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Authors Posts by Diana Jean Schemo

Diana Jean Schemo

Diana Jean Schemo
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Diana Jean Schemo is co-founding executive editor of 100Reporters and an award-winning former foreign, national and cultural correspondent for The New York Times and the Baltimore Sun.

Madonna performing at Budva. / MADONNALICIOUS FAN PHOTO
The 2008 extravaganza that pop idol Madonna held in the Montenegrin resort of Budka was described by many as an important landmark in the musical history of that Adriatic country. It now appears it was a landmark in the annals of corruption, as well.

A new report by the Organized Crime and Corruption Reporting Project details how taxpayers in Montenegro–who had been promised that no public money would go toward the show–ended up shelling out about $6 million to subsidize the Material Girl’s appearance, without their knowledge.

Moreover, a Montenegrin bank transferred $7.5 million to the singer’s agents ahead of the concert, at the same time that it failed to honor 200 orders for wire transfers from customer accounts, each of them with balances sufficient to cover the transfers.

The report appeared to find no evidence that Madonna knew that her payment was coming from potentially illicit sources.  The “Sticky & Sweet” world tour earned the singer $281.6 million that year, while Montenegro’s Central Bank faced demands that it bail out the bank whose clients unwittingly paid for all that sweetness.

Sweep to Paying for Madonna, Cheating Montenegrins 

Jack Warner, the former FIFA vice-president, will not face criminal charges in his native Trinidad over the alleged bribery scandal that cost him his position at the world soccer body last year.

The public prosecutor announced Monday that he would not be charging Warner and that the case was closed, despite evidence suggesting that Warner was the secret owner a hotel and “center of excellence” built with $22.5 million in aid from FIFA. The Trinidadian investigative website wired868.com published documents showing two companies owned by Warner family members took out an $11 million mortgage on the property.

Warner, deputy prime minister and minister of works in Trinidad, was also accused of handing out bribes to Caribbean delegates at Port-of Spain in May 2011, in an unsuccessful bid to secure the election of Mohamed bin Hammam to lead FIFA.

Warner denies the allegations, saying he is the victim of a vendetta by FIFA President Sepp Blatter.

Sweep to No charge for Warner

While financial analysts may debate the risks and benefits of Wal-Mart’s alleged gamble in Mexico, where the discount chain reportedly paid millions of dollars in bribes to fast-track its vast expansion, shareholders are meting out their own form of boardroom justice.

The Boston Herald writes today that the Massachussetts Pension Reserves Investment Management system, which owns nearly 1 million shares of Wal-Mart, will demand the replacement of seven members of the board.

In addition, Pensions and Investments, an online news site, is reporting that a growing share of major shareholders are publicly vowing to vote against Wal-Mart’s slate of directors at the company’s annual meeting June 1.

The anti-incumbent wave ranges from the California State Teachers Retirement System, which announced plans to vote down all 15 directors, to the California Public Employee Retirement System, which will reject nine directors. The New York and Connecticut employee retirement systems are also calling for a housecleaning, the site reported.

“If the allegations surrounding the Mexican subsidiary are proven true, and the board was unaware of the bribery, then Wal-Mart’s board has badly failed its shareholders and must move swiftly to bolster its oversight mechanisms,” said a letter from Denise Nappier, Connecticut treasurer and overseer of the pension fund, to James Breyer, presiding director of Wal-Mart, that the site quoted. “At a minimum, the board must determine who was responsible for failing to keep the board informed and remove them from the company.”

Sweep to Plans say no to re-election of directors on Wal-Mart board 

Heavy machinery at one of First Quantum’s copper mines in the Democratic Republic of Congo, whose expropriation by the Congolese government is coming under scrutiny. / REUTERS

Imagine that a gigantic corporation privately informs the government that it won an important deal overseas that might have involved the bribery of foreign officials. Journalists discover a confidential document written by the company itself that highlights its concerns. But they can’t write about the story because the corporation hires a white shoe law firm that threatens legal action against media outlets that make inquiries about the document.

That’s the scenario playing out now around a company called Eurasian Natural Resources Corporation, or ENRC, of Kazakhstan, whose founding shareholders are three oligarchs close to that country’s despotic leader. With the help of right-wing Israeli businessman Dan Gertler, it won control of a vast mining concession in the Democratic Republic of the Congo, one of the world’s most corrupt, resource-cursed failed states. Gertler is known for his friendly ties to the Congo’s president, Joseph Kabila.

The College of Cardinals. / REUTERS

Vatican officials are threatening to sue an author, publisher and others over a new book on Vatican secrets and scandals that is based on leaked documents, the Associated Press reports.

The book, His Holiness by Gianluigi Nuzzi, exposes internal power struggles, communications with the powerful and well-connected in Italy and emails between Pope Benedict VI and the Vatican bank. It also reports on the Vatican’s response to scandals such as those surrounding the Legion of Christ. The order has gained notoriety in recent years with reports of a culture of pedophilia and sexual abuse set by its founder.

Earlier this year, the Pope created a task force of cardinals to track down the source of leaked emails exposing alleged corruption in the Vatican contracting office and mismanagement. He had threatened Nuzzi with legal action following previous articles that drew on leaked emails and letters to report on the efforts of a Vatican whistleblower to avoid assignment to Washington.

That whistleblower, Monsignor Carlo Maria Vigano, is the Vatican’s ambassador to the United States.

Sweep to Vatican: New book of leaked documents “criminal”

In what appears to be a growing scandal over property tax assessments in some of California’s wealthiest communities, a former assessor for Los Angeles County was taken into custody Monday.

The assessor, Steven Schenter, had previously admitted to the Los Angeles Times that he had lowered the tax assessments on some 150 residential and commercial properties under pressure from his boss, County Assessor John Noguez.

In exchange for the reduced tax bill, he said, property owners showered Noguez with campaign contributions, and helped lower his post-election campaign debt. Noguez reportedly raised $1 million for his election bid, while his opponent raised only $50,000. Still, Noguez ended his campaign in debt.

He now faces 60 charges of falsifying public records.

“The magnitude or Schenter’s suspected betrayal of public trust is almost inconceivable,” the Times quoted Los Angeles County District Attorney Steve Cooley as saying. “We believe his actions are not isolated.”

Noguez has admitted to asking Schenter to “check the status” of certain properties and to help fundraise for his campaign, but he denies explicitly asking him to lower tax assessments.

Sweep to Ex-official arrested in L.A. County assessor corruption probe

The singer Jack White is keen to set an unusual record at his next show: the most metaphors in a single concert.

But Pennsylvania’s Supreme Court Justice Joan Orie-Melvin might set an altogether less enviable record. She became the third sister in a single family to be charged with corruption as a public servant.

A grand jury in Allegheny County recommended Orie-Melvin face nine criminal counts Friday, in connection with charges she used her official staff to work on her election campaigns in 2003 and 2009. She was also charged with conspiracy to tamper with or fabricate evidence and theft of services.

Orie-Melvin’s sister, Pennsylvania State Senator Jane Orie, is awaiting sentencing for using her legislative staff to work on her campaigns. A third sister, Janine Orie, is also awaiting sentencing for her involvement in misusing official staff for her sisters’ campaigns.

Orie-Melvin was immediately removed from the bench, though she continues to collect her salary of nearly $200,000 a year.

Sweep to Justice Joan Orie-Melvin to step away from state Supreme Court to fight charges

This time, the message came through loud and clear.

A federal judge in Miami sentenced Jean Rene Duperval, a former official at Telecommunications D’Haiti, to nine years in prison for laundering some $500,000 in bribes he collected from U.S. companies, as part of a mushrooming investigation into bribery in Haiti’s telecom sector.

The investigation under the U.S. Foreign Corrupt Practices Act has already netted a record prison sentence for another former official of Haiti Teleco, Joel Esquenazi, who faces some 15 years in prison, the Miami Herald reports.

In exchange for the money, Duperval sold out the people of Haiti: He lowered the contract price for U.S. businesses and allowed them to charge higher rates. Assistant U.S. Attorney James Koukios noted that Duperval came from a wealthy family, and did not need the bribes. Testifying in his own behalf, Duperval contended the payments were not bribes at all, but “tokens of appreciation” for a job well done.

Now, it appears, Duperval is the one who is well done.

Sweep to Ex-Haiti official, 9 years in Telecom bribery case

Former state Senator Pedro Espada Jr., convicted Monday of stealing more than $500,000 from a Bronx health clinic. / REUTERS

He dined on lobster, splurged on spa treatments and ordered up a luxury sport-utility vehicle. On Monday, the bill came due for former State Senate Majority Leader Pedro Espada Jr.: guilty on four counts.

Espada, an Albany power-broker, was convicted of embezzling more than $500,000 from Soundview Health Center, a not-for-profit health clinic he founded in 1978, that grew into a network of clinics. The money went for everything from that $60,000 SUV to a $1.09 pack of chewing gum, the New York Daily News reported. (The New York Times tallies Espada’s haul on the charges for which he was convicted at $448,000.)

The News nicknamed Espada the “piggy pol,” noting that under the terms of his agreement with Soundview, Espada continues to collect his $300,000-a-year salary. He also stands to enjoy a golden parachute that could top $10 million. Patients at the clinic expressed outrage.

The jury deliberated for 11 days, with reported outbursts of bickering and name-calling. The panel deadlocked on four more counts of theft, fraud and conspiracy against the former senator, and on a raft of similar charges against his son, Pedro Gautier Espada. The judge declared a mistrial on those counts.

Sweep to Ex-state Sen. Pedro Espada convicted of stealing from Bronx health clinic

Will the last honest person in Columbus, New Mexico, turn out the lights?

This small town on the border with Mexico, population 2,000, has seen its mayor, police chief, a city trustee and nine other public officials arrested in a conspiracy to sell weapons to drug cartels over the border.

And it is not alone. The Los Angeles Times reports that towns on the U.S. side of the border appear to be a lifeline supplying illicit weapons to the drug gangs that terrorize much of northern Mexico. A dozen public officials are under investigation in Sunland Park, New Mexico, in connection with gun running or drug trafficking over the border, and some 130 U.S. Border Patrol agents have been arrested since 2004. Another 600 are under investigation.

“Unfortunately, the border is just one vast conspiracy,” the Times quotes the attorney for Columbus’s former mayor, Eddie Espinoza, as saying.

Sweep to Corruption flows freely along U.S.-Mexico border 

Some 100 properties at home and abroad, an airline that turned with $15,000 in capital into $1.6 million in a single year: these are some of the alleged spoils that Adolphe Muzito, the former prime minister of the Democratic Republic of Congo, is accused of having amassed at public expense.

Investigators in Kinshasa have confirmed that they are looking into the source of Muzito’s wealth, following accusations from a former fellow lawmaker, Gerard Gecoco Mulumba, the Voice of America is reporting.

Mulumba had given up his own seat in Parliament, saying he could not bear to sit with a man who had so ravaged his country. He contended that the airline, Technafrique, became a conduit for money laundering.

This is not the first time that Muzito’s management has prompted scrutiny, the VOA reports. In 2009, he lost the right to authorize government purchases, after he was caught buying a fleet of SUVs at public expense for his personal use.

Sweep to Congo Police Investigate Former PM for Corruption

Azerbaijan's President Ilham Aliyev.

As the parliament of Azerbaijan debated opening its territory to foreign gold mining companies several years ago, one mysterious consortium had a lock on the rights to prospect for gold in that small nation in the southern Caucasus.

The consortium, AIMROC (Azerbaijan International Mineral Resources Operating Co. Ltd.) was created solely to bid on the contract, and its parties had no experience mining gold. But it had something else, according to a new report by the Organized Crime and Corruption Reporting Project: the two daughters of Azerbaijan’s President Ilham Aliyev had important financial stakes in the companies.

The OCCRP report traces the consortium members to shell companies registered in Panama, which list the president’s daughters Leyla and Arzu Aliyeva as managers.

This is the second report showing how the Azerbaijan’s president is using family members to create a secret business empire, thanks to his hold on government coffers.  The Aliyeva sisters are also listed as managers in a Panamanian front company for Azerfon, which has a monopoly on high-speed Internet connections in Azerbaijan, the OCCRP has reported.

Sweep to Azerbaijan president awarded family stake in gold fields

A South Texas district attorney running for a seat in the U.S. Congress was arrested with his former law partner Monday, accused of taking more than $100,000 in bribes and kickbacks in exchange for fixing court cases.

The arrests were part of a growing federal investigation into the criminal justice system of Brownsville, where key figures appear to have turned the public trust into personal business empires. So far, a judge, a bailiff, lawyers and a former state legislator have faced charges in the years-long investigation.

The 12-count indictment issued Monday accuses Cameron County District Attorney Armando Villalobos of extorting bribes from attorneys in exchange for “favorable acts of prosecutorial discretion, including but not limited to minimizing charging decisions, pretrial diversion agreements, agreements on probationary matters and case dismissals.”

Villalobos and his former partner, Eduardo “Eddie” Lucio, were also charged with two counts of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act, the Houston Chronicle reports.

In one case, Villalobos is accused of giving the confessed killer of a schoolteacher 60 days to get his affairs in order before reporting for prison. The killer fled, forfeiting his $500,000 bond, which was then divvied up to pay for a civil judgment–with Villalobos pocketing $80,000 on the deal.

Villalobos and Lucio both said they are innocent and vowed to fight the charges.

Sweep to South Texas DA indiced in bribery, kickback scheme

A recent post on Chris Morgan Jones’ blog   pondered whether, from a purely financial point of view, Wal-Mart came out ahead in Mexico, where it allegedly bribed a raft of local officials to fast-track the discount giant’s expansion starting in 2003. After all, the company’s Mexico operation made about $12 billion in profits over that time, and its likely liability through prosecution will run $4 billion to $10 billion, if the past is any guide, Jones wrote.

But that calculation might change in the minds of Wal-Mart’s directors and executives, thanks to a new lawsuit by a pension fund heavyweight, the California State Teachers Retirement System, which owns 5.3 million shares of Wal-Mart.

The suit names 27 current and former Wal-Mart executives and directors, whose failure to put an end to the alleged bribery have exposed Wal-Mart, the suit says, to heightened scrutiny from the U.S. Securities and Exchange Commission and the Department of Justice, and to “hundreds of millions of dollars in liability” under the U.S. Foreign Corrupt Practices Act. The suit asks for the court-ordered removal of Wal-Mart’s board of directors, and that any damages recovered in the action be plowed back into the company.

Last week, Jack Ehnes, CEO of the California pension system, called the scandal, “The Fortune 100 version of Watergate.”

Discount giant, meet shareholder giant.

Sweep to California pension fund sues Wal-mart following bribery allegations

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