New Money-Laundering Allegations Against Bodmer

Bloomberg's David Glovin, who provided outstanding daily coverage of Frederic Bourke's 2009 FCPA-related trial, filed a story yesterday about new money laundering allegations against a key government witness, Hans Bodmer.

The Swiss lawyer was accused in August by Russian billionaire Oleg Deripaska of 'masterminding a scheme last year to loot OJSC MMC Norilsk Nickel, a nickel producer in which Deripaska invests.' The complaint alleged that Bodmer 'orchestrated a $1 billion money-laundering scheme.'

In October 2004, Bodmer pleaded guilty in the U.S. to conspiracy to launder money for Viktor Kozeny. Although facing up to ten years in prison, Bodmer hasn't been sentenced and was allowed to return to Switzerland. In June he was appointed to the board of Hyposwiss Private Bank Zurich.

Bodmer, 56, helped FCPA fugitive Kozeny move money that was used to bribe Azeri officials. Bodmer's testimony supported the DOJ's claim that Bourke invested in Kozeny's Azeri deal while knowing Kozeny planned to bribe officials there.

A jury convicted Bourke in July 2009 of conspiracy to violate the FCPA and lying to FBI agents. He was sentenced to a year and a day in prison. He's free on bail while he appeals his conviction.

Bourke's lawyers have charged that Bodmer lied in his testimony. They said prosecutors knew some of Bodmer's testimony would be false but put him on the stand anyway. Bourke's motion for a new trial will be heard November 10.

Kozeny is a fugitive living in the Bahamas. He won court decisions there blocking his extradition to the U.S. The Bahamas attorney general has appealed to the Privy Council in London, where arguments will be heard on November 23.

Bloomberg's Glovin said the 'new allegations against Bodmer came in an August complaint to Swiss prosecutors by Deripaska and a unit of United Co. Rusal, the world’s largest aluminum producer. Swiss authorities haven't open a criminal case and declined to comment, Glovin said.

BRIC Companies Rank Low On New TI Index

Transparency International yesterday released its 2011 Bribe Payers Index. It’s the fifth version of the index and the first update since 2008.

It ranks 28 of the world’s largest economies, TI said, ‘according to the perceived likelihood of companies from these countries to pay bribes abroad.’

The report is based on a survey of business executives. The countries ranked, TI said, cover all regions of the world and represent almost 80 percent of the total world outflow of goods, services, and investments.

It includes perceptions of public bribery and for the first time private ('business to business') bribery.

The top-ranked countries are the Netherlands and Switzerland, tied in first place. Belgium, Germany, and Japan round out the top five.

Companies from the BRIC economies are led by Brazil at 14. Russia ranked last overall at 28, India at 19, and China at 27.

The UAE, Indonesia, and Mexico complete the bottom five spots.

TI’s 2011 bribe payers index is here.

Alstom's Swiss Banker Acquitted

A Swiss federal criminal court last week acquitted a private banker in Zurich of bribery and money laundering charges growing out of his relationship with French firm Alstom SA.

According to a report Thursday by Gabriella Broggi in BusinessWeek, Oskar Holenweger was charged with taking bribes of CHF1 million ($1.1 million) to open 163 anonymous bank accounts that Alstom used to bribe foreign officials.

After acquitting Holenweger, the Swiss court awarded him damages of more than CHF400,000 Swiss francs ($451,000).

The president of the Swiss court, Peter Popp, said none of the charges in the seven-year prosecution were supported by adequate evidence. "The question whether he knew that the money would be used for bribery remains unanswered," Popp told BusinessWeek.

Prosecutors said Alstom used the Swiss accounts to pay CFH80 million ($90 million) in bribes to officials in South America and Asia to win work.

Paris-based Alstom provides equipment and services for power generation and high-speed rail transport. It operates in more than 70 countries with 93,000 employees. Revenue last year was about €23 billion. Its ADRs trade in the pink sheets under the symbol ALSMY.PK.

In March last year, the U.K.'s Serious Fraud Office reported the dramatic arrest of three top Alstom executives from its British unit. They were suspected of paying bribes overseas to win contracts.

After those arrests, the company said:

Several Alstom offices in the United Kingdom have been raided on Wednesday 24 March [2010] by police officers and some of its local managers are being questioned. The police apparently executed search warrants upon the request of the Swiss Federal justice. Alstom has been investigated by the Swiss justice for more than 3 years on the motive of alleged bribery issues. Within this frame, Alstom’s offices in Switzerland and France have already been searched in the past years. Alstom is cooperating with the British authorities.

In August 2008, we reported that Swiss police had arrested a former Alstom manager and searched for evidence as part of a corruption and money-laundering investigation. Offices near Zurich and in Baden were raided, as were homes in several cantons.

Reports in May 2008 said Swiss authorities found evidence Alstom paid around €20 million via shell companies to agents and others in Singapore, Indonesia, Venezuela and Brazil. Reports also mentioned payments of $6.8 million in connection with a $45 million contract for the Sao Paolo subway and a Brazilian energy plant.

The DOJ and SEC haven't commented on the Alstom case.

Swiss Time

Within a half hour of Mubarak's resignation on Friday, Switzerland had acted.

"I can confirm that Switzerland has frozen possible assets of the former Egyptian president with immediate effect," a Swiss government spokesman told Reuters, without saying more.

Later in the day, a Geneva-based news site said an "estimated CHF3.6 billion [$3.7 billion] in assets that may have been deposited by Hosni Mubarak and those close to him were frozen within 30 minutes of the announcement of his resignation."

The speed of Switzerland's move was striking. And it was the best news to those in Egypt who'll be hunting for Mubarak's treasures. And yet, we thought, how much more important if Switzerland's announcement had come a month earlier. Or even a year earlier, or a decade.

To its credit, Switzerland isn't looking for excuses these days to hold back. On a single day last month, the country's federal council froze suspected assets of Tunisia's deposed president and the incumbent of Ivory Coast who lost an election but refused to go. The Swiss president, Micheline Calmy-Rey, said then that the asset freezes were intended to "encourage" the countries to seek help in possible criminal cases against the men.

Swiss policy has given corruption fighters plenty to cheer about. Still, it takes a revolution, coup, or similarly cataclysmic event before the Swiss and others will act against self-enriching rulers. So the question is, will the time ever come for preemptive action? For the freezing of assets while the incumbent still sits on the throne, otherwise undisturbed?

The question is crucial. Once corrupt rulers lose access to their plundered wealth, they lose a major source of their illegitimate power. Money not only talks, it keeps rulers in office long after they've gone stale. Loot fuels patronage. It buys loyalty and, of course, anti-personnel hardware. Take away the offshore billions and suddenly the emperor has no clothes.

Preemptive asset freezes would trigger regime changes and potential shifts in regional balances of power. That's too much blowback for Switzerland or other individual countries to risk, unless they're acting according to international norms and expectations. 

Right now, no one can say for sure whether grand corruption violates international law. Some academics, diplomats, and politicians argue that yes, according to the Rome Statute, grand corruption is a "crime against humanity" and therefore within the jurisdiction of the International Criminal Court in the Hague. That, however, isn't the public consensus within the international community. And until it is, countries aren't likely to act preemptively to freeze the ill-gotten gains of leaders who are still in charge.

Nailing His Assets

Former Tunisian President Zine El Abidine Ben AliLast month, Tunisia's citizens decided they'd finally had enough of their kleptomaniacal president Ben Ali, who managed to escape to Saudi Arabia.

By the time of his hasty departure, he'd ruled the country for 23 years and reportedly had expropriated for the private enjoyment of himself and his family about a third of the country's economy.

The new Tunisian government -- welcomed by the international community like a fresh-faced debutante -- arrested 33 of his family members and issued an international warrant for the former president. It also started hunting for everything Ben Ali and his clan had stripped from the country's shelves. 

How much loot is there?

Probably around $5 billion, according to a lawsuit filed in Paris by Sherpa, Transparency International France, and the Arab Commission for Human Rights. They're alleging corruption, misusing public funds, and money-laundering. 

TI says the family of Ben Ali's wife, Leila Trabelsi, could have up to 30 properties in Paris, the Alps, and the Cote d'Azur, and millions of dollars in French bank accounts.

Last week, pressed by Tunisia and the NGOs, the EU put a freeze on anything owned by Ben Ali and 46 of his family members and friends. By then, French authorities had already seized an executive jet at Le Bourget airport near Paris owned by the family of Ben Ali’s son-in-law. And Swiss officials had frozen bank accounts holding tens of millions of francs, and had grounded another executive jet in Geneva allegedly owned by the ex-president's family.

Nicolas Beau, who co-wrote a book about Leila Trabelsi that was banned in Tunisia until last month, told the BBC it won't be hard to prove that "holdings had been illegally acquired, due to a paper trail and to the sheer number of people involved in the family's business dealings."

"Despite the nature of the regime in Tunisia, a very strong tradition of regulation survived," he said. "Everything was legislated for, everything was written down.

"Everyone had to deal with it, there are an innumerable number of witnesses."

And, he might have added, people whose homes and businesses were expropriated by Ben Ali's family aren't likely to have forgotten about it.