Three U.S. Democratic senators – Elizabeth Warren, Jeanne Shaheen and Richard Durbin have underscored the importance of Ukraine’s fight against corruption.

“When it comes to the issue of Ukraine there is unity between Democrats and Republicans, the Administration and Congress,” Durbin said. Then, referring to the EuroMaidan Revolution that sent Ukrainian President Viktor Yanukovych fleeing last year, the senator said: “We are in solidarity with Ukraine in terms of rebuilding this nation and protecting it from the invasion of the Russians. The spirit of Maidan lives on in terms of reform and change, which was the message of Maidan.”

President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk are received “warmly” in Washington, D.C., while skepticism against the nation’s leaders is growing at home. Durbin said that the leaders have made “real progress” in such areas as energy and reforms.

But corruption in Ukraine is an impediment to better U.S.-Ukraine relations.

“The jury is still out, the questions are still being asked,about real reform when it comes to corruption,” Durbin said. “The people of Ukraine are still looking for modernization and reform when it comes to this issue.”

Warren (Democrat of Massachusetts) said legal reform in Ukraine is essential.

“With weak rule of law, with a system rife with corruption, with a judiciary that is not independent and reliable, it is very difficult to build an economy going forward,” Warren said. A former law professor at Harvard Law School, Warren said that reducing corruption should be a priority in Ukraine.

“The support for this government from within the country and from without depends on real progress toward rooting out corruption,” Warren said. “Many countries around the world had to deal with the issue of corruption and it’s time for a best practices approach here,” Warren said. “It is time to try all measures, as vigorously as possible. And that is for two reasons: one is because some of them won’t be effective, the second is because the government must demonstrate in a very public way that it is committed to rooting out corruption no matter how painful, no matter how difficult.”

Warren said that, while reform is hard, “I also recognize from my time here that the people of Ukraine want reform, that the economy requires reform and that the U.S.A. will stand strong with those who fight for reform.

Durbin, whose state of Illinois has had many public officials who went to prison because of corruption, said that prosecution of lawbreaking politicians is essential.

“In the state of Illinois we have had our share of public corruption,” Durbin said. “We have responded to it by indicting, prosecuting and incarcerating those responsible.”

The U.S. will stand behind Ukraine as long as the dedication to fight corruption is “very clear,” the Illinois senator said.

Shaheen (Democrat of New Hampshire) said that Ukrainians must stop tolerating corruption.

“It’s about how members of the public deal with corruption,” Shaheen said. “Corruption exists everywhere, but if we refuse to tolerate it, then it’s going to be hard to continue to exist.”

Warren said that bringing rule of law will instill confidence in Ukraine’s government.

“Do not give up, this is a very hard fight,” Warren said. “If it were an easy fight, we would have already won…ultimately you will make the government work for you and not the reverse.”

Cash-strapped Greece loses up to 20 billion euros a year to tax evasion and smuggling, and more than a million people and businesses are under investigation, a finance official said on Friday.

“Tax evasion and smuggling are worth between 15-20 billion euros ($17-23 billion) a year,” junior finance minister Tryfon Alexiadis told reporters.

The Greek economic crimes agency (Sdoe) is currently investigating 38,000 cases involving 1.3 million people and businesses, he said.

And five years after receiving insider data on the Swiss bank holdings of over 2,000 Greeks — the so-called Lagarde list — only 136 cases have been conclusively checked, he added.

The left-wing government of Prime Minister Alexis Tsipras has accused its conservative and socialist predecessors of protecting business friends from tax checks.

The list had been sent in 2010 to then socialist finance minister George Papaconstantinou by Christine Lagarde, International Monetary Fund chief and at the time French finance minister. Lagarde had got it from an HSBC whistleblower.

A few years later, it emerged that three members of Papaconstantinou’s family had been on the list, but their names were excised and they escaped scrutiny.

Papaconstantinou denied any wrongdoing but a court in March found him guilty of tampering with the data.

Alexiadis on Friday said that the statute of limitations on the Lagarde list investigation was due to expire on December 31, but the government would take steps to extend the prosecution period by another year.

He added that the government was also poring through bank transfers and data on Greeks with property in London and yachts registered in the Netherlands in search of undeclared income.

“We are not going to cover up anything,” Alexiadis said.

An Indian-born oligarch who purchased M.C. Hammer’s former mansion in California may have followed the previous owner into decadence and bankruptcy, but, unlike the bejeweled and balloon-panted rapper, this flamboyant figure appears to have benefited from the relaxed laws of an island nation to keep his assets out of the hands of his creditors.

Once the owner of an estimated $3 billion business empire, largely founded on India’s telecom industry, Chinnakannan Sivasankaran, or Siva as his friends call him, filed for bankruptcy in August 2014 in Seychelles, following his loss, in British High Court, of a civil case brought against him by an erstwhile partner, a subsidiary of the Bahrain Telecommunications Company, or Batelco.

It was decided that Siva and his Bermuda-registered company Siva Limited should pay the Gulf-based company $212 million by June 26, 2014.

However, even before the trial began, the oligarch used his Seychellois citizenship to arrange a swift legal split from his wife, to whom he then transferred at least $95 million in assets—39 plots of land, one island and numerous corporate holdings registered in Seychelles and the British Virgin Islands, including those that owned even more real estate—as part of the divorce settlement.  Not that bankruptcy would have necessarily hurt Batelco’s chances of recovering their money under Seychelles’ prior law on insolvency. But about a year after Siva lost his case in Britain, the island nation “reformed” its bankruptcy statute.

The story highlights the role of questionable offshore tax shelters, of which Seychelles is a small but hyper-caffeinated example, in allowing an international elite to transcend borders and sovereign jurisdictions in order to safeguard their assets.

The 59-year-old Siva first rose to prominence in India’s southern state of Tamil Nadu in the mid-1980s after he acquired Sterling Computers and sold cut-rate PCs in a burgeoning subcontinental tech industry, transforming the company into one of India’s top three in its field. Frequently adorned with gold Rolexes and known for his obsession with health food and personal fitness, Siva formerly lived and worked out of presidential suites at the Ritz Carlton and Pan Pacific hotels in Singapore.

Over the past four decades, he’s had a hand in all sorts of things: engineering, shipping, commodities trading, and alternative energy. According to NGO Grain, an international nonprofit that supports small farmers, his Siva Group gobbled up about “a million hectares of land in the Americas, Africa and Asia, primarily for oil palm plantations,” making him “one of the world’s largest farmland holders.”

Siva aimed to set up a new U.S. operation by relocating to Fremont, California, in 1996, buying M.C. Hammer’s mansion following the latter’s own loss of fortune, but by the mid-2000s, he opted to move to Seychelles and became a full citizen. This decision was followed almost immediately by his nomination as ambassador-at-large.

In a 2008 U.S. State Department cable alleged that Siva was part of a Seychellois “business mafia” that was buying land from the Seychelles government at the expense of a battered and hopelessly corrupt national economy—this, as the nation was seeking bailouts from the International Monetary Fund and World Bank.

Designed by Rachel Gold

In the US, money flows freely into the political arena.   Citizens who object to this river work to overcome a Supreme Court decision that corporations are people.  It seems to the editors of this website that we would be better off shortening the political season and making politics open to all comers.  Newton Minow, who was head of the FCC, suggested free media time   Shortening the season would also help.  Turns out currently 158 families are contributing astronomical sums, most of them to Republican candidates.

Nicholas Confessore, Saran Cohen and Karen Yourishoct write:  Donors are overwhelmingly white, rich, older and male, in a nation that is being remade by the young, by women, and by black and brown voters. Across a sprawling country, they reside in an archipelago of wealth, exclusive neighborhoods dotting a handful of cities and towns. And in an economy that has minted billionaires in a dizzying array of industries, most made their fortunes in just two: finance and energy.

Now they are deploying their vast wealth in the political arena, providing almost half of all the seed money raised to support Democratic and Republican presidential candidates. Just 158 families, along with companies they own or control, contributed $176 million in the first phase of the campaign, a New York Times investigation found. Not since before Watergate have so few people and businesses provided so much early money in a campaign, most of it through channels legalized by the Supreme Court’s Citizens United decision five years ago.

These donors’ fortunes reflect the shifting composition of the country’s economic elite. Relatively few work in the traditional ranks of corporate America, or hail from dynasties of inherited wealth. Most built their own businesses, parlaying talent and an appetite for risk into huge wealth: They founded hedge funds in New York, bought up undervalued oil leases in Texas, made blockbusters in Hollywood. More than a dozen of the elite donors were born outside the United States, immigrating from countries like Cuba, the old Soviet Union, Pakistan, India and Israel.

But regardless of industry, the families investing the most in presidential politics overwhelmingly lean right, contributing tens of millions of dollars to support Republican candidates who have pledged to pare regulations; cut taxes on income, capital gains and inheritances; and shrink entitlement programs. While such measures would help protect their own wealth, the donors describe their embrace of them more broadly, as the surest means of promoting economic growth and preserving a system that would allow others to prosper, too.

Mega donors to US politicians

Is this the end of the people’s car?

Bernhard Rieger writes:  The US  Environmental Protection Agency’s announcement on September 18 that Volkswagen had manipulated diesel engines during emissions tests sent shockwaves around the Western world. Facing hefty fines in the United States and elsewhere, the corporation soon revealed that no fewer than 11 million of its vehicles were powered by an engine that it had previously praised as ecologically friendly and now revealed as a generator of hazardous exhaust. The company’s stock took a dive, CEO Martin Winterkorn had to resign, and drivers on both sides of the Atlantic filed class action lawsuits. German engineering, once a catchword for excellence, has now gained a set of decidedly undesirable connotations.

Beyond anger, the international response to Volkwagen’s fraud has been tinged with disbelief. Politicians, experts, and ordinary citizens alike have struggled to comprehend why Volkswagen, of all companies, engaged in systematic cheating. Observers were not only flabbergasted that a high-profile car manufacturer had risked sizeable fines from regulators as well as claims for damages by consumers, stockholders, and dealers. They were also stunned at the reputational risk. For Volkswagen, as a U.S.-marketing expert pointed out, being caught cheating was “significantly damaging” because “this is such an iconic brand.” In Germany, the business-friendly Frankfurter Allgemeine Zeitung simply declared that Volkswagen had lost its “honor”—a concept rarely evoked in the context of global corporate giants.

Volkswagen thus finds itself at the center not just of an economic disaster, but a moral scandal of international reach.

Now, by manipulating emissions data for years, Volkswagen did more than cheat regulators and customers. Given its extraordinarily rich and long-standing reputation for quality and dependability, Volkswagen committed a cardinal sin against its own identity. It blemished its “corporate soul,” as historian Roland Marchand called the intangible aura surrounding those enterprises that manage to project themselves in the public sphere as socially and economically responsible agents. To regain customers’ trust, public penance will not be enough. Rather, it will need to undertake demonstrable reforms to assure the public that there are robust internal procedures to prevent fraud. Only then will Volkswagen be in a position to build anew.  The End of the Beetle

The daily fantasy sports (DFS) industry, which is projected to bring in over $14 billion in revenue by 2020, is currently embroiled in a scandal that raises a number of important questions about how the game is run.

The industry blog DFS Report reported that DraftKings employee Ethan Haskell published competitively sensitive data early on the day of DraftKing’s “Millionaire Maker,” the site’s largest tournament. DraftKings, along with its competitor FanDuel, are two of the biggest DFS carriers in the industry.

“[T]his was published in error originally by myself,” Haskell wrote in a forum post featured on DFS Report. “I’ve fixed the error and we’ll be putting checks in place to make sure it doesn’t happen again.”

Haskell reportedly won $350,000 on the rival site FanDuel that same week.

According to DFS Report,  the data that Haskell allegedly posted concerned how popular players were on the DraftKings platform before rosters locked for the day’s games. This is competitively sensitive because in order to win big in DFS you need to select players that other people overlook.

In a recent statement given to Tech Insider, however, DraftKings said that “the employee in question” had “inadvertently” posted the data, and that after a “thorough investigation” over several days, they found “no evidence that any information was used to create an unfair advantage.”

According to industry experts, the concern isn’t in Haskell’s inadvertent publishing of data. If he didn’t have access to the data until the FanDuel rosters were locked, then he couldn’t act on it.

According Chris Grove, editor of the trade publication Legal Sports Report, the real problem is that Haskell had such easy access to data at all. The apparently lax attitude surrounding access to such sensitive data in a multi-billion dollar industry raises a number of important questions, according to Grove:

• How could a mid-level manager have access to that competitively sensitive data so readily?

• How could that data be posted in such a significant manner?

• Given the amount of employees from each site that play on other sites, shouldn’t there be some sort of restriction?  

A joint statement given to Tech Insider from DraftKings, FanDuel, and the Fantasy Sports Trade Association, says that in the Fantasy Sports Trade Association charter has a requirement that employees don’t use competitive data from to play on other sites, and they haven’t found evidence that Haskell violated those rules.

Still, the statement says, “the inadvertent release of non-public data by a fantasy operator employee has sparked a conversation among fantasy sports players about the extent to which industry employees should be able participate in fantasy sports contests on competitor sites.”

The industry is working “to develop a more detailed policy,” the statement says.

In the meantime, the statement says DraftKings and Fanduel are prohibiting employees from playing fantasy sports for money.

Four long months after taking office Nigerian President Muhammadu Buhari finally announced his cabinet positions, with the most controversial and lucrative – oil – going to himself.

Whether Buhari, himself a former oil minister, can clean up an industry that two years had $20 billion in missing funds is quite unclear. Critics say the new president is over-reaching with what amounts to a full-time second job.

Grace Obike writes:  Oil provides 70 percent of Nigeria’s government revenue but is an industry plagued with malfeasance. Two years ago the central bank reported $20 billion in missing oil-related funds.

As Africa’s biggest oil producer, crude runs through the arteries of the Nigerian economy.

But mismanagement and the theft of billions have also plagued the ministry for decades. Most oil is stolen through accounting and oversight gaps. But much goes missing far away from the minister’s eyes: from oil fields, pipelines, and even from the export terminals.

Buhari said last week he is taking the oil ministry job because he doesn’t trust anyone else. His plans include stepped-up accounting of oil receipts and recovering of stolen funds..

Much of the malfeasance appears to have taken place under Diezani Alison-Madueke, the oil minister under former president Goodluck Jonathan, Buhari’s predecessor. Ms. Alison-Madueke was arrested Oct. 2 in London on charges of bribery and money laundering. Her five-year reign at the ministry is widely seen as a period of rampant corruption and theft.

Alison-Madueke’s arrest underscores the complexities in the petroleum sector. But while it could open a path for Buhari to address corruption in an industry he served as government minister for in the 1970s, some question if Buhari’s effort to take charge of oil is constitutional and whether he is the right person for the job.

Buhari’s biggest obstacle may be reining in the NNPC. The huge state oil firm is Nigeria’s largest employer. It’a also the according the least transparent oil company in the world, according to Transparency International and Revenue Watch.

The NNPC has diverted more than $30 billion in oil revenue from the state since 2009, according to a Nigerian watchdog agency. A 2013 PricewaterhouseCooper audit stated that the oil behemoth had a “blank check” to spend without oversight.

Buhari knows the company intimately. He oversaw its creation in the 1970s while he was oil minister. It is this expertise that many say could help him clean up the organization.

Local investigations into Alison-Madueke’s conduct as oil minister, for example, have yielded little result. After she left office, the new government said that between 2012 and 2015, some $19 billion in oil revenue is unaccounted for.

Moving forward, a critical question is whether the arrest of the former oil minister is the beginning – or the end – of Buhari’s NNPC probe. 

Leonid Bershidsky wites:  Marc Rich commodity trader extraordinaire, once gave this advice to an employee: “As a trader you often walk on the blade. Be careful and don’t step off.” Glencore, the world’s biggest commodity trading company, which Rich founded, now seems to be falling off the edge, its business model in question. 

A Glencore director said “we are under hedge fund attack but don’t know why.”

 The immediate explanation was probably a report from the financial company Investec, which said that if commodity prices remained at the current lows, almost all of Glencore’s equity value “could evaporate.” And something similar could happen to Anglo American, another mining giant, the report said.

It’s easy to see how these findings set in motion a sell-off. Yet Glencore already was on a downward trajectory — it has lost more than three quarters of its value since April. I

Relatively few commodity trading houses are publicly traded. They were usually set up by crafty individuals such as the late Marc Rich to look for arbitrage opportunities in commodity markets. These opportunities arise when it makes more sense for the end user to buy from a trader a bundle of services — transportation, warehousing, sometimes processing — in addition to the commodity itself rather than buying the commodity from the producer and dealing with the logistics separately. 

Many commodity deals are just bets on price moves, without any involvement with physical commodities. Yet industries obtain energy and raw materials through physical trades, and this is what companies such as Glencore do best, keeping logistical costs as low as possible, buying when and where it makes more sense, moving vast quantities of oil, iron ore or wheat efficiently around the world. These companies have expertise dealing with unsavory regimes that produce raw materials — they were among the first big investors in the former Soviet Union — and they also master the most sophisticated aspects of marine transport management or hedging. They can even serve as banks.

This versatility usually offers protection against problems in specific markets, and traders usually hedge against commodity price fluctuations. 

The profitability of traditional commodity merchandising depends primarily on margins between purchase and sale prices, and the volume of transactions. 

In other words, when trade volumes rise, so do trading houses’ margins, and vice versa. Margins swelled during the recent commodities super-cycle, with China driving growth.  The trading companies reaped $250 billion in profit in the preceding decade, more than Goldman Sachs, JPMorgan Chase and Morgan Stanley combined. 

Now, China is slowing and so is global trade. That means a drop in profitability for the traders. Bunge’s net income per share fell to 50 cents in the second quarter of this year, from $1.71 in the year-earlier quarter. 

Glencore’s merger with Xstrata, completed in 2013, made the company one of the world’s biggest mining operations, and that probably compounded its problems. 

Big traders, most of which made similar upstream investments during the boom, are being squeezed from all sides. 

Trading houses cannot shed only the risky parts of their business because these days, all parts are vulnerable as demand plummets in commodity markets. It’s too soon to say whether some of them will be wiped out by a crisis like the one that killed off a number of U.S. energy traders, including Enron, in 2002, but the conditions are challenging. Not even Rich, with his limitless capacity to walk the edge of the blade, could escape unscathed.

Marc Rich knew how to court politicians

Will what worked in Georgia work in Ukraine? It will if it is up to Davit Sakvarelidze, deputy prosecutor general of Ukraine and the chief prosecutor of the Black Sea city of Odessa.

L. Todd Wood writes:   Ukrainian President Petro Poroshenko has brought in veterans of the country of Georgia’s reform process to help Ukraine remove the legacy of decades of Soviet and oligarchic corruption. Sakvarelidze, appointed to the national post in February 2015, and to the Odessa post several weeks ago, is attempting to bring change to the one state organization that has most resisted the political reforms sweeping the country, the General Prosecutor’s Office, which enjoys very low trust among the Ukrainian people – indeed, for good reason. I sat with Sakvarelidze last week, during a visit to the Academy of Prosecutors in Kyiv, to discuss the challenges ahead of him. The place was teeming with young, energetic applicants making their way through the new selection process. There seemed to be a pervasive, youthful motivation, albeit possibly naive, with the people I met while engaged at the facility.

Along with former Georgian Prime Minister Mikhail Saakashvili and others, Sakvarelidze is working to bring trust in government to the Ukrainian people.

Sakvarelidze is attempting to overhaul the General Prosecutor’s Office and remold it into a professional force that can deal with the sickness destroying Ukrainian society. The number of prosecutorial positions have been reduced significantly and all candidates, even current hires, must undergo rigorous testing and training to be accepted into the new reality. More than 700 positions must be filled.

The entire effort is behind schedule. In fact, the newly created National Anti-Corruption Bureau cannot begin its work until the prosecutor’s office is up and running. Yet Sakvarelidze is optimistic and seems determined.

“Political changes have reshaped the political structure, but the Prosecutor General’s Office has not changed; the system has remained the same. Now we are trying to correct it,” he recently said at the 12th Yalta European Strategy Annual Meeting in Kyiv.

Regulatory reform should also be a big part of the anti-corruption effort, according to Sakvarelidze; the ability for bureaucrats to siphon cash from the public needs to be reduced. In Georgia, the time needed to get a new passport was reduced to 60 minutes.

The stakes for Ukraine are huge. There have been many half-baked anti-corruption campaigns in the past that lacked the political will for real reform. This time Sakvarelidze hopes it’s different. “It is not just Ukraine who will feel the pain if we fail. Ukraine is the gateway to Europe, a wall against the tide of Soviet-style corruption. I’d hate to think of the consequences to Europe and the world if we fail.”