Kimco Realty
Corp. (NYSE: KIM), a real estate investment trust, is headquartered in New Hyde Park, New York. It owns
interests in 896 shopping centers and has holdings in Puerto Rico, Canada, Mexico,
and South America. It said it received the subpoena on January 28 'from the Enforcement
Division of the SEC in connection with an investigation,In the Matter of Wal-Mart Stores,Inc.,that
the SEC Staff is currently conducting with respect to possible violations of the Foreign Corrupt Practices Act.'
Now a major Wal-Mart bribery scandal in Mexico
has cast a spotlight on the FCPA. The company confirmed last year that it was the subject of investigations by the Justice
Department and the Securities and Exchange Commission after a New York Times bombshell investigation reported that Wal-Mart
had paid bribes to Mexican officials to open more stores in the country. A just-published Bloomberg Government
Study by Global Business Director Sandy Reback and Quantitative Analyst Miguel Garrido suggests that the Wal-Mart investigation
may be part of a longer and larger trend in FCPA enforcement.
Wal-Mart Stores Inc.’s (WMT)Mexican
unit used a current state governor there to facilitate $156,000 in bribes meant to help open stores, an ex-lawyer for the
retailer told company officials in 2005, according to documents released by members of theU.S. Congress. The payments were negotiated byGracoRamirezGarrido
Abreu, who at the time served as a federal lawmaker for the state of Morelos, a Wal-Mart summary of the accusations stated.
It was released Jan. 10 by Democratic RepresentativesHenry WaxmanofCaliforniaandElijah CummingsofMaryland, whose staff is investigating the lawyer’s
allegations. The accusations by attorneySergio Cicero Zapata, who alleged Ramirez was “the main
contact person” to speed needed permissions from the Urban Development Ministry, came in a summary of an Oct. 13, 2005
meeting with the retailer’s officials.Cicero, a 28-year veteran of the company, told them he set
up the bribery scheme while employed by Wal-Mart. He was forced out in 2004 after colleagues questioned his oversight of payments
to consultants in company-related real-estate deals. Governor Ramirez denied Cicero’s claims
This is the inside story of how things came to a pass in
Walmart's fledgling Indian operations: where it is conducting a full-blown internal investigation, where it has suspended
five officials while the probe is on, where it has stopped dealing with the 24 'consultants' and where it has put its expansion
on hold. The India story is based on interviews with three people with direct knowledge of the situation. They asked not to
be named due to the sensitivity of the matter. ET corroborated their narration with Walmart's consultants, suppliers and
vendors, who too declined to speak on record for similar reasons. This is how it all unravelled in Walmart India
Walmart Stores Inc.’s chief executive, Mike Duke, found
out in 2005 that the retailer’s Mexico unit was handing out bribes to local officials, according to e-mails obtained
by lawmakers. The e-mails contradict earlier claims by Walmart senior executives that they were not aware of bribes being
made by the company. Democratic congressmen Elijah E. Cummings and Henry A. Waxman, who are investigating bribery charges
at Walmart’s Mexico division, on Thursday released e-mails that indicate that Duke and other senior Walmart officials
were informed multiple times starting in 2005 about bribes being made in the country. US law forbids American companies from
bribing foreign officials. The lawmakers shared the e-mails, which they said they got from a confidential source, with Walmart
on Wednesday, and sent a letter to Duke asking for a meeting to discuss them. ‘‘It would be a serious matter if
the CEO of one of our nation’s largest companies failed to address allegations of a bribery scheme,’’ according
to the letter written by Waxman and Cummings to Duke. Allegations first surfaced in April that Walmart failed to notify law
enforcement that company officials authorized millions of dollars in bribes in Mexico to speed up getting building permits
and gain other favors. Walmart has been working with government officials in the United States and Mexico on that investigation.
Bharti Walmart, the 50:50 ‘cash-and-carry’
venture between Walmart, the world’s largest retailer, and Bharti Enterprises, has asked five of its executives not
to come to work for some days. The reason: Experts are probing allegations of corruption in the company. Bharti Walmart hasn’t
disclosed what it is, nor has it named the executives who have been suspended. What is clear is that there has been a violation
of the Foreign Corrupt Practices Act (FCPA) of 1977, in the United States, which makes it illegal for American companies to
pay bribes anywhere in the world. While announcing its quarterly results earlier this month, Walmart stated it had extended
its internal probe into potential violations of the anti-corruption law to Brazil, China and India. Walmart claims it has
spent more than $35 million on its global FCPA compliance review efforts over the past 18 months
At
least eight American companies operating in India were found to have violated the US law that prohibits bribing foreign government
officials to further their business interests, long before Wal-Mart Stores Inc., the world’s biggest retailer, started
probing suspected violations of the statute by some executives at its local unit. In the last of those eight cases, in July
2011, distiller Diageo Plc paid $16 million (aroundRs.90 crore today) to settle bribery-related offences spread over six years in India, Thailand
and South Korea.
As Wal-Mart Stores Inc expanded its internal bribery probe to developing
markets including China, the world's largest retailer refused to comment on recent reports that the company will close 100
stores that are not making money...Wal-Mart said that there is no correlation between the slowdown in the development strategy
in the Chinese market and the extension of the internal probe in developing markets beyond the company's Mexican unit to Brazil,
China and India...With 370 stores as of March, Wal-Mart's sales in 2011 ranked fourth in China among the top 100 foreign-chain
retailers, according to the China Chain Store & Franchise Association. The retail giant temporarily closed 13 stores in
Chongqing last year over a pork-labeling probe. Compliance with the law in developing economies is crucial for foreign retailers,
which are supposed to have higher management levels than their local rivals, said Zhao Ping, deputy director of the consumption
and economic research department of the Chinese Academy of International Trade and Economic Cooperation.
Walmart's reporting to the US authorities of possible wrongdoing by its joint venture withBhartiin
India highlights the power of governance
and law enforcement in America. Within ourcountry, this company could have paid millions of dollars in bribes with no fallout whatsoever. While the US's Foreign Corrupt Practices Act (FCPA) is laudable and should
in theory help curbcorruptionaround
the world where American companies do business, it will probably do the reverse. The likes of Walmart, the world's largest
retailer, will be at a distinct disadvantage against local rivals who will continue to bribe their way into reaching milestone
number of stores. In effect, this will stallforeign direct investmentin retail, a move desired by politicians of various hues, giving them dual cause for celebration.
Firstly, they would have protected the trader community and secondly, the "foreign hand" that sought to stop bribing will
be shown its proper place. The benefits to farmers from higher prices and lower perish of produce and to customers from
more competitive rates and a wider range of products will be blocked by corruption in India.
American retail giant Wal-Mart's Indian joint venture has suspended the
Chief Financial Officer (CFO) and other senior executives, as global investigations into bribery allegations begin. The launch
of store openings in the county has also been delayed. The company is conducting an internal investigation into possible violations
of the US Foreign Corruption Practice Act (FCPA), which prevents American firms from bribing foreigners for the benefit of
businesses abroad. The company conducted a similar probe into its Mexican arm and is also making inquires in Brazil and China.
In India, Wal-Mart is operating through a 50-50 joint venture with Bharti Enterprises. "We are committed to conducting a complete
and thorough investigation. Wal-Mart and Bharti have suspended a few associates pending the outcome of the investigation,"
the company said in a statement.
Walmartsaid an
internal probe into potential violations of anti-corruption law had extended to Brazil, China andIndiaas it
reported quarterly profits in line with market expectations and sales growth that fell short. The world’s biggest retailer
by sales said on Thursday that investigations that began with allegations ofbribes paid to secure new store permits in Mexicohad extended
to three other bigemerging markets.
The Times has now picked up
where Wal-Mart’s internal investigation was cut off, traveling to dozens of towns and cities in Mexico, gathering tens
of thousands of documents related to Wal-Mart de Mexico permits, and interviewing scores of government officials and Wal-Mart
employees, including 15 hours of interviews with the former lawyer, Sergio Cicero Zapata. The Times’s examination reveals that Wal-Mart de Mexico was not the reluctant victim of a corrupt culture
that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather,
Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited.
It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes
to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.
Through confidential Wal-Mart
documents, The Times identified 19 store sites across Mexico that were the target of Wal-Mart de Mexico’s bribes. The
Times then matched information about specific bribes against permit records for each site. Clear patterns emerged. Over and
over, for example, the dates of bribe payments coincided with dates when critical permits were issued. Again and again, the
strictly forbidden became miraculously attainable. Thanks
to eight bribe payments totaling $341,000, for example, Wal-Mart built a Sam’s Club in one of Mexico City’s most
densely populated neighborhoods, near the Basílica de Guadalupe, without a construction license, or an environmental permit,
or an urban impact assessment, or even a traffic permit. Thanks to nine bribe payments totaling $765,000, Wal-Mart built a
vast refrigerated distribution center in an environmentally fragile flood basin north of Mexico City, in an area where electricity
was so scarce that many smaller developers were turned away.
There are Indian allegations that WalMart has
been engaged in bribery over access to the Indian market. This is a difficult allegation on two counts. Firstly, that a large
foreign company might be bribing has very strong political connotations inIndia. Secondly access to that grocery and retail market
is jealously guarded on (perhaps misplaced) social grounds. So that the allegations have been made, and at least party believed,
is a serious problem:
"The
Indian Government has reacted furiously after it emerged that Wal-Mart has spent $25 million in lobbying fees to persuade
the country to loosen restrictions on direct foreign investment in the retail industry."
Wal-Mart Stores Inc prepared
its entry into India's supermarket sector in 2010 with a $100 million investment into a consultancy with no employees, no
profits and a scant $14,000 in revenue.
The
company, called Cedar Support Services, might have been a more obvious selection four months earlier: it began its corporate
life as Bharti Retail Holdings Ltd, according to documents filed with India's Registrar of Companies. The Cedar investment is now the focus of an investigation
by India's financial crimes watchdog into whether Wal-Mart broke foreign direct investment rules by putting money into a retailer
before the government threw open the sector to global players. Wal-Mart said it was in compliance with India's FDI guidelines, and had followed all procedures.
It said the central government had sought "information and clarification", which Wal-Mart has provided.
An Indian government agency is investigating allegations that Wal-Mart Stores Inc. (WMT) violated legal restrictions on foreign investment in the retail industry, Trade Minister Anand Sharma said. The government received complaints alleging Wal-Mart invested in the retail
industry before a September decision to loosen rules, Sharma told parliament today. Wal-Mart is “in compliance with
India’s laws,” Arti Singh, a company spokeswoman, said in an e-mailed statement. India’s central bank has referred the matter to the Directorate of Enforcement,
an agency that investigates violations of rules relating to foreign investment, for further probes, the minister said. He
didn’t say who filed the complaints. The investigation
adds to Wal-Mart’s troubles in India, where it recently suspended some workers at its joint venture, Bharti Walmart
Pvt., as it examines potential violations of U.S. anti-bribery laws.
Bharti Walmart, the 50:50 ‘cash-and-carry’
venture between Walmart, the world’s largest retailer, and Bharti Enterprises, has asked five of its executives not
to come to work for some days. The reason: Experts are probing allegations of corruption in the company. Bharti Walmart hasn’t
disclosed what it is, nor has it named the executives who have been suspended. What is clear is that there has been a violation
of the Foreign Corrupt Practices Act (FCPA) of 1977, in the United States, which makes it illegal for American companies to
pay bribes anywhere in the world. While announcing its quarterly results earlier this month, Walmart stated it had extended
its internal probe into potential violations of the anti-corruption law to Brazil, China and India. Walmart claims it has
spent more than $35 million on its global FCPA compliance review efforts over the past 18 months
At
least eight American companies operating in India were found to have violated the US law that prohibits bribing foreign government
officials to further their business interests, long before Wal-Mart Stores Inc., the world’s biggest retailer, started
probing suspected violations of the statute by some executives at its local unit. In the last of those eight cases, in July
2011, distiller Diageo Plc paid $16 million (aroundRs.90 crore today) to settle bribery-related offences spread over six years in India, Thailand
and South Korea.
As Wal-Mart Stores Inc expanded its internal bribery probe to developing
markets including China, the world's largest retailer refused to comment on recent reports that the company will close 100
stores that are not making money...Wal-Mart said that there is no correlation between the slowdown in the development strategy
in the Chinese market and the extension of the internal probe in developing markets beyond the company's Mexican unit to Brazil,
China and India...With 370 stores as of March, Wal-Mart's sales in 2011 ranked fourth in China among the top 100 foreign-chain
retailers, according to the China Chain Store & Franchise Association. The retail giant temporarily closed 13 stores in
Chongqing last year over a pork-labeling probe. Compliance with the law in developing economies is crucial for foreign retailers,
which are supposed to have higher management levels than their local rivals, said Zhao Ping, deputy director of the consumption
and economic research department of the Chinese Academy of International Trade and Economic Cooperation.
Walmart's reporting to the US authorities of possible wrongdoing by its joint venture withBhartiin
India highlights the power of governance
and law enforcement in America. Within ourcountry, this company could have paid millions of dollars in bribes with no fallout whatsoever. While the US's Foreign Corrupt Practices Act (FCPA) is laudable and should
in theory help curbcorruptionaround
the world where American companies do business, it will probably do the reverse. The likes of Walmart, the world's largest
retailer, will be at a distinct disadvantage against local rivals who will continue to bribe their way into reaching milestone
number of stores. In effect, this will stallforeign direct investmentin retail, a move desired by politicians of various hues, giving them dual cause for celebration.
Firstly, they would have protected the trader community and secondly, the "foreign hand" that sought to stop bribing will
be shown its proper place. The benefits to farmers from higher prices and lower perish of produce and to customers from
more competitive rates and a wider range of products will be blocked by corruption in India.
American retail giant Wal-Mart's Indian joint venture has suspended the
Chief Financial Officer (CFO) and other senior executives, as global investigations into bribery allegations begin. The launch
of store openings in the county has also been delayed. The company is conducting an internal investigation into possible violations
of the US Foreign Corruption Practice Act (FCPA), which prevents American firms from bribing foreigners for the benefit of
businesses abroad. The company conducted a similar probe into its Mexican arm and is also making inquires in Brazil and China.
In India, Wal-Mart is operating through a 50-50 joint venture with Bharti Enterprises. "We are committed to conducting a complete
and thorough investigation. Wal-Mart and Bharti have suspended a few associates pending the outcome of the investigation,"
the company said in a statement.
Walmartsaid an
internal probe into potential violations of anti-corruption law had extended to Brazil, China andIndiaas it
reported quarterly profits in line with market expectations and sales growth that fell short. The world’s biggest retailer
by sales said on Thursday that investigations that began with allegations ofbribes paid to secure new store permits in Mexicohad extended
to three other bigemerging markets.
How large is fraud against Medicare? It runs about$60 billion a year. How large is fraud committed against the Walmart company? I do not know, but whatever
it is, it is far, far smaller than $60 billion a year. A large fraud against Walmart reported recently was a $13 million credit
card and gift card fraud. A recentlarge fraud caseagainst Medicare was $430 million. Earlier
this year, there was another large case of $452 million against Medicare...I think that we can safely say that Walmart's fraud losses are infinitesimal compared to Medicare's,
or,alternatively, we can say that Medicare's fraud losses are gargantuan.
The Department of Justice and the Securities and
Exchange Commission are investigating Walmart for violations of the Foreign Corrupt Practices Act, which prohibits improper
payments to foreign officials for a business advantage. Both agencies have made FCPA enforcement a priority in recent years,
collecting about $503 million in financial penalties in 2011 alone. The company has said it is cooperating with the probes.
So far, Wal-Mart has spent more than $30 million on the global review, according to the memo. The company has previously disclosed
$50 million in separate expenses on the Walmex investigation. More than 300 lawyers and accountants at Greenberg Traurig LLP
and KPMG have logged more than 79,000 hours reviewing Wal-Mart's operations in 27 countries, according to the memo. Both firms
were subsequently retained to help Wal-Mart make changes at its Mexico unit.
The position is a newly created one and represents the
company’s efforts to centralize compliance for its international operations in 26 different countries...“Walmart is committed to having strong and effectivecompliance
programs around the world,” Walmart spokesman David Tovar said in an email. “Over the past 18 months, we have
made improvements to our global compliance programs and have taken a number of specific, concrete actions with respect to
our processes, procedures and people. Today’s announcement is consistent with our ongoing efforts.”
High-profile instances of Foreign Corrupt Practices Act scrutiny
focus attention on the law and its enforcement across a broad spectrum. In spring 2012, arguably the most high-profile instance
of scrutiny in the FCPA’s 35-year history occurred as Wal-Mart’s alleged conduct in Mexico dominated the news
cycle. Wal-Mart’s scrutiny has been instructive in many ways at a key point in time for the FCPA. This article uses
Wal-Mart’s potential FCPA exposure as a prism to view the current FCPA enforcement environment.
The New York Times found that when confronted
with evidence of widespread corruption in Mexico, top Wal-Mart executives focused more on damage control than on rooting out
wrongdoing. The scandal is revewrberating around the world where Walmart does business.
The Times’s examination uncovered a prolonged struggle at the highest
levels of Wal-Mart, a struggle that pitted the company’s much publicized commitment to the highest moral and ethical
standards against its relentless pursuit of growth.
One of every five Wal-Mart stores now is in Mexico and it is that country’s
largest private employer, with 209,000 employees there.
The Times said Wal-Mart shut down its internal probe despite
a report by its lead investigator that Mexican and U.S. laws likely were violated by executives of its biggest foreign
subsidiary, Wal-Mart de Mexico.
Mexico’s Attorney General’s Office said the probe involved six officials
at two federal agencies and two state governments who allegedly took bribes from Oklahoma-based BizJet International Sales
and Support Inc. in exchange of work contracts. Prosecutors said the case involved about $2 million in bribes for contracts
worth at least $24 million.
Wal-Mart Stores Inc. said Thursday it had incurred $34 million
in expenses related to ongoing bribery investigations and expects similar expenses in the next two quarters...Wal-Mart also
said it would delay new store openings by 90 days in Mexico, a direct result of the ongoing investigations at its Mexican
operations. Wal-Mart is conducting its own probe and has said it is cooperating with investigations by U.S. and Mexican authorities.
An Indiana union pension fund that owns shares in Wal-Mart
Stores Inc has sued the company to gain access to thousands of internal documents related to allegations that a Wal-Mart subsidiary
bribed Mexican government officials...The latest lawsuit, also filed in the Delaware Court of Chancery, said the company had
made a "woefully deficient" production of documents following an earlier out-of-court demand. What documents were produced
were "so heavily redacted," or blacked out, they were nearly worthless, the pension fund said.
After sending three angry letters to Walmart, two congressional
committees are now threatening to use the most dangerous weapon they have in their arsenal -- releasing an "investigative
report" on the company.
Two U.S. House Democrats investigating bribery
allegations in Wal-Mart's Mexico affiliate said on Tuesday they have obtained new internal records that may point to evidence
of tax evasion and money laundering..."We haveobtained internal company documents, including internal audit reports, from other sources suggesting
that Wal-Mart may have had compliance issues relating not only to bribery, but also to 'questionable financial behavior' including
tax evasion and money laundering in Mexico,"
U.S. authorities
are considering launching a wide-ranging examination of the retail industry for violations of an anti-foreign bribery law,
after Wal-Mart and other retailers have come forth with their own potential offenses, people familiar with the matter said
Retailers have been reviewing their international operations in light of a bribery scandal at Wal-Mart Stores Inc's operations
in Mexico that is the subject of investigations by the Justice Department and the Securities and Exchange Commission...
Other retail companies have also since reported to U.S. agencies
suspicions of their own potential violations, which in turn has the Justice Department and SEC considering a sweep of the
entire industry, said the sources, who are working with companies who have unearthed potential issues but declined to be identified.
The people would not reveal which retail companies have reported problems, but the development could signal that the retail
industry faces an expensive legal headache that could last for years.
Siemens sicced "mercenaries" to beat and torture
a government worker who blew the whistle on its multimillion-dollar bribes to Argentine officials, in pursuit of a $1 billion
government contract, the man claims in court. Carlos Moran
sued Siemens in Federal Court. Siemens' head office in Germanyand
its Argentine branch are the only defendants.
Moran claims he worked as an investigatorfor SIGEN (Sindico Generalde la Nacion) "when he was brutally attacked by the mercenaries hired by Siemens Argentina."
Siemens pleaded guilty to violating accounting provisions of the Foreign Corrupt Practices
Act, which outlaws bribery abroad. Although court documents are salted throughout with the word "bribes," the Justice Department
allowed Siemens to plead to accounting violations because it cooperated with the investigation and because pleading to bribery
violations would have barred Siemens from bidding on government contracts in the United States. Siemens doesn't dispute the
government's account of its actions..."Briberywas
Siemens's business model," said Uwe Dolata, the spokesman for the association of federal criminal investigators in Germany.
"Siemens had institutionalized
corruption."...
Themost common method of bribery involved hiring an outside consultant
to help "win" a contract. This was typically a local resident with ties to ruling leaders. Siemens paid a fee to the consultant,
who in turn delivered the cash to the ultimate recipient. Siemens has acknowledged having more than 2,700 business consultant agreements, so-calledB.C.A.'s, worldwide. Those consultants were at the heart of the bribery scheme, sending millions
to governmentofficials.
Between March 12, 2001and December 30, 2007, Siemens used a variety of methods to
make approximately 4,283 illegal payments to government officials, totaling approximately $1.4 billion. These payments caused
the company to realize over $1.1 billion in profits during the relevant time period.
Siemens,
a German company that was founded in 1847, began seeking business in less developed countries after it had difficulty competing
for business in many Western countries after World War II. Siemens had a practice of making improper payments when competing
for business outside of Germany. Before 1999, Siemens was not listed on a U.S. stock exchange and therefore not subject to
the FCPA. In addition, these types of payments were not illegal under German law at the time and indeed were tax deductible
as legitimate business expenses. In 1999, Germany ratified the Organization of Economic Cooperation and Development (“OECD”)
Convention prohibiting transnational bribery. In 2001, Siemens listed its stock on the New York Stock Exchange thereby subjecting
itself to the FCPA.
Despite the change in
the law, Siemens management and employees did
notchange
their corporate culture or their standard business practices. Siemens did not implement the necessary internal controls to
ensure that improper payments were no longer made and indeed encouraged and rewarded such payments.
The paymentsmade in various divisions of the company between 2001 and 2007 included: (i) cash payments to Nigerian officials
in connection with four telecommunications projects; (ii) payments to ENEL, a partially state-owned company in Italy, in connection
with two power plant projects; (iii) “bonus payments” made to Greek officials by Siemens’ Communications
Group; (iv) payments to officials in Venezuela in connection with metro projects in Valencia and Maracaibo; (v) payments to
government customers in China in connection with seven metro construction projects; (vi) payments to a former director of
the Israel Electric Company for four contracts to build and service power plants; (vii) payments to government customers in
China for the installation of high voltage transmission lines; (viii) payments to officials in Bangladesh for a contract to
install a mobile telephone services; (ix) payments to senior officials in Argentina in order to win a contract to produce
national identity cards; (x) payments in Vietnam in connection with the sale of medical devices; (xi) cash payments and vacation
travel for doctors in China related to the sale of medical equipment; (xii) payments to government officials in Russia related
to a World Bank-funded project for the design and installation of traffic equipment; (xiii) payments to senior officials at
Petroleos Mexicanos (“Pemex”), the Mexican state-owned oil company, to settle cost overruns in connection with
three refinery modernization projects; (xiv) payments to government customers in Russia for the sale of medical equipment;
and (xv) payments to officials in Vietnam related to a contract to supply equipment and services for a GSM network.
In
addition to the payments listed above, Siemens paid approximately $1.7 million in kickbacks under 42 contracts to the government
of Iraq in connection with the United Nations Oil for Food Program. These contracts resulted in over $124 million in revenue
and approximately $38,226,537 in profits. The payments were described as after-sales service fees, even though Siemens did
not render any services under the contracts.
Siemens used a variety of methods to conceal these payments and improperly recorded all 4,283
payments on its books and records.
In a deal loaded with Schadenfraude, the Greek finance ministry
announced it had signed a settlement with Siemens that “achieves significant financial benefit and the benefit to the
real economy.” The deal formally settles long-running allegations that Siemens used bribery to secure a raft on
contracts for the Athens’ Olympic Games in 2004.
The money would go first to a third party, a Hong Kong textile firm owned
by Ahronson’s brother-in-law. Then, it would be paid to a company called Valsheda (owned by Cohen) in the British
Virgin Islands, and then ultimately be transferred to Cohen’s bank account. Initially, a payment of EUR 1.049
million was transferred in this way.
The
battle is on: It's this city's understaffed, underperforming Independent Commission Against Corruption (ICAC) versus the
legendary Kwok family, with its vast real-estate empire, its US$18.3 billion in annual income and the
best lawyers that billionaires can buy.On the face of it, this contest is a mismatch. But don'twrite off Hong Kong's beleaguered graft-busters
just yet.They may not have the Kwoks' deep pockets, but they insist they have evidence of a nine-year trail of corruption
that starts in the boardroom of Sun Hung Kai Properties (SHKP), the Kwok flagship,and leads to the office of the city's second-most-powerful politician.
The Sun Hung Kai probe, Hong Kong's biggest corruption
case since its anti-graft agency was formed nearly 40 years ago, involves one of Asia's most powerful families and the world's
second-largest property company with a market capitalisation of $32 billion.
The charges involve payments and unsecured loans
of more than $4 million and come amid other investigations of government officials and a turbulent political transition that
has set off waves of protests from Hong Kong citizens angry about a host of issues including cronyism and cozy ties between
government officials and the city's tycoons...
Thomas and Raymond Kwok, the billionaire co-chairmen of Sun Hung Kai Properties, and Rafael
Hui, Hong Kong's former No.2 public official, were charged in a bribery investigation surrounding Asia's largest developer...
The ICAC said
the alleged offences took place between 2000 and 2009, with six linked to Hui's tenure as Hong Kong's chief secretary. Hui
faces two misconduct charges alleging he accepted rent-free use of two flats while head of Hong Kong's retirement authority
and two unsecured loans.
The March 29 arrests of the brothers Thomas and
Raymond Kwok, the joint chairmen of Hong Kong's largest property developer Sun Hung Kai Properties, together with Rafael Hui,
the city's former chief secretary for administration, has sent shockwaves through the territory's financial and political
circles. Although official charges are yet to be laid, sources believe Hong Kong's Independent Commission Against Corruption
has long held sufficient evidence to indict the parties for bribery and that the arrests may be just the tip of the iceberg
in a renewed effort to stamp out corruption by Hong Kong's new chief executive-elect, Leung Chun-ying...More than a dozen
anti-corruption officials reportedly raided Sun Hung Kai's headquarters on the same day and seized computers and files. Sources
say the Kwok brothersand Hui are suspected of infringing sections 4 and 8 of Hong Kong's
Prevention of Bribery Ordinance, which relate to bribery of public officials.
In the S.E.C. case, Daimler was accused of making some $56 million in bribes
related to more than 200 transactions in 22 countries that earned the company $1.9 billion in revenue and at least $91.4 million
in allegedly illegal profits.
“Using offshore bankaccounts,
third-party agents and deceptive pricing practices, these companies saw foreign bribery as a way of doing business,”
Turkcell, an Istanbul-based rival, in March filed
a federal lawsuit in Washington alleging South African MTN Group bribed its way into Iran and stole the license from
under it. It is seeking at least $4.2 billion in damages. An elite South African police unit called the Hawks is investigating.
MTN has denied the allegations and called Turkcell's demands "extortionate."
MTN has appointed a prominent judge in London to
conduct an internal probe of the allegations surrounding what has become one of its most valuable holdings. In 2011, MTN generated
$1.3 billion, or 9 percent of its annual revenue, from its Iran venture, the company reported.
The core of the Turkcell case is the sworn testimony
of Chris Kilowan, a former MTN executive who guided the company's bid to win the Iranian license and has emerged as the key
witness. He has turned over to Turkcell's attorneys some 7,000 pages of internal MTN documents related to "Project Snooker"
- MTN's code name for its effort, named after a billiard game popular in Britain. "We said we are going to snooker Turkcell,"
Kilowan testified.
MTN, now Africa's largest mobile phone carrier,
has called Kilowan "a disgruntled former employee" and has termed his allegations "outlandish."
During three days of sworn testimony in Washington
that concluded May 2, Kilowan presented an extraordinary tale of a multinational company so intent on winning a contract,
it was willing to help Tehran obtain military hardware, sway South Africa's votes before the United Nations' International
Atomic Energy Agency and pay bribes, sometimes in the guise of consulting fees. MTN has yet to give evidence in the case,
which is continuing and may go on for years.
Kilowan admitted fronting $200,000 of his own cash
to reward South Africa's then ambassador to Tehran, Yusuf Saloojee, for assisting MTN in Iran. Kilowan says it was MTN's later
refusal to pay him back that convinced him to cooperate with Turkcell. Saloojee, now South Africa's ambassador to Oman, didn't
respond to requests for comment. Other South African officials denied Kilowan's allegations.
Alcoa has agreed to pay $85 million
to settle allegations that the aluminum manufacturer and related companies paid millions in bribes that resulted in a Bahrain-controlled
company overpaying for raw materials.Alcoa agreed to pay $85 million in cash to Aluminum Bahrain BSC, or Alba, without admitting
liability. Separately, it resumed a long-term agreement to sell raw materials to Alba, which owns one of the largest aluminum
smelters in the world...
Alba, which is majority-owned by the Persian Gulf state of Bahrain, had
alleged that Alcoa, Alcoa World Alumina LLC and related defendants paid millions of dollars in bribes to Bahrain officials
and others. Alba claimed that as a result it overpaid by about $420 million for raw materials, including alumina, from 1997
to 2009. Alba sought $1 billion in damages.
Tyco is now a two-time loser under the FCPA and
most of the illegal conduct occurred after Tyco agreed to an initial FCPA based Deferred Prosecution Agreement (DPA) in 2006
for prior FCPA sins. Yet even with all of this Tyco was able to obtain a Non Prosecution Agreement (NPA). Such a result is
fairly stunning...
Tyco International agreed to pay the government
nearly $27 million to settle charges leveled against some of its foreign subsidiaries, which allegedly bribed officials
in more than a dozen countries to win or retain business.
The Securities and Exchange Commission and the
Justice Department, which brokered separate settlements with Tyco, said the Switzerland-based company voluntarily flagged
the U.S. government to the illegal payments after conducting an internal review. Tyco is a major manufacturer of security,
fire-protection and energy-related products.
The internal review came in the wake of the scandal involving
former Tyco chief executive L. Dennis Kozlowski, who was convicted on multiple criminal counts of looting the company. Tyco
paid $50 million in 2006 to settle related civil fraud charges brought by the SEC in that matter...Through
thisprocess, the company discovered a dozen illicit payment schemes at its subsidiaries in Central Asia,
the Middle East and other parts of the world, the SEC said. The schemes collectively reaped $10.5 million for Tyco from 2006
until 2009, the agency said.
Miranda Swaray Goeltom, 63, was found guilty for knowing about
payments in travellers cheques given to members of parliament following a "fit and proper" test in parliament to elect her
to the board of Bank Indonesia. The court ordered Goeltom, named as a suspect by the country's anti-corruption agency in late
January in one of the country's highest profile graft cases this year, to pay a fine of 100 million rupiah ($10,400).
Reserve Bank ofAustraliaGovernorGlenn Stevenssaid
the central bank won’t disclose some documents relating to allegations of corruption at its note- printing units to
avoid jeopardizing criminal prosecutions. “It is very important that the Reserve Bank does not say or do anything which
would improperly impinge on any legal process, most particularly not in a public forum,” Stevens told a parliamentary
panel in Canberra today. “There are accordingly documents which, I am advised, we should not table at this time.”
Eight former managers and employees at the central bank’s Note Printing Australia Ltd. unit and Securency
International Pty face charges in relation to the bribing of officials inMalaysia, Indonesia andVietnamfrom 1999 to 2004 to win bank- note printing contracts.
An oppositional newspaper “Azadliq” has posted a video where one of
the most influential members of Azerbaijani parliament from the ruling “Yeni Azerbaijan” (“New Azerbaijan”)
party, Gular Ahmadova, is apparently discussing with the rector of a private Azerbaijan International University, Elshad
Abdullayev, the bribe amount he has to pay for becoming a member of Azerbaijani parliament. A hidden camera video with an
accompanying letter was sent to the newspaper by Elshad Abdullayev, who is currently living in exile in France. The video
is below in the Azeri language.
Largest Domestic Bribery and Bid-rigging Scheme in the
History of Federal ContractingInvolved Steering Government ContractsIn Exchange For More Than $30 Million in Bribe and Kickback Payments
Michael
A. Alexander, 56, a former program manager for the U.S. Army Corps of Engineers, was sentenced today to six years in prison
for taking more than $1.25 million in bribes as part of a scheme in which corrupt public officials steered government contracts
in exchange for more than $30 million in bribe and kickback payments.
Alexander,
formerly of Woodbridge, Va., is among 11 people who have pled guilty to federal charges for their roles in the largest domestic
bribery and bid-rigging scheme in the history of federal contracting. At the time of his arrest, he and others were actively
conspiring to steer the award of a planned $1 billion federal contract in exchange for money and other benefits. Alexander
is the first of the defendants to be sentenced in the case...
In addition to
the prison time, he was ordered to pay $1.25 million in restitution and a $1.25 million forfeiture money judgment. Upon completion
of his prison term, Alexander will be placed on three years of supervised release. During the first two years of his supervised
release, he must perform 500 hours of community service...
In addition to the prison time, he was ordered
to pay $1.25 million in restitution and a $1.25 million forfeiture money judgment. Upon completion of his prison term, Alexander
will be placed on three years of supervised release. During the first two years of his supervised release, he must perform
500 hours of community service.
Three former Hewlett-Packard Co. (HPQ) managers were charged in Germany in a corruption investigation over improper payments made to win a 35 million-euro
($45 million) sale of computers to Russia about nine years ago. They were charged with bribery, breach of trust and aiding
in tax evasion...
The president delivered the strongly worded apology two weeks after Lee
Sang-deuk, his 76-year-old elder brother and close political ally, was arrested in connection with allegations, which he denies,
that he had accepted $500,000 from two bank chairmen seeking political influence.
Bribery is considered illegal, while lobbying is not. Bribery
is considered a sale of power. However, lobbying is considered an influence of political power by offering contributions that affect political outcomes. Bribes may seem like small amounts compared to lobbying contributions, but
therein lies the problem. Bribes cannot be accounted for and therefore a parallel economy blossoms.It creates inefficiencies in systems and obstacles. In the
World Bank report, "Does Grease Money Speed Up The Wheels of Commerce?," the relationship between bribe payments and a variety
of measures of official harassment (management time wasted with bureaucracy, regulatory burden and cost of capital) was studied.
The evidence suggests that there is no support for the "efficient grease" hypothesis. In fact, a consistent pattern is that
bribery and measures of official harassment are positively correlated across firms. It also increases the cost of doing business.
A law intended to prohibit the payment of bribes to foreign officials
by United States businesses has produced more than $3 billion in settlements. But a list of the top companies making these
settlements is notable in one respect: its lack of American names.
The companies that have reached the biggest settlements under
the law, known as the Foreign Corrupt Practices Act, include Siemens, the German engineering giant; Daimler, the maker
of Mercedes-Benz vehicles; Alcatel-Lucent, the French telecommunications company; and the JGC Corporation, a Japanese consulting
company. The lone American company in the top 10 is KBR, the former Kellogg Brown & Root, a subsidiary of Halliburton,
the Texas oil services company. As a group, they have paid nearly $3.2 billion
in settlements.
A federal grand jury indicted three individuals and a security
firm in connection with an alleged bribery scheme that netted $54 million in supply and training contracts in Afghanistan.
The 72 count indictment charged...conspiracy, procurement fraud, bribery of a public official, acceptance of a bribe by a
public official, wire fraud, money laundering, conspiracy to commit money laundering and structuring transactions in connection
with the alleged scheme...Using confidential information, AISC won multiple contracts from the Army, which paid the company
about $54 million, according to the indictment. The co-conspirators allegedly distributed more than $20 million among
themselves.
The Securities and Exchange Commission adopted rules Wednesday
mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring companies engaged in extracting oil, natural
gas or minerals to disclose any payments they make to the U.S. government or foreign governments...The rules require a resource
extraction issuer to provide the following information about payments made to further the commercial development of oil, natural
gas, or minerals:
• Type and total amount of payments made for each project. •
Type and total amount of payments made to each government. • Total amounts of the payments, by category. •
Currency used to make the payments. • Financial period in which the payments were made. • Business segment
of the resource extraction issuer that made the payments. • The government that received the payments, and the country
in which the government is located. • The project of the resource extraction issuer to which the payments relate.
In an effort to curb corruption, this landmark ruling will
require oil, gas and mining companies listed on US Stock Exchanges to publish the payments that they make to governments.
The ruling on section 1504 is a milestone in the long campaign for transparency in the extractive industry and sets a global
benchmark.
“Curbing corruption in developing countries dependent on
mineral extraction is vitally important. The SEC’s adoption of the new rules marks a significant step in reducing the
uncertainty surrounding the implementation of Sections 1502 (conflict minerals) and 1504 (payments to government by resource
extraction issuers) of the Dodd-Frank financial reforms and enhances transparency. However, these rules will not achieve their
intended benefits unless other countries require similar disclosures by their home companies."
David Ellery, 56, pleaded guilty to one charge of false accounting
in the probe of former managers and employees at Note Printing Australia Ltd. and Securency, who have been charged with bribing
officials in Malaysia, Indonesia and Vietnam to win currency-printing contracts.
Prosecutors say Mr de la Rua paid some $5m (£3m) to secure the
votes of a group of senators in favour of legislation scrapping workers' rights.
An
imminent Supreme Court trial of former government and ruling-party officials is reviving Brazil's biggest corruption scandal
in two decades, with the potential to damage not only the Workers' Party, but also popular ex-President Luiz Inácio Lula da
Silva.
The
trial, set to begin Aug. 2, stems from allegations, first aired in 2005, that Mr. da Silva's powerful chief-of-staff José
Dirceu offered monthly bribes, equal in some cases to more than $10,000, to members of Congress in exchange for their votes.
Prosecutors, who are charging 38 defendants, allege the bribe money was skimmed from the federal government's advertising
budget...
No scandal has
been as widespread or potentially damaging since the 1992 impeachment of former President Fernando Collor, who resigned hours
before his almost certain removal from office by the Brazilian Senate on corruption charges
There wasn't
much that set Aban Pearl apart from any number of oil and gas exploration rigs -- that is, until the massive structure sank
off the coast of Venezuela in April 2010. More than two years after the fact, aninvestigationhas
shown that Venezuela's state-owned oil giant, PdVSA, agreed to pay more than twice as much for the rig's services than its
owners stood to receive in rental fees.In fact, PDVSA agreed to pay $700
million to an intermediary that turns out to be a shell corporation controlled by well-connected players within the Bolivarian
elite (some of whom, interestingly enough, now work out of New York City). It should, by any reasonable reckoning, be a massive
scandal. But in fact, the revelations have caused barely a ripple. No ministers have been called to testify, no officials
exposed to public scrutiny.
Acquiring,
packaging, transporting, and protecting illegal drugs costs a lot of money. But the biggest cost isn't the drugs, the men,
the transportation or the guns.That distinction is reserved for bribery...
...it's speculated that each year, drug cartels spend
more thana billion dollarsjust
bribing municipal police. That's not even taking into account the real men in power like Mexico's former top anti-drug official,
Noe Ramirez. In 2008, Ramirez was charged with providing information about investigations to drug cartels. His compensation
for the information was reportedly$450,000 per month.
Theses sums not only keep the system working smoothly, but
work (literally) as a get out of jail free card. For example, the boss of the Sinaloa cartel, Joaquín Guzmán (better
known as El Chapo),paid $3 millionto
escape from maximum security prison Puente Grande in 1993.
The World Bank lends
around $72 billion each year to some of the world’s poorest countries. A lot of it ends up getting stolen by corrupt
officials, greedy contractors, and organized crime networks. The bank estimates that $20 billion to $40 billion is squandered each year by developing countries.
Now it’s trying
to do something about it. For the first time, the World Bank is publishing the deliberations of its internal body that decides
whether to stop doing business with companies it says engage in corruption.
Investing in compliance is on the rise but those tasked with implementing
it are still concerned about exposure to risk, a new survey by Kroll found.
The survey of 139 corporate compliance executives, conducted between
July 2011 and February of this year, found that 95% of respondents believe their companies’ exposure to bribery risk
increased or held steady over the past few years, and that 85% of respondents said it will increase or stay the same in the
future.
This report summarizes information about bribe demands made in
the United States and reported to BRIBEline between July 11, 2007 and November 15, 2011. The objective of this report
is to identify patterns in reported bribe demands in the United States...
BRIBEline, a project managed by TRACE, is an anonymous, online
reporting tool that collects data about bribe solicitations made by official, quasi-official and private sector individuals
and entities...
The BRIBEline 2011 United States Report summarizes information
about 73 incidents of bribe demands made in the United States and reported to BRIBEline in the period from July 11, 2007to
November 15, 2011.
Abstract:Over the last thirty-five
years, governments worldwide have been engaged in an important and laudable battle against bribery in international business
transactions. The core of the U.S. anti bribery strategy is the Foreign Corrupt Practices Act, a federal law that imposes
criminal penalties on those — and only those — who give bribes to foreign officials and that largely relies on
voluntary disclosure to detect such corruption. This supply-side criminalization strategy, however, is ineffective, incomplete,
inefficient, and inequitable. It punishes many extorted persons who do not deserve it and largely fails to punish the corrupt
foreign officials who do. By punishing companies that voluntarily disclose their payments and denying them opportunities to
recover their losses from extortion, it also establishes a perverse incentive structure that virtually ensures bribery will
remain secret in most cases. The focus of the U.S. strategy should be shifted to prevention, not punishment. To this end,
Congress should decriminalize the giving of bribes, replacing it with a robust mandatory disclosure regime that will enableforeign countries and business competitors to take action against willing
bribe givers and allow victims of extortion to shield themselves from needless litigation, while obtaining meaningful restitution
for the losses they have incurred. The U.S. government should then use the mandatory reports of unwilling payments to criminally
prosecute the corrupt foreign officials who demand such payments, if foreign governments are unwilling or unable to do so.
With 144 new cases in 2011, the total number of cases prosecuted
by 37 major exporters rose from 564 at the end of 2010 to 708 at the end of 2011, with a further 286 investigations ongoing.
Over 250 individuals and almost 100 companies were sanctioned as
a result of foreign bribery-related cases in OECD Convention countries to the end of 2011, according to the OECD. Sixty-six
people have gone to jail in those countries for the crime of bribing overseas officials in business deals.
In some countries, businesses may require making unofficial
payments or gifts to "get things done." The indicators provided capture the prevalence of different types of bribery
in 135 countries. The results are based on surveys of more than 130,000 firms. A database query toolis
available to help you better understand the prevalence of corruption across various firm subgroups. You can also generate graphsto
compare countries and see the details for a specific economy.
A new British anti-bribery law, passed in 2010,
appears to have been better crafted. The Bribery Act is broad and tough. It covers bribery within Britain as well as abroad.
In contrast to the FCPA, it makes no exception for small “facilitation payments” to speed up routine business
such as customs checks or visas.
But it is fair, too. Unlike the FCPA, it has a
“compliance defence” that allows a company to avoid the harshest penalties if the wrongdoer is a junior employee
and the firm otherwise has a strict anti-bribery policy which is clear to all employees and effectively administered. One
rogue employee can’t easily cause a crippling probe into an otherwise blameless company.
A federal law to prevent U.S. companies from paying bribes to
business overseas recently came to the forefront when The New York Times reported that Walmart officials had
covered up alleged bribes made by company representatives in Mexico. The retail giant faces federal investigation for violating
the Foreign Corrupt Practices Act (FCPA). Wealthy individuals connected with Walmart have meanwhile taken advantage of new
campaign finance rules that allow for unlimited contributions -- and raise fears of unlimited influence over a future administration.
Jim and Alice Walton, children of the founder of Walmart, have
contributed $200,000 each to Restore Our Future, the super PAC supporting Republican presidential candidate Mitt Romney's
campaign. Jim Walton sits on the board of Walmart, and both owe their place near the top of the Forbes list of the
400 richest Americans to their stake in the company.
The Waltons are not alone among super PAC donors with businesses
facing FCPA investigation. At least three other major contributors currently have FCPA worries, and others may be looming.
The U.S. Chamber of Commerce, another big-money campaign spender, continues its lobbying to loosen enforcement of the anti-corruption
law...
Watchdogs fear that a future administration, brought to power by
these donors, could drop investigations, appoint or hire opponents of FCPA enforcement at the Justice Department and the SEC,
or otherwise shift the focus away from FCPA.
The oil and gas industry was subject to the most
prosecutions for bribery and graft in the UK of any sector over the past four years, according to a new survey. The study
by Ernst & Young found that of 26 completed cases since 2008, oil and gas made up nearly one-fifth of prosecutions.
Many of the cases analysed by the Ernst & Young
study emerged from the scandal surrounding the Iraq Oil-for-Food programme, in which a number of companies and individuals
admitted to bribing public officials in Iraq and breaching UN sanctions.
This website is dedicated to providing a reference
source on the scourge that is whirling across planet Earth destroying governments, businesses, cities, families and imperiling civilized
culture by agregating and making available on one site sources of news, analysis and opinion about corruption.
Criteria for inclusion on this site of "BIG
Corruption" cases:
Very High level corporate and/or government official(s) involved;
Very Large amount of money lost;
International financing/aid agency program;
Global impact on numerous countries/businesses/investors; and/or
Classic example that can be used in training/seminarsmajor cases of global fraud and corruption.
As a news agregator website this site primarily serves to gather for research and educational
purposes in one single place news and information specifically pertinent to major global corruption in business and government.
The news items, views, editorials and opinions summarized or reported on this website are taken from the general media and
reputable blogs, websites, etc., and are exclusively the responsibility of the original sources and/or authors. In accordance
with Title 17 U. S. C. Section 107, any copyrighted work on this website is distributed under fair use without profit or payment
to those who have expressed an interest in receiving the included information for nonprofit research and educational purposes
only. Ref: http://www4.law.cornell.edu/uscode/17/107html
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