This Week in Compliance: Huawei CFO Arrested in Canada for U.S. Sanctions Violations
Huawei’s CFO arrested in Canada for U.S. sanctions violations: Meng Wanzhou, chief financial officer at Chinese tech giant Huawei Technologies, was arrested in Canada last weekend and now faces extradition to the United States. While the charges have not been made public, Reuters reported that the arrest relates to violations of U.S. sanctions. Huawei has been the subject of a probe by U.S. authorities since 2016 over potential violations of U.S. sanctions, including the shipping of U.S.-origin products to Iran. Huawei has said that it is “not aware of any wrongdoing by Ms. Meng”. The arrest has rocked global markets which were anticipating an easing of U.S.-Chinese trading tensions following meetings between Trump and Xi at the G20 last week. Meng is due to appear in court in Vancouver on Friday for a bail hearing.
Goldman Sachs may boost legal reserves in anticipation of 1MDB fines: Analysts have estimated that investment bank Goldman Sachs may have to boost its legal reserves by USD 500 million to USD 1 billion in anticipation of enforcement action against the bank. The bank has become embroiled in the sprawling 1Malaysia Development Bhd (1MDB) scandal recently. Goldman Sachs helped raise funds through orchestrating bond offerings for the beleaguered fund. An analyst for UBS estimated that the potential fine can range from the USD 600 million in fees the bank charged the fund for the bond offerings, to the USD 2.5 billion embezzled from the fund. Malaysia’s Finance Minister has also indicated that his country is seeking a “full refund” of the USD 600 million in fees.
European Union adopts new Anti-Money Laundering Plan: The European Union’s finance ministers adopted a plan on Tuesday to enhance the trading bloc’s measures against money laundering at its banks. The move comes after several high-profile cases of money laundering came to light in recent years, including the scandal at Danske Bank and raids at Deutsche Bank last week. The plan contains a series of executive measures, but no recommendations for legislative changes were made. Calls from the European Central Bank to set up an EU-wide anti-money laundering agency were also not addressed. The move may also delay reforms proposed by the European Commission (EC) in September, as ministers indicated they first want to assess recent cases of financial crime. The EC plan called for, amongst other measures, an increase in the staffing of the European Banking Authority department overseeing money-laundering from one person to twelve people. However, since the review of current is not due until June 2019, the EC proposal is likely to be delayed.
Hong Kong official convicted of FCPA offenses: Patrick Ho, Hong Kong’s former home secretary between 2002 and 2007, was convicted by a federal jury in Manhattan this week for bribing African officials on behalf of a Chinese energy company. Ho was convicted on seven counts; one count of conspiring to violate the FCPA, four counts of violating the FCPA, one count of conspiring to commit international money-laundering, and one count of committing international money-laundering. The DOJ said that Ho, conspiring with co-defendant Cheik Gadio, offered USD 2 million in bribes to the president of Chad. Gadio acted as a witness at the trial as part of his non-prosecution agreement. Ho also paid a USD 500,000 bribe to Sam Kutesa, Uganda’s minister of foreign affairs. Ho leads an NGO, known as the China Energy Fund Committee (CEFC), which was used to funnel bribes to officials in Africa. The maximum prison sentence for Ho will be five years for each FCPA-count and up to 20 years for each money-laundering count.
CHS Inc. discloses ongoing FCPA probe: Farming giant CHS Inc. disclosed this week in an SEC filing that it has self-reported possible FCPA violations linked to Mexican customs payments. The company has said that it is fully cooperating with the investigation into the payments that were made in 2014 and 2015. The company has said that it made a “small number” of payments to Mexican border agents in connection with inspections of grain crossing into the United States.
U.S. DOJ official pleads guilty to helping funnel illicit 1MDB funds into the United States.: The Justice Department revealed last week that one of its own officials was acting as a middleman in a scheme to pressure the U.S. to go easy on Malaysians involved in the 1MDB scandal. The official, George Higginbotham, used shell companies to funnel USD 74 million into the U.S. at a moment when other banks were refusing to deal with the Malaysians involved. The money involved was meant to pay for a lobbying campaign that sought to influence the investigation underway with U.S. authorities into the 1MDB scandal. The court filing identifies the source of the money as Malaysian billionaire Jho Low, who was indicted on related charges last month. The filing describes an elaborate but at times disorganized effort to move money into the U.S. to pay people who claimed they could stop the Justice Department probe. Higginbotham pleaded guilty to the charges and also admitted to working on fake loan and consulting documents, as well as aiding another lobbying campaign aimed at removing another foreign national from the U.S.
Israeli police recommend indicting Prime Minister Netanyahu for the third time this year: Israeli police recommended this week that Netanyahu be indicted for receiving bribes and other criminal charges. The recommendation is the third, and most severe one, this year. Police have said that Netanyahu had a “bribery relationship” with Shaul Elovitch, the controlling shareholder of Bezeq, a telecommunications company. Netanyahu advanced regulation favoring Elovitch that netted the businessman millions of dollars. In exchange, Netanyahu and his associates dictated content on the company’s news website Walla! News between 2012 and 2017. They placed flattering photos and articles of Netanyahu on the website and removed those that were critical. Netanyahu has denied all charges and has accused the police of a witch hunt. It is now up to Israel’s attorney general to decide whether to bring charges or not.
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