Category Archives: Treasury

When the World Bank is Corrupt, Anyone Care?

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Per the World Bank website:

The World Bank Group considers corruption a major challenge to its twin goals of ending extreme poverty by 2030 and boosting shared prosperity for the poorest 40 percent of people in developing countries. In addition, reducing corruption is at the heart of the Sustainable Development Goals and achieving the ambitious targets set for Financing for Development.

Corruption has a disproportionate impact on the poor and most vulnerable, increasing costs and reducing access to services, including health, education and justice.

Great right? There is even a video of ten steps to stop corruption.

Also on the website:

The United States was a leading force in the establishment of the World Bank in 1944 and remains the largest shareholder of the World Bank today. As the only World Bank shareholder that retains veto power over changes in the Bank’s structure, the United States plays a unique role in influencing and shaping development priorities.

Through the World Bank Group, the United States participates in addressing international development challenges of vital importance. The United States has a long history of generously supporting the World Bank Group’s mission and has been a champion of the International Development Association (IDA), the Bank’s fund for the poorest, which provides low-interest loans and grants to developing countries for education, health, infrastructure, agriculture, communications, economic and institutional development.

Why all the concern?

World Bank Has Expressed This Big Estimate About Indias ...

OCCRP: A paper the World Bank released on Tuesday shows that countries dependent on aid from the organization see increased flows into tax secrecy havens, suggesting that some of its funds is ending up in the wrong hands. The Economist reported last week that the development bank allegedly tried to conceal the findings by neglecting to publish the study, and that Pinelopi “Penny” Goldberg, its chief economist, would be stepping down just 15 months into her tenure.

Because of media reports connecting Goldberg’s resignation and the study, the World Bank issued a public statement, explaining that the paper had undergone “several reviews, and it was improved as a result,” before it was published on the organization’s website. The timing of when it decided to publish the paper has drawn scrutiny, however.

Stefano Feltri, an Italian journalist who reported on the censorship in Pro Market, a University of Chicago-based publication, confirmed to OCCRP that the article was first published on the personal website of Niels Johannesen, a professor of the University of Copenhagen and CEBI, who co-authored it.

The article was then published hours later, by the World Bank, he explained, also confirming this through screenshots he shared with OCCRP.

Goldberg’s reason for resigning is unclear. The Economist said: “After aid to a country spikes, money departs for offshore havens. And after a sensitive paper is spiked, Penny departs for New Haven.”

OCCRP has obtained emails sources say were sent out Feb. 5, before the study controversy went public, showing that she had voiced her intention of returning to her post as an economics professor at Yale University.

Her departure marks the Bank’s second consecutive chief economist who has stepped down — Paul Romer, who served previously, resigned after publicly denouncing the organization for its “politically motivated” methodology that criticized business practice Chile under its socialist president Michelle Bachelet.

“I don’t know what exactly happened,” said Johannesen, who was more focused on the findings of his paper, when asked by OCCRP whether he could provide clarity to the situation.

He said his paper uncovered what he called “leakages” of foreign aid, where the number of offshore transactions going to tax havens designed to hide the origin of the source goes up in aid-dependent countries. He said about 5 percent of aid appears to be flowing illicitly offshore.

“While we can only speculate, the study shows that aid might itself be eroding institutions,” he said.

The professor concluded that the “big task,” in response to the findings, would be “the further disciplining of tax havens, and strengthening anti-money laundering standards.”

*** For context: The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.[6] It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). The World Bank is a component of the World Bank Group.

The World Bank’s most recent stated goal is the reduction of poverty.[7] As of November 2018, the largest recipients of World Bank loans were India ($859 million in 2018) and China ($370 million in 2018).

Remember India just signed a deal during President Trump’s visit to buy $3 billion in military equipment. And China has been buying/loaning money to countries to take over their cargo ports known as debt trapping while building the silk road initiative spending $900 billion.

Anyone asking any real questions on all this?

 

 

Operation Mega Flex

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From July to September last year, Customs and Border Patrol in that 3 month period seized 1061 shipments of counterfeit goods at our cargo ports of entry. Items from Louis Vuitton bags to sports equipment with faulty parts. Other items included children’s toys, drug paraphernalia, deadly opioids, and really scary were (are) counterfeit drivers’ licenses. Recreational drugs, clothing, jewelry and even food and nutritional items (may contain toxins) are part of the counterfeit items affecting likely every American and business.

Image result for cbp counterfeit

Unlike legitimate drug manufacturers that are subject to inspections by the U.S. Food and Drug Administration, labs that manufacture counterfeits have no such oversight. According to a 2019 Better Business Bureau study, “companies based in China, Hong Kong, Singapore, and India shipped 97 percent of the counterfeit medicines seized in the U.S.”In March 2019, Europol, the European Union’s law enforcement agency, seized 13 million doses of counterfeit medicine ranging from opioids to heart medication. Europol noted that this type of counterfeiting is on the rise due to the relatively low risk of criminal detection.

Check those items in retail operations of all sorts and locations and what you purchase in the e-commerce realm, not the from the street vendor at the corner and when purchasing books, movies or music, you could be in real trouble for a transaction that violates copyright protected work.

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Watches and jewelry follow at 13 percent of total seizures. During the Mega Flex operation on August 21, 2019, for example, CBP officers seized counterfeit Rolex watches valued at over $1.4 million. Handbags and wallets represented nearly 11 percent of all seizures, including counterfeits of luxury brands such as Louis Vuitton, Michael Kors, and Gucci. Consumer electronicsrepresented 10 percent of seizures, including products such as iPhones, hover boards, earbuds, microchips, and others. Pharmaceuticals and personal care items account for only 7 percent of total seizures. However, as discussed in the next section, many of the products in these categories pose significant dangers to the consumer. Fake prescription drugs can lack active ingredients, contain incorrect dosages, or include dangerous additives. Fake personal care items such as cosmetics have been found to contain everything from harmful bacteria to human waste. Between 2017 and 2018, CBP and ICE Homeland Security Investigations (HSI) seized over $31 million in fake perfumes from China.

Law enforcement officials have uncovered intricate links between the sale of counterfeit goods and transnational organized crime. A study by the Better Business Bureau notes that the financial operations supporting counterfeit goods typically require central coordination, making these activities attractive for organized crime, with groups such as the Mafia and the Japanese Yakuza heavily involved. Criminal organizations use coerced and child labor to manufacture and sell counterfeit goods. In some cases, the proceeds from counterfeit sales may be supporting terrorism and dictatorships throughout the world.

In FY 2018, 12 percent of DHS seizures included counterfeit versions of critical technological components, automotive and aerospace parts, batteries, and machinery. Each of these industrial sectors have been identified as critical to the defense industrial base, and thus critical to national security. One example drawn from a 2018 study by the Bureau of Industry and Security within the Department of Commerce featured the import of counterfeit semiconductors or “Trojan chips” for use in defense manufacturing and operations. Such Trojan chips can carry viruses or malware that infiltrate and weaken American national security. The problem of counterfeit chips has become so pervasive that the Department of Defense has referred to it as an “invasion.” Companies from China are the primary producers of counterfeit electronics.

According to a 2019 report, Instagram and Counterfeiting, nearly 20 percent of the posts analyzed about fashion products on Instagram featured counterfeit or illicit products. More than 50,000 Instagram accounts were identified as promoting and selling counterfeits, a 171 percent increase from a prior 2016 analysis. Instagram’s Story feature, where content disappears in twenty-four hours, was singled out as particularly effective for counterfeit sellers.

For the full report, go here.

 

 

Justice Dept Brands Huawei as a Criminal Enterprise

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Gotta hope that Europe takes note, especially Britain. Europe so far has approved Huawei as the vendor platform for 5G. Check your use of apps at the Google store and take a second look at your smart devices.

Image result for huawei source

FDD: The U.S. Department of Justice (DOJ) indicted Chinese telecommunications firm Huawei Technologies and its subsidiaries last week for alleged racketeering, theft of intellectual property, and conspiracy to commit bank fraud, among other charges. The indictment portrays Huawei not merely as a company that has broken the law, but as a fundamentally criminal enterprise.

The new charges target Huawei, four of Huawei’s subsidiaries (Huawei Device Co. Ltd., Huawei Device USA Inc., Futurewei Technologies Inc., and Skycom Tech Co. Ltd.), and Huawei’s chief financial officer, Meng Wanzhou, for violating the Racketeer Influenced and Corrupt Organizations (RICO) Act, which Congress passed in 1970 to combat organized crime.

According to the DOJ, the Huawei business model entailed “the deliberate and repeated misappropriation of intellectual property of companies headquartered or with offices in the United States.” DOJ also highlighted other violations, including Huawei’s role in sanctions evasion and fraudulent activities.

Last week’s indictment marks the first time DOJ charged a company with suspect connections to a foreign government as a criminal enterprise. Although Huawei asserts it is not state-owned, the company has indirect ties to the Chinese government and has yet to publically disclose who exactly owns and controls the company. Huawei’s majority shareholder is the company’s labor union, which keeps the details of its membership and governance structure out of the public eye. Last year, Jiang Xisheng, a top executive, explained during a press conference that the labor union’s ownership is simply a matter of legal convenience; this only further obfuscated who is really in charge. Additionally, Huawei’s founder, Ren Zhangfei, served in the Chinese military and is a member of the Chinese Communist Party.

While the indictment does not say that Beijing directed Huawei to operate as a criminal enterprise, China’s National Intelligence Law of 2017 requires Huawei and other private companies to provide the government with their data to “support, assist, and cooperate with state intelligence according to the law.” In short, the law empowers Beijing to exploit Huawei as an intelligence asset whenever it sees fit.

In other high-profile cases, the Chinese government has stolen sensitive U.S. data to achieve a strategic advantage. U.S. officials have even deemed China’s espionage and intelligence activities as a “long-term existential threat to the security of our nation.” In 2012, the head of the U.S. National Security Agency estimated that China’s economic espionage cost U.S. companies $250 billion in annual losses. Additionally, the targeting of strategic industries has allowed Beijing to enhance its own military capabilities at America’s expense.

The exploitation of Huawei could clearly enhance Beijing’s intelligence collecting capabilities. Just last week, the U.S. government reported that for over ten years Huawei secretly maintained “back doors” on its mobile networks that allowed the company – and potentially the Chinese government – to have direct access to their users’ most sensitive data.

The indictment of Huawei as a criminal enterprise shows that the Trump administration was mistaken when it placated Beijing by softening previous penalties for Huawei’s misconduct. If the court finds Huawei guilty under RICO, the administration should ensure the full application of all penalties necessary to end its criminal pursuits.

 

Chinese Spy Leading California Public Pension Fund?

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This may add some very new and different questions when it comes to the Biden foreign operations….read on….

Rep. Jim Banks, R-Ind., joined “Mornings with Maria” to explain why he wrote a letter to California Gov. Gavin Newsom highlighting his concerns about the state public pension fund’s chief investment officer having ties to China.

The fund has invested $3.1 billion in Chinese companies, some of which have been blacklisted by the U.S. government, Banks told FOX Business’ Maria Bartiromo.

“If this were up to me, I would fire [Chief Investment Officer Yu Ben Meng] immediately because of these suspicious ties,” he said. “We learned that Mr. Meng, who is the chief investment officer of CalPERS, was actually recruited to this position by the [Chinese Communist Party] through something called the Thousand Talents Program. Now he’s denied it.”

CalPERS stands for the California Public Employees’ Retirement System, the largest public pension fund in the nation.

“What is unusual is that many of these companies are companies that we’ve blacklisted, that make Chinese military equipment or are responsible for technologies like Hikvision, which is the equipment that’s used by the Chinese for surveillance on the Uighur Muslim population that they’ve been abusing in their own country,” Banks said.

The Commerce Department blacklisted Hikvision in October “for engaging in or enabling activities contrary to the foreign policy interests of the United States.”

CalPERS defended Meng.

“This is a reprehensible attack on a U.S. citizen. We fully stand behind our Chief Investment Officer who came to CalPERS with a stellar international reputation,” a CalPERS spokeswoman told Reuters.

China's Social Credit System – It's Coming To The United ...

Hold on, it is actually worse… going back 4 months ago….

(Reuters) – Some of the biggest public pensions funds in the United States have invested in one of the world’s largest purveyors of video surveillance systems that the U.S. government claims are used in wide-scale repression of the Muslim population of western China.

The Trump administration’s decision to put the company, Hangzhou Hikvision Digital Technology Co (002415.SZ), on a blacklist last week has prompted at least two of the pension plans to say they are reviewing or monitoring that development.

The blacklist applies to Hikvision and seven other companies because they allegedly enabled the crackdown that has led to mass arbitrary detentions in the Xinjiang region.

“We are tracking the situation given this new development with the Department of Commerce’s announcement,” a spokeswoman for the California State Teachers’ Retirement System (CalSTRS) said in an email.

CalSTRS owned 4.35 million Hikvision shares at the end of June 30, 2018, the last data available. The holding, owned directly and through emerging market exchange-traded funds, would be worth $24 million at that share count.

The New York State Teachers Retirement System also owned Hikvision, reporting 81,802 shares at the end of June, up from 26,402 shares at the end of 2018, fund disclosures show.

“Our holdings are primarily held according to their weights in passive portfolios matching the MSCI ACWI ex-U.S. index, our policy benchmark. We are monitoring the situation,” said a spokesman for the teachers’ fund. The ex-U.S. All Country World Index includes stocks from 22 developed and emerging markets.

The blacklisting means Hikvision and the other companies will not be able to buy U.S. technology, such as software and microchips, without specific U.S. government approval. It does not prevent U.S. investors from buying the companies’ shares. In August, Hikvision had been banned from selling to U.S. federal agencies because the government said its products could allow access to sensitive systems.

Hikvision’s General Manager Hu Yangzhong told Reuters on Wednesday it has been talking to the U.S. government about Xinjiang and has hired human rights lawyers to defend itself against the blacklisting.

A spokeswoman for law firm Sidley Austin LLP, which has lobbied for Hikvision this year, declined to comment.

Another major fund investing in Hikvision shares is the Florida Retirement System (FRS), with 1.8 million shares at the end of June.

A spokesman for the fund said it was working closely with external money managers “related to the issue in order to meet all regulatory and fiduciary requirements.”

POSTER CHILD

Risk consultants say the ease with which money used for the retirements of tens of millions of Americans is being invested in such companies should concern U.S. authorities at every level, as well as Americans generally.

“Hikvision has emerged as the corporate poster child for enabling Chinese human rights abuses, with its surveillance cameras visible atop the walls of detention camps incarcerating some one million or more Uighurs in Xinjiang,” said Roger Robinson, president and CEO of Washington DC-based risk consultancy RWR Advisory Group.

Beijing denies any mistreatment of people at the camps, which it says provide vocational training to help stamp out religious extremism and teach new work skills.

Robinson said that many Americans are unwittingly owning shares in such companies because they are in index funds. “They are picked up by the index providers in sizable numbers and sluiced into U.S. investor portfolios with seemingly very little, if any, due diligence or disclosure in the categories of national security and human rights.”

MSCI Inc (MSCI.N), whose products are designed for global investors, added Hikvision to its benchmark emerging markets index last year. MSCI declined to comment.

One other company among the blacklisted eight that is owned by some of the big pension funds is iFlytek Co Ltd (002230.SZ), a speech-recognition firm. Its shares were owned by funds in Florida, New York State as well as CalSTRS and the California Public Employees Retirement System (CalPERS) indirectly through the iShares MSCI Emerging Markets ETF at their last disclosure dates. IShares, a top ETF provider owned by BlackRock Inc (BLK.N), declined to comment.

CUTTING TIES

Not all the funds have stuck with Hikvision.

The New York State Common Fund, one of the country’s biggest pension funds, liquidated its position months ago. It had owned 2.7 million shares worth $14.2 million at the end of March through an external fund manager, but sold them in May, a spokesman said, declining to say why.

U.S. mutual funds have also cut or eliminated positions in Hikvision amid the negative publicity, which included it being named in a Human Rights Watch report on mass surveillance in Xinjiang in May.

Just 9% of global emerging markets funds now own Hikvision, down from 20% in 2018, according to Copley Fund Research. One fund to pull out is the $2.7 billion Artisan Developing World Fund (APDYX.O), which had a $66 million position in Hikvision at the end of March but reported holding no shares three months later, fund disclosures show. Artisan did not respond to a request for comment.

At least one U.S. pension fund had worried this summer about whether to invest in the Chinese surveillance company.

The $33 billion Alaska Permanent Fund had considered an investment in a China fund featuring Hikvision as a top holding, according to minutes of a June meeting of its trustees and staff. The minutes were published last month.

Schroders Global Asset Management, a finalist for the fund’s mainland China investment mandate, touted Hikvision as a top performer.

Some Alaska trustees, however, worried about “headline risks” of investing in companies that aid the Chinese government’s surveillance activities, according to the minutes.

Jack Lee, portfolio manager of the China fund, assured Alaska pension officials he had spoken with Hikvision executives. Hikvision will “try to avoid that kind of business,” the trustees were told, but “they don’t necessarily know how their equipment is used,” Lee told the trustees, according to the minutes.

Reuters could not determine whether Alaska made an investment in the Schroders fund that included Hikvision stock.

A spokeswoman for the Alaska Retirement Management Board, which oversees the pension, said it does not have any additional information to share regarding Schroders’ efforts. A Schroders spokesman declined to comment.

 

 

4 Members of the Chinese Military Hacked Equifax

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(AP) — Four members of the Chinese military have been charged with breaking into the networks of the Equifax credit reporting agency and stealing the personal information of tens of millions of Americans, the Justice Department said Monday, blaming Beijing for one of the largest hacks in history to target consumer data.

The 2017 breach affected more than 145 million people, with the hackers successfully stealing names, addresses, Social Security and driver’s license numbers and other personal information stored in the company’s databases.

4 Chinese military members charged in Equifax case

The four — members of the People’s Liberation Army, an arm of the Chinese military — are also accused of stealing the company’s trade secrets, including database designs, law enforcement officials said.

The accused hackers exploited a software vulnerability to gain access to Equifax’s computers, obtaining log-in credentials that they used to navigate databases and review records. The indictment also details efforts the hackers took to cover their tracks, including wiping log files on a daily basis and routing traffic through dozens of servers in nearly 20 countries.

  Source

“The scale of the theft was staggering,” Attorney General William Barr said Monday. “This theft not only caused significant financial damage to Equifax, but invaded the privacy of many millions of Americans, and imposed substantial costs and burdens on them as they have had to take measures to protect against identity theft.”

Equifax, headquartered in Atlanta, maintains a massive repository of consumer information that it sells to businesses looking to verify identities or assess creditworthiness. All told, the indictment says, the company holds information on hundreds of millions of Americans in the U.S. and abroad.

The case is the latest Justice Department accusation against Chinese hackers suspected of breaching networks of American corporations. It comes as the Trump administration has warned against what it sees as the growing political and economic influence of China, and efforts by Beijing to collect data on Americans and steal scientific research and innovation.

The administration has also been pressing allies not to allow Chinese tech giant Huawei to be part of their 5G wireless networks due to concerns that the equipment could be used to collect data and for surveillance.

The accused hackers are based in China and none is in custody. But U.S. officials nonetheless view criminal charges like the ones brought in this case as a powerful deterrent to foreign hackers and a warning to other countries that American law enforcement has the capability to pinpoint individual culprits behind hacks.

A spokesperson for the Chinese embassy did not immediately return an email seeking comment Monday.

The case resembles a 2014 indictment from the Obama administration Justice Department that accused five members of the PLA of hacking into major American corporations to steal their trade secrets. U.S. authorities also suspect China in the massive 2015 breach of the Office of Personnel Management and of intrusions into the Marriott hotel chain and Anthem health insurance company.

“This kind of attack on American industry is of a piece with other Chinese illegal acquisitions of sensitive personal data,” Barr said of Monday’s announcement, adding that “for years we have witnessed China’s voracious appetite for the personal data of Americans.”

The criminal charges — which include conspiracy to commit computer fraud and conspiracy to commit economic espionage — were filed in federal court in Atlanta.

Equifax last year reached a $700 million settlement over the data breach, with the bulk of the funds intended for consumers affected by it.

Equifax didn’t notice the intruders targeting its databases for more than six weeks. Hackers exploited a known security vulnerability that Equifax hadn’t fixed.

Once inside the network, officials said, the hackers spent weeks conducting reconnaissance. They stole login credentials and ultimately downloaded and extractedate data from Equifax to computers outside the United States.

The indictment says the hackers obtained names, birth dates, and Social Security numbers for about 145 million American victims, along with credit card numbers and other personal information for about 200,000.

According to the Government Accountability Office, the investigative arm of Congress, a server hosting Equifax’s online dispute portal was running software with a known weak spot. The hackers jumped through the opening to reach databases containing consumers’ personal information.

Equifax officials told GAO the company made many mistakes, including having an outdated list of computer systems administrators. When the company circulated a notice to install a patch for the software vulnerability, the employees responsible for installing the patch never got it.

Equifax’s $700 million settlement with the U.S. government gives affected consumers free credit-monitoring and identity-restoration services, plus money for their time or reimbursement for certain services. However, because so many people made claims, officials said some consumers would get far less than the eligible amounts because of caps in the settlement pool.