This Week in Compliance

This Week in Compliance: TLI resolves FCPA violations

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

Business

  • Swiss authorities make arrests PDVSA-linked corruption case: Swiss prosecutors arrested two executives at Helsinge Inc. on suspicion of bringing foreign officials and money laundering following the initiation of a criminal investigation into the Geneva-based consulting company that allegedly served as a conduit for bribes between PDVSA, the Venezuelan state oil company, and some of PDVSA’s largest clients. Allegedly the firm was used by some of PDVSA’s biggest clients and suppliers to obtain insider information on its tenders for oil exports and purchases of light crude. A trust linked to PDVSA filed a civil lawsuit in a Miami federal court claiming that the collusive bidding scheme resulted in billions in lost revenue for PDVSA. The scheme was allegedly maneuvered by two former PDVSA traders, along with a Swiss citizen; they are all three listed on a commercial registry as Helsinge’s representatives in Geneva. Helsinge was set up in Panama and has officers in Miami, Geneva and the English Channel island of Jersey.
  • TLI resolves FCPA violations: Transport Logistics International Inc. (TLI), a Maryland-based company has agreed to pay USD 2 million criminal fine to resolve charges related to conspiracy to violate the FCPA’s anti-bribery provisions by bribery of a Russian official in return for uranium transportation contracts. The Russian official is currently serving a four-year prison sentence after pleading guilty to money laundering in 2015. The company also entered into a three-year deferred prosecution agreement with the DOJ, agreed to adopt a compliance program and to report periodically to the DOJ. According to the DOJ, the fine reflected the company’s inability to pay penalties as due under the US Sentencing Guidelines and took into account the company’s full cooperation on the matter as well as its firing of all employees who had engaged in the misconduct. Three individuals have been charged in the case, including two co-presidents of TLI.
  • Elbit charged with FCPA offenses: The Israeli-based company Elbit and its subsidiary, Plaza Centers NV, agreed to pay USD 500,000 to settle violations of the FCPA books and records and the internal control provisions. Elbit had disclosed the SEC investigation back in mid-2016. Reportedly, Elbit and Central Plaza had paid USD millions to third-party offshore consultants and a sales agent for services involving a real estate development project – so-called Casa Radio Project – in Romania and the sale of a large portfolio of real estate assets in the United States. However, none of the companies knew whether these services were ever provided. The SEC said that Elbit and Central Plaza had failed to keep and maintain internal accounting controls to prevent that company funds would be used for corrupt purposes. The companies had also failed to accurately register these payments in their books and records.

Government

  • Former South Korean president questioned over corruption: South Korean prosecutors brought in former President Lee Myung-bak for questioning at the Seoul Central District prosecutors’ office on bribery embezzlement and tax evasion charges: Mr. Lee allegedly collected more than USD 10 million in illegal funds and bribes from Samsung among others. Several of Mr. Lee’s former aides, relatives and businessmen have either been questioned or arrested in connection with the investigation. The inquiry comes one year following the impeachment and arrest of former South Korea President Park Geun-hye on corruption charges. Mr. Lee is the fifth former president to have been questioned by prosecutors on corruption allegations since the 1990s.
  • Former Iranian vice president jailed for corruption: Hamid Baghai, a vice president under former Iranian President Mahmud Ahmadinejad was convicted and jailed on corruption charges. Baghai was handed down a 15-year prison sentence for embezzlement and illegal business transactions. Before becoming chief of staff during Ahmadinejad’s second term, Baghai served as the ex-president’s deputy.

Noteworthy

  • New Chinese anti-graft agency established: China’s new super anti-graft agency, the National Supervisory Commission, has been established by the country’s legislature who will formally appoint the chief of the new agency. The Commission enjoys a status close to the cabinet and is ranked higher than the supreme court and top prosecutor’s office. The new agency will have jurisdiction over all public sector bodies and public officials; including judges and lawyers and its operations will be regulated under a new supervision law which will be put to a vote by the end of March. The commission is expected to start operating once the NPC Standing Committee confirms the appointments of all the members. All the while a controversial law giving the commission the power to deny suspects access to lawyers is still to be voted on at the end of the annual session.

 

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