Indian government approves anti corruption law draft, but civil society not pleased

Activist Anna Hazare describes the bill as a 'deceit on the nation' 

India's government has approved a draft of the new anti-corruption law, which will be tabled in Parliament during the upcoming session, which starts on 1st August.

The proposed legislation would see the creation of an anti corruption ombudsman, or Lokpal, with the power to probe corruption in the upper tiers of India's bureaucracy, in Parliament and in the ministries.

But many Indian anti corruption civil society activists have rejected the Lokpal Bill 2011 as insufficient as it exempts the prime minister and the judiciary.

Indian activist Anna Hazare called the bill a 'cruel joke' and said he would go on a hunger strike from 16th August in protest.

Another prominent anti corruption campaigner and former senior police officer, Kiran Bedi, said on Thursday 28th July that the government "is taking people for a ride".

The government of India's Prime Minister Monmohan Singh has been hit by a series of corruption scandals in recent months and years, which has seen Singh's previously clean image become increasingly tarnished.

The Lokpal Bill was meant to show that the government is serious about corruption, but while it included anti corruption campaigners in the bill's development, the two sides fell out over the issue of whether the prime minister should be included under the bill.

India's BJP opposition party has also criticised the bill.

"If a prime minister does something corrupt to save his seat and there is no investigation into the corruption, then what does this mean?” BJP spokesman Ravishankar Prasad was quoted by the BBC as saying.

According to Salman Khurshid, one of the government ministers in the bill drafting committee, Prime Minister Singh had wanted the prime minister's role to be brought under the Lokpal's purview, but the Cabinet decided against it.

Khurshid also said the government would introduce separate legislation to increase judicial accountability.

The bill will still have to get Parliament's approval before it becomes law. While it seems likely that it will pass – no party will want to look like it is condoning corruption - it is not a guarantee. Different forms of the Lokpal Bill have made multiple rounds through Parliament since 1968 without being enacted, according to the Wall Street Journal.

If passed, the body would be made up of 8 members, plus a chairperson. It would comprise four retired or serving judges and justices of higher courts and four individuals with at least 25 years of experience in the field of anti corruption. The chairperson would be a serving or retired Supreme Court judge.

The Lokpal members would serve five-year terms, and would be appointed by the President, based on recommendations from a team made up of the prime minister, the speaker of Parliament, the leader of the opposition and others.

Sources: BBC News, Times of India, Wall Street Journal

For more information, please see the Menas ACCS website, here. 

Diageo fined US$16 million for foreign bribery

The world's largest spirits company, Diageo, has agreed to pay over US$16 million to US authorities to settle allegation that it paid bribes to officials in India, South Korea and Thailand.

The Securities and Exchange Commission (SEC) investigated Diageo under the Foreign and Corrupt Practices Act (FCPA) for actions between 2003 and 2009.

The SEC alleged that Diageo's subsidiaries paid more than US$2.7 million in bribes, which helped it generate more than US$11 million in profits.

“As a result of Diageo's lax oversight and deficient controls, the subsidiaries routinely used third parties, inflated invoices and other deceptive practices to disguise the true nature of the payments,” the SEC said.

Diageo's Indian subsidiary, DI, allegedly paid US$1.7 million to Indian officials and hundreds of employees of government liquor stores and the Indian military's Canteen Stores Department, according to the Wall Street Journal.

According to the SEC, the “cash services fees” were used to “increase government sales orders of its products and to secure favourable product placement and promotion within the stores.”

The SEC said that as a result of the cash payments, which were obscured in accounts, put under labels like “marketing promotion”, or “market scheme settlement”, DI received increased sales, allowing to “unjustly” earn over US$11 million.

In Thailand, it is alleged that Diageo, through DT, retained the services of a Thai government and foreign political party official to lobby other officials to adopt Diageo's position in a number of tax and customs disputes.

It is alleged that from April 2004 through July 2008, DT paid approximately US$12,000 per month, for a total of nearly US$600,000. The Thai official in question was paid through a political consulting firm, for which the official acted as a principal.

Some US$15,000 was also used to reimburse the official's entertainment expenses, including those incurred on behalf of government officials. The payments were improperly recorded under labels such as "Corporate Social Responsibility", "Stakeholder Engagement" and "External Affairs".

Diageo's unit in South Korea, DK, allegedly paid more than US$86,000 to a customs official who helped the company in transfer-pricing negotiations with the South Korean government in 2004. The company took numerous other officials on European trips, and made hundreds of small payments to South Korean military officers.

The SEC charged the company with disguising the payments as legitimate expenses in its books and records and failing to establish internal controls, in violation of the FCPA.

Without admitting or denying the charges, Diageo agreed to desist from further violations and pay US$11.3 million in disgorgement, US$2.1 million in prejudgement interest and a US$3 million penalty.

Diageo, who was praised for cooperating with investigators, said it had built systems and controls to prevent illicit payments.

Sources: ChiefOfficers.net The Telegraph, Wall Street Journal

For more information, please see the Menas ACCS website, here.

China telecommunications executive receives death penalty for corruption

Zhang Chunjiang was found guilty of accepting bribes

A former executive at China Mobile Ltd was sentenced to death, with a two year reprieve, on Friday 22nd July for accepting bribes.

Zhang Chunjiang, a former vice chairman of China Mobile, the world's largest mobile phone operator by subscriber number, was found guilty of accepting more than US$1.15 million in bribes while working at a series of state-run telecom companies between 1994 and 2009.

Xinhua, the state-run news agency said that Zhang confessed to his crimes, and therefore was given the two year reprieve. The New York Times suggested that with good behaviour, Zhang's sentence might be commuted to life in prison.

Zhang was found guilty of taking bribes while working as the deputy director of the Liaoning Provincial Postal Administration, while he was general manager of the China Netcom Group, and while he was Communist Party chief and deputy general manager of China Mobile.

According to the Wall Street Journal, the details of Zhang's crimes were not revealed, leaving obscured the larger network of corruption that might have surrounded him. This is common in China's corruption trials.

The state-owned telecommunications giant, China Mobile, has an opaque shareholding structure. Indeed, Zhang was initially investigated by the party – the Communist Party of China's Central Commission for Discipline Inspection – rather than the state.

The Chinese authorities have made fighting high level corruption a priority, and in a major speech on 1st July, President Hu Jintao said corruption was the biggest risk to the party's continued rule.

“Corruption will cost the party the support and trust of the people,” he said.

The lucrative telecommunications industry is the subject of a number of major corruption investigations. China's top three telecommunications companies – China Mobile, China Unicom and China Telecom – are all being investigated, and at least seven senior managers from China Mobile have been arrested since 2009.

A number of investigations have been launched into state-owned industries and government officials in recent years, many of which have resulted in death sentences.

Two former vice mayors of eastern Chinese cities were executed for corruption last week.

According to the Supreme People's Court, 28,708 officials were convicted of abuse of power in 2010. Of them, 5,906 were sentenced to more than 5 years in jail.

Sources: China Daily, New York Times, Xinhua, Wall Street Journal

For more information, please see the Menas ACCS website, here.

FSA hits Willis with record fine for anti corruption failings

The UK's Financial Services Authority has hit Willis Limited, the UK arm of world's third largest insurance broker, with a record £6.9 million fine for anti bribery and corruption failings, related to commissions paid overseas.

Willis Limited, the UK arm of Willis Group, was accused of failing sufficiently to monitor £27 million of payments overseas third parties who had helped the company win new business.

The fine comes less than a month after the introduction of the UK Bribery Act, which introduced tough new laws on third party (or 'associated persons' in the language of the act) activities in foreign countries. The law requires all companies to have policies in place to prevent improper payments.

The fine is the result of Willis agreeing to settle at an early stage in the investigation, and so earn a 30 per cent reduction on the original £10 million fine.

Willis emphasised that the FSA made no finding that the broker or third parties were engaged in any unlawful acts.

The FSA said £27 million in payments that Willis had made to third parties may have been used to help it win and retain business between 2005 and 2009. Willis was said to have failed to ensure adequate records of the payments or undertake necessary due diligence on the associated persons used.

The FSA focussed in particular on £227,000 in payments made to two overseas parties regarding business in Egypt and Russia.

CEO of Willis Limited Brendan McManus said the broker had swiftly engaged with the authorities once the problem was recognised.

"Our close co-operation has been recognised by the FSA and we are grateful to them for that," McManus said.

"It goes without saying that our compliance framework and its application across the business are now very robust and central to the leadership of the company. We can now move forward, stronger as a result."

The Serious Fraud Office was passed one the case by the FSA, but decided not to investigate the case any further.

Willis is not the only insurance company to have had run-ins with the authorities. AON, one of Willis's competitors, was fined £5.25 million in 2009 over suspected corruption in Asia, Europe and the Middle East.

Sources: AFP, the Guardian, Financial Times

For more information, please see the Menas ACCS website, here.

Taiwan establishes anti corruption agency

Taiwan's President Ma has made anti corruption efforts a central part of his presidency

Taiwan has established an anti corruption agency in an effort to clamp down on corruption, in the wake of a series of corruption scandals involving politicians and government officials.

The agency is called the Agency Against Corruption (AAC) and will be a part of the Ministry of Justice.

“Preventing corruption is more important than eliminating it once it occurs,” Taiwan's President Ma Ying-jeou said at the opening ceremony on 20th July.

“We trust that the rigorous measures introduced by this agency will convince civil servants of the dangers of corruption and thus make for a healthier, cleaner government,” he said.

Ma also said that the AAC will work to educate people about the social harms that result from corruption and will expand public participation in anti corruption efforts.

Justice Minister Tseng Yung-fu said the three main objectives of the AAC were to reduce the rate of corruption, effectively prosecute indicted suspects and safeguard human rights.

According to the Jurist, Taiwan currently has a 55 per cent conviction rate for corruption cases, but members of the ruling Kuomintang party have called for the AAC to promise a 10 per cent increase in the conviction rate.

The Taiwanese government announced the decision the establish the agency in July 2010 following a series of corruption scandals among police officers and judges, according to the China Daily.

Indeed, corruption is becoming a problem in many parts of Taiwanese life. Former Taiwanese president Lee Teng-hui was indicted in June on changes of money laundering and embezzling money from a secret diplomatic fund.

Another former president Chen Shui-bian is currently serving a 20-year jail sentence after being found guilty of money laundering, briber and embezzlement of government funds in 2009.

In November 2010, 13 people, including three High Court Judges, were indicted on charges of bribery, corruption and money laundering. The three judges were accused of accepting more than US$150,000 in bribes from former legislator Ho Chi-Hui in exchange for clearing him of charges related to a corrupt land-development project.

The AAC will be composed on 180 members who will handle investigations before turning cases over to federal prosecutors.

Sources: BBC News, China Daily, Jurist, Taiwan Today

For more information, please see the Menas ACCS website, here.

Ghana Bar Association fights allegations of corruption

The Ghana Bar Association (GBA) has condemned “unsubstantiated allegations of corruption” levelled against the judiciary by a group of five lawyers at the organisation's 23rd June General Council.

The five lawyers are Chris Ackumey, Dr Raymond Atuguba, Abraham Amaliba, Larry Bimi and David Annan. The GBA has asked the lawyers to substantiate their claims or issue an official apology.

The disputes follow growing concerns about the dysfunctional nature and corruption in Ghana's judicial system in the wake of the highly critical reports on its performance by the World Bank and the Open Society Initiative.

The GBA statement also notes with concern the “open confession by a member of the Bar, Chris Ackumey, that he had engaged in the corruption of a Judge. In blatant violation of the laws of the land," and proposes disciplinary proceedings against him.

Ackumey claims that he offered a fellow lawyer money to bribe a judge trying the case of a client. Atuguba, Amaliba, Bimi and Annan have threatened to leave the GBA and former a splinter Bar Association.

Source: Menas Associates

For more information, please see the Menas ACCS website, here.

China executes two former vice mayors for corruption

Two former vice mayors of booming east China cities were executed on Tuesday 19th July after they were convicted of corruption, China's Supreme People's Court (SPC) said.

Xu Maiyong, a former vice mayor of Hangzhou, in Zhejiang province, was convicted of bribery, embezzlement and abuse of power on 12th May.

Jiang Renjie, a former vice mayor of Suzhou, in Jiangsu province, was convicted of bribery in April 2008.

Both men were convicted of extracting bribes from real estate developers, according to China Daily.

Xu got land for realtors in exchange for kickbacks: according to China Daily, he received 145 million yuan (US$22.4 million) in bribes and embezzled more than 53 million yuan (US$8.2 million).

Similarly, Jiang received bribes through a company registered by a realtor that was actually under his son's control. His son borrow money from the real estate developer, who got the right to develop a piece of land in exchange. The realtor in question said that Jiang received an 80 million yuan (US$12.4 million) kickback.

Both Xu and Jiang appealed their convictions after their trials, however their appeals were rejected by the higher courts.

The Chinese government has been fighting a wave of corruption in recent years, and no doubt the publication of the news of the execution is intended to send a message to other potentially corrupt officials.

But many analysts say that until political and judicial openness match that of the market in China, officials and civilians will continue to find ways to make money illegally. The real estate industry has a reputation for being particularly corrupt.

Sources: China Daily, Hindustan Times, Reuters

For more information, please see the Menas ACCS website, here.

MPs criticise BAE Systems in Tanzania corruption inquiry

The British arms and aircraft firm BAE Systems have received a severe rebuke by UK MPs for its actions relating to corruption in Tanzania.

Sixteen months ago, BAE agreed to pay £30 million to Tanzania as part of its settlement with the Serious Fraud Office (SFO), but has yet to pay any of the money.

MPs on the International Development Committee accused the company of "procrastinating" and called the "advisory board" the company set up to ensure the money reached the best possible causes in Tanzania a "complete sham".

Committee chairman Malcolm Bruce MP asked whether it was not "offensive" for the company to suggest it knew better how to spend the money than the government of Tanzania, according to the BBC.

The money was due to be paid in March as a single payment, but BAE has said it would prefer to pay it in smaller amounts, and that it is ready to release £10 million in coming weeks.

“BAE's arrogance is breathtaking,” Bruce was quoted in the Financial Times as saying.

“They won't call the money a fine or reparations. They're acting as if they were making a kindly gesture. They want to pay it in tranches instead of handing it over under an internationally agreed system meant to ensure transparency and proper auditing. It is beyond belief.”

The case relates to the supply of an air-traffic radar control system in 1999. BAE admitted to not keeping full accounting records of £8 million it paid to an agent who brokered the deal.

While both BAE and the SFO said they cannot say whether the £8 million was used illegaly to secure BAE the radar sale, the judge in the original court case said it was “naïve in the extreme” to think that the money was used legitimately.

It has also been argued that the military-style air-traffic system that BAE provided to Tanzania was unnecessarily complex and expensive, and the £30 million that BAE agreed to pay was effectiviely a compensation payment, according to the BBC.

BAE said it could not release the payment until the precise settlement had been finalised by a judge. In a statement on Tuesday 19th July, BAE said it would "consider" the views of the MPs "with a view to making the payment in a responsible and timely manner".

SFO Director, Richard Alderman, who was at the hearing, made it clear that he would take BAE back to court if the payment was not made soon.

A subsidiary of BAE, Armor Holdings Inc, has also experienced trouble to do with corruption investigations recently, as it agreed to pay about US$16 million to settle charges in the US that it paid bribes to a UN procurement official in return for contracts to supply body armour for peacekeeping missions.

The US Justice Department announced on Wednesday 13th July that Armor Holdings admitted that from 2001 to 2006, a UK subsidiary paid more than US$200,000 in commissions to a sales agent who then passed some of money to an unnamed procurement official, according to the Wall Street Journal.

Armor admitted to falsely recording the payments and hiding another US$4.4 million, which was used to pay intermediaries who helped gain business with foreign governments.

BAE acquired Armor Holdings in 2007, after the conduct took place, and according to BAE spokesman Brian Roehrkasse, they had "cooperated extensively" with the government since the investigation began in 2007.

Investigated under the US Foreign Corrupt Practices Act (FPCA), Armor Holdings agreed to pay US$10.3 million in criminal fines and US$5.7 million in civil penalties as part of the Securities and Exchange Commission (SEC) settlement.

Sources: BBC News, Bloomberg, Financial Times, the Telegraph, Wall Street Journal

For more information, please see the Menas ACCS website, here.

Three Egyptian ministers found guilty in German license plate case

From left: Youssef Boutros Ghali, Ahmed Nazif and Habib ElAdly

Another judgement has been given in the ongoing trials of former Egyptian leaders, with heavy fines and sentences handed down to three former ministers on Tuesday 12th July.

Former prime minister Ahmed Nazif, former interior Minister Habib ElAdly and former finance minister Youssef Boutros Ghali were found guilty of squandering public funds in relation to the issuing of license plates contracts to a German firm.

Boutros-Ghali, tried in absentia, received a 10 year sentence with labour, ElAdly, also tried in absentia, received a five year sentence with labour, while Nazif received a one-year suspended sentence. All three were fined LE 92 million (US$15 million), plus the reimbursement of an equal sum of money which they were found guilty of profiteering, according to the Daily News Egypt.

The three men were found guilty of squandering public funds by granting license plate contracts to German company Utsch through direct order, at above market prices.

While Egypt's tenders and auctions law does authorise the granting of contracts through direct orders in certain situations, the court in Cairo decided that in the instance in question, it had not been necessary to issue a direct contract, and that it was therefore illegal.

Defence lawyer Farid El-Deeb called the trial a 'campaign to seek revenge from the defendants' and said that the prosecution's investigations were inaacurate.

Following former Egyptian leader Hosni Mubarak's overthrow in February 2011, there has been a wave of corruption trials in Egypt, targeting former officials and close associates of Mubarak.

Many officials are facing numerous charges.

Boutros Ghali was found guilty of squandering public funds in a June trial. He was sentenced in absentia to 30 years in prison, however he remains abroad: it is believed he divides his time between London and Lebanon.

ElAdly was found guilty of money laundering and profiteering in May and was sentenced to 12 years in jail.

Mubarak and his family are also facing charges of corruption.

Sources: Daily News Egypt, Reuters, Xinhua

For more information, please see the Menas ACCS website, here.

Second Indian minister quits over telecom corruption case

Maran is the second member of the Tamil Nadu-based DMK party to resign

India's Textile Minister Dayanidhi Maran has resigned as of 6th July following news that he is being investigated in connection with the country's biggest corruption scandal.

Maran is the second cabinet minister to resign from Prime Minister Monmohan Singh's government over the award of telephone licences.

Maran was telecommunications minister from 2004 until 2007, when he was replaced by Andimuthu Raja. Raja is already on trial, facing charges for having entered into a conspiracy to award phone permits to ineligible companies. He denies any wrongdoing.

India has been hit by a series of scandals in recent months, which have triggered nationwide protests, and severely damaged Singh's reputation.

Maran and Raja belong to the DMK party, which is a key ally of Singh's governing Congress Party.

It is alleged that Maran coerced the founder of the mobile phone firm Aircel to sell his stake to Malaysia's Maxis Group, a firm favoured by the minister. Maxis Group then invested in a media group based in southern India with links to Maran.

An NGO, the Centre for Public Interest Litigation alleged that Maran granted 14 licenses to Aircel, which invested large sums of money in his family business, Sun TV. He later allegedly delayed licenses to Aircel and then pressured owner C Sivasankaran to sell the company to Maxis Group.

The allegations against Maran form just a small part of the investigation over the sale of telephone permit sales, which has become known as the 2G scandal.

It is alleged that in 2008 phone permits were sold at what India's chief auditor called 'unbelievably low' prices, denying the government billions of dollars in revenues. Several government officials and industry executives have been arrested in connection with the case.

India's corruption scandals have in recent months included a parliamentary cash-for-votes case, the resignation of the head of the country's anti corruption watchdog after he himself was accused of wrongdoing, and an investigation into financial irregularities at last year's Commonwealth Games, according to the BBC.

Sources: BBC News, Bloomberg, Indian Express

For more information, please see the Menas ACCS website, here.

London Metal Exchange changes delivery policy to comply with UK Bribery Act

The London Metal Exchange (LME) has updated its policy for approval of delivery points to assure compliance with the newly introduced UK Bribery Act.

A description of the location's corruption and bribery risk is required, and should describe if the location has laws relating to the corruption of public officials, the LME announced on 7th July.

The description should also say whether facilitation payments are often demanded and what, if any, steps are being planned to address it.

The LME “retains the right to limit the capacity in that location or to delist it” if the corruption risk changes, the LME said in a notice to its members.

Bloomberg quoted Miriam Heywood, a spokeswoman for the LME as saying the exchange had updated its policy to ensure compliance with the UK Bribery Act.

The new policy will be effective immediately. The LME currently has 37 approved warehouse locations.

Sources: Bloomberg, WSJ

For more information, please see the Menas ACCS website, here.

BHP Billiton bans facilitation payments

BHP Billiton, the world's largest mining company, has banned the use of facilitation payments, the Australian Financial Review newspaper reported on 6^th July.

The Melbourne-based company had previously discouraged such payments, but it has now banned them outright in an effort to bring the company's anti corruption compliance efforts in line with the newly introduced UK Bribery Act.

The UK Bribery Act expressly prohibits facilitation payments (small bribes paid to facilitate routine government action), whereas the US Foreign Corrupt Practices Act (FCPA) makes an exception for them.

BHP Billiton's "Corporate Social Responsibility Requirements" document states that it has a zero tolerance policy towards bribery and corruption.

“Under no circumstances are kick-backs, facilitation payments, secret commissions or similar payments permitted,” the document reads.

“Specifically, our policy prohibits the offer, promise, gift or authorisation of the giving of a payment or anything else of value, directly or through an intermediary.”

The Wall Street Journal quoted a BHP US spokesperson, Ruban Yogarajah, as saying “We have conducted a review in line with the implementation of the UK Bribery Act (2010) and out policy now prohibits all employees offering or giving facilitation payments, even if it is customary to make such payments.”

The company has been investigated on suspicion on corruption in recent years. It is being investigated by the US Securities and Exchange Commission for possibly making illegal payments to the Cambodian government to secure a bauxite project.

Sources: BHP Billiton, Dow Jones, Wall Street Journal

For more information, please see the Menas ACCS website, here.

Scottish companies encouraged to 'self-report' bribery



Frank Mulholland offered leniency for self-reporting of bribery



The UK Bribery Act came into force on 1st July 2011, but many businesses in Scotland are still racing to figure out how the law will affect them.

While the Bribery Act legislation is relevant throughout the UK, including Scotland, the fact that Scotland has a different legal system has thrown up a number of difficulties.

Unlike in the rest of the UK, the Bribery Act will not be policed, investigated and prosecuted by the Serious Fraud Office (SFO) in Scotland, rather it will be the job of the police to investigate and the job of the Crown Office & Procurator Fiscal Service (COPFS) to prosecute.

In February 2010, the Scottish Parliament agreed a Legislative Consent Motion for the UK Bribery Act, which permitted the UK Houses of Parliament to legislate in a devolved area.

Scotland's Lord Advocate Frank Mulholland QC approved an initiative for businesses to "self-report" bribery offences in Scotland, as of 1st July.

According to COPFS, "The Crown will accept reports from businesses who wish to report the discovery by them of conduct within their organisation which may amount to an offence under the Bribery Act, or under the law before 1 July. The Crown will give consideration to refraining from prosecuting the business and instead referring the case to the Civil Recovery Unit (CRU) for civil settlement."

Mulholland said "The Bribery Act introduces a stricter, modern anti-bribery regime to the UK. Cases of bribery [in Scotland] will be referred to a team of special prosecutors within and Serious and Organised Crime Division and cases will be prioritised and tackled effectively."

Regarding the self-reporting initiative, Mulholland said it "is a one of a number of ways we will fight against this serious and insidious crime. I hope that businesses will be encouraged to self-report any cases involving bribery within their organisations without delay."

While it has already been established that self-reporting could result in leniency in England, this was the first mention of it in Scotland.

The BBC quoted Barbara Bolton, from the law firm Tods Murray, as saying, "Up until now there has been complete silence from the Scottish authorities in terms of whether or not there would be any equivalent in Scotland to the English system of leniency in return for self-reporting."

Other lawyers have highlighted the lack of dialogue and instruction in Scotland.

Tom Stocker, an Edinburgh-based partner of McGrigors said, "When the Act was being discussed, the Scottish Justice Minister clearly looked at the number of prosecutions against Scottish companies for Bribery offences, and took the view that corruption was not an issue in the country. There was never really a proper debate and now a raft of legislation has been introduced that could catch Scottish companies out."

Stocker expresses concern that the UK Bribery Act has not received enough attention in Scotland, and says it is still unclear whether the SFO or Scottish Crown Office will take the lead on enforcement for companies with a presence in both England and Scotland.

Sources: BBC News, Briberyact.com, COPFS, McGrigors, Scottish Government

For more information, please see the Menas ACCS website, here.

First acquittals in former Egyptian ministers' corruption trials

Rachid Mohamed Rachid was one of the ministers acquitted

An Egyptian court has acquitted three former Egyptian ministers, who were being tried on charges of squandering public funds, on 5th July.

There have been a number of trials since the downfall of former president Hosni Mubarak in February, but these were the first not guilty verdicts.

The three charged were former finance minister Youssef Boutros Ghali, former information minister Anas Al-Fikki, and former trade minister Rachid Mohamed Rachid.

Boutros Ghali has already been sentenced to 30 years in jail on profiteering charges, while Rachid was sentenced to five years for unlawfully seizing public money from a government export development fund.

Both men also received sizeable fines in their first trials, and they are being investigated under further charges.

Al-Fikki still faces charge that he deliberately misused funds from the state-run Radio and Television Union.

The BBC quoted one of the minister's lawyers saying Tuesday's ruling proved that the country had maintained its “judicial integrity”.

In a separate ruling, former housing minister Ahmed Maghrabi and Yasseen Mansour, the chairman of Palm Hills Developments, were both acquitted of graft.

Palm Hills is Egypt's second-largest listed developer and its shares, after falling 63 per cent this year, rose by 10 per cent following Tuesday's verdict.

Maghrabi has been sentenced to five years in prison over a separate, illegal land deal.

Mansour, Maghrabi and two other Palm Hills executives were accused on improperly arranging the sale of the land in Sixth of October city on the outskirts of Cairo, and its later transfer to Palm Hills.

Mansour's defence team had offered to make up any shortfall in the price paid for the state land.

Palm Hills received a separate court ruling in April that a state land sale to Palm Hills was illegal and must be scrapped.

But Hamdy Fakharany, the engineer who filed the case, said last week he would not seek further litigation after the government appealed the ruling. He said it showed the government was not dedicated to fighting corruption.

Tuesday's decisions prompted a protest outside the courthouse, and Al-Jazeera suggested that the results could prompt more people to join a protest in Tahrir Square on Friday 8th July that activists have been planning for weeks.

The uprising that ousted Mubarak was driven in part by widespread anger at corruption, and the trials of Mubarak and his former associates is being seen as a test of the new government's will to change.

Egypt's general prosecutor announced that he would be appealing the rulings shortly after they were made on Tuesday.

Sources: Al-Jazeera, BBC News, Reuters

For more information, please see the Menas ACCS website, here.

Tunisia's Ben Ali found guilty in drugs and weapons trial

Ben Ali described his 20th June trial as a 'parody of justice'

Tunisia's former president Zine al-Abidine Ben Ali has been found guilty in a second one-day trial, this time convicted on charges of possessing illegal drugs and weapons.

On 20th June, Ben Ali and his life Leila Trabelsi were sentenced, in absentia, to 35 years in jail for embezzlement and misuse of state funds. 

The second trial, on 4th July, saw the ousted president sentenced to 15 years in jail.

Ben Ali's 23 year-long reign was marred by allegations of corruption and human rights abuses. Ben Ali, his family and those close to him used political power to build huge business empires.

The first trial focussed on the charges of Ben Ali and Trabelsi's misapproapriation of public funds, after large sums of cash and jewellery were discovered in one of their palaces.

In Monday's trial, Ben Ali was accused of harbouring drugs and illegal weapons at his palace in Carthage. He was also accused on drug trafficking.

His lawyer, Hosni Beji, tried to have the trial delayed so he could go to Saudi Arabia, where Ben Ali has been since fleeing Tunisia on 14th January, but his request was denied.

The prosecution listed the items seized in the presidential palace, including weapons, "which do not seem to have been imported legally" and "60 priceless Roman and Punic era archeological pieces”.

The head of the police narcotics squad presented 2kg of seized cannbis resin as well as an envelope on which, according to the judge, was written the word 'drug' in Ben Ali's handwriting.

Beji, who on Friday 1st July called the trial 'irrational', rejected the drug charges, saying Ben Ali “never owned or kept drugs”.

"How can we imagine that a president holding power can have 2 kg of cannabis resin of mediocre quality (with intentions) of selling it?" Beji asked.

On the weapons charges, Beji said the majority of weapons found were personal gifts from international officials. He said Algeria's President Abdelaziz Bouteflika and Saudi Arabia's Interior Minister Prince Nayef Ben Abdel Aziz had given Ben Ali weapons.

Tunisia's interim government requested Ben Ali's extradition from Saudi Arabia in February, but they have yet to receive a response.

Ben Ali and his inner circle face legal proceedings in up to 182 other cases. They are facing charges of torture, money laundering and trafficking of archeological artefacts.

Sources: AFP, BBC News, Oman Daily Observer

For more information, please see the Menas ACCS website, here.

China arrests 36 for Alibaba.com e-commerce fraud

Thirty-six people in China have been arrested in conjunction with a wide-ranging investigation into fraud carried out through e-commerce websites, including China's largest e-commerce site, Alibaba.com.

Hangzhou police announced on 29th June that they had carried out a 40 day investigation into online scammers who posed as legitimate supplier's hosted by Hangzhou-based Alibaba.com and several other websites, including Made-In-China.com, EC21.com and ECPLAZA.net.

Hangzhou police, who carried out their investigation with assistance from Alibaba.com, allege that scammers used fake personal and business identities to open more than 100 "Gold Supplier" accounts on Alibaba.com.

This allowed them to pose as legitimate companies selling to overseas businesses through the Alibaba website.

Police say overseas buyers sent money for goods they never received, and they estimate the scale of the fraud to be over US$6 million.

Increasingly sophisticated scammers have committed fraud on a number of e-commerce websites in China. But Alibaba.com officials hope the announcement of the most recent investigation will act as a deterrent.

"The arrest of the suspects hits online scammers hard," according to Alibaba.com's CEO Jonathan Lu.

The investigation was prompted by action from Alibaba.com staff, who gathered extensive evidence of illegal trading activity on the website before taking the details to the police.

The Hangzhou police launched an investigation, which culminated in a series of raids from 11-15th April in Putian, Fujian province.

Most online scams are for relatively small amounts of money, and so often don't get reported. Those that do often get ignored by police due to the difficulties in tracking down suspects.

"Since the amount is small, buyers won't even bother to complain or report to the police," Jane Jiang, head of Alibaba.com's Trust and Safety department said.

Alibaba's reputation took a hit earlier this year when the company's CEO and COO were forced to resign in the wake of an outbreak of fraud, in which Alibaba.com employees were involved.

Since the resignations, the company has introduced a number of new procedures in an attempt to prevent a repeat of such cases.

According to the BBC, the number of fraud complaints received monthly by the website fell 70 per cent between February and June.

"We will continue to cooperate with defrauded buyers and police to pursue the investigation, arrest and sentencing of those who commit crimes using our platform," said Linda Kozlowski, director of Global Marketing and Customer Experience for Alibaba.com.

"If scammers think they can hide on the Internet and that no one will go after them, they are wrong."

AstraZeneca announce policy change in light of UK Bribery Act

Pharmaceutical firm AstraZeneca have announced that they have stopped their policy of paying for doctors to attend international medical conferences.

According to Dorsey & Whitney LLP, this move, unprecedented in the industry, is believed to be a reaction to the UK Bribery Act, which came into effect on 1st July, 2011.

AstraZeneca's CEO David Brennan announced the policy change at a industry conference in June.

“We have decided that we will no longer pay for doctors to attend international scientific and medical congresses but will instead focus our educational efforts on local educational opportunities for healthcare professionals,” he said.

In recent years, concern had grown about financial ties between doctors and the pharmaceutical industry, especially as healthcare costs have risen.

Experts believe this move will force other companies to make similar policy changes.

AstraZeneca's decision comes at a time of unprecedented scrutiny of the pharmaceutical industry. In the past five years, companies have paid more than US$15billion in penalties to the US government for alleged violations of laws and regulation.

Increased application of the US Foreign Corrupt Practices Act (FCPA) has led to numerous investigations within the industry, and with the introduction of the UK Bribery Act, many are expecting similar investigations in the UK.

Johnson & Johnson recently agreed to pay US$78 million to settle British and US charges that it paid bribes and kickbacks to win business overseas, in the first settlement by a big drug company since the US began investigating the industry under the FCPA over a year ago.

AstraZeneca is currently being investigated by the US Department of Justice and the Securities and Exchange Commission in connection with the FCPA.

Doctors can be considered government officials if they work for state-funded healthcare systems.

Sources: BMJ, Dorsey & Whitney LLP (Lexology), SRxA

For more information, please see the Menas ACCS website, here.

Hu Jintao says corruption poses greatest risk to party

China's President Hu Jintao warned the ruling Chinese Communist Party (CCP) that corruption could cost it the support of the people, in a speech on 1st July, marking 90 years since the party was founded.

He said alienation from the people poses the greatest risk to the CCP, and said efforts to combat corruption must be intensified if the party is to survive.

Hu was speaking to thousands of leaders and party members in Beijing's Great Hall of the People as part of widespread celebrations marking the CCP's anniversary.

Hu said "incompetence" of some members has "separated it [the party] from the people", and that it was important that "the Party imposes discipline on its members.”

“Corruption will cost the party the support and trust of the people” Hu said in his 90-minute speech.

While China's breakneck growth has captured media headlines for the last decade, the country's parallel problem of corruption has also garnered attention, and it is something the party is taking increasingly seriously.

A report by the Central Bank of China from 2008, but which was released in June said that since the mid-1990s, more than US$120 billion had been stolen by some 17,000 party members and employees of state-owned firms, and smuggled out of the country.

Moreover, on top of large instances of corruption, many reports point to the everyday corruption by officials and employees of state-owned enterprises that are a part of working and living in China. In a 2008 survey, Pew found that eight out of 10 Chinese consider party and governmental corruption significant issue.

The government has not been totally complacent on the issue, and on top of the anti corruption rhetoric, regularly declared by Hu and his premier, Wen Jiabao, there have been growing numbers of prosecutions in recent years.

The Atlantic lists just a few of the trials: the vice mayor of Beijing and supervisor for Olympic Construction was fired for taking bribes; the former party boss of Shanghai was sentenced to 18 years for improperly loaning hundreds of millions of dollars from a social security fund to real estate speculators; the head of China's equivalent of the FDA was executed for taking bribes and kickbacks; and the head of China's high speed rail system was fired due to a corruption investigation.

The severity of the sentences is note-worthy, and a number of people have been executed for economic crimes.

On 1st May, China's first foreign anti corruption legislation came into effect, and while the growing investigations and new legislations are certainly a positive step forward, China's opaque political and legal systems means that tackling corruption will require more than words in rule books.

China's rulers, however, have recognised that despite the phenomenal growth and development it has brought the nation, corruption could be the undoing of the CCP.

As Hu said in his speech, “The Party is soberly aware of the gravity and danger of corruption.”

Sources: Asia News, The Atlantic, BBC News, Xinhua

For more information, please see the Menas ACCS website, here.