Indonesian anti-corruption campaigners have criticised the country’s senior lawyers for refusing an article in a money laundering bill aimed to give more authority to the Corruption Eradication Commission (KPK).  The bill – currently being deliberated in the House of Representatives – proposes to give the KPK authority to investigate money laundering cases, but lawyers from the Golkar Party, the Indonesian Democratic Party of Struggle and the United Development Party argue that giving the KPK new powers would reduce public trust in the police and the Attorney General’s Office and cause overlapping of authorities among law enforcement agencies.  But Febri Diansyah, an activist with Indonesia Corruption Watch (ICW), said: “It’s fishy that lawmakers object to empowering the KPK.  It should have been potential looters of public funds raising the issue.”  He commented that it would be useless to retain the authority to investigate money laundering with the police and prosecutors because they had failed to do the job for the past seven years.

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In a follow-up to a story dated 26 July 2010, a former police constable has been jailed for sixteen months for money laundering.  Darren Graysmark had served with Sussex Police for 23 years and was arrested in April 2009 after officers from his own force found cocaine with an estimated street value of £148,000 in his car, which was being driven by Graysmark’s boyfriend Darren Simpson.  Searches of the men’s home revealed a quantity of financial correspondence and £12,000 in cash.  Graysmark pleaded guilty last month to laundering a total of £80,921 over a five-year period up to April 2009, and resigned from the police.  Simpson has pleaded guilty to possession with intent to supply and is awaiting sentence. 

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In the latest trial following a massive FBI sting last year on synagogues in New Jersey, Samuel Cohen of Brooklyn has pleaded guilty to money laundering and been sentenced to eighteen months in prison.  He admitted illegally supplying hundreds of thousands of dollars to Rabbi Eliahu Ben Haim, who has since pleaded guilty to using religious charities to launder US$1.5 million [about £975,000] for a government informant.  Ben Haim was among five rabbis charged in July 2009.  The probe hinged on a former rabbinical student, Solomon Dwek, who began secretly recording conversations for prosecutors after being charged with bank fraud in 2006.  His work ensnared 46 people, including politicians charged with taking bribes and rabbis accused of laundering money.  Cohen said he worked with a contact in Israel to supply Ben Haim with cash, which authorities say the rabbi used to launder cheques for Dwek, the informant.  In some cases, Dwek claimed he needed to hide the money from a bankruptcy proceeding.  At other times, he said the cheques came from criminal schemes, including the sale of counterfeit Gucci and Prada handbags.  Dwek pleaded guilty in October 2009 to charges in connection with a $50 million bank fraud, and has been in hiding since his role as an informant became public. 

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Chanell Cunningham, whose testimony helped convict her drug-dealing boyfriend, has been sentenced in Philadelphia to twelve years in prison for drug offences and money laundering.  US District Judge Curtis Joyner told Cunningham that, were it not for her co-operation, he would have sentenced her to more than thirty years in prison.  He described the mother of two as a “major officer and vice president of personnel” for the multimillion-dollar cocaine-distribution network set up by her lover Maurice Phillips (who was sentenced last week to five consecutive life terms for murder, drug dealing, conspiracy and money laundering).  But the judge said that Cunningham’s co-operation in the conviction of Phillips had to be balanced against the major role she played in helping him distribute thousands of kilograms of cocaine over an eight-year period beginning in 1999: “You hung out with the bad guys . . . lived with the bad guys . . . played with the bad guys”.  Cunningham admitted making major drug pickups, setting up deals with local drug traffickers, and helping Phillips count and launder millions of dollars.  Authorities have placed a value of US$30 million [about £19 million] on the operation, and the couple drove expensive cars, lived in lavish homes, attended major sporting events, and took extravagant vacations on the proceeds.  Cunningham was one of two girlfriends to testify against Phillips, who was living in Maryland with his wife at the time of his arrest three years ago. 

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In a follow-up to a story dated 14 September 2009 (see Old news 2009 page), married Hollywood film-makers Gerald and Patricia Green have been jailed for six months in Los Angeles for bribing Thai officials so that they could run the Bangkok International Film Festival and land other projects, and for money laundering.  A jury found that they had paid a former Thai tourism official US$1.8 million [about £1.1 million] to secure the film festival rights and other tourism-related deals between 2002 and 2007; the deals were said to have earned the Greens more than $13 million [about £8 million].  They are the first entertainment industry figures to be convicted under the Foreign Corrupt Practices Act, which prohibits corrupt payments to foreign officials for business purposes.  Veteran film star Kirk Douglas had sent a letter of support to the court, saying that the couple “were extremely honest and fair in all of their dealings with me”, but as well as a prison sentence, the Greens were also ordered to serve six months of home detention after their jail sentence and pay $250,000 [about £150,000]. 

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The Financial Services Authority (FSA) has fined members of the Royal Bank of Scotland Group (RBSG) £5.6 million for failing to have in place adequate systems and controls to prevent breaches of UK financial sanctions.  (As RBSG agreed to settle at an early stage of the FSA investigation, it qualified for a 30% reduction in penalty – which would otherwise have been £8 million.)  Between 15 December 2007 and 31 December 2008, RBS Plc, NatWest, Ulster Bank and Coutts and Co, which are all members of RBSG, failed to adequately screen both their customers, and the payments they made and received, against the HM Treasury sanctions list.  This resulted in an unacceptable risk that RBSG could have facilitated transactions involving sanctions targets, including terrorist financing.

The FSA considers that RBSG’s failings in relation to its screening procedures were particularly serious because of the risk they posed to the integrity of the UK financial services sector – in 2007, RBSG processed the largest volume of foreign payments of any UK financial institution.  This is the biggest fine imposed by the FSA to date in pursuit of its financial crime objective, and is also the first fine imposed by the FSA under the Money Laundering Regulations 2007.

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PC Darren Graysmark, who served with Sussex Police for 23 years, has pleaded guilty to laundering more than £80,000.  He was arrested when fellow officers found cocaine with an estimated street value of £148,000 in his car in April last year, when it was being driven by Graysmark’s boyfriend.  A search of the men’s home uncovered £12,000 in cash and a quantity of financial correspondence.  Deputy Chief Constable of Sussex Police Giles York said: “Darren Graysmark let himself, his colleagues and the public down, in knowingly benefiting from organised crime.  He took money which was the proceeds of crime and used to it support his own lifestyle.”  Graysmark has resigned from the police.  He is on bail and will be sentenced at a date yet to be fixed; meanwhile Sussex Police will seek a confiscation order to seize his assets.

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Commodities trader Andrew Beveridge has been sentenced to eight years in prison for laundering more than £24 million for a gang of fraudsters.  Beveridge was working for XFP Solutions in Blackpool in December 2007 when he was approached by Robert Hulme and asked to help launder money for a 5% commission.  Beveridge was an undisclosed bankrupt and strapped for cash, so he agreed and successfully laundered £372,000 stolen from two Lloyds TSB customers by moving the money through an unsuspecting money services bureau to a series of front accounts.  Suspicions were raised when he tried to repeat the trick with the proceeds of a £72 million theft from HSBC, which Hulme’s gang had pulled off using an inside man at the bank.  (Bank clerk Jagmeet Channa was jailed for nine years in 2008.)  Beveridge tried to transfer £24 million through the same money services bureau, but investigators moved in.  Beveridge denied the charges and said he believed that the money was legitimate, but Judge Anthony Leonard, QC, told him: “Without money launderers like you, the theft carried out by others would be less easy to undertake.  You took every step possible to make sure that [the transfer] went through.  I do not accept that this is any different from, for example, drug money.  This was a large scale fraud on the banking system.”  Hulme faces sentencing at a date yet to be fixed.

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The US government has filed a civil forfeiture claim on two properties owned by former Taiwanese president Chen Shui-bian and his wife, allegedly bought with bribes the couple received while in power.  The complaint states that former first lady Wu Shu-chen was paid six million dollars to prevent her husband’s government from interfering with a company’s takeover bid for a rival firm in Taiwan, and then laundered the money using shell companies and Swiss bank accounts controlled by her son and his wife.  Some of the money was allegedly transferred to the US to buy an apartment in Manhattan and a house in Virginia.  The move by the US has been welcomed by the authorities in Taiwan. 

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As their country seeks to attract foreign investors, Russian legislators have announced that they plan to overhaul the law on economic crimes, resulting in the early release of as many as 100,000 imprisoned executives and entrepreneurs.  On 30 June, Andrei Nazarov, deputy head of the committee that handles civil and criminal legislation in the lower house of the parliament, introduced amendments to the Criminal Code, saying “We are taking economic amnesty not as one law but as a series of legal changes.  At least 100,000 businessmen will be released from prison or will have to spend less time in jail.  This will happen within the next year and a half.”

About a quarter of the 900,000 people in Russian jails are accountants, entrepreneurs, legal advisers or mid-level managers.  Yana Yakovleva, co-owner of Moscow chemical distributor Sofex spent seven months in jail awaiting trial in 2007 before she was acquitted of trafficking in dangerous substances, and has spoken out about the “predatory” culture of police, prosecutors and judges: “The current environment is like swimming with crocodiles in a pool of sulphuric acid.  There’s a war on business people in Russia, and it’s purely business for officials: they can charge you with any crime and incarcerate you to extort money.”  The proposed changes will reduce penalties for white collar crimes, end pre-trial detention for those charged with economic crimes, and expand the use of bail.

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A Panamanian court has dropped money laundering charges against former Nicaraguan president Arnoldo Aleman.  The court ruled that the case against Aleman violated his right to be tried for a crime only once, as the charges against him were similar to charges he has already faced in Nicaragua.  Aleman had been accused of using bank accounts in Panama to launder US$58 million [about £38.5 million] allegedly stolen from the Nicaraguan government, but denied all charges.  In January 2010, Nicaragua’s Supreme Court overturned Aleman’s conviction for money laundering, but an appeals court later reopened three cases against him.

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Panama’s former military ruler Manuel Noriega has been found guilty by a French court of money laundering, and been sentenced to seven years in prison.  Noriega denied taking payments from Colombian drug lords in the 1980s and laundering the money in France.  In 1999, a French court sentenced him to ten years in prison in his absence, but in April 2010 he was extradited from the US (after spending twenty years in prison for drug trafficking) and a fresh trial was held.  The money was allegedly used by his wife, Felicidad, and a shell company to buy three luxury apartments in Paris, which have since been seized by the French state.  The judge also ordered the seizure of 2.3 million euros [about £1.9 million] of Noriega’s other assets.

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Tarique Rahman, the eldest son of Bangladeshi former prime minister Khaleda Zia, and one of his aides have been charged with money laundering.  Bangladesh’s Anti-Corruption Commission says that Rahman and his business associate Giasuddin al-Mamun siphoned off US$3.5 million [about £2.3 million] in the proceeds of corruption to Singapore between 2003 and 2006.  Rahman, the senior vice chairman of the opposition Bangladesh Nationalist Party, has been charged with corruption on fourteen occasions, and has been staying in London to receive medical treatment since his release on bail in 2008. 

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Eight out of ten members of a gang who “peddled misery” by supplying up to 75% of the cocaine sold in the Swansea Valley have been sentenced to a total of 80 years in prison for drug offences and money laundering; the two remaining gang members will be sentenced in a few days’ time.  The sentences are the culmination of a two-year investigation into cocaine trafficking on the south coast of England and the Swansea Valley launched by the Serious Organised Crime Agency (SOCA) in September 2007 and involving the Dorset and South Wales police forces.  They discovered that the crime network had three regional hubs in Bournemouth, Kent and the Swansea Valley – the Swansea group was buying up to 8kg of pure heroin per week from the Kent organisation, with the Bournemouth gang acting as the go-between.  Gang members owned large houses and expensive cars both home and abroad – until police raided seven properties in the quiet town of Pontardawe near Swansea last year.

Darren Blake (gang leader in Kent) and Craig Blake (gang leader in Bournemouth) had previously collaborated in the export of cocaine to Australia.  With the help of the Australian Federal Police, evidence was obtained of both the drug trafficking and associated money laundering through a Panamanian-registered company and bank accounts in the US and Cyprus, which resulted in additional charges against the pair. 

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Jackie Selebi, former chief of the South African Police Service (SAPS) and a former president of Interpol, has been found guilty of corruption.  Selebi was a political appointee and had no previous policing experience when he became the first black SAPS chief in 2000.  In 2008 he was suspended after being accused of having links to organised crime – specifically convicted drug smuggler Glen Agliotti – and accepting bribes worth 1.2 million rand [about £103,000].  The prosecution alleged that Agliotti, who was also a police informant, made gifts to Selebi so that the policeman would turn a blind eye to drug trafficking.  At Selebi’s trial, Agilotti told the court, “When the accused and I met, I enjoyed shopping and so did he. Him being my friend, I would instruct shop attendants to put all the clothes on my account.”

Selebi denied both charges as malicious, claiming that they were down to political intrigue and conspiracy – he is a close friend of former president Thabo Mbeki, who is a bitter rival to current president Jacob Zuma.  But Judge Meyer Joffe found that Selebi had shown “complete contempt for the truth” and had “low moral fibre and could be relied upon”.  He will be sentenced on 15 July – facing up to fifteen years in prison – and plans to appeal. 

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Randy Russell, a disc jockey from Burlington, Vermont, has been sentenced to thirty months in prison for selling marijuana and laundering the proceeds.  Russell – known professionally as DJ Randy – distributed over 100kg of marijuana.  He invested US$90,000 [about £60,000] of his drug proceeds in the defunct Justin Cruz Hairdressing Salon in Burlington, and deposited more than $100,000 in cash in two bank accounts during 2006 and 2007.  Russell argued that he used much of the proceeds to care for his family, including a disabled uncle, but prosecutors said that on the contrary Russell lived a “high-spending, high-rolling lifestyle that included extensive travelling, nightclubbing and snowboarding and renting two houses”.

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