Kreller Forensics 
The CFPOA has been criticized in the past for not going far enough in what it covers or in how it is enforced. However, a recent appeals court decision upheld a 2013 conviction in the R. v. Karigar case, and in so doing may have added some "teeth" to the law. FCPA Blog has a good summary of the case generally, and Canadian Law Firm McCarthy Tétrault has an in depth analysis of the original decision. The full text of the original decision can be read here, and the appeals court decision can be read on the here.
Strategy& provides a pretty good summary of this section of the report in their article "Are CEO's less ethical than in the past?" One point they make is that while it's hard to know if corruption and unethical behavior among CEO's is actually more common, it's clear that companies are doing more about it. From the article:
Our data cannot show — and perhaps no data could — whether there’s more wrongdoing at large corporations today than in the past. However, we doubt that’s the case, based on our own experience working with hundreds of companies over many years. In fact, our data shows that companies are continuing to improve both their processes for choosing and replacing CEOs and their leadership governance practices — especially in developed countries.
On July 28th, the Prime Minister of Pakistan Nawaz Sharif resigned after the Supreme Court ruled that the corruption allegations stemming from the Panama Papers disqualified him from the position. The information leaked in the Panama Papers led to the accusation that Sharif engaged in money laundering through offshore companies owned by his children in order to purchase high-end properties in London. On July 31st, The National Accountability Bureau in Pakistan announced that Sharif and his three children will face four counts of corruption charges over these revelations.
On Monday, June 12th, news broke that the US Department of Justice is investigating improprieties in the 2013/2014 sale of the Houston based Coastal Energy Company to Compañía Española de Petróleos, S.A.U. (CEPSA), a subsidiary of the Abu Dhabi sovereign wealth fund International Petroleum Investment Co. The $2.2 billion sale was orchestrated by Jho Low, a Malaysian financier close to the family of Malaysian Prime Minister, Najib Tun Razak. Low reportedly supplied $50 million for the deal (believed to have been misappropriated from 1MDB); one week later CESPA transferred $350 million back to Low’s shell company. Jho Low has been at the center of several lawsuits related to the scandal.
We’ve been following the results of Brazils “Operation Car Wash” for a while now, which has rooted out corruption in some of Brazi's biggest companies and numerous politicians. So far though, no corruption is on the scale of the construction firm Odebrecht SA.
Bloomerg provides one of the best summaries of the entire saga we’ve seen yet. It details the whole thing from start to finish. How the company set up a secret division just to handle bribes, how it bought a bank to facilitate the bribery division's activities, and how the whole thing came crashing down thanks in part of a rat in a barbecue grill. It’s a great read.
On June 5th, 2017, in a case with implications for complex fraud and corruption investigations, the US Supreme Court ruled to limit the Security and Exchange Commission’s power to recover ill-gotten gains. The case (Kokesh v. SEC) hinged on whether SEC disgorgements should be considered a “fine, penalty, or forfeiture,” or whether they are instead a remedial tool. In a unanimous decision, the Justices ruled that SEC disgorgement “bears all the hallmarks of a penalty,” and is therefore subject to a five-year statute of limitations as laid out in 28 USC § 2462. In the short term, the ruling reduces the disgorgement payment for Charles R. Kokesh (an investment advisor who spent more than a decade misappropriating client funds) from $35 million to around $5 million. In the long term, it will likely change the way the SEC structures enforcement actions.
International business environments are always in a state of flux, and it’s not always easy to figure out the implications for your business. Whether it’s a corruption scandal in Brazil, currency changes in India, or renewed sanctions on Russia, local issues can often have an unexpected impact on your international operations. Whether you’re just considering entering a new market, or you’re trying to come to grips with a new political paradigm, Smith Brandon International can help you assess the environment and position your company to succeed.
A year on from the disclosure of the Panama Papers, revelations continue to trickle to the surface. In April the International Consortium of Investigative Journalists added two world leaders to their Power Players list: Australian Prime Minister Malcom Turnbull and former Mongolian Prime Minister Sükhbaataryn Batbold were both revealed to have interests in separate offshore companies connected to mining operations in central Asian.
Meanwhile, a Joint Investigation Team in Pakistan formally began investigations related to the naming of Prime Minister Nawaz Sharif and his sons (Hussain and Hassan Nawaz) in the leaked Panamanian documents.
And in Ukraine, authorities arrested Italian fugitive Giuseppe Donaldo Nicosia. Nicosia stands accused of a $48 million tax fraud. The Panama Papers helped reveal the chain of shell companies he’d used to perpetrate his fraud and hide his money.
Sadly, a lack of transparency in offshore business operations is hardly a surprise. But these recent revelations serve as a reminder that hidden ownerships can have big implications. At Smith Brandon International we have over 20 years of experience conduction international Due Diligence, to help you ensure that your new partners are who they say they are.
