Friday, August 3, 2007
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.
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
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
© BBC MMVII
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
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.
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
© BBC MMVII
Corruption 'mars Iraq rebuilding'
Reports of widespread fraud and waste of funds in Iraq
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
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.
OXFAM/NCCI REPORT IN FULL
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
© BBC MMVII
Sunday, July 29, 2007
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 ittefaq.com
Westminster Hall debates
Wednesday, 18 July 2007
What is Westminster Hall?
First Solution Money Transfer Ltd
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
Last Update: 6:33 PM ET Jul 24, 2007
By Judith Burns Of DOW JONES NEWSWIRES
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; Judith.Burns@dowjones.com
(END) Dow Jones Newswires
July 24, 2007 17:04 ET (21:04 GMT)
-Contact: 201-938-5400 End of Story
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.
After waiting passively for three years...
Gonzi asks Auditor: 'What happened to the John Dalli investigation?'
Kurt Farrugia Sat, 28 July 2007
After waiting passively for three whole years, Prime Minister Lawrence Gonzi wrote a letter to the Auditor General asking what happened to an investigation into the procurement of air tickets by the former Foreign Minister John Dalli, sources at the Office of the Prime Minister revealed.
Auditor General Joseph G Galea’s term in office will effectively expire this week. But on Saturday 28 July it was announced that his term has been extended until a replacement is found. Meanwhile, it is still not yet known whether the Dalli report is concluded or not.
Gonzi’s dependability could be at stake depending on the outcome of the auditor general’s investigation into the air ticketing case.
A report in The Times on 9 June 2004 had alleged that all travel arrangements for the Foreign Ministry were made by a travel agency, Tourist Resources, in which members of the former minister’s family had an interest.
Among other issues, these allegations had led to John Dalli’s resignation.
Gonzi has on various occasions went on record claiming that he accepted Dalli’s “offer” to resign because of case of the air tickets.
But John Dalli, who had contested Lawrence Gonzi in the PN leadership battle, still claims he was forced to resign because of a fabricated report on another case in relation to Mater Dei hospital.
Ask the auditor general - John Dalli
Asked by maltastar.com whether he knew if the auditor general’s report was concluded, former minister John Dalli said: “I have no information about the said report. You would have to ask the auditor general about it.”
Various attempts to contact the auditor general on Saturday were not successful.
If the report finds no wrong doings in the procedures used by John Dalli to buy air tickets from Tourist Resources, then the million dollar question will gain added credibility: “Why has Gonzi sacked John Dalli from his Cabinet?”
In his short letter sent a few days ago – seen by maltastar.com sources at the OPM – the prime minister refers to the speech by the Leader of the Opposition Alfred Sant in Parliament on 18 June 2007, who also referred the auditor general’s unfinished investigation.
During the debate on a no confidence motion in Transport Minister Jesmond Mugliett, Alfred Sant had asked on which grounds the prime minister had accepted John Dalli’s resignation.
On a point of order the former minister said that the investigation by the auditor general had been going on for three years. “It is indeed shameful,” Dalli had said.
Gonzi-Dalli impromptu meeting
After the session Gonzi was seen approaching John Dalli and the two spoke for a few minutes. They were also seen heading to the Prime Minister’s office in Parliament.
It is believed that the subject of the impromptu meeting was the auditor general’s report. The outcome of which was the short letter to the auditor general.
maltastar.com is not informed whether the auditor general has replied to the prime minister.
11 July 2007
Different weights for different ministers
John Dalli’s resignation three years ago and the reasons behind the Prime Minister’s decision to accept it have resurfaced following Lawrence Gonzi’s decision not to accept transport minister Jesmond Mugliett’s resignation last week, MATTHEW VELLA writes.
If Lawrence Gonzi had found nothing to substantiate allegations made against John Dalli, why had he accepted his resignation back in 2004? The answer seems no clearer today than it was three years ago, as it is revealed that Dalli has never been the subject of any investigation by the Auditor General, while Jesmond Mugliett’s actions have also convinced the PM there are no grounds of corruption on which to accept the roads minister’s resignation.
Two ministers, both found to have not acted incorrectly in their government roles, but a different outcome for the PM’s former leadership rival.
With an audit by the Auditor General into the procurement of air tickets by government ministries in its final stages, the news that neither Dalli nor his former ministry are not the subject of this ‘investigation’ carries more weight today, after the Nationalist MP yesterday told MaltaToday that the Tourist Resources saga had been the “excuse” for Gonzi to accept his resignation.
Yesterday the Office of the Prime Minister said there was no relation between the resignations of Dalli and Mugliett, the latter accused by the Opposition of misleading parliament on the reinstatement of two ADT officials which were publicly indicted by a court.
In the John Dalli case, the OPM said yesterday, “the Prime Minister accepted the explanation given by John Dalli on the IRISL issue” – referring to Gonzi’s response to Dalli’s resignation letter that the IRISL allegations had been “unsubstantiated”.
But as for the suggestion by John Dalli himself in his resignation letter to refer the airline tickets case to the Auditor General, the OPM skirted the issue by stating that the matter is “still sub judice” – an incorrect terminology given that the case is not being investigated by any court of law, but is in fact a general and overarching audit of all the ministries’ procurement practices.
So if John Dalli has never been the focus of any investigation, how did the airline tickets saga come to bear so much upon the Prime Minister’s acceptation of Dalli’s resignation?
Dalli’s accusation is that the ‘excuse’ used by the PM had as a background the fact that he had come into possession of the Joe Zahra report in June 2004, later found to have been fabricated, which implicated Dalli’s brother Sebastian in a kickback over a multi-million hospital equipment contract.
“The prime minister had been in possession of that report but it had not yet been sent for investigation by the police,” Dalli told MaltaToday yesterday. “And the air tickets story was brought up as an excuse to justify the decision to accept my resignation.”
And since 2004, the impression given was that Dalli was being ‘investigated’ over the way Lm40,000 in airline tickets had been purchased by the foreign ministry, when he was foreign minister, from the company Tourist Resources Ltd.
When the story broke out on 9 June 2004 in The Times, amid allegations that Dalli had wooed over the Islamic Republic of Iran Shipping Lines (IRISL) to be represented by Gauci Borda Shipping, whose director was his son-in-law, the news item was carried in full by PBS journalist Ivan Camilleri, whom Dalli has accused of having “kept up the attack on various occasions”.
He wrote in his resignation letter of 3 July 2004 that, “Wonder of wonders, PBS departed from their normal practice, and not only covered the same story but practically read out the Times report,” referring to Camilleri, the brother of Gonzi’s then communications coordinator Alan Camilleri.
From then on, it seemed it was on this basis that Gonzi had accepted Dalli’s resignation. Even Nationalist Party secretary-general Joe Saliba, speaking on Super One TV last December, referred to the case saying he believed John Dalli “will not be found to have done anything inappropriate” – again reinforcing the impression that Dalli’s prospects of re-entering the cabinet as a minister depended on the outcome of the audit by the Auditor General.
Last week however, Gonzi’s refusal to accept Jesmond Mugliett’s resignation brought back to the fore John Dalli’s departure from the Cabinet. The Office of the Prime Minister sys Gonzi did not see any grounds for accepting Mugliett’s offer of resignation, “as Minister Mugliett had never defended corruption and never tried to intervene to reverse the ADT board’s decision to terminate the employment of the employees concerned.”
As Gonzi himself stated, the decision to keep Mugliett on may be considered “debatable”. His decision on whether to accept Minister Mugliett’s was based on whether he considered the minister’s behaviour in this issue “as one that compromises his position as a minister,” an OPM spokesperson said.
And as in the John Dalli affair, a minister who has presented his resignation but whom Gonzi finds nothing that compromises his position, has been spared his demotion from the Cabinet.
But in an ‘investigation’ which has proved itself to be nothing but a rudimentary auditory exercise into procurement practices, the implications of John Dalli’s resignation ring loud to this day – short of any investigation that places Dalli under the lens of the prosecutor, why did Gonzi choose not to keep this minister in his Cabinet?
Corrupt ADT employees salaries published
Mugliett's gift to corrupt ADT officials: Lm1,235 each
Kurt Farrugia Wed, 04 July 2007
Jesmond Mugliett’s intervention to stop the transport authority from sacking two of its officials convicted with corruption has cost the authority Lm2,470 in salaries since end of January.
The roads minister admitted that in February he personally intervened to stop the ADT’s board from sacking the two corrupt officials, one of which was a canvasser of the same minister, pending a request for a presidential pardon.
A stand which does not make legal or political sense, especially when coming from a minister, political analysts commented.
Roderick Galea and Jason Buttigieg were in November found guilty of taking bribes to give a pass mark to candidates taking driving tests. They were handed a general lifetime interdiction sentence which means they cannot hold public office ever. Their appeal was turned down in January 2007 but they were not sacked from ADT despite a board decision in that sense. It was later revealed that Jesmond Mugliett had personally intervened against the board’s decision.
Replying to a parliamentary question tabled by Labour MP Silvio Parnis, Mugliett said that the two corrupt officials who were suspended from ADT on half pay were paid Lm2940.81 each for the period June 2006-June 2007, when their job was actually terminated.
Had it not been for Mugliett’s intervention to stop the ADT from terminating Galea’s and Buttigieg’s job, the authority would have been better off by Lm2,470.
In fact, an ADT board meeting early in February decided to terminate the job of its corrupt officials. But roads minister Jesmond Mugliett intervened directly to stop the ADT from sacking Galea (his canvasser), and Buttigieg.
For the period January 2007 (when the lifetime interdiction was confirmed) to June 2007, the ADT forked out Lm1235.45 each to the ADT officials.
Jesmond Mugliett had said that Roderick Galea was his canvasser and used to accompany him during campaigning in PN party clubs and home visits. Galea also used to take time off from work at ADT to drive Mugliett’s constituents to political activities organised by the minister.
The attitude of the minister who interfered in favour of two corrupt officials was not yet denounced by the prime minister who is keeping dead silence on the matter.
The Labour Party demanded for the minister’s resignation, but the minister has not shown any intention of stepping down despite his scandalous political attitude in the ADT corruption scandal.
The suspect has said he was forced by Mexican authorities to store money in his home.
(Richard Drew / AP)
From the Los Angeles Times
Calderon hails arrest in cash case
The owner of a mansion in Mexico City where $207 million was found is arraigned in the U.S.
By Héctor Tobar
Times Staff Writer
July 25, 2007
MEXICO CITY — A week ago, Zhenli Ye Gon was the toast of the Mexican media.
Speaking to reporters by telephone while in hiding, he said he would prove that senior officials of the government of President Felipe Calderon were responsible for the $207 million in illicit cash found in his Mexico City home.
On Tuesday, Ye Gon was in a U.S. courtroom, having been captured hours earlier at a restaurant in suburban Washington by U.S. agents who traced his cellphone. And Calderon was claiming victory in a case that officials say yielded the biggest haul of drug money in history.
"Today, those who commit crimes should know that my government will not spare any resources or effort to hunt them down wherever they may be, inside or outside our national territory," Calderon said at a speech at his alma mater here, the Free School of Law.
Agents of the U.S. Drug Enforcement Administration arrested Ye Gon in Wheaton, Md., on Monday night, about four months after police entered his Mexico City mansion on suspicion that he was running a methamphetamine production ring.
With its massive haul of cash, involving more than 2 tons of U.S. $100 bills, and allegations of official complicity, the case has come to symbolize the wealth and power behind the international trade in illicit drugs.
A 44-year-old naturalized Mexican of Chinese descent, Ye Gon was arraigned Tuesday in U.S. District Court in Washington on drug-trafficking charges. Mexican authorities alerted their U.S. counterparts last month that they thought Ye Gon was in the United States.
Mexican authorities have said they will request Ye Gon's extradition on a variety of drug-trafficking charges. If convicted in Mexico, he faces up to 73 years in prison.
U.S. authorities filed their own charges against Ye Gon last month.
On Tuesday, U.S. officials released an affidavit by a DEA agent in Mexico with new details on the scale of Ye Gon's alleged operation. He is said to have imported enough chemicals to produce methamphetamine worth $724 million on the street.
A note discovered at Ye Gon's home refers to apparent assistance from corrupt Mexican customs officials, the affidavit said.
Ye Gon traveled often to Las Vegas to launder drug money and to gamble, the affidavit said. Between 2004 and 2007, records from Las Vegas hotels and casinos show, Ye Gon had gambling losses of $125.9 million.
The DEA also conducted tests in April at Ye Gon's Mexican pharmaceutical plant and found ephedrine, a stimulant and decongestant used to manufacture methamphetamine.
Martin McMahon, a Washington lawyer representing Ye Gon, told the Associated Press that the charges against his client were "complete nonsense…. He has never had drugs, and he didn't have any drugs on him when he was arrested."
If he is extradited, Ye Gon will not receive a fair trial in Mexico, McMahon said.
"President Calderon has already said he is going to jail," McMahon said. "We will vigorously oppose his extradition."
In statements made before his arrest, Ye Gon said Mexican officials had forced him to store the money in his home. He said the funds were destined for use in Calderon's 2006 presidential campaign and "terrorist" activities. Calderon called the statements a "tall tale."
Ye Gon's arrest comes amid growing concern in Mexico that his alleged drug operation may have flourished thanks to the complicity of corrupt officials.
According to news reports here, an investigation by the Mexican attorney general's office is focusing on the role of drug regulators and of a high-ranking tax and customs official, Luis Roberto Patron Arregui.
The investigation has found that Patron Arregui assisted Ye Gon by providing false documents that allowed Ye Gon's company to import chemicals required to produce pseudoephedrine, also a precursor to methamphetamine.
During the administration of President Vicente Fox, Patron Arregui ran the customs office at the Pacific port of Manzanillo.
After winning the presidency last year, Calderon named Patron Arregui to head the national customs office, but Congress refused to even hold confirmation hearings because of allegations that he was corrupt.
Patron Arregui instead became the No. 2 official in Mexico's tax collection agency. He is related by marriage to the Coppel family, a key backer of Calderon's presidential campaign.
police discovered $207 million at his Mexico City mansion
U.S. agents arrest fugitive in historic drug bust
By Hector Tobar, Times Staff Writer
5:55 PM PDT, July 24, 2007
MEXICO CITY -- A week ago, Zhenli Ye Gon was the toast of the Mexican media.
Speaking by telephone from a hiding place, he told a news conference that he would one day prove that senior officials of the government of President Felipe Calderon were responsible for the $207 million in illicit cash found in his Mexico City home.
Tuesday, Ye Gon was in a U.S. courtroom, having been captured hours earlier at an Asian restaurant in suburban Washington by U.S. agents who traced his cell phone. And Calderon was claiming victory in what was said to be the largest drug-cash seizure in the country's history.
"Today, those who commit crimes should know that my government will not spare any resources or effort to hunt them down wherever they may be, inside or outside our national territory," Calderon said at a speech at his alma mater, the Free School of Law.
Agents of the U.S. Drug Enforcement Administration arrested Ye Gon in Wheaton, Md., Monday night, some four months after Mexican police entered his Mexico City mansion on suspicion that he was running a methamphetamine production ring.
With its massive haul of cash, involving more than 2 tons of U.S. $100 bills, and allegations of official complicity, the case has come to symbolize the great wealth and power behind the international trade in illicit drugs.
A 44-year-old naturalized Mexican of Chinese descent, Ye Gon was arraigned Tuesday in U.S. District Court in Washington on drug-trafficking charges. Mexican authorities alerted their U.S. counterparts last month that they thought Ye Gon was in the United States.
Mexican authorities have said they will request Ye Gon's extradition on a variety of drug-trafficking charges. If convicted in Mexico, he faces up to 73 years in prison.
U.S. authorities filed their own charges against Ye Gon last month.
Tuesday, U.S. officials released an eight-page affidavit by a DEA agent in Mexico City that offers new details on the vast scale of Ye Gon's alleged operation. He is said to have imported enough "precursor chemicals" to produce methamphetamines with a street value of $724 million.
A note discovered at Ye Gon's home refers to apparent assistance from corrupt Mexican customs officials, the affidavit said.
Ye Gon traveled often to Las Vegas to launder drug money and to gamble, the affidavit said. Between 2004 and 2007, records from Las Vegas hotels and casinos show Ye Gon had gambling losses of $125.9 million.
DEA agents conducted tests in April at Ye Gon's Mexican pharmaceutical plant and discovered ephedrine, a stimulant and decongestant that can be used to manufacture methamphetamines.
Martin McMahon, a Washington lawyer representing Ye Gon, told The Associated Press that the charges against his client were "complete nonsense. . . . He has never had drugs, and he didn't have any drugs on him when he was arrested."
If he is extradited, Ye Gon will not receive a fair trial in Mexico, McMahon said. "President Calderon has already said he is going to jail," McMahon said. "We will vigorously oppose his extradition."
In statements made before his arrest, Ye Gon said Mexican officials had forced him to store the money in his home. He said the funds were destined for use in Calderon's 2006 presidential campaign and "terrorist" activities. Calderon called the statements a "tall tale."
Ye Gon's arrest comes amid growing concern in Mexico that his alleged drug operation may have flourished thanks to the cooperation and complicity of corrupt officials.
According to news reports, an investigation by the Mexican attorney general's office is focusing on the role of drug regulators and of a high-ranking tax and customs official, Luis Roberto Patron Arregui.
The investigation has found that Patron Arregui assisted Ye Gon by providing false documents that allowed Ye Gon's company to import chemicals required to produce pseudoephedrine, a precursor to methamphetamine.
During the administration of President Vicente Fox, Patron Arregui ran the customs office at the Pacific port of Manzanillo.
After winning the presidency last year, Calderon named Patron Arregui to head the national customs office, but Mexico's Congress refused to hold confirmation hearings, because of allegations that he was corrupt.
Patron Arregui instead became the No. 2 official in Mexico's tax-collection agency. He is related by marriage to the Coppel family, a key backer of Calderon's presidential campaign.
Authorities Nab Alleged Mexico Drug Kingpin Zhenli Ye Gon in Maryland
Tuesday , July 24, 2007
MEXICO CITY —
U.S. federal agents have arrested a Mexico City businessman wanted in connection with one of the Western Hemisphere's largest trafficking rings for the main chemical ingredient in methamphetamine.
Zhenli Ye Gon was arrested in a Maryland restaurant Monday evening, four months after police discovered $207 million at his Mexico City mansion in what U.S. officials have called the world's biggest seizure of drug cash.
Mexican Attorney General Eduardo Medina Mora called the arrest "magnificent news" and said Mexican officials had 60 days to file their legal arguments for Ye Gon's extradition. The Chinese-Mexican fugitive is wanted on organized crime, drug trafficking and weapons charges.
DEA spokesman Garrison Courtney said Ye Gon was arrested on drug smuggling and money laundering charges, adding that he was tracked down by agents and did not turn himself in.
Medina Mora said the cash seized at Ye Gon's home was connected to one of the hemisphere's largest networks for trafficking pseudoephedrine, the main ingredient in methamphetamines. He said the ring had been operating since 2004, illegally importing the substance and selling it to a drug cartel that mixed it into the crystal form and imported into the United States.
Ye Gon has said the chemicals imported by his company, Unimed Pharm Chem de Mexico SA, were legitimate and intended for use in prescription drugs to be made at a factory he was building in Toluca, just west of the Mexican capital.
Ye Gon also claimed that $150 million of the money belonged to Mexico's ruling party, and that he was forced to store it for party officials in his mansion under threat of death during the 2006 presidential race, which Felipe Calderon narrowly won.
Calderon has called the accusations "pure fiction."
Ye Gon's U.S.-based lawyer, Ning Ye, denounced the "lousy evidence made up by Mexican government" and said Ye Gon would apply for political asylum in the United States.
Ye said DEA agents swarmed a restaurant in Silver Spring, Md., where Ye Gon was dining with another member of his legal team. The agents also raided the house where Ye Gon had been staying. Ye Gon went willingly, he said.
The Mexican Attorney General's office said Ye Gon was arrested in Rockville, Md. The discrepancy could not immediately be explained.
Ye said he was surprised by the arrest because he said he had reached a verbal agreement last week with a DEA agent in Mexico that called for Ye Gon to surrender to U.S. marshals on Thursday. In return, Ye Gon was to be tried in the United States, not Mexico, Ye said.
"Only the United States can provide the most comprehensive procedural safeguards concerning what is happening on the Mexican side," Ye said.
Ye said he will file the first motions in the legal battle at a U.S. district court in Washington early Tuesday.
Medina Mora said Ye Gon's girlfriend Michelle Wong had been detained in Las Vegas and may also face criminal charges.
Rogelio de la Garza, Ye Gon's lawyer in Mexico, said he feared that U.S. authorities may simply deport him to avoid a drawn out battle in a U.S. court.
De la Garza said he will fight for Ye Gon's immediate freedom if he arrives in Mexico, arguing the money was earned legally and that Ye Gon was not found with any narcotics.
U.S. anti-drug officials have praised Calderon's crackdown on Mexican traffickers since taking office. DEA chief Karen Tandy also applauded Mexican agents following the March money seizure.
"This is like law enforcement hitting the ultimate jackpot. But luck had nothing to do with this windfall," Tandy said, calling it "the largest single drug-cash seizure the world has ever seen."
ABB, Siemens Probes Show Bribery Hard To Stamp Out
An investigation into suspected bribery by ABB shows the difficulty of eradicating decades-old corruption to win foreign contracts.
An investigation into suspected bribery by ABB -- a second case involving a major European engineering firm -- shows the difficulty of eradicating decades-old corruption to win foreign contracts.
In an echo of the low-key beginning a year ago of a scandal at Germany's Siemens that escalated to claim the scalps of its chairman and chief executive, Swiss-based ABB said on Thursday it was probing suspect payments made by some employees abroad.
For many years the practice of bribing foreign officials was not only tolerated but tax-deductible in Europe. Following the lead of the United States, most European countries have enacted laws in the past decade that have made the practice illegal, although few cases have been prosecuted.
ABB said it was investigating several cases of suspect payments in Asia, South America, Europe and in particular Italy. It is unclear how much money may be involved, it said, adding that it had informed U.S. justice authorities.
ABB's statement that it may have violated the U.S. Foreign Corrupt Practices Act bribery law followed on the heels of a statement from German industrial group Siemens that it was extending its own internal corruption investigation.
Siemens said it was now looking at suspect payments in its turbines, power distribution, transport, medical and industrial services divisions as well as the hundreds of millions of euros' worth of payments it was already examining at its telecoms unit.
"The company has identified a significant increase in the total amount of business consultant agreement payments under review," it said in a statement.
Siemens added that it had spent 188 million euros ($260 million) on outside advisers hired in connection with the corruption investigations in the first nine months of its financial year.
Anti-corruption watchdog Transparency International said the cases showed that corrupt practices were often deeply ingrained in company culture and were not simple to weed out.
"It shows that corruption was endemic in the industry in the past, and it shows that these new laws are very difficult to put into effect," Peter von Blomberg, the deputy head of TI Germany, told Reuters.
"At Siemens, measures obviously weren't implemented carefully enough as the division heads didn't take them that seriously. That's the lesson that all companies should learn from the Siemens case," he said.
Investors have been largely indifferent to the corruption affair at Siemens, and ABB shares rose on Thursday, despite the bribery investigation revelation, based on the forecast-beating results the company released at the same time.
"The news on the disclosure of suspect payments ... is worth monitoring, but we do not view it as a major issue at this stage," Credit Suisse analysts said in a note.
Published: July 26, 2007 13:37h
ABB launches probe as results beat forecasts
The ABB engineering group says it may have violated a United States bribery law after discovering suspect payments made by some employees abroad.
The group, which has its headquarters in Zurich, said on Thursday it had launched an inquiry and had notified the US authorities. At the same time, ABB announced first-half figures that clearly surpassed market expectations.
"The news on the disclosure of suspect payments... is worth monitoring, but we do not view it as a major issue at this stage," commented Credit Suisse analyst Julian Mitchell.
ABB said in a note in its results statement the payments may be in violation of the US Foreign Corrupt Practices Act or other applicable laws.
"If ABB is found to have violated any of these laws, the company could be liable for penalties and other costs and the violations could otherwise negatively impact its business," it said.
ABB said it was investigating several cases of suspect payments but it was unclear whether they were linked. It added it had not made any provisions and was not sure how much money could be involved.
The news came after shares in Swiss logistics firm Panalpina of Basel fell by as much as nine per cent on Wednesday after it started an inquiry in response to a US request for documents in a bribery probe.
The US Foreign Corrupt Practices Act includes anti-bribery measures that forbid corrupt payments to influence decisions that could help a company to obtain or retain business.
ABB reported that its first-half net profit had risen to $1.266 billion (SFr1.54 billion) from $571 million in the comparable period last year.
Second-quarter profit almost doubled to $729 million as it sold transformers, switchgear and substations to customers in China and the Middle East.
"Our second quarter was marked by continued strong growth with outstanding operating margins," company CEO Fred Kindle said in a statement.
"As a market and technology leader, ABB continues to benefit from increased global investments in energy efficiency as well as power and industrial infrastructure," he added.
China alone plans to spend about $33 billion this year on extending its electricity grid to help power new plants and reduce outages.
Orders at ABB in the second quarter rose 26 per cent to $8.666 billion as growing demand for power in emerging markets and a drive from customers to update their energy transmission systems bolstered the group.
The ABB statement said the business environment for ABB during the rest of 2007 was expected to remain in line with the positive market situation in 2006 and the first half of this year.
Order growth is seen continuing on a high level but is expected to moderate in the course of 2007, said ABB. The market anticipates the group will raise its medium-term earnings goals in September as business booms.
The group has a target of turnover growth above five per cent and an operating margin above ten per cent for 2005 to 2009.
swissinfo with agencies
Traffic streaks by during the evening commute in Tijuana. (Bob Chamberlin / LAT)
A crackdown on Baja bribes
As coastal luxury resorts go up south of Tijuana, officials are seeking to end police corruption that can discourage tourism.
By Richard Marosi, Times Staff Writer
July 26, 2007
TIJUANA — Baja California sees a lucrative future in the luxury residential towers sprouting up along its coast, and officials are hoping developments by the likes of Donald Trump will bring Southern California prosperity south of the border.
But there's a problem: The 5-mile highway from the border to the beaches is notorious for police who pull tourists' cars over in search of bribes.
Now Tijuana police say they're cleaning up the route and targeting corruption elsewhere in an effort to make the border area more inviting.
They're installing cameras to catch extortion attempts, publicizing that people can pay tickets with credit cards and transferring corrupt cops. They've deployed a squad of female traffic officers to offer courteous help to tourists. They've even declared the stretch of road a "no-ticket" highway.
"I've told my officers it is strictly prohibited to stop vehicles with foreign plates, especially from California," said Victor Manuel Zatarain, Tijuana police chief.
Police say that this time, unlike before, their efforts will make a difference.
Corrupt cops have long slipped around such measures to prey on retired American expatriates, surfers and college kids on weekend getaways.
Still, with stretches of shoreline now attracting heavyweight developers from outside Mexico, the latest crackdown, even with its gimmicky touches, seems to be being taken seriously, say border experts and real estate professionals.
Government officials, they say, can't readily dismiss the concerns of investors set to pour an estimated $3.5 billion into the local economy.
"I think they're finally getting the message," said Gustavo Torres, president of the Rosarito Beach-Ensenada Board of Realtors. "They don't want to kill the goose that laid the golden egg: the developers."
Police corruption has emerged as a major issue in the mayoral campaign in Rosarito Beach, a popular weekend destination down the coast from Tijuana, which also is experiencing a real estate boom.
Along the 70-mile stretch of coast from Tijuana through Rosarito Beach to Ensenada, 25 condominium and hotel high-rises are planned or are under construction, some with golf courses and private beaches. The Trump Ocean Resort Baja, set to break ground this year on a 17-acre oceanfront bluff, is pitched as the new standard for Baja California luxury.
Potential buyers, many from Southern California, are treated to sales events with open bars and gourmet food. At one event in Del Mar, Calif., buyers got to meet Trump's 25-year-old daughter, Ivanka. Sales agents said she bought a unit in one of the three towers.
Dazzled by the five-star treatment at a sales event in San Diego, Don Smith, 61, a retired psychiatric nurse from Oceanside, waited eagerly for a chance to buy a $450,000 one-bedroom unit. The prospect of being stopped by corrupt cops on the way to the gleaming high-rises didn't concern him.
"I don't personally feel afraid that something bad might happen," Smith said.
Many potential buyers visit Mexico frequently and are not fazed by petty corruption. But Realtor association President Torres said developers have lost $3.5 million in sales this year as buyers pulled out of deals after being extorted.
One former police patrol officer in Rosarito Beach, who spoke on condition of anonymity, estimates he took more than 3,000 bribes in six years, enough to build his own house near the beach. "It was a good living," he said.
Many police officers turn to extortion, he said, because their supervisors threaten to transfer them to dangerous neighborhoods if they don't fork over a daily share of cash from bribes.
Officers usually don't demand cash from the drivers they stop, he said. Instead, they start asking a lot of questions and reviewing registration records. Most people are quick to offer a bribe to avoid long dealings with officers who seem to have nothing but time on their hands.
"For Americans, $20 is nothing," said the former officer. "The American has money. The American doesn't know the law. The American doesn't want his vacation delayed."
The best way to avoid paying a bribe, he said, is to insist on being taken to the police station.
"If the American wanted to go to the station, I would follow for a while, and then put on my lights and pretend I had an emergency. I didn't want to get in trouble with my supervisors," the former patrol officer said.
The crackdown on highway bribes in Tijuana is the result of pressure from developers, real estate agents and citizens groups.
Now cameras, not police officers, identify speeders on the highway and only traffic officers who carry new credit card machines are allowed to issue tickets. The machines allow Americans to pay citations at a reduced rate, officials said. The officers also will be monitored by cameras.
Near the border crossing, the squad of female officers — many of whom are bilingual — directs traffic in an effort to ease congestion. The women wear crisp white shirts and smile a lot to calm harried tourists.
Tijuana Police Chief Zatarain said he has transferred a notorious motorcycle squad and its supervisor from the coast to other areas. Two police officers who harassed tourists last month were thrown in jail for 36 hours as punishment, he said. This month, the Police Department began subjecting officers suspected of corruption to lie-detector tests on a new polygraph machine that officials say is 98% accurate.
Conversely, officers who show Americans hospitality are treated like heroes. After Julio Caesar Garcia, a 33-year-old police supervisor, gave driving directions to a saleswoman for the Trump development, he was given an award by Torres' real estate association.
"She was impressed that I didn't ask for a bribe, but I was just doing my job," said Garcia, who was a bit bewildered by the praise. "I never got an award for being shot at."
The latest anti-corruption measures, say border experts, reflect Baja California's growing commitment to professional law enforcement. Police salaries in Tijuana were recently doubled — to about $1,500 monthly — making the force the highest paid in Mexico, say officials who hope the increases also will make their officers the least likely to seek bribes.
Serious problems remain, including a lack of professional training, minimum educational requirements and an entrenched culture of corruption that in some departments starts at the top.
There's also the temptation of all the new money in the area.
The former Rosarito Beach police officer said many cops viewed the building boom as a bribe-taking bonanza on par with the filming of "Titanic" in Baja in the mid-1990s, when he and other police regularly stopped studio workers and visiting Hollywood executives.
"They were easy targets because of the language difference and because they were always in hurry," the former patrol officer said. "Those were great days."
Real estate professionals don't see it that way.
Their goal is to re-create the Southern California oceanfront experience in Mexico at a fraction of the price, without the problem of corrupt officers' outstretched hands.
"They kill our business," said Torres, the Realtor association president. "We want tourists and investors to feel like we love them here."
Farmers say they are unaware that growing opium is illegal
Commentary: Dynamics of the Rajasthan drug trade
VARANASI, Jul. 24
Column: Incredible India
Reshma never knew what she was carrying. She was asked by a "friend" to go to Ajmer and hand over a small parcel, which was supposed to contain letters to the person waiting for her at the railway station. At the Ajmer railway station, however, she was met by the railway police who asked for her "parcel," which was found to contain drugs, not letters. She was subsequently taken into custody. Now Reshma is in prison awaiting trial. She was told by her lawyer that if found guilty she would be sentenced to seven years in prison.
Reshma is one among hundreds of people languishing in prisons in Rajasthan and neighboring Indian states facing charges of drug trafficking. Poppy cultivation in Rajasthan is not rare. In and around Manur, there are large poppy fields. Though the license for most farmers is for a small patch of land, the actual area for cultivation is a much larger piece of property, meaning the excess yield will have to be laundered and brought to market through safe routes.
The safety of routes is ensured by bribing law enforcement officers, from the state police to law enforcement agencies often unrelated to such a trade, like the railway police. Huge quantities of drugs are transported through various means. The entire illegal process is done with the knowledge of law enforcement agencies. However, these agencies periodically have to record a few arrests and recover some drugs. Reshma is a victim of one of these operations.
The drug trade could not flourish with the help of just a few corrupt law enforcement officers, however. Although the number of police officers actively engaged in the drug trade is alarmingly high, they could not carry on their illegal activities without the support of local politicians and state-level political party leaders. Political parties, irrespective of ideologies and affinities, support the drug trade, for the huge amount of money involved in the trade also funds their parties.
The money is used to contest elections and propagate party ideologies. In the recent past, the ruling political party and its factions distributed weapons to its followers in the name of religion. Naturally, a large amount of money was required to procure these arms. The party leadership ordered local cadres to manage the affair from the money they could collect in their area. It is well known in the state that a major portion of the money came from the drug mafia.
The police and politicians alone though could not manage the trade without the help of yet another group within the state structure -- the state judiciary. An alarming number of court staff as well as presiding officers in the state judiciary are corrupt.
The state government has spared no effort to induct "favorable" officers into the system. The policy is meticulously followed in appointments ranging from court clerks to High Court judges. One of the most sought-after positions is that of the office of the prosecutor. In such a corrupt structure, it is difficult for officers with integrity to coexist with their corrupt colleagues.
It is for survival that poor women from villages in Rajasthan volunteer to do errands for these people, without much knowledge of the nature of the drug-trafficking business. Once they discover what they have agreed to do and try to escape from the clutches of the agents and a completely corrupt system, they realize it is impossible. Those who resist end up like Reshma -- in prison awaiting trial.
The conditions in prison, of course, are uncomfortable, and imprisonment naturally limits one's freedom. Restrictions of freedom are not the worst of what awaits a female detainee in custody. She is likely to be exploited for sexual gratification by prison officers, but the abuse will not end there. Some women are taken out of the prison for "external services," mostly for the sex trade. This violence against women also occurs with the connivance of officers within the system, including the judiciary.
Every person detained during the period of their trial, which can last for years, is kept in custody for 14 days. The remand must be extended every 14th day, for which the detainee must be produced in court. The detainees, women in particular, are never brought to court, however. They are taken from the prison and transported elsewhere. The presiding officer, who is supposed to see the detainee to extend the remand, does so without seeing the person. While their case is before the court and in their absence, with the connivance of the prosecutor, court staff and the judge, the women are forced to "deal with" their "clients," who book them through the prison officers.
By the time her case is finally tried -- probably after five to 10 years -- the female detainee is likely to be emotionally broken and physically unfit for anything other than to wait for the imminent death that looms for anyone infected with HIV/AIDS or other serious sexually transmitted diseases.
While the state of Rajasthan boasts about its culture and tradition, much less is known about its role in promoting and supporting the international drug trade. Needless to say, the role of a fallen justice system is never debated while human rights groups inside and outside of Rajasthan lament the deteriorating condition of the rule of law in the state.
Drug trafficking in Rajasthan is a flourishing business. No one would ever dare stop it since it is a gold mine of money, influence and power. Leaders of the state administration are intoxicated with this influence that is injected into Rajasthan like a powerful opiate by the drug mafia of the state. While the entire state is suffering from this intoxication, it is also poisoning the rest of the world by being a silent, but huge, supplier to the world market of illegal drugs and narcotic substances.
(Bijo Francis, a human rights lawyer currently working with the Asian Legal Resource Center in Hong Kong, contributed this column while visiting Uttar Pradesh. He is responsible for the South Asia desk at the center. Mr. Francis has practiced law for more than a decade and holds an advanced master's degree in human rights law.)
Authorities have destroyed opium worth more than $150m
Crackdown on India's poppy crop
By Habib Beary
BBC News, Bangalore
Police in southern India have been cracking down on a flourishing trade in opium poppies.
Authorities have destroyed opium crops worth more than $150m in a number of raids across the state of Karnataka in the past two months.
Officials say the illegal cultivation of poppies is widespread.
They say farmers have taken to growing the crop because it is lucrative and easy to grow, with a harvesting time of 90 days.
Now a spate of police raids have scared them.
"We are living in fear. We don't know when the police will come again," says Mariapppa, a farmer in Kolar, 100km (62 miles) from Bangalore.
The scene is similar in Mandya on the busy highway to the city of Mysore, a major tourist destination.
"My husband is innocent. We did not know this crop was illegal. I have not slept properly after police raided our farm," says 46-year-old Savithramma.
Her husband, A Krishnappa, is on the run.
Mr Krishnappa grew poppies on a two-acre farm at Algudu village close to the road.
Police have charged Mr Krishnappa under the stringent Narcotic Drugs and Psychotropic Substances Act.
If found guilty, he could be jailed for a minimum of 10 years with a fine of $2,200.
"The person who gave us the seeds said it was for medicinal plants. We believed him and grew the crop. Now look at our plight," says Savithramma.
Most farmers growing poppies say they are innocent.
But senior police official, R Hitendra, says: "There is no ambiguity about the law. Opium cultivation is illegal.
"We are investigating who the end user is. The involvement of drug traffickers in the racket is also being looked into."
Although poppy seeds are used in making spices, there are fears that drug traffickers could be buying to make heroin.
Deals with agents
The cultivation of opium in Karnataka and parts of southern India has caught the attention of the Vienna-based International Narcotics Control Board.
In some of the fields, police found poppies being grown camouflaged between maize, cereal and sugarcane crops.
Agriculture Minister Srinivas Gowda says farmers are being exploited by drug dealers.
"Most of the farmers did not know that poppy cultivation is prohibited," he says.
The government, which does not want to be seen as being anti-farmer, has announced an amnesty until 31 March for those farmers who voluntarily surrender the crop.
Concerned over the unrest the raids have generated among farmers, a senior leader of the socialist Janata Dal Secular party, HD Kumaraswamy, has called for a halt to the crackdown.
"The farmers are naïve and have been growing poppies as any other crop," he says.
Story from BBC NEWS:
Published: 2005/03/25 08:40:03 GMT
© BBC MMVII
Sierra Leone's President Ahmad Tejan Kabbah. (Photo: Rabih Moghrabi / AFP-Getty Images)
Grand Strategy for a Corrupt Sierra Leone
Kenday S. Kamara
July 11, 2007
Sierra Leoneans at home and abroad are at odds in a taxing debate about the breadth and depth of their country's leaders' strategies against corruption. The 2006 press release by Britain's international development secretary, Hilary Benn, is one of many press releases and statements from the international community ever since "the I.M.F.'s [International Monetary Fund's] series of 'quantitative performance criteria and benchmarks for the Poverty Reduction and Growth Facility (P.R.G.F.) [were set in place] for the continued maintenance of macroeconomic stability in Sierra Leone." The international community has periodically analyzed the Sierra Leone government's efforts to tackle corruption and the low salary structure in the country. In July 2006, the press release "on taking a stand against corruption" put forward a characteristic outline of the approach. The development secretary "called for the government and people of Sierra Leone to take greater action against corruption as he backed a governance and accountability pact during a visit to the country. The pact, supported by international partners and the government of Sierra Leone, will monitor progress on 10 critical reforms to address problems including money laundering, bribery, public theft, and election abuse which perpetuate poverty in the country" (www.wider.unu.edu).
Even though the development secretary was thoughtful of the threats to political survival reducing corruption may cause for even the most committed leaders, his foremost concern was "the urgency of improving governance and accountability, and also of citizens taking a stand against corruption," not the political survivability of high-level government actors. He lamented the fact that "corruption is both a symptom and a cause of poor governance." He maintained that the ultimate "success of an institution like the A.C.C. [Anti-Corruption Commission] will depend on the broader support it receives from the government and the real political will to root out corruption. Only the people and government of Sierra Leone can provide this" (news.bbc.co.uk), he further contended.
Both petty corruption and grand corruption have become systemic in Sierra Leone. When corruption is systemic, "any anticorruption reform becomes risky for decision makers because it creates the possibility that it will undermine their political position. Even a highly committed leader may face opposition from entrenched interests in government. In the worst cases, anticorruption reforms undermine the personal security of leaders, if they provoke a violent reaction from beneficiaries of corruption." Such manifestations in the Sierra Leonean society whose government actors' political commitment to fight corruption has been questionable is as daunting as it is treasonable. Hilary Benn's call on Sierra Leoneans for a broad national consensus against corruption would therefore prove effective when "the public, often bearing the brunt of corruption, must expose wrong doing and leaders must listen. And wrongdoers must be brought to the courts, supported by a strong police force and legal system" (www.wider.unu.edu) and prosecuted for treason.
This action call against corruption is more relevant today than ever. Many surveys have confirmed that the "country's public sector is riddled with corruption. Two-thirds of users of public services, from telephones to banks to schools or hospitals, reported having to pay bribes to use the service. Forty-two percent of public officials have admitted to mismanaging their institutions, including misappropriating budgets, usually by drawing on international aid earmarked for [national reconstruction]" (www.odiousdebts.org). A perilous mismatch has opened up between the Sierra Leone government's national responsibility and its political inclination to fight corruption. As made clear by the A.C.C.'s inability to aggressively pursue culpable government actors and the office of the president and vice president's covert actions to protect party heavyweights from prosecution for crimes of corruption, the country's national program against corruption has no teeth. Without redress, the political pillars of a strong national consensus against corruption will continue to crumble, making the country chronically vulnerable to the perils of a conflicting and incomprehensible program against corruption.
Solomon Berewa, Ernest Koroma, and Charles Margai—any one of these presidential candidates who understands the resolve and dignity of working out the right balance between Sierra Leone's anticorruption purposes and its political instruments, is in a position to win twofold. The visionary candidate would likely draw solid national support; as in the 2004 municipal elections with A.P.C.'s (All Peoples Congress') Winstanley Johnson declared mayor of Freetown after running a campaign against "the poor state of the council's finances with staff remaining unpaid for months on end" (www.sierraleonedebate.com); in the 2007 elections, anticorruption ideas, unemployment, electricity, roads, health, water, food, and shelter are set to be decisive issues. The elected candidate would also drum up international support by considering a compelling strategy that is politically viable, thereby pacifying a nation that looks forward to its politicians to provide strong leadership.
Putting together a compelling strategy will require "the commitment of political leaders to reform—that is, their willingness to implement and sustain reforms" (www1.worldbank.org). Simultaneously, it will be critical to toughen the nation's anticorruption policy by garnering public support for a new direction of national action. Forcefulness is the conduit to addressing corruption. It is far better for the political leaders to seriously consider a clearer grand strategy that enjoys national consensus rather than being nervous that anticorruption reforms undermine their personal security as that would be as catastrophic as it would be unpatriotic.
For Sierra Leoneans who lived through the idyllically stable era of Prime Minister Milton Margai, "who was neither corrupt nor did he make a lavish display of his power or status" (www.sierra-leone.org), the current conditions of corruption at the highest level is a damning aberration. Without a doubt, President Tejan Kabbah has been a grossly negligent president, for the most part due to his failure to "distance himself from corrupt officials or put them on trial" and him not serious about implementing measures necessary "in ridding the country of the corruption scourge" (www.odiousdebts.org).
Following the sudden death in office of the conservative but tolerant Milton Margai in 1964, came the "glamour and increased pomp and pageantry of the office of the prime minister" under Albert Margai, who led a government that was "racked by accusations of corruption in high places and of disregard for the interests of significant sectors of the population" (www.sierra-leone.org). In 1967, noncommissioned members of the military were worried that the new independent nation was in the throes of a civil war following the Brigadier Lansana and the Colonel Juxon-Smith coups. The Lansana coup was seen as a calculated attempt by a Mende-dominated military to sustain the nepotistic and ethnically based era of the flamboyant Albert Margai who was reluctant to concede defeat to Siaka Stevens whose A.P.C. party clearly won the 1967 elections. The counter coup by Col. Andrew Terrence Juxon-Smith two weeks after the Lansana coup also did not last long. The noncommissioned members thus favored staging another coup against the colonels who then coordinated the return of the exiled Siaka Stevens to power in 1968.
Siaka Stevens turned out to be an extraordinarily controversial leader. With some analysts remembering him as "the Huey Long of African politics: an avuncular figure, whose folksy pork-barrel deals kept everyone happy, [Stevens] was the architect of the plunge into lawlessness, kleptomania, and social immorality that have undermined the Sierra Leonean political system" (www.worldviewmagazine.com). Stevens had a "tough-guy" approach to politics. He pursued his enemies and conquered them. He squared scores with the "paramount chiefs he felt had been involved in Brigadier Lansana's short-lived coup." On economic matters, Stevens' leadership made easy a methodical "decline in per capita G.D.P. growth from 2.5 percent in 1960-70 to -0.5 percent." The people also accepted kleptocracy as a way of self-enrichment. "State-sponsored corruption manifested by public theft; illicit payments and bribes, and manipulation of access to diamond and other natural resources defined an era" (www.gdnet.org) that compromised the development and growth of the nation.
This national acceptance of widespread corruption saw the popularization of "the self-seeking ethos 'oosie dem tie cow nar dae ee go eat,' meaning a cow grazes wherever it is tethered. [This shift in the attitudinal composure of the people] retreated into a culture of fear, silence, and complicity, culminating in one party rule from 1978." Corruption became a life of choice for Sierra Leoneans. The Stevens-led A.P.C. was able to make Sierra Leoneans believe the party ideology of kleptocracy due to the party's monopoly on power, but the party's slogan of "A.P.C. Lives Forever" soon proved politically unsustainable. Starting with the extremely complacent President Joseph Saidu Momoh, Stevens' handpicked successor's declaration of failing the nation and his abandonment of state security, "with little resistance, disillusioned war front soldiers storming Freetown ostensibly to protest their neglect ended up overthrowing the A.P.C. government" (www.gdnet.org). It was clear that Momoh's self-destructive ethos and survival strategy justified the military's motivation to usurp the high-level responsibility of ruling the nation.
After the A.P.C.'s demise and the end of the N.P.R.C.'s (National Provisional Ruling Council's) yippee-ka-yay four-year orgasm with state power in 1996, the Kabbah-led S.L.P.P. (Sierra Leone Peoples Party) approach to politics wobbled clumsily between barren alternatives. President Kabbah's shoddy adventure with state power quickly chipped away the country's expectations for development. The S.L.P.P.-led administration was bedeviled with self-destructive machinations, which largely account for "the coup of 1997, the rebel re-invasion of Freetown in January 1999, and the government's generally weak war machine" (www.gdnet.org).
On security, the international community had embraced a path to an end in violence, preferring a stay of execution of the 24 members of the armed forces of the Republic of Sierra Leone who were "convicted before a court martial in Freetown for treason and failure to suppress a mutiny." But the S.L.P.P.-led administration, virtually blinded by implacable rancor, would have none of it. As the Human Rights Committee's special rapporteur for new communications reported, "They were deeply disturbed by the information that Abdul Karim Sesay [and 23 others] were executed by firing squad outside Freetown on Oct. 19, 1998" (www.law.wits.ac.za). Most Sierra Leoneans shunned the brutal and public execution of the 24 soldiers, including a female nurse in the military, Maj. Kula Samba, by "Nigerian soldiers of fortune" in 1998, instead favoring the illusive safety of national reconciliation advocated by the Human Rights Committee.
President Kabbah again tried "devious diplomacy," pretending to reconcile with his enemies through what he called a "government of national unity" by working with the rebel chief Foday Sankoh as second vice president of the republic and the A.F.R.C. (Armed Forces Revolutionary Council) boss Johnny Paul Koroma as an honorable member of parliament. But his strategy, though clever, still elicited the indignation of the state's party members who viewed his strategy as little more than capitulation to the interests of the R.U.F. (Revolutionary United Front) and A.F.R.C. ring leaders who had caused much collective suffering for the people of Sierra Leone. Apparently, President Kabbah had steered Sierra Leone toward a new kind of "reconciliation."
However, with the official end of the war in 2002 as a backdrop, Kabbah had flipped flopped to reach an agreement with the United Nations to establish the Special Court of Sierra Leone. The new direction mandated a commitment to both truth and reconciliation: "power to prosecute persons who bear the greatest responsibility for serious violation of international humanitarian law and Sierra Leonean law—committed in the territory of Sierra Leone since Nov. 30, 1996, including those leaders who, in committing such crimes, have threatened the establishment of and implementation of the peace process in Sierra Leone." This move, although disapproved of by the predominantly Southern members within his party because he had disowned their southern deputy minister of defense Samuel Hinga Norman whom Kabbah believed "exceeded his mandate in the struggle to restore his government" and was one of those who together with Foday Sankoh, Sam Bokarie, and Johnny Paul Koroma, bore the greatest responsibility for committing war crimes and crimes against humanity, brought some closure to most Sierra Leoneans.
Remarkably, one of Kabbah's greatest feats was satisfying his indignant state party and many Sierra Leoneans to use the pretext of the Libyan-trained rebel leader's inability to control his rag tag army of rebel forces to arrest the rebel chief. "After 22 months in custody, facing charges at the international tribunal set up to try war crimes in Sierra Leone, [the demented Foday Sankoh] ended up as a shadow of his former self." The rebel leader "died [in July 2003] in a Freetown hospital while in the custody of the special U.N. war crimes court for Sierra Leone" (news.bbc.co.uk). Again, like the demented rebel chief who died while in the custody of the Special Court, the dishonored defense deputy minister, Samuel Hinga Norman, who stood as the first accused in the Civil Defense Forces (C.D.F.) case, died in February 2007 in a hospital in Dakar, Senegal.
On economics, Kabbah has the challenge of rekindling growth and reducing poverty. He has the support of the international community, which became committed to helping to address the problem of corruption in Sierra Leone. The commitment of the international community led by Britain, the former colonial master, instilled expectation, encouraging all Sierra Leoneans to unite around a common enemy—corruption. Moreover, the strategic adoption of the United Nations Convention Against Corruption on Oct. 31, 2003, demonstrated a sense of strong international consensus behind the struggle against corruption. Former United Nations Secretary General Kofi Annan, upon adoption of the U.N. convention, recognized the compelling truth that "corruption hurts the poor disproportionately—by diverting funds intended for development, undermining a government's ability to provide basic services, feeding inequality and injustice, and discouraging foreign investment and aid" (www.canadafreepress.com).
Re-establishing government authority and rebuilding key institutions like the army, the police, education, health, and the minerals sectors was the outcome not just of strategic need but also of the shifts in the nation's expectations for the best to come out of the Kabbah presidency. But Kabbah's declaration of corruption as "a national security issue"—a declaration that was intended to underscore the gravity of the problem of corruption—was not good enough. Even his signing of the Anti-Corruption Act in February 2000, which established the Anti-Corruption Commission was not good enough either. President Kabbah knew that corruption was common in every sector of the economy—the allocation of scarce or donated resources to the wrong activities and persons, corruption in taxation, and bribing customs officials. Kabbah also acknowledged that it is the primary responsibility of government to create the conditions for ensuring the economic and social well being of its people. He even acknowledges that corruption is for African states as important a threat for survival as is terrorism for some of the largest world powers today. But he chose to be soft on corruption waiting for democracy to take its course. Kabbah believes that "in a democracy, authority rests on the pillar of popular support, good governance, and the rule of law" (www.statehouse-sl.org). He did not believe that authority is derived from force, where decisions can be imposed without the consent of the people, and he could, or should only do no more than follow the exact words of the constitution and carry out the laws of parliament. Kabbah was therefore a weak and negligent president who failed to do much to assert his leadership as a means to the end of winning the fight against corruption.
A Nation Neglected
It is common knowledge that the feebleness of the state in combating corruption did not start with Tejan Kabbah. Political discipline dropped sharply following the death of Prime Minister Milton Margai, reaching a post-independence low when Albert Margai stepped into his brother's shoes as prime minister. Repeated cases of corruption exposed in the government of Siaka Stevens that also followed only marked the scooping out of anticorruption legislations that did not have the force of law. The Kabbah administration then continued with the trends of the Stevens era, ensuring today's systemic corruption is every bit as wide as the corruption pervasiveness that haunted the flamboyant Margai and Stevens administrations. Parliamentarians are also aware of the gravity of the problem. On the most basic questions of Sierra Leone's grand strategy—severely punishing corruption—representatives of state power and parliamentary power could not balance the ends and the means.
When members of parliament met at the Kimbima Hotel in Aberdeen, Sept. 48, 2006, for a capacity building course on anticorruption, there were echoes of piling pressure on Kabbah's government to submit to parliament the African Union (A.U.) Convention on Preventing and Combating Corruption and Related Offences for ratification. Three years after the A.U. convention was formally adopted by African heads of state in Maputo, Mozambique, in July 2003, the Kabbah administration had still not submitted it to parliament for ratification. With parliamentarians in partnership with civil society organizations opting for the ratification of the A.U. convention and the Kabbah administration choosing to be negligent on such a critical issue as combating corruption and ensuring that curative and penal actions are taken in established cases, the national consensus between power and parliamentary collaboration—the formula that created the Anti-Corruption Commission—has come undone.
Indisputably, the Sierra Leone parliament is still home to a few dedicated anticorruption crusaders, such as Bernadette Lahai (S.L.P.P. member of parliament for Kenema district) and Dauda Sulaiman Kamara (A.P.C. member of parliament for Kambia district). But they are isolated by the leaders with power. And some parliamentarians, especially those who wish to hold on to their seats in parliament, are keen to make evident their resolve on matters of combating corruption. But the parliamentary crusaders are being ignored by the increasingly powerful state machine. The philosophical overlap between state power and parliament is thus inconsequential, and the areas of shared aims are external at best. Most state leaders and parliamentarians still believe that they have national responsibilities, but there is little solidarity on how to balance means and ends. And on the pivotal issue of state power versus parliamentary power, the two power brokers are moving in opposite directions—with the escalating schism evident among the public and the politically privileged.
In the British Department for International Development (DfID) sponsored February 2005 Commonwealth Parliamentary Association (C.P.A.) Workshop to Strengthen Legislatures in Commonwealth Africa held in Freetown, all parliamentarians who attended the workshop maintained, among other key points, that "members should continually examine existing anticorruption legislation to determine if it is still relevant" (www.cpahq.org). A similar thought was echoed by the world organization of national parliaments, the Inter-Parliamentary Union (I.P.U.) maintaining that with national "parliaments empowered to establish the legal framework for the organization and management of public affairs and society, they should promote the inclusion in their national constitutions of the major principles of the probity of political figures, institutions and public servants and transparency in public administration" (www.ipu.org). This made clear that the interest in combating corruption is not just a national concern but has become a Commonwealth concern.
Nonetheless, a recent assessment recorded by the Truth and Reconciliation Commission (T.R.C.) lamented that "Sierra Leone remains in the grip of pervasive corruption, which, if not arrested, will sap the country of its life force and lay the ground for further conflict." As for action the government is taking to combat corruption, other experts have grieved over the reality that "Sierra Leone is making little progress in tackling corruption and is squandering foreign aid, leaving its most vulnerable citizens as destitute as they were before its civil war ended five years ago." Similarly, former West Africa director for the International Crisis Group think-tank Mike McGovern commented that "things are as bad, if not worse, than they were when the war started in 1991. And Tony Blair's government bears a lot of responsibility for facilitating this state of affairs, precisely because they did not hold the government to account" (www.alertnet.org).
Fueled by these bleak assessments, a major development crisis has engulfed Sierra Leone. According to one widely used index (Index of Economic Freedom), "Sierra Leone ranks 126th out of 158 countries in Transparency International's Corruption Perceptions Index for 2005" (www.transparency.org). The country today is more economically destitute and pitiful than at any time in the last 45 years. After Kabbah won the controversial 1996 elections and gained a majority in Parliament at the same time, many Sierra Leoneans anticipated that as having lived abroad for many years working for the United Nations he was going to use his international experience to foster development. Instead, cold-blooded corruption under his watch further ruined the nation. Kabbah, despite his initial pledge on his assumption of office to reverse the downward trend of a failing state, failed to assertively act as much as necessary to restore hope in a population that had been so demoralized and rendered desperate in decades of methodical plunder by government actors.
The sources of Kabbah's cold-blooded negligence might equally so be because of Sierra Leoneans self-destructive behavior patterns which he said made it hard for him to govern. Nonetheless, as he leaves the office of the president for good, Kabbah claimed to be content that he has played his part "in the progress and development of his country and has made a difference in his own humble way" (www.thepatrioticvanguard.com). There are speculations that Kabbah will retire to his new home in Conakry, Guinea, where he has built for himself a luxurious mansion, leaving Sierra Leone's economy more vulnerable than ever before. The problems created by Kabbah's negligence have proved too costly for Sierra Leoneans. Meanwhile, Sierra Leone's still unregulated corruption is causing more suffering and continues to decimate the population of the country as "several staggering indicators" are showing that Sierra Leone has "one of the highest maternal and infant mortality rates in the world, two of the worst symptoms of the country's ailing health system" (www.mg.co.za). Likewise, at a recent launching ceremony of his organization at the Miatta Conference Hall, Youyi Building, the country director of ActionAid Sierra Leone, Tennyson Williams, has gone on record to confirm that "hunger is killing 16,000 children daily" (allafrica.com), again a testament of the country's pitiful state.
Visibly, the political conditions that once encouraged nationalism have weakened over 40 years of gross mismanagement of state power. The power brokers—state power and parliamentary power—do not seem to agree about what the nature of the country's anticorruption strategies should be as well as about issues such as roads construction, housing, and electricity. Reformers are in ever-shorter supply. Weak parliamentary oversight powers, a negligent executive power, and the set mentality of a corrupt population have all contributed to sustaining the status quo. A generational presence is taking its toll, too. Almost 75 percent of cabinet ministers in the Kabbah administration are recycled ministers who served in the Stevens and Momoh administrations. The "old generation" is slow to retire from political life, maintaining the status quo of a corrupt-minded service.
Restoring Common Sense Leadership
In the years immediately after the death of the great statesman Milton Margai, strong unpatriotic actions by the ambitious Albert Margai and the cunning Siaka Stevens produced erratic and perilous shifts in Sierra Leone's development obligations and ultimately led to ruining a nation of vast natural abundance. A similar dynamic has unfolded during the presidency of Kabbah. The negligent conduct of the Kabbah administration has proven politically and economically damaging. Eyeing the 2007 elections, the A.P.C. and P.M.D.C. (Peoples Movement for Democratic Change) are readying ambitious plans to breathe new life into state institutions. But they, too, will find their preferred grand strategy politically and economically unsustainable. The S.L.P.P., now led by Kabbah's surrogate, the determined Solomon Berewa, has little patience for free and fair elections—and will do whatever it takes to retain state power in S.L.P.P. hands. Especially taking clues from the April 2007 elections confirmed by Nigeria's leading election monitoring outfit, Transition Monitoring Group, and the United States-based monitoring group, the International Republican Institute (I.R.I.) as apparently flawed elections in Nigeria that benefited Umaru Yar'Adua (Obasanjo's surrogate), with an S.L.P.P. landslide victory in Sierra Leone, it could be argued that sustained corruption and negligence of state power could once again obstruct the dawn of a new nation, perhaps even provoking another civil conflict.
The Sierra Leonean electorate already seems to be heading in that direction. According to a recent independent research poll, 87 percent of Sierra Leoneans interviewed thought that Sierra Leone needs a new direction. If the incumbent party continues to pursue a grand strategy that goes beyond its political means, rebellious sentiment among Sierra Leoneans is sure to spew out again. Sierra Leoneans need to pursue a new grand strategy that is politically sensible. In today's politics of mediocrity, with state power being so appallingly misdirected and parliamentarians too weak to compel ethical and administrative codes of conduct, restoring common sense means bringing Sierra Leone anticorruption strategies back in line with political means. Finding a new national balance that guarantees responsible state and parliamentary leadership against Sierra Leone's systemic corruption requires an effort that is as compelling and direct as it is persistent.
First, a common sense strategy would entail the office of the president sharing more burdens with the house of parliamentarians. Developed countries have regularly closed the gap between state power and its obligations by devolving strategic responsibilities to congressional or parliamentary actors. The United States Congress and the British Parliament, for instance, do have certain mechanisms in place for balancing power. They uphold a principle of government under which "the separate branches are empowered to prevent actions by other branches and are induced to share power" (www.britannica.com). But the parliament in Sierra Leone finds it hard to engage with strategic priority-setting exercises, and the parliament is often too weak and lacks a formidable establishment to play a role in legislating applicable anticorruption policies. Parliament has always been the subservient arm of the executive. This has to change. Parliament has to be a versatile policy forum for debate and a framework that brings all parliamentarians and its partners into dialogue on the challenges of corruption. It has to be an important check on executive power. It should use its power and good offices to demand greater transparency in state power and the conduct of cabinet ministers of the various departments.
Parliament ought to build on pragmatic partnerships with civil society groups such as professional associations; the Chamber of Commerce and its member business entities; local nongovernmental organizations including national religious organizations; international agencies such as Transparency International, the USAID, the DfiD, the O.E.C.D. (Organization for Economic Co-operation and Development), and the Global Integrity Project; labor unions; housing associations; and the media, to coordinate an earnest fight against corruption. Parliament should be better prepared to engage in meaningful consultations with these local and international stakeholders as part of the legislative process to "ensure the existence of legislation with dissuasive sanctions which effectively and actively combat the offence of bribery of public officials" (www.adb.org).
Second, the Anti-Corruption Commission must rebuild its hard power capable of engaging crimes of corruption in A.C.C.'s terms. To do so, the commission must have the funds necessary to pursue crimes of corruption and the appointment of the commissioner and deputy commissioner of the commission should be run in an open fashion to the public. In September 2000, the Sierra Leonean veteran journalist Philip Neville suggested to Worldpress.org that "the only way that the A.C.C. can be viable, can be productive, is if it is staffed with independent people. We need expatriates leading that commission" (www.worldpress.org), he said. Parliament should consider this alternative of outsourcing the task of transforming the A.C.C. into a body with independence and international clout to foreign expatriates. Should the A.C.C. be run by foreign experts, its work will attract great international clout, and become monetarily appealing, full of autonomy, and well supervised. The experts will be in an unbiased position to maintain the best recruits and produce investigating officers dedicated to the tasks of ensuring that embezzlement and bribery offences are quickly investigated and prosecuted.
Third, another common sense strategy is taking effective measures to coordinate public awareness activities including national press club luncheons, student union debates, seminars, inter-departmental round-tables, face-to-face meetings with senior members of the state, civil servants and non-government aid groups to discuss corruption and to examine the relevance of existing anti-corruption legislation aimed at creating an anticorruption culture. Also, measures that provide for "a meaningful public right of access to information" on corruption matters should be put in place so that the general public, particularly the media, will have access to such information.
The final component of this grand strategy should be relevant use of traditional belief systems. The extent to which traditional belief systems in Africa help to stem corruption has never been entirely researched. However, the African management expert Mzamo Mangaliso's analysis of the centrality of the isangoma, or traditional healer in employee's well-being maintenance in South Africa disclosed salient facts. Some companies in South Africa are reported to have taken full advantage of the power of the isangoma as the following real-life case illustrates. "Faced with large-scale pilfering, one company tried everything—including peer monitors, fingerprinting, and police investigations—to stop it. After all efforts to stop the pilfering had failed, the C.E.O. finally called in an isangoma. The isangoma told the employees that the person who had stolen the goods would die from a spell cast on all employees if he/she did not confess within 24 hours. Within eight hours, an employee confessed. In this case, foreign-evolved management tactics, such as peer control, police investigations, and fingerprinting, did not work." Though management and the workers came from entirely different worldviews, the successful strategy engaged employees in their own worldview.
Far from being superstitious, if Sierra Leoneans believe in the existence of meso-cosmic spirits, it would be strategic to retain the services of traditional healers. By the A.C.C. retaining the services of traditional healers and all public servants including cabinet ministers told they would die from a spell if they steal public funds or accept bribes would result in easing corruption in public service that would be beneficial for the government and the people of Sierra Leone.
Taking the Bold Step
"Forty non-governmental and civil society organizations (N.G.O.'s/C.S.O.'s) from around the continent (including women's, grassroots, and labor organizations, churches, research institutions, and policy advocacy groups) [that met in Addis Ababa May 23-24, 2007, once claimed that] 'good governance is a process by which governments and people together identify shared values, needs and challenges, set priorities and develop programs to address those needs and challenges and jointly manage the implementation of those programs and the available resources, through a transparent and accountable process with shared responsibility for outcomes that are responsive, gender-sensitive and broad-based'" (www.un.org). They may have over worded their claim, but they articulated an enduring truth: good governance requires collaborative effort. Balancing the ends that justify the means would help rekindle the conviction of the Sierra Leonean public in promoting good governance. But implementing strict anticorruption policies will require hardening the A.C.C. and building an unwavering consensus behind it. The relative success demonstrated by "Botswana's Directorate on Corruption and Economic Crime (D.C.E.C.), [the equivalent of Sierra Leone's A.C.C.,] have attracted the attention of researchers and encouraged the view that, subject to certain conditions, the A.C.C. remains a viable vehicle for driving forward anti-corruption strategies in Africa" (www.u4.no).
The next president will have to take advantage of the distinct areas in which his executive branch and parliament can find solidarity and goodwill. The A.P.C., P.M.D.C., and S.L.P.P. members of parliament must work together on arming the A.C.C. for national development. Many parliamentarians, corporate executives, think-tank gurus, and academic social commentators, might support outsourcing A.C.C. functions to foreign expatriates if the president is willing to explain the need for foreign expatriates in the A.C.C. as necessary to maintain the unquestionable independence and fairness of the body. Having an understanding of the benefits of an independently and strictly administered A.C.C. would reconcile any differences that might play in the debate. So will more efforts to make the A.C.C. independent and more assertive—executive and parliamentary support for outsourcing A.C.C. functions, making the A.C.C. financially solvent, initiating public awareness campaigns, and making use of traditional belief systems. The next president should be qualified and tough to lead these efforts that constitute a grand strategy for a corrupt Sierra Leone that not only meets the country's anticorruption needs but also restores common sense leadership in Sierra Leone.
Kenday S. Kamara is a native of Sierra Leone, where he attended Fourah Bay College, University of Sierra Leone, 1982-1986. He is currently an educator in the Prince George's County education system in Maryland, an organizational development consultant for MedCall Staffing and Management Consultants, Inc., and a Ph.D. scholar-practitioner in applied management and decision sciences at Walden University specializing in leadership and organizational change.