From Singapore (Yes, Singapore), A Corruption Story

It's not often -- every 16 years or so -- that we have something big to report from Singapore. That's why the tiny Southeast Asian nation (along with New Zealand and Denmark) is ranked by TI as the least corrupt country on earth.

But Bloomberg's Ann Koh and Andrea Tan reported last week on the biggest case of public fraud in Singapore since 1995.

It wasn't about bribery but dipping into the public till.

'Koh Seah Wee was sentenced to 22 years in jail and Lim Chai Meng to 15 years for their roles in cheating Singapore government agencies of S$12.5 million ($10 million),' Bloomberg said.

The former bureaucrats from the Singapore Land Authority did a lousy job of covering their tracks. They bought apartments and cars, including a $1.25 million Lamborghini Murcielago LP670-4 SV and a Ferrari F430.

The sentencing judge said buying the limited-edition Lamborghini was a 'rather egoistic act.”

There was another big case in 1995, Bloomberg said. 'Choy Hon Tim, a deputy chief executive at the Public Utilities Board, was jailed for 14 years for taking S$13.9 million in kickbacks in Singapore’s [then] largest public sector graft case. Choy was released in 2005 for good behavior.'

OECD Enforcement Scores

Transparency International's latest report about antibribery enforcement in the OECD breaks down this way:

Active Enforcement: Seven countries: Denmark, Germany, Italy, Norway, Switzerland, United Kingdom, and United States

Moderate Enforcement: Nine countries: Argentina, Belgium, Finland, France, Japan, Korea (South), Netherlands, Spain, and Sweden

Little or No Enforcement: 21 countries: Australia, Austria, Brazil, Bulgaria, Canada, Chile, Czech Republic, Estonia, Greece, Hungary, Ireland, Israel, Luxembourg, Mexico, New Zealand, Poland, Portugal, Slovak Republic, Slovenia, South Africa, and Turkey

For specifics, the report said the United States has 227 cases (prosecutions and investigations) in the 2011 report, up from 169 in 2010; Germany has 135 cases, up from 117; and Brazil reports eight ongoing investigations, up from four in TI’s last report.

The U.K. made it into the "active enforcement" category. But TI said enforcement there is up in air. The Serious Fraud Office is facing budget cuts and a plan to break the agency up and send its functions to other government departments. (The break-up didn't happen; see our post here.)

In France, there's also uncertainty. Although the country is listed in the "moderate enforcement" category, with eight French prosecutions reported last year, "only one resulted in a conviction, while the others have apparently been closed." And only one new investigation of a major French company was opened.

Canada is cited for a lack of progress, and placed in the "little or no enforcement" category, the only G7 country put there.

Russia passed an overseas antibribery law and last week was invited to join the OECD’s Working Group on Bribery.

Earlier this year, the Chinese Parliament also passed an overseas antibribery law, and one was introduced in the Indian Parliament. Chinese and Indian representatives are attending Working Group meetings as observers but the countries aren't yet on a schedule to join the OECD Convention.

Click on the map above for TI's interactive version.

Someone Tell The Lawyers

The International Bar Association (IBA) said about half the world's lawyers haven't heard of the FCPA. Seventy percent are unaware of the U.K. Bribery Act, and four in ten don't know about the OECD and U.N. anti-corruption conventions.

The IBA -- a group of 40,000 lawyers and about 200 bar associations and law societies around the globe -- surveyed 642 legal professionals in 95 jurisdictions. It worked with the OECD and the United Nations Office on Drugs and Crime to learn what lawyers think about the risks of corruption and the tools available to fight it. 

The majority of respondents selected "none of the above," even in developed economies, when asked about anti-corruption tools such as the OECD convention, the FCPA, and the Bribery Act. More than 40 percent of respondents in developed countries such as Denmark, Germany, Canada, and Japan were not familiar with any instrument, a result that increased to more than 70 percent for participants in New Zealand and Hong Kong.

The results varied by region but showed:

• Younger respondents (aged 20 to 30) were, on average, less aware of international anti-corruption laws and national legislation than older respondents.

• Only 43 percent of respondents recognised that their bar associations provide some kind of anti-corruption guidance for legal practitioners. Of these, only a third said that such guidance specifically addresses the issue of international corruption.

• Less than 40 percent of respondents said anti-corruption was a priority at their law firm and just under a third said that their firms do not have a clear and specific anti-corruption policy.

• More than two-thirds of respondents said their law firms had not been subject to anti-corruption or anti-money laundering due diligence conducted by foreign clients.

Over half the lawyers surveyed said corruption is an issue in the legal profession in their own country. More than one in five, according to the IBA, said they'd been approached to take part in what they believed could be a corrupt transaction. And, one in three said they had lost business to corrupt law firms or individuals.

“The survey results are disappointing, so we need to do more to raise awareness of these instruments,” said Nicola Bonucci, Director for Legal Affairs at the OECD.

The complete survey can be downloaded here.

Novo Nordisk Pays $18 Million In Penalties For Iraq Bribery

Denmark-based Novo Nordisk A/S will pay a $9 million criminal penalty and enter into a deferred prosecution agreement with the Justice Department for illegal kickbacks paid to the former Iraqi government under the U.N. oil-for-food program. It will also pay $3,025,066 in civil penalties and $6,005,079 in disgorgement of profits, including pre-judgment interest, to the Securities and Exchange Commission.

The DOJ charged Novo in U.S. District Court for the District of Columbia with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act.

Novo manufactures insulin, medicines and other pharmaceutical supplies. Between 2001 and 2003, it paid about $1.4 million to the former Iraqi government by inflating the price of contracts by 10 percent before submitting them to the United Nations for approval. It then concealed from the U.N. the amount of the kickbacks included in its prices. Novo also admitted it inaccurately recorded the kickback payments as commissions in its books and records.

The deferred prosecution agreement has a term of three years. The DOJ didn't charge the company under the FCPA's anti-bribery provisions. It said Novo conducted a "thorough review of the illicit payments" and implemented "enhanced compliance policies and procedures. "

In the civil enforcement action, the SEC charged Novo with violating Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. §78m(b)(2)(A)] for failing to keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflected its transactions and dispositions of its assets. It also charged the company under Section13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)] for failing to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) payments were made in accordance with management's general or specific authorization; and (ii) payments were recorded as necessary to maintain accountability for its assets.

The SEC said Novo paid kickbacks in three ways:

Initially, Novo Nordisk wired the kickback to [its] Agent's account at the Arab Bank in Amman, Jordan as an advance on his commission. The Agent would then Wire the funds to an official Kimadia account at the Rafidain Bank in Amman, Jordan. [Kimadia is the Iraq State Company for the Importation and Distribution of Drugs and Medical Appliances.] After Kimadia received the kickback payment, the Iraqis authorized the opening of a letter of credit and then Novo Nordisk shipped the goods to Iraq.

Later, Novo Nordisk informed Kimadia that it could not pay the ten percent kickback before it received payment from the U.N. as it was not easy for [Novo's] Athens office to authorize large advance payments to the Agent.

Thereafter, Kimadia no longer required the kickback be made upfront, and instead insisted on a bank guarantee. [The Agent in Jordan] opened a bank guarantee from the Arab Bank payable to Kimadia's account at the Rafidain Bank in Jordan. Eventually, Kimadia informed Novo Nordisk that it would no longer accept bank guarantees paid to its account at the Rafidain Bank. Instead, Kimadia provided Novo Nordisk with an account number where the kickback was to be paid.

Novo Nordisk's ADRs trade on the New York Stock Exchange under the symbol NVO.

Download the DOJ's May 11, 2009 release here.

Download the May 11, 2009 criminal information against Novo Nordisk A/S here.

View the SEC's Litigation Release No. 21033 dated May 11, 2009 in Securities & Exchange Commission v. Novo Nordisk A/S, Civil Action No. 1:09-CV-00862 (D.D.C.) (EGS) here.

Download the SEC's civil complaint against Novo Nordisk here.