KI Daily Brief – February 20, 2015

Putin’s Long Arm: How Russia Uses Interpol to Harass Opponents
The Weekly Standard

In Chechnya, Georgia, and Ukraine, Russia works through bribery, fear, and force to destroy its opponents. In the West, it works through Interpol and the U.S. Treasury. If Moscow decides to target you, being in the United States won’t protect you from Russian harassment. In fact, it makes you a better victim.

Is Vladimir Putin Hiding a $200 Billion Fortune (And If So, Does It Matter)
The Washington Post

Many (understandably) don’t buy Putin’s own version of his accounts, and reports suggesting that Putin holds a vast wealth go back many years. In 2007, he was estimated to have a fortune of $40 billion, making him the “richest man in Europe.” That number then jumped to $70 billion in 2012, pushing him into the global top spot. Given the enormous political power he has amassed, you can extend this logic further and further: Russia’s currency reserves are his; Russia’s military is his; even the asphalt that paves Russia’s roads is his. Money may give Bill Gates power, but Putin already has the power: He doesn’t need the money.

Corruption in Romania: Cleaning Up
The Economist

Romanians had assumed that Elena Udrea, a former tourism minister, was too powerful for prosecutors to touch. The ex-wife of a rich businessman, she is a protégée of Traian Basescu, a former president. Yet the National Anti-corruption Directorate (DNA) has arrested her for helping to launder millions of dollars her former husband made from charging the government inflated prices for software. Her prosecution is a boost for the DNA, which is slowly convincing observers of progress in tackling corruption.

Latvia Torn Between Money and Fear of Russia

The Latvian capital is an hour and a half’s flight from Moscow. The majority of the people speak Russian. But the main attraction for Latvia’s “residency for property” program was, until recently, its relative cheapness compared with similar “golden visa” programs in Europe. Nationalist-oriented Latvian politicians have been alarmed by the Russian government’s rhetoric about protecting compatriots abroad, and have voiced a desire to alter, if not stop altogether, the residence permit program. “By continuing to issue residence permits to Russian citizens, we are playing Russian roulette in the true sense of the term,” center-right National Alliance MP Edvins Šnore announced in Latvia’s parliament last year.

China Designs Policies to Halt Hidden Bribes
Jakarta Post

China is turning its attention to highlighting the hidden ways in which officials are paid bribes, with plans to regulate prepaid gift cards as part of its anti-corruption campaign. In the past, prepaid gift cards were very popular as an untraceable way to bribe public officials. As early as 2012, restrictions were introduced, and anyone buying a high-value prepaid gift card had to register their name and address. However, taking advantage of online shopping platforms, third-party delivery people and online payments, more gift cards were able to circulate among officials undetected, People’s Daily reported. People’s Daily said the new channels for bribery include electronic gift cards, virtual red envelopes with real money and e-commerce websites, which have put an “invisibility cloak” over gift card corruption.

Alibaba, Qualcomm, JPMorgan: China Is No Country for the Fainthearted Business

Managing the risk of doing business in foreign countries is no walk in the park for American corporations and investors. In the case of China, with its arbitrary government, lack of transparency, and endemic corruption, political and regulatory risks are not only a fact of life, they cost U.S. businesses and investors dearly. Three recent but unrelated incidents illustrate the need to rethink – and reprice – the risks of doing business in China. Compared to Qualcomm, the U.S. chipmaker, investors in Alibaba should consider themselves lucky. In the same week the SEC contacted Alibaba, Beijing fined the San Diego-based Qualcomm a record $975 million for violating China’s monopoly law. What was Qualcomm’s sin? It is simply too successful in the Chinese market.

SEC vs. Big Four, Dust Has Yet to Settle
People’s Daily

Chinese branches of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG and Ernst & Young had refused to turn over documents related to what the SEC said were investigations of potential fraud. The firms each agreed to pay 500,000 US dollars and admitted that they did not produce documents before proceedings were instituted against them in 2012, but without admitting or denying the SEC contention that they violated securities law. The sanctions are largely seen just a slap on the wrist. “As compared to the fines that the SEC typically imposes, the amount is small, almost a nuisance payment.” said Jacob S. Frenkel, an expert on SEC investigations who worked for almost ten years at its enforcement division and as a U.S. federal criminal prosecutor.

China’s Corruption Probe Bares Its Teeth

Every Chinese republican regime and imperial dynasty has inveighed against corruption. This time, it is different. The anti-corruption campaign launched by China’s leader, Xi Jinping, after he took office at the end of 2012, will go on forever, says its chief implementation officer, Wang Qishan, head of the Communist Party’s Discipline Commission. Apart from its scale and duration, what marks out this campaign is how it has reached into industry during the past year. This suggests that Mr Xi and Mr Wang (previously vice-premier for economic affairs) see it as the best way of dealing with the inefficiencies of the big state-owned enterprises (SOEs), which absorb much of China’s resources while making a limited contribution to real growth and employment.

China to Project Power from Artificial Islands in South China Sea

China’s creation of artificial islands in the South China Sea is happening so fast that Beijing will be able to extend the range of its navy, air force, coastguard and fishing fleets before long, much to the alarm of rival claimants to the contested waters. While the new islands won’t overturn U.S. military superiority in the region, Chinese workers are building ports and fuel storage depots as well as possibly two airstrips that experts said would allow Beijing to project power deep into the maritime heart of Southeast Asia.

DPRK Says to Launch Anti-Graft Campaign Within Ruling Party

The Democratic People’s Republic of Korea (DPRK) said it will roll out an anti-graft campaign within the ruling Workers’ Party of Korea (WPK), the state media reported Thursday. “The resolution stressed the need to wage an all-party intensive campaign against abuse of power, bureaucratism, irregularities and corruption,” the KCNA said.

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