This Week in Compliance

This Week in Compliance: Colombian anti-corruption referendum fails to reach minimum votes

Here’s what’s been going on in the compliance world this week: 

Business

  • Legg Mason to pay over USD 64 million to resolve FCPA violations: The U.S. Securities and Exchange Commission (SEC) announced this week that investment management firm Legg Mason Inc. is to pay USD 64 million following an administrative order. The firm reached the settlement earlier in June, but this week’s administrative order confirms the settlement. Legg Mason will pay a criminal penalty of USD 36.2 million and disgorge profits of USD 31.6 million. The DOJ said that in order to avoid ‘piling on’, the disgorgement will be credited against disgorgements made to other law enforcement agencies. The charges relate to bribery in Libya between 2004 and 2010 which the firm committed together with a French financial services company in order to solicit business from Libyan state-owned enterprises.
  • Barbados-based insurance company issued declination with disgorgement by DOJ: The Insurance Corporation of Barbados Limited (ICBL) received a declination from the DOJ this week relating to FCPA charges of charging a Barbadian official. Agents and employees of the firm paid around USD 36,000 in bribes to an official named Donville Inniss in order to win USD 686,000 in insurance contracts. The DOJ said that Inniss laundered the money in the U.S. with the help of a dental company owned by a friend. ICBL was given credit by the DOJ for making a timely and voluntary self-disclosure, conducting a thorough investigation, and remediating the problem through firing the individuals involved.
  • Microsoft facing bribery probe over sales in Hungary: The Wall Street Journal reported this week that software giant Microsoft is being investigated over potential bribery and corruption in relation to the sale of software in Hungary. The U.S DOJ and SEC have launched a probe into how the company sold its popular products, including Word and Excel to middleman firms in Hungary at steep discounts. These intermediaries then sold the software to government agencies at close to full price. It is now being investigated whether the difference was used by these middlemen to pay bribes or kickbacks to government officials.
  • Volkswagen external U.S. compliance monitor seeks more transparency regarding emissions: Larry Thompson, the former deputy U.S. attorney general who was installed by the U.S. Department of Justice as an external monitor after the German carmaker was caught cheating in a widely reported emissions scandal, has said that he disagreed with some of VW’s executives’ use of privacy and attorney-client privilege rights to withhold information. The interim report notes that the VW defendants have promised improvements in the provision of information. Hiltrud Werner, VW’s board member tasked with integrity and legal affairs has indicated that it will take until 2025 to fully implement the lessons from the crisis in terms of systems and a code of conduct.

Government

  • U.S. CTFC simplifies rules for compliance officers: The U.S. Commodity Futures Trading Commission released new guidance for compliance officers that clarifies a CCO’s duties by “providing reasonable standards and guidance on effective compliance”. The rules are intended to simplify requirements, particularly in relation to preparing annual reports. The agency also indicated that personnel other than the CCO may be involved in implementing the requirements in an organization. The CTFC enforces violations of the Commodity Exchange Act and CTFC regulations.
  • Colombian anti-corruption referendum fails to reach minimum votes: Colombians were asked to vote on a measure that would have hardened punishment for corruption offenses after Congress failed to implement the measures. 11.7 million Colombians turned out to vote on the measure which included seven anti-corruption proposals. However, the measure failed to pass as another 470,000 votes were needed. President Ivan Duque said that ninety-nine percent of those who voted on the measure voted in favor of the proposal. The changes would have lowered the salaries of members of Congress by 40 percent and politicians would have been forced to disclose their income.

Noteworthy

  • U.S. federal appeals court affirms most of Hoskins dismissal: A U.S. federal appeals court upheld a 2016 decision this week that held that a non-resident foreign national may not be charged with conspiracy to violate the FCPA or with aiding and abetting a violation of the FCPA. However, if the government is able to prove that the foreign national acted as an agent of a “domestic concern” or was physically present in the United States, charges may be brought. The case concerns Lawrence Hoskins, a British national based in France and former executive at Alstrom UK who was charged with FCPA offenses in 2013. This week’s decision means that the U.S. DOJ is still able to pursue Hoskins if it can prove he was an actor of a “domestic concern”.
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