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 Novartis' FCPA charges as well as German Wirecard's fraud case. Read these stories and more news below:
Novartis Pays USD 347 Million to Settle Bribery Probes:
Novartis AG and two affiliated subsidiaries settled FCPA charges for a sum of USD 347 million with the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC). The firms were accused of running bribery schemes in public and private clinics and hospitals in the U.S., Greece, South Korea, and Vietnam between 2012 and 2016. The parent company, Novartis AG agreed to pay USD 112.8 for FCPA record-keeping violations and bribery in several jurisdictions to the SEC and the DOJ. In addition, Novartis' Greek subsidiary, which was charged for bribing employees of state-owned hospitals and clinics in exchange for increasing the number of prescriptions and FCPA book-keeping violations, entered a DPA with the DOJ and paid a USD 225 million fine. In Greece, Novartis' previous eye-care subsidiary Alcon Pte Ltd., also entered a DPA with the DOJ and agreed to pay a USD 8.9 million penalty for similar FCPA violations. Alcon was Novartis' former eye-care unit and spun-off from the firm in 2019. Besides the mentioned charges, all the firms have agreed to undertake self-reporting on improvements in compliance measures for the next three years.
Wirecard's Former CEO Arrested Over Fraud Allegations:
Markus Braun, the former CEO of one of Germany's most important fintech companies, Wirecard, was detained over fraud allegations and later released on a EUR 4.5 bail. The former CEO was accused of falsifying company accounts and manipulating the market. The arrest is related to a hole in the company’s balance sheet totaling EUR 1.9 billion, to which Wirecard admits is missing and says probably 'does not exist.' The company had previously stated that the funds were being held in fiduciary accounts in two banks in The Philippines. However, both banks later reported that Wirecard was not their customer. Investigators found that the evidence linking Wirecard to the Philippine banks had been falsified. German prosecutors are now investigating the scale of the fraud and Germany's Finance Minister has pointed to monitoring gaps in the country's financial watchdog.
France Probing if 2.2 Billion Tax Credit to Societe Generale was Illegal:
French prosecutors have opened a probe into whether France's tax authority illegally gave EUR 2.2 billion (USD 2.5 billion) in tax credit losses to investment bank Societe Generale, after having been charged for fraud. According to French law, fraud-charged companies cannot legally benefit from tax deductions if they have shown manifest deficiencies. Societe Generale was charged with fraud in 2016 after its control and security mechanisms were found to aid a fraudulent stock market scheme by financier Jerome Kerviel. The latest probe was launched after one of the leaders of the Green Party filed a complaint, which was later backed up by anti-corruption organization Anticor.
Prosecutors Want 4 Year-Jail Sentence and USD 500K Fine for Ex-IAAF President Lamine Diack:
World Athletics' former President Lamine Diack was given a USD 565,000 fine and a four-year jail sentence for corruption, breach of trust and money laundering charges. The former president of the international governing body of athletics, formerly known as IAAF, allegedly misused his position to solicit USD 3.9 million in bribes from athletes that were suspected of doping during his 16 years of rule. Russian athlete Lilya Shobukhova has testified that she paid USD 506,000 million. Diack denies all corruption allegations.
Policy & Guidance Updates
U.S. Supreme Court’s Ruling on SEC Disgorgement Could Shrink Whistleblower Awards:
The U.S. Supreme Court issued a decision curtailing the Securities and Exchange Commission's (SEC) disgorgement power over future legal settlements. According to the court's decision, the SEC must (1) ensure that disgorgement fines do not exceed the wrongdoer's net profits, and (2) take into consideration legitimate business expenses. Legal experts have stated that the decision gives companies facing SEC fines, the 'necessary tools for challenging and circumscribing the amount sought by the SEC', potentially shaping what courtroom battles are going to look like in the coming years. Over the past five years, disgorgement penalties have constituted 71% of the Commission's recovered assets.
LA City Councilman Jose Huizar Arrested On Corruption Charges:
U.S. authorities arrested Los Angeles City Councilman Jose Huizar for violations of the Racketeer Influenced And Corrupt Organizations Act. Huizar allegedly accepted hundreds of thousands of dollars in bribes from real estate developers, part of which was found in his closet during a 2018 investigation. A close connection to the Councilman pleaded guilty to conspiracy in connection to the bribery scheme last month. If convicted, Huizar could face a maximum penalty of 20 years in prison.
Former Algerian Premier Sentenced For Corruption:
Algeria's former Prime Minister, Ahmed Ouyahia, and Algeria's former Energy Minister were given prison sentences after being found guilty of corruption charges. The former PM was given 12 years and the Energy Minister was given 3 years in relation to corruption in the car assembly industry as well as corrupt financing for former president Abdelaziz Bouteflika's election campaign. Among other things, the former PM is accused of money laundering, tax evasion, 'granting loans out of interest', and 'adapting the government job to private interests'.