General Cambridge Symposium on Economic Crime 2017

In a speech to the Cambridge Symposium on Economic Crime, the Director of the SFO, David Green CB QC, has spoken of the value for money provided by the SFO. He stated that since April 2014 the SFO has made a net contribution of £460m to the Treasury over 4 years.  He also confirmed that since September the SFO has opened 14 new cases, including investigations into Airbus, Rio Tinto and Petrofac.

In a separate speech to the Symposium, Alun Milford, General Counsel for the SFO, considered the DPA regime and what can be taken from the four DPA's agreed to date. In particular, he noted that companies should not dwell on the fact that Rolls Royce did not self-report and take that as meaning it was now possible to get a DPA by doing nothing and waiting for the SFO to approach you. Mr Mitford noted that Rolls Royce had started at a disadvantage by not self-reporting but following that, they had been highly co-operative and had also alerted the SFO to additional wrong-doing that the SFO were unaware of and this was highly relevant in the offering of a DPA.

SFO, 4 September 2017

SFO, 5 September 2017

 

Bribery and Corruption

Indonesian judge sentenced to eight years in prison

A judge sitting on the Constitutional Court of Indonesia has been sentenced to eight years in prison for corruption. Patrialis Akbar was found to have accepted a $10,000 bribe from a meat importer to influence his decision in a judicial review case. His sentence was passed by Indonesia's Corruption Court in Jakarta.

This comes three years after the former chairman of the Constitutional Court of Indonesia was sentenced to life imprisonment, also on bribery charges.

News & Observer, 4 September 2017

 

Fraud

SFO probe Formula One Group on suspicions of fraud

The SFO have commenced a "pre-investigation" into Formula One, following a tip-off made by Damian Collins MP, chairman of the Government’s Culture, Media and Sport Select Committee and MP for Folkestone and Hythe.

The SFO has “indicated that the matter was currently in its pre-investigation stage and that, in order to consider whether the SFO should open an investigation, it would review relevant material to determine whether or not there are suspected offences that on reasonable grounds involve serious or complex fraud”.

The above allegations stem from a Concorde Implementation Agreement signed in 2013 by the Fédération Internationale de l'Automobile (FIA), the sport's governing body, and the Formula One Group. The Contract was amended in 2013 to only allow a vote to the top six teams, with the FIA and the Formula One Group getting six votes each, in turn boosting the Formula One Group and the FIA's voting power from 3.8% to 33%. The Formula One Group paid the FIA £3.9m ($5m) in recognition of it signing up to the Agreement.

The Independent, 28 August 2017

SFO trial against former Tesco directors adjourned until 25 September

The high profile fraud trial brought by the SFO against three former Tesco directors has been delayed until 25 September, having been due to start on Monday 4 September. The former finance director Carl Rogberg, former managing director Christopher Bush and former commercial director John Scouler each face charges of fraud by abuse of position and false accounting. If convicted of fraud by abuse of position the directors could face up to 10 years' imprisonment. 

The trial relates to a 2014 accounting scandal in which Tesco overstated its profits by £326 million. In April, Tesco secured a deferred prosecution agreement (DPA) relating to the scandal under which they were fined £129 million and paid the SFO's full costs. 

The trial of the directors is expected to last between 10 and 12 weeks.

The Telegraph, 4 September 2017

The Lawyer, 29 August 2017

 

Money Laundering

Belgium named most lenient on money laundering in the EU

According to data provided by the anti-money laundering (AML) firm Fortytwo Data, Belgium has been named the most lenient country on money laundering within the EU.

Fortytwo Data reports that Belgium has a maximum sentence of only five years for money-laundering, which is the lowest of any EU country. Fortytwo Data suggest that this evidences the EU’s 'disjointed approach' to the fight against money laundering.

The CEO at Fortytwo Data, Mr Julian Dixon, stated: “It is remarkable and deeply concerning that such weak sentencing powers are found in a country that has acted as a staging post for international terror."

Conversely, Bulgaria was named as the least tolerant country in the fight against money laundering with a maximum sentence of 30 years.

Banking Tech, 15 August 2017

Azerbaijani ruling elite accused of $2.9 billion money laundering scheme

A report by the Organized Crime and Corruption Reporting Project (OCCRP), working with the Guardian and other European newspapers, has alleged that the Azerbaijani leadership has operated a $2.9 billion money laundering scheme, dubbed the "Azerbaijani Laundromat".

It is alleged that the money was funnelled through the Estonian branch of Danske Bank which, according to the OCCRP, "turned a blind eye to transactions that should have raised red flags". Some of the money was then transferred through two Limited Partnerships registered in Scotland and two UK LLPs, the Guardian reports.

Both the OCCRP and the Guardian report that some of the money was paid to journalists and politicians in a lobbying campaign designed to encourage a more positive portrayal of the ruling Aliyev family, which has been accused of corruption and human rights violations.

The Guardian, 4 September 2017

OCCRP, 4 September 2017

 

Financial Regulation

Government finalises guidance on new corporate "failure to prevent" tax evasion

New guidance has been published by HMRC in relation to the new corporate offences of failure to prevent the criminal facilitation of tax evasion which are due to come into force on 30 September 2017.

This guidance is intended to be of general application, although it does specify that trade bodies should use it when developing sector specific, comprehensive procedures. The guidance will also be helpful to all companies in that it contains case studies and examples which will assist in a company's risk assessment of their exposure to the new offences.

HMRC, 1 September 2017

SEC charges investment adviser with defrauding professional athlete and his wife

The SEC has charged Jeremy Drake, formerly an investment adviser with LA-based HCR Wealth Advisors, with defrauding two clients (a professional athlete and his wife) by deceiving them for more than three years about the nature of their investments.

It is alleged that Drake told them they paid an annual rate of 0.15% to 0.20% of their assets under management. In fact, they paid 1%. As a result of the deception, Drake received around $900,000 in incentive-based compensation. When a client requested an explanation for the difference in fees in 2016, Drake is alleged to have posed as Ron Stenson, an invented persona, to corroborate his explanation.

SEC, 22 August 2017

Muni Bond Issuer and Underwriter Charged With Disclosure Failures

The Beaumont Financing Authority has settled charges that it made false statements about its past compliance with its disclosure obligations.

The false statements were made in relation to bond offerings made between 2012 and 2013. Because of its failure to disclose, customers buying the bonds offered (totalling in excess of $32 million) were misled about the danger that Beaumont would fail to comply with its disclosure obligations in the future.

LeeAnn Ghazil Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit, said: “Investors in municipal bonds depend on timely and complete continuing disclosure from municipal issuers. Issuers and underwriters will continue to be held accountable when they fail to provide investors with an accurate picture of past compliance with continuing disclosure obligations.”

SEC, 23 August 2017

 

Cyber Crime

British man extradited to UK to face cyber-attack charges

A British National, Daniel Kaye, has been extradited to the UK from Germany under a European Arrest Warrant and appeared in court on Thursday having being charged for launching cyber-attacks against Lloyds Banking Group and Barclays in January.

Mr Kaye is alleged to have launched a DDoS attack where thousands of hacked computers simultaneously target a single computer system in an attempt to crash it and allow information to be accessed. Although no information was accessed in either case, the BBC reported that the attack cost Lloyds and Barclays respectively £190,000 and £146,000.

A senior operations manager at the NCA said: "The investigation leading to these charges was complex and crossed borders. Our cyber crime officers have analysed reams of data on the way. Cyber crime is not victimless and we are determined to bring suspects before the courts."

NCA, 30 August 2017

BBC, 31 August 2017

 

Sanctions

Theresa May demands further North Korean sanctions to halt Pyongyang's nuclear ambitions

The Prime Minister has demanded that China take action to prevent North Korea's nuclear missile launches. Theresa May stated that China has a prominent part to play in applying pressure on Pyongyang. She encouraged China to do "everything it can to bring pressure on North Korea to stop this".

The UN has condemned North Korea's decision to fire an intermediate-range ballistic missile over Japan on Tuesday. North Korea claimed it did so in response to American and South Korean military drills being conducted in the region.

The Independent, 30 August 2017

Venezuela says US sanctions will lead to halt in oil exports

Venezuelan President Nicolás Maduro has claimed that the financial sanctions made against it by the US has the effect of stopping its state oil firm, PDVSA, from selling bonds in the US. Citgo Petroleum, a subsidiary of PDVSA based in the US, will be forced to close down, leading to the loss of jobs of many US citizens.

The financial sanctions are justified on the basis that the Venezuelan government violated human rights and subverted democracy. One of the accusations is that the government has denied its citizens food and medicine.

BBC, 26 August 2017

Sanctions: new UN measures relating to Mali

The UN Security Council unanimously approved a resolution on Tuesday 5 September introducing a travel ban and assets freeze against those in Mali who obstruct a 2015 peace agreement by continuing attacks or delaying its implementation.  The resolution establishes a committee tasked with determining the individuals and entities to be blacklisted.  Further legislation will be required at EU level (or at national level for non-EU countries) before these measures take effect.  Companies should be mindful of this development and ensure that Mali is included in any internal restricted country lists once the new measures are in force.

UN, 5 September 2017

 

Environment

North east man sentenced for illegal waste operation

George Charlton, 62, of Manor Way in Jarrow, appeared at Gateshead Magistrates’ Court for sentence on Wednesday 23 August after previously pleading guilty to flouting environmental law. He was charged with operating a waste site without a permit at Reay Street, Bill Quay in Gateshead, and illegally burning waste at that site. He was sentenced to an 18-month Community Order, 250 hours of unpaid work, a 30-day Rehabilitation Activity Requirement, and ordered to pay costs of £750.

Gov.uk, 24 August 2017

Dorset farmer given suspended prison sentence for burning rubbish

A Dorset man has received a six-month suspended prison sentence and been banned from working in the waste industry for five years after burning waste at a site near Poole. Environment Agency officers visited French’s Farm, Watery Lane, Upton on 17 August 2015 to check whether David House had complied with a formal notice to remove illegal waste from the site. Earlier checks revealed the farm was being used for the illegal storage and disposal of domestic and commercial waste. Inquiries revealed House, a tenant farmer, had been disposing of waste by burning at the site since 2013.

Gov.uk, 24 August 2017

 

Health & Safety Construction company fined for health and safety risks

Ikon Construction Limited have been fined for failing to ensure the construction phase of a project was planned, managed and monitored correctly.

A complaint was made by a member of the public which prompted an investigation by the HSE. The investigation identified a number of risks to health and safety at the site on which nine timber framed town houses were being constructed.

The HSE had taken action at other sites and had previously issued advice to the company.

Ikon Construction Limited pleaded guilty to breaching Regulation 33(1)(c) of the Health and Safety at Work etc. Act 1974 and Regulation 13(1) of the Construction (Design and Management) Regulations 2015 and was fined £145,000 plus £2,191.20 in costs.

SHP, 29 August 2017.

Textile company fined £300,000 after worker suffers life changing injuries

Heathcoat Fabrics Limited has been fined after a 21 year old employee suffered severe crush injuries to his hand resulting in the partial amputation of four fingers.

Anthony Seward was preparing a piece of machinery when his hand was drawn into the rotating rollers. An investigation by the HSE found that the company had initially installed a guard on the machine but when it broke down they had failed to repair it and had instead replaced the guard with an emergency stop wire.  

Heathcoat Fabrics Limited pleaded guilty to breaching Regulation 11 of the Provision and Use of Work Equipment Regulations 1998 and was fined £300,000 plus costs of £2862.30.

HSE, 22 August 2017.