The Channel Island Financial Ombudsman (CIFO) has recently been considering some complex issues involving pension-related complaints against Channel Islands pension providers where the complainant cites unacceptable delays in transferring a pension to a new pension provider.

The complainant is usually the pension plan beneficiary and these, at least in part, relate to pensions in the form of a trust which is a commonly used pension structure in the Channel Islands.

The complaints involve several different issues arising from pension transfer requests that can create frustrating delays and clearly illustrate the complexity of this area of financial services.

1. NON JERSEY VIS-À-VIS JERSEY PROVIDERS NOT AGREEING
   1. The first type of pension transfer dispute arises where the local pension provider and the new proposed pension provider located outside of the Channel Islands are unable to agree the terms of a customer-requested pension transfer.
   2. Each provider seeks to clarify its respective legal liabilities through the provision of letters of indemnification to the other. The pension provider seeking to receive the transferred pension is based in a different regulatory jurisdiction, which adds further complexity to the situation as CIFO can only review the provision of pension services in or from the Channel Islands.
   3. While it is understandable that a pension provider would seek an indemnification to legally protect itself from the risk of any future change (e.g., something which might undermine the original treatment of the pension assets by tax authorities), some might be seen to go beyond what might be fairly and reasonably required in order to thwart a pension transfer or alternatively to avoid liability for an unsuitable future action taken by another provider with the pension assets.
2. “LETTER OF UNDERTAKING” FOR A TRANSFER 
   1. Similar to the first type above, the second type of pension transfer dispute arises where the current pension provider requires a “letter of undertaking” before approving the transfer,
   2. essentially a written assurance that the new pension provider will adhere to certain obligations to protect the integrity of the original pension plan and the underlying assets. When these obligations are not accepted by the new provider, this causes delays and frustration to the complainant, the plan beneficiary seeking the pension plan transfer.
   3. Essentially the disagreements in the two scenarios above are not between the complainant and their current pension provider, but rather between two different pension providers, one in the Channel Islands and one in another jurisdiction, with the complainant stuck in the middle frustrated by the inability of the two financial services providers to reach agreement.
3. REFUSAL TO TRANSFER THE ASSETS =
   1. Finally, the third type of pension transfer dispute arises when the current pension provider refuses to transfer the assets to the new pension provider – sometimes without disclosing its reasons for the refusal.
   2. Some may claim that as trustees they do not consider the transfer to be in the beneficiary’s best interest and therefore their fiduciary obligations as trustee prevent them from carrying out the transfer as instructed by the customer or the customer’s independent financial advisor.
   3. This sets up a direct conflict between the beneficiary’s stated wishes and the trustee’s interpretation of its fiduciary duty under the law.
   4. In this situation, unless the current provider is being demonstrably unreasonable in delaying the transfer or in its approach to the transfer to the new pension provider, it is not possible for CIFO to obtain the evidence required to resolve the complaint based on the fairness and reasonability test set out in our law.
4. OUTSIDE OF JERSEY
   1. Other than the local pension provider, all of the other parties with an interest in the pension transfer: the independent financial advisor, the underlying investment funds, the investment managers, and the pension provider recipient of the plan transfer, all potentially stand to benefit economically from the plan transfer and are generally outside of the Channel Islands and the scope of CIFO’s remit.
   2. CIFO does not have the ability to compel evidence and review these other financial services providers and their roles in the proposed transfer to determine whether the local pension provider is acting fairly and reasonably in the circumstances by refusing to make the transfer as requested.
5. GUIDANCE
   1. It is noted that the local pension provider also stands to benefit from refusing to make the transfer as the assets remain in place and fees continue to be earned.
   2. At the present time, there is little clear guidance that applies to these circumstances from the law or regulation and limited published information on industry general or good practice.
   3. It is noted, however, that further regulatory guidance is currently in the public consultation stage in Guernsey, information about that can be located here.

6. CONCLUSION
   1. These complex complaints can involve an assessment of the performance of a trustee’s fiduciary duty and actions, decisions, or potential conflicts of interest of other parties outside of the Channel Islands beyond the reach of CIFO’s remit or ability to compel the production of required information for our review.
   2. Although it will depend on the individual circumstances of the complaint, CIFO may decide that it is more appropriately resolved through the legal system which has the ability to compel evidence, assess the fiduciary’s performance and determine the appropriateness of the actions of other financial services providers beyond CIFO’s remit, especially those in other jurisdictions.
7. CASE STUDY
   1. CIFO has published a case study which illustrates these pension transfer issues. It can be located here.
   2. ttps://www.ci-fo.org/wp-content/uploads/2019/10/17-000622.pdf

To read original article please click here  

The UK has published the Export Control (Sanctions) (Amendment) Order 2019 which amends existing subordinate legislation, and creates new offences for some export control violations.

The amendments include:

The addition of Eritrea to the Export Control Order 2008 to control the transit of Category B goods (small firearms and light weapons);

Updates to definitions and descriptions of controlled activities in the Export Control (Russia, Crimea and Sevastopol Sanctions) Order 2014 (SI 2014/3257);

Updates to definitions in the Export Control (Sudan, South Sudan and Central African Republic Sanctions) Regulations 2014 (SI 2014/3258)

Deloitte challenge PwC in £25m claim over Guernsey ‘Ponzi’ scheme 

1. PwC in bid to dismiss £25m claim over a Guernsey ‘Ponzi’ scheme Big Four auditor up against the administrators (Deloitte) in Providence collapse

PWC AND THE REGULATED FUND (PONZI SCHEME)

2. The closed-ended GFSC AUTHORISED AND REGULATED absolute return fund aimed to provide investors with annual returns of between 7% and 14.25% from investments in Brazilian debt, specifically the factoring of receivables (the purchase of debt) of small and medium-sized businesses.
3. The fund lent money to the factoring company based in São Paulo for between 30 and 180 days. The short-term debt was purchased at a discount of more than 2% per month with the returns collected at par.
4. The minimum investment was $50,000, €37,500, or £30,000.
5. PwC audited Providence’s 2013 and 2014 accounts, producing “clean” audit reports on the financial statements for both years in April 2016, the court filings said.
6. Two months later, the US Securities and Exchange Commission began investigating Providence Financial Investments, part of the same group, for selling “fraudulent securities”.
7. Another subsidiary, Providence Bonds II, came under scrutiny for selling UK investors a so-called “mini-bond” — a high yielding investment product. PwC resigned as auditor to Providence Investment Fund in July 2016, one month before the appointment of administrators.

BACKGROUND

8. The Providence Fund and its manager, Providence Investment Management International Limited (Pimil), were put into administration in August 2016 following an application by the Guernsey Financial Services Commission (GFSC).
9. The decision was taken after all of the directors from both companies resigned in early August, having informed investors that the fund had been suspended on 29 July 2016.
10. Deloitte was appointed administrators and found, as part of its review, that the Providence parent company was insolvent. As a result, joint liquidators were appointed to Providence Global on 22 August 2016.
11. A criminal investigation into Providence was launched on Guernsey in October 2016.
    1. four men have been arrested on suspicion of fraud as part of the ongoing investigation into the collapsed Guernsey-based Providence Investment Fund that saw some investors lose their life savings.
    2. Four arrested in connection with Guernsey’s Providence funds
    3. The men, who have not been named, were arrested in Guernsey this week. They have since been released on bail pending further inquiries, according to local media reports.
12. At the time and According to local newspaper, a local law enforcement spokesman said:
13. “The arrests were undertaken at four separate addresses in the island, in connection with suspected offences of fraud by abuse of position and in response of the provision of false or misleading, or recklessly furnishing information relating to the protection of investors.
14. “Due to the ongoing nature of this investigation, we are unable to give any further details at this time.”

PWC V DELOITTE

13. PwC is trying to quash a £25m lawsuit in which it is accused of negligence for signing off on the accounts of Providence Investment Fund, a Guernsey “Ponzi scheme” that collapsed owing investors millions.
14. The Big Four accounting firm has filed an application to dismiss the claims against it, which are being brought by administrators to the failed investment company in the Guernsey courts.
15. The administrators at Deloitte, another large accounting firm, are suing PwC for
16. “negligence, breach of duty and breach of contract” in its role as auditor to the Providence fund.
17. PwC called the lawsuit “misconceived” and said it would vigorously defend it.
18. Providence was put into administration in 2016 owing investors, who were promised returns of up to 14 per cent, more than £40m.
19. Court documents filed by lawyers for the administrators allege the business was run as a “fraudulent Ponzi scheme”.
20. PwC said: “While we are disappointed this action has been brought, we believe the claim is misconceived and will seek to vigorously defend our position through the court process.”
21. The audit work was carried out by PwC’s Channel Islands office, a subsidiary of PwC UK.
22. A hearing will take place on the disclosure of documents in Guernsey in October.
23. PwC’s application to dismiss the case will be heard in November.
24. A person close to the process said administrators at Deloitte would oppose PwC’s application.
25. The administrators’ case is being funded by Manolete Partners, a litigation financing company that is listed on the London Aim market.

NOT THE ONLY CASE

25. The lawsuit is just one of a handful of legal cases brought against Britain’s largest audit firms by the administrators or liquidators of failed businesses.
26. KPMG is facing a lawsuit over allegations of negligence in its audit of Carillion by the UK government agency tasked with unwinding the collapsed outsourcer.
27. KPMG has also been told by the board of Goals Soccer Centres to prepare for a legal challenge over claims it was negligent in its tax accounting of the football pitch operator.
28. Grant Thornton under fire – Administrators to Patisserie Valerie have also been tasked by creditors to explore a possible legal claim against Grant Thornton, the cake chain’s auditor after it collapsed following an apparent fraud.

Background

26. Providence claimed to invest in Brazilian factoring, a type of debt financing.
27. 97 per cent of investors’ money was used to finance the wider Providence group, according to the court papers.
28. The documents said investors’ cash was also lent to companies in Brazil that were controlled by Antonio Buzaneli, founder of the Providence group.

Mr Buzaneli, a Florida businessman, was this year sentenced to 20 years in prison in the US as part of a plea agreement after he was accused of orchestrating an investment fraud at the group company, Providence Holdings International.

On 5 June 2003 Yvonne Edmond-O’Brien was convicted by the Royal Court (Sir Richard Tucker, Commissioner, and Jurats Rumfitt and Alio) of

• BEING CONCERNED IN AN ARRANGEMENT TO LAUNDER THE PROCEEDS OF DRUG TRAFFICKING by her husband Michael O’Brien,
• ’’KNOWING OR SUSPECTING” that he was carrying on drug trafficking, contrary to article 17(1)(a) of the Drug Trafficking Offences (Jersey) Law 1988.

The Court sentenced her to seven years’ imprisonment, made a confiscation order and imposed a sentence in default. She appealed against both conviction and sentence.

• https://www.jerseylaw.je/judgments/unreported/Pages/[2003]JRC137A.aspx
• https://jerseyeveningpost.com/news/2003/07/31/three-jailed-for-drug-money-laundering/

On 12 November 2003 the Court of Appeal (Southwell P, Gloster and Vaughan JJA) set aside the verdict, sentence and confiscation order.

• https://jerseyeveningpost.com/news/2003/11/13/drugs-cash-woman-freed/
• https://www.jerseylaw.je/judgments/unreported/Pages/[2006]JCA035.aspx
• https://www.jerseylaw.je/judgments/Pages/Search.aspx?k=Yvonne%20Edmond-O%27Brien#

IN 2006, The Attorney-General, by special leave, appealed to Her Majesty in Council.

ATTORNEY GENERAL FOR JERSEY –V- O’BRIEN (JERSEY) – Attorney General for Jersey v. O’Brien (Jersey) [2006] UKPC 14 (14 February 2006) – Privy Council Appeal No 50 of 2005 – Her Majesty’s Attorney General for Jersey Appellant v. Yvonne Edmond O’Brien Respondent – FROM THE COURT OF APPEAL OF JERSEY – REASONS FOR DECISION OF THE LORDS OF THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL, OF THE – 14th February 2006, Delivered the 22nd March 2006

At the conclusion of the hearing the Board announced that it would humbly advise Her Majesty that, for reasons to be given later, the appeal against the setting aside of the conviction should be allowed and the appeal against sentence remitted to be heard by the Court of Appeal.

These reasons now follow.

• https://www.casemine.com/judgement/in/5779fc4ae561096c93131a91

THE CASE

Mr O’Brien ran a butchery business and Mrs O’Brien kept a lodging house.

There is no dispute that from about the middle of 1996 Mr O’Brien, under cover of his butchery business, started importing drugs into Jersey on a large scale and selling them to retail dealers and pushers. This continued until his arrest in Portsmouth on 15 September 1998. He pleaded guilty to a number of drug charges in Portsmouth Crown Court on 19 February 1999 and was sentenced to six years imprisonment. In May 2002 he was charged in Jersey with laundering drug money and pleaded guilty to two charges.

Mr O’Brien maintained a number of bank accounts. Some were designated as business accounts for the butchery business and four were personal accounts with different banks. Mrs O’Brien, who described herself in evidence as ’’very organised” and “good with figures”, was responsible for paying money into the butchery accounts and her husband’s personal accounts. She would take the money to the banks and fill in the deposit slips.

During the period 1995 to 1998 there was a substantial increase in the amount of money deposited in the business accounts:

• 256,962 in 1995,
• 377,801 in 1996, 434,752 in 1997 and
• 336,191 (the equivalent of 448,254 in a full year) in the first nine months of 1998.

But the forensic accountant called by the prosecution accepted that if these had been the only sums of money involved, Mrs O’Brien might reasonably have thought only that the butchery business was becoming more prosperous.

The payments into personal accounts were more difficult to explain. These had amounted in

• 1995 to 104,880 but they increased to
• 302,455 in 1996,
• 1,191,680 in 1997 and
• 607,754 in the first nine months of 1998.

Some of these payments could be explained by reference to the sale of the O’Brien’s house and work done on their new home, but the forensic accountant could find no explanation for

• 870,729 deposited in the personal accounts in 1997 and
• 537,388 deposited in 1998.
• 699,330 of the money deposited in 1997 and
• 451,943 of the money deposited in 1998 had been in cash.

There were other unusual features about the deposits.

Until the middle of 1996, Mrs O’Brien used to go to the bank once or twice a week. But in 1997 and 1998 it was often three times a week or more. Even more significantly, she began regularly to visit two and sometimes three banks on the same day. In 1997 there were 89 and in 1998 56 occasions on which she went to more than one bank.

The Jurats were invited to infer that she had made the deposits, particularly of cash, with different banks and on different days so that no single deposit would be large enough to attract attention.

Another feature of the deposits was the large number of 50 notes; these are not commonly used by customers in butchers’ shops; indeed, they were at the time and remain rarities in ordinary retail trade. But there was evidence that they were standard in the wholesale drug trade.

The numbers of 50 notes paid in by Mrs O’Brien were

• 1,490 in 1997 and
• 1,159 in 1998.

The prosecution also relied upon what was said, for that time, to be a disproportionately large number of 20 notes. After the arrest of Mr O’Brien, the Jersey police searched the matrimonial home.

Detective Constable Grieve gave evidence that he found 19,000 in cash in various places.

He asked Mrs O’Brien about 3,000 which he found in a dresser in the dining room and she said that it belonged to “friends”, whom she declined to name, for whom she and her husband paid bills so that they did not have to pay tax.

Interviewed by the police, she said that she had never noticed the increases in cash going into the accounts, assumed that the money came from the butchery business, never asked why she was paying so much money into the personal accounts and never thought it odd to pay substantial sums into different accounts on the same day.

Both Mr and Mrs O’Brien gave evidence.

Mrs O’Brien largely repeated the explanation she had given to the police. But she denied having said that the money in the dresser belonged to friends. It was, she said, cash from the butchery and lodging house businesses. Mr O’Brien said that he had papers recording details of drug deals which, as he admitted in cross- examination, he had left “lying around” in the house.

He also said that he would count his cash (which at times amounted to 50,000) in the bedroom or downstairs. He appeared not to have taken any very elaborate precautions to prevent his wife from knowing about his activities.

But Mrs O’Brien said that she never knew that he was a drug dealer.

This and other details (such as Mrs O’Brien’s apparent lack of curiosity about her husband’s frequent trips to England) were cumulatively relied upon by the prosecution as circumstantial evidence from which the Jurats could infer that Mrs O’Brien must have known or suspected that a substantial part of the money which she regularly deposited was the proceeds of drug trafficking.

The Information Commissioner’s Office is warning people of the risk of holdings on the sensitive personal data when they change jobs or leave a company.

It follows an investigation into the actions of two former Metropolitan Police officers who – having retained their notebooks – subsequently leaked information about a case in the media.

Although the ICO decided not to take action on this occasion (perhaps because the matter was investigated under 1998 legislation), it stressed that under the tougher Data Protection Act 2018 there is a new obligation not to “knowingly or recklessly retain personal data without the consent of the data controller”.

The ICO says that anyone who uses personal information in the course of their job – from teachers, health workers, police officers to those in private business – should be aware of this law change.

Risk and Compliance considerations

• Implement procedures for when people leave your company, retire or switch jobs – ensure their access to personal information continues to be appropriate (i.e. there is a ‘need to know’ or any extra permissions are promptly removed)
• Promptly remove access permissions when people switch jobs – even unintentional leaks can violate privacy and damage your company’s reputation
• Evaluate the data landscape – what electronic or physical access to personal information might someone retain (for example, in diaries, notebooks, calendars, etc.) when they leave?
• Protect against curious or prying employees – remind everyone that the ICO takes data privacy seriously and has taken action against many individuals  – consider this case

• Jeannette Baines / Date 06 June 2019 / Type Prosecutions / Sector Charitable and voluntary /
• A Restorative Justice Caseworker has been prosecuted for sending sensitive personal data to her own personal email account without authorisation.
• Jeannette Baines had worked at Victim Support and sent spreadsheets containing a combination of victim and offender data from her work email address to her personal email address during her last week of employment.
• Jeannette Baines, of Merseyside appeared before Blackpool Magistrates’ Court and was found guilty of obtaining personal data, in breach of s55 of the Data Protection Act 1998. She was sentenced to a 3-year conditional discharge, ordered to pay costs of £600 and a victim surcharge of £20.

• Examples of failures = forwarding personal information to personal emails, for selling personal data on, or simply accessing personal information without a valid business reason). Share cases of violations to keep data protection ‘top of mind’.

To read original article please click here and here 

Read the new CORRECTIV investigation

Lebanese businessman Ahmad El Husseini has long helped the German arms industry win business in the Middle East.

CORRECTIV have now uncovered that he was involved in brokering a large ammunitions package, which shipbuilder ThyssenKrupp purchased from another German defence company, Rheinmetall – except that Mr. El Husseini acted as a middle man with an unclear role.

At the end of a dubious flow of money via Singapore and Abu Dhabi, about 50 million euros never arrived at Rheinmetall and is now disputed.

Further, CORRECTIV found that Mr. El Husseini also maintained excellent contacts among some German politicians. And he sent expensive wine hampers to them, including the current German President Frank-Walter Steinmeier. At the time of the gifts, Steinmeier was foreign minister and MP.

Steinmeier was involved in the German government’s decision to approve the export of two frigates to Algeria – for which Mr. El Husseini brokered the ammunition.

There is nothing to suggest that the wine hampers influenced any decisions (and that would be hard to imagine), but questions remain.

About Correctiv

CORRECTIV is the first non-profit investigative newsroom in the German-speaking region.

CORRECTIV conduct long-term investigations into injustice and abuses of power.

CORRECTIV also initiate educational programs and promote media literacy. We finance our work through donations and contributions by citizens and foundations.

To read original article please click here

The UK’s Foreign Secretary Dominic Raab has announced that the UK will impose ‘Magnitsky’ sanctions on authoritarian regimes that

• “harass and imprison dissident journalists and campaigners […] with impunity in their own countries”.

Mr Raab stated that when the UK leaves the EU and therefore has autonomy over its sanctions regime, the UK will

• “hold those who commit serious abuses of human rights to account – by barring them from entering the UK, and freezing their assets such as bank accounts”.

This would be a use of ‘Magnitsky’ sanctions powers, which allow for the freezing of assets on the grounds of gross human rights violations, as provided for in the Sancion s and Money Laundering Act 2018 the UK’s post-Brexit sanctions legislation.

To read original article please click here

OFAC has listed Iran’s National Development Fund (NDF) and Etemad Tejarate Pars Co. under the newly-enhanced counter-terrorism authority

The sanctions come in response to “Iran’s brazen attack against Saudi Arabia”, and the State Department’s says that evidence for the attack “points to Iran – and only Iran”.

The NDF reportedly provided the IRGC-QF, Iran’s Ministry of Defence, and Iran’s Atomic Energy Organisation with hundreds of millions of USD from 2017 to 2019, whilst Etemad Tejarate is said to have transferred and concealed some of the military related transfers.

To  read orignal article please click here