The CEO’s Ruminations

While celebrating or bemoaning (depending upon your perspective) the 21 years since resumption of sovereignty or handover or takeover of Hong Kong to China (depending upon your politics), I had time to contemplate the soon to be enacted Cross-boundary Movement of Physical Currency and Bearer Negotiable Instruments Ordinance of Hong Kong (the “Ordinance”). No doubt the luvly bubbles of Krug pulsating down my palate inspired me to put chubby fingers to keys in anticipation of what I have dubed “No Cash Day” on 16th July.

Prior to what you no doubt will consider to be a rivetting repartee, how about the World Cup? Japan? Russia? Jolly Ole England? No Germany, Argentina, Portugal or Spain? No Messi or Ronaldo? I almost thought I would wake up, pinch myself and discover China or even Hong Kong in the Quarters with Xi Jiping or Carrie Lam leading the charge. Oh my ears and whiskers…

Back to business. The Financial Action Task Force (the “FATF”), an inter-governmental body with 37 members (35 out of 195 countries), was established in 1989 “…to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.” Despite representing only 18% of the sovereign states on the planet, the FATF states quite unashamedly that it “…has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.”

Bottom line: the FATF is an undemocratic, battering ram of global heavyweights – China, Europe, Russia and the USA – seeking to impose “standards” upon the other 82% of financially and militarily less powerful liliputian states.

Alas, Hong Kong is set to succomb to the almighty FATF after successfully withstanding the onslaught of five iterations of the Recommendations since 1990. On or after “No Cash Day”, if you visit Hong Kong with HKD120,000 (or equivalent thereof) or more of currency or bearer negotiable instruments, then you must disclose the same to the relevant Custom’s officer. Singapore, the island state to which Hong Kong is often compared/contrasted, fell prey to the FATF much earlier, and in 2014 decreased the the threshold for reporting to SGD20,000 (USD15,000).

Let’s have a brief, critical look at the most recent, 2012 Recommendations (in particular number 32) and the Ordinance while positing possibilities of legally sidestepping the same.

“In God We Trust…All Others Pay Cash” – Novel by Jean Shepherd

Since the 1800s, “In God We Trust” has been emblazoned upon the currency – coin and paper – of the USA. The Yank novelist had a bit of fun with the phrase while recalling childhood memories. Good read.

Bin that phrase! Many of us may still trust in God, however defined, but cash no longer seems to be acceptable. Many a car park in Hong Kong posts signs clearly stating “no cash”.

Thus, I make a leap to number 32 of the Recommendations with a slightly edited version reproduced as follows:

“Countries should have measures in place to detect the physical cross-border transportation of currency and bearer negotiable instruments…should ensure that their competent authorities have the legal authority to stop or restrain currency or bearer negotiable instruments that are suspected to be related to terrorist financing, money laundering or predicate offences, or that are falsely declared or disclosed.…should ensure that effective, proportionate and dissuasive sanctions are available to deal with persons who make false declaration(s) or disclosure(s).”

Yes, even when edited, that is a mouthful. Let’s give it some thought.

First, please do not be fooled by the word “recommendation”. The FATF states quite clearly in its Glossary that “For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must.” Translation: it is our way or the financial-ruination-highway.

Second and not surprisingly, the Ordinance albeit using fancier language like “conveyance” rather than “transportation” and “import”/”export” rather than “in-bound”/”out-bound”, largely follows Recommendation 32. I gather the drafters felt a need to earn their keep (our tax dollars) by improving on the language. Kudos!!!

Third, while I was perusing the Glossary, I noticed the FATF defines physical cross-border transportation as “any in-bound or out-bound physical transportation of currency or BNIs from one country to another country…including (1) physical transportation by a natural person, or in that person’s accompanying luggage or vehicle; (2) shipment of currency or BNIs through containerised cargo or (3) the mailing of currency or BNIs…”; currency as …banknotes and coins that are in circulation as a medium of exchange”;…and “bearer negotiable instruments”, “…monetary instruments in bearer form such as: traveller’s cheques; negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee’s name omitted.”

Hmmm…does that cover diamonds or gold bullion? Nothing specific in the FATF or the Ordinance. The Yanks address the issue in the Customs Declaration Form 6059B if and only if you happen to turn over the form and read explanatory note 13, which uses the language “…$10,000 or more in U.S. dollars or foreign equivalent in any form…”

Hey, what about cryptocurrencies? If I flew into Hong Kong with the username, password and whatever other form of access code may be required (Ethereum calls it a “wallet”), did not disclose my possession of the same and then used that information to exchange my cryptocurrency into Hong Kong in excess of the threshold amount of HKD120,000, would I be facing the Ordinance’s maximum fine of HKD500,000 and two years in prison? What if I flew into the UK (similar FATF laws) and used a Bitcoin ATM?

Finally, is this sort of FATF-compelled legislation really achieving the stated objectives? In 2017, the Hong Kong Tourist Association reported total visitor arrivals of 58,472,157 of which 44,438,839 were from Mainland China. Let’s say 0.1% of our friends from the Motherland each legally imported HKD110,000 into Hong Kong. HKD5 billion or approximately USD630 million!!! (As an aside, I should have thought these figures would make one wonder why Hong Kong is the most expensive real estate market in the world).

Call me crazy, but even if 1% of that money (USD6.3 million) was used for, say, terrorist financing, then I think it fair to say one of the objectives, if not the most important, of Recommendation 32 and the Ordinance easily could have been flouted by naughty actors.

Something to ponder when 18% of the countries of the world with all the power treat the other 82% like naughty children by imposing rules that Little Johnny seemingly can quite easily sidestep.

Shudder the thought but perhaps the members of the FATF have other, undisclosed, objectives, i.e. even greater control by government of the people?

“It is the people who control the Government, not the Government the people.” – Winston S. Churchill

Really Winston!? Perhaps a better time. Just a thought…cheers!

COO James Tunkey Briefs Retired FBI Agents

Photo from left: Charlie Beaudoin, Scott Olson, James Tunkey, Tim Screen.

I-OnAsia’s Chief Operating Officer provided a briefing to New York Chapter of The Society of Former FBI Agents at a recent meeting.  During the briefing, Mr. Tunkey reviewed key trends discussed in his April Insights Guide, published by Compliance Week.  Mr. Tunkey’s presentation focused on the strengths of China’s economy, challenges affecting businesses in Asia, the importance of global institutions, and the importance of resolving current challenges in the relationship between the United States and China.

The CEO’s Ruminations

I apologize profusely to those of you who tinkled regarding my failure to ruminate, at least publicly, over the last few months. Suffice it to say, life and all its odd permutations have had me hopping.

Hey, let’s hear it for The Donald and Rocket Man!!! I definitely have my issues with both of these fellas and their new “bromance”, but I am giddy as a teenage gal dressing for her first “date” that leaders of two countries with nuclear weapons are breaking bread rather than uttering threats and/or lobbing bombs. Baby steps are better than “ad hominem” attacks (ya gotta love those polite Canadiens), man-made craters or loss of life in my book. Watch this space…we just might be saying “thanks” to two unlikely heroes.

Back to business. Did you happen to see the Mark Cuban produced, Netflix flick aptly entitled The China Hustle? Basically a story of robber baron Yanks mining the less than transparent corporate world of China for the purpose of flogging shares on USA stock exchanges/markets. These sort of developments always require two greedy parties, i.e. the investors and the promoters/companies. The China Hustle adds some usually missed third parties to the mix, i.e. regulators and financial functionaries (lawyers, accountants, banks).

Bottom line: a plethora of Chinese companies are now being de-listed, sued for fraud and generally being shown to have participated in a multi-billion USD scam.

I raise this story because the largest failure was in the pre-IPO (pre initial public offering) due diligence process. Basically, if a big law firm or one of the final four accounting firms said “OK”, then the shares of the companies were listed/quoted and investors bought with the confidence of gold at the end of the rainbow.

This is where I-OnAsia makes a difference. We work with the big law firms, final four accounting firms, promoters, etc, to ensure full disclosure and the offering memorandum is accurate.

Whether it is Hong Kong, Singapore or any of the stock exchanges/markets in the USA, we roll up our sleeves and have a look under the hood, so to speak!

“All that glisters is not gold…” – The Merchant of Venice, Act II, Scene VII, William Shakespeare

The Bard, yet again, was years before his time in speaking truth.

Pre-IPO due diligence, basically, covers any activity the objective of which is to achieve transparency and to ensure what is promoted to the investing public via the offering memorandum or other mediums is accurate.

Large-scale IPOs require lawyers, accountants, specialists (surveyors, engineers, etc), regulators and even private investigation firms to sift through an enormous amout of information provided by the company.

I am confident you will not be surprised to learn the company believes it is perfect. This is the moment the Bard’s warning rings true.

Nothing is perfect!!!

Equally, I can tell you the amount of information, useful or otherwise, provided and often not provided (but discovered) is mind boggling. Given the numerous methods by which communication is plastered all over our faces on a daily basis, it is true to say “We are drowning in information but starved for knowledge.” (John Naisbitt)

Why hire I-OnAsia to handle such an important element of an initial public offering?

First and with my usual diplomatic approach to all matters, we do not rip-off and OVER-charge our clients. We have noticed how some of our so-called competitors dress-up similar services simply to charge exorbitant fees. I am a big fan of earning a fair wage for our services. However, if the waiter adds a zero to an excellent meal, then I take umbrage.

Second, we specialize in the search for knowledge in a cost and time-effective manner. Such services include, but by the very nature of the beast are not limited to and continually are being enhanced, the following:

  • Organization and Good Standing. Does the company acutally exist and is authorised to do business? Did the company pay its annual government fees?
  • Previous Financing Efforts. What sort of private offerings, debt arrangements, preferred securities, etc., pre-date the IPO?
  • Financial Information. Has the accountant been paid off? Did the auditor really check the numbers with what is happening on the ground?
  • Physical Assets. Is the inventory fairly valued? Does it even exist? Does the machinery actually work?
  • Real Estate. Is the factory really situated on 100 acres?
  • Intellectual Property. Trademarks? Patents? Knowhow? What is owned and by whom? Is it adequately protected?
  • Employees and Employee Benefits. Credentials? Are they legally allowed to work for the company in that country? Are they compensated fairly? Are their benefits excessive?
  • Licenses and Permits. Simply put, is the company authorised by the relevant government agency(ies) to do its business?
  • Environmental Issues. Is the factory situated on a toxic waste site?
  • Taxes. Is the company current? Any tax liens?
  • Material Contracts. Loans? Stock options? Non-disclosure? Non-competition?
  • Product or Service Lines. Existing? Under development?
  • Customer Information. Major? Marketing and advertising? Competitors?
  • Litigation. Contingent liabilities, material commitments, government action or any of those now fairly common sexual harrassment claims? Criminal matters?
  • Anti-bribery and foreign corruption. Does the company have policies to meet these legal requirements?
  • Insurance Coverage. Do they have health and/or life insurance for employees? Do they have D&O liability insurance? Are machines and other equipment covered? Is coverage sufficient?
  • Professionals. Were they simply hired as a “label” or did they actually do their jobs?
  • Articles and Publicity. Positive or negative image? Is the company or its executives/employees active in social media?

Doing extensive homework takes time, effort and focus on the ultimate goal of ensuring transparency and accuracy.

Third and as I always point out in virtually every Rumination, the very nature of our team is to be skeptical. We adhere to Arthur Conan Doyle’s truism that “There is nothing as deceptive as an obvious fact.” Simply stated, when working for a client, we take the position that all obvious facts are nothing but well-dressed deceptions seeking a colonosocopy-like investigation.

Finally, we have the global network to ensure the correct subject matter experts are employed to handle the job.

Are you going public? Are you a professional seeking some additional and necessary pre-IPO investigative assistance?

Tinkle me…

The CEO’s Ruminations

As I tucked into my first glass of champers on yet another long-haul flight to somewhere to do something hopefully important, I began to contemplate recent complaints from clients who have been the victims of “scams”.

To say I have assisted many clients battling against the most successful scams running on the planet may be a British euphemism.  If a scam has been perpetrated, I have had the sad occurrence to seek redress for the victim(s).

As an aside, whether any form of Nigerian wickedness (419 letter fraud, dating/romance, Western Union, etc) or modern cyber-phishing, I remain perplexed at the longevity and success of these deceptions. I think it fair to say my surprise requires some soul-searching by the victims and is well-beyond my ambit as a simple sleuth.

Nevertheless, I am more interested in addressing the emotional, financial and reputational issues that often rear their ugly heads when a client falls prey to this insiduous form of conduct. Homer, the Greek poet famous for penning The Iliad and The Odyssey, summed up my feelings on the subject when writing “Hateful to me as the gates of Hades is that man who hides one thing in his heart and speaks another.”

Given my disdain for these characters, I am positive you would expect I-OnAsia to attack with a passion these matters.

We roll up our sleeves and get dirty!  Legal, of course!  However, we take the position that to win against such adversaries often requires what one might call “aggressive” tactics.

Simply stated, we are ready, willing, able and dedicated both to preventative as well as curative action for the victims.

“An ounce of prevention is worth a pound of cure.”  Benjamin Franklin

Ah, the uber-polymath of the 1700s, perhaps best known for his face adorning the USD100 note, was an uparalleled visionary.  I have no doubt he may have anticipated these issues, which are global in ethnicity and nationality, despite the modern state of Nigeria not being formed until the 19th century.

First, I think it useful to itemize some of the more popular and long-running scams in an effort to provide, free of charge, “an ounce of prevention”.  According to many non-government and government websites, the super-scams include, but certainly are not limited to, those detailed below.

  • Phishing (SMS version is smishing) is an attempt to obtain sensitive information like username, password, bank details, the details of staff in a position to transfer funds.
  • Nigerian letter frauds (419, which is the country code for Nigeria) combine the threat of impersonation fraud with a variation of an advance fee scheme in which a letter mailed, or e-mailed, from Nigeria offers the recipient the “opportunity” to share in a percentage of millions of dollars that the author, supposedly a government official, is trying to transfer illegally out of the country.
  • Commercial fraud often combines any one of these scams along with the stolen money being used (a) to buy real products from legitimate manufacturers, (b) products are then sold on to unknowing buyers and (c) the purchase monies is sent to the seller’s account and thereafter withdrawn in cash or transferred through some other mechanism to the fraudster (bitcoin?).
  • Malware is, as the name implies, is software that is intended to damage or disable computers and often is accidentally downloaded when an innocent employee clicks on an email sent from a seemingly reliable person who, in fact, is a fraudster.
  • Telemarketing fraud occurs when you send money to people you do not know personally or give personal or financial information to unknown callers.
  • Lottery fraud sees the victim being told that he has won a lottery, prize or sweepstakes and that money must be sent to cover the taxes or fees on the winnings. The victim may receive a check for part of the winnings and once the check is deposited and money is sent, the check bounces.
  • Romance/dating scammers spend their day trolling web sites and chat rooms for contact emails, and then send off thousands of fraudulent letters and emails awaiting the victim’s replies that result in no love, plenty of heartbreak and usually financial loss.
  • Social networking is when a cybercriminal accesses your social media accounts, and those of your close friends and family. Useful information for highly targeted pitches usually involving requests for money.
  • Tax scams involves a victim being contacted by someone claiming to be from a governmental agency saying that money is owed for taxes, and it must be paid immediately to avoid arrest, deportation or suspension of driver’s license/passport.

When I add “etc” to this list, I mean ETCETERA as the list is never-ending!

Second, now that you have an incomplete laundry list of potential scams, please defend yourself.  Why?  If not for any other reason, then how about the fact things are not going to get better!

One noted expert recently commented regarding identity theft via phishing scams that “Police don’t have time, the FBI won’t care unless it’s a lot of money or kids involved and then they are overwhelmed. The best you can do is put credit freeze and a hold on things and hold on tight. This is going to get worse.”

In Hong Kong, the Hong Kong Police recorded 653 cases of cybercrimes in 2005, which was the first year it began tracking such offences.  By 2016, the number of cases reached 5,939 in 2016 and resulted in HK$2.3 billion of losses to the victims!

Third, if you are the victim of a scam, you must act QUICKLY.  Once the money is sent, identity is stolen, etc (there goes that abbreviation again), you have a matter of hours to respond.  The longer your wait, the greater likelihood you will never see your money again, your identity will be irreversibly lost and the etc will become your first, middle and last name FOREVER!  Although we support law enforcement’s efforts and we know lawyers work hard to achieve their clients’ objectives, both parties are hampered by various important roadblocks that require time and are well-known to the fraudsters.  Sadly, time is of the essence and not on your side. We are faster!

Finally, is all hope lost?  As Martin Luther King Jr eloquently stated, albeit in a very different context, “We must accept finite disappointment, but never lose infinite hope.”  If we are immediately contacted, we have the global network, high-level contacts and clear, no roadblock-vision to attack the problem and sally forth in more than just a hopeful manner. The old saying “it is not what you know, but who you know” shines brightly in these situations.  Suffice it to say, we know a lot, but we know even more useful people.

Frightened?  You should be.  Having said that, I-OnAsia is a phone call away and we will act quicker than immediately…as we know the game.

In closing, I leave you to ponder the wisdom of The Buddha for a little more of that free,”ounce of prevention”:

“Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your own common sense.”

The CEO’s Ruminations

As we were unwinding from the festivities surrounding Chinese New Year and refocusing on making (rather than spending) money, I stumbled upon an article highlighting 10 of the most ridiculous lawsuits in 2017 (https://www.uschamber.com/series/above-the-fold/here-are-the-top-10-most-ridiculous-lawsuits-2017).

Oooweebaby, humans are truly odd.

How about the lawsuit filed against Uber by a French fella, who used his wife’s phone for the service, which prompted that nasty little app to continue notifying her of his curious pick-ups and drop-offs. She filed for divorce.  He filed alleging Uber ruined his marriage, and he is seeking 45 million euros in damages for the pain caused to him.

I also enjoyed reading about the Yank who is suing Starbucks for the unpaid time between logging out from work until he locks up the store at closing.  A whopping four minutes each time.  Of course, the math begins to become compelling when you multiply those four minutes by days, months and years.  Nice bit of overtime, eh!?

The reason my mind started spinning while reading these tidbits of human absurdity was the fact each one of these plaintiffs and defendants probably used (or should have used) some form of litigation support services.  More importantly, I know the issues of our clients are more complex and the lawyers we assist understand the value we bring to the litigation team.

I am hopeful you will not be shocked to read such services form a large part of I-OnAsia’s work for clients.

Whether it is a nonsensical civil lawsuit or a more serious criminal prosecution, we lift up the skirts, so to speak, in an effort to support out clients’ positions in varying spots of bother.

Tinkle me, or more likely suggest my name to your lawyer, if you think you might need some litigation support.

“When you have eliminated the impossible, whatever remains, however improbable,  must be the truth.” – Arthur Conan Doyle’s Sherlock Holmes

The super-sleuth, albeit fictional, speaketh the truth.  Of course, the issue at hand is eliminating the impossible.  Given the whacky lawsuits I just summarized, one has to ponder if anything is impossible.

Litigation Support, basically, covers any activity the objective of which is to assist a lawyer to try a case.  How long is a piece of string?  Well…

Large-scale civil or criminal litigation requires lawyers, paralegals, accountants, plaintiffs, defendants and event private investigation firms to sift through an enormous amout of dead wood.

On an environmental note, I often wonder how many forests would be saved if people were just a touch more friendly or a little less nutty.  If you ever saw some of the warehouses of paper produced for only one case, you would need a crane to lift up your jaw from the floor.

I digress, as I often do, but the point is litigtation support services are essential to prepare for battle.  Eliminating the impossible requires often mundane and time-consuming work ranging from pulling civil/criminal/corporate records to conducting word searches of emails to checking club/school memberships to asset tracing to…well, I hope you get the picture.

Why hire I-OnAsia to handle such an important element of a lawsuit?

First, we do not charge the same sort of hourly fees meted out by law firms passing on costs of their education, rent and navigating the often murky waters of the river known as “the law”.  In 2016, Lord Neuberger, president of the supreme court of the United Kingdom, bemoaned the litigation burdens of excessive hourly rates among “city” firms that often exceeded GBP1,000 per hour.  Ouch!!!  Litigation is expensive.  The lawyers with whom we work understand this issue.  We work together with the legal eagles, and we complement their technical skills.  A good lawyer as well as a savvy client should consider cost-effective alternatives to achieve their objective.

Second, we specialize in eliminating the impossible to provide our clients with the truth in a cost and time-effective manner.  Such services include, but by the very nature of the beast are not limited to, the following:

  • data analytics involving designing and implementing databases for managing, sorting, indexing, abstracting and coordinating data produced in major litigation, particularly for trial;
  • detect and preserve evidence (metadata) in electronic media, including evidence sought to be destroyed;
  • retrieving information on opponents, whether natural persons or entities, through public records as part of background checks and fact finding;
  • identify and verify physical locations of real and personal property and, of likely greater importance, who owns the same;
  • recovery of assets;
  • identify known and unknown business affiliations that may prove useful;
  • identify and vet credentials of expert witnesses;
  • forensic accounting, including determining financial status of the adversary;
  • access global data sources to support or impeach “facts”;
  • learn locations of potential witnesses and interview the same;
  • obtain information to challenge statements made in depositions;
  • engage in a wide range of surveillance activities;
  • research social media sites; and
  • various investigations including infidelity and romantic interest, child custody, employment background, tenant screening, etc.
  • and….

Doing extensive homework takes time, effort and focus on the ultimate goal of winning.  The lawyers with whom we work know you should not be paying north of GBP1,000 per hour for this sort of work. In your interests, they refer the “grunt work” to I-OnAsia.

Third, the very nature of our team is to be skeptical.  We adhere to Arthur Conan Doyle’s truism that “There is nothing as deceptive as an obvious fact.”  Simply stated, when working for a client, we take the position that all obvious facts are nothing but well-dressed deceptions seeking a colonosocopy-like investigation.

Finally, we have the global network to ensure you engage subject matter experts. In the same manner you hire a lawyer to explain the law or an accountant to prepare your tax returns, we organize and, most importantly, manage the appropriate team of subject matter experts to handle the issues.

I think a Yank hack from the 1900s (Ambrose Bierce) summed up litigation quite nicely with the description that it is “a machine which you go into as a pig and come out of as a sausage”.

We do not really care if you are a pig (hmmm…), but we definitely will seek to help you to avoid being a sausage!!!