KI Daily Brief – April 14, 2015

Swiss Move on Ukraine Frozen Funds Claim

Switzerland says it has complied with a request for legal assistance from Ukraine concerning blocked funds linked to the regime of former Ukrainian president Viktor Yanukovych – the first time it has done so.

Finland Says Secret Emails on EU’s Russia Sanctions Leaked
Bloomberg Business 

The Finnish government is investigating how a confidential e-mail exchange on European sanctions against Russia was leaked to local media. “Last Friday we discovered that some of these e-mails had been offered to media for publication,” Markku Mantila, a spokesman for the government in Helsinki, said in a phone interview. “But I haven’t seen any of these e-mails published.”

Chinese Official Who Ran Oil Giant Admits Bribetaking, Court Reports
New York Times

Jiang Jiemin, a former Communist Party official who once ran China’s largest oil and gas firm confessed to taking huge bribes, according to official reports from his trial on Monday, when prosecutors also said Mr. Jiang lubricated the corrupt dealings of the former security chief, Zhou Yongkang. His case has attracted particular attention because of his ties to Mr. Zhou, the former head of domestic security and law and order, who has also been indicted on corruption and other charges. And the trial gave the first signs of the charges that Mr. Zhou is likely to face at his later trial. According to the court’s summaries of the trial, issued on the Internet, Mr. Jiang pleaded guilty to the charges: taking bribes, accumulating unexplained wealth and abusing his powers as a state company employee.

China’s Army Warns Corrupt Officials Are ‘Keeping It in the Family’
South China Morning Post

The Chinese military’s newspaper has warned officials against enlisting family members in corrupt practices, amid heightening speculation a former top figure in the People’s Liberation Army has been caught up in the anti-graft drive. A commentary in the PLA Daily yesterday said officials should not abuse their power to fulfill their family’s needs, and urged them to teach their children proper moral values. “It is reasonable for cadres and leaders to take care of their families and help their families, but family needs should not override moral principles,” the commentary said. The commentary came after overseas websites said former vice-chairman of the Central Military Commission Guo Boxiong and his wife had been arrested for corruption on Friday.

Chinese Police Chase Corruption Suspects in Australian Suburbs
Sydney Morning Herald

Chinese police have quietly travelled to the eastern suburbs of Melbourne to “persuade” a Chinese-born tour bus driver to return and face bribery charges in China. It is believed to be the first confirmed account of Chinese officers travelling to a Western country to deal directly with targets of Chinese President Xi Jinping’s expanding “Operation Fox Hunt” campaign, aimed at repatriating corrupt officials and seizing their hidden assets overseas. Chinese police have attempted to work around diplomatic obstacles by raising the importance of “persuasion work”, which typically involves applying pressure upon family members who remain in mainland China.

Kazakh City Says Oligarch Swiped $300 Million
Courthouse News Service

The “corrupt former mayor” of Kazakhstan’s largest city looted $300 million and hid the money in the United States, the City of Almaty claims in Federal Court. In the lawsuit, Almaty claims the Khrapunovs’ scheme was twofold: “(a) to steal and loot money from Almaty; and (b) to transfer, launder, and hide that stolen money in the United States where they believed it would be out of reach of Kazakh and other governmental authorities.”

Beneficial Ownership and AML, Sanctions and Anti-Corruption Compliance
JD Supra

In the face of this risk, global financial institutions need to identify all of the beneficial owners of the customer company. This is easier said than done when dealing with Chinese and Russian companies that are notoriously reluctant to disclose the true beneficial owners of a particular company, or have a complex, multi-layered ownership structure intended to “bury” the beneficial owner. These legal requirements, while burdensome, are a good business practice.

Anti-Corruption Drive Grounds China Private Jet Sales
Financial Times

According to Jetnet, an aviation data provider, purchases of business jets by Chinese companies peaked at 55 in 2011, the year before Mr Xi assumed power at the Chinese Communist party’s 18th congress. They have declined steadily ever since, to just 35 last year.  “The drop in the market last year was not in line with our expectations,” Eric Wong, vice-chairman of NetJets China Business Aviation, said as he boarded one of his company’s two China-based jets for a flight from Shanghai Hongqiao International Airport to Hangzhou. “Demand for charters dropped by half after the 18th party congress,” added Mr Wong. “The industry has lost all business from government officials as well as state-owned enterprise executives. But the most critical factor is the lack of infrastructure.”

Were China’s Corrupt Officials Plotting a Coup?
The Diplomat

For the past four months, the media has been obsessed with the idea of a new “Gang of Four” in Chinese politics. It is popularly believed that Zhou Yongkang, Ling Jihua, Xu Caihou, and Bo Xilai formed a political faction and conspired to overthrow the Xi Jinping leadership through a coup. Nevertheless, the evidence is still too thin to glue the four men together as a “Gang of Four.” For one thing, there is no evidence of Xu Caihou’s involvement in “non-organizational political activities” either alone or together with Zhou, Ling, and Bo. Xu’s problem was taking bribes, not participating in a coup. Finally, there is no evidence that the four men ever held any private meeting together on any topic. The only time they were physically in the same location (along with thousands of others) was during the official occasions of the National People’s Congress sessions, as they were deputies to the NPC during the same period.

Ukraine Crisis, Anti-Corruption Drive, Boost Romanian Energy Reform

Recent investigations of “smart guys” contracts have helped reduce corruption within the Romanian energy sector, and have accelerated the country’s market liberalisation, at a time when the Ukraine crisis has forced Bucharest to assume a more important role in region.

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