Guess Who Leads the Bribery World?
The USA is the most corrupt country in the world and I have 10,000 posts that point heavily to that fact…

Prosecutor: 2 former Utah attorneys general arrested in bribery investigation. July 16, 2014

Authorities say two former Utah attorneys general have been arrested as part of a bribery investigation.

Salt Lake County District Attorney Sim Gill said John Swallow and Mark Shurtleff were taken into custody Tuesday.

Jail records show both were booked on charges of receiving or soliciting a bribe, among other counts.

Swallow and Shurtleff’s attorneys did not answer after-hours calls Tuesday morning.

The arrests come more than 14 months after two county attorneys began scrutinizing Shurtleff and Swallow’s relationships with several businessmen in trouble with regulators.

Shurtleff left office in January 2013 after a dozen years as Utah’s top law enforcement officer.

His successor and former chief deputy, Swallow, resigned after less than a year as attorney general. Both have denied wrongdoing throughout the investigation.

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Corruption Currents: From Iran Deadline Looms to Forex Immunity Deals Offered

Readers can subscribe to The Morning Risk Report here. Follow us on Twitter at @WSJRisk.


Mike Lucas

Wal-Mart Stores Inc. shouldn’t be forced to give investors internal documents about what directors and executives knew about alleged bribes tied to Mexican real-estate deals, a company lawyer argued. (Bloomberg)

The FCPA Blog flags an Israeli intelligence officer, tracks the sentencing of a U.S. Navy contractor and wonders whether Wal-Mart will become the new Caremark. The FCPAProfessor runs a guest post that questions the fight against small bribes. Tom Fox starts a series on mergers. Mike Volkov pays attention to corporate culture.

Cybercrime/Data Security:

The U.S. charged the owner of a Chinese aviation technology company with stealing reams of information from U.S. defense contractors about key American technology. His lawyer didn’t respond to a request for comment. (WSJ, NY Times, Financial Times sub req)

Google created a council to help deal with Europe’s “right to be forgotten.” (Financial Times sub req)

Apple Inc. denied a Chinese state media report that the iPhone poses a security risk. (Financial Times sub req, WSJ Digits, Bloomberg)

Hackers have multiplied and become more professional. (Economist)

Money Laundering:

An undercover U.S. probe yielded convictions on money-laundering charges. (Thomson Reuters Corporate Compliance Complete sub req)

AML compliance has grown in importance as regulators take aim. (Inside Counsel)


With one week left before an interim agreement between Iran and global powers runs out, a deadline looms over talks for a longer-term deal. U.S. officials say wide gaps remain between the two sides. Discussion has begun on extending the interim deal, which lawmakers appear to back. (Al Monitor, Reuters, WSJ, WSJ, NY Times, Al Jazeera, Reuters)

Meanwhile, two U.S. Senators introduced a bill that would impose sanctions against Iranian leaders who violate human rights. (The Hill)

Canada added to its sanctions blacklist on Russia and Ukraine. (press release)

General Anti-Corruption:

U.S. prosecutors are offering immunity deals to junior traders in London as they try to gather evidence against banks and more senior staff in the investigation into alleged currency market manipulation. (Financial Times sub req)

Wealthy Chinese people should worry about the corruption crackdown. A prominent TV anchor was detained by the Chinese authorities just before his financial news show was about to air; his “words of wisdom” may be his downfall. (CNNMoney, NY Times, Financial Times sub req, Offbeat China)

Major lenders in Europe and Asia are reacting to the steady flow of punishments from the U.S. by doing ever more to comply with U.S. laws. (Reuters)

Art crime is the third highest-grossing criminal trade over the past 40 years, behind drugs and weapons. (Newsweek)

Lofty ideologies and national self-image coexists with rampant corruption. (Economist)

The whereabouts of a hospitality executive accused of being a top figure in an illegal World Cup ticket-scalping scheme remains unknown. (Sunday Times, AP)

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Former mayor of Greece’s 2nd largest city has life sentence for corruption …

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Greece: Hospital Probe Into Bribery-Death Claim

Associated Press

A judicial inquiry is taking place at a state hospital in Athens where a 67-year-old heart patient died after allegedly being denied timely surgery by a doctor seeking a bribe.

Judicial officials in a statement Tuesday said the investigation was ordered Monday, a day after the patient died.

The 59-year-old surgeon and hospital administrator was arrested last week after receiving a payment of 500 euros ($680) from the heart attack victim in an operation monitored by police. He has been changed with bribery and blackmail.

The patient received heart surgery on Saturday but died the following day.

Bribery remains widespread in Greece, which is ranked by the Berlin-based Transparency International watchdog group as one of the most corrupt countries in Europe.

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Georgia ranks in middle in new corruption study

Georgia doesn’t rank among the most corrupt states in the nation, according to a recent study. But it doesn’t rank among the least corrupt either.

Georgia ranks as the 31st least corrupt state in America, according to a study in the May/June issue of Public Administration Review.

Oregon headed the list as the least corrupt state, followed by Washington, Minnesota, New Hampshire, Utah, Iowa, Nebraska, Colorado, Vermont and Wisconsin.

Mississippi was at the bottom of the list as the most corrupt state. Louisiana, Tennessee, Illinois, Pennsylvania, Alabama, Alaska, South Dakota, Kentucky and Florida also ranked among the bottom 10 states.

Researchers John L. Mikesell of Indiana University and Cheol Liu of City University of Hong Kong developed the list by dividing the number of federal convictions of public officials in each state between 1976 and 2008 by the number of public employees.

Georgia had 0.54 federal convictions for each 10,000 public employees in that period. By comparison, Oregon had 0.128 and Mississippi had 0.855.

Among states that border Georgia, Tennessee had 0.836, Alabama had 0.711, Florida had 0.645, South Carolina had 0.567 and North Carolina had 0.325

But lawmakers and some analysts said they aren’t sure how much those numbers tell us.

“I haven’t been able to access the full study, but I’m not sure this is the best methodology,” said Matthew Hipps, assistant professor of political science at Dalton State College.

“I’m not sure that the number of convictions really tells us how much corruption there is in an area,” he added. “It’s a measure, but it’s not a very nuanced measure.”

State Sen. Charlie Bethel, R-Dalton, agrees.

“This tells us who got caught and convicted. It doesn’t tell us who is out there doing things we haven’t caught yet,” he said. “It’s entirely possible that having a larger number of prosecutions and convictions may be a good thing because it shows that going after corruption and rooting it out is something that prosecutors and law enforcement and others take seriously. I’m not sure I’d feel really great to be at the top of this list. I’m not sure that I’d feel bad to be at the very bottom.”

Bethel said he would like to believe that Georgia’s people and elected officials have created an atmosphere where public officials are less corrupt than the average.

“But reason tells me that there’s probably going to be a uniform average everywhere without the threat of prosecution and sanctions,” he said.

Bethel said he supports legislation that would allow the attorney general to impanel a state grand jury.

“Most of the places that use the statewide grand jury use them for the purpose of addressing public corruption,” he said. “With all due respect to the prosecutors we have throughout the state, it can be difficult just from a resources standpoint, much less the local relationships, for a (district) attorney to address a major issue of public corruption.”

Does this latest study provide any help for lawmakers in drafting measures to combat corruption?

“Without being able to dig down into the details, I don’t know that it does,” said state Rep. Tom Dickson, R-Cohutta. “We really need to know the type of corruption we face before we can write any laws to try to reduce it. Is it elected officials or public employees? Is it at the state level or the local level? The answers to those questions could make a difference in how we respond.”

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The Implications of China’s Anti-Corruption Drive July 15, 2014

Clean, transparent government is a basic tenet of Western political liberalism, so we are naturally inclined to support government reform efforts elsewhere. But in the case of the People’s Republic of China, should we be rooting for Xi Jinping’s version of an anti-corruption campaign to succeed, or to fail, in its intended purposes? Or should we hope it succeeds spectacularly in ways not intended by Communist Party leaders, as glastnost and perestroika did under Mikhail Gorbachev?

Xi’s campaign is designed to accomplish multiple Party objectives, none of which necessarily serve Western interests in regional peace and stability.

His first goal is to expand and consolidate his personal power over any challengers in China’s political and military bureaucracies. Targeting political rivals as financial miscreants, bribe-takers, or power-abusers is a time-tested way of dealing with them (and not just in China). Would a more powerful and potentially more autocratic Xi be more or less likely to confront the West? Given the aggressive predilections he has demonstrated since taking China’s helm, there is little reason to be sanguine about a further accretion of Xi’s political, and military, power.

The broader aim of the current crackdown – as with past efforts – is to refurbish the tarnished image of the CCP and restore some of its lost legitimacy as the moral guardian of the Chinese people. Communist ideology has long ceased to motivate ordinary Chinese, or even many Party leaders. Instead, they rely on economic success – ostensibly distributed fairly across society – and their default position: enhanced military power and virulent nationalism against the United States and Japan.

The economic fairness pillar of domestic legitimacy has been crumbling in recent decades. The nation’s remarkable growth in wealth, combined with the CCP’s ongoing monopoly on power and opaque governance, has spawned massive corruption at all levels of political and military authority. Every year, China experiences almost 200,000 public protests against land seizures, environmental degradation, bribery, and other official misconduct.

To the extent Xi’s team can clean up the Augean stables of official corruption – or to be seen as seriously trying – they may win at least grudging public approval and thus have less need to play the anti-West, anti-Japan card.

The problem with that scenario is that the limited, half-way measures Xi is deploying are exceedingly unlikely to get at the core cause of official corruption. As with all dictatorships, that is the absolute political power wielded by the CCP and the lack of transparency and public accountability that enables and protects the wrongdoers.

Moreover, there is little reason to believe that greater public approval of Xi’s rule and a transitory semblance of political legitimacy will moderate the increasingly aggressive foreign policy embodied in his “China dream.” He has made it painfully clear to China’s neighbors that Deng Xiaoping’s days of hiding capabilities and biding time are over.

The period of China’s “peaceful rise” has yielded to military muscle-flexing, sweeping regional claims, and aggressive actions not only against smaller, weaker countries, but also against a U.S. now seen as irresolute and faltering, and a Japan clearly divided on the use of military force, despite Prime Minister Shinzo Abe’s strong security emphasis.

Which brings us to the third major purpose of Xi’s corruption crackdown: the reform and strengthening of China’s military. The People’s Liberation Army has long been riddled with graft and illicit business collusion. In a dramatic demonstration that the PLA will not be immune from the cleanup, the CCP last week expelled Gen. Xu Caihou, former vice chair of the Central Military Commission, the highest military official purged since the Mao era.

Since his ascendancy to China’s pinnacle in November 2012, Xi has made further growth of China’s military power a paramount objective of his rule. His first official travel was to key PLA bases where he urged the troops to make ready for “real combat.” He sees military corruption as impeding the PLA’s emergence as a modern, effective fighting force able to execute expanding missions, particularly in the maritime domain. That is not a result the West will welcome.

There is an analogy in U.S. policy toward China. Decades of Washington’s obsession with military-to-military engagement provide an object lesson in what a more efficient and effective Chinese military brings us.

That officer-to officer interaction was intended (a) to develop greater personal contacts and understanding at all levels of our military establishments in order to avert or manage potential crises; (b) to help “professionalize” the PLA and imbue it with such Western values as subordination to civilian control and respect for the population it is charged with protecting; and (c) to impress Chinese observers with America’s awesome technological capabilities and dissuade them from challenging U.S. military superiority.

The well-intentioned U.S. initiative has failed on all three counts:

(1) During the EP-3 crisis, America’s ambassador in Beijing tried in vain to reach any of the military contacts he had assiduously cultivated during his stint as head of the Pacific Command.

(2) The PLA has indeed become more professional, capable and effective – and more confident in challenging other navies, including the U.S. Seventh Fleet, in the East and South China Seas and the Taiwan Strait.

As for subordinating military aspirations to civilian control, yes, the PLA understands the concept, but its loyalty is to the Communist Party, not to the Chinese state or citizenry. It demonstrated that sad reality on June 4, 1989, when the People’s Army turned its guns and tanks on the Chinese people: the students, workers and professionals gathered peacefully in Beijing and cities across China.

(3) Far from being awed or intimidated by American technical prowess, the PLA has exploited the close contact to correct its own technological and operational deficiencies. Using know-how freely given by trusting Americans, or stolen from them, China has developed asymmetrical capabilities that have enabled deployment of a serious counter-deterrent strategy of its own. A growing fleet of attack submarines and an expanding arsenal of anti-ship cruise and ballistic missiles now provide China with a credible area denial/anti-access strategy, greatly complicating U.S. planning for contingencies in the Taiwan Strait and elsewhere in East Asia.

Given the aggressive ends to which an improved Chinese military will be put, we cannot wish Xi well in his quest to make it more effective. The region was safer with the inferior PLA capable only of defending the homeland rather than projecting Chinese power throughout the region – and with a PLA rife with corruption and inefficiency.

The Chinese people, the region and the world will be more secure with a China that undertakes the ultimate clean government project: changing the Communist Party itself and its inherently corrupt monopoly of power.

A Chinese government confident in its political legitimacy will not need to fear its own people or whip them into nationalist hostility against conjured foreign threats. It will develop in peace with its neighbors and play a constructive role in a regional and international order that already has immensely benefited modern China.

The Chinese people themselves want that kind of country and understand the need for fundamental structural change. They showed that at Tiananmen Square and in the millions of civil protests over the ensuing twenty-five years.

Yet many in the West will agree with the Chinese government’s self-serving argument that such fundamental political change will inevitably lead to massive domestic and regional instability. That need not be the case if China’s leaders will openly put the nation on the path to gradual, staged, predictable democratic evolution as Taiwan and other Asians have done. The Voice of America and Radio Free Asia should encourage that process in China as VOA and Radio Free Europe did in the Soviet Union and Eastern Europe during the Cold War.

The risks of stirring political ferment in China and incurring the (further) resentment of its leaders must be weighed against the dangers posed by the course they are presently pursuing, one that is leading inexorably to regional conflict.

Until the world is presented with a strong and democratic China, it is better to face a militarily weaker authoritarian China. It is in regional and Western security interests for Xi to fail in his narrow reform goals designed to prepare China for coercion and conflict and instead to pursue a larger, more benign China dream.

Joseph A. Bosco is a member of the U.S.-China task force at the Center for the National Interest and a senior associate at the Center for Strategic and International Studies. He previously served as China country desk officer in the office of the secretary of Defense from 2005-2006.

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Prosecutor: 2 ex-Utah attorneys general arrested

SALT LAKE CITY (AP) — Two former Utah attorneys general were arrested on a battery of bribery charges Tuesday stemming from their cozy relationships with several businessmen, a stunning fall for a pair of politicians who built immense political clout in their years at the highest level of state law enforcement.

John Swallow, 51, and Mark Shurtleff, 56, were arrested at their homes Tuesday morning, Salt Lake County District Attorney Sim Gill said at a news conference at the FBI office in Salt Lake City.

“This is a sad day for Utah,” Republican Gov. Gary Herbert said in a statement Tuesday. “The entire situation, regardless of how the legal process plays out, is a black eye for our state.”

Court records show John Swallow faces 13 charges, including felony bribery charges, while Shurtleff faces 10 counts that include bribery. The most serious charges for each man come with a maximum penalty of 15 years in prison.

Gill said the investigation, which the FBI is assisting on, is ongoing and additional charges will likely be filed against both former attorneys general and other individuals.

Swallow’s attorney Stephen McCaughey said Tuesday morning he hadn’t yet seen the charges.

Salt Lake County District Attorney Sim Gill, right,nbsp;hellip;

“He’s maintained his innocence since the whole thing started. His position’s still the same,” he said. “Now they’ve filed these charges, we get to have our day in court and they get to prove it.”

Shurtleff’s attorney Max Wheeler did not answer calls Tuesday morning.

Shurtleff declined to comment when he walked out of jail Tuesday. He said he planned to speak at a news conference Tuesday afternoon.

Gill said both men are accused of accepting at least $50,000 in cash or campaign contributions from people who faced or were about to face scrutiny from the attorney general’s office. They used a luxury jet and personal property belonging to a businessman in trouble with regulators, authorities said. Swallow also used the businessman’s million-dollar houseboat on Lake Powell, according to officials.

They stayed at a high-end Newport Beach resort where they enjoyed meals, golf, clothing and massages paid for by another businessman who had been charged months earlier with fraud by the Utah attorney general’s office.

Salt Lake County District Attorney Sim Gill, right,nbsp;hellip;

They’re also accused of trying to cover up the alleged schemes.

Both have denied all the allegations.

Swallow resigned in late 2013 after spending nearly 11 months dogged by the bribery and corruption allegations. Swallow adamantly denied breaking any laws and said the toll of the scrutiny had become too much for him and his family.

The first bombshell allegations dropped less than a week after Swallow took the oath of office in January 2013, when a businessman in trouble with federal regulators accused Swallow of arranging a bribery plot involving Senate Majority Leader Harry Reid of Nevada. Reid and Swallow denied the allegations.

In the months following, the accusations and investigations snowballed, and led to probes by the U.S. Department of Justice, Utah elections officials and the state bar.

Salt Lake County District Attorney Sim Gill, right,nbsp;hellip;

An investigation from Utah lawmakers concluded Swallow destroyed and fabricated records and hung a veritable “for sale” sign on the door of the attorney general’s office.

Swallow denied the allegations and said any missing records were deleted unintentionally.

Shurtleff, his predecessor, is Utah’s longest-serving attorney general. He left the office in early 2013, but allegations of corruption followed him.

Swallow served as chief deputy for Shurtleff from 2009 to early 2013.

Officials with the state’s pretrial services have agreed to let Shurtleff out without posting bail, court records show. It’s unclear if Swallow will be granted a similar arrangement. Their initial court appearances have not yet been set.


Associated Press reporters Brady McCombs, Annie Knox and Rick Bowmer in Salt Lake City and Michelle Rindels in Las Vegas contributed to this report.


Follow Michelle L. Price at

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Is the US as Corrupt as the Third World?

Last week former New Orleans Mayor Ray Nagin became the latest American politician to be sent to jail for abuse of power, following in the footsteps of former Detroit Mayor Kwame Kilpatrick and onetime Illinois Congressman Jesse Jackson Jr. Despite such high-profile convictions, most Americans see political corruption as a problem that plagues the developing world far more than the U.S. The truth is more complex: It’s certainly the case that paying bribes is a lot less common in the U.S. than in Nigeria or Bolivia, for example. But when citizens are asked if corruption is prevalent in their country, they’re thinking about a lot more than bribes. They’re more concerned about whether government and the political system is fair or stacked against them. And on those grounds, there are good reasons to think the difference between the U.S. and developing countries isn’t very big at all.

It doesn’t take a detailed look at Transparency International’s Corruption Perceptions Index to work out which types of countries are viewed to be particularly corrupt by the political risk analysts, aid agency economists, and think-tank staff whose opinions the index reflects. At the (virtuous) top of the ranking are rich countries: Sweden is No. 3, the U.K., 14; and the U.S., 19. At the (villainous) bottom are poor countries: Ivory Coast is No. 136, Vietnam, 116; and Tanzania, 111. It’s an unquestioned truth among Western politicians, businesspeople, and aid agency employees that corruption is rife in the developing world and that’s a big and, perhaps, even the main reason why poor countries are poor.

When surveys ask companies around the world about how often they make side payments for anything from avoiding taxes to winning a government contract, there’s a strong pattern: the poorer the country, the more likely companies are to make such payments. Ask individuals if they have ever paid a bribe and it’s the same story: According to Transparency International surveys, only 10 percent of Americans say they have ever been asked to pay a bribe, and 6 percent of people in the U.K. have. Compare that with 22 percent in Turkey, 33 percent in Pakistan, or more than half of the populations in countries such as Senegal, Ghana, or the Democratic Republic of the Congo.

Nagin wasn’t convicted of taking a bribe. His big crimes were related to steering business to his family’s kitchen countertop company.  That underscores a vital truth: There are lots of different ways to be corrupt. And when you survey people around the world about the problem of corruption in their country, most have a definition of “corruption” that’s broader than bribery. Ask the same people, “Have you paid a bribe,” and then ask, “Is corruption a problem in this country?” and the relationship between the two answers is weak. Again, ask the same companies, “How much do you pay in bribes?” and “Is corruption a major constraint to doing business,” and many who say bribery in their industry is common also don’t see corruption as a problem—while many who don’t pay bribes are convinced corruption is holding them back.

People in poor countries are more likely to say the police and the judiciary are corrupt than respondents in rich countries. Less than a third of people in the U.K. and about two in five in the U.S. think police are corrupt, compared with 82 percent in Pakistan and 92 percent in Ghana. But there’s pretty much no relationship between national income and views of how corrupt business is. And people in richer countries are slightly more likely than are citizens of poorer countries to say political parties and the media are corrupt or very corrupt.  In the U.S., 76 percent of the public thinks political parties are corrupt—the same proportion as in Romania, Ghana, Pakistan, or the Democratic Republic of the Congo.

How people answer questions about the corruption of political parties or legislatures is more closely related to how they answer the question, “To what extent is this country’s government run by a few big entities acting in their own best interests?” Rather than defining corruption narrowly around the question of whether bureaucrats ask for a speed payment to cut through red tape, most people conceive of corruption as elites using the power of government to their own advantage.

One good indicator of government being skewed toward the interests of the rich is income inequality. After all, if government is set up to favor the lucky few, you’d expect the lucky few to be especially wealthy. It turns out this is as much a problem in rich countries as poor ones. The top 10 percent of households in the U.S. shared 44 percent of total after-tax income in 2004 (the figure is higher today). In the U.K., the top decile share 34 percent of total household income. The average for the 78 developing countries with data from the World Bank over the last five years is a top income share of 32 percent.

There’s a relationship between popular perceptions of political corruption and inequality. People in more unequal countries do indeed perceive the system as more skewed against them. Recent analysis in the U.S. suggests the political system couldn’t be much more skewed against the average guy: Studying the link between opinions and policy change, Martin Gilens of Princeton University and Benjamin Page of Northwestern University found that the median income voters’ opinion had little or no influence on outcomes, while the respondent at the 90th percentile had “substantial” impact.

For all that bribery and collusion are serious problems worldwide—and rampant in some developing countries—the average person appears to think that corruption is about a lot more than paying a bribe. It’s time for business and political elites to take note and use a slightly less self-serving view of corruption. Leaders of the rich world face exactly the same challenge as their colleagues in the developing world: “Fighting corruption” is about more than dollars under the table or law enforcement, it’s about following the spirit of the laws—and rebuilding trust so citizens think their voices really count.


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US anti-corruption laws extend to employees of ‘instrumentalities of a foreign … July 14, 2014

The US Court of Appeals for the Eleventh Circuit confirmed an extended scope of the FCPA prohibition on corrupt payments made to foreign officials in its ruling of May 2014. FCPA payments are not only limited to those officials serving in a traditional government ministry or agency, but also apply to employees of an instrumentality of a foreign government. This is the first time a court of appeals has ruled on what defines instrumentality, and it supports the position already taken by the SEC and the DOJ. Companies subject to the FCPA therefore need to keep in mind that a wide range of entities are subject to US anti-bribery legislation.

The case

In 2011, the former president of the US-based company Terra Telecommunications Corp. and his colleagues were convicted for their involvement in a scheme to bribe employees at Telecommunications D’Haiti, S.A.M. (Teleco), a telecom company largely owned by the Haitian government. The former president was sentenced to 15 years in prison. On appeal, he argued that Teleco was not an instrumentality of a foreign government, alleging that Teleco is not and has never been a state-run enterprise, and that no laws designated Teleco as a public institution. The Court of Appeals did not agree and applied a more extensive definition of instrumentality, supporting the position previously taken by the DOJ and the SEC.

The definition of instrumentality

The case revolved around the extent to which entities qualify as instrumentalities under the FCPA. The Court rejected the stance that the entity should be part of the foreign government since that explanation would be too narrow in light of the “wide net over foreign bribery” intended by the FCPA. Instrumentalities encompass a “distinct class of entities” not limited to governments and their departments or agencies. The Court defined instrumentality as “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own”. The two elements in this definition are fact-bound, and can be determined by answering the following questions:

  • Is the entity controlled by the government of a foreign country?
  • Does the entity perform a function the controlling government treats as its own? 

Beware of instrumentalities of foreign governments

Companies subject to the FCPA need to keep in mind that a wide range of entities may be considered instrumentalities of foreign governments. Moreover, the line between instrumentalities of foreign governments and private companies may not always be clear; government-controlled entities can provide services that are normally performed by private companies. In light of the fact-bound qualification of instrumentality, companies should determine whether (prospective) business partners may, under certain circumstances, be considered instrumentalities of foreign governments under the FCPA. It is prudent to review applicable corporate anti-corruption compliance policies on this point.

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Americans Less Satisfied With Freedom

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China indicts GSK-linked foreign investigators: Xinhua

Shanghai (AFP) – Prosecutors in Shanghai have indicted two foreign investigators linked to drugmaker GlaxoSmithKline (GSK), which is at the centre of a bribery scandal in China, state media reported Monday.

British national Peter Humphrey and his wife Yu Yingzeng, a US citizen, are charged with illegally obtaining private information on Chinese citizens, the official news agency Xinhua reported, citing unnamed prosecutor sources.

The case is the first indictment by Chinese prosecutors against foreigners for illegal investigation, the report said.

In other cases, state media have cited legal experts saying the maximum penalty for illegally obtaining and trading personal information is three years in prison.

The two will be tried on August 7 in a closed session shut to relatives and diplomats, a family friend who asked not to be identified told AFP earlier this month.

Prosecutors told Xinhua that the couple illegally sold personal information including details of household registrations, property and car ownership, call logs and exit-entry records to multinational corporations in the country, including GSK China.

Information was either bought or obtained through means including secret photography or infiltration, according to Xinhua.

Humphrey, a veteran fraud investigator and former journalist for the news agency Reuters, founded Shanghai-based risk advisory firm ChinaWhys in 2004, while Yu worked as its general manager.

GSK hired Humphrey to investigate the origin of a sex tape of Mark Reilly, the former boss of its China division, Britain’s Sunday Times newspaper has reported.

The recording emerged just before Beijing launched a bribery probe into the company.

Reilly was accused of ordering employees to bribe hospitals, doctors and health institutions to gain billions of dollars in revenue, Chinese authorities said in May after a 10-month investigation.

China’s healthcare sector is widely considered to be riddled with graft, partly the result of an opaque tendering system for drugs and doctors’ low salaries.

The government has since last year launched sweeping probes into alleged malpractice by foreign companies in several sectors, including the pharmaceutical and milk powder industries.

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Study: Kentucky 9th most corrupt US state

For anyone who has said Kentucky was one of the most corrupt states in the U.S., new data has been released to back up that argument.

Last month, the Public Administration Review released a study that measured corruption levels in all 50 states by focusing on illegal uses of public funds. Kentucky was determined the number nine most corrupt state.

But the Bluegrass was not alone. Many other southern and eastern states like Pennsylvania, Tennessee, Florida, Louisiana and Alabama were ranked among the top 10 in terms of corruption; Mississippi was rated the worst. Kentucky’s Midwest neighbor, Illinois, was the fourth most corrupt state.

The top 10 least corrupt states were mostly from the West. Oregon was found least corrupt, followed by Washington, Minnesota, Nebraska, Iowa, Vermont, Utah, New Hampshire, Colorado and Kansas.

John L. Mikesell of Indiana University and Cheol Liu from City University of Hong Kong compiled data from 1997 to 2008, measuring corruption levels by the number of public officials in each state that were convicted for federal violations of corruption laws, as published by the Public Integrity Section of the U.S. Department of Justice.

Mikesell and Liu defined corruption in two ways: the misuse of public office for private gain (Mauro 1995) and as crimes involving abuses of the public trust by government officials (USDOJ 2002).

As it goes, many political scandals in Kentucky are based upon misusing public funds for private gains, whether it be for vote-buying, kickbacks or personal means.

Michael W. Hail, an associate professor of government at Morehead State University and director of the Masters of Public Administration program, said he thinks Kentucky’s corruption traces back to the public education system.

He said while other states require government classes in middle school and high school, Kentucky does not.

“Or they require some form of a government class in school, but it deals more with the history of government, not the functional side of government,” he explained.

He also said corruption in some parts of the state has become so common that it is no longer investigated, becoming part of a norm instead of an offense.

“Some people in Kentucky, I think, sort of have resigned themselves into thinking that’s the way politics is. But, no, that is corruption,” Hail said.

Not only does Hail think voters need to be more educated, but he said public officials should have a higher academic pedigree in administration or politics, too.

“The more they are educated in their field and profession, and practices in the profession, the better job they will do in handling the public’s money,” he said.

Since the study only examines levels of corruption from 1997-2008, here is a brief look at some of the state’s scandals that may have attributed to the high levels of corruption found in the study.

Operation: BOPTrot

This scandal from the 1990s was unearthed by a federal investigation involving the Kentucky legislature’s Business Organizations and Professions committee, and horse racing.

Up to 15 state legislators were taken into custody, some being dragged straight off the house floor in cuffs, by the feds for selling votes to lobbyists.

New legislative restraints have been placed on lawmakers since BOPTrot, such as restricted interaction between them and lobbyists, and requirements for full financial disclosures from both parties, but it does not erase the scandal these rules were inspired by.

Richie Farmer

With a nationally acclaimed basketball team at the University of Kentucky, news of Richie Farmer’s corruption during his time as the state’s commissioner of agriculture traveled far and wide.

Essentially, it’s a story of a basketball star so beloved by the people of the state turning around and misusing their money for private gains.

Farmer served as commissioner from 2004-11. Federal prosecutors sought and secured the maximum sentence of 27-months for his crimes, to which he pleaded guilty to last year.

He may have been cited in USA Today as telling Kentuckians he was, “truly, truly sorry,” but the reality is media uncovered spending abuses and illegal hiring procedures by Farmer and his office.

When current commissioner James Comer took over Farmer’s office the following year, he asked State Auditor of Public Accounts Adam Edelen to perform a special audit for the department, which served as the ultimate trigger into a federal investigation.

Farmer went through a lengthy legal battle and was taken to jail earlier this year.

This scandal may be relevant to the study explained above, since it takes into account expenditures each year from 1997-08, which includes most of the time Farmer spent in office.

Corruption, some locally, has continued even after the study was completed. Here are some examples:

Conley and misuse of Morgan FEMA money

Morgan County Judge-Executive Tim Conley and his community had their world flipped upside down by a devastating tornado that struck West Liberty in the spring of 2012.

Federal Emergency Management Agency sent money to Morgan County for disaster relief, a welcomed gesture by those who had possessions and lives ripped apart by the storm.

But Conley is being accused of misusing this money to pay for PBTHNOJJ Construction of Salyersville to remove debris from West Liberty and other areas of the county. According to the indictment, Conley misused his position to ensure the firm was overpaid for the work.

The indictment also alleges Conley was paid kickbacks, including cash payments from proceeds of the contracts he awarded PBTHNOJJ.

Court records now show that Kenneth Lee and Ruth L. Gambill, owners of the contracting firm, will plead guilty to the kickback scheme, which also involved $1.1 million in contracts through Conley, mostly for small bridge and culvert projects.

Of course, all this happened after the survey time.


While buying votes is not the same as directly dipping into state funds, it is still a serious crime and an example of Kentucky’s most notorious form of corruption.

Vote-buying can be categorized as anything a politician does to win votes, whether it be paying off citizens or even bribery through services.

These types of scandals seem to be more prominent amongst judge-executive candidates or school system superintendents.

For example, Arch Turner pleaded guilty in federal court to a vote-buying scheme in 2012. That year, he went into federal court as the current superintendent of Breathitt County Schools, but he admitted he was guilty of vote-buying during the 2010 primary.

Former Elliott County Judge-Executive David Blair was removed from office by the feds and convicted of theft in office and abusing public trust during the May primary in 2010.

How did Blair choose to buy votes? He was graveling private driveways.

If this sound familiar, it is because graveling or paving driveways in exchange for votes is one of the most common forms of vote-buying in Kentucky.

Ned Pillersdorf, Blair’s attorney, told a local television station, “Unfortunately, it had become part of the culture here.”

LANA BELLAMY can be reached at or (606) 326-2653.

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Ex-CalPERS chief pleads guilty to bribery July 12, 2014

Sam Wyly attends a panel on Day 2 of the American Renewable Energy Day Aspen, Colo.

Sam Wyly was found not liable for insider trading by a U.S. court after a federal jury found him guilty of fraud.

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Two more sentenced to prison in bribery scheme


Two more contractors have been sentenced to prison for their roles in a widespread bribery scheme involving contracts with the Navy’s Military Sealift Command.

Adam C. White of Windsor was sentenced Friday to two years in federal prison after pleading guilty to conspiracy to commit bribery.

White told the judge at sentencing that he had “nothing but regret, embarrassment and humiliation” for what he had done.

Chief U.S. District Judge Rebecca Beach Smith found White to be the “least culpable” of five defendants in the conspiracy who have pleaded guilty so far, and she gave him a slight break from recommended sentencing guidelines.

During a five-year period, about $265,000 in bribes were paid to two government officials who funneled lucrative Military Sealift Command contracts to two companies, including one part-owned by White.

White admitted paying about $26,000 of those bribes over a yearlong period, through intermediaries, to the sealift command contracting officials Kenny E. Toy and Scott Miserendino Sr. White also admitted giving Toy flat-screen televisions.

“This bribery scheme constitutes serious conduct that erodes the public’s confidence in government and government officials,” prosecutors wrote in a sentencing memorandum.

“Public corruption, like the sort paid for by White’s bribes, breeds cynicism and mistrust of public officials. It causes the public to disengage from the democratic process, and it has the potential to shred the fabric of democracy by making the average citizen lose respect and trust in his or her government.”

Smith had similar sentiments.

“It hurts every law-abiding citizen and taxpayer in this country,” she said.

Assistant U.S. Attorneys Stephen Haynie and Emily Woods asked for a sentence within the recommended guidelines range of 2-1/2 to 3 years in prison. But Haynie noted that White’s cooperation in the case “outweighs almost everyone’s.”

“My knowledge of him suggests he’s a decent man,” Haynie said.

White’s attorney, Jon Babineau, said his client is “significantly ashamed about his conduct.”

“I think that he’s honest in his remorse,” the judge said in agreeing to a lower penalty.

Another contractor, Dwayne Allen Hardman, who worked with White at the Chesapeake company involved in the bribe payments, Mid-Atlantic Engineering Technical Services, was sentenced Wednesday to eight years in prison for his role in the scheme.

Hardman admitted he paid $144,000 in bribes in exchange for the company receiving millions in government contracts. His partner, Roderic Smith, was sentenced last month to four years in prison for his role.

Toy has pleaded guilty and is awaiting sentencing. Miserendino and another alleged conspirator, Timothy S. Miller, are scheduled for trial Sept. 30.

Tim McGlone, 757- 446-2343,



Posted to: Military Norfolk

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FBI arrests Puerto Rico mayor accused of bribery

SAN JUAN, Puerto Rico (AP) — FBI agents have arrested a mayor in Puerto Rico on charges of bribery, extortion and obstruction of justice.

The U.S. Attorney’s Office said Thursday Eduard Rivera Correa accepted more than $39,000 in kickbacks from a contractor. He also allegedly extorted $4,000 from the contractor in exchange for providing ongoing municipal business.

Rivera has been mayor of Rio Grande for nearly a decade. He previously worked for 26 years in Puerto Rico’s comptroller office in positions including audit supervisor.

Also charged in the case is attorney Alejandro Carrasco. He allegedly received more than $183,000 in kickbacks while representing Rio Grande and two other municipalities.

Neither man could be reached for comment. A municipal attorney for Rio Grande said its secretary, Rafael Ramos Matos, would serve as interim mayor.

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Is Montana More Corrupt Than Miami?

For such a sparsely populated state, Montana has managed to generate some outsize headlines lately. There’s the GOP Senate candidate who made news by suggesting that creationism should be taught in public schools. Then there’s Missoula’s reputation as the “rape capital” of the world, thanks to, among other things, serious allegations of sexual assault committed by University of Montana football players. And continuing that theme, there’s also the Justice Department’s investigation of the Missoula County Attorney’s office alleging that prosecutors had been systematically discriminating against female sexual-abuse victims.

Now comes new data showing that Montana is leading the country in public corruption prosecutions, suggesting that the state’s reputation for graft (dating back to the days of the Copper Kings) hasn’t changed much. Clocking in with 18 active cases, the federal judicial district of Montana has had more public corruption prosecutions in 2014 than those in South Florida, Southern California, and even New Jersey, according to data crunched by the Transactional Records Access Clearinghouse at Syracuse University.

How is it that such a small state has so many prosecutions? “Why prosecutors do what they do is a mystery,” says TRAC’s David Burnham. But the prosecutors in Montana have a good explanation: They’ve recently organized a major crackdown on corruption on American Indian reservations, of which the state has seven. 

A recent AP investigation concluded that, nationally, tribal governments are five times more likely to have “material weaknesses” in their administration that make corruption possible, and reporters for years have been sounding alarms that federal prosecutors have largely turned a blind eye to these problems. Montana decided to change that trend, at a time when millions in additional federal dollars have flowed into tribal governments thanks to the federal stimulus package enacted after the financial collapse in 2008.

In 2011, the US Attorney’s office launched a task force, dubbed the Guardians Project, with the FBI, the IRS, and inspectors general of various federal agencies, to target corruption on American Indian reservations. The results have been telling: In 2012, Montana had only one official corruption prosecution, but by August of last year, the Guardians Project had netted 25 indictments against people who’d allegedly done all sorts of devious things to keep federal money from reaching those it was supposed to help.

Prosecutors promised there would be more to come, and there have been. Just last month, four members of the Blackfeet tribe were sentenced to prison for involvement in a scheme to steal federal mental-health and substance abuse treatment funds from a $9 million contract. More than $225,000 intended for the program ended up being spent on travel and gambling, among other things.

Six people have pleaded guilty to embezzling federal dollars from a $361 million pipeline project designed to bring freshwater to the Rocky Boy’s Indian Reservation. Another seven people from the Crow reservation were indicted for stealing at least a half-million dollars from the tribe in a double-billing scheme operated out of the tribe’s historic preservation office. One of the people convicted in the scheme allowed a coal company to take a backhoe to a 2,000-year-old sacred bison burial site. The corruption investigations have already ensnared a former state representative and Chippewa Cree tribe official, Tony Belcourt, who in April pleaded guilty to bribery, theft, and tax-evasion charges related to the water project, as well as construction of a multimillion-dollar clinic.

Overall, though, Montana itself probably isn’t more scandal-plagued than New Jersey or Miami. Montana’s US attorney has just taken a harder line on prosecuting the abuses on its reservations, and all those cases have added up to boost Montana to the top of the rankings in terms of public corruption prosecutions. “These figures from Syracuse reflect only a portion of our effort,” US Attorney Mike Cotter said in a statement Tuesday. “Many of the public corruption indictments brought in Montana were initiated before last October. Relatively speaking, Montana is a small office; a David among Goliaths. But the Guardians have done truly remarkable work. Their efforts have unearthed widespread criminal activity and flagrant abuses of trust with regard to federal programs and grants designed to provide for the common good of our Indian communities.”

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Sentenced for Corruption US Former Mayor of New Orleans

10 de julio de 2014, 00:06Washington, Jul 10 (Prensa Latina) Ray Nagin, former Mayor of the U.S. city of New Orleans (Louisiana), was sentenced to 10 years of prison for public corruption, fraud, money laundering and bribery.

The former official, 58 years old, accepted hundreds of thousands of dollars from companies disputing contracts for reconstruction projects in the city after the devastating Hurricane Katrina in 2005.

Among the evidence against him, documents detailing how the Democrat former burgomaster received 500 thousand dollars in bribes and trips paid for him and his family to tourist destinations in the Caribbean and Hawaii, among other perks, for which he issued public contracts for more than five million dollars, were presented.

The politician remained in office for two terms (2002-2010) and with the ruling of the federal judge in the Eastern District of Louisiana, Ginger Berrigan, he managed to reduce the penalty asked by prosecutors who had initially requested between 21 and 30 years in prison.

The accusatory part stressed “Nagin’s astonishing unwillingness to accept any responsibility for his actions” during the trial.

Katrina caused about two thousand deaths and property damage that exceeded one hundred billion dollars.


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Ex-chief of huge pension fund guilty of bribery

SAN FRANCISCO (AP) — The former head of the nation’s largest pension fund admitted Friday that he took bribes, including hundreds of thousands of dollars stuffed in paper bags and a shoe box, and helped an associate collect millions in a fraudulent investment scheme.

Fred Buenrostro Jr. pleaded guilty in San Francisco federal court to fraud and bribery charges stemming from his time as chief executive of the California Public Employees’ Retirement System from 2002 to 2008.

In his plea agreement, Buenrostro said that in exchange for his help Alfred Villalobos, a former CalPERS board member, took him on a trip around the world, gave him casino chips and paid for his wedding in Lake Tahoe, California.

Villalobos denied the allegations through his attorney Friday.

Buenrostro’s guilty plea arises from a yearslong investigation into the role of money-management firm middlemen, called placement agents, in helping clients win investment business from a California pension system that controls $300 billion.

CalPERS said the investigation has prompted it to take “aggressive steps to implement policies and reforms that strengthen accountability and ensure full transparency.”

Buenrostro said in his plea that he started taking bribes in 2005 to use his influence with CalPERS to make investment decisions to help Villalobos’ clients. He also said he gave Villalobos, a CalPERS board member in the mid-90s, access to confidential investment information.

The 64-year-old former executive said he forged letters allowing firms connected with Villalobos to collect a $14 million commissions on $3 billion pension fund investments. He said he started writing bogus investor disclosure letters after CalPERS legal and investment officials declined to authorize them.

Further, Buenrostro said after he left CalPERS and went to work for Villalobos that he accepted $50,000 to lie to federal investigators in 2010 about their relationship.

Buenrostro faces five years in prison and a $250,000 fine when he is sentenced in January. In exchange for a lesser sentence, Buenrostro has agreed to cooperate with the continuing investigation of Villalobos, said Buenrostro lawyer William Portonova. “He got tired of lying,” Portonova said. “He’s ready to tell the truth.”

Villalobos has pleaded not guilty to fraud charges and other related counts. His attorney, Bruce Funk, said his client denies the claims contained in Buenrostro’s plea agreement. “If he’s truthful, there is nothing he can say that will hurt Mr. Villalobos,” Funk said.

Buenrostro and Villalobos, 70, also face two government lawsuits.

The state attorney general sued in 2010, saying Buenrostro and Villalobos, along with other former pension board and staff members, participated in kickback scheme.

At that time, the attorney general obtained a court order freezing assets of Villalobos and his company in an attempt to recover more than $40 million in commissions. Villalobos filed for bankruptcy later in 2010. His assets included 20 bank accounts, two Bentleys, two BMWs, a Hummer, art worth more than $2.7 million and 14 properties in California, Nevada and Hawaii. None of Buenrostro’s assets were seized.

State attorney general spokesman Nick Pacilio said a trial is scheduled for Sept. 8 in San Francisco Superior Court.

The Securities and Exchange Commission has also filed a lawsuit in 2012, which is still pending.

In a related sanction, the state’s campaign watchdog, the Fair Political Practices Commission, fined other executives and investment managers in 2011 for failing to report gifts that included food, wine and baseball and Rose Bowl tickets.


AP Writer Don Thompson in Sacramento contributed to this report.

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Corruption Currents: From Djibouti’s Arbitration Case to Russian Capital Flight

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Mike Lucas

The government of Djibouti filed an arbitration case in London against Dubai’s DP World, alleging the global ports operator paid bribes to secure a concession to run the Doraleh Container Terminal in 2000. DP World rejected the allegations. (WSJ)

Airbus Group NV employees were arrested in a U.K. investigation into potential bribery at the company’s satellites unit. (Bloomberg, IBTimes)

A list of do’s and don’ts regarding bribery risk is here. (Grant Thornton)

Bernie Ecclestone’s Munich trial has been extended. (InAuto News)

FCPA probes are zeroing in on the c-suite. (

A soldier of the U.S. Army National Guard pleaded guilty to his role in a wide-ranging corruption scheme involving fraudulent recruiting bonuses from the Army National Guard Bureau. (press release)

In local politics: The latest in a trial of a former New York City councilman accused of helping orchestrate a scheme to get a state lawmaker on the city’s mayoral primary ballot is here, here and here. Ray Nagin was the 17th New Orleans official sentenced since Katrina, and the city is trying to move on. (NY Daily News, Times Ledger, NY Daily News, New Orleans Advocate, Time)

The FCPA Blog notes companies under scrutiny for cyberattacks. The FCPAProfessor considers whether the U.S. selectively prosecutes FCPA violators. Tom Fox continues his mid-year review. Mike Volkov stresses that compliance officers need seats at the table.


Beijing dismissed assertions that Chinese hackers infiltrated U.S. government computer systems that store personnel information on federal employees. U.S. Secretary of State John Kerry slammed Beijing over cyber-espionage. (NY Times, NY Times, Washington Post, Guardian, WSJ, Guardian)

The judge in alleged Silk Road mastermind Ross Ulbricht’s trial ruled, in denying Mr. Ulbricht’s motion to dismiss, that bitcoin is close enough to real currency to consider a money laundering charge. (Wired)


Fraud lurks in the shadows of the digital advertising landscape. (Financial Times sub req)

Money Laundering:

Former Guatemalan President Alfonso Portillo is scheduled to be released from a U.S. prison in February 2015, more than five years after his arrest on money laundering charges. (Reuters)

Will the money laundering accusation against the Bank of China lead to a major crackdown? (South China Morning Post)

Firms in Hong Kong face penalties in the U.S. and China if they don’t comply with FATCA. (South China Morning Post)

The FATF continues to whittle down its blacklist. (Thomson Reuters)

A Bangladeshi political leader accused of money laundering was granted bail. (BDNews)

Myanmar police vowed to fight financial crime. (Eleven)


Russia saw $74.6 billion in net capital outflow in the first half of 2014, more than for the whole of 2013, the central bank said. Russian President Vladimir Putin is sending mixed messages in a bid to head off tougher Western sanctions. But U.S. senators exasperated with the Obama administration’s response to Russia’s aggression in Ukraine threatened to pass new sanctions without waiting for the Obama administration to act. European diplomats agreed to target 11 more people with sanctions over the conflict in Ukraine. Moscow has helped Visa Inc. and MasterCard Inc. stay in operation. (WSJ, Moscow Times, WSJ, Washington Post, AP, AP, Voice of Russia)

Terms are beginning to emerge for a potential settlement between the U.S. and Commerzbank AG over alleged sanctions violations. (Reuters)

Fokker Services B.V.’s $21 million settlement with the U.S. over the violation of sanctions on Iran was delayed by a federal judge who questioned the terms of the deal and whether the aerospace company voluntarily disclosed its wrongdoing. (Bloomberg)

Foreign ministers are set to join the flagging nuclear talks between Iran and global powers. Could the terms of sanctions relief sink any deal? (WSJ, Al Monitor, Reuters, Reuters, Reuters, Lobe Log)

OFAC published regulations governing the U.S. sanctions program against the Central African Republic. The U.S. executive order issued this week on sanctions in the conflict in the Democratic Republic of the Congo shows the U.S. remains engaged in a region it’s often accused of forgetting. (Sanction Law, NY Times )

A former BNP Paribas SA risk manager left the bank to open a creperie. A federal judge accepted the bank’s guilty plea. BNP’s misuse of satellite banks could lead to future enforcement over “nested” correspondent accounts, sources told Reuters. (Bloomberg, WSJ, Reuters)

Terrorism Finance:

A 27-year-old British student was charged with playing a role in a terrorist plot to fund jihadi fighters in Syria when she was arrested at Heathrow Airport with tightly rolled 500-euro bills worth $27,000 in her underwear. She denies the charges. (Daily Beast)

Hezbollah is profiting from hash sales. (Daily Beast)

A U.S. appeals court ruled that $1.75 billion in Iranian funds must be turned over to families of the victims of the 1983 bombings of a Marine barracks in Beirut. (Reuters)


The tradition of Swiss banking secrecy stands tall against an onslaught of requests for disclosure from countries tracking down tax evaders. (Law of Secrecy, NY Times)

China’s top prosecutor ordered greater transparency in publicizing corruption cases involving senior officials. (Reuters)

General Anti-Corruption:

The director of a World Cup hospitality company implicated in ticket scalping surrendered his tournament credentials. (AP)

The U.S. doesn’t help its friends prosecute corruption cases. (GAB)

Florida’s prison system is mired in corruption. (Miami Herald)

The Vatican Bank will no longer open secret accounts. (Daily Beast)

Russia raided the home of an anti-corruption activist. (Moscow Times)

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Convicted of corruption, Ex-Minister Arias seeks asylum in the US: media reports

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Ex-Minister of Agriculture Andres Felipe Arias is currently in the United States seeking political asylum, according to Colombian media reports released Friday morning.

The news comes just over a week after Arias was found guilty of embezzling over $25 million through an agricultural subsidy program called Agro Ingreso Seguro (AIS).

Arias was nowhere to be found at the time of his sentencing, leading to suspicions that he escaped the country to avoid imprisonment, as had former intelligence director Maria del Pilar Hurtado, who also served under ex-President Alvaro Uribe. Reports emerged that Arias’s sentence may have been leaked two weeks prior to the announcement, giving the former minister time to leave the country.

MORE: Former Colombian minister found guilty of embezzling $25M

Prosecutors successfully demonstrated that Arias had funneled state subsidies intended for poor farmers into the accounts of wealthy and politically powerful families, a beauty queen, and even former paramilitaries.

Arias was “on vacation” in the United States at the time of his sentencing, having been there since June 13 — the same day Colombian media were informed of a potential guilty ruling against him. Bogota-based Blu Radio reports that Arias’ protection squadron has not heard from him since July 13.

MORE: Former Colombia minister found guilty of embezzling $25M in farming subsidies: Report

If Arias returns to Colombia, he will be facing eight to 33 years in prison for his role in the embezzlement scheme, according to Bogota-based Radio Santa Fe.

After the guilty verdict, Arias’ lawyer reiterated his client’s defense, which was that Arias did not personally know any of the recipients of the subsidies, and that Arias was convicted because the people actually responsible “had their office on the same floor as Dr. Arias.”

Conservative candidate for the presidency

Widely known as “Uribito” for his resemblance in politics, personality, and appearance to  former President Alvaro Uribe, Arias served as minister of agriculture from 2005-2009, when he resigned to run in the 2010 presidential elections. According to Colombian law, a person cannot seek the presidency if they hold another role in the public sector within one year of elections.

Arias lost out to Noemi Sanin in the Conservative Party primary and refused an invitation to join the candidate’s campaign. Arias later changed his mind and served the Sanin campaign, which later lost in first round elections to candidates Juan Manuel Santos — the eventual victor — and Antanas Mockus.

MORE: Arias asks allies to support Sanin for president

The breaking of the Agro Ingreso Seguro scandal and imprisonment

Arias was offered the ambassadorship to Italy in 2010, just before AIS scandal broke out and Inspector General Alejandro Ordoñez banned Arias from holding public office for 16 years.

MORE: Ex-minister Arias barred from public office over subsidy scandal

At this point, more details began to emerge about the extent of the embezzlement, and Arias was sent to prison for the case as a “precautionary measure.”

Judge Orlando Fierro said that Arias had run an opaque and ultimately illegal bidding process and expressed suspicion about Arias’ frequent visits to prison, where he met with former functionaries of the ministry.

MORE: Ex-Minister Arias jailed in corruption case

Four other functionaries that worked with Arias in the Ministry of Agriculture were released from prison without a trial, because the legal time limit to begin proceedings had expired.

MORE: Agricultural subsidies scandal: Ex-officials released without trial

Release from prison

Arias was released from prison on bail in June of 2013, despite being denied bail when he was first arrested in 2011. Prosecutors stated it was because of the lack of evidence that existed on the charge that Arias was obstructing justice, giving grounds for the “precautionary measure” to be overturned.

MORE: Colombian ex-minister accused of embezzling $25M released on bail

The judge who released Arias was quoted as saying, “The precautionary measure [jail] imposed on Dr. Arias Leyva was not appropriate or reasonable to contribute to a constitutional end, nor did it prove to be necessary,” according to national newsmagazine Semana.

Arias’ eventual conviction makes him the latest former Uribe allies to be sentenced on charges relating to corruption.

While Maria del Pilar Hurtado was recently stripped of her political asylum in Panama, the director has yet to return to Colombia, where she is wanted in relation to the DAS wiretapping scandal, in which intelligence agents were found to have spied on Supreme Court justices, opposition politicians, journalists, and human rights workers, turning over intelligence to paramilitary forces in some cases.

It is unclear what grounds Arias would use to obtain asylum in the United States, as such status is typically granted to persons facing political persecution.


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