A scintillating story that has already been coined the “modern age Watergate” by President Donald Trump made its way to the top of both domestic and international headlines this past week. On October 24th, Republicans from the House of Representatives announced their plans to thoroughly investigate a controversial uranium deal previously made between the United States and Russia during the presidency of Barack Obama. A CNN article written by esteemed reporters Sophie Tatum and Mary Kay Mallonee titled “DOJ gives FBI informant green light to testify on Russian uranium efforts” has chronicled the case thus far, and the writers have offered daily updates on the latest developments and information as it has become available. The circumstances surrounding the investigation involve the 2010 sale of the Canadian uranium mining company Uranium One to Russia’s central energy agency, Rosatom, a move that was approved by the Obama administration. The sale ultimately gave Russia control of a significant part of the U.S. uranium supply. However, recent reports by political newspaper/website The Hill have shed light on one of the key issues involved with the deal: the fact that the FBI was in the initial stages of a racketeering and extortion investigation into a U.S. subsidiary of Rosatom during the same time period that the deal was being finalized. Without factoring in other aspects of the move, the sale of uranium to the wildcard that is Vladimir Putin’s Russia itself appeared troublesome from the start, as uranium is one of the essential elements needed to develop nuclear weapons.
The new reports come at a time when Russian involvement with the U.S. is already a hot-button issue, as prominent political and intelligence officials of the world’s largest country have been accused of playing a role in the outcome of the 2016 United States presidential election, which saw Donald Trump, a man with virtually no background in politics, edge out former First Lady of the United States Hillary Clinton to attain the presidency. As a result of the speculation surrounding this issue, an investigation into ties between Russia and President Trump as they relate to the election is currently underway. In addition, these reports have led many on Capitol Hill to wonder whether the primary decision makers for the 2010 deal, a group that includes members of Congress, were provided any details on the investigation occurring at the time by either the Department of Justice (DOJ) or the FBI. To add yet another twist to the case, CNN reports that “The Hill cites sources indicating that Russian nuclear officials routed millions of dollars to the US that were designed to benefit the Clinton Foundation at the same time the deal was approved” (Schneider & Mallonee, 2017). Since this information was revealed, former Secretary of State Hillary Clinton and multiple members of her staff have repeatedly rejected the validity of the claims and have denied any involvement with the improprieties involved in the deal with Rosatom. Nevertheless, reports have indicated that the DOJ has granted a former FBI informant permission to testify in front of Congress, members of the Senate, and the House intelligence committees about the findings of an investigation into Russia’s attempts to build its nuclear energy business in the U.S. The informant has been given the green light to disclose “any information or documents he has concerning alleged corruption or bribery involving transactions in the uranium market, including but not limited to anything related to Vadim Mikerin, Rosatom, Tenex, Uranium One, or the Clinton Foundation” (Tatum & Mallonee, 2017).
The House Republicans are also launching an investigation into Clinton’s use of the now-notorious private email server during her tenure as Secretary of State. Democrats in large part have been angered by the announcement of the joint investigations, as the probes have been viewed as feeble attempts by the GOP to distract attention from the tainted-election allegations. In a statement voicing his own displeasure with the House announcement, Representative Adam B. Schiff of California, the top Democrat on the House Intelligence Committee, said “This may be good politics, but it is a disservice to the far more important cause of investigating Russian interference in our democracy and protecting our elections in 2018 and beyond from outside influence” (Demirjian, 2017).
Global RADAR will provide further updates on the probes in its 2017 Annual Review this December.
Corrupt Rio Olympics Head Conditionally Released from Prison
October has been an interesting month to say the least for the former head of Brazil’s Olympic committee. After being arrested in his home in Rio de Janeiro on October 5th, Carlos Nuzman was “formally charged Wednesday with corruption for his role in the alleged $2 million-scheme to secure votes in Rio’s bid for the 2016 Olympics” (AFP, 2017). However, despite the pending charges, Brazil’s Superior Tribunal of Justice decided that the detention of Nuzman was a measure disproportionate to the charges against him. As a result, Nuzman, 75, was released from prison on Friday, although he is not permitted to leave Brazil nor visit the offices of the Brazilian Olympic Committee. Earlier this month, Brazilian prosecutors announced corruption, money laundering, tax evasion and the operation of a criminal organization charges against Nuzman, and filed several others against the deputy of Nuzman’s former Olympic committee, Leonardo Gryner.
In a statement released on the filings, federal prosecutors stated that the two men “promoted, formed, financed, and integrated a criminal organization aimed at committing the crimes of corruption and embezzlement in detriment of the State of Rio de Janeiro, Brazil’s Olympic Committee and the organizing committee of the Rio 2016 Olympics” (AP, 2017). It is alleged that Nuzman and former Rio Governor Sergio Cabral solicited a $2 million payout to the son of Senegalese Olympic Committee member Lamine Diack in order to secure extra votes for Rio de Janeiro to be selected as the Olympic site for the summer of 2016. Rio ultimately won the bid, beating out sites that many had viewed as superior and better equipped for an event of that stature, including sites in the United States, Madrid, and Tokyo. Following his arrest, Nuzman announced his resignation from his chairman position, one that he had held since 2012. The International Olympic Committee followed by stripping him of his membership status to the coordination committee for the 2020 Olympic games.
Global RADAR will provide an update on this case in the weeks to come.
Former HSBC Exec. Convicted in Billion-Dollar Fraud Case
On October 22nd, Mark Johnson, the former global head of HSBC’s foreign exchange trading regime was found guilty on eight counts of wire fraud and one count of conspiracy to commit wire fraud in relation to the use of client information for personal profit. By way of a U.S. Department of Justice (DOJ) probe investigating foreign exchange rate manipulations, Johnson was discovered to have “exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client” (O’Brien, 2017). Commonly referred to as “front-running”, the practice that Johnson and HSBC’s former head of currency trading, Stuart Scott, engaged in typically employs shady tactics, which in this case were difficult to identify due to them coming from a seemingly-trustworthy individual. In front-running, “someone with advance knowledge of a major market order buys for their own account, then earns a profit when the larger transaction drives up the price” (O’Brien, 2017).
The currency trade that Johnson and Scott capitalized on reportedly amounted to $3.5 billion USD, which were to be converted to British pounds on behalf of prominent oil and gas company Cairn Energy Plc. of Scotland. Prosecutors believe that prior to the transaction, Johnson directed HSBC traders from offices in the U.S. and abroad to stockpile several million pounds into HSBC accounts. Following the transaction, Johnson and Scott were able to drive up the price of the pound, which then allowed them to sell the HSBC currency at a higher price. This led to increased profits for HSBC, while Cairn Energy’s profits suffered. All in all, the strategy reportedly “netted $3 million in trading profits and $5 million in fees for HSBC” (O’Brien, 2017). This case is one in a string of oversight failures seen by HSBC in recent years, as the bank has been forced to pay hundreds of millions of dollars in fines related to improper activity since 2012 alone. While sentencing has yet to be determined in this case, the charges against Johnson carry a maximum sentence of up to 20 years in prison.
Florida Software Guru Jailed for Bitcoin Hacking
A software engineer from Florida was recently sentenced to 16 months in prison for his role in a money-laundering scheme involving online hackers and several large U.S. publishing firms. According to reports, one of the key individuals charged with helping to run this ploy, Yuri Lebedev, “helped operate Coin.mx, which tricked banks into processing bitcoin transactions by disguising them as restaurant-delivery charges and online purchases of collectible items” (Larson, 2017). Lebedev’s sentencing comes several months after his conviction on conspiracy and fraud charges that came about following a month-long trial that concluded in March. The unregistered exchange platform was found to have sold the cybercurrency to indiividuals who they believed were engaging in criminal activity, as these bitcoins were utilized in multiple illegal online transactions. Coin.mx also was found to have provided bitcoins as payment for ransomware attacks.
Considered an expert in computer programming and technology, Lebedev created Coin.mx for hackers to exploit JPMorgan Chase & Co. and Dow Jones & Co. through multiple exploits of this nature in 2014. Although he played a significant role in the events that manifested, Lebedev was spared of the maximum sentence of ten years in prison, as U.S. District Judge Alison J. Nathan ruled on Friday that Lebedev was ultimately following orders from Coin.mx’s chief operator Anthony Murgio. Earlier this year, Murgio was sentenced to 5.5 years in prison for his role in the money laundering fiasco. Murgio operated Coin.mx with Lebedev between 2013 and 2015 via a front company called the Collectables Club Private Member Association.
AFP. “Tainted Rio Olympics Chief Carlos Nuzman Conditionally Freed from Jail; Awaits Verdict on Vote-buying Scandal.” FirstPost. 20 Oct. 2017. Web.
Associated Press. “Rio 2016 Leader Nuzman to Be Released from Jail.” The Washington Post. WP Company, 19 Oct. 2017. Web.
Davis O’Brien, Rebecca. “Former HSBC Executive Convicted of Fraud for Front-Running — 3rd Update.” Fox Business. Fox Business, 23 Oct. 2017. Web.
Demirjian, Karoun. “House GOP Launches Probes into Obama-era Uranium Deal, Clinton Email Inquiry.” The Washington Post. WP Company, 24 Oct. 2017. Web.
Larson, Erik. “Bitcoin Scam Ends in Jail as Immigrant’s American Dream Fades.” Bloomberg.com. Bloomberg, 20 Oct. 2017. Web.
Schneider, Jessica, and Mary Kay Mallonee. “Obama-era Uranium Deal Yields New Questions, New Accusations and New Investigation.” CNN. Cable News Network, 25 Oct. 2017. Web.
Tatum, Sophie, and Mary Kay Mallonee. “FBI Informant Allowed to Testify on Uranium.” CNN. Cable News Network, 26 Oct. 2017. Web.