Letter from the Editor, July 2015

Nick Burkill Aside from the high profile investigations and charges against multinational companies that have dominated the news, has China’s anti-corruption campaign had any real impact on commercial bribery? If so, what?

The Anti-Fraud Network commissioned Dorsey & Whitney China and Blackpeak to examine recent corruption cases and conduct confidential conversations with their clients and contacts to provide a snapshot of the current situation in relation to corruption in China, and valuable insight into what areas of business are vulnerable now. Together, Nick Blank, Frank Hong and I provide guidance on the practical, proactive and preventive steps that can be taken to prevent corruption and protect businesses.

The report has generated considerable media interest. Frank Hong spoke on BBC World News’ Asia Business Report on 28 June about our findings.  On 10 July I spoke to Commercial Risk Europeand Nick Blank spoke with Thomson Reuters Regulatory Intelligence.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

I would like to take this opportunity to wish all our readers a good summer as we will now take a break until the end of August.

Nick Burkill

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Has China’s Anti-Corruption Drive Had Any Real Impact on Commercial Bribery?

Nick BlankNick BurkillFrankHong

 

 

 

 

It is impossible to ignore the anti-corruption campaign launched by China’s president, Xi Jinping. Aside from the high profile investigations and charges against multinational companies that have dominated the news, has the campaign had any real impact on doing business in China? If so, what?

Without doubt, China’s anti-corruption campaign is significantly impacting state officials and the senior leadership of state-owned corporations. The arrest of ex-security chief Zhou Yongkang and the one-day trial of former China National Petrolefum chief Jiang Jiemin who admitted guilt are just two high-profile recent cases. The net has also stretched beyond China’s border, with Xu Jinhui, head of the anti-graft bureau, giving the US government a priority list of corrupt officials allegedly hiding in the United States.

The biggest change seen by one security manager at a foreign manufacturer in light of the campaign and in line with these cases, is a dramatic change in the way multinational corporate employees interact with employees at state-owned enterprise. No one wants to interact or meet with them anymore – everyone is afraid that they could become ensnared in the net of the crackdown.

But what has been the impact on business-to-business relationships? Are kickbacks still being paid between businesses? From vendors to suppliers? Is the scrutiny being faced by officials also being felt within the private sector?

In a series of private conversations held by Dorsey & Whitney China and Blackpeak with the security managers of multinational companies, we identified the real effects of Xi Jinping’s campaign on businesses operating in China.

Commercial corruption hasn’t gone away. It’s simply evolving

Our interviews with security managers who are regularly assigned by multinational companies to investigate allegations received by their staff of kickback payments revealed that little has really changed. The security managers we spoke to consistently held the view that commercial corruption was still occurring at levels consistent with their experience during previous administrations but, as one investigator in the pharmaceutical industry put it, the methodology has changed.

In the past, employees would skim expense accounts in order to get cash for bribery payments. The hope was that delivering big sales contracts would increase their chances of bonuses and promotions. These days they are still skimming, but they are keeping the cash for themselves.
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Posted in 2015-07, Newsletter | Tagged , , , |

Letter from the Editor, June 2015

In this issue, Deirdre Lyons and I take a look at the ways in which virtual currencies, such as Bitcoin, pose a challenge for anti-money laundering enforcement.

I will be speaking at the Construction Law: Contracts & Dispute Management conference in London this summer. The conference takes place from 29 June to 2 July and aims to provide practical guidance to help you minimise and manage construction-related disputes. Click here to register and use VIP code FKW82566AFL to obtain a 20% discount.

We are also delighted to be able to offer you a 10% discount on IIR’s Detecting & Preventing Fraud courses on 17 and 18 June 2015 in London. Click here to register and use VIP code FKW52924AFNWL to obtain your discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , , |

Virtual currency: a new challenge for international AML enforcement

Nick BurkillDeirdre LyonsVirtual currencies, such as Bitcoin, present new challenges for international anti-money laundering (AML) enforcement. Whilst they have legitimate uses, they offer real-time, low-profile conduits for criminals to transfer funds and launder traditional currencies in a vacuum, outside international banking laws and regulation. The key appeal of the virtual currency industry to criminals is its anonymous nature, which allows criminals to participate in financial markets and convert, transfer and withdraw funds without detection, quickly and easily across borders. The peer-to-peer basis of virtual currencies allows criminals to evade sanctions and AML controls, and facilitate twenty-first century criminal activities linked to money laundering, cybercrime and even national security.

As such, virtual currencies, and in particular virtual currency exchanges, occupy a legal grey area for criminals to exploit and regulators to address. As a consequence, the regulation of virtual currency exchanges has been identified by governments as a key requirement for effective AML efforts.
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Posted in 2015-06, Newsletter | Tagged , , , , , , |

Letter from the Editor, May 2015

In this issue, Nick Blank and Frank Hong take a look at the fine art of investigating corrupt  behaviour in China and how to manage the subsequent dismissal process.

I will be speaking at the Construction Law: Contracts & Dispute Management conference in London this summer. The conference takes place from 29 June to 2 July and aims to provide practical guidance to help you minimise and manage construction-related disputes. Click here to register and use VIP code FKW82566AFL to obtain a 20% discount.

We are also delighted to be able to offer you a 10% discount on IIR’s Detecting & Preventing Fraud courses on 17 and 18 June 2015 in London. Click here to register and use VIP code FKW52924AFNWL to obtain your discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , , , , , |

Refining the art of corruption investigations and subsequent dismissals in China

 

Nick Blank

FrankHong

 

 

 

 

 

 

PART 1: Allegations, evidence and expecting the unexpected

Real world examples

Mr Wang (not his real name) headed the purchasing department for his division in a Shanghai based multinational advertising company.  He was also a shareholder in a small technology company, a fact that he kept secret from his employer but which came to light following a whistleblowing letter sent to senior management.

The advertising company’s labour contract and employee handbook made it clear that employees aren’t permitted to have conflicting interests involving supplier companies.  Mr Wang’s employer was ready to take action if they found Mr Wang had been sending orders to his own company, but the internal investigation hadn’t actually uncovered any concrete evidence that Mr Wang’s company was directly a supplier to the advertiser.  In fact, the technology company’s main business was giving strategic advice to internet start-ups, which had little overlap with advertising, a point Mr Wang made when he was interviewed for the investigation.  He also noted that he was only a shareholder, and not technically working at the technology company, which meant he was not in violation of his contract.
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Posted in 2015-05, Newsletter | Tagged , , , , |

Letter from the Editor, April 2015

Nick BurkillIn this issue, Alan Day, Director of AKD Services, looks at the similarities between anti-fraud security and physical security, and suggests that we could learn from the physical security systems that we take for granted and apply them to our anti-fraud security processes.

We are delighted to be able to offer you a 10% discount on IIR’s Detecting & Preventing Fraud courses on 17 and 18 June 2015 in London. Click here to register and use VIP code FKW52924AFNWL to obtain your discount.

In addition to plenary and track sessions, interactive round table discussions and opportunities to network, the Summit also includes an exclusive session in which former FCPA prosecutor Billy Jacobson will interview Richard Bistrong, who he targeted for prosecution in a 2007 FCPA investigation.  Mr Bistrong will reflect on how he “rationalised” bribery on the front lines of international business, which ultimately led to 14 months imprisonment. The discussion will cover the process of “flipping” Mr Bistrong and convincing him to cooperate undercover.

Register using code AFN15 to obtain your 15% discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged |

Physical security and anti-fraud security. Strange bedfellows or a match made in heaven?

Alan DayGo on admit it, everyone’s done it.  On leaving your home you say to yourself, “Did I lock the door?”  You retrace your steps and ensure that the door to your home is secure.  Some would call this a “senior moment”, but actually we just want to make doubly sure our home is secure against any criminal who may try to break in and steal our personal possessions.

But the latest figures from the United Kingdom’s Office for National Statistics (ONS) suggest that, for the first time, you are now more likely to be defrauded than you are to be burgled.  So when was the last time you heard anyone say as they left the house, “Oh, did I remember to update my antivirus software?”
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Posted in Newsletter |

Developments in the British Virgin Islands that assist in the fight against fraud

Jack HusbandsA number of developments in the British Virgin Islands (BVI) have improved creditor access to the courts and their subsequent chances of recovering their funds.  These developments exemplify the evolution of the BVI as both a leading commercial centre and a centre for the resolution of disputes.

Black Swan jurisdiction

Since the decision of the UK House of Lords in 1977 in the case popularly known as The Siskina, it has commonly been accepted that an applicant could not commence a suit seeking only interlocutory (intermediate, temporary or provisional) relief, at least not against foreign defendants who could not be served process without the permission of the court. According to The Siskina, a claimant must always seek final judgment against the defendant.
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Posted in 2015-03, Newsletter | Tagged , , |

Letter from the Editor, March 2015

Nick BurkillIn this issue, Jack Husbands from British Virgin Islands (BVI) law firm, Walkers Global, takes a look at a number of developments in the BVI that have improved creditor access to the courts and their subsequent chances of recovering their funds.

We are delighted to be able to offer you a 15% discount on Momentum’s annual Anti-Corruption & Export Controls Summit (ACES Summit) on 21 and 22 April 2015 in McLean, Virginia, USA.  The Summit will be of value to leaders and practitioners within the international trade community who specialise in anti-corruption, export controls or sanctions management.

In addition to plenary and track sessions, interactive round table discussions and opportunities to network, the Summit also includes an exclusive session in which former FCPA prosecutor Billy Jacobson will interview Richard Bistrong, who he targeted for prosecution in a 2007 FCPA investigation.  Mr Bistrong will reflect on how he “rationalised” bribery on the front lines of international business, which ultimately led to 14 months imprisonment. The discussion will cover the process of “flipping” Mr Bistrong and convincing him to cooperate undercover.

Register using code AFN15 to obtain your 15% discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , , , |