Global Corruption
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Global Corruption
Corruption is a particularly viral form of cancer. It is caught here and there but it reappears somewhere else as soon as vigilance is relaxed. It is not eliminated, just driven underground. The corrupt merely suspend their operations temporarily. It lingers, hovering always in the background for its next opportunity.<br>                                                                         - Gerald E. Caiden <br>
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For FOIA’s 50th, FEMA Still Dragging Feet After 10 Years

For FOIA’s 50th, FEMA Still Dragging Feet After 10 Years | Global Corruption |
HAPPY BIRTHDAY to the Freedom of Information Act (FOIA), which turned 50 years old yesterday, and which just got a boost from Congress and the White House. FOIA is a terrific democratic tool which enables the public to learn more about government operations, activities, and spending, but sometimes that tool is of limited usefulness. Nearly one decade ago, the Project On Government Oversight submitted a FOIA request to the Federal Emergency Management Agency (FEMA) for records involving some questionable contracts related to the Hurricane Katrina recovery and clean-up efforts. After a protracted run-around involving four separate FOIA case numbers, an appeal, and an abundance of useless documents released to POGO by FEMA, it is unclear if POGO is any closer to getting the information it seeks.

POGO first blogged about this particular FOIA case a few months ago. At that time, we were waiting for the results of an appeal we had filed to receive 39 pages the Department of Homeland Security (DHS) had found in 2013 and referred to the Office of Inspector General (OIG) for review, and that, two years later, the OIG declined to release because, they claimed, doing so would constitute an “unwarranted invasion of privacy.”

Our appeal has since been denied by the DHS OIG because it did not comply with the agency’s 60-day filing deadline: we mailed the appeal before the due date, but it arrived four days after the deadline. You read that right: the DHS OIG denied the appeal that was received a few days late despite the fact that DHS has been dragging its feet for nearly a decade. In a common-sense plea to the DHS OIG, and to avoid having to file a lawsuit or to file the same FOIA again, POGO begged the agency to reconsider its denial of the appeal and to provide POGO with the records that have already been collected and reviewed by multiple components inside DHS.

FEMA replied a few days ago, treating the request as a new FOIA and warning that procuring the documents will most likely prove a lengthy process because the request “seeks numerous documents that will necessitate a thorough and wide-ranging search.” It seems unlikely, however, that such a laborious search could be necessary, given that the 39 documents in question had already been located in December 2013. The correspondence from FEMA continues in a similarly evasive fashion, “If any responsive records are located, they will be reviewed for determination of releasability.” This statement by FEMA is problematic when it has been established that responsive records exist and have already undergone processing.

FEMA had let POGO know that our “new” request now finds itself behind 1,688 other inquiries, but a separate email from a DHS OIG employee suggested that processing might be sooner than later, explaining, “I reached out to the FEMA-FOIA office, and they are in the process of reviewing the records. As far as I can tell, you’re not in the back of the line and that was probably just an automatically generated email.”

In August 2006, POGO submitted a FOIA request for communications between former director of FEMA Daniel Craig and a contractor, The Shaw Group, that POGO believed could reveal unethical behavior. Mr. Craig captured POGO’s attention when The Shaw Group received one of four FEMA contracts, totaling $3.3 billion, to rebuild New Orleans following Hurricane Katrina only nine days after he disclosed in an ethics document that he was leaving FEMA and seeking employment with The Shaw Group.

The FOIA request also asked for communications between Craig and three other contract winners: Fluor Corp., Bechtel National Inc., and CH2M Hill; documents pertaining to Craig’s resignation from FEMA; and other ethics and conflict-of-interest documents related to Craig.

The ongoing struggle to obtain the requested documents constitutes such a large-scale failure on the part of FEMA and the DHS OIG that it feels almost deliberate. Correspondence between POGO and both FEMA and the DHS OIG suggest at best a broken system and at worst purposeful delay and equivocation.

In March 2008, the DHS OIG responded to the FOIA request by releasing several redacted pages documenting complaints against the work of three of the four winners of the large contract, none of which contained information relating to Craig. The DHS OIG wrote that “even to acknowledge the existence of such records pertaining to [Craig] could reasonably be expected to constitute an unwarranted invasion of their personal privacy.”

As expressed in the previous blog post on this case, POGO considers this defense inadequate. Information present in the requested documents that could imaginably pose a threat to individual privacy could simply be redacted. Further, legal precedent has established that the protections covering private citizens do not apply to those who have held high-ranking government positions, such as Craig.

A communication from FEMA in 2010 confirmed that the FOIA request, at the time five years old, had been had been flagged for priority processing. It should be stressed that this communication was written six years ago, and POGO has yet to receive the requested documents, though POGO narrowed the scope of the search in 2010. The following year, FEMA wrote to POGO requesting a confirmation of continued interest and said that it would close the investigation if it did not receive a reply within 14 days. POGO reaffirmed its interest but waited several years for more information.
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The Ponzi Scheme Blog: June 2016 Ponzi Scheme Roundup

The Ponzi Scheme Blog: June 2016 Ponzi Scheme Roundup | Global Corruption |

The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 39 years of newly imposed sentences for people involved in Ponzi schemes; at least 14 new Ponzi schemes worldwide; and an average age of approximately 59 for the alleged Ponzi schemers.

    Charles E. Bennett, 57, was disbarred from the Bar of the State of New York. Matter of Bennett, 2016 N.Y. App. Div. LEXIS 4176 (Sup. NY, June 2, 2016). Bennett is a former corporate lawyer at Skadden, Arps, Slate, Meagher & Flom, who was sentenced to 5 years in prison for running a $5 million Ponzi scheme. Bennett had left a suicide note before trying to kill himself which revealed the scheme that defrauded 30 friends and family members. Bennett survived the suicide attempt.

    Andrew Caspersen, 39, was indicted on allegations that he ran a $40 million Ponzi scheme over an 18 month period. Caspersen pleaded not guilty to the charges, claiming that he had uncontrollable gambling addiction. Caspersen told the judge that he had been treated for “compulsive gambling and mental health illness.” He is expected to plead guilty next month.

    Thomas J. Connerton, 64, was charged by the SEC with defrauding 50 people, including 6 women that he met on an online dating site, to invest in his surgical glove company, Safety Technologies LLC. Connerton claimed that his company was developing a material to make surgical gloves more resistant to cuts or punctures and that major glove manufacturers wanted the technology.

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Argentina’s Culture of Corruption

Argentina’s Culture of Corruption | Global Corruption |
Cristina Kirchner was accused of amassing a fortune while she and her husband were in office, and then of far worse. In January, 2015, the prosecutor Alberto Nisman was found dead in his apartment, the night before he was due to deliver evidence that, he claimed, would show that she had conspired with Iran to conceal its involvement in the 1994 bombing of a Jewish community center in Buenos Aires. Kirchner’s first reaction was to suggest that Nisman had committed suicide; she then claimed that her own intelligence agency had murdered him, and called for its dissolution.

When I met Kirchner in Panama, last April, she told me that she was convinced that Nisman’s murder, as well as his denunciations of her, were part of a vast conspiracy “linked to the Middle East,” and having to do with “negotiations between Iran and the United States, with the Five Powers,” and with Israeli Prime Minister Benjamin Netanyahu’s “visit to the Congress.” She continued, “I believe we are looking at an international operation that involves the intelligence agencies of the world.” I asked her if she was suggesting that Israel was somehow involved. “No, I point to none of them, and to all of them,” she said. Kirchner told me that she couldn’t say anything further while a judicial inquiry was under way, but she urged me to watch a BBC spy drama she had recently enjoyed, called “The Honorable Woman,” about a British heiress who is the daughter of an Israeli arms dealer, and who gets caught up in the violent entanglements of the new Middle East.

I asked Kirchner what she thought her legacy would be. She said it would be egocentric to engage in this question, adding, “In any case, history will take care of defining the legacy—it always does.”

Since Kirchner left office, federal prosecutors have ramped up an investigation into the activities of a group of businessmen with close ties to her and her late husband. On April 5th, Lázaro Báez, who grew extremely wealthy from government construction contracts during the Kirchners’ years in power, was arrested after a former associate testified against him and the Kirchners. Báez has been charged with participating in a scheme in which hundreds of millions of dollars from government contracts were laundered through a complex web of fictitious offshore companies. Mossack Fonseca, the firm at the center of the recent Panama Papers scandal, is alleged to have played a role in the laundering scheme. Argentina’s new government also accused López—he of the bags-of-cash scandal—of favoring Báez’s construction firm in the allocation of road-building contracts.

After Báez’s arrest, the federal prosecutor’s office summoned Kirchner to testify as a person of interest in the corruption case. Her response to the summons was to arrive at the courthouse, on April 11th, only to refuse to speak to the judge assigned to hear the case, accusing him of bias against her. Kirchner stormed out to the steps of the courthouse, where, before a crowd of thousands of supporters, she tearfully accused the new “right-wing” government of being part of “a conspiracy” to sweep away Latin America’s “progressive” governments, and she called for the formation of a “citizens’ movement” to fight back. “I want the people to return to happiness in Argentina. I want them to return to freedom,” she said. “I want people to return to feeling love, because I see and I intuit, in the air, that things are not good.”
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The Supreme Court’s Bribery-Blessing McDonnell Decision - The New Yorker

The Supreme Court’s Bribery-Blessing McDonnell Decision - The New Yorker | Global Corruption |
the governor of Virginia, Bob McDonnell solicited a fifty-thousand-dollar “loan” from a nutraceutical entrepreneur named Jonnie R. Williams, Sr., and, minutes later, he texted an aide about making sure that Williams got meetings he wanted with Virginia state officials. McDonnell also accepted a Rolex watch and a twenty-thousand-dollar “loan,” plus the payment of the catering bill for his daughter’s wedding, all the while making calls and arranging meetings on Williams’s behalf. McDonnell’s wife, who had suggested to Williams that her husband could use a Rolex, also let the businessman pay for about twenty thousand dollars’ worth of clothing for her, including designer dresses and (my personal favorite) a full-length white leather coat. The gifts and loans added up to a hundred and seventy-five thousand dollars. Today, the Supreme Court ruled, unanimously, that a Virginia jury was wrong to think that McDonnell’s actions obviously counted as official corruption. What’s more, in vacating his conviction, the Court set a new standard for official-bribery cases that is so absurdly narrow that it will likely be almost impossible to convict any but the most bumbling politicians of the crime. As Jeffrey Toobin predicted a few weeks ago, “Citizens United let rich people buy candidates; now they may be able to purchase office-holders, too.”

Technically, the Court held that selling an “official act” can be still illegal. But it also held that the McDonnell jury heard a definition of that term that was too broad. Something as subtle—or unsubtle—as an executive calling up an aide and telling her to listen to his very good friend, or taking a check and then having a quiet word with regulators, or even a directive that an influence-buyer should be helped in every way does not constitute an official act, at least not on its own, the Court found. Instead, according to the opinion written by Chief Justice John Roberts, an official act “must involve a formal exercise of governmental power that is similar in nature to a lawsuit before a court, a determination before an agency, or a hearing before a committee.” In other words, if no gavel is involved, it will probably be hard to prove bribery, after this ruling. Indeed, the few politicians whom prosecutors may be able to convict are those who are careless enough to put together corruption to-do lists, since, according Roberts, a test of whether something is a bribable official act is whether it is “the kind of thing that can be put on a
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Why the Supreme Court’s Decision on a Governor’s Corruption Conviction Matters

Why the Supreme Court’s Decision on a Governor’s Corruption Conviction Matters | Global Corruption |
Perhaps it will now be harder for the government to prove quid pro quo corruption, but the clarity that the Supreme Court has now provided, unanimously no less, should be welcome news for those who believe in representative government.

While it is certainly true that politicians are invariably grateful for gifts and contributions that they receive and that those who give them often get special access to decision-makers as a result, as the Supreme Court stated in 2013 in McCutcheon v. FEC, “government regulation may not target the general gratitude a candidate may feel toward those who support him or his allies, or the political access such support may afford.”

Indeed, the Supreme Court continued, ingratiation and access “embody a central feature of democracy—that constituents support candidates who share their beliefs and interests, and candidates who are elected can be expected to be responsive to those concerns.”
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Corruption Currents: Ericcson Meets Investors Amid Bribery Probe

Corruption Currents: Ericcson Meets Investors Amid Bribery Probe | Global Corruption |
Ericsson met with large shareholders to brief them on the company’s anti-corruption program, but investors said they didn’t receive satisfactory answers on a bribery investigation. (Bloomberg)

ExxonMobil is under investigation in Nigeria over a deal for the rights of its “crown jewels” of oil reserves; an ExxonMobile spokeswoman says the company “takes strong exception” to the allegations. (Guardian)

An Indonesian trial focuses on whether two defendants paid bribes to prosecutors to quash a case against them. They didn’t appear to be contacted. Updates on other notable bribery cases in Indonesia are here and here. (Jakarta Post, Jakarta Post, Antara News)

Bribery is surging among Malaysian companies, a survey found. Employees don’t trust whistleblowing systems. (Today, Malay Mail, The Star)

China accused a former deputy environmental official of taking bribes. He couldn’t be reached. (Reuters)

Detectives in Portugal’s main criminal-investigation force were among those detained in an alleged bribery scam. (Portugal News)

Are pharmaceutical representatives not really bribing doctors? (Bloomberg)

In local politics: A former premier of Moldova was sentenced to nine years in prison for bribery. A prominent former Chilean senator was ordered to house arrest amid an investigation into bribery; he has maintained his innocence. Slovakia acquitted a judge accused of bribery. (AP, Reuters, Slovak Spectator)

Money Laundering:

German regulators fined Deutsche Bank AG $40 million over flaws in the bank’s anti-money-laundering controls. Neither the bank nor the regulator commented. (Reuters)

A Swiss court ordered UBS AG to release documents on a Malaysian politician as part of a potential money-laundering prosecution of the bank. While the politician dismissed the allegations, the bank didn’t appear to be contacted. (FMT, Malaysiakini)

A former Nigerian official on trial for money laundering said he’s being prosecuted over old grievances. (Sahara Reporters)

Guinea adopted anti-money-laundering measures. (Xinhua)

A lawyer testified to opening 150 offshore companies for a reputed Serbian drug lord on trial for money laundering. (OCCRP)


The U.S. defended its use of sanctions on Venezuela as talks continue over a political impasse in Caracas. (Bloomberg, Reuters, NPR)

Boeing Co.’s deal with Iran rests on shaky foundations. (CBS)

OFAC fined a company for sanctions violations.

Terrorism Finance:

Hezbollah moves tons of cocaine and has sophisticated money-laundering schemes, a U.S. official said. Its leader said the group receives its money directly from Iran, not via Lebanese banks. (YaLibnan, AFP)
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SEC Accuses Texas 'Frack Master' Of Bilking Investors Out Of Millions

SEC Accuses Texas 'Frack Master' Of Bilking Investors Out Of Millions | Global Corruption |
Texas oilman Chris Faulkner built a high-profile public persona, raised millions for his oil and gas ventures and courted politicians. But the SEC has alleged that behind the scenes, he cheated investors out of $80 million to fund a “debauched” jet-setting lifestyle.

The U.S. Securities and Exchange Commission on Friday filed a lawsuit that alleges a stunning failure of corporate governance at Faulkner’s Dallas-based Breitling Energy Corp and other companies he helped to create.

Based upon inflated estimates of the oil and gas that his companies controlled, the charges said, Faulkner lured hundreds of U.S. investors to back his firms. Their investments were largely used to pay personal expenses for Faulkner, his associates, family and friends, the SEC alleged.

Chris Faulkner, chief executive officer of Breitling Oil & Gas Corp., is accused luring hundreds of investors to back his firms, but their investments were largely used to pay for personal expenses.
Faulkner, 39, faced a spate of lawsuits in the early 2000s in connection with his previous web hosting business.

The businessman turned his attention to energy drilling during the U.S. shale boom in the last decade. His companies boasted of holding prime drilling real estate in regions like Texas, Oklahoma and North Dakota.

But after raising funds, Faulkner did little drilling and instead racked up millions in credit card charges, the SEC said.

The lawsuit charged Breitling CEO Faulkner, three related companies and seven other people for activities starting in 2011.

Faulkner, the self-proclaimed “Frack Master,” was frequently featured in the media, including Reuters, offering rosy projections about shale drilling and his own companies’ prospects.

Faulkner used investors’ cash on extravagances including lavish meals, chartered planes, jewelry, strip clubs and female escort services, according to the SEC complaint.

Along the way, Faulkner, his friends and associates violated various securities laws, it said. Breitling and related firms sold investments in more than 20 oil and gas prospects in several states. The SEC said they exaggerated the prospects’ earnings potential and also booked fictional drilling costs.
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Anti-Corruption Digest International Risk & Compliance News

Anti-Corruption Digest International Risk & Compliance News | Global Corruption |

Gartner’s top 10 security predictions

Forward looking IT security pros need to better address known risks, monitor closely the value of shadow IT devices and solve the inherent weaknesses introduced by the internet of things, Gartner says. The consulting firm has taken a look at five key areas of security concern that businesses face this year and issued predictions on and recommendations about protecting networks and data from threats that will likely arise in each.
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Walking A Tightrope: Can Peru's New President Tackle Corruption And Encourage Investment?

Walking A Tightrope: Can Peru's New President Tackle Corruption And Encourage Investment? | Global Corruption |
Fallout from Operation Car Wash is now being felt in Peru. The creation of a special Car Wash congressional commission in October 2015 was prompted by the scandal in Brazil. The commission was established to investigate alleged donations by 11 Brazilian companies to politicians, public officials and presidential campaigns in order to receive preferential treatment in the awarding of high-value public contracts. After months of speculation and rumors surrounding the potential findings of the congressional commission, it failed to release the results of its investigations on the agreed date of May 31 – only managing to agree on four of the 14 points investigated – and three separate reports will be presented at a later, unspecified date.

The commission was side-lined when, on June 16, as part of a separate investigation, Judge Richard Concepción Carhuancho ruled that First Lady Nadine Heredia, her brother Ilan Heredia and friend Rocío Calderón would not be allowed to leave the country while investigations take place into their alleged role in money laundering and influence peddling related to campaign financing (including by Brazilian companies) during the 2006 and 2011 presidential elections. This represents the first time a sitting first lady has been sanctioned in such a way.

These two cases may have hit the headlines recently but they are certainly not the sole ongoing investigations into alleged corruption. Congressional commissions, the Office of the Comptroller General and the Office of the Prosecutor General are just some organizations whose remits include investigating cases of alleged inappropriate political and private conduct and are currently in the process of conducting research into corruption allegations.
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Corruption Currents: U.K. Uses U.S. Tactics in Bank Anti-Bribery Probes

Corruption Currents: U.K. Uses U.S. Tactics in Bank Anti-Bribery Probes | Global Corruption |

Panama Papers: Iceland is still concerned about the leak; its top presidential candidate promised a break from the past. A Canadian businessman named in the leak was honored. A guide on sidestepping New Zealand disclosure requirements is here. (Iceland Review, Financial Times, Toronto Star, RadioNZ)


A tipster lost his job after criticizing conditions at an offshore detention center. (Guardian)

General Anti-Corruption:

Rome’s first woman mayor pledged to fight against corruption. (Irish Examiner)

The New York Police Department scandal continues to reveal new twists. The NYPD has a checkered history in the Borough Park area of Brooklyn. (Atlantic, DNAInfo, Newsday, NY Times)

Guatemala’s corruption scandals are explained here. (iSight)

Egypt fired its top auditor, and now it plans the same for his daughter. (Washington Post)

What parts of the Brazilian government don’t have corruption problems? (Washington Post)

A jailed Brazilian executive will testify against the former president at her impeachment trial. (Guardian)

Montreal’s inspector general released reports finding corruption in contracting. (CBC)

“Wasta,” a practice of involving influential family members in business decisions, encourages corruption in Saudi Arabia, a study found. (Gulf Business)
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Chilean politician put under house arrest in wide corruption scandal

Chilean politician put under house arrest in wide corruption scandal | Global Corruption |
A Chilean court ordered that a prominent former senator be placed under nighttime house arrest, while authorities investigate him for possible tax fraud and bribery.

Pablo Longueira, who was a presidential candidate in Chile's 2013 election, is accused by prosecutors of receiving close to $1 million from specialty mining company SQM from 2009 to 2013, then hiding the donations through falsified receipts in contravention of Chilean law. He also is accused of accepting bribes while working on a 2010 law that regulates mining concessions.

The order for Longueira's arrest came late on Wednesday night, six days after a court jailed conservative senator Jaime Orpis after he was convicted of falsifying donation receipts.

It also comes the day after Chile's public prosecutor said it was investigating a former high-level cabinet official in leftist President Michelle Bachelet's government for bribery and tax offenses.

Longueira has maintained his innocence.

"I understand the charges and I don't agree with them," he said during a brief appearance before a judge.

The current scandal caused Longueira to resign in March from the UDI party, which was founded by right-wing allies of former dictator Augusto Pinochet.
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Will the US side with Venezuelans or their corrupt and incompetent government? 

Since his disputed election in 2013, Maduro has jailed political opponents and used gangs of militants to crush dissent. As insecurity and scarcity of food and medicine worsened, Maduro’s Socialist Party suffered a crushing defeat in National Assembly elections last December. The institutional military insisted that Maduro accept those results, but he packed the Supreme Court with loyalists to nullify virtually any act by the Assembly.

The Assembly has initiated a constitutional “revocatory referendum” to allow voters to decide whether the president should finish his term. The opposition quickly gathered 1.8 million signatures (nine times the requisite number) needed to advance this solution. In light of the massive popular response and opinion polls suggesting that Maduro would lose a recall vote, electoral authorities loyal to him may seek to delay or prevent a referendum.

OAS Secretary General Luis Almagro has issued a lengthy report detailing Maduro’s undemocratic actions, describing the humanitarian crisis, and endorsing the referendum. Almagro has invoked Article 20 of the Inter-American Democratic Charter, which authorizes the secretary general to bring democratic breaches to the attention of the 34 OAS member states.

By advocating a peaceful, democratic, and constitutional solution — in the form of a revocatory referendum — Secretary General Almagro is attempting to rally the region to keep faith with the Venezuelan people. After weeks of delay, the OAS will meet Thursday to discuss Almagro’s recommendation that the OAS press the Venezuelan government to respect its own constitution. Invocation of the Democratic Charter does not mean the “suspension” of Venezuela from the OAS. However, if the Maduro government resists OAS involvement, any plan of action would require the backing of 18 of the 34 member states to overcome the regime’s objections.
Venezuelans from across the political spectrum know that a way out of the current crisis can be found in their constitution.

One would expect US diplomats to help to rally majority support for the solutions endorsed by Secretary Kerry. The senior responsible US official, Under Secretary of State Thomas Shannon, rushed to Caracas Tuesday to meet with Maduro. It remains to be seen whether the United States seeks to placate Maduro yet again or energetically support a solution that will ameliorate the suffering of 30 million desperate Venezuelans.
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What Are The World's Most Corrupt Countries?

How Corrupt Is Brazil? Subscribe! From politicians to police officers, corruption has plagued countrie
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Corruption Currents: North Korea Calls U.S. Sanctions an Act of War

Corruption Currents: North Korea Calls U.S. Sanctions an Act of War | Global Corruption |
Brazilian police arrested 19 people as part of a probe into a graft scheme at a nuclear power plant owned by state-led utility Eletrobras that allegedly paid out more than $60 million in bribes. Eletrobras said it’s cooperating. (Reuters, WSJ)

Dutch prosecutors asked judges to seize more than 300 million euros in assets belonging to a Netherlands-based front company they say was used to bribe Gulnara Karimova, the daughter of Uzbekistan’s president. Ms. Karimova has denied the allegations. (Reuters)

The U.S. is appealing a ruling denying its role in an extradition hearing for Jack Warner. (Caribbean360)

In local politics: An aide to the head of Delhi admitted taking a bribe following his arrest. An Indian tax official was arrested in the act of taking a bribe. (Express, Hindustan Times, Hindustan Times)


A teen was convicted for conducting cyberattacks as a form of protest. (Guardian)


Italy arrested 11 people over mafia-related fraud linked to the Milan Expo. (Reuters)

Money Laundering:

Pavlo Lazarenko, a former Ukrainian prime minister wanted in his home country who was convicted of money laundering in the U.S., seeks his money and U.S. asylum. (NY Times)

The owners of a Filipino remittance firm denied money laundering charges linked to the hacking heist. (ABS-CBN News)

Rich landowners in India are using a tax loophole critics call money laundering. A long-running money-laundering investigation in India continues. (Bloomberg, India Today, Express)

Bitcoin companies are welcoming stronger anti-money laundering regulation in Europe. (Quartz)
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Argentina corruption cops search properties of ex-leader Fernandez

Argentina corruption cops search properties of ex-leader Fernandez | Global Corruption |
Argentine police searched properties of former President Cristina Fernandez on Thursday as part of an investigation into possible corruption during her two-term administration, which ended in December with the inauguration of Mauricio Macri.

Authorities are looking for documents related to a case that accuses Fernandez of illegal enrichment using a family real estate company called Los Sauces, state press agency Telam said.

Local television showed images of the searches being conducted. The judge and investigators in the case could not be reached for comment.

"It has been a while, decades I would say, since we've seen such an abuse of power and political persecution," Fernandez posted on Twitter.

The properties in question are located in three different parts of Patagonia: Rio Gallegos, El Calafate and El Chalten, Telam said. Television also broadcast a search of the municipal government office of El Calafate, where Los Sauces is based.

In a separate case, Fernandez was indicted in May on charges that she was responsible for central bank irregularities in the futures market.

After testifying in that case, she also accused the current administration of political persecution.

Macri's government has opened investigations into alleged corruption during Fernandez's 2007-15 presidency.
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Corruption Currents: U.S. Said to Downgrade Myanmar in Human-Trafficking Report

Corruption Currents: U.S. Said to Downgrade Myanmar in Human-Trafficking Report | Global Corruption |
North Korea is selling counterfeit U.S. currency to terrorists, analysts said in Seoul. (Korea Times)


Panama Papers: A Swiss IT worker for Mossack Fonseca was released after being detained in Geneva. Why haven’t U.S. authorities asked to see the documents? (The Local, McClatchy)

General Anti-Corruption:

China wants more cooperation with the West in its anti-graft drive. A rebellious Chinese village protested again after its elected leader was detained on corruption charges. (Reuters, NPR)

South Africa’s treasury said the president should repay the country for repairs made to his home at taxpayer expense. (AFP)

The Philippine president is “hell-bent” on fighting corruption; he’s setting up 12 hotlines to do it. (CNN, Jakarta Post)
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Guest Post: Fixing the Federal Definition of Bribery–From “Intent to Influence” to “Illegal Contract”

In the United States, the principal federal criminal statute prohibiting the bribery of federal officials, 18 U.S.C. § 201(b), forbids “corruptly” offering or giving anything of value to an official “with the intent to influence any official act.” Yet, as I argue in a recent article, defining bribery primarily in terms of the payer’s “intent to influence” is overbroad. The phrase “intent to influence” not only seems on its face to reach common and widely accepted practices; it also invites speculation about motives and may produce prosecutions and convictions based on cynicism.

There’s an alternative: The American Law Institute’s 1962 Model Penal Code defines bribery as offering, giving, soliciting or accepting any pecuniary benefit as “consideration” for an official act. As a Texas court said of a state statute modeled on this provision, the Code “requir[es] a bilateral arrangement—in effect an illegal contract to exchange a benefit as consideration for the performance of an official function.” More than two-thirds of the states now embrace an “illegal contract” definition of bribery; the federal government and the remaining states should follow suit.

To understand the problems with the “intent to influence” standard for bribery convictions, it’s helpful to consider the origins of this standard. When the common law crime of bribery emerged in England in the early 17th century, it forbade only the bribery of judges. This common law prohibition emerged in response to the common practice of litigants giving gifts to the judges hearing their cases. The common law outlawed this practice—but at the same time permitted judges to receive gifts from family members and friends who did not “intend to influence” the judges’ work. Thus the common law definition of the crime of bribery covered “bribes” and “presents” given “with intent to influence” the actions of judges.

In the United States, the federal criminal code enacted by the first Congress in 1790 also prohibited only bribing judges. Congress did not enact a general prohibition on bribery of federal officials until 1853; when it did, it borrowed the common law definition of the crime, including the “intent to influence” requirement.

As applied to unelected judges, making the distinction between a lawful gift and a criminal bribe turn on the donor’s “intent to influence” seems sensible. True, the standard requires an assessment of a benefactor’s motives, but it does identify the gifts to unelected judges that should be punished. This standard makes little sense, however, when applied to elected officials who must collect campaign contributions to run for office, and who are appropriately subject to persuasion in social settings very different from a courtroom. Political contributions often are given in the hope that they will make their recipients more receptive to the donors’ agendas. So are lunch invitations, speaking invitations, contributions to favorite charities, and invitations to seminars, conferences, and golf outings. Ethical codes and campaign finance regulations appropriately limit this kind of influence seeking. Someone who complies with ethical codes and campaign finance regulations, however, should not go to prison simply because he or she bought lunch for an official “with intent to influence.”

The modern version of the federal anti-bribery statute requires not only that the donor have the “intent to influence,” but also that he or she offer the payment or gift “corruptly.” One might have thought that the word “corruptly” (added in 1962) would tame § 201(b), but many federal courts see this word as doing no work at all. They have made it redundant by declaring that a person acts corruptly whenever his or her conduct and mental state establish the other elements of bribery. Other courts define the term in language that is just as fudgy, open-ended, and evaluative as the term itself. They use words like “improper,” “wrongful,” “evil,” and “bad.” No federal court has embraced the common law meaning of “corruptly” by reading this word to require knowledge that an actor was violating established norms of legitimate conduct.
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Michael Johnston: Defining corruption down

Michael Johnston: Defining corruption down | Global Corruption |

Today’s unanimous decision in McDonnell vs. United States — invalidating former Virginia governor Bob McDonnell’s 2014 conviction — continues a trend in which the justices, in Citizens United among several others, have applied a naively narrow conception of corruption.

About the time I launched my corruption course, the ruling in Buckley vs. Valeo held — rightly, in my view — that restrictions on political money raise First Amendment concerns. Buckley overruled major provisions of the Federal Election Campaign Act, but also made it clear that the government retained a legitimate interest in preventing corruption, or the appearance of corruption, and could impose limitations on that basis so long as they were as narrowly crafted as possible.

But in campaign-finance cases over the past decade and more, the court has reverted to relying on that ridiculous corruption caricature. Restrictions on contributions and independent expenditures, it now appears, require proof almost of an explicit quid pro quo: I’ll give you this contribution if, and only if, you do XYZ for me.

Payments made for purposes of “ingratiation and access,” Citizens United held, are not corruption. In the McDonnell case, a variety of payments and favors — exchanges that for me at least certainly fail the appearance-of-corruption “smell test” — were apparently seen as the necessary processes of politics as usual.

In this case the issue was what constitutes an official act. Perhaps in the narrowest of senses, hosting social gatherings and making telephone calls on behalf of a wealthy friend and his business, in exchange for numerous personal gifts, is not part of the job description of being governor of Virginia. But most would agree that such activities and calls made by the commonwealth’s highest elected official carry weight that no ordinary citizen can wield.

How to define corruption is a notoriously slippery question, and analysts have never arrived at a consensus. But at issue here is much more than a conceptual debate over definitions. For years substantial majorities of poll respondents have said money in politics has corrupted American democracy — even though the overwhelming majority of that money is given, disclosed and spent within the (increasingly lax) boundaries of the law.

Cozy accommodations between wealth and power have energized Occupy movements, the Bernie Sanders and Donald Trump campaigns — and deepen a democratic malaise visible in many parts of the world.

When solid majorities in a democracy say money has corrupted politics, then you’ve got a corruption problem. Strangely, the members of the current Court, so finely attuned in other ways to current political trends, don’t seem to see that fact.

There are more immediate consequences too. New York State politics has been given a long-overdue shakeup by the recent corruption convictions of former State Assembly Speaker Sheldon Silver and former State Senate Majority Leader Dean Skelos. I’m not a lawyer, but I wager that appeals are being rewritten today with the McDonnell decision in mind. On the other hand, prosecutors looking into Mayor de Blasio’s dealings on several fronts may need to rethink their evidence and arguments in fundamental ways.

We don’t, in this country, try defendants in the court of public opinion, and that’s a good thing. On the other hand, Anglo-Saxon law going back to 1215 has held that taking or receiving personal benefits “under color of official right” is corruption — an old idea that functions better today than the court’s narrow view.

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Dorsey Anti-Corruption Digest - June 2016

Dorsey Anti-Corruption Digest - June 2016 | Global Corruption |
In this edition, among the many topics discussed, we report on an announcement by the SEC that two unrelated companies have entered into non-prosecution agreements, under the FCPA Pilot Program, for alleged bribes paid by their foreign subsidiaries to Chinese officials; an update regarding the “Fat Leonard” Navy bribery matter in which it is alleged that that Glenn Defense Marine Asia paid bribes in connection with U.S. Navy contracts worth over $20 million; and a judgment of the Court of Appeals for the Eleventh Circuit where it was held that the five-year statute of limitations in 28 USC § 2462 applies to SEC claims for disgorgement or declaratory relief.  

Updates from the U.K. include news that the SFO has expanded its investigation into Rolls-Royce to examine allegations of suspected bribery in its former energy operations in Nigeria; and reports that a Metropolitan police officer has been removed from his post in the NCA’s International Corruption Unit following allegations that he received payments in return for providing information about a Nigerian politician’s case. 

Global updates include news from Brazil that the country’s Transparency Minister, who took office last month having been tasked with fighting corruption, has resigned following leaked recordings suggesting that he tried to derail a corruption investigation; updates from China regarding its continued anti-corruption enforcements; the commencement of the trial of the former Vice-President of the DRC, Jean-Pierre Bemba, in the International Criminal Court regarding allegations of bribery and forgery in his war crimes trial; the arrest of Egypt’s health minister’s consultant for medical affairs for allegedly receiving corrupt payments totalling $500,000; allegations that Viktor Yanukovych, Ukraine’s former president, allegedly paid bribes worth at least $2 billion during his four year tenure in office; plus anti-corruption developments in Guatemala, Japan; Liberia, South Korea and more from around the globe.
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Supreme Court rules unanimously in favor of former Va. governor McDonnell in corruption case

Supreme Court rules unanimously in favor of former Va. governor McDonnell in corruption case | Global Corruption |

CHIEF JUSTICE ROBERTS: "...for prosecutors to prevail, they must identify a “question, matter, cause, suit, proceeding or controversy” that “may at any time be pending” or “may by law be brought” before a public official.”

Secondly, the government must prove that the public official made a decision or took an action “on” that question, matter, cause, suit, proceeding, or controversy, or agreed to do so, Roberts wrote.

“The issue here is whether arranging a meeting, contacting another official, or hosting an event—without more—can be a ‘question, matter, cause, suit, proceeding or controversy,’ and if not, whether it can be a decision or action on a ‘question, matter, cause, suit, proceeding or controversy.’”

Roberts took pains not to excuse McDonnell’s conduct. Even though he and his supporters said his conviction made illegal routine acts performed by politicians, Roberts disagreed.

“None of this, of course, is to suggest that the facts of this case typify normal political interaction between public officials and their constituents” he wrote. “Far from it. But the government’s legal interpretation is not confined to cases involving extravagant gifts or large sums of money, and we cannot construe a criminal statute on the assumption that the government will ‘use it responsibly.’”

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SEC accuses Breitling CEO, others, of $80 million fraud

SEC accuses Breitling CEO, others, of $80 million fraud | Global Corruption |
The U.S. Securities and Exchange Commission on Friday charged Breitling Energy Corp, its chief executive and seven other people with defrauding investors out of around $80 million by misleading them about the value of oil and gas assets.

In a civil lawsuit, the SEC alleged that Chief Executive Chris Faulkner of Texas-based oil and gas driller Breitling, a frequent media commentator who calls himself the "Frack Master," had worked with several co-conspirators to dupe hundreds of unwitting investors in his oil and gas companies out of millions of dollars.

The illicit gains were used by Faulkner, 39, to fund "a lifestyle of decadence and debauchery," the SEC said, including lavish travel and the use of escort services.

Faulkner allegedly took advantage of investor interest in the shale oil boom to operate the scheme in which he fraudulently sold investments in more than 20 oil and gas prospects in several states.

The descriptions of these investments were "replete with material misrepresentations and omissions," the SEC said.

The SEC said the fraud relied on four interlinked companies whose relationships weren't fully disclosed to investors.

The SEC charges that Faulkner and his associates knowingly lied to investors about the cost of drilling and completing wells, and the expected earnings for the prospects.
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Fugitive governor extradited to Peru from Ecuador

Fugitive governor extradited to Peru from Ecuador | Global Corruption |
Former Tumbes governor Gerardo Viñas was extradited from Ecuador to face more than 30 corruption charges in Peru.

The former governor of Peru’s northern border state of Tumbes ranked among the public ministry’s most wanted fugitives. Viñas had been on the run for two years since an arrest warrant was issued in June 2014.

Ecuadorean police arrested Viñas in Quito on June 13 after receiving a tip from an informant looking to claim a $30,000 reward. Viñas was the seventh high-profile fugitive to be arrested on tips, which has since grown to eight, since President Ollanta Humala enacted a financial compensation program for informants in a 2015 package of legislation aimed at reducing crime.

“This has been a joint operation with the Ecuadorean police,” interior minister Jose Luis Perez said when Viñas was arrested. “As you know, [Viñas] was on the most-wanted list and the reward scheme has been a resounding success. Now they are seven.”

Viñas is considered one of Peru’s most corrupt governors. Prosecutors allege the small state of less than 300,000 residents incurred losses of $17 million dollars during his administration between 2010 and 2014. Viñas faces over 30 charges for corruption in various state contracts and sales.

A Tumbes judge first issued an arrest warrant when it was revealed that Viñas approved the sale of 89 acres of land near the beach town of Punta Sal, a popular tourist destination, for just $750. The land was appraised to be worth more than $6 million.

Prosecutors are seeking 20 years in prison in just one of the charges related to projects to expand running water in Tumbes.
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USA: Former Fugitive Sentenced to 96 Months in Prison for Embezzling $8.7 Million from Employer

James T. Hammes, 54, formerly of Lexington, Kentucky, was sentenced in U.S. District Court today to 96 months in prison. Hammes pleaded guilty in October 2015 to one count of wire fraud and agreed to pay nearly $7.7 million in restitution, specifically, approximately $6.7 million to G & J Pepsi-Cola Bottlers, Inc. and $1 million to Cincinnati Insurance Company.

Benjamin C. Glassman, Acting United States Attorney for the Southern District of Ohio and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the sentence handed down today by U.S. District Judge Susan J. Dlott.

According to court documents, from about 1998 through February 2009, Hammes embezzled more than $8.7 million from his employer, G & J Pepsi-Cola Bottlers, Inc., a large, privately held manufacturer and distributor of Pepsi products that is headquartered in Cincinnati.

Hammes served as a controller for the company, and was responsible for all financial accounting and internal controls for his division, including supervising accounts payable to vendors for services provided to the company’s division.

The defendant set up phantom vendor accounts and manipulated monthly accounting reports, using a miscellaneous account to charge off fraudulent checks and then manipulating legitimate accounts to offset the amounts carried in the miscellaneous account.

The stolen money that Hammes invested and traded generated IRS 1099 forms. Hammes voluntarily made estimated tax payments to the IRS totaling at least $2.7 million using the funds that he stole from his employer. Despite making the estimated tax payments, he failed to file tax returns for multiple tax years.

Hammes was questioned about the issuance of possible fraudulent checks in February 2009, at which time he fled and spent the majority of six years as a fugitive hiking the Appalachian Trail and living under an alias, which belonged to a real person. Federal criminal charges were filed against Hammes and he was arrested in Virginia in May 2015, following a tip from a hiker who had seen the defendant’s story on television.

“Hammes embezzled a lot of money over a long period of time,” Acting U.S. Attorney Glassman said. “As the district court recognized, his scheme was sophisticated; he abused the trust that his employer had placed in him; and sheer greed motivated him. Hammes followed up his crime by coldly abandoning his family without explanation or warning and running from the law for six years under someone else's name. But no one can run from justice forever, and today his lies were punished. Hammes more than earned every minute of the term of imprisonment that the district court imposed today.”
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BRAZIL: Cunha expects acquittal of new charges

BRAZIL: Cunha expects acquittal of new charges | Global Corruption |
Brazil's suspended house speaker Eduardo Cunha said he expects to be acquitted of new corruption charges brought up against him, claiming evidence favouring his case was ignored.
Cunha was indicted late on Wednesday in the country's Supreme Court for alleged money laundering and illegal currency dealing involving state-oil player Petrobras.

According to Brazil's attorney general, Cunha benefited from the sale of a Petrobras oilfield and concealed the funds in foreign bank accounts.

The judge overseeing the case, Teori Zavascki, said in the decision, "There is concrete evidence that Cunha received [illicit] funds."

The court's decision to proceed with the case against Cunha was unanimously accepted.

Cuhna denied the allegations and said he was disappointed with the court's decision, but that he expects to be acquitted.  

"In relation to the indictment accepted by the court, I respect the decision and trust that at the end of the trial I will be acquitted," Cuhna said in a statement in Portuguese.

He also claimed that evidence presented by his defence - that an alleged meeting at Petrobras did not exist - was ignored.
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National Health Care Fraud Takedown Results in Charges against 301 Individuals for Approximately $900 Million in False Billing | OPA | Department of Justice

National Health Care Fraud Takedown Results in Charges against 301 Individuals for Approximately $900 Million in False Billing | OPA | Department of Justice | Global Corruption |
Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced today an unprecedented nationwide sweep led by the Medicare Fraud Strike Force in 36 federal districts, resulting in criminal and civil charges against 301 individuals, including 61 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $900 million in false billings.  Twenty-three state Medicaid Fraud Control Units also participated in today’s arrests.  In addition, the HHS Centers for Medicare & Medicaid Services (CMS) is suspending payment to a number of providers using its suspension authority provided in the Affordable Care Act.  This coordinated takedown is the largest in history, both in terms of the number of defendants charged and loss amount.  

Attorney General Lynch and Secretary Burwell were joined in the announcement by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, FBI Associate Deputy Director David Bowdich, Inspector General Daniel Levinson of the HHS Office of Inspector General (OIG), Acting Director Dermot O’Reilly of the Defense Criminal Investigative Service (DCIS), and Deputy Administrator and Director of CMS Center for Program Integrity Shantanu Agrawal M.D.

The defendants announced today are charged with various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes, money laundering and aggravated identity theft.  The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and prescription drugs.  More than 60 of the defendants arrested are charged with fraud related to the Medicare prescription drug benefit program known as Part D, which is the fastest-growing component of the Medicare program overall.

“As this takedown should make clear, health care fraud is not an abstract violation or benign offense – It is a serious crime,” said Attorney General Lynch.  “The wrongdoers that we pursue in these operations seek to use public funds for private enrichment.  They target real people – many of them in need of significant medical care.  They promise effective cures and therapies, but they provide none.  Above all, they abuse basic bonds of trust – between doctor and patient; between pharmacist and doctor; between taxpayer and government – and pervert them to their own ends.  The Department of Justice is determined to continue working to ensure that the American people know that their health care system works for them – and them alone.”

“Millions of seniors depend on Medicare for essential health coverage, and our action shows that this administration remains committed to cracking down on individuals who try to defraud the program,” said Secretary Burwell.  “We are continuing to put new tools and additional resources to work, including $350 million from the Affordable Care Act, for health care fraud prevention and enforcement efforts.  Thanks to the hard work of the Medicare Fraud Strike Force, we are making progress in addressing and deterring fraud and delivering results to help ensure Medicare remains strong for years to come.”

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare and Medicaid for treatments that were medically unnecessary and often never provided.  In many cases, patient recruiters, Medicare beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of submitting a total of approximately $900 million in fraudulent billing.

“The Medicare Fraud Strike Force is a model of 21st-Century data-driven law enforcement, and it has had a remarkable impact on health care fraud across the country,” said Assistant Attorney General Caldwell.  “As the cases announced today demonstrate, the Strike Force’s strategic approach keeps us a step ahead of emerging fraud trends, including drug diversion, and fraud involving compounded medications and hospice care.”
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