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:
- Final part of South Africa’s state capture report criticises incumbent president, and Atul and Rajesh Gupta arrested in Dubai in connection with South African corruption charges;
- German asset manager DWS Group investigated for greenwashing; and
- Singapore’s Monetary Authority announces further restrictions on cryptocurrency industry following recent global crypto meltdown.
ARGENTINA: SANCTIONED VENEZUELAN PLANE WITH TIES TO IRAN DETAINED IN BUENOS AIRES
On 8 June, the Argentinian authorities detained an aircraft belonging to cargo airline Emtrasur, a subsidiary of Venezuela’s state carrier Conviasa. The plane had landed at Buenos Aires’ international airport with a crew of 14 Venezuelans and five Iranians after being denied access to Uruguayan airspace. According to the Argentinian government, Conviasa acquired the aircraft from Iranian airline Qeshm Fars Air in 2021. Both Iranian and Venezuelan airlines are subject to US sanctions, with the Iranian company sanctioned for its alleged support of Iranian entities designated as terrorist organisations by the US. The Argentinian authorities launched an investigation focused on ascertaining the flight’s purpose and the identities of its crew, with suspicions that one of the pilots was linked to Iran’s Islamic Revolutionary Guard Corps. As of 24 June, the plane remained grounded at Buenos Aires’ international airport.
BRAZIL: FORMER MINISTER OF EDUCATION ARRESTED ON SUSPICION OF INFLUENCE PEDDLING AND CORRUPTION
On 22 June, the Brazilian federal police arrested former minister of education Milton Ribeiro (2018-March 2022) on suspicion of influence peddling and corruption. The arrest was part of the Operação Acesso Pago investigation, which began after a recording of a meeting between Ribeiro and Brazilian mayors was leaked in March 2022. Ribeiro is accused of using his position to negotiate the transfer of federal funds to municipalities connected to Christian evangelical religious leaders, themselves close to Brazilian president Jair Bolsonaro (2019-present). Ribeiro has denied the accusations and claimed that his arrest was “unfair”. On 23 June, Ribeiro’s habeas corpus request was accepted and he was released from prison. Leaked phone conversations suggest that president Bolsonaro may have interfered with the investigation, allegedly warning Ribeiro of a search and seizure that would be conducted by the federal police. Due to Bolsonaro’s possible involvement, on 24 June, the case was transferred to the Supremo Tribunal Federal, Brazil’s highest court.
VIETNAM: SENIOR POLITICIANS ARRESTED FOR CORRUPTION IN COVID-19 TEST KITS SCANDAL
On 7 June, Vietnam’s health minister Nguyen Thanh Long and Chu Ngoc Anh, the mayor of Hanoi, were arrested for abuse of power, amid an expanding investigation into price fixing of Covid-19 test kits in the country. They are among nearly 60 suspects in a long-running probe into Viet A Technology Corporation, which is accused of bribing officials to use its marked-up Covid-19 test kits instead of others. The company reportedly generated over USD 172 million in revenue from selling these test kits at prices that had been inflated by as much as 45 per cent. Both politicians were reportedly also stripped of their membership of Vietnam’s ruling Communist Party and of their positions in the government before their arrests.
SINGAPORE: MONETARY AUTHORITY TO TIGHTEN REGULATIONS ON CRYPTOCURRENCY
On 23 June, the Chief Fintech Officer of the Monetary Authority of Singapore, Sopnendu Mohanty, announced that Singapore would move to be “brutal and unrelentingly hard” on wrongdoing in the crypto industry following the latest global crypto meltdown that unfolded in May. Until recently, while other nations have introduced restrictions on crypto activities, Singapore was celebrated for its crypto-friendly regulations. However, Singapore is seen to be tightening its regulatory grip on cryptocurrencies, with new legislation introduced in April 2022 requiring crypto businesses based in the city-state to obtain a licence. Many crypto firms have since flocked to Dubai as it has passed new laws aimed at positioning the UAE as the next global hub for digital assets.
MALAWI: PRESIDENT RELIEVES VICE-PRESIDENT OF DUTIES AMID CORRUPTION ALLEGATIONS
On 21 June, Malawian president Lazarus Chakwera stripped vice-president Saulos Chilima of all delegated powers and fired George Kainja, the inspector general of police, after they were named in an ongoing corruption scandal relating to Zuneth Sattar. On 23 June, the ACB also arrested Kainja. Sattar is a British-Malawian businessman accused of paying bribes to win Malawian state contracts totalling USD 150 million between 2017 and 2021. According to Malawi’s Anti-Corruption Bureau (ACB), 53 current and former officials – including Chilima – received money and gifts from Sattar between March and October 2021. In the UK, Sattar was arrested in 2021, and is subject to an ongoing corruption investigation by the National Crime Agency relating to three Malawian state contracts. Chakwera cannot dismiss or suspend Chilima from his role as vice-president as he holds an elected position.
SOUTH AFRICA: FINAL PART OF STATE CAPTURE REPORT RELEASED, AND GUPTA BROTHERS ARRESTED IN DUBAI
On 22 June, South Africa’s Zondo Commission, established to investigate allegations of corruption during the presidency of Jacob Zuma (2009-2018), released the final instalment of its findings. In addition to the Commission’s findings against Zuma, the final report criticises Zuma’s successor, president Cyril Ramaphosa (2018-present), for failing to curb corruption at the Passenger Rail Agency of South Africa. As the Commission prepared the final part of its report, on 5 June, Atul and Rajesh Gupta, Indian-born South African businessmen prominently implicated in corruption linked to Zuma, were arrested by Dubai police on an Interpol Red Notice issued in July 2021. The Guptas fled South Africa shortly after the establishment of the Zondo Commission in 2018. The Commission has found that Gupta-linked corruption cost the state as much as USD 32 billion. South African authorities intend to submit a formal application to the UAE to extradite the Guptas.
GERMANY: DWS GROUP INVESTIGATED FOR GREENWASHING
On 31 May, German police, public prosecutors, and officials from BaFin, Germany’s financial regulator, raided the Frankfurt offices of DWS Group, a German asset manager, as part of an ongoing investigation into allegations of greenwashing. DWS Group is alleged to have made misleading statements in 2020 by falsely claiming that over half of its total assets – valued at USD 900 billion – were invested following environmental, social and governance standards (ESG), i.e. greenwashing its investments. The public prosecutor has reportedly suggested that the company had committed “prospectus fraud” by doing this. The US Securities and Exchange Commission had previously launched an investigation into greenwashing at DWS Group in August 2021. The Frankfurt offices of Deutsche Bank, DWS Group’s majority shareholder, were also raided, though the bank is not itself accused of greenwashing.
UK: FINANCIAL CONDUCT AUTHORITY FINES INSURANCE BROKER GBP 7.9 MILLION OVER WEAK FINANCIAL CRIME CONTROLS
On 16 June, the Financial Conduct Authority (FCA), the UK financial regulator, fined JLT Speciality Limited (JLTSL), a British insurance company, GBP 7.9 million for several failures in its financial crime controls. These reportedly included failing to prevent a USD 3 million bribe being paid through a third party introducer to Colombian government officials to secure business in the country for JTLSL and associated companies. The FCA reported that the fine had been reduced by 30 percent from GBP 11.3 million as JLTSL had agreed to a settlement early in the investigation. This is not the first time that JTLSL has been fined by the FCA – in December 2013, the company was fined GBP 1.8 million for similar failures relating to third party introducers and bribery.