Articles, Videos and Cases on the growing menace of official and
commercial corruption, fraud and bribery
"There is no kind
of dishonesty into which otherwise good people more easily and more frequently fall than that of defrauding the government."- Benjamin Franklin
“During my campaign for the Presidency, I repeatedly stressed the need
for tough legislation to prohibit corporate bribery. [The Act] provides that necessary sanction. I share Congress’s
belief that bribery is ethically repugnant and competitively unnecessary. Corrupt practices between corporations and public
officials overseas undermine the integrity and stability of governments and harm our relations with other countries. Recent
revelations of widespread overseas bribery have eroded public confidence in our basic institutions.”
--President Jimmy Carter upon signing the Foreign Corrupt Practices Act of 1977
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Remember the ZZZZ Best Scandal of the 1980's?
Here's the rest of the story - about one of the greatest
fraudsters of all time.
U.S. Ignored U.N. Aid Agency's Fraud and Mismanagement
Between 2004 and 2008, the U.S. Agency for International
Development (USAID) showered more than $330 million on an obscure United Nations agency known as UNOPS — United Nations
Office for Project Services — to carry out development aid projects in Afghanistan. What happened next wasn’t
pretty.
Among other things, USAID apparently overlooked a growing
stack of U.N. audits and investigations that pointed to fraud, mismanagement and lack of internal financial controls by UNOPS
in Afghanistan, even as the U.S. agency continued to shovel money in UNOPS’s direction. So did other branches of the
U.S. government, to the tune of an additional $100 million.
In a stunning number of cases, however, USAID also ignored
its own oversight procedures and did not even insist that contracts with UNOPS enshrine the agency’s uncontested right
to access financial records that would tell how the U.S. government money was spent. Consequently those records were never
examined.
In other cases, it looked like legal loopholes were created
to make sure UNOPS got to keep its financial records out of USAID’s reach...
"USAID has not consistently implemented its oversight policies
when making grant awards with UNOPS and has been vulnerable to program fraud and abuse. While USAID has policies that require
it to perform pre-award assessments of Public International Organizations (PIO), such as UNOPS, USAID could not provide official
documentation of these assessments for 7 of its 11 awards made to UNOPS from 2004 through 2008. In the 4 assessments USAID
provided, there were no statements acknowledging findings of weak internal controls from UN audits and investigations. In
addition, USAID did not negotiate to include audit authority for 9 of these awards that would have allowed USAID access to
UNOPS project financial records. We found that an absence of clear guidance, training, and monitoring contributed to these
failures. USAID’s noncompliance with its policies resulted in limited access to data on UNOPS grants that were associated
with findings of possible criminal actions."
Last April...the
Inspector General of USAID issued a separate report on $25 million worth of projects sub-contracted to UNOPS between 2003
and 2006 to build small-scale infrastructure projects throughout Afghanistan. It revealed, among other things, that $10 million
of the money was spent on UNOPS work in Haiti, Sudan, Sri Lanka and Dubai; that some of the projects actually completed in
Afghanistan were built shoddily or to the wrong specifications and were on the verge of falling apart; that UNOPS officials
saw at least one of the projects as a “cash cow,” and that UNOPS officials stonewalled when U.S. inspectors tried
to find out what happened.
According to
the report, UNOPS also drew down $6.7 million worth of U.S. funds from a line of credit months after the project ended, with
no apparent justification. One whistleblowing U.N. employee cited in the Inspector General’s report reported that the
local director of UNOPS spent about $200,000 of U.S. money on renovating his guesthouse.
At the same time,
the agency’s oversight was further hampered by the fact that its 36-nation supervisory Executive Board did not have
direct access to the internal audit reports documenting UNOPS’s failings — just as the same Executive Board, which
also supervises the United Nations Development Program (UNDP), did not have access to internal audit reports from the same
period that pointed to UNDP violations of its own rules in North Korea.
Extract from USAID Inspector General's Report:
On 8/1/07,
an anonymous complainant contacted the Regional Inspector General
, Investigations
(RIOII), Manila office to convey allegations of abuse by the UN. Allegations provided included:
• In spite of being told in writing
that UNDP could only bill "nominal" close out costs after
12131/06, UNOPS claimed to
expend $1.7 million in
2007. UNDP inexplicably drew $5.1 million from its USAID letter of credit(LOC) in 5/07 and then another
$1.9 million.
• UNDP and UNOPS staff are unwilling
to meet with USAID to explain the draw downs
.
• Projects worked byUNOPS were
not completed as claimed and others have defects and warranty issues that UNDP refuses to address
. There are numerous design errors, neglected repairs
and uninstalled equipment and materials -
all
of which was billed as complete. Some incomplete work includes life-threatening oversights on a
bridge and several buildings. Building parts are missing from some sites.
The investigation largely substantiated these allegations.
The United Nations has
cut back sharply on investigations into corruption and fraud within its ranks, shelving cases involving the possible theft
or misuse of millions of dollars, an Associated Press review has found.
At least five major cases
in Afghanistan, Iraq and Africa are among the inquiries halted as the U.N. scaled back on self-policing over the past year.
The world body was rocked
earlier in the decade when more than 2,200 companies from some 40 countries colluded with Saddam Hussein's regime to bilk
$1.8 billion from a U.N.-administered oil-for-food program for Iraqi humanitarian relief.
In response, it established
a special anti-corruption unit, the Procurement Task Force, in 2006 that over the next three years uncovered at least 20 other
major schemes affecting more than $1 billion in U.N. contracts and international aid.
But at the beginning
of 2009, the United Nations shuttered the agency and diverted its work to the Office of Internal Oversight Services' permanent
investigation division.
Since then, the number
of cases opened, pursued or completed has dropped dramatically and the division has let go most former task force investigators,
the AP found in an examination of U.N. documents, audits and e-mails, along with dozens of interviews with current and former
U.N. officials and diplomats.
Over the past year, not
a single significant fraud or corruption case has been completed, compared with an average 150 cases a year investigated by
the task force. The permanent investigation division decided not to even pursue about 95 cases left over when the task force
ceased operation, while another 80 unfinished cases have languished.
It also stopped probes
into contractors and cut qualified staff and other resources — and halted five major corruption investigations documented
by the task force in the final days of 2008.
La
convención contra sobornos de la OCDE sólo ha sido aplicada por 4 de los 36 países suscritos; Alemania, Noruega, Suiza y EU
son los únicos en aplicar las normas del convenio adquirido en 1997.
- Martes, 23 de Junio de 2009
PARÍS
(Reuters) —
El fracaso de muchos estados ricos para combatir los sobornos en operaciones con empresas extranjeras
amenaza la lucha contra la corrupción, lo cual sólo podría empeorar con la crisis económica global, mostró el martes un informe.
Sólo
cuatro de los 36 países que suscribieron una convención contra los sobornos auspiciada por la Organización para la Cooperación
y el Desarrollo Económico están cumpliéndola de manera activa, señaló Transparencia Internacional.
"El desparejo cumplimiento de esta convención es peligroso, especialmente
en la actual recesión global donde las empresas enfrentan presiones agudas para obtener pedidos", dijo a la prensa el director
gerente de Transparencia Internacional, durante un foro organizado por la OCDE en París.
En un informe publicado en el foro, Transparencia Internacional mencionó
señales peligrosas que podrían resultar en el fracaso de la convención -como leyes débiles contra el pago de sobornos en Gran
Bretaña y la falta de voluntad política para castigar esa práctica.
"El fracaso de la convención de la OCDE sería sin duda el revés más serio
en la lucha contra la corrupción internacional", afirmó de Swardt.
Esta situación lastimaría otras convenciones internacionales y al mismo
tiempo perjudicaría las campañas anticorrupción en los países más pobres, añadió.
El año pasado la OCDE criticó a Gran Bretaña por no lograr cerrar los vacíos
en sus leyes antisobornos y dijo que Londres podría haber hecho más en las investigaciones de las denuncias de corrupción
en una operación de compra de armas con Arabia Saudita.
Mark Pieth, presidente del grupo de trabajo de la OCDE sobre sobornos en
negocios internacionales, dijo el martes que combatir la corrupción en el sector de defensa era particularmente difícil debido
a los aspectos de confidencialidad y de seguridad nacional.
Francia también se vio inmersa en la polémica por proponer la abolición
del rol del juez de instrucción y pasar el poder a un fiscal designado políticamente, que podría estar menos dispuesto a investigar
casos que podrían complicar líderes franceses.
Los miembros de la OCDE adoptaron la convención para combatir la corrupción
en funcionarios extranjeros en 1997. Pero Transparencia Internacional dijo que sólo Alemania, Noruega, Suiza y Estados Unidos
estaban aplicando la convención con seriedad.
El 61% de los latinoamericanos cree
ineficaces las medidas anticorrupción
Bruselas, 3 de junio de 2009 (EFE).
El 61 por ciento de los ciudadanos de ocho países latinoamericanos
consultados considera ineficaces las medidas gubernamentales de lucha contra la corrupción, según un informe publicado hoy
por la organización Transparencia Internacional (TI).
Los más críticos con los mecanismos existentes considerados ineficaces fueron los argentinos (un 81%) y los peruanos
(71%), pero la proporción fue también alta en Venezuela y Panamá (65%), Chile (59%), El Salvador (53%), Bolivia (43%) y Colombia
(34%).
Sólo un 26% de los ciudadanos de estos países calificaron las
medidas de "efectivas" y un 13% no supieron valorarlas.
En Europa, el 56% de los ciudadanos estima insuficientes las
herramientas anticorrupción y en cifras globales (TI ha estudiado 69 países de todo el mundo) sólo uno de cada tres entrevistados
dice confiar en los mecanismos existentes, mientras que más de la mitad estimó que no eran efectivos.
En España, el 44 por ciento dijeron que las medidas son "ineficaces"
frente a 29 por ciento que las calificó de "efectivas" y al 27 por ciento que no supo valorar la acción del gobierno en esta
materia.
Un 34% de los encuestados latinoamericanos estimaron que son
los partidos políticos las organizaciones más afectadas por la corrupción, un 21% que el más expuesto es el poder judicial
y otro 20%, el poder legislativo.
El sector privado y los medios de comunicación despiertan la
desconfianza del 5 y el 3% de los entrevistados en América Latina.
En cifras globales, el 68% de los ciudadanos del total de países
estudiados percibe también a los políticos como corruptos.
En España, el 29 por ciento de los encuestados creen que el
sector privado es el más expuesto a la corrupción, seguido por los partidos políticos (27%), los funcionarios (15%), el poder
judicial (12%), los medios (9%) y el poder legislativo (8%).
El 30% de los bolivianos reconocieron haber pagado algún tipo
de soborno en los últimos doce meses, igual que el 28% de los venezolanos y el 20% de los peruanos.
Las cifras son más moderadas en Chile (10%), Colombia (8%),
Argentina y Panamá (4%).
En todo el mundo, uno de cada diez encuestados admite haber
pagado un soborno durante el último año, una proporción que en España representa sólo el 2 por ciento.
La organización indica que existe una diferencia entre nuevos
y antiguos miembros de la UE, ya que mientras los niveles se mantuvieron bajos Holanda (1%), Luxemburgo (4) o Reino Unido
(3) en otros como Lituania llegaron al 30 por ciento.
Las regiones más expuestas a este tipo de prácticas son Oriente
Medio y África: en Liberia, Sierra Leona y Uganda más del 50 por ciento de los encuestados reconoce haber pagado un soborno
en el último año.
La policía es "la institución más propensa" a aceptar sobornos,
seguida del poder judicial, las oficinas de registro y permisos y los servicios de administración de tierras, salud y
educación.
Lo más grave para el TI es que sólo uno de cada cinco encuestados
denunció de manera oficial los hechos y los que no lo hicieron alegaron, entre otras cosas, que creían que informar de lo
ocurrido no tendría efecto o les causaría problemas.
La encuesta publicada hoy fue realizada
por Gallup Internacional entre octubre de 2008 y febrero de 2009, sobre 69 países de todo el mundo, entre ellos 17 de los
27 miembros de la Unión Europea.
A free market economist admits he's not surprised that there are at least 20 civil and criminal investigations into potential
fraud in the $700 billion Wall Street bailout program. In a report to Congress, Neil Barofsky, the special inspector
general for the Troubled Asset Relief Program (TARP), says that the probes involve possible public corruption; corporate,
stock, and tax fraud; insider trading; and mortgage fraud. Dr. Mark Hendrickson, adjunct professor of economics at Grove
City College, says he expected such fraud would occur because the TARP was assembled so hastily last fall.
"You
dole out $750 billion without much of a plan and without any real transparency right from the start, and you think there aren't
going to be any shenanigans involved?" he wonders. "So, I think this was just an inevitability. It was something just waiting
to happen."
He finds it amusing that Inspector General Barofsky has opened audits into the role of outside lobbying
in winning the federal money.
"And I'm thinking to myself, 'Well, gee, when was the last time Washington didn't
make decisions about where money goes based on who's lobbying whom?' This is just business as usual," he contends. "The
TARP is a new program, but the modus operandi is the same. You have special interests who can afford the lobbyists, and they're
huddling up with the members of Congress. And then they work out an insider deal that we, the taxpayer, end up paying for."
The FBI is conducting more than 500 investigations of corporate fraud amid the financial meltdown,
FBI Deputy Director John Pistole told the Senate Judiciary Committee...38 of them involve some of the biggest names in corporate
finance in cases directly related to the current economic crisis.
NEW DELHI — Managers at the outsourcing company Satyam Computer Services spun an elaborate web of
fraud to attract customers and investors, while using stakes in the company to raise cash for themselves, according to a report
filed by India’s top investigation agency.
The deception played out over at least eight years, involved dual accounting books, more than 7,000 forged invoices, dozens
of fake bank statements, thousands of unnecessary employees and auditors who received fees several times the market rate,
according to a charge sheet filed by the Central Bureau of Investigation in a court in Hyderabad.
The 77-page document details the scope of the fraud at Satyam, and lays out the bureau’s case for charging six company
managers, their PricewaterhouseCoopers auditors and an adviser with cheating, forgery and falsification of accounts.
Satyam managers, including the founding brothers B. Ramalinga and B. Rama Raju “were able to attract prospective
customers and investors by making them believe” that the company was “carrying out huge volumes of business,”
the report said.
The details of the bureau’s investigation could bolster a string of class-action suits pending against Satyam managers
and auditors.
Tech Mahindra, a joint venture between the Indian conglomerate Mahindra & Mahindra and BT Group won an auction
to take over Satyam on April 13 with a bid valuing the company at $1.1 billion. The deal may still need to clear regulatory
hurdles in the United States and Europe.
The Raju family and their friends, which held 19 percent of Satyam when it went public in 1992, “made hay when the
sun was shining” by selling shares as they carried out the fraud, the bureau said in its report. More than 300 investment
companies were started, some of which used loans backed by shares to invest in real estate and agriculture, the report said.
Banks issuing the loans included Deutsche Investments India, GE Capital Services and DSP Merrill Lynch.
Like many companies, Satyam had a multistep process for taking customer orders, calculating what the work would cost and
generating invoices. Managers in different departments checked and crosschecked the figures as they passed through the system.
But employees in the accounts receivable team could also practice “emergency generating of invoices” which
bypassed most of the steps, the bureau report said.
From the beginning of April 2003 to the end of 2008, nearly 75,000 of these special invoices were created. Of these, 7,561
were fraudulent, generated to make Satyam look as if it had more business than it did.
The invoices named 11 different Indian companies but were never received by those customers, the report said, based on
conversations with the companies. From 2004 until the fraud came to light when B. Ramalinga Raju confessed in January, sales
were inflated 18 percent a quarter on average, for a total of about 42.6 billion rupees ($840 million).
Satyam has claimed that the invoices were paid through the New York branch of Bank of Baroda, on Park Avenue in Manhattan.
But the bank said it received no such payments, according to the report. To back the invoices, the managers falsely inflated
the percentage of employees that it said were working “onsite,” or on profitable projects, the bureau said.
A part of the inflated sales were recorded in Satyam’s books as debt every quarter, using forged monthly bank statements,
the bureau said. By the quarter ended September 2008, that fictitious debt totaled about $100 million.
Every quarter, the Raju brothers and two finance executives received both the actual and falsified sales figures, the bureau
said. A copy of the dual reports was retrieved from the e-mail box of the chief financial officer, Srinivas Vadlamani.
The company’s auditors, S. Gopala Krishnan and Srinivas Talluri, who have been suspended from PricewaterhouseCoopers,
both received figures from Satyam’s banks that were in “great variance with the figures provided by the management”
but certified Satyam’s accounts anyway, the bureau said. In return, the bureau claims, the auditors received an “exorbitant
audit fee” over and above the market rate.
In an e-mailed statement, the global director of communications for PricewaterhouseCoopers, Mike Davis, said “We
are aware that charges have been leveled against the two PW partners. We are yet to engage with the partners on the contents
of the charge sheet and therefore we are not able to comment at this stage.”
Both brothers are accused of forging receipts for bank deposits and destroying the forgeries. Satyam’s founding brothers,
the company’s chief financial officer and the two PricewaterhouseCoopers auditors remain in jail in Hyderabad.
Investment companies created in the names of the brothers’ wives, children and even their mother were used to hold
proceeds from selling shares and from borrowing 17.4 billion rupees ($350 million) from finance companies.
Whenever you find you
are on the side of the majority, it is time to pause and reflect
--- Mark Twain
We have never observed
a great civilization with a population as old as the United States will have in the twenty-first century; we have never observed
a great civilization that is as secular as we are apparently going to become; and we have had only half a century of experience
with advanced welfare states...Charles Murray
Kella
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U.S. Ignored U.N. Aid Agency's Fraud and Mismanagement
