Posts

For the Love of the Game: Corruption & Sports NGOs

tennis-player-1246768_1280This article, written by GRC Solutions Expertise Panel member Jeremy Sandbrook and co-authored with Liz Burton,  examines some of the types of corruption that has taken place within sports NGOs, why they are so susceptible to it, and what some of the potential solutions are to solving the problem.

While sport is now the dominating source of entertainment worldwide, it has a darker, shadier under-belly it just can’t seem to shake-off – Corruption.  Sports NGOs are particularly vulnerable with bribery, match-fixing, extortion, doping and money laundering now common place.

 

Sports NGOs and ‘Corruption as usual’

It seems that barely a month passes without yet another report of corruption in sports being splashed across newspaper headlines.  These include members of FIFA’s executive committee accepting bribes, a former president of CONCACAF charged with fraud and money laundering, hosting nations paying bribes to win Olympic hosting rights, match-fixing, and the IAAF’s involvement in corruption and cover ups.

This phenomenon isn’t just limited to football and athletics however, with the following examples showing just how wide spread the issue is:

  • Cricket has witnessed allegations of both spot-fixing and match-fixing involving players from Pakistan, England, New Zealand, India, South Africa, Sir Lanka and Kenya.  There have also been on-going match-fixing allegations made in relation to the Indian Premier League (the most lucrative cricket event in the world), with two of the league’s eight teams recently suspended for two years over a corruption scandal;
  • Tennis is also currently undergoing a crisis as allegations of match fixing engulf the sport;
  • Cycling has for many years been dogged with allegations of illegal doping, with the issue only coming to a head when the International Cycling Union was accused of knowingly protecting Lance Armstrong – cycling’s long time poster boy – against doping allegations; and
  • Badminton, boxing, handball and other sports, including US collegiate sports, have all suffered from similar credibility gaps.

It is clear from this that there are serious underlying issues that sports NGOs need to address in order to clean up their respective sports.

Kroll fraud report highlights third party bribery and corruption risk

Half of the executives polled in an international survey have expressed concern over the risk their companies faced when dealing with overseas third parties, the recent Kroll Global Fraud Report revealed.

The Kroll Global Fraud Report surveyed over 750 senior executives from a variety of industries and countries worldwide.

Two in five respondents said they felt moderately or highly vulnerable to bribery and corruption risks.

Four in five respondents believed their organisations had become more vulnerable to fraud over the past year.

The report also found that companies had restrained their own expansion due to fears associated with third party bribery and corruption risk. Kroll found that almost 75 percent of those polled “were dissuaded from operating in a particular country or region because of the heightened exposure it would bring to fraud.”

The US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act confer forum courts with extraterritorial reach – that is, the laws can catch businesses incorporated in countries other than the US and the UK – so long as there’s some connection with the jurisdiction.

So when working with third parties, companies must comply with anti-bribery and corruption frameworks to avoid detrimental reputational and legal consequences.

This means that companies must have processes in place for scoping, risk assessment due diligence and risk mitigation.

In 2013, 99 percent of all foreign bribery criminal prosecutions under the FCPA involved third parties.

Penalties under the wide-reaching FCPA and UK Bribery Act are severe.

Breaches of the FCPA may result in company fines of up to USD$2 million per violation of the Act. Penalties for individuals include up to USD$250,000 and/or sentences of up to five years’ imprisonment.

In 2013, Parker Drilling Company paid over USD$4 million to settle charges with the Securities and Exchange Commission for authorising improper payments totalling USD$1.25 million to a Nigerian agent who would later use the funds to bribe Nigerian officials.

Individuals that commit an offence under the UK Bribery Act may be subject to an unlimited fine and/or up to 10 years’ imprisonment.

GRC Solutions provides off-the-shelf and customised training in Anti-Bribery and Corruption across Australia and other jurisdictions.

Contact us today for more information.

Source: FCPA Blog

December 9 is International Anti-Corruption Day

This important campaign aims to celebrate the United Nations’ Convention against Corruption. It also takes stock of worldwide efforts to tackle corruption.

Sponsored by the UN Office on Drugs and Crime (UNODC) and the UN Development Program, it attracts widespread engagement and support internationally.

According to the Anti-Corruption Day website, “Corruption is a serious crime that can undermine social and economic development in all societies.”

“No country, region or community is immune.”

“This year UNODC and UNDP have developed a joint global campaign, focusing on how corruption affects education, health, justice, democracy, prosperity and development.”

Education and training play an important role in tackling corruption. To highlight International Anti-Corruption Day, GRC Solutions will be publishing a range of resources and commentary over the week ahead.

We’ll be offering broad-ranging multimedia content that will place International Anti-Corruption Day in the context of ongoing anti-corruption measures. We’ll also consider what consequences corruption poses, not only for its victims, but also for those who engage in it.

Stay tuned.

Talk to GRC Solutions today about our range of Anti-Bribery & Corruption courses, as well as our broader Salt Compliance online training library.

International Anti-Corruption Day: everybody has a role to play in tackling corruption

It blights lives, and blunts social and economic growth. And the efforts to stamp it out are enforced by some of the severest laws in the world.

Corruption is the broad term we use to describe dishonest conduct or the abuse of power by a person for personal gain. Arguably the best-known form of corruption is bribery.

Every year, the costs of corruption are said to amount to USD$2.6 trillion globally, with an estimated $1 trillion paid in bribes. One estimate indicates that private sector corruption alone accounts for US$515 billion annually.

December 9 is International Anti-Corruption Day, a United Nations initiative designed to raise awareness about the risks and consequences of corruption. Sponsored by the UN Office on Drugs and Crime (UNODC) and the UN Development Program, it attracts widespread engagement and support internationally.

To mark last year’s campaign, UN Secretary-General Ban-Ki Moon said, “To dismantle corruption’s high walls, I urge every nation to ratify and implement the UN Convention against Corruption.”

“Its ground breaking measures in the areas of prevention, criminalisation, international cooperation and asset recovery have made important inroads, but there is much more to do.”

Everyone has a role to play in stamping out corruption, a point made in a statement released by the UNODC.

coins-990693_1920

It states that “people can – and should – inform themselves about what their Governments are doing to tackle
corruption and hold elected officials responsible for their actions.”

“Actions are also key – reporting incidences of corruption to the authorities, teaching children that corruption is unacceptable and refusing to pay or accept bribes,” it continues.

The costs of engaging in corrupt conduct are huge. One person who knows this more than most is Richard Bistrong. A former sales executive, Richard was sentenced to 18 months in prison for bribery. His crime involved attempting to win contracts from the United Nations and several foreign countries by bribing officials.

Prior to his jail term, Richard spent two and a half years as a US government witness, agreeing to go undercover to expose networks of corruption.

Today, he’s a leading anti-bribery and corruption consultant, speaking regularly about his experience and the toll it took on his life and the lives of his loved ones.

“During the many years when I was working in the field of international sales, I was aware that I was engaging in illegal behaviour,” he says.

“However, at that time in my life, I wasn’t thinking about getting caught and did not think I would get caught.”

Anti-corruption measures are enforced by strict legislation worldwide, including the Prevention of Corruption Act in Singapore and section 70 of the Commonwealth Criminal Code in Australia.

The US Foreign Corrupt Practices Act has continued to attract high-profile international cases. To cite just two cases in 2015, there has been a USD$19 million settlement by pharmaceutical company Bristol-Meyers Squibb and a $14 million case involving Japanese conglomerate Hitachi.

The UK Bribery Act has also drawn scrutiny for its recognition of a broad range of offences. This includes the offence of failing to prevent bribery by a third party, which sits alongside the traditional offences of bribing (including the bribery of foreign public officials) and receiving bribes.

Recently, a Scottish cabling systems supplier Brand-Rex Limited became the first company to fall foul of this offence since the Act took effect in 2011.

Every year, independent body Transparency International publishes a Corruption Perceptions Index which ranks countries in relation to perceptions of corrupt practices from the least to the most corrupt.

While the top of the list tends to remain consistent, the 2014 list contained some surprises. Singapore fell from the top five for the first time to seventh place. Australia slipped out of the top 10 altogether.

As one report by the Organisation for Economic Co-operation and Development (OECD) explains, corruption increases the cost of doing business, leads to waste and the inefficient use of public resources, perpetuates poverty and undermines the rule of law.

Drawing attention to corruption through education and training – equipping people with the practical means to identify what it is exactly, avoid corrupt conduct and report it through the proper channels – is crucial to tackling it.

In the lead-up to International Anti-Corruption Day, GRC Solutions will be offering a range of resources and commentary.

Talk to GRC Solutions today about our range of Anti-Bribery & Corruption courses, as well as our broader Salt Compliance online training library.

Macau real estate billionaire latest charged in UN bribery case

Billionaire real estate developer Ng Lap Seng is the latest person to have been indicted in the US for involvement in a scheme to bribe former president of the United Nations General Assembly, John Ashe.

Three other people have been named in the indictment, including former chief executive of the Global Sustainability Foundation and Australia-China social queen, Shiwei Yan, and Francis Lorenzo, a suspended deputy Dominican Republic ambassador to the UN.

According to prosecutors, Lorenzo was one of several intermediaries used by Ng to pay Ashe more than USD$500,000. The bribes were intended to elicit Ashe’s help in acquiring UN support to build a UN conference centre in Macau, where Ng is based.

Ashe is alleged to have taken more than USD$800,000 in bribes from other Chinese businessmen to support business deals in Antigua. Although covered by diplomatic immunity, he faces tax charges for under-reporting his income by more than USD$1.2 million.

Ng also faces money laundering charges after making false statements to custom officials about why they brought USD$4.5 million in cash from China into the US.

US authorities deemed Ng to be a flight risk due to his financial resources, which include USD$1 billion in real estate holdings. He has since been released on a USD$50 million bail and currently lives under 24-hour house arrest in his apartment in Manhattan, pending trial.

The US Foreign Corrupt Practices Act (FCPA) has a wide extraterritorial reach. Under the FCPA, individuals may be subject to fines of up to USD$250,000 per act of corruption and/or five years’ imprisonment.

GRC Solutions is the leading provider of online compliance training on Anti-Bribery and Corruption and Anti-Money Laundering. Contact us today for more information about out off-the-shelf and bespoke options.

Sources: Sydney Morning Herald, Yahoo! News, CNN

Former Singapore resort director charged with corruption

The inside of a darkly lite casino, with an ominous statue in the foreground

An ex-director of one of Singapore’s major integrated resorts faces up to five years’ jail and/or a fine of SGD$100,000 for seven charges of corruption.

Soh Yew Meng was allegedly paid at least SGD$317,000 in bribes in the course of his position as director of Resorts World Sentosa (RWS). The bribes were said to have been paid as consideration for “furthering [certain contractors’] business interests” in RWS projects, including restaurants and cafes located in the resort.

The bulk of the bribes comes from two SGD$150,000 payments made by the managing director of a furniture and construction company to Soh between 2013 and 2014 to “further the business interests” of the company. Other contractors accused of making corrupt payments to Soh include a lighting designer, a building company and a security systems business.

The charges against Soh also include three accounts of attempting to obtain corrupt benefits of an unspecified amount from a contractor and an individual.

Tan Siow Hui, a freelance quantity surveyor working with Soh, has been prosecuted for conspiring with him to receive and attempt to obtain bribes from contractors.

The Corrupt Practices Investigation Bureau (CPIB) has identified a number of locations where the bribes were paid, including car parks and a local canteen. It emphasises that it will not hesitate to act against parties involved in corrupt practices: “Procurement systems and processes are put in place to ensure fair competition from all bidding vendors. But when individuals circumvent these processes and seek benefit for themselves, a level playing field becomes impossible to achieve.”

Last year, Singapore fell two places in the Corruption Perceptions Index ranking of least corrupt countries in the world. It currently sits at 7th place.

Are you on top of your international anti-bribery and corruption obligations? GRC Solutions produces off-the-shelf and custom compliance training for a number of jurisdictions, including Australia, New Zealand and Singapore. Contact us today for more information.

Sources: The Straits Times, Today Online, Channel NewsAsia

“Sextortion” – an overlooked form of corruption

There are many form of harassment in the workplace, sextortion is just one example

When we think of “corruption”, we tend to think of the provision of monetary bribes. But as the 16th International Anti-Corruption Conference (IACC) has highlighted, corruption comes in many forms. One such form is the abuse of official power to extort sexual favours, or “sextortion”.

According to Interpol, there are hundreds of thousands of victims of sextortion around the world. But because there is often a lack of hard evidence and victims are too ashamed to come forward, incidents remain grossly underreported and corruption prosecutions for these practices are rare.

Mainstream anti-corruption movements tend to overlook it, despite victims of sextortion often suffering greater adverse effects than those of financial corruption. These effects include physical violence, a violation of human rights, social ostracisation and the possibility of pregnancy or disease.

Sextortion can be explicit or implicit, and often overlaps with sexual harassment. The spectrum of the nature of the extortion in reported cases ranges from the threat of withholding basic nutrient supplements by NGO workers in West Africa to promises of career advancement or good grades in first world workplaces and universities. A recent survey commissioned by the Royal Australasian College of Surgeons revealed first-hand stories of junior surgical staff being expected to provide sexual favours to senior surgeons in exchange for tutorship.

A 2014 study by the International Association of Women Judges (IAWJ) and the Thomson Reuters Foundation of nine jurisdictions, including Australia, the United Kingdom, Canada, Uganda and Argentina, found that none of the countries had laws explicitly addressing sextortion.

Nancy Hendry, senior advisor at the IAWJ, told delegates at the IACC, “People tend to dismiss [sextortion], partly because it is seen as part of life. But it shouldn’t be, just like sexual harassment or domestic violence are unacceptable.”

Contact GRC Solutions today for more information about our off-the-shelf and bespoke compliance training in Anti-Corruption and Bribery and Diversity and Equality, including discrimination and sexual harassment.

Sources: The International Anti-Corruption Conference, the Thomson Reuters Foundation, the Global Anticorruption Blog, ABC News

Sony investigated for Chinese bribery allegation

According to documents leaked during its recent hacking, Sony Pictures Entertainment is under investigation for allegedly bribing a Chinese official to secure distribution of its 2010 film, Resident Evil: Afterlife, in China.

The Wall Street Journal reported that the United States Securities and Exchange Commission (SEC) subpoenaed Sony in 2013 for allegedly violating a US law that outlaws bribing a foreign government official.
For many years, Sony has allegedly used the Dynamic Marketing Group, a Beijing-based firm, to get around China’s quotas and strict censorship systems, which inevitably hinder film distribution in China. The SEC is now looking into the precise methods employed by DMG to secure distribution of the blockbuster that grossed $296 million worldwide, of which $21.6 million came from China.

Once the subpoena was issued, the SEC stated that an email sent by a Sony employee showed that DMG resorted to using “special influence” to ensure the blockbuster be shown in theatres across China.
The documents revealing the bribery probe were a result of a cyberattack on Sony in November 2014, which also leaked confidential data such as personal information about Sony employees, internal emails between Sony workers and executive salary information.

Contact GRC Solutions today for more information about our Anti-Bribery and Data Protection online compliance training courses.

Source: Wall Street Journal

Department of Justice announces historic USD $772 million fine over FCPA violations

In late 2014, the United States Department of Justice (DOJ) fined Alstom, a French power and transportation titan, USD $772 million for multimillion dollar bribes the company paid to government officials worldwide.

The bribes helped Alstom secure lucrative energy contracts worth billions of dollars in countries including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.

Alstom admitted to charges brought under the US Foreign Corrupt Practices Act. It confessed to falsifying its books and business records and failing to implement adequate internal controls to monitor and prevent corruption conduct.

In brokering a plea agreement, the Justice Department factored in Alstom’s reluctance to disclose its misconduct, its refusal to cooperate, the breadth of its misconduct, the company’s prior criminal misconduct and its lack of an effective compliance and ethics program. Several senior individuals within the company have also had charges brought against them.

DOJ Attorney General James Cole said the historic fine sent an “unmistakable message to other companies around the world: that this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.”

The substantial penalties and preceding criminal investigation brought by the DOJ demonstrate the broad scope of American anti-bribery and corruption legislation.

Does your organisation comply with corporate misconduct and white collar crime laws? Speak to GRC Solutions today about our Anti-Bribery and Corruption courses.

Source: Compliance Week

First charges under the UK Bribery Act

Britain’s Serious Fraud Office (SFO) has secured its first charges under the UK Bribery Act. The SFO’s criminal investigation revealed Gary West, 52, James Whale 38, and Stuart Stone, 28, of Sustainable AgroEnergy (‘SAE’) masterminded a 23 million pound biofuel investment scam.

The three men falsely and deliberately misled investors between 2011 and 2012 into thinking that SAE owned property in Cambodia. Investors were told Jatropha trees, once considered a promising plant in the quest for oil, were planted on the land and that an insurance policy in place protected the investors from loss in case the crops failed.

David Green, Director of the SFO, was reported as saying, “These three individuals preyed on investors, many of whom were duped into investing life savings and pension funds”.

While Whale was charged and convicted of conspiracy to commit fraud by false representation and fraudulent trading, West and Stone were convicted of bribery offences, in addition to other charges such as conspiracy to furnish false information, making it the first time the SFO secured convictions under UK’s Bribery Act. Specifically, West and Stone were both found guilty of offences of bribing another person and being bribed under the legislation.

London’s Southwark Crown Court sentenced West, Whale and Stone to prison for 13, 9 and 6 years respectively.

The UK Bribery Act is considered one of the world’s toughest laws against bribery and corruption. Individuals can face up to 10 years’ imprisonment and an unlimited fine and have their assets confiscated. The legislation also grants the SFO with extraterritorial jurisdiction that is the power to prosecute any company or individual, even if the alleged bribery took place outside of the UK, provided there is still a sufficient link to the UK.

Contact GRC Solutions today for more information about our anti-bribery and corruption training courses.

Also find out more about our UK Bribery Act training course.

Source: Yahoo News UK and the Serious Fraud Office

Small bribes, big headaches

bribery and corruption

Even relatively small bribes are taken seriously by the authorities, as the three cases below reveal.

The Independent Commission against Corruption (ICAC) announced proceedings against Eddie Obeid last Thursday over the former MP’s lobbying efforts, which concerned a series of secretly-owned Circular Quay cafes. The case serves as a fresh reminder that even small bribes can lead to big headaches.

“Just like Al Capone and tax evasion, it might seem ironic that Eddie Obeid, the ultimate NSW powerbroker who pulled off a corrupt $60 million coal scam, goes down for a contract for a couple of lousy restaurants,” Australian Financial Review (AFR) reporter Geoff Winestock commented. The ICAC reports that Obeid may be undone for misusing his position as a Member of Parliament to influence the decisions of public officials, which resulted in favourable outcomes for his businesses. According to the AFR, Obeid hoped to double, or triple, the value of his $2.4 million investments in Circular Quay.

Last July, in the US, the Securities and Exchange Commission (SEC) pursued firearms manufacturer Smith & Wesson Holding Corp for a bribe of $11,000 to a Pakistani police department, in order to secure a $107,852 contract. The SEC fined the arms manufacturer $2 million under the U.S. Foreign Corrupt Practices Act (FCPA).

Commenting on the case, Bill Michael, co-chairman of Mayer Brown’s global anti-corruption and FCPA practice, told Corporate Counsel the SEC’s decision to chase down Smith & Wesson for a relatively small bribe was indicative of the commission’s hard-line approach on anti-bribery law. “Apparently, no case may be too small,” he said.

And in 2011, Manir Yakub Patel, the first defendant prosecuted under the UK Bribery Act, received a shocking six-year prison sentence for accepting £500 bribe to conceal a traffic summons. At the time, the 22-year-old worked at the Magistrates’ Court as a clerk. His sentence has since been reduced to four years in prison on appeal.

These three cases demonstrate that even relatively minor breaches of the law can lead to criminal investigations, court proceedings and severe penalties. Whether you’re in Australia, Singapore, or the UK, it’s essential you understand and comply with your country’s anti-corruption legislation.

Does your organisation understand and adhere to corporate misconduct and white collar crime laws? Talk to us today about our Anti-Bribery and Corruption courses.

Source: Australian Financial Review, Corporate Counsel

Anonymous shell companies* siphon USD $1trillion from developing countries

$1 trillion, enough money to employ half a million primary school teachers, is lost to corrupt activities undertaken by multinational companies in developing countries, according to a study by international advocacy group ONE.

The group states the lost money could alternately educate an extra 10 million children every year, provide antiretroviral medication for over 11 million people living with HIV/AIDS, or pay for 165 million vaccinations in sub-Saharan Africa alone.

A 2011 report by the World Bank, titled The Puppet Masters, estimates anonymous shell companies made an appearance in 70 per cent of major corruption cases between 1980 and 2010.

Director and co-founder of Global Witness, a London-based anti-corruption NGO, Charmian Gooch told the Sydney Morning Herald the group had turned up similar results: shell companies were consistently at the centre of all sorts of scandals, from suspect oil deals to blood diamond transactions.

Research from the World Bank indicates setting up a shell company is a low-cost enterprise, costing corporations between $900 and $7,000 AUD. In countries like the United States, where regulations are particularly lax, large corporations can create shell companies within an hour.

The crusade against shell companies has recently found new life as G20 leaders recently pledged to pursue tougher anti-corruption policies and chase illegal tax evaders and money launderers. The G20 recently released an anti-corruption action plan for 2015-2016.

“At the end of 2014, corruption continues to represent a significant threat to global growth and financial stability,” the plan reads. “Corruption destroys public trust, undermines the rule of law, skews competition, impedes cross-border investment and trade, and distorts resource allocation.”

“As a group of the world’s largest economies, the G20 remains committed to reducing the incidence of corruption and building a global culture of intolerance towards corruption.”

* A shell company refers to a non-trading company used as a vehicle for various financial manoeuvres.

 


 

Dates for your Diary!

Support our leaders in their mission to reduce corruption by attending the G20 High Level Principles on Beneficial Ownership Transparency. It is a ‘high priority’ pledge.

TI Corruption Perception Index 2014 Launch
Date: 4 December
Location: Brisbane, Melbourne, Perth and Sydney

International Anti-Corruption Day
United Nations Campaign
Date: 9 December

http://www.anticorruptionday.org/