Tag Archives: corruption

Bribe payments by Scottish oil and gas company result in USD 8.9 penalty Reply

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Recent Enforcement Developments

Scottish oil and gas services company agrees to civil settlement. On 23 November 2012, Abbot Group Ltd. agreed to a civil settlement of GBP 5.6 million (USD 8.9 million) with the Crown Office and Procurator Fiscal Service. The penalty, which will be invested in programs to foster youth employability, healthy lifestyles, and reduced recidivism among Scottish youth, represents the profit obtained from a 2006 contract between an overseas subsidiary of Abbot and an unidentified oil and gas company, resulting in improper payments by Abbot in 2007.  The authorities did not disclose the location or the identity of the individuals and subsidiaries involved, pending a criminal investigation of the transaction. This is the first instance of a Scottish company entering into such an agreement under the Proceeds of Crime Act.  The complete Compendium summary for this case may be accessed here.

Yes, the CAN Can: Progress toward Anti-Corruption Enforcement in Peru Reply

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Photo: Congreso de la República del Perú

The Peruvian Comisión de Alto Nivel Anticorrupción (“CAN”) was created by legislative decree in January 2010, to serve as an anti-corruption liaison between government bodies at the regional and national levels and the business community, and to propose long-term policies for preventing and combating corruption. Last week, following a two-day debate in the plenum of the Congress of the Republic of Peru, a bill was approved which would confer the status of law on the original decree. Sixty-five legislators voted in favor of the bill, 28 abstained, and no one voted against passage of the law.

The new provision arose from the recognition that Peru should strengthen the CAN and institutionalize anti-corruption efforts in an independent framework, and thereby bring Peruvian law and enforcement practices into conformance with international obligations. With its passage into law, the CAN will be composed of presidents of both the judicial and legislative branches, the president of the Council of Ministers and the Ministry of Justice, as well as the head of the Prosecutors’ Bureau, the Constitutional Court, the National Judicial Council, the National Assembly of Regional Governments, and the Association of Municipalities of Peru. Other government and quasi-government bodies will have observer status in the CAN.

Although Peru ratified the United Nations Convention against Corruption in 2004 and the Inter-American Convention Against Corruption in 1997, it is not a signatory to the OECD Convention on Combating Bribery. The country has sometimes been viewed as fairly lax in terms of adequate legislation and enforcement, having investigated one international corruption case and obtained 147 convictions in domestic bribery cases in the past four years (one of them described in this previous post). Even before a vote was taken on the proposed legislation, on 12 November 2012, the CAN issued its National Plan for Combating Corruption through 2016, an ambitious program outlining 55 measures aimed at confronting the problem of corruption at all levels of government. With the new authority vested in the CAN, Peru seems poised to establish a more active record of enforcement.

Corruption faces a new foe: Xi Jinping Reply

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Xi Jinping

The Chinese Communist Party’s new leader, Xi Jinping, made corruption the focus of his first speech to the Politburo.  Speaking in Beijing on Monday,  Xi warned that corruption in other countries had caused major unrest and instability.

Xi’s departure from the broad, euphemistic language often used by the Chinese leadership surprised some China watchers.  It seems to mark a campaign on the part of Xi and the new cadre of leaders to achieve a rapprochement with average Chinese citizens, and to distance themselves from the past two decades of party elite.

Xi was certainly not exaggerating when he said, “In recent years, within our party there have been serious discipline violations of a very bad nature, with serious political impact.”  Like most countries, China has laws in place which criminalize bribery in the public sector.  Civil servants can be punished – even executed, — for abusing their positions or appropriating public property for private gain.  In 2011, two significant anti-bribery events took place in China:   (1) the criminal law was amended to make foreign bribery a crime, and (2) the government promised to publicize data from the Supreme People’s Procuratorate’s investigations of bribery allegations.  And indeed, some cases have been published on the Procuratorate’s public database.   A number of prominent officials have been convicted, like Lai Changxing, and ranking Communist Party official Jia Qinglin, or Xu Maiyong, Jiang Renjie, Zheng Xiaoyu  and Cao Wenzhuang ,former deputy mayors and food and drug administrative officials who were convicted of accepting bribes, sentenced to death, and executed (with the exception of Cao, whose sentence was suspended).

In addition to recent cases of prosecution of individuals on domestic corruption charges, Chinese officials have occasionally prosecuted foreign companies for corrupt practices in China.   Individuals from at least ten such companies have been prosecuted or are currently under investigation by the People’s Procuratorate.

The new Communist Party leader’s concern is not unjustified where foreign companies are concerned either.  In recent years, there have been dozens of investigations of foreign companies suspected of paying bribes in China.  The pharmaceutical industry, the entertainment industry, and other sectors, have been targeted by U.S. authorities, as well as by enforcement authorities in Europe, Australia and elsewhere in Asia.  In fact, data from the TRACE Compendium indicate that more enforcement actions have involved payments in China than in any other market in the world.

Xi’s apparent determination to combat corruption on Chinese soil is a very welcome development.  It will be interesting to observe how this plays out as the new Chinese leadership steps into the future.

US obtains forfeiture of assets worth USD 2.1 million bought with bribe money Reply

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Last week the Department of Justice announced that it had forfeited a Manhattan condominium and a home in Keswick, Virginia valued at approximately USD 2.1 million because they had been purchased with money received by the family of Shui-Bian Chen as bribes.

Shui-Bian Chen wrested power from the ruling Kuomintang party in the 2000 elections, and served as president until 2008. During his presidency, a company called Yuanta Securities Co. Ltd. paid USD 6 million to Chen’s wife, Sue-Jen Wu so that Yuanta could acquire a financial holding company without opposition from Chen’s administration.

By the time the U.S. government obtained the forfeiture order, the money paid to Wu had been laundered through bank accounts in Hong Kong and Switzerland, a series of shell companies in the British Virgin Islands and elsewhere, and a St. Kitts and Nevis trust.

Announcing the forfeiture, which was effected in cooperation with the Homeland Security Investigations unit of U.S. Immigration and Customs Enforcement (“ICE”), Assistant Attorney General Lanny Breuer said, “We are committed to using every tool available to root out foreign official corruption.”

Breuer has, in the past, emphasized the importance of asset forfeiture as a tool, and the use of shell companies to launder illicit funds. For example, the Assistant Attorney General noted last summer that “a key way in which criminals launder the proceeds of their crimes is through the use of shell companies.  They open bank accounts in the name of a shell company, for example, and then use that shell company to conduct business transactions that appear legitimate….One area in particular in which we have seen very extensive use of shell companies is that of kleptocracy.”

In recent months, the U.S. has used the kleptocracy initative against two former state governors in Nigeria, Diepreye Solomon Peter Alamieyeseigha (denominated “DSP” and described in this earlier post), and James Onanefe Ibori. Unlike DSP, who is at large and still powerful, Chen and Ibori are serving lengthy prison sentences. Chen has spent the last four years in a Taiwan prison cell, without bed, table or chair; he will be there for the next 13 years unless, as some have suggested, he is granted a medical parole to serve out his sentence in the hospital.