China sees active month for prosecuting senior officials
A number of news stories have emerged this month of high-ranking officials being prosecuted for corruption, showing that Chinese regulators continue to be active in their fight against graft.
Notable cases have included the former chairman of the China Insurance Regulatory Commission (CIRC), Xiang , who was charged with taking "huge" bribes by the Supreme People's Procuratorate (SPP) on 16 April, and former Politburo member Sun Zhengcai who was put on trial for bribery charges on 12 April.
Provincial officials including a former head of the publicity department of the Communist Party of China Hunan provincial committee, Zhang Wenxiong, and a former deputy governor of Shaanxi, Feng Xinzhu, also face various corruption charges.
Corruption scandal surrounding South Korea's former presidents continues
Further to our last update (which can be found here), on 9 April, a court in Seoul found former president Park Geun-hye guilty on a number of corruption charges including bribery, abuse of power and leaking state secrets. She was sentenced to 24 years in prison, (essentially a life sentence for a 66 year old), and fined 18 billion won (US$16.9 million).
The court found Park guilty of colluding with her old friend, Choi Soon-sil, to receive about 7 billion won (US$6.56 million) each from Lotte Group, a retail giant, and Samsung, the world’s biggest maker of smartphones and semiconductors, while demanding 8.9 billion won from SK, an energy conglomerate. Most of the money was intended to bankroll non-profit foundations run by Choi’s family and confidants, and to fund the education of Choi’s horse-riding daughter, according to court submissions.
On 10 April, another former president, Lee Myung-bak, was also formally indicted for corruption charges, including bribery, abuse of power, embezzlement and tax evasion. Lee has denied the charges against him, rejecting the investigation as "political revenge" mounted by the current administration in office. His trial is expected to begin next month.
Cabinet to raise maximum reward for whistle-blowers to 3 billion won
The Cabinet is expected to approve a proposal to provide whistleblowers with a maximum reward of 3 billion won (US$2.78 million) if their reports lead to marked increases in revenues of central or local governments. This raises the maximum whistleblower reward in the Protection of Public Interest Reporters Act from the current 2 billion won. The Act provides for financial rewards to be given for information leading to a direct recovery of or increase in revenues of the state or a local government through imposition of penalties, forfeitures and other measures that wouldn't be possible without such whistleblower reports.
South Korean authorities demonstrate increased scrutiny of cryptocurrencies
Our last update (which can be found here) noted that the South Korean authorities, and in particular the Finance Supervisory Service, appeared to be taking a more permissive stance on cryptocurrency regulation. However, on 5 April, South Korean prosecutors detained four executives of two cryptocurrency exchanges for alleged embezzlement of clients’ funds. One of the detained executives was Kim Ik-hwan, CEO of Coinnest, South Korea’s fifth largest cryptocurrency exchange. The other suspects, and the other exchange, were not identified. Prosecutors will decide whether to issue arrest warrants for the detained exchange employees, and said that they planned to investigate other virtual coin exchanges for possible crimes.
On 20 April, two men from South Korea were sentenced to fines of US$15 million and US$8 million respectively for their roles in running a bitcoin pyramid scheme that stole around 20 billion won (around $20 million) from investors.
The enhanced enforcement environment contrasts with the more permissive regulatory approach previously indicated by the authorities.
Malaysia introduces new law to combat corporate bribery
The Anti-Corruption Commission (Amendment) Act 2018 was passed by the Senate of Malaysia on 5 April 2018. One of the major amendments is the introduction of section 17A. Modelled on the UK Bribery Act's corporate offence, it penalises commercial organisations for corrupt acts by associated persons, subject to a reasonable procedures defence.
The legislation is widely drafted and supplements an already broad anti-corruption framework which criminalises the offer and receipt of bribes in the public and private sectors. Since enforcement to date has focused on individuals, the new corporate offence represents an important tool for Malaysia's domestic enforcement authorities. Whilst it remains unclear when the new Act will come into force (it awaits royal assent), corporates operating in Malaysia should familiarise themselves with the new provisions and ensure they implement adequate compliance procedures.
15 years imprisonment for former Indonesia Parliament speaker after US$170million corruption scandal
Setya Novanto, one of Indonesia's most influential politicians and ex-speaker of parliament has been sentenced to 15 years imprisonment by the Jakarta Corruption Court. In addition, Novanto was ordered to pay US$36,000 in fines and restitution of US$7.3million.
This marked the heaviest sentence meted out by the Jakarta Corruption Court and illustrates Indonesia's determination to fight corruption at the highest levels of government.
The corruption charge was brought by the Corruption Eradication Commission (KPK) in connection with rigging the Rp 5.9 trillion (US$424 million) e-ID project, which reportedly caused Rp 2.3 trillion (US$165 million) in state losses.
Indonesia proposes new law to eradicate money laundering
Indonesia’s government has proposed a new law to curb bribery and money laundering by limiting cash payment to a maximum of 100 million rupiah (approximately US$7,260). According to Ki Agus Badaruddin, the Head of the Financial Transaction Reports and Analysis Centre (PPATK), the draft will be assigned as a legislative priority for 2018.
However, this is not the first time the Indonesian government has attempted to regulate transactions in this way. Last year, a draft law was introduced to support a national non-cash policy to curb money laundering and other criminal activity. Similarly in 2015, the government introduced a draft law on Limitation of Cash Transactions. Neither draft was passed.
Oil and gas sector looks to ISO 37001-2016 to curb bribery and promote investment
ISO 37001-2016 is an international standard intended to guide organisations seeking to implement anti-bribery management systems. Last month, we reported that Transparency International Malaysia had urged Malaysian businesses to adopt anti-corruption policies in line with ISO 37001:2016, which was launched by the Malaysian Anti-Corruption Commission together with the Department of Standard Malaysia last year. Now, another Southeast Asian jurisdiction has looked to the international standard to help promote anti-bribery compliance. Indonesia's Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) launched SNI ISO (which adapts ISO 37001:2016) last year. Last month it announced that it expects adoption of the standard to boost investment in oil and gas exploration and production.
Asia Pacific Group on Money Laundering (APG) to evaluate Philippines compliance
The Anti-Money Laundering Council has tasked the Asia Pacific Group on Money Laundering to evaluate Philippines’ level of compliance for the third round of mutual evaluations after the introduction of recent new laws in relation to anti-money laundering. The evaluation will be carried out in two phases; the technical compliance assessment where the report is due for submission next month; and the effectiveness assessment in relation to the effectiveness of the country’s existing AML/CFT system in July.
The result of the evaluation is expected to be published in 2019.
The Philippines has been slipping in its Global Corruption ranking by Transparency International, from 95th of 168 countries in 2015 to 111thof 180 countries in 2017 and has been classified as a high risk country for money laundering.
Inspired by the UK regime, Singapore introduces deferred prosecution agreements for corruption and money laundering offences The Singapore Parliament has enacted a framework for Deferred Prosecution Agreements (DPAs). This will apply to corporate offences including corruption, money laundering and the reciept of stolen property. DPAs will need to be supervised by a judge and confirmed by the Singapore High Court.
The new law largely copies the UK's DPA law, with two main exceptions: (1) Singapore DPAs cover a more limited range of criminal offences (2) Singapore prosecutors are not required to issue guidelines on when a DPA is appropriate, meaning that prosecutors retain maximum flexibility regarding terms
This development heralds a change of approach regarding corporate criminal liability. However, with corporate liability still contingent on the common law identification principle, there may be limited appetite on the part of corporates to pursue DPAs when the actual risk of prosecution remains low. Putting corporate liability on a legislative footing, as is the case in the US, the UK and a growing number of other jurisdictions, may be the logical next step for Singapore. The US approach, advocating significant discounts on penalties for voluntary disclosure of corporate violations, may also be required to help push the regime forward. For more information, see our earlier e-bulletin here.
EU extends sanctions on Myanmar
The Regulation also includes asset freezing provisions, providing for the imposition of targeted financial sanctions against individuals from the Myanmar Armed Forces (Tatmadaw) and border guard police where those individuals are responsible for serious human rights violations, obstructing the provision of humanitarian assistance or obstructing the conduct of independent investigations into human rights abuses (together with natural or legal persons associated with such individuals). No targets have been designated to date under these asset freezing powers.