4 June 2024

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Corruption charges filed against Malta’s ex-PM | Red Flag Bulletin | June 2024

June 2024
Hospital Mater Dei in Malta, Europe

This month’s top stories:

  • Corruption charges filed against former Maltese prime minister Joseph Muscat over hospital scandal; 
  • US proposes deal to ease sanctions on Israeli mining magnate Dan Gertler to facilitate disposal of assets in the Democratic Republic of Congo; and 
  • Saudi Arabia’s anti-corruption body publishes details of 20 ongoing corruption, fraud, and embezzlement cases. 


US: Department of Justice charges Congressman Henry Cuellar with bribery and acting as a foreign agent 

On 3 May, the Department of Justice (DOJ) unsealed an indictment against US Congressman Henry Cuellar, a Democrat representative from Texas, and his wife for bribery, unlawful foreign influence, and money laundering. The DOJ alleges that between 2014 and 2021, Cuellar and his wife accepted USD 600,000 in bribes from an Azerbaijani state-owned oil company and a Mexican bank to influence US policy. Cuellar is accused of laundering these payments through a series of shell companies owned by his wife. In exchange for the bribes, Cuellar allegedly agreed to influence US foreign policy in favour of Azerbaijan and to pressure high-ranking US officials regarding policies beneficial to the Mexican bank. On 29 May, the US House of Representatives’ Ethics Committee announced that it will open an investigation into Cuellar’s alleged bribetaking. Cuellar has denied the allegations and said he will not resign from his position. 

Peru: President Dina Boluarte’s brother and lawyer arrested for alleged influence peddling 

On 10 May, Peruvian authorities arrested both the brother and the lawyer of President Dina Boluarte over allegations of influence peddling. Nicanor Boluarte and lawyer Mateo Castañeda are accused of working to appoint subprefects – representatives of the Executive Branch in the different regions of Peru – in exchange for money and an agreement that the officials would help gather signatures to register Boluarte’s Citizens for Peru political party. Nicanor Boluarte and Mateo Castañeda were released on 17 May but remain under investigation. This is one of several scandals that President Boluarte has faced in recent months, which have led to various as of yet unsuccessful impeachment attempts against her. 

Brazil: Governor of the State of Acre charged in corruption scheme  

On 15 May, Brazil’s Superior Court of Justice charged Gladson Cameli, the governor of the State of Acre, in a criminal case accusing him of corruption, embezzlement, money laundering, and bid rigging. These charges originate from a complaint presented to the court by the prosecutor’s office last November. The prosecutor’s office has alleged that in 2019, Cameli orchestrated a fraud scheme in tenders for public works in Acre. Cameli will remain in office while this proceeding is ongoing. 

Middle East and North Africa

Saudi Arabia: Anti-corruption body publishes details of 20 ongoing corruption, fraud, and embezzlement cases 

On 5 May, a spokesperson for Saudi Arabia’s Oversight and Anti-Corruption Authority, a public body responsible for promoting transparency and combating financial and administrative corruption in the Kingdom, announced the details of 20 criminal cases it has launched. They involve corruption, fraud, and embezzlement of funds across a range of state institutions, including the National Water Company and Ministry of Interior. The highest profile case involves the arrest of two unnamed employees at the Saudi Central Bank, who are accused of receiving kickbacks from an unnamed resident in exchange for accepting cash deposits totalling SAR 7.34 million (GBP 6.2 million) into accounts belonging to commercial entities without checking the source of the funds. 

US/Egypt/Qatar: US Senator’s federal bribery trial commences in New York  

On 15 May, US Senator for New Jersey Bob Menendez’s federal trial commenced. He stands accused of 18 criminal counts, including accepting hundreds of thousands of dollars’ worth of bribes, extortion, and acting as a foreign agent for the Egyptian and Qatari governments during his time in office. The trial is expected to continue until July 2024. He has pleaded not guilty to all charges against him.


Malta: Public prosecutors file corruption charges against former prime minister and government officials

On 6 May, Maltese public prosecutors filed corruption charges against Joseph Muscat, the country’s former prime minister; Chris Fearne, the current deputy prime minister; and Edward Scicluna, the governor of the Central Bank of Malta, following an investigation into the privatisation of three hospitals in 2015. Public prosecutors allege that the suspects colluded to award Vitals Global Healthcare, a company with no prior experience in the healthcare industry, a concession to privatise three public hospitals. Vitals Global Healthcare reportedly received hundreds of millions of euros in public funds to invest in the hospitals, but sold the concession to another company after 21 months, without having made any investments. The three men deny the charges. Muscat published a statement on 7 May to his Facebook page in which he stated that the investigation was a smear campaign. On 28 May, Muscat pleaded not guilty, and on 29 May, Fearne and Scicluna pleaded not guilty.  

Germany: German authorities raid politician’s office over money laundering and bribery allegations  

On 16 May, German police raided the offices of far-right Alternative for Germany (AfD) parliamentarian, Petr Bystron, over money laundering and bribery allegations. Bystron is suspected of having received EUR 20,000 from individuals with links to President Vladimir Putin in return for spreading Russia propaganda. Raids were conducted in Munich, Mallorca, and Berlin, the location of Bystron’s parliamentary office, as part of an investigation launched by the Munich public prosecutor’s office. In response to these allegations, the German parliament lifted Bystron’s parliamentary immunity to enable the raids to take place. Bystron has claimed that the allegations are part of a political campaign against him as he stands for election to the European Parliament 

Sub-saharan Africa 

DRC: US proposes deal to ease sanctions on Israeli mining magnate with assets in the DRC 

On 23 May, the US proposed a deal with the government of the Democratic Republic of Congo (DRC) to ease sanctions on Dan Gertler, an Israeli mining magnate with significant business interests in the DRC. Gertler has been sanctioned by the US for “opaque and corrupt deals” since 2017. The deal, which is also supported by the DRC government, would allow Gertler to sell his assets in the DRC and permanently exit the country, allowing Western companies easier access to minerals in mines currently linked to Gertler. While the deal could hand Gertler tens of millions of dollars, the US hopes that the deal would encourage Western investment into the DRC’s mining sector. This would not only increase access to critical minerals needed for the transition to green energy, but also spark debate among new investors on improving labour and environmental standards within the DRC’s mining sector. International and DRC civil society have denounced the deal, reporting that it lacks the necessary legal oversight. Gertler has been presented with the proposed deal, and is yet to respond.  

Eswatini: Leaked documents reveal regulators’ concerns over embezzlement and money laundering networks in Southern Africa 

Since April 2024, the Swazi Secrets, a series of investigative reports based on 890,000 leaked records from Eswatini’s financial sector regulator (EFIU), have detailed embezzlement and money laundering concerns raised by financial regulators in Southern Africa between 2016 and 2022. Over the month of May, investigative reporting by African news publications revealed (1) instances of suspected money laundering and embezzlement tied to Eswatini dignitaries, including three of Eswatini’s former ministers, the former deputy prime minister, royal family members, and High Court judges; (2) embezzlement concerns surrounding the Eswatini residential assets of  Edgar Lungu, Zambia’s former president (2015-2021); (3) money laundering concerns surrounding Eswatini-incorporated shell companies tied to gold smuggling networks between Zimbabwe and Dubai; and (4) terrorism financing concerns regarding transfers facilitated by Southern African banks. There is no indication that formal investigations have been launched in connection with these allegations. 

Russia and CIS

Russia: EU examines proposal to sanction insurer of Russian “shadow fleet” of oil tankers 

On 29 May, Bloomberg reported that the executive arm of the European Union is examining a proposal to sanction Ingosstrakh Insurance Co, a major Russian insurance provider. Following the G7’s imposition of price caps on seaborne Russian crude oil and petroleum products in late 2022 and early 2023, Ingosstrakh reportedly became one of the main insurance providers for theshadow fleetof tankers continuing to haul Russian oil. A move to sanction Ingosstrakh could significantly impact wider international commodities shipments that Ingosstrakh provides coverage for. Russian outlet Kommersant commented that such a decision could have a greater adverse impact on western parties than on Ingosstrakh, which could continue to rely on its strong relationships with major companies in China, India and other South Asian countries. The EU’s foreign affairs and security policy spokesperson did not confirm the anonymous claims, and Ingosstrakh emphasised its strict compliance with applicable regulations. The proposed sanctions are not included in the EU’s latest proposed sanctions package. 

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

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