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For the Love of the Game: Corruption & Sports NGOs

tennis-player-1246768_1280This article, written by GRC Solutions Expertise Panel member Jeremy Sandbrook and co-authored with Liz Burton,  examines some of the types of corruption that has taken place within sports NGOs, why they are so susceptible to it, and what some of the potential solutions are to solving the problem.

While sport is now the dominating source of entertainment worldwide, it has a darker, shadier under-belly it just can’t seem to shake-off – Corruption.  Sports NGOs are particularly vulnerable with bribery, match-fixing, extortion, doping and money laundering now common place.

 

Sports NGOs and ‘Corruption as usual’

It seems that barely a month passes without yet another report of corruption in sports being splashed across newspaper headlines.  These include members of FIFA’s executive committee accepting bribes, a former president of CONCACAF charged with fraud and money laundering, hosting nations paying bribes to win Olympic hosting rights, match-fixing, and the IAAF’s involvement in corruption and cover ups.

This phenomenon isn’t just limited to football and athletics however, with the following examples showing just how wide spread the issue is:

  • Cricket has witnessed allegations of both spot-fixing and match-fixing involving players from Pakistan, England, New Zealand, India, South Africa, Sir Lanka and Kenya.  There have also been on-going match-fixing allegations made in relation to the Indian Premier League (the most lucrative cricket event in the world), with two of the league’s eight teams recently suspended for two years over a corruption scandal;
  • Tennis is also currently undergoing a crisis as allegations of match fixing engulf the sport;
  • Cycling has for many years been dogged with allegations of illegal doping, with the issue only coming to a head when the International Cycling Union was accused of knowingly protecting Lance Armstrong – cycling’s long time poster boy – against doping allegations; and
  • Badminton, boxing, handball and other sports, including US collegiate sports, have all suffered from similar credibility gaps.

It is clear from this that there are serious underlying issues that sports NGOs need to address in order to clean up their respective sports.

December 9 is International Anti-Corruption Day

This important campaign aims to celebrate the United Nations’ Convention against Corruption. It also takes stock of worldwide efforts to tackle corruption.

Sponsored by the UN Office on Drugs and Crime (UNODC) and the UN Development Program, it attracts widespread engagement and support internationally.

According to the Anti-Corruption Day website, “Corruption is a serious crime that can undermine social and economic development in all societies.”

“No country, region or community is immune.”

“This year UNODC and UNDP have developed a joint global campaign, focusing on how corruption affects education, health, justice, democracy, prosperity and development.”

Education and training play an important role in tackling corruption. To highlight International Anti-Corruption Day, GRC Solutions will be publishing a range of resources and commentary over the week ahead.

We’ll be offering broad-ranging multimedia content that will place International Anti-Corruption Day in the context of ongoing anti-corruption measures. We’ll also consider what consequences corruption poses, not only for its victims, but also for those who engage in it.

Stay tuned.

Talk to GRC Solutions today about our range of Anti-Bribery & Corruption courses, as well as our broader Salt Compliance online training library.

International Anti-Corruption Day: everybody has a role to play in tackling corruption

It blights lives, and blunts social and economic growth. And the efforts to stamp it out are enforced by some of the severest laws in the world.

Corruption is the broad term we use to describe dishonest conduct or the abuse of power by a person for personal gain. Arguably the best-known form of corruption is bribery.

Every year, the costs of corruption are said to amount to USD$2.6 trillion globally, with an estimated $1 trillion paid in bribes. One estimate indicates that private sector corruption alone accounts for US$515 billion annually.

December 9 is International Anti-Corruption Day, a United Nations initiative designed to raise awareness about the risks and consequences of corruption. Sponsored by the UN Office on Drugs and Crime (UNODC) and the UN Development Program, it attracts widespread engagement and support internationally.

To mark last year’s campaign, UN Secretary-General Ban-Ki Moon said, “To dismantle corruption’s high walls, I urge every nation to ratify and implement the UN Convention against Corruption.”

“Its ground breaking measures in the areas of prevention, criminalisation, international cooperation and asset recovery have made important inroads, but there is much more to do.”

Everyone has a role to play in stamping out corruption, a point made in a statement released by the UNODC.

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It states that “people can – and should – inform themselves about what their Governments are doing to tackle
corruption and hold elected officials responsible for their actions.”

“Actions are also key – reporting incidences of corruption to the authorities, teaching children that corruption is unacceptable and refusing to pay or accept bribes,” it continues.

The costs of engaging in corrupt conduct are huge. One person who knows this more than most is Richard Bistrong. A former sales executive, Richard was sentenced to 18 months in prison for bribery. His crime involved attempting to win contracts from the United Nations and several foreign countries by bribing officials.

Prior to his jail term, Richard spent two and a half years as a US government witness, agreeing to go undercover to expose networks of corruption.

Today, he’s a leading anti-bribery and corruption consultant, speaking regularly about his experience and the toll it took on his life and the lives of his loved ones.

“During the many years when I was working in the field of international sales, I was aware that I was engaging in illegal behaviour,” he says.

“However, at that time in my life, I wasn’t thinking about getting caught and did not think I would get caught.”

Anti-corruption measures are enforced by strict legislation worldwide, including the Prevention of Corruption Act in Singapore and section 70 of the Commonwealth Criminal Code in Australia.

The US Foreign Corrupt Practices Act has continued to attract high-profile international cases. To cite just two cases in 2015, there has been a USD$19 million settlement by pharmaceutical company Bristol-Meyers Squibb and a $14 million case involving Japanese conglomerate Hitachi.

The UK Bribery Act has also drawn scrutiny for its recognition of a broad range of offences. This includes the offence of failing to prevent bribery by a third party, which sits alongside the traditional offences of bribing (including the bribery of foreign public officials) and receiving bribes.

Recently, a Scottish cabling systems supplier Brand-Rex Limited became the first company to fall foul of this offence since the Act took effect in 2011.

Every year, independent body Transparency International publishes a Corruption Perceptions Index which ranks countries in relation to perceptions of corrupt practices from the least to the most corrupt.

While the top of the list tends to remain consistent, the 2014 list contained some surprises. Singapore fell from the top five for the first time to seventh place. Australia slipped out of the top 10 altogether.

As one report by the Organisation for Economic Co-operation and Development (OECD) explains, corruption increases the cost of doing business, leads to waste and the inefficient use of public resources, perpetuates poverty and undermines the rule of law.

Drawing attention to corruption through education and training – equipping people with the practical means to identify what it is exactly, avoid corrupt conduct and report it through the proper channels – is crucial to tackling it.

In the lead-up to International Anti-Corruption Day, GRC Solutions will be offering a range of resources and commentary.

Talk to GRC Solutions today about our range of Anti-Bribery & Corruption courses, as well as our broader Salt Compliance online training library.

Macau real estate billionaire latest charged in UN bribery case

Billionaire real estate developer Ng Lap Seng is the latest person to have been indicted in the US for involvement in a scheme to bribe former president of the United Nations General Assembly, John Ashe.

Three other people have been named in the indictment, including former chief executive of the Global Sustainability Foundation and Australia-China social queen, Shiwei Yan, and Francis Lorenzo, a suspended deputy Dominican Republic ambassador to the UN.

According to prosecutors, Lorenzo was one of several intermediaries used by Ng to pay Ashe more than USD$500,000. The bribes were intended to elicit Ashe’s help in acquiring UN support to build a UN conference centre in Macau, where Ng is based.

Ashe is alleged to have taken more than USD$800,000 in bribes from other Chinese businessmen to support business deals in Antigua. Although covered by diplomatic immunity, he faces tax charges for under-reporting his income by more than USD$1.2 million.

Ng also faces money laundering charges after making false statements to custom officials about why they brought USD$4.5 million in cash from China into the US.

US authorities deemed Ng to be a flight risk due to his financial resources, which include USD$1 billion in real estate holdings. He has since been released on a USD$50 million bail and currently lives under 24-hour house arrest in his apartment in Manhattan, pending trial.

The US Foreign Corrupt Practices Act (FCPA) has a wide extraterritorial reach. Under the FCPA, individuals may be subject to fines of up to USD$250,000 per act of corruption and/or five years’ imprisonment.

GRC Solutions is the leading provider of online compliance training on Anti-Bribery and Corruption and Anti-Money Laundering. Contact us today for more information about out off-the-shelf and bespoke options.

Sources: Sydney Morning Herald, Yahoo! News, CNN

Former Singapore resort director charged with corruption

The inside of a darkly lite casino, with an ominous statue in the foreground

An ex-director of one of Singapore’s major integrated resorts faces up to five years’ jail and/or a fine of SGD$100,000 for seven charges of corruption.

Soh Yew Meng was allegedly paid at least SGD$317,000 in bribes in the course of his position as director of Resorts World Sentosa (RWS). The bribes were said to have been paid as consideration for “furthering [certain contractors’] business interests” in RWS projects, including restaurants and cafes located in the resort.

The bulk of the bribes comes from two SGD$150,000 payments made by the managing director of a furniture and construction company to Soh between 2013 and 2014 to “further the business interests” of the company. Other contractors accused of making corrupt payments to Soh include a lighting designer, a building company and a security systems business.

The charges against Soh also include three accounts of attempting to obtain corrupt benefits of an unspecified amount from a contractor and an individual.

Tan Siow Hui, a freelance quantity surveyor working with Soh, has been prosecuted for conspiring with him to receive and attempt to obtain bribes from contractors.

The Corrupt Practices Investigation Bureau (CPIB) has identified a number of locations where the bribes were paid, including car parks and a local canteen. It emphasises that it will not hesitate to act against parties involved in corrupt practices: “Procurement systems and processes are put in place to ensure fair competition from all bidding vendors. But when individuals circumvent these processes and seek benefit for themselves, a level playing field becomes impossible to achieve.”

Last year, Singapore fell two places in the Corruption Perceptions Index ranking of least corrupt countries in the world. It currently sits at 7th place.

Are you on top of your international anti-bribery and corruption obligations? GRC Solutions produces off-the-shelf and custom compliance training for a number of jurisdictions, including Australia, New Zealand and Singapore. Contact us today for more information.

Sources: The Straits Times, Today Online, Channel NewsAsia

Former Commonwealth Bank IT executive arrested for alleged receipt of corrupt payments

insider trading

An international investigation has led to the arrest of Keith Hunter, former general manger of information technology (IT) service management and operations at the Commonwealth Bank Australia (CBA). Hunter pleaded not guilty to charges of bribery. Over USD$1.5 million in corrupt payments relating to the case have been frozen.

Hunter is alleged to have been involved with granting a publicly-listed US technology provider a lucrative contract without first putting it to public tender, in return for bribes. Detectives have estimated the value of the illegal payments at tens of millions of dollars. A second former CBA manager is also wanted for questioning as part of the ongoing investigation.

CBA alerted NSW Police earlier this year to a possible corrupt relationship between the two men and the technology provider. The Bank had conducted its own internal investigations into what is alleged to be suspicious payments made to two of its senior IT managers.

The NSW Police Fraud and Cybercrime Squad has congratulated CBA on coming forward with their suspicions, warning that any corruption in the business community would not be tolerated. The Squad’s Commander, Detective Superintendent Arthur Katsogiannis, noted that the offence of corrupt commissions carries a seven-year jail sentence.

A CBA spokesperson has confirmed the Bank’s zero tolerance policy for any illegal activity by its employees.

The World Economic Forum estimates that bribery and corruption increases the cost of doing business by up to 10%.

GRC Solutions provides online compliance training courses in anti-bribery and corruption. We offer off-the-shelf courses as well as customisation.

Sony investigated for Chinese bribery allegation

According to documents leaked during its recent hacking, Sony Pictures Entertainment is under investigation for allegedly bribing a Chinese official to secure distribution of its 2010 film, Resident Evil: Afterlife, in China.

The Wall Street Journal reported that the United States Securities and Exchange Commission (SEC) subpoenaed Sony in 2013 for allegedly violating a US law that outlaws bribing a foreign government official.
For many years, Sony has allegedly used the Dynamic Marketing Group, a Beijing-based firm, to get around China’s quotas and strict censorship systems, which inevitably hinder film distribution in China. The SEC is now looking into the precise methods employed by DMG to secure distribution of the blockbuster that grossed $296 million worldwide, of which $21.6 million came from China.

Once the subpoena was issued, the SEC stated that an email sent by a Sony employee showed that DMG resorted to using “special influence” to ensure the blockbuster be shown in theatres across China.
The documents revealing the bribery probe were a result of a cyberattack on Sony in November 2014, which also leaked confidential data such as personal information about Sony employees, internal emails between Sony workers and executive salary information.

Contact GRC Solutions today for more information about our Anti-Bribery and Data Protection online compliance training courses.

Source: Wall Street Journal

Department of Justice announces historic USD $772 million fine over FCPA violations

In late 2014, the United States Department of Justice (DOJ) fined Alstom, a French power and transportation titan, USD $772 million for multimillion dollar bribes the company paid to government officials worldwide.

The bribes helped Alstom secure lucrative energy contracts worth billions of dollars in countries including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.

Alstom admitted to charges brought under the US Foreign Corrupt Practices Act. It confessed to falsifying its books and business records and failing to implement adequate internal controls to monitor and prevent corruption conduct.

In brokering a plea agreement, the Justice Department factored in Alstom’s reluctance to disclose its misconduct, its refusal to cooperate, the breadth of its misconduct, the company’s prior criminal misconduct and its lack of an effective compliance and ethics program. Several senior individuals within the company have also had charges brought against them.

DOJ Attorney General James Cole said the historic fine sent an “unmistakable message to other companies around the world: that this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.”

The substantial penalties and preceding criminal investigation brought by the DOJ demonstrate the broad scope of American anti-bribery and corruption legislation.

Does your organisation comply with corporate misconduct and white collar crime laws? Speak to GRC Solutions today about our Anti-Bribery and Corruption courses.

Source: Compliance Week

First charges under the UK Bribery Act

Britain’s Serious Fraud Office (SFO) has secured its first charges under the UK Bribery Act. The SFO’s criminal investigation revealed Gary West, 52, James Whale 38, and Stuart Stone, 28, of Sustainable AgroEnergy (‘SAE’) masterminded a 23 million pound biofuel investment scam.

The three men falsely and deliberately misled investors between 2011 and 2012 into thinking that SAE owned property in Cambodia. Investors were told Jatropha trees, once considered a promising plant in the quest for oil, were planted on the land and that an insurance policy in place protected the investors from loss in case the crops failed.

David Green, Director of the SFO, was reported as saying, “These three individuals preyed on investors, many of whom were duped into investing life savings and pension funds”.

While Whale was charged and convicted of conspiracy to commit fraud by false representation and fraudulent trading, West and Stone were convicted of bribery offences, in addition to other charges such as conspiracy to furnish false information, making it the first time the SFO secured convictions under UK’s Bribery Act. Specifically, West and Stone were both found guilty of offences of bribing another person and being bribed under the legislation.

London’s Southwark Crown Court sentenced West, Whale and Stone to prison for 13, 9 and 6 years respectively.

The UK Bribery Act is considered one of the world’s toughest laws against bribery and corruption. Individuals can face up to 10 years’ imprisonment and an unlimited fine and have their assets confiscated. The legislation also grants the SFO with extraterritorial jurisdiction that is the power to prosecute any company or individual, even if the alleged bribery took place outside of the UK, provided there is still a sufficient link to the UK.

Contact GRC Solutions today for more information about our anti-bribery and corruption training courses.

Also find out more about our UK Bribery Act training course.

Source: Yahoo News UK and the Serious Fraud Office

Australia, Singapore and New Zealand fall in Corruption Perceptions Index

bribery and corruption

Australia, Singapore and New Zealand have fallen respectively from 9th, 5th and equal 1st, to 11th, 7th and 2nd in the Transparency International’s annual Corruption Perceptions Index.

Transparency International, a global anti-corruption organisation, started out in 1993 and currently has a presence in over 100 countries. The organisation has contributed to the development of international anti-corruption conventions and the prosecution of shady leaders and the seizure of their corruptly-obtained property.

In 2014, Australia scored 80, down from 81 in 2013 and 94 in 2012. Singapore fell to 84, from 86 in 2013 and 87 in 2014. New Zealand remained steady on 91, but was overtaken by Denmark, which scored 92 this year.

“A poor score is likely a sign of widespread bribery, lack of punishment for corruption and public institutions that don’t respond to citizens’ needs,” the organisation says.

Perceptions of corruption can also harm countries’ economic growth and standing in the global community.

Several governments have adopted powerful legislation to combat bribery and corruption, equipping regulators and courts to hand out severe penalties for business misconduct.

Regulators in a variety of jurisdictions have regularly demonstrated that even small bribes can have serious consequences.

In the US, under the Foreign Corrupt Practices Act, arms manufacturer Smith & Wesson Holding Corp was hit by a $2 million fine by the Securities and Exchange Commission over a bribe of $11,000 for a contract valued at $107,852.
In the UK, a Magistrates’ Court clerk was sentenced to six years imprisonment for accepting a £500 bribe to conceal a traffic summons – but has since had his sentence reduced to four years.

The reach of anti-corruption legislation often extends across state jurisdictions.

In 2013, Chinese official Li Huabo was found guilty of receiving stolen Chinese government money in his Singaporean bank account.

Under Singaporean anti-money laundering laws, Li was sentenced to 15 months imprisonment following an investigation by the Suspicious Transaction Reporting Office. The Chinese official had received less than 10 per cent of his ill-gotten funds in his Singaporean bank account.

Though difficult to quantify, the World Bank estimates that at least $1 trillion is paid in bribes each year.

Does your organisation understand and comply with corporate misconduct and white collar crime laws? Talk to us today about our Anti-Bribery and Corruption courses.

Small bribes, big headaches

bribery and corruption

Even relatively small bribes are taken seriously by the authorities, as the three cases below reveal.

The Independent Commission against Corruption (ICAC) announced proceedings against Eddie Obeid last Thursday over the former MP’s lobbying efforts, which concerned a series of secretly-owned Circular Quay cafes. The case serves as a fresh reminder that even small bribes can lead to big headaches.

“Just like Al Capone and tax evasion, it might seem ironic that Eddie Obeid, the ultimate NSW powerbroker who pulled off a corrupt $60 million coal scam, goes down for a contract for a couple of lousy restaurants,” Australian Financial Review (AFR) reporter Geoff Winestock commented. The ICAC reports that Obeid may be undone for misusing his position as a Member of Parliament to influence the decisions of public officials, which resulted in favourable outcomes for his businesses. According to the AFR, Obeid hoped to double, or triple, the value of his $2.4 million investments in Circular Quay.

Last July, in the US, the Securities and Exchange Commission (SEC) pursued firearms manufacturer Smith & Wesson Holding Corp for a bribe of $11,000 to a Pakistani police department, in order to secure a $107,852 contract. The SEC fined the arms manufacturer $2 million under the U.S. Foreign Corrupt Practices Act (FCPA).

Commenting on the case, Bill Michael, co-chairman of Mayer Brown’s global anti-corruption and FCPA practice, told Corporate Counsel the SEC’s decision to chase down Smith & Wesson for a relatively small bribe was indicative of the commission’s hard-line approach on anti-bribery law. “Apparently, no case may be too small,” he said.

And in 2011, Manir Yakub Patel, the first defendant prosecuted under the UK Bribery Act, received a shocking six-year prison sentence for accepting £500 bribe to conceal a traffic summons. At the time, the 22-year-old worked at the Magistrates’ Court as a clerk. His sentence has since been reduced to four years in prison on appeal.

These three cases demonstrate that even relatively minor breaches of the law can lead to criminal investigations, court proceedings and severe penalties. Whether you’re in Australia, Singapore, or the UK, it’s essential you understand and comply with your country’s anti-corruption legislation.

Does your organisation understand and adhere to corporate misconduct and white collar crime laws? Talk to us today about our Anti-Bribery and Corruption courses.

Source: Australian Financial Review, Corporate Counsel

Bribery and corruption takes its toll over Smith & Wesson Multi-National Corporation

bribery and corruption 

A recent case serves as a vital example of what small and medium sized businesses wanting to expand globally must first achieve in terms of governance, risk and compliance measures, to avoid bribery and corruption activities taking its toll on global operations.

In an out-of-court dispute between Smith & Wesson Holding Corporation and the US Securities and Exchange Commission to resolve Foreign Corrupt Practices Act offences, Smith & Wesson cooperatively agreed to pay a fine of $2 million.

Smith & Wesson, a US-based company was found guilty of paying bribes across the globe. According to the SEC, “Smith & Wesson’s international sales staff engaged in a pervasive effort to attract new business by offering, authorising, or making illegal payments or providing gifts meant for government officials in Pakistan, Indonesia and other foreign countries.”

Smith & Wesson consented to the order without admitting or denying the findings that show evidence of violating the anti-bribery, internal controls and books and records provisions of the Securities Exchange Act of 1934.
In addition to this large fine, Smith & Wesson has also been ordered to report to the SEC on its FCPA compliance efforts for the next two years.

This case demonstrates the challenges faced by corporations operating in multiple countries, no matter how well recognised they are. Even after 4-years of international operations keeping on top of compliance in all areas can be a struggle. This large penalty of $2 million serves as a warning to other organisations who are not vigorously looking into a compliance training program to educate their staff.

It is important to note that the SEC took into consideration Smith & Wesson’s cooperation with the investigation when determining an appropriate penalty. Smith & Wesson took effective remedial action straight after the conduct came to light by improving its internal controls and compliance process and also fired its entire international sales staff.

Don’t let undiscovered, illegal activities take place throughout your organisation. Ensure you are covered with an Anti-bribery and Corruption course.

Source: The FCPA Blog

Secret sex tape reveals £90million bribery and corruption probe

A secret sex tape involving a senior executive and his Chinese girlfriend was filmed and anonymously emailed to board members at GlaxoSmithKline.

The £76 billion global pharmaceutical company has been accused of bribing doctors to prescribe Glaxo’s drugs in return for £320 million worth of gifts.

Get a complete anti-bribery and corruption training course for your organisation.

Read the full article here.