This quagmire seems to get nothing but deeper...

The Diligence / IPOC story is a convoluted one, but at the meat of it are two Diligence investigators who apparently pretended to be British Intelligence operatives in order to pump KPMG emplyees for information on an onging money lanudering investigation into the Bermuda based, Russia connected IPOC International Growth Fund.

Diligence was subsequently sued by KPMG alleging bribery, deception, and computer hacking. Diligence was also sued separately by law firm, Barbour Griffith & Rogers, their apparent client in this mess. BG&R had reportedly hired Diligence on behalf of the Alfa Group, an entity competing against IPOC for control of lucrative Russian telecom business.

Meanwhile, a lawyer representing IPOC made claims that another investigative firm, Kroll, had broken into the email of Bermuda law firm, Wakefield Quin, seeking data on the matter. While this claim was ultimately unsubstantiated, Kroll WAS also active in the matter - not in Bermuda, but rather in Europe.

Kroll's IPOC involvement was confirmed by the chair of a Geneva audit panel charged with making decisions about whether IPOC or the competing Alfa Consortium would end up with the rich prize of OAO MegaFon telecom shares - worth about $2.5 billion (and you wondered what all the fuss was about...). Kroll is (was? - need to check on this) currently under investigation by Russian authorities due to their activities in the case.

But I digress. Back to the (relative) here and now. Let's let Law.com do the talking:

Diligence’s problems began in earnest in September 2005. Court documents show that the company accused its then-chief financial officer, Igor Alexeev, of stealing internal documents, directing employees to erase data from Diligence computers, and encouraging workers to leave the company. Nick Day, Diligence’s CEO, fired Alexeev on Sept. 28.

Weeks later, a sheaf of Diligence e-mails appeared at the offices of accounting firm KPMG in Montvale, N.J. The messages detailed an operation straight out of a John le Carré novel. (The document drop and details of the operation were first reported by BusinessWeek in February.)

Posing as British and American intelligence agents, Diligence operatives infiltrated a KPMG office in Bermuda, according to court papers. The goal: to get their hands on a draft audit KPMG had conducted on IPOC International Growth Fund.

The audit contained potentially damaging financial information that could be used against IPOC in a high-stakes fight over control of Megafon, a $1.5 billion Russian telecom.

Diligence had been hired by Barbour Griffith, which, in turn, had been hired by Alfa Group Consortium, a Russian conglomerate, to turn up dirt on IPOC. Alfa was also battling for Megafon and would later use the information from the audit against IPOC in an arbitration over Megafon’s ownership.

Officials at Diligence were virtually certain, according to media reports, that Alexeev had burned their investigation and tipped off KPMG. Claims and counter claims were filed between Diligence and Alexee and the whole thing turn ten shades of ugly, even as the ramifications of Alexeev's alleged leaks took their toll on the company.

Currently the whole mess is in arbitration, which is where the story takes another interesting turn...

Lawyers for Diligence have subpoenaed any communications between Alexeev and Terry Lenzner, head of the DC-based Investigative Group International. The material turned over so far suggests that Winston & Strawn hired IGI to assist in IPOC’s lawsuit against Diligence. Well slap my face and call me Aunt Sally... Beat that for your scandal dollar: Diligence, Kroll and IGI all wrapped up in one tangled international mess.

Check out the full Legal Times article for expanded details. There is also a load of past reportage relating to IPOC available via the TAGS below.

-- MDT

Labels: Alfa, corporate scandal, Diligence LLC, Investigative Group International, IPOC, Kroll

Interesting stuff from The American Lawyer. Their newly released study would seem to indicate that the Justice Department's Corporate Fraud Task Force (formed by the Bush Administration in July 2002) has slowed major prosecutions to the point that the group no longer even reports on its efforts. The DOJ calls this a mark of success. The folks at TAL take a slightly different view... Check out the full American Lawyer Report right here.

-- MDT

Labels: Corporate Fraud Task Force, corporate scandal, DOJ

Citizen Works' Corporate Scandal Fact Sheet.

-- MDT

Labels: corporate scandal

CondeNast Portfolio continues to amuse...

Well, ME at least.

-- MDT

Labels: CondeNast Portfolio, corporate scandal, funny, Prison

Quest's former CEO, Joe Nacchio, was sentenced on Friday in connection with his sell-off of $52 million in Quest stock while not disclosing to his companies investors that rough times were ahead. For what the judge in the case called "crimes of overarching greed" Nacchio was sentenced to six years in prison. He was also ordered to forfeit the $52 million within 15 days along with a $19 million fine. Still ahead for Nacchio is a civil suit against Quest executives that is scheduled to get going in 2009.

-- MDT

Labels: corporate scandal, Joe Nacchio, Quest, sentencing

Deal or fight? Traditionally these are the two options available to high-profile white collar criminals. Increasingly though, a third option has presented itself - run like hell. Let's face it, what would you do if you were an international bon vivant with more money than god who was looking down the barrel of a 20 year prison sentence?

If you're a second tier player, you probably just strike a deal and turn in your boss. But what if you are the boss (and you didn't happy to provide the current president with his campaign jet)? You might just decide that (insert non-extradition treaty country) is supposed to be really beautiful this time of year, rather than make your court date.

Take the case in point of Michael Berger, a hedge fund manager wanted since 2000, who ran out on an 87 month prison sentence and who only recently found himself back in the warm bosom of international law enforcement.

-- MDT

Labels: corporate scandal, on the run execs, prosecution

Following a decision by a U.S. District court to toss out a case against 13 former KPMG executives, the Justice Department has made an effort to tout its conviction record. At the same time embattled US AG Alberto Gonzales was decrying the KPMG verdict, DOJ number two, Deputy Attorney General Paul McNulty was attemoting to focus attention on the Department's 1,236 convictions in corporate fraud cases since 2002. Click on through to this IHT article for further details on the KPMG verdict as well as for further comment from the DOJ on life after Enron.

-- MDT

Labels: Alberto Gonzales, corporate scandal, DOJ, KPMG, Paul McNulty, tax shelters

Tuesday marked the start of the sentencing process of former Health South exec, Richard Scrushy and former Governor Don Siegleman.

Both were convicted last year on charges of bribery, mail fraud and conspiracy. Siegleman was also convicted on an additional count of obstruction of justice.

Final ruling should take place on Friday. Further details @ The Houston Chronicle.

-- MDT

Labels: corporate scandal, Don Siegleman, Health South, Richard Scrushy

So says The Business Pundit (and the SEC is apparently investigating).

-- MDT

Labels: 10b-51 manipulation., corporate scandal

You may recognize Mr. Mokhiber as the editor of the long-running Corporate Crime Reporter. He's been on the white collar crime beat for at leas 20 years and knows a thing or two about its perpetrators.

This list of 20 Things You Should Know About Corporate Crime is derived from the text of a speech he gave a few days ago at a conference on corporate accountability in Washington, DC.

Do check it out.

-- MDT

Labels: Corporate Crime Reporter, corporate scandal, Russell Mokhiber

No charges filed, criminal probe dropped....a little (a lot) of cash makes everything alright.

Details at The Times Online.

-- MDT

Labels: corporate scandal, split trust

Andrew Murray-Watson, Business Editor at The Independent muses about the Siemens bribery scandal. Not only do the escalating issues at Siemens tarnish the country's reputation for transparency, AMW argues, they may also signal a sea change for how business is done in Germany.

-- MDT

Labels: bribery, corporate scandal, Germany, Siemens

And their pick? Peter Loscher, who comes out of the pharmaceutical industry. Löscher is currently the president of Global Human Health at Merck. His appointment makes him the first Siemens CEO to have not held a prior position with the company.

Read more about Loscher at the IHT.

-- MDT

Labels: bribery, CEOs, corporate scandal, Siemens

We're four weeks into the trial of several Peregrine Systems executives in a case that has been called San Diego's Enron. Another separate trial is still to come, arising from the rampant internal fraud that first came to light at Peregrine in 2002.

Back in March Peregrine CEO, Stephen Parker Gardner plead guilty to charges of conspiracy, securities fraud and obstruction of justice. Eight other company execs preceded him in January '07. There was also the Peregrine related extradition of the unfortunately named Jeremy Crook back in September '06.

In more recent news Peregrine's former General Counsel was just indicted last month and will face charges similar to his former bed-fellows: securities and wire fraud, bank fraud and conspiracy to commit fraud.

And the beat goes on...

For up-to-date details on the Peregrine trial, click here.

-- MDT

Labels: accounting fraud, corporate scandal, Peregrine Systems

Siemens and beyond... The Times Online covers all the sorid details.

-- MDT

Labels: corporate scandal, Germany

Klaus Kleinfeld has announced that he will resign from Siemens, a result of the explosive bribery investigation that continues to dog the manufacturing firm (if not the company's stock price). Kleinfled had not, as yet, been implicated in any wrong doing, but he did have his enemies on the board Siemens board, who have apparently used this as an opportunity to force his ouster.

At least that's the story the FT is tellin'.

-- MDT

Labels: bribery, corporate scandal, Klaus Kleinfeld, Siemens

Looks like Nacy Heinen and Fred Anderson - Apple's former general counsel and CFO, respectively - are coming out swinging. So far Heinen and Anderson are the only two Apple execs to take a public fall for the company's stock option backdating, but both may still have a great deal to say about the role of Apple CEO Steve Jobs.

Official charges against Heinen are expected from the SEC as soon as this week. She has vowed to fight. Anderson, on the other hand, has cut a deal with the SEC - paying $3.5 million to settle backdating-related charges against him.

More on all the schenanigans from Palo Alto, via the FT - here and here.

-- MDT

Labels: Apple, backdating, corporate scandal, Fred Anderson, Nancy Heinen, SEC, stock options

While a Siemens internal investigation found no evidence implicating CEO Klaus Kleinfeld in the recent bribery scandal, there is apparently still great pressure for him to step down. The German Financial Times has reported that Siemens' supervisory board is pushing for a new chief executive to replace Kleinfeld. Deutsche Bank CEO Josef Ackerman, a key member of the Siemens board is apparently spearheading the push against Kleinfeld.

-- MDT

Labels: bribery, corporate scandal, Josef Ackerman, Klaus Kleinfeld, Siemens

Check out The Factbox for details. Can't tell your crooked CEO without a scorecard...

-- MDT

Labels: convicted, corporate scandal

Heinrich von Pierer, supervisory board chairman of Siemens, is expected to resign in the next few days in response to mounting scandal at the troubled German conglomerate.

The FT has further details on von Pierer and his decision to resign.

-- MDT

Labels: bribery, corporate scandal, Heinrich von Pierer, Siemens