This Week in Compliance

This Week in Compliance: European regulator hits Google with record antitrust fine

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

Business

  • European regulator hits Google with record antitrust fine: Google was hit with a record-breaking EUR 4.34 billion fine as well as an order to refrain from using its mobile operating software Android to block its rivals. The EU antitrust regulator determined that Google has abused the dominance of Android to promote its revenue-generating search engine. Google has indicated it will appeal the ruling. While large, the fine represents only two weeks of revenue for Google’s parent company Alphabet Inc. However, the fine is likely to add to trade tension between Brussels and Washington. The fine follows an EUR 2.4 billion fine imposed on the company last year after the company’s shopping portal was deemed to be unfair to competitors. A third EU inquiry against Google, which remains open, involves the company’s AdSense advertising service which has been accused of blocking search advertisements of Google’s competitors.
  • Judge dismisses FCPA suit against two former managers at Och-Ziff over statute of limitations: A federal judge in Brooklyn dismissed a suit against two former executives at hedge fund Och-Ziff Capital Management Group who the SEC accused of violating the Foreign Corrupt Practices Act for allegedly orchestrating bribery in Africa. Judge Garaufis found that the statute of limitations of five years had been reached, since the conduct in question happened between May 2007 and April 2011. The judge also rejected the SEC’s argument that it should have been granted more time to conduct discovery. The SEC alleged that the executives directed bribes to win mining contracts in Chad, Niger, Guinea, and the Democratic Republic of the Congo. Och-Ziff paid USD 412 million in criminal and civil penalties to resolve their FCPA charges.
  • CFTC issues first award to foreign whistleblower: The U.S. Commodity Futures Trading Commission (CFTC) announced that it has awarded in excess of USD 70,000 to a foreign whistleblower who significantly contributed to a CTFC investigation that led to a successful settlement. The award follows the record USD 30 million awarded to a whistleblower last week that led to a successful enforcement action. The CTFC’s whistleblower program was created following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under the program, whistleblowers are eligible to receive between 10 and 30 percent of the penalties collected.
  • Japan concludes first plea deal to resolve foreign bribery charges: Industrial giant Mitsubishi Power Systems Ltd. entered into a plea bargain with prosecutors in Tokyo this week after a new law adopted in June introduced plea bargains into the Japanese legal system. Details of the allegations are sparse, but the bribery relates to a power plant contract awarded in 2013 and involved one of the company’s employees and a civil servant in Thailand. Tokyo prosecutors agreed to not indict the company “in exchange for information on the employee involved”. The plea bargain system only applies to cases involving organized crime or bribery. Foreign bribery has been an offense in Japan since 1998, but only four cases have ever been prosecuted.
  • Individual pleads guilty over Venezuelan FCPA charges: Luis Carlos De Leon-Perez, a dual U.S.-Venezuelan citizen pleaded guilty to bribing officials at Venezuela’s state-owned oil company as well as laundering the bribe money paid to the officials. De Leon was extradited to the U.S. after he and four others were indicted by a federal grand jury in Texas. The DOJ has charged fifteen others in relation to the case, of which twelve have pleaded guilty. De Leon is facing his sentencing hearing on September 24th.

Government

  • Peru’s Minister of Justice fired over judiciary corruption scandal: Leaked recordings of judges and ministers indicating corruption and embezzlement have surfaced in Peru. The conversations indicate widespread corruption, with one judge asking for a bribe to ensure the appointment of another judge. Another recording features a judge discussing the possibility of lowering the sentence or declaring innocent a child rapist. Peru’s President Martin Vizcarra has dismissed the Minister of Justice Salvador Heresi. Protests broke out last week in Lima following the release of the recordings. President Vizcarra was appointed following the impeachment of former President Pedro Pablo Kuczynski who was accused of buying congressional votes to avoid impeachment.
  • Illegal enrichment law passed in Tunisia to strengthen anti-corruption fight: Tunisia’s parliament approved an illicit enrichment law which will force the president, ministers, senior officials in the public sector, and a number of other groups including banks and journalists to declare their property. The law will allow public scrutiny of wealth acquired illegally. Penalties under the law include fines and up to five years of imprisonment. The new law comes on the heels of an unprecedented government campaign against graft; about twenty prominent businessmen were arrested and had property confiscated as well as bank account was frozen last year over charges of corruption.

Noteworthy

  • Germany overhauls anti-money-laundering agency after just a year: Finance Minister Olaf Scholtz has promised a fresh start for the Financial Intelligence Unit (FIU) after problems including under-staffing and poor equipment led to a massive backlog of cases just a year after the agency was conceived. As of May this year, the agency was only able to handle slightly over half the cases reported to it since June 2007, even though urgent cases should be handled within days. The FIU’s staff will triple from 165 to 475 and the agency will get additional authority to obtain the data it needs from law enforcement and other financial and administrative authorities. In addition, the FIU will gain the authority to immediately stop suspicious transactions.
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