Want to help Ukraine? How to identify and report sanctions violations to Ethic Alliance
Concerned individuals who want to support Ukraine can help by reporting sanctions violations by corporations enabling Russia’s invasion.
Many companies are likely violating U.S. sanctions against Russia, says Tofer Harrison, an expert in foreign policy and finance who formerly worked in the George W. Bush administration and later in the hedge fund industry. Harrison co-authored a 2020 article in Foreign Affairs magazine, “The Rise of Strategic Corruption”.
“Sanctions are pretty easy to get around,” Harrison says. “You set up a shell company. And the Westerners think that they're completely hidden that way. Through Russian sources you can figure out who that shell company is, because if you see a receipt for some shell company selling tanks, you can probably figure out who that is by what they're selling. And so the kimono is open in Russia, we just have to look.”
“Most sanctions violations happen in plain sight,” says Scott Williams, CEO of Ethic Alliance. “Unfortunately, corporate management often seems to be more concerned about top line revenue and profit growth than compliance with the law. We’ve found that companies are violating sanctions very openly. They typically transfer company assets that are in violation of sanctions to a different wholly owned subsidiary, thereby keeping the revenue and profits from these illegal activites, while stating that they are in compliance with all sanctions, even though they are not. Since the companies that do this are often public, it becomes much easier to trace ultimate ownership since publicly held companies have to disclosure their holdings.”
Public involvement is critical. “People who live in areas like the Crimea or work for Western subsidiaries that continue to operate there know what’s happening,” Williams says, “even if they don’t know the corporate structures being used to hide the activity from the government or public markets. Providing evidence, which can simply be in the form of pictures of stores and offices continuing to do business, or copies of marketing campaigns targeting sanctioned areas or businesses, is a critical contribution anyone can make. With that information, we can trace ultimate ownership, match it with public statements from the company, and work with the government to build strong cases against companies that are continuing to support Russia. The U.S. government also offers substantial financial rewards to individuals that provide information and assistance, as well as protection of their identities.”
Russia does not really have the industrial base or technology to produce some of the weapons it’s using against Ukraine. “When you turn in these companies,” Harrison says, “it chokes off avenues for Russia to get this technology. And that in turn means they don’t have the ability to make quality tanks or cruise missiles or what have you. And that has a direct effect. And the quicker you do that, the quicker it helps Ukraine.”
In addition, he adds, “the more that you can cut off revenue to the Kremlin, the more it hurts Putin.”
The U.S. Justice Department reported on October 19, 2022, that it charged nearly a dozen individuals and several corporate entities for participating in unlawful schemes to export powerful civilian/military dual-use technologies to Russia, some of which have been recovered on battlefields in Ukraine.
If someone working inside a company believes it is violating sanctions against Russia or another sanctioned country, what should he or she do? The first thing is to contact Ethic Alliance. “They can help put a criminal case together and take it to the right agency,” says Harrison.
There’s an alphabet soup of regulatory agencies that govern sanctions or corruption by American companies. If a concerned individual randomly submits a tip by coldcalling an agency, the tip may or may not get seen by the right person, Harrison cautions. For example, government agencies continuously receive suspicious activity reports that banks are required to file. The number of tips these offices are receiving is way more than they can handle.
Conctacting Ethic Alliance will be much easier and effective. Ethic Alliance knows how to get to the right person. It is also able to pass on tips to researchers who can gather evidence needed to spur on investigative agencies. “They can quarterback cases,” Harrison adds.
How would the average person know if something is a violation of a sanction? “Obviously, if your company is doing business with a country that's doing bad things, there's a fairly decent chance that it's violating a sanction,” Harrison says. But it may not even be a sanction, it may just be corruption generally.
“If you thought your company was bribing some official somewhere, or even if you suspected something was amiss, you need to be able to speak to somebody who's going to be able to tell you whether that's corruption or a sanctions violation or whatever,” says Harrison. “Say you turn in a tip to the Department of Justice. It may or may not get seen, but you'll never hear back from them. And you'll never know whether or not you didn't hear back because it just got lost in the mail or because what you turned in wasn’t a sanctions violation. It's really helpful to have up front some kind of feedback on what it is you're talking about.”
Documentation can also help lawyers build a case to prove a sanctions violation, Harrison says. “If you think about how bureaucracies are, you’ve got to get their attention somehow. And the more evidence you have, the more interesting or real the case looks, the easier time you’re going to have getting their attention. So documentation just helps a lot.”
Ethic Alliance works to protect whistleblowers’ identity through a combination of the strongest technology and legal protections available, including encrypted reporting and messaging platforms, and attorney-client privilege that takes effect the moment a whistleblower files a report on the platform. “You just want to be discreet with documents,” Harrison says.
He concludes an interview by noting that whistleblowing can be a strange, cumbersome and difficult process. “Most people don't think of how the whole whistleblowing system works and how to contact these people. It’s very wonky in a way, to know how this works. So just knowing that there is a resource out there like Ethic Alliance who can really guide you through it is important.”
Photo by Yehor Milohrodskyi on Unsplash