This month’s top stories:
- UK High Court overturns USD 11 billion damages arbitral award against Nigerian government due to fraud during arbitration proceedings;
- US eases sanctions on Venezuelan oil and gas and gold mining sectors after Venezuelan government and opposition sign roadmap agreement; and
- Money laundering and tax evasion investigations opened into Turkish social media influencer and associates.
ASIA PACIFIC
India: Executive at Chinese smartphone maker arrested in money laundering probe
On 10 October, India's financial crime agency arrested an executive at Chinese smartphone maker Vivo in connection with a money laundering probe first launched in 2022. Guangwen Kuang, the head of administration at Vivo India, was arrested by the Enforcement Directorate alongside three other unidentified individuals. Last year, Vivo India’s offices were raided and USD 60 million from the company’s bank accounts were seized over allegations of tax fraud and moving money out of the country illegally. Vivo has denied the allegations. Kuang’s arrest came as relations between China and India continued to sour following a deadly clash at their shared contested border in 2020. India has reportedly subjected deals with Chinese firms to greater scrutiny since then. Xiaomi, another popular Chinese phone maker, has faced similar accusations to Vivo from Indian authorities.
Indonesia: Former minister of agriculture and top officials charged with corruption, abuse of power, and money laundering
On 11 October, Indonesia’s anti-corruption agency (KPK) announced an investigation and criminal charges against former minister of agriculture Syahrul Yasin Limpo (2019-2023) and two other top officials for alleged corruption, abuse of power, and money laundering. Limpo is accused of devising a complex extortion and money laundering scheme and of ordering his subordinates to solicit bribes from civil servants at various levels of the agriculture ministry. The bribes are suspected to have been paid using the ministry’s funds and by inflating budgets from ministry vendors. Limpo and his associates allegedly received at least IDR 13.9 billion (USD 876,000) in illegal proceeds, which they in turn used to settle personal debts and fund the purchase of a vehicle. The KPK is also investigating whether Limpo had used the illicit proceeds to sponsor the Nasdem Party, one of the political parties in Indonesia’s ruling coalition. Limpo has filed legal proceedings disputing his inclusion as a suspect in the case; the next hearing is scheduled for 6 November.
MIDDLE EAST AND NORTH AFRICA
Turkey: Money laundering and tax evasion investigations opened into Turkish social media influencer and associates
On 22 October, the Chief Public Prosecutor of Istanbul’s Anatolian District announced the launch of an investigation into Turkish social media influencer Dilan Polat, her husband Engin Polat, and 11 other suspects including six of the couple’s family members. Polat and her associates are suspected of money laundering, tax evasion, and being members of a criminal organisation. The Financial Crimes Investigation Board (MASAK), Turkey’s financial intelligence unit, also launched a separate tax investigation into the couple’s business activities, which reportedly found evidence of fraud and other suspicious activity. The suspects’ assets – comprising a fleet of vehicles, the bank accounts of at least 20 companies at which the suspects hold appointments, safety deposit boxes, and cryptocurrency assets – have been frozen and international travel bans have been imposed. The couple’s lawyer has publicly denied the money laundering allegations.
Egypt: US Senator pleads not guilty to acting as an Egyptian government agent
On 23 October, Robert Menendez, the US Senator for New Jersey, pleaded not guilty to charges of acting as a foreign agent for the Egyptian government during his time in office. Menendez had previously been indicted by the US Attorney for the Southern District of New York on charges of bribery and corruption for accepting hundreds of thousands of dollars’ worth of bribes and using his influence and power to act in the Egyptian government’s interests. Menendez has rejected calls to resign from Congress but stepped down as the chairman of the Senate Foreign Relations Committee. Menendez’s trial is expected to commence in May 2024.
AMERICAS
Mexico: Supreme Court closes investigation into diversion of public funds by federal government
On 11 October, Mexico’s Supreme Court closed a long-running investigation into government corruption known as Operación Safiro by denying a request from the government of the state of Chihuahua to be recognised as a victim of the diversion of public funds that occurred in 2016. This investigation found that the federal government diverted MXN 250 million (GBP 11 million) in public funds to finance the electoral campaigns of the PRI, a Mexican political party. The corruption scheme implicated high-ranking PRI officials and the Enrique Peña Nieto administration (2012-2018), revealing a complex web of money laundering and embezzlement. A former senior PRI member had previously been acquitted of embezzlement in the context of this scheme in February 2023.
Canada: OECD finds anti-corruption efforts in Canada remain “exceedingly low”
On 12 October, the Organisation for Economic Cooperation and Development (OECD) published a report that found that the enforcement of anti-bribery and corruption laws in Canada remains “exceedingly low.” The report states that 25 years after Canada’s adoption of its foundational anti-corruption legislation, the Corruption of Foreign Public Officials Act (CFPOA), enforcement remains rare, with charges having been levied in only nine cases and only two individuals convicted for foreign bribery and four companies sanctioned. Beyond domestic enforcement, the report details the need for increased monitoring of Canadian business activities abroad given their operation in high-risk sectors such as the manufacturing and extractive industries. The OECD advocates for Canadian authorities to greatly increase efforts to systematically collect, maintain, and publish data on foreign bribery reports.
Venezuela: US eases Venezuela sanctions after election roadmap agreement signed
On 18 October, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued four general licences suspending certain sanctions on Venezuela. The suspensions occurred in response to an agreement between the Venezuelan opposition and representatives of president Nicolás Maduro regarding a roadmap for the country’s 2024 general election. The licences authorise transactions involving the Venezuelan oil and gas sector for six months and transactions with the Venezuelan state-owned gold mining company, and remove a ban on secondary trading for certain types of Venezuelan sovereign debt. The licences’ renewal is conditional on the fulfilment of the agreement’s terms by the Venezuelan government. On 22 October, the Venezuelan opposition held a primary election to choose Maduro’s opponent in 2024.
US: Court documents reveal FTX founder made millions in political donations through “dark money” organisations
Newly publicised documents in the ongoing criminal trial of FTX cryptocurrency exchange founder Sam Bankman-Fried have revealed an elaborate network of donations to political groups during the 2022 US election cycle. Bankman-Fried and his associates reportedly channelled over USD 50 million to “dark money” organisations – meaning tax-exempt organisations which are not required to disclose their donors – in order to influence congressional campaigns across the US. Recipients of the funds reportedly included Republican Senate Minority Leader Mitch McConnell and Democratic Senate Majority Leader Chuck Schumer, along with other regional political action committees. Bankman-Fried, publicly a supporter of Democratic candidates, reportedly utilised the opaque “dark money” donation structure in order to avoid drawing attention to millions in donations he made to conservative political action groups. Bankman-Fried acknowledged the “dark money” donations in an interview in November 2022.
EUROPE
Bulgaria: FATF adds Bulgaria to financial crime grey list
On 27 October, the Financial Action Task Force (FATF), the international financial crime watchdog, added Bulgaria to its grey list of countries that require increased scrutiny to prevent financial crime. Jurisdictions placed on the grey list undergo a period of increased monitoring, during which they agree to cooperate with FATF to detect deficiencies in their anti-money laundering, terrorist financing, and proliferation finance regimes within agreed timeframes. During FATF’s October 2023 review of jurisdictions’ financial crime frameworks, four countries – including Panama and the Cayman Islands – were removed from the grey list. The grey list is differentiated from a list of jurisdictions deemed by FATF to be high-risk, referred to as the black list, on which currently sit the Democratic People’s Republic of Korea, Iran, and Myanmar.
SUB-SAHARAN AFRICA
Ghana: Former sanitation minister investigated by US and Ghanaian authorities for corruption
On 16 October, the Ghanaian Office of the Special Prosecutor (OSP), an independent agency charged with investigating allegations of corruption associated with public officials, announced that it had partnered with the US Federal Bureau of Investigation (FBI) to investigate corruption allegations against Cecilia Dapaah, Ghana’s former minister of sanitation and water resources. Having been appointed as minister in 2018, Dapaah resigned from this position in July 2023 after she was accused of corruption following the discovery of over USD 1 million in cash – comprising both local and foreign currencies – during a search of her residence and bank accounts. Dapaah was arrested by the OSP shortly thereafter, and remains under investigation, with the FBI focusing on Dapaah’s financial transactions and assets in the US. International media has noted that this investigation is indicative of increasing international collaboration in combating corruption, and that it may set a precedent for further collaboration between various national anti-corruption agencies. Dapaah has denied the allegations.
Nigeria: UK High Court overturns USD 11 billion arbitral award against Nigerian government due to fraud
On 23 October, the UK High Court overturned a USD 11 billion arbitral award which had been issued against the Nigerian government in connection with a failed gas supply and processing agreement. The award was overturned on the basis that, amongst other things, the gas supply and processing agreement had been obtained through fraud and in a manner which was contrary to public policy, and that the claimant had failed to disclose this when it initiated the arbitration proceedings. The agreement had originally been signed in 2010 between the Nigerian government and Process & Industrial Developments Limited (P&DI), a British Virgin Islands-incorporated company co-founded by two Irish businessmen. In 2017, an arbitration tribunal appointed by the parties found the Nigerian government to be in breach of the agreement and ordered it pay USD 6.6 billion plus interest in damages to P&DI. With interest accrued in the intervening years, the final order for damages was estimated to exceed USD 11 billion, a fiscally material sum of money equal to nearly half of Nigeria’s annual federal budget.
