The Institute for Ethics and Economic Policy (IEEP)

 

Fordham University is a renowned Jesuit institution with over 165-year history of emphasis on ethics.

 

To promote Governance with Respect Ethics Accountability and Transparency (GREAT)

 

UNITED KINGDOM (UK)

 

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Transparency International’s corruption rank for this country in 2000=10, corruption perception index =8.7. According to 2001 report the rank has slipped to 13 and the CPI has slipped to 8.3 suggesting worsening corruption

 

Anti-corruption barrister jailed for fraud. According to reports, a barrister employed as the corruption tsar for the British travel industry was jailed for corruption. Ricardo Nard is alleged to have siphoned off money by making payments to imaginary holiday companies, which consequently found their way into his own bank accounts. His wife is also facing charges of helping purloin over a quarter of a million. (Yahoo! News (Roll on Friday), February 18th, 2005, summary by Sherldine Tomlinson).

 

PLEDGE TO CLEAN UP ISLE OF MAN’S IMAGE. Richard Corkhill, Isle of Man’s chief minister is alleged to have been involved in the misuse of tourism grants by his family’s business. The article points out that the Isle’s economy is growing twice as fast as that of the UK’s. However Donald Gelling, who is expected to take over as chief minister, has called for better corporate governance and freedom of information initiatives. (Financial Times, December 14 2004 summary by Mark Hustwayte)

 

ENGLAND: Casino corruption claim absurd. British Minister Tony Blair has rejected the Tory party allegations that the government colluded with US casino bosses on weakening money laundering laws. Blair has said that he did not know that there had been concessions on money laundering offered by the government. Blair has accused the Tories of "lame opportunism" in opposing gambling reforms they had previously supported. (BBC News, November 3, 2004, summary by Sherldine Tomlinson).

 

UK hiding Zimbabwe bankers. It was reported that Zimbabwe’s President Robert Mugabe has accused the UK of sheltering three bankers accused of corruption. Seven farms belonging to the three men are to be seized for redistribution under the controversial land reform programme. Police has said they wanted to question the three men, Julius Makoni, Francis Zimuto and Nicholas Vingirayi, in connection with the alleged illegal transfer abroad of billions of Zimbabwe dollars, but they have fled the country. State radio reports that senior police investigators are being sent to the UK and South Africa to trace the fugitive bankers. (BBC News, September 15, 2004, summary by Sherldine Tomlinson).

 

Nine bailed on corruption charges. It has been reported that nine men including a Police officer and a former officer have appeared in court on corruption charges. The charges range from conspiracy to supply drugs, conspiracy to corrupt, possession of counterfeit currency with intent to supply $6,500 (£3,635), and possession of a firearm. (BBC News, September 9, 2004, summary by Sherldine Tomlinson).

 

Corruption charges levelled at ex-champion apprentice. It was reported that former champion apprentice Gary Carter was charged with conspiring to ensure that certain horses he rode would not win or be placed in the interests of bets laid on the internet betting exchange. The report also said that two other men jockey, Pat McCabe, and the trainer Shaun Keightley were charged over the running and riding of a horse in a race at Wolverhampton in October 2003. The Jockey Club alleges that Carter, McCabe and Keightley have all had contact with Coleman, which is a breach of the Rules of Racing. (The Guardian (UK), 16 July 2004, 2004, summary by Sherldine Tomlinson).

 

UK lawyer named in bribery inquiry: Solicitor said to have played key role in 'corrupt' Nigerian deal. A solicitor in a small north London firm has been named in connection with a $180m French and American corruption investigation which could lead to the indictment of Dick Cheney, the US vice-president. Jeffrey Tesler, a partner in Kaye Tesler & Co in Tottenham, has been identified in the French press as a financial intermediary in the deal being investigated. The Paris inquiry, led by Judge Renaud van Ruymbeke, concerns allegations of bribery against an international consortium building a $4bn liquefied natural gas plant in Nigeria during the regime of the late dictator Sani Abacha. (The Guardian 06 Feb 2004 summary by Sherldine Tomlinson).

 

UK: Special investigation: BAE accused of hiding cash paid to win deals. It was reported that Britain’s biggest arms company stands accused of running an international system of secret commission payments, using Swiss banks and a tiny island in the Caribbean. The allegations, by sources involved in the transactions, are based on Swiss bank records. BAE has denied any illegality or wrongdoing. (The Guardian 05 Dec 2003 summary by Sherldine Tomlinson).

 

Police worker arrested on corruption charges. According to reports, a civilian worker for Wandsworth police has been arrested for his suspected role in the passing of confidential information. Two other men were also arrested by the Met’s anti-corruption team, investigating allegations that police information was being provided to private investigation agencies. The three men were arrested for offences including conspiracy to corrupt and misconduct in public office. (Local London, September 5, 2003 summary by Sherldine Tomlinson).

 

Entrepreneur cleared in corruption scandal case. Entrepreneur Andrew Regan has been cleared of masterminding and bribery scandal. Regan allegedly stole the money from his company to bankroll a shady trade-off, ensure the extension of a critical food supply contract, and protect his wealth. The prosecution, brought by the Serious Fraud Office, claimed that he used most of the cash to bribe a couple of corrupt Co-op executives who helped push through the ‘tea, custards and biscuits’ deal. (nanova, August 6, 2003, summary by Sherldine Tomlinson).

 

Blair’s plea to tackle oil corruption. Prime Minister Tony Blair has launched an initiative to persuade multinational oil, gas and mining firms to declare publicly any payments to government officials in developing countries. The aim is to tackle corruption by making such financial transactions more transparent. Governments and multinationals are being asked to sign up to a system designed to make public the large sums of money paid out by multinationals to governments. Transparency Lobby groups say billions of dollars just disappear every year, pocketed by corrupt officials. Opening the conference, Blair said transparency was an important step towards cracking down on corruption and fighting poverty. “When there is corruption it is almost always the poor who suffer most,” Blair said. Blair added that increased transparency would also help to create the right climate for attracting foreign investment and encouraging an enterprise culture in the developing world. (BBC News, June 18, 2003, summary by Sherldine Tomlinson).

 

UK failing to honour convention on bribery. According to the head of bribery task forces, Britain’s poor record on legislating against corruption makes it look as if the government is trying to shelter corrupt companies, the head of. Professor Mark Pieth said that Britain had already “flunked” two opportunities to honour its commitments under the Organisation for Economic Co-operation and Development convention on bribery. And he warned that the draft corruption bill could also fall short of what was required, putting Britain’s international reputation at risk.  Pieth said that he could not understand why Britain persisted in seeking to define “corrupt” behaviour, rather than adopting the OECD’s concept of “undue payments” like most of its trading partners. (Financial Times, June 3, 2003 summary by Sherldine Tomlinson).

 

ISIS heads oil trade corruption campaign. It was reported that ISIS Asset Management is leading a group of powerful investors in a campaign to stamp out corruption in countries that rely on oil production and mining. Karina Litvack, ISIS Asset Management’s head of socially responsible investing, said that legitimate payments such as taxes, royalties and signature bonuses are “open to misuse”. “They can fuel corruption, poverty and conflict in developing countries. This creates unstable and high-cost operating environments for the companies in which we invest,” said Litvack. (Financial Times, May 19, 2003, summary by Sherldine Tomlinson).

 

LONDON: UK POLICE IGNORE COSTLY FRAUD CASES: - The outgoing head of the Serios Fraud Office Rosalind Wright says fraud involving millions of pounds are not investigated because of lack of police resources. She also said the quality of fraud investigations varied greatly across the UK, and suggested some fraudsters deliberately operated in areas where they knew police were unlikely to target them. "Well, it's come to the stage where the police won't deal with it. And you're faced with a stark choice that unless we take things on and investigate them, I don't think they'll be investigated at all. That is becoming very serious." She said the SFO had long had the discretion to turn away cases that were not "complex or serious" - typically involving sums over £1m - secure in the knowledge that police fraud squads would deal with them. However, though the office handles only about 75 cases at a time, the lack of resources is a constant problem. But Ms Wright insists extra cash is available for exceptional cases where there was huge public interest. Source: Financial Times 08 Apr 2003 Summarised by Davis Joseph Weddi (Stockholm Sweden).

 

Dentist in biggest single NHS fraud’is told to pay back £1.3m. A dentist who carried out the biggest single fraud in NHS history has been ordered to pay back £1.3 million. For six years, Mohammed Shiekh, 35, ran an expenses racket based on claiming for thousands of false emergency call-outs. He had 14 surgeries and used them to devise a fraud based on generous recall fees paid to dentists if they have to re-open their surgeries out of hours to carry out emergency treatment. The scheme centred on expenses allowed when a dentist attends an emergency call and needs to reopen a surgery. A dentist can only claim once for reopening the surgery. (Daily Telegraph Apr 04 2003 summary by Sherldine Tomlinson).

 

Fraud robbed training scheme of millions. According to the Commons public accounts committee, nearly £100 million was siphoned off in abuse and fraud from the government's flagship adult training scheme.  In the latest of a series of damning accounts of the fiasco surrounding Individual Learning Accounts, the committee will blame short cuts taken at the Department for Education and Skills. Edward Leigh, committee chairman, said that “it is likely that half of the original budget for ILAs was siphoned off in fraud and abuse.”  Losses over the scheme could cost the taxpayer £97m, including £67m in fraud, the committee said. (Financial Times Apr 04 2003 summary by Sherldine Tomlinson).

 

LONDON: FRANCE DEMANDS EXTRADITION OF ARRESTED IRAQI BILLIONAIRE FRIEND OF UK POLITICIANS- Nadhmi Auchi the Iraqi billionaire with controversial links to Saddam Hussein's regime was arrested in London this week on a French extradition warrant after two years under British protection. Auchi whose Business Empire is worth more than Pounds 1bn, is expected to appear corruption trial involving the giant oil firm TotalFinaElf. The trial, expected to start next month, will involve testimony about Mr Auchi's alleged role in channeling a pounds 28m commission from the French oil company to buy an oil refinery from its Kuwaiti owners. British politicians linked to Auchi included former Tory chancellor Norman Lamont, former Tory health minister Gerry Malone and former Conservative Home Office minister, Tom Sackville, who resigned from a board of one of the banks Mr Auchi bought into, BCN of Germany. Scotland Yard is quoted as saying Auchi is bailed to appear at a London magistrates Court on April 8, 2003. His business empire is also involved in pounds 27m lawsuit by the National Health Service, which claims one of Auchies pharmaceuticals firms, is one of those that colluded to overcharge the NHS for the drug warfarin.  (The Guardian 02 Apr 2003 summary by Davis Joseph Weddi).  

 

LONDON: FRAUDULENT ASYLUM-SEEKERS LANDLORDS NOT YET INVESTIGATED:- The government here has been accused of failing to fight fraud by landlords housing asylum seekers. Home Minister Beverley Hughes has admitted that there have been no investigations into suspected fraud in the housing scheme set up to support the asylum seekers after a 2001 audit report revealed increasing benefit fraud by asylum seekers-landlords. One company was reported to have received pounds 450,000 for non-existent asylum seeking tenants. The UK's National Asylum Support Service (NASS) was set up in 2000 with a budget of pounds 3billion. (BBC 02 Apr 2003. Summary by Davis Joseph Weddi).  

 

Council gets tough on fraud and corruption. The city of York Council is imposing tough new measures to crack down on fraud and corruption. The Fraud Response Plan sets down a policy to introduce initiatives, including the presumption that the council will consider prosecution in every case of fraud it uncovers. Under the new regulations councillors have agreed to take on the risk of loosing legal costs, which are not always recoverable following a successful prose

 

POLICE SEND FILE ON SKELLETT £1M BRIBE ALLEGATION TO CPS City of London Police has handed a file to the Crown Prosecution Service (CPS) on Colin Skellet, the Wessex Water boss, who was arrested last May on suspicion of receiving £919,000 from YTL Power of Malaysia as a "sweetener" to facilitate the £1.24 billion purchase of Wessex by YTL, a Malaysian conglomerate but then got his freedom on bail. The CPS will have almost one month to decide whether to prosecute Mr. Skellett under the Prevention of Corruption Act. Mr. Skellett, who denied this charge, continues in his role as chairman and chief executive at Wessex. (The Times, 07 Jan 2003, summary by Hanh Vu).

 

RENOWNED AUTHOR ON POLICE CORRUPTION AND RACISM. James Kelman, Scottish author and winner of Booker prize in 1994 writes of the continuing and entrenched institutional racism of UK police and criminal justice system.  Police corrupt acts include fabrication of evidence, forged confessions, wrongful imprisonment, brutality and death.  A large percentage of the victims are black. In several cases where deaths have occurred, police cited cause of death as suicide. The real criminals, some of whom are the police themselves, go unpunished. For example, two Gloucester men were imprisoned for life for the murder of Hensley Wiltshire, a black man who died in a police cell after a brutal police beating.  Police are able to avoid corruption allegations by retiring on medical grounds.  This was done by 70% of Metropolitan police officers faced with disciplinary charges or under investigation during 1995-96.  (Variant Issue13, Summer 2001,www.ndirect.co.uk/~variant , summary by Kelly Kristen).

 

EX-COUNCILLOR JAILED FOR CHARITY FRAUD Garvin Reed, 54, a long-serving Labour councillor, Bob Bone, 47, the National Local Government Forum Against Poverty coordinator were sentenced to 3 years and 2 years in jail respectively on charge of swindling 172,000 from an anti-poverty charity fund. Confiscation orders against the two are likely to be made at the further hearing. Besides, Reed's driver and personal assistance John Cook, 54 had to do 220 hours coummunity service for conspiracy to defraud. According to Judge patrick Robertshaw, the operation, the ramifications of which are still being investigated by police was evil, corrupt and deeply damaging to local democracy. (The Guardian, 26 Nov 2002, summary by Hanh Vu).

 

New clampdown on public corruption. Home Office ministers are to move against corruption in business, government and public life. Ministers are to commit themselves in law to combating corruption, which left unchecked can cause considerable damage to all aspects of commercial and public activity, and undermine transparent and democratic government. One Home Office member said that “The focus of the bill is on raising standards in both public and private life and sending out a clear message across all sections of society that corrupt practices will not be tolerated”.  (EPolitics News, November 13, 2002 summary by Sherldine Tomlinson).

 

West Indies batsman not guilty on corruption charges. According to reports Brian Lara, the West Indies batsman, has been cleared of match-fixing charges after a West Indies Cricket Board (WICB) investigation. Elliott The report alleged that Lara had received money for under-performing in two one-day international matches during the West Indies tour to India in 1994. During the investigation, commissioned in April last year, Elliot Mottley an attorney at law conducted personal interviews with several people, including Lara, and submitted questions to several people in writing. He also visited the ICC’s Anticorruption Unit for discussions with Lord Condon and his staff. (Times, November 12, 2002, summary by Sherldine Tomlinson).

 

8 arrested UK for smuggling. British police arrested eight airport, security and airline workers on Saturday at Heathrow international airport in a year-long investigation into an alleged people-smuggling ring. The eight were suspected of helping illegal migrants enter the United States from Britain by getting them through security checks and on to transatlantic planes unhindered. Two Virgin Atlantic Airways staff members and two employees of Initial Aviation Security, a company hired by Virgin to conduct security checks, were among those held. The other four were suspected of offences related to providing false papers for potentially.  (Xinhua News Agency, November 11, 2002, summary by Sherldine Tomlinson).

 

Officials are suspended after Filkin inquiry into courts. Elizabeth Filkin, the former parliamentary standards watchdog, has suspended a number of senior officials in charge of London magistrates´ courts after an inquiry into financial irregularities. It is understood that the investigation centres on five courts. Mike Langdon, acting Assistant Chief Constable of Merseyside Police, said the arrests followed an investigation by Merseyside Police and had been carried out in co-operation with the Lord Chancellor’s Department, the Magistrates Courts Committee and the Crown Prosecution Service. Ms Filkin, who was Parliamentary Commissioner for Standards, the MPs’ sleaze watchdog, for three years, left her post in February. Many believe she was the victim of a "whispering campaign" Ms Filkin said she realised it was time to go when she was invited to reapply for her own job last year. (The Independent, September 24, 2002, summary by Sherldine Tomlinson).

 

SWISS ANGRY AT UK CLAIM ON BANKING SECRECY LAWS. At a meeting of the Organization for Economic Co-operation and Development (OECD) in Paris, Paul Boateng, the UK's financial secretary, suggested that the banking secrecy laws of Switzerland stood in the way of the fight against terrorist financing. Pascal Couchepin, Switzerland's minister of economic affairs, reacted angrily to this suggestion. Switzerland had earlier opposed a proposal for greater transparency in the exchange of information on tax matters. A Swiss counter-proposal was not endorsed by the consensus of other OECD members. Finally, a compromise agreement was reached, aiming at eliminating "harmful" tax practices. Switzerland and Luxembourg abstained from endorsing OECD measures that aimed at reducing banking secrecy. Switzerland manages one-third of the private individual wealth in the world, estimated at Dollars 1,860bn (Euros 2,060bn) (Financial Times, May 17, 2002, summary by Pavlidis George).

 

ACCOUNTANCY BODY ACTS TO RESTORE CONFIDENCE IN WAKE OF ENRON SCANDAL  According to reports, the accountancy professions will initiative to restore flagging public confidence in its conduct in the wake of the Enron scandal. The profession's new Ethics Standards Board has set up a consultation exercise designed to move the industry closer to independent regulation. The board will canvass opinion from 700 organisations in drawing up a draft agenda for the regulation of the six accountancy bodies that it oversees. The ESB was set up last year under the auspices of the Accountancy Foundation; a body incorporating lay members that replaced the industry's previous regime of self-regulation. The ESB consultation will address many of the issues facing regulators and standard-setters in other jurisdictions which includes possible conflicts between audit and non-audit work and whether ethical standards should be based on strict rules or broader principles.  (Financial Times, May 29, 2002 summary by Sherldine Tomlinson).

 

BRITISH FIRMS USING BRIBERY ABROAD A survey suggests that companies in Britain are using bribes to win business abroad despite the threat of prosecution. Campaign group Transparency International (TI) claims that many businesses in Britain and other western countries pay kick-backs to win contracts overseas. It says the practice is continuing despite a convention designed to halt international corruption. The result, it claims, is that the firms are helping corrupt officials in developing countries steal billions of pounds from their desperately poor citizens. TI has drawn up a list of the countries whose firms are most likely to turn to corruption. Companies from China, Russia and South Korea, the US, France, Germany, head the TI group. The industries most likely to be affected are defence and construction. TI also says many people in developing countries in Africa, Latin America and Asia are being kept in poverty because of the practice. (BBC News, May 14, 2002, summary by Sherldine Tomlinson).

 

Blair calls for clampdown on companies that exploit Africa  British Prime Minister Tony Blair wants tougher regulations on companies that exploit African countries for their natural resources such as diamonds, oil and timber.  During his speech, Blair noted that there are several industrialized companies who extract natural resources, and provide the governments with money to be used to purchase arms. Some companies, which include multinationals, have also been accused of fueling wars and breaching human rights in Africa.  One senior British official said that governments should be supporting international guidelines, such as the Organization for Economic Co-operation and Development guideline on proper business conduct and encourage companies to work to them. The OECD guideline is a union, which focuses on labor and environmental standards, combating corruption and safeguarding consumer rights. Prime Minister Blair will outline his proposals to African leaders during his trip to Nigeria, Ghana, Senegal and Sierra Leone.   (Financial Times, February 7, 2002, summary by Sherldine Tomlinson). 

 

PRESSURE MOUNTS OVER CORPORATE BRIBES    Commissions and other bribes paid by multinational companies to officials in other countries will be outlawed next month and the tax relief on bribes will be clamped.  This will help to eradicate corruption as to bribes to award contracts; however, BP and Unilever stressed opposition to bribery and corruption, but admitted making facilitating payments last year.  (FT, Jan. 10, 2002, summary by Marg Reynolds).

 

COUNCILLORS 'BRIBED IN £2.5M DEAL'. Nottingham Crown Court heard that two councillors and a former mayor accepted huge bribes for granting planning permission to Alan Hughes, a property developer. Allegedly, Alan Hughes secured the support of the officials to develop land earmarked as countryside. The Court heard that the businessman gave thousands of pounds to John Dainty, then leader of Doncaster council's Tory group; more than £5,000 was also given to Raymond Stockhill, the Labour-run authority's former deputy leader and mayor; finally, the planning chairman, Peter Birks, allegedly received a £150,000 farmhouse. The briberies resulted in the approval of Hughes' planning application to transform Poppyfields, in Branton, Doncaster, into a residential site. All persons accused deny the charges of corruption. (Source: The Daily Telegraph, January 9, 2002, summary by Pavlidis George).

 

£2.4M 'USED FOR CWS BRIBES'. Andrew Regan, 36, is the former chief executive of food manufacturer Hobson. He allegedly stole £2.4m from his own firm to bribe two senior employees of the Co-operative Wholesale Society (CWS) into extending an exclusive supply agreement. Allan Green, 57, and David Chambers, 56, CWS staff, are accused of receiving the bribes. According to Douglas Day, prosecuting, "it was clearly dishonest for Andrew Regan to authorize the withdrawal of £2.4m ... when he knew that [some of] the money was intended to be handed to Green and Chambers." The money was transferred through the Swiss bank accounts of Trellis International, a firm controlled by Israeli businessman Ronald Zinet. The bribes were then passed on to British Virgin Island-registered companies Pitchblend and Monavale. All defendants deny the charges and the case is expected to last 10 weeks. (Source: The Guardian, November 28, 2001, summary by Pavlidis George).

 

SCOTLAND’S FIRST MINISTER RESIGNS. Scotland’s first minister, Henry McLeish, who came to power after the death of Donald Dewar, resigned on Thursday, leaving the Scottish parliament leaderless the second time since its formation just a year ago. McLeish has been beset with corruption allegations for the last six months including one involving £36,000 ($53,000) in undeclared expenses. He has denied the charges by stating that his political ambitions nurtured over the last 25 years overrode any intentions of risking his principles.  (International Herald Tribune, November 9, 2001, summary by Aruna Balakrishnan).

 

BBC Director of Global Marketing and Brand Development arrested on corruption enquiry. A senior BBC executive, Mr Jeff Taylor who runs the children’s learning and music business of the Corporation was arrested for enquiries on allegations that he had accepted illegal commissions from Hong Kong based manufacturers on BBC’s order for toys and watches connected to the highly popular Children’s TV programme Tweenies. Jeff is one among the 12 people being investigated under Operation Epistles by the Independent Commission Against Corruption. All have been released on bail and BBC has also begun its internal investigations on this matter. (The Guardian (UK), October 27, 2001, summary by Aruna Balakrishnan).

 

LAW TO BE TIGHTENED ON MONEY LAUNDERING. International regulators have been investigating into whether Osama bin Laden speculated in the financial markets ahead of last week's terrorist attacks on New York. Gordon Brown, the chancellor, and David Blunkett, the home secretary, presented a list of all suspected terrorists, including bin Laden. The list was given to all financial institutions in a concerted attempt to strengthen the national and international regimes against the financing of terrorism. In addition to these, more staff will be recruited for the national criminal intelligence service. Furthermore, a new task force will be set up to investigate Hawala bankers. This mysterious underground group allows criminals in the UK to make illegal transactions in other countries without being detected. The amended crime bill will give the government power to instruct financial institutions to monitor accounts that are suspected of being linked to terrorism. UK is also calling on the global watchdog, the Financial Action Task Force, to press all countries to report transactions suspected of being linked to terrorists. UK will also urge EU to accelerate the implementation of the anti-money laundering directive. Finally, Britain wants the participation of all countries in the enforcement of financial sanctions against the Taliban. (Source: The Guardian, September 19, 2001, summary by Pavlidis George).

 

KENNETH CLARKE COMPANY FACES NEW SMUGGLING CLAIMS Kenneth Clarke, currently seeking leadership of Britain's Conservative Party, faces a major embarrassment. A whistleblower suggests that, during Clarke's tenure as deputy chairman, British American Tobacco used a Swiss subsidiary and helped worldwide smuggling network. (Aug. 23, 2001 story on Pulic-I at:   http://www.public-i.org/story_01_082201.htm

 

NAO SAVES THE U.K. 1.4 BN. PDS.    The National Accounting Office has audited $650 billion of income and expenditures in the last three years resulting in many value-for-money reports, recommendations, and a taxpayer saving of $1.4 billion Pds.  The NAO is encouraging government departments and agencies to take up its recommendations and has extended its work to EU-funded offices in Hungary, Slovenia, and Estonia.    (AccountancyAge Weekly 1123485, July 26, 2001, summary by Marg Reynolds).

 

DO NOT LET TOFF CROOKS MAKE LAWS FOR OTHERS. A new Act of Parliament is needed that compels any peer convicted of a serious criminal offence to give up his seat at Westminster.  An anomaly in the ancient rules of Westminster allows a Lord to murder his Lady, and still sit in judgment on commoners.  It cannot be right that toffs who willfully break the law should still be allowed to make laws for the rest of us. (The Mirror, July 21, 2001, summary by Barbara Gray).

 

OIL CHIEF PAID $1 MILLION TO WARLORD    Bob Finch, Director of Vitol, a British oil company, paid $1 million to Arkan, a Serbian war criminal who was indicted in 1997 for crimes against humanity by the U.N. war crimes tribunal in the Hague.  The secret oil deal, to supply fuel to Slobodan Milosevic’s Serbia, was struck during the raging Bosnian conflict and while U.N. sanctions were in place.  Arkan was assassinated last year in a Belgrade hotel lobby, and his band of paramilitaries was the most feared unit of the Serbian murder machine.  He ammassed a fortune from the currency black market, arms dealing and oil smuggling.  His involvement with Vitol resulted from a 122 million Pd court case in which Kaveh Moussavi, British businessman, was involved in a controversial oil deal in Iran.  Alan Duncan, former Tory vice-chairman, is also involved in the action as he is a close friend of Vitol’s president, Ian Taylor, and brokered a deal during the Gulf War between Vitol and Pakistan.  Duncan stated Vitol is a well-respected oil-trading company and allegations of wrongdoin have no foundation.    (The Observer, July 1, 2001, summary by Marg Reynolds).

 

Transparency International criticizes UK. “The OECD Anti-Bribery Convention was a landmark in the fight against corruption in international business, but countries such as the United Kingdom have still not even tabled the legislation to implement the Convention.” Said Peter Eigen, President of TI, on June 27, 2001 (see http://www.transparency.org ).

 

POLICE BEAT TRANSATLANTIC SCAM    Havant and CIA detectives have smashed a 700,000 Pd. Credit card scam in which 25 victims lost $1 million from their bank accounts.  The conmen telephoned banks and requested new, unsigned credit cards be forwarded to a postal box office address, after which the conmen used the cards to go on a spending spree.  Many of the victims, who included pensioners, a police officer, a lawyer, and a bank worker were unaware the money had been spent and detectives are unsure how sensitive security information was obtained by the conmen.    (The News, June 4, 2001, summary by Marg Reynolds).

 

‘CAROUSEL FRAUD’ COSTING GOVERNMENT BILLIONS    Dissident and terrorist groups are thought to be using a scam by which goods are sold between companies owned by the same person in different countries to obtain a VAT refund.  Laundering money from activities of crime syndicates costs the Treasury Department an estimated 2.2 billion Pds. per year and unchecked proceeds from the ‘carousel’ are set to double in the next two years.    (Accountancy Age, June 4, 2001, summary by Marg Reynolds).

 

CORRUPTION UNIT DISBANDED AMID ALLEGATIONS OF DECEPTION    An internal fraud unit of the Hackney Council has been forced to disband after a whistleblower member alleged widespread deception involving millions of Pds.  Scotland Yard detectives were already investigating allegation of a major housing fraud at the Labour Party controlled Council and Max Caller, Hackney Council Chief Executive, stated the anti-corruption unit would remain closed until after the investigation.  Hackney Council has been famed for incompetence, sporadic corruption, malpractice, false accounting, falsifying hours worked, and taking bribes to investigate certain claims.  An estimated 500 million Pds. has been squandered in the past ten years by the Council, and it has garnered only 68 percent of the 54 million Pds. it could levy, a shortfall of 15 million Pds. from that it had expected to collect.    (This is London, June 7, 2001, summary by Marg Reynolds).

 

COUNCIL ON EUROPE CONVENTION ON CIVIL REMEDIES FOR CORRUPTION VICTIMS SIGNED    The Lord Chancellor, Lord Irvine, recently signed the Council of Europe Convention on civil law remedies for corruption victims, however, the UK cannot yet ratify the Convention because UK law does not provide the required rules of limitation for civil proceedings.  The government will review the issue of inadequate rules of limitation of actions when the Law Commission makes its report available.    (Lord Chancellor’s Department Release, June 8, 2001, summary by Marg Reynolds).

 

COUPLE CHARGED WITH BENEFIT FRAUD    Sharon Vaughn of Briton Ferry, Neath, and her live-in lover, Ian Rouse, have been charged with eleven counts of false accounting and one count of conspiring to defraud an authority of housing benefit between 1989 and 1999.  Both deny the charges, in which they gained more than 15,700 Pds. by claiming their relationship was merely a landlord and tenant agreement.  Elwen Evans, prosecutor, stated their joint vacations in which Rouse described Vaughn as his fiancee verified his confidence he would not be evicted by his landlady.    (iC Wales, June 5, 2001, summary by Marg Reynolds).

 

GOVERNMENT ACCUSED OF NOT HONORING OECD ANTI-BRIBERY CONVENTION    Mark Pieth, Chairman of an OECD working group on bribery, believes economic sanctions could be faced by Britain for failure to enact laws to enforce a 1999 international agreement whereby companies bribe foreign officials to win lucrative overseas contracts.  Pino Arlacchi, UN official, believes s small investment in fighting organized crime and money laundering would have a big return for the Russian economy.  A harsh symbolic blow was dealt to Turkey’s anti-corruption campaign by the ousting of Saadettin Tantan, Interior Minister.    (WB DevNews, June 7, 2001, summary by Marg Reynolds).

 

OECD TARGETS CORRUPTION BY MULTINATIONALS    Swiss lawyer, Mark Pieth, OECD working group on bribery official, believes British multinationals could be frozen from state contracts in Europe and the United States unless the next government introduces legislation to ban bribery of foreign officials.  British companies, by bribing with impunity, garner a competitive advantage in foreign markets; but retaliation of foreign capitals would have to be within existing regulations of the World Trade Organization.  The Home Office has admitted its laws are inadequate and Bowen Wells, retiring Conservative MP and Commons International Development Committee Chairman, believes Britain will lose credibility as a trading nation and that France, by domestically implementing the agreement, has taken the moral high ground to Britain.    (The Guardian, June 7, 2001, summary by Marg Reynolds).

 

TAX HAVEN DEMONSTRATORS TO HIT JERSEY    The Paris-based tax-haven protesters, the Attac Group, has stated its demonstration in Jersey will be peaceful and parliament has rejected measures such as emergency peacekeeping laws to protect the public and businesses.  Jersey was one of thirty-five tax havens playing a huge part in criminal financial activities and has been asked by the OECD to cooperate and revise their tax regimes or face economic sanctions.    (Accountancy Age, June 4, 2001, summary by Marg Reynolds).

 

TWO ELDERLY SISTERS ARRESTED ON $25 BILLION FRAUD ATTEMPT    Two elderly Filipina sisters have been charged with fraud in one of the largest attempts in British history.  They tried to cash a forged $25 billion US Federal Reserve Bond at a London bank.  The women have been bailed.    (AOL News (Reuters), June 1, 2001, summary by Marg Reynolds).

 

 ‘DR. FRAUD’ JAILED FOR MULTI-MILLION PD. HOSPITAL FRAUD    Dimitri Padelis, doctor, was sentenced to a four year prison term for defrauding the NHS of funds estimated between 2 million and 4 million Pds. in the largest single fraud ever detected in the health service.  Charges involved duplicate invoicing, inflating hours worked, and false accounting.  Jeffrey Rucker, Judge, stated the grotesque fraud was so serious because of nationwide concern for the NHS and also because Padelis had plundered the system that gave him employment as a doctor and as a businessman.  Padelis was ordered to pay $100,000 costs, disqualified for five years from being a company director, and faces being struck off the GMC.    (This is Croydon, May 29, 2001, summary by Marg Reynolds).

 

UK:  FRAUD SQUAD PROBES 35 MILLION PD. DOME CONTRACTS    Scotland Yard detectives are investigating contract awards to four main suppliers to the Millenium Dome that are worth between 30 and 35 million Pds. and also allegations of bogus invoices and other unexplained payments.  The contracts include lighting maintenance, design, and construction firms, and the Dome was under the stewardship of Lord Falconer during the main construction period of 1999.  Inquiries into the award of a further three contracts are underway, and concerns have been raised about potential conflicts of interest of the Dome’s management, the New Millenium Experience Company.    (Fraud News (Sunday Times), May 27, 2001, summary by Marg Reynolds).

 

LONDON BANKS FACE PROBE OVER TECH FLOATS    The regulator of the Financial Services Authority has requested information from at least eight investment banks and several hedge funds to investigate claims that investors paid ‘kickbacks’ during the technology share boom in 1999-2000.  Also, the U.S. Securities and Exchange Commission has launched similar inquires at the CSFB, Morgan Stanley, Goldman Sachs, and others.  Authorities are seeking to establish if excessive fees were charged to investors for allocation of shares before the companies were listed on the stock market and also if the banks rigged the market.  The banks deny any wrongdoing.    (The Observer, May 27, 2001, summary by Marg Reynolds).

 

BANK WORKER DENIES ‘HIGH LIFE’ FRAUD    Melanie Rees, customer accounts manager of Lloyd’s TSB’s branch in Ammanford, Carmarthenshire, has been charged with thirty counts of theft and nine of false accounting whicvh totaled almost 300,000 Pds.  Paul Crown, Lloyd’s TSB auditor believes Ms. Rees set up accounts for seven non-existent RAF personnel based in Cyprus and that she has been investigated for eighteen months.  She has denied the charges and was thought by friends to have won a lottery.    (BBC News, May 16, 2001, summary by Marg Reynolds).

 

HIGH CONSERVATIVE PARTY OFFICIAL ALLEGED INVOLVED IN SANCTIONS BUSTING. Interest recently arose in the former career of Alan Duncan, Conservative Party Trade and Industry spokesman, in the wake of Bill Clinton’s controversial decision to pardon Marc Rich, fugitive commodities broker and Duncan’s former boss.  Duncan refused comment on detailed allegations that he was involved in managing covert shipments of oil from Brunei to Durban in breach of international embargos between 1982 and 1988.  Rich was the main supplier of oil to South Africa between 1979 and 1993 and kept the apartheid economy afloat for more than ten years in defiance of the U.N. voluntary oil embargo and sanctions by the major oil exporting states.  Forged documents disguised the multi-million dollar shipments’ destination, substituting France and Italy for South Africa.  It has been suggested to be the duty of William Hague, leader of the Tory Party, to investigate the role his team members played in breaking South African sanctions and sustaining apartheid.    (The Guardian, May 4, 2001, summary by Marg Reynolds).

 

PRIME MINISTER URGED TO DITCH PARLIAMENTARIAN OVER ETHICAL FAILURE. Geoffrey Robinson, Coventry North West MP and former Paymaster General, has been found guilty of misleading Parliament in failure to declare a 200,000 Pd. Payment in the Register of Members’ Interests.  Robinson has been previously criticized over his complicated financial affairs, and this payment was from Robert Maxwell, disgraced former publishing tycoon from Hollis Industries.  Tony Blair, prime Minister, has been urged to deselect Robinson or abandon any pretence to an era of politics claimed as ‘purer than pure’.    (Independent, May 4, 2001, summary by Marg Reynolds).

 

THE TIMES TO CHALLENGE RULING AGAINST MONEY LAUNDERING STORY. A journalist investigation of Dr. Grigori Loutchansky by The Times reporter, David Lister, was given overwhelming backing to truthfulness by a jury two weeks ago.  However, Loutchansky has sued The Times as Mr. Justice Gray judged the newspaper had no ‘duty to publish’ the story.  The Judge claimed there was no urgency for publishing the story without managing to contact Loutchansky, therefore the claim of ‘qualified privilege’ was not justified.  The story, sourced by Lister from an Interpol official, claimed Loutchansky was linked to a money laundering investigation and also portrayed him as the boss of a major Russian criminal organization.  Richard Spearman, defense for The Times, believes the reliability of the story’s source and the public’s ‘right to know’ was failed to be weighed properly by the judge.  The Times has elected to allow a jury to decide the issue, although the judge urged the newspaper to let him do it.    (The Times, Apr 28, 2001, summary by Marg Reynolds).

 

NEW LAWS TO CRACK DOWN ON ORGANIZED CRIME BEING CONSIDERED    . Jack Straw, Home Secretary, stated he is considering introducing new laws based upon the U.S. Racketeer Influenced Corrupt Organizations Act (RICO) in the country’s war against organized crime.  However, he feels practical considerations could make this unworkable.  A group of 150 super-criminals are presently untouchable under current laws and police chiefs have lobbied for broad legislation for prosecution based upon evidence of membership involvement in criminal enterprises.  At the present time, phone-taps are not admissable in court.    (Ananova, Apr 24, 2001, summary by Marg Reynolds).

 

INSURANCE BUSINESSES WITHOUT CENTRALIZED DATA RULES RISK POOR QUALITY INFORMATION    Unstructured and multiple database systems of brokers, reinsurers, customers and third parties will result in inconsistent data, inconsistent rule applications and inconsistent modification of responses to new business lines or regulatory changes warns John Wilson of Eurobase Systems.  He believes one simple set of business rules will allow updates to be made quickly and more cost effectively.    (Insurance News Net, Apr 19, 2001, summary by Marg Reynolds).

 

INVESTIGATING ACCOUNTANTS TO BE MADE ACCOUNTABLE    The private security industry’s major players are lobbying against an amendment to the Private Security Industry Bill that would exempt accountants from the Bill and the industry’s regulatory body.  The lobbyists believe the accountants’ exemption should be removed as it undermines the legislation’s effectiveness.  Licences issued for accountants conducting fraud investigations would be regulated by the Security Industry Authority.  The Bill will reach Report Stage and Third Reading just prior to the General Election and rejection or reintroduction of the amendment may occur at any time during this process.  (Accountancy Magazine, Apr 12, 2001, summary by Marg Reynolds).

 

FREE WHISTLEBLOWER WEBSITE LAUNCHED    Employees may anonymously and confidentially report suspicions of fraud to a new web-based, free, whistleblower service launched recently.  Detailed instructions of disclosure and activity type is provided on the webpage and is provided by Forensic Accounting Ltd.  The site is located at:  www.fraudhotline.net    (Accountancy Magazine, Apr 12, 2001, summary by Marg Reynolds).

 

MULTI-BILLION DOLLAR NET BANKING FRAUD UNCOVERED    Jon Merrett, assistant director of the International Chamber of Commerce Commercial Crime Bureau and Cybercrime Unit, which polices financial and intellectual property rights breaches on the Internet, has uncovered a $3.9 billion fraud involving fake bank guarantees.  People are losing millions of dollars in these types of scams; the persons involved in this particular scheme are still at large and could be running other online fraud schemes.    (Yahoo News (Reuters), Apr 12, 2001, summary by Marg Reynolds).

 

INFORMATION SYSTEM SECURITY THREATS MAINLY THREATENED FROM WITHIN SAYS KPMG    The KPMG consultancy recently completed a study in which it was noted most attacks by e-commerce hackers are carried out by staff members.  Insiders possessing knowledge of the systems breach network security and seventy percent of fraud in the last decade has occurred within the firm.  Outsourcing security and concentrating on detecting and reacting to breaches are critical as the internal threat caused by hackers could ‘cripple Britain faster than a military strike’.    (Yahoo News, Apr 9, 2001, summary by Marg Reynolds).

 

BAN DEMANDED ON OVERSEAS BRIBES    The U.K. has been grouped with Turkey, Brazil, Argentina, and Chile for its lack of compliance and failure to implement to OECD Convention on Bribery of Public Officials.  Also, Britain cannot credibly demand governance improvements a condition of development aid to other countries.  The International Development Committee estimated 53 billion Pounds a year is paid in bribes by western businesses, the worst offenders being the arms and construction industries.  Britain’s response to corruption has been uncoordinated, piecemeal, underfunded, and undersourced.  Sani Abacha, former Nigerian President, had 42 accounts at 23 banks with a turnover of 0.87 billion Pds between 1996 and 2000.  Lawyers and accountants are prime targets for money launderers and Bowen Wells, MP, admitted Britain was a world center for laundering proceeds of bribery and fraud.    (The Guardian, Apr 4, 2001, summary by Marg Reynolds).

 

RESOURCE ACCOUNTING FOR CENTRAL GOVERNMENT REPLACES OLD CASH BASIS ACCOUNTING    Central government plans to replace its old cash accounting system with resource accounting, a switch that has taken seven years to implement.  The results of the valuation of assets, from Whitehall to military equipment, will be published shortly in the Register of Assets.  Sir John Bourn, head of the National Audit Office, stated account preparation lacked in technically competent support staff and key personnel, therefore it would take time before the new system was functioning properly.    (Accountancy Age, Apr 2, 2001, summary by Marg Reynolds).

 

BANK OF ENGLAND FACES BCCI TRIAL IN 550 MILLION CLAIM FOR FAILURE OF SUPERVISION    Deloitte and Touche, liquidators of the debt and fraud-ridden Bank of Credit and Commerce International, will bring a claim for 550 million Pds against the Bank of England for failing to fulfil its licensing and supervising role.  The Bank of England is expected to be accused of ‘misfeasance in a public office’ when the civil trial goes ahead, and interest on the claimants’ amount could bring the total claim to 1 billion Pds.  BCCI collapsed with debts of 7.03 billion Pds in 1991.    (Accountancy Age, Mar. 22, 2001, summary by Marg Reynolds).

 

CORRUPTION INVESTIGATIONS CASCADE TO BRITAIN.  Arcadi Gaydamak, Russian-born multi-millionaire with French, Israeli, Canadian and Angolan passports is wanted for questioning by magistrates about a 450 million illegal arms sale to Angola which lead to the arrest of Jean Christophe Mitterand in December.  The international arrest warrant issued also includes fraud, abuse of trust and trafficking in influence.  In a second related case, Pierre Falcone, a Franco-Brazilian arms dealer, is under arrest in Paris on the same charges.  In a third related case, Jacques Attali, former Mitterand advisor and former head of the European Bank for Reconstruction and Development, is being investigated for receiving 150,000 from Pierre Falcone to help with a 44 million tax claim.  Philippe Courroye and Isabelle Prevost-Desprez are the investigating magistrates in the money laundering and tax avoidance inquiry into the financial affairs of Gaydamak and Falcone.  Jose Eduardo dos Santos, Angolan President, confirmed last week that he had been instrumental in acquisition of arms from eastern Europe. (The Guardian, Mar. 26, 2001, summary by Marg Reynolds).

 

CHAMPAGNE FAUDSTER WHO FOOLED 1,000 SENTENCED TO 3 YEARS JAIL    Judge Robin Laurie sentenced Craig Dean to three years in prison, one and a half years suspended, for fraudulently marketing cheap wine bought at $5 a bottle as allegedly fine champagne during the millenium celebration fear that the world would run out of champagne.  Co-defendants, Julian Blee and Lee Rosser, were sentenced in 1995 to prison terms of seven years and four years respectively for a whiskey fraud involving a whiskey investment company called Hamilton Spirit Management.  For their involvement in the champagne fraud, they received sentences of one year and eighteen months respectively.    (This is London, Mar. 23, 2001, summary by Marg Reynolds).

 

EX-MAGISTRATE JAILED FOR 2 YEARS FOR IMMIGRATION FRAUD INVOLVING FICTITIOUS COLLEGE    Alfred Webley, ex-magistrate and Isa Ibrahim fraudulently obtained illegal visas for nine foreign students, and obtained money from the students in return for claiming they were in full-time education.  Webley set up the non-existent Wye Valley Institute and then took money from the immigrant asylum seekers.  Judge Peter Crawford stated that a custodial prison sentence was necessary, found him guilty of conspiracy to defraud the Home Office, and sentenced him to a two-year prison term.    (Electronic Telegraph, Mar. 23, 2001, summary by Marg Reynolds).

 

TRANSPARENCY INTERNATIONAL SUPPORTS ANTI-BRIBERY CONVENTION LEGISLATION    Dr. Peter Eigen, Transparency International Chairman, has stated new legislation if adopted in Britain, would signal serious anti-corruption attempts by criminalizing the bribery of foreign public officials.  Tony Colman introduced The Bribery of Foreign Public Officials Bill to the House of Commons this week and, if passed, would implement the AECD Anti-Bribery Convention with specific provisions.  These are:  criminal offense to bribe foreign official as it is officials in England and Wales, jurisdiction will apply even if all components take place offshore, the Serious Fraud Office will investigate and prosecute cases, and the Attorney General’s approval will not be required.  Under present inadequate laws, payment of offshore bribes is deductible for tax purposes.    (TI Press Release, Mar. 16, 2001, summary by Marg Reynolds).

 

SHADOW CHANCELLOR’S BUSINESS AFFAIRS SCRUTINIZED  Michael Portillo, shadow chancellor and responsible for making opposition policy on fuel taxes, faces inquiries into secret payments by oil giant, Kerr McGee.  A small portion of a wider agreement disclosed earnings of between 35,000 and 310,000 for parliamentary activities and general advice, and his constituents ask where his work lies – with them or with the oil industry.  Portillo refused to disclose his overall income from the oil firm, but is confident he has complied with the rules of disclosure of the House of Commons.    (The Observer,  Feb. 25, 2001, summary by Marg Reynolds).

 

SCOTLAND:  FREEDOM OF INFORMATION ACT PROPOSED    Jim Wallace, deputy first minister, has recently published a draft Freedom of Information Bill allowing public access to all information unless there would be ‘substantial prejudice’.  Other exemptions include Royal Family communications, awarding honours advice, and commercially sensitive information.  Roseanna Cunningham, shadow justice minister, has stated the draft of the Bill should clearly include exactly which information would be available that is not already available.  Failure to do so would just waste people’s time, raise unrealistic expectations, and cost an estimated 32.5 million to 34.8 million.    (ExpNews,  Mar. 4, 2001, summary by Marg Reynolds).

 

ZERO-TOLERANCE DETECTIVE CLEARED OF CORRUPTION CHARGES. Lord Mackenzie, Labor peer and former President of the Police Superintendent’s Association, has demanded the investigation of two officers, Detective Superintendent Ray Mallon and Chief Constable Barry Shaw over allegations that drugs were offered to criminals for information.  Both officers have been suspended from duty and the inquiry has cost $37 million over three years.  However, a full inquiry is still required and a decision has not yet been made on whether the two constables should resign.    (Guardian Unlimited, Feb. 23, 2001, summary by Marg Reynolds).

 

London, UK FINANCE RISKS 'SLEAZY' IMAGE.  Giving evidence to the Commons international development select committee, three senior lawyers strongly criticized government departments for failing to develop a coherent approach to international financial crime. According to Mr. Jeremy Carver, head of international law at Clifford Chance, the law firm, there was a "pathetic performance" of the Home Office, characterized by "non-activity and sloth", in responding to requests from overseas governments investigating corruption in their own countries. "I am still waiting for any sign that the Foreign Office has even noticed international corruption," he added. Mr. Carver pointed out that unless ministers took the international agenda more seriously, Britain risked gaining "a reputation for sleaze" and becoming an "increasingly risky place" to invest funds. According to Mr. George Staple, Clifford Chance partner and former director of SFO (Serious Fraud Office), the role of the SFO should be expanded to cover the investigation of corruption and money laundering even when not related to fraud inquiries. Finally, Mr. Monty Raphael, senior partner of Peters & Peters, said that criticisms of the international efforts of the country, did not mean the government was succeeding on the domestic front either. According to him, a "holistic" approach is needed, recognizing the links between fraud and corruption, along with the creation of a national fraud squad and adequate funding.  (Source: Financial Times, January 23, 2001, summary by Pavlidis George).

 

UK 'FAILING TO TACKLE' GLOBAL CORRUPTION. The UK is being criticized by the Organization for Economic Co-operation and Development (OECD), for not cracking down on international corruption. The UK was a signatory to the OECD's convention on the bribery of overseas public officials, which made the bribery of foreign officials a criminal offence. However, UK law hasn't been changed yet, since the UK argued that existing legislation, which dates back to the turn of the last century, was broad enough to be applied to foreign bribery cases. As a result, few company directors have been prosecuted for briberies overseas. "As far as we could determine, there has not been an effective prosecution under existing [UK] laws, this wasn't good enough," said Enery Quinones, the head of the OECD's anti-corruption unit. (Source: BBC News, January 9, 2001, summary by Pavlidis George).

 

London – Health ministers have launched a hotline to stop corruption by health workers. The new confidential phone line will allow reporting on dishonest and cheating pharmacists, physicians, and dentists.  The writing of false prescriptions costs the National Health Services about £100m a year, though there has been a  £48m reduction in fraud since 1999. (Independent News, Dec 14,2000. Summary by Fabian Camacho).

 

BEWARE OF FRAUD "MINNOWS" WARNS KPMG FORENSIC ACCOUNTING. There was a sharp decrease in the value of fraud cases being heard in UK courts but no decline in the number of cases in the first nine months of 2000, according to KPMG Forensic Accounting. A total of 50 cases involving £174m were recorded between January and September this year, compared with 53 cases involving £500m in the same period last year. Public sector and tax fraud both continued to increase. For the last 10 years, KPMG's Fraud Barometer has been a leading indicator of fraud trends. The latest figures may be less than the actual level of fraud since many cases are not reported to the police because of embarrassment or to avoid negative publicity. A discomforting trend is the discovery that a previous employer knew about the fraudster´s activitie but that references were not properly made. Jeremy Outen, KPMG Forensic Accounting partner, called for vigilant recruitment procedures as a key aspect of good fraud risk management. (KPMG Press Release, 14 November 2000, summary by Debbie Uy).

 

Britain is the only country out of the 28 in the Organization for Economic Cooperation and development that has no laws against bribery and corruption in the worldwide business world.  Britain’s unreformed laws date back to as early as the late 1800’s and early 1900’s.  Since the 1970’s, bribery, in weaponry, oil and construction have been both a way of life and encouraged in Britain.  (November 11, 2000, The Guardian, summary by Amanda Glatzel).

 

FSA TO PROBE UK DIRTY MONEY LINKS. The Financial Services Authority (FSA) has started an investigation into the alleged involvement of banks in the UK in money laundering. The move came after criticisms that money-laundering controls failed to stop from passing through London some of the $4bn (£2.8bn) of money looted from Nigeria under dictator Soni Abacha's rule. The FSA said it started the investigation in August; right after evidence of UK Bank, involvement in the Abacha funds was uncovered by the Swiss Banking Commission. (The Independent, 24 October 2000, summary by Debbie Uy).

 

BRITISH CAR COMPANY DISMISSES MANAGERS AFTER BRIBERY CLAIMS. Three managers at car giant Rover have been sacked following claims that they demanded bribes to sign redundancy applications. (see related story on issue 205 of AAA newsflash). The three were suspended from the huge Longbridge factory in Birmingham last week while an internal investigation was held Rover said that following a "thorough investigation" into allegations of bribery in the paintshop area of the plant, the three had been dismissed. Ananova, September 4, 2000 http://www.ananova.com

 

BRITISH BANKS THE SOURCE OF DICTATOR´S CORRUPT $123 MILLION SAY SWISS REGULATORS, Britain was the source of $123m (£84m) of Nigerian public assets laundered by Nigeria´s former military dictator, General Sani Abacha, through Swiss banks during the 1990s, Switzerland´s banking regulator said yesterday It had been assumed that funds allegedly embezzled in the world´s largest case of political corruption were sent from Nigeria to countries with tight banking secrecy regulations in an effort to conceal their origin before they reached mainstream financial centers like London or New York. But an investigation by the Federal Banking Commission into the handling of Abacha assets by 19 banks in Switzerland shows that almost one-third of the $660m frozen here came from banks in Britain and the US. The commission said six banks had violated money laundering guidelines and due diligence requirements by ignoring the origin of the funds or the "politically exposed" nature of their clients. In most cases they dealt directly with Sani Abacha´s sons, Ibrahim and Mohammed. "The fact alone that significant funds of dubious origin from the close entourage of the former Nigerian president, Sani Abacha, were deposited in Swiss bank accounts, is disturbing and damaging to the reputation of Switzerland´s financial sector," said Kurt Hauri, the commission’s chairman. "The financial center and Switzerland have no interest in

 attracting assets that stem from corruption." The commission said it would lobby for minimum international banking standards on the handling of funds from "potentates". Switzerland returned $66m of frozen Swiss assets to Nigeria in July, while the rest is blocked pending the outcome of separate criminal proceedings. The Abacha family and their associates are thought to have embezzled up to $4bn of Nigerian assets. The Guardian, September 5, 2000 http://www.guardianunlimited.co.uk

 

 --Without prejudice perils of going private. The rich may do it, but go outside the NHS and you enter a world of corruption and greed.--The National Health Service was not a home for the many under-resourced and over-worked people who run the most efficient medical service in the developed world, but a swamp of vested interests. Nurses, doctors and cleaners were the elite forces of conservatism. HCA's international reputation is somewhat tarnished. On 19 May, it agreed to pay $745 million (£500m) to the US Justice Department for the greatest fraud in American medical history, without admitting liability, after two executives had been jailed. When other alleged scams are resolved the final fine will be about a billion dollars. The result of a free market is pervasive fraud. June Gibbs Brown, Inspector General of the US Department of Health, estimated that private hospitals were overpaid by $23 billion (£15bn) a year. Fourteen cents in every dollar spent on health were stolen from the government by accident or design. Tales of scams fill the US press. There were the psychiatric hospitals, which refused to release cash-earning patients even when they had recovered their wits. The FBI investigation into HCA showed corruption went beyond the odd rotten apple. 'Columbia's fraudulent cost-reporting practices have infected the cost reports of virtually every health care facility,' the US government said in its affidavit. As in Britain, HCA had engaged in the vigorous buying of beds and built a network of 340 hospitals. It was then able to add new euphemisms to the dictionary of fraud. Its executives tried 'upcoding': the exaggeration of the seriousness of an illness to receive higher fees; 'gaming': the double billing of the state; and 'physician partnerships': the practice of offering doctors shares, subsidized offices and directorships in return to steering patients to HCA hospitals. (The Guardian Unlimited, August 13, 2000 by Nick Cohen, summary by Rujuta Vinod).

 

 Corruption stories in the media:

 

 BBC Large archive with more than 500 documents on corruption.

 Financial Scandals. Links to corruption issues, University of Exeter.

 Freedom of Information Act in UK

 

 UK: Editorial comment: Expensive way to tackle fraud (Financial Times, 17.8.00,

 

 http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=
FT3C18QR0CC&live=true&tagid=ZZZU2IUKJ0C)

 

AGRICULTURAL WORKER GANGMASTER JAILED FOR £269,000- VAT FRAUD A GANGMASTER supplying agricultural workers to farms and packhouses in the Fens pocketed more than a quarter of a million pounds in cash that should have been paid in VAT. Scott Richardson, 40, cheated Customs and Excise out of £269,000 in two-and-a-half years by charging agricultural establishments VAT but never passing the money on. Richardson, formerly known as Paul Witton, was jailed for four years yesterday for the fraud – but takes the secret of what happened to the cash with him to prison. He pleaded guilty at Cambridge Crown Court to two charges relating to periods between December 1996 and July last year when he was supplying workers primarily to JMB Services and Greenacre Packers and Recruitment based at Littleport. The court heard that Richardson, who has a record for dishonesty dating back to 1977, did not register for VAT until 1997 but in any case did not pay a penny despite invoicing the company owners, Janet and Jonathan Beckson, and being paid the relevant sums by them. There was no question of the Becksons being involved in any wrongdoing, the court heard. The fraud was uncovered largely as a result of "Operation Gangmaster", a joint effort by the Immigration Office, the Inland Revenue, Customs and Excise, the Agricultural Fraud Team of the Benefits Agency and the police, to crackdown on gangmaster cheats. Richardson disappeared from his home at Vermuyden Gardens, Ely, after repeated efforts by Customs and Excise to interview him and was eventually traced to Peterborough. Despite extensive investigations and checks on Richardson´s four bank accounts, which show the paying in, and removal, of almost £250,000, no sign of the money has been found. Nor will Richardson give any clue as to what happened to it, said Angela Rafferty, prosecuting. Richardson´s counsel, Catherine Moore, said his side of the story was that he had not seen a penny of the money although he concedes it has "passed through his hands".  "This area of work, this job, is one that does attract a degree of violence and intimidation between rival masters and for whatever reason he has decided to say nothing about where the money went," added Miss Moore Jailing Richardson for four years, concurrently on each charge, Judge Jonathan Haworth accepted the fraud was unsophisticated but said that, because Richardson refused to disclose what had happened to the cash, he was bound to conclude that he was the sole beneficiary. Cambridge News, August 1, 2000)

 http://www.cambridge-news.co.uk/news/newsarticle5.html

 

CRIME NETWOKING POSES NEW THREAT

 More than 900 crime families and other organised criminal groups in the UK are dealing in activities ranging from drugs smuggling to trafficking endangered species of rare animals, the national criminal intelligence service revealed in a report yesterday. With crime costing the country an estimated pounds 50bn a year, the gangs posed a formidable threat to the economy and the justice system, the report said. They had started "networking" in a way that could make them more difficult to catch. The Threat from Serious and Organised Crime said that 56% of gangs were involved in drug trafficking, and nearly all were laundering money. Yet NCIS found that few solicitors, accountants and estate agents submitted "suspicious transaction reports". In vestigators believed that many professionals turned a blind eye to criminal activity. Rows between rival drug gangs accounted for an estimated 52 murders in the UK last year, the report said. The increase in the number of kidnappings - from 41 in 1998 to 72 last year - was a reflection of the increase in illegal entrants, particularly from the Fujian province in China. Many of those who paid criminals for passage to the UK were either forced into prostitution or imprisoned until their families paid a ransom. While most of the crime gangs were British, NCIS identified significant activity by criminals from Albania, China, Colombia, the former Soviet Union, south Asia, Turkey, west Africa and the West Indies. Albanian criminals were associated mainly with heroin trafficking, and prostitution. Chinese Triads, primarily the 14K and Wo Shing Wo groups, were linked to illegal immigration. The Colombian cocaine cartels had been focusing particular attention on the UK because users here were prepared to pay up to 20% more than in other European countries. The report said there were signs that crime gangs were beginning to diversify and collaborate in an unprecedented way. "Thus, south Asian criminals appear to be involved in a wide spectrum of organised crime, including armed robbery, insurance fraud, credit card fraud, and vehicle theft, as well as crimes with which they were previously associated, such as heroin trafficking and illegal immigration." It added: "If a greater degree of collaboration occurs between criminals of different ethnicities, it will make criminals more effective by introducing them to new criminal networks." NCIS has compiled intelligence reports on 930 families and gangs working in the UK, though Roger Gaspar, its director of intelligence, said they were not all big organisations. Computer hacking, internet fraud and counterfeiting of the euro were identified as key problems for the future. The report said one high street bank, HSBC, came under regular attack from hackers, though security had never been breached. One hacker tried 150m passwords over two days before giving up. The traffic in endangered animals and plants was also highlighted. In 1997 and 1998, 2,999 live animals were seized. For the full NCIS report see:

 http://www.ncis.gov.uk/publications.html

(NewsEdge, August 7, 2000

 http://www.e-topics.com/index.asp?layout=topic_story&UserID=
199912221910540.4592554&top

 

TWELVE CHARGED IN LOCAL GOVERNMENT CORRUPTION SCANDA Twelve people have appeared in court charged in connection with an inquiry into alleged corruption on a local authority. A total of 14 Labour councillors have so far been convicted of offences connected to the so-called Donnygate scandal surrounding the Labour run Doncaster Council in South Yorkshire. They have all been convicted on charges relating to fiddling expenses. The 12 people appearing at Rotherham Magistrates´ Court were charged with a variety of offences in relation to an alleged planning scandal at the authority. They included the leader of Doncaster Conservative group, John Dainty OBE, 58, of Blaxton, Doncaster. He was charged with receiving payments to influence planning applications on behalf of a local property developer. The property developer in question, Alan Hughes, 61, of Bessecarr, Doncaster, faces charges including making payments to former deputy Labour leader of the council Ray Stockhill. Stockhill, 66, of Stainforth, also faces charges but did not appear in court. The former chairman of Doncaster´s planning committee Peter Birks, 57, of Bentley, Doncaster, has been charged with living rent-free in a Grade 2 listed building in return for influence in planning applications. His 47-year-old girlfriend Stephanie Higginson, also of Bentley, has been charged with aiding and abetting corruption. A spokeswoman for South Yorkshire Police said: "Twelve persons charged have been given unconditional bail until November 6 when they will appear in court again." The investigation by South Yorkshire Police into allegations of corruption at Doncaster Council - called Operation Danum - have now been running for more than three years. Ananova, August 11, 2000

 http://www.ananova.com/news/story/courts_uk-politics_933491.html

 

63 ARRESTED IN EDUCATION GRANT FRAUD CASE, MORE TO FOLLOW DETECTIVES investigating a large-scale education grants fraud have made 63 arrests. A team of South Wales Police detectives is investigating the awarding of more than £300,000 of council-tax-payers' money in the form of grants for further education to people who are allegedly ineligible to receive them. Detectives leading the inquiry, which is focusing on Cardiff Council, revealed yesterday that the final tally of arrests is expected to run to more than 120. Three employees of the council's education grants department have so far been sacked over the grants scandal, which became known last autumn because of inquiries by the author-ity's auditors. One employee is appealing against dismissal. Detective Chief Inspector Graham Lloyd, head of Cardiff Central CID, said, "We have so far arrested 63 people in relation to this ongoing fraud inquiry. Files of evidence are being prepared for the Crown Prosecution Service. "It is anticipated that the inquiry will take at least another six months to conclude, with a similar number of people yet to be arrested." Police are expected to liaise with crown prosecutors over issuing summonses to those involved in the alleged fraud over the coming months, requiring them to attend magistrates' court to face charges. It is understood that the suspected ringleaders of the alleged scam, who are believed to have links to organised crime, have not yet been arrested. One line of inquiry is focusing on whether council officials were pressurised or intimidated into approving the allocation of grants for college courses for students aged 16 to 19. Total Wales (The Western News), August 15, 2000

 http://www.totalwales.com/news/news_story.cfm?ID=

 199906313723&TYPE=

 

CUSTOMS INTERNAL FRAUD DOUBLED IN AMOUNT IN 1999 DUE TO POOR INTERNAL CONTROLS. Customs and Excise´s annual report shows internal fraud is on an increasing trend, due to poor internal controls. Cases of internal fraud rose from 36 in 1998 to 39 in 1999 and the sums involved more than doubled. Customs have identified their biggest security issue as theft, particularly of computer equipment, with parts being removed from PCs being a particular problem On the plus side, Customs´ recent "victories" include a 700 percent increase in the value of drugs seizures in Scotland and the finding of £125000 worth of cocaine on a boeing 757 at Manchester airport. (LawZONE, August 10, 2000)

http://www.lawzone.co.uk/cgi-bin/item.cgi?id=23949&d=101&h=175&f=
173&dateformat=
%o%20%B

 

FRAUDBUSTERS LEARN SPY SKILLS TO PURSUE BENEFIT SWINDLERS. Fraud investigators are being taught SAS and MI6 spy-catching techniques to use in the hunt for benefit cheats. The skills, honed in the ´dirty war´ of Northern Ireland and the murky world of international espionage are now to be employed to catch benefit bandits who sign on but work at the same time. Lieutenant-Colonel Alastair MacKenzie, a former Para and SAS officer is now coaching benefit fraud officers through the firm he set up in 1995, AMA Associates. Several of his 30 teaching staff are former members of MI6 and special forces, reports the Sunday Times. Among the gadgets used by undercover investigators is a two-way radio concealed as a handbag, but Lt Col MacKenzie says technique is more important than technology. Fraud officers are taught about the ´pick-up´ - intitial contact with the target; the ´follow´ - tailing the target; and conducting surveillance on a building. The civil servants are also told the best operatives are the ´grey men´ who can easily blend into the background, and taught how to pull-out of an operation if their position is discovered or they are otherwise compromised. Alistair Darling, the social security minister has approved the AMA courses in a crackdown on benefit fraud that is costing the taxpayer between £2 and £4 billion each year. (Ananova, August 13, 2000)

http://www.ananova.com/news/story/sm_34460.html

 

MORE TESTS SET UP TO DETECT INSURANCE FRAUD

 http://support.casals.com/aaaflash1/busca.asp?ID_AAAControl=2953

 The Western Mail, August 18, 2000

 http://www.totalwales.com/news/news_story.cfm?ID=

 199906304465&TYPE=BIZ&STYPE=

 

TOP DOCTORS FACE CHARGES FOR FRAUD IN NATIONAL HEALTH SERVICE

 http://support.casals.com/aaaflash1/busca.asp?ID_AAAControl=2934

 The Sunday Times, August 21, 2000

 http://www.etopics.com/eTopics/story.asp?storyid=

 2000m0816002.4cc&topicid=

 137&user=2000

 

BROKER HID £32 MILLION FRAUD FOR 15 YEARS

 http://support.casals.com/aaaflash1/busca.asp?ID_AAAControl=2952

 Electronic Telegraph, August 18, 2000

 http://www.telegraph.co.uk/et?ac=003100565149417&rtmo=

 fqqoYo3s&atmo

 =HHHHHH8L&pg=/et/00/

 

The OECD anti-Corruption report for UK can be found at http://www.oecd.org/daf/nocorruption/report.htm

 

The Index of Economic Freedom (by Driscoll-Holmes-Kirkpatrick) for 2001 places U.K. in the “Free” category with a rank of 7 (Ranks range from 1 for Hong Kong to 155 for North Korea, Wall Street Journal, Nov. 1, 2000). H. D. Vinod’s trimmed correlation analysis indicates that countries free from economic regulation are less corrupt. After allowing for some exceptions by 20% trimming, the correlation is near 0.9.

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