This Week in Compliance

This Week in Compliance: Leader of Romania’s ruling party sentenced for corruption

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

Business

  • Unaoil charged over Iraq bribes by SFO: The UK’s Serious Fraud Office announced on Tuesday that it has filed criminal charges against Unaoil, a Monaco-based intermediary, for paying bribes in Iraq to assist two companies attempting to win energy-related contracts. The first set of charges relate to alleged corrupt payments made by Unaoil on behalf of Leighton Contractors Singapore PTE Ltd for a contract to build two oil pipelines in Iraq worth USD 733 million. The second set of charges relate to alleged corrupt payments to secure contracts in Iraq on behalf of SBM Offshore. A first appearance in court has been scheduled for July 18th. The SFO has already charged four individuals in connection to the Unaoil bribes; their cases remain pending as of today. Unaoil has continuously denied the allegations.
  • Former Aruban telecom official sentenced to prison in U.S. for bribery: Egbert Yvan Ferdinand Koolman, a Dutch citizen residing in Miami and former product manager for Servicio di Telecommunicacion di Aruba (Setar) was sentenced on Wednesday to three years of imprisonment after pleading guilty to charges of conspiring to commit money laundering in April in connection to taking over USD 1.3 million in bribes. The DOJ said that Mr. Koolman received corrupt payments via wire transfer from U.S. banks and further cash payments during meetings in Miami and Aruba. Mr. Koolman struck a plea deal in which he admitted to conspiring to launder money connected to FCPA violations with Florida businessman Lawrence W. Parker. In a separate deal struck back in April, Parker was sentenced to 35 months of imprisonment for conspiracy to violate the FCPA. His companies won almost USD 24 million in business from Setar.
  • SEC completes Toshiba accounting probe without issuing a penalty: Toshiba announced on Monday that the U.S. Securities and Exchange Commission (SEC) completed its investigation into the company’s past accounting practices without issuing a fine. The investigation relates to a 2015 accounting scandal which uncovered widespread accounting errors at the conglomerate dating back to 2008. It led to the company having to recognize huge cost overruns at its U.S. nuclear unit Westinghouse which has since gone bankrupt. Toshiba was also forced to sell company the company’s memory chip unit for USD 18 billion.

Government

  • Leader of Romania’s ruling party sentenced for corruption: Liviu Dragnea, head of the ruling Social Democratic Party (PSD) and widely regarded as the most powerful man in Romania, was convicted on charges of abuse of power and hit with a three-and-a-half-year prison sentence. Dragnea is expected to appeal the decision. Prosecutors have alleged that Dragnea intervened between 2008 and 2010, in his role as a government official, to keep two women on the payroll of a welfare agency even though the women were employed by his party. The conviction is feared to lead to a further heightening of political tensions in the country, as the PSD has been preparing to fire the head of the National Anticorruption Directorate (DNA) and impeach President Klaus Iohannis, who enjoys the support of the opposition.
  • Malaysia to seek recovery of USD 4.5 billion in 1MDB funds: Prime Minister Mahathir Mohamed has said that his government will seek to recoup the money from troubled state investment company 1MDB. The company is under investigation in various jurisdictions, including the U.S., around the world over suspicious transaction through a web of transactions and shell companies. Former Prime Minister Najib Rzak lost the election last May in part due to outrage over the corruption allegations. One of the suspicious transactions involves payments of USD 593 million to investment bank Goldman Sachs in exchange for arranging three bond sales for 1MDB. The borrowing costs charged by the bank were more than double than what would be expected under the circumstances, Mahathir said. Mahathir has said that his predecessor would be hit with bribery and embezzlement charges. Najib has repeatedly denied wrongdoing.

Noteworthy

  • Council of Europe urges Luxembourg to improve prevention of corruption in government: The Council of Europe’s Group of States against Corruption (GRECO) published its fifth-round evaluation report of Luxembourg this week. The group notes that the country generally scores highly in international perception surveys and cases of minor corruption are not frequently reported. However, GRECO criticizes the reactive rather than proactive approach persisting in the country towards problems such as favoritism or conflicts of interest. One gap identified by the group is a lack of a general strategy and a code of conduct for preventing and combatting corruption, particularly in the Grand Ducal Police. Luxembourg also lacks a law giving a general right to freedom of information. The next GRECO evaluation of Luxembourg is due in 2020.
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