This Week in Compliance

This Week in Compliance: Glencore to face potential investigation by SFO

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

Business

  • Glencore to face potential investigation by SFO: U.K. Serious Fraud Office (SFO) is preparing to open a formal bribery investigation into Glencore Plc and its work with Israeli billionaire Dan Gertler and the President of the Democratic Republic of Congo Joseph Kabila. Gertler and Kabila have been implicated in previous British and American bribery investigations. The SFO has been scrutinizing their relationship with a Kazakh mining company, Eurasian Resources Group BV, for six years and investigating whether the latter paid off Congolese officials with Gertler’s help. As Glencore is based in Switzerland, the SFO would have to show that it has jurisdiction because the company’s shares are traded in London in order to obtain formal approval for a full probe into the company’s dealings in Congo.
  • UK criticized for a lack of crackdown on money laundering: In a report released by the Foreign Affairs Committee of the British Parliament, the UK government was criticized for “turning a blind eye” to the role London’s financial center plays in laundering the proceeds of Russian corruption. According to the British National Crime Agency, the UK is a prime destination to legitimize Russian proceeds of corruption and potentially hundreds of billions of pounds of money-laundering are channeled into Britain each year. The report recommended, among other, cooperating with the EU and the US in order to prohibit the purchase of Russian bonds which have been sold with the help of sanctioned banks.
  • New Irish anti-corruption bill reviewed by Seanad: Ireland’s Dáil passed the Criminal Justice (Corruption Offences) Bill 2017 and is now before the Seanad. A number of significant amendments have been made to the Bill, including, but not limited to, the expansion of the definition of ‘Irish Official’ and passive corruption, and the removal of the dual criminality requirement regarding bribery of a foreign official as a predicate to money laundering. One of the most significant changes relates to the introduction of a new provision which imposes criminal penalties on companies that don’t have measures in place to ensure that employees and third parties do not engage in bribery and corruption. Companies will need to ensure that they implement a compliance programme to meet the requirements of the new bill which is expected to be enacted in June.

Government

  • Former PM Najib questioned over funds allegedly linked to 1 MDB: The Malaysian anti-corruption commission questioned former Prime Minister Najib Razak over the suspicious transfer of USD 10.6 million from SRC International into his account. The SRC was created as a unit of 1 MDB by Najib’s government then moved to the finance ministry. Since the case erupted in 2015, Najib has denied all wrongdoing and claims that USD 681 million in funds deposited in his bank account were a donation from a Saudi royal and did not originate from 1 MDB. Najib replaced several MACC officers and an attorney general to block initial investigations. The US Department of Justice said that it will also carry on its own investigation: back in 2016 and 2017, the US filed forfeiture complaints to recover USD 1.7 billion of the USD 4.5 billion in assets reportedly diverted from 1 MDB and laundered through a web of shell and bank accounts in countries including the US.
  • Former Brazilian minister and close Lula ally sentenced to prison: Brazil’s courts found former minister José Dirceu – also the right hand of former president Lula da Silva – guilty of receiving bribes in connection with the corruption scheme operated at the state-owned Petrobras, also known as Operation Car Wash. Dirceu was sentenced to 30 years’ imprisonment, which he will serve in a detention center in Curitiba. Dirceu faced a previous corruption investigation involving parliamentary bribes which ended in a nine-year prison sentence, during which Dirceu, the Justice claims, received USD 3.24 million from Engevix in return for influencing the granting of contracts with Petrobras.

Noteworthy

  • Private companies join initiative to help whistleblowers: More than 400 private companies in Slovakia, who count among the top 20 employers in Slovakia, have joined the Backing the Bold Ones initiative – launched by the local chapter of Transparency International – under which they have committed to help whistleblowers who have lost their jobs due to reporting corruption at work. The companies will offer the whistleblowers an interview or provide them with coaching, counselling, and requalification for a future career. Reportedly, Slovakia is one of the countries with the lowest levels of willingness to report corruption within the EU because due to a lack of trust in authorities’ handling of investigations and from fear of retaliation.
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