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KI News Highlights (July 25-31)

Kleptocracy Initiative

July 31, 2015
Londoners Are the Real Losers of the City’s Luxury Property Boom
Almost one in 10 properties in the City of Westminster (9.3%) and 7.3% of properties in Kensington and Chelsea are owned by investors registered in an offshore secrecy jurisdiction. It’s difficult to stuff an old mattress with millions of pounds of stolen cash, but far easier to invest it in bricks and mortar. That the London property market is so attractive to tax dodgers, mystery overseas investors and criminal gangs is no accident, but symptomatic of the very root of the problem of housing in the UK.

Average Bribe in Russia Doubles in Rubles, Remains Steady in Dollars
Moscow Times
The amount of the average bribe in Russia has nearly doubled this year, reaching 208,000 rubles ($3,485 at today’s rate), as the country’s currency has shed value amid Western sanctions and an economic downturn, according to Interior Ministry estimates cited by pro-government Izvestia daily on Friday. The increase in bribe amounts is substantially less significant in their dollar equivalent, because the Russian ruble traded at around 35 to the dollar at the start of 2014, but has slumped to around 60 to the dollar as of this week.

China’s Xi Swats ‘Blood-Sucking Mosquitoes’ as Graft Push Goes Small
Japan Times
Chinese President Xi Jinping, who has likened his nationwide corruption purge to hunting tigers and swatting flies, is sending Communist Party graft-busters after an even more annoying pest: mosquitoes. The term has been used in state media reports to describe a new initiative targeting corruption in rural villages where petty cadres hold sway. While tigers lurk far away, such mosquitoes are usually “buzzing around the corner” and “sucking blood,” the official Xinhua News Agency wrote in a commentary published July 4. “There is still significant resistance to Xi, though those who do not approve of what Xi is doing are biding their time,” Tsang said, likening the effort to riding a tiger. “Xi cannot stop or get off without getting bitten by the tiger. So, Xi will press on.”

China’s Anti-Corruption Watchdog Accuses Former Inner Mongolia Police Chief of Murder
South China Morning Post
China’s anti-graft watchdog accused the former police chief of the Chinese region of Inner Mongolia of murder on Friday, saying he would be prosecuted for crimes that included bribery and illegal possession of firearms. Zhao Liping was in charge of the police in Inner Mongolia from 2005 until 2010 and had worked for almost three decades as a police officer. He was detained on suspicion of the murder of a woman in March. The ruling Communist Party’s Central Commission for Discipline Inspection said Zhao had taken bribes, illegally owned firearms and was an adulterer.

July 30, 2015
US: Global Magnitsky Act Passed to Senate
A United States bill which would allow authorities to bar corrupt foreign officials and those responsible for human rights abuses from entering the US and using its financial institutions has moved a step closer to possible adoption. The US Senate Foreign Relations Committee (SFRC) voted unanimously to pass the Global Magnitsky Act to the Senate floor for a vote, Senator Ben Cardin announced via Twitter on Wednesday.

U.S. Names New Targets of Sanctions Over Ukraine
New York Times
The Obama administration on Thursday identified 26 additional people and institutions that will be subject to economic sanctions as part of an effort to maintain pressure on the Russian government over its support of insurgents fighting in Ukraine. The new actions are aimed at individuals or entities that American officials said had been helping previously identified targets to evade sanctions. Eight of the new targets are linked to Gennady Timchenko, a billionaire Russian businessman who is known to have ties to President Vladimir V. Putin.

Impact of Litvinenko Poisoning Equal to ‘Nuclear Attack’ — Inquiry
Moscow Times
An unknown number of Londoners might have been put at risk by the 2006 poisoning of ex-KGB agent Alexander Litvinenko with a radioactive isotope, which amounted to “a nuclear attack on the streets” of the British capital, an inquiry heard on Thursday. Kremlin critic Litvinenko died weeks after drinking green tea laced with polonium-210 at London’s plush Millennium hotel. From his deathbed he accused Russian President Vladimir Putin of ordering his killing but the Kremlin has always denied any role.

Secret NSA Map Shows China Cyber Attacks on U.S. Targets
A secret NSA map obtained exclusively by NBC News shows the Chinese government’s massive cyber assault on all sectors of the U.S economy, including major firms like Google and Lockheed Martin, as well as the U.S. government and military. The map was part of an NSA briefing prepared by the NSA Threat Operations Center (NTOC) in February 2014, an intelligence source told NBC News. The briefing highlighted China’s interest in Google and defense contractors like Lockheed Martin, and in air traffic control systems. It catalogued the documents and data Chinese government hackers have “exfiltrated” — stolen — from U.S. corporate, government and military networks, and also listed the number and origin of China’s “exploitations and attacks.”

Ex-Military Leader in China Is Subject of Graft Inquiry
New York Times
A former commander of the People’s Liberation Army was expelled from the Chinese Communist Party and placed under investigation for graft crimes on Thursday, becoming the most senior military figure brought down in President Xi Jinping’s campaign against corruption. The fall of retired Gen. Guo Boxiong had been rumored since last year, and was hinted at in Chinese news reports earlier this year that laid out graft accusations against his son. His family came under scrutiny, and in March the Chinese military confirmed that his son, also a senior officer, was under investigation for corruption. Chinese magazines and newspapers also revealed allegations that the son and his wife had enriched themselves in illegal property deals using military-owned land.

This Fact About the Rampant Corruption of Putin’s Russia is Just Devastating
In most countries, criminals need to make their dirty money clean in order to make it useful in the legitimate economy. As any Breaking Bad fan knows, that’s what money laundering is: a way to bring the proceeds of crime onto account books and into bank accounts as the proceeds of a legitimate business. But in Russia, corruption has gotten so bad that the logic of money laundering has turned upside down. There, many companies face the opposite problem: In order to get things done, they need to take clean money and make it dirty.

China, Russia to Hold Military Drills in Sea of Japan
China and Russia will hold joint naval and air defence drills in the Sea of Japan, China said on Thursday, the latest exercises between the two countries which could concern Japan, involved in a marine dispute with China to the south. The manoeuvres also come as the United States ramps up military cooperation with its allies in Asia in response to China’s increasingly assertive pursuit of territorial claims in the disputed waters of the South and East China seas.

China’s Central Bank Tightening Internal Controls ‘To Root Out Potential Corruption’)
South China Morning Post
The People’s Bank of China is strengthening internal risk controls to weed out potential corrupt practices, a unit of the Communist Party’s graft watchdog within the central bank said on Thursday. President Xi Jinping has launched a sweeping crackdown on deep-rooted graft since taking over the party’s leadership in late 2012 and the presidency in 2013. Dozens of senior officials have been investigated or jailed. The watchdog, the Central Commission for Discipline Inspection, said in a statement its staff in the bank had initiated a “clean government risk prevention and control” system since late 2012.

Former Deputy Environmental Protection Minister Accused of Corruption in China
South China Morning Post
A former deputy environmental protection minister in China is under investigation for alleged corruption. The Communist Party’s anti-graft agency said in a statement that Zhang Lijun had been detained for serious violations of party discipline and law, the form of words it regularly uses to describe corruption. Zhang is the first senior official, or “tiger”, working in environmental protection to come under investigation for graft under the government’s huge anti-corruption campaign.

July 29, 2015
China Anti-Graft Purge Recovers $6.2bn in Ill-Gotten Gains
Financial Times
The Rmb38.7bn recovered includes confiscated bribes in the form of cash, land and gifts, as well as fines levied as part of the recovery of unpaid taxes and sales of underpriced state assets. “Submitting illegally obtained money to the national coffers and recovering economic losses will help correct the economic incentives distorted through corruption,” Ms Han said. “Not allowing these people to benefit economically is also an important criterion from a political, legal and social standpoint.”

Former Rusnano Chief, Financial Director Charged with Embezzlement
Former chief of Rusnano (formerly Russian Corporation of Nanotechnologies) Leonid Melamed, former Rusnano financial director Svyatoslav Ponurov have been charged with embezzlement, spokesperson for the Investigative Committee Vladimir Markin told journalists on Wednesday. The Investigative Committee is also probing Melamed’s and Ponurov’s involvement in other crimes, he said. The spokesman reported that investigators are cooperating closely with the Federal Financial Monitoring Service (Rosfinmonitoring) and Interpol in order to obtain information on siphoning funds abroad, as well as on possible involvement in other crimes by the suspects. Also, after the report on the investigation was published, several witnesses addressed the Investigative Committee with evidence of other offenses by the defendants.

China-Tied Hackers That Hit U.S. Said to Breach United Airlines
Bloomberg Business
Among the cache of data stolen from United are manifests — which include information on flights’ passengers, origins and destinations — according to one person familiar with the carrier’s investigation. The theft of airline records potentially offers another layer of information that would allow China to chart the travel patterns of specific government or military officials. United is one of the biggest contractors with the U.S. government among the airlines, making it a rich depository of data on the travel of American officials, military personnel and contractors. The hackers could match international flights by Chinese officials or industrialists with trips taken by U.S. personnel to the same cities at the same time, said James Lewis, a senior fellow in cybersecurity at the Center for Strategic and International Studies in Washington.

Does the Kremlin Have a New Way of Hacking the West?
Foreign Policy
A highly-capable Russian hacker group with links to Russian intelligence and that is known for going after high-profile foreign and corporate targets is deploying a powerful new data theft tool against Western systems, according to a new report by a prominent American cybersecurity firm. The technical report by California-based FireEye Inc. analyzes the advanced piece of malware, called HAMMERTOSS, and connects the tool to a cyber-espionage gang known as APT29. Cybersecurity experts say the group is unusually well-disciplined and sophisticated, and the new malware — uncovered during a FireEye investigation at an unnamed organization targeted by the hackers — is said by the firm to be reserved for covertly stealing information from high-value targets.

British Judge Accuses Russia Of Interfering In Litvinenko Case
The British judge investigating the radioactive poisoning death of former Russian agent Alexander Litvinenko accused Russian authorities of interfering with his inquiry July 28. Robert Owen spoke after suspect Dmitry Kovtun failed to give evidence by video link, saying he was bound by confidentiality obligations to an ongoing Russian inquiry. Owen said that either Kovtun’s offer of participation had been “a charade” or “obstacles have been put in the way of his doing so.”

China’s Communist Party Releases Rules Setting Out Criteria for Sacking Incompetent Officials
South China Morning Post
China’s Communist Party has released details of trial regulations for employing officials which may make it easier for the government to replace incompetent or mediocre staff. The regulations might also make it simpler for the party to carry out reshuffles, with hundreds of senior posts vacant amid the government’s sweeping anti-corruption crackdown. This can cover 10 scenarios such as disloyalty to the party, inability to complete work or having spouses and children who go and live abroad. The Communist Party has previously warned that officials’ families emigrating can be a sign that a cadre is about to abscond.

Many in Russia Think a Major Political Turning Point is Coming
Putin may claim that the National Endowment for Democracy and other nongovernmental organizations are “a threat to Russia’s basic constitutional order,” and his labeling them as dangerous enemies, along with the Russian democrats he calls “national traitors,” is his typical way of rallying political support by appealing to nationalist fears and hostilities. But it is the regime itself that has been undermining Russia’s constitutional order through repression, corruption and international aggression; and the pressures are now building toward what many in Russia believe is a major political turning point.

July 28, 2015
Ukraine Poised to Bring Corruption Case Against Yanukovych
Ukraine looks poised to bring criminal proceedings for corruption and other offences against deposed President Viktor Yanukovych and a number of former senior officials within his administration. The ex-strongman fled to Russia in February 2014, amid the Independence Square revolution. But now prosecutors have presented preliminary evidence paving the way for a court case against Yanukovych who is also wanted in Ukraine over claims he was behind the shootings of protesters.

Q. and A.: Christopher K. Johnson on the Heavy Thumb of Xi Jinping
New York Times
This is another characteristic of Xi Jinping. I don’t think there’s a lot of Communism necessarily in his thinking, but there’s a lot of Leninism, especially with regard to the Leninist structure of the party and how to think of control over the key levers of power. If you look at the various tiger cases that have been exposed so far for corruption, you had some very important power centers within the Communist Party system that were not responding to central control — the security services under Zhou Yongkang, the General Office under Ling Jihua and certainly the military under Xu Caihou-Guo Boxiong. These investigations revealed that there was a lot going on and that the party center did not have control over the key levers of power.

Vladimir Putin’s Most Effective Weapon is Gas – But Not the Poison Kind
Gazprom is first and foremost a tool of Russian foreign policy, which Putin is not shy about wielding to pursue Russian interests. During Putin’s years in power, the Kremlin has used its control over Gazprom — increasing or decreasing the cost of energy — to maintain influence over Russia’s neighbors. Putin once described Gazprom as “a powerful political and economic lever of influence over the rest of the world,” and a team of Russian foreign policy experts noted that “if the leaders of this or that country decide to show good will towards the Russian Federation, then the situation with gas deliveries, pricing policy and former debts changes on a far more favorable note to the buyer.”

Litvinenko Poisoning Inquiry Nears End as Russian Refuses to Testify
New York Times
A high-profile inquiry into the death by poisoning of a former K.G.B. officer who had sought asylum in Britain entered its final, public stages on Tuesday overshadowed by the last-minute refusal of a key Russian suspect to testify.

Putin Has Started a New Clash with the West, This Time Over the Flow of Oil Through Georgia
Moscow has escalated its brinksmanship with the West, reopening a monumental 1990s clash over an oil pipeline that it fought and lost with the United States. The new front is Georgia, a Russian neighbor that’s been a theater of US-Russian struggle since the mid-1990s. Now, Putin appears to have taken a new step. On July 13, Georgia accused Russia of putting up barbed wire fencing about a mile outside the South Ossetian border, including signs claiming the land part of the Russian protectorate. For BP and US geostrategy, the land grab was ominous—a mile-long section of the Baku-Supsa pipeline is contained within the newly annexed territory.

China Conducts Air, Sea Drills in South China Sea
China said it conducted air and sea drills in the South China Sea on Tuesday as it stakes an increasingly assertive claim to virtually the whole sea despite rival claims by neighbors. The live-ammunition drills involved more than 100 ships, dozens of aircraft, information warfare units as well as the nuclear force, the state-backed China Military Online said in a report posted on the defense ministry’s website. It did not specify where exactly the exercises took place.

July 27, 2015
Lovely, Lamentable London
New York Times
What draws the world to London is opportunity. But it is also a magnet for people looking for a safe place for their money. Having made it in countries like Russia and China with a cowed press, rampant corruption and no rule of law, oligarchs and crony capitalists reach the conclusion that they like nothing as much as democratic systems with real legal systems and a vigorous press. Having trashed the West they trust the West with their money.

David Cameron Vows to Fight Against ‘Dirty Money’ in UK Property Market
David Cameron will promise to act against corrupt foreigners who buy up luxury properties in the UK using secretive holding companies to hide their “dirty money”. The prime minister will use a visit to Singapore to make an anti-corruption speech on Tuesday in which he will express concern that some properties, mainly in London, “are being bought by people overseas through anonymous shell companies, some with plundered or laundered cash”. Drawing on proposals advanced by campaign group Transparency International, Cameron will set out his determination to ensure that “the UK must not become a safe haven for corrupt money from around the world”.

Party Members Made to Renounce Their Sworn Relatives
Epoch Times
Fictive kinship—a term used by scholars to describe kinship not based on blood or marriage ties—refers to the time-honored Chinese tradition of adopting relatives, often nieces, nephews, brothers, sisters, and godchildren. But the idea has been put to ill use in communist China, and such informal ties have become fertile grounds for corruption. The move by officials in the province of Sichuan seems to be a unique, local gesture in support of Communist Party leader Xi Jinping’s sweeping anti-corruption campaign. In Qingshen, the local Party leader led the officials to ink their name on a large red board bearing the words of their oath after they recited it. Each official also signed a letter of commitment. By end August, any Qingshen official caught tapping their adopted “relatives” to get rich would be duly punished, according to Beijing News, a state-run publication.

Queensland is the New Hot Spot for Chinese Buyers, According to
Move over, Sydney and Melbourne. Chinese interest in Australian property is increasing, and there’s a new hot location. Chinese purchasing intent was up 35 per cent month-on-month and up 17 per cent on the same period one year ago, according to’s Purchasing Intent Index for Q2. Queensland is the clear winner, with Brisbane, the Gold Coast and Townsville all up in the first half of 2015. The Gold Coast in particular is now the place to be, with purchasing intent up 161 per cent on the first quarter and up a massive 1120 per cent on the same time last year.

Slovenia Wants to See End of EU Russia Sanctions That Hurt Trade
Bloomberg Business
Slovenia wants the European Union to end its sanctions on Russia because they are hurting trade between the two countries, Prime Minister Miro Cerar said. “Slovenia wants to see an end to EU-imposed sanctions against Russia as it’s hurting trade between the to nations,” Cerar said in Ljubljana on Monday after talks with his Russian counterpart Dmitry Medvedev. “We will press our case with the rest of EU, but it’s the whole EU that has to take the final decision.”

Biggest Number of Chinese Provincial-Level Corruption Suspects ‘Caught in Guangdong’
South China Morning Post
The highest number of senior provincial-level officials to be caught under the government’s crackdown on corruption worked in the southern province of Guangdong, according to a newspaper report. Ninety senior officials have been formally accused of corruption by anti-graft investigators since President Xi Jinping launched the anti-corruption initiative in late 2012, The Beijing News reported. Hubei is second highest with 61 officials, the newspaper said.

How a U.S. Think Tank Fell for Putin
Daily Beast
The Carnegie Moscow Center used to be a hub of Russian liberalism. Now it stands accused of being a ‘trojan horse’ for Russian influence.

July 26, 2015
Reporter Who Accused Azeri Leader of Corruption Goes on Trial
China Post
A top Azerbaijani investigative journalist and anti-graft campaigner, who accused the country’s president of corruption, went on trial Friday on charges she denounced as politically motivated. Considered the energy-rich country’s most prominent journalist, Khadija Ismayilova faces up to 12 years in prison if convicted on a string of charges including embezzlement and tax evasion. “I am being persecuted for exposing corruption in Aliyev’s family,” she told the court in the capital Baku, referring to President Ilham Aliyev.

Gazprom Doesn’t Think Turnabout Is Fair Play
The American Interest
If you’re a fan of irony, sit down, kick your feet up, and get ready: you’re in for a treat. Earlier this month, Turkmenistan called Gazprom out for allegedly not paying for any of its gas imports from the former Soviet country in 2015. This raised eyebrows because it’s normally Gazprom calling out one of its captive customers for non-payment (ahem…Ukraine), which in return would normally provoke an angry response from that customer. But dutiful to its part in this bizarro gas supply standoff, Gazprom is now taking Turkmenistan’s state-owned gas company Türkmengaz to court over a pricing dispute.

Activist Known for Calling Corrupt Chinese Officials ‘Pigs’ Among Dozens Held in Crackdown
Fox News
Bearded, bald and burly ex-soldier Wu Gan calls himself The Ultra Vulgar Butcher. He poses for online portraits brandishing knives in both hands that he says he’ll use to “slaughter the pigs” among local officials who’ve done wrong. Since 2009, he championed a confrontational approach to compel police, local officials or the courts to address alleged unfairness in China. “I don’t want to see policies being dictated by hooligans who will do harm to the nation. And so we go out there to help people, with the simple hope that our action will make this country a better place to live,” he said in a 2012 video he made for supporters in the event that he should ever disappear or be arrested. That day has come. Wu was formally arrested this month, as part of a recent crackdown on a loosely allied group of more than 200 “rights-defender lawyers” and the activists associated with them.

July 25, 2015
Graft-Busters Investigate Former Top Aide to China’s Disgraced Security Tsar Zhou Yongkang
South China Morning Post
Zhou Benshun, the Hebei provincial Communist Party boss who served as a top aide to ex-security tsar Zhou Yongkang, has been placed under investigation for suspected graft, the authorities announced on Friday. Earlier in the day, Zhou Benshun, 62, attended a meeting chaired by Vice-Premier Zhang Gaoli on the integration of Beijing, Hebei and Tianjin. State media initially ran a photo of the two sitting a seat apart, but Zhou was later cropped out.

Banker Shot Six Times in London Hit ‘holds the Key to Probe into Moscow Murder of Russian Opposition Leader Boris Nemtsov’
Daily Mail
A wealthy banker who survived an assassination attempt in London has emerged as a potential key witness in the murder of a Russian opposition leader. Police in Moscow want to speak to German Gorbuntsov, who has been living under 24-hour armed guard in the UK after being shot six times outside his apartment in Canary Wharf in 2012. The Russian authorities believe 49-year-old Gorbuntsov can help them build a case against a Chechen powerbroker and his associates suspected of murdering Boris Nemtsov, an arch critic of Russian President Vladimir Putin, in February.

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