Friday, August 3, 2007

China: 1,800 officials admit to graft

Undated photo of Zheng Xiaoyu, China's former head of the food and drug watchdog who was executed last month for corruption

Chinese officials admit to graft

Almost 1,800 officials confessed to corruption in June, a Chinese Communist Party watchdog has announced.
The officials were taking advantage of a month-long leniency offer that began on 30 May, the Central Commission for Discipline Inspection (CCDI) said.
Over the month, 1,790 people confessed to corruption totalling 77.89m yuan ($10.2m, £5m), a spokesman said.
China has been working hard to tackle official corruption, which has become a major trigger for public discontent.
"Some of the officials have corrected their mistakes and some are still under investigation, since we need to check whether they have confessed all their wrongdoings," CCDI spokesman Gan Yisheng said.
No details were given of what penalties the officials who confessed might face, Xinhua news agency said.
But Mr Gan said corrupt officials who had not confessed would face severe punishment, the agency reported.
Public anger
Corruption is one of the Communist Party's biggest problems and the thing that ordinary people criticise most bitterly, says the BBC's James Reynolds in Beijing.

Chinese gamers at an internet cafe in Shanghai (file photo)
Chinese gamers have embraced a game that tackles corrupt officials

He says they complain about officials with gold watches, driving around in black Mercedes, getting fat on bribes and free lunches and handing out all the best jobs to their friends and family.
Now, our correspondent says, Chinese President Hu Jintao wants to show that he is taking action, particularly with the party's key five-yearly congress looming.
Last week, the Communist Party's former leader in Shanghai, Chen Liangyu, was expelled from the party, and may now face charges, after he was linked to a pensions fund scandal that has also implicated other senior officials.
His expulsion follows the execution last month of Zheng Xiaoyu, the former head of the country's food and drug watchdog who was convicted of taking bribes to approve products.
But corruption is widespread, affecting local and provincial administrations, as well as the central government.
The popularity of an online game that allows players to eradicate corrupt officials illustrates the depth of feeling among ordinary people over the issue of graft.
The game, entitled "Incorruptible Fighter", was launched just over a week ago.
Since then, it has been downloaded more then 100,000 times and is in such demand that its website has crashed, state media reported.

Thursday, August 2, 2007

US: FBI searches senator's house

Ted Stevens: Longest-serving Republican senator in history

FBI searches US senator's house

Federal agents in the United States have searched the Alaska home of veteran Republican Senator Ted Stevens as part of an inquiry into corruption.
FBI and Internal revenue Service agents entered the house to investigate Sen Stevens's ties to the jailed head of an oil service company, Bill Allen.
Mr Allen was sentenced this year after admitting to bribing state legislators.
Sen Stevens, 83, who is up for re-election next year, has not been charged with any wrongdoing.
He is being investigated for his links to Mr Allen, who was the chief executive of Veco, the biggest oil service company in Alaska.
In May, Mr Allen and another Veco executive Rick Smith pleaded guilty to several corruption charges, including paying more than $400,000 to bribe Alaskan legislators.
Contractors have told a federal grand jury that Mr Allen oversaw a project that doubled the size of Sen Stevens's home in the Alaskan ski resort of Girdwood.
Sen Stevens has said that money for the remodelling of his house came out of his own pocket.
Sen Stevens, who has been in office since 1968 and an influential member of Congress for many years, said he would not comment on the search.
"I continue to believe this investigation should proceed to its conclusion without any appearance that I have attempted to influence its outcome," he said in a statement.
He is among more than a dozen current and former members of Congress who have come under federal scrutiny over allegations regarding their links to lobbyists, defence contractors and other business interests.
Story from BBC NEWS:
Published: 2007/07/31 10:52:54 GMT

Investigators searched inside and outside the house

Senator Stevens's Igloo

New York Sun Editorial
August 2, 2007

Senator Stevens is finding himself in hot water. The FBI raided the Republican's residence in Girdwood, Alaska, looking for evidence on his relationship with an oil-field-service contractor by the name of Bill Allen. Allen, who was been convicted this year of bribing state legislators, oversaw a 2000 renovation project that more than doubled the size of Mr. Stevens's house; Allen's company, VECO Corp., has reaped millions of dollars in federal contracts over the years.
Though the matter must await the outcome of the law-enforcement process, a note of caution is in order. It has been corruption more than any other issue that has dragged the Republican Party down in recent years. Having been given a majority in 1994 to root out the corruption of the Democratic Congress, all too many Republicans who came to Washington to do good stayed to do well. Despite the war, "corruption/ethics" ranked highest in voters minds, according to exit polls, when voters threw the GOP out of power.
Mr. Stevens has become a symbol of Republican susceptibility to pork, particularly the idea that taxpayers should be forced to disgorge a half a billion dollars so that a "Bridge to Nowhere" could be constructed connecting two chunks of ice in Alaska, one uninhabited. He even threatened to resign should his favored earmark be removed from the budget. The FBI investigation could yet force his resignation for different reasons. But we're not so focused on who paid for the ice in the Stevens igloo. The real scandal is not what's illegal but what's legal Â-- namely the earmarks that grew a mind-boggling tenfold on the Republican watch.

Wednesday, August 1, 2007

Japan: Scandal-hit minister quits

Mr Akagi said he bore partial responsibility for the poll result
Mr Akagi apologises

Scandal-hit Japan minister quits

Japan's scandal-hit agriculture minister is to step down following the ruling coalition's crushing defeat in Sunday's upper house polls.
Norihiko Akagi, who is accused of financial irregularities, offered his resignation and Prime Minister Shinzo Abe accepted it, a spokesman said.
A number of Mr Abe's ministers have been hit by scandal, an issue seen as a key factor in his party's poll defeat.
The premier has pledged to reshuffle his Cabinet in the wake of the polls.
Mr Akagi said he was partly to blame for the defeat.
"There were various reports about me during the upper house election campaign," he said.
"It is an undisputed fact that these were partly responsible for the defeat of the ruling coalition."
Mr Akagi, who is accused of misreporting office expenses, was appointed only two months ago. His predecessor, Toshikatsu Matsuoka, committed suicide in May over a separate funding scandal.
Two more of Mr Abe's ministers have been forced to step down in recent months, causing many voters to question his leadership skills.
'Senseless conduct'
But the prime minister has so far resisted calls for his resignation in the wake of Sunday's elections, which saw control of the upper chamber wrested from his Liberal Democratic Party (LDP)-led ruling coalition.
The opposition Democratic Party of Japan (DPJ) made huge gains, becoming for the first time in its history the largest party in the upper house.
The LDP still controls the more powerful lower house and the party has continued to back Mr Abe - in part, some experts say, due to the absence of a suitable candidate to replace him.
The premier has stated that he plans to continue with an agenda of reform.
But according to the latest opinion polls, almost half of the public want him to step down.
About 47% of respondents wanted him to resign, the Asahi newspaper said, while the Yomiuri newspaper put the figure at 45%.
On Tuesday, DPJ leader Ichiro Ozawa hit out at Mr Abe's decision to stay.
He was "trying to get away with such senseless conduct, trying to keep his cabinet in charge even after his party lost the majority", he said.
"I don't think he will gain people's support and understanding by doing something so selfish."
Story from BBC NEWS:
Published: 2007/08/01 04:07:10 GMT

Iraq: Corruption 'mars Iraq rebuilding'

Corruption 'mars Iraq rebuilding'
Reports of widespread fraud and waste of funds in Iraq

Bowen interview

The US agency overseeing reconstruction in Iraq has told the BBC that economic mismanagement and corruption there are equivalent to "a second insurgency".
The chief auditor assigned by Congress, Stuart Bowen, said the Iraqi government was failing to take responsibility for projects worth billions of dollars.
Mr Bowen also said his agency was investigating more than 50 fraud cases.
Meanwhile, nearly a third of Iraq's population is in need of emergency aid, a report by Oxfam and Iraqi NGOs says.
The report said the Iraqi government was failing to provide basic essentials such as water, food, sanitation and shelter for up to eight million people.
It warned that the continuing violence was masking a humanitarian crisis that had escalated since the US-led invasion in 2003.
On Monday, six people were killed and at least 12 injured in a car bomb attack in Baghdad. The US military also announced the deaths of three of its soldiers in the western province of Anbar.
US Special Inspector General for Iraq Reconstruction Stuart Bowen was appointed to audit $44bn (£22bn) allocated since 2003, after reports of widespread fraud and waste.
The agency publishes quarterly reports on the situation, most of which have complained about a serious lack of progress. Monday's report was no different.

Millions of Iraqis have been forced to flee the violence, either to another part of Iraq or abroad - many of those are living in dire poverty
Jeremy Hobbs
Director of Oxfam International
In an interview with the BBC, Mr Bowen said corruption was endemic and described it as "an enemy of democracy".
He added: "We have performed 95 audits that have found instances of programmatic weakness and waste, and we've got 57 ongoing cases right now, criminal cases, looking at fraud."
Mr Bowen said the transfer of projects to Iraqi government control was "troubling", and expressed concern about delays and cost overruns.
The report gave the example of the Doura power station, rebuilt with tens of millions of US dollars, which fell into disrepair once it was transferred to Iraqi control.
Mr Bowen also said Iraqi ministries were struggling to administer funds.
Last year, Prime Minister Nouri Maliki's government only spent 22% of its budget on vital rebuilding projects, while spending 99% of the allocation for salaries, he said.
He said "a pathway towards potential prosperity" could be found only if oil production was brought up to optimal levels, and security and corruption effectively managed.
'Ruined by war'
The Iraqi parliament has now adjourned until 4 September, despite US calls for it to remain in session and pass already-delayed legislation.
The recess means parliament will reconvene just days before America's top commander in Iraq, Army Gen David Petraeus, reports to Congress on the US troop "surge" strategy.

Adobe Acrobat Reader.

His assessment will likely provide the backdrop to the next round of war spending.
The BBC's Nicholas Witchell in Baghdad says the report by the UK-based charity and the NGO Co-ordination Committee in Iraq (NCCI) makes alarming reading.
The survey recognises that armed conflict is the greatest problem facing Iraqis, but finds a population "increasingly threatened by disease and malnutrition".
It suggests that 70% of Iraq's 26.5m population are without adequate water supplies, compared to 50% prior to the invasion. Only 20% have access to effective sanitation.
Nearly 30% of children are malnourished, a sharp increase on the situation four years ago. Some 15% of Iraqis regularly cannot afford to eat.
The report also said 92% of Iraq's children suffered from learning problems.
It found that more than two million people have been displaced inside the country, while a further two million have fled to neighbouring countries.
On Thursday, an international conference in Jordan pledged to help the refugees with their difficulties. Oxfam has not operated in Iraq since 2003 for security reasons.
Story from BBC NEWS:
Published: 2007/07/30 14:51:55 GMT


Sunday, July 29, 2007

Bangladesh: Overseas remitting system shaken: Million-dollar scam

Overseas remitting system shaken: Million-dollar scam: Corrupt people close to past political regime involved
By Pulack Ghatack
Tue, 3 Jul 2007, 13:37:00
From New Nation Online Edition
The million-dollar scam of First Solution Money Transfer Limited has shaken the overseas money remitting system and credibility of the entitled institutions. People are also raising questions about the surveillance mechanism of the governments and the central banks of Bangladesh and the United Kingdom.
Some sources on Monday said that certain corrupt people close to the last political regime in power were involved in business with First Solution Money Transfer Ltd.
They said that move was taken during the previous government to close down Sonali Exchange, the foreign currency collecting branch of the Sonali Bank in London to facilitate growth of money transfer companies in the UK. But the information is yet to be confirmed, for Bangladesh Bank and the authorities of eight other banks, which were involved in business with the fraud company, do not know who the owners are. When asked, Bangladesh Bank officials could not confirm the names of the people involved. Then, what was the basis of their trust in establishing drawing arrangements with the fraud company?
"We want business. Bangladesh High Commission in London recommended the company to establish drawing arrangements. Bangladesh Bank also gave permission after checking their documents. Then where is our fault?", replied a mid-level executive of a private bank on condition of anonymity.
Bangladesh Bank permits banks in Bangladesh to establish drawing arrangements with foreign banks and exchange houses to facilitate remittance by Bangladeshi nationals living abroad.
Persons willing to remit their earnings through official channels can buy either Taka draft or US dollar draft from these foreign banks and exchange houses having drawing arrangements with different banks in Bangladesh.
With this arrangement, Bangladeshi nationals living abroad can send foreign exchange directly to their own bank accounts or to their relatives' bank accounts in Bangladesh.
Questions are, however, being raised about the credibility of Bangladesh Bank about giving permission to any bank to establish drawing arrangements with foreign banks and exchange houses.
People are now questioning about the difference between the "hundi" and the so-called legal money supply of accredited companies. If a criminal gang forms a company and starts to transfer legal or illegal money, will the banks get involved in business with it without verifying its credibility? "How could the central bank allow banks to establish drawing arrangements with a company without having enough information about it?," a host of people told the New Nation yesterday.
Globally, some 86 institutions including the foreign branches of Bangladeshi banks are involved in money transfer to Banladesh. A total of 38 institutions including four branches of Sonali Bank are engaged in money transfer from the UK.
Of those, First Solution maintained relationship with the highest number of Bangladeshi banks. The fraud company remitted money through eight Bangladeshi banks including Uttara Bank, Eastern Bank, National Credit and Commerce (NCC) Bank, SouthEast Bank, Mutual Trust Bank, BRAC Bank Limited, Prme Bank and Islami Bank.
The firm claimed itself as one of the biggest Bangladeshi money-transferring firms in London. They had 42 branches in different cities. But, all the branches were suddenly closed down on Thursday last.
It was also involved in business like travel services, Hajj and Umrah services, property finance, business loan, personal loan, general insurance, tax consultancy, pensions etc. It lured people offering higher profit in the name of religion terming it "Islamic finance" and "Shariah Compliant Investments."
"We are committed to providing Shariah compliant products and services to all our clients. As part of our vision, we want to be at the forefront in encouraging more and more British Muslim Women to become successful entrepreneurs through participation in First Solution Investment Projects such as property developments as individuals or in groups," says the website of the fraud company.
Reports received from London revealed that the expatriate Bangladeshis living in the UK sent 9 million pound sterling worth Tk 126 crore to Bangladesh through the company during the last six weeks.
Meanwhile, UNB reports that Bangladesh Bank has asked Bangladesh High Commission in London to take up with the British authorities the remittance scam by UK-based First Solution Money Transfer Ltd that allegedly misappropriated huge money sent by NRBs.
"We wrote a letter to the High Commission in this regard today," Bangladesh Bank Governor Dr Salehuddin Ahmed told reporters Tuesday.
"They (the remittance house) are not under our supervision. The UK authorities gave them license to operate," he said after a function at the auditorium of National Press Club.
He was addressing a function marking the distribution of stipends among meritorious students by Islami Bank Foundation.
Replying to a question, he said the commercial banks here would pay the beneficiaries from their covered funds. "Later, we'll see what we can do in this regard."
The company, which had money transfer arrangements with the local banks, reportedly closed down all of its branches immediately after misappropriating the huge amount of money remitted by the expatriate Bangladeshis living in the UK.
They advised the local commercial banks to send the money to the beneficiaries but did not post the remitted money for the banks.
A senior Bangladesh Bank official told UNB that the High Commission has already started collecting relevant documents for sending the remittance from the expatriate Bangladeshis in UK and they would take up the problem with the UK authorities for its settlement as per UK's legal provisions.
"Otherwise, we'll look for a satisfactory solution locally," he said, adding that the remitted money, if necessary, should be given from the profits of the banks concerned.
He said Bangladesh Bank has also launched an internal investigation whether the commercial banks had proper agreements with the remittance house for transaction or the agreements had any discrepancy. "Bangladesh Bank will take action after examining the documents," he said.
To avert future problems related to remittance, Bangladesh Bank has decided to publish ads in newspapers urging people not to make transactions with fake exchange houses.
The central bank would also formulate a policy to regulate the local exchange houses to avert future problems relating to wage earners' money.
Meanwhile, Bangladesh Bank executive director Yasin Ali summoned senior executives of the commercial banks involved and had case-to-case talks with them in this regard.
The central bank convened the meeting as part of its investigation into the alleged misappropriation of remittance. It has so far detected an amount of Tk 18 crore remitted from the United Kingdom that remained to be disbursed among the recipients in Bangladesh by the local commercial banks.
Of the amount, South East Bank alone is responsible for Tk 14 crore as reported at a meeting between the Bangladesh Bank and eight commercial banks at the central bank's conference room on Monday.

© Copyright 2003 by

Westminster Hall debates
Wednesday, 18 July 2007
What is Westminster Hall?
First Solution Money Transfer Ltd

4:15 pm

George Galloway (Bethnal Green & Bow, Respect)

The collapse of First Solution Money Transfer Ltd hit the community of the east end of London and elsewhere with all the force of a flood. It has devastated some of the poorest people in England: some of the lowest paid and some of the poorest housed, who live in the chilly shade of the hedge fund operators in the richest square mile on earth in the City of London and the gleaming spires of capitalism at Canary Wharf. Those people sweated from their brow to save what often may be small amounts to you and me, Mr. Cummings, but large amounts to them, and bigger amounts to those in Bangladesh, the poorest country in the world, to whom the money was destined to be sent.
No one will know the full scale of the losses until the Insolvency Service has concluded its forensic examination of the accounts, but at the moment the directors are claiming that £1.7 million is owed to 2,000 creditors. Those figures do not begin to paint the human picture of the suffering. One man from Manchester has lost £70,000, his life savings, which has brought him to the edge of despair. Another has lost the money that he had saved for retirement back in Bangladesh. In yet another case, money saved by a man for a whole year to buy essential medical treatment for his brother has gone missing. The tale of misery is represented among the strangers here, who are some of the poorest and some of the oldest victims of this collapse.
I was first alerted to the problems in the company almost four weeks ago. Agents working for First Solution in the Home Counties contacted me and said that money that they had taken in over the previous two months for transfer to Bangladesh—some £150,000—had for the most part failed to get there. They said that a meeting had been held between more than 40 agents and the directors of First Solution in the middle of May after money had stopped getting to Bangladesh. They had been told by the directors that there were problems, but that they would soon be put right. More than one month later, the situation had merely got worse as the amount of money owed to clients had grown.
As the evidence mounted that there were problems in the company, and that good money was being paid in after bad in large quantities daily, my response was to seek the authorities' assistance to find out what had gone wrong. I contacted the Financial Services Authority, but to my amazement was told that this financial service fell outside its remit, and that I would have to approach trading standards officers.
My office contacted trading standards officers at Tower Hamlets council with the evidence that had been presented to me, but they said that the matter was too big for them and that the police should be contacted. I sent a personal letter straight away to the borough commander in Tower Hamlets, again outlining the evidence of the very serious problems in the company, and of the suspicions, now widespread, of wrongdoing, and asked him to engage whatever agencies in the police were responsible for investigating the company. Commander Savill referred the matter to the local fraud office and an officer then contacted my office to say that he was preparing a report to send to Her Majesty's Revenue and Customs, as it was in fact the regulating body and should carry out any investigation. This was some three days before the company finally ceased trading.
Under mounting media pressure—I commend the excellent investigative reporting of Ted Jeory of the East London Advertiser—the company seems to have engaged with its accountants and lawyers, and I believe the directors were advised that they were almost certainly trading as an insolvent company, which is a criminal offence. They were advised by their lawyer to instruct their agents to stop taking business, but to this day, many agents claim that they never received any such instruction. Early in the morning on 21 June, the directors posted a notice on their office in the London Muslim centre, saying that their office was closed until further notice.
That was no tin-pot business. It had grown from a £4 million turnover in its first year of operation, 2004, to an estimated £87 million turnover in 2006-07. That growth was achieved in several ways. First, the business offered higher exchange rates for lower fees and a quicker service to more outlying areas of Bangladesh than its rivals, in particular the banks, which are subject to financial security regulation. Secondly, with its headquarters located in the London Muslim centre next to the East London mosque, it was assiduously and ruthlessly promoted as a community service on the Bangladeshi TV station Channel S. Not coincidentally, Dr. Fazal Mahmood, the driving force behind First Solution, which also includes real estate, investment, travel and other services, was also the managing director of Channel S until the day before First Solution collapsed.
I have asked Ofcom, and I demand it again today through you, Mr. Cummings, to investigate whether there was a breach of the broadcasting code as a result of that close relationship and the apparent conflicts of interest, but so far Ofcom has not agreed to an inquiry. I want to know whether the adverts that ran interminably on Channel S for First Solution, even though the two companies shared Dr. Fazal Mahmood's services, were properly billed and paid for, and whether it was really commercial advertising or a relentless drive to get the TV station's audience to do their business with First Solution. Ofcom has a duty to the population of east London in that regard.
Mr. Cummings, you may be surprised to know—I was—that Dr. Fazal Mahmood was convicted in 2004 on two counts of the criminal offence of breaching section 84 of the Immigration and Asylum Act 1999. A convicted criminal in 2004 was allowed to build up an £87 million business within three years because of the failure to put a fit and proper person regulation in place for people operating money transfer businesses.
The next point is even more interesting. Upon the collapse of the company, the directors appointed an insolvency firm, Panos Eliades, Franklin and Co., to register creditors, set up a creditors' meeting and advise on liquidation. Panos Eliades himself fronted and continues to front that operation. Mr. Eliades, however, was excluded from membership of the Institute of Chartered Accountants in 2000, and, in a legal dispute over debts with the boxer Lennox Lewis, a New York court and the High Court in London ruled that Mr. Eliades had comprehensively lied in order to avoid paying the debts that he was alleged to owe. His partner, Mr. Franklin, is qualified as an insolvency practitioner, although he is subject to restriction and monitoring by the Insolvency Practitioners Association. In a word, he is in "special measures".
One cannot help wondering why among all the insolvency firms operating in London, many of which have bombarded me with offers of help, the directors of First Solution managed to choose that one. There is a very important point to make. There is a great deal of anger in the British Bangladeshi community in the east end, and in Bangladesh itself about what has happened. There is a feeling, which I share, that it should be impossible for a money transfer company to lose money. After all, it merely takes money from Peter and promises to transfer it to Paul. In the east end, there has been much rumour and speculation that something criminal must have happened to that money.

US Justice Department probing oil operations in Nigeria

US Justice Department probing oil operations in Nigeria

Last Update: 6:33 PM ET Jul 24, 2007

WASHINGTON (Dow Jones)--The U.S. Justice Department is conducting a criminal inquiry of nearly a dozen oil and oil-services companies, focusing on potentially illegal payments to customs agents who provided freight forwarding and other services, including in Nigeria, Dow Jones Newswires learned Tuesday.
A civil investigation by the Securities and Exchange Commission also is underway.
Eleven oil and oil-service firms received a July 2 letter from the Justice Department's criminal fraud section asking them to detail their relationship with Panalpina World Transport Holding Ltd. (PWTN), a Swiss-based shipping and logistics-management company, according to individuals familiar with the matter, who agreed to speak anonymously. The Justice Department letter, which was read to Dow Jones, cited concerns about payments that may violate the U.S. Foreign Corrupt Practices Act.
The oil and oil-service firms were asked to list the countries where Panalpina provided it with services in the past five years, and to specify what it paid for those services. Each firm also was asked to meet separately with federal prosecutors in Washington, D.C. A Justice Department spokesman didn't respond to requests for comment. SEC spokesman John Heine declined to comment.
Panalpina announced Tuesday that it is conducting an internal investigation and has been asked to provide documents to the Justice Department relating to services in Nigeria, Kazakhstan and Saudi Arabia for "a limited number of customers."
"Obviously, we are cooperating with the investigation," Panalpina spokesman Martin Spohn told Dow Jones.
The Justice Department probe underscores the difficulty of complying with U.S. anti-bribery laws in countries that may be as awash in corruption as they are in oil. Federal officials, in a bow to such concerns, called a meeting at the Justice Department in Washington, D.C., last Friday specifically to discuss the pitfalls of operating in Nigeria.
Participants included four companies that weren't recipients of the July 2 letter, and which had previously reported internal investigations of potential violations of U.S. anti-bribery laws in West Africa.
Tidewater Inc. (TDW) , Noble Corp. (NE) , GlobalSantaFe Corp. (GSF ) and Global Industries Ltd. (GLBL ) , in announcing their own investigations, didn't identify any third parties by name, referring only to reimbursements to an unidentified "customs agent."
On the agenda at the July 20 meeting: how to comply with U.S. anti-bribery laws while doing business in Nigeria, where such laws aren't respected and bribery is rampant.
The meeting included officials from the Justice Department, the SEC, the Commerce Department and the State Department. U.S. State Department officials based in Lagos took part by telephone, but not Nigerian government officials, allowing U.S. corporations to freely discuss frustrations about doing business in Nigeria, said an individual close to the matter, who declined to be identified. A Commerce Department spokesman had no immediate comment and a State Department spokeswoman didn't return phone calls seeking comment.
"It's a very difficult operating environment, even if you're trying to do everything by the book," said an individual familiar with operating in Nigeria, who agreed to speak anonymously. Another individual, who has conducted business in Nigeria, who also agreed to speak anonymously, said corruption in Nigeria is so widespread, "you can't pass through the Lagos airport without being asked to pay a bribe."
Firms that refuse to pay bribes cannot obtain permits needed to conduct business in Nigeria, while those that pay run the risk of being charged with violating the U.S. Foreign Corrupt Practice Act, according to individuals familiar with the matter, speaking anonymously.
U.S. oil and oil-services companies that do business in Nigeria are keenly interested in having the U.S. government address such issues, and hope Nigeria's recent elections might offer an opportunity for change, these individuals said. They spoke on condition they not be identified because they are not authorized to talk to reporters.
Solutions are in short supply, however. Pulling out of Nigeria would help U.S. companies avert potential legal harm, but wouldn't benefit the nation's energy supply or U.S. consumers. Remaining in Nigeria carries other risks, particularly for companies found to be repeat offenders of the Foreign Corrupt Practices Act.
In February, Vetco Gray Controls, a Houston oil-services company, and two other Vetco International Ltd. subsidiaries, paid a $26 million settlement to the Justice Department, a record for a criminal foreign corrupt practices case. The units admitted paying about $2 million in bribes to Nigerian customs officials through an international freight forwarding and customs clearing company, ending in 2005. Vetco had agreed in 2004 not to make such payments.
Baker Hughes (BHI) and a subsidiary paid $44 million in April to settle criminal charges involving bribes in Kazakhstan and SEC civil charges involving payments elsewhere, including Nigeria, the largest combined penalty for such charges. Baker Hughes had a 2001 agreement not to pay bribes under an SEC settlement related to payments in Indonesia.
As the Justice Department focuses on 11 oil and oil-services firms that relied on Panalpina for services, including in Nigeria, four others are voluntarily scrutinizing operations, a process that might or might not yield criminal charges depending on the findings.
New Orleans-based Tidewater Inc. announced in April that it was investigating payments to a customs agent to obtain permits to operate in waters off Nigeria. It cited concerns stemming from the fact that its Nigerian affiliate used the same customs agent thought to be implicated in the Vetco case.
Noble Corp., of Sugar Land, Texas, GlobalSantaFe Corp., of Houston, and Global Industries Ltd., of Carlyss, Louisiana followed suit in June. Noble announced an internal investigation of its Nigerian operations, focusing on reimbursements to customs agents for expenses for import permits. GlobalSantaFe said it is examining agents who handled customs matters in Nigeria, and Global Industries reported it was probing payments in Nigeria that may violate laws meant to prevent U.S. firms from bribing officials overseas.
Noble spokesman John Breed declined to comment and officials from Tidewater, GlobalSantaFe and Global Industries weren't immediately available to comment. GlobalSantaFe, an offshore drilling firm, announced merger plans Monday with Transocean Inc. (RIG ) .
-By Judith Burns, Dow Jones Newswires, 202-862-6692;
(END) Dow Jones Newswires
July 24, 2007 17:04 ET (21:04 GMT)
-Contact: 201-938-5400 End of Story

US: Former Executive of Willbros Group Inc. Indicted on Foreign Corrupt Practices Act Charges

Former Executive of Willbros Group Inc. Indicted on Foreign Corrupt Practices Act Charges

WASHINGTON – A federal grand jury in Houston has indicted a former executive of a subsidiary of Houston-based Willbros Group Inc., on charges of conspiring to make corrupt payments to Nigerian officials in violation of the Foreign Corrupt Practices Act (FCPA), the Department of Justice announced today.The four-count indictment unsealed today charges Jason Edward Steph, 37, a U.S. citizen residing in Kazakhstan, with conspiring to make over $6 million in bribe payments to Nigerian officials in order to obtain and retain gas pipeline construction business from a joint venture majority-owned and controlled by the Nigerian state oil company.
(PressZoom) - WASHINGTON – A federal grand jury in Houston has indicted a former executive of a subsidiary of Houston-based Willbros Group Inc., on charges of conspiring to make corrupt payments to Nigerian officials in violation of the Foreign Corrupt Practices Act ( FCPA ), the Department of Justice announced today.
The four-count indictment unsealed today charges Jason Edward Steph, 37, a U.S. citizen residing in Kazakhstan, with conspiring to make over $6 million in bribe payments to Nigerian officials in order to obtain and retain gas pipeline construction business from a joint venture majority-owned and controlled by the Nigerian state oil company. Steph was also charged with money laundering based upon the international transfer of some of the bribe money.
Willbros, a publicly-traded company that provides construction, engineering and other services in the oil and gas industry, conducts international operations through a subsidiary known as Willbros International Inc. ( WII ). Steph was a WII employee from 1998 to April 2005. From 2002 until April 2005, he served as general manager of WII’s on-shore operations in Nigeria.
The Nigerian National Petroleum Corporation ( NNPC ), the state-owned oil company in Nigeria, is responsible for developing Nigeria’s oil and gas wealth and regulating the industry. NNPC is the majority shareholder in certain joint ventures with multinational oil companies. The multinational oil companies often serve as the operators of the joint ventures. NNPC’s subsidiary, National Petroleum Investment Management Services ( NAPIMS ), manages NNPC’s investments in the joint ventures. Among other functions, NNPC and NAPIMS approve the award of major oil and gas construction projects to private contractors such as Willbros.
The indictment alleges a conspiracy from late 2003 through March 2005 that included Steph, a former senior Willbros executive officer, two individuals acting in Nigeria as purported consultants to Willbros, Nigeria-based employees of a major German engineering and construction company, and others, to make millions of dollars in corrupt payments to assist in obtaining a major gas pipeline engineering, procurement and construction project known as the Eastern Gas Gathering System ( EGGS ), which Willbros and its German consortium partner bid to perform for approximately $387 million. In exchange for the award of the EGGS project, the conspirators allegedly paid, promised to pay, and authorized payments to officials of NNPC, NAPIMS, a senior official in the executive branch of the Nigerian federal government, and to political party, as well as to officials of the operator of the EGGS joint venture. Most of the payments were allegedly laundered through the consultants, who typically received 3 percent of Willbros’ contract revenue by wire transfer from Houston to a foreign bank, and transferred some or all of the funds to Nigerian officials.
The maximum sentence for a charge of conspiring to violate the FCPA is five years in prison and a fine of up to $250,000, or twice the gross gain or loss. Each of the money laundering charges carries a maximum sentence of 20 years in prison and a fine of up to $500,000 or twice the value of the funds involved in the transfer, whichever is greater.
An indictment is merely an accusation. A defendant is presumed innocent of the charges and it is the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.
The case is being prosecuted by Deputy Chief Mark F. Mendelsohn and Trial Attorney Thomas E. Stevens of the Fraud Section, Criminal Division at the U.S. Department of Justice. The case is being investigated by the Federal Bureau of Investigation’s Washington Field Office and the Internal Revenue Service, Criminal Investigation Division. The Fraud Section also acknowledges the assistance of the Fort Worth Regional Office of the Securities and Exchange Commission. The criminal investigation is ongoing.