Global Investigations Review - The law and practice of international investigations

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Friday, 08 February 2019

Danske Bank placed under formal investigation in France again

A judge at the Tribunal de Grande Instance de Paris has reopened an investigation into Denmark’s largest bank over money laundering allegations worth €21.6 million while also ordering it to post bail of €10.8 million.

Danske Bank announced the news on 7 February and said it had been charged with allegedly assisted tax evasion and money laundering in France, Estonia, Luxembourg and other countries between 2007 and 2014. 

French authorities launched an investigation into Danske Bank over the Estonia allegations in October 2017. However, the French authorities dropped the investigation in January 2018, changing the bank’s status in the investigation to “assisted witness”.

Danske Bank announced in January that the French court was considering reopening the probe. 

Ex-Deutsche Bank trader cries as he asks to be spared jail term

A former Sydney-based Deutsche Bank derivatives trader has argued that he should not receive jail time for lodging fake transactions because no one lost money as a result of his scheme to inflate performance statistics, the Australian Financial Review reports.

Andrew Donaldson reportedly broke down in tears as he pleaded for leniency during his sentencing hearing at a Sydney court on 8 February.

Donaldson reportedly pleaded guilty in August 2018 to one count of dishonestly using his position to gain an advantage after he admitted to inflating his performance statistics by creating fictitious transactions and cash flows in Deutsche Bank’s internal system to improve his chances of finding another job.

Najib Razak charged with three counts of money laundering

Malaysia’s former prime minister was charged at the Sessions Court on 8 February with three counts of money laundering tied to development fund 1MDB of up to $11.5 million, according to reports.

Najib Razak pleaded not guilty to the offences that allegedly occurred through his accounts at AmIslamic Bank Berhad in 2014.

Najib was initially charged over the same offences at the  High Court of Malaysia on 28 January, but the attorney-general applied for a discharge on the grounds that the prosecution wanted the matter to be heard at the Sessions Court. 

Najib has been charged with several criminal offences in relation to 1MDB. The former prime minister has consistently denied wrongdoing.

Geneva closes Equatorial Guinea vice president money laundering investigation

The Geneva Prosecutor’s Office said on 7 February that it had closed its money laundering investigation into the son of Equatorial Guinea's president, confiscating and selling 25 luxury cars and putting the proceeds towards a social programme in the African country.

Equatorial Guinea has agreed to pay the Swiss authorities 1.3 million Swiss francs ($1.3 million) for procedural costs, which include obtaining legal assistance from the US, France and the Netherlands.

Switzerland opened its probe against Teodor Nguema Obiang Mangue in October 2016 for money laundering and mismanaging public assets. France gave him a three-year suspended jail term for embezzlement in October 2017, while the US reached a kleptocracy settlement with him in October 2014.

OFAC announces “unprecedented” sanctions penalties

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced a $13,381 settlement with US-based Kollmorgen Corporation, which agreed to pay the penalty on behalf of its Turkish affiliate motor manufacturer company Elsim for apparent Iran sanctions violations. 

OFAC also simultaneously sanctioned Evren Kayakiran, the head of Elsim, for directing a foreign subsidiary of a US company to violate US sanctions against Iran and trying to conceal those violations.

OFAC said in a 7 February statement that it is unprecedented for it to concurrently designate a foreign sanctions evader and announce a directly related settlement with a US company. 

Former PCAOB executive attempts to quash subpoena in KPMG case

A cooperating witness in the case concerning two former KPMG executives and a former official of the US Public Company Accounting Oversight Board (PCAOB) is attempting to quash a subpoena from a defendant in the case.

Former PCAOB executive Brian Sweet, who pleaded guilty in January 2018, filed a motion on 7 January at the US District Court for the Southern District of New York, calling for the court to dismiss a subpoena issued by defendant David Middendorf, a former KPMG executive.

Middendorf, his former KPMG colleague David Britt, and ex-PCAOB official Jeffrey Wada are facing trial over an alleged illegal scheme to help KPMG pass inspections.

Former KPMG accountant Thomas Whittle, who pleaded guilty on 29 October 2018, also asked the court to quash a Middendorf subpoena on 7 February.

Connecticut District Court approves civil settlement between Flotron and CFTC

The US Commodity Futures Trading Commission (CFTC) announced in a statement on 7 February that the US District Court for the District of Connecticut has approved its $100,000 spoofing civil penalty against Andre Flotron.

The final judgment and consent order states that Flotron, a former commodities trader for UBS who was also given a one-year trading ban, placed spoof orders in the precious metals market between August 2008 and November 2013.

Spoofing is the practice of placing large orders to generate a sense of higher demand and cancelling them before they are executed.

A federal jury acquitted Swiss citizen Flotron of conspiring to commit wire fraud in April 2018. His lawyer said in September that the US authorities “couldn’t get their hands on where the crime was”.

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