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Friday News Flip 22 April 2016

CORRUPTION

Here’s more on the bribery scandal affecting Australian company Leightons. $15 million was allegedly paid to a Dubai ‘consultant’. Yes…we consultants have a bad name in anti-corruption circles.

Former Cabinet Secretary Michael Kamau failed to stop a corruption case against him proceeding.

Pakistan’s military has dismissed 2 generals, 3 colonels and a brigadier for corrupt practices and ordered them to return the earnings accumulated as a result of their practices. Proof that corruption can touch any and every institution in a country and that therefore no one (including the military) should be untouchable when it comes to sanctions for graft.

In Madagascar, yet another newly elected politician vows to make fighting corruption his priority in power. We’ll see…

CRIMINAL LAW

20 Taiwanese citizens suspected of a telecoms scam affecting Mainland Chinese victims were arrested in Malaysia, deported to Taiwan, then released, then (after Mainland pressure) rearrested by Taiwanese officials. What particularly caught my eye is that Malaysia, like Kenya, does not recognise Taiwan as a state and follows the ‘one China’ policy too. Yet the Malaysian government deported the arrested Taiwanese to Taiwan while Kenya deported its Taiwanese ‘guests’ to the Mainland, and then used non-recognition of Taiwan as a justification!

https://youtu.be/j-SYBkJud9o

Furthermore, as is pointed out by Taiwanese legal specialists, Taiwan and Mainland China have already cooperated in a similar phone scam case in the Philippines. Part of that cooperation meant that the Mainland Chinese were sent to the People’s Republic of China while the Taiwanese were sent to the island. The Philippines also gives no recognition to Taiwan as an independent state.

 

So something about the Kenyan story of ‘deporting to the immediate country of entry’ does not add up. China has itself said that it is putting the 47 ‘deportees’ on trial. It may have a strong jurisdictional case if the alleged crimes had Mainland victims, but the failure to simply follow due extradition procedures or even the informal cooperation practice begun in the Philippines is what is puzzling. It seems it was a political choice for Kenya- under Beijing’s pressure- to deport the Taiwanese to Mainland China.

On other transfer matters, I saw this one coming: the AG has decided to execute the President’s roadside declaration: Kenya will not surrender Walter Barasa, Phillip Bett and Paul Gicheru. Rather, the country will try them for what the AG called relative minor crimes against administration of justice. It’s an absurd attempt to try and hide behind complementarity given how the ICC struggled to get adequate cooperation from Kenya. A country that did not give credible respect and cooperation to an international tribunal can hardly be expected to show greater due deference and cooperate with a local court- where the opportunities for political meddling are greater. Can a government that used all means- political, social and others- to end the ICC cases really show it’s willing and able to guarantee genuine investigations and proceedings? And bear in mind that this is a government with a track record of ignoring domestic court orders (see here, here and here).

It’s curious that neither the President nor the AG (who gives the government legal advice) is keen to allow the surrender proceedings in the Kenyan courts to run their natural course through the appeals process. They are mighty eager to forestall any possibility of a decision in favour of surrendering Walter Barasa, for example, to the ICC.

The other thing I saw coming was that the government would continue to wreak vengeance on the ICC for the temerity of putting Kenyan royalty on trial. Thus the move to withdraw from the Rome statute continues apace. The opposition has vowed to block this, but childish tactics can’t hide the fact that the opposition has been pretty ineffective in stopping the majority from rubber-stamping presidential directives.

Brazilian President Dilma Rousseff is about to use the tried and tested Uhuruto tactic of using the UN to run from personal legal problems.

In cybercrime matters, the FBI allegedly paid over $1.3 million to the unidentified hackers who broke into the San Bernadino shooter’s iPhone 5.

ISIL/Daesh executed 250 women who refused to be sex slaves. The crimes against humanity and war crimes this group has committed are staggering in magnitude. What to do about it in the absence of a stable Syria and Iraq is the frustrating dilemma.

Here’s a thoughtful analysis of similar international crimes by Daesh against the Yazidis and other ethnic and religious minorities.

On Wednesday I mentioned that China had sentenced a former public official to death for taking money in return for leaking thousands of documents to an unnamed foreign intelligence service. My suspicion is that foreign intelligence service may have been American in nature. Now the Americans are charging a Chinese woman with espionage related offences and conspiracy to defraud for smuggling underwater drone parts to China. The charges each carry 10-20 year maximum terms.

Some gutsy conmen cloned the mobile phone line of the Lagos State Governor in order to attempt to steal 50 million naira from the accounts of the State government. They were caught and charged with conspiracy to obtain by false pretences under the Criminal Law of Lagos State. We have a similar offence in s.313 of the Kenyan Penal Code.

More on why sedition, subversion and other similar offences are out of date India and across the world.

Companies should be on alert for a lucrative scam where fraudsters impersonate company executives in emails and thereby elicit wire transfers.

SENTENCING

The CBK governor wants sentences for fraudulent bank managers to be stiffened. This is in the wake of suspected fraud in the troubles facing Dubai, Imperial and Chase Banks (NBK is also in a crisis related to mismanagement). The article suggests that the Governor wants a minimum sentence of 20 years- if so, I hope he is advised that harsh minimum sentencing are rarely effective as a deterrent- America has learned this with respect to drug policy and Kenya is slowly learning this with respect to sexual offences. The second assumption underlying the raising of the sentence is that the bankers will be deterred despite knowing the relatively low conviction rates for wealthy white-collar criminals. In a sense the tail is wagging the dog on this proposal: unless you achieve a consistent level of effective and safe convictions, even a mandatory death sentence for criminal bankers will sound like a bad joke.

MONEY LAUNDERING

More bad news for bitcoin’s reputation as a haven for the shady: an American and 3 Israelis have been charged with, among other things, using an illegal online bitcoin exchange to launder the proceeds for data theft scams. The victims had to log into the site, change dollars into bitcoins which were then sent to the anonymous accounts of the scammers.

I wrote a recent policy paper on illicit enrichment- available here– and why Kenya should have such a corruption offence. In a recent AML plan, the UK government said that it plans to introduce an illicit enrichment offence for public officials. The basic definition of illicit enrichment is: if your assets suddenly increase significantly (some laws use the word ‘disproportionately’) and you are unable to explain the increase based on your known sources of income, you are presumed to have acquired them unlawfully.

Singapore has charged a former banker with money laundering offences related their investigation into the scandal over Malaysia’s State Investment fund, the fund known as 1MDB. This is the scandal that led to revelations that Saudi Arabian royals charitably hand over hundreds of millions of dollars to the Malaysian PM with no questions asked. It also led to allegations that The Wolf of Wall Street may have been funded with laundered money from 1MDB.

The Singaporean charges relate to over $4 billion that flowed through the island’s financial system from 1MDB.

China is tightening its grip on online financial institutions, ostensibly to prevent financial crime and money laundering.

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