7 December 2023

9 min read

Red Flag Bulletin | December 2023

December 2023
Oil industry equipment, oil refinery, oil pump

This month’s top stories:

  • New Ugandan law grants state petroleum company Uganda National Oil Company monopoly over the import and supply of petroleum products.
  • Portuguese prime minister resigns amid investigation into corruption in green hydrogen and lithium mining projects, prompting dissolution of government.
  • Cryptocurrency exchange Binance and its CEO plead guilty to AML violations for not reporting transactions with terrorist organisations, as well as to sanctions violations for conducting over USD 1 billion worth of transactions involving Syria, Iran, North Korea, and Russia.

 
SUB-SAHARAN AFRICA

Nigeria: Former central bank governor charged with fraud and corruption

On 17 November, Godwin Emefiele, the former governor of the Central Bank of Nigeria (CBN), was charged with six counts of fraud and corruption by a Nigerian court. He is accused of improperly awarding contracts for the purchase of vehicles during his tenure as governor. These contracts were allegedly awarded to a company linked to an employee of the CBN, which was in breach of Nigerian procurement laws. The charges follow Emefiele’s suspension from his role as governor by the country’s president in June 2023, and subsequent arrest in relation to allegations of misappropriation of state funds. Emefiele has pleaded not guilty to the charges. On 22 November, he was granted bail by the Nigerian court on the condition that he pays a bond of approximately USD 333,000, provides properties as surety, and deposits his travel documents with the court.

 

Uganda: New law grants state oil company monopoly import rights

On 23 November, Uganda’s president enacted the Petroleum Supply (Amendment) Act, 2023, which grants Uganda’s state petroleum company, the Uganda National Oil Company Limited (UNOC), a monopoly over the import and supply of petroleum products in the country. Historically, the import of petroleum products was largely undertaken by private licensed oil marketing companies through open tender systems in Kenya, which according to the Ugandan government, favoured supply to Kenyan companies. This practice led to shortages in Uganda and, subsequently, volatile fuel prices. The 2023 Act is intended to mitigate this by guaranteeing the security of Uganda’s petroleum supply. Going forward, private licensed oil marketing companies will not be permitted to import petroleum products into Uganda, and will be reliant on the supply of these products by UNOC. Ugandan MPs who voted against passing the law on 14 November cautioned against the lack of price competition that will arise through having UNOC as the sole importer of petroleum products.

 


 
ASIA PACIFIC

Thailand: Government body set up to tackle online scams

On 1 November, Thailand’s Ministry of Digital Economy and Society launched the Anti-Online Scam Operation Centre (AOC) in collaboration with authorities including the Anti-Money Laundering Office, the Department of Special Investigation, and the Bank of Thailand. The AOC acts as an integrated government body to tackle the country’s rampant online scams. It provides a 24-hour hotline for the general public to report any suspected scams. Within the first six days of its operations, AOC’s hotline reportedly received over 15,000 calls, which resulted in the freezing of 680 suspected or fraudulent bank accounts. AOC said it would follow up on the complaints with investigations, accelerate the process of scam money recovery, and engage AI-based technology for future scam prevention.

 


 
AMERICAS

US: SEC adopts new regulatory framework for security-based swap execution facilities

On 2 November, the US Securities and Exchange Commission (SEC) approved new regulations for security-based swap execution facilities (SBSEFs), electronic platforms provided by corporate entities that allow participants to buy and sell swap products. The new framework for the registration and regulation of SBSEFs is intended to increase the transparency and integrity of SBSEFs by mitigating conflicts of interest. SBSEFs are now required to designate a chief compliance officer; submit filings to the SEC; establish and maintain a programme of automated systems and risk analysis; and establish and maintain emergency procedures, backup facilities, and disaster recovery plans. SBSEFs are further required to register with the SEC as a broker, although they will be exempt from certain broker requirements. The new regulations align the SEC regime more closely with that of the US Commodity Futures Trading Commission (CFTC).

 

Venezuela: EU renews sanctions on Venezuela for six months

On 13 November, the EU announced the renewal of sanctions against Venezuela for six months. The EU sanctions were first applied in 2017 and involve an arms embargo, as well as travel bans and asset freezes on over 50 individuals. They had previously been reviewed on a yearly basis, and the EU’s decision to review them after six months has been seen as a gesture of goodwill after the Venezuelan government and opposition reached an agreement regarding a roadmap for the country’s 2024 general election. The renewal of EU sanctions was criticised by Jorge Rodríguez, president of the Venezuelan congress, who stated that the EU would not be able to oversee the Venezuelan elections if sanctions persist. The EU’s decision followed the temporary and conditional suspension of US sanctions on the Venezuelan oil and gas sector on 18 October in response to the roadmap agreement. However, on 30 October, the Venezuelan Supreme Court – which has been accused of being controlled by the government – annulled the results of primary elections held by the opposition earlier in the month to select president Nicolás Maduro’s adversary in 2024, citing electoral fraud.

 

Argentina: Newly elected president vows to combat corruption

On 19 November, Javier Milei – an Argentinian far-right politician, economist, former television personality, and member of the Chamber of Deputies of Argentina (2021-present) – was elected Argentina’s next president. During his campaign, Milei vowed to contain economic deterioration and corruption, including by privatising state-owned energy and media companies. Other campaign proposals included replacing Argentina’s currency with the US dollar, the reduction of the state’s control over the economy, the extinction of Argentina’s central bank, and Argentina’s exit from Mercado Comum do Sul, the South American trade bloc. Milei’s inauguration will take place on 10 December.

 

US: Binance and its CEO plead guilty to AML violations for not reporting transactions with terrorist organisations

On 21 November, Binance, the world’s largest cryptocurrency exchange, and its CEO and founder, Changpeng Zhao, pled guilty to federal criminal charges in the US following an investigation by the US Department of Justice (DoJ). Binance’s violations include failing to report and prevent transactions with terrorist organisations including ISIS, Hamas’ al-Qassam Brigades, Palestinian Islamic Jihad, and Al Qaeda. The exchange was also charged with unlicensed money transmitting and sanctions violations for conducting over USD 1 billion worth of transactions between US users and users in sanctioned jurisdictions such as Syria, Iran, North Korea, and Russia. Zhao, who pled guilty to one felony charge for failure to prevent money laundering, faces up to 18 months in prison and has agreed to pay a USD 150 million fine and step down from his role as CEO. Binance will be required to pay USD 4.3 billion in penalties and forfeiture and is expected to face additional civil regulatory enforcement action.

 


 
EUROPE

Portugal: Prime minister resigns amid investigation into corruption in energy projects

On 7 November, António Costa, the prime minister of Portugal, resigned after the Portuguese Supreme Court of Justice initiated an investigation into allegations of corruption in the award of several government contracts. The investigation relates to whistleblower allegations that a contract to build a green hydrogen energy plant and a connected data centre in Sines, Alentejo region, was awarded by the government through favouritism. The probe is also investigating government contracts awarded for two large lithium mining projects in Barroso and Montalegre in northern Portugal. Politicians from a wide spectrum of political parties called for Costa’s resignation after Portugal’s public prosecutor announced the investigation earlier on 7 November. Costa denied the allegations but stated that questions regarding his integrity were incompatible with the duties of prime minister. As a result of Costa’s resignation, Portugal’s president announced that the government would be dissolved at the beginning of December 2023, and called for new legislative elections to be held on 10 March 2024.

 

UK: Gambling company settles alleged bribery investigation with HMRC

On 24 November, Entain plc, a British sports betting and gambling company listed on the London Stock Exchange, agreed to a GBP 585 million settlement with HM Revenue and Customs (HMRC), the UK’s tax authority, relating to allegations of bribery. Entain, which operates the UK gambling brands Coral and Ladbrokes, reached a deferred prosecution agreement with HMRC to close an investigation into allegations that a Turkish betting and gaming business formerly owned by Entain failed to have adequate procedures in place to prevent bribery. Under the terms of the agreement, Entain will pay the penalty in instalments over four years, in addition to a GBP 20 million donation to charity, but will not receive a criminal conviction. In a press release, the company stated that it had “changed immeasurably” since the alleged events took place, and would continue its strategy to improve corporate governance.

 

The latest news from our regional desks about financial crime, corruption, sanctions, and integrity issues worldwide.

To discuss this article or other industry developments, please reach out to one of our experts.

Authors

Martin Devenish MBE
Martin Devenish MBE
Board Director, Global Head of Corporate Intelligence

Martin Devenish MBE joined the business in 2014. Martin works with our clients to ensure critical decisions are well informed. Prior to S-RM, Martin spent 22 years at Goldman Sachs in London and New York. During his career, Martin assumed a number of leadership roles and became a Partner in 2002. From 2005 to 2011 he was Head of Equities for Central and Eastern Europe, Middle East and Africa (CEEMEA) and for the following two years an Advisory Director to Goldman Sachs with a focus on growth and frontier markets in CEEMEA.

Martin was awarded an MBE in the Queen’s New Year Honours list of 2017 for services to education in both the UK and Overseas.

Penelope Jenkins
Penelope Jenkins
Senior Associate, Corporate Intelligence

Penelope is a Senior Associate in S-RM’s London office. As a fluent German, Russian, and French-speaker, she leads the company’s work in German-speaking Europe and regularly manages projects across the Former Soviet Union and francophone Europe. She has worked on a range of asset tracing and network mapping investigations and complex pre-transactional and compliance due diligence projects for clients in the financial services, legal, technology, natural resources, life sciences, and hospitality sectors.

Penelope holds an MA in Modern & Medieval Languages (German and Russian) from the University of Cambridge, and a Masters degree in Russian and Post-Soviet Politics from the School of Slavonic and East European Studies at University College London. She has also completed the Graduate Diploma in Law. Penelope grew up in Switzerland and Austria and worked in Vienna, Moscow, and Paris before joining S-RM.

Martin Devenish MBE
Martin Devenish MBE

Board Director, Global Head of Corporate Intelligence

Penelope Jenkins
Penelope Jenkins

Senior Associate, Corporate Intelligence

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