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RKN Global on Corruption by Local Public Officials

The mayor of Paterson, New Jersey was recently accused of public corruption charges, allegedly involving a bid to provide members of his family with free labor by getting tax payers to pay the workers’ salaries.1 The charges allege that Mayor Jose Torres and three other staff members hired municipal employees to work in a warehouse that had been leased by the mayor’s family.2

Normally, hiring someone to work for family doesn’t sound like such a big problem. But in this case, the arrangement was allegedly carried out at the expense of the tax payers. These alleged acts included conspiring to pay workers for overtime, while exploiting public funds for the benefit of the mayor’s family. The company which was set to benefit from the free labor was known as “Quality Beer”, located in the city of Paterson.3

RKN Global founder, Ronald K. Noble, notes that the use of taxpayer money needs to be tightly and transparently controlled so the public’s money is only ever used in an appropriate way.

What is corruption?

Corruption often involves the abuse of power for private gain.4  It can have many consequences, costing people their money, freedom, and in some cases their lives.5

In addition to the charges being brought against the mayor, three individuals who worked with him were also charged with the same crimes. The mayor, along with Joseph Mania, Imad Mowaswes, and Timothy Hanlon, have face six charges in total:

  • Theft by unlawful taking or disposition
  • Falsifying or tampering with public records
  • Pattern of official misconduct
  • Conspiracy
  • Falsifying or tampering with records
  • Official misconduct7

Undermining public trust

The mayor’s case highlights issue of a public official misusing a power that was entrusted to him for the public good. 

The trust that the public had put in their mayor seems to have been undermined by his alleged behavior. In 2002, Mayor Torres ran an anti-corruption campaign against Martin G. Barnes, who had served as mayor of the city before Torres and had previously been charged with extortion.8 Mayor Torres has in fact been a part of another lawsuit which involved city employees reportedly being paid overtime for carrying out work in his home.9 It seems that the most recent allegations  that lawsuit share a common theme: Using public funds to achieve private gains.10

The current charges allege that carpentry, electrical, and painting work had been carried out by municipal employees in 2014 and 2015 at the taxpayers’ expense.11 The warehouse, which is owned by the mayor’s daughter and nephew, is thought to have been used as a distribution facility as part of their wholesale liquor company.12

How to protect yourself from corruption

While we as individuals may not be able to protect ourselves from corruption, whether it’s being carried out by those who work in our government, or the businesses we work for, we can refuse to partake in activities that may not be legal.14 It is important to report anyone engaged in corrupt activity.15

Mayor Torres and his three city employees face up to 10 years in prison for the charges.16  The mayor continues to protest his innocence and says that the charges have left him “extremely disappointed and surprised.”17

Ronald K. Noble, founder of RKN Global urges governments and businesses to work together to combat corruption and foster a culture of integrity.

Corruption affects the lives of millions—even billions– of people all around the globe. While it may be impossible for governments and authorities to fight corruption in “one big sweep”, working on a case by case basis can help.18

RKN Global on Corruption in Sports: More on Match-fixing’s Harms

Corruption in sports is an unfortunately too common phenomenon.  Match-fixing in particular is widespread in numerous sports in every country, yet there are many who are unaware of the problem, and others who remain unperturbed.

Ronald K. Noble, founder of RKN Global, expresses the unfortunate truth that match-fixing is, indeed, very harmful. In our last piece, we looked at the violent crimes that it brings in its wake.  But there are other reasons that match-fixing is so pernicious.  One of them is the support and succor it lends to organized crime.

The Canadian anti-match-fixing activist Declan Hill asserted years ago that all the major participants in sports recognize the hand of organized crime in sports:

“The very least is that all parties, soccer officials, players, and the fixers themselves, agree that organized crime gamblers do regularly approach teams to fix games at international tournaments. They are able to do so easily, and sometimes they succeed.”

Yet Hill’s quote really understates the role of organized crime in sports.  The Europol held a press conference in 2013 in which it described an investigation that revealed three hundred and eighty soccer matches that were fixed between 2009 and 2011, and pointed to an additional three hundred matches that were under suspicion for being fixed.  A Singapore-based organized crime group was fingered as responsible for these corrupt matches, perpetrated throughout the world.

Similarly, one of the most wanted terrorists and organized crime leaders in the world, Dawood Ibrahim, has played a role in fixing matches and sports corruption in Indian cricket.

The reason why organized crime groups are drawn to match-fixing is that it pays handsome dividends for low risk.  If their members are caught fixing matches, then the punishments are not very serious.  At the same time, they can make a great deal of money betting on fixed matches, and can also use the proceeds to launder money that they made in their other illegal businesses.   A 2014 estimate from the non-profit International Center for Sport Security estimated that 140 billion dollars each year were laundered by gambling on matches that were fixed.

Ronald K. Noble and RKN Global draw attention to how attractive match-fixing and sports corruption is to organized crime. It is therefore all the more important to combat it.

A small bribe to make a small change in the outcome or progress of a sporting event is an essential element of a significant web of corruption.  Sex slavery, human trafficking, illegal drugs—all these areas produce revenue that organized crime must explain as legal so they don’t get caught.  Match-fixing provides them a way to launder their money through the gambling markets, and reinvest it in their other, life-destroying activities.

RKN Global on Corruption in Sports: Match-fixing: How Bad Can It Be?

Match-fixing, the wrongful manipulation of a sporting competition, is an insidious form of corruption that is far from being child’s play.  While there is a growing consensus about the dangers of match-fixing in the sports world and among legal authorities, there are occasionally those who argue otherwise.  Their arguments are wrong and unsupported, and need to be addressed.

In particular, they argue that people watch sports for their entertainment, and don’t really care whether a match is fixed or not.  They further contend that changing details within a game (like the score, or an on-field detail) that doesn’t affect who wins and who loses is harmless because the outcome of the game is still uncertain.  Finally, they argue that players who take bribes and succumb to other corrupt enticements are just looking to maximize their profits, just like anyone else in business.

Ronald K. Noble and RKN Global stand at the forefront of trying to combat various forms of corruption.  They emphasize that the “harmlessness” of match-fixing and sports corruption is really an illusion—the harms are very real.

One significant problem is that match-fixing comes together with a package of other crimes, including violent crimes like murder. Another is that match-fixing hurts sports players, the values of our society, the values that we pass on to our children, and our very society itself.

Among the violent crimes that match-fixing often brings in its wake are murder, assault, and extortion.  In 2013, for example, an Indian inspector instituted the first step in legal proceedings relating to a match-fixing case in Indian cricket.  He stated in his complaint that organized crime figures are

“are contacting cricket players who have been recently engaged by IPL sponsors at very high prices for the respective teams with a view to stage-managing some matches to make windfall gains through several bookies, who facilitate illegal gambling in the sport. Players who will be ‘fixed’ will be paid huge amounts of money to underperform during pre-decided bowling overs/spells.”

Less than two days later, the inspector, Badrish Dutt, was found shot to death next to his girlfriend at his flat.  Some have argued that he was murdered by crime organizations because of his investigation into match-fixing.

RKN Global’s founder Ronald K. Noble says that corruption in sports is no mere game.  Corruption is often accompanied by the lowest and most heinous crimes.

There have also been cases of suicide by players who have been caught or accused of match-fixing, and suspicious murders of numerous football directors in Bulgaria, among others.

Already five years ago, the Bochum, Germany Police Commissioner, Friedhelm Althans stated that “I can’t identify the people who have died [from match-fixing], but I certainly believe it.”

Match-fixing is, therefore, not “harmless” sports corruption.

RKN Global on Corporate Corruption: The Role of the Individual

The investigative reporting that exposed the alleged widespread corruption scheme perpetrated by the private, Monaco-based firm Unaoil was based on a trove of emails that had been obtained by reporters.  The emails revealed a scheme by which Unaoil performed its function as a middleman between multinational corporations and state governments of oil producing countries by bribing government officials and officers of oil companies in those countries.

This past week, a former employee of Unaoil has come forward to detail how he personally participated in one such bribe in Libya.

RKN Global’s founder, Ronald K. Noble, stresses that every corrupt or criminal scheme rests on the actions of individuals.  Even a large and wide-reaching scheme of bribery or corruption is often built upon numerous, small corrupt transactions and bribes.

The former Unaoil employee underscores this phenomenon with his reports.  The former executive, Lindsey Mitchell, is cooperating with agents from the U.S. Federal Bureau of Investigation and the U.K.’s Serious Fraud Office.

Before he began working for Unaoil in 2009, Mitchell had been CEO of Western Energy Services Corp, a public Canadian energy company.   Shortly after he came onboard with Unaoil, he was asked to unduly influence Libyan officials under the regime of Moammar Gaddafi in order to get them to approve contracts for Unaoil’s customers.

One of those officials told Mitchell that he and other officials could help Unaoil’s customers get contracts.  He provided Mitchell with secret tender documents relating to multi-million dollar government contracts.  Mitchell relayed to his bosses at Unaoil that the official would want to get paid, and he was provided with an envelope to provide the officials containing between fifteen and twenty thousand US dollars.  Around midnight, he went to the official’s home to deliver the bribe.

Mitchell claims that while he was familiar with other instances of corruption and bribery, that incident was the only one where he personally delivered the bribe.

He resigned a few days later, having suffered from feelings of guilt for his participation in the corruption.

Ronald K. Noble and RKN Global recommend that employees that find themselves in an organization with a culture of corruption take efforts to resist the temptation to follow the crowd, and avail themselves of their company’s ethics hotline, or if necessary, the authorities.  One small compromise with corruption often leads to progressively larger moral and legal violations.

Lindsay Mitchell’s story illustrates how easy it is for an otherwise upstanding individual to get pulled into a company’s culture of corruption and bribery. Employees everywhere should take note, so they do not surrender their integrity to corruption by another’s greed.

RKN Global on Corruption in Business: The Power of the Bribe

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Corruption is a plague that affects all societies in their various sectors, from the political to the corporate, from the individual to the public, from arts to entertainment.  Oftentimes, corrupt behavior can continue unabated for years, generating tremendous windfalls for its perpetrators, even as they enjoy a reputation of integrity.

RKN Global’s founder Ronald K. Noble, notes that part of corruption’s danger is that its allure can affect anyone, given the right conditions.  A corporate culture of corruption makes further corruption even more likely.

The case of Unaoil is illustrative of the great reach of corruption in even one company.  Unaoil is a Monaco-based company that is privately owned by the well-known Ahsani family.  The company’s business is to help Western oil companies get contracts in oil-producing countries in the Middle East.  It does so by serving as a middle man, a bridge between Middle-Eastern oil and Western companies which ostensibly “integrate[s] Western technology with local capability,” according to Chariman Ata Ahsani.

However, Australian media broke a story that reveals an allegedly different way that Unaoil gets contracts for its clients: bribery.

According to the news reports, Unaoil convinced its customers that its mediation was necessary to do business overseas. It would then bribe officials in the oil countries in order to get contracts for those customers.

For example, Unaoil allegedly gave bribes of more than $25 million to various Iraqi officials between 2004 and 2012.  This included prominent politicians such as Iraq’s education minister and former Deputy Prime Minister and its Oil Minister, as well as Iraqi oil officials.  One oil official, Oday al-Quraishi, received, in addition to a number of larger bribes, a payment of $6,000 each month which included five thousand dollars for him and one thousand for him to distribute as bribes to others.

Customers who used Unaoil for its middleman services included Rolls-Royce, Samsung, Halliburton, Honeywell and KBR.  While not all of the companies were aware of the bribes and corruption practiced by Unaoil, some allegedly were.

RKN Global’s founder, Ronald Noble, emphasizes that corruption is not a victimless crime that smooths the way for doing business. It tilts the playing field against companies that can provide the best services in favor of those who are helped by corrupt means.  Among other harms, this decreases efficiency, diverts money and profits from companies that should rightfully earn it, and hurts the public in the countries whose officials have been bribed and who therefore do not act in the public interest, but in their own.

The Unaoil saga demonstrates the incredible power of corruption to spread, from an individual company to an entire industry around the world.

Corruption in Law Enforcement

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Ronald K. Noble, founder, RKN Global

Corruption in government, especially in law enforcement, engenders a high level of cynicism in the general public, to the extent that at times police and other authorities are always suspect and abusive of their power in the popular mind.  The anger towards police at some Black Lives Matter protests in the United States, for example, is partially the natural result of seeing abuse of black men by police continue unabated.  Nevertheless, the vast majority of law enforcement officers—in the U.S. and in most countries of the world—are honest, hard-working, and dedicated.  The public owes them a debt of gratitude.

I served as the head of numerous national U.S. law enforcement agencies as Under Secretary for Enforcement of the U.S. Treasury Department, and led INTERPOL, the world’s largest international police organization, for 14 years as Secretary General.  I am aware of the high quality and professionalism of most law enforcement officers.  Nevertheless, I am also aware that corruption affects law enforcement as well.

Sometimes even those who are revered by the community and their peers can fall prey to the lure of corruption. Damacio Diaz was a police officer in Bakersfield, California, with almost two decades of experience behind him.  In early 2015, he achieved a level of public prominence and accolade after his younger self was portrayed in the Disney movie “McFarland, USA,” and his ultimate career as a distinguished police officer was portrayed in the movie credits as part of the positive results of the story told in the movie.

In 2012, however, Diaz accepted a $1,000 bribe from a drug informant, and began a slippery slide into corruption and criminality, accepting more than $5,000 from the drug dealer in bribes each year.  Soon, he and his partner were robbing drug dealers and reselling the methamphetamine that they sold to others.  Diaz even tipped off his drug dealer informant of a Federal wiretap that had captured some of his conversations.

The effects of Diaz’ transformation from cop to criminal had a wide-reaching effect.   The public suffered at the loss of one of its heroes and the revelation that it could not really trust those who represented the law.  The public and law enforcement suffered even more, as criminal cases involving Diaz and his partner, including individuals serving sentences in 64 different convictions, may be reopened, dismissed, or overturned.  People undoubtedly used the methamphetamine that Diaz sold—instead of becoming part of the solution, his corruption led him to become part of the problem, harming the public and hurting people.

It is essential to implement systemic safeguards in law enforcement agencies, as well as in other government agencies where power can lead to corruption. These safeguards should include checks and balances, regular comprehensive review of activities, and continuing education that might alert officers like the once-honest Diaz about how criminals might target them with bribes and favors.  With a comprehensive anti-corruption plan in place, those officers who might give in to corruption might be saved and remain on the right side of the law, for their sake and for ours.