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DOJ issues further guidance, warnings on ephemeral messaging apps

By Charlotte Hill

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.

DOJ issues further guidance, warnings on ephemeral messaging apps

Senior DOJ officials offered extensive guidance at the March 2023 Bar Association National Institute on White Collar Crime the use of ephemeral and encrypted messaging for company communications, companies’ policies on the use of such communications tools and whether or not the comms have been preserved or can be accessed during an investigation. The officials stressed that a company’s inability to provide access to such communications will affect possible settlements with regulators. The DOJ’s advice includes effective training and policies governing employees’ use of personal devices and third party messaging. In fact, it stated that the way in which companies address the use of personal devices and third-party messaging platforms can impact a prosecutor’s evaluation of the effectiveness of its compliance program.

Celebrities charged for promoting crypto

The SEC recovered money celebrities Lindsay Lohan and Jake Paul had earned by promoting cryptocurrencies of Chinese entrepreneur Justin Sun. According to the SEC, Justin Sun artificially boosted his company’s trading volume and covered up payments made to celebrities including Ms. Lohan and Mr. Sun to promote the tokens. Justin Sun has been charged with fraud by the SCE. Six celebrities charged with promoting the crypto investments without explicitly saying they were paid to do it have settled the claims with the SEC and agreed to pay USD 400,000 in disgorgement, interest and penalties.

Chinese regulator accuses chip tycoon of corruption

The former chairman of chipmaker Tsinghua Unigroup, Zhao Weiguo has been accused of corruption by China's Central Commission for Discipline Inspection (CCDI). Several key players in the country’s semiconductor industry have been the center of a corruption investigation following the failure of billion-dollar government backed projects during 2022. According to a statement released by China’s anti-fraud watchdog, Mr Zhao abused his position at the state-owned company by, among other things, handing relatives and friends profitable businesses and overpaid for goods and services from companies managed by his associates. Tsinghua Unigroup, which was one of China's leading chipmakers, has accumulated large amounts of debt and defaulted on several bond payments in 2020 under Mr Zhao's leadership.

Joe Biden issues first veto, rejecting attempt to block ESG effort

A recent Republican bill aiming at preventing managers of pension funds from basing investment decisions on environmental, social, and corporate governance (ESG) factors was vetoed by President Biden. According to the Republican argument, investments on ESG factors entail that fund managers are "forcing their own views down the throats of every company and every investor.” Republicans have clarified that the resolution would prevent fund managers from primarily basing investment decisions on ESG factors, as the primary criterion should be the financial return on investment, however it would not prevent managers from considering ESG issues altogether. According to Biden’s veto, the bill would risk retirement savings by making it illegal to consider ESG implications.

Mercedes-Benz site searched over suspected corruption

Two Mercedes-Benz employees are at the center of a corruption investigation for suspected bribery in business transactions. German prosecutors conducted searches at the car manufacturer's site in Sindelfingen where they seized a mobile phone and a computer. According to a Mercedes-Benz spokesperson, the car manufacturer has filed a complaint and is working with the authorities on the matter.

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