This Week in Compliance

Barclays Settles ‘Referral Hiring’ Violations for USD 6.3 Million

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 Barclay’s referral hiring violations case and much more.  Read the full story and more news below:

Top Story

Barclays Settles ‘Referral Hiring’ Violations for USD 6.3 Million:

  • British bank Barclays PLC paid the Securities and Exchange Commission (SEC) USD 6.3 million to settle FCPA offenses related to the hiring of relatives of public officials in Asia. The SEC charged businesses within the Barclays Asia Pacific Region (APAC) with violating the FCPA’s books and records and internal accounting controls provisions in relation to the hiring of at least 117 candidates referred by or connected to foreign government officials or non-government clients. Some of the hires were made as a personal benefit to those officials and executives with the expectation that the bank would gain investment banking business, according to the SEC. The hiring practices started in South Korea and later expanded to other countries in the region. The total fine amount is comprised of disgorgement of USD 3.8 million and a USD 1.5 million penalty paid to the commission in addition to pre-judgment interest of USD 984,000 READ MORE 

Business

Clean fuel tech firm and ex-CEO violated the FCPA in China:

  • Westport Fuel Systems, a Canadian clean fuel tech company, and its CEO Nancy Gougarty resolved FCPA charges corresponding to USD 4.1 million for bribing a government official in China. According to the SEC’s administrative order, the company bribed a Chinese officer by transferring shares of stock from Westerport’s Chinese joint venture to a private fund where the official held shares. The company concealed the transfer by hiding the identity of the Chinese private fund in its bookkeeping records. The company agreed to the payment without admitting or denying the SEC’s findings but publicly stated that the FCPA charges relate to a transaction that occurred three years ago and was committed by individuals who are no longer employed at the company.

Wisconsin-based digital marketing company settles FCPA charges:

  • Quad/Graphics Inc, a Wisconsin based digital marketing company settled FCPA charges for USD 10 million for engaging in bribery schemes in Peru and China. According to the SEC’s indictment, a Chinese subsidiary of the company used sham sales agents to extend bribes to employees and government officials to win contracts. Reportedly, the Chinese subsidiary failed to conduct appropriate due diligence on the sales agents and had concealed the payments to them as “commissions”. Quad’s Peruvian subsidiary also paid repeated bribes to Peruvian government officials as a means to win sales contracts and avoid penalties as well as to improperly influence the outcome of a judicial dispute concerning Peruvian tax authorities. The company also violated U.S. sanctions on Cuba by creating false records to hide the illegal business the company was conducting in the country. Quad has so far conducted a few remedial actions such as firing the employees involved in the improper conduct and bolstered compliance efforts across the organization, including the hiring of a new International Trade Compliance Manager and new internal audit staff with anti-corruption work experience.

General Electric pays USD 2.7 million fine for violating Cuba sanctions:

  •  Industrial giant General Electric (GE) paid the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) USD 2.7 million in civil penalties this week for violating sanctions imposed on Cuba. The OFAC said that three GE subsidiaries violated the sanctions 289 times between December 2010 and February 2014 by accepting payments from The Cobalt Refinery Co. for goods and services provided to a Canadian customer of GE. The invoices totaled more than USD 8 million over the four-year period. GE was also negligent in its “restricted party” screening; it failed to screen for both Cobalt’s full legal entity name and the acronym for the company, Corefco, as it appears on the sanctions list. The penalty was reduced because of mitigating factors, including GE’s self-disclosure and cooperation with the investigation.

Government

Peruvian President disbands Congress in anti-corruption developments: 

  • Peruvian President Martin Vizcarra disbanded congress this week in what Vizcarra refers to as a bitter fight to curb corruption. The move came in response to the opposition-controlled Congress pushing forward a vote to select an almost entirely new slate of magistrates for the Constitutional Tribunal. Vizcarra said the constitution permitted his move and that fresh elections were necessary to tackle graft. Opposition lawmakers said Vizcarra had overstepped the bounds of the constitution and voted to suspend him on the ground of his “permanent moral incapacity”. Peru has faced political upheaval in recent years, with several of Vizcarra’s predecessors having left office in disgrace over corruption scandals. Pedro Pablo Kuczynski resigned from the office of president in 2018 in order to avoid impeachment.

Israel’s PM pre-trial hearing starts over corruption charges: 

  • Israel’s Prime Minister, Benjamin Netanyahu, faced a pre-trial stemming from a corruption investigation this Wednesday. His representatives have dismissed the allegations and said Netanyahu will not seek to negotiate a deal as there are already “solid grounds” for the court to reconsider the charges. The allegations, which were put forth by the police, accused the PM of receiving gifts from businessmen and media moguls in exchange for political favors in 2018. Netanyahu is accused of having pushed regulatory decisions benefiting a wealthy businessman and a local media magnate in exchange of positive portrayal of one of his news sites. Another case being investigated concerns an instance in which the PM allegedly received bribes from a Hollywood producer and Australian casino owner in exchange for political favors. While the final decision of the court awaits to be determined, the PM has denied all allegations and dismissed them as part of a “witch hunt” by political opponents.
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