KPK Calls for Expansion of Authority in Private-sector Corruption
During an internal discussion on 25 July 2016, Chair of the Corruption Eradication Commission of Indonesia ("KPK"), Agus Rahardjo, called for the Commission, the main body in Indonesia responsible for fighting corruption, to be given authority to investigate lower value corruption cases in the private sector. At present, KPK's investigation power is limited to cases involving at least IDR 1 billion (approximately US$76,274) or involving government officials. Corruption cases involving government officials still rank first (accounting for about 26.01 percent) of the total 496 corruption cases that have been handled by KPK so far, while about 23.79 percent of the total cases involve private entities.
KPK's Recent Enforcement to Combat Graft in Judicial Bodies
KPK arrested Muhamad Santoso ("Santoso"), a Central Jakarta District Court clerk, and two other individuals on 30 June for bribery. Santoso has allegedly received 28,000 Singapore dollars in bribes from PT Kapuas Tunggal Persada ("PT KTP"), an Indonesian natural resources company. The money was allegedly given by PT KTP’s lawyer (Raoul), via Ahmad Yani, an employee of a legal consultant firm, in return for a favourable ruling for PT KTP in a civil case at the Central Jakarta District Court. All three people involved were arrested. KPK said that it is possible that the bribes were intended for the judges and they are still investigating that possibility.
This is not the first time that Indonesia's anti-graft institution combats graft in judicial bodies. In February KPK arrested Andri Tristianto, a Supreme Court official, for having accepted a bribe amounted to Rp400 million (US$30,166) to delay the transfer of a cassation dossier. In another case, North Jakarta District Court clerk Rohadi was arrested in June on suspicion of accepting bribes related to an alleged lenient sentence for a Dangdut singer accused of sexual abuse.
Senior South Korean Prosecutor Faces Charges including Bribery
A top South Korean prosecutor (vice-minister level), Jin Kyung-joon, faces charges including bribery and violating the law on financial transactions in South Korea. The investigation revealed that Jin took 420 million won (approximately US$375,000) from Kim Jung-ju, the founder of Nexon, the country's biggest online game developer, and purchased unlisted company shares before selling back to the companies at a much higher price. Mr Jin is also accused of having received from Nexon a luxury sedan and about 50 million won (approximately US$45,000) for his family’s trips. Jin was dismissed by the Ministry of Justice in August while the investigation is still ongoing. Kim, the bribe giver, has also been indicted.
Novartis Employees in South Korea Indicted for Bribing Doctors
Further to the visit of the company's offices in Seoul this February in relation to suspected bribery, the Public Prosecutor's Office in Seoul indicted six former and current Novartis employees of the company's subsidiary in South Korea on August 8 on charges of paying kickbacks of more than US$2 million to doctors in return for prescribing its medicines. Publishers of medical publications and doctors involved were also indicted. The kickbacks alleged to have been offered took varied forms, and included travel to international conferences, funding academic events organised by medical publications, and financial support to doctor attendees of events. Novartis AG, the Swiss-based pharmaceutical company, has faced numerous bribery investigations across the globe. Earlier in March this year, the company agreed to pay US$25 million to settle the civil charges that it violated the FCPA when certain employees and agents of its China-based subsidiaries provided things of value to healthcare professionals in China to increase sales.
MAS Vows to Take a Rigorous Approach towards Money Laundering after 1MDB Scandal
In a statement given on 25 July, Monetary Authority of Singapore ("MAS") vowed to take a more rigorous approach after admitting that the recent findings related to Malaysia’s state-owned investment fund 1MDB has made a dent in the city’s reputation as a clean and trusted financial centre. While Singapore’s investigations into 1MDB fund flows are still ongoing, Singapore authorities announced the seizure of bank accounts and other assets totaling S$240 million (approximately $176.82 million). MAS said that preliminary findings of its probe showed lapses and weakness in anti-money laundering ("AML") controls in some Singapore-based financial institutions.
Meanwhile, MAS launched a dedicated AML unit to consolidate existing supervisory resources with a view to taking a more targeted approach to combat money laundering and illicit financing risks. It will conduct more intrusive inspections of financial institutions identified as facing higher risks.
RBI Penalizes Banks for Violation of Anti-Money Laundering Norms
The Reserve Bank of India ("RBI"), the regulator of banks in India, announced in July that despite the lack of prima facie evidence of money laundering revealed during its scrutiny, RBI has imposed monetary penalty (up to Rs 5 crore (about US$751,000)) on more than 30 banks operating in India, for violation of regulatory directions and guidelines, among other things, on Know Your Client ("KYC") and anti-money laundering ("AML"). A few other banks scrutinised were advised to put in place and keep appropriate mechanisms to enhance their controls and ensure strict compliance of KYC/AML requirements. RBI started the scrutiny of books of accounts, internal control, compliance systems and processes on these banks since 2013. In a recent scrutiny on advance import remittances in 21 banks started from October 2015, findings revealed weaknesses in the internal control systems, management oversight and violation of certain regulatory guidelines issued by the RBI, such as non-adherence to certain aspects of KYC norms like customer identification and risk categorisation procedure, and non-adherence to RBI's instructions on monitoring of transactions in customer accounts.
Former BSP Employee Sentenced to Jail for Receiving Bribes
Aidah Tengah, a former employee of Brunei Shell Petroleum ("BSP"), the leading oil and gas production company in Brunei, was sentenced to five years’ jail and fined US$200,000 (not including the payment of US$120,000 in costs to the prosecution) by the Brunei High Court on 4 August after pleading guilty to bribery charges. Investigation conducted by the Anti-Corruption Bureau ("ACB") revealed that Aidah had received gratifications from 2008 to 2009 amounting to a total of BND$200,200 (about US$148,000) from David Chong, the Manager of Musfada Enterprise (one of BSP's contractors), as a reward for creating purchase orders to commit BSP to purchase products supplied by Musfada Enterprise. It is said that her actions had directly resulted in losses of about US$5.5 million to BSP from the contract where BSP had paid for products it never received. The bribe giver David Chong is currently serving an imprisonment sentence of six years and four months following his conviction in the High Court in November 2013 for a range of corruption offences.
Formal President of a State-Owned Company Sentenced to 10 Years for Graft
In August, Rodolfo "Jun" Lozada, the former president and CEO of Philippine Forest Corp. ("PFC"), a state-owned corporation under the Department of Environment and Natural Resources, was convicted of graft and sentenced to 10 years in prison and a perpetual ban from holding public office by a Philippine court. Investigation revealed that during the performance of his official function at PFC which was tasked to award leasehold rights over public lands to qualified beneficiaries, Lozada caused the award of a leasehold right over a public land to Transforma Quinta Inc., a private company in which he has a financial interest. It was also found that Lozada granted a leasehold right to his brother (also sentenced to prison), who did not participate in the relevant selection procedures. The court found that Lozada violated Section 3 (e) of the Anti-Graft and Corrupt Practices Act, which prohibits public officials from giving unwarranted benefit, advantage or preference to any party or causing any party (including the government) under injury. However, the court acquitted Lozada of the graft charge of Section 3(h) violation (which prohibits public officials from having financial interest in any business, or transactions that the government is entering into). Such acquittal was challenged by the Office of the Ombudsman in early September who filed a motion to the court requesting it to reconsider the case.
MACC Aggressively Freezing, Confiscating and Forfeiting Crime Proceeds
Malaysia's Anti-Corruption Commission("MACC")'s new Chief Commissioner Datuk Dzulkifli Ahmad said in an exclusive interview on August 13 that MACC would be more proactive in taking measures including freezing, confiscating and forfeiting properties acquired by corrupt practices under the provisions of the Malaysian Anti-Corruption Commission Act 2009, the Anti-Money Laundering Act and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. Among others, Dzulkifli said that in order to ensure the measure was more effective, the freezing of crime proceeds may be available to cases that were still under investigations and the person involved was just a suspect. In addition, the MACC is working on to take measures against proceeds transferred to the accused's family members.
In line with this statement, in a recent simultaneous three-state enforcement action against three high-ranking public servants in Malaysia in August, MACC detained and frozen a total amount over RM13million (approximately US$3.15million) in bank accounts belonging to the three individuals who were under investigation for alleged accepting bribes, misuse power and money laundering. In addition, the MACC officers also seized several condominiums including penthouse, a bungalow and luxury cars such as Maserati, BMW and Audi, which are believed to have been obtained from proceeds of corruption and money-laundering.
High-ranking Official of the Central Committee of the CPC Sentenced to Life
Jihua Ling, ex-presidential aide in China, the former vice chairman of the 12th National Committee of People's Political Consultative Conference, was convicted of taking bribes, abuse of power and illegally obtaining China state secrets and was sentenced to life imprisonment by a first instance court in China in July after a closed-door trial that was held in June. It is found that, regarding the charge of bribe taking, Mr Ling together with his family members took bribes totalling RMB 77 million (approximately US$11.6 million). Mr Ling's wife was also detained on corruption charges. The conviction of Mr Ling is widely considered as one of the biggest catches in China's current massive anti-corruption campaign.
Former Provincial Tourist Official Guilty of Taking Bribes
Xuefan Hu, the former head of Anhui provincial bureau of tourism, was convicted of taking bribes while he held relevant public positions, and was sentenced to 12 years in prison, together with monetary fines of RMB 4 million (approximately US$ 600,000), by a first instance court in China in August. Mr Hu was found, together with his family members, to have accepted or solicited bribes in a total amount of more than RMB 4.6 million (approximately US$ 692, 000) in varied forms including cash, shopping cards and gold bars. In return, Mr Hu was found to have taken advantage of his positions and sought benefits for more than 20 companies or individuals in connection with allocation of tourism funds, resort ratings, job promotions and other matters.
Former chairman of China Telecom Group under Criminal Investigation
On 9 August, the Supreme People’s Procuratorate ("SPP") announced that the SPP has decided to initiate criminal investigations into the allegation that Xiaobing Chang, the former chairman of the state-owned China Telecom Group, among others, took bribes and used his position and influence to seek benefits for his relative's business. The investigation against Mr Chang by the Central Commission for Discipline Inspection ("CCDI"), the lead agency in China's anti-corruption campaign against the public officials started in December last year. In this July, Mr Chang was removed from the Communist Party and public position due to CCDI's finding that Mr Chang committed "serious violation of the Communist Party's discipline".