The “Mother” of All Corporate Scandals
Siemens AG, a multinational engineering company based in Germany, acknowledged it used up to 1.3 billion euros illegally in an elaborate bribe-and-kickback system to win foreign contracts around the world. From 2002 to 2006, slush funds, off-book accounting and suitcases full of cash were used to bribe officials in Argentina, Bangladesh, China, Iraq, Israel, Libya, Mexico, Nigeria, Russia, Venezuela and Vietnam.
In December 2008, Siemens agreed to pay to U.S. and European authorities $1.6 billion in fines, an amount as unprecedented as the number and scope of international investigations into Siemens’ wrongdoings. U.S. agencies had cooperated closely with the Munich Public Prosecutor’s Office to bring several cases, and German prosecutors benefited from cooperation with their counterparts in Greece, Italy and Switzerland. Now Siemens AG is on the forefront of good governance efforts.
Losing in a Thieves’ Casino
Two former managers of the state-run Bank of China Ltd., initially got lucky in the gambling Mecca of Las Vegas. They used casinos to launder some of the $485 million they had siphoned off from a bank branch in southern Guangdong province in the mid-2000s. They had funneled the money through shell corporations in Hong Kong and Canadian and U.S. banks, and then fled to the United States.
Ultimately, the law caught up with Xu Chaofan and Xu Guojun in Las Vegas. In May 2009, a U.S. federal court sentenced them to more than 20 years in prison for financial fraud and other crimes. China and Hong Kong assisted U.S. authorities in producing evidence and made witnesses available for testimony.
Who Gets Crook’s Money?
With up to $5 billion in stolen funds, General Sani Abacha made Transparency International’s top five — that is, he is considered one of the world’s most corrupt leaders in recent history. Abacha ruled Nigeria from 1993 until he died in 1998.
In 2002, $1 billion was returned to Nigeria as part of an out-of-court settlement with the Abacha family. In 2005, with other funds in Switzerland in legal limbo, a Swiss lawyer used an innovative tactic to break the logjam, allowing the Swiss government to return $505 million to Nigeria. The United Kingdom, Liechtenstein, Luxembourg and other entities returned an additional $700 million as a result of separate proceedings. Swiss and Nigerian nongovernmental groups worked with their respective governments to ensure that recovered funds are used for development.
Stealing from the Poor
Judging by Arnoldo Alemán’s expenses — a $46,609 party in Coral Gables, Florida, for example — one might think he was the leader of a rich nation. In reality, from 1997 to 2002, he was the president of Nicaragua, one of the world’s poorest countries. He looted the country of $100 million, according to Transparency International. When Alemán was charged in Nicaragua with corruption-related offenses, governments in several countries froze his bank accounts.
A U.S. investigation traced stolen money to U.S. bank accounts and real estate. In 2004, U.S. authorities forfeited and transferred approximately $2.7 million of the former president’s assets to the government of Nicaragua. The funds were to be used for education projects.
Lies, Bribes and Videotape
In the 1990s, Vladimiro Montesinos, the head of Peru’s intelligence service, managed a web of corruption, which involved drug trafficking, arms trade and other transgressions. A large part of the proceeds from his illegal schemes was laundered through shell companies and transferred to banks outside Peru. Montesinos’ fate was sealed when he was caught bribing an opposition legislator on videotape, which aired on a local TV station. He fled Peru in 2000.
When Montesinos was captured in 2001 by Venezuelan authorities working with U.S. and Peruvian law enforcement agencies and later convicted by a Peruvian court, several countries — including the United States, Switzerland, the Cayman Islands, Luxembourg and Mexico — cooperated to track and recover stolen assets. Thanks to these efforts, Peru’s new elected government recovered more than $185 million.
Hawala International
A hawala network, an informal money transfer system, was at the center of a money laundering operation based in Maryland and Washington. Saifullah Ranjha, Abdul Rehman and others used hawala to launder money from drug trafficking and smuggling of counterfeit cigarettes.
After four years of an undercover investigation into four different criminal schemes that span the globe, Ranjha, Rehman and 37 of their associates were arrested by U.S. authorities. In 2007, they were indicted on charges related to money laundering, bribery of public officials and, in one case, terrorist financing. Authorities in Australia, Belgium, Canada, Spain, the Netherlands and the United Kingdom assisted U.S. law enforcement agencies in the investigation.
In 2008, Ranjha pleaded guilty to conspiring to launder money and to concealing terrorist financing and was sentenced to 110 months in prison. By February 2009, 23 other defendants had pleaded guilty to their participation in one or more of the schemes.
