This Week in Compliance

Israel’s Largest Bank to Pay USD 904 Million For Involvement in FIFA Corruption Case & U.S. Tax Evasion

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 Hapoalim’s charges for tax evasion and corruption in relation to FIFA.   Read the full story and more news below:

Top Story

Israel’s Largest Bank to Pay USD 904 Million For Involvement in FIFA Corruption Case & U.S. Tax Evasion:

Israel’s largest bank, Hapoalim, has agreed to pay a penalty of USD 904 million for its role in the FIFA bribery scandal. The bank admitted to having participated in a money-laundering scheme where employees laundered bribes related to FIFA broadcasting rights acquired by Full Play S.A, an Argentinian Sports Media Company. Hapoalim agreed to pay USD 30 million for its role in FIFA’s international bribery conspiracy. The bank also admitted to conspiring with clients to let them hide money offshore. According to the U.S. Department of Justice (DOJ), Hapoalim set up more than 5,500 shell bank accounts in Israel and Switzerland from 2002 to 2014 to help its clients evade taxes. The bank is paying a fine of USD 874.28 million for tax evasion. 

Business

Alexion Pharmaceuticals Strikes Tentative USD 25 Million Bribery Settlement: 

Boston-based Alexion Pharmaceuticals Inc. reached a tentative settlement with the U.S. Securities and Exchange Commission (SEC) on FCPA charges for USD 15 million. The SEC’s investigation reportedly began in 2015 and focused on FCPA compliance in various markets including Turkey, Russia, Japan, and Brazil. Alexion also announced plans for ramping up compliance efforts and stated they were in close collaboration with regulators on the probes.  

Former Pension Insurer Employee Pleads Guilty to Bribery Scheme: 

Jeffrey Donahue, former director of procurement for the U.S. government’s pensions insurer, Pension Benefit Guaranty Corp. (PBGC), pleaded guilty of accepting cash and other items of value from a chief executive in a contracting party in exchange for contracts. The involved executive, Nadeem Ansari, also pleaded guilty for the offenses. According to the judgment, in 2015 Donahue helped Ansari draft bid proposals to U.S. procurement authorities in exchange for a job with USD 1 million in compensation. Donahue was charged for steering the contract in favor of Ansari’s firm by providing unfair guidance, confidential information, and modifying the terms of the contract to match the qualifications of Mr. Ansari’s team. It was also found that in 2016, Donahue proposed a scheme in which he would receive USD 125,000 from Ansari in exchange for contracts. Effectively, Donahue received around USD 48,000 in bribes and additional gifts.

World Bank Debars Chinese Electrical Equipment Firm Over Fraud on Zambia Project:

Liaoning-EFACEC Electrical Equipment Company Limited (LEEEC) was debarred from participating in any World Bank-financed projects for the next 20 months due to fraud allegations. The company admitted to failures in disclosing an important conflict of interest as well as misrepresenting the company’s past experience and agreed to implement remedial measurements in the organization. The project was destined to help raise the quality of Zambia’s electricity systems. Even though this debarment also qualifies for a cross-debarment by other multilateral development banks, the granted 20-month sentence is shorter than the usual three-year debarment because LEEEC agreed to develop a compliance program.

Policy & Guidance Updates

EU Commission Sets New Plan to Counter Money Laundering: 

The European Commission announced a new action plan to counter money laundering and terrorism financing which includes a proposal for the establishment of a new supervising authority to oversee AML governance across member states. According to the Commission, because supervision lies within member states, the EU needs an integrated EU-level mechanism in order to implement the existing AML framework effectively. The Commission stated the new body could be run out of the European Banking Authority or by a new dedicated body. While the proposal of a new regulatory body is only a part of the action plan and its impact is still to be evaluated, the plan has been described as the first step towards a new, comprehensive framework to fight AML across the EU. Other important points in the action plan include the announcement of a new set of harmonized AML rules and a proposal for a new mechanism for coordination of  Financial Intelligence Units by the first quarter of 2021. The plan also includes announcements on guidance on public-private partnerships for better enforcement and plans on adjusting the EU’s third-country methodology for AML risk assessments.

Government

U.S. Repatriates to Nigeria over USD 300M Stolen by its Ex-Dictator:

U.S. authorities announced the repatriation of USD 311.8 million worth of stolen assets to the government of Nigeria. The assets, which were looted by Nigeria’s previous dictator Sani Abacha, were funneled out of the country via U.S. backed bonds and financial instruments. The assets were retrieved from the island of Jersey, a self-governing dependency of the U.K. that ranks in the top 20 of the Tax Justice Network’s Financial Secrecy Index. It is estimated that around USD 174 million of Abacha’s wealth are still shored in the U.K. and France. 

Israel Court Clears Netanyahu to Form a Government Despite Corruption Charges:

Israel’s supreme court reached a decision allowing Israel’s Prime Minister Benjamin Netanyahu to begin his fifth term despite corruption charges. Netanyahu’s trial on bribery and fraud allegations has been ongoing for six months. In a unanimous ruling, Israel’s highest court concluded that there was no legal basis for preventing him from forming a government again. Critics have voiced concerns over the corrosive effect this leadership could have on the rule of law in the country.

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