Spotlight 27: Corruption in institutions
Can corruption be found in (parts of) institutions?
Hi and welcome back to the 27th issue of Spotlight, a fortnightly collection of news, articles, and events about organised crime and corruption curated by Firm UK.
Every two weeks a collective of experts, academics, and volunteers will select a few relevant articles and/or events that will help you to understand our society under the hood.
We have come to understand that corruption is not something related to a few places but rather a global phenomenon that can either remain local, national or transnational. Most of the time, it is the combination of factors that can recur. But, when corruption deeply affects some institutions or parts of them, it becomes harder to detect and tackle. In our opening suggested article, Professor of Accounting Prem Sikka discusses why it would not be wrong to say “corruption is institutionalised in the UK” and he brings examples from his field.
Also, on the 27th January 2022, our associate Federico Varese - Professor of Criminology at the University of Oxford, will discuss criminal groups in a webinar.
Last but not least, you can know more about gangs with our suggested book.
We hope you enjoy Spotlight. And if you like it, please share it with your network and invite them to subscribe.
Thank you!
Accounting firms are at the heart of corruption in the UK
Corruption is institutionalised in the UK. The finance industry routinely fleeces people by misselling financial products, money laundering and forging customer signatures.
The corporate sector has its private police force in the form of auditing firms that supposedly act as watchdogs highlighting financial irregularities.
Accounting firms don’t bite the hand that feeds them and it is hard to recall any malpractices exposed by them. Even worse, they engage in fraud and irregular practices.
The article, written by a professor of Accounting, Prem Sikka, looks at some recent examples of these malpractices.
“Accounting scandals at BHS, Carillion, Thomas Cook, Patisserie Valerie, London Capital and Finance, Quindell, Autonomy, Rolls Royce, BT and Tesco provide a glimpse of audit failures.”
How Brazil's Port of Santos Became Cocaine's World Trade Center
On January 3rd three shipments of cocaine were caught as they were about to head to France, Spain and Ghana. All originated from the Brazilian port of Santos, from where cocaine shipments radiate around the world.
While the port of Santos is only the 46th busiest in the world, it is the second-largest in Latin America after the port of Colón in Panama. As such, it has become a crucial lynchpin for the global cocaine trade.
It is argued that much of this growth has been due to the rise of the First Capital Command (Primeiro Comando da Capital – PCC), a powerful drug gang that dominates São Paulo. The amount of international criminal networks that have some sort of presence, whether permanent or through envoys, in PCC territory is also considered relevant for the cocaine trade through Santos.
Landlocked Paraguay Becoming Major Cocaine Link to Europe
The son of a former Paraguayan congressman has been accused of overseeing large cocaine shipments to Europe, illustrating how corrupt elites have influenced Paraguay's emergence as a top supplier of the European cocaine pipeline. Fernando Enrique Balbuena Acuña, alias "Riki," was arrested on January 9 amid a series of raids. Balbuena Acuña is the son of former Cordillera department congressman Elvis Ramón Balbuena. A 7-month investigation by SENAD led to the arrest of Balbuena Acuña and three other people, including a Ukrainian national. Authorities also seized nearly a ton of cocaine on a property just 200 meters from Balbuena Acuña's home outside of the capital of Asunción.
According to SENAD, Balbuena Acuña was allegedly responsible for "the collection and shipment" of large loads of cocaine via the Paraguay-Paraná waterway. The drugs were then smuggled to Europe.
A 2021 investigation by InSight Crime revealed a slew of cases involving congress members, police, judicial officials and prosecutors accused of facilitating the drug trade. While Paraguay has become a springboard for cocaine in Europe, the country also appears to be a gateway for drugs headed to West Africa.
Corruption in construction: it isn’t always obvious
Anita Clifford - a barrister at Red Lion Chambers - advises firms to implement robust measures to combat fraud and bribery
On 28 November 2021, the Financial Times reported that between 2% and 10% of all spending on the UK government’s £100bn a year infrastructure drive would be lost to fraud, collusion or bribery. The vulnerability is not limited to construction companies themselves. Banks and professional services firms are under a duty to report reasonable grounds to suspect money laundering to the National Crime Agency.
Ms Clifford notices “Any tendering process presents a vulnerability. A temptation can arise to provide an incentive to a key decision-maker. It will be important to recognise that the incentive might not be financial but can also include an offer to do something in the future, favourable treatment, a large payment couched as something that appears legitimate or excessive hospitality. The offences in the Bribery Act 2010 are drafted widely.”
She warns “What may be overlooked is that signs of illicit activity will engage the money-laundering reporting obligation applying to businesses that are regulated for the purposes of anti-money laundering (AML). The construction industry is not AML regulated, therefore not subject to the duty, but a company’s bank, accountant, a transactional lawyer and tax adviser will be.”
A data ‘black hole’: Europol ordered to delete vast store of personal data
The EU’s police agency, Europol, will be forced to delete much of a vast store of personal data that it has been found to have amassed unlawfully.
Europol denies any wrongdoing. However, a series of internal documents obtained under freedom of information laws suggests that the police agency is holding out for new EU legislation to provide retrospective cover for what it has been doing without a legal basis for six years.
Billions of points of information have been drawn from crime reports, hacked from encrypted phone services and sampled from asylum seekers never involved in any crime.
Now, and without the greenlight the European Data Protection Supervisor (EDPS) Europol is developing its machine learning and AI programme, including facial recognition tools, to make sense of it all.
GameChangers 2021: How Organised Crime Devoured the Amazon Rainforest
In its annual GameChangers series, InSight Crime looks at the most important trends in organised crime in the Americas over the year.
This article focuses on organised crime-driven deforestation patterns in several Latin American countries throughout 2021, highlighting the complexity of the criminal landscape in the region as legal and illegal activities, industries and actors become increasingly intertwined.
“Deforestation is more intertwined with criminal activities than ever. Those involved in gold mining, cattle ranching, drug trafficking and illegal logging are working hand-in-hand, either with each other or with public and private interests to destroy the lungs of the planet.”
As organised crime-driven deforestation is increasingly connected to both legal and illegal industries in Latin America, criminal groups are highly benefitting from the expansion of their criminal portfolio. Activities such as agriculture and cattle ranching, now one of the main motors of illegal land grabs in the Amazon, have become highly profitable and advantageous for criminal groups:
“Land cleared to build runways for drug planes has provided timber to be sold. Clandestine roads built through the forest can be used to move drugs, minerals, timber and contraband”.
As deforestation advances and criminal groups expand their activities, corruption and violence soar across the region; endangering especially the livelihoods of environmental defenders, public officers, small farmers and local indigenous communities.
Books, podcasts & more
Book: “On Gangs” by Scott H. Decker, David C. Pyrooz, and James A. Densley
This book offers a comprehensive review of what is known about gangs. Including interviews with current gang members, it tries to understand different phenomena, such as prison gangs, gender and gangs, and international gangs. There is also a focus on policing, legislation, and punishment. Weaving together research and policy findings to address the causes, contexts, and consequences of gangs, the authors address topics including joining, resisting, and leaving gangs, and how gangs operate in communities and institutions.
Events
[Wednesday, 19th January 2022, 3 pm GMT] End extortion now
Focusing on the theme ‘extortion and organized crime, the 2021 Fellows have been incubating and growing efforts against extortion in a variety of locations around the world, documenting its causes and effects, and providing a voice to those affected by this crime.
In this webinar, we will discuss extortion and its impacts, and we will present case studies about civil society resilient responses that are being implemented to fight this crime.
[Thursday, 27th January 2022, 4-5 pm GMT] Webinar - The Structure of Trade-type and Governance-type Organized Crime Groups: a Network Study Federico Varese, Professor of Criminology, Department of Sociology, University of Oxford and Niles Breuer, Analyst, Altman Solon. The paper provides a theoretical framework for categorizing organized crime groups based on what they do—whether they produce, trade or govern. It then tests whether the internal structure of, respectively, a heroin distribution organization in New York City (trade) and a Sicilian mafia group and the Provisional Irish Republican Army (governance) differ.
In Brazil, approximately 500 thousand vehicles are stolen per year. Car theft is perceived in public debate as a significant security problem. The country’s main insurance group has about 35 thousand vehicles stolen each year. Given this scenario, insurers create partnerships with public security agencies and develop new technologies to reclaim their assets. Based on ethnographic data, this presentation will focus on the responses of insurers to this safety issue, giving particular attention to the impacts of mechanisation processes in urban governance. Technology will be understood as a mode of politics, rather than merely a tool of politics. More broadly, it will explore how the car theft market, criminal logic, and disputes between private companies and public security forces have become entangled in the role technologies play in the process of vehicle recovery. Following the daily routine of a tracking team from a large insurance company that retrieves stolen vehicles, I emphasise their close and continual negotiations with the police and public authorities and reveal the key roles that insurance and private security companies play in the development of new technologies and systems of control and surveillance.