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Legal news from Monday, January 5, 2009 |
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US House financial services committee begins hearings on Madoff fraud scheme
Jaclyn Belczyk on January 5, 2009 2:40 PM ET

[JURIST] The US House of Representatives Financial Services Committee [official website] on Monday began hearings [materials] in an investigation into how the Securities and Exchange Commission (SEC) [official website] failed for years to detect the fraud scheme allegedly perpetrated by Bernard Madoff [JURIST news archive]. The SEC had received numerous complaints against Madoff, dating back to 1999, but did not act on them until Madoff was charged with securities fraud [JURIST report] last month. This marks the first congressional hearing on the matter. Witnesses included SEC Inspector General H. David Kotz, Securities Investor Protection Corporation President Stephen Harbeck, and former Madoff investor Allan Goldstein. Kotz told [testimony, PDF] committee members: I can assure you that our investigation and review will be independent and as hard-hitting as necessary. While we approach these efforts with an open mind and at this stage of the investigation we have not reached any conclusions or made any findings, the matters that have been brought to our attention require careful scrutiny and review. We will conduct our work in a comprehensive and thorough manner and, if we find that criticism of the SEC is warranted and supported by the facts, we will not hesitate to report the facts and conclusions as we find them. The hearings will be used by the committee as it undertakes a comprehensive rewriting of US financial regulatory laws.
Madoff has been charged with violating the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940 [texts]. Madoff allegedly told two employees of his firm last week that his investment advisory business was "basically, a giant Ponzi scheme." Last month, UK financial firm Bramdean Alternatives Limited [corporate website] raised concerns [statement, DOC; JURIST report] about the US financial regulatory process after its value dropped by more than 35 percent following news of its exposure to the fraud. In the week following Madoff's charges, SEC Chairman Christopher Cox [official profile] said that he would launch an immediate investigation [press release; JURIST report] into how the fraud allegedly perpetrated by Bernard Madoff went undetected for so long. Last month, President-elect Barack Obama [transition website] named [press release] Mary Schapiro [professional profile] as the SEC Chairman, replacing Cox.


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UN torture investigator calls on countries to accept Guantanamo detainees
Devin Montgomery on January 5, 2009 11:08 AM ET

[JURIST] UN Special Rapporteur on torture and other cruel, inhuman or degrading treatment or punishment Manfred Nowak [official website; JURIST news archive] on Monday said more countries around the world should accept [ORF interview, WMP audio, in German] released Guantanamo Bay [JURIST news archive] detainees so the military prison can be closed. In an interview with Austrian radio station ORF [media website], Nowak said that many of the prisoners were detained because they were "in the wrong place at the wrong time," and do not pose a security risk to countries that allow them to emigrate. Nowak said he understood reluctance to accept the detainees given the negative way [JURIST report] in which US officials have represented them, but said the international cooperation was necessary to allow incoming US President Barack Obama [transition website] to close the facility [JURIST report] as promised. Nowak made a similar plea [JURIST report] urging European Union countries to accept detainee applications for asylum in November of last year.
On Saturday, Australian acting prime minister Julia Gillard [official profile] officially announced that country's rejection [JURIST report] of a US request to accept foreign Guantanamo detainees. Other countries, including Britain, Germany, Ireland, and Portugal [JURIST reports] have, however, said they would consider accepting released detainees. On December 18, US Secretary of Defense Robert Gates ordered the Pentagon to draft a proposal for shutting down [press release; JURIST report] the military prison at Guantanamo Bay in preparation for a possible order from Obama once he takes office. The US government has reportedly been in contact with some 100 foreign governments asking them to consider taking in detainees who it says cannot be returned to their home states.


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Taiwan ex-president appeals pretrial detention order
Devin Montgomery on January 5, 2009 10:02 AM ET

[JURIST] Former Taiwanese president Chen Shui-bian [BBC profile; JURIST news archive] on Monday appealed a Taiwan High Court [official website] order that he be detained while awaiting his trial on corruption charges [JURIST report]. The court made the decision last week, overruling a district court decision [JURIST report], citing risks of flight, collusion, and interference with other witnesses. Lawyers for Chen said the decision was politically motivated [Taiwan News report], and that he had done nothing to violate the terms of his release before his re-incarceration. They have also filed a petition to have the judges hearing Chen's case recused for potential bias. Late last week, the Taipei Bar Association [association website] defended [Taipei Times report] Chen lawyer Cheng Wen-lung against Taipei District Prosecutors Office [official website] decision to seek disciplinary action against Cheng for comments he has made against the judiciary. The charges against Chen include embezzlement, receiving bribes, forgery and money laundering, and his trial is scheduled to begin on January 19. His wife, his son and daughter-in-law, three former presidential aides, and eight other associates and family members have also been indicted in the case.
Chen has been detained since his November arrest [JURIST report] on suspicion of embezzling money from the state affairs fund. While in prison, Chen later went on a hunger strike and was hospitalized [JURIST reports]. Chen, the former leader of the now-opposition Democratic Progressive Party (DPP) [party website, in Mandarin] who resigned the presidency in May 2008, has maintained his innocence and has said that the investigation of his conduct is a political attack by members of the ruling Kuomintang Party [party website]. Chen spent eight months in prison twenty-one years ago for defaming Nationalist leaders. In September, he was cleared [JURIST report] on more recent defamation charges.


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South Korea minority party files suit against ruling party after quashed protest
Eric Firkel on January 5, 2009 7:16 AM ET

[JURIST] South Korea's minority Democratic Party [official website, in Korean] filed a criminal suit Sunday after Assembly Speaker Kim Hyong-o [official website] on Saturday ordered security guards to end a sit-in by the minority party, which led to dozens of injuries. Democratic Party officials allege abuse of power [AP report] by the ruling Grand National Party (GNP) [official website] and filed suit against Kim, Chief of Police Eo Cheong-soo, and two other GNP parliamentary officials. The protest was aimed at preventing President Lee Myung-bak [BBC profile] from passing a series of bills including a free trade agreement [text, USTR materials] with the US before the current legislative session ends on Thursday.
The US-Korea Free Trade Agreement (KORUS FTA) was signed by both parties on June 30, 2007 [USTR press release] after eight rounds of negotiations concluded on April 1, 2007, but has yet to be ratified by either party. The agreement is intended to increase bi-lateral trade and economic investment in both countries. Under the agreement 64 percent of Korea's agriculture imports from the US would become duty free, as well as 95 percent of bi-lateral trade in industrial and consumer products. The agreement would also eliminate all tariffs on automobile trade between the two countries.


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