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 EU's progress on mandatory human rights due diligence legislation. Read the full story and more news below:
EU Parliament's Legal Committee Votes on Human Rights Due Diligence:
On January 27th, the EU Parliament's legal affairs committee voted in favor of adopting a report summoning the EU to pass a law that would require companies to conduct mandatory human rights and environmental due diligence. The full EU Parliament is expected to vote on the draft law in March. The draft initiative calls on the Commission to legislate new requirements for companies to identify, address and remedy human rights and environmental impacts throughout their supply chains. The draft initiative further proposes that the rules apply to all companies operating in the EU internal market, and to impose sanctions on non-compliance. Members of parliament also called for banning products from areas linked to severe human rights violations.
McKinsey Pays Nearly USD 600M Over Role in Opioid Crisis:
Consulting firm McKinsey Co. settled charges for nearly USD 600M over its role in the opioid crisis in 49 U.S. states. According to the multi-state settlement, McKinsey worked with drugmaker Purdue Pharma to increase OxyContin painkiller sales amid the ongoing opioid crisis. Authorities reported that even after Purdue pharma pleaded guilty of defrauding regulators and misleading doctors in 2007, McKinsey still advised the company to focus its strategy on selling these pills. In one of the settlements, Phil Weiser, the attorney general of Colorado, stated that McKinsey partners acted 'almost as executives of the firm.' In October 2019, Purdue Pharma paid USD 8.3 B after pleading guilty for a second time over fraudulent marketing charges. McKinsey denied the allegations and stated that the two consultants involved in the investigation had been fired.
China Executes Former Banking Official for Graft:
Lai Xiaomin, the former chairman of China's state-owned China Huarong Asset Management, was executed by Chinese authorities due to corruption charges. The former executive was found guilty for attempting to receive bribes equivalent to USD 278M over ten years. A Chinese court sentenced Lai to the death penalty in January after finding him guilty of abuse of office between 2008 to 20018 when he attempted to solicit bribes and embezzled public funds. The executive was arrested in 2018 after the allegations were made public.
German Markets Watchdog Chief Dismissed Over Wirecard Scandal:
The German government announced the dismissal of Finance Minister Olaf Scholz amid increased criticism over the agency's handling of the Wirecard scandal. Germany's financial regulator BaFin has been under criticism by opposition politicians and investors for failing to respond to red flags on the Wirecard case. The agency did not yet name a successor to Mr. Scholz.
Facebook Appoints First CCO:
Amid increased regulatory scrutiny, Facebook Inc. announced the hiring of its first Chief Compliance Officer (CCO), Henry Moniz, who will oversee Facebook's compliance and risk management functions. Even though the social media giant has a compliance group and set up an oversight board, it did not have a CCO until now. Facebook stated that the appointment is a result of the 'current regulatory environment.' Facebook is currently facing increased scrutiny in the areas of privacy, antitrust, and taxes.
New York Bank Settles Money Laundering Charges:
New York-based Apple Bank for Savings settled money laundering charges for USD 12.5M with U.S. Federal Deposit Insurance Corporation. According to the regulator, the bank violated the Bank Secrecy Act from 2014 to 2018. The bank stated that regulators had acknowledged Apple Bank's compliance enhancements after a separate settlement in 2015 ordered the bank to institute a stricter compliance program. As part of the new settlement, Apple Bank reinstated its commitment to work with regulators and continue improving its compliance program to comply with both orders.
Brazil Shuts Down Car Wash Corruption Investigation:
In a move that has led to increased criticism against Brazilian President Jair Bolsonaro, Brazil's famous task force of prosecutors investigating high-profile corruption cases (Lava Jato or Car Wash) was shut down. The Car Wash investigation began in 2014 and sent various high-profile politicians across Latin America to jail, including former Brazilian President Lula da Silva, Peru's Alejandro Toledo, and Panama's Ricardo Martinelli. President Bolsonaro ordered the Car Wash task force's shutdown after declaring Brazil 'free of corruption' in October 2019.
GRECO Releases Update on Slovakia:
The Council of Europe's Group of States Against Corruption (GRECO) released a compliance report assessing Slovakia's progress in implementing the EU's anti-corruption recommendations and reprimanded the country for failing to prevent corruption in the judiciary system and parliament. According to GRECO, even though Slovakia has made some anti-corruption reforms in its legal framework, current rules lack rigor regarding public officials' asset declarations.
UN Accuses Yemeni Government of Corruption:
The United Nations (UN) released a report accusing the Yemeni government of misappropriating international aid packages for military campaigns. According to the UN, Yemeni authorities laundered money meant to be used for hunger relief and diverted it to private corporations illegally, fueling the country's current humanitarian crisis.
Implement a bespoke Third-Party Risk Management solutionView platform