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This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

Mishcon's Culture vs Corruption Diary - November 2014
 Briefing 
Date
28 November 2014

Mishcon's Culture vs Corruption Diary - November 2014

Welcome to the November edition of Mishcon's Culture vs Corruption Diary. Its aim is to provide businesses and their advisors with a snapshot of what has been happening in the world of corruption in the last month.

 

UNITED KINGDOM

A three man team of commissioners has been appointed as a 'takeover squad' to run Tower Hamlets. Following a six month investigation, a report by PwC auditors found what Cabinet Minister Eric Pickles referred to as "a worrying pattern of divisive community politics and alleged mismanagement of public money by the mayoral administration." The report has been sent to the police. One of the key findings related to the sale of Poplar Town Hall for nearly £900,000 to a political support of mayor Lutfur Rahman, despite the borough having been advised to accept a higher bid.
Evening Standard, 5 November 2014

A former MI6 spy is being investigated by the police for corruptly deceiving a high-profile divorcee out of nearly £15,000. Mark Hill-Wood, who ran his own private detective agency after a 25 year career with GCHQ and SIS, told Michelle Young that he had found proof that her husband Scot Young had £3.2bn in assets hidden away. The Youngs spent 8 years divorcing and despite Mrs Young being awarded £26m, property and telecoms magnate Mr Young has consistently claimed that he lost all his money just after their split. Mr Hill-Wood claimed that he required the money from Mrs Young to investigate the hidden assets, and later claimed he had been arrested by the Russian authorities and needed another £15,000. Surrey Police confirmed that an investigation is ongoing.
Tom Harper, Independent, 9 November 2014

Executives of Smith & Ouzman, a company that prints ballot papers and exam certificates, are in court facing charges of bribing foreign officials to win contracts at inflated prices. Christopher Smith, his son Nicholas Smith, Abidrahman Omar and Tim Forrester are all accused of paying bribes totalling nearly £450,000 to officials in Mauritania, Somaliland, Ghana and Kenya, including sending one officials son a PlayStation and paying another £200 for a relative's medical bills.
The Times, 21 November 2014

A report from the Independent Commission for Aid Impact has claimed that British taxpayers aid money is funding corruption in foreign countries. An investigation into the Department for International Development shows that money invested by the UK government has been used to actively encourage corrupt practices. Examples given include a Nepalese development project which encouraged people to forge documents to gain grants. The DfiD's anti-corruption effort has been rated as amber-red, which means that it is performing poorly.
Ben Riley-Smith, The Telegraph, 31 October 2014

 

ASIA

Shakeel Ahmed Beig, the deputy inspector general of police in Jammu and Kashmir, India, is being investigated by the police after his son loaded pictures onto Instagram of the senior police officer appearing to abuse the benefits of his position. Photos included Beig having his shoelaces tied for him, and his son using an armed guard as his gold caddy.
Robin Pagnamenta, The Times, 30 October 2014

 

SOUTH AMERICA

The Brazilian police have raided the offices of Petrobas and some of its contractors as part of a money-laundering investigation. Former Petrobas director Paulo Costa, who is currently in jail, has accused President Rousseff of accepting kickbacks on contracts from leading construction companies during her time in charge of the company. 27 people were arrested and assets of nearly (US)$280m have been frozen. The raids came after a Petrobas spokesperson announced that due to "a unique moment in its history" the company was unable to release its 3rd quarter financial statements as they needed to "gain greater understanding from the ongoing investigation". Petrobas is also being investigated by the American SEC and DOJ, and has hired private investigators (Brazilian law firm Trench, Rossi and Watanabe, and US law firm Gibson, Dunn and Crutcher) to look into the corruption allegations.
Joe Leahy, Financial Times, 15 November 2014

 

EASTERN EUROPE

The European Union's £1bn rule of law mission, Eulex, to aimed at reducing corruption in Kosovo has been accused by a whistle-blower of abandoning investigations which implicated senior Kosovan politicians during its 6 year existence. Andrea Capussela, the head of the economic unit of the international mission which helped oversee Kosovo following independence, claims that investigations were repeatedly dropped despite credible evidence that implicated senior politicians. The EU's foreign policy chief has promised that they will send an independent investigator to examine the claims that that Eulex has been covering up corruption within its ranks.
Julian Borger, The Guardian, 7 November 2014

 

WESTERN EUROPE

Princess Cristina of Spain will be the first member of the Spanish royal family to stand trial as she faces tax fraud charges. The Majorca high court has dropped a money laundering charge but has upheld the two tax charges. Cristina and her husband Inaki Urdangarin stand accused relating to undeclared income from two companies. Urdangarin is also accused of embezzling millions of euros of public money.
Graham Keeley, The Times, 8 November 2014

FIFA has submitted a criminal complaint to the Swiss attorney general after finding evidence that illegal "international transfers of assets took place" (according to a FIFA statement) in the run up to the vote in 2010. No official names have been released, but FIFA ethics judge Hans-Joachim Eckert's summary said former FIFA executive committee members Mohamed bin Hamman and Jack Warner had breached bidding rules.
Ben Rumsby, Daily Telegraph, 19 November 2014

 

AUSTRALASIA

Former New South Wales minister Eddie Obeid has been charged with misconduct in public office. Mr Obeid is said to have persuaded an official at the Maritime Authority of New South Wales to deal favourably with a company effectively owned by the Obeid family in relation to tenancies that were situated on government land.
Geoff Winestock, Australian Financial Review, 21 November 2014