IELR Blog

Official Blog of the International Enforcement Law Reporter

Archives for September 2021

Crypto Expert Plead Guilty to Assisting N. Korea Evade Sanctions

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On September 27, 2021, the U.S. District Court in Manhattan announced that a U.S. citizen pled guilty to conspiring to aid Democratic People’s Republic of Korea (North Korea) evade economic sanctions through the use of financial technology to hide illegal transactions.

Crypto expert, Virgil Griffith, 38, pled guilty to conspiracy to violate the International Emergency Economic Powers Act and Executive Order 13466, a law that prohibits U.S. citizens from “exporting any goods, services, or technology to the DPRK without a license from the Department of the Treasury, Office of Foreign Assets Control (“OFAC”).” Griffith allegedly violated that law by engaging with North Korean officials, advising them on how to evade sanctions.

Virgil Griffith’s Aid to North Korea

           Griffith alleged interactions with North Korea dates back to 2018 when he developed and funded cryptocurrency channels. He allegedly was aware that these platforms could financially help North Korea by dodging U.S. sanctions and funding illegal activities such as nuclear weapon development programs.

Then in April 2019, Griffith traveled to North Korea, even though the State Department did not give him permission to do, to give a presentation on blockchain and cryptocurrency at the “Pyongyang Blockchain and Cryptocurrency Conference” (the “DPRK Cryptocurrency Conference”). The presentation focused on how to use these services to evade sanctions and launder money. He mainly focused on “how blockchain technology such as ‘smart contracts’ could be used to benefit the DPRK, including in nuclear weapons negotiations with the United States.” Griffith and his co-conspirator allegedly answered questions and gave advice on the subject matter.

Even after the conference, Griffith continued to engage with North Korea. He aided in a cryptocurrency exchange between North Korea and South Korea – with full knowledge that such actions would violate the sanctions against South Korea. His actions were not authorized under the OFAC requirements.

The authorities caught up with Griffith in November 2019 and arrested him in Singapore.

Griffith’s sentencing hearing is set for January 2022; his charge carries a maximum of 20 years in prison.

Audrey Strauss, the United States Attorney for the Southern District of New York, praised the work of the Federal Bureau of Investigation and its New York Field Office, Counterintelligence Division, and thanked the U.S. Department of State’s Diplomatic Security Service, the Department of Justice’s National Security Division, Counterintelligence and Export Control Section, the Department of Justice’s Office of International Affairs, and the Singapore Police Force for their assistance.”

The use of crypto assets has been one of the main mechanisms by which North Korea has tried to circumvent the United Nations and U.S. sanctions.  Griffith’s actions in speaking at a conference and then helping the North Korean government in a crypto currency exchange platform clearly were prohibited without a license, for which Griffith did not apply.  The plea and the facts indicate how difficult it is to implement effectively and enforce sanctions.

On September 21, 2021, the U.S. Department of Treasury sanctioned SUEX, a crypto currency exchange owned by a Russian and incorporated in the Czech Republic, which was allegedly processing ransomware payments.  The U.S. and G7 governments have identified crypto exchange exchanges as one of the elements of the ecosystem of ransomware operatives, so prosecuting a person who has helped the North Korean government use crypto assets and crypto currency exchanges fits within that strategy.

United States Adds Seven Central American Officials to Undemocratic and Corrupt Actors List

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On September 10, 2021, the U.S. Department of State announced the addition of seven perpetrators of the United States’ Undemocratic and Corrupt Actors list.[1]  The additions included Elsy Dueñas De Aviles, Oscar Alberto López Jerez, Hector Nahun Martinez Garcia, Jose Angel Perez Chacon, and Luis Javier Suárez Magaña, current Magistrates of the Constitutional Chamber of the Supreme Court of El Salvador.[2]  Maria Consuelo Porras Argueta De Porres, current Attorney General of Guatemala, and Angel Arnoldo Pineda Avila, current Secretary-General of Guatemala’s Public Ministry, were added to the list for obstructing investigations into acts of corruption in the State.[3]  Placement on the United States’ Undemocratic and Corrupt Actors list makes the perpetrators ineligible for visas and admission to the United States.[4]

The sanctions placed on September 10 were placed in response to current events in El Salvador and Guatemala.  Antony J. Blinken, Secretary of State, maintained that the United States is committed to supporting the people of El Salvador and Guatemala in the pursuit of democratic institutions and equitable economic opportunities.[5]

Current Events in El Salvador

The U.S. Department of State has accused the current Magistrates of the Constitutional Chamber of the Supreme Court of undermining democratic processes in Guatemala by accepting direct appointments to the Chamber by the Legislative Assembly.[6]  While the Magistrates assert that their installation to the Constitutional Chamber of the Supreme Court was constitutional, the actions appear to have circumvented the processes laid out in the Salvadoran constitution.  The U.S. Department of State, therefore, views the actions committed by the Magistrates to have undermined democratic processes in El Salvador.[7]

While the presidency of Nayib Bukele is quite popular throughout El Salvador, critics have raised concerns regarding the blockage of access to information, infringement on independent media, politicization of the armed forces, and erosion of institutional checks and balances.[8]  The movement to replace all five magistrates and the Attorney General of the country is thought to be a tactic to remove his political opponents from office, as the past Attorney General opened corruption investigations against several of the President’s Cabinet Ministers.[9]  The actions taken against the current Magistrates, therefore, are an effort by the United States to condemn the unchecked authority of President Bukele and promote freedom of political expression in El Salvador.

Current Events in Guatemala

The U.S. Department of State has denounced Maria Consuelo Porras Argueta De Porre for ordering prosecutors in Guatemala’s Public Ministry to ignore cases based on political considerations, as well as undermining investigations carried out by the Special Prosecutor Against Impunity.[10]  Juan Francisco Sandoval, then-lead prosecutor of the Guatemalan Special Prosecutor’s Office Against Impunity, fled the country in July soon after being removed from his position by Porras.[11]  The U.S. Department of State also sanctioned Angel Arnoldo Pineda Avila for interfering in anticorruption investigations; he allegedly tipped off investigative targets about the cases that were being built against them.[12]

Corruption in the Guatemalan criminal justice system is largely caused by extortion of public officials by clandestine organizations.  During Guatemala’s civil war (1960-1996), cuerpos illegales were civilian groups armed by the military that engaged in campaigns of horror and repression of the indigenous Mayan population.[13]  While the elimination of Cuerpos Illegales y Apartaos Clandestinos de Seguridad (CIACS, or the Clandestine Security Apparatus in English) was stipulated in the Comprehensive Agreement of Human Rights of 1994, no structure was set in place to truly eliminate its presence in Guatemala.[14]  While many members of the cuerpos illegals went into retirement, some were integrated into the police force, and many of the younger members joined private security companies.[15]

The clandestine security apparatus after the civil war continued to operate in illicit activities with the mission to suborn the legal system to protect personal gains.[16]  In recent years, the CIACS has exploited an institutional framework including the judiciary, the Attorney General’s Office, public criminal defense attorneys, and associations of judges and magistrates.[17]  Gangs have served the clandestine structures of the state to ensure control of prisons and the distribution and sale of drugs, and protection to the cartels is ensured through extortion of officials in the criminal justice system.[18]  The alleged actions committed by Porras and Avila have upheld this inequitable system and thwarted anticorruption efforts to mitigate it; the U.S. Department of State hopes that these sanctions will hold public officials accountable for their nefarious activities.

The October issue of the IELR will have a more comprehensive discussion of the origins of political corruption in both El Salvador and Guatemala.

 

[1] Antony J. Blinken, United States Announced Actions Against Seven Central American Officials for Undermining Democracy and Obstructing Investigations into Acts of Corruption, U.S. Department of State, September 20, 2021, https://www.state.gov/united-states-announces-actions-against-seven-central-american-officials-for-undermining-democracy-and-obstructing-investigations-into-acts-of-corruption/.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Adam Isacson, a Critical Moment for El Salvador’s Democracy, WOLA, February 19, 2021, https://www.wola.org/analysis/a-critical-moment-for-el-salvadors-democracy/..

[9] El Salvador’s moves against Attorney General, Constitutional Court: “Direct Attack on Democratic Institutions”, WOLA, May 3, 2021, https://www.wola.org/2021/05/el-salvador-attorney-general-constitutional-court/.

[10] Id.

[11] Guatemalan anti-corruption prosecutor flees country after sacking,, Aljazeera, July 24, 2021, https://www.aljazeera.com/news/2021/7/24/guatemala-anti-corruption-prosecutor-flees-country-after-sacking.

[12] Antony J. Blinken, supra.

[13] Carlos Castresana, Guatemala: Illegal Entities and the Clandestine Security Apparatus, Criminalized power structures: the overlooked enemies of peace, at 53, 2016 (Michael Dziedzic, ed).

[14] Id.

[15] Id. at 59.

[16] Id.

[17] Id. at 60.

[18] Id. at 61.

U.S. Returned Dream Poem Tablet from Epic of Gilgamesh to Iraq

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On September 23, 2021, the U.S. confirmed the return of the poem tablet that is part of the Epic of Gilgamesh. The return was confirmed when the Iraqi ambassador to the U.S. signed the certificate of transferring ownership as a part of a repatriation ceremony at the Smithsonian Institution’s Museum. In July 2021, the U.S. announced that it would return 17,000 looted artifacts.

 

Tablet’s journey to the U.S.

 

A majority of the artifacts entered the U.S. illegally when an international auction house sold the tablet to craft store Hobby Lobby based in Oklahoma for their Museum of the Bible. Then in 2019, the U.S. authorities obtained a seizure warrant and seized the items.

 

According to an amended U.S. complaint documents, in 2003, a U.S. antiquities dealer purchased the tablet from a London dealer. The dealer then shipped the tablet to the U.S. without informing authorities of the item. The tablet was unreadable and had dirt, but after a cuneiform cleaned it, it was discovered that the tablet contained a poem, a part of the Gilgamesh epic.

 

In 2007, the dealer sold the tablet and included a letter that mischaracterized it and labeled it “miscellaneous ancient bronze fragments.”  Over the years, the tablet traveled around the world, going from seller to buyer from different countries and parts of the world.  Then in 2014, the tablet returned to the U.S. from London, and after that, Hobby Lobby admitted to the tablet’s forfeiture.

 

“Today, Iraq is reclaiming a piece of its cultural history,” said Special Agent-in-Charge Peter C. Fitzhugh of HSI New York. “We are honored to have played a role in the repatriation of this rare tablet that was pillaged from Iraq, only to be sold without a valid provenance and any regard for his cultural value. HSI New York’s Cultural Property, Arts and Antiquity Investigations program will continue to work tirelessly to interrupt the criminal activities of those who loot antiquities and seek to profit off the theft of a country’s rich history.”

 

 

The backstory of the Artifact

 

The Gilgamesh epic poem is about the main character or a protagonist that details his dream to his mother; his mother responds with an interpretation of that dream, which is that he is to expect the arrival of a new friend, she said to her son “You will see him and your heart will laugh.”  “The names of the hero, Gilgamesh, and the character who becomes his friend, Enkidu, are replaced in the Gilgamesh Dream Tablet with the names of deities Sin and Ea,” according to the Department of Justice press release.

 

Acting U.S. Attorney Jacquelyn M. Kasulis for the Eastern District of New York  said that “This office is proud to have played a central role in making this rare and ancient cuneiform tablet available for repatriation to its country of origin and the people of Iraq,” and continued to say that the U.S. will continue to use the law to go after illegal activity in cultural treasure so that it “may be restored to their rightful place in a country’s history.”

 

U.S. Sanctions Russian-Owned Crypto-Exchange for Ransomware Activities

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On September 21, 2021, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the first virtual currency exchange for laundering cyber ransoms and updated its ransomware advisory to encourage reporting of incident and ransomware payment to both Treasury and law enforcement.

Rationale for Designating Virtual Currency Exchanges

OFAC explained that some virtual currency exchanges play a critical role in the ransomware ecosystem, since virtual currency is the main way of facilitating ransomware payments and associated money laundering activities.  In this regard, the Financial Crimes Enforcement Network (FinCEN) has issued guidance concerning the application of the Bank Secrecy Act rules in this area in 2013 and 2019.  FinCEN has also taken enforcement action against non-compliant virtual currency money transmitters facilitating ransomware payments.  In 2017, it acted against BTC-e and in 2020 against the virtual currency mixing service Helix.

FinCEN is especially targeting “nested” exchanges, such as SUEX, that piggyback off large crypto platforms; peer-to-peer platforms that permit direct confidential transactions between parties; and mixers, whose exchange services make tracking transactions more difficult.  Virtual currencies facilitate illicit activities for their own profits.  Treasury will continue to employ its authorities against malicious cyber actors in cooperation with other U.S. law enforcement agencies, as well as with its foreign partners.  The goal is to disrupt financial nodes connected to ransomware payments and cyber-attacks.

Designation of SUEX

SUEX OTC, S.R.O. (SUEX), a virtual currency exchange, is designated due to its facilitation of financial transactions for ransomware actors.  SUEX has alleged facilitated transactions involving illicit proceeds from at least eight ransomware variants.  Over 40% of SUEX’s known transaction history is with illicit actors.  OFAC is designating SUEX pursuant to Executive Order 13694, as amended, for providing material support to the threat posed by criminal ransomware actors.

SUEX is believed to have facilitated ransomware attacks, which help fund additional cybercriminal activity.  Treasury has promised to continue to disrupt and hold accountable entities, such as SUEX, to reduce the incentive for cybercriminals to continue to conduct these attacks.

The designation of SUEX is the first sanctions designation against a virtual currency exchange.  The Federal Bureau of Investigation assisted in the designation.

Sanctions Implications

The designation of SUEX means that all property and interests in property of SUEX that are subject to U.S. jurisdiction are blocked.  U.S. persons are generally prohibited from engaging in transactions with them.  In addition, any entities 50% or more owned by one or more designated persons are also blocked.  Additionally, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals can expose themselves to sanctions and/or enforcement actions, especially for money laundering.

OFAC Updates Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments.

OFAC issued an Updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments.  The Advisory underscores that the U.S. government continues to strongly discourage the payment of cyber ransom or extortion demands.  It recognizes the importance of cyber hygiene in preventing or mitigating such attacks.

The updated advisory underscores the importance of improving cybersecurity practices and reporting to, and cooperating with, appropriate U.S. government agencies in the event of a ransomware attack. The reporting is critical for U.S. government agencies, including law enforcement, to understand and counter ransomware attacks and malicious cyber actors.  For instance, law enforcement has knowledge of payment right after it occurs, it can more easily trace and seize the money.

International Cooperation on AML/CFT Measures for Virtual Currencies and Service Providers

The international cooperation against ransomware is quite dynamic.  The G7 heads of state agreed to act and had statements in the communique after their June meeting in England.  They committed to cooperate to urgently address the increasing threat from criminal ransomware networks.  The G7 Expert Group (CEG), co-chaired by the U.S. treasury and the Bank of England, met on September 1 and September 14, 2021, to discuss ransomware.  They explored ways to improve overall security and resilience against malicious cyber activity.  At the September 8-9 meeting of the G7 ministers of security and INTERPOL, the participants agreed to hold an Extraordinary Senior Officials Forum on ransomware by the end of 2021.

In June 2019, the Financial Action Task Force (FATF) revised its standards to require all countries to regulate and supervise virtual asset service providers (VASPs), including exchanges, and to mitigate against such risks when engaging in virtual asset transactions.  For instance, countries must impose customer due diligence (CDD) requirements and suspicious transaction reporting obligations across Virtual Asset Service Providers (VASPs).  The due diligence will inhibit cybercriminals’ exploitation of virtual assets and support investigations into the illicit finance activities.

Analysis

The designation of SUEX is likely the first of a series of designations by the U.S. and G7 countries of virtual currency exchanges and platforms deemed to be servicing ransomware attacks.  Meanwhile, the G7, G20, and FATF continue to strengthen the standards for applying AML/CFT and financial regulation to crypto-assets.

VASPs and crypto platforms will want to review with an eye to upgrading their AML/CFT due diligence standards as the regulatory requirements will continue to be dynamic.

The next issue of the IELR will have a more comprehensive discussion of this matter.

The Gambia Will Not Accept Expelled Gambian Nationals from the EU

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In late August 2021, the Gambian government said that any migrants wanting to return home to The Gambia would not be allowed to enter. The Banjul administration said it would not allow any flights carrying Gambian migrants coming from the EU.

This announcement came as Germany decided to expel several Gambian migrants in early September. And the DW media reports that “more than 2,000 Gambian migrants who have exhausted their asylum appeals in Germany are awaiting repatriation.” The country is not accepting its citizens back to the Gambia due to security concerns and difficulties in reintegration. Other issues cited related to the pandemic and the possibility that Gambian migrants could contribute to a rise in COVID-19 cases, thereby putting additional strain on public health facilities in the country.

This move could also be due to the upcoming election in the Gambia that is set for December 2021, which could be a way to boost electoral support in the polls. The forthcoming election will be the first one after oppressive dictator Yahya Jammeh ruled for nearly 22 years till he lost an election in 2017 to Adama Barrow.

The Gambian foreign ministry spokesman, Saikou Ceesay, explained that allowing migrants to return to the Gambia would cause a “social upheaval” he also added that Gambia is trying to perverse and “consolidate the peace, stability and democracy,” and presumably, allowing Gambian nations to reentry would hinder the country’s development.

Gambia’s decision could also be tied to an underlying political motive tied to the election, according to a European Union Diplomat.

The Gambia and the EU

           The topic of immigration between The Gambia and the EU has long been sore spot for both parties.  For example, in 2018, the two entities signed an agreement called the “Good Practices document on identification and return procedures.” Allegedly, Gambia has not fully upheld its end of the agreement.

The European Council is also looking into a proposal that would make it harder for Gambians to obtain an EU visa due to the country’s “failure to cooperate on readmission.”

A Ugandan expert in international law, Gawaya Tegulle, said that each country has a duty and obligation to accept its nationals back and The Gambia’s decision is unlawful and breaks international law. “Therefore, the action per se by the government of the Gambia has no place under international law,” Tegulle said to DW news, and further stated that “It is illegal before we start even to list the demerits of the circumstances surrounding the decision.” On the other hand, Tegulle disagrees with Germany’s decision to expel Gambians and says that both nations made the wrong decision.

Analysis and Implications

EU’s decision to expel Gambian migrants is not new. In 2019, migrant Gambians faced the same dilemma of having to leave their home in hopes of finding a safer home just to get deported to their country.

One issue is the proof required to establish that a migrant is a national of a country.

No human, especially a migrant fleeing their country in seeking better opportunities, should be left in limbo, not knowing where their permeant address lies.  A problem is that the flood of migrants from Afghanistan, Syria, Iraq, the Northern Triangle, Myanmar, and many other countries is unsustainable.  The tide of refugees imposes significant pressure on the existing international refugee law.

The September Issue of the IELR will have a more comprehensive discussion of this topic.

 

Basel AML Index 2021: 4 things holding back the global fight against money laundering

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Released today, the 10th annual edition of the Basel AML Index raises grave questions about whether jurisdictions are serious about tackling their money laundering and terrorist financing (ML/TF) risks, and what is holding them back.

The Basel AML Index is an independent annual ranking that assesses ML/TF threats around the world and the capacity of jurisdictions’ anti-money laundering and counter financing of terrorism (AML/CFT) measures to address their specific risks.

The average global money laundering risk score increased from 5.22 to 5.3 out of 10, as assessed across all 110 jurisdictions in the 2021 Public Edition of the Basel AML Index.

Even among jurisdictions whose risk scores improved this year, none managed to improve by even one point out of 10. Half of improvements were 0.3 of a point or less.

What is holding jurisdictions back from effectively tackling their ML/TF risks and avoiding being the weak spot in regional and international financial systems? This year’s Basel AML Index report looks at four areas of AML/CFT policy that urgently need more attention.

1 – A strong response to threats from virtual assets

The use of virtual assets such as cryptocurrencies is exploding – for legitimate as well as illicit purposes. This year’s Basel AML Index report analyses data from the Financial Action Task Force (FATF) on how jurisdictions are responding to ML/TF threats related to virtual assets.

The answer: not well at all. Most jurisdictions assessed or re-assessed in the last year have worsened their scores for technical compliance with FATF Recommendation 15 on virtual assets and virtual asset service providers. Average compliance levels have dropped by 10 percentage points globally.

Read the report to find out why.

2 – Effective prevention, not just enforcement

Previous editions of the Basel AML Index have lamented that many jurisdictions have AML/CFT systems that are mostly compliant with FATF technical recommendations but are ineffective in practice.

This year’s report looks at the distinction between compliance with technical recommendations vs effective implementation. Does the problem prevail for both prevention and enforcement?

The analysis reveals that:

  • once again, jurisdictions score rather badly for effective implementation across the board;
  • the discrepancy between technical compliance and effective implementation is even worse in relation to prevention.

These findings should ring an alarm bell for policy makers. Jurisdictions should invest more resources in the prevention of ML/TF, without reducing resources for enforcement.

3 – Beneficial ownership transparency

Beneficial ownership transparency is directly related to the effectiveness of a jurisdiction’s AML systems and the essential role of these systems in preventing, detecting, prosecuting and sanctioning financial crimes.

The Basel AML Index report analyses the implementation of beneficial ownership registers around the world. It shows how slow and ineffective implementation of beneficial ownership transparency measures continues to provide safe havens for dirty money.

This is damaging for individual jurisdictions, but more importantly undermines all global efforts to combat money laundering.

4 – Addressing ML/TF vulnerabilities beyond the financial sector

The final issue highlighted by the Basel AML Index data analysis is the generally weak application of AML/CFT preventive measures by lawyers, accountants, real estate agents and other designated non-financial businesses and professions non-financial entities (DNFBPs).

This means that there is a significant risk that such businesses and professions remain open to abuse by criminals and corrupt individuals wishing to launder their money. Moreover, there is increasing concern among regulators that:

  • some DNFBPs are advising and assisting criminal clients with hiding and laundering illicit funds;
  • as some high-profile cases have shown, accountants are used as intermediaries to avoid scrutiny.

At a minimum, more supervision over DNFBPs is urgently needed. Certain jurisdictions should also tighten their regulatory framework – and ensure that it is effectively enforced – over selected groups of DNFBPs in line with their risk exposure.

Regional deep dives

For a second year, the report offers profiles of money laundering risks in different regions. Our regional infographics show how jurisdictions score in relation to each other – and in too many cases let their neighbours down.

Policymakers should analyse their respective jurisdictions’ risks and make plans for serious reform. No jurisdiction is doing well. We call on all jurisdictions to step up their game.

See the report and website

Extradition of Former Liberian Public Officials: A Review of Anti-Corruption Efforts

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As part of the Liberian government’s efforts to recover assets of corruption and hold corrupt officials accountable for their actions, the Liberia Anti-Corruption Commission (LACC) is seeking the extradition of former government officials recently indicted for corruption.[1]  On August 16, 2021, the Chairperson of the LACC, Counselor Edward Kla Martin, assured that Liberia would follow all necessary extradition procedures with the United States to ensure that individuals who are residing in foreign lands either return to Liberia to answer questions regarding their alleged connivance, or are taken to court for prosecution in their current country of residency.[2]

 

During the news conference, Counselor Martin assured that the commission remains committed to keeping with the laws of the State and ensuring accountability for government officials that have taken part in corrupt acts.[3] Despite some progress towards eliminating corruption amongst Liberian public officials, overall challenges to this goal remain significant.

 

Current Investigations in Liberia

 

Since the end of the second civil war in 2003, Liberia has enjoyed a period of relative stability in which the government can focus on rebuilding government capacity and re-establishing the rule of law.[4]  In 2017, the first peaceful transfer of power between leaders since 1944 led to the presidency of George Manneh Weah, the current president of Liberia.[5]  Despite high expectations for strong anti-corruption efforts during Weah’s presidency, reports of patronage, nepotism, and cronyism have continued to plague the Liberian government.

 

According to the National Port Authority (NPA), MacArthur Charles Gull voluntarily admitted to the transfer of $300,000 belonging to the NPA into a personal bank account.  While there are reports that Gull had fled Liberia, the LACC affirmed that it would continue its investigation even if Gull does not honor the invitations sent to him.[6]  Counselor Martin affirms that, if Gull had truly fled and his current country of residence is identified, the Liberian government will go through the process of extradition to ensure due process.[7]

 

The LACC is currently investigating separate corruption allegations against the suspended heads of the Liberia Water and Sewer Corporation, Duannah Kamara, Herbie McCauley of the National Transit Authority, and the dismissed Managing Director of the Liberia Airport Authority (LAA) John Allen Klayee.[8]  The LACC has not arrested John Allen Klayee, but rather invited him for questioning at the commission.[9]  The LACC has seventy-three open cases regarding alleged corruption in the State; during the recent news conference, Counselor Martin encouraged all Liberian citizens to report suspicion, signs, or acts of corruption amongst public officials to the committee.[10]

 

 

Other Anti-Corruption Measures

 

While Liberia has a legislative framework to combat corruption, it lacks strong structure and reinforcement.  Within the Penal Code, there are currently criminal penalties for “economic sabotage, mismanagement of public funds and bribery.”[11]  Additionally, the Code of Conduct Law sets guidelines against corrupt practices in the Liberian government; however, the Code of Conduct does not provide explicit penalties and does not extend to family members of officials, or to their political parties.[12]

 

As part of its anti-corruption measures, LACC has established the National Code of Conduct for All Public Officials and Employees of the Government of the Republic of Liberia.[13]  This national code requires all public officials to declare assets before taking office and upon leaving. Though there are allegedly administrative sanctions for non-compliance, this rule has not been well executed; even the president declared his assets six months after assuming office.[14]  Enforcement has not improved since 2018; as of early 2021, only 59 public officials have declared their assets and LACC has continuously extended its deadlines due to difficulties receiving records from government officials.[15]

 

Through LACC, the Liberian government introduced a voluntary restitution program to ensure that public officials found guilty of stealing, misapplying or misappropriating public funds make full restitution in government’s coffers.[16]  Through the several years of the program’s existence, there appears to be little to no restitution of misapplied, stolen, or misallocated funds.[17]  However, there are signs that this program may be utilized more frequently in the months to come; Counselor Martin recently announced that a restitution of $18,000 U.S. dollars has been reallocated to the government.[18]

 

Analysis

 

While working to extradite corrupt officials living abroad and ensure due process in the Liberian judicial system is laudable, several obstacles still hinder the Liberian government’s ability to curtail corruption in the State.  Despite the encouragement of the LACC to report possible corruption, it is important to note that the passage of a Whistleblower Protection Act has continuously stalled within the legislative body.[19]  In order to encourage citizens to report possible corruption, the Liberian government should further develop protections for individuals submitting complaints against public officials.

 

While current anti-corruption efforts concentrate on prosecuting officials involved in illicit acts, many of the root causes of corruption have gone untreated.  Economic instability has been cited as a principal factor attributing to corruption within the State.  Low salaries for public officials may be an incentive for corruption, as public servants seek bribes in order to supplement their income.  Corruption is not limited to public officials, however, and heightened poverty levels provide individuals with incentives for corrupt behavior.  Since President Weah took office in 2018, the Liberian dollar has dropped by a third against the U.S. dollar and inflation has soared as high as 28%.[20]  Economic uncertainty may provoke high levels of corruptions in the public sector, including but not limited to doctors, teachers, and tax authorities.[21]

 

However, economic instability is not the sole cause of corruption in Liberia.  There has been minimum enforcement of the legal framework that would hold public officials accountable for their actions, contributing to a culture of impunity.[22]  While the LACC strives to change this lack of accountability within the legal system, it does not currently have prosecutorial powers and is under the constraints of a limited working capacity and budget.[23]  Other institutional frameworks, such as the Grievance and Ethics Committee, which reviews the unethical conduct of lawyers, have brought relatively few cases since their initial establishment.[24]

 

The September issue of the IELR will have a more comprehensive discussion of the current extradition efforts and the challenges faced by Liberia in its anti-corruption campaign.

 

[1] Obediah Johnson, Lberia Anti-Corruption Commission Seeks Extradition OF Accused Former Government Officials Indicted for Corruption, Front Page Africa, August 17, 2021, https://frontpageafricaonline.com/front-slider/liberia-anti-corruption-commission-seeks-extradition-of-accused-former-government-officials-indicted-for-corruption.

[2] Id.

[3] Id.

[4] Krista Lee-Jones, Liberia: Overview of corruption and anti-corruption, U4 Anti-Corruption Resource Centre, September 7, 2019, https://www.u4.no/publications/liberia-overview-of-corruption-and-anti-corruption.

[5] Id.

[6] Obediah Johnson, supra.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Obediah Johnson, supra.

[16] Id.

[17] Id.

[18] Id.

[19] Krista Lee-Jones, supra.

[20] Krista Lee-Jones, supra.

[21] Id.

[22] Id.

[23] Id.

[24] Obediah Johnson, supra.

French Supreme Court Overturns Dismissal of Complicity for Crimes against Humanity against Lafarge in Syria

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On September 7, 2021, the French Supreme Court (Court of Cassation) overturned the decision of the Paris Court of Appeal, dismissing a charge of complicity in crimes against humanity against Lafarge, now part of Switzerland-listed Holcim.  After an internal investigation, Lafarge admitted that its Syrian subsidiary paid armed groups to protect its workers at its Syrian plant.

In 2019, a French appellate court dismissed the crimes against humanity charge.  It reasoned that Lafarge did not deliberately associate itself with those crimes.[1]

The French Supreme Court remanded the case so that magistrates can re-examine Lafarge’s request to dismiss the case.  Until now, French courts have not tried any French entity for crimes against humanity even though French courts have jurisdiction over such offenses.[2]   The  French  Criminal  Code  of  Procedure  (CCP) establishes  universal jurisdiction  over  specified  offenses  emanating  from  international  conventions ratified  by  France.[3]

Under  French  law,  crimes  against  humanity  are  generally  defined  according  to the  Rome  Statute, with some  difference.  For instance, the CCP  requires  that  a crime against  humanity  be  part  of  a concerted plan.[4]

The French prosecution accuses Lafarge of paying close to $15.3 million to jihadist groups, including the Islamic State (IS).[5]

In October 2016, the prosecution started after the French Ministry of Economy and Finance brought a complaint against Lafarge.

Thereafter, Lafarge started an internal investigation.  It learned that the Syrian subsidiary gave funds to third parties to arrange deals with various armed groups.[6]

In 2019, the Court of Appeal dismissed the crimes against humanity charge.  It reasoned that it accepted that the payments were not to help IS’s agenda of executions and torture.  Nevertheless, it ruled that the prosecutor could proceed on three other charges: financing terrorism, violating an EU embargo, and endangering the lives of others.[7]

In its decision the French Supreme Court explained “one can be complicit in crimes against humanity even if one doesn’t have the intention of being associated with the crimes committed.”

The Court reasoned that “Knowingly paying several million dollars to an organization whose sole purpose was exclusively criminal suffices to constitute complicity, regardless of whether the party concerned was acting to pursue a commercial activity.” [8]

Analysis

The significance of the Lafarge prosecution concerns two important issues: accountability of multinational enterprises operating in conflict zones for contributing financially to the perpetration of atrocities by terrorist groups or other entities;[9] and the responsibility of parent companies for the illegal activities of their subsidiaries abroad.[10]

In this regard, in 2017, France enacted the first “duty of vigilance” law in Europe.  It requires companies to prevent human rights abuses in their supply chains worldwide.  It obligates them to pay damages if they fail to do so.[11]

The case is also important for its illustration of how universal jurisdiction applies with respect to crimes against humanity.

Additional issues facing Lafarge are investigations in the United States.  The U.S. has imposed sanctions on Syria during the last ten years.  They include the regime of Syrian President Bashar a-Assad and terrorist groups, such as IS.   The internal investigation suggests the risks for U.S. sanctions are limited, partly since the improper payments were in cash and did not, to the company’s knowledge, enter the U.S. banking system.  Normally, multinational enterprises violating U.S. sanctions send U.S. dollars that are cleared in the U.S.[12]

The current issue of the IELR will have a more comprehensive discussion of the Lafarge case.

[1]    Sarah White, Court blocks Lafarge bid to scrap Syria crime against humanity charge, Reuters, Sept. 7, 2021.

[2]    Id.

[3]    Open Society Justice Initiative, Universal Jurisdiction  Law and Practice in France 4 (February, 2019), citing French Criminal Code,  Article 689.

[4]    Open Society Justice Initiative, supra, at 5.

[5]    AFP, French firm Lafarge loses bid to dismiss ‘crimes against humanity’ case in Syria, Sept. 7, 2021. www.france24.com.

[6]    AP, Lafarge charges of crime against humanity dropped on appeal but others remain, July 11, 2019, https://www.france24.om.

[7]    AFP, supra.

[8]    Id.

[9]    Madeline Young, Lafarge’s Case Cemented:  Holding Corporations Liable for Crimes against Humanity, Emory Int’l L. Review: Recent Developments, 1 (2021), citing Claire Tixeire et al, Holding Transnational Corporations Accountable for International Crimes in Syria:  Update on the developments in the Lafarge Case (Part II), Opinio Juris (July 27, 2020).

[10]   Young, supra.

[11]  Id., citing Tixeire et al, supra.

[12]  David Keohane and Ralph Atkins, Syrian operation: Lafarge faces probe over Isis payments, Financial Times, Mar. 7, 2018.

Disclaimer

Nothing in this blog constitutes or is intended to constitute legal advice. Neither transmission nor receipt of such materials creates an attorney-client relationship. Blog readers and subscribers should consult with an attorney. This blog may be considered attorney advertising under the rules of some states. The hiring of an attorney is an important decision that should not be based solely upon advertisements. Prior results do not guarantee similar outcomes.

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