This Week in Compliance

This Week in Compliance: Standard Chartered Bank Pays USD 657 Million For Sanction Violations

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  • Standard Chartered Bank pays USD 657 million for sanction violations: Standard Chartered Bank agreed this week to resolve sanctions violations with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) related primarily to dealing in Iran, but also Cuba, Sudan, Burma, Syria, and Zimbabwe. OFAC said that the bank processed 9335 transactions worth a total of USD 437.5 million involving persons or countries subject to comprehensive sanctions programs. Transactions involving Iran-related accounts managed by Standard Chartered’s Dubai branches made up the majority of the violations. The Dubai offices processed U.S. currency transactions on behalf of Iran-based customers through the bank’s branch office in New York and other U.S. financial institutions. Standard Chartered was also fined GBP 102 million in the UK on Tuesday for anti-money laundering breaches related to its activities in the UAE.

Business

  • BMW warns it may face charge exceeding EUR 1 billion over collusion allegations: German luxury carmaker BMW AG warned investors this week that it may have to take a charge in excess of EUR 1 billionstemming from a European Union probe into alleged collusion among German carmakers BMW, Volkswagen, and Daimler AG in a bid to delay the rollout of cleaner-emission vehicles. An investigation into possible collusion was announced by the European Commission’s Competition Commissioner last September. The carmakers were sent a letter last Friday laying out allegations that the carmakers conspired to limit or delay the introduction of two types of technologies for diesel and gasoline cars. BMW is saying it is contesting the allegations “with all legal means”.
  • Zambian villagers can pursue mining pollution claims in English courts: In a major legal development, Zambian villagers who allege their livelihoods have been ruined by toxic waste from an opencast mine have been granted the right to pursue the mine’s operator Konkola Copper Mines (KCM) and its parent company mining conglomerate Vedanta Resources in English courts. The decision is highly significant as it may set a precedent exposing other parent companies domiciled in the UK to lawsuits for actions relating to overseas subsidiaries. A number of other cases against Royal Dutch Shell, Unilever, and BHP Billiton concerning similar allegations of polluting communities in foreign countries have been awaiting the decision in the Vedanta case before they are allowed to proceed. It should be noted that the claims against parent company Vedanta are based on claims that the company took responsibility for environmental and sustainability standards across the group. The case still has to be judged on its merits.
  • Three U.S. drugmakers to pay USD 123 to resolve charity kickback probe: Jazz, Alexion, and Lundbeck collectively agreed to pay USD 122.6 million to resolve claims the companies used charities that help patients cover out-of-pocket drug costs as a way to pay kickbacks to encourage the use of their medications. The claims are the result of an industry-wide probe into drugmakers’ financial involvement in patient assistance charities. In the settlement, none of the companies admitted wrongdoing. Drugmakers are prohibited from subsidizing copayments for patients enrolled in Medicare for those over 65 years old. Companies are allowed to donate to nonprofits, as long as they are run independently. In one example, Alexion asked a foundation in 2010 to set up a fund supporting only patients using Soliris, a drug it provides that costs over USD 500,000 annually.

Government

  • Fourteen plead guilty in U.S. college admissions bribery scandal: Felicity Huffman and thirteen other defendants agreed to plead guilty in the college admissions bribery scandal that erupted earlier this spring. All the defendants agreed to plead guilty to a charge of conspiracy to commit mail fraud and honest services mail fraud. Huffman faces a maximum sentence of 20 years in prison, three years probation, and a USD 250,000 fine. The actress allegedly gave USD 15,000 to William singer, the ringleader of the nationwide scam, to participate in the college entrance exam cheating scheme for her oldest daughter, according to court documents. In total, the parents allegedly paid over USD 1.8 million in bribes to Singer to rig their children’s college entrance exams and bolster their entrance applications with fictitious information.
  • Bulgaria investigates luxury apartment scandal: Bulgaria’s chief prosecutor has ordered investigations into the country’s head of the anti-corruption commission amid allegations over purchases over luxury apartments at below-market prices. A number of senior officials have already resigned their positions as a result of the scandal. Anti-corruption commissioner Plamen Georgiev is being investigation for making false declarations about the circumstances under which he and his wife acquired an apartment in the country’s capital of Sofia. Others under investigation include the wife of Supreme Court of Cassation head Lozan Panov and the son of National Investigation Service director Borislav Sarafov. Prime Minister Bokyo Borissov has called on those named to either resign or take leaves of absence.
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