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The IMB aware of the escalating level of this criminal activity, wanted to provide a free service to the seafarer and established the 24 hour IMB Piracy Reporting Centre (PRC) in Kuala Lumpur, Malaysia.
A newsletter about fraud and global asset recovery from the office of International Chamber of Commerce's FraudNet. To read about key asset recovery cases and global compliance with anti-fraud and money-laundering laws, please click in the link above for the Newsletter PDF.
CCS offers a flexible membership arrangement based on the selection of predetermined membership packages. A prospective member can elect to join one or more Bureaux according to their requirements.
Losses due to official misconduct account for a great many maritime trade incidents. Each incident can be complex and wide-ranging in nature. It is therefore unlikely that any one company will have the knowledge and resources to be able to investigate it thoroughly.
Counterfeiting and piracy are a drain on our businesses and on the global economy. It has resulted in the widespread loss of lawful employment and a massive reduction of tax revenues.
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StephenBaker@bakerandpartners.com www.bakerandpartners.com |
Address
Baker and Partners
Midland Chambers 2-10 Library Place St Helier JE1 2BP Jersey |
Telephone
+44 1534 766254
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Languages
English
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Declining Economy Fuels Brazil’s Corruption Scandals With news last month of Brazil’s decision to impeach and suspend President Dilma Rouseff based on allegations of corruption and wrongdoing, the country teeters on political and economic uncertainty.
According to media reports, Ms. Rouseff’s opponents have accused her of buoying government accounts in 2014, when she was seeking re-election, by borrowing from state banks to cover up a growing deficit. It is not the only scandal that has beset Brazil in recent years, though. |
Ms. Rouseff also has been linked to the Petrobras scandal, known as Operation Car Wash, in which Brazil’s largest construction firms overcharged the state-run oil company and then split the excess charges among Petrobras executives and well-connected politicians, many of whom were affiliated with Rouseff’s Workers’ Party. The party, then, allegedly used the funds to finance political campaigns and expenses. This scandal has engulfed a significant proportion of Brazil’s political class and Petrobras. It can be blamed on a number of factors, but the two most likely causes are the fact that Brazil is a natural- resource-rich country with a significant state-owned operator and that the dominant political force, the Workers’ Party, has been in power since 2003. These factors – a valuable resource generating significant sums, control thereof and motive – make fertile ground for corrupt activity among the unscrupulous. Additionally, there are long-standing political divisions, which have heightened tensions between the opposition parties and the Workers’ Party, with the former seeking to gain political advantage at every turn. However, given the populist policies pursued by the Workers’ Party that lifted millions out of poverty and reduced inequality, the incumbents have support they are keen to maintain, even in the face of dramatically declining economic performance. Yet, as the poor performance of the Brazilian economy continues to make headlines in country and around the world, many are left to wonder if her previous show of strength and solidarity will wane. Indeed, it’s likely that the corruption scandal and the failing economy strengthened the decision to impeach her. Previous administrations have not been punished for similar actions. It is therefore as much politically, as legally, motivated. Stephen Baker is an Advocate and Partner of Baker & Partners, and a member of ICC FraudNet. He is also an appointed Crown Advocate. He has acted regularly for foreign governments including Brazil, Kenya, Pakistan and Nigeria in asset recovery actions, and has been responsible for handling suspicious activity reports and investigations for the Attorney General of Jersey. Regularly instructed by both the Attorney General and the Jersey Financial Services Commission, Stephen is a specialist in conducting investigations into the flow of suspected corrupt payments made to politicians through Jersey. He also has expertise in cases involving complex fraud and money laundering, particularly those with an international and political dimension. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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A Giant Leap Toward Transparency with Small Steps Harder to Take Asset tracers and recovery specialists watched intently the announcement by British Prime Minister David Cameron at last month’s Anti-Corruption Summit in London that a renewed international commitment to anticorruption has formed. And many of us still continue to debate whether Cameron’s call for public registries of beneficial owners will have an impact in the countries that agreed to publish registers of who really owns companies in their territories.
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Photo credit: www.herald.ng
Prior to the London summit, The Guardian reported that Nigerian Attorney General and Minister for Justice Abubakar Malami said Nigeria’s government – often cited for endemic corruption – would support publicly accessible registers of beneficial ownership and an open government partnership to disclose contracting agreements for public funds. Even as President Muhammadu Buhari, who attended the summit, called for the conference to agree upon swifter measures to return stolen assets, as also reported by The Guardian, and issued a statement of commitment to other countries to curb corruption, money laundering and opaqueness, we’re still left to wonder whether Nigeria’s voice would carry greater authority if it were possible to have greater access to such information as is held by Nigerian governmental agencies and bodies. Currently, access to information about registered companies in Nigeria is really only possible through the use of persons accredited by the Corporate Affairs Commission, the body responsible for regulating the formation of companies in Nigeria. The public does not have direct access to much of this information because the Commission’s internet portal is so poor as to be essentially of little value. The public can only search the name of a company to ascertain whether it is registered. Information about its shareholders and directors is not available online. Further, its systems tend to be down for long periods of time, making Internet searches frequently pointless. Additionally, Nigeria does not yet require the disclosure of the beneficial ownership of companies. Individuals seeking to register companies must provide proof of identity, such as copies of passports. However, corporations may also register companies and proof of the incorporation of a company will not disclose its beneficial ownership. Presently most registers will record the information provided to it without much detailed checking to confirm the accuracy of such information. Consequently, it would be little surprise if Messrs. Mickey Mouse and Donald Duck were found to be members of numerous companies. Another issue that receives little comment when such calls are made is how public access can be given to such information as is recorded, in the light of data protection laws that exist in many jurisdictions. This is a problem that Nigeria does not have at present, as its data-protection laws leave a great deal to be desired. Something that should be of concern given that biometric information of millions of Nigerians is held variously for every registered mobile telephone number and for every individual with a bank account. This information is held outside the telecommunications companies and banks, but there does not appear to be any law that regulates how this information is kept or who may access it. While the UK boldly announced the creation of the first ever global forum to improve international asset recovery with a focus on returning assets to Nigeria, as well as Ukraine, Sri Lanka and Tunisia, the proof is in implementation. Calls for registers of beneficial ownership of corporate vehicles and for such registers to be publicly accessible all make for great sound bites in the current climate. Little discussion, however, is heard about how such registers should be compiled. Clearly, there is much that needs to be done. Babajide Ogundipe, co-founder of Sofunde, Osakwe, Ogundipe & Belgore in Lagos, Nigeria practices as a commercial litigator and conducts investigations into various different types of fraud and other misconduct on behalf of clients in the banking, insurance, petroleum, pharmaceutical and shipping industries. Ogundipe has also assisted numerous clients in the recovery of assets lost as a result of fraud and other misconduct and has been recognised as one of Nigeria’s leading asset-recovery lawyers. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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caylorl@bennettjones.com www.bennett jones.com |
Address
3400 One First Canadian Place
P.O. Box 130 Toronto, Ontario M5X 1A4 Canada |
Telephone
+1 (416) 777 6121
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Languages
English
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Third-Party Funding Still Facing Challenges in Common Law One of the most critical developments in civil – and potentially, commercial – litigation in recent years has been the growth of third-party financing of legal costs for cases that might not otherwise have their day in court.
Originating in Australia and the UK more than a decade ago, third-party litigation funding agreements (LFAs), in which institutions offer financing for a percentage of any monetary recovery in the case, are enabling plaintiffs to seek justice through court actions that otherwise would be cost-prohibitive. This includes fraud, environmental, and corporate cases worldwide. |
Several recent news events illustrate the dramatic paradigm shift that third-party funding can bring even to complex commercial litigation, where the parties typically bear preemptive, upfront costs just to determine the merits of mounting a case.
The Persona Ruling However, a recent ruling in a high-stakes case in Ireland shows how third-party finance can still face barriers in common law jurisdictions. In Persona Digital Telephony Ltd & Anor v. The Minister for Public Enterprise, [2016] IEHC 187, Persona claimed it lost out on a mobile phone license to a rival company, Esat Digifone, in 1996, due to a bribe paid by Esat to Irish minister for communications Michael Lowry. Persona’s owner, Tony Boyle, sought a declaration from the High Court of Ireland that it was not violating Irish prohibitions against maintenance and champerty by using €10m from Harbour Litigation Funding to mount and pursue its claims against Esat, Lowry, and the Irish government. On one hand, concerns arise whenever third-party funders are permitted to interfere with lawsuits in which they have no legitimate interest. Intermeddling in a dispute in which a third-party has no interest without justification or excuse is a legal impropriety known as maintenance and, if carried out with a view to sharing in the profits of the action, will amount to champerty. In Ireland, both maintenance and champerty are still considered to be torts, as well as criminal, offenses. And historically, these common law prohibitions have deterred the use of LFAs. In many jurisdictions, there need not be an assignment of either the cause of action being funded by a third party, or the fruits of the action, in order for the funding to avoid falling foul of the rules of maintenance and champerty. There can simply be an agreement to fund litigation in return for a contingent percentage of any amounts recovered. Nevertheless, Persona presented the Irish courts with an opportunity to step away from the enforcement of these ancient offenses and open the door to professional third-party litigation funding. However, the presiding judge decided that the plaintiff’s constitutional right to access the court was superseded by a longstanding line of statutory authorities in the common law that she did not have jurisdiction, under the Irish separation of powers, to fundamentally alter. While noting its lack of jurisdiction, the court also indicated that its position could be amended by a ruling by an appellate court or legislative action. And, on the positive side, the court did underscore the major value of judicial access and left the door open for constitutional challenges to the statutory offenses of maintenance and champerty in the interest of access to the justice system. It’s our opinion that courts must aim to strike a balance in governing the use of professional litigation funding, between LFAs’ potential to interfere with the administration of justice and their potential to unlock greater access to justice. The deck is often stacked against plaintiffs who dare to take on companies with deep pockets. LFAs level the playing field by providing access to the courts for parties who would not otherwise be able to litigate a case. Funders can also balance lopsided financial resources between parties and assist parties who would otherwise accept lower settlements, because they lack the financial resources to continue with the litigation. The more front-end loaded a case, the more quickly critical pre-proceeding finance will make clearer the merits of litigating it, for both plaintiffs and defendants. And any development that gets parties to a quicker determination is positive, both for the parties and for the legal system. On the business side, professional litigation funding gives corporations and law firms a way to shed risk from their balance sheets. And for investors in such funding, rather than betting on one-off lawsuits, the largescale backing of whole portfolios of cases will allow money to be deployed faster for more consistent returns. As the LF market becomes more mature, litigation finance will become more accessible, common place and transparent. Lincoln Caylor of Bennett Jones is recognized as a “leading counsel and commentator in the asset recovery field,” by Chambers Canada 2016, and is listed as a Most Highly Regarded Individual in North America by Who’s Who Legal: Asset Recovery 2015. The sole Toronto member of ICC FraudNet, he is internationally recognized for leading state-of-the-art asset tracing investigations and pursuing asset recovery litigation and enforcement actions in prominent, high-value international financial frauds and other economic crimes. The author would like to recognize his colleague Ranjan Agarwal of Bennett Jones for coauthoring this article. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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Recent Cyberattacks Focus Attention on Cybersecurity for Banks There’s been a lot of finger pointing within the global finance industry recently, as banks, governments and the industry’s primary service provider for moving money between financial institutions try to address how three separate banks fell victim to cyberattacks, resulting in the theft of nearly $100 million over the past year. As these entities battle it out in the media, in boardrooms and in court, cyber thieves are becoming more sophisticated and threatening our entire global financial system.
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Three Similar Cases The largest and best-known of these cyberattacks was disclosed in February, when the Central Bank of Bangladesh reported an $81-million heist after discovering the unauthorized transfer of money between the Federal Reserve Bank of New York and accounts in the Philippines, as reported by Fortune in March. Yet, just last week, CNBC and other media outlets reported that Vietnam’s Tien Phong Bank thwarted a similar heist, just as The Wall Street Journal revealed a lawsuit that Ecuador’s Banco del Austro filed in New York federal court this year against Wells Fargo & Co. The suit accuses the San Francisco-based bank of failure to notice a dozen suspicious transfers of about $12 million to banks in Hong Kong over a 10-day period in January 2015. According to The New York Times, in the most recent attacks in Vietnam, hackers successfully gained access to the banks’ messaging and transfer system, implemented by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, using valid credentials, possibly obtained from known insiders or from other breaches of the banks’ systems. The thieves then covered up their actions by installing computer malware to erase traces of the fraudulent transfers. While SWIFT, the backbone of global financial transactions, acknowledged the attempted attack, it quickly pointed out that its core messaging system had not been breached and reiterated that each bank is responsible for maintaining a secure connection to the SWIFT network. At the same time, SWIFT noted that these attacks exhibited a “deep and sophisticated knowledge of specific operational controls” at targeted banks and may have been aided by “malicious insiders or cyberattacks, or a combination of both.” ‘A Very Serious Concern’ These attacks on commercial banks are eye-opening and represent a very serious concern. Not only are we seeing an increase in hackers regularly using CEO email scams on small- to medium-sized companies, but also these attacks are growing larger and more sophisticated, employing criminal networks that are now focusing on our global financial system. Fortunately, the attack in Vietnam was apparently recognized quickly enough to prevent a huge loss. Nevertheless, it sends a clear warning that these malicious cyberattacks, described by SWIFT as a “highly adaptive campaign targeting banks,” will continue, and the next financial institution to be attacked may not be so lucky. Unregulated Service According to Reuters, SWIFT is not regulated. Led by the National Bank of Belgium and overseen by a group of 10 central banks from developed nations, the network says it requires its members to notify it of problems that can affect the "confidentiality, integrity, or availability of SWIFT service.” However, former SWIFT employees and cybersecurity experts told Reuters that SWIFT has no specific requirements for member banks to report hacking thefts. So, when banks experience a theft and choose not to report it out of fear of exposing vulnerabilities, there’s no real recourse – a fact that is likely to change in light of these thefts. Regardless of who is to blame, these recent attacks, and others undisclosed or yet to be disclosed, should be a wake-up call to financial institutions and the global financial industry to make cybersecurity a top international priority. By working together to ensure the use of the best deterrence systems available, regular disclosure of attacks and the sharing of information to prevent such attacks, global financial institutions will be better prepared to fight the common enemy – cyberthieves – and prevent the potentially disastrous results of larger, more sophisticated and successful cyberattacks. Joseph J. Wielebinski, a shareholder at Munsch Hardt Kopf & Harr, PC in Dallas, is part of the firm’s Fraud and Asset Recovery group and Executive Director Emeritus of ICC-FraudNet. He has represented numerous victims in matters involving complex financial fraud, cybersecurity and offshore asset recovery. Joe has served as a Federal District Court receiver at the request of the SEC in cases involving national and cross-border fraud schemes. ICC Fraudnet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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