Chinese regulators step up enforcement
The Chinese Securities Regulatory Commission announced administrative penalties of 7.57 billion yuan ($1.2 billion) in 2017, up 80 percent from the year before. The fines related to 237 cases, the majority concerning information disclosure breaches and insider trading. Punishments were also stricter, with 44 people banned from securities trading last year, the highest in recent years. The People's Bank of China has also announced that it will crack down on money-laundering and related crimes to safeguard national security and social stability.
Sun Zhengcai sentenced to life in prison for bribery
Sun Zhengcai, former member of the Politburo and once tipped to be among China’s next generation of leaders, was sentenced to life in prison for bribery on 8 May. The Tianjin No 1 Intermediate People’s Court said Sun, a former member of the Politburo, was convicted of taking more than 170 million yuan (US$26.7 million) in bribes directly or through designated third parties. He was also stripped of his political rights for life, and all his property and illicit gains confiscated.
Sun’s downfall followed that of Bo Xilai, his predecessor as party chief in Chongqing, and is part of an ongoing crackdown on political graft in Chongqing and throughout China.
Chen Miner, a protégé of President Xi Jinping who is now in charge of Chongqing, has repeatedly called on officials there to banish the “pernicious influence” of his disgraced predecessors. It is thought that next in his sights may be the chief of Fuling district police, Zhou Jingping, once a close aide of Bo Xilai's police chief and right-hand man, Wang Lijung. Wang is currently serving a 15-year sentence, and four of his most senior aides in the police force have also been jailed.
Proposals to try fugitives in absentia
China has proposed an amendment to its criminal procedure law to allow judgment to be delivered in corruption cases even where the suspect does not appear in court. The amendment is designed to tackle cases where graft suspects are currently seen to be escaping justice by hiding overseas. If passed, the change will allow prosecutors to proceed with a case if evidence against the suspect is ample and the crime is clear, even though the suspect may be abroad.
Herbert Smith Freehills publishes guide to corporate investigations in China
Kyle Wombolt, global head of corporate crime and investigations, and Anita Phillips, a professional support consultant, have published a guide to corporate investigations in China. This forms part of GIR's acclaimed 2018 text, The Practitioner's Guide to Global Investigations, available in print and online. The chapter covers the legal and regulatory framework in China, running an internal investigation, dealing with cross-border investigations and responding and reporting to the Chinese authorities. Please see our blog post for more details, including a short update on developments since the book's publication.
Ongoing conflicting messages concerning cryptocurrency regulation in South Korea
Our last update (which can be found here) noted that South Korean authorities had been demonstrating increased scrutiny of cryptocurrencies, in contrast to the more permissive stance advocated in various official statements. The mixed messages have continued this month, as authorities continue to endorse 'soft touch' regulation, while demonstrating a harsher approach in practice.
In particular, the newly-appointed governor of the Financial Supervisory Service, Yoon Suk-heun, indicated on 6 May that his agency may ease the rules for cryptocurrency exchanges. While declining to give details about his proposed plans, he said that there were "some positive aspects" to the growing commodity. He promised to improve regulations and try to produce a more stable financial system with better services and products. However, he also cautioned that these processes would take time to be finalised. Yoon is known as an activist and reformist, and his appointment is considered a positive sign for the industry.
This does not mean that regulatory oversight of the industry has eased, however, with the FSS raiding the offices of Upbit (the largest cryptocurrency exchange in Korea and fourth largest in the world) on suspicion of fraud only a few days later. On 11 May, investigators seized Upbit's computers and account sheets and they are investigating charges that the exchange faked its balance sheet and deceived investors.
Presidential corruption scandal continues
The presidential corruption scandal covered in our previous updates (see here and here) continues, with former president Lee Myung-bak strenuously denying allegations of bribery, embezzlement and tax evasion as his trial began on 23 May. On 25 May, Lee's attorneys submitted a formal request for future hearings to be held in absentia, citing the 76-year-old's failing health. The case against Lee means all four former South Korean presidents who are still alive have been charged or convicted for criminal offences.
Singapore launches best practice paper to combat money laundering and financial crime
On 14 May 2018, the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership ("ACIP") launched two best practice papers, Best Practices for Countering Trade Based Money Laundering and Legal Persons – Misuse Typologies. The ACIP was established in April 2017 by the Monetary Authority of Singapore ("MAS") and the Singapore Police Force.
The papers serve as practical guidance for banks to implement the standard stipulated in MAS guidance on Trade Finance and Correspondent Banking published in October 2015 and the Wolfsberg Guidelines. The papers discuss common "red flags" relating to customer behaviour and trade related finacial activities. They also make recommendations for best practice responses for banks.
Former Malaysia Prime Minister barred from travelling due to corruption investigation
Tun Dr Mahathir Mohamad, the new prime minister of Malaysia, has barred Datuk Seri Najib Razak, the former prime minister, from leaving the country. He also vowed to reopen the investigation into the infamous 1MBD scandal. Following the travel ban, several properties linked to the former prime minister were raided and police seized approximately US$29 million in cash, luxury bags and jewellery. Tun Mahathir has stated that the government will make arrests as soon as there is clear evidence and reiterated that there will be “no deal” struck with the former prime minister.
Since the election, Datuk Seri Mohd Shukri Abdull has replaced Tan Sri Dzulkifli Ahmad as the Malaysian Anti-Corruption Commission chief commissioner. This heralds a new chapter in anti-corruption enforcement. With Malaysia's broad anti-corruption laws criminalising demand and supply side bribery in the public and private sectors, we expect to see an uptick in enforcement.
Jakarta Corruption Court sentences former sea transportation official for bribery
Last month, we reported that the Jakarta Corruption Court sentenced Indonesia's former parliament speaker to prison over a US$170 million corruption scandal. This month, the former sea transportation director general of the Transportation Ministry, Antonius Tonny Budiono, was sentenced by the Jakarta Corruption Court to five years' imprisonment and a fine of Rp 300 million. Budion was sentenced for accepting bribes of Rp 2.3 billion from Adi Putra Kurniawan, a commissioner of the dredging company PT Adhi Guna Keruktama, in relation to dredging harbour permits. Budion was found guilty of accepting unlawful gifts valued at around US$1 million. In a separate trial, the bribe-giver, Kurniawan was sentenced to a four year prison sentence which he is currently serving. These cases show the Indonesian authorities' increasing appetite to prosecute both demand and supply side bribery.