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 Read the full story and more news below:
Herbalife Settles FCPA Charges for USD 123 Million:
Herbalife Nutrition Ltd. settled FCPA charges for more than USD 123 M with U.S. authorities. In the first enforcement action, the U.S. Securities and Exchange Commission (SEC) charged Herbalife USD 67 M for violating FCPA book-keeping provisions. According to the SEC, Herbalife made several improper payments in gifts and hospitality expenses to Chinese officials in exchange for favorable government behavior. The latter included favorable conditions for obtaining licenses, removing negative coverage from state-owned media, and curtailing investigations. Herbalife also entered a deferred prosecution agreement with The U.S. Attorney’s Office for the Southern District of New York and agreed to pay USD 55 M in penalties. The company also agreed to cooperate with U.S. authorities in future investigations as well as to revamp its compliance program.
Malaysia Drops Goldman Sachs Criminal Charges Over 1MDB:
After Goldman Sachs paid USD 2.5 billion in cash as part of their settlement with Malaysia last week, Malaysia’s Attorney General’s Chambers dropped all 12 criminal charges against the bank for their involvement in the 1MDB fund corruption case. The bank still needs to repatriate another USD 1.5 billion of stolen assets. Goldman’s Singapore, London, and Hong Kong subsidiaries faced criminal charges for misleading investors when they raised USD 6.5 billion in bond sales for Malaysia’s 1MDB development funds. The funds were misappropriated by several high-level Malaysian officials and two Goldman executives, one of which pleaded guilty in the U.S. Although the acquittal marks progress in the bank’s management of the scandal, Goldman is yet to reach a final settlement with the U.S. Department of Justice.
SEC Gives Two Whistleblower Awards of USD 1.25M and USD 2.5M:
In two separate actions, the U.S. Securities and Exchange Commission (SEC) awarded USD 1.25 M and USD 2.5M to three whistleblowers. In the first award, announced on August 31st, the SEC gave 1.25 M to an individual who alerted the agency of securities violations which resulted in the reimbursement of USD millions to harmed investors. In the second award, announced on September 1st, the SEC gave USD 2.5 M to two whistleblowers who helped the agency achieve a successful enforcement action. The whistleblowers provided an independent analysis of a publicly-traded company’s filings, which according to the Commission not only helped in the early stages of the investigation but also proved the potential of high-quality independent analyses in leading to successful enforcement actions.
Samsung Heir Faces New Fraud Charges over 2015 Merger:
South Korean prosecutors pressed new charges against Samsung heir Lee Jae-yong over alleged stock and accounting fraud in a 2015 merger. According to the allegations, Mr. Lee and 10 of his senior employees conducted illegal activities to help Lee gain control over the tech conglomerate. The group is also facing charges of fake testimony and audit violations. Mr. Lee, who has denied all allegations will not be detained as he faces trial. In 2017, Lee was convicted for bribery charges and given a now-suspended five-year prison sentence.
Policy & Guidance Updates
SEC Cancels Controversial Vote on Whistleblower Rules:
After the SEC’s scheduled vote on the long-awaited changes to its whistleblower award program on Wednesday, September 2nd was delayed, the agency announced yet another rescheduling of the decision – signaling that its commissioners might not have reached a final consensus on the updated rules yet. The changes which were proposed in 2018, among other things, could potentially give the SEC the faculties to process whistleblower tips more quickly as well as to give awards for smaller enforcement actions. A previous vote on the amendments had already been rescheduled back in October 2019.
Ex-Venezuela Official Flees to Aid U.S. in Corruption Probe:
Carmelo Urdaneta Aqui, the former legal counsel of Venezuela’s oil ministry, fled Venezuela amid a high-level corruption investigation in which the official is facing money laundering charges. Urdaneta is accused of participating in a scheme in which USD 1.2 B worth of assets were stolen via bribery and fraud from the country’s state-owned oil company PdVSA (Petróleos de Venezuela). Three individuals linked to the case already pleaded guilty. Urdaneta, who is expected to attend a federal court hearing in Miami, has stated that he is willing to aid U.S. authorities in their ongoing investigation into PdVSA.