Collection of electronic data by Chinese criminal authorities set to increase
On 1 October, new binding provisions came into force in China governing the collection, extraction and review of electronic data in criminal investigations. The Provisions contain procedures for the retrieval of electronic data inside and outside China. The Provisions set out procedures to, wherever possible, preserve the integrity of electronic data to be used as evidence. Collection should be carried out by two or more investigators and written notification should be provided to the holder of the data, network service providers and relevant departments for enforcement. Foreign companies operating in China, as well as those headquartered in China with branches overseas, should ensure compliance (both by them and by investigators). Overall, the Provisions provide a welcome framework around which investigators (and those being investigated) must work. The law and procedures in this area were previously fragmented and unclear.
Mega International under investigations in Taiwan
Following the New York fine for violations of New York's anti-money laundering laws, Mega International Commercial Bank Co., Ltd.("Mega International"), one of Taiwan's biggest banks, has been subject to local investigations in Taiwan for potential breach of local laws.
On 19 August 2016, after finding serious deficiencies in the New York Branch's compliance function, transaction monitoring systems and policies, lax attention to risks associated with transactions involving Panama, and a number of suspicious transactions running between the bank's New York and Panama Branches, New York's Department of Financial Services fined Mega International USD180 million. It also required the bank and its New York Branch to take immediate steps to correct anti-money laundering violations.
Subsequently, Taiwan authorities formed an intergovernmental investigation team – a task force consisting of Financial Supervisory Commission (FSC), the Ministry of Finance, Central Bank of Taiwan and the Ministry of Justice – to investigate the bank's potential violations of Taiwanese laws. In September, FSC fined the bank for TWD 10 million for violating Taiwan Banking laws and required that the bank correct its violations and enhance its controls. FSC also mandated dismissal of the bank's General Manager and other responsible officials at the bank's New York Branch. The local criminal investigation is still ongoing.
Cambodia and China sign memorandum of understanding on anti-money laundering
A memorandum of understanding (MOU) was signed on 30 August between Cambodia’s Financial Intelligence Unit and China’s Anti-Money Laundering Monitoring and Analysis Centre on the exchange of financial intelligence related to anti-money laundering and combating the financing of terrorism. The aim of the MOU is to boost collaboration between the two countries in the fight against money laundering and terrorism financing. According to the press statement given by the National Bank of Cambodia, cooperation within the MOU would focus on training, capacity building and technical assistance.
Small and Medium Enterprises (SMEs) establish partnership with Transparency International
The Federation of Associations of Small and Medium Enterprises of Cambodia ("FASMEC") has signed a memorandum of understanding with the anti-corruption organisation Transparency International on cooperation in the fight against corruption, with a view to seeking support from Transparency International to strengthen internal management and combat corruption among the business federation's members. As the first Cambodian business entity to partner with Transparency International, FASMEC will be running training programs to help SMEs improve their anti-corruption practices. This partnership comes after the recent announcement from the Ministry of Economy and Finance that SMEs can now be publicly listed on the Cambodia Stock Exchange.
Thailand opens its first dedicated corruption court
In early October, Thailand opened a specialised corruption court with the aim to be able to resolve corruption cases more quickly and expand the reach of prosecution to cover both the public and private sector corruption-related offences. This move was after Thailand's Prime Minister Gen Prayut Chan-o-cha's promise to eliminate corruption in the country within the next 20 years. It remains to be seen what this dedicated corruption court will bring to the country, in the context of previous criticisms that anti-corruption legislation has been inadequately enforced.
New Know-Your-Customer (KYC) Process for accepting deposits from the public
Thailand recently promulgated new regulation for financial institutions, which set out enhanced requirements on account opening process for accepting deposits or funds from the public. The new regulation imposes strict restrictions on the KYC process for deposit acceptance or fund acceptance from the public via an electronic means, so as to ensure accurate identification and verification of customers of financial institutions pursuant to the Anti-Money Laundering Law. As required by the new regulation, the same standards of the verification process must apply as if the customers are physically present at banks. Among other measures, for account opening via an electronic means, financial institutions must use electronic devices, such as video conferencing system, to enable bank officers to interview and observe a customer’s behaviour on a real-time basis. The new requirements were set with the aim to enhance the security of the account opening process, and improve the credibility of the commercial banking business. This means that financial institutions will have to improve their current internal systems and adapt to a higher level of scrutiny in the future.
Multinational IT service provider investigates potential corruption probe
Cognizant Technology Solutions Corp. ("Cognizant") announced on 30 September that it is conducting an internal investigation to determine whether payments related to facilities in India were made in possible violation of the US Foreign Corrupt Practices Act. The announcement follows the resignation of Cognizant's president, Gordon Coburn, who has been replaced by Rajeev Mehta, the chief executive officer of IT Services. It is reported that Cognizant is looking into various land deals the company has entered into in India for setting up development centres. Cognizant has voluntarily disclosed this internal investigation in a regulatory filing to the US Securities and Exchange Commission (SEC) and the US Department of Justice on 30 September. The investigation is currently being conducted under the oversight of the audit committee and with the assistance of outside counsel.
SAARC organizes first anti-corruption forum
Upon the initiative of Pakistan's National Accountability Bureau, the member states of the South Asian Association for Regional Cooperation ("SAARC") attended the first Anti-Corruption Forum in Islamabad, on 26 and 27 September. Member states agreed that it is necessary for the states to coordinate their efforts in eradicating corrupt practices in the South Asia region. The Forum was an opportunity for the states to share their strategies to combat corruption and to bring awareness on the issues. At the conclusion of the Forum, the member states agreed to formulate guidelines to govern the SAARC Anti-Corruption Forum.
MACC probes kickbacks for bank loans
The Malaysian Anti-Corruption Commission ("MACC") are investigating details of alleged kickbacks and falsification of documents for personal loans approved by staff of Bank Rakyat, an Islamic cooperative bank in Malaysia. MACC investigators arrested eight people on 6 and 8 September, and two more bank officers on 15 September in connection with the investigation. The Director of Sabah MACC said they believe certain bank officials were taking bribes for approving loan applications. The suspects were arrested after MACC received a report from a civil servant on 2 September that two bank officers had demanded RM7,000 (approximately US$ 1,664) from him to facilitate his loan application with the bank. Bank Rakyat is conducting an internal investigation and said that stern actions will be taken against those found guilty, including the termination of their services.
South Gyeongsang Governor sentenced to prison for bribery
On 8 September, the Seoul Central District Court sentenced Hong Joon-pyo, governor of South Gyeongsang, to 18 months in prison for reportedly having accepted 100 million won (approximately $91,601) from Sung Wan-jong, the former chairman of the Keangnam Enterprises, ending his presidential ambitions. It was alleged that the bribe was delivered in a paper bag through Sung’s aide Yoon Seong-mo, the former vice president of the Keangnam in Hong's National Assembly office in June 2011. The court found Hong guilty partly based on Sung’s phone interview with a local newspaper just hours before his suicide on 9 April 2015, in which Sung admitted that he had bribed Hong. The court held that Sung's remarks were in line with the testimony from other persons involved and were considered reliable as evidence. Hong did not accept the ruling and vowed to appeal the case.
New Anti-graft Law to affect more than 40,000 organizations
South Korea's Anti-Corruption and Civil Rights Commission ("ACRC") said on September 5 that the Kim Young-ran anti-graft law, which comes into effect on 28 September, is expected to affect 40,919 organizations, including central administrative bodies, provincial state-run organizations, and some 21,201 local schools.
In a country with strong gift-exchanging traditions, the law is expected to have a significant impact in the country.
Please refer to our e-bulletin for the key changes that the law introduces.
It has been reported that the police of South Korea handed out investigation manuals on 8 September to help officers apply and enforce the new anti-graft law. It also summoned senior officials of regional police stations for an intensive training session. The National Police Agency sent out 4,000 copies of probe manuals to police stations around the country.
Former executives of national swimming body get jail terms for corruption
On 2 September, the Seoul Central District Court sentenced former executives of South Korea's Swimming Federation to jail for corruption charges. One of the former executives whose surname is Chung was convicted of receiving approximately 440 million won (approximately US$393,000) bribes from others in exchange for peddling influence over the selection of national team members. He was sentenced to three years in prison and ordered to forfeit the illegally obtained bribes. Among the people who offered him bribes is another executive member whose surname is Park. He was convicted of offering bribes to Chung between 2004 and 2015 in return for favor in the national team selection. Park was sentenced to ten months in prison with a two year suspension. The court also held two other former executives guilty for embezzlement and bribery during their tenure at the federation.
Former IT Director of Schenker charged with graft
Leong Chee Shian, a former IT director of Schenker (Asia Pacific), a transport and logistics company, was charged on 28 September with obtaining bribes of more than SG$200,000 (approximately US$ 144,300). Leong faces twenty-eight charges, including six counts of receiving bribes amounting to SG$238,243 (approximately US$ 204,500) and three of attempting to get bribes of SG$248,046 (approximately US$ 179,000) between June 2008 and August 2011 from Chuah Hooi Fong, a Malaysian businesswoman who was a director of Asia Management Link and AML Managed Services, as an inducement to advance the business interest of the two firms with Schenker. Chuah was also charged in court with six counts of giving bribes and three counts of attempting to bribe Leong. In a statement on 8 September, the Corrupt Practices Investigation Bureau said Singapore adopts a zero tolerance approach towards corruption and any criminal activity. The Bureau said it takes a serious view of any corrupt practices and will not hesitate to take action against any party involved in such acts.
Singapore Court Approves Extradition of Two in US Navy Bribery Case
On 21 September, a Singapore court approved the extradition of Linda Raja and Neil Peterson, two former executives worked at Glenn Defense Marine Asia ("GDMA"), for their involvement in a multi-million dollar Navy bribery scheme. A US Department of Justice statement issued on 15 September said that Neil Peterson and Linda Raja, both Singaporeans, were charged in San Diego, California. They are accused of conspiring with the owner of GDMA, Leonard Glenn Francis, to defraud the US Navy by submitting more than US$5 million in false claims and invoices. Francis is awaiting US sentencing after admitting his port-services company bribed officers to ensure US Navy ships stopped at ports where GDMA operated. A total of sixteen individuals have been charged in connection with the investigation into GDMA, including Peterson and Raja as well as eleven current or former US Navy officials. Peterson and Raja's extradition to the US awaits the formal approval of Singapore's law minister.
High-ranking Official Arrested on Graft Allegation
Indonesian anti-corruption watchdog, the Corruption Eradication Commission ("KPK"), arrested the Chairman of Regional Representatives Council (DPD), Irman Gusman, for allegedly receiving a bribe on 17 September. The Chairman of KPK, Agus Rahardjo said that Gusman was declared suspect for allegedly receiving a bribe of 100 million rupiah (approximately US$7,615.6). Rahardjo added that the bribery was linked with a case regarding sugar import quotas for West Sumatra. The KPK also arrested and declared suspect the president of the company, his wife and his younger brother for allegedly giving the bribe. The arrest of the DPD chairman sent shockwaves through the nation since DPD is one of Indonesia’s highest state bodies. Reacting to the arrest, Indonesia's President Joko Widodo reaffirmed a call to eradicate corruption.