The latest news from our regional teams about financial crime, corruption, sanctions and integrity issues worldwide.
North Korea: More sanctions
The United Nations Security Council unanimously imposed new sanctions on the Democratic People’s Republic of Korea on 22 December following the country’s intercontinental ballistic missile test in November 2017. The new sanctions have further reduced North Korea’s ability to import crude and refined petroleum and imposed a ban on the export of food and agricultural products, machinery, and electrical equipment. Additionally, the sanctions require all countries employing North Korean guest workers and their security monitors to repatriate them within 24 months, effectively banning the country’s citizens from working abroad.
Italy/Germany: 169 arrest warrants targeting Italian mafia clan
Italian and German authorities issued 169 arrest warrants for charges including money laundering, extortion and attempted murder in an operation targeting the Farao-Marincola clan from the ‘Ndrangheta mafia. USD 60 million in assets belonging to 57 companies, believed to be controlled from jail by the clan’s 70-year-old godfather, Giuseppe Farao, were also seized.
10 local politicians were among those arrested, including the president of the Crotone region, Nicodemo Parrilla, for facilitating the transnational network’s attempts to monopolise economic activities across entire towns relating to food and wine supplies, funeral services and waste recycling. The clan had taken over the local economy and politics of Ciro Marina in Calabria before establishing bases in Frankfurt, Munich, Wiesbaden and Stuttgart, and is believed to be seeking to expand its operations in Switzerland and North America.
Bulgaria: Anti-corruption law vetoed
On the second day of the new European Council Presidency, President Rumen Radev vetoed a new anti-corruption law, contending that it would stand in the way of an efficient fight against corruption. The move has been welcomed by international press, which cited concerns over potential loopholes in the proposed bill.
Brazil/US: Petrobras reaches settlement with international investors
On 3 January 2018, Petrobras SA, Brazil’s national oil company, announced it had reached a USD 2.95 billion settlement to end a class action lawsuit initiated by international investors. The dispute occurred in the fallout from severe losses caused by a large-scale bribery and money laundering scheme within the company, which had come to light in 2014. According to multiple observers, the settlement, which was lower in value than anticipated, put an end to uncertainties relating to the company’s exposure to liabilities associated with systematic corruption practices exposed by the Car Wash investigation, Brazil’s largest ever corruption probe. After the announcement, the company stated again that it had been a victim of the scheme. Petrobras’ investors in Brazil, not covered by the settlement, are likely to seek a similar deal before Brazilian courts.
Singapore/Brazil: Keppel Offshore & Marine scandal
In December 2017, a subsidiary of Keppel Corp, a Singaporean conglomerate, agreed to pay USD 422 million to resolve a high profile foreign bribery investigation by authorities in the United States, Singapore and Brazil. The subsidiary, Keppel Offshore & Marine Ltd, one of the world’s largest oilrig builders, was implicated in a bribery scheme involving the payment of kickbacks to Brazilian politicians and executives to win business deals worth USD 352 million between 2001 and 2014. Most of the illegal payments were made to officials at Brazil’s state-owned oil giant, Petroleo Brasileiro SA, which is the largest listed company in Latin America. In response, Keppel Corp has taken measures to enhance regulatory controls by introducing rigorous anti-corruption training and robust compliance and governance regimes.
Peru: President Kuczynski survives impeachment vote
On 21 December 2017, Peruvian President Pedro Pablo Kuczynski (PPK) survived an impeachment vote in congress, after the motion received 79 votes, which was short of the two thirds majority required. PPK’s opponents wanted to remove him from office for allegedly receiving illegal payments from Brazil’s largest construction company, Odebrecht, while he held ministerial positions under President Alejandro Toledo. PPK eventually acknowledged that his firm, Westfield Capital, had received money from Odebrecht, but that this had not violated laws, was not a bribe for preferential treatment, and that the company had been run by his business partner at the time.
Middle East & North Africa
USA/Turkey: US court convicts Halkbank banker
On 3 January 2018, a US court convicted Mehmet Hakan Atilla, a former banker at Turkey’s Halkbank, on several counts of bank fraud and conspiracy to evade US sanctions on Iran. This ruling comprises the latest development in a US investigation into Turkey’s oil-for-gold scandal, a lucrative Turkish money laundering scheme that circumvented Obama-era sanctions on Iran. The ruling will undoubtedly exacerbate increasingly diplomatic tensions between Turkey and the US. President Erdoğan, who has been accused of approving the scheme, previously denounced the case as a Gülen-orchestrated conspiracy against Ankara.
Saudi Arabia: Ritz-Carlton in Riyadh to re-open as a hotel
On 15 January 2018, various media sources reported that the Ritz-Carlton hotel in Riyadh, which has served as luxury prison for up to 200 prominent Saudis since November 2017, will soon reopen. The planned reopening of the hotel suggests that the so-called Saudi corruption purge, launched by Crown Prince Mohammed bin Salman Al Saud on 4 November 2017, is beginning to wind down. Several of the detained are thought to have secured their release through agreeing lucrative settlements with the Saudi authorities. A prominent example of this may be seen in the case of Bakr Binladin, president of the Saudi Binladin Group (SBG), who is among those detained. On 14 January 2018, a number of shareholders in SBG, including Bakr, are thought to have handed over their stakes to the Saudi government. In contrast, Prince Al Waleed bin Talal Al Saud, a prominent Saudi business mogul, is thought to remain in custody following his refusal to pay out to the authorities. The Saudi government has not confirmed details of recent developments in the purge, although they have previously stated their aim to recover up to USD 100 billion embezzled in the kingdom over recent decades.
Russia: Former government minister sentenced for corruption
In December, Alexey Ulyukayev, Russia’s former minister for economic development, was sentenced to 8 years in prison and fined RUB 130 million (around USD 2.3 million) after being found guilty of having accepted bribes. Ulyukayev, who has not admitted guilt, is accused of soliciting a bribe from Igor Sechin, the CEO of state-owned oil company Rosneft, in order to ensure Rosneft’s smooth acquisition of Bashneft, a smaller oil producer. He was arrested in November after leaving a meeting with Sechin with a bag containing USD 2 million. According to the defence, Ulyukayev believed the bag to contain fine wine. Rosneft’s acquisition of Bashneft has proved particularly contentious. In a separate case, the state-owned oil giant recently secured a RUB 100 billion (approximately USD 1.8 billion) settlement from Sistema, the former owner of Bashneft, which it accused of asset stripping.
Ukraine: High profile anti-corruption activist found dead on New Year’s Day
Iryna Nozdrovskaya, a human rights lawyer, died of stab wounds less than a week after winning a court case leading to the imprisonment of a powerful judge’s nephew. The accused, Dmitry Rossoshanksy, had killed Nozdrovskaya’s sister in a drunk driving accident. Although he had been arrested on numerous occasions for driving under influence, he had previously walked free under the protection of his influential uncle, Judge Sergei Kuprienko. The incident is viewed as symbolic of the government’s repression of anti-corruption activists, which saw attempts to curtail the work of the independent National Anti-Corruption Bureau of Ukraine. An increasingly hostile harassment campaign targeting journalists, NGOs and activists involved in anti-corruption work, including a law requiring them to file public declarations of personal assets, also drew heavy criticism from Human Rights Watch, Transparency International, the US State Department and the EU.
Cypriot court freezes Akhemetov’s assets
On 6 January, a Cypriot court ordered a freeze on USD 820 million in assets belonging to Rinat Akhmetov, one of Ukraine’s wealthiest and most powerful businessmen. Akhmetov has been accused by Denis Gorbunenko, the owner of Raga, a Cyprus-based investment group, of withholding payment for his acquisition of Ukrtelecom, a Ukrainian telecoms company that Raga sold to Akhmetov for USD 860 million in 2013. Akhmetov joins a short but wealthy list of Ukrainian businessmen who have seen their assets frozen in recent months. In December, a court in London ordered a freeze on USD 2.5 billion of assets belonging to Igor Kolomoisky and Gennady Bogolyubov, two high profile businessmen who are accused by Ukraine’s PrivatBank of transferring funds out of the bank to companies under their control.
US/The Gambia/DRC: US sanctions imposed on high-profile African figures
In December, the US imposed sanctions on several high profile figures across sub-Saharan Africa, including Yahya Jammeh, the former president of The Gambia. Jammeh is accused of using security forces to abuse, intimidate and assassinate rivals and those he deemed were undermining his authority. He is further accused of embezzling state funds. Dan Gertler, an Israeli mining magnate, is also sanctioned. He is accused of using his close friendship with Joseph Kabila, the president of the Democratic Republic of Congo President, to secure mining contracts and broker fees for companies wishing to operate in the DRC that resulted in the loss of USD 1.4 billion in revenue for the state.
Nigeria: Shell and ENI due to stand trial in Italy
In December 2017, an Italian court ordered that Eni SpA and Royal Dutch Shell Plc will stand trial in March relating to their acquisition of a Nigerian oil block in 2011. The oil companies purchased the block for USD 1.3 billion from a Nigerian oil company secretly owned by a former Nigerian oil minister. Corruption concerns around Eni and Shell’s acquisition also extend to their relationship with the administration of Goodluck Jonathan, the president of Nigeria from 2010 to 2015. Italian prosecutors have alleged that as much as USD 466 million of the 2011 payment may have been personally laundered by Jonathan and his associates.