Shell Companies Can’t Wear Watches

With the U.S. Department of Justice’s recent emphasis on using data analytics to root out corrupt actors, it’s worth remembering that simple observation can sometimes be just as revealing.

Anti-corruption activist Aleksey Navalny was well aware of this, using Instagram and other public sources to reveal in 2015 that a watch worn by Russian President Vladimir Putin’s press secretary Dmitry Peskov was worth more than $600,000 – or four times the official’s declared annual income. Weeks later, Navalny and his team of investigators used photos, geotagging data, and ship tracking records to provide strong evidence that Peskov vacationed on a yacht that cost more than $380,000 to charter.

Perhaps the self-styled “Rich Kids of Instagram” should have thought about this before they posted pictures on social media of their over-the-top lifestyles, which sometimes included their parents’ ill-gotten gains. Posts showing off yachts and private jets have been used to identify assets for recovery, and their geotagging data allowed litigants to bring suit in venues where the rule of law is more consistent.

Then again, you don’t have to be selfie-prone to get in trouble. It was during a government photo shoot that Thailand’s Deputy Prime General Minister Prawit Wongsuwon shielded his eyes from the sun – and revelated a luxury watch on his wrist, prompting an investigation by the country’s National Anti-Corruption Commission. Netizens then combed through older photos and identified him wearing dozens more luxury watches, worth more than $1 million combined. The Commission, which is governed by political appointees and was headed by Prawit’s former secretary-general, cleared him of wrongdoing in 2018, accepting the explanation that he had merely borrowed them from a friend who had since died. However, Thailand’s Supreme Administrative Court recently ordered the Commission to disclose further details of its findings.

Perhaps it is safer to just keep illicit cash stashed away, but that has its unforeseen drawbacks.

When Chinese police arrested Lai Xiaomin, a former Communist Party secretary and the former chairman of distressed lender Huarong Asset Management in 2018, they reportedly found so much idle cash – around $40 million worth – that it was collecting mold. Perhaps, like former U.S. Congressman William Jefferson, he should have kept the cash in his freezer.

Dave Lee

FCPA Compliance Consultant, TRACE