Compliance Insider

Issue 15 > Compliance Alerts

Supply chain transparency needed to tackle slavery and human trafficking

The public consultation period on the transparency in supply chains clause in the United Kingdom Modern Slavery Act is due to end on 7 May. Companies that fall under the Act, which was passed by the United Kingdom Parliament and received Royal Assent on 26 March, will now need to show the public every year what they have, or have not, done to eradicate slavery and human trafficking in their supply chains.

Issue 15 > Compliance Alerts

Markets respond to Petrobras disclosure

Brazilian oil company Petrobras has said that the ongoing graft scandal has cost it US$2.1 billion following five months of internal debate during which it has been excluded from the bond markets. Following the disclosure, Petrobras has been allowed to re-enter the financial markets and, despite a US$7.1 billion net loss last year, the company’s shares have risen. Sao Paulo-based Tendencias Consuloria political analyst Rafael Cortez said that the positive reaction was because “however the market interprets the number, actually arriving at a number creates more credibility”.

Issue 15 > Compliance Alerts

United States dermatology company settles False Claims Act violations

The United States Department of Justice (DOJ) has announced that Family Dermatology P.C. has agreed to settle allegations that it engaged in improper financial relationships with a number of its physicians. The company, which owns and operates a dermatopathology laboratory in Georgia and a number of dermatology practices on the east coast of the United States, will pay approximately US$3.2 million plus interest.

Issue 15 > Compliance Alerts

United States companies falling short on conflict minerals checks

Global Witness and Amnesty International have compiled a joint report that has concluded that nearly 80 percent of United States companies are failing to adequately check and disclose whether their supply chain uses conflict minerals. The Digging for Transparency report analysed 100 conflict minerals reports that had been filed by companies such as Apple, Boeing and Tiffany & Co under the 2010 Dodd-Frank Act (Section 1502), known as the conflict minerals law.

Issue 15 > Compliance Alerts

China’s corruption crackdown targets golf temptation

China’s crackdown on corruption has addressed misconduct involving drugs, gambling and prostitution, among other capitalist pastimes, but is now going after the less obvious target of golf. Various state-run news outlets have sought to portray the leisurely game as yet another temptation for Communist Party officials. Recent developments include an investigation involving a senior Commerce Ministry official, and the government closure of dozens of courses across the country.

Issue 15 > Compliance Alerts

Beijing brings in the auditors for offshore assets probe

The Chinese government has called on the services of seven auditors to examine the conduct of major state-owned enterprises (SOEs) in regards to their overseas assets. The State-owned Assets Supervision and Administration Commission (Sasac) said that three of the audits would concentrate on the offshore assets of various state firms, while four others would look into key SOE projects. The seven audits will be carried out over the course of this year.

Issue 15 > Compliance Alerts

Australia faces foreign bribery allegation surge amid lack of transparency

The Australian federal police is investigating 16 allegations of Australians engaging in bribery with foreign officials. The number of allegations represents a two and a half year surge in cases of this kind, according to the Organisation for Economic Cooperation and Development (OECD), with the surge peaking on 17 December 2014. The OECD has expressed frustration that the secrecy of Australia’s anti-bribery efforts is stalling an in-depth discussion of the country’s international obligations.

Issue 15 > Compliance Alerts

Guilty plea from top Chinese official

A top Chinese official who ran the country’s largest petroleum company before overseeing state-owned companies has pleaded guilty to corruption and abuse of power. Former chairman of the state-run China National Petroleum Corporation Jiang Jiemin’s defense requested a light sentence as Jiang admitted to taking bribes, having assets that had unidentifiable sources and abusing his position of power. Jiang received bribes both directly and through his wife from 14 sources which accumulated to approximately US$2.2 million between 2004 and 2013.

Issue 15 > Compliance Alerts

All accused found guilty in Satyam fraud case

The 10 people who were accused of fraud at Satyam Computer Services in an accounting scandal that came to light in 2009 have all been found guilty. The scandal is said to be India’s largest accounting scandal after the firm’s founder and chairman at the time B Ramalinga Raju allegedly admitted inflating the company’s profits and manipulating the books over many years in an attempt to syphon off money.

Issue 15 > Compliance Alerts

Sri Lankan Airlines accused of corruption

A criminal investigation has been ordered against Sri Lanka’s state-run airline. Sri Lanka’s new government has alleged that corruption at the airline involved “billions of dollars”. Prime Minister Ranil Wickremesinghe’s office said that an inquiry had uncovered “shocking” amounts of corruption at Sri Lankan Airlines, which is 51 percent state-owned. Irregularities were highlighted in the companies US$2.3 billion deal to buy 10 Airbus aircraft, although the statement made no allegations against the plane manufacturer.

Issue 15 > Compliance Alerts

Menendez says there is nothing corrupt about friendship

United States senator Robert Menendez is angry that his friendship with Dr Salomon Melgen has been labelled corrupt by the United States Department of Justice (DOJ). A jury indictment against both men alleged that Melgen gave the senator nearly US$1 million in gifts and campaign donations in exchange for business favours, while Menendez protests that the gifts were out of friendship with no ulterior motive. The defence will take the ‘bromance’ stance and argue that the gifts were not part of a quid-pro-qui agreement, but merely a product of friendship.

Issue 15 > Compliance Alerts

HSBC’s clean up attempts are insufficient

HSBC is not rectifying the way it does business sufficiently, according to a 1000 page report by a United States Department of Justice (DOJ) monitor. The report was written by lawyer Michael Cherkasky who was installed in the bank by the DOJ following a US$1.9 billion fine in 2012 for laundering money for Mexican drug cartels, terrorists and pariah states. The report has said that the bank released documents about resolving problems following the event in 2012, but pretending that they had been produced earlier than they had been. The report also contains details about inadequate risk controls in high-risk countries such as Oman, and an incident in which an executive shouted at an auditor.

Issue 15 > Compliance Alerts

Second CBA IT executive hands himself into police

A second Commonwealth Bank of Australia (CBA) IT executive has handed himself into the New South Wales police and has been charged for an alleged multi-million-dollar bribery scandal. The charges follow that of Keith Hunter, who allegedly accepted bribes in exchange for offering contracts to an American based company. The police thought that Hunter had worked with another conspirator to award “lucrative” contracts to an overseas technology firm without putting them out to tender

Issue 15 > Compliance Alerts

Indian companies short on time to promote women

Indian companies have until April 1 to promote at least one woman to the board of directors. The regulation was announced last year by the Securities and Exchange Board of India (SEBI). However, as of 15 March 451 companies out of the 1,479 listed on India’s National Stock Exchange are yet to comply. With the deadline fast approaching, 30 female directors needed to be appointed a day for the 15 days following 15 March, according to managing director of PRIME database Pranav Haldea.

Issue 15 > Compliance Alerts

Tax scandal costs Brazil US$5.96 billion

Brazilian authorities have said that they have uncovered a tax fraud scheme that may have cost tax payers up to 19 billion reais (US$5.96 billion). Members of a body within the Finance Ministry called CARF were accepting bribes in return for reducing or wavering tax money that was owed. Federal police inspector Marlon Cajado said that 70 industrial, agricultural, civil engineer and finance companies were being investigated for giving bribes to CARF, which hears appeals on tax disputes.

Issue 15 > Spotlights

How dangling carrots in front of executives can boost compliance programmes

When bribery schemes are uncovered, senior members of staff are often found to be involved. Therefore, implementing financial incentives into the remuneration packages of senior executives can actually be an effective means of enhancing the quality of a company’s compliance programme.

Issue 14 > Compliance Alerts

Delegates urged to stay ahead of financial crime

Banks, financial institutions and multinational corporations are playing an increasingly critical role in the identification and prosecution of financial crime. But they need to do more to keep up with increasing regulatory demands as well as stay ahead of the countermeasures of criminal organisations. That was the message from the International Chamber of Commerce (ICC) whose Banking Commission will host its first annual meeting in Singapore next month.

Issue 14 > Compliance Alerts

Airbus Helicopters denies Greek bribery

Airbus wholly owned subsidiary Airbus Helicopters has denied allegations in the German media that it bribed Greek officials. Reports in German newspaper Bild had accused the rotorcraft manufacturer of giving bribes to Greek officials in exchange for their purchase of NH-90 helicopters. The German newspaper alleged that €41 million (approximately US$45 million) was paid in bribes to secure the purchase of the 20 military helicopters.