This Week in Compliance

This Week in Compliance: Barclays Fined for Whistleblower Program Failings

Business

  • Barclays fined USD 15 million for deficiencies in whistleblower program: New York’s Department of Financial Services (DFS) fined Barclays PLC and its New York subsidiary USD 15 million this week for attempts by the bank’s CEO, Jes Staley, to unmask a whistleblower “in contravention of Barclays’ established whistleblowing policies and procedures.” The DFS also found that several members of senior management did not follow the bank’s whistleblower program and instead attempted to protect the CEO and the bank. Staley attempted to hunt down the author or authors of a letter sent to the board in 2016 expressing concerns about Staley’s role in the hiring of a senior Barclays executive. Barclays’ security chief, Troels Oerting, asked U.S. federal law enforcement authorities for help with tracking down the sender. Staley was previously personally fined GBP 642,430 by UK regulators for attempting to identify a whistleblower. As part of this week’s settlement, Barclays is also required to submit an “enhanced written plan for internal controls” and a board oversight plan with best practices for whistleblowing.
  • Malaysia files charges against Goldman Sachs and two of its executives in 1MDB case: Malaysian prosecutors formally charged Goldman Sachs and two of its executives for “grave violations of securities laws”, saying they are seeking billions in fines as well as imprisonment for key figures involved in the scandal. Criminal charges were filed against Goldman bankers Tim Leissner and Roger Ng Chong Hwa, as well as a former 1MDB employee, Jasmine Loo Ai Swan and billionaire Jho Low. Prosecutors have said they will seek fines in excess of the USD 2.7 billion they believe was misappropriated, as well as a ‘refund’ of the USD 600 million Goldman Sachs charged in fees. The bank has said it believes the charges are misdirected and that it aims to vigorously defend itself.
  • Former Alstom executive is convicted for Lithuanian power plant bribery: A fifth person has been convicted in the Alstom bribery case. Nicholas Reynolds, a former Alstom executive, was found guilty in a UK court this week for his role in bribing Lithuanian officials to win a power plant contract. The charges related to bribes worth more than USD 5.7 million paid to power plant officials and senior Lithuanian politicians in an attempt to win two contracts to retrofit a power station worth USD 274 million. Earlier this year, two other former Alstom executives were handed prison sentences for their roles in the case. The SFO said this week that it cooperated with authorities in more than 30 countries in the case. Alstom was ordered to pay USD 22 million in penalties in 2016 to settle the charges. In addition, Alstom settled FCPA charges, relating to widespread bribery in many different jurisdictions, with U.S. authorities for USD 772 million in 2014.
  • Two former senior Panasonic executives settle SEC charges related to USD 280 million FCPA settlement: Former CEO of Panasonic Avionics, Paul A. Margis, and Takeshi “Tyrone” Uonaga, former CFO, settled charges with the SEC without admitting or denying the commission’s findings in relation to their roles in Panasonic’s USD 280 million FCPA settlement earlier this year. Both former executives were charged with knowingly violating the books and records and internal accounting controls provisions of the FCPA. The SEC settled the charges using internal administrative orders rather than going to court. Margis paid a USD 75,000 penalty and Uonaga paid a USD 50,000 penalty in addition to being barred from practicing as an accountant before the SEC for five years. As CEO, Margis authorized the company to offer a post-retirement position paying USD 200,000 a year to a government official involved in a deal worth USD 700 million the company was trying to close with a foreign government-owned airline. The official was paid through a third-party vendor providing unrelated services to Panasonic Avionics. Uonaga caused the company to falsely record USD 82 million in revenue on a backdated contract, in addition to making false representations to auditors about Panasonic Avionics’ finances.

Government

  • Saudi Arabia expect corruption settlements totaling approximately USD 13 billion in 2019: Mohammed al-Jadaan, Saudi Arabia’s finance minister, said on Wednesday that he expects that settlements from corruption probes would net “not significantly less” in 2019 than the roughly USD 13.3 billion collected in 2018. al-Jadaan also indicated that construction giant Saudi Binladin Group would soon have a “normal board” with family members and representatives of the government’s ownership. The Saudi government took a roughly one-third stake in the construction giant during the anti-corruption campaign.
  • Former chief of “Israeli FBI” sentenced to community service for corruption: Menashe Arbiv, the former commander of Lahav 433 which is often referred to as Israel’s FBI, was sentenced to 200 hours of community service and handed a suspended jail sentence this week. Arbiv struck a plea bargain for failing to report attempts by Rabbi Yoshiyahu Yosef Pinto. Pinto attempted to offer USD 16,000 in bribes to halt a criminal case against the famous rabbi. Despite refusing Pinto’s offer, Arbiv failed to report the attempted bribery. Arbiv was originally indicted in March 2017 on multiple charges concerning his interaction with Pinto, but all other charges were dropped. Arbiv resigned in 2014 over the scandal, but he maintained his innocence for years after.
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