|
The Morning Risk Report: How a Credit Suisse Banker Helped Fuel an Alleged $2 Billion Debt Fraud
|
|
|
|
|
|
|
Andrew Pearse pleaded guilty to charges arising from an alleged conspiracy to defraud investors in Mozambique debt deals. PHOTO ILLUSTRATION BY EMIL LENDOF/THE WALL STREET JOURNAL
|
|
|
Good morning. Former Credit Suisse Group banker Andrew Pearse’s life was a whirl of clandestine meetings, secret bank accounts and exotic travel—and then he and two former colleagues pleaded guilty to charges arising from an alleged conspiracy to defraud investors in Mozambique debt deals.
In October, Mr. Pearse was the star government witness in the trial of Jean Boustani whom the U.S. Justice Department has accused of fraud and money laundering in $2 billion of debt deals in Mozambique. A verdict in Mr. Boustani’s trial could come as soon as Monday.
[Continued below…]
|
|
|
Mr. Boustani has denied paying bribes and disputed Mr. Pearse’s account of the payments. He said Privinvest backed Mr. Pearse’s boutique investment firm and paid him a share of revenue. Lawyers for Mr. Pearse and Mr. Boustani declined to comment.
The trial came at a sensitive time for Credit Suisse, which drew fire in September for hiring investigators to spy on a banker who left for a competitor. That episode and the Mozambique deals added to questions about the bank’s oversight following client tax-evasion scandals and regulatory failings in recent years. The Swiss bank arranged financing for two of the three Privinvest Group projects that ultimately defaulted on their debts. Credit Suisse says it is a victim of rogue employees in the Mozambique deals and is cooperating with authorities.
|
|
|
|
Regulatory Compliance in a Disrupted World
|
|
Join The Wall Street Journal on Dec. 10 in London for a discussion about regulatory risk and geopolitics with Anna Bradshaw, a partner on the business crime team at Peters & Peters Solicitors; Neil Donovan, a senior associate at Freshfields Bruckhaus Deringer; and Sophie Harding, global geopolitics lead at KPMG International. To register, click here.
|
|
|
From Risk & Compliance Journal
|
|
|
|
The Commodity Futures Trading Commission filed a record 16 enforcement actions alongside related criminal charges during the 2019 fiscal year, the agency said in its annual enforcement report. PHOTO: STEPHEN VOSS FOR THE WALL STREET JOURNAL
|
|
|
The nation’s derivatives regulator is filing more enforcement cases in tandem with criminal prosecutors, creating a more muscular approach to deterring wrongdoing in the markets it oversees. The Commodity Futures Trading Commission during the 2019 fiscal year filed a record 16 enforcement actions alongside related criminal charges, the agency said in its annual enforcement report.
Coordination between the CFTC and criminal prosecutors has been on the rise for several fiscal years, with the agency filing 14 parallel actions during 2018 and two in 2017, the report said. A big reason for the upswing: The agency has strengthened its relationship with the U.S. Justice Department, sharing information on cases in which it spots potential criminal activity. Doing so has enabled the CFTC to send a stronger message to the companies it regulates, and to the individuals those companies employ.
|
|
|
-
Police have launched an investigation into Norwegian bank DNB AS A’s involvement in handling payments from an Icelandic fishing company embroiled in a bribery probe.
-
Swedish state broadcaster SVT said that about 194 clients at Skandinaviska Enskilda Banken are suspected of using the bank to launder money through Swedish and Baltic accounts, with around 475 million Swedish kronor ($49.4 million) linked to the case of Sergei Magnitsky, the tax lawyer who died in a Russian prison in 2009 after accusing tax officials of siphoning money from the company he was working for, Hermitage Capital.
-
Amazon has removed mercury-laced skin lightening creams from its U.K. and U.S. websites and eBay is reviewing products on its platform, following an investigation that found e-commerce companies are selling cosmetics with mercury levels in violation of an international convention.
|
|
|
|
A blue Kanto Kosan wastewater-processing barge is docked at the U.S. Navy base in Sasebo, Japan. The Navy’s contracts with Kanto Kosan were worth more than $100 million since 2008. PHOTO: ALASTAIR GALE/THE WALL STREET JOURNAL
|
|
|
-
A Japanese contractor is under investigation by U.S. federal authorities for possibly dumping wastewater from American warships into Japanese harbors, in a case that shows the U.S. Navy’s ongoing struggles in overseeing its contractors.
-
Four UPS workers have been arrested as part of a long-running investigation into how criminal organizations use the shipping giant to move narcotics into the U.S. The UPS drivers and supervisors were among 11 people arrested in the Tucson, Ariz., area, over approximately the past two weeks, law-enforcement officials said. The individuals face a range of state charges, including drug smuggling and money laundering.
-
GPB Capital Holdings LLC faces renewed allegations of fraud by a Massachusetts auto executive whom the alternative asset manager forced from his leadership role earlier this year.
-
PG&E has lost a challenge to a California law that holds it liable for property damage from fires related to its equipment, a win for wildfire victims seeking to collect billions of dollars in the utility’s bankruptcy.
-
An international network of financial watchdogs said the Vatican’s handling of confidential information posed “an evident security threat to our organization,” in a statement explaining why it suspended the Vatican from access to its information. The suspension comes at a delicate moment, ahead of an on-site evaluation of the papal state early next year by the official pan-European money-laundering watchdog Moneyval.
-
President Trump said the U.S. plans to designate Mexican drug cartels as foreign terrorist organizations, a move that would expand the potential scope of U.S. action through tougher legislation and stiffer penalties.
|
|
|
|
Vape consumer-advocate groups and vape store owners rallied outside the White House on Nov. 9 to protest the proposed vaping flavor ban in Washington. PHOTO: JOSE LUIS MAGANA/AGENCE FRANCE-PRESSE/GETTY IMAGES
|
|
|
The Food and Drug Administration is coming under attack for not prioritizing study of whether vaping products may well be an important way to reduce deaths from traditional smoking, even as more state and local governments have imposed restrictions on flavored e-cigarettes.
More than 480,000 Americans die each year from causes related to cigarette smoking. Some leading academic researchers believe e-cigarettes may be an effective and safer alternative. Those scientists and doctors say e-cigarettes should be tested as medical products that can get smokers to quit, since they dispatch nicotine into the bloodstream.
|
|
|
-
U.S. lawmakers detailed their proposal to combat illegal robocalls, unveiling a bipartisan bill that appears on track to become law in the coming weeks. As with many of the government’s efforts to combat the scourge of calls inundating Americans, this one isn’t likely to stop the calls. Instead, it arms the government with tougher enforcement tools for what officials say will be a long fight to curb them, and launches a number of regulatory and industry initiatives designed to attack the problem.
-
Credit unions, long seen as a humdrum corner of consumer finance, are going toe-to-toe with the biggest financial institutions. Credit unions’ assets have grown at nearly twice the pace of banks’ over the past decade, and the cooperatives are buying small banks in record numbers. One recently partnered with Google on its plans to create a checking account.
|
|
|
|
‘My father was totally worried about me,’ says Sachin Kumar Soni, regarding calls from collection agents. PHOTO: VIVEK SINGH FOR THE WALL STREET JOURNAL
|
|
|
-
Silicon Valley venture capital is funding a wave of fintech startups in India that use data from borrowers’ cellphones to collect on debts in ways that are illegal in both India and the U.S. The startups are providing much-needed credit in India, where consumer lending has been limited by a lack of credit scores and by banks that are reluctant to make personal loans. While the newcomers’ tactics are illegal, they are ignored by Indian regulators who want to encourage lending, according to analysts and company insiders. The startups also use personal data to make lending decisions.
-
Nearly $50 million was swiped from a South Korean cryptocurrency exchange, the industry’s latest setback as it struggles with problems still plaguing cryptocurrencies and the venues where investors trade them.
|
|
|
|
Target retrained the bulk of its 300,000 year-round U.S. workers over the past year. PHOTO: JACKSON KRULE FOR THE WALL STREET JOURNAL
|
|
|
-
Retailers are racing to adapt to a world where shopper behavior is changing and competition for online spending is fierce. Target, Walmart and other retailers are staffing stores differently in an effort to meet new competitive challenges, as well as attract workers and control payroll costs amid the tightest labor market in decades.
-
General Electric aims to excite investors about its health-care unit, a business that was tagged to be cast off but is now central to the company’s turnaround efforts.
-
Etsy is banking on a new free-shipping strategy to help boost sales as it faces pressure from investors who worry about the company’s growth potential.
|
|
|
|
Huawei’s drive to shake off its dependence on U.S. parts goes beyond smartphones. PHOTO: ALEX TAI/SOPA IMAGES/ZUMA PRESS
|
|
|
American tech companies are getting the go-ahead to resume business with Chinese smartphone giant Huawei, but it may be too late: It is now building smartphones without U.S. chips.
Huawei’s latest phone, which it unveiled in September—the Mate 30 with a curved display and wide-angle cameras that competes with Apple’s iPhone 11—contained no U.S. parts, according to an analysis by UBS and Fomalhaut Techno Solutions, a Japanese technology lab that took the device apart to inspect its insides.
In May, the Trump administration banned U.S. shipments to Huawei as trade tensions with Beijing escalated. That move stopped companies like Qualcomm and Intel from exporting chips to the company, though some shipments of parts resumed over the summer after companies determined they weren’t affected by the ban.
|
|
|
|
|
|