Former Stanford Financial Group CFO Testifies on 'Slush Fund'

Greater oversight and corporate governance may have helped reduce or prevent the corruption at R. Allen Stanford's companies. The Associated Press reports that Stanford's former CFO, James Davis, recently testified that he helped the finance mogul fabricate corporate financial reports to make it seem as if the bank was making a profit.

Davis told the court that he and Stanford had set up Swiss bank accounts to store investors' money. It was used to pay bonuses, regulators' bribes and personal expenses, he testified, including payment to Leroy King, the regulator in Antigua who did not report wrongdoing at Stanford's Caribbean bank.

"Davis testified funds from the Swiss account were also used to regularly bribe Stanford's outside auditor, C.A.S. Hewlett, who was based in Antigua, with amounts as high as $180,000," the AP reports. "Davis said Stanford considered Hewlett 'greedy' but 'indispensable' to hiding the fraud."

Corruption continues to be an issue in the financial services industry, as another high-profile case plays out in U.S. District Court. Bloomberg reports that one of the traders who assisted an insider-trading investigation that ultimately put Galleon Group co-founder Raj Rajaratnam behind bars was recently his own sentence.

David Slaine will be on probation for three years for securities fraud, the source reports, and has also been fined $500,000 and assigned 300 hours of community service.