Brazil’s Car Wash Scandal Reveals a Country Soaked in Corruption

What may be the largest corruption case in modern history runs deep in Latin America’s largest country.

In U.S. history, entire cities and states have been branded corrupt: Think Richard J. Daley’s Chicago or Huey Long’s Louisiana. But amid even the worst federal scandals, Watergate included, the country has never been nationally profiled as crooked—a venal society from coast to coast, from dogcatcher to commander-in-chief.

Brazil feels that way right now, largely the result of a bribery scandal of Amazonian proportions known in Portuguese as Lava Jato, or Operation Car Wash, believed to be the largest corruption case in modern history. The multibillion-dollar tsunami of sleaze barreling through Latin America’s largest country and economy is deeper and broader than any Trump-Russia allegations pouring out of Washington. And it could force the resignation of Brazilian President Michel Temer, who’s been fingered repeatedly in recent weeks for allegedly orchestrating and receiving millions of dollars in bribes. read more »

Laws protect whistleblowers

Question: Over the years, “60 Minutes” and similar television programs have reported on whistleblowers and their employers’ subsequent retaliation, including termination. Are there laws to protect whistleblowers?

Answer: Yes. Both federal and state statutes have been put in place to protect whistleblowers from retaliation. Legal protections vary according to the subject matter of the whistleblowing and the state where the case arises.

A whistleblower is a person who makes public disclosure of corruption or wrongdoing.

The first federal whistleblower law was passed in 1778 to protect sailors who were arrested after reporting incidents of torture committed by superior officers.

In 1863, the U.S. False Claims Act (amended in 1986) was adopted in an attempt to combat fraud by suppliers of the U.S. government during the Civil War.

The act encourages whistleblowers by promising them a percentage of the money recovered by the government and by protecting them from employment retaliation. read more »

Data Mining to Find Tax Cheaters

That Swiss bank account may be closed—but it’s not forgotten.

Driven by fear of prison and scandal, tens of thousands of Americans who hid money offshore have taken an amnesty deal offered by the U.S. Internal Revenue Service since 2009. They had to bring the money home, pay the taxes plus penalties, and tell authorities how bankers helped them cheat. In return, they weren’t prosecuted. Some resisted, however. They moved their money from Switzerland to other tax havens such as Singapore and Hong Kong, daring the U.S. government to find them.

Now this high-stakes game of catch-me-if-you-can is heating up, thanks to an avalanche of data handed over by the 80 Swiss banks that made deals with the U.S. to avoid prosecution. As with the Americans, they’ve had to show how the cheating worked, although in deference to Swiss privacy laws they weren’t required to name clients or provide account numbers. Prosecutors have been poring over the information and focusing on “leavers”—the clients who pulled their hidden money and stashed it elsewhere. They’re also looking at companies and middlemen who helped them, say prosecutors and tax lawyers. read more »

Unshackled algorithms

Machine-learning promises to shake up large swathes of finance

In fields from trading to credit assessment to fraud prevention, machine-learning is advancing

Machine learning is beginning to shake up finance. A subset of artificial intelligence (AI) that excels at finding patterns and making predictions, it used to be the preserve of technology firms. The financial industry has jumped on the bandwagon. To cite just a few examples, “heads of machine-learning” can be found at PwC, a consultancy and auditing firm, at JP Morgan Chase, a large bank, and at Man GLG, a hedge-fund manager. From 2019, anyone seeking to become a “chartered financial analyst”, a sought-after distinction in the industry, will need AI expertise to pass his exams.

Despite the scepticism of many, including, surprisingly, some “quant” hedge funds that specialise in algorithm-based trading, machine-learning is poised to have a big impact. Innovative fintech firms and a few nimble incumbents have started applying the technique to everything from fraud protection to finding new trading strategies—promising to up-end not just the humdrum drudgery of the back-office, but the more glamorous stuff up-front. read more »

The Dirty Family Secret in a Brazilian $20 Billion Buying Spree

When beef tycoons Joesley and Wesley Batista sat down with Brazilian prosecutors last month and told them all they knew about the metastatic corruption scandal known as Carwash, they also let the world in on a dirty family secret.

The meteoric rise of the Batistas’ JBS SA, the global meat powerhouse that seemed to come out of nowhere a decade ago, wouldn’t have been possible without a top politician on the take, hundreds of millions of dollars in bribes and a series of sweetheart deals with Brazil’s state development bank. read more »

Former Massachusetts Man Sentenced for Multi-Million Dollar Ponzi Scheme

A former Massachusetts man was sentenced yesterday in federal court in Boston in connection with running a $10 million Ponzi scheme.

Mark Anderson Jones, 64, was sentenced by U.S. District Court Senior Judge Mark L. Wolf to 70 months in prison, three years of supervised release, and ordered to pay restitution of $3,749,039 and forfeiture. In September 2016, Jones pleaded guilty to one count of wire fraud and one count of engaging in monetary transactions in proceeds of unlawful activity.

Between 2008 and 2015, Jones obtained more than $10 million in investments from over 20 individuals by leading them to believe that they would be providing financing to Jamaican businesses. Because Jamaican banks can take time to close business loans, Jones claimed that he was offering these businesses “bridge loans” as an interim measure, i.e., loans to bridge the gap between the date a business sought a loan from a Jamaican bank and the date the bank actually distributes the requested funds. However, Jones misled investors about the purported bridge loan investments and how their money would be used. Specifically, rather than investing in bridge loans and paying returns based on those investments, Jones used new capital to either repay investment principal or to pay purported returns to earlier investors. read more »

Petrofac suspends chief operating officer amid corruption probe

Petrofac has suspended its chief operating officer and barred all contact between its chief executive and external agents, as a criminal probe into suspected bribery, corruption and money laundering deepens.

The UK-listed oilfield services company said on Thursday it had suspended Marwan Chedid, its chief operating officer, who is a potential suspect in the probe by the UK’s Serious Fraud Office. read more »