The chief executive of Brazilian bank BTG Pactual has been arrested in the ongoing corruption probe into Brazilian state-owned oil firm Petrobras. André Esteves, one of the country’s richest businessmen, was detained in his home after being accused of obstructing the Petrobras investigation. Latin America’s largest independent investment bank has since been struggling to contain the financial and reputational repercussions of the arrest.
Mobile operator VimpelCom is allegedly in discussions with the United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to pay a US$775 million settlement for violations of the Foreign Corrupt Practices Act (FCPA). The proposed settlement, the details of which could be announced in January, relates to allegations of bribery in Uzbekistan. Should it be agreed, the settlement would represent the second-largest penalty ever paid for FCPA violations. German conglomerate Siemens paid US$800 million in 2008 after pleading guilty to violating the internal controls and books and records provisions of the FCPA.
Geneva-based Nestlé has revealed that poor workers from developing countries such as Thailand, Myanmar and Cambodia often end up trapped in illegal and brutal working conditions as part of the company’s supply chain. The unusual disclosure concluded a near yearlong investigation by the Swiss food and beverage company into its supply chain following allegations by various media outlets and non-governmental organisations. They claimed that such working conditions were connected to the sourcing of shrimp, prawns and Purina brand pet foods which mirrored similar reports by The Associated Press (AP) of slavery in the seafood industry.
Volkswagen is set to face a new inquiry from German prosecutors following its admission of irregularities in the carbon dioxide (CO2) emissions of approximately 800,000 vehicles earlier this month. The German carmaker’s publication of incorrect emissions data may have led to unjustified tax breaks for some drivers. If confirmed, this would have also enabled VW to bypass taxes as many European countries base their tax rates for vehicles on their CO2 emissions. German regulators are currently investigating five unnamed individuals related to the case.
Compliance officers are leaving banks and other financial institutions en masse amid fears that they could face jail time for failing to stop the malpractice of rogue employees. The fear of facing repercussions was highlighted in a recent study by the British Bankers’ Association. Just over half of study respondents said that they would leave the compliance industry if a suitable opportunity presented itself. The financial industry has seen a huge rise in the recruitment of compliance staff in recent years in response to an increase in regulations.
Thailand’s Public Sector Anti-Corruption Commission (PACC) has established a hotline for those foreign investors seeking recourse against state officials who solicit bribes. PACC chief Prayong Preeyajit said that the 24-hour hotline was set up because the country’s Board of Investment found that many foreign investors were being coerced into giving bribes and backhanders to state officials but lacked a suitable avenue through which to lodge a timely complaint. The initiative should serve as an example to companies to do everything they can to facilitate the internal reporting of misconduct.
Animal rights organisation People for the Ethical Treatment of Animals (PETA) has started a petition against Kikkoman Corporation after accusing the Japanese soy sauce producer of testing on animals to enable it to make health claims about its products. In response, Kikkoman has stated that its previous practice of “minimal animal testing” is now a thing of the past. The PETA petition, which has to date amassed almost 100,000 signatures, has called on Kikkoman to “stop killing animals for soy sauce health claims”.
Kenyan athletics team coach Paul Simbolei has claimed that at least three Kenyan marathon runners avoided lengthy bans for doping by paying bribes. In addition, the International Association of Athletics Federations (IAAF) is examining possible sponsorship money embezzlement by Kenyan officials. The allegations and probe could see Kenyan athletics suffer the same fate as Russian athletics, which was recently suspended from international competition following findings by the World Anti-Doping Agency (WADA) that it had engaged in widespread doping.
Iran’s Islamic Revolutionary Guards Corps (IRGC) has arrested the administrators of more than 20 groups using the messaging application Telegram, citing concerns over Western “infiltration” and the alleged sharing of “immoral content”. IRGC’s crackdown on content such as satirical advice as well as images and texts “insulting to Iranian officials” has led to the detention of several journalists, artists and United States citizens. Iranian authorities previously blocked the application when its chief executive refused a demand to hand over “spying and censorship tools”.
The United States Department of Justice (DOJ) has written a draft policy that could see it pursue fewer cases against companies that self-report violations of the Foreign Corrupt Practices Act (FCPA). The draft is aimed at increasing the incentive for companies to come forward about their misconduct as well as clarifying FCPA penalties for the business community. The DOJ policy shift is understood to date back to earlier this year. However, issuance of the new policy has been delayed due to concerns by senior officials in the DOJ criminal division that the proposed change is too lenient on guilty parties.
The ongoing corruption crackdown in China has snared its latest two victims in the form of Beijing-based deputy Communist party boss Lu Xiwen and Shanghai vice mayor Ai Baojun. Both are officially being investigated for ‘breaches of discipline’, a phrase commonly used to refer to corrupt behaviour and misconduct. Ai heads up the committee in charge of Shanghai’s experimental free trade zone, which aims to facilitate the business activities of foreign firms in China, and is the most senior official in Shanghai to become a target of President Xi Jinping’s anti-corruption campaign.
The United States Department of Justice (DOJ) is finalising further guidance on the Foreign Corrupt Practices Act (FCPA) that will clarify to companies when they might face guilty pleas and how best to avoid them. The move is designed to educate companies on the measures they can take to cooperate in foreign graft probes and discourage the DOJ from pursuing cases against them. The DOJ has been criticised of late for not pursuing enough guilty pleas in cases where egregious misconduct is found, and instead allowing guilty parties to enter deferred prosecution agreements (DPAs).
An Iranian commercial airline has violated sanctions imposed by the United States by purchasing a jet manufactured in the United Kingdom. Mahan Air purchased the jet with the intention of delivering Iranian soldiers and weapons to Syria to assist the embattled regime of President Bashar Assad. Although the purchase does not technically violate the recent Joint Comprehensive Plan of Action between the United States and Iran – i.e. the nuclear deal – it could affect the way that Iranian sanctions are eased.
The United States Office of Personnel Management (OPM) is yet to notify three quarters of the 21.5 million victims of a high profile hack into its system some six months after the incident. The OPM, which provides human resource services for the federal government, partnered with the Defense Department at the start of October to alert victims via mail that their data had potentially been compromised. Only five million notifications have currently been sent out. The case is a reminder to those companies that suffer data breaches of the importance of warning customers as soon as possible of the risk of identity theft, fraud and financial loss.
Japanese airbag manufacturer Takata Corporation has been fined US$70 million by United States regulators over its defective airbags as well as for failing to alert authorities to the problem in a timely manner. Takata’s poor handling of the case is causing the company hefty financial and reputational damages and is an example of how not to handle a crisis. In addition to the financial penalty, some of Takata’s partners – such as its largest, Honda Corporation – have dropped it as a supplier citing concerns over its integrity and behaviour.
The owner of one of China’s most successful investment firms has been arrested on suspicion of insider trading and other offences. Shanghai-based Zexi Investment owner Xu Xiang and others were apprehended in Zhejiang Province and are now in criminal detention, according to the Chinese government’s official media outlet. The arrest of one of China’s wealthiest investors – Xu and his relatives reportedly have a combined fortune of US$2.2 billion – comes as the government expands its corruption crackdown to aggressively tackle misconduct in the financial sector.
A Scottish developer of cabling solutions for network infrastructure and industrial applications has become the first company to self-report its failure to prevent bribery under the United Kingdom Bribery Act (UKBA). Glenrothes-based Brand-Rex has paid £212,800 (US$328,000) to the civil recovery unit of Scotland’s prosecution service for contravening Section 7 of the 2010 UKBA. Brand-Rex was able to incur a civil settlement rather than criminal proceedings by self-reporting that it had benefited from unlawful conduct by a third party and taking steps to ensure that it will not occur again. The case should serve as a reminder to companies of the value of self-reporting and being proactive with compliance.
Rabobank is facing a probe by United States federal regulators in response to allegations of money laundering at one of its branches. Frequent trips of armoured trucks carrying United States dollars out of the Dutch bank’s Calexico branch on the Mexican border raised the alarm and led to allegations of cross-border money laundering. A representative from Rabobank, which prides itself as being one of Europe’s cleanest and safest banks, has said that the institution is cooperating fully with the investigation.