Archives for March 2019

GCHQ Report Raises Security Concerns over Huawei, but international legal frameworks remain ill-equipped to handle these concerns

March 31, 2019 by Evan Schleicher Leave a Comment

On March 28^th, the Government Communications Headquarters (GCHQ), a British intelligence agency, released a report assessing that Chinese telecom company Huawei poses significant security risks to British telecom networks. It came to a similar conclusion last year. In this year’s report, specific focus was given to the fact that security risk management of products new to the UK or of new software releases for products already in the UK will be increasingly difficult.

These concerns are supported, most notably, by US lawmakers, who have argued that Chinese government involvement with Huawei will pose significant physical and intelligence threats to Western governments. A recent update to Chinese law, Article 28 of the 2016 Cybersecurity Law, which “states that network operators, which include telecommunications companies such as Huawei, have to provide “technical support and assistance” to government offices involved in protecting national security,” foretells that these fears may not be totally unfounded. American lawmakers are particularly concerned that Huawei and other companies would be compelled into turning over 5G data, thus compromising the data security of anyone utilizing 5G networks in Western countries, and even into embedding malicious code into new Huawei equipment and software updates.

Several close American allies, such as Japan, New Zealand, and Australia, have totally banned Huawei from partaking in 5G trials within their countries, while the United Kingdom, Canada, Italy, India, and Germany have considered similar bans, but have not yet acted. Troublingly, countries like Germany, India, the United Kingdom, and the United Arab Emirates seem unlikely to fully support US efforts to ban Huawei from 5G network development. The United Kingdom, despite identifying significant risks in Huawei networks both this year and last year, has continued to argue that hackers pose a more significant threat to networks than foreign governments and that the stated threats can be managed.

Huawei has not been silent in the face of these accusations. They commissioned a 37-page legal opinion by Zhong Lun, a Chinese law firm, which concluded that Chinese law cannot compel corporations to gather intelligence against the interests of their customers. Despite the reported soundness of this opinion, legal experts and advisers warn that a lack of legal testing makes it difficult to know exactly how insulated from Chinese government control and influence Chinese companies actually are. Some legal experts concluded that Huawei would have a very difficult time rejecting a request for data sharing from the Chinese government due to the nature of Chinese laws.

These concerns are further justified because there is no international legal framework for protecting corporations from the abuse of states. Although there are a multitude of corporate-focused treaties and agreements at the international level, including the ILO Convention No. 29 on Forced Labor, the International Covenant on Economic, Social, and Cultural Rights (ICESCR), and the ILO Declaration on Fundamental Principles and Rights at Work, these agreements impose obligations on states, not on companies. Further, corporations generally enjoy rights under international law only when rights are authorized through formal lawmaking processes such as international treaties or national statutes. As such, Huawei relies almost exclusively on the good will of the Chinese government to not coerce or misuse its systems. Conversely, other nations must rely almost exclusively on the assurances of Huawei and the Chinese government that they are not misusing the information networks that Huawei has developed.

Due to the absence of international legal standards, much of the fight over Huawei’s access to markets has taken place in national courts. This reliance on national-level courts has produced heavily disparate results between US and Chinese companies.

After the US blocked the purchase of Huawei equipment due to national security concerns, Huawei filed a lawsuit in the U.S. District Court in Texas which argued that the prohibition unfairly punishes the Chinese company without due process and without proof of an espionage threat to the United States. The Chinese government came out in support of this lawsuit almost immediately, saying it did not want to see the company “victimized like silent lambs”. Huawei also filed a notice of civil claim in the British Columbia Supreme Court in Canada in early March over the detainment of Meng Wanzhou, the daughter of the company’s founder. She had been detained at the request of US officials on allegations of subverting Western sanctions against Iran and participating in bank fraud and corporate espionage.

Somewhat hypocritically, the Chinese government has frequently banned US companies, quoting national security concerns, and these companies have never been able to bring lawsuits against the Chinese government. Apple, McAfee, Citrix, and Cisco were all dropped from official state purchasing lists in 2015, effectively banning the sale of their products within China. According to Zhang Lin, an independent Chinese economist and columnist, “It’s hard for a (Chinese) company to bring such an administrative lawsuit, even harder for a foreign company. It could be blocked in the first place when it tries to open a case”. Tellingly, not one of the previously mentioned Western companies has been able to sue the Chinese government.

This legal framework is clearly neither sustainable nor preferable. In a world in which corporations increasingly wield significant power in dictating security and connectivity across multiple regions and countries, there must be international assurances that those companies will not be weaponized by national governments.

___

Evan Schleicher is an Editorial Intern with the International Enforcement Law Reporter. He is also an MA candidate in Security Policy Studies at George Washington University’s Elliott School of International Affairs.

Attempted Case of Wildlife Smuggling Reminds the International Community of Its Prevalence

March 29, 2019 by Alex Psilakis Leave a Comment

On March 25, 2019, Indonesian authorities detained a Russian man accused of attempting to smuggle an orangutan out of the country. Andrei Zhestkov, the suspect, claimed that he purchased the animal from a market for $3,000, believing that he could bring it home as a pet. When Indonesian authorities discovered the orangutan inside one of Zhestkov’s suitcases at the international airport in Bali, they did not find an aggressive, terrified animal as they feared, but one sound asleep. Authorities uncovered allergy pills wrapped in plastic amongst Zhestkov’s belongings, which he had mixed with milk and fed to the animal, pacifying it for up to three hours. While he has not yet been charged, Zhestkov could face up to five years in prison, as well as fines of up to $7,000 for smuggling. Indonesian authorities have not charged Zhestkov because they are investigating if he is any way connected to wildlife trafficking syndicates.

The case of Zhestkov is by no means unique. The illegal trade in wildlife is one of the most lucrative trades in the world. According to Interpol, the trade is valued at $20 billion a year. As it is so expansive, criminals often conduct other illicit activities in tandem with those toward wildlife, including money laundering, corruption, and document fraud.

In 2016, the United Nations Environment Programme (UNEP) and Interpol released a joint report analyzing the rise of environmental crime, which assesses topics including the illegal wildlife trade. The report stresses that the illegal wildlife trade is so lucrative because it is so vast. It involves all types of animals, including insects, reptiles, and mammals, and, depending on the case, those animals may be dead or alive. Individuals may use animals for a variety of reasons, be it for ornamental, medicinal, or pharmaceutical purposes.

While elephant and rhino poaching may be one of the most well-known cases when it comes to wildlife crimes – as poachers relentlessly pursue their highly-valued horns – other cases are proving incredibly prevalent as well. The pangolin, a mammal found throughout Africa and Asia, has become one of the world’s most targeted animals in the illegal wildlife trade. All Pangolin species are protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Nevertheless, from 2006 to 2016, well over one million Pangolins were killed or trafficked as a result of the trade. Pangolin populations in Asia have been hit hardest, as the demand for them is huge in China, where the scales are used for traditional medicinal purposes and the meat is viewed as a luxury item. Myanmar has proven one of the most frequently relied upon smuggling routes for Pangolin poachers, as its weak government, prime geographic location, and size make it highly appealing. Even though the Pangolin trade has proven this prevalent, authorities have worked to curb it, with Vietnamese officials seizing 4,000 kg worth of scales in 2015, and Myanmarese authorities making 52 seizures between 2010 and 2014.

In recent years, the international community has ramped up their efforts to combat the illegal wildlife trade. Interpol has been leading the charge in this effort. In 2015, they launched Operation Paws II, in which they seized 13 tons of pangolin products, which represented about 1,000 animals and more than $2 million worth of product. States involved enhanced their communication and intelligence sharing techniques by deploying cyber investigations, DNA analysis, and joint enforcement activities of on-the-ground personnel. In 2018, Interpol commenced one of their largest operations yet – Operation Thunderstorm. The operation targeted both the individuals and organizations behind wildlife crime. 92 countries took part in the month-long operation, which resulted in nearly 2,000 seizures, as well as the identification of approximately 1,400 suspects, alongside arrests. Animal products seized included 43 tons of wild meat and 1.3 tons of elephant ivory. Live animals were discovered as well, with authorities, for example, rescuing 48 live primates. Interpol partnered with a variety of international organizations in this effort, including the World Customs Organization (WCO) and the International Consortium on Combatting Wildlife Crime (ICCWC). WCO Secretary General Kuino Mikuriya praised the operation’s outcome, stating,

“By leveraging the global network of worldwide environmental law enforcement experts and customs community’s commitment to protecting wildlife, WCO and its partners have clearly illustrated the power and effectiveness of international cooperation in keeping our natural heritage safe, both now and for future generations.”

While the recent case of Andrei Zhestkov has reminded the international community of just how prevalent the illicit wildlife trade is, actions like Operation Thunderstorm emphasize how seriously international authorities treat the subject. Since the trade remains one of the most lucrative in the world, international enforcement authorities must remain vigilant in their efforts to seize and prevent acts of wildlife smuggling by both individuals and organized syndicates.

A note from Dean Michael Scharf, Founder and Editorial Board Advisor of War Crimes Prosecution Watch, on Case Western Reserve University’s new International Criminal Law LLM Program

March 20, 2019 by Alex Psilakis Leave a Comment

As documented by the developments covered in the War Crimes Prosecution Watch (WCPW) e-newsletter, international criminal law has become one of the fastest growing and highest profile areas of law. Taught by leading experts in the field, the Case Western Reserve University LLM in International Criminal law will provide individuals who hold a degree in law with an in-depth knowledge of international criminal law and procedure, international humanitarian law, and national security law, and will equip them to practice international criminal law before international tribunals or national courts.

Now in its twelfth year, there are seven unique aspects of the Case Western Reserve International Criminal Law LLM, which I’d like to especially call to your attention:

First, Case Western Reserve is known around the world for the strength of its international criminal law program. Program faculty include a former State Department official, a former Senior Counsel at the IMF, the former head of the International Branch in the Navy Judge Advocate General’s International and Operational Law Division, a former counsel in the NSC, a former Senior Counsel for Human Rights First – Law and Security Program, a Senior Coast Guard lawyer, and the former Chief of Prosecutions of an international criminal tribunal. Reflecting the strength of our program, the Chief Prosecutor of the Special Court for Sierra Leone nominated our War Crimes Research initiative for the Nobel Peace Prize, and Case Western Reserve was the most recent American team to have won the World Championship round of the Jessup International Law Moot Court Competition. Based on a survey of international law professors, the 2020 rankings issue of US News and World Report ranked us among the top twenty international law programs in the nation, and International Jurist magazine recently ranked our LLM program as one of the best in the country.

Second, our International Criminal Law LLM Program is designed as an elite and intimate program, with enrollment limited to approximately five LLM students per year. We provide generous scholarships and one of those students may be a full-scholarship “Distinguished Visiting Jurist,” whose presence is designed to enhance the program and facilitate networking. Our last Distinguished Jurist was Duncan Gaswaga, who is currently a judge on Uganda’s High Court War Crimes Chamber.

Third, among the dozen international criminal law-related courses we offer, you can enroll in the War Crimes Research Lab, taught by former Chief Trial Attorney of the Special Court for Sierra Leone, Jim Johnson, in which students write research memoranda at the request of international war crimes tribunals, piracy courts, the Guantanamo Bay Military Commissions, and INTERPOL on cutting edge issues pending before those institutions.

Fourth, as part of the program, our International Criminal Law LLM students may receive a semester’s worth of credit by interning at one of the international war crimes tribunals, a Piracy Court, UNODC, the General Counsel’s Office of the U.S. Coast Guard, or INTERPOL in the spring semester.

Fifth, our international Criminal Law LLM students are invited to be editors of War Crimes Prosecution Watch, the e-newsletter that goes out every two weeks to war crimes prosecutors, judges, and more than 15,000 experts in the field. Our students are also invited to be Senior Researchers on our Yemen Accountability Project, which is mapping the atrocities that have been committed in the Yemen conflict and preparing model indictments for future international prosecution efforts.

Sixth, we host several major lectures and an annual international criminal law-related symposium, which bring dozens of leading experts in the field to the Law School each year. Recent speakers have included: Sean Murphy, ILC Special Rapporteur for the Convention on Crimes Against Humanity; Brenda Hollis, Chief Prosecutor of the Special Court for Sierra Leone; Stephen Rapp, US Ambassador at Large for War Crimes Issues; Hon. Christine Van den Wyngaert, Judge of the ICC; Sir Christopher Greenwood, UK Judge on the International Court of Justice; Prince Zeid Ra’ad Al-Hussein, UN High Commissioner for Human Rights; Robert Petit, Chief Prosecutor of the Extraordinary Chambers in the Courts of Cambodia; Richard Goldstone, former Chief Prosecutor of the ICTY and ICTR; William Schabas, Commissioner on the International Truth Commission for Sierra Leone; Fatua Bensuada , the Chief Prosecutor of the ICC; and the late Cherif Bassiouni who was known as “the father of international criminal law.”

Finally, we have placed more than 140 students in externships at the ICC and international war crimes tribunals, and our alumni include individuals who have served as a member of the Office of the Prosecutor of the International Criminal Tribunal for the former Yugoslavia, a member of the Office of the Prosecutor of the Cambodia Tribunal; a Legal Adviser to the Chambers of the International Criminal Court; a member of the Office of the Prosecutor of the Special Tribunal for Lebanon; a prosecutor in the Office of Guantanamo Bay Military Commissions; a lawyer at INTERPOL; several distinguished law professors; the former Judge Advocate General of the US Navy Reserve; the Chief of Staff of the International Federation of the Red Cross and Red Crescent; and the head of the Africa Bureau at the United Nations.

To apply for the International Criminal Law LLM Degree, click: http://law.case.edu/Academics/Degrees/LLM/LLM-in-International-Criminal-Law

To sample one of our International Criminal Law courses (offered free on demand by Coursera), click: https://www.coursera.org/learn/international-criminal-law

Thank you for passing this information on to those who might be interested in this program.

Sincerely,

Michael P. Scharf
Dean of Case Western Reserve University School of Law

UN Report Labels South Sudanese Oil Industry as Key Driver of Continuing Conflict

March 19, 2019 by Evan Schleicher Leave a Comment

On February 20^th, the Commission on Human Rights in South Sudan, a United Nations Human Rights Council investigative body, released a report documenting continuing violations including potential war crimes and crimes against humanity, despite the signing of a peace agreement in October 2018.

The report is particularly notable from a legal perspective because it labels the South Sudanese oil industry as “a major driver for the continuing violence, the ensuing human suffering, and the violations of international humanitarian law witnessed there.” In fact, the three major joint oil ventures in the country, between Nile Petroleum Company, the state-owned oil company, and Chinese National Petroleum Company, Petronas of Malaysia, and the Indian Oil and Natural Gas Corporation, have already been designated by the U.S. Department of Commerce as violators of American policy and national security interests.

However, despite this, it must be asked: will these companies likely face any legal blowback for their purported involvement in the South Sudanese civil war?

The likelihood that these companies will face legal discipline for their actions within South Sudan seems to depend largely on the outcomes of two other cases which are currently underway.

In June of 2018, LafargeHolcim, a major French construction company, was placed under formal investigation on allegations of terrorist financing and aiding and abetting war crimes and crimes against humanity to continue operating in Syria during the civil war. This investigation arose from questions surrounding how the company was able to keep its plant in the city of Jalabiya in northern Syria running when the area was controlled by ISIS. French court documents indicate that LaFarge shelled out as much as $5 million to various armed groups.

Initially, in 2017, eight former executives were charged this case, which involves not only the payment of taxes and bribes to ISIS and other armed groups, but the selling of cement and other materials to those same groups. In October, investigators seized the severance payment given to Bruno Lafont upon his departure from the company. They also seized funds from two former managers in Jalabiya, Bruno Pescheux and Frederic Jolibois, as well as the former deputy general operating manager Christian Herrault, bringing the total sum of seized money to 3.7 million euros. On March 5^th, French judges dropped the charges against former Chief Executive Eric Olsen, saying that he was not involved in acts which could be considered terrorist financing.

It seems likely that at least some individuals will be charged in these cases, but a more institutional-level responsibility does not seem likely, especially because Olsen, the Chief Executive at the time of the illegal operations, was cleared of charges.

A similar situation has unfolded around Royal Dutch Shell in Nigeria. In 2009, the civil case of Wiwa v. Shell, which was heard in the federal district court of New York, was settled for $15.5 million. In 2013, a case forwarding a similar narrative was dismissed in the U.S. Supreme Court over a lack of jurisdiction. Most recently, the widows of four of nine men executed by Nigeria’s military regime in 1995 filed a civil lawsuit in 2016 seeking compensation and an apology from the Royal Dutch Shell company for their alleged complicity in the violent crackdowns that led to the deaths of these nine men. A hearing took place on February 12, 2019 and a decision is expected on May 8, 2019.

Several months after the announcement of this most recent civil case, Amnesty International urged the UK, Nigeria, and the Netherlands to consider criminal investigations against Shell, believing the company complicit in murder, rape, and torture in Nigeria. So far, no such case has materialized.

The reality may be that these cases will remain inconsistent. While the U.S. and Netherlands have thus far shied away from strong criminal investigations, the French have shown little pause in undertaking a criminal investigation of LaFarge.

To solve this problem, there must be a push to create better international consensus on how the complicity of transnational corporations in war crimes and crimes against humanity should be judged. The UN should establish a working group meant eventually to produce a convention governing the complicity of various third party actors in conflict environments as a means to clarify legal issues surrounding warfare.

In the absence of those standards, the punishments for the oil companies present in South Sudan will ultimately fall to the governments of Malaysia, China, and India. In this world of inconsistency, there is no telling whether these companies will ever be held accountable for their actions in South Sudan.

____________

Conviction of Iraqi War Criminal Raises Questions About the Treatment of Extremist Fighters in Conflict and Captivity

March 16, 2019 by Evan Schleicher Leave a Comment

On February 19^th, the Orebro District Court of Sweden convicted 38-year-old Kurda Bahaalddin H Saeed to 15 months in prison for his involvement in the desecration and filming of bodies of Islamic State in Iraq militants.

The desecration of dead bodies constitutes a war crime according to Article 8(2)(b)(xxi) and (c)(ii) of the 1998 ICC Statute, which state that “[c]ommitting outrages upon personal dignity” constitutes a war crime in both international and non-international armed conflicts. A later document, the ICC Elements of Crimes, specifies that this includes the desecration of dead bodies. Despite admitting to being in pictures which showed him desecrating the bodies, Bahaalddin denied that he had committed war crimes.

This decision reiterates the reality that war crimes, even when committed against ISIS members, who have engaged in countless criminal acts themselves, are still war crimes. It also contrasts with some troubling trends within Iraq and the broader international community regarding the treatment of extremist groups.

A reporter from the New Yorker met with a senior Iraqi intelligence official who detailing patterns of battlefield executions, murders in detention centers, and coverups organized by the state. This pattern has carried over into the courtrooms, where thousands of individuals have been tortured into confessing affiliation to ISIS and hundreds have been hanged. The magnitude of the problem is even greater than that, as these numbers reflect only a small number of total detainees.

Mistreatment of insurgents is not purely an Iraqi Armed Forces phenomenon, as multiple Navy Seals have been charged with severe crimes against ISIS fighters, including one officer, Chief Special Warfare Operator Edward Gallagher, who underwent his reenlistment ceremony while posed with the corpse of a teenage ISIS fighter he killed. He was also accused of shooting two civilians and firing indiscriminately into crowds while deployed in Iraq. On February 19^th, Gallagher’s trial was postponed three months so that the defense would have more time to review new evidence from the prosecution. His official trial date is now May 28^th.

Although only individual soldiers have been tried, to date, the previous evidence of the Iraqi situation makes it clear that a culture exists which implicitly justifies widespread abuses both against civilians and ISIS members in Iraq. An Amnesty International report published in 2018 claims that over 1,000 civilians were killed by Coalition and affiliate forces during the 2017 Raqqa offensive in Syria. The report concludes with the not-so-subtle claim that “states have an obligation to investigate allegations of war crimes by their forces or nationals.”

The question becomes: Is there hope that US or Iraqi war criminals will be broadly brought to justice? The answer, it seems, is no. To begin, neither Iraq nor the United States have ratified the Rome Statute of the International Criminal Court, meaning that any international attempt to try war criminals in Iraq may be doomed to failure from the onset. Sweden was only able to try Bahaaldin because he arrived in the country with his family as a refugee, and given the recent opposition in the West to repatriating the large numbers of captured ISIS fighters, it may fall on the governments of Iraq and Syria to mete out “justice” to these captured individuals. Further, thousands of ISIS fighters are being held by the Syrian Democratic Forces, who were a large part of the previously mentioned Raqqa offensive, and who may become judge, jury, and executioner if no agreements are made to repatriate captives. Previous concerns about the Iraqi justice system and the SDF reveal the potential for widespread abuse which exists in the present moment.

Perhaps the larger concern here is that the violence committed against supposed members of these extremist groups will create a cycle of violence. A CIA officer, commenting on the indiscriminate executions undertaken by the Iraqi government, said that “Of course [ISIS] came back…What do you expect? You literally killed their dads.” The previously mentioned Iraqi intelligence officials noted a similar concern, saying that the indiscriminate arrests and killings of Sunnis fed into the narrative that Sunnis could not live safely in Iraqi society. This contributed heavily to ISIS recruitment and to implicit support for the group among terrified Sunni populations across the country.

This case is undoubtedly important, given that it should, in combination with cases like Edward Gallagher’s, begin to establish norms of accountability regarding war crimes committed against war criminals. Further, it provides a blueprint for countries fighting with terrorist groups by which they can punish war criminals justly within the bounds of international law and avoid becoming criminals themselves in the process.

____________

As the U.S. Deals a Blow to the ICC, the ICC Refuses to Recoil

March 15, 2019 by Alex Psilakis Leave a Comment

On Friday, March 15, the United States dealt a sharp blow to the International Criminal Court (ICC), declaring that they would prohibit entry of ICC officials to the U.S. that sought to investigate U.S. personnel. Speaking at the State Department, Secretary Pompeo noted that, “I’m announcing a policy of U.S. visa restrictions on those individuals directly responsible for any ICC investigation of U.S. personnel. This includes persons who take or have taken action to request or further such an investigation.”

This decision comes in response to a comment made by an ICC prosecutor, who last year stated that the ICC should investigate allegations of war crimes in Afghanistan. In describing the potential investigation, the prosecutor noted that the ICC should investigate all potential belligerents, including Afghan national security forces and the Taliban. However, it was the prosecutor’s decision to include U.S. forces and intelligence officials in that potential investigation that truly riled the Trump administration.

Since the ICC raised the idea of a potential investigation into U.S. personnel, the Trump administration has made clear its abhorrence of the international institution. In September 2018, National Security Advisor John Bolton sharply criticized the ICC, stating that the U.S. would potentially sanction the body in response to its decision to launch an inquiry into Israel. “If the court comes after us, Israel, or other US allies we will not sit quietly,” he said. “We will let the ICC die on its own. After all, for all intents and purposes, the ICC is already dead.”

The U.S. has always had a mixed relationship with the ICC. President Clinton signed the Rome Statute in 2000, bringing the international organization into existence, but he never submitted the treaty to the Senate for its consideration and potential ratification. In 2001, the Bush administration promoted and passed the American Service Members Protection Act, which stove to immunize American troops from potential ICC persecution. On March 15, Secretary Pompeo built upon this American skepticism to the ICC, while taking it to a whole new level, noting that,

“Since 1998, the United States has declined to join the ICC because of its broad, unaccountable prosecutorial powers and the threat it poses to American national sovereignty. We are determined to protect the American and allied military and civilian personnel from living in fear of unjust prosecution for actions taken to defend our great nation. We feared that the court could eventually pursue politically motivated prosecutions of Americans, and our fears were warranted.”

The ICC refused to recoil in response to these comments. In a statement, the court noted that, “The court is an independent and impartial judicial institution crucial for ensuring accountability for the gravest crimes under international law. The ICC, as a court of law, will continue to do its independent work, undeterred, in accordance with its mandate and the overarching principles of the rule of law.”

The Trump administration has made its position clear, further emphasizing that in its “America First” agenda, it will strike at any international institution it believes threatens the interests of American personnel. Yet in this effort, it not only isolates the U.S. on the world stage, but reveals the administration’s hypocritical tendencies. While the Trump administration has praised states like Germany for seeking to punish alleged Syrian war criminals, it refuses to even consider the idea that the U.S. has committed crimes itself.

Knowing how the U.S. will react to a potential investigation into the war in Afghanistan, it remains to be seen what if anything the ICC will uncover. Yet once those findings come to light, the U.S. and ICC will clash with even more ferociousness than we have ever seen.

EU Adds 9 Jurisdictions to Tax Haven Blacklist

March 13, 2019 by Bruce Zagaris 1 Comment

On March 12, 2019, the EU Finance Ministers updated the EU list of non-cooperative tax jurisdictions. The list now has 15 countries and is part of the EU’s fair taxation initiative.^[1]

The Commission explained that it assessed 92 countries based on three criteria: tax transparency, good governance and real economic activity, and the existence of a zero corporate tax rate. As a result of the assessment and pressure to avoid the blacklist, 60 countries acted and eliminated over 100 harmful regimes.

The Ministers blacklisted 15 countries. 5 have taken no commitments since the first blacklist adopted in 2017: American Samoa, Guam, Samoa, Trinidad and Tobago, and the U.S. Virgin Islands. 3 others were on the 2017 list, but were moved into the grey list following commitments they had taken. However. They have been blacklisted again for not following up: Barbados, the United Arab Emirates and the Marshall Islands.

7 additional countries were moved from the grey list to the blacklist for the same reason: Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu, and Dominica. Another 34 countries will continue to undergo monitoring in 2019 (grey list), while 25 countries from the original screening process have been cleared.^[2]

The EU members have agreed on a set of countermeasures against listed countries. They can choose to apply them, including increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions. The Commission will continue to support EU members’ work to develop a more coordinated approach to sanctions for the EU list in 2019. Additionally, new provisions in EU law forbid EU funds from being channeled or transited through entities in countries on the tax blacklist.

The EU will send a letter to all jurisdictions on the EU list, explaining the decision and what they can do to be de-listed. The Commission and Member States (Code of Conduct Group) will continue to monitor the jurisdictions that have until the end of 2019/2020 to deliver, and assess whether any other countries should be included in the EU listing process. The Commission will continue the dialogue and engagement with the jurisdictions concerned, to provide technical support and clarifications whenever needed and to discuss any tax matters of mutual concern.^[3]

Some of the targeted countries sent letters or made press releases, protesting their listing.

Approximately one week ago pressure from the U.S., Saudi Arabia and Panama prompted EU governments last week to block another blacklist of countries that show deficiencies in countering money laundering and terrorism financing.^[4]

A criticism of the EU listing initiative is that is does not include the many EU countries with international financial services, such as Ireland, Luxembourg, the Netherlands, Cyprus, Austria, Hungary, and the U.K. A continuing criticism is that, notwithstanding the EU’s statements of open and vigorous engagement, the targeted countries complain about ever-shifting and obscure standards and insufficient communication over the standards and the expectations from the EU. A continuing complaint is about the overlapping standards of the EU and OECD.

The March issue of the IELR will have a more comprehensive article on the new listing, including the responses of the targeted countries. See also EU Q & As on the list

[1] European Commission, Fair Taxation: EU updates list of non-cooperative tax jurisdictions, IP/19/1606, March 12, 2019.

[2] Id.

[3] European Commission, Fair Taxation: EU updates list of non-cooperative tax jurisdictions, supra.

[4] Id.

Canada Proceeds with Extradition of Huawei CFO While She Sues Canada and China Accuses Canadian Former Diplomat of Espionage

March 5, 2019 by Bruce Zagaris 2 Comments

On March 1, 2019, Canada’s Justice Department authorized an extradition hearing for Meng Wanzhou, the chief financial officer of Huawei, the Chinese telecom and electronics company, on 13 criminal counts of conspiracy, fraud, and obstruction. The extradition hearing will start on March 6 at the British Columbia Supreme Court. On that day the court will set a date for the start of her extradition hearing.[1] Meanwhile, Ms. Meng has sued the Canadian government for violating her constitutional rights when she was detained and her electronics were seized and reviewed. The Chinese government has just charged two Canadians – one a former diplomat – of espionage and violating state secrets.

Canada Proceeds with Extradition of Ms. Meng

The Chinese Embassy in Ottawa said it is “utterly dissatisfied” with the Canadian decision to proceed with the extradition. It termed the case “a political persecution against a Chinese high-tech enterprise.”

Meng’s counsel said it is disappointed Canada has allowed the process proceeding “in the case of the political nature of the U.S. charges and where the president of the United States has repeatedly stated that he would interfere in Ms. Meng’s case if he thought it would assist the U.S. negotiations with China over a trade deal.”[2]

David Martin, counsel for Meng, said violating U.S. sanctions on Iran is not a crime under Canadian law. However, the U.S. has characterized Meng’s acts to circumvent the sanctions as a fraud against banks, which is a crime in Canada.[3]

On March 1, 2019, two Huawei subsidiaries pleaded not guilty to fraud, trade secrets conspiracy, and other charges in U.S. District Court in Seattle. The court set a trial date for March 2020.[4]

Meng Sues Canadian Law Enforcement of Violating Her Constitutional Rights

On March 1, 2019, the law firm of Gudmundseth Mickelson, counsel for Ms. Meng, brought a 13-page civil action in the Supreme Court of British Columbia, alleging members of the Royal Canadian Mounted Police (RCMP) and the Canada Border Services Agency (CBSA) violated her constitutional rights when they arrested her on December 1, 2018. According to the lawsuit, she was held and interrogated for three hours without being advised of her rights. During that time, CBSA officials unlawfully searched her electronic devices, including two cellphones, an IPad and a personal computer, as well as obtained passwords to search them, without advising her of her right to counsel and her right to silence. She has requested a declaration that her constitutional rights were violated.[5]

China Accuses Former Canadian Diplomat of Espionage and Theft of State Secrets

On March 4, 2019, China issued more detailed allegations against former Canadian diplomat Michael Kovrig, accusing him of espionage and the theft of state secrets. For the first time Chinese officials connected the case of Mr. Kovrig with that of Michael Spavor, a detained Canadian businessman. The Chinese detained both men on December 10, less than two weeks after the arrest of Ms. Meng. Until now, China has only accused them of endangering Chinese national security. China has interrogated them intensively, often for six hours a day.

Kovrig worked as an analyst with the International Crisis Group, which focuses on peaceful resolution of conflict. In his job he regularly met with government officials, think tanks, scholars, and journalists in China and throughout the world.

Spavor regularly dealt with persons interested in North Korea, including Kovrig.

The Chinese government has said it will proceed to press its case against the two detained Canadians. Chinese law allows authorities to detain suspects for up to six months without formal charges, normally in rooms with 24-hour lighting so that authorities can keep them under constant surveillance.[6]

The decision by the Canadian government to proceed with extradition of Ms. Meng comes at a time when allegations against the Trudeau and top officials in his Administration charge them with interfering in the prosecution of engineering firm SNC-Lavalin concerning bribery offenses in Libya. In particular, the former attorney general Jody Wilson-Raybould testified that she faced heavy pressure and veiled threats from Trudeau and others to help SNC-Lavalin avoid a criminal trial.[7] Hours before the Canadian Justice Department’s announcement it will proceed with the extradition, China’s Foreign Ministry focused on possible double standards by referring at a regular daily news briefing on allegations of political interference in the SNC-Lavalin case.[8]

Meng’s civil suit, if successful, may result in the exclusion of evidence seized from Meng when she was detained on December 1 in Vancouver.

Meanwhile, as U.S.-China trade talks move towards a settlement, prospects exist for some type of settlement over the Meng extradition. The new charges against Kovrig and Spavor increase the stakes.

The March issue of the IELR will have a more comprehensive discussion of the cases.

[1] Canada green-lights formal extradition process for Meng Wanzhou, Vancouver Sun, Mar. 2, 2019.

[2] Id.

[3] Dan Bilfesky and Ian Austen, Huawei Chief Receives Date for Hearing in Canada, N.Y. Times, Mar. 2, 2019, at A9, col. 4.

[4] Id.

[5] Wendy Stueck, Huawei executive Meng Wanzhou files lawsuit alleging breach of constitutional rights, Globe and Mail, Mar. 3, 2019.

[6] Nathan Vanderkippe, China accuses detained Canadians of spying, days after Huawei extradition hearing approved, Globe and Mail, March 4, 2019.

[7] Canada green-lights formal extradition process for Meng Wanzhou, supra.

[8] Robert Fife, Steven Chase, Andrea Wood, and Xiao Xu, Canada allows extradition hearings against Huawei executive Meng, Globe and Mail, March 1, 2019.

Levin Center Provides Accountability Training to Foreign Governments

March 1, 2019 by Alex Psilakis Leave a Comment

In 2018, Elise J. Bean released her newest work titled Financial Exposure: Carl Levin’s Senate Investigations into Finance and Tax Abuse. Bean, who served as Senator Levin’s (D-MI) staff director and chief counsel on the Permanent Subcommittee on Investigations (PSI), intimately details how the former senator partnered with his Republican colleagues to investigate money laundering, accounting fraud, and high-risk trades by some of the world’s largest financial institutions.

While Bean’s book details her past work with PSI, she is continuing the fight for good governance and accountability today, alongside others. She currently serves as the Washington Co-Director of the Levin Center at Wayne State University Law Center. The Levin Center trains attorneys, leaders, and public figures to promote government transparency, while holding public and private institutions to high ethical standards. To carry out this effort, the Center takes a variety of actions, including offering academic coursework, training programs, and symposia, reaching individuals and groups from around the world. In addition to Bean, the Center hosts a deeply experienced staff that is dedicated to promoting ethics and effectiveness in government. Robert Ackerman, Director of the Levin Center, was the Wayne Law School Dean from 2008-2012, before which he served as a Professor at Penn State University’s School of Law. Linda Gustitus is currently acting as the Washington Co-Director alongside Bean. Gustitus worked on Sen. Levin’s staff for 24 years, eventually becoming his Chief of Staff in 2001. She pioneered oversight investigations into the Social Security Disability Program, IRS seizure policy, and gasoline pricing.

Since its foundation in 2015, the Levin Center has acted both domestically and internationally to train public officials, government figures, and others on the elements key to implementing and upholding government transparency.

In December 2015, the Levin Center traveled to Kiev, Ukraine for their first foreign training session. The Levin Center partnered with the Ukrainian Parliament’s Committee on Corruption Prevention, as well as the Anti-Corruption Action Center – a Ukrainian NGO – to offer Ukrainian Parliamentary staffers guidance on how to carry out oversight investigations. The session offered in-depth guidance on elements key to conducting an oversight investigation, stressing the facts-based, multi-party approach that staffers must take in their efforts. Alongside the training workshop, Bean gave two presentations in Kiev. Her first, which focused on driving change through oversight investigations, took place at the Open University of Reforms. The latter, which emphasized combatting corruption, occurred at the America House and received the U.S. Embassy’s sponsorship. The State Department not only sponsored one of Bean’s presentations – they provided funding for the workshop, emphasizing the importance with which they viewed the effort.

In October 2016, the Levin Center carried out a two-day training session at the European Parliament in Brussels, Belgium. The Center spoke to more than 55 Members and their staff, all of whom came from the Parliament’s “Committee of Inquiry to investigate alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance, and tax evasion.” The committee was formed to investigate the release of the Panama Papers. Attendees came from seven of the Parliament’s eight political parties, signifying the Center’s bipartisan reach. The workshop analyzed the four stages of a committee investigation: investigating facts, collecting results, holding a hearing, and confronting identified problems. The Levin Center eventually split the attendees into multi-party teams, where they tested their ability to execute the four stages of an investigation. As a result, the workshop not only educated staffers on how to effectively conduct an investigation, but provided them a space to practice working together, improving their ability to do both in the future.

Since then, the Levin Center has hosted a variety of events that focused on promoting governmental transparency. In March 2018, the Center held a Symposium titled “Congressional Oversight in the 21^st Century,” which united scholars from across the country to consider the relationship between oversight and the judicial branch. That June, in light of the Inspectors General Act’s 40^th anniversary, they hosted a panel to discuss role of the Inspectors General in oversight efforts. The Levin Center has multiple events planned for the near future as well, all of which will consider government oversight from a unique perspective.

After serving in the Senate for 36 years, Carl Levin best exemplified how policy makers in the U.S. and around the world may tackle financial crimes like money laundering, tax abuse, and accountability fraud. Furthermore, his dedication to acting in a bipartisan manner, continually crossing party lines to create change through compromise, should serve as an inspiration to those seeking to drive change now. The Levin Center is helping to foster that change. By partnering with government workers, public figures, academics, and students, the Levin Center constantly strives to promote the importance of open, honest, and transparent government to the generations of today and tomorrow. The work that Sen. Levin began over 40 years ago upon his election to the Senate continues today through the Levin Center. The training of parliamentary officials in Ukraine and Brussels illustrates how other foreign officials are accessing good practices in accountability