Rudolf Elmer, former Swiss banker is found guilty

Rudolf Elmer the former Swiss banker who gave Wikileaks details of rich tax evaders has been found guilty of breaching Switzerland's strict bank secrecy laws.

A judge in Zurich did so even though the leaked documents referred to accounts in the Cayman Islands.

Judge Sebastian Aeppli fined Rudolf Elmer, 55, more than 6,000 Swiss francs ($6,250; £4,000). However he rejected prosecution demands to give Elmer an eight-month prison sentence.

Elmer also said that he had handed confidential Julius Baer banking files to tax authorities, and later the Wikileaks website run by Julian Assange, because he had wanted to expose tax evasion by businessmen and politicians.

Mr Assange has said that he will publish that information within weeks, once it has been checked.

Speaking minutes before he returned to court to hear the verdict, Elmer told reporters: "I made big mistakes, I admit that... I wouldn't say it was revenge [against Baer], but I defended myself. That's human nature."

Elmer was subsequently arrested after a court verdict in a separate case. Chief prosecutor Peter Pellegrini said: ‘He is in police detention and will be questioned today.’


Mr Pellegrini confirmed the new investigation centres on Mr Elmer’s visit to London on Monday.

Former Julius Baer executive hands over offshore bank details to WikiLeaks

A former executive at Swiss bank Julius Baer has handed over the offshore account details of around 2,000 corporations and high net worth people - including politicians - to WikiLeaks.

Rudolf Elmer presented CDs containing the information, which he claims reveals potential tax evasion, to WikiLeaks at the Frontline Club in London, two days before he goes on trial in Switzerland.

The former Julius Baer COO in the Cayman Islands earlier told the “Observer” newspaper that he is handing over the data on multinationals, hedge funds, artists and around 40 politicians, which comes from three financial institutions, "in order to educate society".

WikiLeaks founder Julian Assange, currently on bail, was at the press conference to receive the data, which he said would be vetted before publication and that some of it may also be handed over the Serious Fraud Office.

Assange also says that in 2008 Julius Baer went to court in the US in a failed bid to have WikiLeaks.org shut down over previous revelations.

Elmer left Julius Baer in 2004 and has since become a self-styled whistleblower seeking to expose the use of offshore accounts for tax evasion, describing himself on his Website, swisswhistleblower.com, as an activist, reformer and banker.

Later this week the ex-banker faces trial in Switzerland over allegations that he breached bank secrecy and threatened Julius Baer officials.

You can watch the full press conference below.

New York Fed ends AIG assistance after full repayment

The Federal Reserve Bank of New York has announced the termination of its assistance to American International Group (AIG) and the full repayment of its loans to AIG as a result of the closing of the recapitalization that was announced on September 30, 2010. AIG no longer has any outstanding obligations to the New York Fed.

In September 2008, the Board of Governors of the Federal Reserve System authorized the New York Fed to provide AIG with an emergency loan of up to $85 billion to prevent its disorderly collapse, which could have had catastrophic consequences to the U.S. economy during the most damaging financial crisis in 70 years. The assistance provided by the Federal Reserve was restructured over time, and was supplemented in November 2008 and April 2009 by additional financial assistance from the Treasury Department under the Troubled Asset Relief Program.

As part of the November 2008 restructuring of the government’s assistance to AIG, two special purpose vehicles, Maiden Lane II LLC and Maiden Lane III LLC, were created with loans from the New York Fed to purchase various mortgage-related securities in order to address AIG’s capital and liquidity strains. The loans extended by the New York Fed to the Maiden Lane II and III facilities remain outstanding and are being repaid from the assets in those facilities. The fair values of the portfolios well exceed the balances of those loans.

This closing represents a substantial step toward achieving the Federal Reserve’s dual goals of stabilizing AIG and ensuring its repayment of government assistance. It reflects the significant progress AIG has made in reducing the scope, risk and complexity of its operations and stabilizing its operating results. The accelerated repayment of the New York Fed frees up collateral that will enable the company to access private debt markets, an essential step toward facilitating the US Department of the Treasury’s future sale of the common stock it owns.

"This concludes an important effort by the Federal Reserve to stabilize the financial system in order to protect the U.S. economy" said William C. Dudley, president of the New York Fed.

With the closing of the recapitalization, the New York Fed’s revolving credit facility has been fully repaid, including interest and fees, and its commitment to lend any further funds has been terminated ahead of the credit facility’s scheduled expiration in September 2013.

In addition, the New York Fed has been paid in full for its preferred interests in the AIA and ALICO special purpose vehicles. A portion of those interests has been redeemed with proceeds from AIG’s sale of ALICO to MetLife, Inc. The remaining interests have been purchased by AIG through a draw on the Treasury Department’s Series F preferred stock commitment and transferred to the Treasury Department.

The closing of AIG’s recapitalization also marks the termination of the AIG Credit Facility Trust, which was established to hold an approximately 79 percent controlling equity interest in AIG for the sole benefit of the US Treasury, the general fund of the U.S. government. The Trust’s equity interest in AIG is being exchanged for common stock of AIG and transferred to the Treasury.

“We are grateful to Jill M. Considine, Chester B. Feldberg, Peter A. Langerman and Douglas L. Foshee for their invaluable contributions and commitment to the execution of their responsibilities as Trustees,” Mr. Dudley added.

Barclays Mobile Banking Service Scoops Top Award

Barclays has trumped its rivals to scoop a much-coveted 2010 Financial Innovation Award for its mobile banking and text banking services.

The Barclays.mobi application, which allows customers to access their account on a smart phone, picked up the top award for 'transforming performance or customer service through technology – mobile and internet' at a ceremony in Covent Garden, London last month.

Judges of the awards said they were looking for an initiative that creates value, enhances customer service and improves business through technology.

Barclays.mobi was recognised as a leader in its field because, unlike other mobile banking applications, the service can be used on all smart phone platforms, such as iPhone, Blackberry, Android and Windows.

Dr Tony Gandy, one of the judges, said: 'In a hotly-contested category, Barclays mobile banking stood out as a modern application for a modern smart phone market.'

Phil Sowter, Head of Mobile, said: 'Barclays.mobi is unique in the UK financial services market place today.'

He added: 'Barclays.mobi is a new and important part of UK Retail Banking's multi-channel mix, extending choice and improving financial control for our customers.'

The Barclays mobile banking service was launched in May 2009 and receives around half a million visitors from mobile devices each month.

Customers can log in to their account to check balances, make transfers or payments and find the nearest ATM or branch whilst on the go. In addition, the innovative text banking service means customers can choose to receive text alerts that notify them of weekly balances, when a large debit/credit has been made and when they are approaching their account limit.

Barclays customers can register for both mobile banking and text banking by visiting http://www.barclays.co.uk/ .

Barclays also picked up a 2010 Financial Innovation Award for 'Improving the Customer Experience' through its Customer Discussion Document (CDD), which is a tool that allows customers to evaluate their finances.

http://www.prweb.com/releases/2011/01/prweb4971884.htm

Safaricom cuts Kenyan SMS rates

Kenya’s integrated communications firm, Safaricom has significantly reduced its SMS rates across all local networks. Readers will recall that Safaricom pioneered commercial mobile money transfer globally through its award winning M-PESA operation.

Under the new tariff subscribers save up to 71 per cent when sending text messages.

Announcing the new tariffs, Safaricom CEO Bob Collymore said the reduced SMS rates are a permanent tariff proposition applicable to ALL PrePay and PostPay subscribers.

“We are lowering the cost of sending text messages to any local network by giving our entire subscriber base an SMS rate of Kshs 1/- for Safaricom to Safaricom and Kshs 2/- for SMS’s from Safaricom to other local networks,” said Mr Collymore.

With the new SMS rates, Safaricom subscribers will make savings of up to 71 per cent, when sending Safaricom to Safaricom SMS’s, and savings of up to 60 per cent when sending SMS’s to other local networks.

Growing from its cradle in mobile voice services, Safaricom has evolved into a total telecoms company. The firm, which has a subscriber base of over 17 million, offers all telecoms services under one roof: mobile and fixed voice and data services on a variety of platforms: Kenya’s widest and only 3G network; a growing fibre optic cable footprint and its most expansive WIMAX presence.

Former analyst fined £50,000 for disclosing misleading information

The Financial Services Authority (FSA) has fined Christopher Gower £50,000 for making misleading and inaccurate disclosures to the market about Enterprise Inns plc (ETI) to clients via Bloomberg instant messenger, substantially impacting ETI share price.

Gower, a former senior research analyst employed by MF Global Securities Limited and MF Global UK Limited, attended a meeting with the Chief Executive Officer of Punch Taverns plc on 7 May 2008. In the course of the meeting they discussed an application made by Enterprise Inns plc to Her Majesty’s Revenue and Customs (HMRC) for approval to convert to a Real Estate Investment Trust (REIT). This discussion concerned solely information which was in the public domain.

Following the meeting, Gower sent a Bloomberg instant message to 14 clients of MF Global, a Bloomberg reporter and MF Global equity salesmen in the following terms:

“*** HOT OFF PRESS*** Just had meeting with CEO of PUNCH TAVERNS. They have heard from HM Revenue & Customs that it is highly likely Enterprise Inns has been granted REIT status and ETI are due to announce this on 13th May at interims. Expect ETI to bounce (was up 10% on previous HMRC news) BUT then fall back as mkt realises it will take time to implement.... MORE on my meeting to follow.... Chris”

This instant message did not accurately reflect the conversation Gower had had. It gave the impression of containing inside information although, in fact, Gower had no such information. The message was misleading and inaccurate. It was rapidly circulated widely in the market and contributed to a substantial increase in the volume of ETI shares traded.

Gower gave no apparent consideration to the consequences to the market of his message. His conduct was careless and fell below proper standards of conduct in the circumstances.

Margaret Cole, the FSA’s managing director of enforcement and financial crime, said:

“There is no excuse for a senior retail analyst to be so careless with messages that could have such an impact on the market. Gower's dissemination of inaccurate information contributed to a large increase in the volume of shares traded and a disorderly market in ETI shares.

“Maintaining market confidence is one of our key objectives and we hope that the fine imposed in this case will act as a reminder to approved persons of their obligations to ensure markets are not provided with careless misinformation.”
The FSA accepts that Gower did not intend to give the impression that this was inside information but concludes that Gower failed to observe proper standards of market conduct in this matter and has imposed a fine of £50,000.

Investment banker, his wife and family friend plead guilty to insider dealing

Christian Littlewood, a senior investment banker and former Financial Services Authority (FSA) Approved Person, his wife Angie Littlewood (also known as Siew Yoon Lew and Angie Lew) and a family friend Helmy Omar Sa’aid have pleaded guilty to 8 counts of insider dealing contrary to section 52 of the Criminal Justice Act 1993. They are alleged to have made approximately £590,000 profit from the trades.

The offences relate to trading in a number of different London Stock Exchange and AIM listed shares between 2000 and 2008 and were only brought to an end when the City of London Police working with FSA staff arrested the Littlewoods in March 2009.

The third defendant Helmy Omar Sa'aid was returned to the UK in March 2010 following the execution of a European Arrest Warrant in Mayotte, one of the Comoros Islands.

The case was bought by the FSA and heard at Southwark Crown Court. It is the sixth successful prosecution for insider dealing bought by the FSA and is part of its ongoing drive to tackle market abuse and promote efficient, orderly and fair markets.

Margaret Cole, managing director of enforcement and financial crime, said:

“It seems that the penny is beginning to drop. These guilty pleas show that our strategy of a tough approach to insider dealing - and, in particular, demonstrating that we are prepared to fight difficult criminal prosecutions to trial - is paying off. Dedicated hard work, bold and innovative use of the tools at our disposal and close seamless co-operation between our markets, enforcement and intelligence functions underpin our successful track record in this complex area.”

The full sentencing and confiscation hearing will take place in the week commencing 31 January.

Former Chase Bank official convicted of taking bribes and disclosing existence of a Suspicious Activity Report

A former official with Chase Bank has been found guilty of disclosing the existence of a suspicious activity report (SAR) filed with federal officials, and then soliciting thousands of dollars in bribes to help the borrower deal with a possible criminal investigation related to the illegally disclosed SAR.

Frank E. Mendoza, 45, has been convicted on three counts of bank bribery and one count of unlawfully disclosing a SAR. The federal jury deliberated about 30 minutes before issuing its verdict, which included a not guilty finding on a charge of attempted economic extortion.

Following a one-week trial in United States District Court, the jury determined that Mendoza demanded a $25,000 bribe, ultimately accepted $10,000 in bribes from the customer, and disclosed the existence of a SAR. The Financial Crimes Enforcement Network (FinCEN), a bureau within the Treasury Department that receives SARs from financial institutions around the country, believes Mendoza is the first bank official in the nation to be convicted of criminal charges for revealing the filing of a SAR.

The evidence presented during the trial showed that Mendoza, who worked as a loss mitigation specialist for Chase Bank, conducted an investigation of a delinquent borrower on mortgage loans made in relation to seven properties in Palmdale. In the fall of 2008, Mendoza reported to Chase that he suspected fraud in relation to the mortgages, and the bank in late November 2008 filed a SAR with FinCEN.

Several months later, Mendoza approached the borrower and suggested that he pay $25,000 in exchange for Mendoza’s assistance with Chase and a possible federal criminal investigation related to the loans. In these conversations, Mendoza disclosed the filing of the SAR and asserted that a federal criminal investigation of the borrower was imminent.

Mendoza’s bribery solicitation in May 2009 caused the borrower to contact the FBI. After the borrower delayed paying any bribe money, Mendoza ultimately agreed to accept $10,000 in cash. During two meetings in the borrower’s car in the parking lot of the Mall of Victor Valley, the borrower made two $5,000 payments to Mendoza. Following the second payment on June 29, 2009, special agents with the FBI arrested Mendoza, recovered the second $5,000 payment, and recovered from Mendoza’s wallet two $100 bills that were part of the first bribe payment.

Steven Martinez, Assistant Director in Charge of the FBI in Los Angeles, said: “Dishonest practices by bank employees corrode our banking system and, as evidenced by Mr. Mendoza’s conviction, can have serious consequences.”

Mendoza is scheduled to be sentenced on May 25. As a result of yesterday’s guilty verdicts, Mendoza faces a statutory maximum penalty of 95 years in federal prison.

“Suspicious activity reports filed by financial institutions with FinCEN provide some of the most useful information available to government authorities in criminal, tax or regulatory investigations or proceedings,” according to FinCEN Director James H. Freis, Jr. “This flow of highly confidential information among financial professionals, FinCEN, and law enforcement depends on the training and trust placed on industry and government officials alike. This case demonstrates the severe consequences that come with betraying that trust, disregarding the Bank Secrecy Act, and ignoring one’s duty as an employee of a financial institution.”

The Financial Crimes Enforcement Network is a bureau within the Treasury Department charged with partnering with the financial industry, law enforcement and regulators to protect the U.S. financial system from criminal abuse. FinCEN administers the Bank Secrecy Act, which is the federal anti-money laundering and counter-terrorism financing statute. The Bank Secrecy Act and FinCEN regulations require certain financial institutions, including all banks, to have Anti-Money Laundering programs in place and to report suspicious transactions and large currency transactions. FinCEN receives approximately one million SARs every year.

Royal Bank of Scotland and NatWest fined £2.8m over poor complaint handling

The Financial Services Authority (FSA) has fined Royal Bank of Scotland (RBS) and National Westminster Bank (NatWest) £2.8m for multiple failings in the way they handled customers’ complaints, responding inadequately to more than half the complaints reviewed by the FSA.

The FSA’s investigation found that there was an unacceptably high risk that customers may not have been treated fairly due to a number of failings within the banks’ approach to routine complaint handling, including:

• delays in responding to customers
• poor quality investigations into complaints, with complaint handlers failing to obtain and consider all the appropriate information when making their decision
• issuing correspondence that failed to fully address all of the concerns raised by customers and failed to explain why complaints had been upheld or rejected, and

• customers not receiving their Financial Ombudsman Service (Ombudsman) referral rights within the appropriate time period.

Of the complaint files reviewed by the FSA, 53% showed deficient complaint handling; 62% showed a failure to comply with FSA requirements on timeliness and disclosure of Ombudsman referral rights; and 31% failed to demonstrate fair outcomes for consumers.

The FSA’s investigation also found that:

• the banks did not give complaint handling staff adequate training and guidance on how to properly investigate a complaint,
• the monitoring of complaint handling in branches and the management information produced was ineffective in assessing whether customers were being treated fairly, and
• the banks failed to ensure that complaint handlers properly reviewed complaints taking account of all relevant factors.

Margaret Cole, the FSA’s managing director of enforcement and financial crime said:

“We expect firms to treat customers fairly and that consumers can be confident that their complaints will be dealt with properly. The failure of these two high street banks to deal adequately with complaints put consumers at unacceptable risk and the fine of £2.8m reflects this.

“The poor complaints procedure of RBS and NatWest came to light during our review of complaint handling in major banks. The review showed that banks need to make major changes to handle consumer complaints fairly and the FSA will continue to take appropriate action to ensure these changes are put in place.”

The failings in the complaints handling processes of RBS and NatWest were uncovered during the FSA’s review of complaints handling in the UK’s major retail banks. As a result of the thematic review, five banks have undertaken significant action to improve their complaint handling. The FSA subsequently published a consultation paper on 30 September 2010 on changes to complaint handling requirements, which aims to increase the quality of complaints handling across the industry and increase senior management accountability for complaints.

RBS and NatWest have co-operated fully with the investigation, accepting the findings at an early stage and have agreed to make significant changes to their complaints handling arrangements. The FSA has required RBS and NatWest to work with an independent skilled person to undertake an extensive review of all parts of their complaint handling arrangements. The FSA is also working closely with the banks to ensure that the changes will lead to effective improvements.

The banks agreed to settle at an early stage in the investigation and therefore qualify for a 30% reduction in penalty. Were it not for this discount the FSA would have sought to impose a financial penalty of £4m on the firms.