Compliance Insider

Issue 15 > Compliance Alerts

FIFA scandal set to embroil Nike

United States prosecutors have alleged that an intermediary helped secure a US$160 million, 10-year sponsorship deal in 1996 between a sportswear company and Brazil’s football federation (CBF) by paying bribes. In their indictment, prosecutors simply referred to “sportswear company A” or “E” in two separate documents. Although the sportswear company has as yet not been named, the deal fits the description of one signed by Nike and the CBF in 1996. In a statement in response, Nike said: “The … documents … do not allege that Nike engaged in criminal conduct. There is no allegation in the charging documents that any Nike employee was aware of or knowingly participated in any bribery or kickback scheme.”

Issue 15 > Compliance Alerts

Irish credit unions fall short on AML requirements

The Irish Central Bank has identified widespread deficiencies in the anti-money laundering (AML) policies and procedures of credit unions. The Bank has released a report that says it has reviewed a sample of credit unions and found that they lack adequate risk assessments of customers and transactions. The unions are also reported to lack adequate procedures, systems and controls, and often fail to train staff properly in AML procedures.

Issue 15 > Compliance Alerts

FIFA officials indicted on United States federal corruption charges

At least five officials from football’s world governing body FIFA were arrested in Zurich on Wednesday in an early morning operation. Plain-clothed policemen descended on the Baur au Lac hotel to make the arrests in the city where this year’s annual FIFA meeting is taking place. Those arrested are awaiting an extradition request from the United States, according to the Swiss Federal Office of Justice (FOJ). A total of nine FIFA officials and five corporate executives have been indicted worldwide for racketeering conspiracy and corruption. They include two current FIFA vice presidents and the current and former presidents of the Confederation of North, Central American and Caribbean Association Football (CONCAF).

Issue 15 > Compliance Alerts

Executives on alert as China steel industry sweep continues

China’s steel industry has been put on notice that the country’s sweep of corrupt officials in the sector is set to continue. The news follows the recent start of the corruption trial of Shi Xiongliang, the former vice general manager of Maanshan Iron & Steel (Masteel). Shi allegedly accepted over 1.9 million yuan (US$306,000) in bribes from suppliers and retailers during his role at the state-run steel company. Although he retired in July 2013, he found himself on the list of suspects for corruption in May 2014 as Anqing prosecutors from Anhui province investigated illicit behaviour at Masteel.

Issue 15 > Compliance Alerts

Indirect sponsorship challenges include loss of fund control

Organisations that indirectly fund the education of doctors risk losing track of their funds. The warning came from Zimmer vice president and chief compliance officer Angela Main to delegates on the final day of GMTCC2015. Speaking on a session entitled ‘Direct and indirect sponsorship of HCPs to third party organised conferences: global trends and challenges’, Main said that funds were often used in some less financially-developed jurisdictions to pay for items other than those related to education due to a lack of proper controls.

Issue 15 > Compliance Alerts

Banning direct sponsorship could have unforeseen consequences

The Medtech profession has been cautioned about the possibility of unforeseen consequences if it continues on the path away from healthcare companies directly sponsoring healthcare professionals (HCPs). Speaking at GMTCC2015 on a panel discussion entitled, ‘Moving to new models of support for medical education: considerations from physicians and scientific societies’, American Academy of Orthopaedic Surgeons (AAOS) CEO Karen L Hackett said: “I’ve never been involved in a change that didn’t have unintended consequences.”

Issue 15 > Compliance Alerts

Compliance should focus on integration as industry consolidates

With the Medtech industry consolidating at an unprecedented speed, compliance professionals have been urged to focus on integration activities – something that is often overlooked during a merger or acquisition but is as critical to the success of a deal as due diligence activities. “Acquisition due diligence is certainly key to success, but it’s also a combination of other factors such as compliance being fully integrated with legal and the deal teams,” said Boston Scientific senior director and European general counsel Suzanne Durdevic.

Issue 15 > Compliance Alerts

Sepp Blatter denies being FBI probe target

FIFA president Sepp Blatter has denied that he is being investigated by the United States Federal Bureau of Investigation (FBI). Blatter was accused by ESPN of avoiding the United States because he was under investigation by the Bureau, but he has responded by saying that its focus remains on former members of FIFA rather than on him. They include former executive committee members Jack Warner and Chuck Blazer, who were also regional confederation officials for the Confederation of North, Central American and Caribbean Association Football (CONCACAF) for Trinidad and Tobago and the United States respectively.

Issue 15 > Compliance Alerts

Journalists argue for greater whistleblower protection

A number of journalists have met with Members of the European Parliament (MEPs) to argue for the better protection of whistleblowers that reveal behaviour that goes against the public interest and not only when they reveal illegal activities. The meeting followed recent reprisals against French journalist Edouard Perrin, who is being prosecuted in Luxembourg for his part in revealing secret tax rulings in the Grand Duchy. Several MEPs voiced their support for the French journalist and have described the prosecution as “foolish” and “scandalous”.

Issue 15 > Compliance Alerts

Continuing supplier problems cause Toyota and Nissan to escalate recalls

Japanese car manufacturers Toyota and Nissan are set to recall 6.5 million vehicles due to concerns with faulty airbags made by Takata Corporation. Toyota has announced that it will recall just fewer than five million cars worldwide, manufactured between March 2003 and November 2007, of which 1.36 million are in Japan. They include models such as the Corolla and the Vitz. Nissan meanwhile has said that it will recall approximately 1.5 million cars for the same issue.

Issue 15 > Compliance Alerts

Hong Kong anti-graft agency refuses to comment on dropped probe

The chief of Hong Kong’s anti-graft agency, the Independent Commission Against Corruption (ICAC), has refused to divulge why no action has been taken against the territory’s Secretary for Development Paul Chan Mo-po following a two-year probe. Chan was being investigated for a possible conflict of interest relating to farmland in the Northern Territories. In 2013, it emerged that his family owned 18,000 sq ft of land within a new town development, which could potentially generate HK$20 million (approximately US$2.5 million) when the government took it over.

Issue 15 > Compliance Alerts

Indian politician cleared of corruption after appeal win

The first active politician in India to be sentenced to jail for corruption has won her appeal and been cleared of any wrongdoing. The head of India’s largest Tamil party, Jayalalithaa Jayaram, stood down from her position as chief minister of Tamil Nadu and was sentenced to four years in jail following her conviction in September. The recent verdict has led to widespread celebrations owing to her immense popularity, and has paved the way for her return as one of the country’s most powerful politicians.

Issue 15 > Compliance Alerts

Outgoing Guatemalan VP to cooperate with investigation

Guatemala’s vice president Roxana Baldetti has resigned and abandoned her offices as a customs corruption scandal, which has already implicated her former private secretary, threatens to expose her to investigation. Baldetti becomes the first Guatemalan vice president to step down amid a corruption probe although prosecutors are yet to implicate her in the graft. President Perez Molina has described Baldetti’s decision as “brave” and “personal”, saying that she wanted to leave her office voluntarily and cooperate with any investigation. Baldetti denies any involvement in the scandal.

Issue 15 > Compliance Alerts

Bilfinger seeks leniency in Brazil

German engineering firm Bilfinger has sought a leniency deal in Brazil as it becomes the first international company to disclose that it may have paid bribes in the South American country. By reporting possible bribery to Comptroller General Valdir Simão, Bilfinger hopes to continue to operate in Brazil though it may still pay damages. Companies convicted of bribery may be banned from future contracts in Brazil under the country’s new anti-corruption law, which has been in place since January 2014.

Issue 15 > Compliance Alerts

Siemens denies bribery report

Siemens and a Chinese regulator have both denied a newspaper report that alleged Siemens was being investigated for “commercial bribery”. Recently, it was published that China’s State Administration for Industry and Commerce (SAIC) had launched an investigation into Siemens. The report alleged that the company had sought improper influence by donating expensive medical equipment to hospitals under an agreement whereby they would then buy the chemicals needed to run the machines from Siemens.

Issue 15 > Compliance Alerts

Victorian Government to open inquiry into slave conditions and visa abuse

The Victorian Government in Australia has said it will begin an inquiry into slave-like conditions and visa abuses at farms and factories across the state of Victoria. The inquiry was prompted by a news channel report that seemingly uncovered examples of labour exploitation. The Victorian Government probe will begin in the second half of this year, as the government is in the process of putting terms of reference together and forming a committee to conduct the investigation.

Issue 15 > Compliance Alerts

Military contractor sentenced for bribery in Afghanistan

A trucking company contractor in Afghanistan has been sentenced to four years in jail after he pleaded guilty to offering bribes to servicemen at United States Army installations. Akbar Ahmed Sherzai from Centreville, Virginia offered US$54,000 in bribes to try and persuade an Army official to falsify documents confirming that fuel shipments had been delivered, when this was not the case.

Issue 15 > Compliance Alerts

Former Auckland Transport officials charged with corruption

Two former Auckland Transport officials and the managing director of a project management firm have been charged with multiple counts of corruption dating back nine years. The New Zealand Serious Fraud Office (SFO) says that the trio face allegations of bribery worth more than NZ$1 million (approximately US$750,000). The officials were remanded after making their first appearance in Auckland’s North Shore District Court. They are yet to enter a plea.