China FCPA Investigation

Herbalife Reserves USD 123 Million to Settle China FCPA Investigation

Saara Barberena
Saara Barberena

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 Herbalife’s FCPA settlement over bribery allegations in China.  Read the full story and more news below:

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Herbalife Reserves USD 123 Million to Settle China FCPA Investigation:

The U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have led a decade-long corruption investigation into Herbalife’s dealings in China which might come to an end soon. A regulatory filing stated that Herbalife, which allegedly engaged in a long-haul bribery scheme will most likely pay USD 123 million to settle these allegations. According to enforcement authorities, Herbalife paid bribes to Chinese officials as a means of obtaining selling licenses, evading regulatory scrutiny, and suppressing negative media coverage by state-owned media outlets. Under the settlement, Herbalife would tentatively enter a deferred prosecution agreement to defer criminal prosecution of the FCPA’s bookkeeping provisions.


Consumer Lender Sets Aside USD 21.7 Million For FCPA Settlement:

The consumer lender, World Acceptance Corp., has been in discussions with the SEC for FCPA violations in its Mexican operations since January. The SEC’s probe, which began after an employee blew the whistle on the firm’s conduct in 2017, will most likely reach a settlement where the lender will likely pay USD 21.7 million. World Acceptance Corp allegedly failed to comply with both the FCPA and Mexican employment regulations in relation to certain loan payments and employee compensation schemes. 

Former Garuda Indonesia CEO Jailed For Eight Years For Bribery:

Indonesia’s flag carrier Garuda Indonesia’s former CEO, Emirsyah Satar, was fined USD 1.4 million and sentenced to eight years in prison by an Indonesian corruption court for procurement bribery and money laundering charges related to the procurement of Airbus and Rolls Royce equipment. According to the Indonesian Corruption Eradication Commission’s (KPK) indictment, Satar was involved in a scheme in which he received bribes from a third party in exchange for the procurement of Rolls Royce engines and Airbus planes. Both Airbus and Rolls Royce received record-breaking fines for large-scale bribery schemes in 2017 and 2020. Satar has denied all allegations and will decide whether he will appeal to KPK’s decision next week. 

Biomin America Fined for Alleged Sanctions Violations:

The global maker of animal feed Biomin America has reached a settlement with the U.S. Treasury Department for possible sanctions violations in Cuba. The company agreed to pay USD 258,000 in the settlement as the company’s Austrian division, Eber Group, allegedly sold agricultural products to Cuban Company Alfarma from 2012 to 2017 worth USD 17.4 million. The case highlights the importance of having an effective compliance program as Biomin America failed to have an appropriate OFAC compliance program to ensure that their transactions in the Cuban market were appropriately approved by the OFAC. Biomin, which has now set-up a new compliance program, and hired a compliance consultant to improve internal policies, disclosed the violations after an internal investigation. 


Facebook Appoints New Board Privacy Committee & Announces Independent Oversight Board:

Facebook has announced the establishment of a new Privacy Committee within the company’s board of directors and of a new independent Oversight Board composed of international journalists, academics, and judges to oversee the company’s policy on freedom of expression. Following the Cambridge Analytica scandal in 2018, the tech giant was required by federal regulators to establish a formal privacy committee within its board of directors. The committee will oversee risks related to Facebook’s data usage and privacy and will be in charge of re-assessing the company’s Privacy Program periodically. The creation of the privacy committee together with a new independent Oversight Board, tasked with overseeing freedom of expression, has been regarded as measures to increase transparency and move on from its scandal-ridden past. The Oversight Board which includes high profile professionals such as Denmark’s former PM and several law professors, will function independently and issue policy advisory opinions of Facebook’s content. This week, Facebook also settled a class-action lawsuit for USD 52 million to compensate current and former content moderators. 


U.S. & Malaysia Authorities Reach New Settlements to Recover 1MDB Assets: 

In two separate cases, the DOJ  and Malaysian authorities have reached settlements regarding the forfeiture of assets from Malaysia’s sovereign wealth fund, 1MDB. In the most recent ruling, Malaysian authorities reached a settlement for an undisclosed amount of funds to be paid to the government by Hollywood producer and stepson of former Malaysian prime minister Riza Aziz. The producer was charged with money laundering and of receiving USD 248 million of misappropriated funds from the 1MDB fund. In a separate action, the U.S. DOJ reached a settlement of a civil forfeiture case ensuring the repatriation of USD 49 million back to the fund. The assets were recovered from Khadem al-Qubaisi, the former director of Abu Dhabi’s International Petroleum Investment Company (IPIC), who had reportedly embezzled the assets and laundered them through financial institutions in several countries including the U.S., Singapore, Luxembourg, and Switzerland from 2009 to 2014. 

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