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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 - October 2014
 Briefing 
Date
31 October 2014

Mishcon's Culture vs Corruption Diary - October 2014

Welcome to the October 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 study by the Policy Exchange think tank claims that the way British elections are run are "dangerously inefficient and seriously open to fraud". They estimate that by the 2015 general election there will be between 12.5-15m errors on the electoral roll.
Christopher Hope
Daily Telegraph, 23 October 2014

West Yorkshire police have launched an investigation into suspected false claims of abuse at the hands of Jimmy Savile by his great-niece, Caroline Robinson. An investigation by the Mail on Sunday claims that Ms Robinson's accusations do not tally with evidence given by other family members. A compensation scheme drawn up by the NHS, BBC and Savile's estate will see victims offered compensation payments of between £7,000 - £40,000.
Nicola Fifield
Daily Telegraph, 19 October 2014

Trinity Mirror has agreed to pay compensation to 10 phone hacking victims, who include Sven-Goran Eriksson and Christopher Eccleston. The claims are against three of Trinity Mirror's newspapers, and the publishers are believed to have set aside £10 million to cover the costs of dealing with phone hacking claims.
Jane Martinson and Mark Sweeney
The Guardian, 25 September 2014

 

NORTH AMERICA

A four year State Department investigation has brought back evidence that one of the US's largest military contractors, DynCorp, paid thousands of dollars in bribes to Pakistani officials to obtain visas and weapons licenses. However the state has currently decided against taking action.
Jim McElhatton
The Washington Times, 1 October 2014

On October 10, the Department of Justice announced that Arthur Budovsky, the founder of a virtual currency used by cybercriminals to launder their money around the world, was extradited from Spain to face federal charges in the U.S.  Mr. Budovsky operated his currency, known as Liberty Reserve, from Costa Rica.  According to the Department of Justice, after being convicted of operating an unlicensed money transmitting system in New York State called Gold Age Inc., Mr. Budovsky set out to create a digital currency that would be able to elude law enforcement authorities.
-Dep’t of Justice Press Release, 10 Oct. 2014
(
http://www.justice.gov/opa/pr/liberty-reserve-founder-extradited-spain)

On October 9, the Department of Justice announced that a federal grand jury in Washington State returned a second superseding indictment against Roman Valerevich Seleznev a/k/a Track2, of Vladivostok, Russia, for his involvement in a scheme to hack into businesses and steal credit card numbers which he later sold online.  According to the Department of Justice, Mr. Seleznev not only sold the credit card numbers but also operated a website that provided instructions on how to use stolen credit card numbers to commit crime.
-Dep’t of Justice Press Release, 9 Oct. 2014 
(http://www.justice.gov/opa/pr/alleged-russian-cyber-criminal-now-charged-40-count-superseding-indictment)

On October 2, JP Morgan Chase announced that the cyber-attack it sustained over the summer was much larger than originally reported, impacting 76 million households and 7 million small businesses.  The bank reported in securities filings that over-seas hackers gained access to names, e-mails, addresses, and phone numbers of account holders, but not passwords or social security numbers.  JP Morgan now plans to spend $250 million per year on digital security.
-New York Times, 2 Oct. 2014
(http://dealbook.nytimes.com/2014/10/02/jpmorgan-discovers-further-cyber-security-issues/?_php=true&_type=blogs&_r=0)

On September 29, the Department of Justice announced the indictment of Hammad Akbar of Lahore, Pakistan, with the advertisement and sale of a surreptitious interception device for marketing a mobile device spyware app called StealthGenie.  According to the Department of Justice, the StealthGenie app allowed a third-party to intercept communications to and from mobile phones, record voice calls, monitor e-mails and text messages, and access address books, calendars, photographs, and videos, all without the phone owner’s knowledge.  This indictment is the first time a case has been brought over the advertisement and sale of a mobile device spyware app.
-Dep’t of Justice Press Release, 29 Sept. 2014 
(http://www.justice.gov/opa/pr/pakistani-man-indicted-selling-stealthgenie-spyware-app

 

ASIA

Indian minister for transport and shipping Nitin Gadkari is under investigation but the national election commission after telling attendees of a political rally in Maharashtra to accept cash bribes. If found guilty and charged, Mr Gadkari could face up to 1 year in jail.
Robin Pagnamenta
The Times, 8 October 2014

Tamil Nadu chief minister Jayalalithaa Jayarm has been jailed for four years and banned from politics for ten years after being convicted of corruption between 1991-1996. Despite only receiving a token salary of 1 rupee a month as chief minister during this period, Jayalalithaa amassed a fortune of around 53m rupees. She has also been fined 1bn rupees ($16m)
Victor Mallet
Financial Times, 29 September 2014

 

SOUTH AMERICA

The personal security unit of Citigroup's Mexian arm, Banamex, has been found to have been committing and estimated £15m of fraud. Servicios Especiales a la Presidencia provides security for the banks executives but has been charging external clients, buying and transcribing unauthorised surveillance and creating shell companies to pose as vendors. Citigroup has closed the unit and is said to be co-operating with enforcement agencies in Mexico.
Camilla Hall
Financial Times, 15 October 2014

 

WESTERN EUROPE

Guiseppe Orsi and Bruno Spagnolini, former executives at Italian defence group Finmeccanica, have been acquitted of corruption charges but found guilty of falsifying related invoices. The two men were accused of bribing Indian officials to win a €560m contract to supply helicopters. The company has since been banned from competing for contracts in New Dehli.
James Politi
Financial Times, 10 October 2014

 

AFRICA

Nigerian senator Chris Anyanwu has accused Rochas Okorocha, governor of Imo State, on embezzling N357 billion between 2011 – 2014. The claims have been made during Anyanwu's declaration that she will run for governor; Okorocha has denied all claims.
Africa News, 21 October 2014

 

AUSTRALASIA

The New South Wales Supreme Court has fined Allan Powell $80,000 for defamation and put in place a permanent injunction following Mr Powell's false claims that councillor Richard Graham was corrupt. Mr Powell published a series of articles in 2013 claiming Mr Graham had defrauded Palerang Shire council of thousands of dollars, but when criminal charges against Mr Graham collapsed, Mr Graham sued Mr Powell.
Michaela Whitbourn
Sydney Morning Herald, 21 October 2014