Included in this weeks Corporate Crime & Investigations Update: SFO commences criminal proceedings against Unaoil group companies; Revell-Reade receives additional jail term; Company fined £730,000 for vehicle incident; and more.
Bribery and Corruption
SFO commences criminal proceedings against Unaoil group companies
The SFO has commenced criminal proceedings against Unaoil Monaco SAM and Unaoil Ltd as part of its ongoing corruption investigation into the Unaoil Group. Both companies have been summonsed on two charges each of conspiracy to give corrupt payments in breach of section (1) of the Criminal Law Act 1977 and section 1 of the Prevention of Corruption Act 1906. As with the four individuals already charged with conspiracy to make corrupt payments, the charges relate to Unaoil Group's activities in connection with the award of contracts in Iraq.
Former Och-Ziff executive pleads not guilty to criminal charges in the US
Michael Cohen, former head of European investing at Och-Ziff Capital Management Group has reportedly pleaded not guilty to charges including conspiracy and fraud. The charges relate to Och-Ziff's activities in Africa and follow an agreement made by Och-Ziff in 2016 to pay more than £400 million in settlement regarding alleged bribery of officials in several African countries including Libya and Congo. One part of the business agreed to plead guilty to criminal charges, and in a separate agreement, Och-Ziff's founder Dan Och paid over £2 million to settle claims with the SEC. It is now reportedly alleged by US prosecutors that Mr Cohen concealed conflicts of interest from a UK-based charitable foundation and obstructed a SEC corruption investigation into the fund.
ING expects details of consequences of Dutch money laundering probe
ING Group has reportedly announced that it expects to be informed of the timing of any consequences coming out of the probe into it later this year. The criminal probe is being carried out by Dutch prosecutors and focuses on potential money laundering and corruption at the firm. ING has made few comments about the investigation bar acknowledging it in its 2017 annual report, and a number of narrow disclosures.
Revell-Reade receives additional jail term
The SFO has announced that Jeffrey Revell-Reade, the so-called "Wolf of Wimbledon" has had his default prison sentence of 4 years activated for failure to pay a confiscation order following his conviction for fraud. Mr Revell-Reade, and accomplice Anthony May, ran a large boiler room fraud scheme before he was caught by UK authorities. The scheme surrounded sales of US-listed companies from Madrid, and resulted in hundreds of investors finding that they had bought worthless shares in shell or inactive companies, which they then could not sell. Mr Revell-Reade's confiscation order stands at £7,535,802, but only £3,497,000 has been paid so far. He is currently serving a sentence of 9 year 6 months in prison, and will remain liable for any outstanding sums once he is released.
SEC charges credit ratings analyst and accomplices with insider trading
The SEC has announced that it has charged a credit ratings agency employee and two friends outside the business with offences in connection with insider trading. The conduct relates to the confidential acquisition of The Valspar Corp. by The Sherwin-Williams Co. The employee, Sebastian Pinto-Thomaz, allegedly learned of the acquisition when his firm was consulted on the merger's potential impact on the parties' credit ratings. It is alleged that he then shared this information with two friends, Abell Oujaddou and Jeremy Millul, who bought Valspar securities before the announcement of the merger. After the announcement their share prices went up 23%, and Mr Oujaddou and Mr Millul made substantial profits.
Criminal charges have now been brought against all three men. The SEC's complaint alleges fraud and seeks disgorgement of ill-gotten gains, prejudgment interest, penalties, and injunctive relief.
Former State Street Bank & Trust executive convicted of conspiring to defraud clients
The US Department of Justice has announced that Ross McLellan has been convicted of a number of offences including conspiracy to commit securities fraud and wire fraud, after a three week trial. The scheme involved secret commissions applied to billions of dollars of securities trades, which resulted in at least six of State Street Bank & Trust's clients being defrauded. Between February 2010 and 2011, Mr McLellan and two accomplices resident in the UK conspired to add undisclosed commissions to fixed income and equity trades performed as art of the transitional management business. These commissions were added on top of fees already charged by the bank, and McLellan and accomplices took steps to conceal them, for example by ensuring that they were not disclosed in post-trade reports.
Joint law-enforcement activity targets users of illegal web tools
The NCA has reported that it has targeted users of web tools that could be used to carry out cyber-attacks in an operation in conjunction with the West Midlands Regional Organised Crime Unit (WMROCU). Seven warrants were executed for arrests over the last week.
The operation targets DDos-for-hire services, otherwise known as "booters" or "stressers". These can be rented for small amounts of money and used to launch "distributed denial of service (DDOS) attacks", which entail intense volumes of internet traffic which can disable websites or individuals' internet use. It is believed that there have been thousands of victims of these attacks worldwide, ranging from large businesses to members of the public.
Arrests made in cybercrime and business email compromise conspiracy
The US Justice Department has announced that it has arrested eight individuals in connection with a widespread Africa-based cyber conspiracy responsible for allegedly defrauding US companies and individuals of circa $15 million over at least a six year period. It is alleged that the defendants used sophisticated techniques to instigate a series of intrusions into the servers and email systems of a Memphis real estate company in June and July 2016. The co-conspirators were allegedly able to identify large financial transactions and then use fraudulent email correspondence, spoofed email addresses, and Virtual Private Networks to redirect funds away from their correct destination. It is alleged that through this and various similar schemes the defendants have caused millions in losses to victims around the world.
Italy supports de-escalation of Russia sanctions
It has been reported that Italy supports the resumption of EU funding to small Russian firms in a bid to improve relations with Russia. Italian Prime Minister Giuseppe Conte has reportedly stated that the renewal of EU economic sanctions against Russia should not be an automatic process. EU sanctions have previously been prolonged several times since their introduction in response to Russian action in Ukraine in 2014, but the Italian government is increasingly concerned about the impact on the Italian export industry.
US revokes General Licenses under Iran sanctions
The US Office of Foreign Assets Control has revoked General Licenses H and I, which were previously available to authorise certain transactions with Iran under the Joint Comprehensive Plan of Action. This follows the decision by the United States in May to withdraw from the Iran nuclear deal. General License H had authorised non-US subsidiaries of US-owned companies to do business with Iran under certain conditions, while General License I had authorised the export of commercial passenger aircraft to Iran. Such transactions are now prohibited under US sanctions, subject to the provisions adopted by the US to allow companies to wind down existing business activities entered into prior to the withdrawal announcement.
US threatens sanctions against NATO ally Turkey
It has been reported that, according to a US State Department official testifying before Congress, the US will impose sanctions on Turkey when it receives a Russian missile defence system. Delivery of the S-400 systems, which Turkey will purchase from Russia, will damage military cooperation between the US and Turkey. The statement comes after the US Senate passed a bill calling for a freeze on arms sales to Turkey while assessment of the military and diplomatic impact of the purchase of the defence systems is carried out.
FCA to change complaint handling rules in response to authorised push payment fraud
The FCA is currently consulting on changes to the application of the FCA Handbook to assist victims of authorised push payment fraud. Authorised push payment fraud occurs where a fraudster tricks a victim into instructing a payment services provider to send money from their account to an account controlled by the fraudster. Under current rules, if the payment service provider is not at fault, the victim cannot complain to that payment service provider. The FCA is proposing to extend the application of Handbook complaints handling rules so that victims of APP fraud are able to complain and then have recourse to the Financial Ombudsman Service if they are unsatisfied with the response they receive.
The FCA is also planning to consult on requirements for payment service providers to report data on complaints regarding alleged APP fraud, in order to measure its scale in the industry and progress toward remedying it.
EA crack down on illegal waste carriers around London City Airport
The Environment Agency recently provided support to a multi-agency spot-check day involving the Met police and the Driver and Vehicle Standards Agency (DVSA) in an attempt to reduce and disrupt waste crime, cable theft, tax evasion and the use of dangerous vehicles.
During the day-long operation, a vehicle carrying suspected stolen cable was stopped and interviewed under caution and three vans were taken off the road. The EA carried out checks on waste carriers to ensure that the correct waste transfer notes were being provided to the waste sites from which the waste was being collected.
An Environment Agency Officer said of the operation: "People who manage waste illegally cost the taxpayer millions every year in clean-up costs and make considerable sums of undeclared income. They also undercut legitimate business, and pose a direct threat to sustainable growth in the waste management sector. Our enforcement days make sure that the Right Waste goes to the right place to stop unpermitted businesses undermining legitimate businesses and help create a level playing field.”
Health and Safety
Company fined £730,000 for vehicle incident
The incident occurred at the yard of Palmer Timber Ltd in February 2015. Two employees were hit by a side loader truck whilst on site and suffered serious injuries. One employee suffered multiple injuries and required skin grafts and the other sustained a fractured ankle.
The company had not ensured that effective precautions were in place in relation to vehicles and pedestrians at their site.
Palmer Timber Ltd pleaded guilty to breaching Regulation 4, by virtue of Regulation 17 of the Workplace (Health, Safety and Welfare) Regulations 1992. The company was fined £730,000 and ordered to pay costs of £13,844.87 and a victim surcharge of £120.
Food manufacturer fined £176,000 following fatality
Bakkavor Foods Limited have been fined £176,000 following an incident in which an employee was killed as he unloaded empty food trays. The trays were stacked and were being carried by a forklift truck at the time of the incident. The stack collapsed and struck the employee on the head – he died from his injuries two week later.
Bakkavor Foods Limited pleaded guilty to breaching Section 2(1) of the Health and Safety at Work etc. Act 1974 and was fined £176,000.