World News

Petrobras corruption case overshadows Brazil presidential campaign

Petrobras corruption case overshadows Brazil presidential campaign (photo: challenger Aecio Neves took the podium at a yacht club in Copacabana this week for a rapid-fire news conference at which he took aim at incumbent Dilma Rousseff for a corruption scandal involving Petrobras, the state-owned oil company.

The president, he charged, had failed to respond to testimony by a former Petrobras director "that a chunk of money went to her party's coffers."

Soon after, Neves flew to Sao Paulo to take part in the latest in a series of debates with Rousseff, who proceeded to attack Neves' Social Democracy Party for being implicated in the same scandal, which has been dogging Brazil's largest company.

For good measure, she accused Neves personally of nepotism and corruption.

As the two candidates lurch neck-and-neck into a runoff election Sunday, corruption allegations are at the center of the free-swinging debate in South America's largest country, as they have been in every presidential campaign since 2006. Analysts and insiders say rising election costs have ratcheted up the pressure on campaigns to raise money, creating an environment that is ripe for corruption.

The total cost of Brazil's presidential, congressional and state elections in 2014 may exceed $3 billion, up from less than $2 billion in 2010 and just $321 million in 2002, according to government figures and a congressional report verified by academics.

Elections here are among the most expensive in the world, and loosely regulated campaigns are overwhelmingly paid for by corporations, in particular construction companies, food producers and banks.

Political and legal forces are pushing for spending limits or effective regulation, but face an uphill battle.

"Brazil didn't reinvent the wheel in terms of the way campaign finance affects politics. But … campaigns are extremely expensive, due to the size of the country and the format of elections, and that increases the incentive for corruption," said Joao Augusto de Castro Neves, a political analyst at Eurasia Group in Washington.

Candidates are given free TV time every night to air ads during the "political hour," but they have to create the content to fill it. Social networks and websites are furiously updated. And candidates must crisscross a country that is nearly twice the size of the European Union and often difficult to traverse.

"It's one of the most expensive places in the world to have an election, and costs have increased at a remarkable pace for the last 20 years," said Mauro Macedo Campos, a professor of public policy specializing in political campaigns at Norte Fluminense University in Rio de Janeiro state.

Brazil's campaign spending still pales compared with that of the United States, where the presidential and congressional elections in 2012 cost $6.3 billion, according to the Center for Responsive Politics. Brazil's $3-billion figure includes state races, which aren't included in the U.S. calculation.

Still, Brazil is a smaller and much poorer country, with a gross domestic product that is one-fifth that of the United States.

An investigation of alleged corruption at Petrobras is the largest and most recent to involve huge companies funneling money into political party coffers. The so-called mensalao vote-buying scandal in 2003, which threatened to bring down the government of Rousseff's predecessor, Luiz Inacio Lula da Silva, involved advertising companies and is the only case that has led to major convictions.

The Petrobras case stems from the testimony of the company's former executive Paulo Roberto Costa, now in jail in a corruption investigation. He agreed to talk in exchange for a plea deal, and Brazilian news media have been leaking details of his testimony in recent months. He reportedly said he was accepting bribes on inflated contracts in the company's refinery division and passing along some of the money to Rousseff's Workers' Party and its allies.

However, he also reportedly said he bribed the leader of Neves' Social Democratic Party. The investigation has not been concluded, but both candidates have used the reports to attack the other.

Across the country, accusations of campaign finance malfeasance are so common that they barely get attention unless they involve ruling parties.

Campos said major companies have continued to play an outsized role in the political process. "There are legal and moral ways they can do it, technically legal but obviously immoral ways … and illegal ways."

Campaign finance reports for the presidential election were last updated Sept. 9, nearly a month before Neves and Rousseff advanced to the second round. Several of the largest donors to both campaigns have been implicated in news reports as playing roles in the Petrobras scandal, although all have denied breaking the law.

"Obviously the donating companies have interests in how the elected government runs things, which in my opinion is very unhealthy," said Henrique Fontana, a lawmaker from the Workers' Party who supports public campaign financing and cost limits.

The major candidates, including now-defeated environmentalist Marina Silva, support some kind of major political reform, although analysts think it unlikely that Congress will vote to undermine the machine that has given lawmakers power.

If the politicians remain deadlocked, Marcus Vinicius Furtado Coelho, president of Brazil's Bar Assn., said there may be a legal case for imposing rules.

"The actual system is, in reality, a business investment strategy, in which large economic groups establish an extremely unhealthy relationship with democracy," said Furtado, noting that more than 95% of the funding is supplied by companies, leading the Bar Assn. to file a motion in court to declare the system unconstitutional.

"The vote of the owner of a construction company should not be worth any more than his worker."

Los Angeles Times         October 24, 2014

Australia slow to tackle international corruption

Australia slow to tackle international corruption (photo: Getty Images)Most of the world’s developed economies have barely moved on tackling international corruption, and while Australia has begun 21 investigations in the past two years, only two have resulted in penalties to companies.

Only four of 34 OECD countries are actively investigating and prosecuting international bribery, a Transparency International investigation has found.

Fifteen years after 41 nations – the 34 OECD member countries, and seven non-members – signed a global anti-bribery convention, more than half are doing “nothing or little” to stop their companies bribing foreign officials to illegally win or inflate contracts.

Australia, rated as having “moderate enforcement”, has begun 21 investigations into international corruption in the past two years, but has started only one case in court, and concluded only two with minor sanctions.

However, the Australian federal police are set to seize assets of allegedly corrupt Chinese officials in a joint operation with Chinese authorities, Fairfax Media reports.

“Naked officials”, as they are known in China, typically use family members sent overseas to illegally shift assets offshore.

A report released on Thursday in Berlin from Transparency International finds only four countries within the 34-member Organisation for Economic Co-operation and Development, the US, UK, Germany and Switzerland, are actively investigating and prosecuting companies allegedly engaged in international corruption.

Five countries, including Australia, were rated as having moderate enforcement.

Twenty-two OECD countries, including major economies and Australian trade partners Japan and South Korea, are reported to be doing “little or nothing” to stop transnational bribery. Those 22 countries represent more than a quarter of global trade.

In many countries law enforcement agencies have no resources for complex investigations, and governments lack the political will to pursue large, powerful companies.

“The OECD has worked hard to make the convention a powerful too and pushed governments to adopt tough laws. Now it needs to make sure that enforcement authorities have all the support they need to counter the growing power of cross-border crime networks,” the Transparency International chair, Jose Ugaz, said.

Corrupt international deals are increasingly done through shell companies, companies with no assets or business operations, and whose beneficial owners are not known, even to authorities.

Ahead of the G20 next month in Brisbane, Transparency International’s Australia executive director, Michael Ahrens, said the host country should push the world’s most powerful economic gathering to properly address corruption across national borders.

“We have to deal with the corruption that remains rife in so many places,” he said. “The G20 needs to close loopholes in the international financial system to make it harder for corrupt individuals to hide their identity and shift their illicit assets to shell companies.”

The Guardian         October 23, 2014

Anti-corruption reform to move Ukraine closer to European standards
 Anti-corruption reform to move Ukraine closer to European standards (photo: AFP)

Lawmakers have approved the anti-corruption package presented by the Cabinet of Ministers and President Petro Poroshenko in what experts term the most important legislation since Ukraine achieved independence.

"The whole package submitted by the president and the government was developed by international experts. The main things Ukraine expects from this package are fair and transparent state authority, fair prosecutors and judges. And in order to make them fair, they should be all brought to light," Prime Minister Arseniy Yatsenyuk said while introducing the bill to the parliament.

The new strategy calls for reform of the prosecutor's office and establishment of an anti-corruption bureau, which will investigate cases brought against senior officials, judges and heads of departments of the law enforcement system. The bureau's staff will have about 700 well-paid professionals.

New laws will also provide transparency in funding of political parties. One of the most important innovations is the law on defining ultimate beneficiaries of legal persons and public figures, officials said.

"The offshore era is over in Ukraine," Yatsenyuk told the parliament. "Now every official will be plainly visible. All accounts, all properties of the company will be disclosed, and those who illegally own them will be brought to justice." Experts said there were attempts to adopt similar laws before, but only the new government succeeded.

"The law about the anti-corruption bureau is much awaited. It is being created as a law enforcement agency. But it has more power to fight political corruption," Mykola Havronyuk, director of Scientific Development Centre for Political and Legal Reforms, told SETimes.

"In our country, you could always pay money and resolve any issue before the court or the police. But now no one can do that because we are making major changes in the criminal code," he said.

Olexandr Solontay, an analyst for the Kyiv-based Institute of Political Education, said the new measures are not perfect, but the most important is that they contain the "spirit of the law" and he believes the new parliament will be able to improve them.

"These laws have very correct and useful ideas," Solontay told SETimes. "For example, information on real estate and companies must be open. Every citizen has the right to receive it. In our country, always a lot of money from the state budget is laundered by companies owned by the officials. Now we will be able to monitor such facts."

In addition to the anti-corruption reforms, the parliament also adopted a law that focuses the role and authority of the prosecutor's office.

"The adoption of the new law on the prosecutor's office is our unfulfilled obligation to the Council of Europe, which we were supposed to meet a long time ago," Kateryna Tarasova, head of the NGO Ukrainian Judicial Association-Foundation for Justice, told SETimes.

"Prosecutors in our country are like gods. They can open a case, can close it, do whatever they want. According to the old laws, their powers are limitless. And we could not appeal some illegal actions of the prosecutors," she said. Experts said Ukrainians will see results of the reforms soon.

"I think we will see the first result by the end of 2015," Havronyuk said.

Southeast European Times        October 22, 2014

5 ex-Afghan ministers faces prosecution on corruption charges

5 ex-Afghan ministers faces prosecution on corruption charges (photo: Khaama Press)The Attorney General Office (AGO) said Tuesday that the cases of five former ministers accused of graft charges have been referred to the Supreme Court of Afghanistan.

Basir Azizi, spokesman for the Attorney General Office (AGO) told reporters that the former ministers are accused of corruption and misuse of power.

Former transportation ministers Hamidullah Qaderi and Enayatullah Qasemi, former trade and commerce minister Amin Farhang, along with the former mines minister Mohammad Sediq and former minister of economy Jalil Shams are facing prosecution over graft charges and misuse of power, Azizi said.

He also added that the cases of five former ministers were referred to Supreme Court on Tuesday.

According to Azizi, the Attorney General Office is working on the cases of a number of other government officials accused in corruption.

Azizi said the cases will be sent to the court once the Attorney General Office finalizes its work.

Khaama Press       October 21, 2014

South Korea: Nuclear fraud figures back on job

South Korea: Nuclear fraud figures back on job (photo: high-level officials at a state-run energy company who resigned from their posts last year after a corruption scandal involving counterfeit parts in nuclear plants are back on the job, according to an NPAD lawmaker.

One of the three was re-employed in two months, while the other two had their jobs back within nine months.

The findings were presented by New Politics Alliance for Democracy Rep. Chun Soon-ok during a National Assembly audit hearing yesterday for Kepco E&C.

Chun said she found out about the rehirings while reviewing a document submitted by the company, a subsidiary of the Korea Electric Power Corporation (Kepco).

“Rehiring these executives is a fraudulent action against the public,” said Chun. “These people resigned on their own will after the company was found to have been involved in an illicit activity that allowed faulty parts to be installed in nuclear plants.”

In June last year, two state-run companies - the Korea Hydro and Nuclear Power Corporation (KHNP) and Kepco E&C - removed a total of 246 executives in the wake of the scandal that involved counterfeit and uninspected nuclear parts.

The faulty parts caused the affected power plants to be shut down numerous times.

After the parts scandal was revealed, the public became outraged when the former government officials were rehired at smaller affiliates of state-run companies. The rehiring was considered corrupt, and included other practices such as taking bribes for parts supplies.

Two executives from KHNP, the main public corporation in charge of managing operations of nuclear reactors, resigned in January.

However, top management at Kepco E&C followed suit only after it was unveiled that none at the company was discovered that no one had taken responsibility and resigned.

That fueled a public outcry that resulted in immediate resignation of the three officials.

But it turns out the executives got new positions at the energy company as contract workers while receiving annual salaries of between 50 million won ($47,187) and 60 million won.

The lawmaker said all three men are figures who have powerful influence within the company, as they have worked there for more than 30 years. They had even received paychecks of as much as 180 million won a year.

One of the officials, surnamed Kim, who was in charge of management and planning, also acted as a proxy CEO for four months beginning in June 2013 after CEO Ahn Seung-kyu resigned in the face of mounting public anger over the corruption scandal.

Kim currently works in the company’s public relations department.

“The rehiring of executives is unethical and completely violates the social responsibility made by the current CEO of eradicating any corruption,” the lawmaker claimed.

Korea JoongAng Daily        October 21, 2014

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