For those who’ve wondered how the UK’s Serious Fraud Office (SFO) decides to take on a case such as #Chickengate’s Smith & Ouzman prosecution, here is is a useful summary from the Counsel to the SFO.
The tribulations of businesses trying to avoid being tarred with the corruption of third party partners is discussed in this article. The writer sets out a good summary of the steps needed in third party anti-corruption due diligence.
As the Kenyan President announced a pathetic corruption recovery of Ksh.1.6 billlion, a few days earlier the Chairman of the EACC stated that nearly a third of the Kenyan budget is lost to corruption. Given the latest budget was over Ksh.1.2 trillion, you can see why Ksh.1.6 Billion recovered is a drop in an ocean.
To put this in perspective, Switzerland is planning to return a whopping $321 million (over Ksh.32 billion) to Nigeria.
Naturally this re-ignites the debate about whether returning $321 million to a country still ranked by TI’ Corruption Perception Index as highly corrupt may not simply open up fresh avenues of corruption. The basic question is what level of risk of fresh theft of assets (25%? 50%? etc.) would lead the recovering country to refuse to directly return stolen assets. Put another way, what likelihood of benefit to the citizens of the ‘victim’ country is sufficient to determine the return of stolen assets? While the UN Convention Against Corruption (to which both Nigeria and Switzerland are parties) urges the return of stolen assets, it emphasises agreements and cooperation between the ‘victim’ country and the recovering country (which has traced the assets) as opposed to demanding instant restitution. In the case of Nigeria, it has agreed with Switzerland that the World Bank will supervise the use of the returned $321 million
The UN Economic Commission for Africa has released a report on measuring corruption in Africa. The report is interesting to corruption researchers because it makes a deliberate effort to steer away from the commonly used perceptions indices which are notoriously flawed- though they are still useful if handled with care.
Many of UN peace-keeping’s top troop contributors are also countries listed as high corruption risk jurisdictions.
More on UN due diligence failures in tackling corruption. Going for UN-sponsored conferences apparently lands you a free iPad.
Indonesia’s corruption problem may have its roots in historical patron-client relationships and the colonial authorities ruthless exploitation of those relationships.
More historical corruption- apparently Julius Caesar (yes, that Caesar) was one of the most corrupt Romans ever.
Romania’s top anti-corruption prosecutor is doing so well, she may well be reappointed.
Vojislav Seselj, a Serbian defendant at the International Criminal Tribunal for the Former Yugoslavia was acquitted of crimes against humanity. Like a football goal, Serbia celebrated while Croatia mourned. But does the acquittal really matter if much of the target audience of the criminal trials- citizens of Bosnia/HZG, Croatia, Serbia and Kosovo- has bunkered down into denialism and see the ICTY through the lens of ethnic bias? As in many post-conflict societies- including Kenya- there isn’t a single, universally accepted truth about past atrocities, often the real truth is irrelevant no matter how hard Truth Commissions and criminal courts try, what matters is the narrative of victimhood and who gets to wear the ‘victim’ mantle as a badge of ethnic nationalism.
How many tweets praising Islamic State = too many tweets praising Islamic State?
8,000 apparently according to UK Prosecutors who charged an IS supporter with the offence of encouraging terrorism for those thousands of tweets. The man pleaded guilty. Kenya’s Prevention of Terrorism Act has a similar offence- perhaps Kenyan prosecutors should be guided by this number in determining when to press charges?
Some are asking whether the Filipino bank involved in the Bangladeshi Central Bank theft should be prosecuted for money laundering.
Can a criminal conviction for corruption deter the convict from committing a similar offence in the future? Specific deterrence, as it is known in sentencing, has jumped into the limelight in Israel as the Interior Minister, jailed for corruption years ago (when he was Interior Minister under a previous government) is being investigated for corruption again. Although nothing’s been proved yet in this latest case, I can’t help wondering if the judge in the earlier case explicitly set a deterrent sentence for this gentleman.
Kudos to Chrisee Dela Paz of rappler.com for setting out in layman’s terms how the SWIFT banking system works and how hackers were able to to exploit it to transfer $81 million from a Bangladeshi bank to the Phillipines before they were stopped. The case has spawned major investigations both in Bangladesh and the Phillipines (where it is suspected that casinos were used to launder the money).
This case matters for Kenya because if someone hacks the CBK or another Kenyan bank here in Kenya that person can send SWIFT instructions to the Kenyan bank’s foreign account (e.g. one held with the US Federal Reserve) to make payments to some obscure secrecy jurisdiction. So the Eurobond doubters may not be far off base in pointing out weak cyber-security systems here in Kenya.
Furthermore, even if the cyber-fraud is detected there may be a lag-time between detection and actually stopping the damage done by the fraudulent instructions. To understand this, consider that the fraudsters in the Bangladeshi case intended to withdraw over $900 million from the Bangladeshi bank, but only succeeded in withdrawing $81 million through SWIFT before they were detected and the withdrawals stopped. They then managed to transfer that $81 million to a Filipino bank via a chain of correspondent banks and around $58 million was withdrawn from that Filipino bank before it received and acted upon instructions to stop withdrawals from the suspects’ account. $58 million is still a lucrative payday for scammers. Currently, around $14 million remains unaccounted for. Here is a helpful diagram of how dummy and fake accounts were used in this scam:
Finally, the Malaysian corruption scandal known as the 1MDB scandal has even allegedly tainted Hollywood movie The Wolf of Wallstreet.
Oh, the irony of low ethical standards at the Malaysian PM’s office supposedly providing dodgy funding for a movie about low ethical standards in Wall Street. According to the article the scam will also rope in Goldman Sachs (the Wall Street firm that helped raise funds for 1MDB) in FBI and Congressional investigations.
An Australian bank, ANZ (Australia and New Zealand Banking Group) is also roped into the 1MDB scandal.