This Week in Compliance

This Week in Compliance: Porsche Offices Raided in Corruption Probe

Top Story

  • Porsche Offices Raided in Corruption Probe: Prosecutors in the German city of Stuttgart said they raided Porsche’s offices in Tuesday over suspicions that an auditor working for the government had been paid bribes to pass information to the car manufacturer’s tax advisor. Six people, including some in “leadership positions” are at risk of being charged with breach of trust, according to prosecutors. In addition to Porsche’s offices, a number of private homes in nearby towns were raided after the authorities discovered that a former member of Porsche’s workers’ council received unusually high compensation for their work. An official tax bureau and financial advisors’ offices were additional targets in the raid. The investigation is unrelated to the so-called Dieselgate scandal involving emissions test cheating. Porsche has said it was “cooperating fully with the authorities”.

Business

  • UBS cleared by U.S. court in whistleblower libel suit: A New York appeals court has dismissed a USD 20 million libel suit brought against Swiss bank UBS by a whistleblower, as the court concluded that statements the bank made against the former employee were at least “substantially true”. Bradley Birkenfeld, the whistleblower, had accused UBS of acting in malice in making statements about him to the media. His suit was dismissed in 2017 and that decision was upheld by the court this week. Birkenfeld spent two and a half years in prison for helping one of his clients, a billionaire, evade taxes. However, he got a USD 104 million award from the U.S. tax authorities for his role as a whistleblower in a case that led to the bank being fined USD 780 million by U.S. authorities in 2010 for the bank’s role in helping wealthy individuals hide up to USD 20 billion.
  • SEC awards former Brazilian surgeon turned whistleblower USD 4.5 million: A former Brazilian surgeon who alerted the Securities and Exchange Commission (SEC) of a medical device company that allegedly bribed doctors in order to win business, was awarded USD 4.5 million by the SEC this week. The information the surgeon supplied was crucial in helping the commission uncover bribery at Biomet Inc. in multiple countries across the world. Biomet paid more than USD 30 million in 2017 to resolve FCPA charges with the DOJ and SEC.

Government

  • Israeli police recommend bribery charges against Shikun & Binui: After a year long investigation by the ISA (Israel Securities Authority) and the Israeli Police, Israel’s largest construction group, Shikun & Binui, has been found to participate in several bribery offences in its foreign subsidiaries in Africa. The offences include bribery of a foreign public servant, misrepresentation of corporate documents, conspiracy, disruption of legal proceedings, money laundering, and misreporting to authorities between 2008 and 2016. While the investigation focused mostly on the group’s foreign subsidiary in Kenya, evidence from other sources shows that the company engaged in bribery payments to civil servants across multiple African countries. The spokesman from Shikun & Binui has declined to comment on the situation.
  • Romanians overwhelmingly reject changes to anti-corruption laws: Alongside this year’s EU parliamentary elections, the Romanian Centrist president Klaus Iohannis, issued a non-binding referendum addressing the most recently approved changes to the country’s anti-corruption laws. The changes, which were put forth by the country’s ruling party, the Social Democrats (PSD), would support amnesty and pardon for government officials in cases of corruption and were criticized to restrict the prosecutor’s independence. The results of the referendum showcased a stark rejection from the population towards the newly passed legislation, with more than 80% of the population voting against the amendments. Meanwhile, as the results for the European Parliament election show, the Social Democrats (PSD) suffered from a historic loss in votes showcasing a 14.2 percentage points drop from the 2014 elections where they went from having 45% to just 23.4% of the votes in 2019.
  • Romania’s ruling party leader jailed for corruption: Romania’s Supreme Court sentenced the leader of the Social Democrat Party (PSD), Liviu Dragnea, for a 3 ½ year prison sentence. According to the verdict, Dragnea, who served as a government official from 2008-2010, was charged with keeping two women employed by his party on the payroll of the Romanian family welfare agency. The women admitted to working for the party while they received wages from the public agency. Dragnea, who has also been considered to be the most influential politician in Romania, had already been barred from serving as a prime minister due to previous charges for vote-rigging in 2015.
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