This Week in Compliance

First individual charged in Switzerland over Operation Car Wash

Welcome to This Week In Compliance: GAN’s weekly news roundup, where we curate the latest stories on compliance and anti-corruption to keep you informed. This week we cover the first charges of corruption related to Operation Car Wash in Switzerland. Read the full story and more news below:

Top Story

First individual charged in Switzerland over Operation Car Wash:

Prosecutors in Switzerland filed their first charges this week against a person in the corruption probe of Petrobras, the Brazilian state oil company, and construction firm Odebrecht. According to prosecutors, the person charged is suspected of acting as a financial middleman who helped to bribe public officials and facilitate money laundering in connection with the “Operation Car Wash” case. The case is one of the biggest corruption cases in Latin America and has resulted in the prosecution of dozens of individuals, including former President Luiz Inacio Lula da Silva, as well as resulting in large fines for Odebrecht and Petrobras. Prosecutors have submitted the case against the individual at the Federal Criminal Court under an accelerated procedure. So far the affair has led to around 60 criminal proceedings in Switzerland, while more than 130 businessmen and politicians have been convicted in Brazil. The Swiss attorney general has so far seized assets worth CHF 620 million and has returned CHF 390 million to Brazilian authorities.

Business

Lebanese salesman masterminded $2 billion Mozambique loan scheme, U.S. jury told:

Jean Boustani, head of sales for the Lebanese shipbuilding company Privinvest, is being accused of conspiracy for defrauding U.S. investors in a scheme involving USD 2 billion in loans to finance Mozambican government projects. While Boustani’s lawyers have stated that he did not have any ties to the U.S., the latest opening hearing launched what is expected to be a 5-week trial process that could give prosecutors further information on Mozambique’s corruption-ridden 2016 debt default scandal. The 2016 case involves three contracts that were awarded to the Lebanese shipbuilder, Privinvest, which were financed by loans from Credit Suisse Group AG and Russian lender VTB, worth USD 2 billion. According to the latest accusations, Boustani paid millions of dollars in bribes to both the Credit Suisse and Mozambican government officials to secure the three contracts. Allegedly, Credit Suisse sold the loans to investors in the United States which later defaulted on the loans. While three Credit Suisse Bankers already pled guilty, Boustani has only admitted to paying bribes to Mozambican government officials.

Swedbank profits take hit because of money-laundering scandal:

Sweden’s Swedbank reported lower-than-expected quarterly earnings this week in part because of the costs hiring more compliance staff and dealing with the fallout of the bank’s alleged involvement in a massive money-laundering scandal. The bank said total costs in the third quarter of its financial year jumped by 29% year-over-year which was partly due to hiring more compliance staff and engaging two financial forensic firms as well as lawyers to deal with the investigations it faces. As it emerged earlier this year that Swedbank was caught up in the money-laundering allegations that engulfed its Danish peer Danske Bank, the Swedbank’s CEO was dismissed and its chairman resigned. It is alleged that the bank processed gross transactions of up to EUR 20 billion a year from primarily Russian non-residents in Estonia between 2010 and 2016. Swedbank is under investigation by Swedish and Baltic regulators in addition to two government entities in the United States.

Samsung heir facing retrial over corruption charges:

Jay Y. Lee, heir to the Samsung Electronics Co. conglomerate, is due to face a retrial over expanded corruption beginning this Friday at the Seoul High Court. The retrial is a reboot of the landmark case that led to the impeachment of former president Park Geun-Hye and sparked widespread anger about the power of Korean conglomerates known as chaebols. An appeals court decided to release Lee from jail in early 2018, where he’d spent about a year after his initial arrest. The same appeals court will now decide his final sentence over the coming months. Unless new evidence emerges, the appeals court is expected to rule in line with the decision of Korea’s Supreme Court, which found that Lee had used three horses and other funds to bribe President Park through an intermediary in return for political support for his succession as Samsung Chief. The amount of the bribery alleged by the top court carries a minimum sentence of five years, which would not be suspendable in the same manner that the existing sentence has been. 

Government

Ex-CEO parents plead guilty in college admissions scandal:

Four wealthy parents pleaded guilty on Monday to participating in a vast bribery and cheating scheme involving U.S. college admissions. The parents include the former chief executives of bond manager Pimco and specialty finance lender Hercules Capital Inc. The four are among 52 people charged with participating in a vast scheme where wealthy parents conspired with a California-based college admissions consultant to use bribes and other forms of fraud to secure admissions of their children to top schools. Other parents charged include celebrities including Felicity Huffman and Lori Loughlin. William “Rick” Singer, the consultant, pleaded guilty in March to charges that he facilitated cheating on college entrance exams helped bribe sport coaches at universities to present their clients’ children as fake athletic recruits.

Global watchdog gives Iran until Feb to tighten anti-money laundering rules:

The Paris-based global dirty money watchdog, Financial Action Force (FATF), gave Iran a final deadline of February 2020 to comply with international standards. The FATF has stated that if Iran fails to comply they will urge all member states to apply counter-measures. Additionally, they have already asked member states to demand higher external auditing standards and scrutiny in any transactions involving Iran. While FATF is requiring Iran to comply with FATF rules as well as the Palermo and Terrorist Financing Conventions, Iranian leaders appear to be split on the decision of complying whether to comply the standards. Opposing politicians say that complying with the standards would restrict Iran’s support to its allies while the supporting side argues compliance could ease trade with Asia and Europe.

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