This Week in Compliance

This Week in Compliance: Trial of Shell and Eni to start in March

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

Business

  • Trial of Shell and Eni to start in March: A Milan judge ruled this week that former and current executives at Shell and Eni, including former and current CEOs, as well as the companies themselves will be facing trial by March in relation to a USD 1.1 billion bribery scheme manoeuvred to secure the companies’ control over one of Africa’s most lucrative oil blocks in Nigeria. Reportedly, the companies had paid USD 520 million that were used as bribes, while several USD hundred-million more were diverted to a former Nigerian oil minister. The case is also investigated by Dutch authorities, while charges have already been filed in Nigeria targeting, however, a Shell subsidiary and not the parent company. According to Nigerian authorities, the government only made USD 210 million for granting the block’s license, while more than USD 800 million were pocketed by government officials. Both companies deny the allegations.
  • Former IberiaBank employees blew the whistle on misconduct: Two former employees of the Louisiana-based IberiaBank, Kelley R. Shackleford and Karen Mills, blew the whistle on the bank’s mortgage unit which had made false claims for federal loan guarantees. According to the Department of Justice, the bank had certified Federal Housing Administration mortgage loans for FHA mortgage insurance despite the ineligibility of some loans whose files didn’t document or corroborate borrowers’ incomes and down payments and contained unresolved appraisal discrepancies. The bank was obligated to self-report the violations but didn’t perform timely quality reviews. Shackleford and Mills filed a lawsuit in federal court under the False Claims Act, which made the two whistleblowers eligible for a 20% of the government’s USD 11.7 million settlement with the bank.
  • Trial of Hong Kong home affairs secretary begins: The trial of former Hong Kong home affairs secretary Patrick Ho Chi-ping, indicted for bribery and accused of masterminding a USD multimillion-dollar bribery scheme to help an unidentified Chinese energy firm – believed to be CEFC China Energy – win exclusive oil rights in Africa, is expected to start this week. Reportedly, Ho wired USD 1 million through the New York banking system, while he sealed some other deals in the halls of the United Nations. Earlier this year, the Department of Justice filed a formal indictment against Ho for bribery. Ho faces five charges of bribery in violation of the FCPA and three involving money laundering. Ho faces up to 20 years prison if found guilty of the charges.
  • Marcelo Odebrecht to spend the rest of his prison sentence at home: In 2015, authorities arrested the former head of the Odebrecht construction company, Marcelo Odebrecht, the grandson of the company’s founder, who received a 19-year prison sentence – later reduced for agreeing to testify for the prosecution – after being found guilty of masterminding a large political kickback scheme in several countries. He will be spending the remaining seven years of his sentence in his 32,292 sq ft luxury home within one of Sao Paulo’s most exclusive and heavily guarded gated communities. He will be strictly bound to his home for the first two and a half years and may only receive family and a small number of other visitors. Restrictions will however be eased during the second half of his sentence. The company agreed to pay USD 2.6 billion to Brazilian, Swiss and US governments to settle the case.

Government

  • More prosecutions in Vietnam’s anti-corruption crackdown: Vietnamese police ordered the prosecution of Phan Dinh Duc, a member of PetroVietnam’s board of directors over financial losses. Authorities alleged that Phan Dinh Duc violated economic management regulations and has thereby caused serious consequences.   PetroVietnam has been embroiled in a sweeping high-level corruption crackdown and police has reported investigations into alleged violations of state rules within the company, causing a loss of USD 35.2 million investment in local lender Ocean Bank. The company’s chairman Dinh La Thang, is the most senior official to be arrested in the case, which took place earlier this months. PetroVietnam stated that it would cooperate with authorities on the case.

Noteworthy

  • Former Massachusetts state senator bribed with 500 pounds of coffee: A federal indictment was issued against former Massachusetts state senator Brian Joyce on charges of racketeering, extortion, honest services fraud, money laundering, and tax offenses. According to the allegations, Sen. Joyce took more than 500 pounds of coffee in the form of bags, boxes, and K-cups from the owner of about 100 Dunkin’ Donuts franchises in return for help fighting legislation over pooling of employee tips. Reportedly, the senator tried to cover up the bribery by giving franchise owner backdated checks. Sen. Joyce is also indicted for pressuring a town official to hire an energy broker in return for kickbacks. Joyce has reportedly also received a Jeep from a developer after helping him win a subdivision waiver in another town. Sen. Joyce has denied the charges and is free on a USD 250,000 bail.
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