UK: Culture vs Corruption Diary

Last Updated: 18 July 2006
Article by Gary Miller

Welcome to the July edition of Mishcon's Culture vs Corruption Diary, the object of which is to better inform those within corporations responsible for managing the fraud risk by illustrating how different countries treat issues which lie at the very heart of allegations of corrupt practices.

We make no judgement whatsoever as to the morality, legality or appropriateness of the conduct which forms the subject matter of this diary. We simply aim to bring these matters to the attention of those whose responsibility it is to set ethical standards and produce business practice guidelines for the companies they work for and allow them to make an informed decision as to the best practice for their organisation.

UNITED KINGDOM

Defence

The Serious Fraud Office is investigating BAE and Barry George, an agent for the company, in connection with a payment of £7m 'commission' made by BAE during the government sale of two British frigates to Romania. The Guardian, 8 June 2006.

Hospitality & Leisure

Two jockeys, Brian Reilly and Dean Williams, are facing corruption charges after an investigation by the Horseracing Regulatory Authority. The two are accused of aiding a breach of the rules of racing and preventing horses running on their merits. Daily Mail, 13 June 2006.

Government

A new police investigation team will be set up to focus on allegations of bribery by UK companies operating abroad. Details of the team are unlikely to be announced before the government's 'corruption action plan', which is expected later this year. Financial Times, 23 June 2006.

Legislation

A provisional date of 20 October 2006 has been set for the second reading in the House of Commons of the International Development (Anti-Corruption Audit) Bill. The bill proposes amendments to section 7 of the International Development Act 2002.

A provisional date of 20 October 2006 has been set for the second reading of the Corruption Bill in the House of Commons.

A provisional date of 20 October 2006 has been set for the seconding reading of The Honours (Prevention of Corruption) Bill in the House of Commons. The Private Members' Bill had its first reading in the House of Commons on 13 June 2006.

Legal Profession

The head of the International Bar Association's anti-corruption working group has criticised a proposed overhaul of the UK's anti-corruption laws as 'very disappointing'. Financial Times, 13 June 2006.

WESTERN EUROPE

Hospitality & Leisure

Italian football clubs Juventus, AC Milan, Lazio and Fiorentina, are amongst 30 defendants to be formally charged with breaking the country's code of sporting justice. Allegations against the clubs include match fixing, illegal betting and manipulation of referee assignments. Daily Telegraph, 23 June 2006

Prince Victor Emmanuel, the son of Italy's last king, has been charged with corruption and pimping. The prince is accused of being the ringleader of a group that supplied rigged slot machines and eastern European prostitutes to a casino in Campione d'Italia, an Italian enclave in Switzerland. The Daily Telegraph, 20 June 2006.

Pharmaceuticals

Three executives at Recordati, an Italian pharmaceutical company, have been arrested in connection with an investigation into possible bribes to doctors to encourage them to prescribe the firm's drugs. Reuters, 18 June 2006.

EASTERN EUROPE

Organisations

The Millennium Challenge Corporation has approved financing for an anti-corruption initiative in Ukraine. The two-year initiative will be worth up to $45m and administered by the United States Agency for International Development. Millennium Challenge Corporation press release, 16 June 2006.

NORTH AMERICA

Government

David Safavian, the former United States government's chief procurement officer, has been found guilty of lying and obstructing justice. His conviction is the first in connection with the scandal surrounding Jack Abramoff. The Daily Telegraph, 21 June 2006

Chuck Guité, a former Canadian public servant has been convicted of defrauding the state of Ottawa of $1.5m. The charges relate to government contracts involving the firearms registry and a sponsorship programme. CBC, 19 June 2006.

Legislation

The Federal Accountability Act has been passed by the Canadian House of Commons. If the Senate grants its approval in the autumn, the Act will establish new limitations on lobbying activities and campaign financing. The Toronto Star, 26 June 2006

The United States Senate Foreign Relations Committee has recommended that the Senate ratifies the United Nations Convention Against Corruption. The United States has signed, but not yet ratified the convention. United Press International, 22 June 2006.

AUSTRALASIA

Banking & Finance

Brad Cooper, a Sydney businessman, has been found guilty of charges of bribery and fraud in connection with the collapse of the insurance company HIH. Mr Cooper faces up to eight years in jail. www.news.com.au, 23 June 2006.

ASIA

Hospitality & Leisure

An investigation into possible corruption in connection with the construction of Olympic venues in China has widened to include Jin Yan, the deputy director of the city's Olympic venues construction office. Daily Telegraph, 24 June 2006.

Manufacturing

Chung Mong Koo, chairman of Hyundai Motors, has admitted full responsibility for creating and using a slush fund from company resources. Mr Chung faces charges in Seoul of using 400bn won of company funds to bribe bankers and government officials and embezzling 120bn won to set up a slush fund. The International Herald Tribune, 16 June 2006.

NORTH AFRICA

Energy

The Namibian Anti-Corruption Commission is investigating Namibia Liquid Fuels, a joint venture company with Sasol, for alleged bribery in connection with fuel-supply contracts worth R800m. Business Day, 26 June 2006.

Organisations

The Kenyan branch of Transparency International has fired its executive director for suspected financial corruption.Reuters, 25 June 2006.

MISHCON DE REYA

Mishcon's Culture vs Corruption Diary is published by the Corporate Investigations and Asset Recovery Group of Mishcon de Reya Solicitors. Widely recognised as the leader in the field of fraud investigations, the Group has extensive experience in conducting and/or project managing highly sensitive international investigations in respect of bribery and corruption allegations. The Group founded and runs both the Asset Protection & Recovery Network, made up of international legal fraud specialists, and the Financial Fraud Group, for risk and compliance officers.

This article is only intended as a general statement and no action should be taken in reliance on it without specific legal advice.

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