Dissertation Example on the Issue of Corrupt Directors and Money Laundering

Date:  2021-06-22 13:14:01
7 pages  (1863 words)
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University/College: 
University of California, Santa Barbara
Type of paper: 
Dissertation
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This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

1.0 Introduction

Money laundering refers as a p to a process of making dirty money, that which is obtained from illegal dealings such as drug trafficking, terrorist activities, theft, corruption deals, etc. look legit and clean. The individuals involved does so by indulging into businesses that would make it appear clean through reverting it back to the primary financial system. The parties do so by concealing the source completely. The evolution of intelligence in the world has occurred as law enforcement across the world have evolved towards apprehending the directors of various companies who get involved in money laundering. The legislation, especially, in the United Kingdom, have been in place to manage and provide a breakthrough in handling the individuals who engage in money laundering malpractices.

Money laundering activity is a universally accepted crime. It is unwanted across the world. As a result, various nations have initiated anti-money laundering campaigns and strategies, which involves set of laws and regulations aimed at bringing to halt the act of generating high income through money laundering technique. Institutions offering credit cards or permitting account openings have been prompted to create a legit system, which is captured diligent credentials of the owners as a way of mitigating chances of money laundering.

Money laundering occurs in different forms as mentioned thereof. The paper is set out to investigate ways and tricks through which directors to great enterprises manage to get involved in money laundering activities. Also, the instances in which authorities have identified and dealt with the money laundering perpetrators are considered in the study. Various regulations are considered for discussion as a way of identifying legal frameworks as a technique of dealing with the money laundering partisans. Lastly, but equally crucial, the liability of companys directors on corruption cases plays a significant part in the vice.

2.0 Effects and Forms of Money Laundering

Money laundering occurs in various ways. Most importantly, all these techniques are reportedly illegal. There are three main steps involved in money laundering. Placement includes designing methodologies through which the illegally acquired money can be introduced back into the financial system. Layering on the hand refers to the methods that are used to mask the sources of the money, in particular through indulging in a series of complex transactions and various bookkeeping gymnastics. The last important step is the integration. It involves techniques designed to acquire the dirty money legitimately.

The forms that have been designed as rampant entails doing businesses that would make money look legit. An example is in the movie, Breaking Bad, in which the drug dealer indulges in a car washing industry to make his money look legit. Also, some people tries to bank their money in foreign nations, which have not strict on matters to do with money laundering. The individuals cross the borders and bank their illegal money there. Later on, they can use the cash to do businesses to make it legal. Countries such as the USA, which have strict money laundering policies, the orders to report suspicious activities involving individuals depositing an enormous amount of money per day, worth more than $10,000, were reported as a way of mitigating malicious activities.

Money laundering has no implications that it may bring to the social, economic or political standoffs in the country. It concentrates on using unorthodox means for generating income while neglecting associated risks of country's economy. The money is a limited commodity. Therefore, the process of acquiring money illegally and without any sign of regulation bars channeling of capital into socioeconomically productive industry settings. Printing of money is as well harmed by the process, which directly influences the purchasing mighty of nations currency. Therefore, if it is not controlled, the inflation can erode the economy of the affected country.

3.0 Dealing with Corrupt Directors on Money Laundering

Dealing with the money laundering menace has never been easy over the years. The directors are either indirectly or directly held responsible for frauds within the companies. Therefore, holding directors to be liable substantially minimizes the chances of corruption instances in the companies.

In the news, dunstabletoday.co.uk (2013), Grenville Eames, a 47-year-old director at Totterhoe Co. was arrested in his home for the allegation of improper record keeping in September 2012. He was alleged to have misappropriated amount of money worth 170,000 in a breach of money laundering regulations. The arrest occurred through home raids as it marked a significant first ever arrest on money laundering convictions. Eames was reportedly adamant to keep clear records of significant transactions in the enterprise even after being issues with warnings from HMRC inspections. As a result, he was charged to pay a total of money worth 16,000 as well as JGE Commercial Ltd at Luton Crown Court. Also, the company had ordered to pay 135, 900 as a confiscation fee within the three months.

It was believed that Eames had chances of correcting the accounting mistakes. However, he refused the call to do so. Instead, he continued on the signs to remain adamant on unclear financial activities within the firm. Adrian Farley, who was the assistant director of the criminal investigation department reinstated their stance on matters to do with money laundering activities as it aims at providing protection to the general public from unscrupulous crooks who would want to reap benefit from criminal activities. Farley added that the department would act to seize anyone who is found in allegations of money laundering activities. The move was a clear indication of a bold move to directly work on the directors. As noted, they are individuals who engage in money laundering activities and seizing them would significantly save the company.In another similar case, Anticorruptiondigest.com (2016) reports that two Musaddilal were arrested on September 8, 2016, for allegations of money laundering activity. They included Naredi Narender, 65 years old and Sagar Petroleum Pvt. Ltd Managing Director, and Naredi Kumar, 59-year-old. The allegations asserted that the family indulged in money laundering activity by black banking money after series of illegal activities to make it look legit. They pretended to be selling jewelry in some sections within India as a family business to mask the source of funds. They did so by launching a series of jewelry shops managed by family members across parts of India.

Deputy Commissioner of Police, Avinash Mohanty, stated on 8th November, after the money laundering had been announced that the family had a plan to channel the black money back in the store through depositing them in various banks to mask the sources. The act may have led to a significant loss to the government of India and its people. As stated thereof, money laundering has a significant effect on the governments economy control, especially in money printing as it significantly affects the purchasing power of a given government. It is the people of the country that suffers most when the currency goes down. Therefore, going after specific crooks may save the rest of the innocent people within the country. It has been noted that pinning individual directors is a sure way of mitigating misappropriation of funds in specific companies and it saves the citizens.

The most recent money laundering reports in the Nigeria, Nnochiri (2017) reported that Andrew Yakubu, a former Group MD of Nigerian National Petroleum Corp. was accused of concealing N3billion in the house. A hint from a whistleblower gave directives to his home in Kaduna where money worth 74,000 and $9.7 million was found hidden in a fireproof safe in Kaduna. The recovered money was forfeited to FG after an order from federal High Court situated in Kano. However, Yakubu insisted that the money were accumulated gifts that he got from various ceremonies.

3.1 What Causes Corruption by Directors

The human wants believed to be insatiable. The directors have long since been linked to the unending need to promote self-success. It is worth noting everyone knows that money laundering or any corruption is unwanted and once found, there is a guarantee of an arrest. In a case Teso vs. Natrass (1971), the directors are held liable to have acted corruptly even in their absence. The subordinates are believed to act in the absence of top-ranked managers after duty delegation. Therefore, the court and ruling believe that juniors may carry out duties as delegated by seniors. Therefore, directors may be held responsible for breaches even if they did not commit it as well as the company as a whole.

In another case, SFO v Rolls Royce (2017), involving schemes of corrupting government officials for specific contracts, Rolls-Royce agrees to pay a total of $170 million as a penalty to resolve the case. Even if it was a case of the company, it is worth noting that it is the duty of the directors to act on behalf of the business and sign relevant prosecution documents. All in all, directors are held liable to act in the name of the enterprise.

Nigerian politician, in a case Nigeria vs. Santolina Investment Corp and Ors, (2007), Alamieyeseigha was alleged to have laundered money as detected in unusual bank transfer between companies, of which he was the sole signatory. As a director and owner of the companies, he was held liable. He was then detained and left on bail after which he escaped from the UK with the use of fake passport ID. The case indicates a sign of greed to accumulate unprecedented wealth by directors.

4.0 Regulations for Combating Money Laundering

In the year 2010, three UK-based MDs at Alstom Engineering were arrested on the allegation of money laundering activities namely Altan Cledywyn-Davies, Stephen Burgin, and Robert Purcel (Theguardian.com, 2010). They were arrested on allegations of briberies to win the overseas contracts, which had direct links to money laundering and other acts of corruption. The Criminal Finances Finances Act 2017, therefore, denotes the explanation for any sign of unusual money transfers within or outside the jurisdiction of the nation. Any cash worth more than 50,000 must be explained for its origin as well as intentions. Andrew Yakubus case also is applicable in this matter. He laundered money and hid it in the fireproof safe house at Kaduna. It is a case of unclear funds for the politically exposed individuals, Criminal Finances Act 2017 holds that the individual must be in a position to provide clear accounts for the sources of the wealth.

4.1 Bribery Act 2010

It provides a robust framework for the companies to abstain from acts of corruption of any form for those wishing to do business in the United Kingdom. The content in the Bribery Act 2010 has elevated liability risks for directors, companies, and individuals who may be found guilty of engaging in any corruption in the country. The act would fit into the Alstom case, in which three of its directors were involved in bribery acts to win overseas located contracts. Noteworthy, the directors were further involved in other money laundering activities during the process. Therefore, they had an idea of using the contract winning strategy as a sure way of masking the black money they had earned in the country.

The Bribery Act 2010 also provides provision for foreign-based companies to exercise adequate precaution by avoiding signs of bribery of any kind. The section 7 of the law provision advocates for corporate offense, which involves failure to prevent signs of corruption within its jurisdictions. The legislation appli...

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