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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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Foreign Corruption and Ethics How Overseas Interns Cost BNY Mellon Millions The Bank of New York Mellon has earned the ignominious title of first Bank to be charged by the U.S. Securities and Exchange Commission (SEC) with violating the Foreign Corrupt Practices Act (FCPA). And the bribe? Internships. As reported by Global Investigations Review (GIR), BNY Mellon agreed to settle Aug. 18 without admitting or denying allegations that it violated the FCPA by hiring relatives of foreign officials as interns.BNY Mellon agreed to pay the SEC a total of $14.8 million, $8.3 million of which represents disgorgement of profits from its operation in the Middle East and North Africa region, plus $1.5 million in interest and a $5 million penalty.
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This is reportedly the first foreign bribery enforcement action in which internships, as opposed to cash, constituted the alleged bribe, and BNY Mellon is not alone. JPMorgan Chase & Co., Goldman Sachs Group Inc. and Deutsche Bank AG have also been investigated over whether their hiring practices violated the foreign bribery statute. The outcome of these investigations is not currently known. As a result of an investigation into BNY Mellon’s practices (part of an industry-wide investigative sweep in 2011) the SEC discovered that valuable internships had been offered to the relatives of certain foreign government officials associated with one of BNY Mellon’s clients, to assist BNY Mellon in retaining and obtaining business. BNY Mellon, per an employee, felt it was “not in a position to reject the request from a commercial point of view” even though it was a “personal request” from the foreign official. Clearly, when an organization is driven by the desire to make a profit at all costs, it will never be in a position to reject a request for a bribe “from a commercial point of view.” Can such a mindset be changed?
The short-term answer is no. There will always be competitors willing to go to great lengths to win business. That is the very nature of competition. There is no doubt that “BNY Mellon deserved significant sanction for providing valuable student internships to family members of foreign officials to influence their actions," as Andrew Ceresney, the SEC's director of enforcement, said in a statement released by the SEC. However the problem that lead to this sanction will not disappear overnight or even over the next decade. The desire if not need to increase profit will always be present. In the words of a relationship manager at BNY Mellon “It’s [sic] silly things like this that help influence who ends up with more assets.” In the governing of a well-functioning society, different interest groups are represented, not just those focused on the numbers. Why? Because many factors impact the bottom line. This should hold true for any organization, public or private. The creation of separate interest units within an organization, all with an equal voice in decision-making, can go a significant way toward ensuring that it is not just profit that rules. The creation of profit at all costs is rarely, if ever consistent with the many varied factors (such as environmental, human rights, or employee welfare to name a few) that come into play in the pursuit of the goal of profit maximization. To tackle the problem presented by briberyit will be necessary to cultivate a business ethic that incorporates healthy and fair competition; that avoids the temptation to bend rules to create advantages; and above all an ethic that puts people before profit. The Dalai Lama, one of the most respected religious leaders of our time has said that ethics are more important than religion, in business, ethics should be more important than profit. The Dalai Lama hopes to, and believes he will, see a free Tibet before he dies. Can we hope fora business environment free from corruption? Martin S. Kenney is an international expert on asset recovery and commercial litigation and a member of ICC FraudNet. Based in the British Virgin Islands, Martin Kenney & Co. Solicitors focuses on representation of people harmed by international economic crime, as well as on complex insolvency, bankruptcy and commercial litigation work. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country.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. FraudNet has been recognized byChambers Global as the world’s leading asset recovery legal network. |
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Tackling Fraud in Guatemala Make Transparency and Asset Recovery Part of Government Reforms In the wake of two colossal government fraud scandals that captured international media attention, it appears that there may finally be a glimmer of hope for change in a beleaguered Guatemala, long plagued by fraud. Citizens from across the country have taken to the streets, calling for accountability, with an election looming in September. Public support for law enforcement efforts in a series of criminal investigations is high.
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With public opinion in favor of broad reforms, leaders who care about good government and the country’s future should seize the opportunity for change. Details of rampant corruption were made public following investigations by Guatemalan law enforcement authorities and the International Commission Against Impunity in Guatemala (CICIG). CICIG isan independent United Nations operation established in 2006 under an agreement between the UN and the Guatemalan government as part of efforts to investigate and prosecute secret groups responsible for violence, intimidation and corruption within the national government. Investigations have revealed the existence of criminal organizations involving every branch of government, police, attorneys and members of the private sector. Between April and August of this year, more than 50 individuals have been subject to investigations in more than ten fraudulent schemes that exceed US$250 million. Send a Clear Message That Citizens Matter While the process will not be easy, citizens want serious reforms to guarantee a transparent and efficient use of public resources and access to information. They want to ensure that elected officials comply with ethics laws. They also want adoption of legislative reforms based on international standards that would modify our civil service regime, public contracting system, handling of the country’s annual budget and impose stricter regulation of the public ministry, general comptroller and tax administration. Criminal prosecution of government officials of the highest rank is not enough. The governmentneeds to make every effort to return defrauded money to the people of Guatemala, sending a message that its citizens do matter.Public officials must then use the restored assets to strengthen law enforcement efforts so that criminals cannot operate with impunity within the government. To address the millions defrauded from its citizens, the country must also adopt an enforcement plan that includes asset tracing and asset recovery through collaboration with international specialized agencies and professionals. As asset recovery specialists and affiliates of ICC FraudNet, we often see the damage done by fraud in countries around the world and the impact on victims – both individuals and governments. ICC FraudNet is an international network of independent lawyers who are the leading civil asset recovery specialists in each country. We also see the success that a coordinated asset recovery network can bring to investigations, including restoring assets to victims. Without the excellent work of investigators, these scandals would not have come to light. However, they need help. The size of the fraud cases points to the need for extensive reform, and additional outside assistance.
The fraud at the Guatemalan Social Security Institute (IGSS) involved a $14.5 million contract for dialysis services that has allegedly caused the deaths of more than 20 patients covered by Institute’s health insurance. Prosecutors accuse public officials of bribery, trading in influence and gaining illegal commissions in connection with the contract awarded to a private firm. According to a recent study presented by the Central American Institute of Fiscal Studies (ICEFI) and Oxfam Guatemala, in 2015, 6 percent of the approved budget will be lost by acts of corruption, equivalent to Q1.00 of every Q5.00. The study concludes that this loss violates respect for human rights, impeding opportunities for health, education, nutrition, housing, justice and overall quality of life for Guatemalan citizens. Restoring Assets and Faith in Government Assets can be traced and recovered in favor of the State. Traditionally, authorities have focused mainly on the prosecution of criminals and their punishment, not considering the full potential of civil lawsuits to recover stolen assets. For example, in the case of former president Alfonso Portillo (2000-2004), who was extradited to the U.S., and in 2014 pleaded guilty to money laundering charges, tracing and recovery efforts are ongoing in jurisdictions including France, Switzerland and Luxembourg. Portillo has served his sentence, but the State of Guatemala has not recovered the lost funds channeled by Portillo through several financial institutions in America and Europe for the benefit of himself and his family.These funds are allegedly continuing to be used unchecked to finance Mr. Portillo´s run for congress. With 21 resolutions being issued so far in 2015, civil-asset forfeiture efforts have recovered approximately US$4.5 million, which will be used to continue asset recovery efforts.Notwithstanding, the State should implement all available tools, through the General Prosecutor of the Nation (PGN) and Attorney General, to recover funds in favor of victims, including the State, its institutions (Tax Administration and Social Security Institute), and patients victimized by fraud at the Institute and other victims of financial fraud. While Guatemala’s predicament may seem extreme, there is much for other countries to learn. Combattingand even preventing fraud and corruption requires an integral approach facilitated by a strong legal framework with the necessary tools -- technically savvy investigative authorities, a global approach to fraud and asset recovery, advanced technology, and most importantly, active citizens demanding accountability for the acts of public officials. Rodrigo Callejas, partner with Carrillo y Asociados focuses on Insolvency, Fraud, Asset Tracing and Asset Recovery. He has actively participated in complex white-collar crime investigations in Central and South America, United States, the Caribbean and Europe. The author gratefully acknowledges the assistance of Emanuel Callejas in preparing this article. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country.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. FraudNet has been recognized by Chambers Global as the world’s leading asset recovery legal network. |
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s.bonifassi@lebray.fr www.lebray.fr |
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Note to Governments: Laws Can Help or Hinder International Fraudsters Stéphane Bonifassi Avocat au barreau de Paris, Executive Director, ICC FraudNet image from bbc.co.uk/news
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Business and financial laws with dull sounding names may not be interesting to the average hardworking citizen of any country. However, criminals looking to literally get away with $1 billion, find them fascinating. Case in point, the discovery last November that three leading banks in the former Soviet republic of Moldova, the poorest nation in Europe, had been virtually cleaned out. A large scale international fraud scam made off with $1 billion, estimated to be about 15 percent of the country’s GDP. Based on an investigation and report by international private investigation firm Kroll,lax Limited Partnership Laws in Scotland, specifically the Limited Partnerships Act of 1907, helped make it possible for criminals to carry out the crimes, thanks to the absence of tax reporting obligation and lack of sufficient controls by the Scottish treasury.Growth of limited partnerships in Scotland has been explosive over the past five years, and law enforcement estimates that many of these are shell companies used for money laundering. In complicated crimes like this one, other factors also play a role. Accusations of wrong- doing including money laundering have followed Moldova’s business and political leaders for years, and this recent scandal resulted in the resignation of former Prime Minister ChirilGaburici after citizens took to the streets in May to protest the scandal following release of the Kroll report. The report found that individuals and legal entities linked to Ilan Shor, a 28-year-old millionaire businessman, took control of the banks. Shor recently denied involvement in an interview with the BBC, but the report found that financial trails in several countries all lead back to Shor.
First, the ownership structure of these banks (Unibank, Banca de Economii and Banca Sociala) was modified through the integration of new shareholders. The shareholders’ companies were incorporated shortly before the purchase of the banks’ shares. These companies acquired the shares through limited partnerships in the UK and Latvia, but most significantly in Scotland. While the spotlight may be on Scotland, laws in other countries and cities around the world, have been unwitting accomplices to fraud, as criminals took advantage of loopholes to the detriment of victims. As executive director of ICC FraudNet, icc-ccs.org/home/fraudnet, our members regularly see the aftermath of various laws thwarted in country after country by financial criminals. ICC FraudNet is an international network of independent lawyers who are the leading civil asset recovery specialists in each country. While Scotland is in the spotlight today, it could be your country and government tomorrow. We have also seen and participated in cases where assets were found and returned. For those who will be instructed by Moldova to recover these assets, it will be an uphill battle to obtain information and analyse it in order to be able to freeze, attach and eventually recover the assets. While some of Moldova’s assets are no doubt gone forever, some can be returned with expert help. This will have to be done in a coordinated way with the help of lawyers, forensic accountants and investigators in various jurisdictions. FraudNet attorneys have seen the effectiveness of this coordinated global strategy in their work on high-profile cases, including the recovery for Nigeria of assets stolen by General Sani Abacha, the dictator who embezzled billions during his five year reign of terror and the recovery of assets in the case of Allen Stanford, whose investment company was the vehicle for the second largest Ponzi scheme in American history. Scottish law enforcement and public officialsagree that a rewrite of the law is a priority, a process that will take time and thought. The reality is that criminals work just as hard as we do. Scotland or any other country will never be completely immune to fraud, but good laws can make it harder for them to operate. However, the country’s reputation and that of the UK have been compromised by the scandal. Their work to find answers and punish perpetrators will help restore faith, along with tightening the current limited partnership laws. Meanwhile, the people of Moldova, who are understandably angry, want clean government and their money back. The more Scotland and the UK can do to help a battered Moldova recover assets for its coffersand its people, who were driven into recession, the better for their reputations and sense of good government. ABOUT THE AUTHOR Stephane Bonifassi, of Lebray & Associes, specializes in representing victims of fraud, and is the executive director of ICC FraudNet, an international network of independent lawyers who are leading civil asset recovery specialists in each country. He is the former president of the criminal law commission of the International Association of Lawyers (UIA) and the former chair of the business crime committee of the International Bar Association (IBA). Bonifassi regularly speaks and writes about issues including corruption, fraud, asset recovery and mutual legal assistance. He contributed to the book, Asset Tracing & Recovery: the FraudNet World Compendium, and his article Long Arm of the Law – Obtaining Jurisdiction and Evidence in France, was published in International Legal Practitioner. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country.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. FraudNet has been recognized by Chambers Global as the world’s leading asset recovery legal network. |
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s.bonifassi@lebray.fr www.lebray.fr |
Address
7, rue de Madrid
75008, Paris, France |
Telephone
+33 1 44 90 17 10
|
Languages
French, English, Russian, divish, Arabic, Romanian, Bulgarian
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Where is Moldova's Money? August 4, 2015 The government of the former Soviet Republic of Moldova is still reeling from a billion dollar bank fraud discovered last November, that cleaned out three of its banks -- the equivalent of 15 percent of the country’s GDP. Already the poorest nation in Europe, Moldova plunged into a recession, as a massive bailout rescued the banks at a cost of half the country’s annual budget.
After almost a year and a lengthy investigation, the questions remain for Moldova and its citizens, the real victims in this colossal fraud. Where is Moldova’s money, and can these assets ever be recovered? |
What we’ve learned from other complicated largescale fraud cases is that while the process can be arduous, asset recovery is possible for victims. Sadly, efforts rarely retrieve all the funds they are owed. Many victims are still waiting for payouts from complex international cases. However, when the losses are enormous, recovery of large sums of money is more than worth the effort. We also know that the best chance for success requires utilizing key strategies the bad guys use in order to help victims regain their money and some sense of control over their financial lives. The Criminal Strategy A report by international private investigation firm Kroll found that individuals and legal entities linked to IlanShor, a 28-year-old millionaire businessman, took control of the banks. Shor recently denied involvement in an interview with the BBC, but the report found that financial trails in several countries all lead back to Shor. First, the ownership structure of these banks (Unibank, Banca de Economii and BancaSociala) was modified through the integration of new shareholders. The shareholders’ companies were incorporated shortly before the purchase of the banks’ shares. These companies acquired the shares through limited partnerships in the UK and Latvia, but most significantly in Scotland. The Shor Group was then able to place at the head of the three banks people that authorized fraudulent financial transactions such as loans for companies within the Shor Group. These funds were then transferred on to offshore entities. Shor took over as chairman of Banca de Economii in April 2014, and is also mayor of a small town in Moldova. Recovering Moldova’s Assets The Moldovan government, which is still attempting to find and prosecute the perpetrators, can choose between two asset recovery strategies, and time is of the essence. It can work with enforcement authorities in jurisdictions where the assets could be traced. Experience shows that this approach is hardly effective, because it lacks the level of cross-border coordination and expertise required. While some funds may be recovered, it is always a small percentage of the losses. Whoever was the mastermind behind this large cross-border fraud put together an international network of various companies and individuals with specific skills to implement the scheme. In order to retrieve Moldova’s assets, the government must employ a similar strategy. Not only logical, this strategy has also proven to be effective. In the relatively small number of success stories, a team approach has worked. A case of this magnitude and international reach requires an international network of professionals (respected lawyers in the field, accountants and asset tracing and recovery specialists), experts primed to work together and with law enforcement to track and retrieve stolen assets. Lawyers who understand asset recovery and have experience in complex cases know how to foster effective collaboration with enforcement authorities in the countries involved. Instituting the proper legal protocols can ensure efficient gathering and use of the information needed to recover the assets or to make claims against entities or individuals who have taken part in the fraud. Accountants and asset tracing specialists work with attorneys to follow the money in complex cases where the assets and the criminals have scattered across the world. I am the executive director of ICC FraudNet, an international network of independent lawyers who are leading civil asset recovery specialists in each country. Its 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. FraudNet has been recognized by Chambers Global as the world’s leading asset recovery legal network. Prevention is key, and this fraud shows that in Moldova and in other countries involved in the fraud, flaws in the regulations allowed the crime to occur. Moldova was ripe for picking, and the criminals knew it. However, even with stronger regulation, fraudsters will continue to develop new schemes to go around the checks and controls in place. Therefore, it is important to understand that the work of asset recovery specialists must be part of any strategy. Enforcement authorities and the judiciary are not sufficiently equipped to handle such large scale complex transnational cases in which fraudsters exploit the weaknesses of each jurisdiction to make off with millions. When it takes a network to perpetrate a complex international fraud, an experienced network has the best chance of recovering the assets. ABOUT THE AUTHOR Stephane Bonifassi, of Lebray & Associes specializes in representing victims of fraud, and is the executive director of ICC FraudNet, an international network of independent lawyers who are leading civil asset recovery specialists in each country. He is the former president of the criminal law commission of the International Association of Lawyers (UIA) and the former chair of the business crime committee of the International Bar Association (IBA). Bonifassi regularly speaks and writes about issues including corruption, fraud, asset recovery and mutual legal assistance. He contributed to the book, Asset Tracing & Recovery: the FraudNet World Compendium, and his article The Long Arm of the Law – Obtaining Jurisdiction and Evidence in France, was published in International Legal Practitioner. |
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