Transparency International

Real estate and the promise of ready money – who cares if the cash is dirty?

The UK welcomes wealthy foreign investors, but does it really care where their money comes from? Estate agents in London’s super expensive neighbourhoods are apparently agreeing to house purchases with ‘corrupt’ Russian politicians.FCA London Property

If you are in the UK, tune in to Channel 4 this evening to watch a revealing documentary about what really goes on between agents and super rich buyers. In ‘From Russia with Cash‘,  undercover reporters pose as an ‘unscrupulous’ Russian government official “Boris’ who wants to buy a house in London for his mistress, ‘Nastya’. Despite ‘Boris’ making is clear to the agents that his funds are not from a legitimate source, the estate agents he deals with are apparently happy to go ahead with the sale and even recommend ways for ‘Boris’ to keep a low profile, according to the Guardian report.

Channel 4’s reporters used hidden cameras to film meetings with estate agents, who talked openly about previous dealings with foreign clients, government ministers – politically exposed persons, and the amount of deals which are made with some degree of anonymity. Politically exposed persons (PEPS) are individuals with access to national coffers, funds which belong to the electorate. They are government officials, their families, their associates and beyond.

Property, or real estate, is widely recognised as the best way to invest. So it should be no surprise that the proceeds of crime have found a natural home in bricks and mortar. Rules on investing and moving dirty cash are well publicised. In the UK and many other countries, Financial institutions, lawyers, accountants, dealers in high value goods and real estate agents are required to report transactions of dubious origin – those which could be hiding the proceeds of crime – to law enforcement. The penalties for not reporting suspicious transactions are severe for the institution and the individual.

Corruption and billionaires  

FCA - TITransparency International’s ‘Unmask the Corrupt‘ campaign looks closely at how UK property launders funds for corrupt individuals, many of whom are politically exposed persons. Funds designated for schools and hospitals – ‘Boris’ claims his money comes from a government health budget – is sent to offshore havens, shrouded in secrecy and then passed on to ‘enablers’ or gatekeepers in the UK who advise and facilitate investment. The thing is, the practice is nothing new. This is how the big money has always moved – the only difference is that now it is under scrutiny.

Forbes, the register of all things super-rich, lists London as third in the world of ‘Billionaire Cities‘.  Five of the remaining nine are Asian cities – Hong Kong, Tokyo, Shanghai, Singapore and Mumbai sit alongside Paris, Moscow, New York and Sydney. If the corrupt are managing to get money into the UK property market, they are certainly managing it in the other countries on this list.

Will the estate agencies and law firms mentioned in this programme be investigated and will this give rise to increased scrutiny of the real estate sector in the UK? Financial Crime Asia is keen to find out.


New Zealand: New anti-graft rules could boost reporting

Proposed rules to ramp up NZ’s anti-corruption measures, could mean that every foreign remittance worth more than NZD1,000 (USD876)could be reported to the police.

Furthermore, new regulations would require banks and financial institutions to report physical cash transactions of more than NZD10,000 (USD8,761) to the police.

New Zealand lawmakers hope the new rules will cement the country’s position as one of the least corrupt jurisdictions. Transparency International’s Corruption Perceptions Index for 2013 listed New Zealand as the least corrupt country in the world, a place it shares with Denmark.

Source: The New Zealand Herald


On 23 April 2014, Almaty’s first nationwide Anti-Corruption School opens its doors for students, civil society representatives, journalists and all citizens who wish to

John Cole Cartoon satirising corruption in Luzerne Schools

John Cole Cartoon satirising corruption in Luzerne Schools

learn how to counteract corruption in daily life.

Transparency International Kazakhstan – with support from the Soros Foundation-Kazakhstan and in partnership with the Agency for Fighting against Economic and Corruption Crimes (the Financial Police), the Financial Police Academy, Turan University, the Kazakhstan Association of Higher Education, and the Republican State Enterprise “Kazakhstan Temir Zholy” – will present a completely new educational format that provides students with anti-corruption instruments and tools, with step-by-step recommendations on how to apply them.

The Anti-Corruption School project aims at promoting the theory and practice of anti-corruption. Over the course of seven days, all students will get the opportunity to work with leading anti-corruption experts, government representatives, businessmen and scientists. They will also get the opportunity to see real-life examples of how to effectively fight corruption. The school’s programme includes four training modules that combine both theoretical and practical courses on topics, such as corruption research and public sector, private sector and civil society participation in combating corruption.

Within the framework of this project, we have also launched an informational campaign “I have a dream” – focusing on children’s dreams about a clean, transparent and just Kazakhstan. All of the words presented in our posters are real expressions of children from Almaty kindergartens. The dreams of these young citizens of Kazakhstan are rather small and these dreams cannot be executed by fairies or by cyber toys. Only we, adults, can make these dreams come true.

We argue that corruption is a part of a culture or lifestyle; that corruption is an integral part of doing business and that ordinary people cannot resist corruption. Corruption is a two-way street – those who give bribes have to be responsible for their actions as well as those who receive bribes.

Source: Transparency International

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Six ways corruption undermines Afghanistan

Although these six ideas are linked here to Afghanistan, they could be applied to any nation living under a severely corrupt regime. Some of the lessons serve as a warning to jurisdictions which are not post-conflict but could be tipping towards corruption.

A fair society is already on the way to breaking down when corruption is no longer considered a taboo, as in point one. When citizens of a country are able and willing to pay bribes for services as a norm, getting society and the economy back on track to fairness and transparency is an enormous challenge.

The information in this graphic comes from a Rawa News article and all credit must go to the reporter.

Infographic - Corruption in Afghanistan

Infographic – Corruption in Afghanistan

Malaysia: New bribery rules bring collective liability for firms

Newly tabled provisions to the Malaysian Anti-Corruption Commission (MACC) Act 2009, would mean thatFCA - KL by night companies can be held responsible if employees commit bribery.

The new rules are similar to those under the UK’s Bribery Act 2010, which holds employers responsible for acts of bribery committed by employees and intermediaries. The legal change would see firms facing financial penalties for allowing bribery to take place. Tracking the actions of every employee in a firm is not an easy task and the chances of a bribe being paid without the knowledge of the wider firm and senior management, for example, are high. So, the MACC will contain one defence for firms.

A firm could defend itself against a potential financial penalty if they can prove they have adequate procedures in place to prevent bribery. Financial Crime Asia has not found any specific guidance relating to what those adequate procedures are vis a vis the MACC, however there is a raft of information on the same provision under the UKBA, which can be found by searching this blog or via Transparency International and the UK Ministry of Justice web portals.

If any readers can share links to good sources of information on adequate procedures for preventing and detecting bribery and corruption, please do share in the comments. Thank you.

Source – The Borneo Post

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Probe reveals hidden rule of business in Turkey: bribery

Bribery has become a critical rule of the game for many businesspeople carrying out large-scale projects in Turkey, as recently leaked telephone recordings have raised the specter of widespread corruption with top government officials involved in business FCA - Turkeydeals and tenders, observers assert.

The numerous audio recordings leaked since Dec. 17, when a major graft scandal involving prominent public figures close to Prime Minister Recep Tayyip Erdoğan came to light, reveals that businessmen have paid millions of dollars in bribes promised to government officials in return for favors in public tenders.

Voice recordings regarding Turkuaz Media Group, obtained through legal wiretaps and shared by Twitter user Haramzadeler earlier in February, revealed that the government allegedly collected millions of dollars from businessmen, promising favors in a big government tender to buy the media group.

Cengiz Holding owner Mehmet Cengiz, Kolin İnşaat owner Celal Koloğlu, Limak Holding owner Nihat Özdemir, IC Holding owner İbrahim Çeçen and one unknown businessperson allegedly contributed a total of $100 million each to the pool to buy the media group. Other businesspeople contributed smaller amounts, including Adnan Çebi with $30 million and Hayrettin Özaltın’s sum of $20 million. Çeçen is reportedly willing to give an additional $50 million if he is allowed a favorable place in the third Bosporus Bridge tender. According to the voice recordings, it is unknown whether Muzaffer Nasıroğlu and Abdullah Tivnikli contributed to the pool.

Similarly, the return of a valuable piece of land in the Şişli district of İstanbul to a Bulgarian foundation in 2012 has raised bribery allegations, as it involved a development project by the Taş Yapı Construction Company, whose owner stands accused in the corruption scandal that was exposed in December of last year.

It appears that Emrullah Turanlı, the owner of Taş Yapı, had plans for a project on the Şişli land, including the construction of a shopping mall, residences and a hotel, and he needed approval to carry out a project in a special area. A bribery ring thus made efforts to profit from the project by changing the zoning plan.

The alleged leader of the bribery ring, Hüseyin Avni Sipahi, ensured that the land in Şişli was turned into a special project area with the approval of Environment and Urban Planning Minister Erdoğan Bayraktar.

Turanlı allegedly met with Erdoğan in Ankara on July 17 of last year to request that the Şişli land be turned into a special project area. Following the meeting, Erdoğan is claimed to have given an order to Bayraktar to complete the procedures related to the project.

On Dec. 27 of last year, after being arrested in the second wave of the corruption operation, Turanlı told the Bugün daily about the bribery allegations against the minister: “Ten municipalities illegally took TL 20 million from me. Everything has been recorded.”

Within the scope of the corruption and bribery investigation, prosecutors charged the minister and his son Abdullah Oğuz Bayraktar with granting privileges to certain individuals by helping them obtain approval on special project areas for the development area known as Bakırköy 46, which belongs to Ağaoğlu Construction; the development project on the property of the Bulgarian foundation to be carried out by the Taş Yapı Construction Company was one of them.

“Principles and transparency are lacking in current [Turkish] politics,” Mehmet Altan, a professor at İstanbul University, told Sunday’s Zaman. Altan also stressed that construction companies have financed politics dozens of times through changes in the Public Procurement Law since the ruling Justice and Development Party (AK Party) first came to power in 2002, and that amendments in competition laws prevent the efficient use of resources in Turkey.

On Jan. 1, the Financial Times put emphasis on the ever-increasing activity of Erdoğan and government in Turkey’s construction sector, as the second phase of the major corruption investigation launched on Dec. 25 shifted the attention towards issues in public tenders and big construction projects.

“In private conversations with the FT, two leading Turkish businessmen said bribes were sometimes necessary to go ahead with big construction projects, although the government emphasizes that Turkey has improved its standing in Transparency International’s Corruption Perceptions Index over the past decade to 53rd out of 177 countries this year,” the daily reported.

The daily maintained that Erdoğan plays a leading role in the sector: according to a notice published in the Official Gazette in June, all transfers of state companies’ real estate holdings have to be approved by the prime minister.

In a more recent audio recording uploaded to YouTube in late February, two people, allegedly the prime minister and his son Bilal Erdoğan, are discussing a lower-than-promised bribe from a businessman whose name is mentioned by Bilal as Sıtkı. In the recording, Erdoğan ordered Bilal to hold out for a better offer in an unspecified deal with the businessman: “Don’t take it [the money]. Whatever he has promised us, that’s what he should bring. If he is not going to bring that, there is no need,” says the voice on the recording. “The others are bringing [that amount]. Why can’t he bring it? What do they think this business is? … But don’t worry, they will fall into our lap.”

The second audio track, with accompanying text, says the businessman mentioned in the tape is Sıtkı Ayan, the chairman of İstanbul-based transportation company Turang. Some media outlets claim the conversation may have been be about government incentives that Turang was granted for a business deal in Iran. Turang received a license in 2010 to build part of a pipeline intended to carry gas from Iran and Turkmenistan to Europe through Turkey, according to its website. It was granted incentives including tax exemptions on investments of up to TL 11.5 billion ($5.2 billion) from the government in December, according to the Economy Ministry’s website. Representatives of Turang were not immediately available for comment as of Thursday morning.

Yet, it seems that the scope of bribery has not been limited to the construction sector, as new audio recordings posted on YouTube last weekend confirmed bribery involving Bilal Erdoğan.

In the conversation, Mehmet Fatih Saraç, known as “Alo Fatih” for his close ties to Erdoğan and for seeming to act as a monitor of Ciner Media Group’s publishing policy for Erdoğan, tells Bilal that Ali Kibar will donate to the Turkish Youth and Education Foundation (TÜRGEV), of which Bilal Erdoğan is an executive board member. Bilal responds by asking if the money is “zakat” — an Islamic form of donation to charity — or something different. Saraç replies that money is not being given as zakat.

In 2011, Turkey’s national flag carrier Turkish Airlines (THY) agreed to commence the mass production of an aircraft seats project amounting $5 billion jointly with Kibar Holding, with an eventual goal of marketing them overseas.

Source: Todays Zaman
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