News Archive: May - June 2005

• New York Times Special on Corruption in India: August 30, 2005 The New York Times. Celia Dugger investigates the system of small bribes that are imposed on new parents wanting to hold their own child at hospitals in impoverished areas. The report explores the inescapable burden of corruption that is acting as a “hidden tax” on some of the world’s poorest people.
  
  
• Weapons Sales Worldwide Rise to Highest Level Since 2000: August 30, 2005. The New York Times A Congressional Research Service Report on conventional arms sales presented to Congress on Monday reveals that the value of military weapons sales have jumped to nearly $37 billion, the highest level since 2000. EthicsWorld Editorial Note: We have included this article in light of Transparency International’s research that show the arms industry as second only to the construction industry in high levels of non-transparency and frequency of bribery.
  
  
• KPMG Pays $456 Million in Fines for Helping Clients Evade Taxes: August 29, 2005. The New York Times . Eight former KPMG executives were indicted on Monday and the firm agreed to pay $456 million in fines for selling fraudulent tax shelters to high net worth clients. The tax shelters were developed to help their clients evades billions of dollars in capital gains and income taxes. The board of KPMG unanimously agreed to the deal and KPMG CEO Timothy Flynn said, ''We regret the past tax practices that were the subject of the investigation.”
  
  
• Sharon’s Son Indicted on Corruption Charges: August 28, 2005. The Washington Post. Omri Sharon, son of Israeli Prime Minister Ariel Sharon, was indicted Sunday by the Israeli Justice Ministry on corruption charges. The charges are related to Omri Sharon’s alleged role in setting up fictitious companies that were used to channel around $1.3 million in illegal financial contributions to the Likud party’s political campaigns in 1999.
  
  
• Merck Rethinks Courtroom Strategy in Vioxx Cases: August 26, 2005. Financial Times. Merck has decided to revamp its courtroom strategy as a result of the determination last week to award plaintiff Carol Ernst $253 million in damages for the death of her husband after he used the company’s drug, Vioxx. Merck now faces 4,951 Vioxx-related lawsuits but believes that it can prove to jurors that Merck has acted ethically at all times and that Vioxx is not the cause of harm in the majority of the lawsuits. Merck said that last week’s determination was based on “specious scientific testimony” and hopes that in future cases the counsel will be better prepared to educate jurors about “complicated science and how it relates to their personal experience.”
  
  
• Serious Mismanagement Causes Global Fund to Suspend Uganda Program: August 25, 2005. The New York Times . The United Nations Global Fund to Fight AIDS, Tuberculosis, and Malaria has suspended its funding for grants to programs in Uganda due to the mismanagement of the grant money. The suspension came after a review of grant records by PriceWaterhouseCooper revealed “messy bookkeeping” six weeks ago. The Fund hopes that the suspension will cause Uganda to quickly implement management reforms so that funding can resume.
  
  
• Citigroup’s New Leader Emphasizes Ethics: August 23, 2005. Wall Street Journal. During a speech at Columbia University this week, new leader Charles Prince told students that it imperative to focus on long-term results. He said, “ You can never sacrifice your long-term growth, your long-term reputation, to the short term.” Mr. Prince’s ideas are a departure from prior Citigroup leaders who were known for their emphasis on fast growth, acquisitions, and year-to-year earnings. Mr. Prince’s commitment to ethics was underscored by the general counsel’s report that said last year Prince spent at least half his time working on those issues of culture and values.
  
  
• U.S. Businesses in China Face Dilemma: August 22, 2005. The Washington Post . In an article by Peter Goodman, U.S. business executives working in China revealed that often use bribes and kickbacks to win contracts, which is in violation of U.S. anti-bribery laws. They reported that it’s “normal industry practice” to funnel bribes through distribution companies or public-relations firms in order to avoid scrutiny by the U.S. Justice Department. Businesses say that the lure of the potentially lucrative Chinese market adds pressure from shareholders who want to see growth in the region and that pervasive local-level corruption makes it impossible to operate without bribes.
  
  
• Former Bank of China-Hong Kong Chief Given Suspended Death Sentence for Embezzlement: August 15, 2005 The New York Times. Liu Jinbao, former chief executive of Bank of China's Hong Kong subsidiary, was given a suspended death sentence after being convicted of embezzling $2.7 million and accepting $173,000 in bribes. Liu's death sentence will most likely be commuted to life in prison.
  
  
• New York Times Special Report on Corruption in Russia: August 13, 2005 A special report by Steven Lee Myers emphasizes the pervasiveness of corruption in Russian business and society and how corruption has continued to increase under the Putin administration despite anti-corruption measures. See the New York Times for the full report.
  
  
• Former German Defense Official Sentenced to 27 Months in Jail: August 13, 2005 Ludwig-Holger Pfahls, former junior defense minister under Helmut Kohl, was setenced to 27 months in prison for evading taxes and accepting bribes during an arms deal with Saudi Arabia in 1991. Mr. Pfahls had admitted to accepting a $2.4 million bribe from an arms dealer.
  
  
• Ex-WorldCom CFO Scott Sullivan Sentenced to 5 Years in Prison: August 12, 2005 AP, Reuters, NYTimes Ex-WorldCom Chief Financial Officer Scott Sullivan was sentenced to five years in prison yesterday. The judge called Sullivan the "architect of the fraud" and said that his offenses were "of the highest magnitude" but lessened his setenced because of his cooperation in convicting ex-WorldCom CEO Bernard Ebbers.
  
  
• Investors Wait for Sign of Political Will Behind Malaysia's Corporate Governance Reform: August 11, 2005 The Wall Street Journal. The Malaysian government is counting on the latest round of corporate governance reforms to attract foreign money into the Malaysian stock market. The reforms are aimed at Malaysia's state-controlled listed companies and the proposed reforms have contributed to a 2.5% jump in the composite index over the past several weeks. However, most investors say that they will remain skeptical until the reforms are effectively implemented. The proposed reforms include making the procurement process of companies more transparent, reducing bloated workforces, and increasing director accountability for policing management.
  
  
• Krispy Kreme Report Reveals Egregious Accounting Practices: August 11, 2005 The Wall Street Journal. A 10-month investigation of Krispy Kreme by a special committee conlcuded with a report that described the company's irresponsible accounting practices as "egregious" but stopped short of accusing former company executives of fraud. The report cited a lack of internal controls at the company and noted that senior managers were "profiting greatly" from the questionable accounting practices employed at the company.
  
  
• Judge "Strongly Encourages" Directors to Employ Best Practices Yet Rules in Favor of Disney: August 10, 2005 The New York Times and The Wall Street Journal. Delaware Judge William Chandler ruled yesterday that Disney's directors did not violate its responsbilities to shareholders in the hiring and firing of Michael Ovitz who received a controversially large $140m compensation package.
  
  
• Thousands of Companies Implicated in Oil for Food Scandal: August 10. 2005 AP, Reuters. The committee commissioned by the UN to investigate charges of corruption in the Oil for Food program announced Monday at a press conference that they will soon release information about the 4,500 companies involved. Top investigators say that over half of the 4,500 companies paid kickbacks or illegal surcharges.
  
  
• Corporate Philanthroy Debated: August 9, 2005 The August 15th issue of Business Week features corporate philanthropy developments. Under the heading of "The Debate Over Doing Good" the reporters state that some companies are taking a more strategic tack on social responsibility and the question is: Should they? The long and detailed article suggests that corporate pohilanthropy is more than just good PR - it is increasingly being seen as a core essential component of sound corporate strategy relative to a host of stakeholders.
  

• Newmont Mining Faces Criminal Charges for Pollution in Indonesia: August 8, 2005 The New York Times The trial of Newmont Mining, the world's largest gold producer, began in Indonesia with the company's president Richard Ness saying there was no pollution. The company maintains that the tumors, skin rashes, and dizziness experienced by Indonesian villagers were not the result of illegal dumping of toxic chemicals including mercury and arsenic into the local water.
  
  
• Former Head of UN Oil for Food Program Quits: August 8, 2005 Benon Sevan, the former head of the UN Oil for Food program, quit on Sunday after sending UN Secretary General Kofi Annan a bitter letter saying that Mr. Annan sacrificed Sevan for political expediency. Sevan continues to deny all charges of corruption. See BBC World News for a timeline of the Oil for Food scandal.
  
  
• PricewaterhouseCoopers Ordered by Jury to Pay $120 Million: August 5, 2005 The Wall Street Journal A federal jury has ordered PricewaterhouseCoopers LLP to pay a landmark $120m, making the decision one of the largest ever jury verdicts against an accounting firm.
  
  
• Ex-WorldCom Execs Sentenced: August 5, 2005 The Wall Street Journal.
  
  
• Ex-UN Aide Allegedly Took Iraqi Money: August 5, 2005 Benon Sevan, the former head of the UN's Oil-for-Food program in Iraq, has been accused of taking kickbacks from oil deals. Reuters has the story.
  
  
• SEC Investigation of DaimlerChrysler Escalates: August 5, 2005 The Justice Department is now pursuing a criminal investigation of allegations that DaimlerChrysler's Mercedes unit paid bribes in several countries and that top executives were aware of the bribes. Please go to the Wall Street Journal for the full story.
  
  
• KPMG Confident of Avoiding Tax Trial: August 5, 2005 Talks with the Justice Department have KPMG confident that they will reach a deferred prosecution agreement over charges of past tax avoidance schemes. A settlement has not been finalized but could involved fines of up to $500 m. See the Financial Times for more information.
  
  

• Update on Major US Scandals: August 4, 2005 Major US media continue to track several very high profile stories: So far banks have agreed to allocate $7 billion to settle securities fraud charges brought against them by former Enron investors; US Justice Department is still weighing whether to bring criminal charges against KPMG over allegations of promoting illegal tax shelters; pharmaceutical firms, responding to charges of unethical advertising, have announced a set of voluntary guidelines for doing better. Please see CNNMoney for more on the Enron settlement and the Washington Post for more on KPMG.
  
  

• Enron Fall-Out Hurts Credit Suisse: Credit Suisse yesterday set aside $761m more to cover lawsuits related to the collapse of Enron. The firm's net profit fell to from 1.26 francs per share to 82 centimes per share after a charge of $489mn was taken to cover the legal expenses. The Credit Suisse announcement follows on the heels of the Canadian Imperial Bank of Commerce's $2.4bn settlement in an Enron-related case. For the full story, see the Financial Times or the Wall Street Journal.
  
  

• Corruption Once Again in Chicago: August 3, 2005 Chicago Sun Times. This time in the adminsitration of Mayor Richard E. Daley. The Chicago Sun-Times reported: "Days after one Chicago city official pleaded guilty and admitted that political hiring is a way of life in City Hall, a federal judge Tuesday took the drastic step of appointing a monitor to oversee the city's hiring.
  
  

• UN Global Fund Orders Investigation: August 3, 2005 Wall Street Journal. The UN Global Fund to Fight AIDS, Tuberculosis, and Malaria has hired an outside investigator to examine allegations of improper hiring procedures and mishandling of the procurement program. "We have taken these allegations very seriously," said the chairman of the Global Fund board, Carol Jacob.

• Kohl Denies Allegation of Corruption Against Junior Defense Minister: August 3, 2005 BBC World News. The former German Chancellor Helmut Kohl testified in defense of Holger Pfahls, former junior defense minister and ex-head of German counter-intelligence, who is charged with accepting a 2mn euro bribe. The bribe was allegedly offered to Pfahls by businessman Karlheinz Schreiber during a deal to supply Saudi Arabia with personnel carriers in 1991.
  
  

• Sweeping anti-corruption reforms seen in Georgia’s education system: July 29, 2005 BBC World News. Natalia Antelava reports from Tbilisi that officials believe that up to $30m - more than the country's entire education budget - was spent on bribes every year. She notes that as thousands of Georgian high school students prepare for their university admission exams, many here remember an old Soviet joke about a man who visits a college professor. "My son has an exam with you tomorrow, but he is not well prepared," he says, "I am afraid that he will fail." Without raising his head the professor replies: "I bet you $500 your son will pass". The BBC’s reporter notes that many in the Caucasus republic hope that from now on this joke will be told as a symbol of the past.
  
  

• Wal-Mart Sues Ex-Vice Chairman: July 28, 2005 Wal-Mart Stores Inc. filed a suit against former Vice Chairman Thomas Coughlin, alleging that Coughlin committed fraud in connection with efforts to misappropriate as much as $500,000 through bogus expenses and the unauthorized use of company gift cards.
  
  

• Brazilian Scandal Scares Investors: July 28, 2005 As more revelations of suspicious campaign-finance deals emerge within his government, Brazilian President Luiz Inácio Lula da Silva is starting to face trouble in investor confidence.
  

• Amerindo Founders Indicted on New Charges: July 27, 2005 The two founders of Amerindo Investment Advisors Inc. were indicted on new charges for using investor funds for their personal use. The indictment charges the men with conspiracy, money laundering and multiple fraud charges.
  
  

• Whistle Blower Files Lawsuit Against DaimlerChrysler: July 26, 2005 The Wall Street Journal reported that the former administrator of DaimlerChrysler AG’s confidential employee hotline, Christine Holtzman, has filed a lawsuit against the company, alleging that corporate auditors suppressed some claims of theft and fraud that came into the hotline, and corporate security agents sought in several cases to identify individual hotline callers. Holtzman was fired from her job in 2003 after complaining about how the hotline was run. DaimlerChrysler says it is cooperating with the SEC investigation into the case, and it has denied Holtzman’s assertions in court. The SEC inquiry can be viewed as a test of a new law meant to encourage and protect corporate whistle-blowers. The law, a provision of the Sarbanes-Oxley corporate accountability clause, required all public companies by the start of this year to provide ways for workers to anonymously report alleged fraud or misconduct to the audit committee or to the company’s board.
  
  
• Commerzbank in Laundering Probe: July 25, 2005 Commerzbank, Germany's fourth-largest lender, has confirmed that five executives and former staff are caught up in a Russian money-laundering probe. Frankfurt prosecutors searched Commerzbank’s offices as part of an inquiry into the money-laundering investigation. Volkswagen Directors to Hear Report Into Scandal: July 25, 2005 Volkswagen will today for the first time be presented with findings of an independent inquiry into the bribery and kickback allegations currently surrounding the company.
  
  
• U.S. Regulators Say Oversight of Banks is Flawed: July 18, 2005 U.S. Federal bank regulators conceded that their supervision of anti-money-laundering efforts by banks has been inadequate, but said that monitoring practices were being bolstered. This comes after criticism of bank regulators over a scandal involving Riggs Bank N.A.’s handling of foreign embassies and wealthy clients, including former Chilean dictator, Augusto Pinochet.
  
  

• Enron Settles in California Over Alleged Fraudulent Energy-Bidding Strategies: July 18, 2005. Judge sends advertising exec to prison, sets cash fine, and orders her to write advertising industry ethics code: July 15, 2005 Shona Seifert and Thomas Early, two former senior executives of the flagship New York office of Ogilvy & Mather Worldwide, part of the WPP Group, have been sentenced and fined after being found guilty of over billing a federal antidrug agency for advertising work. In addition to serving 18 months in prison and paying a $125, 000 fine, Seifert must also write a code of ethics for the advertising industry as part of her sentence.
  
  
• Bernard Ebbers Is Sentenced to 25 Years For $11 Billion WorldCom Fraud July 14, 2005.
  
  

• Police in Brazil Step Up Tax-Cheat Crackdown: July 14, 2005 Brazilian police raided the country's most famous luxury store, Daslu, and arrested its owner on suspicion of tax evasion and counterfeiting. Yesterday's raid is the latest move by the Brazilian government to crack down on tax evasion, money laundering and corruption among the nation's elite.
  
  

• Scrushy Avoids Perjury Retrial: July 14, 2005 HealthSouth Corp. founder Richard M. Scrushy, acquitted last month of leading a $2.7 billion accounting fraud, gained another legal victory yesterday when federal prosecutors said they would not retry him on three perjury charges dismissed during his trial.
  
  

• Gap Report Says Factory Inspections Are Getting BetterJuly 13, 2005 Gap releases its second annual social-responsibility report on labor conditions in its supplier factories.
  
  

• Shell Pays $90 Million to settle a suit over the company’s write downs of its energy reserves last year July 13, 2005.
  
  

• Enron Settles With Employees Who Lost Retirement Money: July 12, 2005 Enron Corp. agreed to a $356 million settlement with about 20,000 current and former Enron employees who lost money in their retirement plans when the company collapsed in 2001, though they likely will see only a fraction of that amount.
  
  

• Antitrust Officials Aggressive in Brazil: July 12, 2005 Antitrust authorities in Brazil are moving aggressively to break up anticompetitive behavior in the country. Two years ago, Brazilian police and antitrust officials broke into a meeting of companies that produce flint, seizing software that the group allegedly used to calculate prices on a daily basis and cards that exhorted group members to manage prices "with ethics and secrecy." The formula that was supposedly used to fix prices was still on display. Since then, prosecutors have charged 12 corporate officers with running an illegal cartel.
  
  

• VW Executive Offers to Resign: July 11, 2005 Amid a widening bribery scandal, a top executive resigns at Volkswagen. The resignation of Peter Hartz follows German media reports that VW used expense accounts to bribe labor representatives involved with contract talks. Business Week reporter, Gail Edmondson, reports on the scandal in a commentary dated July 18, 2005: “Just when Volkswagen’s fortunes looked like they couldn’t fall further, a scandal has erupted that could shake Europe’s biggest auto maker to its foundations…As details of the scandal emerge, the real challenge for VW CEO Bernd Pischetsrieder will be to abolish the culture of mutual back-scratching. The European Union has already taken Germany to court to challenge the legality of [a] law limiting shareholder-voting rights at VW. Forcing VW to operate as a real company, instead of a market-insulated puppet of labor bosses and politicians, would help deliver the kinds of jobs and prosperity that officials and union leaders have failed miserably to produce. Then VW could become a model for the best practices of Germany Inc., not the worst.”
  
  
• Arrest of ‘Asia’s Hero’ shows corruption in India: July 2, 2005 A former bureaucrat in Bihar, Gautam Goswami, turned himself in to Indian police yesterday after warrants were issued for his arrest. Goswami, a man who Time magazine designated last year as one of Asia’s “20 heroes under the age of 40” due to his administration of aid to countless poor Biharis, faces allegations that he misappropriated l arge sums of money and owns property that he could not have afforded on his civil service income. The Goswami affair highlights the deep-rooted corruption that is practiced in India, corruption that the World Bank has argued is the main obstacle to India’s economic development. Transparency International last year ranked India 90th out of 146 countries, with a score of 2.8 out of 10 (scores less than three indicate “rampant” corruption).
  
  

• Brazil's Markets Show Resilience: July 7, 2005 Despite a spreading political crisis, Brazil's bonds and other markets so far have been holding up surprisingly well. Since early June, the ruling Worker's Party, or PT, has been battling probes into alleged bribery of lawmakers. The scandal has led to resignations of the president's chief-of-staff, two PT party leaders, and yesterday, replacement of two cabinet ministers. Andre Singer, spokesman for President Luiz Inácio Lula da Silva, said more cabinet changes will come tomorrow. Brazil's financial markets, however, are taking political turbulence in stride, and many observers believe the scandal won't affect the economy, as its market impact has been negligible so far.
  
  

• Volkswagen Scandal: July 6, 2005 Prosecutors in Germany are looking into whether Volkswagen officials paid bribes to some of the company's top labor leaders as a way of securing their cooperation during recent contract negotiations, an official with the prosecutor's office confirmed yesterday.
  
  

• Indonesia to Charge One Newmont Executive: July 6, 2005 Indonesia will charge only one of six Newmont Mining Corp. executives accused of dumping toxic waste into a bay, prosecutors said, in a legal victory for the Denver gold-mining company.
  
  

• Liberate Africa From Its Political Elites: July 5, 2005 Reported in the Wall Street Journal: As the G-8 summit approaches and the leaders of the developed world contemplate huge increases in aid to Africa, we must ask ourselves what has become of the billions of dollars already poured into the continent? Africa remains wracked by poverty and disease while other former colonial outposts like East Asia are booming. At the root of Africa's problems are ruling political elites that have squandered the continent's wealth and choked its productivity over the last 40 years. The list of abuses is long and impressive. African political elites have systematically exploited their positions in order to line their own pockets. They have given favors and won influence through the funding of huge loss-making industrialization projects. They have exploited the natural resources of their countries and then transferred profits, taxes, and aid funds into their own foreign bank accounts at the same time that they ran up enormous debts to finance their governments' operations. Successful development in Africa will not be achieved by throwing more fuel on the flames. Merely handing more aid money to African governments only reinforces the pattern of abuse. The key to development lies in a dynamic private sector. For a country to produce more, private individuals must generate savings and plow those savings back into the production process in the form of new and improved techniques, processes and products.
  
  

• German Broker Is Investigated For Millions in Missing Funds: July 5, 2005 In what appears to be one of Europe's biggest investment frauds -- potentially affecting as many as 30,000 investors -- about €270 million, or roughly $320 million, in client funds hasn't been accounted for at a little-known German brokerage firm, lawyers probing the firm's activities said Friday.
  
  

• Shell Won't Face Criminal Charges In SEC Reserves Probe: June 30, 2005 Federal prosecutors said they won't criminally charge Royal Dutch/Shell Group in a probe of its overstatement of energy reserves, citing the oil titan's cooperation. "Because Shell has cooperated fully with the government's investigation, has implemented substantial remedial efforts to enhance its reserves reporting and compliance, and has paid a $120 million civil penalty to the [Securities and Exchange Commission], the public interest has been sufficiently vindicated," David Kelley, U.S. attorney for the Southern District of New York, said in a statement yesterday.
  
  

• Government Wants to Try Scrushy: June 30, 2005 The federal government wants another chance to put Richard M. Scrushy behind bars and a shot at banishing the executive from ever being an officer or director of a publicly held company. Prosecutors intend to try Mr. Scrushy on three perjury counts that were dismissed in April by a U.S. District Judge, Karon O. Bowdre. The charges stem from statements made by Mr. Scrushy during a Securities and Exchange Commission investigation in 2003.
  
  

• Government Prosecutors Aim at Tyco Executive’s Fortunes: June 30, 2005 In seeking restitution from the defendants in the Tyco case, New York prosecutors have filed for $600 million, which includes the money the two men reaped from illicit stock sales. The payback would go in undetermined parts to Tyco's coffers and shareholders who suffered losses in the fraud. But how much the men actually have, or will be forced to come up with, remains a mystery.
  
  

• House Ethics Committee: June 30, 2005 Washington—The House took its first step toward investigating the alleged ethical lapses of Majority Leader Tom DeLay of Texas and others when leaders of the Committee on Standards of Official Conduct reached a deal to allow the panel to begin work for the first time this year. Once operational, the ethics committee will be the focus of several pitched partisan fights over ethics issues.
  
  

• Rhodia Probe Keeps at French Finance Minister: June 30, 2005 Ever since French President Jacques Chirac named him finance minister in February, Thierry Breton has tried to distance himself from Rhodia SA. Breton was a director of the chemicals group and chaired its audit committee from 1998 to 2002, but the minister claims that he has had no part in the recent scandal involving the company in France.
  
  

• Bernard Ebbers Could Draw 85 Years: June 29, 2005 According to court papers released yesterday, federal prosecutors are seeking 85 years in prison for WorldCom Inc. founder Bernard Ebbers, 63, convicted in March in what was the largest corporate-fraud case in history. In their memo, prosecutors said the name WorldCom, like Enron, has become "synonymous with fraud."
  
  

• Plea Deals In Parmalat Case; 11 are Convicted: June 29, 2005 A judge in Milan delivered the first convictions related to the collapse of Parmalat SpA, accepting plea-bargain deals from 10 former executives and the company's former outside counsel on charges that they systematically misled markets about the dairy giant's true financial condition.
  
  

• HealthSouth's Richard Scrushy Is Acquitted: June 29, 2005 The case against HealthSouth Corp. founder Richard M. Scrushy ended yesterday after a jury acquitted Mr. Scrushy of participating in a $2.7 billion accounting fraud. After 21 days of deliberation, the jury cleared Mr. Scrushy on all 36 criminal charges he faced, including conspiracy, securities fraud, mail fraud and a single charge under the Sarbanes-Oxley Act, the statute Congress enacted to force companies to strengthen their internal controls and mandating penalties for CEOs and finance chiefs who sign false financial filings. The verdict handed the government a defeat in its high-profile campaign against corporate corruption and its first attempt to convict a CEO for violating Sarbanes-Oxley.
  
  

• Egyptian Presidential Candidate Pleads Innocent to Forgery Charges: June 28, 2005 Egypt's leading opposition candidate for president, Ayman Nour, pleaded innocent to forgery charges in his trial Tuesday. Supporters of Nour swarmed the court building, denouncing the case as a government attempt to frame Nour and eliminate a rival.
  
  

• Prosecutors Gain Cooperation in Milberg Case: June 28, 2005 Federal prosecutors have won the cooperation of a former stockbroker from Great Neck, N.Y., in connection with their criminal investigation of the big class-action law firm Milberg Weiss and the way the firm recruited plaintiffs for its cases.
  
  

• President Arroyo Offers Apology For Election Phone Call: June 28, 2005 Philippine President Gloria Macapagal Arroyo apologized for telephoning an election official while votes were still being tallied after last year's closely fought presidential vote but said that the call had not influenced the outcome of the race and that she wouldn't step down.
  
  

• Malaysian Minister Suspended on “Money Politics”: June 28, 2005 A key cabinet minister has been fired from politics in a corruption scandal. Federal Territory Minister Isa Samad, a vice president in Prime Minister Abdullah's United Malays National Organization, or UMNO party, has been suspended for six years from the party on charges that he bribed delegates during internal party elections in September.
  
  

• Parmalat's Founder Trial: June 27, 2005 The trial of Parmalat SpA's founder and former CEO Calisto Tanzi, and 15 others, has been set by a Milan judge for Sept. 28. The bankruptcy of this vast global dairy company has been Italy’s equivalent of the Enron and WorldCom scandals.

• French Treasury Investigation: June 27, 2005 French investigators have searched the Finance Ministry seeking evidence in an insider trading scandal allegedly involving Rhodia SA and former Finance Minister Thierry Breton who chaired the chemical company’s audit committee from 1999 to 2002.
  
  

• U.S. Investigation Into Milberg Weiss Law Firm: June 27, 2005 The Wall Street Journal reported that Federal prosecutors are investigating law firm Milberg Weiss Bershad & Schulman, for alleged fraud, conspiracy and kickbacks in scores of securities lawsuits, and could seek criminal charges against the firm itself and its principals.
  
  

• Bribery in Brazil: June 22, 2005 Accusations that the ruling Workers Party paid off lawmakers for support in Congress last week has weakened the government of Brazilian President Luiz Inácio Lula da Silva. Finance Minister Antonio Palocci is preparing to respond to the crisis with austere measures, using his credibility with financial markets and his close ties with Mr. da Silva.
  
  

• SEC Examines the Big Four: June 22, 2005 Securities and Exchange Commission officials are privately discussing steps to take in the event of a collapse of one of the Big Four accounting firms (KPMG, Deloitte & Touche LLP, Ernst & Young LLP and PricewaterhouseCoopers LLP), including temporarily relaxing some rules they put in place two years ago to try to improve the quality of audits.
  
  

• Executives on Trial: June 21, 2005 high-profile cases in which executives have been accused of white-collar crimes are on the rise. Check the scorecard at WallStreetJournal.com and see how some defendants have fared.
  
  

• Adelphia's John Rigas Gets 15 Year Sentence: June 21, 2005 Adelphia Communications Corp.'s 80-year-old founder, John Rigas, was sentenced to 15 years in prison for fraud and conspiracy. Mr. Rigas's son, Timothy, 49, Adelphia's former chief financial officer, was sentenced to 20 years in prison for his role in the case.
  
  
• In a Post-Enron Era, Companies Rush to Cooperate to Avoid Risk of Prosecution: June 20, 2005 The Wall Street Journal argued that businesspeople and corporations are at greater risk of criminal liability than ever before. A wave of corporate fraud starting with the 2001 collapse of Enron Corp. has led to potent new weapons for prosecutors such as stiffer financial penalties and prison terms. The Securities and Exchange Commission has more money and manpower than ever before to aid in its pursuit of civil-fraud cases.
  
  

• “More Pinstripes To Get Prison Stripes”: June 20, 2005 According to reporters Shawn Young and Peter Grant of The Wall Street Journal, this summer is going to be one of reckoning for convicted corporate wrongdoers. In fact, there may never have been a worse time to be a corporate criminal. The reason: After a wave of corporate-fraud cases.
  
  

• Defendants Convicted in Tyco Trial: June 20, 2005 New York– The former top executives of Tyco International Ltd., L. Dennis Kozlowski and Mark H. Swartz, were convicted Friday after jurors concluded that the defendants were lying on the witness stand. Kozlowski, 58 years old, and Swartz, 44, were accused of blatantly looting Tyco of more than $150 million. Each of the two men was found guilty on 22 of 23 charges, including grand larceny, conspiracy and securities fraud.
  
  

• Cape Town Corruption Scandal: June 20, 2005 President Thabo Mbeki of South Africa fired his deputy and heir apparent, Jacob Zuma, Tuesday after Zuma was implicated in a corruption scandal. The dismissal throws open the question as to who will become the next leader of South Africa when Mr. Mbeki steps down in 2009.

Back To Top