Compliance Insider

Issue 15 > Compliance Alerts

Season’s Greetings

The team at Compliance Insider® would like to take this opportunity to extend our very best wishes to all of our readers and their families during this holiday season, and to thank you all for your support over the last 12 months.

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

Bosch pleads guilty to price fixing

Automotive parts supplier Robert Bosch has pleaded guilty and agreed to pay a fine of US$57.8 million for its role in a price fixing scheme. The world’s largest independent parts supplier to the automotive industry admitted it helped fix prices and rig bids for spark plugs, oxygen sensors and starter motors to be sold to manufacturers around the world. The United States Department of Justice (DOJ) has said that Bosch allocated the supply of the spark plugs and oxygen censors from 2000 to 2011. It also rigged bids and fixed, stabilized and maintained prices before selling the two products to major manufacturers such as DaimlerChrysler AG, Ford Motor Company and General Motors Company.

Issue 15 > Compliance Alerts

SFO fined for data breach, shows training is important at every level

The United Kingdom Serious Fraud Office (SFO) will pay an £180,000 fine (approximately US$266,000) after an inexperienced staff member accidently sent thousands of documents of evidence in a high-profile bribery scandal to a witness. The evidence contained the personal information of 64 people. The witness informed the SFO of its mistake only to have more evidence sent to him a few months later. The Information Commissioner’s Office (ICO) has attributed the mishap to a “relatively inexperienced” temporary worker, and the SFO has said it has subsequently “substantially overhauled its procedures”.

Issue 15 > Compliance Alerts

Israel’s former Prime Minister convicted of corruption

The former Prime Minister of Israel has been convicted of accepting bribes from a United States businessman. Ehud Olmert has already been sentenced to six years in jail in May when he was found guilty of accepting bribes linked to a real estate deal in Jerusalem during his time as the city’s Mayor. Olmert, who held the position of Prime Minister between 2006 and 2009, is appealing against May’s verdict and his lawyer said they are considering appealing against the more recent decision as well.

Issue 15 > Compliance Alerts

Tinder prank exposes security lapse

A prankster exposed a lapse in security on the dating app Tinder by creating fake accounts to match with men. Instead of sending messages to women as intended, men were sending messages to fake accounts and then having their messages sent to other straight men’s accounts, so effectively they were flirting with each other while the prankster acted as a middle man. The person responsible has identified himself as a man called Patrick and cited his motivation as an attempt to highlight the unsavoury messages men send to women on Tinder.

Issue 15 > Spotlights

The ever-increasing profile of the compliance officer

A recent lawsuit in the United States finance sector has raised the prospect of individual compliance officers being held responsible for the failings of a compliance programme. Compliance Insider® considers the measures officers can take to minimise personal liability, as well as the implications for companies.

Issue 14 > Compliance Alerts

No business as usual for Nepal FA during FIFA investigation

The president of the Nepal Football Association (ANFA) has voluntarily agreed to stand down from his position for an additional 90 days while FIFA continues to investigate corruption allegations. Ganesh Thapa had already been absent from his post for 120 days as the football world governing body conducted the probe. The additional period will mean that he now misses next month’s Asian Football Confederation congress in Bahrain, during which a full-time regional replacement will be voted on and sought.

Issue 14 > Compliance Alerts

European Commission likely to file antitrust charges against Google

The European Commission (EC) is expected to imminently file formal charges against Google for antitrust violations. The news follows this week’s revelations in a leaked report from the United States Federal Trade Commission (FTC) that FTC staffers wanted to sue Google for abusing its monopoly power after the Commission’s own probe into the search engine company in 2012. They alleged that Google threatened to remove websites from its search if companies such as Amazon and Yelp refused to let it use their content. Google ultimately made some changes and the FTC voted unanimously against bringing charges.

Issue 15 > Case Study

OECD Report reveals dominant role of intermediaries

The OECD Foreign Bribery Report has found that third-party intermediaries such as agents, distributors and brokers, and even corporate vehicles such as subsidiaries, offshore tax shelters and consulting firms, are often involved in bribery. This was just one of a number of surprising results.

Issue 14 > Compliance Alerts

OECD urges Greek government to enact whistleblower law

The Organisation for Economic Co-operation and Development (OECD) has released a report urging the Greek government to do more to combat foreign bribery by Greek companies. In the report, the international economic organisation alleges that government investigations into cases of overseas corruption lack thoroughness, and that the authorities are failing to promote awareness of foreign bribery. As a remedy, it suggests the introduction of a whistleblower law in order to help uncover more corruption by Greek companies overseas.

Issue 15 > Industry Interview

Pharmas seek local Russian intelligence

The Russian pharmaceutical sector has attracted significant international investment in recent years as it becomes less reliant on foreign imports. But this has exposed international pharma companies to an array of local risks that demand enhanced due diligence on third-party manufacturers and distributors, among others.

Issue 15 > Country Focus

Caviar diplomacy symptomatic of wider Azerbaijani concerns

Azerbaijan has been talked about in investment circles as ‘the new Dubai’ because of its oil and gas riches. Yet widespread corruption, poor enforcement and a poor human-rights record is continuing to deter many foreign investors.

Issue 15 > World Watch

What continued Russian sanctions mean for compliance

Despite French President François Hollande’s January calls to scale back sanctions, and the uncertain position of Greece as a result of its recent change in government, the European Union has extended its existing sanctions measures against Russia until September this year. While sanctions remain, compliance programmes must not be static; effective sanctions compliance should be a day-to-day job that encompasses fluidity and continuous monitoring.

Issue 14 > Compliance Alerts

United States government seeks user info without a warrant

A new bill in the United States may allow the federal government to collect user information from companies such as Google and Facebook without a warrant. The Senate Intelligence Committee has approved the Cyber Information Sharing Act (CISA), which ‘encourages’ companies to share information with the federal government with minimal oversight. A draft version of the bill was passed by a vote of 14 to 1 in the closed-door hearing, with the Committee now sending the bill on for a final vote.

Issue 14 > Compliance Alerts

Algerian company C-suite investigation suggests missing tone at the top

A former chief executive officer of an Algerian state-owned oil company, together with a number of former senior company officials, has gone on trial in the North African nation for alleged corruption involving foreign suppliers. The charges against the 19 defendants include granting privileges to third parties, increasing the price of contracts with a state company, embezzlement, money laundering and corruption. The case against Sonatrach is just one of many against the state-owned company, but comes at a particularly sensitive time with the fall in oil prices and the reduction in foreign interest in Algeria’s offer to develop new fields.

Issue 14 > Compliance Alerts

New York bus tour JV settles antitrust allegations

The United States Department of Justice has announced that two bus tour companies have agreed to settle allegations that their joint venture violated antitrust laws. Two of New York’s largest bus tour companies, Coach USA and City Sights, joined together to allegedly form a monopoly and increase the price of hop-on, hop-off bus tours. The two companies have agreed to relinquish all of City Sights’s Manhattan bus stop authorisations and disgorge US$7.5 million in ill-gotten profits.

Issue 14 > Compliance Alerts

Corruption suspected in Indonesian hangar collapse

Indonesian police believe that the collapse of a hangar at Sultan Hasanuddin International Airport in Makassar, Indonesia, which killed five workers, may have been the result of corruption. South Sulawesi Police detectives said that the hangar project, which was still under construction at the time of the collapse, was not in line with the Rp 46.2 billion (US$3.5 million) state budget agreed between the contractor and the country’s Transportation Ministry.