Compliance Insider

Issue 14 > Compliance Alerts

Vietnam to incentivise whistleblowers with money and medals

The Vietnamese government plans to incentivise corruption whistleblowers in the country with, among other things, financial rewards, the Medal of Bravery, and even the Prime Minister’s Certificate of Merit. The financial rewards could amount to as much as VND5 billion (approximately US$230,000) and would be applicable in cases carrying a value of more than VND300 million (US$14,000). Director of the Government Inspectorate’s department of anti-corruption Pham Trong Dat said that the Ministry of Finance and the Ministry Home Affairs had reached an agreement with his department about awarding individuals for their contributions to the country’s war on corruption.

Issue 14 > Compliance Alerts

Supreme Court rubber-stamps FTC antitrust authority

The United States Supreme Court has backed the Federal Trade Commission’s (FTC) authority to scrutinise professional licensing boards, even if they are state-government bodies. In a 6-3 opinion by Justice Anthony Kennedy, the Court upheld a 2010 case against the North Carolina State Board of Dental Examiners in a case involving teeth whitening services. The FTC alleged that the Board, which is predominantly made up of private dentists, was preventing hair salons and day spas from providing such services at prices lower than those of its members.

Issue 14 > Compliance Alerts

Prosecutors charge former Petrobras executive with bribery

Prosecutors in the ongoing scandal involving state-owned Brazilian oil company Petrobras have accused a former senior company executive of racketeering, bribery and money laundering. Former head of international operations Nestor Cerverό allegedly laundered money through Switzerland and Uruguay between 2003 and 2008, when he is accused of accepting bribes to help firms win engineering and construction contracts with Petrobras.

Issue 14 > Compliance Alerts

Singapore cybersecurity agency targets prevention

Singapore’s new Cyber Security Agency (CSA) will work with businesses in an effort to prevent cybersecurity attacks. The message that implementing security measures before an attack is more cost-effective than after, was delivered by the city-state’s minister for communications and information (MCI) and soon-to-be minster in charge of cybersecurity Dr Yaacob Ibrahim. At the opening of the Singtel-FireEye Advance Security Operations Centre, Yaacob said that online security should not be an afterthought and something that is implemented only after a system has been installed or strengthened following an attack.

Issue 14 > Compliance Alerts

Romania praised for corruption crackdown

The European Commission (EC) has praised Romania for its efforts in tackling corruption some 13 years after it established its National Anti-Corruption Directorate (DNA) and eight years after it joined the European Union (EU). In recent weeks, a host of high profile individuals have been arrested and are being investigated for corruption, as Romania’s crackdown reaches the country’s elite. The EC’s first vice president Frans Timmermans said: “Romania is on the right course and just needs to stick to it. Tackling corruption remains the biggest challenge and the biggest priority.”

Issue 14 > Compliance Alerts

Cuba releases Canadian transport company president

Cuba has released the president of a Canadian transport company after he spent more than three years in jail following his conviction for bribery. Cy Tokmakjian of the Tokmakjian Group faced a 15-year jail sentence following his arrest in 2011 alongside two other company executives. The court also seized the company’s Cuban assets, which were reportedly worth approximately US$100 million.

Issue 14 > Compliance Alerts

Bank of America whistleblower faces retaliation

A whistleblower who reported on the flawed mortgage policies of Bank of America (BOA)-owned Countrywide Financial is experiencing retaliation despite an initial favourable outcome to his actions. Michael Winston reported Countrywide for selling subprime mortgages and as a result was fired. Countrywide’s mortgage policies contributed to the 2008 global financial crisis.

Issue 14 > Compliance Alerts

Southwest Airlines settles whistleblower retaliation case

Southwest Airlines has agreed in a settlement to remove disciplinary action from an employee mechanic’s file and pay him US$35,000 in legal fees. The AIR-21 statute, under which the lawsuit was filed, is specifically for staff or airline workers who are on the receiving end of negative consequences as a result of making safety related reports. According to Forbes, in July last year the mechanic was carrying out a maintenance check on a Southwest aircraft when he identified two cracks on the fuselage of the plane and noted them. As a result, the aircraft was sent for repair.

Issue 14 > Compliance Alerts

China’s corruption crusade expands to economic fugitives

Chinese President Xi Jinping has coined a new term for the latest targets of corruption in the country – ‘foxes’. The term is used to describe those individuals who are alleged to have partaken in corrupt activity and subsequently fled China. Other notable anti-corruption related references from Xi include ‘tigers’ and ‘flies’, which are also part of the campaign to stamp out corruption in the country and which refer to the pursuit of both high and low level officials who have been involved in improper conduct.

Issue 14 > Compliance Alerts

Indonesian anti-graft efforts damaged by internal politics

An ongoing feud between the Indonesian police force and the country’s Corruption Eradication Commission is hampering Indonesia’s progress in tackling widespread corruption. Concerns have been raised following the police arrest of Bambang Widjojanto on charges of false testimony emanating from a five-year old case. Widjojanto is a board member of the Commission, which is also known as Komisi Pemberantasan Korupsi or KPK in Indonesian.

Issue 14 > Compliance Alerts

Hospital Group settles New Mexico fraud claims

A unit of one of the largest hospital groups in the United States, together with three of its hospitals, has agreed on a settlement relating to claims that they fraudulently secured federal funding by making illegal donations to county governments in New Mexico. Community Health Systems will pay US$75 million, of which US$18.7 million will go to whistleblower Robert Baker subject to United States New Mexico federal court approval.

Issue 14 > Compliance Alerts

Qualcomm fined US$975 million to settle China allegations

Qualcomm has agreed to settle antitrust allegations in China by paying a record fine of US$975 million. The decision ends a two-year battle to determine whether the United States semiconductor company abused its dominant market position to increase prices on its patents in China. The news has increased Qualcomm’s share price by 3 percent in after-market trading.

Issue 14 > Compliance Alerts

JP Morgan investigated for China recruitment misconduct

JP Morgan is facing fresh scrutiny for its hiring practices in China as investigators look into whether or not the bank improperly hired relatives of government officials to gain business advantages. Unanimous sources close to the investigation have confirmed that one such hire was Gao Jue, the son of vice-minister for commerce Gao Hucheng. The financial institution is expected to settle allegations that it violated the Foreign Corrupt Practices Act (FCPA) later this year.

Issue 14 > Compliance Alerts

Tesco to be investigated for supplier misconduct

The United Kingdom Groceries Code Adjudicator (GCA) is to investigate the supermarket chain Tesco for supplier violations. Adjudicator Christine Taco has said she has reasonable suspicion that Tesco breached the Groceries Supply Code of Practice, and that other supermarkets might also be investigated. However, if the misconduct took place before the GCA was granted power to penalise, then the supermarket will not face any financial penalties.

Issue 14 > Compliance Alerts

Cyber thieves hijack emails to steal US$215 million

Cyber thieves have stolen US$215 million over the last 14 months by compromising the email accounts of executives and employees at businesses that either work with foreign suppliers or regularly perform wire transfer payments. The Federal Bureau of Investigation (FBI) described the so-called ‘business email compromise’ (‘BEC’) swindle as a sophisticated and increasingly common scam.

Issue 14 > Compliance Alerts

United Kingdom police report reopens historical corruption cases

A report by Her Majesty’s Inspectorate of Constabulary (HMIC) into the police force in England and Wales has highlighted the need for an effective whistleblower policy and systems. Although the report concluded there is not endemic corruption in the police force in the United Kingdom, it has ordered the review of nearly 2,000 cases of alleged corruption. Her Majesty’s inspector constabulary Mike Cunningham said that officers recognise the importance of reporting misconduct, but “don’t have confidence that those systems for reporting are as safe or anonymous as they should be”.

Issue 14 > Compliance Alerts

Petrobras investigation cost aids compliance messaging

Petrobras chief executive Maria das Gracas Silva Foster has told analysts that the internal investigation into alleged corruption at the Brazilian state-run oil firm will cost approximately US$57 million this year as a result of legal fees and the company’s investment in a new internal compliance division. She also warned that the investigation could last up to two years. The revelations came amid a 12 percent drop in the firm’s share price following publication of its delayed third-quarter earnings, which did not include an expected asset write-down linked to last year’s corruption scandal.

Issue 14 > Compliance Alerts

Construction manufacturer suit verifies antitrust programme value

A United States-based start-up online dealer of Chinese construction equipment has filed an antitrust lawsuit against construction manufacturer Caterpillar and three other companies. International Construction Products (ICP) alleges that that the defendants conspired to hinder the progress of the new venture by limiting its ability to “efficiently bring its products to market”.