KI Daily Brief – February 5, 2016

Mega-Rich Homes Tour Puts Spotlight on London’s Oligarchs

Campaigners connected to Russia’s opposition leader Alexei Navalny – a lawyer and critic of corruption – hired a bus and gave a guided tour of houses and flats in London’s most exclusive districts, properties owned by Russian government ministers and wealthy friends of Russia’s president, Vladimir Putin. “It’s in Britain’s interests to stop this flow of corrupt money,” said Vladmir Ashurkov, a Russian opposition politician, who has received political asylum in the UK. Ashurkov said he rejected the argument that foreign money helped the economy. Rather, he said, it raised house prices to unaffordable levels and turned London into a global centre for money laundering.

Bills Seek Transparency of Shell Companies
New York Times 

Bills requiring greater transparency of shell companies were introduced in Congress on Wednesday, continuing a yearlong legislative effort to shine light into one of the darkest recesses of business dealings in the United States. Shell companies, often limited liability companies, are registered at the state level and, in numerous states, the government is not given the name of the person who actually owns the company. This opacity is a significant barrier for law enforcement authorities when they are investigating money laundering and other crimes involving shell companies.

€250 Billion Romania-Russia Tupolev Deal Dead in the Water

An agreement between Bucharest and Moscow to construct an aircraft factory and airport in Romania has been stopped by allegations of money laundering at an international level. The deal’s administrator is a controversial figure. Vitalie Usturoi has been linked with a high-profile cigarette-smuggling scandal, the privatisation of the Auto Romania company and the closure of the country’s largest bank, Bancorex, as well as the 1989 Revolution. Usturoi’s “financial platform” is called Hestiun Finance Limited, a British firm that apparently holds its money in Frankfurt. In 2005, Usturoi’s name was linked to a case of large-scale money laundering by the National Office of Preventing and Combatting Money Laundering (ONPCSB). It involved transferring significant amounts of unclean money from natural gas distributors and Gazprom, claimed ONPCSB inspectors.

How Chinese Used Insurance to Dodge Currency Controls
Bloomberg Business

Such policies, in addition to providing better health care, beneficiary payments and returns than those on the mainland, are also popular because they’re shielded from seizure in the event of bankruptcy in China or criminal proceedings, which have been intensifying under President Xi Jinping’s anti-corruption campaign. Last year, Insurance Commissioner Annie Choi, who was later replaced, warned of growing money-laundering risks through the use of insurance policies and changes made to inflate their value after purchase. “These changes, including advance premium payment, policy loan, lump sum top up, policy assignment, changes in the beneficiary or early surrender, may make it possible for a life insurance policy to become an unnoticed tool for money laundering,” she said in a speech at a financial crimes conference in April.

Chinese Anti-Corruption Agency Warns of ‘Major Problems’ in Financial Sector
CNN Money

The findings by the ruling Communist Party’s Central Commission for Discipline Inspection range from abuse of power at a top state-owned bank to officials using data for personal gain at the government statistics bureau. Some of the inspectors’ criticisms of state-run companies highlighted the Chinese Communist Party’s requirement of loyalty above all else — even business’ bottom line. Members of the Communist Party committee at the financial conglomerate Citic Group were accused of “talking about business too much while seldom talking about the Party.”

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