This Week in Compliance

DOJ Criminal Division Chief to Step Down in July

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 the latest updates from the DOJ as it’s criminal division chief steps down. Read the full story and find more news below:

Top Story 

DOJ Criminal Division Chief to Step Down in July:

Brian Benczkowski, the head of the Department of Justice’s (DOJ) criminal division has decided to voluntarily step down from his position and will depart in July. Benczkowski, a senior DOJ official, has helped supervise several high-profile white-collar crime cases, such as the prosecution of Mexican drug cartel leader “El Chapo” and the 1MDB embezzlement and money-laundering scheme, as well as the agency’s response to the opioid crisis. Mr. Benczkowski’s portfolio included the division’s fraud section, which is responsible for enforcing the FCPA. Under his tenure, the fraud section managed to secure several large settlements with multinational corporations, including a more than USD 1 billion settlement fine with Ericsson AB. Benczkowski also announced several shifts in policy, including, what became known as the Benczkowski memo, which laid out the DOJ’s practices for selecting monitors. Mr. Benczkowski’s position will be filled by Brian Rabbitt, a senior official who, until recently, had served as chief of staff to Attorney General William Barr.

Business

FRC Ends Probe into Tesco Accountants:

The U.K. Financial Reporting Council (FRC) concluded that there was no evidence of misconduct among Tesco accountants and, hence, closed its final investigation into the British multinational retailer’s earnings statements. FRC began investigating the conduct of some of Tesco’s employees back in 2014 over alleged involvement with the overstatement of company profit forecasts in 2014, approval, and audits of financial statements for the fiscal years 2012, 2013, and 2014, as well as interim results released late 2014. The company itself reported that it had suspended four senior executives and called in external auditors and legal counsel back in 2014 to look into a USD 334.5 million overstatement of its first-half profit forecast, which had reportedly involved the early booking of income and delayed booking of costs. 

FCC is Seeking To Impose USD 225 Million Fine On Telemarketer:

The Texas telecommunications company, Rising Eagles, allegedly marketed short-term health care insurance plans from companies such as Cigna Corp. and CVS Health Corp.’s Aetna in early 2019 and subsequently steered the recipients to call centers that pitched Rising Eagle’s other customers. According to the Federal Communications Commission (FCC) the telecom company and its affiliates violated the Truth in Caller Act (via) by making about one billion misleading robocalls and spoofing caller ID information and is, therefore, seeking to impose a fine that could potentially reach up to USD 225 million. The company and its two founders, John Spiller and Jakob Mears are also facing a federal lawsuit filed by attorneys general from seven states accusing them of directing tens of millions of unwanted calls to state residents.

States Sue Drug Companies and Executives Over Alleged Price Fixing:

Attorney generals from more than 50 states and territories have filed a third lawsuit against generic drug manufacturers and executives accusing them of inflating drug prices, price-fixing, and stifling competition from 2009 through early 2016. According to Connecticut Attorney General William Tong, collusion and pricing fixing practices were carried out via “phone calls, text messages, emails, corporate conventions, and cozy dinner parties”. He added that pharmaceutical executives were well aware of their mischiefs and used code words and warnings to avoid getting caught. He added that the allegations are based on a database of more than 20 million documents, multiple witnesses, phone records, and contact information for more than 600 people involved in drug sales and pricing. The lawsuit was filed in the U.S. District Court in Connecticut on June 10th and names 26 companies and subsidiaries, including Novartis AG subsidiary Sandoz Inc. as defendants as well as 10 former or current executives and involved at least 80 skin products. 

3M Files Lawsuit Against Merchant Selling 3M-branded Products at Inflated Prices:

In its latest attempt to curb chaos in the market of protective equipment, 3M filed a lawsuit against Mao Yu and his affiliated companies for selling 3M-labeled masks on Amazon.com Inc for more than 18 times their list price. 3M claimed that the defendant had sold the masks, designed to block 95% of very small particles including droplets containing the new COVID-19 virus, at a list price of around USD 1.25 for an average price of USD 23.21 each on Amazon. Yu had allegedly charged customers over USD 350,000 in total for the masks. 3M is demanding Yu to halt the sale of 3M-branded products and to turn any profit acquired from previous sales over to 3M. According to Amazon’s vice president of customer trust, his company has been working with 3M to keep counterfeiters and price gougers off its platform. Over 500,000 offers of pandemic-related products have already been removed while 6,000 seller accounts have been suspended over alleged price gouging. 

Government 

Former NHS Chief Executive Charged With Corruption in Australia:

Malcolm Stamp, the former chief executive of several NHS hospitals and Mid Essex Hospitals NHS Trust in the UK, faces extradition to Australia after being accused of nepotism as he had allegedly arranged for his daughter to be employed by a hospital contractor and conspired to pay her wages from hospital funds. Mr. Stamp was chief executive of Metro-North Hospital in Brisbane at the time of the alleged offenses, which reportedly took place back in 2014. The Queensland Crime and Corruption Commission (CCC) reported that the defendants had tried to cover up the offenses by creating documents and said that it has already served Mr. Stamp a Notice to Appear in court.

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