</h1> <article> <h1>ADJUDICATING INTERNATIONAL CRIMES</h1> <p>2015-10-31T11:17:00.000-07:00</p> <div class="separator" style="clear: both; text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEharORaVGJMpK3lM3c-ex21UrYoa_zJAfA0jCfAANMnKrgxEc5QoW2A-LPPGTOs_tlVvc7RWZzUtwgXA06cGpggy_eMoa_Ns8IsL_DAoqQgCVwfXM21Z4IWbc-0tIhMR6IcAM23hLjfoskU/s1600/ADJUDICATING+INTERNATIONAL+CRIMES.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a></div> <div style="text-align: center;"> <br /></div> <br /> Since the war crimes trials that followed World War II, the “law of nations” has become more widely understood and accepted throughout the world. As a result, an increasing number of individuals have been prosecuted and convicted for international crimes. Understanding the principles of effective administration of international criminal justice and the proper adjudication of international crimes begins with a review of the sources of international criminal law, followed by the various steps in the process. In general terms, these are the investigation, the indictment, the trial, and appeals. The sources of international criminal law can be divided into two basic categories: international and state. References to state law in this context mean international law that has, in one way or another, been incorporated into the national, domestic, or municipal laws of a country. The sources of inter-national law that are found beyond the borders of any given state include multilateral treaties such as the Geneva Conventions of 1949 and the Rome Statute of the International Criminal Court (ICC). International crimes also can be found in custom-ary international law, which is viewed as generally accepted principles of law or customs, irrespective of whether they are codified into any particular con-vention, treaty, or legislation.<br /> <br /> Regardless of the specific source of international law, the acts and offenses categorized as interna-tional crimes include, but are not limited to geno-cide, war crimes, and crimes against humanity, such as murder, extermination, enslavement, torture, forced prostitution, rape, forced sterilization, and forced disappearance when perpetrated in connec-tion with an attack against a civilian population. It should be noted that the nexus between the attack against civilians and specific crimes is purely juris-dictional, and it is not an element of the crime that must be proved against a particular defendant.<br /> <br /> International crimes that are specified in treaties, conventions, and other international instruments include the taking of hostages, apartheid, terrorist bombings, financing of terrorism, crimes against inter-nationally protected persons and diplomatic agents, and slavery. For example, the Hague Convention on the Suppression of Unlawful Seizure of Aircraft (Hijacking Convention) requires each contracting state to take all necessary measures to establish crimi-nal jurisdiction over offenses falling within the con-vention. Another example is the Geneva Conventions of 1949, particularly the Third Convention Relative to the Treatment of Prisoners of War and the Fourth Convention Relative to the Protection of Civilian Persons in Time of War. Both of these conventions codify grave breaches of the conventions, such as murder, rape, and torture, as international crimes.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">Individual Criminal Responsibility</span></h3> <br /> Contemporary prosecutions for violations of inter-national criminal law are brought against individuals. As with most domestic criminal law, in order for a person to be held criminally responsible for a particular act, there must be a coexistence between the actus reus , or physical act, and the mens rea , or “guilty mind.” The actus reus , however, can take different forms, such as an omission or a failure to perform a legal duty. One very good example is a military commander’s failure to prevent a crime from being committed by one or more subordinates if the commander reasonably should have known the crime was likely to occur. Alternatively, military commanders who fail to punish their subordinates after learning of their criminal activities, such as murdering prisoners of war or sexually assaulting civilians, also may be held individually criminally responsible for international crimes.<br /> <br /> Historically, the idea of collective criminal respon- sibility—holding an individual criminally responsible merely for membership in a particular group—has drawn criticism, particularly when a specific criminal act (other than group membership or association) cannot be demonstrated. Participation in criminal conspiracies and criminal enterprises is an exception to this notion, although these concepts also have been criticized by some jurisdictions when holding one participant criminally responsible for the acts of another. As in many national jurisdictions, the crime of conspiracy may or may not be available relative to a particular crime under international law. For example, the International Criminal Tribunal for the former Yugoslavia (ICTY) has jurisdiction to adjudi- cate charges of conspiracy to commit genocide under Article 4 of the Statute of the ICTY, but conspiracy is not applicable to other crimes. However, the ICTY has ruled that the word commit under Article 7 of the statute includes committing crimes by indirect means, such as participating in an activity with a “common purpose” or a joint criminal enterprise (JCE) with a nexus to one or more of the crimes over which the tribunal has jurisdiction. Since the indictment of Slobodan Miloševi in 2001 for crimes alleged to have been committed throughout the Republic of Croatia, almost every major international criminal indictment has incorporated some aspect of the theory of the JCE. This was the first indictment at the ICTY that specifically charged the JCE, which was also based on an investigation premised upon this specific theory of individual criminal responsibility.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">Investigation</span></h3> <br /> Prior to the actual adjudication of an international crime, a criminal investigation must be conducted. The investigation of international crimes can be undertaken by international bodies such as the ICTY or the ICC, or by national authorities. Most investigations of international crimes pursued at the national level are undertaken by national-level investigative or law-enforcement agencies, as opposed to states, provinces, or other political subdivisions.<br /> <br /> Investigations are led in a number of ways. They include the common-law method, led by senior investigating police officers; the civil-law method, by investigating judges or magistrates; and the grand-jury method, with a prosecutor providing overall direction that is carried out at the operational level by criminal investigations managers. At the ICTY, for example, during the earlier stages of the tribunal’s work, police investigative managers, working closely with team legal advisers, carried out the overall supervision of the entire case until the time of indictment, when a senior trial attorney (STA) took over the case. During the later stages of the tribunal’s work, officials believed that legal direction from the outset of the investigation was critical to the successful outcome of the case. Accordingly, a model roughly following the U.S. investigative grand-jury process was adopted, whereby overall direction from the inception of the investigation was directed by an STA with experience as a criminal prosecutor in a common-law country or an investigating judge in a civil-law country. Supervision of the investigative team and operational control in the field remained with the investigation manager.<br /> <br /> Indictment<br /> <br /> Following the investigation, the next step is formal indictment of the suspect. The prosecutor writes an indictment that informs judicial authorities of the charges alleged and provides, in one way or another, a minimal amount of evidence or a prima faciecase to support the allegations. A judge reviews the indict-ment and the evidence and decides whether there is indeed sufficient evidence to warrant proceeding to trial. The judge may ask to speak to the prosecutor or the lead investigator during an in camerareview, that is, a meeting in the judge’s chambers. This is an ex parteproceeding in which the person named in the indictment is not present to give evidence in his or her favor. If the judge agrees that a trial is warranted, the judge will confirm the indictment by affixing his or her signature to the indictment. This process is relatively analogous to returning a “true bill” of indictment in many common-law countries. If the judge believes there is insufficient evidence to proceed further, the indictment will be dismissed.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">Initial Appearance</span></h3> <br /> Once arrested or surrendered to the court of jurisdiction on the indictment, the accused will be brought before the judge without unnecessary delay. This is the stage where the accused is formally charged with the crime or crimes. The judge will ensure that the accused has legal counsel and, if the defendant is indigent, counsel will be arranged at no cost. The indictment then will be read to the defendant in a language he or she understands, and the accused will be called upon to enter a plea of guilty or not guilty. If the plea is not guilty, the case will be docketed for trial. If the accused fails to enter a plea or refuses to do so, the court automatically will enter a plea of not guilty on the defendant’s behalf.<br /> <br /> If the accused pleads guilty, the court will endeavor to ascertain two important facts: whether the plea was voluntarily and knowingly made and, if so, whether there is a sufficient factual basis for a finding that a crime within the court’s jurisdiction indeed was committed and that the accused commit- ted the crime.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">Trial</span></h3> <br /> From the outset, it must be noted that in the process of adjudicating international crimes, the objective of the criminal justice system is to provide internationally recognized standards in connection with the rights of the accused at every step of the judicial process. Article 14 of the International Covenant on Civil and Political Rights is of the utmost importance. This international instrument lays the ground- work for many of the defendant’s rights, which are similar to those found in domestic criminal justice systems. These include the presumption of innocence, the burden of proof on the prosecution, and the standard of proof. Other international legal instruments incorporate the provisions of Article 14. For example, Article 66 of the Rome Statute pro- vides for a presumption of innocence for an accused person, and Article 21 of the ICTY statute places the burden of proof on the prosecutor.<br /> <br /> There are, however, some differences between the rights and processes of international and domestic courts. At international tribunals, for instance, hear- say evidence is more easily admissible. For example, Article 69 of the Rome Statute of the ICC allows all probative evidence, that is, evidence that tends to prove an issue before the court. Another difference concerns the right to trial by jury. Unlike courts in the United States and other common-law countries, where a jury trial is provided by law, most international criminal trial courts consist of a panel of three judges, and judgments must be rendered by a majority of the judges.<br /> <br /> At a minimum, the accused will be given adequate time and facilities to prepare a defense and will be tried without undue delay. Defendants will have the right to legal counsel of their own choosing, and if they are indigent, legal assistance will be provided at no cost. Defendants have the right to examine wit-nesses on their own behalf and to have the court compel the attendance of witnesses. Defendants also may not be compelled to be witnesses against them-selves, and inferences of guilt cannot be drawn from their silence.<br /> <br /> Defenses<br /> <br /> Many of the traditional defenses seen in national courts, such as self-defense and mistake of fact, are provided for in connection with international crimes. Some defenses, however, may not be avail-able. For example, the defense of duress for the killing of another and the defense of superior orders when the act was manifestly unlawful are not avail-able. Moreover, even traditional defenses may not be available under some circumstances. For example, defenses such as legitimate military targets and col-lateral deaths associated with those targets are inapplicable to crimes against humanity. These defenses also may not be available to a defendant charged with war crimes if the military objective was criminal from the outset, since combatants may lose their lawful combatant immunity for their criminal acts.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">Protective Measures</span></h3> <br /> In order to ensure the proper administration of jus-tice in international criminal tribunals, the court sometimes implements protective measures to pro-tect the privacy of victims and witnesses. To main-tain balance, these efforts must be consistent with the rights of the accused. Some examples of protec-tive measures include preventing disclosure to the public, including the media, of the names, identi-ties, and locations of victims and witnesses; using pseudonyms for witnesses; and altering the voices or images of witnesses. The court also may hold certain closed sessions of the proceedings for this purpose.<br /> <br /> Appeals<br /> <br /> Like many domestic legal systems, international tri- bunals have due process safeguards that provide the right to appeal a negative decision of the trial court. The case typically moves to an appeals chamber of the court, which reviews the case on record for error of fact and error of law. This review may include the sufficiency of the evidence for a finding of guilt and the appropriateness of the sentence.<br /> <br /> Unlike in the United States and many other states, the prosecutor has the right to appeal a finding of “not guilty” or the appropriateness of the sentence. This means that an accused who was found not guilty could face jeopardy a second time, a notion that is not entirely uncommon in many legal sys- tems throughout the world. It must be noted that international criminal tribunals are often a hybrid of a number of legal systems, such as adversarial and inquisitorial models, and do not necessarily view one system as better than another.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">National Prosecutions</span></h3> <br /> Most of the discussion thus far has focused on the adjudication of international crimes by international tribunals, but as previously noted, national juris- dictions also can adjudicate international crimes. Indeed, many United Nations (UN) conventions and resolutions require member states to adopt relevant national-level legislation so that crimes can be pros- ecuted.<br /> <br /> For example, Article 4 of the UN Convention Against Torture (CAT) requires state parties to enact legislation that criminalizes torture. In this sense, state prosecutions for violations of CAT can be had in national courts. This includes legislation that establishes jurisdiction over the offender by various means, including foreign nationals who are present in the state and nationals who are abroad. Such a prosecution incorporates the notions of extraterri- torial jurisdiction over a state’s own nationals and universal jurisdiction of crimes committed abroad by persons who are then in their states. Another example is the United States War Crimes Act, which codifies several instruments of international law. Section 2441 of Title 18 of the United States Code proscribes crimes against humanity, genocide, and grave breaches of the Geneva Conventions of 1949.<br /> <br /> Other examples of national prosecutions related to international crime include Article 101 of the UN Convention on the Law of the Sea, which defines acts of piracy on the high seas, including theft, hostage taking, and other acts of violence or dep-redation. Directly related to this is the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation and the International Convention Against Taking of Hostages. In spite of these conventions and the fact that piracy is an inter-national crime under customary international law, jurisdiction to prosecute and adjudicate these crimes is often problematic, because various states have dif-ferent laws under which the matter is approached, and some lack such laws altogether. The United States, however, pursuant to its authority under the Constitution and federal criminal laws, exercises “universal” jurisdiction over all acts of piracy on the high seas when the offenders are physically in or taken to the United States. Courts may impose strict punishment, including life in prison.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">Enforcement of Sentences</span></h3> <br /> Individuals found guilty of international crimes by an international criminal tribunal usually serve their sentences at a correctional or penal facility physi-cally located within a state that has entered into an agreement for this purpose with the international court. The laws of the receiving state relating to par-dons and commutation of sentences typically apply to international prisoners serving their sentences in that state. If that is the case, the state notifies the international tribunal, which makes the ultimate decision in this regard. The statutes that form the basis for the creation of an international criminal tri-bunal typically require member states to cooperate with the international tribunal.<br /> <br /> <h3 style="text-align: center;"> <span style="color: #0b5394;">Civil Adjudication of International Crimes</span></h3> <br /> The International Court of Justice (ICJ), often referred to as the World Court, does not have juris-diction to adjudicate international crimes committed by individuals. The ICJ has jurisdiction over disputes between states, some of which do indeed involve international crimes. Accordingly, the ICJ cannot find anyone guilty of a crime, nor can it sentence someone. In fact, its decisions sometimes are seen as nonbinding or, at the very least, unenforceable. However, decisions of the ICJ often are very relevant and persuasive in national and international crimi- nal courts when interpretation of the UN Charter or the application of domestic law in international criminal prosecutions is relevant.<br /> <br /> Another example of civil adjudication of inter- national crimes is the U.S. Alien Tort Claims Act (ATCA). The ATCA incorporates the Law of Nations into the domestic law of the United States, which provides a venue for U.S. district courts to hear claims under the act. Non-U.S. citizen victims of war crimes and crimes against humanity—includ- ing torture, cruel and inhuman treatment, forced disappearance, sexual assault, and other serious vio- lent crimes—can seek damages against individuals who were acting pursuant to foreign “color of law” or private parties who were acting under foreign color of state authority or whose conduct violates a norm of international law that extends to private parties. The accused must be properly served within the borders of the United States in order for there to be jurisdiction in the case.<br /> <br /> </article> <article> <h1>ACCOUNTING FRAUD</h1> <p>2015-10-31T07:42:00.002-07:00</p> <h2 style="text-align: center;"> </h2> <b>Accounting fraud is an international problem touch-ing all countries and most entities. Fraud affects companies of all sizes in a variety of industries. Transparency International is a global network whose goal is to fight fraud and corruption in the national arena by producing an annual Corruption Perceptions Index (CPI). Just some of the massive frauds within the past few years include those asso-ciated with Adelphia, Bernard Madoff (now serv-ing a 150-year prison sentence), Cendant, Computer Associates, Dell, Enron, Harris Scarfé, HealthSouth, Livedoor, Parmalat, Qwest, Royal Ahold, Satyam, Siemens, Sir Robert Allen Stanford, SK Global, Tyco, Vivendi, Waste Management, WorldCom, and Xerox. In the United States, 20 percent of the locations of fraud companies’ headquarters were in California, 10 percent in New York, and 8 percent in Texas and Florida.</b><br /> <b><br /></b> <b>A 2010 Committee on Sponsoring Organizations (COSO) study covering a 10-year period in the United States (1998–2007) found that fraudulent financial reporting results had significant negative consequences for executives and investors. The average cumulative misstatement or misappro-priation amount for 300 companies was $397.68 million, while the median cumulative misstatement was $12.05 million. The frauds of the early 2000s skewed the 1998–2007 total and mean cumulative misstatements or misappropriations upward. The median fraud in this study was almost three times larger than the previous 1999 COSO study. For the purposes of this discussion, accounting fraud is defined, as stated by the American Institute of Certified Public Accountants (ACFE), as “any inten-tional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the per-petrator achieving a gain.” Coverage will emphasize financial statement fraud and not necessarily oth-ers, such as occupational fraud, white-collar crime, or computer fraud. For example, accounting fraud is the intentional manipulation of (rather than an error in) the recording of revenues (inflows) and expenses (outflows) in order to make the operating profit of an entity appear better. Typical examples would be overreporting of sales or revenue: Cendant Corporation created at least $500 million in ficti- tious revenues, and Barry Minkow created a $200 million corporation based upon fictitious sales.</b><br /> <b><br /></b> <br /> <h3 style="text-align: center;"> <b><span style="color: #0b5394;">Costs of Accounting Fraud</span></b></h3> <b><br /></b> <b>There have been some massive accounting frauds throughout the years, including the $11 billion WorldCom and $50 billion Madoff scandals. In an interview in the February 16, 2011, edition of the New York Times , Madoff spoke of the “will- ful blindness” of many hedge funds and banks that dealt with his investment advisory business: “They had to know. But the attitude was sort of, ‘if you’re doing something wrong, we don’t want to know.’” Financial scandals and their resulting fallout in the first few years of the 21st century in the United States drew comparisons with activities surrounding the stock market crash of 1929. Superstar compa- nies such as Enron and HealthSouth were caught in the fraudulent behaviors that seemed untenable for most investors and unfathomable for most people. The worldwide stock markets shook. One of the most respected, storied, and successful accounting firms, Arthur Andersen, became a casualty of the financial scandals.</b><br /> <b><br /></b> <br /> <div class="separator" style="clear: both; text-align: center;"> </div> <div class="separator" style="clear: both; text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWXMReUE1BniUpBV-GXjkhjQeyJgijDudgcEA4O1k3NI2C3QyF2LCsZ8DvvDbVUXOIGoPyJNuoLvZbH9kHYm428Du9KCbhHzq2AfnY0JVwOqhkgYsWF3RR9AUwUaufXbQhkX38zzn1hrdY/s1600/Accounting+Fraud.jpg" imageanchor="1"></a></div> <div style="text-align: center;"> <b><br /></b></div> <b><br /></b> <b>Although there are no reliable statistics as to the cost of fraud, the 2010 Report to the Nations of the ACFE group reports that the typical organization loses 5 percent of its annual revenue to fraud. Based upon the estimated 2009 Gross World Product, this percentage translates to a total potential fraud loss of more than $2.9 trillion each year world-wide. Although asset misappropriation losses were the most common form of fraud (at $100,000 per scheme), financial statement frauds were the most costly (at $1,730,000 per scheme). Corruption schemes fell in the middle at $176,000 per scheme. Like a cold, it is hard to keep fraud from spreading.</b><br /> <b><br /></b> <b>With fraud there is often collusion. The president and chief financial officer of Continental Express established an insurance company with the same name in another state. The real company made pay-ments to the fraudulent insurance company and the executives paid themselves multiple salaries.</b><br /> <b><br /></b> <b>Lee Seidler (as reported by George Mannes) says that “auditors will continue to miss fraud because much of their work is predicated on the assumption that separation of duties—say, one person holds the money and another person keeps track of it—prevents fraud.” The equity funding scandal “shakes the foundations of auditing, in that so much is based on the assumption that people don’t collude, or they wouldn’t collude very long. But they do.”</b><br /> <b><br /></b> <b>“Cooking the books” is often a collaborative effort. For financial restatements between January 1, 1997, and June 30, 2002, 45 percent were accused of securities fraud and subject to shareholder suits. An average of seven individuals were implicated, including chief executive officers, chief financial officers, chief operating officers, general counsels, directors, and, internal/external auditors. In the case of WorldCom, at least 40 people knew about the fraud but were afraid to talk. Chief financial officer Scott Sullivan handed out $10,000 checks to seven individuals involved.</b><br /> <b><br /></b> <b>Joseph Wells, the founder of ACFE, says that the actual cost of fraud is unknown and unknowable. It is a concept the criminologists call “the dark fig-ure.” Unlike visible crimes, such as robbery, not all frauds are uncovered. Of those uncovered, not all are reported. No agency is tasked with compiling com-prehensive data on fraud. More forensic techniques should become a part of both external and inter-nal auditing. However (as reported by Eric Krell), Stephen Seliskar says that “in terms of sheer labor, the magnitude of effort, time and expense required to do a single, very focused (forensic) investigation—as contrasted to auditing a set of the financial state-ments—the difference is incredible.” It is physically impossible to conduct a generic fraud investigation of an entire business.</b><br /> <b><br /></b> <br /> <h3 style="text-align: center;"> <b><span style="color: #0b5394;">Abusive Earnings Management </span></b></h3> <b><br /></b><b>Financial statement fraud, fraudulent earnings management, or creative accounting has become an increasing concern to accounting regulators, especially in the post-Enron era (since 2002). The flexibility in generally accepted accounting prin-ciples (GAAP) gives management discretion to use its professional opinion to choose from a range of alternatives in selecting those standards that suit the needs of a company—such as “first-in, first-out” (FIFO) or “last-in, first-out” (LIFO) inven-tory methods. Different accounting methods result in different earnings and earnings per share, and most often management prefers to smooth earnings. Companies tend to use accounting techniques to try to smooth earnings from one period to the next. Under International Accounting Standards, management has even more discretion.</b><br /> <b><br /></b><b>The U.S. Securities and Exchange Commission (SEC) defines abusive earnings management as an intentional and material misrepresentation of results. Nonfraudulent earnings management is accom-plished within the GAAP framework, whereas fraud-ulent earnings management does not follow GAAP (such as recording fictitious sales). The National Center for Continuing Education even offers a semi-nar, “How to Manage Earnings in the Conformance with GAAP.” Nothing, however, gives greater fear to a corporate officer or investor than when there is a rumor about “an accounting problem.” Glass, Lewis and Co. indicated that between 200 and 500 publicly traded companies listed in the United States, or about 5 to 12 percent of the total, have to restate their earnings each year.</b><br /> <b><br /></b><b>Some motivations for fraudulent behavior are meeting external or internal expectations, conceal- ing bad performance, preparing for a debt/equity offering, improving management compensation (for example, through stock options), and covering up fraud.</b><br /> <b><br /></b><b>Abusive earnings management would include the following:</b><br /> <b><br /></b> <br /> <ul> <li><b>Improper revenue recognition (such as bill and hold sales) </b></li> <li><b>Improper expense recognition </b></li> <li><b>Using reserves to inflate earnings in years with falling revenues (cookie-jar accounting) • Shifting debt to a special-purpose entity (SPE) </b></li> <li><b>Channel stuffing </b></li> <li><b>Capitalizing rather than expensing marketing costs </b></li> <li><b>Extending useful lives and inflating salvage values </b></li> <li><b>Accelerating revenue from leasing equipment </b></li> <li><b>SPEs that are not consolidated</b></li> </ul> <div> <b>Early warning signs of earnings management include the following:</b></div> <div> <b><br /></b></div> <div> <ul> <li><b>Cash flows that are not correlated with earnings </b></li> <li><b>Receivables that are not correlated with revenues </b></li> <li><b>Allowances for uncollectible accounts that are not correlated with receivables </b></li> <li><b>Reserves that are not correlated with balance- sheet items </b></li> <li><b>Acquisitions with no apparent business purpose </b></li> <li><b>Earnings that consistently and precisely meet analyst’s expectations</b></li> </ul> <div> <b>The 2010 COSO fraud report indicates that revenue recognition schemes are used 61 percent of the time to cook the books, followed by over- stating assets (51 percent), understatement of expenses and liabilities (31 percent), and misap- propriation of assets (14 percent).</b></div> </div> <div> <b><br /></b></div> <div> <b>Revenue Recognition Schemes Companies use any of multiple methods to create fictitious revenues in order to inflate income on financial statements. A slightly different approach is simply to overstate income either by omitting ele- ments that would lower actual revenues (such as returns of purchases) or by using mark-to-market accounting to make records of (future) income more “flexible.”</b></div> <div> <b><br /></b></div> <div> <b>One type of overstated-income scheme is the bill-and-hold transaction. The customer agrees to purchase goods and the seller invoices the customer but retains physical possession of the products until a later delivery date. Not all such transactions involve fraud, but the practice must be closely examined in light of accounting rules because it is open to abuse. Fraudsters may use this approach to count both sales and inventory on hand as revenue procedures. In a well-publicized scandal, Sunbeam created revenues in 1997 by using a bill-and-hold practice. The company sold products to customers but held onto the ship-ments with an agreement to deliver the goods later. Coca-Cola created income by loading up syrup trucks near the end of the year and driving the trucks outside the warehouse and parking them. After the end of the year, the trucks with spoiled syrup came back inside the warehouse and the inventory was written off. </b></div> <div> <b><br /></b></div> <div> <b>Premature revenue recognition is a means of recording income as actual in order to inflate earn-ings totals when sales have not been completed, the products have not been delivered, or invoices have not been paid. In general, revenue from product sales should not be recognized on financial state-ments until it has been realized or realizable and earned. Based on the provisions of Staff Accounting Bulletin (SAB) 101, income should not be recog-nized under these circumstances because delivery has not actually occurred. Customers on the other side of early delivery schemes often return the unfin-ished product or demand more completion before payment is rendered. </b></div> <div> <b><br /></b></div> <div> <b>Xerox, for example, overstated revenue for more than four years by accelerating the recognition of $3 billion in revenue and inflating earnings by $1.5 bil-lion. It allegedly included the recognition of revenue on Xerox office copy equipment leases too early in the cycle. Parmalat, an Italian milk company, invented $620 million sales of powdered milk to Cuba. If the “sales” were true, Cuba would have been “swimming in milk.” The company also used double invoicing: one real and one fake invoice. Both invoices were entered into the books, but only one was sent to the customer. U.S. Foodservice, Inc., was offered rebates from its vendors for volume purchases. The company recognized these vendor rebates as a reduction of cost of goods sold (thereby increasing income), which should not have been recognized.</b></div> <div> <b><br /></b></div> <h3 style="text-align: center;"> <b><span style="color: #0b5394;">Overstating Assets</span></b></h3> <div> <b><br /></b></div> <div> <b>Assets may be overvalued or expenses may be capi- talized. Overvalued assets comprise property for which executives set prices that are unsupportable using standard business valuation approaches. These assets might be bought to essentially pay off parties to which the fraudsters are beholden, sold to artifi- cially boost income, or simple held and recorded on statements at far more than their actual worth. </b></div> <div> <b><br /></b></div> <div> <b>Gain-on-sale accounting is a technique enabling fraudulent executives to use special-purpose entities to purchase or sell overvalued ventures at unsup- portable values, which are recorded by the corpora- tion as massive losses/revenues. </b></div> <div> <b><br /></b></div> <div> <b>Accounts receivables offer myriad opportuni- ties for valuation schemes. GAAP require accounts receivable to be reported at net realizable value—the gross value of the receivable minus an estimated allowance for uncollectible accounts. Companies circumvent GAAP by underestimating the uncol- lectible portion of a receivable. Underestimating the value of the provision (the amount deemed uncol- lectible) artificially inflates the receivables value and records it at an amount greater than net realizable value. A related fraud is failing or delaying to write off receivables that have become uncollectible. </b></div> <div> <b><br /></b></div> <div> <b>Inventory is another area ripe for earnings man- agement and misclassification by manipulating the quantity or value. GAAP require that inventory be reported at the lower of replacement cost or market value (current replacement cost). Inflating inven- tory value achieves the same impact on earnings as manipulating the physical count. Fraudulent manag- ers can accomplish this creative accounting simply by creating false journal entries that increase the balance in the inventory account. Another common way to inflate inventory value is to delay the write- down of obsolete or slow-moving inventory, since a write-down would require a charge against earnings. </b></div> <div> <b><br /></b></div> <div> <b>Although GAAP require expenses to be rec- ognized in the period in which they are incurred, Symbol Technologies, Inc., deferred $3.5 million of FICA expenses to a later year in order to boost its net income. WorldCom initially properly expensed its operating line costs. However, near the end of various quarters it would reverse these expenses by creating various huge assets. Parmalat had a nonex-istent Bank of America account worth $4.83 billion. Apparently, the auditors Grant Thornton relied on a fake Bankers’ Automated Clearing Services (BACS) confirmation prepared by Parmalat. No auditor took the time to call or e-mail the bank.</b></div> <div> <b><br /></b></div> <h3 style="text-align: center;"> <b><span style="color: #0b5394;">Understating or Omitting Liabilities and Expenses</span></b></h3> <div> <b><br /></b></div> <div> <b>Omitted liabilities are the mirror image of fictitious revenues and assets: Fraudsters hide debt or employ other off-balance-sheet financing to avoid having to include the negative picture on corporate financial statements. Special-purpose entities (SPEs) may be used to bury poorly performing assets because their transactions are not part of the corporate financial statements. Decreasing liabilities increase the net worth of the company. </b></div> <div> <b><br /></b></div> <div> <b>By the time Enron declared bankruptcy in December 2001, it was reported to have hidden billions of dollars of off-balance-sheet debt using SPEs. Also, Enron entered into futures contracts with financing organizations such as J. P. Morgan that were thinly disguised loans not actually based on delivery of energy commodities. Enron also used prepaid swaps through its Delta subsidiary, wherein CitiGroup paid the fair value of its por-tion of the swaps, but Enron was allowed repay-ments spread over five years—in effect, obtaining loans. Enron never disclosed these transactions as such on its financial statements, accounting for the deals as “assets from price risk management” and as “accounts receivable.” </b></div> <div> <b><br /></b></div> <div> <b>Waste Management shifted current expenses to a later period by debiting rather than expensing asset accounts. In 1999, AMR Corporation changed the depreciation schedule from 20 years to 25 years on some planes, which reduced depreciation expense in 2000 by $158 million. Adelphia Communications omitted at least $1.8 billion of debt from its balance sheet.</b></div> <div> <b><br /></b></div> <h3 style="text-align: center;"> <b><span style="color: #0b5394;">Misappropriation of Assets</span></b></h3> <div> <b><br /></b></div> <div> <b>Misappropriation of assets is generally considered to be individual fraud by employees or outsiders. However, the Rigas family, who owned Adelphia Communications, a cable operator, was accused by the U.S. Department of Justice of looting Adelphia on a massive scale and using it as a personal piggy bank. This area involves situations where a manager misappropriates assets and then covers up the theft by manipulating the financial statements. </b></div> <div> <b><br /></b></div> <div> <b>One problem fraudsters have is getting the assets into their pockets. Tyco solved this problem by granting large, interest-free loans to the officers ($8.71 million). The company then forgave the loans. Unauthorized bonuses also were given to the officers without the approval of the board of directors. </b></div> <div> <b><br /></b></div> <div> <b>Chung Moung-koo, chairman of Hyundai Motors, South Korea’s largest car maker, was sen- tenced to three years in prison in February 2007 for embezzlement, breach of trust, and secretively setting up slush funds. He embezzled about $100 million in company funds, although he owned only 5 percent of the company.</b></div> <div> <b><br /></b></div> <h3 style="text-align: center;"> <b><span style="color: #0b5394;">Other Fraudulent Financial Reporting Schemes</span></b></h3> <div> <b><br /></b></div> <div> </div> <br /> <div> <b>Companies can manipulate reserves by placing a contingency or liability on the balance sheet dur- ing a poor performance period (so-called cookie-jar accounting). In subsequent years, these reserves are reduced in order to pump up revenues. Alternatively, these reserves can be created in high-revenue years, and then fraudsters can dip into the cookie-jar reserves during difficult times. Both Xerox and Sunbeam engaged in cookie-jar accounting. </b></div> <div> <b><br /></b></div> <div> <b>For example, a large Canadian telecommunica- tions manufacturer, Nortel Network, was accused by the SEC of establishing more than $400 million in excess reserves. Eventually Nortel restated an excess of $2 billion in revenues. Cendant Corporation over- stated acquisition-related reserves and then reversed portions back into earnings. In the early 1990s, W. R. Grace had earnings far exceeding estimates, so the company deferred some of its income by estab- lishing and increasing reserves. Grace then released these reserves to report steady earnings growth in subsequent years. Freddie Mac understated its income from 2000 to 2002 by $5 billion using a tac- tic called wrong-way earnings management. </b></div> <div> <b><br /></b></div> <div> <b>Related parties can be used to increase revenues and hide liabilities. The 2010 COSO report found that firms that engaged in fraud disclosed sig- nificantly more related-party transactions than no- fraud companies. CEC Industries Corp., a Nevada Corporation, created a substantial portion of its revenue as a result of an asset exchange transac-tion with a related party. Enron shifted a massive amount of liability to special-purpose entities. Tyco had undisclosed real estate transactions with related parties, and Adelphia moved debts to subsidiaries, which were not consolidated. Baptist Foundation of Arizona (BFA) set up subsidiaries owned by insiders to buy real estate (which had crashed in value) from BFA. Nikko Cordial (Japan) was fined for failure to consolidate a special-purpose entity that was 100 percent owned by its subsidiary.</b></div> <div> <b><br /></b></div> <div> <b>Afinsa, a Spanish stamp company, controlled 72 percent of Escala, a U.S. stamp company. Escala said all sales to Afinsa took place at independent estab-lished prices. However, Escala’s reported gross mar-gin on stamp sales to Afinsa exceeded 44 percent, compared to less than 14 percent on those to U.S. clients. Therefore, Escala was manipulating the value of stamps sold to Afinsa in order to boost its own bottom line artificially. Escala’s stock fell from $32 to $5 in five days after the May 8, 2006, arrests of seven executives. Police found $12.6 million behind one dealer’s freshly plastered walls in his home.</b></div> <div> <b><br /></b></div> <div> <b>Conclusion</b></div> <div> <b><br /></b></div> <div> <b>Thomas Ray, chief auditor of the Public Company Accounting Oversight Board (PCAOB), says that a large number of financial frauds are accomplished by simply booking late entries. “It’s the easiest way to commit fraud. It’s the easiest thing to find.” Nevertheless, Dell, Inc., cooked the books for four years, overstating profits by $50 million without Price Waterhouse Coopers’ knowledge. Just as ter-mites never sleep, fraud never sleeps, and just like ter-mites, fraud can destroy the foundation of an entity.</b></div> <div> <b><br /></b></div> <div> <b>D. Larry Crumbley </b></div> <div> <b>Louisiana State University</b></div> <div> <b><br /></b></div> <div> <b>See also Charity Fraud; Financial Fraud; Investment Crimes; Money Laundering: Countermeasures; Money Laundering: Methods; Sales Tax; Tax Evasion; Value-Added Tax Fraud.</b></div> <div> <b><br /></b></div> <div> <b>Further Readings</b></div> <div> <b>American Institute of Certified Public Accountants. Managing the Business Risk of Fraud: A Practical Guide. 2008. <a href="http://www.acfe.com/uploadedFiles/ACFE_Website/Content/documents/managing-business-risk.pdf" rel="nofollow" target="_blank">http://www.acfe.com/uploadedFiles/ACFE_Website/Content/documents/managing-business-risk.pdf</a> (Accessed February 2011). </b></div> <div> <b><br /></b></div> <div> <b>Beasley, M. S. et al. Fraudulent Financial Reporting, 1998–2007: An Analysis of U.S. Public Companies . New York: Committee on Sponsoring Organizations, 2010. </b></div> <div> <b><br /></b></div> <div> <b>Blumenstein, Rebecca and Susan Pullian. “WorldCom Fraud Was Widespread.” Wall Street Journal (June 10, 2003). </b></div> <div> <b><br /></b></div> <div> <b>Crumbley, D. Larry. Forensic and Investigative Accounting . Chicago: Commerce Cleaning House, 2011. </b></div> <div> <b><br /></b></div> <div> <b>Financial Week . “Auditors Told to Go Harder on Fraud.” December 17, 2007. <a href="http://www.financialweek.com/%20apps/pbcs.dll/article?AID=/20071217/REG/71214031" rel="nofollow" target="_blank">http://www.financialweek.com/ apps/pbcs.dll/article?AID=/20071217/REG/71214031</a> (Accessed February 2011). </b></div> <div> <b><br /></b></div> <div> <b>Glass, Lewis and Co. “Trend Report: Restatements.” March 19, 2009. </b></div> <div> <b><br /></b></div> <div> <b>Henriques, D. B. “Madoff Said From Prison That Banks Had to Know.” The New York Times (February 16, 2011). </b></div> <div> <b><br /></b></div> <div> <b>Jones, M. Creative Accounting, Fraud and International Accounting Scandals . New York: Wiley, 2011. </b></div> <div> <b><br /></b></div> <div> <b>Krell, Eric. “Will Forensic Accounting Go Mainstream?” Business Finance Journal (October 2002).</b></div> <div> <b><br /></b></div> <div> <b>Mannes, George. “Cracking the Books II: Reliving Equity Funding.” October 22, 1999. <a href="http://www.thestreet.com/story/791614/cracking-the-books-ii-reliving-equity-funding-part-2.html" rel="nofollow" target="_blank">http://www.thestreet.com/story/791614/cracking-the-books-ii-reliving-equity-funding-part-2.html</a> (Accessed February 2011). </b></div> <div> <b><br /></b></div> <div> <b>Tillman, Robert and Michael Indergaard. “Control Overrides in Financial Statement Fraud.” <a href="http://www.theifp.org/research-grants/tillman_final_report.pdf" rel="nofollow" target="_blank">http://www.theifp.org/research-grants/tillman_final_report.pdf</a> (Accessed February 2011).</b></div> <div class="t s4_32" id="tl_32" style="color: #231f20; font-family: ACMILN-Sabon-Bold32; font-size: 70px; left: 229px; overflow: visible; position: absolute; top: 545px; transform-origin: left top 0px; transform: scale(0.25); white-space: nowrap; word-spacing: 9px; z-index: 2;"> <b><br /></b></div> <div> <b><span class="fmt-9" style="font-family: Gulim_Type1_3, Gulim, serif; font-size: 11.5pt; white-space: pre;"></span></b></div> <span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span style="font-family: Gulim_Type1_0, Gulim, serif; font-size: 14.6667px; white-space: pre;"></span><span class="fmt-9" style="font-family: Gulim_Type1_3, Gulim, serif; font-size: 11.5pt; font-weight: bold; white-space: pre;"></span><span class="fmt-9" style="font-family: Gulim_Type1_3, Gulim, serif; font-size: 11.5pt; font-weight: bold; white-space: pre;"></span><br /> <div style="left: 149.6pt; letter-spacing: -0.194em; position: absolute; top: 286.63pt; z-index: 23;"> </div> </article> <article> <h1>Chronology</h1> <p>2015-10-31T06:09:00.000-07:00</p> <table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody> <tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGKOhuG71Zh9izS0ORrvIJRP48f6RIBxj09VhO2U9f_FR6OP9b_10t7u6bY4ySHzPkhm139NMjenJvvCCUuGpNuxwo-P1H4jjl8156X-4W6-EfEH50XC76vCuBUZCE2tIb9zA8D_O4ngXI/s1600/justice+and+crime.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"></a></td></tr> <tr><td class="tr-caption" style="text-align: center;"><b><span style="color: #0b5394;">Justice and Crime Chronology</span></b></td></tr> </tbody></table> <div style="text-align: center;"> <b><br /></b></div> <b><br /></b> <b>1856</b><br /> <b><br /></b> <b>Great Britain, France, Russia, Austria, Prussia, and Sardinia sign the Declaration of Paris, agreeing that they will not engage privateers.</b><br /> <b>1898</b><br /> <b><br /></b> <b>The First Hague Convention adopts a number of principles regarding the laws of war and war</b><br /> <b>crimes.</b><br /> <b><br /></b> <b>1900</b><br /> <b><br /></b> <b>The Lacey Act in the United States attempts to protect game species by prohibiting the sale or importation of plants, fish, and wildlife that have been taken illegally, as defined by the laws in the region where they were acquired.</b><br /> <b><br /></b> <b>1912</b><br /> <b><br /></b> <b>The International Opium Convention, the first international drug control treaty, is signed by the United States, Germany, France, China, the United Kingdom, Italy, the Netherlands, Portugal, Russia, Japan, and Thailand; it goes into force globally in 1919 as part of the Treaty of Versailles.</b><br /> <b><br /></b> <b>1915</b><br /> <b><br /></b> <b>The phrase “crime against humanity” is used in a statement by Britain, France, and Russia denouncing the Ottoman Empire’s role in the Armenian genocide.</b><br /> <b><br /></b> <b>1918</b><br /> <b><br /></b> <b>The United States passes the Migratory Bird Treaty Act, which prohibits the hunting, capture, or sale of migratory birds or any part of them, such as eggs and feathers. The act currently lists more than 800 species that are thus protected. The United States will later enter into agreements with other nations, including Canada and Mexico, to expand these protections.</b><br /> <b><br /></b> <b>1919</b><br /> <b><br /></b> <b>Prohibition begins in the United States with passage of the Volstead Act and the Eighteenth Amendment to the U.S. Constitution, prohibiting manufacture, sale, and transportation of “intoxicating liquors.” Ironically, one of Prohibition’s effects is to strengthen organized crime and foster a culture of bootlegging across both national and state boundaries. Prohibition will be repealed in 1933.</b><br /> <b><br /></b> <b>1923</b><br /> <b><br /></b> <b>Interpol, the International Criminal Police Organization, is founded (as the International Criminal Police Commission) to promote cooperation among the law enforcement agencies of member countries.</b><br /> <b><br /></b> <b>1925</b><br /> <b><br /></b> <b>The Geneva Protocol prohibits the use of chemical and biological weapons.</b><br /> <b><br /></b> <b>1945</b><br /> <b>The London Charter of the International Military Tribunal establishes, in August, the procedures by which the Nuremberg trials will be conducted. The United Nations charter establishes the International Court of Justice to settle disputes between nations; it begins work in 1946.</b><br /> <b><br /></b> <b>1946</b><br /> <b><br /></b> <b>The United Nations Commission on Human Rights (UNHCR), a subsidiary body of the UN Economic and Social Council, is established. It will be replaced in 2006 by the UN Human Rights Council. The Commission on the Status of Women Within the United Nations is established; it and the United Nations Commission on Human Rights are the first two functional commissions established within the UN structure.</b><br /> <b><br /></b> <b>1948</b><br /> <b><br /></b> <b>The American Declaration of the Rights and Duties of Man is adopted in April at the Ninth International Conference of American Stages in Bogotá, Colombia, making it the first general international declaration of human rights. The Universal Declaration of Human Rights is adopted by the United Nations General Assembly in 1948; it contains 30 articles setting out various points, such as the prohibition of slavery, the right to political and religious freedom, and social, economic, and cultural rights.</b><br /> <b><br /></b> <b>The United Nations Convention on the Prevention and Punishment of the Crime of Genocide defines genocide as acts intended to destroy a national, racial, ethnic, or religious group.</b><br /> <b><br /></b> <b>1951</b><br /> <b><br /></b> <b>The United Nations adopts the United Nations Convention Relating to the Status of Refugees, which defines who qualifies as a refugee, their rights, and the responsibilities of nations that grant them refuge.</b><br /> <b><br /></b> <b>1959</b><br /> <b><br /></b> <b>The Declaration of the Rights of the Child, adopted by the United Nations General Assembly in November, sets out 10 principles pertaining to all children, such as the right to education, food, medical care, and citizenship, as well as protection against exploitation or cruel treatment, including protection against being forced into work that pays less than a minimum wage.</b><br /> <b><br /></b> <b>1961</b><br /> <b><br /></b> <b>Amnesty International is founded by British lawyer</b><br /> <b>Peter Benenson.</b><br /> <b><br /></b> <b>1963</b><br /> <b><br /></b> <b>The initial draft of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is drafted at a meeting of the World Conservation Union (IUCN). The Convention on Offenses and Certain Other Acts Committed on Board Aircraft (the Tokyo Convention) is concluded; it comes into force in 1969 and is the first law recognizing the authority of the aircraft commander on international flights to restrain anyone believed to be committing or about to commit an offense endangering the safety of those onboard.</b><br /> <b><br /></b> <b>1967</b><br /> <b><br /></b> <b>The United Nations Commission on Human Rights (UNHCR) begins to investigate and report on human rights violations, in contrast to its former policy of restricting its activities to drafting treaties and promoting human rights in general. The Popular Front for the Liberation of Palestine is founded.</b><br /> <b><br /></b> <b>1969</b><br /> <b><br /></b> <b>U.S. President Richard M. Nixon announces Operation Intercept in September, instituting increased surveillance of the U.S.-Mexican border and inspection of vehicles crossing the border in an attempt to prevent marijuana from Mexico from entering the United States. Operation Intercept is abandoned after less than a month because of the burden imposed on vehicles crossing the border.</b><br /> <b><br /></b> <b>1971</b><br /> <b><br /></b> <b>The 1971 Convention on Psychotropic Substances responds to a broadening spectrum of drugs by introducing controls over synthetic drugs.</b><br /> <b><br /></b> <b>1972</b><br /> <b><br /></b> <b>The Biological Weapons Convention supplants the 1925 Geneva Protocol and becomes the first multilateral disarmament treaty to ban an entire class of weapons. </b><br /> <b><br /></b> <b>At the Olympic Games in Munich, Germany, 11 members of the Israeli Olympic team (coaches and athletes) are taken hostage and murdered by the Palestinian terrorist group Black September.</b><br /> <b><br /></b> <b>1973</b><br /> <b><br /></b> <b>The final language of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is approved by representatives of 80 nations meeting in Washington, D.C.;CITES will go into effect in 1975 and, as of 2010, will be accepted by 175 countries.</b><br /> <b><br /></b> <b>1976</b><br /> <b><br /></b> <b>The International Foundation for Art Research (IFAR) creates an art-theft archive and begins publishing the Stolen Art Alert. Ten years later, the archive will include more than 20,000 manual records.</b><br /> <b><br /></b> <b>1978</b><br /> <b><br /></b> <b>Helsinki Watch is founded to monitor the Soviet Union’s adherence to the Helsinki Accords; today it is called Human Rights Watch and conducts advocacy and research into many aspects of human rights.</b><br /> <b><br /></b> <b>1981</b><br /> <b><br /></b> <b>The Chaos Computer Club, an organization of computer hackers, is formed in Germany.</b><br /> <b><br /></b> <b>1982</b><br /> <b><br /></b> <b>The United Nations Convention on the Law of the Sea (UNCLOS), an international agreement defining laws concerning the world’s oceans, is concluded; it comes into force in 1994.</b><br /> <b><br /></b> <b>1984</b><br /> <b><br /></b> <b>The Court of Arbitration for Sport, an international body established to deal with disputes related to the Olympics, is established.</b><br /> <b><br /></b> <b>1986 </b><br /> <b><br /></b> <b>The International Whaling Commission (IWC) establishes a moratorium on commercial whaling. </b><br /> <b>The U.S. Congress passes the Computer Fraud and Abuse Act, which makes it a crime to access (without authorization) computers used by the U.S. government, by financial institutions, or in foreign or interstate commerce, and to transmit a program or other code (such as a computer virus or worm) that causes damage.</b><br /> <b><br /></b> <b>1987</b><br /> <b><br /></b> <b>The United Nations Convention Against Torture and Other Cruel, Inhuman and Degrading Treatment or Punishment—adopted in 1984—comes into force. It includes provisions against the use of torture and against returning any individual to a state where he or she would be likely to be subjected to torture.</b><br /> <b><br /></b> <b>1988</b><br /> <b><br /></b> <b>The 1988 Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances is abroad in scope and includes provisions against money laundering.</b><br /> <b><br /></b> <b>Cornell University graduate student Robert T. Morris sends a computer worm across the ARPAnet (the predecessor to the Internet), and it eventually spreads to about 6,000 networked computers; Morris is sentenced to three years’ probation and a fine of $10,000 and is dismissed from Cornell.</b><br /> <b><br /></b> <b>1989</b><br /> <b><br /></b> <b>The United States invades Panama during Operation Just Cause, in part to combat drug trafficking.</b><br /> <b><br /></b> <b>The Financial Action Task Force (FATF) is founded at the G7 Summit in Paris to combat money laundering and funding of terrorist organizations. In Soering v. United Kingdom, the European Court of Human Rights declares that allowing extradition of a German national to the United States to face capital charges is a violation of the European Convention on Human Rights.</b><br /> <b><br /></b> <b>1990</b><br /> <b><br /></b> <b>International trade in ivory is banned by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), in response to the rapid decline of the African elephant population in the previous decade. (Some estimate that in 1979 there were more than 1.3 million African elephants; by 1989, there were fewer than half that number.)</b><br /> <b><br /></b> <b>1991</b><br /> <b><br /></b> <b>The Art Loss Register (ALR) is created by the International Foundation for Art Research to combat the international trade in stolen art; by 2010, the ALR will have become the world’s largest private database of lost and stolen art, collectables, and antiques.</b><br /> <b><br /></b> <b>1992</b><br /> <b><br /></b> <b>The Chemical Weapons Convention (CWC) outlaws the use and stockpiling of chemical weapons; as of 2010, 88 countries will have become party to the CWC. The Maastricht Treaty (Treaty on European Union, or TEU) creates the European Union. The United Nations Security Council passes Resolution 780, condemning widespread violations of international law in Bosnia and Herzegovina and providing a definition of the term ethnic cleansing. Six international organizations join forces to create the International Campaign to Ban Landmines.</b><br /> <b><br /></b> <b>1993</b><br /> <b><br /></b> <b>The Golden Venture, a Chinese smuggling ship, is grounded in New York City’s harbor with nearly 300 illegal immigrants aboard; an estimated six to 10 of the immigrants die while trying to swim to shore.</b><br /> <b><br /></b> <b>1995</b><br /> <b><br /></b> <b>The UNIDRIOT Convention on Stolen or Illegally Exported Cultural Objects creates regulations regarding the return of cultural objects stolen from member states.</b><br /> <b><br /></b> <b>1997</b><br /> <b><br /></b> <b>The Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti- Personnel Mines (the Ottawa Treaty) bans the use of anti-personnel landmines; 156 countries will be parties to the treaty by April 2010.</b><br /> <b>The Organisation for Economic Co-operation and Development's Convention on Combating Bribery of Foreign Public Officials in International Business Transactions calls for effective measures to deter, prevent, and combat the bribery of foreign public officials in connection with international business transactions, in particular the prompt criminalization of such bribery in an effective and coordinated manner.</b><br /> <b><br /></b> <b>1998</b><br /> <b><br /></b> <b>Physicians for Human Rights is founded in Cambridge, Massachusetts, to conduct research and investigation into potential human rights violations The Washington Conference on Nazi-Confiscated Art, involving 44 countries, is held and endorses 11 principles regarding art confiscated during the Holocaust.</b><br /> <b>The Rome Statute of the International Criminal Court is adopted in July and enters into force in July 2002; it establishes a permanent international tribunal to prosecute genocide and other serious international crimes; as of October 2009, 110 countries will be parties to the statute, but the United States and Israel will not.</b><br /> <b><br /></b> <b>1999</b><br /> <b><br /></b> <b>The World Anti-Doping Agency (WADA) is established in Lausanne to combat the use of performance- enhancing drugs in international sport, including the Olympics. </b><br /> <b>The International Labour Organization (ILO) adopts the Convention Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor; signatories agree to eliminate the worst forms of child labor, which are defined as slavery (including trafficking in children, debt bondage, forced or compulsory labor, and forced recruitment of child soldiers); commercial sexual exploitation of children (CSEC), including prostitution and pornography; and the use of children in commission of crimes, including drug trafficking and production. Europol, the European Police Office, becomes fully operational. </b><br /> <b>The United Nations International Convention for the Suppression of the Financing of Terrorism specifies that it is a criminal activity to help finance terrorist activity, even if the person involved is not actually taking part in the violent action; nations that sign this treaty commit to freezing funds to be used for terrorist activity.</b><br /> <b><br /></b> <b>2000</b><br /> <b><br /></b> <b>The United Kingdom passes the Terrorism Act, which defines terrorism, proscribes a number of domestic and international organizations, and allows police special powers with regard to those suspected of terrorism (such as an extended period of time during which a person could be held without charge).</b><br /> <b><br /></b> <b>The United Nations Convention Against Transnational Organized Crime, adopted by the General Assembly November 2000, is the main international instrument in the fight against transnational organized crime. It opened for signature by member states at a high-level political conference convened for that purpose in Palermo, Italy, on December 12–15, 2000, and entered into force on September 29, 2003. The convention is further supplemented by three protocols that target specific areas and manifestations of organized crime: the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children; the Protocol Against the Smuggling of Migrants by Land, Sea and Air; and the Protocol Against the Illicit Manufacturing of and Trafficking in Firearms, Their Parts and Components and Ammunition. Countries must become parties to the convention itself before they can become parties to any of the protocols.</b><br /> <b><br /></b> <b>2001</b><br /> <b><br /></b> <b>A conference of East Asia Forest Law and Governance is held in Bali, Indonesia, to address issues related to forest policy and law enforcement, including illegal logging. Following the September 11 terrorist attacks in the United States, the Financial Action Task Force (FATF) issues eight Special Recommendations on Terrorist Financing.</b><br /> <b><br /></b> <b>2002</b><br /> <b><br /></b> <b>The International Criminal Court (ICC) is created to prosecute individuals for war crimes, genocide, and crimes against humanity. U.S. art and antiquities dealer Frederick Schultz is convicted of receiving antiquities stolen and smuggled out of Egypt; together with co-conspirator Jonathan Tokeley-Parry, an antiquities restorer (who was prosecuted in the United Kingdom), Schultz had smuggled more than 2,000 artifacts out of Egypt.</b><br /> <b><br /></b> <b>2003</b><br /> <b><br /></b> <b>Africa Forest Law Enforcement and Governance (AFLEG) holds a conference in Yaoundé, Cameroon, to address issues, including methods to combat illegal forest exploitation and trade associated with that practice.</b><br /> <b><br /></b> <b>The International Criminal Court issues arrest warrants for Joseph Kony, leader of the Lord’s Resistance Army (LRA) in Uganda, as well as Vincent Otti, Raska Lukwiya, Okot Odiambo, and Dominic Ongwen, who also held leadership positions in the LRA. International action against corruption progressed from general consideration and declarative statements to legally binding agreements.</b><br /> <b><br /></b> <b>The United Nations Convention Against Corruption (UNCAC) deals with forms of corruption such as trading in official influence and general abuses of power, including a focus on the recovery of stolen assets, that had not been covered by many of the earlier international instruments.</b><br /> <b><br /></b> <b>The Financial Action Task Force (FATF) completely revises its 40 Recommendations (originally issued in 1990) in recognition of the continued evolution of techniques in money laundering.</b><br /> <b><br /></b> <b>2004</b><br /> <b><br /></b> <b>European and North Asian Forest Law Enforcement and Governance (ENAFLEG) holds a conference in Russia and agrees to the St. Petersburg Declaration on Forest Law Enforcement and Governance.</b><br /> <b><br /></b> <b>The United Kingdom passes the Human Tissue Act, specifying regulations regarding the handling of human tissues, partly in response to the Alder Hey organs scandal, during which medical personnel, without obtaining parental permission, harvested organs and other body parts from infants who had died at the Alder Hey Children’s Hospital in Liverpool.</b><br /> <b><br /></b> <b>2005</b><br /> <b><br /></b> <b>The Fund for Peace, a think tank founded in Washington, D.C., in 1957, begins publishing the Failed States Index.</b><br /> <b><br /></b> <b>The National Consortium for the Study of Terrorism and Responses to Terrorism (START) is established at the University of Maryland, funded with a $12 million grant from the U.S. Department of Homeland Security, to study terrorism and society responses to it.The United Kingdom passes the Prevention of Terrorism Act, which allows the home secretary (secretary of state for the Home Department) to restrict the liberty of individuals suspected of being involved in terrorism through the use of control orders that may affect their ability to travel, their right to choose their place of residence or employment, and other liberties.</b><br /> <b><br /></b> <b>2006</b><br /> <b><br /></b> <b>Thomas Lubanga is arrested under a warrant issued by the International Criminal Court for conscripting children under the age of 15 to serve in the Union of Congolese Patriots.</b><br /> <b><br /></b> <b>The J. Paul Getty Museum in Los Angeles, California, announces that it will return a Greek statue dating from the 6th century b.c.e. and a gold funerary wreath dating from the 4th century b.c.e. in response to claims by the Greek government that these artifacts were illegally excavated and removed from Greece.</b><br /> <b><br /></b> <b>2008</b><br /> <b><br /></b> <b>In January, an illegal organ-trafficking scheme is discovered in Gugaon, India, in which kidneys were obtained from poor Indians and sold to clients in the United States, Europe, and elsewhere.</b><br /> <b><br /></b> <b>In June, the International Criminal Court (ICC) issues an arrest warrant for Jean-Pierre Bemba, a former official of the Democratic Republic of the Congo, for crimes against humanity and war crimes in the Central African Republic; he is turned over to the ICC in July.In July, Omar al-Bashir, president of Sudan, becomes the first sitting head of state to be indicted by the International Criminal Court (ICC) for war crimes and crimes against humanity.</b><br /> <b><br /></b> <b>2010</b><br /> <b><br /></b> <b>Ten American missionaries are charged with kidnapping for taking children out of Haiti in the wake of the January 2010 earthquake without proper authorization.</b><br /> <b><br /></b> <b>The labor recruiting firm Global Horizons, based in Los Angeles, is indicted for bringing Thai farm workers to the United States, then mistreating them and withholding their wages.</b><br /> <b><br /></b> <b>2011</b><br /> <b><br /></b> <b>A number of artifacts illegally removed from Iraq by U.S. Department of Defense contractors in 2004 are returned to Iraq.</b><br /> <b><br /></b> <b>2012</b><br /> <b><br /></b> <b>The International Criminal Court finds Thomas Lubanga, a Congolese military leader, guilty of kidnapping children to serve as soldiers. The short film Kony 2012 spreads rapidly over video-sharing Internet sites and draws attention to the alleged war crimes of Joseph Kony, head of the Ugandan guerilla group the Lord’s Resistance Army.1856</b><br /> <b><br /></b> <b>Great Britain, France, Russia, Austria, Prussia, and Sardinia sign the Declaration of Paris, agreeing that they will not engage privateers.</b><br /> <b><br /></b> <b>Sarah E. Boslaugh</b><br /> <b>Kennesaw State University</b> </article> </main></body></html>