Compliance Insider

Issue 12 > Compliance Alerts

Shipyard fine is timely reminder of importance of due diligence

A shipyard company has agreed to pay the United States Securities and Exchange Commission (SEC) US$1 million to settle allegations that it violated the False Claims Act. North Florida Shipyards and company president Matt Self are accused of setting up a smaller company as a front to win contracts from the Coast Guard that were intended for the Service Disabled Veterans Owned Small Businesses (SDVOSB).

Issue 12 > Compliance Alerts

South Korea proposes bill to cut corruption

Pressure on the Government to tackle South Korea’s corruption culture has mounted since a ferry sinking earlier this year was at least partly linked to bribery. Civil servants are closely watching the impending fate of a new anti-graft bill. Former head of Korea’s anti-Corruption & Civil Rights Commission Kim Young-ran first proposed the bill two years ago. The bill contains tougher punishments for officials who received bribes, however, the government submitted a toned down version to the nation assembly in August.

Issue 12 > Compliance Alerts

Guilty plea for bribes illustrates risks with government contracts

The former mayor of Rio Grande, Puerto Rico, has pleaded guilty to soliciting and accepting bribes in exchange for construction contracts. Eduard Rivera-Correa accepted US$39,000 in cash, and in return he awarded three inspection contracts with the municipality of Rio Grande.

Issue 12 > Compliance Alerts

Banks may be required to ensure vendors have warranties

One of New York’s financial regulators has said that he is considering a new rule that requires banks to obtain representations and warranties from vendors to increase cybersecurity. Benjamin M Lawsky emphasised to banks the increasing danger of the cyber world and warned that the monitoring vendors’ security is needed to thwart hackers.

Issue 12 > Compliance Alerts

China to close gift loophole in corruption fight

The Chinese Government is likely to close a loophole that allows officials to claim that money or luxury goods they receive are merely gifts, and not bribes. Receiving money, or goods such as watches and cars, is currently only considered a crime if it can be linked to an abuse of power. This is the latest in a widespread corruption crackdown in China that started when President Xi Jingping promised to take down “tigers and flies”: a reference to low and high level offenders.

Issue 12 > Compliance Alerts

United Kingdom banks should embrace more compliance

Banks in the United Kingdom have been complaining about the increasing number of regulations they face in the coming years, warning that they will cost the country its reputation as a global financial centre. Banks with deposits of at least US$40 billion will be required to ‘ring fence’ their retail banking activities from their investment banking activities by 2019. In addition, senior managers will be held more accountable for the misconduct of staff. And provisions will be introduced to control and rein in bonuses.

Issue 12 > Compliance Alerts

Employee and employer reach stalemate over contract breach

An employee of a Housing Association claims to have blown the whistle on an overspend by his employer only to find himself subject to a breach of confidentiality as his emails were searched. The search uncovered breaches in the employee’s contract, leaving both parties in a stalemate that resulted in the employee resigning but potentially sacrificing compensation.

Issue 12 > Compliance Alerts

Compliance officer alters document for SEC investigation

The United States Securities and Exchange Commission (SEC) has announced it is enforcing action against a former compliance officer at Wells Fargo Advisors for altering a document used in an investigation. Judy K Wolf was responsible for uncovering suspicious trading at Wells Fargo and then identifying whether or not the trades had been based on non-public information. She subsequently created a document in 2010 to report her findings, and concluded that there was nothing of note to disclose.

Issue 12 > Compliance Alerts

Managers suspended as Tesco probe widens

Tesco has suspended three senior managers amid a growing crisis since the new chief executive launched a probe into an estimated £250 million (almost US$400 million) profit overstatement. William Linnane was responsible for the buying of impulse purchases; Dan Jago was responsible for the buying of wines and spirits; and Sean McCurely was responsible for convenience.

Issue 12 > Compliance Alerts

Snapchat blames the use of third parties for leaked photos

Explicit images have been hacked from Snapchat and distributed online, but the social media messenger denies any fault and blames the downloading of third party applications (apps) by users. Thousands of photos have been leaked from Snapchat, which is an app that allows people to send photos, videos or messages that ‘disappear’ after they have been viewed. Users who have been using the service via a third party app have fallen victim to widespread hacking.

Issue 12 > Compliance Alerts

Wisconsin podiatrist accused of defrauding the Government

The United States Department of Justice (DOJ) has filed a civil complaint in a Milwaukee federal court, accusing a Wisconsin-based podiatrist of defrauding government health insurance programmes and violating the United States False Claims Act (FCA). Alan Balkansky runs the Healthy Foot and Ankle and Grafton Podiatry Group and is accused of submitting false diagnoses for patients in order to submit false claims to Medicare.

Issue 12 > Compliance Alerts

Infosys accused of whistleblower retaliation

The compliance practices and culture at Indian multinational corporation Infosys are to be re-examined following a second lawsuit by a former employee. Jack Palmer filed his latest suit in a New Jersey district court, seeking reappointment and compensation for alleged wrongful termination. The whistleblower’s first suit three years ago concerned possible visa violations at the company.

Issue 12 > Compliance Alerts

Apps help build transparency in Latin America

A number of new Applications (apps) have been launched in South America to help build transparency in the dealings of officials. Each app performs a different function, from revealing the history of government members and monitoring the spending of events to holding officials accountable to promises made during elections.

Issue 12 > Compliance Alerts

Transatlantic partners seek cyber threat collaboration

Financial Groups in the United States have called for the improved sharing of information between financial institutions on cyber threats. The call comes as the United Kingdom looks to implement technology to address the same problem. Following attacks on JP Morgan, the Financial Services Information Sharing and Analysis Centre (FS-ISAC) teamed up with the Depositary Trust and Clearing Corporation to try and develop a new way to share intelligence automatically in the United States.

Issue 12 > Compliance Alerts

Petrobras probe shows director also signed deals

The contracts at the centre of an ongoing investigation against Petroleo Brasileiro’s (Petrobras') former executive were also signed by a former director of engineering and services.

Issue 12 > Compliance Alerts

Transatlantic regulators get tough on insider trading

Regulators on both sides of the Atlantic have in the past week reinforced a clear message to compliance-challenged companies, and rogue employees, that insider trading will not be tolerated. In the United States, charges have been brought against two former Wells Fargo employees for buying or short selling stock prior to publication of research analyst reports containing rating changes, while the United Kingdom has witnessed yet another scandal involving one of its ‘big four’ supermarket chains.

Issue 12 > Compliance Alerts

Uganda introduces whistleblowing phone app

Uganda has introduced an app to allow people to anonymously report information when they think that public funding for schools and hospitals is not reaching its intended destination. The Action for Transparency (A4T) app is being piloted by three Ugandan districts and was developed in Sweden.

Issue 12 > Compliance Alerts

First active politician jailed for corruption in India

The popular chief minister of the Indian state of Tamil Nadu has been jailed for four years and banned from politics for 10 years. She was convicted for an 18 year-old corruption case, making her the first chief minister to be found guilty while still in office.