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, former Volkswagen executives settle the Dieselgate case. Read the full story and more news below:
Former Volkswagen Executives Settle Dieselgate Case:
Martin Winterkorn, former CEO of Volkswagen AG, and other executives will pay the company USD 351M for their role in the Volkswagen Dieselgate emissions scandal. Winterkorn, who led the company from 2007 to 2015, stepped down after facing fraud charges in Germany and the U.S . The long-running fraud scandal became public in 2007 after the company was accused of installing carbon emissions software in 11 million cars used to cheat emissions requirements tests and then covering it up. Separately, German authorities charged Winterkorn for issuing false testimony under a 2017 parliamentary investigation on the Dieselgate case on June 9th, 2021.
Renault Charged in Carbon Emissions Probe:
French auto-maker Renault SA stated it would pay USD 24.4M (EUR 20M) to French authorities under preliminary corruption charges due to its role in Volkswagen’s carbon emissions fraud scandal. Renault will also provide USD 60M in bank guarantees in case of potential damages. According to the French Antifraud Authority, Renault engaged in fraudulent practices by equipping its cars with Volkswagen’s software used to cheat carbon emissions tests conducted by authorities around Europe. Renault, which denied all wrongdoing, stated that its cars have always complied with the law.
BrewDog Issues Public Apology Over ‘Toxic Culture’
U.K. brewing company and pub chain BrewDog, which has been accused by its employees of having a toxic work culture, issued a public apology and said it would ‘listen, learn and act’. The accusations became public after a group of 100 employees anonymously signed an open letter and shared it on Twitter. In the letter, they wrote, “the single biggest shared experience of the former staff is a residual feeling of fear”. Brewdog founder James Watt responded that he would ’reach out to the entire team to learn more.
EU Launches New Enforcement Office:
Last week, the European Union launched a new enforcement authority, the European Public Prosecutor’s Office (EPPO), which will investigate crimes related to EU taxes and funds. According to the EU, more than EUR 460M of the EU’s 2019 budget was lost to fraud. The agency, which has an anti-fraud mandate, is tasked with monitoring the provision of the EU’s USD 913BN (750 BN EUR) recovery package destined to help member states recover from the pandemic. EPPO, which does not have a criminal code of its own, will have to use the 22 member state’s judicial systems to enforce charges. The new agency will be working with the EU’s Office for Anti-Corruption (OLAF) and other European institutions to prosecute cases. The agency will be composed of prosecutors appointed by member states who will conduct investigations into their respective states and coordinate with the EU’s office in Luxembourg.
Biden Ramps Up Anti-Corruption Policy Focus:
U.S. President Joe Biden announced an interagency anti-corruption process where individual government agencies will soon be required to submit clear steps on how they can strengthen anti-corruption measures. According to the directive, which, if necessary, calls federal agencies to establish new programs and increase resources aimed at preventing corruption, it gives the agencies 200 days to submit their reports. This broader policy focus could have significant implications for U.S. foreign policy and also the functioning of several anti-corruption programs.
Bosnia’s Former Head of Tax Agency Sentenced for Corruption:
Bosnia and Herzegovina authorities sentenced Kemal Čaušević, former head of the country’s tax authority, to nine years in jail for corruption. According to the charges, Čaušević was part of a bribery scheme. The former public official conspired with Chinese, Hungarian, and Turkish importers of textiles and received USD 1.06M in bribes in exchange for favorable treatment. As part of the deals, the companies were subject to tax exemptions resulting in a loss of more than USD 1BN to the government’s budget during a period of five years. More than 300 public officials have been found to be involved in the corruption scheme.
El Salvador Leaves OAS Anti-Corruption Accord:
El Salvador announced that it would be leaving the International Commission Against Impunity issued by the Organization of American States (OAS), one of the OAS’ main anti-corruption accords. Salvadoran authorities stated that they pulled out of the accord due to the OAS’ decision to hire a former Salvadoran mayor who was accused of fraud in El Salvador. Luis Almagro, the President of the OAS said he deeply regretted the decision as it would curtail the investigative powers of the institution.