Bribery and corruption behind Football match fixing in Malaysia

Online gambling on football matches in Asia has reached hundreds of millions of dollars each season – with the risk that those involved in making or receiving large scale bets would seek to manipulate the results by threats or bribes of the players, managers or officials.

Malaysia and the Malaysia Super League (Liga Super Malaysia) is a keen target for such match fixers seeking to cream off winnings from the illegal bookmakers.

To combat this threat, the Football Association of Malaysia (FAM) has engaged FIFA’s Early Warning System (EWS) in an effort to combat the issue of match fixing in the country. The FIFA Early Warning System was implemented in August 2016 by the Malaysia Super League (MSL) and will also be extended to international matches hosted in Malaysia. The Football Association of Malaysia have been given a good deal as they won’t have to spend any money on the system, which normally sells for RM100,000 per football season.

The Early Warning System, which was started operations in 2007, is a fraud detection system that monitors betting trends to spot rapid changes in odds being offered and also provides match result analysis. The Early Warning System monitors FIFA competitions, including the World Cup and all qualifying matches, and also works closely with the Asian Football Associations.

Rumours of match-fixing in the Malaysia Super League are nothing new as a number of corruption scandals have surfaced in the past.

The low point for Malaysian football came in 1994-95, when more than one hundred footballers were disciplined with punishment ranging from life bans to suspensions from playing for up to four years. Investigations by Royal Malaysian Police found that there had been gross interference by gambling syndicates to fix the results of games – allegedly physically threatening players who refused to assist. Among those involved included Malek Rahman, Matlan Marjan and Azizol Abu Hanafiah. The arrests and punishments came under a law then known as ‘Emergency Ordinance’, where players could be detained and banished from the game if suspected of fixing matches [the law has since been repealed].

Malaysia came under the football match fixing spotlight again in 2009, when the Malaysian national team played friendly matches against Zimbabwe in Kuala Lumpur – but the games were arranged by notorious convicted match-fixer Wilson Raj Perumal, a Singapore national.

Malaysia managed to beat a higher-ranked Zimbabwe side 4-0 and 1-0 – raising suspicion with the Early Warning System and so the games were investigated by FIFA.

Following an investigation, FIFA revoked the ‘A’ international classification for both matches once it was discovered that a Zimbabwean club team, Monomotapa United, was masquerading as the Zimbabwean national team and were not approved by the Zimbabwean Football Association.

Also in 2009, Lesotho were beaten 5 to nil by Malaysia in a friendly game – with many Lesotho players witnessed going on a shopping spree after the game; generating suspicion as to whether the match result had been interfered with by outsiders.
Since this debacle in 2009, the Football Association of Malaysia has been working with the Malaysian Anti-Corruption Commission (MACC) to investigate suspect results and monitoring players, support staff and identified match fixers. In addition to providing data of betting trends, the Early Warning System will also provide

  • a confidential whistle-blower system
  • a dedicated integrity phone number and email address for anonymous tips to be submitted
  • a monitoring process for all matches in the Malaysian Super League to identify results which may suggest match fixing has been involved
  • an investigation unit to follow up on leads

The Football Malaysia Limited Liability Partnership (FMLLP) Chief Executive Kevin Ramalingam said the implementation of a fraud detection system would uphold the league’s integrity. Kevin Ramalingam added the system will be able to pinpoint players who are likely involved in fixing matches.

Pen drive `of allegations’
Corruption and dishonesty within Malaysian football became a hot topic in September 2016 after
Youth and Sports Minister Khairy Jamaluddin submitted a pen drive, supposedly containing documentary evidence of misconduct, to the Malaysian Anti-Corruption Commission.

Khairy Jamaluddin stated that he had received the pen drive from the Tengku Mahkota of Johor, Tunku Ismail Sultan Ibrahim, in August 2016. The pen drive purportedly contained a 280-page report detailing misconduct and corruption within the Football Association of Malaysia.

However, the Malaysian Anti-Corruption Commission investigation director Azam Baki later reported the commission had examined the contents of the pen drive, but found no evidence under the MACC Act 2009.

 

US Navy officials charged in ‘Fat Leonard’ fraud

A Malaysian national operating from naval bases in Singapore and across Asia has managed to cause one of the biggest criminal fraud cases in US Navy history. US government investigators have detained and charged multiple US Navy officials for offences relating to bribery and corruption.

The Malaysian national is named Leonard Glenn Francis – widely known as “Fat Leonard” – who operated Glenn Defense, a maritime service company which held more than $200 million worth of contracts to resupply and refuel US Navy vessels across Asia.

The scandal became public in September 2013 when federal investigation agents Leonard Glenn Francis, from his base in Asia to San Diego in a sting operation. Leonard Glenn Francis believed that Glenn Defense was on the cusp of being awarded further US Navy contracts; instead he was arrested and charged with bribery and corruption offences. Leonard Glenn Francis has since pleaded guilty to bribing “scores” of US Navy officials with prostitutes, cash, gifts, expensive meals and other indulgences over a decade.

Leonard Glenn Francis has allegedly now admitted to cheating the US Navy out of at least US$35 million by ways of forging invoices, overbilling, running kickback schemes and gouging for standard maritime services. Essentially, Leonard Glenn Francis bribed senior officers within the US Navy so that they would turn a blind eye to the increased charges.

Leonard Glenn Francis operated a sophisticated machine to penetrate various levels of the US Navy establishment to ensure he obtained the information he needed and covered his tracks where necessary. Leonard Glenn Francis allegedly recruited three officers within the US Navy to act as paid moles for the contractor, Glenn Defense Marine Asia, by leaking intelligence about criminal investigations into the company or other information to give the firm an unfair advantage over competitors.

It is alleged that Leonard Glenn Francis and Glenn Defense had:

  • Bribed US Navy officers with access to prostitutes and gifts of cash or electronic items
  • Corruptly arranged the US Navy to grant diplomatic clearance to Glenn Defense so that it could avoid inspections and dodge customs duties into the Philippines
  • Bribed a retired commander to leak Naval Criminal Investigative Service (NCIS) files to Glenn Defense to help the firm thwart fraud inquiries.

Leonard Glenn Francis adeptly identified personnel on ship and shore, civilian and uniform, who were willing to work with him to defraud the US Navy. Leonard Glenn Francis even hired retired IS Navy officers who then helped recruit active-duty officers to assist with supplying information.

With the high level contacts with US Navy decision makers, Leonard Glenn Francis was able to have ships steered to certain ports where Glenn Defense could easily overcharge the Navy for services.

Leonard Glenn Francis benefited from the US Navy ignoring warnings over the years from honest US Navy personnel, some who requested reviews and cancellations of contracts due to the huge charges for services that Leonard’s company billed. When he fell under suspicion, Leonard Glenn Francis had a Navy criminal investigator pass him internal documents about investigations into Glenn Defense.

Leonard Glenn Francis was an adept networker and worked hard to cultivate relationships in the Navy. He chose to host lavish parties for US Navy officers at select restaurants and bars, spending freely to entertain. Leonard Glenn Francis would then start the bribery process by giving small gifts to individual officers such as whisky or the services of a prostitute – those that accepted the gifts were then targeted to obtain information whilst the gifts were increased in frequency and value.

In 2008, Leonard Glenn Francis targeted one US Navy officer based at the Fleet Logistics Centre in Yokosuka, Japan. The officer was involved in the naval supply system, responsible with providing logistics support for ships, awarding and overseeing contracts.

This officer provided internal US Navy information on ship schedules, port visits, and how the service would handle ship servicing contracts and controlling costs. Leonard Glenn Francis exploited this information so that he could charge excessive costs. In exchange, the officer received more than US$100,000 in cash, stays at luxury hotels and the services of prostitutes.

Leonard Glenn Francis built up a web of contacts throughout the US Navy – including those on contract review boards, which could recommend and approve bidders for Navy contracts. Leonard Glenn Francis would then have his contacts steer contracts for servicing ships to Glenn Defense in Thailand and the Philippines.

The federal investigation has established that Leonard Glenn Francis ran a decade-long scheme by which he defrauded the US Navy out of tens of millions of dollars by targeting a handful of key points in Asian operations of the fleet.

So far, federal investigators have charged 14 individuals and prosecutors have said that as many as 200 others are under investigation. According to US Navy officials, nearly 30 admirals are under scrutiny for possible criminal or ethical violations.

 

Questionable hiring practices in Asia causes Conflict of Interest for banks

The UK based Barclays Bank PLC has become the latest international bank to reveal that U.S. authorities are investigating some of their hiring practices in Asia – suggesting a conflict of interest. Sources indicate that Barclays Bank is alleged to have improperly recruited friends and family members of Asian government officials as well as top executives in the region with which the bank had previous dealings.

The Securities and Exchange Commission [SEC] is known to be already making inquiries into around a dozen banks in the U.S. and Europe regarding similar aspects of their foreign personnel recruiting. HSBC Holdings PLC has also recently disclosed that it had received information requests from the SEC as to their hiring practices around potential hires with ties to Asian government officials. Such inquiries by the SEC have been active since August 2013, when J.P. Morgan Chase & Co. disclosed that the SEC was likewise reviewing its hiring processes in Asia.

One recent report in the WSJ stated that J.P. Morgan Chase & Co. had hired friends and family members of executives at seventy-five percent of the major Chinese companies it helped take public in Hong Kong during the decade long boom in Chinese IPOs of major firms. The numbers reportedly came from a document compiled by the bank as part of a federal bribery investigation into the behaviour.

Other US Banks with operations in Hong Kong are rumoured to have hired friends and family members of senior executives at major Chinese companies, which were taken public in Hong Kong between 2005 and 2013. There are questions as to whether such hiring activity would breach current U.S. foreign-bribery laws.

“Sons and Daughters” China personnel hiring program

A 2015 inquiry by US Authorities further revealed the leading US bank J.P. Morgan had hired over 200 candidates said to be part of China’s business and political elite under a system supposedly known internally as “Sons and Daughters”. U.S. authorities are still investigating the program to determine whether this activity may have constituted bribery under the U.S. Foreign Corrupt Practices Act. The FCPA makes it illegal for US companies to give anything of value to a foreign official with the intention of improperly influencing their decisions.

Such conflict of interests can occur when departments within an organisation take actions with disclosing sensitive issues to legal or compliance officers. Some of the Banks currently under investigation by the US Authorities may have pursued an advantage by recruiting personnel with insight to possible deals, without fully disclosing these personal connections to legal counsel within the banks. Failure to develop, or enforce, suitable Standard Operations Procedures [SOPs] regarding the method for hiring personnel, coupled with poor oversight by senior management and reporting structures probably contributed to this situation.

Tips for Avoiding a Conflict of Interest

  1. Have a system to check for conflicts of interest – make sure such checks are documented and all levels of managements are aware of the requirement for such checks
  2.  Even if there is no conflict at the start of a relationship, keep your radar on as the matter proceeds – and even after it ends. Some conflicts appear over time. Others may arise after the matter is concluded.
  3. Take action at the slightest hint of a conflict arising – Talk to any clients and management overseeing the matter at the first instance
  4. Don’t just keep silent and look the other way – encourage all levels of management to speak up once a problem arises
  5. Full disclosure and client briefings can often defuse a sticky situation and prevent a bad situation getting far worse

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Air India Found Wanting – Designing a Robust Fraud Prevention Program

Stelios Haji-Ioannou, founder of budget airline EasyJet once uttered the famous phrase “If you think safety is expensive, try an accident”. This was based upon his dire experience in 1991 when a tanker belonging to his father’s shipping company spilled 50,000 tonnes of oil in an environmental catastrophe that claimed five crew members’ lives. As chief executive, Stelios Haji-Ioannou barely escaped incarceration in Italy for manslaughter.

Likewise, any substantial business or organisation is tempting fate by failing to have a Robust Fraud Prevention Program in place. The risks may not be an oil spill but can be equally costly to the bottom line and damaging to the reputation of the business.

As an example for failing to have an adequate Fraud Prevention Program in place, the state owned airline Air India has recently been in the news for all the wrong reasons. Allegations of rampant theft, fraud and maladministration have been widely circulated. These have included tales of repeated thefts of liquor from flights, diversion of spare parts for illicit sales, kick-backs related to the orders of goods plus pilots being paid for duties not performed.

State owned Air India is now facing the reality of job cuts or cease flying certain routes. The failure by executives and management to inculcate an atmosphere of anti-corruption as well as implement an anti-fraud structure has set the scene for wide scale waste and theft.

Any company, institution or organisation –must create and implement a robust fraud prevention programs that is staffed and overseen by capable fraud examiners.

A fraud prevention program will help to protect a company or organisation by:

  1. Instituting a whistle-blower hotline whereby employees and contractors can make confidential tip-offs regarding fraudulent behaviour;
  2. Setting the principled “tone at the top” so that the whole business or organisation embodies the anti-fraud ethos;
  3. Developing a code of conduct and a confirmation process to structure anticipated behaviour for all personnel and contractors
  4. Creating an environment that ensures audit trails for purchase, orders etc. are in place;
  5. Hiring and promoting appropriate employees via a Pre-Employment Screening program;
  6. Instituting suitable anti-fraud and graft training programs;
  7. Identifying and measuring fraud risks;
  8. Implementing and monitoring internal controls;
  9. Having a strong and independent audit committee;
  10. Contracting independent external auditors;

Stopping fraud before it occurs is the ultimate goal of a successful fraud prevention and awareness program.

Hotlines Run Hot
Honest and responsible employees & contractors will utilise hotlines to report irregularities and suspicions anonymously without fear of retaliation. Anti-fraud surveys by the ACFE have reported that hotlines can cut an organization’s fraud losses by approximately up to one half.

An independent third-party vendor can set up whistle-blower hotlines; receive, screen and log confidential calls before passing along relevant information to investigative entities for their action.

Extra effort should be made to communicate the existence, contact channels and benefits of the hotline to all employees and contractors on a regular basis to report any suspect or improper business practices.

Three fraud mitigation actions
Fraud experts have outlined three main actions to mitigate fraud: create a culture of honesty and high ethics, evaluate anti-fraud processes and controls, and develop an appropriate ongoing oversight process.

Setting the Tone at the Top
A company or organisation’s executive and management team sets the moral and ethical direction for all employees and contractors to follow. Employees need to know that the upper echelons believe and submit to a high level of ethical behaviour. Management must clearly communicate a zero tolerance for fraud and the need to follow the pronouncement with education and awareness campaigns to reinforce policies and procedures.

Develop a Code of Conduct
The keystone of an effective fraud prevention program is a culture with a strong value system founded on integrity. This value system can be reflected in a code of conduct. The code of conduct should be created with the involvement and input of employees so that they can be guided whilst making appropriate decisions during their workday.

A code of conduct should include written standards that are designed to deter dishonest or immoral behaviour, promote honest and ethical conduct by all employees plus advise employees what they can and cannot do. The code of conduct should be provided in both a soft and hard copy to all employees, circulated regularly and translated into appropriate languages for overseas locations.

Confirmation Process
People with low integrity or external pressures may be deterred from committing fraud if they know that there is an oversight and confirmation process which increases the likelihood that they will be caught. After issuing the code of conduct to all employees, each should be required to sign a statement indicating that they have read and understood the code’s requirements and will comply with them. This will have the effect on those who have signed the statement can’t later hide behind the claim of ignorance.
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Major corruption payments to Singapore Ikea manager

 

A Singaporean businessman who paid an incredible SGD $2.4 million to Singapore Ikea’s food services manager over six years has pleaded guilty to 12 counts of corruption involving $761,020. Andrew Tee Fook Boon, owner of business AT35 Services, gave monthly bribes to Mr Chris Leng Kah Poh, then Ikano’s food services manager [Ikano is the local franchisee of Inter Ikea Systems B.V. which operates Ikea in Singapore.

The purpose of the payments was to influence Mr Chris Leng to favour him in placing orders for food products with AT35 and later Food Royale Trading.

Andrew Tee had been operating a scrap metal and waste material disposal business in 2002 when he accepted a business proposition to supply food – mostly raw marinated chicken wings – to Ikea. Yes, those chicken wings consumed by the plateful at Ikea Tampines and Alexandria with plenty of chilli sauce.

Between January 2003 and July 2009,  Tee and his alleged accomplice  Lim Kim Seng had on over 80 separate occasions, given Mr Leng sums of money derived from the profits made by AT and/or Food Royale from the business dealings with Ikea. Following the discovery of the fraud, Mr Tee paid $1 million compensation to Ikano. He could have been fined up to $100,000 and/or jailed for up to five years on each charge.

The fraud case is believed to be one of the biggest amounts involved in a private corruption case in recent years. The corrupt relationship existed from 2003 through to 2009 before being discovered.

Some commentators have questioned how the corrupt relationship was allowed to flourish and continue for such a long period and such large sums were paid to the Ikea manager without being detected.

Possible red flags that could have arisen and, had they been noted by Ikea management at the time, may have led to the corrupt relationship being exposed sooner include:

The Big Spender
The recipient of large corrupt cash payments resort to buying luxury items or else taking expensive holidays [though some chose to pay down debt and keep a low profile]

The Gift Taker
The manager who is willing to accept inappropriate or questionable gifts from suppliers is likely to succumb to corrupt approaches

The Rule Breaker
The recipient of corrupt payments will often take it upon himself to make decisions relating to the contract and payments and seek to exert total control. The recipient will merrily bend or break rules to suit himself or else have subordinates turn a blind eye. Some may involve themselves in areas that are not part of their responsibility and interfere in an attempt to control the contract.

The `Odd Couple’
Corrupt payers and recipients often appear to have friendly relations and meet up socially, though they don’t seem to make a normal fit. The lure of cash and profits outweighs the social awkwardness.

The Explainer
The corrupt receiver will frequently take steps to cover up any failings of the payer’s products or services; the receiver will explain away the poor quality, later delivery or excessive prices as necessary because the payer is `specially qualified’.

The Needy One
The corrupt receiver may have financial pressures resulting from gambling, substance abuse, debt problems or else family pressures. Observing these pressures may help pre-empt them and take away the need for corrupt payments.

Do you need to know more about our services and how Regents can assist you with preventing fraud and money laundering? Simply go to our Fraud Investigation page for further details and us send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

Is Speak Asia Online to be trusted?

Despite being the home of software programmers and large scale IT out-sourcing companies, the Indian public has not been exposed to internet sensations, rumours and intrigue to the same extent as countries such as the USA.

Until now.

The online opinion company Speak Asia Online is a Singapore-based company which is now being investigated by Indian authorities for alleged financial fraud and conducting business in India without a licence. Some claim that Speak Asia Online has all the hallmarks of a classic internet Ponzi scheme whilst its supporters claim that it is a legitimate business venture which is being criticised for its own rapid success.

Speak Asia Online claims that it is a legitimate company which pays its’ subscribers a small sum each time they complete an online questionnaire regarding a product or service. Speak Asia Online claims that it is engaged by various companies to conduct market research with Indian households.

Speak Asia Online claims to have attracted nearly two million members in India since it started operations in January 2010. A company statement says it has paid out more than $50 million to survey takers and reported revenue of $80 million in the past nine months.

But there is a catch. Of course there is.

To become a subscriber, you must first pay fees of around Rs10,000 which provides a ‘Surveys Today’ e-zine, an online magazine, for one year and the opportunity to enrol as s panellist. A panellist can be paid up to Rs900 to fill up two surveys of about 12 lines each.

Therefore, after completing around eleven surveys a panellist would start to earn an income from Speak Asia Online. Panellists can also earn money by recruiting other panellists to join and thus receive a commission.

This has left some detractors to conclude that Speak Asia Online is some sort of fraud, scam or Ponzi scheme and should be investigated or shut down by the Indian government. Speak Asia Online protests that it is genuine business and has broken no laws, offering to co-operate with the authorities if need be.

Supporters also point out that they are earning an income from Speak Asia Online as panellists and those complainants should mind their own businesses.

In order to assess whether Speak Asia Online is a genuine business, fraud experts would recommend assessing the following points in relation to Speak Asia Online:

Business model – does the model itself make sense?
This is hard to answer directly. Certainly there are genuine businesses which have operated for decades conducting surveys. But the surveys are focused, relatively small and usually conducted face to face to ensure quality. Speak Asia Online does not follow this path.

People can also earn money by recruiting other subscribers. This has generated a group or recruiters seeking to find new subscribers to continue their income stream.

Analysts have seen this as the trait of a classic Ponzi scheme, sucking in new cash to pay out to earlier subscribers. Speak Asia Online needs to demonstrate that this is not the case.

Does the subscriber need to pay?
Definitely and it is paid upfront. This can be viewed as a definite red flag for a possible scam. It has been noted that Speak Asia Online charges subscribers to be a panellist and receive an e-zine – smartly declining to promise that later payments will be made or else that this is an investment scheme.

Location of the business – does this make sense?
Not at first blush. Though Speak Asia Online is only active in India it has few employees or offices there. Instead, it is a registered company in Singapore. It could be argued that it makes sense for taxation but this doesn’t make business sense.

It has been noted that reporters from Star TV are said to have visited the business address in Singapore and found that there were few people present who claimed they were not involved with Speak Asia Online. This certainly raises more red flag concerns.

Business history – how long has it been running?
Not very long; about 18 months according to the registered documents held by ACRA in Singapore. It should be noted that the business has changed its’ name two times; from Haren Technology Pte Ltd to Pan Automotives Pte Ltd. Neither of these former names suggests that the previous business incarnations were internet based opinion operations.

A cause for concern.

What do the top people of Speak Asia Online say about the business?
Not much and not very convincing.

Speak Asia Online CEO (India) Manoj Kumar claimed during an interview that Speak Asia Online was engaged by ICICI Bank. Following a refutation by ICIICI Bank they there were not a client, Kumar back tracked and said that his earlier claim was a mistake. Kumar allegedly claimed a number of other prominent clients which were later found not to have any relationship with Speak Asia Online. Commentators stated that the CEO ought to know who his own clients are.

At a press conference in Mumbai, Kumar struggled to define exactly what Speak Asia Online does. He denied that they are a direct seller or a company that makes money based on referrals.

Is the company properly regulated?
Not really. It operates in an economic area which has been overlooked so far.

The Indian Direct Selling Association (IDSA) has asked the government to come up with a regulatory framework that will define direct selling, stipulate how it should operate and pass laws to protect consumers.

Meanwhile the Ministry of Corporate Affairs (MCA), Economic Offences Wing, market regulator Sebi and bank regulator Reserve Bank of India are reviewing different aspects of Speak Asia Online’s operations.

What other bad news has Speak Asia Online experienced?
The Singapore bankers of Speak Asia Online, United Overseas Bank, are reported to have declined to continue to be their bankers. Speak Asia Online claimed that they elected to change banks but the confusion suggests that United Overseas Bank no longer wanted to be associated with Speak Asia Online. Does United Overseas Bank know something we don’t?

 

Speak Asia Online may prove it’s detractors wrong and thrive in a new business sector in the budding Indian market. If it can be more transparent about the operations and exactly who its’ clients are, then it should be able to save the day.

Watch this space.

 

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India investigates Dehli Games corruption

The  new Indian sports minister has sacked the chief organiser of 2010 scandal-ridden Delhi Commonwealth Games as the coalition government suffers a string of corruption scandals and thus seeks to repair its own public image.

Ajay Maken said he took the decision to terminate Games chief Suresh Kalmadi and Secretary General Lalit Bhanot so that the inquiry can mount an open investigation into corruption allegations surrounding the $6 billion event held in October 2010.

The Games were intended to be India’s answer to China’s impeccable staging of the 2008 Beijing Olympics. However, the Delhi Games descended into a complete farce and were salvaged only after a last-minute mad scramble by the red-faced government.

Once the Games were finished, the government appointed  federal investigating agency the Central Bureau of Investigation to review allegations of corruption and irregularities in the construction, organisation and conduct of Commonwealth Games 2010.

Long before the actual Games began, corruption charges surrounded the London leg of the Queen’s Baton Relay, which lead  to the sacking of three senior officials in August. Subsequent inquiries by Indian anti-corruption watchdogs identified several irregularities in the awarding of contracts and identified several Games projects beset large-scale corruption.

The Games debacle resulted in Ashwini Nachappa, a former international athlete, teaming up with ten other international athletes spear-heading CleanSports India, a nationwide campaign to rid Indian sports of all types of crooked officials and rigged results for gambling, including those overseeing the games.

Investigations have revealed scandal after scandal involving officials with kickbacks, off-shore companies, forged emails, unjustified payments to bogus companies and inflated costs for goods and services ranging from cleaning to exercise machines. The final costs for the Games are expected to be over $8 billion – most of it paid by the tax payer and draining government resources.

India’s leading corruption watchdog, Central Vigilance Commission, highlighted the irregularities in more than a dozen projects and questioned the quality and finish of the venues. Huge piles of rubble and rubbish, a collapsed roof, hanging wires, leaky walls, broken tiles and an incomplete stadium became the visual staple of daily newspapers and television channels.

The government and police have been kept busy with the upcoming Cricket World Cup due to start in February 2011. The state of some of the venues has been criticized and there is the fear that the rampant illegal bookmaking syndicates will try to infiltrate the player’s dressing rooms and hotel accommodation.

Despite the recent disciplining of three Pakistani players for match fixing, the lure of easy money and the fact that nearly all gambling in India is outlawed means that ready cash flows around the stadiums and has the power to spoil the sport.

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Woolworth’s buyer and coffee importer charged over corruption

A senior Woolworths executive and an alleged co-conspirator both face criminal charges following a protracted investigation into a corruption kickback scheme operating inside Australia’s major supermarket chain.

In January 2011, Bill Harvey, formerly Woolworth’s national buyer for coffee, tea and sugar, was charged by Police with receiving or soliciting secret commissions and with conspiracy to cheat or defraud. Harvey was responsible for selecting the brands and lines of coffees and teas from a number of suppliers across Australia. Therefore, Harvey would have been required to frequently meet with current and prospective suppliers as well negotiate terms of contract for supply.

The allegations centre on the claim that Mr Harvey accepted a percentage of a ”promotional fee” from the coffee and tea supplier for the purpose of ensuring that the coffee and tea products were given space on Woolworth’s shelves.

One of Woolworths suppliers was Melbourne based LZ Enterprises, which is the Australian distributor of Arrosto Bello coffee and Cha Yuen tea brands. Robert Lever, now the former marketing and export manager at LZ Enterprises, dealt with Harvey as part of his task for promoting the brand.

Upon receiving this allegations, Woolworths undertook its’ own investigations and made a report to the Police. Harvey was subsequently arrested at the Woolworth’s offices. Internal auditors are checking to see if other products are involved in the alleged scheme and whether more offences may be detected.

The charges come almost a year after both were arrested during operations by police in New South Wales and Victoria. The matter came to light after a tipoff from a disgruntled supplier suggesting that corrupt activity was occurring.

Corrupt kick back schemes are nothing new for the major grocery retailers in Australia, Woolworths and Coles. In October 2009, Woolworths removed three buyers from the fresh produce purchasing department after investigations showed that the grocer was paying up to $20 per carton too much for vegetables from one of its supplier. In 2006, Coles fired an executive after a secret business deal came to light that the executive and the owner of Tasman Group Holdings, then one of Coles’ primary suppliers of red meat products.

When employees interface with suppliers and vendors on a daily basis there is always a likelihood that over time they may form an illicit alliance and seek to act corruptly. As demonstrated in the case above, it is possible to detect errant employees and have them arrested / prosecuted for this activity which can be so damaging to the company and the reputation overall.

In order to reduce the likelihood of corrupt activities between employees and suppliers, plus increase the chances of detecting such activity, it is advised to at least follow some of these suggestions:

  • Ensure that all meetings between employees and suppliers take place at designated locations only, usually company offices
  • Have all meetings documented and meeting notes made to detail what was discussed and agreed
  • Have managers randomly attend meetings to ascertain the demeanor and progress of discussions on pricing, quality, deliverables
  • Ensure that all proposals, agreements and communications are scrutinised by auditors and or legal departments
  • Issue a Code of Conduct outlining what constitutes corrupt or dishonest conduct and the severe penalties involved for this activity
  • Have all employees and suppliers / contractors read the Code and Conduct and sign that they will abide by this
  • Install a working `whistle blower’ program so that any party can make a formal complaint as to suspect activity
  • Have regular training and education on the perils of corrupt activities
  • Rotate employees between positions so as no to over familiarize them with individual suppliers

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Indonesia has a new anti-corruption Czar

The new Indonesian anti graft czar, Busyro Muqoddas, was appointed in November 2010 for a one year period. Busyro Muqoddas has pledged to resolve difficult corruption cases that have led to some in the media claiming that the country’s fight against corruption has stalled.

Busyro Muqoddas promised that the Corruption Eradication Commission (KPK) would investigate all pending cases through to a conclusion. Busyro Muqoddas added that he wanted all stakeholders including the government, the media and the people to create a tradition of transparency. “Transparency means honesty. We must respect each institution’s authority, including the KPK’s.”

Busyro Muqoddas will have a hard time regaining the people’s trust in a once-respected agency that has seen its last chairman convicted of murder and a number of high-profile cases languish on the back burner due to an internal leadership crisis.

Busyro Muqoddas has only a year to turn around the Commission before he would have to undergo a new election for his post, should he want to put his name forward. Many observers have criticized the decision by the House of Representatives to limit Busyro’s tenure to just the remaining term of the sitting commissioners, which will expire next year.

Busyro, the former head of the Judicial Commission, could win popular support by meeting public demands for the KPK to take over the investigation of the scandal involving Gayus or the Bank Century bailout saga from other agencies. But gaining control over either of those complex cases would be hard as legal proceedings are already under way, with several suspects already convicted and sentenced.

Meanwhile, a number of Non Governmental Agencies have kept up the pressure on the government to continue the anti corruption investigations and the pursuit of senior officials. One of the popular agencies maintains the website http://antikorupsi.org/

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