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The Anticorruption Blog

UK company director jailed for bribing public officials in Africa

Posted in Africa, Courts, UK Bribery Act, United Kingdom

In order to win a contract worth £2.26m for making ballot papers, Smith and Ouzman Ltd, a printing firm based in Sussex, gave £395,074 in corrupt payments to public officials in Kenya and Mauritania.

In February 2015, Southwark Crown Court jailed Nicholas Smith, the Sales and Marketing Director, for three years and handed his father, Christopher Smith, Chairman, an 18-month suspended term, 250 hours of unpaid work and a three month curfew. Both have resigned from the company and were disqualified from acting as directors for 6 years. The International Sales Manager and a Sales Agent were both acquitted of making corrupt payments in relation to a contract in Somaliland.

As the payments in question took place before the Bribery Act 2010 came into force, both were convicted of the old (pre-Bribery Act 2010) offence of corruptly agreeing to make payments (three counts and two counts respectively).

The Company was convicted of the same offence but will not be sentenced until October 2015, at which point confiscation proceedings will also take place, meaning that Smith and Ouzman Ltd will face not only an unlimited fine but the financial benefit they gained from the corrupt payments (i.e. the value of the contract) could be confiscated.

Following the conviction, Director of the SFO, David Green CB QC commented: “This is the SFO’s first conviction, after trial, of a corporate for offences involving bribery of foreign public officials. Such criminality, whether involving companies large or small severely damages the UK’s commercial reputation and feeds corrupt governance in the developing world.”

Monthly China Anti-Bribery Update Report — February 2015

Posted in Uncategorized

1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) On February 6, 2015, Ma Yingkui (“Ma”), the former Deputy Chief of the Standing Committee of People’s Congress of Heping District, Shenyang City, Liaoning Province, was sentenced to 13 years in prison for taking bribes exceeding RMB 5.2 million (USD 828,916) and abuse of power by the Intermediate People’s Court of Dandong City, Liaoning Province.

Allegedly, from 2012 to the first half year of 2013, Ma has accepted RMB 1.32 million (USD 210,417), USD 40,000 and shop cards valued at RMB 100,000 (USD 15,940) from an individual named Shi Haiying (“Shi”) on several occasions, and provided assistance for Shi in obtaining illegal demolition compensation for three affiliated companies of Shi exceeding RMB 100 million (USD 15.94 million).

In 2012, Ma accepted RMB 600,000 (USD 95,644) from the chairman of Shenyang Lexi Printing Co., Ltd., an individual surnamed Quan, and sought illegal benefits in demolition and relocation of the company’s plant. Ma was also found guilty of taking bribes on another 30 occasions by abusing his power from 2004 to 2013.

(2) It was reported on February 11, 2015 that Qi Pingjing (“Qi”), the former Deputy Director of China Foreign Languages Publishing Administration, was sentenced to life imprisonment with all his personal property confiscated for accepting bribes and embezzlement by the Intermediate People’s Court of Zibo City, Shandong Province.

Qi was accused of seeking illegal benefits for bribe-givers in raising money for registered capital, real estate purchase, job arrangement, etc. by abusing his position, and accepted bribes amounting to RMB 10.04 million (USD 1.6 million) during his term of office from 2000 to early 2013. Besides, Qi was charged of illegally embalming RMB 600,000 (USD 95,644) in the name of construction payment to a construction company based in Tianjin in the second half year of 2003.

(3) On February 13, 2015, Yang Yueguo (“Yang”), the former Chairman of the People’s Political Consultative Conference of Dehong Dai and Jingpo Autonomous Prefecture, Yunnan Province, was sentenced to life in prison for taking bribes and embezzlement by the Intermediate Railroad Transportation Court of Kunming City, Yunnan Province, with all his personal property confiscated.

Reportedly, during his term of office from 2003 to 2013, Yang has accepted bribes totaling RMB 21.2 million (USD 3.37 million) from several individuals and enterprises, and in exchange, sought illegal benefits in grant of state-owned land use right, coordination of construction project and job promotion for bribe-givers by taking advantage of his position. Yang was also found guilty of embezzling the jadeite products valued at RMB 200,000 (USD 31,881) purchased by public funds in February, 2012. Yang was given a lighter sentence due to his confession.

(4) On February 15, 2015, Huang Fengping (“Huang”), the former Deputy Chief of Shanghai Municipal Commission of Health and Family Planning, was sentenced to 19 years in jail by Shanghai No. 1 Intermediate People’s Court for embezzlement, taking bribes, misappropriation and holding a large amount of property from unidentified sources.

Huang, a well-known neurosurgeons in China, was found guilty of embezzling public funds of RMB 70,000 (USD 11,162) and taking bribes exceeding RMB 301 million (USD 479,998) by abusing his position. During Huang’s term of office as the chairman of Chinese Neurosurgical Society of Chinese Medical Association (the “Association”), he misappropriated properties of the Association worth over RMB 1.41 million (USD 224,849). Furthermore, the sources of his properties valued at RMB 11 million (USD 1.75 million) were unable to be explained. Huang was given a lighter sentence due to his confession.

(5) On February 28, 2015, Ni Fake (“Ni”), the former Deputy Governor of Anhui Province was sentenced to 17 years’ imprisonment by the Intermediate People’s Court of Dongying City, Shandong Province for accepting bribes and holding a large amount of property from unidentified sources, with his personal property valued at RMB 1 million (USD 159,480) confiscated.

Ni was charged of accepting, solely or together with other individuals, cash and jades worth RMB 12.96 million (USD 2.06 million) from 9 individuals on 49 occasions from 2000 to 2012 by taking advantage of his position, and sought illegal benefits for the relevant entities. Ni also failed to explain the sources of his personal property amounting to RMB 5.78 million (USD 921,798). Ni was given a lighter sentence due to his confession and return of illegal gains.

4. Other

(1) On February 6, 2015, the U.S. Securities and Exchange Commission (the “SEC”) announced that the China-based counterparts of the “Big Four” accounting firms (Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers) have reached an agreement with the SEC with regard to their refusal to reveal their clients’ auditing documents to the SEC. According to the SEC, the Big Four has agreed to pay USD 500,000 respectively and admitted that they had failed to provide required documents to the SEC before 2012 when the proceeding was brought against them by the SEC. The Big Four eventually started providing the required documents to SEC, and were required to take specific measures to satisfy the requests from SEC for similar documents in the following four years.

5. China-related FCPA Action

No developments.

Pursue, Prevent, Protect and Prepare – The UK Government’s Anti-Corruption Plan

Posted in Commercial Bribery, Compliance Program, UK Bribery Act, United Kingdom

The UK Anti-Corruption Plan, published in late 2014, sets the strategic direction for anti-corruption activity in the UK.

It contains 66 action points that the UK government will undertake by the end of 2015 in line with four components:

  • Pursue – prosecuting and disrupting people engaged in corruption;
  • Prevent – preventing people from engaging in corruption;
  • Protect – increasing protection against corruption; and
  • Prepare – reducing the impact of corruption where it takes place.

The Plan states that the immediate priorities in the UK are to: Build a better picture of the threat from corruption and the UK’s vulnerabilities; Increase protection against the use of corruption by organised criminals and strengthen integrity in key sectors and institutions, including the criminal justice system and regulated professions; and Strengthen law enforcement response so that the UK can pursue, more effectively, those who engage in corruption or launder their corrupt funds in the UK. The international priorities are to engage with overseas partners to: Improve transparency, tackle money-laundering and return stolen assets; Raise global standards for all, including through our international development programmes; and Promote sustainable growth, including through our work to stop bribery.

The Plan sets 66 specific actions to achieve these objectives. These actions include the following:

  • Examine the merits of a new “failure to prevent economic crime” offence, which would be similar to section 7 of the Bribery Act 2010 (the corporate offence of failing to prevent bribery by associated persons) but be wider in scope, covering, for example, fraud and money laundering, for which it would be a defence to have adequate procedures in place to prevent such crime.
  • Consider how to encourage whistle blowers to report bribery and corruption and develop a model for a single reporting mechanism for allegations of corruption.
  • Create a new central bribery and corruption unit within the National Crime Agency.
  • Recruit specialists into enforcement agencies to support corruption investigations.
  • Increase the powers of enforcement agencies to investigate financial crime.

It also contains a number of actions to try to combat corruption in specific sectors, such as defence and sport.

It is a positive step in the fight of global corruption that, despite the UK having low levels of corruption compared to many other countries, the UK government still sees room for improvement and recognises its role in helping tackle corruption overseas. The 66 action points seem ambitious but if they can be achieved, the UK really would be leading the fight against corruption.

Monthly China Anti-Bribery Update Report — January 2015

Posted in Uncategorized

1. New laws or regulations

 

State level: No developments.

 

Local level (Beijing & Shanghai): No developments.

 

Communist Party Rules: No developments.

 

 

 

2. Upcoming laws or regulations

 

No developments.

 

3. Government Action

 

(1) It was reported on January 4, 2015 that Xu Meng (“Xu”), the former Party Secretary of Ya’an City, Sichuan Province, had been sentenced by the Intermediate People’s Court of Dazhou City, Sichuan Province to 16 years in prison for taking bribes and abuse of power.

 

Xu was found guilty during his term in office from May 2009 to November 2013 of accepting, together with his brother, bribes totaling RMB 5.48 million (USD 877,579) in the form of cash, company equity, vehicles, etc. from various enterprise located in Hainan Province and Sichuan Province. In exchange, Xu abused his position to seek illegal benefits in real estate developments for the bribe givers. Xu was given a lighter sentence due to his confession.

 

(2) It was reported on January 7, 2015 that Lu Zhanglei (“Lu”), the former Chief of the Management Station of Fishery Administration and Fish Ports of Wenchang City, Hainan Province, was sentenced to 12-years’ imprisonment by Hainan No. 1 Intermediate People’s Court for accepting and giving bribes.

 

Reportedly, in 2006, Lu, together with others, accepted bribes from several individuals totaling RMB 1.89 million (USD 302,891) and sought illegal benefits for the briber givers with respect to the distribution of fishery tools, the annual inspection of fishery vessels, and granting exceptions for fishing during periods of fishing moratorium, etc. To shield against sanction, Lu offered bribes to the then Director of Ocean and Fishery Bureau of Wenchang, Lin Zhitie (“Lin”) at the end of each fishing moratorium from 2007 to 2011. The bribes aggregated to RMB 170,000 (USD 27,244). Lu said at the hearing that he plans to appeal.

 

(3) On January 12, 2015, Luo Guoqing (“Luo”), a former Member of Communist Party of China (“CPC”) Quanzhou Standing Committee and Party Secretary of Quanzhou, Fujian Province, was sentenced by the Intermediate People’s Court of Longyan City, Fujian Province to 15 years in prison for accepting bribes, and Luo’s personal property valued at RMB 2 million (USD 320,284) was confiscated.

 

Reportedly, during his term of office from 2005 to 2011, Luo sought illegal benefits for bribe-givers by abusing his position, and accepted bribes amounting to RMB 9.09 million (USD 1.45 million). Luo was given a lighter sentence due to his confession and return of illegal gains.

 

(4) On January 13, 2015, Zhu Yongguo (“Zhu”), a former Office Chief of Economic and Information Commission of Anhui Province, was sentenced to 15 years’ imprisonment by the Intermediate People’s Court of Xuancheng City, Anhui Province, with the confiscation of personal property of RMB 750,000 (USD 120,106).

 

Zhu reportedly solicited and accepted bribes during his term of office up to RMB 5.97 million (USD 956,048), including RMB 5.41 million (USD 866,369), ERU 17,000 (USD 19,465), USD 13,000, shopping cards valued at RMB 290,000 (USD 46,441), and two gold bars of 50 grams and 20 grams respectively.

 

4. Other

 

(1) On January 13, 2015, PRC President Xi Jinping (“Xi”) gave a speech related on anti-corruption at the fourth plenary session of the 18th CPC Central Commission for Discipline Inspection. The speech emphasized that the country holds a “zero-tolerance attitude” towards corruption, and the high pressure on cracking down corruption will be continued. The examination of the leadership of state-owned enterprises, according to Xi, will be further strengthened, and a certain number of important Party rules and regulations will be revised to regulate Party members more efficiently.

 

(2) According to a press conference held by the Supreme People’s Procuratorate on January 19, 2015, since the initiation of certain special actions in October 2014 to pursue job-related criminal suspects who have fled or transferred ill-gotten properties abroad, the nationwide procuratorate organs have captured 49 suspects as of December 31, 2014, among whom 11 are suspected of embezzlement and 31 are suspected of bribery.

 

5. China-related FCPA Action

 

No developments.

 

 

2014 Corruption Perceptions Index

Posted in Commercial Bribery

Transparency International recently released its 2014 Corruption Perceptions Index. The Index is an excellent tool for identifying geographic areas that generally present corruption-related risks and where companies are likely to encounter corruption-related challenges. Twelve data sources were used to develop the 2014 Index, including ratings and assessments from the African Development Bank, the Economist Intelligence Unit, and the World Bank.

The Index has scores ranging from zero through one hundred, with the low end of the scale indicating a country to be highly corrupt, and a high score suggesting that a country is very clean. No country received a perfect score. Denmark had the highest score with ninety-two. The bottom ten countries were Eritrea, Libya, Uzbekistan, Turkmenistan, Iraq, South Sudan, Afghanistan, Sudan, North Korea, and Somalia. Continue Reading

Monthly China Anti-Bribery Update Report — December 2014

Posted in China

1. New law or regulation

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

 

2. Upcoming law or regulation

No developments.

 

3. Government Action

(1) On December 5, 2014, Zhang Xiaodong (“Zhang”), the former Party Secretary of Anyang City, Henan Province, was sentenced for taking bribes by the Intermediate People’s Court of Zhumadian City, Henan Province to life in prison plus confiscation of all personal property. Continue Reading

The UK Bribery Act – what to expect in 2015

Posted in Commercial Bribery, Compliance Program, Courts, UK Bribery Act, United Kingdom

We have reported previously that the UK’s Serious Fraud Office (SFO) has confirmed its commitment to prosecuting bribery and corruption and that although there is yet to be a “big case” under the UK Bribery Act 2010, the SFO are busy investigating companies it suspects may have broken the law. As we approach the end of 2014, it is interesting to reflect on what we can expect over the coming year.

Following a statement made by the UK Home Secretary Theresa May, there has been talk about the responsibilities of the SFO being transferred to the National Crime Agency (NCA), established in October 2013 to target the criminals and groups posing the biggest risks to the UK. This would mean that all white-collar crime was under the same control, removing the split where the budget of the NCA is controlled by the Home Office controls but the budget of the SFO is controlled by the attorney-general’s office. The chairman of the SFO, David Green CB QC’s opinion is that this is “just not sensible”, given the upheaval and uncertainty that this would bring, with no guarantee of better results, and that there is a need for the regulator of top end bribery to remain independent from the government and have these types of offences as its top priority.

There has been some concern that the lack of enforcement under the Bribery Act by the SFO could be due to the fact that the SFO’s budget was cut from £52million in 2008 to £32million in 2014. The SFO have dealt with this by using blockbuster or ring-fenced funding to ensure its most expensive investigations can continue. Continue Reading

Monthly China Anti-Bribery Update Report — November 2014

Posted in China

1. New law or regulation

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

 

2. Upcoming law or regulation

No developments.

 

3. Government Action

(1) On November 4, 2014, Yang Xianjing (“Yang”), the former Inspector of the Department of Land and Resources of Anhui Province, was sentenced by the Intermediate People’s Court of Bengbu City, Anhui Province to life in prison for abuse of power and taking bribes, with confiscation of all his personal property.

Yang was accused of taking advantage of his position from 2007 to 2011, illegally separating, renewing, and transferring the exploration rights of several mines, causing the state to suffer economic losses exceeding RMB 189,000 (USD 30,696). Continue Reading

Russia Data Privacy Update – New Regulations

Posted in Russia

In July 2014 Russia enacted Federal Law No. 242-FZ which introduced new requirements for storage of personal data of Russian citizens (the “Amendment”). The Amendment will become effective September 1, 2016. The purpose of the Amendment is two-fold:

No. 1: It amends Federal Law No. 152-FZ “On Personal Data” dated July 27, 2006 (the “Personal Data Law”) by introducing new obligations with regard to the storage of Russian citizens’ personal data.

No. 2: It amends Federal Law No. 149-FZ “On Information, Information Technology and Protection of Information” dated July 27, 2006 (the “Information Law”) by introducing a mechanism for the regulator, i.e. the Federal Service for Supervision of Communications, Information Technology and Mass Media (the “RKN”), to block websites that process personal data of Russian citizens in violation of the Russian data protection laws.

Our findings include, among others, that the Amendment applies to non-Russian companies, regardless of their presence in Russia.

Click here to learn more.

China Data Privacy Update

Posted in China

Peter William Humphrey, a British citizen, and his American wife, Yu Yingzeng, were prosecuted on August 8, 2014 in Shanghai No.1 Intermediate People’s Court for illegally obtaining the personal information of Chinese citizens. The court sentenced Mr. Humphrey to a fixed-term imprisonment of two and one-half years, a fine of RMB 200,000, and deportation from China after serving the imprisonment term; and sentenced Yu Yingzeng to a fixed-term imprisonment of two years plus a fine of RMB 150,000.

Before they were arrested in August 2013, the couple operated a business risk advisory firm in Shanghai known as ChinaWhys. This was only weeks after the firm delivered an investigation report to the British pharmaceutical company GlaxoSmithKline (“GSK”) China. Inevitably, their detention became linked with the GSK China bribery scandal, but the case has implications for China’s emerging data protection and privacy regime.

The PRC criminalized the sale of personal information in the seventh amendment to the PRC Criminal Law on February 28, 2009. Continue Reading