This Week in Compliance

This Week in Compliance: Credit Suisse settles FCPA charges with the SEC

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

Business

  • Glencore issued a subpoena to hand over documents in FCPA investigation: Glencore, the world’s biggest commodity trader, revealed on Tuesday that it had been issued a subpoena by the U.S. DOJ to hand over documents in an investigation into possible breaches of Foreign Corrupt Practices Act provisions as well as U.S. money-laundering statutes. The documents relate to the company’s activities in Nigeria, the Democratic Republic of Congo, and Venezuela between 2007 and the present day. Glencore said it will review the subpoena and provide documents as appropriate. The company is already facing an investigation by UK authorities over its work with Israeli billionaire Dan Gertler who is a close friend of Congo President Joseph Kabila. A Swiss court ordered companies controlled by Gertler to hand over documents to U.S. Federal prosecutors last December. Upon release of the news, the company’s shares lost 13 percent in value.
  • Beam Suntory resolves FCPA offenses with USD 8 million payment: Beam Suntory agreed on Monday to pay USD 8 million to resolve FCPA charges brought by the Securities and Exchange Commission (SEC) regarding improper payments made by its Indian subsidiary. The subsidiary used third-party promoters and salesmen to make illicit payments to Indian government employees between 2006 and 2012. The expenses were then consolidated and reported In Beam’s books. The charges were resolved through an internal administrative order; the SEC did not go to court. The penalty consists of disgorgement amounting to USD 5.26 million, prejudgment interest of USD 917,000, and a civil penalty of USD 2 million. Beam indicated in 2012 that it had self-reported the conduct following an investigation triggered by a whistleblower.
  • Credit Suisse settles FCPA charges with the SEC: Swiss banking giant Credit Suisse and its Hong Kong subsidiary agreed on Thursday to settle FCPA charges by paying a combined USD 76.7 million to the SEC and DOJ. Of that amount, USD 47 million represents a criminal penalty imposed by the DOJ last month. In its settlement with the SEC, the bank agreed to disgorge USD 24.9 million in profits in addition to USD 4.9 million in prejudgment interest. The absence of the imposition of a civil penalty by the SEC could be a reflection of the new ‘no-piling on’ policy. The SEC settlement was reached through an internal SEC administrative order; the agency did not go to court.
  • Former Brazilian mining and oil magnate jailed for bribery: Eike Batista, once Brazil’s richest man, was convicted Tuesday on charges of bribery of Rio de Janeiro state’s former governor. Batista was found guilty of paying USD 16.5 million in bribes to former governor Sergio Cabral, who was also found guilty in the case. In return for the bribes, Batista’s companies won state contracts, including prestigious contract for operating Brazil’s most famous soccer stadium the Maracana, where the 2014 World Cup finale was played. A quarter of the bribes was paid in cash and the rest was paid in shares of state-run oil company Petrobras, as well as mining company Vale SA among others. The conviction was the sixth for Cabral, who has now been sentenced to over 120 years of imprisonment.

Government

  • Former Malaysian Prime Minister Najib Razak arrested over 1MDB scandal: Following statements by Malaysia’s current Prime Minister alleging corrupt actions by his predecessor, Najib Razak was arrested by authorities on Wednesday.  The former Prime Minister has been accused of pocketing USD 700 million from state-run development fund 1MDB. Najib has continuously denied any wrongdoing. Raids carried out in recent weeks by authorities recovered over USD 273 million in luxury goods and cash. Najib had previously been cleared of wrongdoing by Malaysian authorities while he was in power, but he has come under investigation again after losing the elections in May.
  • Romania’s parliament passes bill weakening corruption laws: Romania’s lower house of parliament passed controversial amendments to the country’s penal code on Wednesday in a 168 to 97 vote. The amendments passed within a week, which is extraordinarily fast. The vote follows a ruling by the country’s Supreme Court last week that found Social Democrat Party leader Liviu Dragnea guilty of abuse of office and sentenced him to three-and-a-half year in prison. Dragnea stands to benefit from the weakened penal code, because prosecutors will now have to prove beyond any doubt that the allegations would benefit himself or a close relative. The European Commission has voiced its concerns over the developments.
  • Brother of Honduran official pleads guilty to money-laundering in Louisiana court: Carlos Zelaya pleaded guilty in Federal Court in Louisiana to charges of laundering USD 1.3 million in bribe money along with other assets his brother had stolen from the Honduran Institute of Social Security. Zelaya’s brother Is the former Executive Director of the Institute which provides pensions and healthcare to Hondurans. The bribe money came from two Honduran businessmen and benefited Zelaya’s brother. The funds were laundered in the U.S. through the purchase of personal and commercial real estate using U.S. wire transfers. Zeyala will be sentenced in October.

Noteworthy

  • SEC looking for more discretion in setting whistleblower awards: The U.S. Securities and Exchange Commission voted 3-2 in favor of a proposal that would provide the agency’s top officials with more leeway to set whistleblowing awards. This means the commission could cut the largest awards because of their sheer size but also boost awards it deems too low. The two dissenting votes came from the Democratic commissioners over fears that the changes would undermine the whistleblowing program and invite improper considerations in decisions about future awards. The proposal will be sent out for public comment.
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