Global Investigations Review - The law and practice of international investigations


Friday, 14 March 2014

Corruption cost Egypt US$28 billion over 2013

Corruption in Egyptian governmental institutions cost the country around 200 billion Egyptian pounds (US$28 billion) over 2013, the head of the country’s Central Auditing Committee, Hisham Geneina, has said. A report covering the findings, the impact of corruption on the country and potential solutions to the problem will be presented to Egypt’s prime minister, Ibrahim Mahlab, who was appointed to lead Egypt’s sixth government since the 2011 uprisings in late February.

SEC: charges and settlements

The Securities and Exchange Commission (SEC) announced several enforcement actions yesterday: John Babikian, a promoter of a platform of affiliated microcap stock promotion websites, was charged with securities fraud known as “scalping". The agency froze Babikian’s assets while its investigation continues. Motion picture company Lionsgate Entertainment, which was in the dog house for failing to “fully and accurately” disclose a key aspect of its effort to stop a hostile takeover, has admitted wrongdoing and will pay US7.5 million to settle SEC charges. The agency also announced a US$200,000 settlement with Ronald N Dennis, a former analyst at an affiliate of SAC Capital. Dennis also agreed to be barred from the securities industry. The SEC alleged Dennis received illegal information from two fellow analysts, who were both charged with insider trading in 2012 as part of the agency’s larger investigation into hedge fund trading activities.

Hedge fund third to sue over gold fix

Hedge fund AIS Capital Management has followed Kevin Maher and Peter DeNigris by bringing an antitrust class action lawsuit against Barclays, Deutsche Bank, HSBC, Société Générale and Bank of Nova Scotia, alleging the five conspired to manipulate London's gold fix benchmark. AIS, which was approached by Hausfeld name partner Michael Hausfeld, said it had a responsibility to take part on behalf of its clients, the Wall Street Journal reports. The fund filed its complaint in the Southern District of New York on 10 March.

Hong Kong: UBS failed to report Hibor misconduct

Hong Kong’s Monetary Authority (HKMA) today announced it has concluded its investigations into the Hong Kong Interbank Offered Rate, a financial benchmark similar to Libor. The agency said UBS traders internally attempted to rig the benchmark, and that the bank failed to report misconduct to the HKMA once it became aware of the alleged attempts – but said the effect of the rigging was “negligible”. The investigation also found weaknesses in the bank’s internal controls.

As a result of the investigation, UBS must take disciplinary action against staff members responsible for the misconduct and for the failure to report it to the HKMA. It must also create an externally audited plan to tackle internal controls and governance weaknesses.

Along with UBS, the HKMA had investigated Bank of Tokyo-Mitsybishi, Citibank, Crédit Agricole, Deutsche Bank, HSBC, JPMorgan, RBS and Société Générale and found no evidence the banks had colluded to rig the rate.

Bolivia anti-corruption policeman convicted of extortion in US

A US federal jury in the Northern District of Florida has found Bolivian anti-corruption chief, Mario Fabricio Ormachea Aliaga, guilty of extortion after he tried to get US$30,000 out of fellow Bolivian national and businessman Humberto Roca to make charges disappear. Roca fled to the US after being charged with illegal enrichment in 2011 – charges he said are politically motivated – and has since obtained political asylum. In a sting operation, Ormachea was filmed taking US$5,000 in cash from Roca, who testified that Ormachea threatened to pursue the illegal enrichment charges and seek his extradition back to Bolivia. According to the Miami Herald, Aliagas will be sentenced in late May, and faces up to 25 years in prison.

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