Just so we don’t think that alleged misconduct by senior corporate officials occurs only in the United States, fraud and embezzlement charges have been filed against leading Iceland businessman Jon Johannesson. He is the CEO of Bauger Group, an investment firm that has taken a stake in some of Britain’s and the Continent’s leading retailers. According to an article in The Guardian (here), however, the charges essentially involve accusations of improper purchases of a "Big Mac and a hot dog" — you’ve gotta love the subtlety of the British press. "The indictment alleges that between October 5 1998 and May 2 2002 Mr Johannesson spent ISK12.5m (£110,000) on his Baugur Visa and Mastercard credit cards before the bills were covered by the executive’s private family company, Gaumur. The transactions show him shopping at Gucci, Armani Exchange, Prada, Nike and Dolce & Gabbana, as well as tracking his apparent visits to a sleazy bar in Florida. He is also accused of using company money to buy pizzas and fried chicken. A former colleague of Mr Johannesson’s is charged with embezzling customs duties on a lawn mower." Five others were charged, including Johannesson’s father and sister, and the case has been adjourned until Oct. 20. Somehow, Big Macs and Prada don’t exactly go together. (ph)
Category: International
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Accounting firms have in some cases been the target of US government investigations – – just state the name Arthur Andersen, LLP and everyone understands. But is this unique to the U.S.? And are other countries handling things differently by having agency investigations as opposed to criminal investigations?
In the Wall Street Jrl. here it is reported that the UK Accountancy Investigation & Discipline Board is investigating Deloitte & Touche LLP on its handling of matters related to MG Rover Group Ltd.(U.K. automobile company). MG Rover’s collapse in April has led to an investigation (See BBC here)
Is a pattern developing? First a company has problems, and then who do they look to blame – the accountants.
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The New York Times reports here that a leading banker in China, convicted of embezzlement, has been given a sentence of death. The sentence was suspended.
So for those, like me, who thought Bernard Ebbers, Jamie Olis, and the Rigas’ sentences were too high – I guess they certainly weren’t according to the standards used in China.
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Two former executives of Bayer have been indicted for price-fixing. The Department of Justice press release reports here that:
"The former Bayer executives were charged with carrying out the conspiracy with their co-conspirators by:
- Participating in meetings among major rubber chemical producers to discuss the prices of rubber chemicals to be sold in the United States and elsewhere;
- Agreeing, during those discussions and meetings, to increase prices of rubber chemicals to be sold in the United States and elsewhere;
- Participating in discussions and meetings concerning implementation and adherence to the agreement reached; and
- Issuing price announcements and price quotations in accordance with the agreements reached."
Both individuals indicted are German citizens. It appears from this press release that the conduct occurred extraterritorially. It seems likely that the government is using the principle of "objective territoriality" to acquire jurisdiction. Whether this is in fact the case, and whether jurisdiction will be contested by the accused, remains to be seen. One of the concerns that needs to be considered here is whether the prosecution of non-US businesspeople will open the door tor other nations prosecuting individuals from the US who are doing business abroad.
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This is not the first time one sees Augusto Pinochet’s accounts at Riggs Bank mentioned. (see here) But the focus this time is on Pinochet’s wife and son, and the investigation relates to their aiding the General with these accounts. (see New York Times here) With respect to Pinochet’s wife, a defense appears to be one premised upon her being an innocent spouse who was unaware of her husband’s financial dealings. One rather eye-brow raising comment in the article is that Gen Pinochet was visiting his wife who was being held in a military hospital. The claim has been that he is not medically fit to stand trial.
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Much has been happening in the last couple weeks with respect to the aftermath of the Parmalat investigation. (see here). As is often the case in white collar matters, criminal actions are not the only cases to follow. Collateral civil matters can also provide significant information. The Wall Street Jrl reported here that Parmalat can proceed in its civil action against Bank of America Corp. Previousl noted was that three Bank of America Corp individuals, from the Italian branch, have been charged by Italian prosecutors. (see here).
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A post yesterday (here) discussed the Independent Inquiry Commission’s report on corruption in the UN’s Oil-for-Food program, and that the UN would lift the immunity for two officials identified in the report as having accepted bribes. Later that afternoon, one of the officials, Alexander Yakovlev, a former UN procurement officer, entered a guilty plea in the U.S. District Court for the Southern District of New York to conspiracy, wire fraud, and money laundering charges. According to a press release issued by the USAO (here):
As charged in the criminal Information filed today, in 2000, YAKOVLEV, while working as a procurement officer at the United Nations, established the company Moxyco, Ltd. to facilitate the illicit and secret payment of money to him by foreign companies seeking to secure contracts to provide goods and services to the United Nations. Thereafter, YAKOVLEV received wire transfers sent to bank accounts in Antigua and Switzerland from foreign companies in exchange for providing information to companies about United Nations contracts that were up for bid and for assisting companies to obtain United Nations contracts.
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The Independent Inquiry Commission Into the United Nations Oil-for-Food Programme issued its third interim report (here) and identified two senior officials in the Programme who it concluded engaged in criminal wrongdoing. The report analyzes the role of Benon Sevan, the Executive Director of the UN Office of the Iraq Programme, and Alexander Yakovlev, a UN procurement office, and concludes that they solicited bribes. The Commission further recommends that the UN waive the immunity that protects each from prosecution. A statement (here) by the UN chief of staff announced that Secretary-General Annan intends to waive the immunity, and that "[w]ith specific regard to Mr. Sevan, the United Nations is already cooperating with inquiries from the Manhattan District Attorney and is in the process of replying to a request for cooperation from the U.S. Attorney for the Southern District of New York. With regard to Mr. Yakovlev, the UN’s Office for Internal Oversight Services (OIOS) last month contacted the U.S. Attorney for the Southern District of New York to alert them that internal, ongoing investigations of Mr.Yakovlev had turned up prima facie evidence of criminal wrong doing and has shared that evidence with the U.S. Attorney’s office." With the immunity from prosecution gone, look for prosecutors to file charges in the near future against each for his role in a program that was rife with corruption. (ph)
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The Wall Street Journal has an article here titled, "U.S. Probes Allegations Of Bribery at DaimlerChrysler." The issue appears to be whether the Mercedes unit engaged in activities that might be prohibited by the Foreign Corrupt Practices Act FCPA).
According to the company web page, sales in the Mercedes division are up (see here). Business Week looks closely at DaimlerChrysler here.
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The Times of London reports (here) that the Serious Fraud Office is looking at possible bribery involving "Robert Lee International, Travellers World and BAE, in connection with defence equipment contracts and the Saudi Arabian Government." A report issued earlier this year (here) by the Organisation for Economic Co-operation and Development (OECD) criticized the British government for not taking a more active role in implementing the OECD’s anti-corruption covention, which largely parallels the Foreign Corrupt Practices Act by prohibiting the payment of bribes to obtain or keep overseas business contracts. The disclosure of the investigations may be a result of the OECD’s prodding, and an earlier post (here) discussed articles in the New York Times on the effects of corruption in Latin America and Africa. (ph)
MattBray.net 