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 Cardinal Health’s FCPA fines for bribery in China. Keep reading for this breaking story and find more news below:
Cardinal Health Fined USD 8M for FCPA Violations:
Healthcare provider Cardinal Health was fined USD 8 million this week for making improper payments to state-owned retail entities in China in order to boost the sales of a skincare company whose products they were exclusively distributing in the country. The company agreed to disgorge USD 5.4 million plus interest and also pay a USD 2.5 million penalty for violating the Foreign Corrupt Practices Act. The SEC said in a statement that “Cardinal’s foreign subsidiary hired thousands of employees and maintained financial accounts on behalf of a supplier without implementing anti-bribery controls surrounding these high-risk business practices.”
Herbalife Sets Aside USD 40 Million for Bribery Settlement:
After negotiating with the U.S. Justice Department and Exchange Commission to settle an FCPA-focused investigation, Herbalife Nutrition Ltd. has allocated USD 40 million to resolve the probe. The firm is under investigation for non-compliance with the FCPA in its China branch. Two former Herbalife execs in China were indicted over related charges last year. While the company took remedial action on its internal compliance in relation to last year's case, Herbalife stated the outcome of the investigation cannot be predicted yet.
Former Danske Bank CEO Facing EUR 358 Million Lawsuit:
Thomas Borgen, Danske Bank’s ousted chief executive, is being personally targeted in an investor lawsuit arguing that he withheld information about potential money laundering that resulted in a sharp drop in the bank’s market value. The complaint was filed by Deminor, a Brussels-based law firm, on behalf of 155 institutional investors seeking combined damages of EUR 358 million. The claim stems from Danske’s failure to properly screen roughly EUR 200 billion in non-resident transactions flowing through its Estonian branches, most of which is now considered suspicious. Borgen was ousted from the bank in late 2018 and is facing preliminary criminal charges from the Danish police.
U.S. FAA Agrees to Pay USD 90,000 to Whistleblower Who Disclosed Unqualified Flight Safety Inspectors:
The U.S. Federal Aviation Administration (FAA) granted a USD 90,000 award to a whistleblower who faced retaliation after raising security concerns regarding unqualified flight safety inspectors. The whistleblower revealed that flight inspectors who lacked required formal training and certifications were conducting safety 'check rides' and effectively certifying new pilots. The FAA's Office of Audit & Evaluation stated they received the allegations and would call for a review of the operations of several aircraft including the Boeing 737 MAX and the Gulfstream VII. After raising the concerns, the FAA found that the whistleblower was forced to take a new position in another city to flee what he described as 'pervasive harassment'.
KPMG Partner Accused of Bullying Departs Firm:
Sanjay Thakkar, one of KPMG’s most senior partners has left the Big Four firm after months of widespread scrutiny over his conduct. A spokesperson for KPMG said Thakkar left by “mutual consent” after 28 years at the firm. Last year, Thakkar was accused of bullying in a high profile row that led to two female partners resigning from the firm and starting their own business. KPMG has declined to reveal the findings of an investigation conducted by law firm Linklaters. The firm has revealed that it conducted 99 investigations into whistleblower complaints about ethical and conduct violations in 2019 and organized a variety of workshops on “psychological safety” and “safety and trust”.
EU chastises 8 member states on AML even as bank watchdog girds guidelines for gauging fincrime risk:
The EU has formally put Cyprus, the Netherlands, Spain, and five other countries on notice for failing to apply proper financial crime protections after the 5th EU Anti Money Laundering Directive came into force. The 5th EU AML was updated two years ago and came with a 2020 implementation deadline for all member states, who were required to enact stringent rules to prevent money laundering risks in various sectors including crypto, prepaid cards, and shell companies. The eight countries are now expected by the EU to implement remedial action in the following two months within the domains of third-country due diligence harmonization, improved transparency in business ownership, virtual currency regulation and CDD measure application.