Bribery and Corruption  

Airbus Group Investigation  

The Serious Fraud Office has launched a criminal investigation into allegations of fraud, bribery and corruption in the civil aviation business of Airbus Group. The allegations relate to irregularities in relation to third party consultants.

SFO, 8 August 2016

Prison time for bribe of UN official

Sheri Yan was sentenced to 20 months in prison by Judge Vernon Broderick of the United States District Court in Manhattan after admitting guilty to a bribery charge.

Yan admitted to having paid more than $800,000 in bribes to John W. Ashe, the former president of the General Assembly. The Judge commented that “there is substantial damage done to the U.N., and the image of the U.N. itself” and that the institution is diminished by the acceptance or the taking of a bribe.

New York Times, 29 July 2016

German bribery probe over Rolls- Royce's Asian sales

Stuttgart prosecutors are expanding their bribery investigation in respect of sales across seven Asian countries made by the German unit of Rolls-Royce Holdings Plc. As part of a settlement of a corruption case over sales in South Korea, Rolls-Royce has paid 12 million Euros ($13.3 million).

The SFO have already instigated a UK-probe in 2013 as to the whether Rolls-Royce engaged local agents in return for orders and whether that constituted bribery.

The German spokesman for Rolls Royce, Stefan Wortmann has stated that the company follows a strict “zero-tolerance” approach towards any form of non-compliant action and that it does not comment on ongoing investigations.

Bloomberg, 29 July 2016

FIFA bribery trial could commence in Autumn 2017

At a hearing, U.S. District Judge Raymond Dearie stated that federal prosecutors were looking for an early 2017 trial date but that it was more likely to be September or October of next year due to the amount of evidence still being processed.

There are eight defendants facing the potential trial next year, including former FIFA officials and executive committee members Jose Maria Marin of Brazil, Juan Angel Napout of Paraguay, Eduardo Li of Costa Rica, and Julio Rocha of Nicaragua.

They have been accused of participating in schemes involving more than $200 million in bribes and kickbacks, for the marketing of and broadcasting rights to tournaments and matches.

Reuters, 3 August 2016

Anti-bribery law upheld by South Korea top court

South Korea's constitutional court ruled to uphold an anti-corruption law relating to the practice of pampering public officials with meals and gifts. It will take effect in September and it sets a cap on what government workers, teachers and journalists can accept, that being 30,000 won ($27) for meals and 50,000 won for gifts.

Bloomberg, 28 July 2016

Cyber Crime

Telegram breach by Iranian hackers

Independent cyber researcher Collin Anderson and Amnesty International technologist Claudio Guarnieri, have revealed that Iranian hackers have compromised more than a dozen accounts on the Telegram instant messaging service and identified the phone numbers of 15 million Iranian users. The cyber researchers consider this to be the largest known breach of the encrypted communications system.

Telegram uses SMS text messages to activate new devices however, the authorization codes sent via SMS, can be intercepted by the phone company and shared with the hackers. Once armed with the codes, the hackers can add new devices to a person's Telegram account, enabling them to read chat histories as well as new messages.

Headquartered in Berlin, Telegram says it has 100 million active subscribers and is widely used in the Middle East, including by the Islamic State militant group, as well as in Central and Southeast Asia, and Latin America.

Reuters, 27 July 2016

Fraud

SFO to decide charges in BOE fraud probe by year-end

It has been reported that the SFO will determine whether to pursue charges in respect of its investigation into the possible manipulation of Bank of England liquidity auctions at the height of the financial crisis by the end of the year.

As money markets froze during the financial crisis, the BOE intervened to provide emergency liquidity to lenders. It allowed them to swap a wider range of assets for funding through programs including its Extended Collateral Long-Term Repo Operations in 2007 and the so-called Special Liquidity Scheme, a 2008 plan that allowed banks to use an even wider range of collateral.

A central focus of the SFO investigation, which was announced in March 2015, is whether BOE officials told lenders what prices to bid at the auctions to play down questions about the health of financial institutions.

Bloomberg, 9 August 2016

'Bio fuel' confiscation orders

At a hearing on 27-28 July 2016, Gary West was ordered to pay a £52,805, James Whale to pay £172,952.43 and Stuart Stone to pay £1,141,680 in confiscation orders. They were all given 3 months each to pay the confiscation orders or to serve default sentences of 12 months, 2 years and 7 years respectively. The judge ordered that compensation should be paid out of the confiscation amounts.

Messrs West, Whale and Stone were convicted, on 5 December 2014 of fraud and bribery offences following the Serious Fraud Office’s investigation into Sustainable Growth Group (‘SGG’) including its subsidiary companies Sustainable AgroEnergy plc (‘SAE’) and Sustainable Wealth (UK) Investments Ltd (‘SWI’).

SFO, 29 July 2016

Jailed trader responsible for UK's biggest fraud warns it could be repeated

Kweku Adoboli, the rogue trader, was jailed in 2012 for the biggest fraud in British history and was released from prison last year. He has said that his crimes could be repeated because bankers still faced the same pressure to make profits "no matter what".

As a star trader on the Exchange Traded Funds desk at UBS's London office, Adoboli lost the Swiss bank $2.3 billion after trading far in excess of his authorised risk limits and booking fictitious hedging trades to hide his true exposure. Having now been banned from working in financial services, he speaks about his experiences for free at banking compliance conferences.

Reuters, 1 August 2016

Gulf emirate says talks on $1.5 billion fraud allegations end without result

The Gulf emirate of Ras Al Khaimah said an effort to negotiate the recovery of $1.5 billion it says it lost to fraud had ended without result and further criminal charges could be sought against Khater Massaad, the former senior official it alleges was responsible.

In a statement this week, the Ras Al Khaimah (RAK) government said it had been in talks with Massaad in relation to "global embezzlement and mismanagement of $1.5 billion" during his tenure as chief executive of the Ras Al Khaimah Investment Authority (RAKIA).

The government statement said negotiations, which had lasted for two years and had aimed to reach a settlement to "recompense the government of RAK", were ended by Massaad. 

Reuters, 4 August 2016

Health and Safety

Scottish Hydro Electric Transmission fined £133,000

Electricity company Scottish Hydro Electric Transmission has been fined £133,000 after a 26-year-old worker was electrocuted on a power line.

Gareth Aitken died while using a suspended work platform to replace the cables between the pylons on the line. He came into contact with a charged electric cable while moving the platform to a lower position on the pylon and was electrocuted.

Scottish Hydro Electric Transmission pleaded guilty to breaking health and safety legislation after admitting it failed to adequately ensure a safe system of work was in place.

A highly complex joint investigation by the Health and Safety Executive and Police concluded that the Permit to Work issued by the company in relation to the work to be carried out was inadequate and that the risk of death or very serious injury was readily foreseeable. 

SHP, 1 August 2016

Network Rail fined £130,000

Network Rail has been fined £130,000 over health and safety failings after a worker was hit by a 25,000 volt power surge while repairing an overhead line near Ardrossan South Beach station in 2009

The employee, who has been named as David McDermott, was with a colleague in a mobile platform fixing an isolated section of cable when he touched a live wire and was struck by a 25,000 volt power surge. His injuries were severe, resulting in significant loss of function and years of surgery.

It was admitted by Network Rail that they had failed to provide safe working documentation and to ensure that the work was only done on isolated sections of line.

BBC News, 2 August 2016

Fine for NHS Foundation Trust over patient death

Pennine Care NHS Foundation Trust has been fined £30,000 for safety failings after an in-patient at Birch Hill Hospital drowned during a canoeing activity event.

Mansoor Elahi participated in the canoeing activity when he attempted to end his life by removing his buoyancy aid.

The Health and Safety Executive found that the trust had failed to carry out a risk assessment for the activity or to adequately assess Mr Elahi’s suitability to attend. The Trust pleaded guilty to breaches of Regulation 3(1) of the Management of Health and Safety at Work Regulation 1999 and Section 3(1) of the Health and Safety at Work Act 1974

HSE, 29 July 2016

Company fined for exposing family to risk of asbestos

A Hertfordshire-based home improvement company has been fined after the unsafe removal of asbestos material from a domestic property.

The court heard how asbestos Insulation Board (AIB) sourrounding the guttering of the property had been dismantled in an unsafe manner creating serious risk of repiratory exposure to workers and residents of the property, the HSE also found that the company were not licensed to remove asbestos.

Ace of Hearts Home Improvements Limited pleaded guilty to breaching Regulation 8(1) and Regulation 16 of the Control of Asbestos at Work Regulations 2012, and The Health & Safety at Work etc. Act 1974, Section 33 (1) (g) in that it failed to comply with an Improvement Notice, and was fined £100,000 and ordered to pay costs of £2,118.50. 

HSE, 29 July 2016   

Agency worker injured at Malting factory

A malting company based in Suffolk has been fined after an agency worker was injured when he fell approximately two metres from a ladder sustaining two fractures to his right foot, bruising to his chest and head injuries. A HSE investigation found that the company had not carried out a suitable and sufficient risk assessment of the work at height.

Pauls Malt Limited pleaded guilty to breaching Section 3(1) of the Health and Safety at Work etc. Act 1974, and was fined £100,000 and ordered to pay costs of £2,257. 

HSE, 29 July 2016

Company receives £120k in fines following roof light fatality

A company which manufactures signage and displays for high street retailers has been sentenced for safety breaches after a worker fell to his death through a roof light.

Richard Perry fell 5.5 meters through a fragile roof light as he worked with a colleague to cover the roof lights with blackout vinyl. A HSE investigation found that the employees were not appropriately supervised and no precautions were put in place to prevent a fall through a roof.

Whiteghyll Plastics Ltd pleaded guilty to breaching Section 2(1) of the Health and Safety at Work Act 1974 and was fined £120,000 with £37,655 costs. 

SHP, 29 July 2016

Firm sentenced after worker’s arm severed

A Bristol based manufacturer of concrete products has been fined after a worker's arm was torn off when it was pulled into the rotating tail pulley of a conveyor belt.

The man was attempting to knock off aggregate that had built up on a rod within the machine with a hammer but the hammer was dragged into machinery along with the employees arm severing it between the shoulder and elbow.

The HSE told the court that Concrete Fabrications Ltd should have had adequate guards on dangerous parts of machinery, ensured the machine was isolated and provided clear procedures for employees carrying out maintenance tasks.

Concrete Fabrications Ltd pleaded guilty to breaching Section 2(1) of the Health and Safety at Work Etc. Act 1974 and was fined £100,000 with £7758 costs awarded to the HSE. 

SHP, 1 August 2016

Money Laundering

Singapore central bank investigate Goldman on work associated with 1MDB bond deals

Goldman Sachs' local unit will be examined by Singapore's central bank to establish the extent of its involvement in bond deals related to 1 Malaysia Development Berhad (1MDB).

It was said last week, that the Monetary Authority of Singapore (MAS) has already seized assets worth S$240 million ($179 million) in relation to the 1MDB money laundering probe. In a statement, MAS said that it "will take decisive regulatory actions against any financial institution or individual in Singapore that has breached regulations or failed to meet the expected anti-money laundering standards".

Reuters, 30 July 2016

FinCEN Expands Reach of Real Estate “Geographic Targeting Orders”

On 27 July 2016, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced Geographic Targeting Orders (GTO) that will temporarily require U.S. title insurance companies to identify the natural persons behind shell companies used to pay “all cash” for high-end residential real estate in six major metropolitan areas in connection with money laundering concerns.

The new GTOs cover certain real estate purchases in New York, Florida, California, and Texas. They will go into effect for 180 days beginning on August 28, 2016. 

FinCen, 27 July 2016

Tax

Embraer, BRF Dropped as Targets in Brazilian Tax-Fraud Probe 

It has been reported that the Brazilian federal prosecutor leading a probe into systemic tax fraud said he has suspended his investigation, at least temporarily, into alleged abuses at planemaker Embraer SA, oil giant Petroleo Brasileiro SA and processed-food producer BRF SA to focus on cases where he believes the evidence is strongest.  

Bloomberg, 3 August 2016

Sanctions 

HM Treasury renews 5 terrorist asset freezes

HM Treasury has renewed the final designations in respect of Mansour Arbabsiar, Hamed Abdollahi, Abdol Reza Shahlai, Ali Gholam Shakuri and Major General Qasem Soleimani listed under the UK’s Terrorist Asset-Freezing etc. Act 2010, effective from 5 August 2016.

All five are designated by the UK, EU, and US in relation to their alleged involvement in plot to assassinate the Saudi Arabian ambassador to the US in 2011 and links to Iran’s Islamic Revolutionary Guard Corps. Designations under the Act automatically expire if not renewed after 1 year.

OFSI’s notice is here.

European Sanctions, 8 August 2016

Foreign flights to Iran allowed by U.S.

A license has been issued by the U.S. allowing foreign carriers to fly to Iran without fear of violating U.S. sanctions.

Subject to a carrier obtaining a specific license for a flight, it as technical rule of the U.S. Treasury Department’s Iran sanctions regulation that U.S.-origin aircraft is barred from landing in Iran. According to one expert, the rule was almost never enforced.

Douglas Jacobson, a partner at the international-trade focused firm Jacobson Burton Kelley PLLC, stated that "all these aircraft that have been flying to Iran for years have [technically] been in violation of the Iran transaction regulations, but they [Treasury] were never enforcing it".

Wall Street Journal, 1 August 2016