5 February 2024

12 min read

Red Flag Bulletin | February 2024

February 2024
Sunset over city and river

This month’s top stories:

  • Trial scheduled in Saigon Commercial Bank embezzlement and corruption case that has been described as Southeast Asia’s largest corruption scandal.
  • Global software company SAP agrees to pay over USD 320 million to settle US charges of bribery by its intermediaries and consultants in Sub-Saharan Africa.
  • US sanctions former Guatemalan president Alejandro Giammattei for alleged involvement in corruption.

 
ASIA PACIFIC 

Japan: Liberal Democratic Party lawmaker arrested for suspected fundraising violations 

On 6 January, Tokyo prosecutors arrested Yoshitaka Ikeda, a lawmaker from Japan’s ruling party, for suspected fundraising violations. Between 2018 and 2022, Ikeda and some members of the Liberal Democratic Party (LDP) allegedly pre-determined quotas for fundraising ticket sales for its members based on their elected positions. They then funnelled the excess revenue to lawmakers including Ikeda without declaring the amount transferred in political fund statements. Ikeda allegedly received USD 330,000 in kickbacks in the process, and was also suspected of instructing his subordinates to destroy evidence related to the matter. He has since been expelled from the LDP. Ikeda has not commented publicly on the allegations against him. 

 

Vietnam: Trial in Saigon Commercial Bank embezzlement and corruption case scheduled for March 2024 

On 10 January, the People's Court of Ho Chi Minh City scheduled the trial in the corruption case of Truong My Lan for March 2024. Proceedings are expected to last over a month. Truong My Lan, who founded and chaired Ho Chi Minh City-based property developer Van Thinh Phat Group, was indicted in December 2023 alongside 85 accomplices for allegedly embezzling over VND 304 trillion (USD 12.4 billion) from Saigon Commercial Bank, which she controlled, and for paying more than USD 5.2 million in bribes to officials. The embezzled amount reportedly equated to 3 percent of Vietnam's GDP, with mainstream media describing the case as the largest corruption scandal in the history of Southeast Asia. Truong My Lan has not responded publicly to the charges. 

 


 

MIDDLE EAST AND NORTH AFRICA 

Yemen: Designation of the Houthis as a Specially Designated Global Terrorist Group  

On 17 January, the US Department of State announced the designation of Ansar Allah, a militant organisation commonly known as the Houthis, as a Specially Designated Global Terrorist group (SDGT). This designation is pursuant to Executive Order 13224 which relates to terrorist groups, their leaders, and those providing support. It follows a series of recent Houthi attacks on commercial vessels transiting the Red Sea which has disrupted international shipping routes in the Red Sea and Gulf of Aden. The SDGT designation has a 30 day implementation delay and will be effective as of 16 February. Under former President Trump’s administration (2017-2021), the Houthis were designated as a Foreign Terrorist Organisation; this designation was subsequently removed in February 2021 under President Biden’s administration (2021-present).  

In December 2023, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions targeting financial facilitators of the Houthis, comprising three currency exchanges based in Turkey and Yemen that OFAC accused of facilitating the flow of Iranian financial assistance to the Houthis. The head of one of the Turkey-based currency exchanges designated was also sanctioned. On 25 January, OFAC announced sanctions targeting four key Houthi figures. This designation was closely coordinated with the UK government’s sanctions measures, which also announced asset freezes, arms embargoes, and travel bans targeting the same four key Houthi figures designated by OFAC on 25 January.

 

The Occupied Palestinian Territories: Fresh rounds of sanctions targeting Hamas announced 

On 22 January, OFAC announced its fifth round of sanctions targeting the key leaders, operatives, financiers, and financial facilitators of Harakat Al Muqawama Al Islamiya (Hamas), the Islamist militant group which governs Gaza, in response to Hamas’ attacks on southern Israel on 7 October 2023. OFAC’s actions were closely coordinated with the UK and Australian sanctions regimes targeting the financial networks and leaders of Hamas and other Palestinian militant organisations. This comprised Gaza-based financial facilitators and Turkey-based currency exchanges which facilitated the flow of money to Hamas, including from the Islamic Revolutionary Guard Corps-Qods Force, a sanctioned Iranian arms force.   

 


 

SUB-SAHARAN AFRICA 

Sub-Saharan Africa: Global software firm SAP fined for bribes allegedly paid by intermediaries and consultants 

On 10 January, the US Securities and Exchange Commission announced charges against global software company SAP SE for contravening the Foreign Corrupt Practices Act by bribing government officials in South Africa, Malawi, Kenya, Tanzania, and Ghana – as well as Indonesia and Azerbaijan – between 2014 and 2022. These bribes were allegedly made by third-party intermediaries and consultants employed by SAP, to secure public sector contracts for the company. In South Africa, this allegedly included bribes made to officials at Eskom, the state-owned power utility which has been subject to widespread allegations of corruption. SAP agreed to pay over USD 98 million to settle the charges. Linked to this, SAP also agreed to pay over USD 220 million to settle a concurrent investigation into the matter by the US Department of Justice, specifically focused on bribery schemes in South Africa and Indonesia. SAP stated that it welcomed the conclusion of these investigations, and has been credited by the US Department of Justice for cooperating with the investigations and applying corrective measures. 

 


 

EUROPE 

UK: Majority owner of Tottenham Hotspur football club pleads guilty to insider trading charges in the US 

On 24 January, Joe Lewis, a British billionaire and majority owner of the London-based Tottenham Hotspur football club, pled guilty to charges relating to insider trading at the US District Court for the Southern District of New York. US federal prosecutors charged Lewis with 16 counts of securities fraud and three counts of conspiracy. They accused Lewis of giving insider information relating to companies in which he was an investor to friends, family members, and employees so that they could benefit financially between 2013 and 2021. 

 


 

AMERICAS 

Ecuador: 22 criminal groups declared as terrorist organisations during state of emergency  

On 9 January, Ecuador’s government classified at least 22 criminal groups as terrorist organisations after Adolfo Macias, leader of the criminal group Los Choneros, escaped from prison and prison escapes and violent attacks reportedly coordinated by criminal groups multiplied. Ecuadorian president Daniel Noboa (2023-present) declared a state of emergency for at least 60 days, introducing a state of internal armed conflict and allowing the country’s military to take charge of security. From 9 to 25 January, Ecuadorian security forces carried out over 44,000 operations and arrested over 3,600 individuals, including on terrorism charges. Noboa has announced security cooperation plans with neighbouring countries and the US in order to combat violence in the region.  

 

US: Securities and Exchange Commission approves 11 bitcoin exchange traded funds licences 

On 10 January, the US Securities and Exchange Commission (SEC) announced the approval of 11 applications for US-listed exchange traded funds (ETFs) to list and track bitcoin as an exchange-traded product. Although the SEC had rejected previous applications of this nature, the US Court of Appeals for the District of Columbia found that the SEC had not properly explained its reasoning for the rejections. It remanded the case and prompted the SEC to approve select applications relating to bitcoin but not to other cryptocurrencies. The SEC’s chairperson stated that sponsors of bitcoin ETFs would be required to provide fair disclosures about their products, and that existing rules and standards of conduct to prevent fraud and manipulation would apply. In the announcement, the SEC also warned investors to remain cautious of the risks associated with bitcoin despite the SEC’s approval of certain trading activities.  

 

Guatemala: US sanctions former Guatemalan president for alleged involvement in corruption 

On 17 January, the US Department of State designated Alejandro Giammattei, the president of Guatemala from 2020 to 14 January 2024, and his three adult children as ineligible to enter the US. The US claims that Giammattei’s acceptance of bribes to perform his official duties while in office undermined the rule of law in Guatemala. Giammattei has denied any wrongdoing. The sanctions were announced three days after members of Guatemala’s congress attempted to block president-elect Bernardo Arévalo’s inauguration as Giammattei’s successor. Arévalo is a progressive politician who campaigned on an anti-corruption platform seeking to change Guatemala’s traditionally conservative political landscape. His campaign and election have been marked by official efforts to deny his swearing in to the presidency. 

 

Venezuela:  32 individuals arrested for allegedly conspiring to assassinate president Nicolás Maduro 

On 22 January, Venezuela’s attorney general Tarek William Saab announced the arrest for treason of 32 individuals, including civilians and military personnel. The government claimed that since May 2023, the group had devised five different plans to harm the Venezuelan government, including plots to assassinate president Nicolás Maduro. The individuals involved reportedly originated from Colombia and acted in collaboration with the US Central Intelligence Agency (CIA), the US Drug Enforcement Administration (DEA), and the Colombian military.  

 


 

RUSSIA AND CIS 

Russia: State-controlled diamond miner Alrosa targeted by EU sanctions after G7 ban on Russian diamonds 

On 3 January, Russian state-controlled diamond mining company Alrosa – the world’s largest diamond mining company by revenue – was sanctioned by the EU. Alrosa’s CEO, Pavel Marinychev, was also added to the EU’s sanctions list. Alrosa’s designation comes as part of the G7 nations’ commitment to ban the trade of non-industrial Russian diamonds in an effort to further cut off the revenues of the Russian state in response to its full-scale invasion of Ukraine. While the US imposed a ban on the import of Russian diamonds in March 2022, the sector has largely escaped co-ordinated western sanctions until now. The G7 diamond ban came into effect on 1 January 2024, and the introduction of further sanctions and phased embargoes by G7 nations are expected throughout 2024. Switzerland introduced a ban on imports of Russian diamonds on 31 January. 

 

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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