Anti-Bribery and Anti-Corruption

World Bank Debars Two Companies for Collusion, Fraud
Asia Pacific

The World Bank Group has announced that it’s Sanctions Board has debarred China First Metallurgical Construction Corporation (CFMCC) and any company that it directly or indirectly controls for three years, due to CFMCC’s fraudulent misconduct in relation to the Dhaka Urban Transport Project in Bangladesh. The debarment means CFMCC is ineligible for contract awards under any World Bank Group-financed or executed project.

The Sanctions Board has also debarred Oztas Insaat, Inssat malzemeleri Ticaret Anonim Sirketi (Oztas) for three years (which may be reduced to two years if Oztas implements an appropriate compliance program) for collusive practices in relation to the East-West Highway Improvement Project in Georgia.
The World Bank’s media release (28 September 2011)
(Source: The World Bank Group)

Quebec Anti-Corruption Report Released

The Globe and Mail reports that Quebec’s anti-collusion unit head Jacques Duchesneau is “confident his report on corruption in the construction industry will be taken seriously by the government”. Mr Duchesneau reportedly described the situation as “worse than what [he] thought”. Consequently the provincial government will reportedly review 74 recent public works contracts for corruption; however, the government has stated that cost overruns occurred for only 3.2% of the 1,528 contracts awarded in 2010-11.
The Globe and Mail: Quebec’s corruption report will be taken seriously, author says (23 September 2011)

Related news item:
The Gazette: SQ denies political interference quashes corruption investigations (24 September 2011)
(Source: The Globe and Mail; The Gazette)

Fraud Whistleblower Reinstated

The US Department of Labor’s Occupational Safety and Health Administration (OSHA) has found nutritional beverages company Bond Laboratories Inc (Bond Laboratories) in breach of the whistleblower protections under the Sarbanes-Oxley Act for the company’s improper termination of an employee in 2008. The employee was allegedly terminated after objecting to the company’s manipulation of sales figures and misrepresentations to potential investors. The OHSA has ordered Bond Laboratories to reinstate the employee, in addition to paying $500,000 back pay.
OSHA’s media release (15 September 2011)
(Source: OSHA;

Guilty Pleas over Misleading Prospectus
Asia Pacific

The Age reports that the directors of a property investment scheme financed by the Australian Capital Reserve (ACR) have pleaded guilty to criminal business practices including issuing a misleading business prospectus¬†and inflating company profits. Crown Prosecutors reportedly allege that the company financial controller was instructed to backdate additional sale contracts and to record rescinded sales, resulting in a “turnaround of the company of $14.94 million” which “‘created a false impression of the profitability of the group to any likely investor”.

The Age reports that more than 7000 noteholders are owed more than A$332 million following ACR’s collapse after they were led to believe they were investing in “secure bricks and mortar” when they were in fact investing in “high-risk lending based upon high gearing of up to 85% of property values”. The company directors will be sentenced in the NSW District Court on 20 October 2011.
The Age: How ACR’s juggling act fooled thousands (22 September 2011)
(Source: The Age)

Financial Services Co Licence Revoked for Involvement with Fraudster

The US Office of Fair Trading (OFT) has announced that a tribunal has upheld the OFT’s decision to revoke JST Financial Solutions Limited’s (JST) licence because the company “allowed a convicted fraudster to become involved in its business”. The OFT found that JST had associated with Russell Phillips, who had previously served prison time for fraud, to a nature and extent that went to the heart of JST’s “fitness to hold a consumer credit licence”. The tribunal decision found that JST’s association with Mr Phillips “showed a reckless disregard for the protection of consumers and therefore JST was not fit to hold a consumer credit licence”.
OFT’s media release (21 September 2011)
(Source: OFT)