Ex-Wall Street Banker Convicted in Guinea Bribery Case

A Guinea-born former Wall Street banker was convicted of laundering $8.5 million in bribes that he took while a government minister in the West African country, where claims of corruption and disputes over mineral rights involve some of the biggest mining companies in the world.

Mahmoud Thiam was accused in the U.S. of taking illegal payments to help China International Fund Ltd. win exclusive rights to mine Guinea’s iron, gold, diamonds and bauxite deposits and then laundering the money into the U.S. Thiam served as Guinea’s mining minister from 2009 to 2010 after spending 14 years as an international investment banker at Merrill Lynch & Co. and UBS Group AG in New York.

The jury in Manhattan federal court delivered its verdict Wednesday after about six hours of deliberations, following a six-day trial. Thiam faces as long as 10 years in prison under federal sentencing guidelines.

Prosecutors claim Thiam used the bribes to pay for luxuries, including ski lessons, private school for his kids, a Steinway grand piano and renovations to a 30-acre estate in New York’s Dutchess County. Thiam, who testified in his own defense, said the money was a loan from China International Fund’s Sam Pa. read more »

 

Société Générale to pay £815m to settle Libyan lawsuit

bank was involved in long-running battle with Libyan Investment Authority over alleged fraud and corruption

The French bank Société Générale is to pay €963m (£815m) to settle a legal battle with the Libyan investment fund that dates back to the Gaddafi regime.

A joint statement on Thursday announced the settlement just as the long-running dispute was due to heard in a London court, where the Libyan Investment Authority was accusing SocGen of a “fraudulent and corrupt scheme” involving five trades that took place between 2007 and 2009. read more »

Inside the ‘Scorpion Room’ Where Drug Price Secrets Are Guarded

Susan Hayes can’t forget the trek from the parking lot, across a dusty patch of Arizona desert, to a dingy building without air conditioning and through a door marked “Scorpion Room.”

“Like something out of the Bates Motel,” said Hayes, a fraud investigator for employers, unions and health plans, and a longtime industry critic. In the Scorpion Room, she pored over hundreds of pages of nonpublic contracts between drug companies and a now-defunct pharmacy-benefit manager, a powerful middleman that processes claims and negotiates discounts and rebates.

Office space may be less primitive than it was 15 years ago, but PBMs still often put auditors in secure rooms, limit the number of contracts they can see and restrict and review note-taking, according to people in the industry and contracts reviewed by Bloomberg. It’s an unusual level of control compared with other industries, said David Farber, an Indiana University accounting professor whose research has focused on auditing and its oversight.

“I’ve never heard of circumstances where restrictions like this are imposed,” Farber said. “The audit risk is enormous.”

PBMs occupy a key crossroads of the health system, acting as a nexus among insurers, employers and drug companies. Through a complex web of agreements they help decide what drugs are covered by a patient’s insurance, and how much they’ll cost at the pharmacy counter. The problem, say critics, is that opacity makes it hard for employers to know how much the PBM is paying and profiting on each transaction -- an impression reinforced by restrictions on who can audit them and how. read more »

Wal-Mart seeks anti-corruption certification, in talks with regulators

Wal-Mart Stores Inc said on Wednesday it was considering getting certified under a new international program that could help companies defend themselves against isolated cases of corruption or poor business practices.

The International Organization for Standardization (ISO) developed the so-called anti-corruption compliance program and Wal-Mart is hoping to be the first U.S. company to get certified under it, said Jay Jorgensen, Wal-Mart's executive vice president and global chief ethics and compliance officer.

Wal-Mart's ethics and compliance system came into focus after a New York Times report in 2012 found Wal-Mart had engaged in a multi-year bribery campaign to build its Wal-Mart de Mexico business.

This was followed by an investigation by the U.S. Department of Justice into potential misconduct by Wal-Mart, including violations of the Foreign Corrupt Practices Act in some overseas markets including China, Brazil, India and Mexico.

In October, Wal-Mart rebuffed a proposal by U.S. prosecutors to pay at least $600 million to settle a corruption probe into the company's practices in markets including Mexico, India and China.

So far Wal-Mart has spent about $800 million on legal fees and an internal investigation into the alleged payments and to revamp its compliance systems around the world. read more »

U.S. company turned blind eye to wild behavior on Iraq base

The two American investigators felt a sense of foreboding that Sunday as they headed to an emergency meeting with their boss on the Iraqi air base. But they didn't expect to be surrounded by armed guards, disarmed, detained against their will — and fired without explanation.

It was March 12 — less than two months ago. Robert Cole and Kristie King were in Iraq working as investigators for Sallyport Global, a U.S. company that was paid nearly $700 million in federal contracts to secure Balad Air Base, home to a squadron of F-16 fighter jets as part of the U.S.-led coalition to annihilate the Islamic State.

Cole and King had spent more than a year together in Iraq investigating all manner of misconduct at Balad and beyond.

They'd uncovered evidence that Sallyport employees were involved in sex trafficking, they said. Staff on base routinely flew in smuggled alcohol in such high volumes that a plane once seesawed on the tarmac under the weight. Rogue militia stole enormous generators off the base using flatbed trucks and a 60-foot crane, driving past Sallyport security guards.

Managers repeatedly shut down Cole and King's investigations and failed to report their findings to the U.S. government that was footing the bill, the investigators said.

Right before they were fired, Cole and King had opened an investigation into allegations of timesheet fraud among Sallyport employees. In a call with Sallyport lawyers, they said, they were advised to keep two sets of books about potential crimes and contract violations. read more »

Ex-Tennessee lawmaker, relatives convicted in Ponzi case

A former Tennessee House member and three of his relatives have been convicted by a federal jury in a multi-million dollar Ponzi scheme that was promoted on Christian media and centered on buying and selling gold and silver coins, federal prosecutors said Wednesday.

Former state Rep. Larry Bates; his sons, Chuck and Robert Bates; and Robert Bates' wife Kinsey, were found guilty of mail and wire fraud during a five-week trial in Memphis.

Prosecutors said the Bateses worked through First American Monetary Consultants, which had offices in Memphis and Boulder, Colorado. More than 360 people lost more than $21 million in the scheme, which lasted from 2002 through October 2013.

Larry Bates, who served in the House in the 1970s, promoted the company though Christian television and radio programs, prosecutors said. Bates held conferences predicting an economic collapse and emphasizing the need to invest in precious metals. Evidence at trial showed he diverted more than $4 million to the creation of International Radio Network, a Christian radio system.

Customers gave $87 million to the company for the purpose of buying precious metals. But prosecutors said the Bateses kept money from the payments for their personal use, including commodities trading and a 10,000 square-foot house in Middleton, Tennessee. By 2009, the company had more than $26 million dollars in unfilled orders. read more »

CFTC Charges of Fraudulently Soliciting and Receiving at Least $13 Million in Commodity Pool Scheme

The CFTC Complaint charges Defendants Williams and WAG with commodity futures fraud and Williams with commodity pool fraud and failure to register as a commodity pool operator. The Complaint also charges Williams with engaging in activities prohibited for a commodity pool operator, including commingling pool participant funds with Williams’ personal funds. The Complaint alleges that Williams’ victims included family members, friends, neighbors and members of his church and other related churches in and around Phoenix, Arizona.

James McDonald, Director of CFTC’s Division of Enforcement, stated: “As alleged, Cory Williams lied to his victims to convince them to invest millions of dollars in his fund. Williams promised to invest their money using his expertise, backed up by a track record of profitable investments. But in reality, Williams simply made up his profitable past, and he spent his victims’ money on himself—using some of it to fund his own dining, travel, and other personal expenses. To perpetrate this fraud, Williams preyed on those closest to him, including members of his family, community, and church. The charges in this case send a message that the CFTC will continue to take swift action to stop such fraudulent schemes and to hold fraudsters accountable for their misconduct.” read more »