Corruption: are you an expert? [quiz]

Headlines regularly focus on political scandals and corruption. From public officials embezzling government monies, selling public offices, and trading bribes for favors to private companies generate public indignation and calls for reform—corruption, it seems, is inevitable. But what really is corruption, and who is responsible for its continuation?

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Al Jazeera expose on Maldives wins One World award

A documentary exposing wrongdoings of the Maldives' government wins a prestigious award at the One World Media ceremony.

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Unauthorized Wells Fargo Accounts Scandal

March 21, 2016
Wells Fargo Chair and CEO John Stumpf appeared before the Senate Banking Committee to discuss his company’s settlement with federal officials in which Wells Fargo agreed to pay $185 million in fines over alleged fraudulent accounts opened without customers' permission. Senators questioned Mr. Stumpf about the corporate behavior and practices related to over 2 million unauthorized accounts, and which led to the termination of over 5,000 Wells Fargo employees nationwide. Following Mr. Stumpf, regulators, including Consumer Financial Protection Bureau Director Richard Cordray, answered questions about their investigations into Wells Fargo, and what they recommended to not only address wrongdoing within that company, but prevent future abusive practices across the financial services industry.    
   Elizabeth Warren

"This just isn't right. A cashier who steals a handful of $20s is held accountable, but Wall Street executives who almost never hold themselves accountable, not now and not in 2008 when they crushed the worldwide economy. The only way that Wall Street will change, is if executives face jail time when they preside over massive frauds."

Elizabeth Warren

"We need tough, new laws to hold corporate executives personally accountable and we need tough prosecutors who have the courage to go after people at the top. Until then, it will be business as usual. And at giant banks like Wells Fargo, that seems to be cheating as many customers, investors and employees as they possibly can. ' Thank You, Mr. Chair."

All Rights Reserved to C-SPAN. 

The Sins of Ann Twomey – HPAE of New Jersey

Do you know who Ann Twomey is, and what she is alleged to have done?  No matter how you feel about unions conceptually, and no matter what you think about the very top union representatives and their true intentions, one thing is for certain: private sector unions are made up of largely hard working, blue color American men and women, who are just trying to do their best to support their families in dignity. Steelworkers in Ohio, auto plant mechanics in Michigan, flight attendants in Illinois, or nurses in New Jersey, they are the backbone of our labor force.

That’s why corruption within a union feels so much worse than any Wall Street-manufactured Ponzi Scheme.  Somewhere deep inside we find it harder to cry for some hypothetical fat cat investor that comes to mind, even though in the reality, of course, it’s false and financial fraud often hurts the most vulnerable members of the society.

Yet there is something particularly morally repugnant about schemes and corruption associated with unions. Because, at least on paper, unions are there to serve and protect the interests of hardworking middle-class Americans -- your average Joe the neighbor next door, and Jane the single mom down the block. They faithfully pay their union membership dues and come out to support union activities because they sincerely believe that the union is there for them, and will give them if not prosperity, then at least a sense of financial security. Taking advantage of these people’s goodwill and defrauding them seems like a step out of the boundaries of “usual evil.” 

Ann Twomey is the president and a founder of Health Professionals and Allied Employees, New Jersey’s largest health care union and accused of serious wrongdoing. The actual allegations surfaced in a lawsuit filed back in 2014, with new allegations being added in 2015, but the case has resurfaced again now because of the latest round of depositions and the things one can glean from it.

Ann Twomey started HPAE and has been it’s unchallenged leader for the last 30 years. By all accounts, she turned the HPAE into a powerful regional union with her personal influence extended well beyond the Garden State. Listed at one of the 30 Most Influential Women in New Jersey Politics, Twomey’s national ambitions are absolutely transparent. She is a vice president of AFT (American Federation of Teachers), where she serves as vice chair of the AFT Nurses and Health Professionals program and policy council, a member of the AFT human rights and community relations committee; vice president of the New Jersey State AFL-CIO; co-chair of Patients First Coalition in New Jersey; a board member of New Jersey Citizen Action; Board Trustee at the American Labor Museum, and a member of the Advisory Board of the Felician College Nursing Program.

While HPAE is a union for health care professionals, it’s also used as a platform to advance issues that have little or nothing to do with health care itself. The union regularly pushes to abolish the Second Amendment and extends support to politicians promoting gun control. They played a vital role in forcing the New Jersey legislature to advance the $15/hour minimum wage. And just in these past months, HPAE has been involved in the Verizon worker’s strike, as well as the union move to bring down Atlantic City’s Trump Taj Mahal Casino.  Union dues and volunteers are being used to pursue her broader political agenda, often bringing no real benefit to the nurses and other health care professionals it’s meant to serve.

And then comes the lawsuit, Fonti v HPAE Retiree Medical Trust. The suit provides a rare opportunity to get a glimpse on the way this surprisingly secretive organization operates. It opens the veil on an organizational culture void of transparency, driven by personal ambition, and with either negligence or, as alleged in the lawsuit, by greed and personal gain.

The new charges allege that Twomey steered $1.4 million in legal fees to her boyfriend, New Jersey attorney Richard Loccke, without properly disclosing the relationship. According to the New York Post, the filing reveals that since 2006, Twomey has “awarded virtually all of the union’s legal work to her live-in boyfriend. The no-bid contracts directly benefit Twomey, who has been dating Loccke for 30 years and resides in his spacious Rutherford, NJ, home, the suit says.”

Most would agree that this is illegal under federal law and that the Department of Labor rules would require Twomey to disclose this conflict of interest. The $1.4 million in legal fees to her boyfriend was spent even though the HPAE already pays for an in-house council.

Court documents also show that HPAE is a defendant in the case, which means that union dollars are being used to defend Twomey’s alleged graft. So much for oversight, transparency, and fiduciary duties to the members.

A closer analysis of the financials available through public records paint an even grimmer picture. For the HPAE Retiree Medical Trust, according to their 2014 990 Disclosure statement. The plan’s revenue is 97.8% from plan participants and 2.2% from employer contributions. 16.7% of the expenses were plan benefit and 83.3% in administrative fees, including plan administration fees, legal and accounting with total assets of $9,970,775 for 5,800 members. These numbers beg the question will there be enough to cover the 5,800 plan members with an average of only $1,719.10 in assets available per member and all of their dependents?

Where is the oversight? Why has Twomey, been the uncontested president for 30 years, why has the union dissipated member funds by directing funds to live in boyfriend(s?), supporting unrelated causes, and giving money to other bodies unrelated to their cause? Is her top deputy and heir-apparent Jeanne Oterson compliant in all of this, and what can members expect from her leadership, given the fact that her husband, Richard Engler, has brought attention to himself by rewarding over $100,000 in sole-source contracts for outside lawyers and consultants without public notice or discussion at the U.S. Chemical Safety and Hazard Investigation Board, which he leads.

Can you imagine an investment pool that awards all legal work to relatives without disclosing the conflict of interest, gives member money to other funds, wastes member money on issues and events that are of zero benefits to the investors, and at the all the time funds management’s selfish quest for awards and adulation of public? I can, and I have, with names such as Magnus Peterson, Raj Rajaratnam, and Bernie Madoff and all end with the perp walk of shame.

L. Burke Files, President

The American Anti-Corruption Institute (AACI)

Notes: The Health Professionals and Allied Employees (HPAE)

Organizations Anti-Corruption Certification Program

Starting September 1, 2016, The AACI offers globally a disciplined anti-corruption certification program to organizations seeking to prevent fraud and corruption inside their business processes, operations, and culture. This certification process is the first of its kind worldwide and forms a basis for institutional change in fighting fraud and corruption. It is available to organizations of all kinds and types. The process is principally administered and completed Online.

It is an annual certification process that shows quantitatively the collective anti-corruption knowledge score of those who are charged with governance and reports on the result.

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Swiss Private Bank Linked to Malaysia Scandal

L. Burke Files, President of The AACI, is quoted in the New York Post.

"New cracks appeared earlier this month. L. Burke Files, who heads up a private anti-fraud agency, raised questions about a Cayman fund for 1MDB, the Bridge Global Absolute Return Fund.

“It was less than a month old when billions were deposited in into its accounts,” he told The Post. “The issue is that when the funds were deposited, the company had been formed, but it was not yet registered and licensed as a fund.”

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The American Anti-Corruption Institute (AACI) in Qatar

Under the patronage of the Governor of Qatar Central Bank His Highness Sheikh Abdulla Bin Saoud Al-Thani, Birzeit Consulting – Qatar launched “ Corruption Prevention in Financial Institutions” in cooperation with The American Anti-Corruption Institute (AACI), Tempe – Arizona; the first of its kind in the GCC countries and the Middle East.

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The Auditor's Responsibility Relating to Fraud in an Audit of Financial Statements: Fraud “Audit Expectation Gap” in the Middle Eastern Countries 

The following white paper was presented at the first international auditing and accounting conference in Ramallah, Palestine on November 7, 2012

Prepared by: Mohammed J. Masoud, CPA, CFE, CICA, MBA 
                     The AACI, Technical Advisory Director; Middle East and Africa
                                                                      

 Abstract

This paper presents the results of reviewing the existence of the fraud “audit expectation gap” in the Middle Eastern countries. The purpose of this research is to review the literature written about the audit expectation gap as it relates to fraud to find out whether the results of prior research can be applied to the Middle East where this phenomenon has not sufficiently been examined despite its crucial impacts on the audit profession. Despite the scarcity of research about this phenomenon in the Middle East, we found that the fraud “audit expectation gap” exits in the Middle Eastern countries. 


Click here to reach and read the white paper