Businessmen with close personal connections to Ukrainian President Viktor Yanukovych have been linked to companies involved in what could be categorized as “large-scale embezzlement,” according an investigation by Ukrainian Pravda, reprinted in English by Slidstvo.
The three companies most heavily involved in the questionable practices are TOV Sodetel, TOV Antis Trade, and TOV StroyInvest 2007. Each were given contracts to conduct renovations of multiple social program facilities, many of them schools and orphanages, to bring insulation, heating, and window standards up to modern, acceptable standards. The total value of the contracts is around $200 million.
The investigative journalists covering the story, Dmytro Gnap and Maria Usenko, called at random 40 of the 500 sites on the list of sites to be renovated. Half had seen no progress, and half had seen only partial progress on the work. This is in spite of the deadline passing for the completion of the contracts.
Further investigation revealed that the companies were in fact fronts for more powerful members of Ukraine’s socio-economic ladder. The TOV Sodetel contract, for example, was subcontracted to a company owned by a longtime friend of President Yanukovych, Yuriy Ivaniushchenko. The links do not stop there. TOV Sodetel was originally founded by Viktor Migdisov, an entrepreneur who is a known associate and business partner of Aleksander Yanukovych, the President’s son. Migdisov denied any connection with TOV Sodtel. The investigation also linked TOV Antis Trade to Yuriy Ivaniushchenko.
Through a combination of wildly exaggerating expected costs, and utilizating cheap substitutes in place of agreed-upon materials, it is estimated that the companies scam cost the social programs over $12 million, at the least.
Sodetel alone pocketed $10.5 million in public funds earmarked for the school, Pravda reported.
The State Tax Service of Ukraine has brought criminal tax evasion charges against the front companies involved, according to Pravda, which noted that while the heads of the front companies may be prosecuted, those truly responsible – the politically connected elite of society – are likely to remain untouched.
Serzh Sargasyan was re-elected as the President of Armenia on Monday after an election marred by accusations of voter fraud and electoral irregularities. Sargasyan’s main opponent, Raffi Hovannisian, has published a list of over 100 alleged voting irregularities reported from across the country on Monday. The laundry list of alleged activities include voter fraud, individuals voting in multiple zones, ballot stuffing, and the unwarranted disqualification of ballots, according to Armenian news website and OCCRP partner Hetq Online.
In one reported instance, an opposition representative was allegedly offered “ten thousand dollars to momentarily leave the room,” reported Hetq, who also noted complaints that some voters used incorrect or nonexistent permanent addresses. YouTube videos such as this one purport to show how to remove the voting stamp from an Armenian passport. If true, such a technique would allow for multiple votes.
In a letter accompanying the list of alleged irregularities, the Hovannisian campaign decried the “ultimate failure of the authorities to organize a free and transparent presidential election,” and called the proceedings “a humiliating, scandalous election.”
On Tuesday morning, authorities were pursuing two criminal cases in connection to electoral crimes, according to Hetq.
In a press release, the Organization for Security and Cooperation in Europe (OSCE) stated that the Armenian election displayed “clear improvements” over previous elections, according to the Head of the Parliamentary Assembly of the Council of Europe (PACE) delegation, Karen Woldseth. The election was “generally well-administered,” but there were “areas where marked improvement is needed,” according to the OSCE’s Office for Democratic Institutions and Human Rights (ODIHR) as quoted in that press release . Milan Cabrnoch, the head of the European Parliament Delegation, conceded that the decision by several “major political parties” to not put forward candidates had led to a campaign devoid of “real competition” and “significant political debate.”
The Head of the ODIHR long-term election observation mission pointed out the presence in Armenia of biased public servants, due in large part to the continued “blurring of the distinction between the State and the ruling party.”
The statements by these international observers did not mention the alleged election-day irregularities reported by opposition candidate Hovannisian’s campaign.
The US-based security firm Mandiant has released a report detailing hacking it says was conducted by a cyber unit of the Chinese People’s Liberation Army (PLA). The report alleges that the group of hackers, dubbed Advanced Persistent Threat 1 (APT1), has been conducting cyber espionage “against a broad range of victims since at least 2006.”
This is one of the most prolific cyber espionage groups the Mandiant has encountered in terms of volume of data stolen. Mandiant analyzed over 140 APT1 intrusions over the course of seven years, spanning 20 industries and multiple nations. The cyber-security firm believes this represents “only a small fraction of the cyber espionage that APT1 has conducted.”
Mandiant’s report expresses a belief that APT1 receives “direct government support,” and that APT1 is in fact a cyber-operations unit of the PLA, named Unit 61938. The report cites Unit 61938’s similar “mission, capabilities, and resources” to that of APT1, and notes that the location of Unit 61938 corresponds with the exact area where many APT1 intrusions were traced.
The Chinese Defense Ministry responded strongly to the Mediant report, slamming the publication for lacking in “technical proof,” Reuters reported. The Ministry argued that as cyber attacks are often made from stolen or hijacked IP addresses, the use of IP locations as a method of proof is extremely weak. Cybercrime’s secretive nature makes accurate tracing inherently difficult, the Chinese statement added.
The Ministry said that a large number of hacking that occurs in China originates from the US, but that China did not see this as an invitation to “criticize” the US. It also stressed that “attacks” in the media serve to unnecessarily destroy an atmosphere for cooperation, USA Today reported.
While confident that the evidence supported claims that APT1 and Unit 61398 are one and the same, Mandiant does admit there is an alternative explanation: that a group of independent hackers has successfully operated with impunity over a number of years in one of the world’s most tightly controlled internet countries, and the Chinese government has been unaware. Mediant finds the scenario “unlikely.”
The difficulty in quantifying cyber attacks and accurately tracing the sources breeds skepticism on the size of the problem. State-sponsored cyber-warfare for political and economic reasons is an unquestioned reality, but there are differing opinions on which states represent the greatest threat in cyberspace. James Fallows argued in The Atlantic that China may not be the first, or even the second greatest state-level threat to cyber-security – those dubious honors were given to Russia and Israel, respectively. It is worth remembering that while China is a key focus for US security issues, it is not the only player in the battle for information in the internet age.
The Australian Crime Commission (ACC) has unveiled a report titled “Organized Crime And Drugs in Sport”. The report is looks at the use of Performance and Image Enhancing Drugs (PIEDs) in multiple sports.
PIEDs include a large category of drugs including certain peptides and hormones. PIEDs help the body heal more quickly, develop muscle more rapidly, and shed fat more effectively. However, there are various known side effects depending on the drug used, which can include serious damage to the liver or reproductive system. Despite these risks, demand for the drugs -- especially in the ultra-competitive world of professional sports -- remains high.
The ACC report states that their use is “significantly higher” than previously believed, and that organized crime is increasingly involved in the distribution of PIEDs. The significant profit to be made in the PIED market -- reportedly up to 140 percent -- means criminal organizations are likely to expand their presence in the Australian market.
Organized crime syndicates responsible for trafficking PIEDs also engaged in “money laundering, corruption, match fixing and fraud,” according to the ACC, which noted the development of ties between criminal entities and professional athletes.
A number of medical professionals, team staff, trainers, and coaches, as well as players, were also said to be involved in supporting a culture in Australian sport that condones, and often encourages, the use of PIEDs. The public version of the ACC report does not name any teams, players, or officials involved in the distribution of PIEDs.
OCCRP partner Re:Baltica published an investigation Monday on the non-commercial short-term lending market in Latvia, highlighting the dangers and pitfalls that await low-income customers in the quick-loan market. The investigation raises questions about the source of capital used to start and run the largest quick-loan provider in Latvia.
Those with the lowest lincomes are at the highest risk for exploitation by the short-term lending firms, and are also the most likely to utilize their services, Re:Baltica's investigation found. With compound annual rates as high as 1552%, Latvia's poorest citizens are at risk of being caught in a lending trap, whereby they are forced to extend loans (costing them additional fees), and in worst-case scenarios take out new loans to pay off initial debts.
Re:Baltica's reports on the unclear sources of funding for the largest of Latvia’s quick-credit parent companies, 4Finance. Of the two main shareholders of 4Finance as reported in 2011, one is a Cypriot offshore company, and the other is a Maltese firm which is itself owned by eight additional offshore companies.
Re:Baltica suggested the need for increased regulation of the non-commercial lending sector in Latvia. Limiting times that text-based-lending is available, restricting the maximum allowed compound annual interest rate on loans, and less ambiguous advertising are suggested as ways to curtail predatory lending. These concepts have been successfully applied in other European nations.
The quick-credit companies are banding together to fight off possible regulations that they fear will impede their ability to function efficiently and limit profits. As public dissent towards unsavory loan tactics grows, the companies are scrambling to maintain their image.
Read the full Re:Baltica story here.
Moldova's National Anti-Corruption Centre has launched an investigation into the role Moldovan banks played in the $230 million tax rebate fraud uncovered by Russian lawyer Sergei Magnitsky, Moldovan authorities acknowledged on Wednesday. In doing so, Moldova became the fifth country to try to trace the funds obtained in that tax fraud, joining Cyprus, Latvia, Lithuania, and Switzerland.
The investigation involves Moldova's biggest bank, Banca de Economii (The Savings Bank), which an investigation by OCCRP, showed was involved in the complicated transfer of funds that followed the 2008 tax fraud scheme. OCCRP obtained bank records from two phantom companies used to transfer the funds to the some of the ultimate beneficiaries of the fraud.
Sergei Magnitsky blew the whistle in 2008 on Russian officials who he discovered stole $230 million in tax proceeds from the state and laundered it through a web of phantom companies and offshore accounts. Russian officials then arrested charged him with the very fraud he uncovered. For four months prior to his death in 2009, Magnistky was held at Butyrka detention center where he was denied treatment for pancreatitis and gallstones.
The UK-based investment firm, Hermitage Capital, Magnitsky's former employer, filed a complaint with the Moldovan prosecutor in June, in which it identified two accounts at the Moldovan bank that had received the stolen funds, which were then sent to Cyprus, Latvia, Lithuania, Estonia, Switzerland, Austria, Finland and Hong Kong.
The details of Moldova's criminal investigation will be made public in the next few days, according to the National Anti-Corruption Centre's spokesperson Angela Starinschi.
Brazil is developing a program to chemically identify the “DNA” of seized cocaine and determine the drugs’ origins, according to local media reports. A drug database has already been set up to aid in the identification of drug sources, Brazil’s Director of Federal Police Leandro Daiello told reporters.
The process of tracing the origins of cocaine involves identifying alkaloids within the sample and tracing them back to cocoa leaves grown in specific regions, InsightCrime reported. A similar practice is already utilized by the US Drug Enforcement Agency. However, the identification process may face difficulties when dealing with cocoa leaves processed into coca base in one country and refined into cocaine in another, as this makes identifying the source more complicated.
Brazil has offered to share the database information with Bolivia, which is believed to be the largest producer of cocaine entering Brazil. Daiello’s comments came at a meeting in La Paz on the strengthening of regional cooperation and anti-trafficking legislation. The meeting included representatives from Brazil, Bolivia, Peru, Colombia and the United Nations.
The Brazilian government also plans to employ the use of unmanned drones in an effort to stop the flow of drugs through its long, porous borders. At the conference in La Paz, Bolivia and Brazil reached an agreement allowing Brazilian drones to operate in Bolivian airspace along the countries’ shared borders, Prensa Latina reported.
Brazil has purchased two drones from an Israeli defense contractor, with the option of purchasing more. The Unmanned Aerial Vehicles (UAVs) are able to fly for 37 consecutive hours and cover more than 620 miles (1000km). Daiello said the aircraft would be able to clearly photograph people or objects during its flight, the BBC reported.
The growth of the Brazilian economy has stimulated demand for drugs in the nation, creating what a 2013 Europol report on drug markets describes as “possibly the largest South American cocaine market.” With major cocaine producing neighboring countries and porous borders, Brazil provides traffickers with a growing, easy to access market. The development of identification and central database programs, as well as the agreement on the use of drones on the Brazil-Bolivia border, highlights the growing attention given to drug trafficking by the Brazilian government, and the money and resources the nation is willing to spend to limit the movement of drugs across its borders.
Police in France, the United Kingdom, and Belgium, in coordination with Europol and Eurojust, dismantled an organized criminal network smuggling Middle Eastern nationals on Wednesday, according to a Europol press release. Europol and Eurojust provided logistical and organizational support, as well as real-time intelligence analysis.
Thirty-six people were arrested. In addition, two European arrest warrants were issued and 45 premises were searched. The French Border Police PAF, Belgian Federal Police of Brussels, Federal Police of Brugge, local police from Vilvoorde and Mons, and the UK Border Agency conducted operations in their respective nations.
The illegal immigrants were put on trucks in Belgium and France that transported them to the Calais-UK ferry. An estimated 4,000 illegals were trafficked into the UK annually via the targeted network.
The French Judicial Police opened the first investigation into the crime syndicate in February 2012, leading to further investigations by Belgian and UK authorities. The human trafficking network was based in France and Belgium, with its base of operations shifting between the two European nations. The Europol press release stated that the traffickers employed a “highly sophisticated and complex logistical organization” that had ties to both Greece and the Netherlands.
Eurojust was instrumental in the coordination of the multilateral investigation, co-funding a Joint Investigation Team (JIT) comprising French and Belgian law enforcement beginning in October 2012. The UK joined the JIT on February 4, 2013.
The Serbian anti-corruption agency is looking at the assets of National Security Advisor Ivica Tončev after he failed to report company ownership on his mandatory asset declaration forms. The move by the agency follows a story by OCCRP and the Center for Investigative Journalism in Serbia (CINS) which linked the Prime Minister’s advisor to Branislav Saranovic, an organized crime figure who was murdered in 2009. Tončev, a public servant, must list all interests in companies but the agency is looking into whether he failed to do that.
Spain’s conservative ruling Popular Party (PP) faces allegations of 19 years of secretive – and potentially illegal -- payments to party leaders.
According to a report in El Pais, a ledger attributed to PP’s ex-treasurer, Luis Barcenas, shows payments to members of the PP as well as other irregularities, including donations that exceed legal limits.
The validity of these claims has not been ascertained: the ledger itself has not been verified as being Barcenas’s, nor does it alone prove any wrongdoing. Also, regulations concerning fundraising, financing, and campaigning changed over the time span of the documents, which cover the years between 1990 and 2009.
Barcenas, the alleged author of the ledger, is embroiled in another financial scandal -- his Swiss bank account, which reportedly held more that $29 million, is under investigation for connection to a bribery scandal, according to CNN.
An Embattled PM
Spanish Prime Minister Mariano Rajoy, whose name appears in the copies of the ledger posted by El Pais, is alleged to have received payments of over $34,000 per year, over the course of the 19 years, according to the BBC.
Rajoy, who was asked to step down by opposition parties following the publication of the story, denied the allegations in a nationally televised speech on February 2, according to the BBC. “Never -- I repeat never -- have I received nor distributed cash payments under the table in this party or anywhere else," Rajoy said.
The editor of El Pais surrendered the original documents, alleged to be Barcenas’s ledger, to the Judicial Police, for review by the anti-corruption prosecutor, according to El Pais. The editor relinquished the documents after ensuring that it would not put the identity of the source at risk “under any circumstances.” The anti-corruption prosecutor also requested 13 years worth of PP tax documents from the Treasury, El Pais reported. Tax documents, donations, contributions, and payments associated with PP are to be investigated for potential irregularities.
The allegations against Popular Party and PM Rajoy come amidst a turbulent, trying time for the government. Unemployment, reported at 26 percent, and tough austerity measures implemented by the PP make Rajoy’s government the target of many people’s anger. These latest accusations have further damaged the fragile Spanish economy, with stocks falling and the interest rate on 10-year Spanish bonds reaching a year-long high of 5.45% on Monday, the Guardian reported.