Compliance Insider

Issue 20 > Compliance Alerts

Why adaptive training works and role-based training does not

Companies that have used role-based compliance training have traditionally only looked at a few factors to determine the training curriculum that their employees should receive. However, those organisations that are serious about compliance training need to usher in a new era of adaptive training. ‘Role’ based training, as it is entitled, essentially takes into consideration the job title of the employee and, if an employee is lucky, a few other factors. This is the type of training that many companies have been using for years and is currently in place at many companies.

Issue 20 > Compliance Alerts

EU initiatives around international data transfers quell armageddon fears

On 6 October 2015, the European Court of Justice decided the protection of data provided by the United States Safe Harbor Privacy Principles was inadequate and declared its Safe Harbor Decision invalid, effective immediately. London-based Mark Keddie, Chief Privacy Officer at telecommunications company BT, talks to Compliance Insider® Managing Editor Stephen Mulrenan about the impact of European Union (EU) initiatives since then and the extent to which organisations will have to amend their privacy practices.

Issue 20 > Compliance Alerts

Compliance professionals are partners, not scapegoats

The preoccupation with the prosecution of individuals has been building momentum ever since the 2008 global financial crisis, following which not a single prominent executive was held to account. But while recent enforcement actions have caused concern among the compliance community, regulators have been at pains to stress the vital role that compliance professionals can play in stamping out misconduct.

Issue 20 > Compliance Alerts

Ireland set to reinvent itself after tax backlash

Ireland has been at the epicentre of many integrity and compliance headlines over the last year or so. Whether receiving the data protection complaints of a disgruntled Austrian student or being indirectly criticised for the dubious tax strategies of certain multinationals, Ireland has held a certain notoriety in recent times that is forcing change. Compliance Insider® reviews the potential impact of recent developments.

Issue 20 > Compliance Alerts

Trump University fraud case to go to trial

A court in New York has ruled that a US$40 million civil lawsuit filed by New York Attorney General Eric Schneiderman alleging fraud against Trump University should proceed as planned. Justice Cynthia Kern denied the Attorney General’s request for a ruling based on evidence already presented, instead ruling that a trial should take place towards the end of this year. Although the decision was favoured by Donald Trump’s legal team, which had been calling for a jury trial, the timing could be awkward should Trump secure the Republican Party’s presidential nomination.

Issue 20 > Compliance Alerts

Mitsubishi Motors bets on market value impact of further admission

Tetsuro Aikawa, the president of Mitsubishi Motors, has confirmed that the beleaguered Japanese carmaker has been using improper fuel tests since as far back as 1991. Shares in the company fell a further 10 percent on news of the admission, bringing the total drop in market value to almost 50 percent following last week’s revelations that the carmaker falsified fuel economy data in more than 600,000 vehicles sold in Japan.

Issue 20 > Compliance Alerts

North American food recalls highlight supplier health and safety risks

Two separate cases of possible food contamination across North America have once again highlighted health and safety risks that are inherent with any supplier. Costco issued its second recall of a food product in Canada this month when it recalled a brand of organic sweet peas from supermarket shelves due to fears over possible Listeria contamination. Meanwhile, in the United States, CVS Pharmacy voluntarily recalled selected cartons of Gold Emblem Abound Organic Spiced Herbal Tea after being notified of possible Salmonella contamination by the manufacturer.

Issue 20 > Compliance Alerts

Indian tycoon facing money laundering allegations

Indian businessman and politician Vijay Mallya has had his passport revoked as attempts to prosecute him in connection with debts of approximately US$1.4 billion begin to gather momentum. Mallya, who has reportedly been in the United Kingdom for the last month, recently informed India’s Supreme Court that his family’s aggregate foreign assets were worth Rs 780 crore (approximately US$130 million), and that he did not need to disclose any specific details on the assets as he and his family were non-resident Indians. Mallya is facing pressure from creditors who are seeking to recover monies owed by his defunct Kingfisher Airlines.

Issue 20 > Compliance Alerts

Volkswagen owners demand end to compensation delay

Thousands of owners of diesel Volkswagen vehicles have urged a judge to order the beleaguered automaker to press ahead with repairs and compensation if it is unable to reach agreement this week on a solution with the United States Environmental Protection Agency (EPA). Lawyers representing the owners requested an expedited hearing or a full trial in order to secure an order for “equitable relief” that would commence in July. VW has stated that it does not believe that such a hearing or trial – which would include punitive damages against the carmaker – is appropriate given how close it is to finalising a deal with the EPA.

Issue 20 > Compliance Alerts

Recalled Costco frozen fruit linked to Canadian Hepatitis A outbreak

An outbreak of Hepatitis A in Canada is being blamed on a frozen fruit product sold at Costco stores across five provinces in the country. Twelve cases of the infectious disease have so far been reported in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Quebec. Nature’s Touch has recalled its Organic Berry Cherry Blend brand from the marketplace due to the possible contamination, confirmed the Canadian Food Inspection Agency (CFIA).

Issue 20 > Compliance Alerts

UK agency issues yoghurt recall over plastic fears

United Kingdom government agency the Food Standards Agency (FSA) has announced a recall of two brands of children’s yoghurt, manufactured and sold by Müller and Sainsbury’s, over fears that they may contain pieces of plastic. Describing the recall as a “precautionary measure”, supermarket chain Sainsbury’s is encouraging customers not to consume its Strawberry Fromage Frais Pouches as they may include pieces of blue plastic. Müller’s Kids Corner Butterflies Strawberry product has also been recalled as one of its pots may contain a small puck-shaped pink disc.

Issue 20 > Compliance Alerts

Senior manager of Australian broadcaster accused of fraud

The Seven Network in Australia has won an injunction to freeze the assets of a senior manager who has admitted to defrauding the broadcaster by falsifying invoices. The NSW Supreme Court agreed to Seven’s request for freezing orders against the assets of commercial manager for programming John Michael Fitzgerald as well as those of his companies FPC and Kanfit, where he is sole director and shareholder. Sydney-based Fitzgerald admitted that his assets included A$1 million (US$767,000) in a pension fund and A$2.5 million in cash and shares.

Issue 20 > Compliance Alerts

Panama and Unaoil confirm demise of tick-the-box compliance

Companies use business partners all over the world. It is generally understood that some business partners form different risks to other business partners and therefore the initial reviews on their backgrounds may vary. This variation is often assessed based on ‘risk’ and is known as a ‘risk based approach’. The two recent global stories around the Panama Papers and Unaoil highlight some of the gaps in conducting due diligence on business partners.

Issue 20 > Compliance Alerts

Target Australia managers quit following accounting non-compliance

Three senior managers at Australian retailer Target have resigned following the results of a two-week investigation into suspicious accounting practices. The departing managers, which include managing director Stuart Machin, were accused of artificially boosting the company’s earnings by organising early rebates with 31 overseas clothing suppliers in return for higher prices later on – an act that the managing director of parent company Wesfarmers described as “mind-blowingly stupid”.

Issue 20 > Compliance Alerts

Texan tech company and state attorney general charged in stock scam

The United States Securities and Exchange Commission (SEC) has charged a Texas-based technology company and its founder with fraud. Servergy and former chief executive William Mapp are accused of boosting stock sales and misleading investors by making false claims about the energy efficiency of a computer server and the level of interest in the product on the part of high profile customers. Texas attorney general Ken Paxton and a former member of the company’s board of directors have also been charged with raising investor funds for Servergy without disclosing their commissions.

Issue 20 > Compliance Alerts

Wells Fargo pays US$1.2 billion for years of reckless underwriting

Wells Fargo has agreed to pay US$1.2 billion to settle civil mortgage fraud claims stemming from the bank’s participation in the United States Federal Housing Administration (FHA) direct endorsement lender programme. The San Francisco bank, which is the largest bank in the United States by market capitalisation, admitted to certifying to the Department of Housing and Urban Development (HUD) that certain residential home mortgage loans were eligible for FHA insurance, in the years prior to the 2008 global financial crisis, when in fact they were not.

Issue 20 > Compliance Alerts

What the Panama Papers mean for compliance officers

The Panama Papers showed how various people, including government officials, had opened various offshore companies and presumably used those companies to acquire assets and hold funds in offshore bank accounts in the name of those companies, without disclosing these to any necessary authorities. They also revealed a number of interesting things for compliance officers to keep in mind. Here are our top 12 in no particular order:

Issue 20 > Compliance Alerts

Former Chinese general admits to taking ‘huge bribes’

Former Chinese army general Guo Boxiong has admitted to taking “huge bribes” in exchange for helping with promotions within the military. General Guo confessed to accepting bribes worth approximately US$12.3 million, though that is believed to represent a fraction of the actual wealth he accrued during his time in the military. In 2012, Guo resigned as vice chairman of China’s Central Military Commission, which is in charge of the People’s Liberation Army, and has now been handed over to prosecutors.