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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
Curated by Jim Wesberry
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Top Tips for Investigative Journalists

At the Global Investigative Journalism Conference in Rio de Janeiro, Brazil, leading investigative journalists from around the world give their advice on developing sources, finding documents, choosing stories, and more....

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AUSTRALIA: Three men nabbed in $30 million fraud investigation

AUSTRALIA: Three men nabbed in $30 million fraud investigation | Global Corruption | Scoop.it

 

Two Sydney men and a Belgian national have been charged over tax fraud and money laundering of $30 million as part of the ongoing investigations by the Australian Federal Police and Australian Tax Office.

Investigators attached to Project Wickenby raided nine properties on Tuesday, including homes in Chatswood and Point Piper and premises in the CBDs of Sydney and Melbourne.

They arrested a Chatswood man, 65, and a 69-year-old Point Piper man, as well as a Belgian national, 69, at Sydney International Airport.

Investigators will allege the three established a "complicated network" of offshore companies that were used to conduct business in Australia.

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The profits were then allegedly sent offshore, untaxed, only then to be transferred back to Australian companies owned by the three alleged offenders disguised as loans.

Police will allege this "fraudulently reduced the tax liabilities of those companies" - and benefited the accused about $4.9 million over a five-year period.

Each of the men are now facing two charges each which carry a maximum jail sentence of up to 25 years. All three will appear in Sydney's Central Local Court on Wednesday.

"[This] outcome is a warning to people who abuse tax secrecy havens. We will hold tax cheats accountable," ATO Deputy Commissioner Greg Williams said.

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Malawi’s ‘Cashgate’ scandal draws attention to corruption in one of world’s poorest states

Malawi’s ‘Cashgate’ scandal draws attention to corruption in one of world’s poorest states | Global Corruption | Scoop.it

More than $2.5m siphoned off by civil servants...

 

The optimists believe Malawi’s so-called “Cashgate” scandal might herald a new beginning, a new democratic dispensation that would end the corruption and culture of authoritarianism that has plagued the country. It is unlikely this will happen in time for next year’s 50th anniversary independence celebrations, but the election in March might be the start.

Others, meanwhile, are angry, but simply shrug at the inevitability of it all.

Cashgate refers to more than $2.5 million (€1.85 million) that is believed to have been siphoned off by some civil servants over the past two months. The scandal, described as looting, theft and plunder by Malawi’s press, has damaged the reputation of the president, Joyce Banda, who initially handled the crisis appallingly.

When she realised the need to be seen to do something, Banda fired her entire cabinet. The move was almost universally welcomed, though one columnist predicted that all bar one or two would be reappointed, and those not reappointed would be given diplomatic posts.

 

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Naughty, Naughty: China's Corruption Crackdown Skims The Richest

Naughty, Naughty: China's Corruption Crackdown Skims The Richest | Global Corruption | Scoop.it

It is no secret that trouble has dogged past members of our China Rich List. So with President Xi Jinping’s recent crackdown on corruption and other public spotlighting of peccadilloes of the wealthy and powerful, has grief come again to this select roster? Not so much this time.

An exception may be Wang Junlin, chairman of Sichuan Lang Jiu Group, knocked off the list from No. 67 last year ($1.3 billion). He vanished from public sight in December, when a deputy ministry-level official of Sichuan Province was brought down for taking bribes (“Seriously violating disciplines,” as the Central Commission for Discipline Inspection put it). Nine months later there has been still no company hint of 52-year-old Wang’s whereabouts or prospect of return. In July, not far away in Suzhou, Zhu Xingliang, founder of Gold Mantis Construction Decoration, was pulled in for questioning in a suspected corruption probe. But Zhu, at No. 55, remains on the list.

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What China can learn from Hong Kong in its fight against corruption

What China can learn from Hong Kong in its fight against corruption | Global Corruption | Scoop.it

As Beijing cracks down on corruption, experts say it should look to Hong Kong's success in cutting out the rot...

 

As Beijing touts a high-profile crackdown on corruption, experts say it should look south to Hong Kong as an example of a Chinese territory that has succeeded in cutting out the rot.

Four decades ago, Hong Kong was one of the most corrupt cities in the world, according to anti-corruption organization Transparency International.

"I would compare Hong Kong [in the 1970s] to Argentina today," said Ran Liao, the group's senior program coordinator.

Transparency International has only been publishing its Corruption Perceptions Index since 1995 but, had data on Hong Kong been available at the time, Liao said it would have rated at a similar levels not only to Argentina, but Gabon and Tanzania.

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Whose Job Is It to Find Financial Fraud?

Whose Job Is It to Find Financial Fraud? | Global Corruption | Scoop.it

A new report from the Anti-Fraud Collaboration group reveals that board members, financial executives, internal auditors, and external auditors are not completely on the same page when it comes to owning responsibility for deterring and detecting financial statement fraud. 


Via John Merchant, CPA
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Lesson of a Ponzi Scheme: Know Your Customer

Lesson of a Ponzi Scheme: Know Your Customer | Global Corruption | Scoop.it

Scott Rothstein needed a big financial institution to keep his scam going. TD Bank should have managed its risks better...

 

Rothstein’s scam involved persuading investors to put money into “structured settlements.” Investors were told that these were settlements of cases that involved sexual harassment, workplace discrimination and other complaints against certain companies.

He explained to investors that these companies had agreed to pay money over time to his clients in return for their silence. Those clients would sell the right to the payments in return for an upfront payment from the investor. He assured each investor that all the money was paid into escrow accounts he administered.

To pull off such a scheme, Rothstein needed a financial institution to set up bank accounts so he could move money around.  At the time the Ponzi scheme began, Rothstein was using a small bank, Gibraltar Private Bank and Trust.

He later testified to investigators that he had “protection” from officers at that bank, but as the Ponzi scheme expanded, Gibraltar employees started asking more due-diligence questions about Rothstein’s account. He realized that to attract larger investors, including hedge funds, he needed to use a larger bank to assure investors that there was protection from a possible bank failure while the bank held their money.

 
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All the Queen's Horses

All the Queen's Horses | Global Corruption | Scoop.it
Once known as one of the leading American quarter horse breeders, Crundwell embezzled more than $53 million from the town of Dixon, Illinois, which has a population of 16,000 and an annual budget between $6 and $8 million. Crundwell, who was Dixon’s comptroller, carried on her scheme for 20 years, but it was discovered only when a Dixon city clerk opened a letter revealing that Crundwell had set up a secret bank account and was embezzling city monies to finance her lavish lifestyle.
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Corporate fraud study - findings

A pan-European study by Ernst & Young in 2009 found that 55 percent of respondents expected corporate fraud to increase over the next few years. Reference: E...
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How Aggressive Is Your FCPA Gifts and Hospitality Policy in Mexico?

How Aggressive Is Your FCPA Gifts and Hospitality Policy in Mexico? | Global Corruption | Scoop.it

Gifts and hospitality present some of the thorniest issues for companies and business people subject to the FCPA and operating in Latin America. The FCPA does not prohibit providing gifts or hospitality to foreign officials. But the history of enforcement highlights that these practices are high risk and should be conducted with great care and attention to compliance best practices so that they do not constitute foreign bribery.

In this post, FCPAméricas looks at gifts and hospitality practices in Mexico in particular. In Mexico, business is often conducted in social settings, and developing personal relationships is key. Paying for lunch or tickets to a sporting event might be a basic expectation. At the same time, international companies are increasingly interacting with state-owned enterprises there, like Pemex (Mexico is considering opening up its energy market), whose employees might be considered foreign officials. This heightens FCPA risk. Here are considerations for companies’ gifts and hospitality policies there.

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Philippine president consolidates power through corruption scandal - World Socialist Web Site

Philippine president consolidates power through corruption scandal - World Socialist Web Site | Global Corruption | Scoop.it

The administration of Philippine President Benigno Aquino is continuing its consolidation of political power. Backed by the Obama administration in Washington, it is using a corruption scandal in the Congress to remove its political opponents and reshape the Senate to its advantage.

Details of a vast kickbacks scam first came to light in July, when prominent opposition senators were accused of pilfering billions from the Priority Development Assistance Fund (PDAF). The PDAF, or “pork barrel” as it is colloquially known, is a 25.4 billion pesos ($US590 million) lump-sum fund divided between individual congressmen and senators. Though intended for public infrastructure and civic projects, it is regularly used for self-aggrandizement and disbursed through a system of political patronage.

Three senators, as well as a number of current and former legislators and their staff, have been charged with plunder, defined as the exploitation of public office to acquire ill-gotten wealth in excess of P50 million. Prominent opposition senators Juan Ponce Enrile, Ramon Revilla Jr, and Jinggoy Estrada, along with their alleged co-conspirator, businesswoman Janet Lim-Napoles, have been the primary targets of the administration’s vendetta.

Aquino announced in late August that he would “abolish” the PDAF and channel its funds to six national executive agencies. The House of Representatives approved the 2014 national budget on September 28, which authorizes Aquino’s funding realignment.

This latest reform is a sleight of hand. Aquino himself has admitted that legislators will still have the opportunity to identify and promote spending initiatives, leaving the door open to further abuses. The executive agencies to which the funds have been diverted are led by Aquino allies, some of whom have been implicated in the ongoing corruption scandal.

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New Book Identifies Cronyism as Outcome of Big Government, Source of Corruption

New Book Identifies Cronyism as Outcome of Big Government, Source of Corruption | Global Corruption | Scoop.it

The feature that unites all forms of cronyism is that the power of government enables them. The bigger the government, measured both in its expenditures and its regulatory power, the bigger the potential for cronyism. The larger the government's budget, the more influence its tax and expenditure policies will have on business profitability and the prosperity of individuals. The larger the government's regulatory footprint, the more profitability and prosperity will be determined by regulatory favors rather than by productive activity. In this environment, people must become rent-seekers as a matter of economic survival. No matter how well-intentioned regulations are at their creation, over time regulatory agencies become "captured" by those they regulate so that regulations benefit the regulated rather than the general public.

Big government not only steers businesses toward seeking political benefits, it often gives them no alternative but to engage in the political process to protect themselves from harm. The government often threatens to impose taxes or regulatory costs on businesses, pushing even those that want to avoid the political process to get involved in lobbying to protect themselves from predatory policies. Businesses are then presented with two alternatives: either attempt to compete against cronies that have an unfair advantage, or become a crony to stay afloat. Those who don't engage in cronyism must bear the costs that cronies impose on them through government force.

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Social Activist Anna Hazare: 'The First Task Is to Remove Corruption'

Social Activist Anna Hazare: 'The First Task Is to Remove Corruption' | Global Corruption | Scoop.it

In 2011, Indian social activist Anna Hazare hit the headlines when he went on a fast demanding a comprehensive and effective Citizen’s Ombudsman Bill, popularly known as the Jan Lokpal Bill. The 74-year-old Gandhian, who began his journey in 1975 promoting rural development, is now seen as a crusader against corruption. Hazare believes that the Jan Lokpal Bill will ensure that the money meant for development would reach the common man and not get diverted.

In a conversation with Knowledge@Wharton and Devesh Kapur, director of the University of Pennsylvania’s Center for the Advanced Study of India, Hazare talks about the inspiration behind his social activism, his philosophy and his vision for India. “If we manage to create social pressure, then we can agitate on any issue in the country,” he says.

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Corruption under ANC’s watch destroying South Africa

Corruption under ANC’s watch destroying South Africa | Global Corruption | Scoop.it

Apparently, the ANC has made no progress in learning about governance in the past 19 years, says Mangosuthu Buthelezi.

Durban - It was a case of déjà vu when former ANC treasurer-general Mathews Phosa announced that the ANC must stop blaming apartheid and start looking to the high levels of corruption as the reason for its problems. Just six months ago, Minister in the Presidency Trevor Manuel issued the same warning: stop blaming apartheid, and find the real reason for the lack of service.

At the time, minister Manuel pointed out that the ANC-led government could have said in 1994, 1995 and 1996 “we don’t have the experience”. But with almost two decades of democracy under the belt, that is no longer an excuse.

The trouble is, over the past three years the government has spent R102 billion on consultants.

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Swatting flies? Beijing's fight to root out corruption

Swatting flies? Beijing's fight to root out corruption | Global Corruption | Scoop.it

In China, a sex scandal is often more than just a sex scandal -- because it often involves public money....

 

...the Party fixes its focus on lower, easy-to-reach targets -- going after petty officialdom with an austerity drive targeting luxury spending.

"At the end of the day, Xi Jinping's policy of restricting conspicuous consumption, putting an end to banquets and six star hotels, is popular," says Lam.

"Nonetheless, regarding big-time corruption that means the passing of the envelope and greasing the palm through a billion-yuan kickback -- all of this continues to go on."

China's war on corruption is merely the swatting of flies.

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SPAIN: Judge names ex-directors of failed bank as criminal mismanagement suspects

Managers approved loans that allegedly undermined the financial health of Caja Castilla La Mancha...

 

High Court Judge Pablo Ruz has named several former directors of the failed Spanish savings bank Caja Castilla La Mancha (CCM) as suspects in an investigation into banking operations they approved that caused a huge hole in the lender’s books and sparked its intervention by the Bank of Spain.

In a writ made public on Tuesday, the judge order the seven in question to appear before him on November 20 and 21 to account for some 20 loans granted by the bank that allegedly undermined the lender’s financial health in what could constitute criminal mismanagement. The former chairman of the bank, Juan Pedro Hernández Moltó, already faces charges of criminal mismanagement, fraud and false accounting.

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Dixon's Girl

Rita A. Crundwell was arrested April 17, 2012, and indicted by a federal grand jury for embezzling $30 million from the city of Dixon, IL. where she served a...
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Venezuela mayor corruption arrest

Venezuela mayor corruption arrest | Global Corruption | Scoop.it

Mayor Edgardo Parra of Valencia, Venezuela's third largest city, is arrested over accusations of corruption and money laundering....

 

Edgardo Parra, a member of the governing socialist party, his son and two other people are accused of extortion and money laundering.

President Nicolas Maduro has been stepping up his campaign against corruption.

Congress is expected this week to grant Mr Maduro special powers to accelerate his anti-corruption drive.

But the opposition leader, Henrique Capriles, has dismissed as "political pantomime".

Mr Parra was arrested on Saturday and is expected to appear before a court on Monday.

Investigators apprehended vehicles, money in cash and documents, local media reported.

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Anti-Corruption Digest - September 2013 | Lexology

Anti-Corruption Digest - September 2013 | Lexology | Global Corruption | Scoop.it

Anti-corruption enforcement  crosses boundaries like no other, so keeping up to date is more important than ever. In this digest, we
draw together news of enforcement activity throughout the world and aim to reduce your information overload. Our London, Minneapolis, New York and Washington DC offices edit the digest and select
the most important material so that you can use this digest as a single source of information.

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Lawyers link tax evasion and human rights

Lawyers link tax evasion and human rights | Global Corruption | Scoop.it

Six years ago, when the effort to promote greater transparency in the global financial system began to gain traction, it was well understood that at some point private sector support would be a key factor in achieving progress. Last week at the International Bar Association’s (IBA) annual meeting in Boston, an IBA task force released a report that takes a major step in that direction. The study examined the issue of tax evasion from the "perspective of international human right law" and found that there is a linkage between human rights and the use of secrecy jurisdictions and other measures used to avoid or evade taxation.

Titled "Tax Abuses, Poverty and Human Rights," the report—published by the IBA’s Task Force on Illicit Financial Flows, Poverty and Human Rights—found that the evasion of taxes has "considerable negative impacts on the enjoyment of human rights."  Specifically, the study noted that by depriving governments of the resources needed to promote economic and social progress, the evasion of tax is an abuse of human rights.  Further, it noted that actions by jurisdictions that "encourage or facilitate tax abuses. . . could constitute a violation of their international human rights obligations."

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Fallen Southern California SEIU Local President Sentenced | National Legal and Policy Center

Fallen Southern California SEIU Local President Sentenced | National Legal and Policy Center | Global Corruption | Scoop.it

Considering how much he stole, Tyrone Freeman should consider himself lucky. This past Monday, on October 7, Freeman, ex-president of Service Employees International Union Local 6434, was sentenced in Los Angeles federal court to two years and nine months in prison for stealing union funds and making false statements in connection with obtaining a mortgage loan. He also was ordered to pay about $150,000 in restitution. Prior to his ouster by SEIU International President Andrew Stern in 2008, Freeman had been considered by many to be Stern's heir apparent. He was indicted last July on 15 criminal counts and convicted this January on 14 of them. "I am accountable for these bad decisions," Freeman stated at his sentencing. Unfortunately, his offenses were more than simply bad business decisions. 

Union Corruption Update has covered this case many times. Tyrone Freeman, a rising star in Southern California labor circles by mid-decade, headed the 180,000-member SEIU Local 6434, also known as United Long-Term Care Workers. He also ran a joint SEIU-AFSCME project, California United Homecare Workers. And he had become a key fundraiser for Los Angeles County Democratic Party politicians. But Freeman's standing collapsed during the second half of 2008 following a Los Angeles Times serial expose indicating he had been illegally siphoning off union funds to himself, family members and friends, while spending lavishly on entertainment. Worse, he had used the local and a related nonprofit group, Alliance for a Stronger Community, to shake down union rank and file for millions of dollars worth of "contributions" in monetary donations and free labor for political campaigns.

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