Corruption In Iraq & World

End of the Line - This is my last Corruption in Iraq Posting

Tavares, FL - July 17, 2011 -  I give up.   I have been writing this blog on corruption in Iraq and the World, including Afghanistan, since mid-2006.

The news on corruption keeps repeating itself and the US State Dept and USAID don't improve, and neither does the corruption climate in Iraq or Afghanistan.  Congress keeps having hearings, and issuing reports, but they don't fire anyone and establish known methods to reduce corruption in foreign aid and reconstruction programs in "conflict" countries.

Besides, the Wall St. Journal now has a "Corruption Currents" blog with daily postings and two guys who are PAID to do it, so why compete?   However, they have no clue how to FIX corruption, just report it.

Here is the link to one of their recent postings on their online blog:

http://blogs.wsj.com/corruption-currents/2011/07/15/high-tide-from-metros-sagging-shares-to-ancient-egyptian-artifacts/?mod=WSJBlog  

If you want to see my lists of actions to take to reduce corruption in foreign countries, look in the PAGES section in the right column for my article on Vance Jochim's 28+ Ways to Reduce Corruption.

If you are on a US Congressional Committee investigating Corruption, and want to learn how to actually fix it and not just listen to people talking about it and issuing reports, contact me.

And, if you are a country leader and want to actually fix corruption, and not just talk about it, send me an email to FiscalRangers AT Comcast DOT net.

Vance Jochim  -  July 17, 2011

US Anti-Corruption adviser to the Iraqi anti-corruption agency, Commission on Integrity, 2004-2006.

 

 

UK's BAE Pays $400-million find for paying Bribes to get contracts

Here is another example of big time corruption and bribery investigated by the UK's Guardian newspaper and the UK Serious Fraud Office (SFO).   A UK arms and security firm, BAE (http://www.baesystems.com/ )  was hit with $400-million in big fines after being caught paying bribes on several contacts in the US and UK over the past years.   The UK newspaper, the Guardian, has been printing exposes for SIX years which forced the issue, and apparently former UK Prime Minister Tony Blair intervened to restrict investigations in the past.

This seems to be an anti-corruption victory for both the Guardian and the SFO.  The UK has been notorious for having lax anti-corruption standards, and was quite late in signing the UN Convention on Corruption.  However, the UK seems to be ramping up anti-corruption and anti-bribery investigations, which is ABOUT time.   The UK is one of the havens used by corruption Iraq and Afghan officials to transfer funds to, and maybe this case indicates maybe more cases against them will be initiated.

Finally, it seems that BAE has seen the light and

US Whistleblower Saves Taxpayers over $1-billion, but is being sent to jail

A Whistleblower support blog has disclosed that a former international banker who blew the whistle on a major tax fraud case is being sent to jail.  Sad, but true.

Read the article below...

Lessons in Bribery: US Telecom Firm UTStarcom Fined $3-million for Bribery in China

The article below gives a good idea how a large US firm pays bribes to get business in a foreign country, which is illegal and not in compliance with the US regulation known as the Foreign Corrupt Practices Act, which was passed back in the 1970's when Lockheed paid big bribes to sell aircraft to foreign countries.

According to the article:  "UTStarcom, which sells networking and broadband equipment, has for the last decade sold large quantities of goods to three of China’s biggest government-owned telecommunications companies: China Netcom, China Telecom and China Mobile."

So, if you work in a US firm that sells products or services to firms or governments in foreign countries, watch out for your employees who may:

- Provide free vacation trips to employees of foreign countries or firms disguised as "training" or "plant inspection" trips.

- Provide expensive "executive education seminar" trips.

- Provide "cash allowances" to customer employees.  (This could be "funds for advertising", etc. which were never spent for the specified purpose...)

- Hires relatives of decision makers in the foreign country without them being qualified or actually doing any work.  (Note:  This is also common in developing countries like Iraq, but the "ghost employees" are on the payroll of the government and don't work).

- Pay education expenses of children of government decision makers.

- Pay direct bribes to get a contract.

- Payment for "lavish gifts" to government bureaucrats.  (Note: This is common in Asia.  I once worked at a Japanese firm's US HQ, and every Christmas, the vendors would walk the halls giving out expensive gifts to anyone they dealt with.  And that was still after the US operations had policies the prohibited such practices, so the gifts were limited to something like $100 value).)

One of the aggravating things about this case is that NONE of the UTStarcom employees were prosecuted.  The only penalty was a fine.

It would be interesting to see what happened to the Chinese customer's employees that benefited from the bribes.  This case came from an SEC investigation, and doesn't mention any actions taken by the Chinese firms.

Favorite quote:

"Sometimes, the government said, customers were given cash allowances, and on other occasions, UTStarcom put a Chinese official’s relative on the payroll, even though that person never worked at the company. The company “paid and provided benefits to at least three of these individuals for a period of two years each as if they were real employees, even though they never worked,” the S.E.C. said in its complaint."

vj

January 2, 2010  -  From the NY Times HERE

Telecom Company to Pay $3 Million in China Bribe Case

By DAVID BARBOZA

SHANGHAI — UTStarcom, an American telecommunications company, has agreed to pay $3 million in fines after United States law enforcement officials accused it of a long-running scheme to bribe officials of China and other countries with cash, travel junkets and other gifts.

The Justice Department and the Securities and Exchange Commission, which both issued statements on Thursday, said that from 2002 to 2007, UTStarcom paid about $7 million for hundreds of trips by employees of China’s government-owned telecommunications companies to visit the United States for “training” sessions that were often sightseeing vacations to Hawaii, Las Vegas and other tourist locations.

The company also offered jobs to the family members of clients, paid them to attend universities, secured their travel visas and arranged for a “consultant” to bribe a Mongolian official to win a contract, the American officials said.

The actions appeared to violate the Foreign Corrupt Practices Act, which forbids bribing foreign government officials, the officials said.

Those officials did not say why UTStarcom and its executives were not prosecuted.

Often, American officials choose not to prosecute because it is difficult to prove a case beyond a reasonable doubt. Instead, they often opt to pressure companies to reform their operations and pay large fines.

In a statement released on Thursday, UTStarcom said it took responsibility for the actions listed in the government complaint. A company spokesman could not be reached for comment on Thursday.

The settlement is a window into how global companies sometimes do business in China, where bribery and corruption are widespread.

Every year, tens of thousands of Chinese officials are arrested and accused of corruption. Many legal experts say that steering clear of bribery here has become increasingly difficult, largely because government officials control access to the country’s booming economy.

Two years ago, Lucent Technologies, the American telecommunications giant, settled a similar case with the S.E.C. after it was accused of spending $10 million from 2000 to 2003 to pay for about 1,000 employees of Chinese government-owned telecommunications companies to inspect its plants and attend training sessions. Instead, the groups traveled to Las Vegas, Disneyland, the Grand Canyon and other tourist sites.

And just this week, China Mobile, one of China’s biggest telecommunications companies, removed its vice chairman because of “serious economic crimes.”

For UTStarcom, which is based in Alameda, Calif., China is a crucial market. One of the company’s founders is a Chinese-born American, and most of the company’s operations and employees are based in China.

UTStarcom, which sells networking and broadband equipment, has for the last decade sold large quantities of goods to three of China’s biggest government-owned telecommunications companies: China Netcom, China Telecom and China Mobile.

S.E.C. officials said employees from many of the company’s big Chinese clients accepted bribes.

Apparently eager to maintain or increase its sales, UTStarcom engaged in complex frauds to please its customers here, American officials said.

Company executives arranged for Chinese officials and their relatives to travel to the United States and falsely recorded some of those trips as “training sessions,” even though no training took place, the officials said.

The S.E.C. said there were also “lavish gifts and all-expense-paid executive training sessions” in the United States for customers.

“This was apparently a standard practice,” said Steven D. Buchholz, a lawyer with the S.E.C.’s San Francisco office.

Sometimes, the government said, customers were given cash allowances, and on other occasions, UTStarcom put a Chinese official’s relative on the payroll, even though that person never worked at the company. The company “paid and provided benefits to at least three of these individuals for a period of two years each as if they were real employees, even though they never worked,” the S.E.C. said in its complaint.

The settlement comes at a difficult time for UTStarcom. The company is suffering through a sharp downturn in sales. It lost over $185 million in the first three quarters of 2008 and recently sold one of its plants in China.

Lawrence Lessig Moves from CA to Washington DC to fight US Political "Corruption"

Lessig is an academic from Standord University and founder of the Creative Commons.  He used to write and teach about various issues, but about two years ago I stumbled across a video of a speech where he said his new objective was to analyze corruption and work towards understanding how to solve it.

So, yesterday I stumbled across the Feb. 7 article below where Lessig has actually moved from his university position to the Harvard Kennedy think tank Edmond J. Safra Foundation Center for Ethics in DC to work towards reducing corruption in American Politics with a five year project.  His focus is primarily reducing the affect of money in politics.  He calls on politicians to back four corruption-fighting reforms: stopping contributions from lobbyists or political action committees, ending earmarks, increasing congressional transparency, and supporting public financing of congressional campaigns.

So if your focus is to reduce the type of corruption caused by influence of money over politicians, you should follow what Lessig does at Harvard.
vj

Academic Research Study Shows that Corruption Goes up in US as One Political Party has control

We found this academic research article on "Causes of Corruption" by Larry Pounders and Michele Hites on an asian anti-corruption website, but have not been able to trace the date of the article or the authors.

The main finding seems to be that corruption goes up in US government entities if one political party is in control.   If the parties are equal in power, the corruption is statistically proven to be lower.

Very interesting research, but we would like to track down the authors.
vj

Massive New Jersey (USA) Corruption Arrests by FBI

Update:  I added the Wall St. Journal article below this BBC article on the same subject 7/24/2009.

It seems a ring of Jewish rabbis in New Jersey, a well known hub of corruption in the USA, were laundering money illegally.  And, they drew in various politicians for a cut of the pie. There are articles in many US newspapers, but the BBC delights in writing about US corruption, so here is their take on it.

After a TEN year investigation, the FBI arrested more than 40 people, some receiving bribes and others committing the corruption.  Why it should take 10 years is beyond me.   You almost think the FBI sat and watched what was going on and waiting for the money count and participants to become higher before slamming the jail door on them.

Here is a video about the announcement.

Favorite quote about New Jersey:

"Correspondents say the number of people arrested is large even by New Jersey standards, where more than 130 public officials have either admitted to corruption or been found guilty of it since 2001. "

vj

from the BBC HERE

US corruption probe nets dozens

US corruption probe nets dozens

More than 40 people, including politicians, officials and several rabbis have been arrested in a major FBI operation the US.

Three mayors from the state of New Jersey and two members of the state legislature were among those held.

One man is accused of alleged kidney trafficking involving Israeli donors.

Three hundred FBI agents raided dozens of locations in New Jersey and New York as part of a 10-year probe into corruption and money laundering.

Prosecutors say the arrests were part of a "dual-tracked" investigation.

Acting US Attorney Ralph Marra told reporters there were 29 suspects on what he termed the "public corruption" side of the investigation, including the politicians.

On the other side, he said, there were 15 suspects in connection with alleged international money-laundering, including the rabbis and their "associates".

'Vulnerable people'

Prosecutors accuse one man of dealing in human kidneys from Israeli donors for transplant for a decade.

It's alleged that "vulnerable people" would give up a kidney for $10,000 (£6,000) and these would then be sold on for $160,000 (£97,000).

Law enforcement officials say investigations originally focused on a network they allege laundered tens of millions of dollars through charities controlled by rabbis in New Jersey and neighbouring New York.

It widened to include alleged official corruption with links to a New Jersey construction boom.

Hoboken Mayor Peter Cammarano, Secaucus Mayor Dennis Elwell, Jersey City Deputy Mayor Leona Beldini and Ridgefield Mayor Anthony Suarez were among those arrested.

State legislators Harvey Smith and Daniel Van Pelt were also arrested.

Mr Marra said: "It seemed that everyone wanted a piece of the action. The corruption was widespread and pervasive. Corruption was a way of life for the accused."

He said politicians had "willingly put themselves up for sale" and clergymen had "cloaked their extensive criminal activity behind a facade of rectitude".

The BBC's Jane O'Brien says the money laundering ring reportedly spanned the US, Israel and Switzerland.

ARRESTED Hoboken Mayor Peter Cammarano Secaucus Mayor Dennis Elwell Ridgefield Mayor Anthony Suarez Rabbi Eliahu Ben Haim, Deal, NJ Rabbi Saul Kassin, Brooklyn, NY Rabbi Edmund Nahum, Deal, NJ Rabbi Mordechai Fish, Brooklyn, NY

Jon Corzine, the Governor of New Jersey, said: "The scale of corruption we're seeing as this unfolds is simply outrageous and cannot be tolerated."

Ed Kahrer, an FBI agent who has worked on the investigation from the start, said: "New Jersey's corruption problem is one of the worst, if not the worst, in the nation.

"It has become ingrained in New Jersey's political culture," he said.

Another FBI agent said: "The list of people we arrested sounds like it should be the roster for a meeting of community leaders, but sadly they weren't meeting in a boardroom this morning, they were in the FBI booking room."

Correspondents say the number of people arrested is large even by New Jersey standards, where more than 130 public officials have either admitted to corruption or been found guilty of it since 2001.

==========================================
from Wall St. Journal  July 24, 2009

Jersey Mayors Stung in Graft Probe

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By AMIR EFRATI, SUZANNE SATALINE and DIONNE SEARCEY

New Jersey has never been short of corruption scandals, but the one that unfolded yesterday was surprising even by the standards of the state that inspired "The Sopranos."

View Slideshow

David Bergeland, The Bergen Record/ Associated Press

Secaucus Mayor Dennis Elwell boarded a bus at the FBI building after being taken into custody in Newark.

Federal agents swept across New Jersey and New York on Thursday, charging 44 people -- including mayors, rabbis and even one alleged trafficker in human kidneys -- in a decade long investigation into public corruption and international money laundering.

The key to the investigation: a real-estate developer who became an informant after being arrested on bank-fraud charges in 2006, according to a person familiar with the case. The developer, Solomon Dwek, wore a wire for the Federal Bureau of Investigation while offering to bribe New Jersey mayors and other public officials, that person said.

A lawyer for Mr. Dwek didn't respond to requests for comment.

While the state has a long history of dirty politics -- in Newark alone, three ex-mayors have been convicted of crimes unrelated to the latest sweep -- the scale of the allegations shocked veterans of New Jersey's political crises.

"This is not only a black eye, but this fans more cynicism," said Gene Grabowski, a crisis manager who has represented New Jersey clients in graft probes. "It validates this idea that New Jersey is a setting for 'The Sopranos.'"

Associated Press

A group of unidentified men are walked outside FBI offices Thursday in Newark, N.J., to a waiting bus for transport to court hearing. Federal agents swept across New Jersey on Thursday, charging 44 people in an investigation into public corruption and international money-laundering.

More

• Developer Became Secret Witness
• Law Blog: Highlights, text of complaints
• Video: FBI Arrests N.J. Mayors, Rabbis
• Q&A: New Jersey's History of Corruption
• Sortable table: Arrests, charges, more

Court documents read like a pulp crime novel. At one point, Mr. Dwek (described as a "cooperating witness" in criminal complaints) is quoted saying to an alleged money-launderer: "I have at least $100,000 a month coming from money I 'schnookied' from banks for bad loans."

Another time, Mr. Dwek gave one of the alleged co-conspirators a box of Apple Jacks cereal stuffed with $97,000 cash, the documents say.

The arrests in the public-corruption portion of the probe included the Democratic mayors of Hoboken and Secaucus, Peter Cammarano III and Dennis Elwell; Republican state Assemblyman Daniel Van Pelt; and Democrat Leona Beldini, the deputy mayor of Jersey City.

A woman who picked up the phone at Mr. Van Pelt's office said, "Mr. Van Pelt was arrested today and is out of the office." His lawyer declined to comment.

Mr. Cammarano's lawyer said he "intends to plead innocent because he is innocent."

After her court appearance, Ms. Beldini said she didn't violate taxpayers' trust and declined to comment further while leaving the courthouse. Mr. Elwell and his lawyer declined to comment.

Arrests on the investigation's money-laundering side include several rabbis in New York and New Jersey, said Ralph Marra Jr., acting U.S. attorney for New Jersey. The arrestees appeared in federal court in New Jersey Thursday afternoon.

Corruption among the politicians was "a way of life," Mr. Marra said. "They existed in an ethics-free zone."

The probe includes a bizarre sideshow: the alleged trafficking of human kidneys, a lucrative, illegal industry and not one that's typically showcased alongside political shenanigans.

In the course of the investigation last year, Mr. Dwek came into contact with an alleged organ trafficker, Levy Izhak Rosenbaum, and told him Mr. Dwek's uncle needed a new kidney, according to court papers. The two men discussed how Mr. Dwek would pay a $160,000 fee to buy a kidney from a donor in Israel, documents show. According to the complaint, Mr. Rosenbaum described himself as a "matchmaker."

Mr. Rosenbaum couldn't be reached for comment. A person who answered the phone at his residence declined to comment.

This federal investigation grew out of two previous cases and dates back to 1999, according to the FBI. It culminated at 6 a.m. Thursday with more than 200 FBI and Internal Revenue Service agents making arrests and executing search warrants throughout the state, said Weysan Dun, special agent in charge of the FBI's Newark office.

In all, 29 people were caught up in the public-corruption part of the probe. Fifteen were implicated in the investigation into money laundering, including Mr. Rosenbaum, who was charged with conspiring to broker the sale of a kidney.

Court documents quote a number of incriminating wiretap recordings involving New Jersey politicians -- some prominent names, others known only in their small communities. For example, according to court documents, on April 27, FBI agents caught an incoming call from former Jersey City council candidate Guy Catrillo to a consultant's cellphone. The consultant asked Mr. Catrillo: "Did you get the money from [Mr. Dwek] when we saw him the other day?"

Mr. Catrillo replied: "Yeah, I took care of that. Yeah."

Mr. Catrillo's office didn't answer the phone Thursday.

Looking Back

Journal articles on organized crime in the late 1960s and early 1970s.

• Mafia Chiefs Continue to Elude Prosecution, Feign Respectability (Feb. 20, 1969)
• Mafia Inroads: Business Shares Blame (Jan. 27, 1970)
• Once a Corrupt Haven, State Is Shaken Up by Federal Prosecutors (June 30, 1972)

Mr. Dwek, a 36-year-old religious-school head and philanthropist from Monmouth County, N.J., was at the heart of the investigation. He began his career as a small-time real-estate developer whose investors included friends and relatives in the Syrian Jewish community. Three years ago he was charged with defrauding PNC Bank of $25 million and remained free on a $10 million bond.

In 2007, Mr. Dwek began working for the FBI, wearing a wire and being trailed by FBI agents who videotaped his encounters with targets of their probe, according to someone familiar with the matter and information in the complaints. Prosecutors said the alleged bribe-taking was often tied to election fund-raising efforts. Other recipients took cash for direct personal use, prosecutors allege.

In the case involving Mr. Cammarano, who became Hoboken mayor on July 1, he was charged with accepting $25,000 in cash bribes from Mr. Dwek in return for promising support for zoning changes for a high-rise Mr. Dwek said he wanted to build. Mr. Cammarano is so new to the mayor's job that an events poster outside his office still lists the name of the previous mayor, David Roberts, on it.

The alleged bribes occurred during the 32-year-old Mr. Cammarano's mayoral campaign earlier this year, according to the FBI's complaint.

According to the complaint, Mr. Cammarano assured Mr. Dwek, that "[y]ou can put your faith in me" and that "I promise you...you're gonna be, you're gonna be treated like a friend."

Supporters of the mayor expressed dismay at the charges. "This was a charismatic guy who we thought could get us past all this stuff," said Jay Rose, a 27-year resident of Hoboken who voted for Mr. Cammarano. "It looks like we're back to square one."

In the FBI money-laundering probe, Mr. Dwek represented himself as someone who engaged in various illegal businesses, including bank fraud and counterfeiting of women's handbags. "Business is very good. Prada, Gucci, boom, boom, boom," Mr. Dwek boasted at one point, according to court papers.

The alleged money-laundering operations -- most of them run by rabbis as religious charity organizations -- laundered about $3 million for Mr. Dwek in his capacity as a cooperating witness since June 2007, according to the court documents and a person familiar with the matter. Mr. Dwek likely will receive credit from federal prosecutors for his cooperation.

The prosecutors allege that the rabbis used nonprofit organizations connected to their synagogues to launder money they understood came from criminal activity.

In 2007 Eliahu Ben Haim, principal rabbi of Congregation Ohel Yaacob, a synagogue located in the New Jersey shore community of Deal, accepted a $50,000 check from Mr. Dwek, which was drawn from an account held by a phony company set up by the FBI for Mr. Dwek to help facilitate the investigation, according to the complaint.

The check was made payable to one of Mr. Ben Haim's charitable organizations with the expectation that the proceeds would eventually be returned to Mr. Dwek, documents indicate; Mr. Ben Haim, who was charged with money laundering on Thursday, was to take a 10% fee.

A woman who answered the phone at Ohel Yaacob Congregation in Deal said, "I don't have anything to say." Michael O'Donnell, Mr. Ben Haim's lawyer, declined to comment.

The arrests place an added burden on Gov. Jon Corzine, a Democrat in his first term who is running for re-election this year. Mr. Corzine ran four years ago promising to quash corruption. "The scale of corruption we're seeing as this unfolds is simply outrageous and cannot be tolerated," he said in a statement.

In Hoboken, a city of just less than 40,000, city-clerk employees at the municipal building huddled around a small television to watch the news conference announcing the charges.

Some residents there said they weren't so surprised. "It happens everywhere in New Jersey," said James Goggin, a Hoboken resident. "I'll tell you one thing -- it never gets boring here. But sometimes I wish it would."

—Chad Bray, Robert Copeland, Chris Herring, Lucette Lagnado, Barbara Martinez and Steven Russolillo contributed to this report.

Write to Amir Efrati at amir.efrati@wsj.com, Suzanne Sataline at suzanne.sataline@wsj.com and Dionne Searcey at dionne.searcey@wsj.com