Corruption Archives | Page 6 of 7

Audit Exposes Financial Irregularities in African Soccer

February 24, 2020 by Alexandra Haris Leave a Comment

In early February 2019, a report was released showing that the governing body for soccer, the Confederation of African Football (CAF), in Africa uncovered millions of dollars of financial irregularities. The legitimacy of the millions of dollars concerned cash payments that were distributed to executives and national associations. The review found issues across the board, specifically, the “possible abuse of power” and reported “potential fraudulent adjustments” in accounting records that were suspicious including payments for gifts and organization for a funeral.

The 50-page report, covering 2015-2019, was conducted by PwC, a financial services firm, on request of the Fédération Internationale de Football Association (FIFA). During this time period, the report focused on the presidencies of Issa Hayatou and his successor Ahmad, who remains in power despite an ongoing ethics investigation.

This audit comes at a crucial time as it threatens to bring down its leadership after over a year of turmoil at the organization. In fact, amid accusations last year of financial wrongdoing by former senior executives, CAF agreed to an independent review. Now, the results PwC provided are likely to lead to demands for quick action against CAF’s leadership.

Musa Bility, former head of soccer in Liberia who had called for the audit but was later banned by FIFA for misappropriating soccer funds, said, “I have been left shocked and dismayed, though my fears have now been vindicated.” Bility has yet to deny allegations against him.

The report dug into the details, saying that FIFA had remitted $51 million to CAF from 2015-2018 and, since then, approximately $24 million of that had been disbursed by CAF officials. Furthermore, after reviewing 40 payments totaling $10 million, auditors found just five of the payments, totaling $1.6 million, had enough documentation to confirm what the money would be spent on. The remaining money lacked information that in some cases made it impossible to identify the beneficiaries of the funds.

According to The Associated Press, that obtained a copy of the private report, “The auditors had to grapple with limited documentation to account for payments at CAF worth millions of dollars that raised doubts about the nature of contracts, the need for family members of executives to receive payments, and raised the prospect of kickbacks and tax evasion attempts.” This fact caused the auditors themselves to write that their work was being “stymied.”

Still, auditors concluded, “Based upon the procedures performed and documents reviewed, several red flags, potential elements of mismanagement and possible abuse of power were found in key areas of finance and operations of CAF…Given the serious nature of certain findings and red flags identified from the preliminary due-diligence, we cannot rule out the possibility of potential irregularities.”

FIFA has declined to comment on the matter.

However, a week before the revelations, FIFA announced that its secretary general, Fatma Samoura, completed a mission intended to restore order in CAF’s governance. The organization announced, “FIFA is happy that the joint effort made with C.A.F. was done and delivered within the initial proposed time frame and reiterates its commitment to be at the disposal of African football to assist in the process of raising its level to the top of the world.”

The report stands as yet another reminder of the challenges facing the governance of global soccer, which was shaken in 2015 when the U.S. filed an indictment that laid out detailed accusations of years of corruption and wrongdoing by soccer’s most senior officials. Now, it is anticipated that the audit will lead to several new cases for FIFA’s ethics department.

In the meantime, FIFA and CAF announced a joint action plan to take power away from CAF’s board, composed of soccer leaders across the continent who were revealed to had received thousands of dollars in cash without justifiable business reasons.

For more analysis, check ielr.com for a detailed article within the coming days.

U.S. Court of Appeals for D.C. Circuit Rules Congress Lacks Standing on Emoluments Case

February 8, 2020 by Bruce Zagaris Leave a Comment

On February 7, 2020, the United States Court of Appeals for the District of Columbia Circuit in a per curiam ruling decided the 215 Members of Congress did not have standing to sue President Donald Trump over alleged violations of the U.S. Constitution’s Foreign Emoluments Clause (Clause).[1]

The opinion reverses the district court’s decision, denying President Trump’s motion to dismiss.

Complaint

On June 14, 2017, the Members filed their complaint. They seek declaratory and injunctive relief against the President in his official capacity. The Members allege that President Trump “has a financial interest in vast business holdings around the world that engage in dealings with foreign governments and receive benefits from those governments” and that “[b]y virtue of that financial interest, [he] has accepted, or necessarily will accept, ‘Emoluments’ from ‘foreign States’ while holding the office of President.”

They allege the President’s failure to seek and obtain congressional consent has “completely nullified,” the votes they are authorized to case to approve or disapprove his acceptance of foreign emoluments.

Because the Foreign Emoluments Clause allegedly requires the President to obtain ‘the Consent of the Congress’ before accepting otherwise prohibited ‘Emoluments,” Plaintiffs, as members of Congress, must have the opportunity to case a binding vote that gives or withholds their ‘Consent’ before the President accepts any such ’Emolument.’” They further allege that the Clause is “unique.”

First, the Clause imposes a procedural requirement (obtain “the consent of the Congress” that federal officials must satisfy before they take a specific action (accept “any” emolument from “any…foreign State”). U.S. Const. art. I, § 9, cl. 8. The failure to obtain Congressional before accepting emoluments deprives the plaintiffs of their right to vote on whether to consent to its acceptance.

Plaintiffs claims that, because President Trump is violating the Clause through his private businesses, without the need for government funds or personnel, Congress cannot use its power of the purse to stop him.

The President moved to dismiss, arguing that (1) the Members lack standing; (2) no cause of action authorized their lawsuit; (3) they failed to state a claim upon which relief could be granted; and (4) the requested relief, an injunction against the President in his official capacity, violates the Constitution.

District Court Decision

The district court bifurcated the issues, addressed standing first. It held that the Members “sustained their burden to show that they have standing to bring their claims. Blumenthal v. Trump, 335 F. Supp. 3d 45, 54 (D.D.C. 2018). The President then moved to certify the district court’s standing order for interlocutory appeal under 28 U.S.C. § 1292(b), which motion was denied on June 25, 2019, Blumenthal v. Trump, 382 F. Supp. 3d 77, 83 (June 25, 2019). During the pendency of the certification motion, the district court denied the remainder of the President’s motion to dismiss. The district court held that the Members had an implied equitable cause of action for injunctive relief and that they had stated a claim under the emoluments clause. Blumenthal v. Trump, 373 F. Supp. 3d 191, 207-09 (D.D.C. 2019).

Appellate Court Decision

The President then petitioned the Court of Appeals for a writ of mandamus. The appellate court granted the interlocutory appeal.

The appellate court explained that “[n]o principle is more fundamental to the judiciary’s proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies. Standing to sue is a doctrine rooted in the traditional understanding of a case of controversy.” Spokeo Inc. v Robins, 136 S.Ct. 1540, 1547 (2016) (quoting Raines v. Byrd, 521 U.S. 811, 818 (1997). Only 29 Senators and 186 Members of the House of Representatives brought the case. They do not constitute a majority of either body and hence do not have power to approve or deny the President’s acceptance of foreign emoluments. As a result, the appellate court found the plaintiffs lack standing.

The current issue of the IELR will discuss the case in more detail.

[1] Richard Blumenthal v. Donald J. Trump, U.S. Court of Appeals for the District of Columbia Circuit, No. 19-5237 (Feb. 7, 2020).

U.S. Appropriations Bill Carries More Sanctions and Asset Recovery on the Maduro Regime

December 17, 2019 by Bruce Zagaris Leave a Comment

By Bruce Zagaris and Dale Eppler

The House-Senate Appropriations bill, which is expected to pass this week, has several provisions on Venezuela (at around page 1270 in the 1783 page text), including a new requirements on asset recovery and coordination of economic sanctions with other countries. In April, Senator Robert Menendez (D-N.J.) introduced the “Venezuela Emergency Relief, Democracy Assistance, and Development (VERDAD) Act of 2019 with broad bipartisan support. It directs a new strategy for Venezuela in coordination with Congress, and earmarks substantial funds to support it. We understand there also were very high level meetings in the Executive branch during the past week on Venezuela but, thus far, no word from the White House on any change in the direction of U.S. policy.

The language in the bill is as follows:

Subtitle E—Supporting the 8 Reconstruction of Venezuela

SEC. 151. RECOVERING ASSETS STOLEN FROM THE VENEZUELAN PEOPLE.

(a) RECOVERING ASSETS. —The President, acting through the Secretary of State and in consultation with the Secretary of the Treasury, shall advance a coordinated international effort—

(1) to work with foreign governments—

(A) to share financial investigations intelligence, as appropriate;

(B) to block the assets identified pursuant to paragraph (2); and

(C) to provide technical assistance to help governments establish the necessary legal framework to carry out asset forfeitures; and

(2) to carry out special financial investigations to identify and track assets taken from the people and institutions of Venezuela through theft, corruption, money laundering, or other illicit means.

(b) STRATEGY REQUIREMENT.—

(1) IN GENERAL.—Not later than 180 days after the date of the enactment of this Act, the President, acting through the Secretary of State and in consultation with the Secretary of the Treasury, shall submit a strategy for carrying out the activities described in subsection (a) to Congress.

(2) ADDITIONAL ELEMENTS.—The strategy required under paragraph (1) shall—

(A) assess whether the United States or another member of the international community should establish a managed fund to hold the assets identified pursuant to subsection (a)(2) that could be returned to a future democratic government in Venezuela; and

(B) include such recommendations as the President and the Secretary of State consider appropriate for legislative or administrative action in the United States that would be needed to establish and manage the fund described in subparagraph (A).

Subtitle F—Restoring the Rule of Law in Venezuela

SEC. 161. DEVELOPING AND IMPLEMENTING A COORDINATED SANCTIONS STRATEGY WITH PARTNERS IN THE WESTERN HEMISPHERE AND THE EUROPEAN UNION.

(a) STRENGTHENING SANCTIONS CAPACITY IN LATIN AMERICA AND THE CARIBBEAN.—The Secretary of State, in consultation with the Secretary of the Treasury, shall offer to provide technical assistance to partner governments in Latin America and the Caribbean to assist such governments in establishing the legislative and regulatory frameworks needed to impose targeted sanctions on officials of the Maduro regime who—

(1) are responsible for human rights abuses;

(2) have engaged in public corruption; or

(3) are undermining democratic institutions and 18 processes in Venezuela.

(b) COORDINATING INTERNATIONAL SANCTIONS.

— The Secretary of State, in consultation with the Secretary of the Treasury, shall engage in diplomatic efforts with partner governments, including the Government of Canada, governments in the European Union, and governments in Latin America and the Caribbean, to impose targeted sanctions on the Maduro regime officials described in subsection (a).

(c) STRATEGY REQUIREMENT.—Not later than 90 days after the date of the enactment of this Act, the Secretary of State, in consultation with the Secretary of the Treasury, shall submit a strategy for carrying out the activities described in subsection (a) to: (1) the Committee on Foreign Relations of the Senate; (2) the Committee on Appropriations of the Senate; (3) the Committee on Banking, Housing, and Urban Affairs of the Senate; (4) the Committee on Foreign Affairs of the House of Representatives; (5) the Committee on Appropriations of the House of Representatives; and (6) the Committee on Financial Services of the House of Representatives.

It is not clear yet how the executive branch, working with Congress, will implement the proposed sanctions and asset recovery program. We expect Treasury and State will lead the coordination with other governments. Presumably, the U.S. and its partners will furnish technical assistance to smaller jurisdictions in the region that are willing to help them find, freeze, and even forfeit assets that are the proceeds of crime. Until now, one potential challenge is that some small jurisdictions, especially those that have maintained friendly relations with Chavez and Maduro, and that benefited from PetroCaribe, do not want to take steps inimical to the Maduro regime. Another problem is that governments are much better at freezing accounts than they are at identifying and tracking the proceeds of corruption.

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

Professor of Latin American Narcotics and Money Laundering Indicted for Money Laundering

November 19, 2019 by Bruce Zagaris Leave a Comment

On November 18, 2019, the U.S. Attorney for the Southern District of New York announced the arrest of Professor Bruce Bagley of the University of Miami on charges of conspiracy to commit money laundering and money laundering. The indictment alleges that Bagley participated in a conspiracy to launder the proceeds of graft and corruption in connection with public works projects in Venezuela.

In particular, the indictment alleges that in November 2016, Bagley on behalf of Bagley Consultants, Inc, a company Bagley and his wife incorporated in 2005, opened a bank account. Between November 2016 and November 2017, the account had minimal activity. In November 2017, the account started receiving monthly deposits of hundreds of thousands of dollars from bank accounts located in Switzerland and the United Arab Emirates. Each month, Bagley would receive a deposit of approximately $200,000 from one of the overseas accounts into his corporate account. Thereafter, he would withdraw approximately 90 percent of the funds in the form of a cashier’s check, payable to an account held by another individual, an unnamed Colombian individual who helped him to move the money.

Between November 2017 and October 2018, his corporate account received approximately $2.5 million from the two overseas accounts. The Colombian individual to whom the overseas accounts belonged discussed the fact that they were moving another individual’s funds and that the funds represented the proceeds of foreign bribery and embezzlement stolen from the Venezuelan people. In addition to continuing to receive the money, Bagley entered into sham contracts purporting to justify the transfer of the funds belonging to an apparent Venezuelan person into the Colombian’s account.

In October 2018, a bank closed the account of Bagley Consultants, Inc. for suspicious activity. On December 2018, Bagley provided the Colombian individual with information for a new bank account in order to transfer additional money belong to the Venezuelan person. On two occasions, Bagley received funds into the new account after the Colombian individual allegedly told Bagley that the funds represented the proceeds of bribery and public corruption. Bagley transferred most of the funds to the Colombian individual and retained approximately 10 percent as a commission for his services.

Bagley, 73, is a professor of international studies with publication credits, including the book Drug Trafficking, Organized Crime, and Violence in the Americas Today.

The case shows the utility of the unnamed bank, making a suspicious activity report, which apparently led to the investigation and indictment. The case also illustrates the desperate efforts of people in Venezuela to move money, especially alleged proceeds of corruption.

The current issue of the IELR will have a more comprehensive article on this matter.

FATF Issues Best Practices Report on Beneficial Ownership

October 28, 2019 by Bruce Zagaris Leave a Comment

On October 24, 2019, the Financial Action Task Force (FATF) issued a best practice paper, seeking to provide suggested solutions, supported by cases and examples of best practices for beneficial ownership from delegations. The paper responded to challenges faced by delegations in implementing FATF Recommendation. The results of FATF Mutual Evaluation Reports (MERs) indicate that jurisdictions find it challenging to achieve a satisfactory level of transparency regarding the beneficial ownership (BO) of legal persons.

At present FATF is conducting the fourth round of mutual evaluations of the implementation of the FATF standards on anti-money laundering (AML). FATF mutual evaluations show that jurisdictions using a single approach is less effective in making sure that competent authority can obtain accurate and up-to-date BO information to in a timely manner. Instead, a multi-pronged approach using several sources of information is often more effective in preventing the misuse of legal persons for criminal purposes and implementing measures that make the beneficial ownership of legal persons sufficiently transparent. The variety and availability of sources increases transparency and access to information, and helps mitigate accuracy problems with particular sources.

FATF R.24 requires countries take measures to prevent the misuse of legal persons for ML/TF. Countries should ensure that there is adequate, accurate and timely information on the beneficial ownership and control of legal persons that can be obtained or accessed in a timely fashion by competent authorities.

Through a multi-pronged approach, competent authorities can obtain access to information on beneficial ownership through different sources. They can also ensure the accuracy of information by cross-checking. Key stakeholders, (including companies, directors, shareholders, obliged parties such as FIs and DNFBPs), can more easily identify incorrect beneficial ownership information in their database by reviewing different registers or requesting information from different sources. This will then trigger the obliged party to seek clarifications from the companies, and if necessary, report suspicious activities to competent authorities. Therefore, this approach encourages key stakeholders to fulfil their obligations through peer interaction and supervision.

As stated in Interpretative Note to R.24, countries should use one or more of mechanisms

the Registry Approach, which calls for company registries to obtain and update BO information;
the Company Approach, which requires companies to obtain and hold updated data on their shareholders; and
the Existing Information Approach, which uses existing data sources, such as tax authorities, financial institutions and Designated Non-Financial Business or Professionals (DNFBPs), information held by other competent authorities on the legal and BO of

companies, and available information on companies listed on a stock exchange, where

disclosure requirements ensure adequate transparency of beneficial

ownership.

The FATF best practices papers calls on stakeholders to ensure that information on the beneficial ownership of a company is obtained by that company and available at a specified location in their country; or can be otherwise determined in a timely manner by a competent authority.

The FATF has identified some specific obstacles in the following areas to effective implementation , including: a) risk assessment; b) adequacy, accuracy and timeliness of information on beneficial ownership; c) access by competent authorities; d) bearer shares and nominee shareholder arrangements; e) fines and sanctions; and f) international co-operation.

The FATF paper on best practices in obtaining, maintaining and using beneficial ownership will help jurisdictions whose regime falls below the FATF standards, as enumerated in the MERs, take action to upgrade the quality of their implementation practices.

The current issue of the IELR will have an article discussing in more detail the FATF report.

Federal Judge Overturns Rafiekian’s Conviction and DOJ Ends Investigations of Podesta and Van Weber, Causing a Blow to FARA Enforcement Efforts

September 25, 2019 by Bruce Zagaris Leave a Comment

On September 24, 2019, Judge Anthony J. Trenga of the U.S. District Court Eastern District of Virginia issued a 39-page opinion, overturning the conviction of Bijan Rafiekian, the former business partner of Michael Flynn, the first national security adviser of United States President Donald J. Trump. On September 23, the United States Department of Justice notified Tony Podesta, a Democratic power broker, and Vin Weber, a Republican former congressman, of the closing of its investigation for violations of the Foreign Agents Registration Act.

Rafiekian Opinion

On July 23, 2019, after a six-day jury trial, Rafiekian was convicted for conspiracy under 18 U.S.C. § 371 and acting in the United States as an unregistered agent of a foreign government, namely the government of Turkey, in violation of 18 U.S.C. § 951.

On September 12, 2019, the Court held a hearing on Rafiekian’s Motion for Judgment of Acquittal Under Federal Rule of Criminal Procedure 29 and Motion for a New Trial.

Judge Trenga granted the Motions for Acquittal and conditionally granted the Motion for New Trial.

With respect to the conviction for acting as an unregistered agent of Turkey, Judge Trenga found there is no substantial evidence that Rafiekian agreed to operate subject to the direction or control of the Turkish government. Additionally, Judge Trenga found no evidence of any actual or implied agreement between Rafiekian and the government of Turkey or any official of the government of Turkey.

A contract existed between the Flynn Intel Group (“FIG”) and Alptekin, a Turkish businessman who is the owner of Inovo, BV, a Dutch company located in the Netherlands. Alptekin was previously the Chairman of the Turkish-American Business Council.

On September 8, 2016, Flynn, on behalf of FIG, and Alptekin, on behalf of Invovo, entered into a written agreement, titled “the Independent Advisory Services Agreement.”

The work was to focus on Fethullah Gulen, including his ideology, influence, and relationships with American political leaders. The government of Turkey had tried unsuccessfully to persuade the U.S. government to extradite Gulen.

On September 19, 2016, Alptekin arranged a meeting in which Rafiekian, Flynn and others participated. Also participating was then-Turkish Minister of Energy and Natural Resources Berat Albayrak, President Erdogan’s son-in-law. The meeting mostly consisted of the Turkish officials expressing their negative opinions concerning Gulen.

On November 2, 2016, Rafiekian prepared an op-ed to be published under Flynn’s name. On November 6, 2017, Flynn returned the op-ed to Rafiekian “with substantive changes.” The op-ed was published under Flynn’s name in The Hill newspaper. It was entitled Our Ally Turkey Is In Crisis and Needs Our Support.

Following the publication of the op-ed, the FARA Registration Unit of DOJ sent Flynn a letter, asking about the op-ed and FIG’s relationship with Alptekin and Inovo, so it could determine whether FIG, Flynn, or anyone else should file a registration statement under FARA. After Covington, the lawyers for FIG, conducted an investigation, Covington ultimately decided to file a complete FARA registration statement . The statements listed Inovo, and not the government of Turkey, as the foreign principal.

On December 1, 2017, Flynn pled guilty in a separate case to unrelated charges. He agreed to cooperate with the government.

Section 951 Conviction

Judge Trenga’s opinion observed that mothering about the structure of GIG’s contracts with Inovo and Alptekin or the payments made pursuant to those contracts gives rise to a reasonable or rational inference that Rafiekian had acted or agreed to act as an agent of the Turkish government. The evidence at trial was insufficient to conclude that Rafiekian had agreed or act subject to Turkey’s director or control. The opinion reasons that no evidence exists that the Turkish government required the op-ed, either directly or through Alptekin.

Conspiracy Conviction

The opinion finds insufficient evidence to convict Rafiekian of conspiracy to (1) act as an unregistered agent of a foreign government in violation of Sec. 951; and (2) make willful and material false statements and omissions in a FARA filing in violation of 22 U.S.C. § 618(a)(2). The opinion underscored Rafiekian’s efforts to comply with any registration or notification requirements, including his consultations with two law firms concerning FIG’s registration obligations, FIG’s filing under the Lobbying Disclosure Act on the advice of a lawyer, and his voluntary disclosure to U.S. authorities on September 28, 2016 concerning the FIG engagement arranged through Alptekin “as a business contact” who had “senior level contracts in the Turkish government.”

Notice of Closing the Investigation of Podesta and Weber

The decision to end the investigation of Podesta and Weber followed weeks after a federal jury found former White House counsel Gregory B. Craig not guilty of lying to the DOJ about his media contacts concerning his Ukrainian work. The investigation of Podesta and Weber grew out of the investigation of Manafort and Craig. The Podesta Group and Mercury, for whom Vin Weber worked, reported on their FARA filing that they had represented the European Center for Modern Ukraine, a Brussels-based nonprofit group. Prosecutors alleged the real client was the government of Ukraine.

The current issue of the IELR will discuss in more detail the implications of the Rafiekian acquittal and the close of the investigations against Podesta and Weber.

Gregory Craig Wins Dismissal of One FARA Charge, But Must Go to Trial on the Other

August 6, 2019 by Bruce Zagaris 1 Comment

On August 6, 2019, United States District Judge Amy Berman of the District of Columbia dismissed one of two felony counts against Gregory Craig. In her 57-page memorandum opinion, she found that an October 11, 2013 letter Craig sent to the Foreign Agents Registration Act (FARA) Unit was not part of any formal FARA filing. Hence, the prosecution could not charge him for making false submissions.

Judge Jackson rejected Craig’s defense that pursuant to jurisprudence in United States v. Safavian, 528 F.3d 957 (D.C. Cir. 2008) that he was not under a legal duty to disclose and therefore there was no concealment offense in violation of 18 U.S.C. § 1001(a)(1).

Instead the opinion explained that FARA creates the duty and puts individuals on notice of their specific disclosure obligations. Agents are required to register, disclosing their activities and who paid for them. Hence, the allegations the indictment alleging that Craig carried out a scheme to conceal his potential status as a foreign agent, by making a series of false or misleading statements and omissions allegedly obscuring the true timing and full nature of his public relations activities on behalf of Ukraine, states an offense under 18 U.S.C. § 1001(a)(a). It fulfills Circuit precedent and the Constitution’s due process clause.

The opinion observes that, after the FARA Unit informed Craig of its decision that he and his firm had to register, he embarked on an active effort to persuade the agency to change its position.

At present, Craig will face a jury trial next week on the false-statement charge that remains.

Craig is charged with helping prepare and plan media strategy on a 1986-page report commissioned by Ukraine’s Ministry of Justice through U.S. political consultant Paul Manafort and predominantly paid for through a Cyprus bank account by Ukrainian steel magnate, Viktor Pinchuk.

Craig, who was White House counsel in the Obama Administration, has denied the charges.

The dismissal of one charge illustrates why many experts have called for amending and clarifying FARA.

The current issue of the IELR will cover this case in more detail.

U.S. Attorney General Announces Continued U.S. Funding of Law Enforcement Efforts at 3rd Ministerial of Northern Triangle Attorneys General, as Guatemala Prepares to Abolish Anti-Corruption Prosecutor

May 19, 2019 by Bruce Zagaris Leave a Comment

On May 16, 2019, U.S. Attorney General William P. Barr, during the 3^rd Ministerial of the Northern Triangle Attorneys General announced that, as part of a coordinated law enforcement action known as Operation Regional Shield,President Trump has approved continued funding for law enforcement efforts between the U.S. and the Northern Triangle countries (El Salvador, Guatemala, and Honduras).

In particular Barr said the U.S. will continue fund law enforcement efforts, through the ongoing work of the project’s law enforcement efforts, through the continuing work of the U.S. Office of Overseas Prosecutorial Development Assistance and Training (OPDAT) Resident Legal Advisors in each of the three countries, through the FBI’s Transnational Anti-Gang teams, through the Drug Enforcement Administration’s Sensitive Investigative Units, and through Homeland Security’s (HSI) work to counter human smuggling and trafficking.

Barr said the meeting has reaffirmed his belief that the safety of the citizens of the U.S. and Northern Triangle is interdependent and together they will not only confront but will defeat the criminal gangs.

Inconsistency of U.S. Enforcement Policy with Northern Triangle Countries

In recent months the Trump Administration’s policy in terms of cooperation with the Northern Triangle has not been consistent. For instance, on March 28, 2019, then Secretary of Homeland Security Kirstjen M. Nielsen signed, on behalf of the United States, a Memorandum of Cooperation (MOC) on border security cooperation in Central America. Almost simultaneously, U.S. President Donald Trump said that he was planning on cutting U.S. assistance to the three countries and has threatened to close the border with Mexico.

The initiatives of the U.S. and other governments against transnational organized crime in Central America can be classified in eight areas: whole-of-government solutions; interdiction of criminal flows; targeting of transnational criminal organization leaders; use of the military in a domestic law enforcement; institutional reform within law enforcement; targeting the financial flows and resources of organized criminal groups; prison control and reform; and binational and multinational cooperation against organized crime. (See R. Evan Ellis, Transnational Organized Crime in Latin America and the Caribbean 103-4 (2018).

During his trip Barr highlighted DOJ priorities, including interdicting illegal narcotics, dismantling MS-13, the 18th Street Gang and other transnational criminal organizations, and combatting illegal migration and human trafficking. While in El Salvador, the Attorney General visited the International Law Enforcement Academy.

Effort of Guatemalan Morales Administration to End the Work of the International Commission against Impunty (CICIG)

One setback for the fight against anti-corruption is the effort by the current Guatemala Administration of Jimmy Morales to terminate the work of the International Commission against Impunty (CICIG), which the United Nations established to strength the efforts against organized crime and corruption after Guatemala’s 36-year civil war. See Elisabeth Malkin, Latin America Risks Losing Potential Weapon Against Corruption, N.Y. Times, May 19, 2009, at 10, col. 1.

On May 15, the Guatemala high court rejected the appeal of Thelma Aldana, a crusading former prosecutor, to participate in Guatemala’s presidential election. As a result, at least two of the top three candidates, according to polls, will not be able to run in the election. The decision on Aldana seemed to arise from fears over her zealous prosecutions of corruption in politics and business. Aldana has been denied the right to participate in the election because she lacked a document accrediting that she did not have any outstanding accounts after she was responsible for public funds during her serving as from her time as a former prosecutor.

The Trump Administration has not supported the CICIG, as prior U.S. Administrations have. As a result Morales’ announcement to not renew the CICIG’s two-year mandate in September 2019 and his denial of Ivan Velázquez, the Colombian head of the Commission, in September 2018, mean that, notwithstanding its strong record of prosecuting corruption and transnational organized crime, the lack of independent prosecutors in the Guatemalan government, and the importance of strong and independent prosecutors to better stabilize the security situation in Guatemala, the CICIG may well expire in September. Indeed the enormous security problems due to the proliferation of gangs, gun violence, and corruption fuel migration from Guatemala.

Despite the State Department Banning 16 Saudis, Questions Remain Over Whether the Trump Administration Will Pursue Justice in the Case of Jamal Khashoggi

April 14, 2019 by Evan Schleicher Leave a Comment

On April 8^th, Secretary of State Mike Pompeo announced that 16 Saudis, including one of the closest aides to Crown Prince Mohammed bin Salman, were being barred from entry to the United States under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act of 2019. The full list of individuals can be seen here.

The move was made in response to continued criticism about the lack of accountability for the individuals involved in the Jamal Khashoggi case and it reflects a shift in the Secretary of State’s attitudes on the issue. In January, Secretary Pompeo met with Saudi officials and focused on the internal Saudi investigative and judicial processes as a source of accountability. However, despite this shifting stance, it is still not clear if this new move is a genuine and effective push for justice or simply a political ploy to lessen criticism of the Trump Administration’s policies towards Saudi Arabia.

The confirmation of the new US Ambassador to Saudi Arabia on April 10^th provides some insight into long-term US intentions towards Saudi Arabia. The Senate voted overwhelmingly to confirm the appointment of retired four-star general, John Abizaid, the first US ambassador to the Kingdom since 2016. General Abizaid collaborated extensively with the Saudi military during his time as the Central Command chief from 2003 to 2007, working first with Saudi military commanders at the height of the Iraq War and then with those same commanders and other officials as executive assistant to the Joint Chiefs of Staff.

During his confirmation hearing, Abizaid discussed the Khashoggi murder as a short-term problem that requires a forceful discussion. He has previously pointed to the Saudi internal reform plan Vision 2030 as evidence that Saudi Arabia can be a long-term, moderate partner within the Middle East, despite concerns regarding the actions of the Crown Prince. Although the Senate and House of Representatives have both passed resolutions that would end U.S. support for the Saudi-led coalition in Yemen, an important rebuke of Riyadh, Abizaid has repeatedly said that it is important for support to continue, making it clear that his calls for justice in the case of the Khashoggi murder do not exceed his and the Administration’s support for the Saudi regime.

General Abizaid’s attitudes towards the Kingdom, combined with evidence that the US recently provided authorization for the sharing of nuclear technology and expertise with Saudi Arabia, makes it highly likely that the US will remain committed to a strong bilateral partnership, despite symbolic actions like the banning of individuals connected to the Khashoggi murder. The case itself will remain an important part of the US-Saudi dynamic, though, as the domestic trial of those involved in Khashoggi’s murder continues within the Kingdom. Amid allegations that Khashoggi’s family has accepted blood money from the Saudi government, Salah Khashoggi, Jamal’s son, has affirmed that the trial will continue and that those responsible will be brought to justice. Absent a strong American push for accountability, it will likely fall entirely on the Saudi legal system to seek out justice for the murder of Jamal Khashoggi.

___

Evan Schleicher is the Editorial Intern for the International Enforcement Law Reporter. He is currently an MA candidate in Security Policy Studies at George Washington University, focusing on transnational security and humanitarian issues.

Former White House Counsel Indicted for FARA Violations Relating to Ukraine and Manafort

April 12, 2019 by Bruce Zagaris 1 Comment

On April 11, 2019, a federal grand jury in the U.S. District Court for the District of Columbia returned an indictment charging Gregory B. Craig, a Washington-based lawyer, with making false statements and concealing material information about his activities on behalf of Ukraine from the Department of Justice, National Security Division’s Foreign Agents Registration Act Unit (FARA Unit).

Craig, 74, of Washington, D.C., was indicted for willfully falsifying and concealing material facts from the FARA Unit, in violation of Title 18, United States Code, Section 1001(a)(1), and for making false and misleading statements to the FARA Unit, in violation Title 22, United States Code, Section 618(a)(2).

The maximum penalties for the charged offenses are, respectively, five years’ imprisonment and a $250,000 fine, and five years’ imprisonment and a $10,000 fine.

The indictment details various emails allegedly sent by Craig prior to his firm’s engagement, in which Craig indicated he did not want to register as an agent for the Government of Ukraine, in part because he believed doing so could prevent him or others at the law firm from taking positions in the federal government in the future.

In addition, registration would have required Craig to disclose that a third party had paid his firm, Skadden Arps, Slate, Meagher & Flom LLP (hereafter Skadden) more than $4 million for preparing a report, and that Skadden had a parallel engagement with Ukraine to assist in the prosecution of Tymoshenko on additional charges. These disclosures, as well as the fact of registration itself, would have undermined the report and Craig’s perceived independence.

The indictment details various communications between Craig and his colleagues at Skadden. On January 17, 2019, Skadden entered into a settlement agreement with the U.S. Department of Justice, resolving its liability for violations of the Foreign Agents Registration Act (FARA).

The agreement evidences that Skadden acted as an agent of the Government of Ukraine within the meaning of FARA, 22 U.S.C. § 611 et seq., by participating in a public relations campaign directed at select members of the U.S. news media in 2012. In 2012 and 2013, in response to multiple inquiries from the Justice Department’s FARA Registration Unit about its role in that campaign, a partner then at Skadden made false and misleading statements to the FARA Unit. Thereafter, the FARA Unit concluded in 2013 that the firm did not have to register. In fact, Skadden was active in the public relations aspects of the report, but mislead the FARA Registration Unit in that regard. For instance, Gregory Craig, then the lead Skadden partner on the case, arranged for David E. Sanger of the New York Times to receive a copy of the report, then discussed the report with him. When more facts were known, Skadden was required to register in 2012. Skadden has agreed to register retroactively.

Skadden has agreed under the settlement to pay the U.S. Treasury more than $4.6 million, which it received in fees and expenses for its work with Ukraine, and to ensure that it has formal, robust procedures for responding to inquiries concerning its conduct from any federal government entity and ensuring FARA compliance as to its engagements on behalf of foreign clients.

The money that Craig and Skadden eventually received from a third party was arranged by Paul Manafort and came through a Cyprus bank account.

The settlement and Craig indictment may well cause other law firms and organizations with significant international practices to modify their client intake and training procedures.

The current issue of the IELR will report in more detail on the Craig indictment and its implications, including the announcement by the DOJ FARA Unit that they will no longer treat violations of FARA as routine administrative matters.