The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It

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This new StAR report examines how bribes, embezzled state assets and other criminal proceeds are being hidden via legal structures – shell companies, foundations, trusts and others. The study also provides policy makers with practical recommendations on how to step up ongoing international efforts to uncover flows of criminal funds and prevent criminals from misusing shell companies and other legal entities
Executive summary
In 2002, the government of Kenya invited bids to replace its passport printing system. Despite receiving a bid for €6 million from a French fi rm, the Kenyan government signed a contract for fi ve times that amount (€31.89 million) with Anglo-Leasing and Finance Ltd., an unknown U.K. shell company, whose registered address was a post offi ce box in Liverpool. The Kenyan government’s decision was taken despite the fact that AngloLeasing proposed to subcontract the actual work to the French company. Material leaked to the press by whistle-blowers suggested that corrupt senior politicians planned to pocket the excess funds from the deal. Attempts to investigate these allegations were frustrated, however, when it proved impossible to fi nd out who really controlled Anglo-Leasing.

In March 2010, Daimler AG and three of its subsidiaries resolved charges related to a Foreign Corrupt Practices Act (FCPA) investigation in the U.S. In part, Daimler AG’s Russian subsidiary, DaimlerChrysler Automotive Russia SAO (DCAR), which is now known as Mercedes-Benz Russia SAO, pleaded guilty to one count of conspiracy to bribe foreign offi cials and one count of bribery of foreign offi cials. The Statement of Facts agreed to by Daimler as part of the Deferred Prosecution Agreement in US v. Daimler AG noted that “DCAR and DAIMLER made over €3 million [US$4,057,500] in improper payments to Russian government offi cials employed at their Russian governmental customers, their designees or third-party shell companies that provided no legitimate services to DAIMLER or DCAR with the understanding that the funds would be passed on, in whole or in part, to Russian government officials.” The Statement of Facts details 25 sets of improper payments involving (in addition to cash payments) payments to bank accounts held in Latvia, Switzerland, the United States and unnamed jurisdictions; the accounts were held in the name of some of the 27 involved companies (16 named and 11 unnamed) registered or having addresses in 7 different jurisdictions: theBahamas; Costa Rica; Cyprus; Ireland; Seychelles; United Kingdom; and in United States in California, Delaware and Florida.
Direct link: here
Link for Star report: here