Corruption, Economic Crimes

The United Nations Convention against Corruption is the only legally binding universal anti-corruption instrument. The Convention's far-reaching approach and the mandatory character of many of its provisions make it a unique tool for developing a comprehensive response to a global problem. The Convention covers five main areas: preventive measures, criminalization and law enforcement, international cooperation, asset recovery, and technical assistance and information exchange. The Convention covers many different forms of corruption, such as bribery, trading in influence, abuse of functions, and various acts of corruption in the private sector.

The present Technical Guide is the product of a joint project of UNODC and UNICRI.

The objective of the Guide is to lay out a range of policy options and considerations that each State Party needs, or may wish, to take into account in national efforts geared towards implementation of the Convention. The Guide primarily focuses on the provision to anti-corruption practitioners and authorities of relevant technical advice, tools and examples of good practices to make the articles of the Convention operational. In this sense, it complements the Legislative Guide for the Implementation of the Convention which was drafted for use mainly by legislators and policymakers in States preparing themselves for the ratification and implementation of the Convention. Therefore the two Guides have to be considered jointly.

The 2018 report of the Inter-agency Task Force on Financing for Development finds that most types of development financing flows increased in 2017, and that there has been progress across all the action areas of the Addis Ababa Action Agenda.

This progress was underpinned by an upturn in the world economy, but at the same time the report warns that risks could derail development progress and structural impediments continue to undermine sustainable development prospects. The 2018 report provides policy options which, if implemented, would put the world on a sustained and sustainable growth and development path.

It also examines the financing challenges to the SDGs under in-depth review in 2018 to help assess progress in the means of implementation for goals on water and sanitation, affordable and clean energy, sustainable cities and communities, sustainable production and consumption, and terrestrial ecosystems. The 2018 report is the second substantive assessment of progress in implementing the Financing for Development outcomes and the means of implementation of the Sustainable Development Goals since the adoption of the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda.

The assessment draws on the expertise, analysis and data from almost 60 agencies and international institutions that make up the Task Force, which is led by UN DESA and includes the World Bank Group, the International Monetary Fund and the World Trade Organisation, as well as UN agencies such as UNCTAD and UNDP.

Abstract

The protection of foreign investment by treaties often clashes with the State's sovereign right to investigate economic crimes committed by investors.

This article examines the different approaches taken by tribunals to questions concerning admissibility and jurisdiction, applicable law, the standard of review, the burden and standard of proof and deference to actions taken by domestic courts and regulators related to economic crimes. It concludes that investors should not automatically be deprived of treaty protections and their access to investment arbitration blocked.

The arbitration agreement, being autonomous from the main contract (or the relevant treaty), should, as a rule, remain valid even if the conduct of investors is tainted by economic crimes. The article calls on investment tribunals to reflect in their awards on the contributory fault of the parties when representatives of States and investors are both complicit in economic crimes.

To achieve greater legal certainty and procedural efficiency, a new generation of investment treaties and the practice of investment tribunals should draw on not only applicable domestic law but also existing sources of international law concerning economic crimes or national best practice.

1 FINAL REPORT OF THE PEOPLE’S TRIBUNAL ON ECONOMIC CRIME First Hearings: 3-7 February 2018 Arms Trade 20 September 2018

www.pwc.com/fraudsurvey Global Economic Crime and Fraud Survey 2018 6th South African edition February 2018 The dawn of proactivity: Countering threats from in…

The present legislative guide is the product of a broad participatory process. A group of experts from all geographical regions and representing the various systems of law, as well as observers from relevant United Nations entities and other international organizations, contributed to the development of the legislative guide.

The objective of the legislative guide is to assist States seeking to ratify and implement the Convention by identifying legislative requirements, issues arising from those requirements and various options available to States as they develop and draft the necessary legislation.

The present publication contains the travaux préparatoires (official records) of the negotiations for the elaboration of the United Nations Convention against Corruption, adopted by the General Assembly in its resolution 58/4 of 31 October 2003.

The purpose of the publication is to track the progress of the negotiations in the open-ended intergovernmental Ad Hoc Committee for the Negotiation of a Convention against Corruption, which was established by the General Assembly in its resolution 55/61 of 4 December 2000, with terms of reference that were taken note of by the Assembly in its resolution 56/260 of 31 January 2002. It is intended to provide a comprehensive picture of the background to the Convention and, by presenting the evolution of the text, to give the reader an understanding of the issues confronted by the Ad Hoc Committee and the solutions it found. Thus, this publication is intended to provide a better, in-depth understanding of the Convention.

• The present Travaux Préparatoires of the negotiations for the elaboration of the United Nations Convention against Corruption will become available in all official United Nations languages in due course.

Today’s economic system is a system driven by shareholder value and the interests of large corporations: it maximises their profits, often ignoring the social and environmental costs.

The current globalised world does not offer a sustainable level playing field, and as a result, corporations are caught in a race to the bottom. SOMO wants to contribute to a fair economic system, in which corporations and investors contribute to financing public goods and services, and governments and institutions implement adequate checks and balances, serving social and ecological interests.

Private gain, public loss SOMO’s research reveals how the current economic and financial system perpetuates economic inequality, and how it exacerbates the power imbalance between the private sector and civil society. Through corporate tax avoidance. Through trade and investment agreements that give companies the right to sue governments for enacting sound social policy.

Through a volatile financial system that is increasingly disconnected from the real economy. It is a system of private gain and public loss that leaves ordinary people paying the price. Our focus is on the social and economic impact of tax treaties and regimes, trade and investment mechanisms and agreements, and the practices and lobby of the financial sector.

We pay particular attention to the impact of Dutch and EU policies on low-income countries, examining the degree to which they cohere with sustainable development policies and human rights frameworks. Economic changes We work with others in the Netherlands, in Europe, and across the globe, to adapt the economic system, so it serves the public interest and facilitates a more equitable distribution of resources. We want people to be able to control their own economic circumstances, through democratic processes with adequate checks and balances.

A people's tribunal aimed to facilitate a discussion about corruption, economic crime and state capture in South Africa. Submissions due on 10 Nov 2017.

Given the failure of state institutions to fully investigate allegations of corruption and state capture, members of civil society held a People’s Tribunal on Economic Crime in South Africa from the 3rd to the 7th of February 2018. The Tribunal heard and collected evidence in order to make findings that will be handed over to the relevant authorities for further investigation.

ECONOMIC CRIME


Economic crime, also known as financial crime, refers to illegal acts committed by an individual or a group of individuals to obtain a financial or professional advantage. The principal motive in such crimes is economic gain.

Economic crime areas of specific interest to Europol joint investigation teams include:

MTIC (Missing Trader Intra Community Fraud) fraud, which involves the criminal exploitation of value-added-tax (VAT) rules in the EU, resulting in lost revenue running into the billions of euro for Member States;
excise fraud, which refers to the smuggling of highly taxed commodities such as tobacco, alcohol and fuel;
money laundering, the process of making the proceeds of criminal activity appear legal.

LOW RISK, HIGH PROFITS

The low risk and high profits associated with economic crime make it a very attractive activity for organised crime groups. The likelihood that fraud will be detected and prosecuted is low because of the complexity of the investigations required. This is particularly so for cases of fraud that can be uncovered only through international cooperation, and for internet offences for which jurisdiction needs to be established.

Organised criminal groups operating at an international level benefit from differences in national legislation. Individual and organisational vulnerabilities such as a lack of awareness on the part of victims and low risk perception by target groups are enabling factors for most types of fraud.

NOT VICTIMLESS

There is increased awareness that certain acts within the financial sector that were once considered to be merely poor business practice may in fact have been criminal. Widespread reckless investment, misrepresentation of financial statements and conspiring to manipulate inter-bank interest rates fall within the definition of serious and organised crime.

The huge losses associated with high-level financial fraud undermine social-security systems and destabilise economic systems, thus clearly indicating a failure of self-regulation.

CURRENT THREATS

The 2017 Serious and Organised Crime Threat Assessment (SOCTA) highlights a number of fraud areas that are of particular concern to Europol and law enforcement in Member States. These crime areas, which are described in more detail below, are:

investment fraud
mass-marketing fraud
payment-order fraud
insurance fraud
benefit fraud
EU subsidy fraud
procurement rigging
loan and mortgage fraud.
Investment fraud relies on social engineering techniques – the use of deception to manipulate individuals into divulging confidential or personal information that may be used for fraudulent purposes – making it particularly hard to counter. This type of fraud can be highly lucrative, with one investigation revealing that an organised crime group generated estimated profits of up to EUR　3 billion from the activity.

The most common investment fraud schemes in the EU are:

Boiler room schemes, where fraudsters cold call their victims and pressure them into investing in non-existent or very low-value stocks. The criminals often use false documents and certificates to present their company and stock as legitimate.

Ponzi schemes, where fraudsters attract a group of initial investors with promises of very high returns in a very short time. To attract more victims, the fraudster will start to repay the initial investors using funds accrued from additional investors. Ultimately, the investors are left empty-handed when the fraudster disappears with the funds, which have been laundered through multiple bank accounts held by various front companies in different jurisdictions.

Pyramid schemes, which are similar to Ponzi schemes. However, the initial investors are actively involved and are required to recruit new investors in order to make profits.

In mass marketing fraud, criminals use a variety of communications means, such as telephone calls, the internet, social media, mass mailing, television or radio, to contact victims and solicit money or other items of value in one or more jurisdictions. For example, between May 2014 and May 2015, a UK-based organised crime group defrauded over EUR　690,000 from pensioners across the country. Posing as police officers, the criminals contacted victims by phone to warn them of the risk of fraud involving their bank. The victims were encouraged to transfer their savings to safekeeping accounts controlled by the fraudsters.



Payment order fraud is where criminals use fraudulent transfer orders to defraud private and public sector organisations. Typically, the affected organisations are active internationally. This increasingly common type of fraud is also referred to as CEO fraud, wire transfer fraud or business email compromise. Criminals rely on social engineering techniques and malware to carry out this type of fraud. Typically, stolen funds are transferred through series of accounts in various Member States before reaching destination accounts outside the EU.



Insurance fraud describes the defrauding of private and public insurance providers. Organised crime groups are increasingly involved in fraud schemes targeting healthcare systems.

Benefit fraud involves the targeting of social and labour benefit schemes and is strongly linked to trafficking in human beings and migrant smuggling.

EU subsidy fraud is where criminals submit fraudulent applications for EU grants or tenders. Typically, these applications are based on false declarations, progress reports and invoices.

Procurement rigging is where criminal groups use bribes to elicit information or directly influence the evaluation of bids in order to win public service tenders in competition with legal businesses. This type of manipulation is particularly notable in the energy, construction, information technology and waste management sectors.

Loan and mortgage fraud involves fraudsters using fraudulent documents to obtain bank loans, which are never paid back.