Kenneth Rijock

Kenneth Rijock

Friday, August 26, 2016

AFRICAN TAX REFORMERS AND OFFICIALS EXPRESS THEIR ANGER AT MOSSACK AND FONSECA


We have previously covered the fact that PEPs from most of the countries reportedly have accounts in offshore tax havens, and a large number of them used the Panamanian law firm of Mossack Fonseca to form companies in the most opaque and obscure tax havens, to hide their criminal proceeds from public view.

Now, a whole new group of Africans has a bond to pick with the Mossack firm; it seems that many of the continent's major tourism companies, especially the East African safari trade, purchased corporations domiciled in the British Virgin Islands, Mauritius, and the Seychelles,  which are known low- or zero-tax jurisdictions, and thereby evaded paying taxes in the countries of Africa where they actually operated. Some of these tourism companies actually booked their African safaris through the tax havens, creating an additional layer of protection, and insuring that they would never pay their African host countries a penny in taxes, losing valuable tourism revenue

Mossack also insured that these tourism companies were able to open accounts in such places as Liechtenstein, Luxembourg, the isle of Man, and Switzerland, so that payment for their services never even touched African banks; only the small costs of actual operation made it into the host countries. The local economies did not really benefits from these offshore businesses, notwithstanding that they were working totally within the host countries.

These tourism company operators, with the able assistance of Mossack Fonseca, skillfully ( and legally) avoid paying taxes in countries that sorely need them. What's wrong with their picture ?



'

Thursday, August 25, 2016

LEON FRAZER DIRECTOR GAVE INSIDE INFORMATION TO CLIENTS ABOUT IMPENDING JOVIAN PURCHASE, AND SOLICITED DODGY RUSSIAN MONEY



William Tynkaluk, then a Director of Leon Frazer & Associates, Inc., the Canadian wealth management firm, gave his clients inside information, about the confidential negotiations, by Jovian Capital Corporation, to purchase all the remaining and outstanding shares of Leon Frazer. Tynkaluk, who was a financial advisor to a number of  wealthy retired Canadian businessmen, actively solicited them to trade in Jovian stock, based upon the confidential, non-public information that he acquired and possessed, by virtue of his position at Leon Frazer.

Tynkaluk touted the Jovian stock, saying that its value would greatly increase, when news of the company's purchase of all the Leon Frazer shares became public knowledge. It is not known how many of Tynkaluk's clients made such purchases, based upon his illegal insider disclosures, but the transaction records, for the period prior to the public announcement, should be examined to identify them. The profits those individuals illegally earned must be disgorged, and those original Jovian shareholders, who did not have any inside knowledge of the impending purchase, were denied the profits they would have earned, had they held their shares, until after the purchase.

Additionally, Mr. Tynkaluk asked a Canadian businessman, in the presence of a client of Tynkaluk, whether he could bring Russian purchasers to him, so that he could sell them on buying a large quantity of Jovian shares, and that he was not particular about the Source of Funds of the Russians' investment capital. He stated that dodgy or suspicious buyers would be acceptable, so long as they made large purchases of Jovian stock.

It is known that Mr. Tynkaluk was called in, several times, to answer questions about this matter, before the Ontario Securities Commission (OSC), but it is not known whether a fine, or other sanctions, were imposed against him, or Leon Frazer and Associates, Inc., as this information is treated as confidential, by the OSC, and not available to the public. We ask that it now be disclosed, as a public service, and that the matter be turned over to the appropriate law enforcement agency, for investigation, and further action. Jurisdiction appears to be vested in the Royal Canadian Mounted Police (RCMP).

We are also wondering whether details of these illegal trades, all made prior to public release of information regarding the pending Jovian acquisition, were fully disclosed, during the subsequent acquisition of Jovian, by Industrial Alliance Insurance & Financial Services, Inc.









SECOND CIRCUIT AFFIRMS DISMISSAL IN ALIEN TORT CASE AGAINST LEBANESE CANADIAN BANK


The Second Circuit Court of Appeals has affirmed the District Court decision, in the case of Licci vs. Lebanese Canadian Bank SAL, in which an action against the bank*, for facilitating financing of Hezbollah, through US banks, pursuant to the Alien Tort Statute, was dismissed, holding that customary international law does not recognize liability for the bank, a corporation, relying upon the ruling in Kiobel vs. Dutch Petroleum Co.,  a 2013 US Supreme Court decision.

Readers who wish to review the complete text of the opinion can access it on the Second Circuit website http://www.ca2.uscourts.gov/decisions.html .The case number is 15-580, and the decision was handed down on August 24, 2016.
___________________________________________________________________________
*On the regulatory side, the bank previously paid a $102m fine, for providing financial support to Hezbollah, a Specially Designated Global Terrorist (SDGT) organization.

WHAT WILL BECOME OF THE FARC'S LAUNDERED DRUG PROFITS IN TAX HAVEN BANKS, AND EUROPEAN INVESTMENTS ?


The news from Colombia this week is that the government and its principal insurgent adversary, the Revolutionary Armed Forces of Colombia, more commonly known as the FARC, have reached an agreement on ending the 50-year conflict between them. the FARC, formed as the military arm of the Colombian Communist Party, has reportedly agreed to demobilize, and enter domestic politics.

Of major interest to the financial world is the status of the billions of dollars in FARC narco-profits, which resides in tax haven banks, and has been invested overseas, including in the countries of the European Union. What will become of those illicit profits, and will the banks that knowingly accepted large deposits of the FARCs dirty money be sanctioned as a result ? Will FARC "diplomats" abroad help themselves to this money, as Russians did after the breakup of the Soviet Union ?

Unfortunately, the details of the agreement have not been released, but if the ultimate disposition of the obscene FARC wealth is not that it will be repatriated, and used to compensate victims of the civil war, it is feared that greedy FARC leaders, no longer committed socialists, but now merely career criminals, will seek to enrich themselves. In short, they will take the money and run.

We hope and trust that the Colombian Government has had the foresight to ascertain the locations of the FARCs dirty money stash, as well as investments, and will recover those assets for the people of Colombia. Otherwise, it will serve to fund a new group of transnational criminals.

Wednesday, August 24, 2016

HERE'S TOMORROW'S FEDERAL REGISTER PROPOSED FINCEN REGULATIONS ON CIP



If you are working late tonight, or simply want to get a head start on tomorrow, here is a link to the FinCEN Notice of Proposed Rulemaking, that is scheduled for publication in tomorrow's (8/25) Federal Register. Entitled Customer Identification Programs, Anti-Money Laundering Programs, and Beneficial Ownership Requirements for Banks lacking a Federal Functional Regulator, it extends CIP and beneficial owner requirements to banks not previously subject to such requirements.

You can review the complete text here. 

WATCH FOR MOVEMENT OF FLIGHT CAPITAL OUT OF BRITISH COLUMBIA

Coat of Arms of British Columbia

The extraordinary flurry of interest, in British Columbia real estate circles, regarding the massive arrests, in China, of over 450 individuals, accused of money laundering through underground banks, means that some of the readers definitely have something to hide. China severely limits the amounts that its citizens can legally transfer out of the country, and there is a large, and growing, illicit industry, whose sole aim to to move  wealth, including, but not limited to, the proceeds of corruption, profits upon which taxes have been evaded, legitimate profits, and income from crime, out of China, by any means necessary.

Given that the huge increase in real estate prices, in British Columbia, a favorite destination for Chinese investors, both legal and illicit, has now raised the profile of high-value purchases (remember the new tax), you can expect money launderers, working for Chinese clients, to see the handwriting on the wall, and start, immediately, moving client wealth out of the province, to "invest" in more low-key areas of Canada.

 In the United States, China is running a vigorous campaign to locate some its the more prominent expats, especially those who appear to be wealthy, corrupt, former PEPs. That must also make some BC Canadians nervous.

Therefore, it is prudent for compliance officers, real estate attorneys, realtors, and title insurance companies in Canada, to take a close look at new clients, coming from Vancouver, especially if they are looking for properties to invest in. They may be comfortable paying top dollar for their purchases, be in a bit of a hurry to close, and use corporations or trusts as the vehicle through which the investment is made. They may not be of Chinese origin, as good money launderers can always find frontmen to place forward in such cases.


In summary, if China's crackdown on illegal export of capital, of all types, has drawn the attention of certain people in British Columbia, and their advisors, expect at least some movement of wealth to quieter provinces; watch for it.

Tuesday, August 23, 2016

SECOND CIRCUIT DENIES RICHARD CHICHAKLI REHEARING OR EN BANC OF HIS APPEAL


Readers who have been following Rchard Chichakli's sanctions case know that he took his SDNY convictions for International Emergency Economic Powers Act sanctions violations, money laundering conspiracy, and several counts of wire fraud to the Second Circuit Court of Appeals. The lower court judgment and sentence were affirmed by the appeals court; we reported on the details in this blog earlier this year.

His final act was to petition for a panel hearing, or an en banc rehearing. here is the text of the Court's Order*, which was entered on August 5, 2016:

"Appellant, Richard Ammar Chichakli, filed a petition for panel rehearing, or, in the alternative, for rehearing en banc. the panel that determined the appeal has considered the request for panel rehearing, and the active members of the Court  have considered the request for rehearing en banc."

"IT IS HEREBY ORDERED THAT THE PETITION IS DENIED."

The defendant/appellant has now exhausted all his appellate remedies as a matter of right. Whether he will now file a Section 2255 Petition, to attack his conviction, is not known, but his Presumptive Release Date is June 11, 2017.

Whether justice was served, in Richard Chichakli's case, is a matter of opinion. Should he be serving a long sentence, for money laundering, due to his association with Viktor Bout's African and Asian arms trafficking operations, or should his covert assistance, rendered, with Bout, to the intelligence services of the United States, in a number of classified missions, mitigate any punishment that he receives ? Should he have gotten a free pass, or a much longer sentence ? You be the judge.

Was his silence during the trial, when he could have gone public with details of American operations overseas that certain government agencies would prefer remain hidden, honorable, or did he just opt to remain silent ?  Whatever you think of him, Richard Chichakli's sentence of incarceration ends next year, and, as a US citizen, he will be released. I wonder what his plans are ?
___________________________________________________________
* United States vs. Viktor Bout, et al, Case No,: 14-4255 (2nd Cir.).