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	The hidden truth of banks enabling corruption and the devastating human cost by Stuart McWilliam Global Witness, agencies   There has been no shortage of highly publicized scandals involving the financial sector in recent years, from the crash in 2008 onwards. A much less known, yet equally shocking, one is the key role banks play in enabling corruption, which has a devastating impact on people around the world. This is the focus of Banks and Dirty Money, a recently published report by Global Witness. It highlights how regulatory failure lies at heart of this problem too.   Corruption is “public enemy number one” in the developing world, according to Jim Yong Kim, the President of the Word Bank. In poor countries it kills people and traps millions more in poverty. When unscrupulous officials steal vast sums of state money, they decimate funds that should be spent on vital services like health care, education and infrastructure.   It has other damaging impacts that are felt by all countries. The B-team, a group of eminent business leaders have shown how corruption adds 10% on to the cost of doing business around the world, stifling the global economy. It also leads to a lack of confidence in government institutions, which can lead to insecurity and in some cases failed states that in turn breed terrorism which is exported around the world, threatening the national security of countries everywhere.   The largely hidden truth is that banks play an integral role in enabling this devastating corruption. The days when large scale corruption involved briefcases full of money are largely confined to the past. Corrupt officials now tend to rely on banks to hide the money they plunder and then make it appear “clean.” A World Bank study of 213 grand corruption cases showed that from this sample alone government budgets around the world lost out on $56.4 billion. Global Witness analysed this data and found that at least 140 banks were involved in handing these corrupt funds, including over a third of the current 50 biggest banks in the world.   Most countries have laws and regulations, based on internationally agreed standards, which require banks to spot when they are being used to launder the proceeds of corruption and other crimes. However, while some banks are upholding these anti-money laundering requirements, a large number are not. For example, a damning report by the UK regulator in 2011 found that 75 per cent of banks were violating the rules designed to keep dirty money out of the system in some way. As a result, many banks around the world are leaving the door wide open for not just corrupt officials, but tax evaders, drug cartels, and other criminals to launder their funds undetected.   In common with other recent banking misconduct, skewed incentives are the major underlying cause. Banks stand to make significant profit from taking money that has been embezzled, or earned in other illegitimate ways. Yet there is often very little downside. The regulations are poorly enforced, and where penalties are handed out, they tend to be fines given to a bank as a corporation. Senior executives with ultimate oversight rarely face consequences themselves.   A prime example of this was exposed last year when BNP Paribas, France’s largest bank, was fined $8.9 billion dollars by the U.S. for breaking international sanctions to Sudan and other countries. Senior managers at the bank ignored warnings from compliance staff that they were breaking the law, because the profits were too good to turn down. The New York banking regulator laid bare the full scale of the wrongdoing by declaring “[BNP Paribas] – with the full knowledge of multiple senior executives – engaged in a long-standing scheme that illegally funneled money to countries involved in terrorism and genocide”.   The most effective way to change the persisent rule breaking would be to hold senior executives personally responsible for upholding anti-money laundering regulations. It is not until they start losing their jobs, being personally fined, having bonuses withdrawn, being barred from their profession, or in the worst cases face criminal prosecution and jail, that the people who run banks will take these regulations seriously .   There are some chinks of light. In the BNP Paribas case, the New York regulator insisted that five senior executives be fired. This is almost unique, and other regulators around the world should take note. A few months ago the UK’s banking regulator, the FCA, published the details of a poineering measure – the Senior Managers Regime – which include the requirement for a named senior executive at UK banks to be held personally responsible for complying with anti-money laundering regulations. This is hugely welcome. However, the true test will be whether the FCA implements this effectively when it comes into force next March.   Last week, Hilary Clinton declared that she would hold senior bankers accountable for failures if she became President. If she did get the job, introducing a measure like the Senior Manager Regime would be a good place for her to start.   In a recent speech, the UK’s Prime Minister called corruption “one of the greatest enemies of progress in our time” and announced the UK will be hosting an Anti-Corruption Summit next year. He would secure a huge step forward if other countries at the Summit agreed to hold their senior bankers personally responsible for denying corrupt officials the opportunity to hide and launder their ill-gotten gains.   * Stuart McWilliam is Senior Campaigner for Money Laundering at Global Witness.   Oct 2015   26 bankers already sentenced to a combined 74 years in prison. (Iceland Magazine)   In two separate rulings last week, the Supreme Court of Iceland and the Reykjavík District Court sentenced three top managers of Landsbankinn and two top managers of Kaupþing, along with one prominent investor, to prison for crimes committed in the lead-up to the financial collapse of 2008. With these rulings the number of bankers and financiers who have been sentenced to prison for crimes relating to the financial collapse has reached 26, and a combined prison time of 74 years.   Eleven former bankers have been sentenced to four and a half years or more in prison.   The former top bosses of Kaupping have received the longest sentences to date. Hreioar Mar Sigurosson, the former CEO of failed bank Kaupping and Magnus Guomundsson, the CEO of Kaupþing Luxembourg, top the list, having been sentenced to a combined six years in prison for extensive market manipulation, embezzlement and breach of fiduciary duties. The maximum combined sentence for financial crimes according to Icelandic law is six years.   Courts can sentence people to longer prison terms than six years in cases where the crimes are systematic and repeated, and in cases where people make a living from engaging in financial crimes. Future cases against Magnus and Hreioar Mar will determine if the courts consider the two to have engaged in financial criminality of a scale which justifies expanding on the maximum sentences.   Market manipulation and embezzlement involving bankers   In addition to Hreioar Mar and Magnus eight other individuals with connections to Kaupping have been sentenced to prison. Sigurour Einarsson, the Chairman of Kaupping has been sentenced to a combined prison term of five years in two cases involving market manipulation in the lead up to the 2008 crisis, while the Reykjavík District court sentenced Ingólfur Helgason the CEO of Kaupping’s domestic division to four and a half years and Bjarki Diego, managing director of the bank’s loan division to two years, both for market manipulation. Three others received suspended sentences.   Two financiers with ties to KAupping have also been sentenced. Olafur Olafsson, one of the most powerful “corporate Vikings” of the pre-2008 years and one of the largest shareholders in Kaupþing was sentenced to four and a half years for market manipulation by the Supreme Court while Skuli Porvaldsson, a prominent investor was sentenced to six months in prison by the District Court for cover-up in a case involving the embezzlement of bank funds by the CEOs of Kaupping and Kaupping Luxembourg, Hreioar Mar and Magnus.   The Special Prosecutor for financial crimes has also charged former employees and top managers of the two other big Icelandic banks, Landsbankinn and Glitnir, for various crimes, including market manipulation.   http://icelandmag.visir.is/article/26-bankers-already-sentenced-a-combined-74-years-prison Visit the related web page
	New Global Partnership to End Violence Against Children by Susan Bissell Unicef, agencies   Sept. 2015   Violence against children is widespread and socially accepted in many parts of the world, but can be curbed with political will, money, and a change in age-old attitudes, the head of a new global partnership that will tackle the issue has said.   An estimated 120 million girls - about 1 in 10 of all the girls in the world - have experienced sexual violence, and six in 10 children are subjected to violent discipline, according to the U.N. children''s agency UNICEF.   Ending violence against children is one of the development targets world leaders are due to adopt at a summit later this month and the new partnership will try to meet this goal.   "These are pretty frightening statistics," Susan Bissell, who has worked at UNICEF for 25 years and is heading the Global Partnership to End Violence Against Children, said in an interview in London.   "There are some common everyday acts of violence that could be prevented if there was more political will," she said.   "We need to treat violence like a contagion. We need to interrupt it," she said, referring to techniques used by the U.S.-based group Cure Violence that she said had worked.   The global partnership, to be launched in January 2016, will tackle many forms of violence including sexual violence, trafficking, recruitment by armed groups, physical violence at school and home, female genital mutilation and child marriage.   It will bring together governments that want to take part, U.N. agencies, NGOs, academics, community and faith leaders, and young people.   Bissell, who until last month was UNICEF''s chief of child protection, says the partnership is a first in both its scale and the breadth of groups involved.   The partners will draw up plans on ways to curb violence in the countries involved and report back on progress. A fund is being established to help poorer states.   "The good news is that the solutions - the things we know work - work across income, culture, class, and they''re pretty simple, straightforward things," she said, adding that political will, and in poorer countries financial help, are needed.   Home visits by nurses for young families, setting up hotlines to referral services, keeping schools open after class, changing the times alcohol is sold in shops, have all been found to reduce violence, Bissell said.   Ending abuse, trafficking and all forms of violence against children is one of the development targets global leaders are due to adopt at a U.N. summit later this month, called the Sustainable Development Goals.   "We''ve never had prioritisation of protecting children before now. We''ve had education, child survival, nutrition, water and sanitation - all extremely important.   "But we need to be sure they are not surviving and being educated to later end up in a brothel, or on the streets, or with a military group," Bissell said.   "What we really want to do is breathe some life into implementing the Sustainable Development Goals," she added.   This week, authors of a survey into child violence carried out by Nigeria''s population commission recommended that the government work to change perceptions that violence is socially acceptable.   They found six out of 10 Nigerian children experience some form of violence, and a quarter of girls suffer sexual violence. Adult relatives were the most common perpetrators of physical violence including kicking, burning and choking.   Bissell said attitudes towards children generally need to improve. "I''ve looked back to the 1600s on this. We''ve evolved in so many ways, but not in this one as much as we need to."   Tackling child trafficking is both about attitudes and economics, and these need tackling at source, Bissell said.   "I''m not against all the work that''s been done on the rescue and law enforcement side, but I think we need to do a lot more on equity at source.   Many girls who end up in brothels have experienced sexual violence at home. "So let''s have that conversation right up front," Bissell said.   Much more needs to be spent on reducing gender discrimination and family poverty in the battle against trafficking, she added.   "They''re really big things to address ... But it would be more cost effective to stem the flow than to keep addressing it at the other end."   "For me this partnership only matters if it''s going to make a real difference in the lives of kids. I''m not interested in just talking," Bissell said.   http://www.unicef.org/endviolence/ Visit the related web page
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