Here’s what’s been going on in the compliance world this week:
- New charges in the Rolls Royce bribery case: In a superseding indictment, the Department of Justice charged a former Armenian ambassador, Azat Martirossian, a Russian national, Vitaly Leshkov, and a Greek citizen – also founder and CEO of Gravitas & CIE. International Ltd – Petros Contoguris, for their role in a bribery scheme to help Rolls Royce’s Ohio-based unit win a USD 145 million contract to supply equipment and services for a gas pipeline from Kazakhstan to China. The defendants face several counts of money laundering, conspiracy to launder money, conspiracy to violate the FCPA and violating the FCPA. In early 2017 Rolls Royce paid USD 170 million in US criminal penalties as part of a global settlement for conspiring to violate the FCPA. Rolls Royce admitted widespread bribery in at least a dozen countries including Kazakhstan.
- Legg Mason says it expects to settle FCPA investigation soon: The fund manager Legg Mason, Inc. said that it has accrued USD 67 million as it expects to soon settle an FCPA investigation with the DOJ and SEC into its London-based unit Permal Group which managed funds for the Libyan government. The probe involves Permal Group’s Libya deals from 2005 to 2007. In 2016, Legg Mason combined Permal with another asset management unit and renamed it EntrustPermal. Legg Mason confirmed that the investigation does not relate to its current business activities, nor that of its affiliates, but rather to the actions of former employees at Permal. The employees in question no longer work at Permal and the investigated Libyan investments were all terminated in 2012.
- Indian authorities open corruption investigation into AirAsia: Indian police filed a case against the airline AirAsia Group Bhd, its CEO Tony Fernandes, and its domestic entity AirAsia India on charges of corruption and breaking rules to obtain a flying license. Reportedly, some of AirAsia’s employees and third parties violated India’s foreign direct investment and paid bribes to government officials to circumvent regulations to allow AirAsia India to fly international routes. Reportedly, the airline, Fernandes and other employees at the company paid bribes to government officials in return for approvals to fly internationally from the day the airlines started operations in India. Yet regulations require 5 years of operation in the domestic market and a fleet of 20 aircraft before opening international routes. AirAsia India denies the allegations and said it was cooperating with authorities on the matter. The complaint listed five other individuals and a Singapore-based company, along with unnamed government officials.
- Government corruption triggers public anger in Kenya: The alleged embezzlement of USD 100 million at government agencies in Kenya has triggered public anger and led to the detention of more than 50 top officials and executives. The prosecutor’s office announced that the named suspects, including the head of an agency, dozens of senior officials and four family-related businessmen were to be prosecuted. Charges range from abuse of office, stealing public funds and forgery. The case centers on the National Youth Service (NYS), a paramilitary institution that trains young people and deploys them to projects. The director of public prosecutions is investigating allegedly inflated invoices totaling at least GBP 59 million. Corruption allegations involving electricity supplier Kenya Power have also emerged: families and friends of employees were found to have bagged USD multimillion contracts. Fraudulent payments of USD 30 million have also been uncovered at the National Cereals and Produce Board.
- Pakistan’s NAB recovers assets in the Ashiana Housing scam: The National Accountability Bureau (NAB), Pakistan’s anti-corruption authority, recovered the equivalent of USD 1.3 million and a luxurious Toyota Landcruiser from the former head of the Lahore Development Authority, Ahad Cheema, in the eastern city of Lahore. Earlier this year, the NAB arrested Cheema for alleged abuse of power and corruption involving the Punjab government housing project, also known as the Ashiana Housing scam. Investigations were triggered by several complaints to the NAB about an ‘illegal deal’ involving acres of land between the Punjab Land Development Company — a government-owned company — and some private firms. Reportedly, Cheema received land worth USD 260,000 from the owners of the firm associated with the housing project.
- Egyptian officials arrested for bribery and abuse of office: Egypt’s corruption watchdog arrested four officials, including the head of Food Industries Holding Co., a state-run company responsible for importing food commodities, as well as an adviser to Supply Minister Ali El-Moselhy, on suspicion of taking more than USD 111,550 in bribes from major commodity suppliers in return for securing orders and facilitate payments. The arrests are the latest shake-up in the market, which has faced supply disruptions, trader boycotts and allegations of smuggling and fraud in the past few years. In another case, an official at Egypt’s customs silos and two employees at a grain import and export company were ordered detained for an additional two weeks pending an investigation into allegations of bribery, abuse of office, profiteering, and waste of public funds reaching EGP 30 million. However, it’s unclear whether the two cases are related.