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 new EU Whistleblower directive which is going to kick in on 2021. Read the full story and more news below:
EU Whistleblower Directive Formally Adopted; Rules to Kick In In 2021:
On Monday, the Council of the European Union formally adopted a new set of rules protecting whistleblowers across a wide range of sectors. All employers with more than 249 employees will be required to create safe channels for reporting within the organization. Whistleblowers will also be protected if they choose to bypass internal channels and go to the national authorities directly. The directive further contains a high level of protection for whistleblowers against retaliatory action and requirements for national authorities to inform citizens and train public officials on how to deal with whistleblowing. Member states will now have two years to implement the rules into their national legal frameworks. As the directive only specifies the minimum rules required, national legislatures are free to impose additional requirements. The Directive was approved by the European Parliament back in April, but formal adoption in the Council was required for the Directive to be approved.
EU removes Switzerland, UAE from tax haven list:
This Thursday, the EU revised its blacklist of tax havens and agreed upon the removal of seven countries including the United Arab Emirates and Switzerland. The UAE, which still continues to charge no corporate tax, was removed from the list due to recent tax reforms conducted in September. Switzerland in turn, was removed from the “grey list”, which indicates countries that are being closely monitored by the EU and have officially committed to complying with EU tax laws. The finance ministers behind the assessment said that Switzerland, together with Costa Rica, Serbia, Albania, and Mauritius complied with the implementation of EU tax reforms ahead of their deadline and were thus removed from the list. The EU tax haven listing began in 2017 as a means to “name and shame” jurisdictions that provided favorable laws for tax evasion by MNCs and wealthy individuals. The latest adjustments to the list have been criticized by monitors of global tax fraud including Oxfam for “whitewashing harmful tax havens”.
Justice Department issues guidelines for corporate inability-to-pay claims:
On Tuesday, the Department of Justice issued new guidelines for federal prosecutors concerning inability-to-pay claims. The new guidelines are expected to increase the transparency around cases centered on financially troubled companies facing criminal penalties and provide a uniform set of consideration points for prosecutors. The guideline orders prosecutors to collect specific financial information on the company as well as to analyze past scenarios that led to the company’s financial condition in order to determine whether the company is able to pay or not. If the company is deemed unable to pay, prosecutors are to recommend a reduced fine or offer a payment installment schedule. The guidelines come after the DOJ accepted Odebrecht’s inability-to-pay claim for a USD 4.5 billion fine which is now to be split between the U.S, Brazilian and Swiss governments until a further inability-to-pay analysis is conducted at a future point in time. Additionally, the DOJ also reorganized its Securities and Financial Fraud Unit and renamed it as the Market Integrity and Major Frauds Unit which is now divided into five units.
Ex-KPMG partner pleads guilty in PCAOB cheating scandal:
A former KPMG partner and co-leader of the company’s banking and capital markets division, David Britt, admitted to stealing confidential information and using it in favor of KPMG. The misappropriated information, which concerned the PCAOB’s schedule on inspections to KPMG, was used to improve the company’s position during the routine checkups. Britt, who pleaded guilty to the charges is now facing up to 20 years in prison, alongside Cynthia Holder a former PCAOB inspections leader who is being sentenced for eight months after pleading guilty of conspiracy to commit fraud. The PCAOB is a nonprofit company overseen by the Department of Justice which conducts regular auditing to firms who offer accounting services to public companies. The SEC deemed the conduct of the convicted individuals as “frankly astonishing”. The latest judgment comes after KPMG LLP agreed to pay USD 50 million in June for the admitted use of stolen information to cheat on training exams and regulatory reviews.
U.K Attorney General Accused of Blocking Corruption Probe:
Two British anti-corruption watchdogs have accused the U.K. Attorney General of blocking the investigation of an alleged bribery case involving one of Airbus’ subsidiaries and a defence contract with Saudi Arabia. Transparency International and Spotlight on Corruption issued a letter to the UK Attorney General, where they expressed their concerns about the UK Serious Fraud Office’s delay in investigating GPT Special Project Management, the Saudi Arabian defence contractor under question. GPT has been under the spotlight for bribery allegations since 2012 when an internal GPT whistleblower disclosed information on USD 17 million dollars worth of bribe payments the company disbursed in order to win a contract with a Saudi communications firm. The matter was framed as urgent given that GPT has announced it will cease operations in December 2019 and UK law does not permit prosecution if a company has been shut down. While both the attorney general and the SFO have declined to comment on the situation, Airbus and GPT have publicly stated that they will collaborate with authorities on the probe.
Bulgaria ex-minister Who Embezzled EU Funds to Face Judge:
Bulgaria’s former Deputy Economy Minister Alexander Manolev and Anna Dimitrova were indicted for embezzling EU funds to build an alleged “guest house” which was then used for Manolev’s personal vacations. The house was built from funds granted under the Rural Development Program 2007-2014 and obtained under the basis of false information submitted by Dimitrova. After the construction of the house in the area of Sandanski, Dimitrova delivered the invoices to authorities as “costs of the investment project”. Dimitrova has been deemed the perpetrator of the crime while Manolve has been framed as a partner in crime, being accused of inciting and supporting the perpetrator. The former minister resigned from his position in April of this year after a local consortium of investigative journalists, Bivol, released information suggesting the misuse of EU funds.