Reports purporting to investigate official wrong doing on St. Maarten have a long track record dating back to the now forgotten "Bakhuis report" of the 1970s which is enjoying a well-deserved rest, deep in the bowels of the national archives. It caused quite a stir when it appeared, because it pointed fingers and named names. But as the subsequent "Pourier Report" of 1993 duly noted, "nothing happened".
A lot happened as is well known after the "Pourrier" report. St. Maarten was slapped under "Higher Supervision" and had to endure the shame and humiliation of having to sit in the penalty box for a spell. This report is in that tradition, but fails to mention its predecessors which is rather a pity, for by doing so it failed to show just how long the hunt for "official malfeasance" or "corruption in high places" has been going on in St. Maarten.
How it all began:
In a pique of frustration over a perceived slight by the Prime Minister of St. Maarten, the Dutch council of Minister decided, without consulting St. Maarten it should be noted, to place St. Maarten once more under higher supervision in 2013. The Prime Minister of St. Maarten apparently failed to react in a timely manner to a letter sent on April 13, 2013 enquiring about the state of affairs on St. Maarten. So, in their "KB" or "Royal Decree" the Kingdom Council of Ministers chose another form of "Higher Supervision" , an investigation for "corruption". This is how they justified it:
"The council of Ministers of the Kingdom has since the beginning of 2013 been regularly making its concerns known to the government of St. Maarten with respect to the fact that the functioning and appearance of the government has become a matter of public debate. St. Maarten is regularly in the news in connection with recent incidents and rumors about integrity violations by politicians and the perception of the existence of corruption. There is also the generally shared feeling by citizens, business and foreign governments that proper government in the broad sense is a problem that is bigger and deeper than it appears. For example, reports that a Border Management System is lacking has drawn attention, not only within the Kingdom but also abroad-amongst others the United States. Outside as well as within the Kingdom a largely negative image about the country has been created, which also affects the entire Kingdom."
In a fit a clear thinking the government of St. Maarten decided to spoil the Dutch party by muddying the waters. It installed its own Integrity Investigation committee, made sure to pack it with European Dutch members, and set it to work. It could do so with confidence. Discovering official acts of corruption are extremely difficult and absent the discovery of "Bada Bing" type tapes, very difficult to prove. And as expected the committee has returned a report with which the government can be pleased. No smoking guns have been discovered. The committee reported hearing unsubstantiated reports of "kickbacks" in the awarding of contracts, was completely silent about the rampant money laundering that is supposed to be taking place in casino's, confirmed that the public prosecutor and judiciary are independent and are not under the thumb of government, mentioned reports about payments for permits for prostitutes, and left it at that. The rest of the report was the usual mishmash of "failed to do this, should have done that", followed by a long list of recommendations which are sure to be ignored.
What the report has done though is provide the government of St. Maarten with an excellent defense to rebut the results of the investigation currently being carried out on behalf of the Kingdom Council of Ministers by their investigators, Price Waterhouse, who incidentally were recently fined a whopping US$25 million for "failing to demonstrate the objectivity and integrity expected of bank consultants". The next government can therefore calmly await the outcome of the Price Waterhouse report. The absurdity of having a firm that is its self ethically challenged conducting an integrity investigation on St. Maarten will surely not be lost on neither the Dutch nor St. Maarten government.
A PricewaterhouseCoopers LLP unit will pay $25 million and be suspended from some consulting work for two years to settle allegations that the firm improperly altered a report on a Japanese bank's compliance with anti-money-laundering laws, New York state regulators said Monday.
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A PricewaterhouseCoopers LLP unit will pay $25 million and be suspended from some consulting work for two years to settle allegations that the firm improperly altered a report on a Japanese bank's compliance with anti-money-laundering laws, New York state regulators said Monday.
PwC's regulatory advisory services unit will be suspended, starting immediately, from some new consulting assignments of New York-regulated banks, the New York Department of Financial Services said Monday. The firm also agreed to implement a series of changes to its procedures to help address conflicts of interest, the state financial regulator added.
The regulator alleged that PwC , under pressure from the bank's executives, had watered down a 2008 report sent to regulators about wire transfers that Bank of Tokyo-Mitsubishi had performed on behalf of Iran and other countries subject to U.S. economic sanctions. The New York Times and The Wall Street Journal reported Sunday that a settlement had been reached.
According to the settlement, PwC had warned in an initial draft version of the report in 2008 that it "would have used a different approach" to its review if it had known earlier about a bank policy that stripped its wire messages of key information, the New York regulator said.
But PwC ultimately removed that language from the final version of the report submitted to regulators later that year, saying instead that the bank's policy wouldn't have affected its review, the regulator said. PwC also removed other key information from drafts of the report, the regulator said.
One unidentified PwC director involved with the report said in emails that to "raise an issue of data completeness at this point does not do anyone, especially the bank, any good," and that probing for more information "will open up a whole other can of worms," the state regulator said. PwC withheld more than 20% of the director's compensation as a result, according to the settlement.
PwC admitted in the settlement agreement that its work for Bank of Tokyo-Mitsubishi "did not demonstrate the necessary objectivity, integrity and autonomy that is now required of consultants" who do compliance work for New York-regulated banks.
Miles Everson, PwC's advisory leader, said in a statement Monday that PwC "disclosed the relevant facts" the firm learned subsequent to its main work. The settlement "relates to a single engagement completed more than six years ago," he said.
Under the settlement, the PwC unit will not be allowed to accept new consulting engagements for two years that would require the New York regulator to approve the firm taking on the job. The suspension is relatively narrow in scope, but it could hurt PwC by temporarily curtailing the firm's ability to attract new clients for bank-regulation compliance work. It could also cause concern among existing clients, though the settlement and suspension won't prevent PwC from continuing its work for those clients.
Benjamin Lawsky, the head of the New York financial-services regulator, has been targeting consultants who review and help banks with regulatory issues, over concerns that they are potentially subject to conflicts of interest because the same banks whose work they assess also hire and pay them.
Last year, the department reached a similar settlement with a Deloitte LLP unit, in which Deloitte agreed to pay $10 million and accept a one-year ban from consulting for New York-regulated banks over its anti-money-laundering work for U.K. bank Standard Chartered STAN.LN +0.29% PLC.
In a statement Monday, Mr. Lawsky said his department was "continuing to find examples of improper influence and misconduct in the bank-consulting industry." He said regulators in general should "take a hard look in the mirror" and ask themselves whether they are doing enough to root out conflicts of interest in consulting.
Mr. Lawsky's office also sent a subpoena last year to another consulting firm, Promontory Financial Group, over its work for banks involved in money-laundering investigations, The Wall Street Journal has reported. It wasn't clear Monday whether Mr. Lawsky's office is continuing to look at Promontory. A Promontory spokesman declined to comment.
Bank of Tokyo-Mitsubishi agreed last year to pay $250 million to settle allegations from Mr. Lawsky's office that it illegally moved about $100 billion for governments and private entities in Iran, Sudan, Myanmar and other entities that the U.S. Treasury Department has said are involved in illicit activities. The regulator said at the time that the bank reported the activities to regulators and ceased the practices. A spokesman for the bank declined to comment Monday on PwC's settlement.
NEW YORK TIMES REPORT
(http://online.wsj.com/articles/pricewaterhousecoopers-unit-to-pay-25-million-fine-1408371342)
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