The latest news from our regional desks about financial crime, corruption, sanctions and integrity issues worldwide.This month’s Red Flag Bulletin includes the following stories:
- Israel’s prime minister to face charges of bribery, fraud, and breach of trust;
- Political crisis over journalist’s murder forces resignation of Malta’s prime minister; and,
- Users’ data for sale on dark web following hack of UK streaming service Mixcloud.
Pakistan: Corruption campaign implicates former prime minister
On 25 November, the National Accountability Bureau (NAB) of Pakistan filed a case in Islamabad’s anti-corruption court against Asif Zardari, former prime minister of Pakistan (2008-2013), and his sister, Faryal Talpur, for their alleged involvement in a money laundering scandal. The NAB accused Zardari and Talpur, a member of the provincial assembly of the southern Sindh province, of laundering more than INR 35 billion (USD 300 million) through fake accounts. Zardari and Talpur have denied all charges. The case filed against Zardari forms part of current prime minister Imran Khan’s crackdown against corruption in the country. Under Khan’s tenure, at least 13 high-ranking politicians have received prison sentences on charges of corruption, including three-time former prime minister Nawaz Sharif and his daughter Maryam Nawaz.
PRC: ‘Spy’ defects to Australia
On 23 November, several media sources reported that Wang William Liqiang (Wang), an intelligence operative for the government of the People’s Republic of China (PRC), had defected to Australia by providing information on his previous operations. Wang is a former employee of China Innovation Investment Limited (CIIL), a company listed on the Hong Kong Stock Exchange (HKEX) which he alleged was established to ‘penetrate Hong Kong's financial market’ and collect military intelligence. Wang admitted to sending infiltrators to join pro-democracy student associations to collect activists’ personal data, and that he was personally involved in the kidnapping of a Hong Kong bookseller in 2015. He also claimed that the PRC government has extensive covert operations in Australia and Taiwan to influence their politics. On 26 November, the Australian Federal Police began formal investigations into Wang’s claims. The Taiwan Ministry of Justice Investigation Bureau arrested two CIIL executives at Taiwan Taoyuan International Airport on 24 November on suspicion of breaching the Taiwan National Security Act.
PRC: Regulators shake up Hong Kong stock exchange rules
On 15 November, the China Securities Regulatory Commission (CSRC) approved a change to regulations governing share structures of PRC companies listed on the Chinese HKEX. The new regulation allows all H-shares of Chinese mainland HKEX-listed companies to be traded. Prior to this, major shareholders of HKEX companies were prohibited from trading their stock, reportedly in efforts to prevent insider trading and to maintain state-ownership of these companies. The reform will affect 160 companies, and is hoped to add around USD 200 billion to HKEX’s market cap. More broadly, it is seen as a move to develop Hong Kong’s capital market by increasing liquidity and foreign participation, as well as aligning the interests of large and small shareholders. Analysts have also interpreted the reform as step toward reducing state-ownership in key industries.
Malta: Prime minister steps down amid political crisis over journalist’s murder
On 1 December, Malta’s prime minister, Joseph Muscat, announced his resignation amid widespread anti-corruption protests in the country. Anger has mounted since the murder of investigative journalist Daphne Caruana Galizia in 2017, which has led to a political and constitutional crisis. At the time of her death, Caruana Galizia had been investigating corruption within Muscat’s administration. His resignation came shortly after Yorgen Fenech, one of Malta’s richest men, was charged with complicity in Caruana Galizia’s murder. Fenech has been linked to Muscat’s former chief of staff, Keith Schembri, who has been questioned by police. Muscat has set a deadline of January for his departure, when a new leader of the ruling Labour party will be elected.
United Kingdom: Data hacked from streaming service for sale on dark web
On 30 November, Mixcloud, a UK-based music streaming service announced that a cyber breach in November had left personal data from more than 20 million user accounts exposed. The data, which included usernames, email addresses and hashed passwords, was listed for sale on the dark web for USD 4,000 or 0.5 bitcoin. In 2018, Mixcloud received USD 11.5 million in funding from WndrCo, a media investment company, to expand the company’s global presence.
Brazil: Supreme Court revokes arrest warrant for former Paraguayan president in Car Wash probe
On 29 November, Brazil’s supreme court revoked an arrest warrant issued for Horacio Cartes, the former president of Paraguay (2013-18). On 19 November, Brazilian Federal Police had ordered the detention of Cartes and other individuals implicated in Operação Lava Jato (‘Car Wash’), a large Brazilian anti-corruption investigation. Cartes has been associated with Dario Messer, a black market money dealer who has been under arrest in Brazil since July. Cartes is pressing Paraguayan authorities to be investigated and tried in Paraguay. He argues that, as he was elected senator, he would be immune to prosecution. However, his status as a senate member is disputed.
Peru: Businessmen admit to unregistered political campaign funding before 2017
In November, several of Peru’s leading businessmen were deposed in the country’s Car Wash investigations. Prosecutors asked them about campaign donations made to Peruvian politicians. Before 2017, political donations could be made anonymously, and Peruvian political parties were not required to publicly disclose the source of their funds. Several of the businessmen admitted to offering large amounts of cash in unregistered transactions. Keiko Fujimori, a former presidential candidate who has been accused of money laundering, received over USD 3.8 million from two businessmen for her 2011 campaign.
Middle East and North Africa
Israel: Prime minister Netanyahu charged with bribery and fraud
On 21 November, Israel’s attorney general announced that charges of bribery, fraud, and breach of trust would be brought against prime minister Benjamin Netanyahu in three separate corruption cases. Two relate to allegations that Netanyahu attempted to influence Israeli news coverage of himself, first by advancing USD 280 million in regulatory benefits to his friend and newspaper owner in exchange for positive press, and second, by leading the owner of leading newspaper Yedioth Ahronoth to believe that he would limit a rival paper’s circulation in exchange for favourable news coverage. Netanyahu is also accused of receiving around USD 200,000 in gifts from foreign businessmen between 2011 and 2016 in exchange for assistance with visas and the implementation of tax amendments. Netanyahu has faced a pre-indictment hearing, but the formal indictment is likely to be delayed for the near future due to deadlock in Israel’s parliament. Netanyahu has described the charges as an attempted ‘coup’ against him.
NAMIBIA: MINISTERS ARRESTED FOR CORRUPTION
On 23 November, Namibia’s former minister of fisheries and marine resources, Bernhardt Esau (2010-2019), was arrested on charges of corruption, bribery and money laundering. Esau is alleged to have been involved in a scheme which resulted in kickbacks worth at least NAD 150 million (USD 10.2 million) since 2012. The payments were paid by Samherji, an Icelandic fishing and seafood company, in exchange for fishing quotas, and became subject to an undercover journalistic investigation after a Samherji employee leaked documents to WikiLeaks. Esau resigned from his position as minister prior to his arrest. Sacky Shanghala, Namibia’s former minister of justice (2018-2019), was also arrested. Both Esau and Shanghala have denied the allegations, and Esau is reportedly also under investigation by Namibia’s anti-corruption body in relation to the matter.