This Week in Compliance

Former SEC examiner charged with stealing compromising investigation information

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 case of a former SEC examiner who is being charged of stealing compromising information. Read the full story and find more news below:

Top Story

Former SEC examiner charged with stealing compromising investigation information:

A former examiner for the Securities and Exchange Commission (SEC) was charged last week in federal court for allegedly stealing “compromising” information about an SEC investigation into a private equity firm that subsequently hired the former examiner as its managing director and chief compliance officer. Michael S. Cohn is being charged with obstruction of justice, unauthorized computer access, and unauthorized disclosure of confidential information. Cohn has pleaded not guilty to the charges and was released on a bond of USD 250,000. The DOJ said that Cohn told the private equity firm, GPB Capital Holdings,  about the inside information during his hiring talks. . He disclosed the information to members of GPB’s senior management “on several occasions,” according to the DOJ. Cohn faces up to 20 years of imprisonment if convicted.

Policy Updates

U.S. SEC to propose rules that could limit shareholders’ voice in corporate voting proposals:

The SEC  will vote to modify two rules that might limit shareholder voice in corporate voting proposals. The first rule regards adjusting  the threshold of votes required for shareholders to re-submit proposals for change to corporate boards. Under the new amendments, second time proposals within 5 years will require a minimum 15% support, up from 6%. Additionally, if a proposal is re-submitted for a third time within 5 years, it will require a 25% threshold on the vote of support, up from 10%. According to the SEC, the amendment is being proposed as a means to get rid of proposals that experience a decreasing level of support over time. The second amendment aims to impose a “review and response process” that would give companies five  days to review proxy adviser proposals and provide feedback. The latter proposal was praised by representatives of the U.S. Chamber of Commerce who voiced concerns on the opacity of the current system of proxy advice. Proxy advisor firms such as the ISS (Institutional Shareholder Services) issue recommendations on investor voting in corporate elections and cast votes on behalf of asset managers.

Business

Thales to appeal to South Africa’s top court charges that it bribed Zuma:

French defense firm Thales said this week that it would ask South Africa’s highest court for permission to appeal a ruling that was mandated earlier in October. The past ruling dismissed the firm’s request to drop charges where Thales was accused of bribing former President Jacob Zuma. It is alleged that Thales agreed to pay ZAR 500,000 to Zuma annually for protection from an investigation into a USD 2 billion arms deal conducted in 1999. The charges were originally filed a decade ago, but were then set aside. The charges were reinstated in 2018 following appeals and lobbying by opposition parties and local anti-corruption courts. Thales’ challenge to the lawfulness of the decision to reinstate charges against it was dismissed by the High Court last month.

Judge rejects ENRC’s challenge to the UK’s Serious Fraud Office:

A London judge has dismissed ENRC’s request for a legal challenge to the UK’s Serious Fraud Office’s (SFO) six-year investigation into allegations that include  fraud, bribery, and corruption at mining company Eurasian Natural Resources Corporation (ENRC). ENRC was seeking a judicial review to force the SFO to reinstate an independent examination of the case — one of its longest-running. The company has leveled allegations against the SFO of collusion and cover-up by inducing ENRC’s former law firm, Dechert, to act in breach of contract. The SFO agreed to an independent review of its own investigation last year and brought in retired High Court judge David Calvert-Smith to run an independent slide rule over the case. However, after ENRC filed a separate USD 93 million-plus legal claim against the SFO for alleged wrongful conduct, the review was suspended as the SFO argued that  the review and the lawsuit covered similar ground.

Venezuela’s business elite face scrutiny in $1.2 billion money laundering case:

A group of politically connected businessmen with financial ties to Miami are being convicted of money laundering and conspiracy to bribe government officials to embezzle USD 1.2 billion from Venezuelan state owned oil company – Petroleos de Venezuela (PDVSA). One of the individuals under suspicion, Alejandro Betancourt, reportedly co-founded Derwick Associates, a power company that reaped USD 2.9 billion dollars in overpriced government contracts for oil development plants in Venezuela by an average of 162 percent according to Transparency International’s local chapter. While 9 individuals have already been convicted in the case – two pleaded  guilty and one is still awaiting trial, the rest of the 6 defendants are considered fugitives by U.S. law – including Betancourt’s cousin. 

Government

Malaysia wants to recover USD 4.3bn in 1MDB scandal:

The Malaysian Anti-Corruption Commission (MACC) is seeking to locate USD 4.3 billion in assets related to the global money laundering investigation on state investment fund 1MDB (1Malaysia Development Berhad). While the U.S. has calculated around USD 4.5 billion in losses to money laundering, Malaysian authorities suggest a higher amount of stolen money. Last week, U.S. prosecutors accorded a deal with Malaysian fugitive Jho Low in order to recover USD 700 million of the stolen money. This has left around USD 4.32 billion worth of unidentified assets in at least five countries where Malaysian authorities are collaborating with authorities to identify forfeited properties and assets. Additionally, authorities in Singapore, Switzerland and other countries are investigating money laundering and alleged corruption in relation to former Prime Minister Najib Razak, who was charged with 42 criminal offences related to the 1MDB and other state organs. 

UNRWA boss resigns amid probe into misconduct claims:

The head of the United Nations Agency for Palestinian refugees, Pierre Krahenbuhl, announced his resignation afteran investigation revealed internal “management issues” that had to be adressed. According to a confidential ethics report members of UNRWA’s inner circle had engaged in nepotism, retaliation and misconduct alongside other abuses of authority. The report, which was published after the U.S. decided to cut its contributions to UNRWA in 2018, attributed the misconduct to the funding crisis which allegedly sparked increased disregard for agency rules and extreme concentration of decision making power in the organization. The working environment at UNRWA at that point in time  was described “by low morale, fear of retaliation, distrust and secrecy” with “a significant breakdown of the regular accountability structure”. As a result, the involved individuals were described as an immense risk to UN’s reputation and their immediate removal was recommended. 

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