Corruption Currents: From Dropping Hints to Casting Shadows

 

• SAMUEL RUBENFELD
 

Wall Street Journal

Bribery:

Mike Lucas

An Ottawa-area businessman convicted of arranging illicit payments for public officials in India to win a $100 million security contract with Air India received a three-year prison sentence today in an Ottawa court. (CBC)

A former Indian state chief minister is seeking a discharge from a bribery case. (Express News)

Allegations of bid-rigging and bribery in Cayman electricity contracts were dismissed. (Cayman Compass)

The FCPAmericas blog shows how to establish credibility with FCPA enforcement officials and explainshow Sao Paulo is fighting corruption. The FCPAProfessor rounds up some client alerts on the Esquenazi ruling.

Chuck Duross, the former head of the Justice Department’s FCPA unit, weighs in on the Esquenazi case. Client alerts from Ballard Spahr LLP and Haynes & Boone LLP on the Esquenazi ruling are here and here.

Cybercrime/Data Security:

Without naming them, U.S. prosecutors dropped several hints as to which Chinese companies benefited from alleged hacking by five Chinese military officers. Beijing has denied the U.S. allegations. (Bloomberg, NY Times)

Belgium is desperately seeking a cybersecurity czar. (WSJ Digits)

The next challenge for eBay might be California cyber regulators. (IT Security)

A client alert from Smith Anderson asks if the NIST framework will create a newstandard operating procedure for businesses.

Fraud:

The 14th annual report of the European Anti-Fraud Office is here.

Money Laundering:

Guatemala’s ex-president was sentenced in the U.S. to nearly six years in prison after admitting to laundering  $2.5 million in bribes he took from the government of Taiwan to continue to recognize the Asian nation diplomatically. (AP)

Nine U.S. firms still sending money to Somalia are collateral damage in a U.S. crackdown on money laundering. (WSJ)

FinCEN issued an advisory this week telling St. Kitts and Nevis to better monitor its “Citizenship-by-Investment” program, which the U.S. says is being used as a cover for financial crimes and money-laundering activities. (WSJ)

Russian Railways, run by an old friend of President Vladimir Putin, awarded vast sumsto contractors who disguise their ownership. The transaction patterns show signs of possible money laundering, but they don’t necessarily mean they’re illegal. The company said the companies were all legitimate, and that its contracts were awarded fairly and fulfilled properly. (Reuters, Reuters)

Finra is scrutinizing banks and traders tied to Credit Suisse AG who use turbochargedcomputer systems to move swiftly into and out of stocks in the hopes of capturing gains from short-term swings, sources told WSJ. The bank is planning to cut ties with the clients, sources said.

The case against Credit Suisse AG was brought in Virginia, because a lone Credit Suisse client, on a single day eight years ago, flew out of Dulles International Airport in Virginia on his way to Zurich. (Dealbook)

Is Switzerland trying to wriggle out of a tax information treaty? (Tax Justice Network)

An Italian journalist told a court that Hong Kong banks make money laundering easy. (South China Morning Post)

Ukrainian tax authorities investigated a pro-Russian newspaper for alleged money laundering. The media outlet dismissed the allegation, and called the tax police raid on its office an act of “political pressure.” (Kyiv Post)

Chinese banks halted dollar transactions with most Afghan commercial banks, the central bank governor said, as Afghanistan has failed to pass laws meeting global standards against money laundering and terrorist financing. (Reuters)

The Italian mob uses Malta to set up front companies to launder money. (Malta Today)

India expanded its transaction limits under anti-money laundering law. Its reserve bank’s enforcement of know-your-customer rules enables them to understand risks, the deputy governor said. (PTI, PTI)

Sanctions:

Sanctions cast a shadow over Russia’s answer to Davos. The country’s business community spoke out in defiance of sanctions at the conference. A $400 billion deal between Russia and China could complicate Western sanctions efforts against Moscow. Gazprom's boss said Europe isn’t weaning itself off Russian gas anytime soon. (WSJ, Financial Times sub req, Foreign Policy, WSJ)

The U.N. Security Council added Boko Haram to its terrorism list, meaning its leaderswill have their foreign assets frozen, they will be banned from international travel and the group will be subject to an arms embargo. (WSJ, BBC, Al Jazeera)

The talks between Tehran and global powers have hit a critical turn, as the U.S. mayresurrect bilateral negotiations and Iran may meet with European nuclear officials next week. What would the morning after a deal look like? (WSJ WashWire, Al Monitor, National Interest)

Transparency:

A series of letters to the WSJ discuss an SEC rule governing disclosures over payments to foreign governments.

A client alert from Akin Gump describes the state of play over a rule on conflict minerals.

Whistleblowers:

The U.K.’s highest court expanded the rights of lawyers in the country to blow the whistle against their firms. (WSJ Law Blog)

General Anti-Corruption:

The death sentence handed down on Chinese mining tycoon Liu Han exposed the power struggle behind China’s corruption crackdown. (BBC, Reuters)

Barclays Bank was fined by U.K. regulators after one of its traders was discovered attempting to fix the price of gold. (BBC, ProPublica)

Corruption in Ukraine will be a major problem for the next president, to be chosen by voters this weekend. (Gallup)

A fine from Finra cost J.P. Morgan Chase & Co. three minutes of profit. (Bloomberg)

Is the Alibaba IPO “open sesame” for anti-corruption? Can young people help in the fight against corruption? (GAB, World Economic Forum)

An analysis of the federal investigation into New York’s shuttered anti-graft commission is here. (GAB)

Corruption is on the rise in Pakistan and in Sri Lanka, according to Transparency International reports. (Pakistan Tribune)

Italy struggles to turn the page on corruption. (Reuters)

Readers can subscribe to The Morning Risk Report here. Follow us on Twitter at @WSJRisk.

Somalia: Djibouti Forces going to Kismayo Approved by AMISOM

Amisom security news updates. Somalia has sought the withdrawal of Kenya Defense Forces from the port city of Kismayo and the deployment of Djibouti soldiers there.

Intelligence sources confirm that AMISOM command in Mogadishu approved the proposal for regional security and stability issues; according to UN representative staff office in Mogadishu.

Somalia government does not want the Kenyan soldiers in its territory for a myriad of reasons including the installation of the Jubaland administration which is presided over by warlord Ahmed Madobe, the former Al-Shabaab leader in Kismayo and also an ally of the Kenyan defense forces.

Somali security minister claims that Kenya army is partisan in Kismayo local tribal and Administration issues. That Kenya is influencing the politics and administration of the people in southern Somalia (Shabeele and Juba).

The federal seat of Somalia Mogadishu leaders  also views Kenya as intent on curving a semi-autonomous region which could lead to the annexing of the oil rich coasts of Somalia that are near Kenyan borders.

Djibouti soldiers will join Sierra Leone soldiers who have been struggling to learn the geography of the area and to adapt to increasing insurgency, according to Ethiopian Amisom forces commander.

Kenyan government beliefs that ‘the removal of Kenya army from Kismayu will allow the entry of politicians sympathetic to Al-Shabaab.’  Kenyan military also fear that any attempt to attack forces loyal to Ahmed Madobe’s militia ‘Ras-Kamboni’ will reignite a war in Southern Somalia tribes.

Source: geeskaafrika.com

Recognition of Somaliland is overdue

 WROTE BY: H. E. AHMED MOHAMED MOHAMOUD SILANYO, PRESIDENT OF THE REPUBLIC OF SOMALILAND

Celebrating independence: Women dance after casting their ballots in Hargeisa, the capital of Somaliland. (AFP)

The African Union is proving exactly as far-sighted as its architects hoped; it is a tremendous force for good for our continent. Year by year, its authority and influence grow as it provides an indispensable platform for Africa to come together to address our many opportunities and challenges.

As we look around our continent today, the need for the AU’s intervention – both in response to terrible emergencies (as we have seen in Nigeria) and to accelerate wider progress – has rarely been greater. So I am genuinely reluctant, on behalf of my country, to add to an already packed agenda. But I believe the AU should no longer put off recognising Somaliland as an independent country and full member.

H.E. Ahmed Mohamed Mohamoud Silanyo is the president of Somaliland

It is not the first time, of course, that our young country has asked the AU to take this momentous step. President Dahir Rayale Kahin, my predecessor, first applied in 2005. The result was an AU mission that looked at what our leaders and citizens had built together since we declared independence in 1991. It found that our progress was “unique” in African political history and recommended that the AU “should find a special method of dealing with this outstanding case”.

Eight years later, Somaliland is still waiting. We celebrated our 23rd anniversary as an independent nation on May 18 but we still find ourselves denied recognition by our own continent.

This matters to Somaliland – and to Africa. Our country has much to celebrate. From the ruins of a bitter conflict, we have forged a nation that is an oasis of peace, stability and democracy in a troubled region.

Power is transferred peacefully through democratic elections. State institutions, including the police and armed forces, are in place. Terrorists find no safe haven within our territory. Nor do pirates operate off our coast.

Given the terrible damage that years of conflict have caused, we remain a poor country. But free education has been introduced for children. Our economy is slowly being rebuilt. We have a great deal in which to take pride.

However, the lack of formal recognition from our fellow African countries and the world community remains a serious brake on progress and our hopes of improving the lives of our citizens. It makes it much more difficult for us to gain access to international aid or loans to drive development.

We are denied a seat at the table when the future of the Horn of Africa is being discussed.

I understand, of course, the reasons for caution. But, after 23 years as a functioning independent country, the time has come to recognise the reality on the ground. Our citizens left no doubt about where they saw their future when they voted overwhelmingly for our continued independence in a national referendum in 2001, a referendum judged free and fair by outside observers.

It is also important to remember that the AU mission to Somaliland specifically accepted that granting us membership would not open “a Pandora’s box” and entice other territories to follow our example. One of the principles of the AU’s foundation was respect for borders at the time of independence. Somaliland’s request for recognition does not contradict this doctrine.

Perhaps even more importantly, we believe our case for recognition is even stronger now than in 2006. The intervening years have shown that our country is built on sound foundations. Relations between us and Somalia, with which we had a disastrous union for three decades, have also improved. We have agreed on an ambitious agenda of co-operation, to work together to tackle terrorism, extremism, piracy, illegal fishing, toxic dumping and other serious crimes.

Such co-operation is important not only for our two countries but also for the wider region and the world. The Horn of Africa remains a source of tension and conflict. But Somaliland cannot play its full role in helping spread peace and stability unless we are treated as full partners by the international community.

The AU was born out of the hopes of new countries believing that together they could help each other grow and prosper. Over the past 23 years, Somaliland has shown what can be achieved with courage and hard work.

We are now asking for the chance to be accepted as full members of the African community so we can build on the solid foundations we have put in place and help drive progress across the continent. 

Source: mg.co.za

Julian Assange's spy report knocks Glenn Greenwald down a peg

The UpTake: There's a leak war afoot, and two of the most polarizing participants aren't holding back about who has gone too far, and who hasn't gone far enough.

 

 

 

Michael del Castillo/Upstart Business Journal Technology & Innovation Editor

Arift is forming in the world of leaked top-secret government documents. On one side is Glenn Greenwald, the founding editor of The Intercept online news site, who earlier this week reported that the U.S. government was recording practically every single cell phone call made to or from the Bahamas and another, unnamed country.

On the other side, is Julian Assange, the editor-in-chief of the non-profit Wikileaks, who today published a report that the unnamed country was Afghanistan, a nation where the United States still has troops and is an already tenuous position.

“The Intercept stated that they had censored the name of the victim country at the request of the US government,” Assange wrote in thereport. “Such censorship strips a nation of its right to self-determination on a matter which affects its whole population.”

On May 19, the day Greenwald published the Bahamas report based on documents from the Edward Snowden archive, Wikileaks tweeted, “We condemn Firstlook [the parent company of The Intercept] for following the Washington Post into censoring the mass interception of an entire nation.” That initiated a lengthy exchange about when to censor and when to publish, culminating in a widely quoted tweet by Greenwald in which he said he was “very convinced” publishing the name would lead to “deaths.”

Today, Assange countered Greenwald’s argument, explaining that because the U.S. drone program targets and kills “thousands of people” in Afghanistan, Pakistan, Yemen and Somalia, “The censorship of a victim state’s identity directly assists the killing of innocent people.”

Somalia: Restrictions On Somali's Money Transfers

Thousands of families across Somalia are under threat due to the recently announced closures of money transfer companies' bank accounts, international agencies Adeso and Oxfam warned yesterday. The organizations called on the US Department of the Treasury and its regulatory agencies, whose regulations are responsible for the bank account closures, to ensure that Somali-Americans are able to send life sustaining money to their loved ones.

"Somalia is hanging once again on the precipice of a full-blown catastrophe," said Degan Ali, Executive Director of Adeso. "Even a minor disruption to the link between Somali communities and their friends and family abroad could push them over the edge into crisis. We can't just sit on the sidelines and let this happen, and neither can the Obama administration."

According to research published in 2013 by Adeso, Oxfam and the Inter-American Dialogue, Somalia receives $1.3 billion per year in remittances, which is more than all foreign aid and investment in Somalia combined. Approximately 40 percent of Somali families depend on remittances to meet their most basic needs, including food, health care and education, and 80 percent of the capital for start-up businesses comes from the diaspora.

"Treasury Department rules and pressure created this crisis. Now the Treasury Department and the Obama administration have to fix it and time is running out," said Ray Offenheiser, President of Oxfam America. "It would be an incredible mistake to allow the only regulated channels for sending money back to Somalia to absorb such a crippling blow. Unless emergency measures are taken, many families will be cut off from their only source of income at a time when conditions in Somalia are getting worse."

Since Somalia does not have a formal banking system and large foreign money transmitters are not a viable option, Somali-American money transfer companies remain the only secure and transparent mechanism to send money from the U.S. to Somalia. Without bank accounts, these companies will be unable to wire money internationally, which threatens their ability to keep their doors open.

Despite the companies' investments in due diligence and anti-money laundering systems, Treasury Department regulations have forced banks to close Somali-American money transfer company accounts at an alarming rate. The latest bank to announce account closures, Merchants Bank of California, has extensive expertise serving money transmitters. Unfortunately, that did not spare it from pressure by the Office of the Comptroller of the Currency (OCC), an independent agency in the Treasury Department, to limit its relationships with money service businesses.

If the Merchants Bank account closures proceed as scheduled, on June 20 between 60-80 percent of US remittances to Somalia will be affected, and some companies will be forced out of business immediately. Some of the companies have arrangements with other banks, but those banks lack Merchants Bank's expertise in dealing with money service businesses and are even less likely to maintain the companies' accounts under pressure from the Treasury Department and its regulatory agencies.

While the closure of formal remittance channels would hurt Somali communities, it would benefit criminal networks that prey on informal money transfer systems that are invisible to regulators and law enforcement officials.

The Treasury Department, State Department and USAID have drawn up plans to strengthen the remittance system and the Somali banking sector, but these are long-term interventions. Emergency measures are needed.

In order to maintain the Somali remittance system in the short-term, Adeso and Oxfam call on the US government to spell out for banks the specific due diligence measures on Somali-American money transfer company accounts that they can take to satisfy their legal obligations. This would ensure that the companies can continue to operate until longer-term solutions are realized.

Under the Treasury Department's current regulations, banks are required to conduct "appropriate" due diligence based on the level of money laundering risk of each specific customer. Facing hefty fines and reputational damage, and with little guidance from the Treasury Department on what constitutes appropriate due diligence, banks have opted to exit money transmitters that are perceived as high-risk. Somali-American companies, often unfairly viewed through the lens of terrorism and piracy, are seen as more risky than other money transfer companies.