Global Investigations Review - The law and practice of international investigations


Thursday, 08 August 2019

Former CEO of HSBC fined €500,000

The former chief executive officer of HSBC pleaded guilty in January to helping wealthy clients hide assets worth over €1.6 billion in France, according to court documents seen by Bloomberg.  

Following an investigation by the French National Financial Prosecutors Office (PNF), a Paris court fined Peter Braunwalder €500,000 and gave him a one-year suspended jail sentence. The 68-year-old admitted helping French clients evade taxes between 2006 and 2007 by opening Swiss bank accounts and setting up offshore trusts.

The bank faced similar charges in France in 2017 and agreed to pay €300 million to resolve a PNF investigation into tax evasion in a judicial public interest agreement.

In a separate case this week, HSBC’s Swiss unit agreed to pay €300 million to settle tax fraud accusations in Belgium. 

CEO of Oracle's Romania subsidiary charged with corruption

Romanian prosecutors say they have announced they are investigating the general manager of Oracle Romania, the Romanian subsidiary of the US technology company, for allegedly soliciting bribes from IT contractors.

Prosecutors allege Sorin Mîndruţescu received bribes totalling €869,413 in return for helping IT contractors win state tenders.

The National Anti-Corruption Division made the announcement on August 8 following a reported search of Oracle Romania’s headquarters the previous day.

Mîndruţescu denies the charges and told a reporter that the allegations are the result of a misunderstanding.  

This story was updated on 12 August to clarify that the DNA has started an investigation into Mîndruţescu. A previous version incorrectly stated that he had been charged.

Ecuador AG orders arrest of ex-president over alleged bribery

Ecuador’s attorney general, Diana Salazar Méndez, has ordered the country’s former president, Rafael Correa Delgado, to be placed in preventative detention as part of an investigation into bribery and illegal campaign financing, according to reports.

Prosecutors allege that Correa and his political party, Alianza País, received illegal funding from various companies in Latin America, including the Brazilian firm Odebrecht, during its 2013 election campaign.

The investigation has been dubbed the “Green Rice” case, after investigators found an email detailing several financial contributions to Alianza País which had “recipe for green rice” as its subject header.

Correa has consistently denied the allegations and has taken to Twitter to denounce the “ridiculous” accusations.

OFAC finds violations in shipping company's subpoena response

The US Treasury Department’s Office of Foreign Assets Control (OFAC) issued a finding of violation to DNI Express Shipping after the company provided unsatisfactory information to OFAC during an investigation into the company’s apparent violation of sanctions on Sudan.

In 2015, OFAC issued an administrative subpoena to DNI regarding the company’s involvement in the supply of farm equipment to Sudan. OFAC found that several of DNI’s responses to the administrative subpoena and later requests for clarification were contradictory, false, and misleading.

The news comes after GIR reported OFAC is increasingly issuing subpoenas to companies that flag seemingly minor sanctions infractions, resulting in a dampening of voluntary reports.

Israeli CEO guilty of $145m binary options trading fraud

A jury in Maryland found the former CEO of Israel-based Yukom Communications guilty of defrauding investors in the US and worldwide on 7 August, following a three-week trial.

Jurors at a federal court in Maryland heard how Lee Elbaz, an Israeli citizen, falsely claimed to represent the interests of investors when, in fact, her company profited when investors lost money.

The Justice Department said Elbaz marketed approximately $145 million of fraudulent “options”. They also say Elbaz instructed her Israel-based staff to provide investors with false names and qualifications, and to fraudulently claim they were working from London.

In binary options trading, investors wager on whether a share price will go up or down during a set time period. A fixed price is then paid out if the investor’s wager is correct. Israel banned the practice in 2017 but binary option trading remains legal in the US.

Elbaz is scheduled to be sentenced on 9 December. 

Mozambique to sue Abu Dhabi businessman over "Tuna Bond" scandal

The government of Mozambique intends to sue businessman Iskandar Safa over the “Tuna Bond” scandal, after a former Credit Suisse executive’s guilty plea in New York, according to an emailed statement from its lawyers. 

Safa is the CEO of Abu Dhabi-based shipbuilding firm Privinvest, which was contracted by the Mozambican government for a maritime project that never came to fruition. The project was funded by loans from Swiss bank Credit Suisse and Russian lender VTB Capital. 

Andrew Pearse, formerly head of Credit Suisse’s Global Financing Group, pleaded guilty to the charge of conspiracy to commit wire fraud on 19 July after the Department of Justice indicted him and two of his colleagues in January.

In a statement to a US court in July, Pearse said he received kickbacks from Privinvest with the knowledge of its executives, including Safa. Safa has previously denied wrongdoing. 

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