala wiretaps lead to fraud, bribery allegations that touch highest levels of government

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3 Of The 5 Big Bank Guilty Pleas Aren't All That They Seem To Be

3 Of The 5 Big Bank Guilty Pleas Aren't All That They Seem To Be | Global Corruption |
The Obama administration on Wednesday announced what for years had seemed inexplicably unattainable: guilty pleas from the parent corporations of some of the world's largest banks. Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc pled guilty to manipulating foreign exchange markets and UBS Group AG to manipulating a key financial benchmark, in what the Justice Department trumpeted as "parent-level guilty pleas."

But the pleas by Citi and RBS didn't come from the banks' parent companies. Neither did the UBS plea. Instead, they came from subsidiaries: Citicorp, RBS Plc, and UBS AG.

After years of criticism for its lackluster approach to holding big banks accountable for their mortgage-related misdeeds, the DOJ presented Wednesday's settlements as a tougher line that forced banks' top-level parent companies to admit guilt. Attorney General Loretta Lynch said the crimes were committed by "traders who were very senior, who were acting on behalf of the senior banks, whose behavior profited the parent-level banks."

That is inarguably correct, and means parent companies Citigroup, RBS Group Plc and UBS AG profited from the wrongdoing, along with their subsidiaries who pled guilty.

Previous settlements between big banks and U.S. authorities had been made with small, frequently foreign subsidiaries. This allowed the impact of the agreements to be isolated and provided ammunition for banks to argue publicly that wrongdoing within their organizations was not
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South Florida men targeted seniors around the world in $28M sweepstakes fraud, feds say

South Florida men targeted seniors around the world in $28M sweepstakes fraud, feds say | Global Corruption |

"A South Florida-based sweepstakes fraud that bilked about $28 million from hundreds of thousands of victims around the world has been shut down with the arrests of four local men, federal authorities said Thursday.

Matthew Pisoni, 42, of Fort Lauderdale; Marcus Pradel, 39, of Boca Raton; John Leon, 47, of Wilton Manors; and Victor Ramirez, 35, of Aventura, are all facing mail fraud conspiracy, money-laundering conspiracy, mail fraud and money laundering charges.

Each count carries a maximum punishment of 20 years in federal prison.

92-year-old U.S. Air Force veteran testifies against lottery fraudster
The four men bombarded millions of consumers — mostly people over age 65 — with letters falsely notifying them they had won millions of dollars, according to prosecutors and the Federal Trade Commission.

Recipients were told they had to pay a fee of between $20 and $50 to collect their "winnings." Some of the payments were laundered through shell companies and international bank accounts controlled by the men and others, investigators said.

The fraud had been operating since at least 2010 and targeted people in the U.S., Australia, Canada, Japan, the United Kingdom, France, Germany and several other countries, authorities said.

"This outfit promised people huge prizes and collected millions in fees but never paid out a dime," said Jessica Rich, director of the commission's Bureau of Consumer Protection. "If someone says you have to pay to claim a sweepstakes prize, assume it's a scam."

The four men mailed personalized letters, claiming that recipients had won a "guaranteed" prize of typically more than $2 million, authorities said. To create a false sense of urgency, recipients were told they would forfeit their winnings if they did not pay the advance fee by a deadline.

But the people who got the letters had won nothing.

The letters included "dense, confusing language, at the bottom or on the back" that informed consumers they would receive reports only about sweepstakes and contests operated by other companies, investigators said. Most people who paid the fee did not even receive those unhelpful reports, authorities said.

"This language is not calculated to alert consumers of the truth — that they have won nothing and will get nothing of value for their money … this sort of fine print is no defense to a charge of deception," FTC lawyers wrote.

The sweepstakes fraud continued operating for years despite authorities seizing organizers' mail, the arrest and conviction of one of their employees and a police raid that shut down the group's payment processor in Canada, according to court records.

"Defendants have responded to these setbacks by redoubling their efforts to hide from law enforcement," investigators wrote.

The men simply changed the names of the businesses they used, switched mail drops and opened new bank accounts, authorities said. They used payment processors and mail drops in Canada, the Netherlands and Hong and transferred money to accounts in Colombia, Panama, and the Seychelles off the coast of Africa.

U.S. District Judge James Cohn issued an order this week freezing the defendants' assets, appointing a receiver and prohibiting any illegal conduct by the four men and several companies they controlled, including Mail Tree Inc.; Michael McKay Co.; Spin Mail Inc.; MCP Marketing Activities LLC, also doing business as Magellan Mail and Magellan Marketing; Trans National Concepts Inc.; Romeria Global LLC, also doing business as Lowenstein Varick and Nagel; Supreme Media LLC; Vernier Holdings Inc.; Awards Research Consultant LLC; Mailpro Americas Corp.; Masterpiece Marketing LLC, also doing business as Affiliated Opportunities Group, Corporate Accounting Authority, Dispatch Notification Services, Information Reporting Group, National Directory Center, and Priority Information Exchange.

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Bribery and corruption in New Zealand

Bribery and corruption in New Zealand | Global Corruption |
New Zealand is widely regarded as one of the least corrupt countries in the world. Notwithstanding that reputation, there is increasing evidence of corrupt conduct. We summarise here some of the potential criminal and civil consequences of engaging in such conduct under New Zealand law.

Criminal liability

The New Zealand courts can impose serious criminal sanctions upon those who participate in bribery or other corrupt activities. Those sanctions arise principally under the Crimes Act 1961 and the Secret Commissions Act 1910, but conceivably under the Fair Trading Act 1986 as well.

Sections 99 to 106 of the Crimes Act 1961 deal with bribery of public servants. A bribe is defined widely as any money, valuable consideration, office or employment, or any benefit, whether direct or indirect. In general terms, it is an offence to give or offer or agree to give a bribe to any person with intent to influence a New Zealand judicial officer, a Minister of the Crown or member of the Executive Council, a member of the New Zealand Parliament, a New Zealand law enforcement officer or a New Zealand official such as a civil servant, or an employee of a local body. Such offences are punishable by imprisonment for up to seven years. Receiving a bribe also attracts criminal liability and, in some instances, stiffer penalties. In one high-profile case, a former MP was sentenced to six years imprisonment for accepting plastering and tiling services in exchange for assistance with immigration applications.

Sections 105C to 105E of the Crimes Act 1961 deal with the bribery of foreign public officials. There have been no cases brought to trial in New Zealand for breach of those provisions, though the Serious Fraud Office has conducted one long-running investigation into conduct by a prominent exporter. The Organised Crime and Anti-Corruption Legislation Bill, which is presently proceeding through the New Zealand Parliament, proposes to bring New Zealand into line with international best practice by widening the application of the foreign bribery offences.

There are a number of more general provisions of the Crimes Act 1961 which could also come into play. Section 237 provides that it is an offence to blackmail a person by threatening to disclose something in order to induce him to act in a particular way. Blackmail is punishable by imprisonment for up to 14 years. Section 240 provides that obtaining by deception is also an offence. That may occur, for instance, where a person obtains a pecuniary advantage or benefit by knowingly making a false representation. Obtaining by deception is punishable by imprisonment for up to seven years.
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Assistant Administrator of Riverside General Hospital Sentenced to 40 Years in Prison in $116 Million Medicare Fraud Scheme

Assistant Administrator of Riverside General Hospital Sentenced to 40 Years in Prison in $116 Million Medicare Fraud Scheme | Global Corruption |
The former assistant administrator of Riverside General Hospital was sentenced today to 40 years in prison for his role in a $116 million Medicare fraud scheme. To date, 10 individuals have pleaded guilty or been convicted for their involvement in the scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

Mohammad Khan, 65, of Houston, the assistant administrator who oversaw many of the partial hospitalization programs (PHPs) at Riverside General Hospital, pleaded guilty in February 2012 to conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and paying illegal kickbacks. He was sentenced by U.S. District Court Judge Sim Lake of the Southern District of Texas. He was also ordered to pay restitution in the amount of $31,321,200.

According to admissions made in connection with his guilty plea, from January 2008 through February 2012, Khan and others at Riverside General Hospital operated a scheme to defraud Medicare by submitting claims for PHP services that were not medically necessary and, in some cases, never provided. Prior to Khan’s arrest, Riverside submitted over $116 million in claims to Medicare for PHP services purportedly provided to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided. Khan also admitted that he and his co-conspirators paid kickbacks to patient recruiters and to owners and operators of group care homes in exchange for which those individuals delivered ineligible Medicare beneficiaries to the hospital’s PHPs.

Others involved in the fraudulent scheme already have pleaded guilty and are awaiting sentencing. Earnest Gibson III, the former president of Riverside; his son, Earnest Gibson IV, who operated a Riverside PHP; Regina Askew, a patient file auditor and group home operator; and Robert Crane, a patient recruiter, were all convicted after jury trial in November 2014 and await sentencing. William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie and Sharonda Holmes, who were involved in paying or receiving kickbacks, also have pleaded guilty to their roles in the scheme.
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Inside view: What do corrupt organizations look like?

Inside view: What do corrupt organizations look like? | Global Corruption |
I interviewed 23 prominent anti-corruption experts and asked them what characteristics corrupt organizations have in common. Overall, their answers provide new clues on how to spot red flags and identify risks that may evade common compliance processes.

Each one of these characteristics heightens the vulnerability of a team, office, or division to corruption. Where several are present, there is a high likelihood of a corruption problem.

Strategy: Growth is the primary goal, and all others are irrelevant; competition is high, and it is agreed that the ends justify the means. There is little regard for the ‘social licence to operate’ or relationships with any stakeholders other than shareholders.

Leadership: Leadership is complacent; diffuses accountability, opaque and arrogant. Information is hoarded –communication is restricted and top down. There is complacency, and a lack of engagement with business conditions on the front line – just enough to maintain plausible deniability. Ironically, leaders who preside over corrupt practices are likely to project successfully a self-image of being a high-performing, high-status individual.

Structure: High local devolution and autonomy combines with limited oversight. The group or team isolates itself, by design or circumstance. This isolation creates a sense of mystique, which is very powerful when combined with high commercial success.

Authority: Decision-making is strongly hierarchical and directive, top down, and with little consultation, and short-time horizons.

Incentives: Incentives emphasize high pressure and high rewards. Discretionary bonuses and targets are unrealistic, set without regard to market conditions or risk.

Values and Beliefs: The workplace will hold a pervasive culture of fear, necessity, insecurity, powerlessness, and intense rivalry. The language is of war, games and sport. Corrupt processes are described with jokes and euphemisms, reflecting the need to create distance and reduce shame.

Norms and Behaviors: There is pervasive secrecy, defensiveness, and a lack of pride in the organization.
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Half of Wall Street Knows How Unethical They Are

Half of Wall Street Knows How Unethical They Are | Global Corruption |
It’s been said many times, in many places, even well before the Great Recession: The culture on Wall Street is terrible. It encourages bad behavior. More recently, there are concerns that the Wall Street that caused the financial crisis is back.

A new report by The University of Notre Dame, commissioned by the law firm Labaton Sucharow, which represents whistleblowers, has some alarming numbers to add to this well-trodden narrative. The report surveyed more than 1,200 people in the financial-services industry—account executives, wealth advisors, financial analysts, investment bankers, operations managers, and portfolio managers—in both the U.S. and the U.K. to look at whether increased regulations, along with calls for a cultural change, have had any demonstrable effects.

So how does the financial-services industry view its own behavior, legally and ethically? Not so great, it turns out. Nearly half of the respondents felt that it was likely that a competitor has engaged in unethical or illegal activity in order to gain an edge. Perhaps more shocking are those who say they’ve witnessed such wrongdoing: 23 percent reported personally observing or having firsthand knowledge of misdeeds. That number jumps to 34 percent when looking only at those earning more than $500,000, suggesting that enhanced status and earnings bring a higher likelihood of witnessing wrongdoing.

“People seem more aware of the regulation, but that hasn’t necessarily impacted behavior.”
“I think that the U.S. law-enforcement regulatory authorities are going to be troubled by the results of this survey, but the U.K. ones will be particularly troubled,” says Jordan Thomas, a partner at Labaton Sucharow and the former assistant director at the Securities and Exchange Commission. “This is actually indicative of an industry.”

In the survey, 25 percent reported that they would engage in insider trading if there was a guaranteed $10 million payday at the end of the line and the chances of being arrested were nil. More troubling, those with less than 10 years of experience were twice as likely to say yes to this illegal payday. Overall, the U.K. scored worse than the U.S. on ethical measures ranging from knowledge of wrongdoing to insider trading. Additionally, 10 percent of all respondents reported having felt pressure at their company to violate the law or compromise ethical standards.
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Historic Survey of Financial Services Professionals Reveals Widespread Disregard for Ethics, Alarming Use of Secrecy Policies to Silence Employees

Historic Survey of Financial Services Professionals Reveals Widespread Disregard for Ethics, Alarming Use of Secrecy Policies to Silence Employees | Global Corruption |
Labaton Sucharow LLP, which established the nation's first practice exclusively dedicated to representing SEC whistleblowers, today announced the results of its collaborative survey with the University of Notre Dame's Mendoza College of Business: The Street, The Bull and The Crisis. 

The survey, the most expansive of its kind, polled more than 1,200 U.S. and UK-based financial services professionals to examine views on workplace ethics, the nexus between principles and profits, the state of industry leadership and confidence in financial regulators. With findings pointing to a continued disregard for ethical engagement and alarming new tactics to silence potential whistleblowers, the industry appears to be faltering in its reform efforts.

Profits, Not Principles 

In one of the most concerning findings, 47 percent of total respondents feel it is likely that their competitors have engaged in illegal or unethical behavior to gain an edge. While nearly one in five professionals feels it is at least sometimes necessary for financial services professionals to engage in illegal or unethical activity in order to succeed, a full 32 percent feel compensation structures or bonus plans pressure employees to compromise ethical standards or violate the law. Of those surveyed, 27 percent don't agree that the industry puts the interests of clients first.

How severe is the ethical breakdown? An astonishing 22 percent of respondents say they have observed or have first-hand knowledge of actual wrongdoing in the workplace. On an individual level, a quarter of those surveyed say they would likely engage in insider trading to make $10 million if there was no chance of being arrested. Employees with less than 10 years of experience are more than two times as likely to use non public information than those with over 20 years of experience, reporting 32 percent and 14 percent respectively.

"Most disappointing is the lack of change in many of the results when compared to surveys from previous years. Despite significant energy and efforts, it appears we need to continue to think about how to improve the culture of ethics in the financial services industry and most likely, in other sectors as well," said co-author Ann Tenbrunsel, Ph.D., David E. Gallo Professor of Business Ethics at the Mendoza College of Business and a co-author of Blind Spots: Why We Fail to Do What's Right and What to Do about It.

Secrecy Agreements Mask a Corrupt Culture

Perhaps the most disturbing findings relate to efforts to stifle reports of misconduct. Despite the unwaivable right to report potential wrongdoing to law enforcement, and the federal government's public effort to identify and punish organizations that illegally attempt to silence employees, a shocking 16 percent of those polled say their company's confidentiality policies and procedures prohibit reporting potential illegal or unethical activities directly to law enforcement.

One out of every 10 respondents report they have signed or have been asked to sign a confidentiality agreement that specifically prohibits reporting potential illegal or unethical activities directly to law enforcement. For those who make over $500,000 annually, that number rises to 25 percent. Of the total sample, 19 percent feel it is likely that their employer would retaliate against them for reporting wrongdoing.
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USA: 31 Charged in Dade Insurance Fraud Sweep

A massive insurance fraud sweep has resulted in the arrests of 31 people, most notably a public adjuster already charged in another fraud case, the Miami-Dade State Attorney's Office announced Wednesday.
"Operation Flames and Flood Two" looked closely at the kingpin role of public adjuster Jorge Fausto Espinosa, who is already facing charges in a similar fraud case from last year, dubbed "Operation Flames and Flood One," authorities said.
"In this fraud, public adjuster Jorge Fausto Espinosa would be hired by policy holders to seriously damage the insured homes for one purpose only: to collect ill-gotten gains from insurance companies," State Attorney Katherine Fernandez Rundle said at a Wednesday news conference.
Several homeowners also face charges for their role in the fraud. "Homeowners known to recruit fraudsters would work out plans to loot their insurance policies," Rundle said.
VIDEOCar Slams Into Miami House: Police
Espinosa, through his Miami-Dade company Nationwide Adjusters LLC, is charged with deliberately staging fire and water damage claims to residential homes in Miami-Dade County, Lehigh Acres and Naples.
Case two focused on the expansion of Espinosa's fraud activities from his home and business in Miami-Dade county into the west coast of Florida into Collier and and Lee counties.
Man Submerged Girl, 7, in Bathtub for 1 Minute: Cops
Losses in the first case exceeded several million dollars after 13 homes were intentionally set on fire, with an additional five homes reporting extensive water damage.
Case two involved 20 staged fires, one in which a firefighter sustained an injury. Losses in case two are closer to the $7 million mark.

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Chile’s Bachelet: Crack Down on Corruption Needed

Chile’s Bachelet: Crack Down on Corruption Needed | Global Corruption |
Chile’s President Michelle Bachelet said Thursday her administration will push ahead with contested legislative changes, even as her government’s popularity fades in the face of weak consumer and business confidence, and allegations of political corruption.

In an annual address to the nation, Ms. Bachelet said Chile was at a turning point and noted that economic growth remains weak. The second term president vowed to proceed with her program to improve social inequality and to engineer a new constitution.

A number of corruption scandals have hurt Ms. Bachelet’s image after 14 months in office. The left-leaning president shuffled her cabinet earlier this month, removing various ministers and naming new ones in an attempt to regain momentum for her policy proposals.
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Nine women appointed to select Indonesia's corruption commission have no political affiliation

Nine women appointed to select Indonesia's corruption commission have no political affiliation | Global Corruption |
President Joko Widodo on Thursday (May 21) chose nine women to be a part of the selection committee in appointing candidates to lead the Corruption Eradication Committee (KPK).

There is confidence that members of the selection panel are free from any political interests.

“What is important is that the selection panel for KPK is capable, credible and has integrity," said KPK head Johan Budi. "It's important they do not have any political party affiliation, and I’m quite positive of that."  

Mr Johan expressed his confidence with the selection of the nine women. “I’m optimistic that good leadership can be chosen by the selection panel that has been formed,” he said. "Those who are in the selection panel are not affiliated to any political parties. This is a new breakthrough." 
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Update: Dallas anesthesiologist, indicted on 17 counts of health care fraud, to plead not guilty

Update: Dallas anesthesiologist, indicted on 17 counts of health care fraud, to plead not guilty | Global Corruption |
Dr. Richard Ferdinand Toussaint Jr. is a licensed anesthesiologist who co-founded Dallas’ Forest Park Medical Center and started Ascendant Anesthesia, which has 16 practice locations scattered around the area. He’s also just been indicted by a Dallas federal grand jury on 17 counts of health care fraud.

The full indictment’s below, but the 11-page document unsealed today alleges that Toussaint submitted phony claims to Blue Cross Blue Shield of Texas, United Healthcare and the Federal Employees Health Benefits Program. Says the indictment, during 18 months in 2009 and 2010, the 57-year-old “falsely” claimed he was doing his job when he wasn’t anywhere near the operating room — except for that time “he was under anesthesia undergoing surgery himself.” The indictment alleges that at other times he was out of the state, at another hospital or “flying on his private jet.”

Dr. Richard Toussaint, photographed in 2010 (File photo)
“The indictment further alleges that Toussaint also inflated the amount of time the procedures took and pre-signed patients’ medical records representing the services were provided before the procedures even took place,” says the U.S. Attorney’s Office. “In addition to personally creating false medical records and inflating anesthesia procedure time, Toussaint directed others to do the same, representing he was present for
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Charity Fraud Case Settles -- When 97% Of Money Isn't For Charity

In a rare cooperative effort, the Federal Trade Commission and 58 state and local law enforcement agencies charged four sham cancer charities and their operators with scamming well-meaning consumers out of $187 million. The joint action by the FTC and the states says James T. Reynolds Sr., his ex-wife and son raised the money through their charities: The Cancer Fund of America in Knoxville, Tennessee, and its affiliated Cancer Support Services; The Breast Cancer Society in Mesa, Arizona; and the Children’s Cancer Fund of America in Powell, Tennessee.

Where is the IRS in all of this, you may wonder? Lois Lerner ran the IRS tax exempt organizations unit but may have been busy trying to thwart conservative causes. The FTC says these so-called charities hired telemarketers to collect $20 donations, telling consumers they were helping cancer patients with pain medication, transportation to chemotherapy visits, and hospice care. But little money made it to cancer patients. In fact, the FTC says the groups “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation.”

The FTC claims that Reynolds and his family used much of the $187 million–collected for cancer patients–to buy personal cars, gym memberships, luxury cruise vacations, pay college tuition, and employ family members with six-figure salaries. Donors were assured they were helping cancer patients, but instead, 97% of the money went for the perpetrators, their families and friends. The defendants allegedly used telemarketing, direct mail, websites, etc.

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Corruption Currents: U.S. Sanctions Architect Says Iran Program Could Backfire

Corruption Currents: U.S. Sanctions Architect Says Iran Program Could Backfire | Global Corruption |

An architect of the U.S. sanctions program on Iran thinks it will eventually backfire. (Guardian)

Pakistanis under sanctions operate openly. (Al Jazeera)

Exxon Mobil Corp. is ramping up its lobbying on Iran sanctions. What are the opportunities in a post-sanctions Iran? (Bloomberg, FT, U.S. News)

Terrorism Finance:

Islamic State is using a Russian payment system to raise money online. Smugglers say the group’s latest conquest will reap large rewards. (RFE/RL, BuzzFeed)

India plans to press Pakistan on laxity concerning terrorism financing. (Hindustan Times)


The 2012 death of a Russian whistleblower is getting new attention. (Guardian)

Edward Snowden is watching his victories from a distance. (NY Times)

General Anti-Corruption:

China’s steel industry is the next to face the anti-corruption gauntlet. (WantChina Times)

Turmoil in Thailand apparently delayed a crackdown on human traffickers. (Reuters)

What’s it like building a compliance program from scratch? (Inside Counsel)

A Union City, N.J. man was sentenced to more than two years in prison for creating a fake charity linked to the state’s massive corruption sting. (

Zambia’s anti-corruption chief is under pressure to resign. (GAB)
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In Panama, corruption inquiries grow after president's tenure ends

In Panama, corruption inquiries grow after president's tenure ends | Global Corruption |

A passel of "megaprojects" that Martinelli pushed, such as sprawling hospital complexes, highways and Central America's first metro, routinely resulted in a cut of about 15% to the government, according to business groups, activists and politicians.

Where that money ended up is anyone's guess. Martinelli, a multi-millionaire supermarket tycoon, managed to accrue a public debt larger than all Panamanian presidents before him combined since the toppling of the military dictatorship a quarter of a century ago. (According to official stats, the debt stands at $23 billion in a country of 4 million people.)

Martinelli was stripped by Panama's electoral tribunal of his constitutional immunity last month and criminal charges may be forthcoming. His close ally, former Supreme Court President Alejandro Moncada Luna, was sentenced to five years in prison this year for illicit enrichment and document falsification, and several aides have been arrested.

Construction was only one area in which potentially illegal actions are now roiling the power structure. Martinelli also used an extensive system of wiretaps to spy on his enemies and friends alike.

Targets included politicians and activists, as well as priests, diplomats, trade unions, indigenous leaders and businessmen. The spying took place from boardrooms to bedrooms, according to revelations in the Panamanian press and a criminal investigation opened by Atty. Gen. Kenya Porcell.

The victims reportedly included Zulay Rodriguez, a leftist congresswoman and Martinelli critic. She found this out when a recording of a private conversation with her husband — a bitter argument, in fact — was made public in social media. She said an aide to the president also threatened to publicize a video of her having sex.

"First he tries to buy you," she said, "and then they try to humiliate you.... You could be Mother Teresa and they'd invent a scandal."

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Global profiles of the fraudster

Global profiles of the fraudster | Global Corruption |
Clearly, the behavioural sciences field does not currently allow for one to accurately predict the possibility that an individual will resort to perpetrating fraud in or against an organisation. Having said that, past history and profiles of individuals that have been involved in fraudulent activity does paint a picture, albeit blurry. Using this knowledge, we begin asking questions that can better support fraud risk management capabilities. What measures does my organisation have to identify the red flags of the perfect storm for fraudulent behaviour based on the fraud triangle – motivation, opportunity and ability to rationalise the act of fraud? What controls does my organisation have in place to prevent unlimited authority to go unchecked and provide the opportunity for fraud and misconduct? Is intolerance of fraud part of our corporate culture? Are allegations regarding members of management treated differently than line employees? Are our fraud risk management programs and controls tailored to our region’s corporate and social cultural norms to encourage and support intolerance of fraud and misconduct and improve our efforts to deter and detect crimes? With the failure to initially respond to red flags and lapses in internal controls being major contributors to enabling fraud, how will I enhance my organisation’s awareness with respect to fraud prevention and detection efforts?

While new technology has created novel types of fraudulent behaviour, and fraud risks cannot be fully mitigated, addressing the global profiles of the fraudster across different regions will help you to remain vigilant and remember that the typical fraudster may remain the tenured, trusted employee – the last one you may have suspected.
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FORUM: Anti-corruption and bribery developments in Latin America

FORUM: Anti-corruption and bribery developments in Latin America | Global Corruption |
FW moderates a discussion on anti-corruption and bribery developments in Latin America between Roberto Hernández-García at COMAD, S.C., Mauricio Almar at Halliburton, Isabel Franco at KLA-Koury Lopes Advogados, Ivan E. Velez at KPMG LLP, and Patrick Henz at Primetals Technologies.

FW: To what extent have Latin American countries – historically viewed as being generally soft in terms of their anti-corruption efforts – transformed this perception over the last 12 months or so?

Henz: There are different situations in Latin America. In Brazil, the new government appears to be willing to give priority to compliance topics. In Mexico, the government faces demonstrations and falling approval ratings in public surveys, the combination of which may force them to act. The 2014 Transparency International Corruption Perception Index confirmed the impression provided by local news organisations: the last 12 months brought very little progress for Latin America in the fight against corruption. However it must be noted that local pressure may force national leaders to change.

Hernández-García: We cannot generalise the idea that all Latin American countries are more aware and active on anti-corruption matters today, however some of them have been working hard to understand how corruption affects them and how to face this problem for the benefit of their reputation in the international market. The Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, as extraterritorial regulations that may apply in any country in the world, have been very important in helping to accelerate the consciousness of the problem. The Latin American country which has seen the most activity in the space in recent months is Brazil, not only due to its new regulations, but also as a result of its decision to disclose the details of the Petrobras case and the commencement of proceedings against a number of public officers and companies. The situation in Brazil has had an enormous impact, particularly as the real issues around corruption in Brazil are not corruption itself, but the level of impunity and lack of punishment enjoyed by guilty people and institutions in the past.

Almar: There was significant activity in several Latin American countries regarding anti-corruption efforts in 2014. The most notable changes came in Brazil, where that country enacted sweeping anti-corruption and anti-fraud legislation with the Clean Companies Act. Although often cited as major anti-corruption enforcement reform, the legislation also tackles fraud and other inappropriate activity in the public tendering process. The new law is also not focused squarely on bribery outside of Brazil, but addresses domestic and foreign bribery and impacts both domestic and foreign companies operating in Brazil. Although the passage of new anti-corruption and anti-fraud legislation is noteworthy, there have been instances globally where proposed new legislation does not always turn into actual enforcement. By contrast, authorities in Brazil thus far have taken an aggressive enforcement position regarding both past and new anti-corruption laws. What makes this posture of particular interest is that the enforcement activity has largely been focused on powerful Brazilian corporations, including both privately-owned and state-owned, as well as their high-ranking executives.

Franco: Certainly the perception of corruption has changed in most countries in Latin America, particularly over the last year or so. That is definitely the case in Brazil. After seeing its people take to the streets in the first half of 2013 campaigning against corruption in the government and receiving criticism from all over the world, the Brazilian government passed its Clean Companies Act in August 2013. The bill had been stalled in Congress for over a decade but President Dilma, under a lot of local and international pressure, sanctioned the law to appease the crowds. The most recent scandal involving state controlled oil company Petrobras has disgusted many Brazilians, even those in favour of President Dilma’s government. There has also been a similar case in Mexico, where the publicity on corporate corruption, especially the Walmart bribery case, accelerated the passing of their national anti-bribery law. In addition, the tragedy of the 43 students who disappeared in Iguala has raised an unparalleled awareness of the issue to a society that is more connected than ever thanks to social networking.
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Ex-PM, governor to be indicted on bribery charges - The Korea Observer

Ex-PM, governor to be indicted on bribery charges - The Korea Observer | Global Corruption |
Prosecutors said Thursday they have decided to take to court former Prime Minister Lee Wan-koo and incumbent provincial governor Hong Joon-pyo for alleged bribery.

They, however, failed to clarify when they will indict the two politicians.

Lee is suspected of taking 30 million won (US$27,000) from Sung Wan-jong, chairman of a construction firm who committed suicide last month, when he was running for a parliamentary seat in April 2013.

The prosecution alleges that Hong, governor of South Gyeongsang Province, took illegal political funds worth 100 million won from Sung in June 2011.

A corruption scandal flared up last month after Sung left a note and a recorded interview claiming that he gave money to eight politicians, including Lee and Hong, as well as President Park Geun-hye’s former and current chiefs of staff. Amid the growing scandal, Lee stepped down in April.

Sung hanged himself amid a looming prosecution probe into embezzlement charges.
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The Street, The Bull and The Crisis: A Survey of the US & UK Financial Services Industry.

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Pressure To Act Unethically Looms Over Wall Street, Survey Finds

Pressure To Act Unethically Looms Over Wall Street, Survey Finds | Global Corruption |
A new survey of financial professionals tends to confirm the widely held belief that the financial industry has an ethics problem.

Among the more than 1,200 financial professionals in the U.S. and Britain who were surveyed, about half the respondents believe their competitors in the industry have behaved unethically or illegally to gain an advantage in the market.

Ann Tenbrunsel, one of the authors of the study, says that perception, even if it's just a suspicion, does not bode well for the industry.

"Our behavior is influenced by the norms that we believe exist in the industry, the norms that we believe exist in the organization," she says. "If there's an increased salience of the fact that everybody else is doing this, we also know from psychological research on peer pressure that I will be more likely to do it myself."

Tenbrunsel, of the Mendoza College of Business at the University of Notre Dame, partnered with the law firm Labaton Sucharow to do the study. The firm, which often represents whistleblowers in cases involving financial industry wronging, did a previous study in 2012.

Spreadsheets, Ex-Cons And A Karate Studio: Life At The Bottom Of The Debt Business

Wall Street Wiretaps: Investigators Use Insiders' Own Words To Convict Them
Jordan Thomas, a partner in the firm, says he's disappointed that perceptions of behavior inside the industry have actually deteriorated in many cases, including among younger employees.

"Young professionals, people with less than 10 years in the financial service industry, tended to be more open to engaging in illegal and unethical behavior. And that's our future — that is the future of the financial service industry and right now it looks bleak," Thomas says.
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Corruption on Wall Street view from insid

Corruption on Wall Street view from insid | Global Corruption |
"Wall Street seems to have lost its moral compass and seems to strive to look for."

That tells BBC Jordan Thomas, spokesman for the law firm this week released a study suggesting a deep culture of impunity for corruption in the powerful world financial markets.

The report, prepared by the law firm Labaton Sucharow US and the University of Notre Dame from a survey of employees of Wall Street, paints a worrying picture.

47% of those surveyed said they believe their competitors have engaged in unethical or illegal behavior.

And one in five says that, in his opinion, to be successful on Wall Street need to be part of these behaviors at least occasionally.

For Thomas, who before working in private firm that worked with the Securities and Exchange Commission, the regulatory body of the capital market in the United States, one of the most disturbing trends is that the survey reveals that a growing number of firms would be forced to their employees to sign agreements of confidentiality, which basically prohibit them to report to authorities any irregularities observed within their companies.

What would you do?

The survey, answered anonymously by 1,200 financial executives in the US and UK, asks employees, among other things, they would do if they had the chance to win $ 10 million using irregular procedures such as the use of confidential information .

25% of respondents said that if they could do it undetected, commit the irregularity to earn money.

Not all observers agree that this should be an unmitigated condemnation of the behavior of finance entrepreneurs.

A commentator of Fortune, one of the flagship journals of American capitalism, said Wednesday that the behavior of the czars of finance on Wall Street is not that different from what any other human being put in place.

"What percentage of school teachers do the same? What would you do?" Asks Stephen Gandel in the American publication.

The commenter also notes that one of the study authors, the private firm Labaton Sucharow often represents individuals who report irregularities to Wall Street firms.

So it is not a completely disinterested party in the debate.


Also notes Andrew Ross Sorkin a commentator of the New York Times column "would be unfair to suggest that the entire industry is a nest of thieves. In many ways, Wall Street is very different from pre-crisis (2008) and has improved. Structurally, the Wall Street firms carry much less risk than years. The capital requirements are substantially higher. "

However, the allegations made in the report released this week from a perception of corruption in the very heart of Wall Street, fed a politically volatile issue in the United States, at a time when inequality increases and profits in the financial sector continue by clouds.
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Venezuela’s #2 targeted in U.S. drug probe has faced slew of corruption allegations

Venezuela’s #2 targeted in U.S. drug probe has faced slew of corruption allegations | Global Corruption |
 The man at the center of a major U.S. drug-trafficking investigation involving top members of the Venezuelan government is the Speaker of the National Assembly and the country’s second most powerful man, 53-year-old Diosdado Cabello Rondón.

A longtime ally of late President Hugo Chavez, whom he met while in the Military Academy back in the 80s, Cabello is known these days as Chavismo´s main bully and has repeatedly been accused of corruption.

As President Nicolas Maduro, and President Chavez before him, Cabello also has his own weekly TV show television, in which he mostly attacks opposition leaders and other “enemies” of the so-called revolution. He calls his sources “patriotas cooperantes” (cooperating patriots), infiltrated revolutionary agents who work all over the country collecting data about possible conspiracies against the government or other politically useful information.

After Chávez’s death in 2013, Cabello morphed into the revolution's watchdog. “Chávez was the flood barrier that held all the crazy ideas we came up with,” he warned the opposition just three weeks after the president’s passing.

But his military hand and tough stances have also shooed away some followers. Ahead of December 2013 local elections, more than 100 members of the ruling United Socialist Party of Venezuela (PSUV) were expelled for supporting party candidates not hand-picked by the government.

Discipline was necessary, he argued.

By investigating Cabello, the U.S. is taking on one of the Venezuela’s most influential figures – one whose downfall could further fracture an administration already reeling from an economy on the brink of collapse.

Last month not many were shocked when he sued 22 media executives whose outlets had carried news reported by Spanish newspaper ABC regarding him being investigated in the U.S. – basically anticipating The Wall Street Journal article that broke the news to the American world this week.

The media executives found out too that a court order now also bans them from leaving the country, and Cabello readily admitted on his TV show that he was behind the move.
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India Inc justifies corruption for survival

India Inc justifies corruption for survival | Global Corruption |

Corporate India believes strict adherence to anti-corruption measures will harm competitiveness in the current market conditions.

Justifying corruption for business survival, 66 per cent of the Indian respondents in EY's worldwide Fraud Survey 2015 said some form of bribery, such as giving personal gifts, cash or entertainment was acceptable.

Four in five of the Indian respondents in the survey carried out across 38 countries said bribery and corrupt practices occurred widely in business.

A little over one-third of the Indian respondents said conformity to a company's anti-corruption measures would harm its competitiveness. Globally, 20 per cent of respondents felt alike.

India ranks second among 38 countries with 62 per cent of the respondents saying they had heard of financial performance manipulation at their company in the last 12 months. Also, 59 per cent of the Indian respondents said companies often reported financial performance better than the actual.

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SEC announces fraud charges against Atlanta pension advisor

SEC announces fraud charges against Atlanta pension advisor | Global Corruption |
Pension funds for Atlanta police, firefighters, transit workers and other employees were defrauded by their investment advisory firm, the U.S. Securities and Exchange Commission alleged Thursday in order triggering an administrative action.

The agency is accusing Atlanta-based Gray Financial Group, and its two top executives — founder and president Larry Gray and co-CEO Robert Hubbard — of selling unsuitable investments to the pensions.

The company and executives breached their fiduciary duty by steering pension fund clients with the city of Atlanta and MARTA to invest in products owned by the company that did not comply with state law regulating such investments, the SEC said in a prepared statement.

Larry Gray, photographed in the Atlanta office of Gray & Co. in 2013, has been accused by the Securities and Exchange Commission with defrauding Atlanta pension funds. Photo courtesy of Delane Rouse/Rouse Photography Group
“As alleged in our order, Gray Financial Group breached a fiduciary duty to public pension fund clients by recommending investments it knew did not comply with legal requirements,” Andrew J. Ceresney, director of the SEC’s Enforcement Division, said in the statement. “To make matters worse, the firm profited handsomely from this alleged failure.”

A 2013 investigation by The Atlanta Journal-Constitution found that Gray’s company convinced four public pension plans to invest a combined $80 million in funds owned by the Gray Financial. Those investments guarantee the company a 1-percent annual management fee for a minimum of 10 years.

Those fees are in addition to the money paid to the company as a consultant to the pension systems. That arrangement raised concern about the apparent conflict of interest in the company advising the pensions to invest in products that it owns and from which it profits, the newspaper found.

The newspaper also found that Gray didn’t disclose $425,000 to the pension systems that he was paying off $425,000 in federal tax liens and a $1 million settlement of a lawsuit that accused him of fraud at the time he was pitching his company’s funds.
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66% of businesses believe in some form of bribery: Survey - The Times of India

66% of businesses believe in some form of bribery: Survey - The Times of India | Global Corruption |
A whopping 66 per cent of businesses in the country believe that some form of bribery is acceptable, in spite of increased regulatory actions and public outcry against corruption, according to a survey.

As many as 80 per cent believe that corruption is still widespread, with 52 per cent saying offering gifts to win businesses is "justifiable to help a business survive", while 27 per cent justify cash payments, the survey on fraud and corruption by Ernst & Young said.

Interestingly, 35 per cent of respondents also believe that "conformity to their organization's anti-bribery and anti-corruption policies would harm their competitiveness in the market".
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Italy passes law to tackle rampant corruption

Italy passes law to tackle rampant corruption | Global Corruption |
Italy made a fresh attempt at tackling rampant corruption on Thursday when the Chamber of Deputies approved a strongly contested law stiffening penalties for various types of graft and balance sheet fraud.

Corruption has long undermined Italy's chronically stagnant economy by deterring foreign investors and pushing up costs. A previous "anti-corruption" package in 2012 proved to have little impact.

The last year has seen high-profile arrests of politicians and businessmen over graft allegations connected with the 2015 Expo in Milan, a 5 billion euro Venice flood barrier, and public contracts awarded by the city of Rome.

Italy ranked 69th in Transparency International's 2014 Corruption Perceptions Index, joint last in the European Union with Bulgaria, Greece and Romania.

After a long parliamentary passage, the latest anti-corruption bill was approved by the lower house in a watered-down version more than two years after it was presented by Senate speaker Piero Grasso, a former anti-mafia prosecutor.

The legislation increases prison sentences for corruption by an average of two years up to a maximum of around 10 years for the most common varieties, involving bribery or offering or demanding favors to obtain public contracts.

The bill raises jail sentences for balance sheet fraud by two or three years to a maximum of eight years for listed companies, and six years for unlisted firms. It also makes all balance sheet fraud a criminal offense, unlike before, although if a judge decides the fraud is "mild", the sentence can be as low as six months.
Jan Vajda's curator insight, May 22, 2:19 PM

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