EUROPE AND NORTH AMERICA
Ireland: New anti-corruption laws implemented
On 31 July, Ireland’s Criminal Justice (Corruption Offenses) Act 2018 came into effect, prompting businesses to enhance due diligence procedures in compliance with a new set of anti-corruption laws. Previous anti-corruption legislation had focused on public officials. However, the new Act is broader in scope and also targets companies and individuals, criminalising the payment and receipt of bribes. It contains a corporate liability law, which holds companies and senior management liable if an individual acting on their behalf commits a corruption offence. This corporate liability extends to third parties, as well as employees and subsidiaries. Penalties for convictions include up to ten years’ imprisonment, unlimited fines and a ten-year prohibition on seeking public office.
US: Microsoft investigated for alleged FCPA violation
The US Department of Justice and the Securities and Exchange Commission (SEC) are investigating Microsoft Corporation for possible violations of the US Foreign Corrupt Practices Act (FCPA), which allows US agencies to investigate corporate bribery and corruption in overseas jurisdictions. Microsoft, during its expansion into middle-income countries in 2013 and 2014, is suspected of having sold discounted software to Hungarian intermediaries, who then allegedly used the difference to pay bribes and kickbacks to government officials. Microsoft and other major firms have previously been investigated and fined under the FCPA for attempting to bribe foreign government employees to win sales or retain business. Microsoft is reportedly cooperating fully with authorities, and the outcome of the investigation is yet unknown.
Venezuela: Exiled Supreme Court ‘convicts’ President Maduro for corruption
On 16 August, Venezuela’s exiled Supreme Court symbolically sentenced President Nicolás Maduro to 18 years’ imprisonment on the grounds of corruption and money laundering in relation to the Odebrecht scandal. Odebrecht, a Brazilian construction conglomerate, has faced a global corruption investigation led by Brazilian prosecutors and allegedly bribed Venezuelan officials between 2006 and 2015 in exchange for government construction contracts. In addition, the court fined Maduro USD 25 million for corruption and USD 35 million for money laundering. The exiled Supreme Court was appointed by the opposition-controlled Venezuelan parliament as a symbolic counterweight to Venezuela’s Supreme Court of Justice, which is allegedly tightly controlled by the Maduro regime.
Argentina: New grand corruption investigation into the Kirchner era
As of 14 August 2018, a federal judge ordered the arrest of 15 individuals, including former government officials and businesspeople, and was investigating another 37 individuals for corruption during the Nestor and Cristina Kirchner administrations, which spanned from 2003 to 2015. Argentinian mainstream newspapers have compared the investigation to Brazil’s Carwash operation (also known as Lava Jato), which has targeted previously untouchable political and business figures for corrupt practices, many of whom were sentenced to prison.
The Argentinian case emerged from eight diaries written by the driver of a former high-ranking government official, detailing numerous cases of bribery by private sector executives in exchange for government contracts. After the initial release of the diaries to the Argentinian press in early 2018, prosecutors begun a formal investigation and to negotiate plea agreements with the implicated former officials, some of which have corroborated the allegations. The diaries allege that at least USD 53 million in bribes were received by Kirchner administration officials. Former president and current senator, Cristina Kirchner, has been implicated in the case, which is ongoing.
Myanmar: US imposes new sanctions
On 17 August, OFAC, the financial enforcement arm of the US Treasury, imposed economic sanctions on four Burmese military and border guard commanders and two military units in response to military-perpetrated human rights abuses against Myanmar’s minority communities, particularly the Rohingya community. The commanders include Aung Kyaw Zaw, Khin Maung Soe, Khin Hlaing, and Thura San Lwin; the sanctioned units are the 33rd Light Infantry Division and the 99th Light Infantry Division. OFAC did not provide any details of foreign assets or foreign financial ties of the newly-sanctioned commanders or units.
Zimbabwe: Former energy minister sentenced for corruption
In July, Zimbabwe’s former energy minister, Samuel Undenge, who served in former president Robert Mugabe’s last cabinet, received a sentence of fouryears’ imprisonment from a Zimbabwean court on charges of corruption. Undenge was found guilty of awarding a public relations service contract in 2016 to a company owned by a senior official of the ZANU-PF, Zimbabwe’s governing party. Undenge was one of several Mugabe-era officials to be arrested following Emmerson Mnangagwa’s appointment as president in the wake of a military coup in November last year. Similar trials involving Mugabe’s former mining minister and former sports minister are currently ongoing.
Kenya: Public officials arrested following railway project corruption concerns
On 11 August, Kenyan police detained 17 public officials as part of a corruption investigation into the acquisition of land for the Mombasa-Nairobi Standard Gauge Railway (SGR), a flagship USD 3 billion railway project completed in 2017. Detainees include the chair of Kenya’s public land agency and the managing director of the state-owned rail company. The SGR has been controversial in Kenya, due to concerns relating to the project’s high final cost (four times the original estimate), and the close involvement of People’s Republic of China (PRC) state-owned entities, which provided construction services and debt and for the project. No PRC companies or individuals have been named as part of the Kenyan authorities’ investigation.
Russia: New US sanctions target technology exports
On 27 August, a new wave of US sanctions against Russia came into force, banning the export of US “national security-sensitive goods and technology” to Russian state-owned companies, as well as restricting US foreign aid and credit to the country. The new measures, which were first announced by the US State Department earlier this month, are a response to the poisoning of Russian double agent Sergey Skripal and his daughter Yulia in the UK in March. The wide-reaching sanctions will likely restrict the export of certain engines, integrated circuits, testing and calibration equipment, and other specific electronic devices, potentially hitting Russia’s aviation and oil and gas sectors.
Whilst the financial and diplomatic implications of the new measures remain unclear, several commentators have suggested that the volume of exports to be affected will be minor, given that the Obama administration had already halted the majority of US military exports to Russia in 2014. Though Russia is yet to respond with countersanctions, the US is threatening further “more draconian” measures if Russia does not provide reliable evidence that it is no longer using chemical or biological weapons. The new sanctions have weakened the Russian rouble, which fell 1.5 percent against the dollar to its lowest level since 2016 following their announcement.
Ukraine: Customs corruption rife as anti-corruption progress stalls
Süddeutsche Zeitung, a German investigative newspaper, has reported that the Ukrainian government is losing approximately USD 4.8 billion annually due to corruption in its customs authorities and evasion of customs taxes. The newspaper’s investigations have centred on customs traffic in Kiev, the Ukrainian capital, and Odessa, a large port city in southern Ukraine allegedly under the influence of a mafia group of local politicians and former criminal gang members. A common scheme reportedly involves the relabelling of shipment itineraries in cooperation with corrupt officials in order to mask their true value and evade taxes.
Reports regarding the scale of customs corruption accompany a growing sentiment that progress on corruption in Ukraine has stalled, with various commentators highlighting the lack of criminal convictions against associates of former president Viktor Yanukovych since the 2014 revolution. Ukraine remains dependent on further credits from the International Monetary Fund, whose support of the country hinges on the government’s implementation of economic and anti-corruption reforms, to service its growing debts.
MIDDLE EAST AND NORTH AFRICA
UAE: Abraaj Capital founder settles USD 217 million bounced cheque case
On 28 August, Arif Naqvi, the Pakistani founder of UAE-based Abraaj Capital, reached an out-of-court settlement with Hamid Jafar, one of the firm’s founding shareholders who in 2017 and 2018 lent Abraaj Capital an estimated USD 400 million. This specific settlement relates to a USD 217 million bounced cheque used as partial security for the loans Jafar made to Abraaj Capital and is the second settlement in recent months; in July, Naqvi and Jafar reached an out-of-court settlement for a USD 300 million bounced cheque. In Dubai an individual drawing bounced cheques can face criminal penalties, including a prison sentence. These two settlements come amid Abraaj Capital’s court-supervised restructuring in the Cayman Islands, which began in June and which involves the restructuring of debts worth USD 1 billion. Since February, Abraaj Capital has faced accusations of misusing investor capital designated for hospital development projects as part of a USD 1 billion healthcare fund.