UK establishes money laundering watchdog

On December 21, 2017 HM Treasury announced the creation of a new watchdog organization, the Office for Professional Body AML Supervision (OPBAS), to strengthen anti-money laundering (AML) standards and to facilitate cooperation across law enforcement agencies.

The OPBAS office will provide direct supervision to "22 accountancy and legal professional body AML supervisors in the UK" (1) and will work to "ensure the 22 bodies meet the high standards set out in the Money Laundering Regulations 2017, and have powers to investigate and penalise those that do not." (1)

The OPBAS regulations will take effect on January 18, 2018.

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Argentine Congress Approves New Corruption Law

On Wednesday, November 8, 2017 the Argentine Congress approved a new law to combat corporate corruption.  The passage of this law follows the arrests of two Argentine politicians on corruption charges.

The law applies to private legal entities and covers the following crimes:

  • Local or international bribery and influence peddling
  • Illegal payments to public officials
  • Illegal enrichment of public officers and employees
  • Falsifying balance sheets and reports to conceal bribery or influence peddling

Companies are liable for the above crimes whether they are committed directly or indirectly on their behalf.  A corporation may also be held liable for the actions of third parties acting on their behalf.   

The bill allows for:

  • Courts to fine companies up to five times more than the amount fraudulently obtained
  • Companies to be blacklisted from public contracts for up to 10 years
  • The lessening of a corporations punishment for self-reporting a crime discovered by an internal compliance program, the existence of a sufficient compliance program prior to the violation, entering into a collaboration agreement, among other factors       

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Canada Repeals Facilitation Payments Exception

     On October 30, 2017 the Government of Canada announced the facilitation payments exception, contained within the Corruption of Foreign Public Officials Act (CFPOA), has now been removed.  Bill S-14 repealed the exception and went into force on October 31, 2017.

     The CFPOA defined facilitation payments as follows:

  • "For the purpose of subsection (1), a payment is not a loan, reward, advantage or benefit to obtain or retain an advantage in the course of business, if it is made to expedite or secure the performance by a foreign public official of any act of a routine nature that is part of the foreign public official’s duties or functions, including:
    • the issuance of a permit, licence or other document to qualify a person to do business;

    • the processing of official documents, such as visas and work permits;

    • the provision of services normally offered to the public, such as mail pick-up and delivery, telecommunication services and power and water supply; and

    • the provision of services normally provided as required, such as police protection, loading and unloading of cargo, the protection of perishable products or commodities from deterioration or the scheduling of inspections related to contract performance or transit of goods."

     Contact GCSG professionals at info@globalcompliancesg.com with any questions or for more information on how we can assist you with your compliance program.  Visit our website at http://www.globalcompliancesg.com to learn more about our products and services.   

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Agencies from seven countries join forces against corruption

On July 5, 2017 the UK's National Crime Agency (NCA) announced the establishment of the International Anti-Corruption Coordination Centre (IACCC), based in London.  The UK's NCA will host the IACCC until 2021. 

The IACCC's initial membership includes agencies from Australia, Canada, New Zealand, Singapore, the UK and the United States.  The purpose of the centre is to improve the existing cooperation between member countries corruption enforcement agencies. 

"There is no doubt that the world's major economies are abused by corrupt leaders.  We have a responsibility to guard against that abuse, limit the damage it causes to countries already battling poverty, and pursue the individuals who put self-interest above the welfare of citizens.  This is the first law enforcement partnership specifically coordinating the global response to grand corruption.  We know from our experience the value that dedicated centres for collaboration bring to successful international law enforcement action and we will use all our combined expertise to tackle the most complex and devastating cases of corruption." (1) - Donald Toon, NCA Director of Economic Crime          

The centre should improve the sharing of information and resources, between the participating agencies, and enhance the process of enforcing global anti-corruption laws.  However, because the trend of cooperation between participating agencies has already been growing for years, the centre is likely to have less of an impact than the NCA announcement alludes.

For this effort to truly fulfill its goals, and have the impact the IACCC seeks, the list of participating agencies from non-Western countries will need to grow.       

IACCC participating agencies:

  • Australian Federal Police
  • New Zealand's Serious Fraud Office
  • New Zealand Police
  • Canadian Mounted Police
  • Corrupt Practices Investigation Bureau of the Republic of Singapore
  • National Crime Agency
  • Federal Bureau of Investigation (FBI)

Agencies with plans to join the IACCC:

  • Interpol
  • US Department of Homeland Security (DHS)
  • US Immigration and Customs Enforcement (ICE)
  • US Homeland Security Investigations (HSI)

IACCC observer nations:

  • Switzerland
  • Germany

Contact GCSG experts at info@globalcompliancesg.com with any questions or for more information on how we can assist you with your compliance program.  Visit our website at www.globalcompliancesg.com to learn more about our products and services

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US Supreme Court limits the SEC to 5-year disgorgement remedy

On Monday, June 5th, the U.S. Supreme Court, in a 9-0 ruling (Kokesh v. SEC), limited the Securities and Exchange Commission's ability to obtain profits from a defendant.  The ruling found that the SEC's "disgorgement" remedy is subject to a five-year statute of limitations.  In 2013, the Supreme Court also ruled (Gabelli v. SEC) that civil monetary penalties are subject to a five-year limitation.

Background

The SEC brought an enforcement action against Charles Kokesh in which they alleged he had violated various securities laws.  The allegation claimed Kokesh violated SEC laws by misappropriating $34.9 million from four businesses from 1995-2009.  As a result the SEC sought civil penalties and a $34.9 million disgorgement. 

A jury found that the defendant had in fact violated securities laws.  The District Court applied the 5-year limitation to the civil penalty, but found that the $34.9 million disgorgement was not a "penalty" and not subject to a five year statute of limitation.  The Tenth Circuit agreed with the District Court and held that disgorgement was neither a penalty nor a forfeiture.

Ruling

Justice Sotomayer, writing for the unanimous Court said the following:

"Because SEC disgorgement operates as a penalty under §2462, any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accured."; and

"The application of these principles here readily demonstrates that SEC disgorgement constitutes a penalty within the meaning of §2462.  First, SEC disgorgement is imposed by the courts as a consequence for violating public laws...Second, SEC disgorgement is imposed for punitive purposes."

Consequences

The ruling provides a little more clarity for companies as to what disgorgement amounts they may have to pay if found guilty of violating a securities law.  As a result of this ruling, the SEC is likely to move more quickly to bring cases to a conclusion.      

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UK court ruling allows for breach of attorney-client litigation privilege

The High Court of Justice in London ruled on May 8, 2017 that the Serious Fraud Office (SFO) in certain instances could pierce the attorney-client privilege during their investigation of Eurasian Natural Resources Corporation Ltd (ENRC).  The ruling allows the SFO to obtain evidence that was gathered by the Defendant, ENRC during an internal corruption investigation.

Background

The SFO began a criminal investigation into ENRC in 2013.  The investigation was begun after the SFO terminated discussions with ENRC, which they had begun in 2011.  ENRC stated they were innocent of the charges and originally claimed they would cooperate with the SFO.  However, after the SFO sought access to the disputed documents, ENRC refused and the SFO filed a civil action to obtain access.  The SFO ended discussions with ENRC after ENRC's Chairman, who had been leading the investigation, resigned and they ended their relationship with the Dechert LLP law firm.  

The court ruled that "for the purposes of this claim, it is unnecessary to decide whether the SFO's characterization of the dialogue between itself and the ENRC is correct..."

The investigation focused on allegations of corruption in Kazakhstan and Africa.  While ENRC denied they committed any criminal offences, the court ruling said whether or not they committed an offence wasn't material to the ruling. 

ENRC claimed the documents in dispute were subject to litigation privilege or legal advice privilege.  The SFO position was they accepted the redaction of specific legal advice (as the term was defined in Three Rivers DC v. Bank of England) from the documents in question, but they rejected any generic claim to litigation privilege covering all the information in the documents.

The disputed documents fell into four categories:

  • Category 1 - notes taken by the firm Dechert LLP of employees and former employees, suppliers and third parties when they were asked about the events being investigated.  ENRC claimed all these documents were subject to litigation privilege and alternatively legal advice privilege under attorney work product.
  • Category 2 - materials that were created by Forensic Risk Alliance as part of a books and records review.  ENRC claimed litigation privilege with these documents. 
  • Category 3 - documents that contained factual evidence presented by a partner at Dechert LLP to the ENRC Board.  ERNC cited legal advice privilege for these documents and alternatively litigation privilege.
  • Category 4 - among other documents, this category included 2010 email communications between an ENRC executive and Mr. Ehrensberger, the Head of their Mergers and Acquisitions department.  Mr. Ehrensberger had previously been ENRC's General Counsel and resumed this role in 2011.      

Privilege

Litigation privilege is defined as:

"Communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation attract litigation privilege when, at the time of the communication in question, the following conditions are satisfied: (1) Litigation is in process or reasonably in contemplation; (2) The communications are made with the sole or dominant purpose of conducting that anticipated litigation; (3) The litigation must be adversarial, not investigative or inquisitorial."

The ruling rejecting ENRCs claims of litigation privilege says the following:

"I reject ENRC's submission that by parity of reasoning, litigation privilege extends to third party documents created in order to obtain legal advice as to how best to avoid contemplated litigation (even if that entails seeking to settle the dispute before proceedings are issued). There is no authority cited in support of that proposition, and it self-evidently contradicts the underlying rationale for the privilege. Equipping yourself with evidence to enable you to conduct your defence free from the risk that your opponent will discover how you are preparing yourself, and to decide what evidence you are planning to call if the case goes to court, and what tactics to employ, is something entirely different from equipping yourself with evidence that you hope may enable you (or your legal advisers) to persuade him not to commence proceedings against you in the first place."

The ruling says the following about legal advice privilege:

"Legal advice privilege attaches to all communications passing between the client and its lawyers, acting in their professional capacity, in connection with the provision of legal advice, which "relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law"

"If the communication is between client (or the client's agent) and lawyer for the purpose of obtaining legal advice in connection with anticipated litigation, it is covered by legal advice privilege rather than litigation privilege. If the communication is between the lawyer and someone other than the client, it will only be subject to LPP if it satisfies the test for litigation privilege. That is so whether the client is an individual, a partnership, an unincorporated association or a corporate entity. Communications between clients and third parties, such as professional advisers who are not lawyers, are not subject to legal advice privilege. Interposing a lawyer in the chain of communication will not improve the client's chances of claiming legal advice privilege."

"The question of who was the "client" in this context did not directly arise for consideration. However, the judgment of the Court of Appeal supports the proposition that where the party asserting privilege is a corporate entity, legal advice privilege attaches only to communications between the lawyer and those individuals who are authorised to obtain legal advice on that entity's behalf. Communications between the solicitors and employees or officers of the client, however senior in the corporate hierarchy, who do not fall within that description will not be subject to legal advice privilege."

"I accept that the question "who is the client to whom the lawyer owes a duty?" and the question "who has the client authorised to act on his behalf in communicating with the lawyers?" are different; but in this specific context it is important to bear in mind that the privilege attaches only to those communications between lawyer and client (or the client's authorised representative) whose purpose is obtaining legal advice."

"The judgments of the Court of Appeal in Wheeler v Le Marchant (1881), which played a large part in the Court of Appeal's reasoning in Three Rivers (No 5), support the proposition that privilege will not attach to the employee's (or anyone else's) communication with the lawyer unless that person is acting as the client's agent for the purpose of obtaining the legal advice (in the sense that he has been tasked with obtaining it)."

Ultimately, the court granted relief to the SFO on all disputed categories of documents, except for Category 3. 

In GCSG's experience, we have often seen General Counsels believe privilege is much easier to claim and defend than this ruling would imply.  The ruling brings into doubt the ability of companies to claim litigation privilege in similar situations.  While ENRC will likely appeal this ruling, we recommend General Counsels, with registered businesses in the UK, track the ultimate outcome of this case and carefully review this ruling to determine how it may impact their current approach to claiming privilege during investigations of potential violations of the law.

Contact us at info@globalcompliancesg.com with any questions or for more information.      

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Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Procurement Leaders: Risk Management Ranks Among Top Concerns  | Risk & Compliance Journal - WSJ

"Reducing costs ranks as the biggest priority for chief procurement officers (CPOs) around the world, but risk management, technology, and talent are also top of mind..." (Click here for the article) - North America, South America, Asia Pacific, Europe, Middle East, Africa

Compliance Officers Less Worried About Liability | Risk & Compliance Journal - WSJ

"Concerns about personal liability have lessened somewhat for compliance professionals but a survey shows they continue to be a big worry for those tasked with handling compliance for their organization." (Click here for the article) - Global

The Emergence of Compliance - A new profession? | Harvard Law School Center on the Legal Profession

"What do compliance officers, social media marketers, and 3-D designers have in common?  They are all members of relatively new specialties, attempting to carve out areas of expertise to meet the evolving demands brought on by economic, technological, business, and social change." (Click here for the article) - Global

UN expands North Korea blacklist in first U.S., China sanction deal under Trump | Reuters

"The U.N. Security Council on Friday expanded targeted sanctions against North Korea after its repeated missile tests..." (Click here for the article) - China, North Korea, USA

Federal Contractors Face New Training Requirements | Risk & Compliance Journal - WSJ

"New rules that took effect Wednesday require cleared U.S. government contractors to have in place insider-threat awareness training programs before they can handle classified information." (Click here for the article) - USA

SEC Bars Former PetroTiger GC Convicted in Bribery Case | Corporate Counsel

"Former general counsel Gregory Weisman has been suspended from practicing before the U.S. Securities and Exchange Commission more than three years after his guilty plea in the PetroTiger Ltd. bribery case." (Click here for the article) - USA

Compliance Boosts Foothold in C-Suite, Boardrooms | Risk & Compliance Journal - WSJ

"Chief compliance and ethics officers are increasingly being included in senior-level discussions about corporate strategy, showing compliance is gaining favor in boardrooms worldwide but also pointing out the challenges the function continues to face, according to a survey..." (Click here for the article) - Global

General Motors Accused of Rigging Diesel Pickup Truck Emissions | Road and Track

"A class-action lawsuit accuses General Motors of rigging emission-control systems on 2011-2016 Chevrolet Silverado HD and GMC Sierra HD pickups with GM's Duramax turbo-diesel 6.6-liter V-8 engine." (Click here for the article) - USA

Exports and End-Use | RealClear Defense

"In a report this week, Amnesty International expresses its annoyance that the US Army failed to keep tabs on more than $1 billion worth of arms and other military equipment in Iraq and Kuwait." (Click here for the article) - Iraq, Kuwait, USA

Hong Kong and Macau regulators intensity efforts against money laundering, financial crime and terrorist funding | South China Morning Post

"Hong Kong and Macau have launched simultaneous shake-ups of the systems they have in place to tackle the growing menace of money laundering, financial crime and the funding of terrorist groups." (Click here for the article) - China, Hong Kong, Macau

China's Cyber Security Law: The Impossibility of Compliance? | Forbes

"China's much-anticipated Cyber Security Law (CSL) will come into effect on 1 June 2017.  The new law is the first comprehensive law to address cyber security concerns at the national level and to some extent consolidates cyber activities captured in other laws and regulations." (Click here for the article) - China

CVS's Omnicare to pay $23 million to resolve U.S. kickback case | Reuters

"CVS Health Corp's Omnicare unit has agreed to pay $23 million to resolve a whistleblower lawsuit alleging that it took kickbacks from a drugmaker..." (Click here for the article) - USA

Unaoil Probe Threatens Oil-Sector Merger | Risk & Compliance Journal - WSJ

"An oil merger is in danger after revelations of ties to Unaoil, which is under U.K. investigation for bribery and money laundering." (Click here for the article) - UK, USA

Japan's METI Issues Updated End User List | METI

(Click here for the post) - Japan

Bank's slapped with fines for weak anti-money laundering controls | Mail & Guardian

"Several local and international banks have been slapped with administrative fines by the South African Reserve Bank, for weak anti-money laundering and combating of financing of terrorism controls." (Click here for the article) - South Africa

Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Chief Compliance Officer Fined, Barred from Work  - Corporate Counsel

"Once again, the federal government has held a chief compliance officer personally liable for failing to stop a company's misconduct." (Click here for the article) - USA

Why Me?  What Triggers a US Customs Inspection? - More Than Shipping

"Even today, it remains a mystery - how import shipments are selected to be inspected by U.S. CBP (Customs and Border Protection)..." (Click here for the article) - USA

Industries ranked by open FCPA related investigations - The FCPA Blog

"Here are industries ranked by the number of companies that have disclosed open FCPA-related investigations..." (Click here for the article) - USA, Global

Thirty companies name Brazil in connection with FCPA-related probes - The FCPA Blog

"Of the 104 companies that have disclosed open and active FCPA-related investigations, 30 have mentioned Brazil.  Seventeen have mentioned China.  Poland and India each have three mentions..." (Click here for the article) - Brazil, China, Poland, India

New ISO Anti-Bribery Standard Gaining Traction - Forbes

"Bribery and other forms of corruption continue to plague business and society.  According to the World Bank, some $1.5 trillion is paid globally in bribes each year..." (Click here for the article) - USA, Global

DOJ Sheds Some Light on U.K. Prosecutor Assignment - The Wall Street Journal

"A top U.S. Justice Department official spent part of a speech at an anti-corruption conference in Brazil revealing some of the reasons why the department plans to send a prosecutor on a detail to the U.K." (Click here for the article) - USA, UK, Brazil

 

Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Police raid BT's Italian offices over £530m accounting scandal  - The Times

"BT's offices in Italy have been raided by police as part of an investigation into a £530 million accounting scandal." (Click here for the article) - Italy

Investigation in Brazil "much bigger" than Watergate, says lead prosecutor - CBS News

"The political corruption investigation in Brazil known as Operation Car Wash is 'much bigger' than the Watergate scandal in the U.S., the lead prosecutor tells correspondent Anderson Cooper..." (Click here for the article) - Brazil

Trump administration formally launches NAFTA renegotiation - Washington Post

"The Trump administration on Thursday formally notified Congress of its intent to renegotiate the North American Free Trade Agreement, a step forward on a campaign promise that was widely popular among voters..." (Click here for the article) - USA, Mexico, Canada

Brazil's corruption scandals may be the best thing to happen to Latin America - Miami Herald

"If you think that the corruption scandal swirling around Brazilian President Michel Temer is the only one that will shake Latin America in coming weeks, mark your calendar..." (Click here for the article) - Brazil, Latin America

FIFA audit official admits bribery in US federal probe - USA Today

"The sprawling American investigation of bribery and corruption in international soccer has reached into Asia and claimed the first guilty plea from a senior official in the new FIFA leadership." (Click here for the article) - Switzerland, USA, Guam, Kuwait, Philippines, Germany, France

FDA launches new webpage to promote use of symbols in medical device labeling (Imports) - Customs & International Trade Law

"If you think that the corruption scandal swirling around Brazilian President Michel Temer is the only one that will shake Latin America in coming weeks, mark your calendar..." (Click here for the article) - USA

Chinese National Pleads Guilty to Economic Espionage and Theft of a Trade Secret from US Company - The US Department of Justice

"Today, Xu Jiaqiang, 31, formerly of Beijing, China, pleaded guilty to economic espionage and theft of a trade secret, in connection with Xu's theft of proprietary source code from Xu's former employer..." (Click here for the article) - USA, China

Big data driving SEC focus on disclosures, recommendations and security - OnWallStreet

"Advisers will see SEC regulators employ new methods to investigate a firm's staff training, the suitability of its investment recommendations, conflicts of interest disclosures and cybersecurity safeguards..." (Click here for the article) - USA

UK Plans to Fold Serious Fraud Office into NCA Meet Skepticism - The Wall Street Journal

"UK Prime Minister Theresa May promised to fold the Serious Fraud Office into the National Crime Agency if her Conservative Party wins the general election next month..." (Click here for the article) - UK

More CEOs are getting forced out for ethics violations - Washington Post

"If it seems like more CEOs are getting cast aside amid ethical blunders or corporate scandals, they are." (Click here for the article) - USA

US Presses China to impose sanctions on DPRK - worldecr.com

"The US has indicated that it believes that China will agree to impose new UN sanctions on North Korea..." (Click here for the article) - USA, China, North Korea

Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Global Trade Growth is About to Slow, Morgan Stanley Says - MH&L

"Signs are pointing to a looming slowdown in global trade growth according to Morgan Stanley.  Each component of the bank's proprietary global trade leading indicator -- save for the U.S. dollar -- declined in April to mark back-to-back drops for the index, which is used to forecast real activity with a one-month lead." (Click here for the article) - Global

Qualcomm settles FCPA charges in hiring case for $7.5 million - The FCPA Blog

"The Securities and Exchange Commission said Tuesday that Qualcomm Incorporated agreed to pay $7.5 million to settle charges that it violated the Foreign Corrupt Practices Act by hiring relatives of Chinese government officials." (Click here for the article) - China, USA

31% of surveyed firms in Vietnam pay bribes for customs procedures

On April 27, 2017, the Vietnam Chamber of Commerce and Industry (VCCI) released the results of a 2016 survey that shows 31% of businesses admitted to paying "under the table" fees for customs procedures.

The survey was released in cooperation with Vietnam Customs and shows a slight increase from the 2015 survey when 28% of respondents indicated they paid customs bribes.  Some of the interesting results from the survey respondents include:

  • 17% said they would experience customs procedure delays if they did not pay the bribe
  • 81% indicated that the inspection times were long
  • 72% said information sharing among agencies was not good   

Both the Corruption Perceptions Index 2016 (CPI) and the Trace Matrix 2016 (TM) rank Vietnam as a high risk for bribery.  CPI ranks Vietnam 113 out of 176 countries and TM ranks Vietnam 175 out of 199 countries for bribery risk.

The survey results demonstrate the necessity of having awareness of the markets in which your company operates as well as having a good compliance program in place that includes risk based diligence of your third parties. 

Often bribery risk for a corporation will arise from third party vendors who are facilitating transactions on your behalf.  Customs brokers should be part of any good third party due diligence program.

GCSG offers a variety of due diligence services and reports and utilizes a risk based ranking method to help our clients develop a tailored approach to their third party due diligence program.  Contact us at info@globalcompliancesg.com with any additional question's or for more information on how we can help you with your third party due diligence program. 

US Attorney General Issues Charging and Sentencing Principles

On Friday, May 12 US Attorney General Jeff Sessions issued a memorandum providing charging and sentencing principles for the US Department of Justice (DOJ).  The DOJ in its press release said "This policy was formulated after extensive consultation with Assistant U.S. Attorneys at both trial and appellate level, as well as U.S. Attorneys and Main Justice Attorneys.  It ensures that the Department enforces the law fairly and consistently, advances public safety and promotes respect for our legal system."

The guiding principles within the memo include:

  • Prosecutors should charge and pursue the most serious, readily provable offense
  • Prosecutors must disclose to the sentencing court all facts that impact the sentencing guidelines or mandatory minimum sentences, and should in all cases seek a reasonable sentence under the factors in 18 U.S.C. § 3553

In addition, the memo rescinds any previous policy of the DOJ that is inconsistent with the above guiding principles.

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Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

US President Issues Executive Order Addressing Trade Agreement Violations and Abuses - The White House (Click here for the EO) - USA

India bans all trade with North Korea - CNN Money

"North Korea has lost one of its biggest trading partners after India banned most dealings with the country." (Click here for the article) - India, North Korea

Huawei's Plano office responds to NYT report about investigation into smartphone maker's sales to Iran, Syria, others - The Dallas Morning News

"American officials are investigating whether the company violated American trade controls on Cuba, Iran, Sudan and Syria, according to an administrative subpoena..." (Click here for the article) - China, USA

UK Serious Fraud Office (SFO) confirmed investigation opened into KBR, Inc. - SFO News Releases (Click here for the news release) - UK, USA

FBI agents raid offices, government buildings across Texas in statewide corruption probe - Hearst Newspapers, LLC

"The FBI descended on a host of city and county government buildings...across Texas, executing search warrants as part of a public corruption probe..." (Click here for the article) - USA

Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world, that we deliver on Monday morning's.

UK's failure to deal with customs fraud could affect post-Brexit trade deal with the EU - IBTimes Co., Ltd.

"EU expected to seek 2bn from Britain for not stopping Chinese gangs undervaluing imported goods." (Click here for the article) - UK, European Union

China Indicts Former Statistics Bureau Director Wang for Bribery - Bloomberg

"Wang Baoan, former head of China's National Bureau of Statistics, was indicted on suspicion of accepting bribes, the official Xinhua News Agency reported Tuesday." (Click here for the article) - China

Brazilians fight back against corruption - with the help of a purple plug-in - theguardian

"Released before what is expected to be the highest general strike in decades, Colour of Corruption is an online political scorecard that details criminal allegations against members of the cabinet, the upper and lower houses of parliament, state governors, their deputies - and even the president." (Click here for the article) - Brazil

US President slaps first tariffs on Canadian lumber  - CNN Money

"The Trump administration is hitting Canada with stiff tariffs of up to 24% on lumber shipped into the United States." (Click here for the article) - USA

US Attorney General Stresses Continued FCPA Enforcement - Wall Street Journal

"The US attorney general stressed Monday that prosecutors won't relent in their pursuit of foreign-bribery cases." (Click here for the article) - USA

US Administration Launches National Security Probe on Steel Imports - Wall Street Journal

"The Trump administration has opened a wide-ranging probe into whether to curb steel imports in the name of national security, ramping up its campaign to give a more economic nationalist tinge to American trade policy." (Click here for the article) - USA

US administration launches investigation into aluminum imports - CNN

"President Donald Trump on Thursday will formally order an investigation into the effect of aluminum imports on US national security." (Click here for the article) - USA

Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting compliance news bites, from around the world, that we deliver every Monday morning

Identity Fraud Cases Skyrocket in Netherlands - NLTimes.nl

"The number of reports about identity fraud in the Netherlands more than doubled last year, according to figures from the Identity Fraud Hotline." (Click here for the article) - Netherlands

How hackers made off with millions - Thomson Reuters

"It's been a little over a year since the New York Federal Reserve and the SWIFT international transaction system were breached in a cyber-attack that resulted in $81 million stolen from a Bangladesh central bank account - one of the biggest known bank thefts in history" (Click here for the article) - USA, Bangladesh

Report Faults Wells Fargo's Law Department in Sham-Accounts Scandal - Law.com

"The report, released Monday, was commissioned by Wells Fargo last year after the bank agreed to pay $185 million to settle accusations that employees opened as many as 2.2 million unauthorized accounts by transferring funds without customers consent from existing accounts." (Click here for the article) - USA

The money machine: how a high-profile corruption investigation fell apart - Guardian News and Media Limited or its affiliated companies

"The 2014 summit - much like David Cameron's highly publicized global Anti-Corruption Summit in 2016 - was intended to show Britain's determination to live up to its responsibilities.  Instead, the case of the $23m collapsed within a year - when a British judge ruled that the SFO had built its case on 'conjecture and suspicion', and ordered the money returned to its owner." (Click here for the article) - Britain, Ukraine

North Korea oil imports, airline among possible US sanctions targets - Thomson Reuters

"...the Trump administration is focusing its North Korea strategy on tougher economic sanctions, possibly including an oil embargo, banning its airline, intercepting cargo ships and punishing Chinese banks doing business with Pyongyang..." (Click here for the article) - USA, North Korea, China

How one of the world's biggest oil firms secured a $1.3 billion deal mired in corruption allegations - BuzzFeed

"On the evening of 17 February 2016...the chief executive of oil giant Shell, picked up his phone...The topic of their conversation: a 'dawn raid' on the company's headquarters earlier that day by Dutch police investigating a controversial $1.3 billion Nigerian oil deal struck five years previously." (Click here for the article) - Netherlands, Italy, Nigeria

Trump considers trade order that could lead to duties - CNBC

"U.S. President Donald Trump is considering an executive order to launch a trade investigation that could lead to supplemental duties in certain product categories..." (Click here for the article) - USA

Monday Compliance News - Around the World

Barclays CEO pay slashed after he tried to identify whistleblower - CNN Money

"The American boss of one of Britain's top banks will have his pay slashed after he admitted trying to unmask a whistleblower" (Click here for the article) 

Top 50 Airfreight Forwarders - Transport Topics (Click here for the article)

Swedish defense industry uneasy over proposed export controls - Defense News

"A Swedish government plan to introduce a new legislative bill that would restrict arms exports to so-called non-democracies is causing disquiet.." (Click here for the article)

Japan orders Yusen Logistics to shut down customs operations - JOC.com

"Japanese authorities have ordered Yusen Logistics Co. to completely suspend its customs clearance operations in the country for more than two months for violating the Customs Brokerage Act by making false declarations." (Click here for the article)

 

OECD publishes Anti-Bribery Guidance for African Companies

In October of 2016, the Organisation for Economic Co-operation and Development (OECD) and the African Development Bank Group (AfDB) published new guidance to assist African companies with improving their anti-bribery compliance programs.  The guidance is designed to assist companies with both designing and implementing corporate anti-bribery programs in Africa. 

"The African Development Bank estimates that USD 148 billion is lost to corruption in Africa every year." (1)

The guidance document attributes the bribery risks, that confront both African and foreign companies in Africa, to:

  • Prevalence of business sectors prone to corruption
  • Many predominantly cash-based economies
  • Use of local agents for projects
  • Systemic public sector corruption
  • Weak law enforcement

The guidance includes a checklist to help companies monitor their progress and includes discussion on:

  • How management can demonstrate leadership and commitment to the company's anti-bribery policy
  • Determining the status of a traditional leader/village elder
  • Addressing duress payments
  • Setting rules on gifts and hospitality
  • Avoiding bribes disguised as charitable donations
  • Avoiding bribes disguised as political donations
  • Handling bribery solicitation
  • Getting started with a bribery risk assessment
  • Mitigating third party bribery risks
  • Maintaining accurate books and records
  • Establishing a corporate whistleblowing mechanism

Download the guidance document here

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Ninth Circuit adopts a broad whistleblower definition

The U.S. Court of Appeals for the Ninth Circuit on March 8, 2017, found that the whistleblower provisions of the Dodd-Frank Act applied to employees who raise concerns internally, and not just to those employees who make reports directly to the U.S. Securities and Exchange Commission (the "SEC").  The ruling finds that the anti-retaliation provisions of the Dodd-Frank Act also protects employees fired after making internal disclosures of alleged unlawful activity under the Sarbanes Oxley Act and other laws, rules, and regulations. 

The Ninth Circuit decision in Somers v. Digital Realty Trust takes sides on an issue that has already resulted in a circuit split.  The Second Circuit ruled that Congress did not intend to limit protections to whistleblowers who disclosed information to the SEC.  The Sixth Circuit avoided the question altogether in a January decision, while the Fifth Circuit, the first to weigh in on the issue, ruled that Dodd-Frank limits the definition of "whistleblower" to those who report alleged securities violations to the SEC. 

Judge Schroeder said, "we conclude that the SEC regulation correctly reflects congressional intent to provide protection for those who make internal disclosures as well as to those who make disclosures to the SEC."

The anti-retaliation provision in question states:

"No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower

(I) in providing information to the Commission in accordance with this section;

(ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or

(iii) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.), this chapter, including section 78j-1(m) of this title, section 1513(e) of Title 18, and any other law, rule, or regulation subject to the jurisdiction of the Commission."    

The issue decided by the Ninth Circuit involved subdivision (iii).  This provision was added after the bill went through Committee so there is no legislative history to explain its purpose.  The court ruled that the Sarbanes-Oxley Act and the Securities Exchange Act of 1934 mandate internal reporting and that this reporting is to occur before external reporting.  So, in the courts opinion, leaving employees without protection for the required internal reporting may result in early retaliation before the regulators were informed. 

This issue is almost certain to reach the Supreme Court to be resolved, unless Congress amends Dodd-Frank to clarify their intent.  Corporate General Counsels should keep an eye on this issue as it works its way through the courts.  GCSG will follow developments on this issue.  Contact us at info@globalcompliancesg.com with any question's or for more information. 

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China announces launch of new anti-corruption system

In November 2016 the general office of the Communist Party of China Central Committee announced that a new anti-corruption system would be created to improve oversight efficiency.  A pilot program was launched in Beijing, Shanxi and Zhejiang provinces.

"Zhuang Deshui, deputy director of the clean government research center at Peking University, said, 'the pilots were chosen as a foundation for anti-corruption.  It is unusual to pilot reforms in Beijing, and this move reflects China's determination to press ahead with reform.'"(1)

The goal of the reform is to establish a national anti-corruption work agency, similar to the Corrupt Practices Investigation Bureau in Singapore.  The plan is to expand the scope of inspections and cover more types of public officials.

"Li Yongzhong, former deputy head of the Chinese Discipline Inspection Institute said, 'The current supervision system only covers the country's administrative organs...The new plan will make everyone on the government payroll subjects of the supervision committee, even those in public hospitals and schools.'"(1)

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COSO/ACFE publish a new Fraud Risk Management Guide

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the Association of Certified Fraud Examiners (ACFE) jointly published a new Fraud Risk Management Guide (FRMG) in September 2016. 

COSO/ACFE developed the guidance because they felt there was a demand for more guidance on fraud risk management.  They formed the task force to draft the guidance in January 2015 and they finished their work at the end of 2015.

The guidance is aligned with and supports the five key principles of the 2013 COSO Framework's internal control components.  These key principles include: Control Environment, Risk Assessment, Control Activities, Information & Communication, and Monitoring Activities.  The FRMG describes five essential processes that are necessary for the effective implementation of the key principles. These processes include:

  • Establish a fraud risk governance policy
  • Assess your organizations fraud risk
  • Design and implement fraud prevention control activities
  • Establish reporting and investigation processes
  • Monitor the entire fraud risk management process

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