This Week in Compliance

This Week In Compliance: U.S. Congressional Probe Finds Possible Lapses in Deutsche Bank Controls

Top Story

  • U.S. Congressional Probe Finds Possible Lapses in Deutsche Bank Controls: A U.S. congressional investigation into Deutsche Bank has revealed potential failures in the bank’s money laundering controls in its dealings with Russian oligarchs. After the bank handed over transaction records, emails, and other documents, it was found that several members of Deutsche’s U.S staff had flagged concerns about the new Russian clients, which had been reportedly ignored by management. The probe, which is still in its most initial stage of which the findings haven’t been reported yet, is also examining Deutsche Bank’s possible involvement in the funneling of illegal funds into the U.S through a partner bank. The investigation comes after the bank paid regulators more than USD 630 million in fines for sham trades funneling money out of Russia in 2017. A representative of the bank stated he cannot comment on the work of the congressional committees but addressed the bank’s commitment to cooperating with the authorities as well as their newly implemented internal disciplinary measures on client on-boarding and monitoring. READ MORE 

Business

  • World Bank debars state-owned Chinese engineering and construction company: A state-owned Chinese construction & engineering company, China Energy Engineering Group Hunan Electric Power Design Institute Co., Ltd (CEEC-HEPDI), was debarred by the World Bank this week for fraud charges. The company was found to be engaged in the falsification of documents describing contract experience, litigation history, and business credentials related to a World Bank financed project in Zambia. The falsifications were allegedly conducted in order to comply with the requirements of World Bank bidding documents for a project aimed at providing electricity to an area of Zambia which the company won for USD 210 million. In the settlement, CEEC-HEPDI is no longer eligible to participate in World Bank financed projects for 20 months and is required to set up a compliance program that goes in accordance with World Bank guidelines. The debarment of CEEC-HEPDI was followed by the debarment of its affiliated companies, Hunan Kechuang Power Engineering Technology Co., Ltd., Hunan Kexin Electric Power Design Co., Ltd., and Hunan Zhongtian Engineering Supervision Co., Ltd
  • Nissan’s CEO resigns following allegations of receiving improper payments: Hiroto Saikawa, Nissan’s CEO, announced on Monday that he will leave the company as of next week after acknowledging that he had received dubious income. The move follows an internal investigation that found Saikawa had received excess pay after he altered the terms of a bonus. He stands accused of adding USD 440,000 to his compensation under a scheme where directors can earn a bonus related to the company’s share price performance. Nissan officials maintain that Saikawa did not commit any illegal acts, but they said he should not have given the task to a junior executive. Saikawa said he is “not proud” of passing off the task to a company secretariat but maintains that his actions are “totally different from the intentional wrongdoing that was uncovered during the investigation into former CEO Carlos Goshn and US executive Grey Kelly.
  • Indian government files money laundering case against Rolls Royce and others: Indian Government files money laundering case against Rolls Royce, others: The Indian Enforcement Directorate (ED), the agency responsible for enforcing economic laws and fighting economic crime in India, has now opened up a corruption investigation against Rolls Royce. The automaker is being investigated for breaching India’s Prevention of Money Laundering Act given allegations of bribes for contracts in the company’s dealings with three Indian state-run companies. According to the investigation, Rolls Royce made several payments through banks located in Hong Kong and Singapore from 2007 to 2011. The payments are suspected to have been directed to officials in the Indian state-owned companies Hindustan Aeronautics Limited (HAL), Oil and Natural Gas Corporation (ONGC) and GAIL India Limited as bribes. Although any enforcement action is yet to be taken, the Indian investigation comes after Rolls Royce was investigated by the UK SFO for contract fraud in dealing with defence contractors in Indonesia and China in 2013.

Government

  • Former Goldman Sachs banker ordered to repay laundered money for Nigerian politician: Former Goldman Sachs banker ordered to repay laundered money for Nigerian politician: A British court ordered Elias Preko, a former Goldman Sachs investment banker, to repay GBP 7.3 million in money he laundered on behalf of a Nigerian state governor. If Preko fails to comply, he faces 10 years in prison. Preko was already jailed for four and a half years in 2013 after admitting handling millions plundered by James Ibori from the oil-rich Delta state. The court has given Preko three months to pay back the full amount.
  • Ukraine’s long-awaited anti-corruption court commences work: Last week, Ukraine’s new Supreme Anti-Corruption Court began its work in the country. The new institution was created after several Western donors had strongly advocated for increased controls on corruption in the country, particularly among the elite. While the Ukranian government has established new corruption control mechanisms over the past years such as a specialized investigative agency (NABU) and prosecution service (SAPU), the establishment of the new court body was decided upon in 2018 and has been seen by analysts as a pivotal step towards the creation of Western-style institutions. The new court, which is headed by Elena Tanasevich, a former regional judge, is expected to receive more than three thousand criminal proceedings. The Ukranian president, Volodymyr Zelensky, stated that there are high expectations on the court and that high profile cases against top-ranking politicians will most likely be opened.
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