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We were recently made aware of a new twist on a common scam and want to be sure our readers are aware of it.

For the past several years business email compromise scams have been on the rise. These scams involve a scammer using research and social engineering, and often spoofed email addresses (where they look like they're sending from a different email address), to convince an employee of a company to initiate a wire transfer to the scammer. In many cases the scammers will try to impersonate the CEO or another authority in the business. They will then try to create a sense of urgency in the victim to hopefully make them act quickly without thinking too much. The FBI has been warning about the rise of these scams for some time.

A scandal pertaining to the theft of rare and precious kevazingo wood seized by Gabon officials has allegedly resulted in the termination of the Vice President of Gabon as well as the Forestry Minister. 

Earlier this year, Gabonese officials uncovered a smuggling operation and seized nearly 400 shipping containers of illegally harvested wood from the rare and protected kevazingo tree.  The kevazingo tree can take up to 500 years to reach its full size and thanks to environmental protection laws adopted in Gabon in 2018 it is illegal to export in its raw form.  Shortly after the shipping containers were seized, roughly 350 containers (with an estimated street value of US $250 million) went missing.  According to media, at least 200 containers of kevazingo wood have been recovered thus far.       

Recently, the local Zimbabwe branch of Amnesty International, a UK-based international non-governmental rights advocacy group, was suspended indefinitely following fraud allegations.

In the past year, Amnesty International has been in the news pertaining to reports of the organization’s “toxic” work environment, abuse of power, and bullying that allegedly contributed to the suicide of two of its employees (in its Paris and Geneva offices).  As a result, Amnesty International’s General-Secretary Kumi Naidoo reportedly ordered a review of the organization’s operations. 

On May 27, 2019 the Romanian High Court of Cassation and Justice (the Supreme Court of Romania) upheld the 3.5-year jail sentence originally issued by a lower court in June 2018 to prominent Romanian politician Liviu Dragnea (until recently, leader of the political party – Social Democratic Party) after his conviction for graft charges.

According to media, Dragnea was convicted of abusing his position as a government official by fraudulently maintaining two employees on the payroll of a state family welfare agency between 2006 and 2013 (some media lists the dates as 2008 to 2010).  The individuals were reportedly employees of Dragnea’s political party and did not perform any public functions despite receiving salaries from a government agency. 

In early April of this year Algerian President Abdelaziz Bouteflika resigned from office after ruling for roughly 20 years.  Bouteflika’s resignation is reportedly a result of peaceful protests and pressure from Algerian military leaders in response to Bouteflika’s announcement that he would be seeking a fifth presidential term.  The protests in Algeria have been ongoing since mid-February 2019, and more recently have been occurring on a weekly basis. 

The protesters are now calling for the establishment of transitional authorities that would oversee the country’s elections (the next presidential election is schedule for July 4, 2019) and reviews of the Algerian constitution.  Protesters also call for the departure of government officials associated with Bouteflika’s administration as they are perceived by the Algerian population as corrupt, having abused their political powers and greatly misused public funding.

Here at Smith Brandon International, we watched with some interest the recent conviction of con artist Anna “Delvey” Sorokin. For years, the Russian-born Ms. Sorokin claimed to be a German heiress, situating herself within New York’s wealthy party circles while seeking funding for a private club and arts foundation. As she skipped out on bills for boutique hotels, luxury travel, and lavish events, she repeatedly convinced friends and acquaintances to cover her tabs. All the while, she kept seeking $20+ million loans, despite being stymied by effective due diligence.

The interesting part of Anna Sorokin’s scheme is not that it’s particularly novel; it’s that it has an almost retro or Hollywood feel to it (which might explain Shonda Rhimes and Netflix’s interest in her story).

Yesterday the Department of Justice announced the release of updated guidance on corporate compliance programs. We are still evaluating the new guidance and what has changed, but we wanted to be sure all of our clients and readers were aware that there is new information from the DOJ on what compliance programs should look like and how they should work.

Compliance programs for the Foreign Corrupt Practices Act and other anti-corruption laws can be essential to a corporation in preventing corruption and other problems that could potentially lead to litigation and fines. Additionally, a company with an effective and well designed compliance program is likely to be looked on more favorably by prosecution should they find themselves involved in litigation related to a rogue employee or business associate.

Ukrainian President Petro Poroshenko (Petro Poroshenko Bloc “Solidarity” / BPP-S Political Party) has been the subject of recent reporting by investigative journalists that identified Poroshenko as allegedly tied to a corrupt defense scheme pertaining to contraband military parts.  As a result, the initiation of impeachment proceedings were announced against Poroshenko in Ukraine’s Parliament.   

On February 25, 2019, investigative journalists published a media report on YouTube that alleged Poroshenko and some of his political allies profited from an embezzlement and smuggling scheme that appears to have started in 2015, pertaining to spare military parts used to repair Ukrainian military vehicles.  Many of the contraband parts were reportedly smuggled into Ukraine from Russia, did not meet quality standards, and were sold to Ukrainian military repair stations for inflated prices.  Some of the contraband parts were reportedly stolen from Ukraine’s own military stores and re-sold, again for inflated prices. 

We've written before about Malaysia's 1Malaysia Development Berhad (1MDB) fund and the scandals associated with it. The corruption from the scandal just keeps ensaring more people and organizations through out the world. Recently Tim Leissner, former Goldman Sachs Chairman in Southeast Asia pleaded guilty to money laundering conspiracies in connection with the 1MDB fund. Several other employees were also implicated in that plot.

While we’ve previously written about the uncertainties of international trade involving Iran, we’re currently monitoring a new wrinkle.

On January 31, 2019, the Foreign Ministers of France, Germany, and the UK announced the creation of INSTEX (Instrument in Support of Trade Exchanges), a special purpose vehicle (SPV) designed to facilitate European trade with Iran. The SPV is expected to begin operating within the next few months.

The move comes in response to the 2018 re-imposition of US sanctions on Iran by the Trump administration, following its withdrawal of the US from the Iran Nuclear Deal (JCPOA – Joint Compressive Plan of Action). At the time of the Trump administration’s withdrawal, the leaders of France, Germany, and the UK broke with the US, affirming that the UN Security Council resolution endorsing the JCPOA remained a “binding international legal framework.” The European Union also updated it’s blocking statute, prohibiting EU companies from compliance with the sanctions, and declining to recognize any court verdicts which could result in penalties due to their violation.

 

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