South African leadership in corruption probe

The partner of South Africa's Deputy President Kgalema Motlanthe is being investigated over claims that she sought bribes as part of a plan to sell US helicopters onwards to Iran.

Gugu Mtshali , Motlanthe's long-term girlfriend, was accused by South Africa's Public Prosecutor of seeking $13.8 million from a Cape Town-based company. The company. 360 Aviation, was allegedly seeking to sell Bell utility helicopters to Iran in a major deal - sales of military equipment are prohibited under UN and US sanctions against Tehran.

The company's executive director Barry Oberholzer said that he believed that Ms Mtshali, a businesswoman was asking him for a bribe in exchange for government assistance on securing the deal. Ms Mtshali and Mr Motlanthe have strenuously denied the allegations and welcomed the investigation, which was launched after a March 11 report in a South African newspaper.

The timing of the investigation has raised questions. It comes just months before the ruling African National Congress holds its five-yearly congress, which is expected to look for a successor to President Jacob Zuma. Zuma is currently embroiled in his own corruption investigation and Deputy President Motlanthe is widely considered to be a likely successor.

The timing of the probe has therefore led to speculation that Motlanthe is being smeared in an attempt to discredit his leadership bid. However given the pervasive presence of high-level corruption in South Africa, particularly in the lucrative defence sector, the allegations seem plausible.

Sources: Wall Street Journal, Reuters

Iraq oil official flees after bribe allegations

A senior official at Iraq' South Oil Company has fled the country after being accused of taking bribes. The unnamed official allegedly took money from a subsidiary of Leighton Holdings Ltd, the Australian construction firm, to secure contracts in the south of Iraq.

The Inspector General of Iraq's Oil Ministry, Hilal Ismael, launched an investigation after Leighton alerted the Australian police that Leighton Offshore, one of its subsidiaries may be involved in corrupt practices. Specifically, the company was reputed to be receiving advance details of rival bids so that they could submit a lower price.

The company has won several multi-million dollar bids over the past few years. Last year it won a $518 million contract from SOC to develop two offshore platforms, a pipeline to the Fao export terminal, and a single point mooring system.

On 5 March an Iraqi MP announced that the investigation was now focused on the unnamed department head for accepting bribes, who fled the country.

One official in the Oil and Gas Ministy told media that it would be no surprise if the company had paid kickbacks to officials. “It has become very difficult to do business in Iraq without making payments,” he said. Although the case may only represent the tip of the iceberg, it does at least demonstrate a willingness on the part of Iraqi authorities to go after corrupt officials.

Sources: Rigzone, Wall Street Journal

Hong Kong executive apologises in corruption investigation

Donald Tsang , the chief executive of Hong Kong, has apologised over his role in a corruption investigation currently underway by the city's anti-graft watchdog.

The Independent Commission Against Corruption launched the probe at the end of February to investigate claims that Tsang used his position to get free holidays and an apartment from local business tycoons. In an emotional speech to the city's legislature, Tsang denied the allegations and said that he would cooperate fully with the investigation.

“The chain of events has created worries among the media and public, civil servants and lawmakers and also shaken the public's belief in Hong Kong's system”, he said. Tsang also announced the formation of an independent committee to review the rules which govern the code of conduct for civil servants.

The investigation threatens to tarnish Tsang just weeks before an election is held to choose his successor. The heir apparent, Henry Tang, is embroiled in his own scandal over an unlicenced extension to his house.

The investigation has sparked concern over the rule of law and the political system in Hong Kong. In a rare display of public anger, thousands of protestors took to the streets to demand that Tsang resign and that Tang desist from running to succeed him.

Although Tsang is unlikely to bow out before his term expires this year, the probe has raised concerns over the collusion between politics and business in the city, which has always prided itself on its rule of law.

Sources: Bloomberg, Reuters

EU citizens believe corruption is worsening

A new survey reveals that EU citizens believe levels of corruption have risen in the past three years, and is a major problem at all levels of government.

The Eurobarometer survey, conducted in September 2011 and released in February, was commissioned by the EU's Directorate-General for Home Affairs as part of the EU's broader anti-corruption strategy.

Almost three-quarters of Europeans believe that corruption is a major problem in their country, although there are major differences between different countries – an overwhelming 98% of Greek respondents think corruption is a major problem, compared to just 19% in Denmark. Nearly half of respondents think that the level of corruption has increased, whilst only 7% think it has decreased. Slovenia, Cyprus, the Czech Republic, Portugal and Romania are most likely to think that corruption has increased.

The perceived reasons behind corruption make for interesting reading. A too-close relationship between business and politics is seen as the biggest cause of corruption, followed by inactivity by politicians and a lack of transparency in spending public funds.

Corruption is believed to be entrenched in the country's business culture by two-thirds of Europeans, with the strongest belief – here as on other key issues – in southern and eastern Europe. Northern European respondents, particularly in Scandinavia, are less likely to view corruption as part of their business culture, or more generally as a serious threat.

The report concludes that “there remains a general sense of inevitability and acceptance in relation to corruption” and that trust of national politicians is extremely low. Although private business itself is not seen as particularly corrupt, close links between politics and business is seen as conducive to corruption.

Sources: EU Observer, Eurobarometer

Saudi anti-corruption body aims high

Saudi Arabia's new anti-corruption body has said that it “will not hesitate to strike at corruption wherever it is”.

The National Authority for Combating Corruption has been tasked by King Abdullah with cracking down on financial abuses in government departments, following increasing reports that corruption was growing in the Kingdom.

It was created last year, largely as a result of the flood which hit the port of Jeddah in 2010. The aftermath of this, according to Commission head Mohammed bin Abdullah Al Sharif, “clearly illustrated the poor performance of government departments because of bribery and widespread corruption”.

The Commission will work to complement the Kingdom's General Auditing Bureau, which said recently that public institutions are performing poorly and are viewed with distrust due to graft.

The King, perhaps fearing public anger over corruption as in other Arab countries, has been vocal in ordering the Commission to tackle corruption. He insisted that there should be “no exceptions” to the investigations, suggesting a willingness to tackle entrenched power structures within the government.

A number of these have apparently already been resisting the work of the Commission. Al Sharif said that several authorities had been uncooperative, and said that the Commission would be publishing the names of these authorities in a bid to shame them into compliance.

Given the overlap between public and private corruption in Saudi Arabia (as elsewhere), it remains to be seen whether the Commission's public remit will be a hindrance to its work. The apparent vigour with which it is operating, and with which the King is supporting it, suggests that it will start actively rooting out corruption in the Kingdom.

Sources: Arab News, Wall Street Journal

Nexen denies Yemen bribery claims

Canadian oil and gas explorer Nexen has denied claims that it sought to bribe officials in Yemen over oil and gas contracts.

The rumours surfaced last week in theYemen Post, which alleged that officials from Nexen attempted to pay Yemeni officials within the Petroleum Exploration & Production Authority and the Oil Ministryin order to secure continued access to Block 14. The company has operated the block for almost twenty years, but was forced to hand over control in December to PetroMasila, a new national oil company.

Nexen lobbied hard to renew its licence, which was in doubt for some time; however, the decline in Yemen's security and political situation led to doubts that it could sustain its operations. The Cabinet decided in November that it could secure more desperately-needed revenue through a national oil company than through Nexen.

Yemeni employees at Nexen claimed to media that bribery was commonly used as a way to secure contracts and proposals with the government. According to the allegations on the Block 14 extension, the company offered millions of dollars as well as a share of profits in exchange for a renewal of its licence.

The company strenuously denies the allegations. “We have one of the most robust integrity monitoring processes in the industry”, said spokesman Pierre Alvarez. “We operate by international standards as well as ours, that exceed any industry-wide standards out there.” Nexen is generally considered to have extremely robust anti-corruption standards.

A global anti-corruption watchdog, TRACE International, has pointed out that it is unusual that the allegations have been made from inside Yemen, where anti-corruption efforts are weak and investigative journalism under-developed. TRACE president Alexandra Wrage suggested that Nexen may have been named as a scapegoat by the media, which has close ties with the government, in order to advance domestic political goals.

Sources: Yemen Post, Wall Street Journal, Calgary Herald

Japanese conglomerate pays to settle Nigerian corruption case

Marubeni , the Japanese conglomerate, has paid $54.6 million to settle a bribery and corruption case related to liquefied natural gas in Nigeria, according to the US Department of Justice.

The DOJ alleges that the company was hired as an agent by TSKJ, a four-company joint venture, to secure contracts for building LNG facilities in Nigeria, and that Marubeni bribed Nigerian officials to get the contracts. The overall cost of the LNG facilities, for which TSKJ won four contracts between 1995 and 2004, was estimated at US$6 billion.

Strictly speaking, Marubeni was allegedly hired for bribing lower-level Nigerian officials; Jeffrey Tesler, a UK solicitor, was employed by the joint venture to bribe more senior officials. Marubeni received US$51 million whilst Tesler, who operated using a Gibraltar-based investment vehicle, received US$132 million – the money was used to bribe officials and as payment for facilitating the bribes.

The investigation, under the Foreign Corrupt Practices Act, has already snared many of the other companies and individuals involved. Tesler agreed to forfeit US$148 million after pleading guilty in March last year, and the joint venture partners (Kellogg Brown & Root, Technip, Snamprogetti and JCG Corporation) have paid a combined total of US$1.1 billion in fines over the past few years.

Under the deferred-prosecution agreement filed by the DOJ, Marubeni is bound to retain a consultant for two years to review and assess its compliance programme and to cooperate with further investigative work by the US authorities. Provided that Marubeni abides by the agreement, the DOJ will drop the criminal charges after two years.

Sources: AFP, Wall Street Journal

Former US Army Major sentenced in corruption case

A former US Army major has been sentenced to twelve years in prison for a scheme involving money laundering and bribery for Iraq reconstruction contracts.

Eddie Pressley , along with his wife, was convicted of 22 counts of fraud, bribery, conspiracy and money laundering back in March – the couple had accepted $2.9 million in bribes between 2004 and 2006.

Assistant Attorney General Lanny Breuer said that Pressley “participated in a wide-ranging scheme to steer U.S. Army contracts to particular providers in exchange for personal, illegal profit”. The case resulted from an investigation into contracts from Camp Arifjan, a US base in Kuwait.

The illicit contracts did not generally involve high-end military equipment but everyday items such as bottled water and gravel, which were huge business during the height of the US involvement in Iraq.

The FBI, which led the investigation, insists that the wrongdoing “is in no way representative of the vast majority of public officials and government contractors who work hard to serve our military.” However, the conviction of 15 other people also involved in the scheme suggests that it was a wide-ranging conspiracy.

Many reports have strongly criticised waste and corruption in government contracting related to the wars in Iraq and Afghanistan. The Special Inspector General for Iraq Reconstruction, and its Afghanistan-focused counterpart, have investigated dozens of cases in which contracts were given without proper oversight. In most cases the issue was simply one of negligence, but the huge amounts of money involved also gave easy pickings for those such as Pressley who actively engaged in corrupt practices.

With the war in Iraq now over and the final accounting efforts underway, more investigations into bad contracting will probably begin to get results.

Sources: Wall Street Journal, UPI

Failed Indian anti-corruption bill will return, insists Congress

India's ruling Congress party has insisted that the Lokpal Bill, which would have created an anti-corruption ombudsman, is not dead and “will be back soon”. This is despite the bill's chaotic failure in parliament, which has led to strong criticism of all the players involved.

The bill is the brainchild of civil society activist Anna Hazare, who became a potent force last year when his anti-corruption movement gathered hundreds of thousands of supporters and put serious pressure on the government to clean up India's notoriously corrupt politics.

The legislation, which was largely driven by Hazare, would have instituted an independent body to register and investigate complaints of corruption against politicians, as well as protecting whistleblowers. The process was marked by tension between activists and the government, which had proposed its own version of the bill which campaigners said was insufficient.

Hazare's movement began to fracture at the end of last year, with erstwhile supporters accusing him of a naïve approach to corruption and warning that the proposed ombudsman would be undemocratic and unaccountable. The shift in Hazare's public fortunes decreased momentum for the legislation, and it got bogged down in parliament.

Although it was approved by the lower house on 27th December, the bill failed to be passed to the Senate before the end of the parliamentary season at midnight on 29th December. In chaotic scenes in Parliament, MPs filibustered and argued for hours.

Congress and the opposition BJP have begun a war of words over responsibility, with Congress accusing the BJP of tabling dozens of last-minute amendments in order to torpedo the bill and the BJP calling on the government to resign for its failure to pass the legislation.

Although the government is adamant that the bill will be resuscitated in the next season of parliament, its chaotic failure suggests that politicians are not fully committed to tackling corruption.

Sources: BBC, The Hindu