THE USA Investigations

A range of companies have disclosed that they are conducting internal investigations regarding potential violations of the Foreign Corrupt Practices Act (FCPA) or are subject to governmental investigations regarding such violations. For example, Weatherford International Ltd., an oil and gas company, which has been conducting an internal investigation regarding bribery issues in Europe and West Africa, reported that it spent $106 million on said investigation.

Avon Products Inc., which recently suspended executives in China because of a major bribery probe, expects that a related investigation will cost as much as $95 million this year. That figure would constitute more than 50% of Avon's reported free cash flow.

BHP Billiton, a global resources company, is facing an investigation by the U.S. Securities and Exchange Commission (SEC) over potential violations of the FCPA tied to old mining exploration projects.

More generally, the U.S. Department of Justice (DOJ) reports that it has approximately 150 open "FCPA–related" cases. That number does not include open SEC investigations.

Potential Legislation

At the end of May 2010, U.S. congressman Peter Welch introduced a bill that would require the debarment from contracting with the U.S. government of anyone who violates the FCPA. The bill was referred to the House Oversight and Government Reform Committee for consideration.

Enforcement Trends

The current number of criminal indictments in FCPA cases has quadrupled since 2008 with fines and settlements since 2009 alone exceeding $2 billion.

Over the past few months, the SEC has asked several pharmaceutical and energy companies about their controls against bribery. This action is consistent with the announcement by Lanny Breuer, chief of the DOJ's Criminal Division, in November 2009, that bribery investigations in the drug industry are going to be a focus.

To prepare for more FCPA enforcement activities, both the SEC and the DOJ have added staff. The SEC's new FCPA unit includes approximately 24 lawyers and as many as 10 supervisors, according to Cheryl Scarboro of the SEC. DOJ reports that it now has eight lawyers and 12 Federal Bureau of Investigation agents assigned to FCPA prosecutions full time.

Scarboro also reports that the SEC intends to conduct a "more targeted approach" to identify rivals of bribe-paying companies in specific industries. As she puts it, "If a company comes in to self-report, it shouldn't be a surprise that one of the questions that we're going to ask them is, 'Who else is doing business [in that marketplace]?'" Those competitors could well become subjects of an expanded inquiry themselves.

THE UK

Jailed for Bribes of £1.3 Million Of Public Money

Paul Kent, Stuart Ford and Silinder Singh Sidhu have been jailed for their role in bribery involving £1.3 million of public money belonging to Britain's biggest quasi non-governmental organisation, the Learning and Skills Council (LSC). The Serious Fraud Office (SFO) and West Mercia police launched an investigation in July 2006 after being alerted by a whistleblower to the corrupt contract tendering ring at the LSC. The defendants were sentenced at Birmingham Crown Court for their offences which took place between 2003 and 2005. Mr Kent was sentenced to four and a half years in jail after receiving kickbacks of more than £300,000 for corruptly awarding more than £1.3 million of contracts on behalf of the LSC. Mr Kent received £80,000 of corrupt payments from Mr Sidhu for £266,000 of work from the LSC. Mr Sidhu was sentenced to 3 years in jail. Mr Ford, who was also jailed, was approached by Mr Kent and was awarded £920,000 of work to set up the Telford Learning Centre; he repaid Mr Kent with £190,735 in kickbacks. Mr Kent also encouraged Rebecca Hoyle to apply for contracts through her business and she paid Mr Kent £29,000 from £94,000 of contracts awarded by the LSC. She received a one year suspended sentence.

Former Delta State Governor's Sister Convicted in London

After a trial that began in September 2009, Southwark Crown Court convicted Christine Ibori- Ibie, the sister of former Delta State Governor Mr James Ibori, on charges of money laundering and mortgage fraud. Ms Ibori-Ibie and Mr Ibori's personal assistant had been charged in December 2007 on three counts of conspiring with Mr Ibori and others to defraud the Delta State Government. They had allegedly helped Mr Ibori move an estimated £70 million through several London banks. Mr Ibori who had evaded arrest by the Economic and Financial Crimes Commission (EFFC) is currently detained in Dubai, where he was arrested by INTERPOL on a UK warrant for allegedly stealing as much as $292 million while acting as Governor.

Whistleblower Wins Appeal In Greek Medical Corruption Case

Whistleblower Robert Dougall, a former senior healthcare executive of U.S. healthcare group Johnson & Johnson's subsidiaries DePuy Inc and DePuy International, who was jailed for 12 months for helping to pay more than £4.5 million in bribes to Greek officials to win contracts, has won his appeal against the jail term. Mr Dougall had helped arrange corrupt payments to a third party to bribe surgeons and doctors in Greece for their business. Southwark Crown Court heard that this practice was standard practice in Greece. The Lord Chief Justice recognised that the "case involved a system of corruption that was persistent and an endemic feature of the Greek Healthcare system". He also warned that there could be no "legitimate" or "automatic expectation" of suspended sentences where people admit to corruption or co-operate with an investigating authority. But, in a key test of the SFO's new strategy on plea bargaining, the Lord Chief Justice emphasised that where there had been full cooperation and mitigating factors, such as in the case of Mr Dougall, the case for a suspended sentence would be powerful. The SFO has noted that "judicial guidance will assist prosecutors in the way they bring these cases to court and is welcomed".

Kremlin Whistleblower Flees to UK

Businessman Valery Morozov who was involved in the preparation for the 2014 Winter Olympics has blown the whistle on corruption. Mr Morozov said he had paid £4 million in bribes to a senior official to secure a lucrative state contract for the games as part of a police sting operation to expose the official. To protect his evidence, Mr Morozov came to the UK to lodge the documents with his British lawyers. Prosecutors in Moscow are now examining his claims to assess whether to bring charges against the official. Mr Morozov's company has been removed from the Olympics hotel building site and has had its machinery confiscated.

REST OF THE WORLD

Africa

The Economic and Financial Crimes Commission (EFCC) continued its investigation into the roles played by some Nigerians alleged to have benefited from bribes paid by Siemens. The subjects of the investigation include the acting national chairman of the ruling Peoples Democratic Party, Alhaji Bello Halliru Modhammed, and Alhaji Tajudeen Olanrewaju. The EFCC has also invited Siemens officials from Germany for questioning in connection with the 17.5 million Euros allegedly used to corrupt top government officials in Nigeria. The EFCC are linking up the investigation which was carried out in Germany on Siemens AG and Siemens Nigeria and the EFCC chairman has noted that the recent conviction of former managers of Siemens in a German court will strengthen their investigations. The Nigerian connection in the Siemens bribery scandal was exposed in November 2007, when a report by The Wall Street Journal indicated that four former ministers, a senator and a number of government officials had been bribed by the company to win contacts.

It has been reported that after seven years on trial, former Senate President Chief Adolphous Wabara, former Education Minister Professor Fabian Osuji, and Senator Ibrahim Abdulazeez were set free from criminal charges of obtaining 50 million Naira (£224,193) bribe and breach of public trust. The Court of Appeal in Abuja set them free and quashed the 15-count charge brought against them by the Independent Corrupt Practices and other Related Offences Commission (ICPC), finding that the charges were frivolous. The ICPC had alleged that they defendants accepted money to facilitate the easy passage of the budget of the Federal Ministry of Education in 2005.

Australia

Corruption allegations have been made against The Reserve Bank of Australia (RBA) subsidiary, Securency International, which is the maker of polymer banknotes. Securency International is alleged to have paid bribes to foreign government officials through independent agents to win overseas contracts in Indonesia, Malaysia, Vietnam and Nigeria. Radius Christanto is one of the independent agents alleged to have assisted Securency International in paying bribes in Indonesia, but he has denied such bribery. The RBA have condemned corruption of any kind, but have emphasised that they will not be commenting on the issues covered by the investigation as the investigation is still being carried out by the Australian Federal Police.

China

The China Securities Regulatory Commission (CSRC) has issued draft measures to prevent money laundering in the securities and futures industries for public comment. In order to improve the anti-money laundering mechanism in the industry the measures have specified the supervision responsibilities of the CSRC; selfmanagement guidelines for industrial associations; and anti-money laundering procedures for securities and futures institutions.

The Chinese Government is also trying to combat bribery in the commercial sector. In the past it was not clear whether commercial bribery could give rise to a criminal offence. Now, following a ruling issued by the Supreme People's Procuratorate on 19 May 2010 the police are able make a criminal case of any commercial bribery activity in excess of 5000 Yuan Renminbi (£497).

Greece

In Greece, Siemens officials have been accused of bribing local politicians to secure a multi-million Euro contract before the Athens 2004 Olympic Games. In a parliamentary probe, former Greek transport minister Mr Mantelis has reportedly admitted that he accepted bribes from Siemens to secure lucrative contracts. Mr Mantelis told the investigative committee that 200,000 Deutschmarks ($126,000) was deposited into a Swiss bank account from Siemens in 1998. In response to the fact that no action was taken against Mr Mantelis after he openly admitted to receiving bribes, it has been reported that a draft bill will soon be brought into Parliament to modify current legislation for prosecuting ministers. Greece's Prime Minister George Papandreou has promised to clean up corruption among politicians and restore public trust.

India

The Anti-Corruption Branch (ACB) of the Central Bureau of Investigation (CBI) arrested two engineers posted at an air force base for accepting a bribe of 50,000 Rupees (£729) from a contractor. The contractor reportedly had done road construction work at the air force base, and the engineers promised to pay him for his work only if he paid the bribe. The contractor lodged a complaint and the CBI recorded telephone conversations between the engineers and the contractor to gather evidence.

Italy

Italian prosecutors are investigating the Vatican bank on suspicion of involvement in money laundering. It has been reported that the Institute of Religious Works (IOR) and 10 Italian banks, including major institutions such as Unicredit, were the target of the investigation. It has been alleged that subjects with their fiscal residence in Italy are using the IOR as a "screen" to hide dealings of fraud and/or tax evasion. The IOR manages bank accounts for religious orders and Catholic associations and benefits from Vatican offshore status. Investigators have uncovered transactions of around 180 million Euros ($218 million) over a two year period in one of the accounts held at the IOR.

After media reports of an investigation into Italian defence and aerospace group Finmeccanica SpA opening up secret bank accounts offshore, Finmeccanica SpA have categorically declared "that it is not involved in the establishment of hidden accounts". Prosecutors began their investigation after discovering alleged links between Finmeccanica SpA and a man under arrest in a separate probe into tax fraud and money laundering involving telecommunications operators Fastweb SpA and a unit of Telecom Italia SpA. Prosecutors were trying to learn if funds in offshore bank accounts were used for bribery and money laundering. Finmeccanica SpA have stated that no notice of legal proceedings related to the purported investigation has been served on it, but that it is willing to cooperate with the investigation.

United Arab Emirates

On the 7th June 2010 it was reported that the Dubai Appeals Court acquitted four suspects and seven companies of laundering £150 million, including an Emirati employee, a British executive, an Indian financial controller and a Pakistani general manager. It was reported that the suspects and their companies were prosecuted for more than three years without any substantial evidence. Since the litigation and prosecution process started in August 2006 law enforcement officers failed to prove that the allegedly laundered money was acquired from a crime and failed to bring in any concrete evidence or to corroborate the claim that the suspects laundered the £150 million. All four suspects pleaded not guilty and strongly rejected the charges of intentionally acquiring, possessing and transferring £150 million, which prosecutors claimed was earned from defrauding the UK's Revenue and Customs Prosecution Office and the Netherland Antilles authorities.

Ukraine

Ukrainian President Viktor Yanukovych has signed alterations into the law on counteracting money laundering in Ukraine. The bill was passed by the Ukrainian parliament on 18 May 2010. Financial transactions are now to be automatically monitored if their sum exceeds 150,000 Hryvnia ($18,951). The law also extended the list of subjects to whom primary financial monitoring applies, to lawyers, attorney, notaries, auditors and real estate developers.

It has been reported that the Ukrainian cabinet dismissed Deputy Environment Minister, Bohdan Presner, after he was caught accepting a $200,000 bribe for assisting in appointing a regional level manager. Prime Minister Mykola Azarov said that he would not tolerate corruption and that the government would grant no leniency to corrupt officials.

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