Category Frauds

You may have read varied analyses and opinions on the recent FTX debacle including the due diligence failures and impacts highlighted in the Intelligence Online snippet captured in the picture below.

The flip side of a coin is the wake up call that pre-transaction due diligence must be more exhaustive and deep-dive to leave no stone unturned, and no longer a stroll-in-the-park, check-the-boxes exercise.

Whether confidence has taken a nosedive or demands (on due diligence) have been boosted depends on who’s talking but to borrow an old adage, if I may: It takes two to Tango. And in this case, the dancers are the investigator/consultant and the client.

The investigator/due diligence specialist brought onboard has a professional duty and obligation to give the best advice to the client. And as much as he/she wants the client to go “all out”, the reality is the client has constraints like budget, time, resources, etc, compliance and regulatory requirements aside. Hence the burden on the investigator is to work closely with the client and find the best cost-effective approach, ie. “according to budget”.

The client simply wants the best solution for what’s on the table, ie. The pivotal findings to decide on whether to proceed or to kill the (pending) transaction. The last thing the client wants is to be in the front page of the newspapers for all the wrong reasons.

Which brings me back to the case of Temasek, the state holding company owned by the Government of Singapore.

I wrote in a previous post how the global investment company with a portfolio of over S$400 billion defended in a statement its “extensive due diligence process on FTX” spanning around 8 months – how it reviewed FTX financials, the regulatory risks, etc, and the “qualitative feedback on the company and management team based on interviews with people familiar with the company, including employees, industry participants, and other investors”.

The statement added:

We recognise that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.

It is apparent from this investment that perhaps our belief in the actions, judgment and leadership of Sam Bankman-Fried, formed from our interactions with him and views expressed in our discussions with others, would appear to have been misplaced.

The last paragraph above highlights something interesting.

Yes due diligence comes in many favors and the statement suggests Temasek did focus heavily on financial, legal and regulatory due diligence, and they also gathered “qualitative feedback” on the company and management team.

But that paragraph seems more of a defense and pushing the blame on FTX founder Sam Bankman-Fried, and it suggests two things: Temasek and their investigators overlooked Key Man Risk and had the Wrong Focus in their due diligence.

It’s fair to say everyone benefits from hindsight but I have elaborated in a previous post the Key Man Risk involved with a case like FTX.

Yes it takes two to Tango. The investigator and client should have recognized (with experience) from the outstart there is a potential Key Man Risk based on the background materials and knowledge of the FTX setup. That’s not to say financial (and other) due diligence are irrelevant – you may be familiar with the perils of auditing from “second or third” set of accounts?

If the due diligence have paid due attention to Key Man Risk, the public records and open source intelligence (OSINT) research and the human intelligence (HUMINT) gathering (what Temasek referred to as “qualitative feedback”) would have smoked out at least some of the staggering FTX failings that have now emerged – missing funds through “back doors”, imprecise accounting of the value of FTX’s crypto assets, unacceptable management practices, using corporate funds to buy homes in the personal name of employees, etc.

Temasek has seemingly suffered from missing leads and glaring red flags they could have gotten from a due diligence focused on the Key Man Risk with FTX.

Yes the FTX collapse has delivered a blow to the corporate intelligence world. An extensive and expensive due diligence over eight months is a luxury many investors could not afford. Corporate investigators may be happily billing the clients with cookies-cutter approach that serves no purpose if the due diligence has the wrong focus. In the Temasek case, the due diligence approach as they have explained could run well beyond eight months to a year or two and they would still not find any red flags with FTX if they had the wrong focus – for example, what’s the point if exhaustive financial due diligence is examining cooked accounts?

The FTX collapse is a wake up call for all parties involved.

Source: Intelligence Online

This article was recently printed in CSuite Magazine published by Asia CEO COMMUNITY and CSuite Xchange.

By Vanson Soo

A corporate investigations specialist and Asia CEO Community member explains how business leaders can benefit from probing into the uncharted through intelligence gathering, investigations and due diligence.

It is not everyday that one would come across someone from my industry. “Not unless one is in deep troubles”, many would tend to wrongly conclude. This is a common and fundamentally flawed misconception. Our services go beyond getting clients out of troubles. The smart and savvy business leaders regularly utilize us for strategic and pivotal decisions, to formulate business plans and negotiations, and to get to the truth and mitigate risks. This is why I was told it would be intriguing to pen this article to introduce my profession to the Asia CEO Community.

A friend who is a seasoned business reporter introduced me to an industry peer several years ago after she learned we were in the same trade. “You guys are so weird” was how she ended the introductory email. Those five words have always left me wondering: if a journalist with the top echelon of global business news gives such a sweeping remark, how can one expect the men in the streets to comprehend what is intelligence, investigations and due diligence in the business world?

“Sounds like serious spook stuff” is one common reaction.

Our industry may sound exotic or unusual to some but this industry has been around and is more common than many would think. And it does not always have anything to do with troubles. On the very contrary, it is very relevant and prevalent in the business world. Consider the following scenarios.

– The Asia CEO of a listed conglomerate has been in lengthy discussions with the founder of a competitor about a potential acquisition but left with nagging suspicions he was not dealing with a decision maker. If the founder is controlled by someone behind the scenes, who is his “puppet master”?

– A global investment bank working on a potential public listing has found social media claims that the listco is running a “ghost factory”, a potential damaging red flag that the real business activities do not match the rosy financial figures submitted to meet the stock exchange listing requirements.

– A hedge fund portfolio manager is contemplating short selling opportunities on a listed entity after hearing some market rumors but he needs to verify the grapevine before placing his bets.

There is no trouble and all business as usual above but potential deep troubles if these parties do not do their homework thoroughly and get to the truth. What the Asia CEO, investment bank and hedge fund manager above need is to mitigate counterparties risks, as often times there is a tendency that one would only paint the bright picture and hide the skeletons in the cupboard.

These situations would call for pre-transaction due diligence, ie. two parties considering a pending transaction and one would want to verify the facts put on the table in case the counterparties were not forthcoming.

The above are just some examples of real and typical cases in need for pre-transaction due diligence, which comes in different flavors such as financial, legal, environmental, human resources, IT, and intellectual property due diligence. The type of pre-transaction due diligence for the examples above is investigative due diligence, ie. to examine the counterparties involved in the pending transaction and look for red flags that could translate into material risks before one signs on the dotted line. The counterparties may not always have dirt but if there is any, it is better to uncover them before committing to the transaction.

Thanks to global headlines of mega corporate failures such as Enron, Worldcom and the likes, which have subsequently led to increasingly demanding corporate governance and related regulations, pre-transaction due diligence have been growing ever rapidly since the turn of the century, and further spurred on by the more stringent financial crime compliance environment. So the corporates and financial institutions would be compelled by regulations to conduct due diligence exercises before signing off on a pending transaction like a merger and acquisition, joint venture, public listing, greenfield operations, etc.

The C-Suite executives, general counsel and key decision-makers of a corporation, investment, private or commercial bank, private equity, hedge fund, and family office, as well as high net-worth individuals are the typical parties to demand for pre-transaction due diligence services. That is why I was disturbed by that passing remarks by my journalist friend.

Now onto the more “sexy stuff”, as one would say.

By that, I am referring to post-transaction cases as per our industry speak. Typically they are undesirable situations stemmed from multiparties business transactions/agreements, leading to allegations that warrant the hire of investigators to provide pivotal smoking-gun evidence for their lawyers to prevail in or out of courts. The investigators would deploy various means of investigations as appropriate, including public records and open source intelligence research, forensic investigations, intelligence gathering, gumshoe leg-works like site visits and surveillance, etc.

At the blink of an eye, many people would often associate my profession with the cloak-and-dagger cases involving or characteristic of mystery, intrigue or espionage, ie. spycraft, that most people would relate from movies and novels. Indeed, post-transaction investigations are often full of twists and turns, involving a lot of hard works in the field, sans the James Bond or Hollywood type glamorization.

There are many different types of post-transaction matters. The following are some of the common ones.

– A company received a whistle-blower letter that its factory in Southeast Asia is bloated with frauds and embezzlement involving many of its current and former employees, contractors, suppliers, distributors and vendors, some of which with ties to the local government and supervisory authorities to run parallel and competing businesses, siphoning clients and resources away from the company. The company hired investigators to examine these allegations with the aim of finding smoking-gun evidence to help the lawyers press criminal charges against the alleged parties.

– The stock exchange suspended trading of a listed company after market rumors sent its share price into a tailspin, which eventually led the company into liquidation and endless lawsuits from shareholders alleging management of frauds and various wrongdoings. One institutional investor hired a law firm to file suit against the board but the lawyers found some of the executives may have fled the country with an array of footprints and assets for investigators to trace globally.

– A high net-worth individual found some of his business associates may have abused their appointment as directors and business nominees to secretly strip and divert his companies interests into the hands of some offshore entities through some fancy paperwork he was never aware of. The business tycoon hired investigators to assist his in-house counsel in a global forensic trail to trace the documents and map out the complex manipulations and misrepresentations responsible for his dire situation and financial losses.

Now it should become obvious that in both pre- and post-transaction situations, the sky is the limit with risks, and the losses can be bottomless. The resources spent on investigative services are often minor relative to what is at stake.

The corporate slogan of my practice sums up nicely what a business leader requires for every business situation:

More truth less risk
Take a closer look.

——–

Vanson Soo is the founder of Vanuscript Consulting, a Hong Kong-based independent practice in intelligence, investigations and due diligence covering the Asia Pacific region with a special focus on Greater China.

Many thanks again to the Faculty of Law at the University of Hong Kong for hosting my presentation on “Whistleblowing & Internal Monitoring/Investigations” yesterday. It was a really interactive and responsive class. The scheduled three hours was barely enough to cover what I estimated to be an hour plus presentation thanks to all the interesting questions and my sincere apologies to the class for rushing through the latter parts of the slides.

One question at the end of the session, what’s the take-away on the topic.

With and without a poison-pen letter from a whistleblower, a pre-transaction reputation/investigative due diligence should always be conducted ahead of all other types of due diligence. This is not a biased opinion but one proven by real life experience from many past cases whereby some serious and damaging red flags on reputation issues/risks could potentially kill a transaction no matter how good the counterparties emerged in the legal, financial and other due diligence – although in some situations clients took advantage of the negative findings to re-negotiate terms for the pending transaction. Information is power!

In a post-transaction external/internal investigation especially one potentially heading to the courts, with and without a poison-pen letter, it is critical to conduct public records research first as the findings could be documented evidence legally admissible in courts that can help the lawyers and clients win the case. If the public records search turns out futile (a likely scenario in non-transparent and opaque jurisdictions), the findings from intelligence becomes pivotal.

I shared with the class an example of a typical court case whereby the client wins if we can prove two people A & B collaborated on a fraud scheme. No surprise they denied even knowing each other. A barrister once told me how he often receives surveillance photos of A & B say having coffee together as evidence – and how he can easily lose the case with such weak evidence. The best evidence is to prove the two have a long history of relationship – they attended the same school (public records), they were past business partners (public records), their companies were sued (public records), they commented on each other’s FaceBook (could be public records), etc. In the absence of any/sufficient public records evidence, findings from intelligence gathering can potentially turn into public records and important evidence. Consider:

– They not only attended the same school but same class, same computer club and even went on a school camping trip to Nepal when they were 10. The latter are findings from intelligence gathering
as they may be difficult to find in public records but the sources could provide photos as proof.

– They were in the same WhatsApp & WeChat groups? A source from the group could provide a screenshot of group members as proof.

– They were neighbors when they were young? This could be difficult to prove in public records because they don’t own the properties then but if there’s a lead they were neighbors, a search on their parents names could lead to documented proof.

Hence the importance of intelligence gathering. And thinking out of the box.

Well, what can I say?

Check out the related news here.

Check out the related news coverage.

This is really sick…

Fake Cancer Charities Gave Sick Kids Expired Meds and Little Debbie Cakes

Michael Daly
Only in America05.19.159:39 PM ET

The family behind four so-called cancer charities enriched themselves on donations while giving junk food and bad drugs to sufferers, the feds say—but they’re not facing jail time.

If you think the worst of us are behind bars, consider what you can be accused of doing and not face so much as a minute in jail:

You and your family can run four cancer charities that raise $187 million on false pretenses in the name of kids with cancer and women with breast cancer and the terminally ill of all ages—but spend less than 3 percent of that money on cancer victims.

Meanwhile, you can pay yourself and your relatives big salaries and over-generous bonuses while using donated funds to pay for cars, Disney World trips, jet ski outings, luxury travel, and college tuitions.

And you can use company credit cards for personal expenses, including meals at Hooters, gas, car washes, cellphone apps and games, iTunes songs, and dating website subscriptions, as well as ticket to concerts, sporting events, and movies.

“This is as about as bad as it can get: taking money away from cancer victims,” Jessica Rich, chief of the Federal Trade Commission Bureau of Consumer Protection, told reporters as her agency and the attorneys general of all 50 states brought a complaint against Cancer Fund of America, Cancer Support Services, the Breast Cancer Society, and the Children’s Cancer Fund of America.

To make matters even worse, one of the charities allegedly used some of what little it did spend on cancer victims to furnish sick kids with expired antibiotics that are in fact contraindicated for children.

Another of the charities provided breast cancer victims with drugs that, in the words of a federal complaint, “are not typically used for the treatment of breast cancer and, in some instances, are not recommended for use by persons who have had cancer.”

“Some have even been associated with an increased risk of cancer,” notes the complaint filed this week by the Federal Trade Commission.

The charities are said to have passed along as “direct patient aid” such donated items as adult diapers, sample-size toiletries, and Little Debbie snack cakes.

“They make people happy,” James Reynolds Sr., patriarch of the extended Tennessee family that runs the four charities, is quoted as saying by the complaint.

Reynolds then switched to Moon Pies.

“They make you happier,” Reynolds supposedly said.

And, even though the clan managed to get the Little Debbie snack cakes, the Moon Pies, the adult diapers, and the rest for next to nothing, the charities are said to have claimed the retail amount in financial filings. The idea, apparently, was to make it look like they devoted more of the donations to cancer patients than what little they did.

All the while, the charities are said to have raised ever more money with false and misleading claims, passing themselves off as being “on the forefront for the fight against cancer” and “on the forefront of actually helping needy children with cancer.”

In an alleged effort to squeeze more money out of unsuspecting donors, the charities scripted such telemarketing pitches as, “I understand [your hesitation to give]; however, we never want to have to tell a family that is stretching their finances to the breaking point that, ‘We’re sorry, but the CANCER FUND has fallen short of its fundraising goal, so we won’t be able to provide you with a wig for your child to cover the hair loss due to chemotherapy.’”

Never mind that these charities did not have a program to provide wigs to sick children.

The charities also claimed: “We help cancer patients anywhere in the United States. Men, women, and children with over 240 types of cancer.”

And although they seem not to provide hospice care of any kind, they still claimed: “We also do the hospice care for the terminally ill…We’re the ones that do the hospice care for the cancer patients afflicted with cancer from infants to adults…One hundred percent of our proceeds go to hospice care.”

The complaint notes that in fact “100% of the donations do not go to hospice care.”

On top of all this, the companies allegedly claimed millions of dollars in tax deductions for items delivered to cancer patients—even though the charities purchased nothing but rather served only as a conduit, if the goods existed at all.

And James Reynolds Sr. awarded plum jobs not only to his son, wife, sister-in-law, and mother-in-law, but also to his ex-wife, his stepson, and even a step-nephew.

One of the supposed charities, the Breast Cancer Society, was run by Reynolds’s son, James Jr.; the Children’s Cancer Fund of America was run by Reynolds’s ex-wife, Rose Perkins. Both have agreed not to contest the complaint and to shut those two charities down.

Under the deal they cut with the feds, the son officially faces a judgment of $65 million, but that will be suspended after he pays just $75,000. Perkins is hit with a $30 million judgment, but that will be suspended without her paying a penny due to her supposed lack of funds.

In the meantime, the son is insisting on the Breast Cancer Society’s website that he has not admitted guilt to anything:

“While the organization, its officers and directors have not been found guilty of any allegations of wrongdoing, and the government has not proven otherwise, our Board of Directors has decided that it does not help those who we seek to serve, and those who remain in need, for us to engage in a highly publicized, expensive, and distracting legal battle around our fundraising practices.”

And the patriarch, James Reynolds Sr., is promising to fight the allegations against himself and the other two charities, Cancer Fund of America and Cancer Support Services.

The feds and the combined attorneys general are resolved to press their civil case against him.

But the most Reynolds Sr. presently risks is a monetary judgment that he may escape paying the way his son and his ex-wife did.

He faces not a minute behind bars, where the very worst of us supposedly reside.

One should never wish anybody to fall terminally ill, but if Reynolds Sr. does, let him eat Little Debbie snack cakes.

Or, better yet, Moon Pies.

As it so happened, everything started and ended in Geneva…

It was a cold morning in mid-December 2008. Hervé Falciani has just finished packing his favorite black Rimowa luggage and a small handy leather bag with his five precious CDs safely tucked to the bottom.

“Mate I’m getting ready to leave for Nice for a few days, to do you know what,” he wrote on his encrypted email.

“Good luck mate. That’s the spirit. Am actually planning to get myself out of Geneva and home for good shortly after the New Year. Keep those stuff safe,” the reply promptly appeared on the computer screen.

“Will do. Thanks so much for all the guidance. Take care!” Falciani penned off, half-wishing his pal Snowden was not serious about leaving Geneva.

Well, that was probably how John le Carré approached his next best-selling spy novel but this opening scene may not be too far from the truth.

Falciani was widely dubbed the Snowden of the banking world when the HSBC exposé stole global headlines early this week. According to his profile, the then-36-year-old dual French-Italian national joined the British banking giant HSBC in 2000, in Monaco where he grew up, and was transferred to HSBC Private Bank (Suisse) in Geneva, Switzerland in 2006.

That was the same year Edward Snowden joined the CIA and the now famous whistleblower behind the NSA revelations was posted to Geneva the following year under diplomatic cover, where he admitted having grown disillusioned with American spy craft. He left Geneva and the agency in 2009.

And as an undercover CIA operative based in Geneva, Snowden probably knew some bankers as The Guardian once reported:

He described as formative an incident in which he claimed CIA operatives were attempting to recruit a Swiss banker to obtain secret banking information. Snowden said they achieved this by purposely getting the banker drunk and encouraging him to drive home in his car. When the banker was arrested for drunk driving, the undercover agent seeking to befriend him offered to help, and a bond was formed that led to successful recruitment.

The possibility that Snowden and Falciani knew each other may be a novelist’s creation and a trivial even if it’s true. But nevertheless, it would open up many possibilities.

Consider, for example, both claimed to have reported to their superiors, who ignored their respective complaints and warnings. Both became whistleblowers and accused for their actions. The two IT experts stole and released troves of internal data to the media – Falciani, the systems specialist of the HSBC Private Bank in Geneva now under the global spotlights, reportedly met French tax investigators at a cafe in Nice airport before Christmas of 2008 and handed them five CDs worth of confidential data pertaining to some 130,000 clients and 300,000 private accounts from 200 countries – which eventually reached then Finance Minister of France Christine Lagarde, who subsequently shared it with other countries.

And the rest was history as we know today.

Snowden is scheduled to speak via video-conference this Friday to the International Students For Liberty Conference in downtown Washington, D.C. Would be interesting to hear what he has to say about the HSBC exposé and… his friend Falciani.

In what looks like the opening salvo in response to the major cyberattack on Sony Pictures Entertainment, the United States slapped North Korea with a new round of sanctions last Friday when President Obama signed an Executive Order authorizing the imposition of sanctions and designated 3 entities and 10 individuals for being agencies or officials of the North Korean government.

According to a Treasury Department statement:

The identifiers of these 10 individuals are:

But the US government knew sanctions have had limited impact on the Hermit Kingdom. The new sanctions might be deemed as swift and decisive measures in some quarters but it is really nothing more than a window-dressing of sorts – much like animating a gun with one’s fingers under a coat as a first warning at best. Consider, for example, what kind of impact should one expect from these new sanctions anyway? The 3 organizations were already on the US sanctions list and the 10 North Koreans are highly unlikely to have assets in the US, at least not under their name.

In any case, the horizon ahead of 2015 is likely to be proliferated with more headlines about catastrophic data breaches.

And the Sony cyberattack actually pale in comparison to other data breaches on record, as shown (below) by independent data journalist and information designer David McCandless – you can also click on the bubbles to find out about these cases shown in the chart and table nicely compiled and presented in his blog.

AfriLeaks, a brand new anonymous whistleblowing platform, will be launched end November but unlike the renowned and established WikiLeaks, this African cousin will not be releasing secret information directly to the public.

“[AfriLeaks will] provide a secure tool for connectivity between the whistleblowers and the media who then investigate the substance and character of the leak,” according to Khadija Sharife of the African Network of Centers for Investigative Reporting (ANCIR) – the organization that will host the platform – in a Deutsche Welle report earlier this week

According to Deustche Welle, unlike WikiLeaks’ aim to publish and disclose information, “AfriLeaks will be there to provide leads for stories to media and research organizations. The new platform will allow whistleblowers to choose the media or research organization to which they want to send the information”.

WikiLeaks founder Julian Assange may be smiling. According to a biography (above), Assange described “going to Africa and testing my ground” in the early days of WikiLeaks where one of the very first story his whistleblowing platform broke was on Kenya – which was then fed to The Guardian who ran “The Looting of Kenya” as a front-page story. The article was subsequently picked up by the Kenyan media.

“From our point of view, the leak supported the idea that oppressed media organizations could suddenly be freed when a story that mattered to them – and which they couldn’t reveal on their own – was given legitimacy and the oxygen of international exposure first,” according to the book.

“We kept at it, kept publishing stuff that the African papers were too frightened to publish…”

The FBI announced last week that law enforcement agencies including the bureau, the Department of Homeland Security and Europol have arrested 26-year old San Francisco resident Blake Benthall (below) who was allegedly the operator and administrator – under the handle “Defcon” – of the online drugs marketplace Silk Road 2.0, just a year after the original Silk Road’s alleged mastermind, Russ Ulbricht, was also arrested in San Francisco.

According to related court documents, Benthall was charged last Friday with narcotics trafficking, as well as conspiracy charges related to money laundering, computer hacking, and trafficking in fraudulent identification documents – which Benthall reportedly “admitted to everything”.

“The website [Silk Road 2.0] has operated on the “Tor” network, a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the network’s users,” according to the FBI.

The globally coordinated effort involving 17 nations dubbed Operation Onymous – obviously as opposed to the “anonymous” Tor network – has reportedly led to 17 arrests and a seizure of more than 400 “hidden services” and darknet domains, $1 million in bitcoins, $250,000 in cash plus a variety of drugs, gold and silver.

It later emerged there were actually just over 27 sites seized – including Silk Road 2.0 – instead of more than 400 as initially reported: the FBI spokesperson David Berman later clarified the 400 URLs amounted only to a dozen or so sites.

However, several pertinent questions surfaced:

– Is Tor still safe given the FBI has obviously broken (how?) into it?

– Is the world really a safer place after the FBI shut down a major “darknet” marketplace? What makes the authorities rule out the emergence of a more secure, bigger and effective Silk Road 3.0? (The FBI said in its press release that “Those looking to follow in the footsteps of alleged cyber-criminals should understand that we will return as many times as necessary to shut down noxious online criminal bazaars. We don’t get tired.”)

– How much of taxpayers’ monies were spent to make these 17 arrests in 17 nations with this global operation?

A handful of “rogue” Canadian spies on secret missions overseas were “tortured and hanged” though the truth was covered up and hidden from the Parliament and also the sleuths’ families, according to a tell-all book “The Man Behind the Bow Tie” by Arthur Porter (pictured above – Photo Credit: Montreal Gazette), the former head of Canada’s Security and Intelligence Review Committee (SIRC), the spy watchdog of the country’s intelligence agency CSIS (Canadian Security Intelligence Service).

These spies were found to have snapped photographs of military facilities “without the formal approval” from the CSIS in a foreign country “not exactly a close friend of Canada”, according to the Toronto Sun about the release of the new memoir by Porter, a former medical doctor (oncologist) who headed the McGill University Health Center in Montreal before his SIRC spell between 2008-2011.

“Canadians ended up losing their lives. They were tortured and hanged. We had to keep the truth of how they died from their families, telling them instead that they fell off a balcony in Dubai, for example,” according to the Toronto Sun quoting Porter from his book.

“None of these incidents ever made the papers, and they were not isolated incidents. For whatever reason, agents sometimes went rogue, a bit too James Bond, and stretched the limits of their official position”.

The Sierra Leone-born Porter, always seen in his iconic bow tie, has been a controversial figure, who resigned three months prior to his SIRC term after the National Post reportedly alleged him of business dealings with a notorious international lobbyist and his own close ties to the president of Sierra Leone.

In mid-2013, the Canadian and American citizen Porter was at the center of the largest fraud investigation in Canadian history when he was arrested in Panama on alleged fraud charges relating to a kick-back scheme for the construction of the new billion-dollar hospital at the McGill University Health Center.

The release of his whistle-blowing book, to be released September 15, may raise some eyebrows considering his personal rogue history – Porter was understood to be still under arrest in Panama awaiting extradition to Canada.

Forget-me-not

“More than once, I’ve wished my real life had a delete key.” – Harlan Coben, American novelist.

If that sounds familiar, it has now become a reality but with reasons for concern – it has been two months since the controversial European “right to be forgotten” ruling. The irony is that nothing has actually changed fundamentally despite all the subsequent hoo-hah.

Let’s not forget the internet was originally designed to exchange raw data between researchers and scientists. Any attempt to manually and selectively remove the contents, successful or otherwise, is like playing God – much worse when Google decides what to delete.

I have listed an example to illustrate the lessons to be learned and price to be paid – of a somewhat similar attempt and the implications on the society at large.

You can find the entire column here.

Sometimes Auditors Have to Flee for Their Lives

Who should be most afraid of auditing in China – a US examiner, the Chinese regulators or the companies being audited? Pick those doing the examining. For all of the accounting profession’s image as a dull and boring occupation, in China it isn’t. Sometimes it can be downright dangerous.

You can find the entire column here.

That Whistle Could Have You Behind Bars

For Whom the Bell Tolls was a 1940 novel by Ernest Hemingway about an American in the International Brigades who blows up a bridge during the Spanish Civil War with death the ultimate sacrifice.

But what about For Whom The Whistle Blows? That informs the current debate about Bradley Manning and Edward Snowden, two Americans who risked their lives by leaking documents on US foreign policy and covert cyber-snooping activities during the US war on terrorism. Are they prisoners – one in a US army stockade and the other in exile in Moscow – of conscience?

In contrast to the contemptuous labels and espionage charges the US government slapped on the two, one a US Army private first class and the other a former government intelligence contractor, both claimed their motive was to spark public debate and promote greater transparency in US government conduct. Whistle-blowers in general have all along been quite rightly championed and heralded by the authorities, media and the general public – at least by those whose oxen are not being gored from the revelations. Such are the dichotomies of modern history.

You can find the entire column here and there.

The Former Sheriff of Wall Street is Back

Wall Street – and some of Asia’s markets as well – should really panic if New York’s voters give Eliot Spitzer (again) to troll through corporate records looking for wrongdoing – and if the name Jesse M. Unruh rings a bell.

Spitzer, the disgraced former New York governor and attorney general best remembered for his forced resignation five years ago after being revealed as “client #9” in the wake of a prostitution scandal, announced last week his return to the political spotlight by running for office – as the New York City Comptroller.

One would be forgiven for thinking the Harvard-trained lawyer – once considered in some quarters to be on his way to the White House – has gone low and cheap to run for a backwater auditing office best associated with pallid career politicians. But no, Spitzer the corporate scourge has other ideas.

You can find the entire column here.

The Security Assault on Social Networks

Forget hacking. It works but it’s illegal.

Big data mining is the future of cyber espionage. It is not illegal as long as the data is open source and in the public domain. And all that data on “open” social networking Web sites are most vulnerable.

Two recent commercially developed software packages could soon be giving your government and employer and possibly anyone else who is interested – ways to spy on you like never before, including monitoring your words, your movements and even your plans now and into the future.

Please read the full column here and there.

The Companies Ordinance review has been years in the making

A recent hotly debated topic in Hong Kong relates to the government’s attempt to rewrite the Companies Ordinance, spurred largely by the sudden public realization that the resulting new Companies Bill was already passed in the local legislature without much media attention and the rude awakening to the subsequent impacts.

Much of the current media focus and public debates have been placed on only one aspect of the many proposed changes: to withhold from the public parts of the identification numbers and details of the residential addresses of company directors found in the Hong Kong company registration records.

The lightning rod for public concern has struck many a wrong cord, including outcries about the suppression of transparency and apprehension over possible government submission to China’s will.

This column looks at the roots of the situation and puts the fuss in perspective.

Please read full article here.

While Attempting to Suppress Transparency

Paradoxically, even as the Hong Kong government is proposing far-reaching changes to the Companies Ordinance that would bring due diligence and investigations to a stop, officials are also quietly studying the possibility of introducing a Freedom of Information Act.

If that seems a contradiction, that’s because it is.

The Companies Ordinance amendments, either missed or ignored by the mainstream media when it was passed through the legislature earlier last year, will result in withholding from the public parts of the identification numbers and details of the residential addresses of company directors found in the Hong Kong company registration records – the very thing a freedom of information act is designed to facilitate.

Please read the full column here.

It’s been said that you can’t cheat an honest man. But you can, if he’s naïve enough
The term “confidence man” first came into general use about 160 years ago during the trial in New York of a crook named William Thompson, who accosted strangers and talked them into loaning him their watches, then simply walked off with the timepieces.
Thompson has been followed by a long parade of con men, as they are now known. And what makes a great con artist? I have had extensive hands-on experience investigating hundreds of fraud cases and commercial crimes over the years in my profession and I was wondering which one tops my chart for the greatest one I have run into.
What makes the great con artists, the men who sell the Brooklyn Bridge, who practice the schemes perfected by the famous Carlo Ponzi anyway? They have to be sly but unsuspecting; extraordinary yet ordinary; and very clever at finding simplicity out of complexity and to employ all these traits with their calculated moves, just to get the most out of their innocent victims, or we wouldn’t label them con men.
I have another criterion: their tricks have to be very simple and elegant in design. And to top it off, they should never get caught. By this set of criteria, I have a winner – an insurance fraudster I once investigated in Hong Kong some years ago (Read the entire column here and there).

When does a token of appreciation become a bribe?

Halloween is here, and I was pondering what might be in the cupboards for any surprise treat-or-trick visits from kids in the neighborhood but all I found was an empty cookie tin, which set me wondering (Read the entire column here and there).

Beware of Chinese executives bearing large contracts
Your big break has finally come. A new Chinese client has just placed a sales order so huge, with terms so favorable, that it leaves your boss envious, the lawyers numbed and you breathless about how to spend your obscene year-end bonus. What are you waiting for?
Welcome to the new world of fraud, Chinese style. You may be a victim and you are not alone.
So what went wrong?
A new kind of commercial fraud has recently evolved and become commonplace in China… (Read the entire column here).

(NOTE: This is one of my many investigative exposés on commercial crimes during my newsroom days. It bagged the Society of Publishers in Asia (SOPA) award for Excellence in Business Reporting in 2005. Somehow the link to the story is not working so I am pasting the entire script below. I also penned a follow-up piece under a different byline following the Lehman Brothers mini-bonds scandal – you can find it here.)

The Standard

By Vanson Soo 2004-11-01

Fund losses spark fury

There is never a shortage of bad investments _ or people eager to sell them to you. From Internet come-ons to “boiler rooms” in Bangkok, investors are bombarded with a steady stream of supposedly low-risk, high-return deals.

What is not so common is an investment scheme making similar claims marketed by one of the United Kingdom’s biggest financial institutions carrying what many investors took to be the implicit approval of reputable banks on three continents.

More than 7,000 Hong Kong investors, many of them affluent professionals and small businessmen, invested in one such product, the Offshore With Profits (OWP) funds sold by Clerical Medical Insurance (CMI), a subsidiary of Halifax-Bank of Scotland, one of the UK’s biggest mortgage lenders. Hong Kong was the place where a significant amount of sales for a fund that totalled about US$3.5 billion at its peak _ it is now about half that size _ took place with investors here typically investing more than US$100,000 each.

Although CMI says it does not have complete data, available information suggests that Hong Kong investors alone put more than US$700 million in the funds. Most now wish they had not. That is especially true of those who borrowed up to three times their initial investment to buy extra shares in the fund, only to see its asset value dive. At stake is whether or not they were misled by the sales pitch _ and whether Hong Kong regulators will conduct a thorough investigation into what is shaping up as one of the biggest losses in Hong Kong fund history.

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