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The United Nations recently marked World Anti-Corruption Day. In announcing the day the UN highlighted the current estimate that every year over $1 Trillion is paid in bribes and over $2.6 Trillion is stolen through corruption. That's over 5 percent of the worlds gross domestic product. An astonishing figure. Another statsitic to illustrate the scale of corruption: According to Transparency International, about a quarter of the worlds population has paid a bribe while trying to access public services in the past year. 

While there are many efforts to clean up corruption happening around the world (many of which we've written about here on the blog), corruption remains a huge problem. The United Nations called on countries to implement anti-corruption efforts, including the UN Convention Against Corruption.

The United States Census Bureau performs a vital service for the United States, surveying the population to make sure the government has accurate information on the people it represents and helps to direct government spending and programs. To that end they ask a lot of different kinds of questions in their official surveys. The Census Bureau works hard to make sure they keep your information private and to be trustworthy so they can do their job. Unfortunately, some fraudsters try to use that trust and the fact that census workers ask so many questions to their advantage. They will try to impersonate census workers in order to try to steal information from people to use in scams.

To that end, the Census Bureau has put out a publication warning about the issue and providing some tips on how to verify that someone really is form the Census Bureau, and not an imposter.

Update: We wanted to provide a short update on the results of the election. As expected, Bolsonaro won the most votes, though not enough to win outright, though he came surprsingly close. Despite there being a small fine for not voting in Brazil, almost a third of voters either didn't vote in the last round of the elections or cast blank or null ballots. The low turnout may give Bolsonaro an edge, or if those voters decide they don't like Bolsonaro and come back to the polls it could be a win for Haddad. The run-off election between Bolsonaro and Haddad is scheduled for October 28. We'll be keeping a close eye on things to be sure we can provide the best advice for our clients.

Original Post:
Brazil’s Presidential election is fast approaching, and who the ultimate winner will be is still an open question. The first round of voting happens on October 5th 2018, but the field keeps changing. The most popular candidate, Luiz Inacio Lula da Silva of the Workers Party (PT), who was running from a jail cell after receiving a 12 year sentence for corruption, withdrew from the election last Tuesday. He had been declared ineligible to run by the country’s top electoral board two weeks earlier. He named is running mate Fernando Haddad as his successor on the ballot.

While we can’t predict who will win the election, we can help our clients plan for different possibilities. Smith Brandon International has extensive experience working in Brazil. We know that despite the unpredictability of the upcoming elections, Brazil will likely remain a huge potential opportunity for businesses. We follow developments there quite closely, so we can provide the best advice and help to our clients. Read on for more information on the upcoming election.

Recently authorities in Cambodia seized fake and expired pharmaceuticals from an importer, US authorities charged 22 Chinese importers with smuggling counterfeit goods, including cosmetics and luxury hand-bags, and Singaporean police raided four businesses with $1.03 Million in goods as part of an operation against counterfeit products.These are just a few recent examples, but there are many more. And these are just the cases that have been found out.

The products a company makes are it's lifeblood, and people selling fake copies can cost companies millions. One estimate from 2017 estimated that US companies lost $600 Million a year to counterfeit products. The the damage isn't just in direct sales lost either. The reputational damage of shoddy counterfeits, or expired or damaged goods sold as new, can hurt a company's image in the marketplace.

When you suspect that your products are being copied you need someone to help you find out what's going on so you can shut it down. Smith Brandon International, Inc. has experience helping companies to track down the sources of fake products. We also have experience helping to track down dealers making off-the-books sales of expired goods and products reported as destroyed or missing. We've helped our clients shut down these operations and helped them take steps to prevent the problems from recurring. We can also provide help in setting up your operations to help prevent these problems in the first place.

If you're worried about fake and shoddy products damaging your reputation call Smith Brandon International today. Our Corporate Investigations can help you to protect your bottom line, and your brand's good name.

Over on FCPA Blog they've published an article we wanted to be sure our readers saw. The article comes from Felipe Monteiro a Professor at INSEAD, who has written a case study on the implications of Operation Car Wash for Brazilian businesses. The article on FCPA blog details lessons learned from Brazil's Operation Car Wash, based on comments from Judge Sergio Moro, who has jailed many of those prosecuted by the operation. We thought the article had a lot of good information on the impact of corruption on society and on business.

For example the article covers some of the huge costs from corruption and bribery to business in Brazil:
Building bribes into costs required mind-bogglingly large numbers. For example, the cost for Petrobras’ Abreu e Lima refinery was five times -- $20 billion -- its initial budget. Bribes may not explain 100 percent of the ballooning costs, but according to Judge Moro: “The focus and concerns of executives at Petrobras were not on the welfare of the company but on opportunities to take bribes, not only for them, but for the politicians who gave them their political support so they could remain in their positions.”
The article goes on to cover comments by Judge Moro that the impact of corruption is not just economic:

Recently there was a new round of leaks from Mossack Fonseca, the law firm at the center of the Panama Papers leak that happened several years ago. We’ve covered the Panama Papers several times here on the blog. These latest leaks, of internal company emails and other documents, don’t just add more names and companies to those already leaked, they also give a lot more detail on the practices of this law firm, and the chaos inside the firm after the initial leak, and the eventual demise of Mossack Fonseca.

One of the best summaries of the situation the we’ve read comes from Will Fitzgibbon and Ben Hallman, writing for the Organized Crime and Corruption Project. The article details how Mossack Fonseca tried to deal with the problems caused by the original leak. The article also goes into detail on all the ways the business practices of the firm left them so unprepared for the original leak. Not only were the names and holdings of many of their clients leaked (some of them very high profile), but it turns out in many cases Mossack Fonseca didn’t even know who their clients were, which caused problems when regulators came asking questions.

The US Department of State recently granted an extradition request filed by the government of Panamanian President Juan Carlos Varela to extradite his predecessor – former President Ricardo Martinelli (2009 – 2014), often described as a supermarket tycoon. The extradition request appears to focus primarily on allegations of illegal surveillance and political espionage during Martinelli’s presidential term. Although Martinelli is the subject of several corruption claims in Panama (to which he has already returned), it is unclear if he will be tried solely for illegal surveillance and espionage or if he will face additional corruption charges

After Martinelli’s presidential term ended in 2014, he moved to Southern Florida and applied for political asylum claiming that President Varela was targeting Martinelli due to political motivations. Varela was previously the Foreign Minister (2009 – 2011) and Vice President (2009 - 2014) under Martinelli, though the two represented different political parties. In 2011 Martinelli dismissed Varela from the position of Foreign Minister, a move that resulted in widely-publicized tension between the two politicians and their respective political parties.  In May 2014 Varela was elected president and his Government started inquiries into Martinelli. In June 2015 the Panamanian Supreme Court opened corruption investigations into Martinelli and by December 2015 the Court had issued a warrant for Martinelli’s arrest.  

Ousting corrupt heads of government has slowly become more common across the world. In 2016, major corruption scandals and nation-wide political protests led to the impeachment of the Presidents of Brazil and South Korea. In 2017, the release of the Panama Papers led to the resignation of the Prime Minister of Iceland and the dismissal of the President of Pakistan. Now, a corruption case almost a decade in the making has unseated the Prime Minister of Spain.

On June 1, Spanish Prime Minister Mariano Rajoy was ousted after a vote of no confidence and Pedro Sanchez, the leader of the Spanish Socialist Worker’s Party (PSOE), became the new Prime Minister. The formation of the new Sanchez administration is the latest development of a corruption case that began over nine years ago and has completely disrupted the Spanish political landscape.

Investigations into the Popular Party (PP), Mariano Rajoy’s political party, started in 2009 when businessman Francisco Correa Sánchez was arrested on a number of charges, including bribery, money laundering, and tax fraud. In this case, called the Gürtel case, Correa was identified as the ringleader of a major kickbacks-for-contract scheme with the Popular Party. A series of investigations and court cases involving members of the Popular Party and associated businesspeople uncovered the extent of the kickbacks-for-contract scheme, which had run parallel to the party’s financial structure since the party’s creation in 1989.

It’s always important to hire the right person for the job. But the recent resignation of luggage-maker Samsonite’s CEO, Ramesh Tainwala, serves as a high-profile reminder that resumes sometimes fail to reflect reality.

Mr. Tainwala resigned on June 1, 2018, following the release of an activist investor’s report which included allegations that he had repeatedly been represented as “Dr. Ramesh Tainwala” in online media and regulatory filings, despite never actually completing the PhD program he’d enrolled in. A simple degree check confirmed that he’d never been awarded a diploma, and in statements to the Wall Street Journal (paywall), Mr. Tainwala acknowledged that he did not hold a PhD, and that he had “always felt embarrassed about it as [he] knew [he] did not complete the program.” Ramesh Tainwala’s resignation is reminiscent of former Yahoo CEO Scott Thompson’s resignation in 2012; Thompson had padded his resume by adding a computer science degree to the accounting degree he actually held.

Here on the blog we've discussed the 1MDB scandal before before in Malaysia. First reported on in 2015, the scandal involves some US $4.5 billion that was allegedly misappropriated from a government-owned fund

Recently there have been some new developments in the case. As a result of investigations by the Malaysian Anti-Corruption Commission (MAAC), on May 19, 2018 police forces conducted raids on more than ten apartments associated with the former Prime Minister Najib Razak, as well as several apartments occupied by his children. Malaysian authorities reportedly seized nearly US $29 million in cash from Razak, who had been under investigation by the MAAC since 2015 for allegedly stealing nearly US $700 million from 1MDB. The cash seized by officials was reportedly composed of 26 different currencies. Officials reportedly also seized over 280 boxes containing designer handbags, watches, and jewelry.

Razak reportedly justified the cash as donations from friends intended for an election campaign by the Barisan Nacional political party.  In order for authorities to verify whether or not the alleged donations are legitimate, Razak will be required to declare each of the individual sources of the funding if he wants to prove that none of the payments were illicit or improper.   

As the 1MDB scandal shows, anti-corruption investigations can take years to produce results and recovering funding is a complex issue. It is prudent to protect your business from corrupt and unlawful dealings through compliance and due diligence programs. Smith Brandon International has a wealth of experience in global corporate investigations that can help protect your business. 

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