This Week in Compliance

This Week in Compliance: Walmart pays USD 160 million to settle shareholder lawsuit

Business

  • Walmart pays USD 160 million to settle FCPA-related shareholder lawsuit: Retail giant Walmart agreed this week to pay USD 160 million to settle a long-running shareholder class-action lawsuit connected to the U.S. government’s continuing investigation into the company over alleged bribery. Walmart did not admit fault or wrongdoing as part of the settlement struck with the City of Pontiac, Michigan’s General Employees Retirement System. The pension fund filed its suit back in 2012 alleging that investors had been harmed by the fall in Walmart’s stock following revelations of the bribery investigation in late 2011. Reporting in the New York Times in 2012 alleged that the company paid bribes in Mexico in order to gain approval for zoning changes and obtain permits to open stores. The company has not settled its investigation with U.S. authorities yet, but it has spent USD 892 million on an internal investigation and compliance improvements. Walmart also said last year that it has set aside USD 283 million in anticipation of a settlement.
  • Two ex-Goldman Sachs bankers indicted in the U.S. over Malaysian 1MDB scandal: The U.S. Justice Department announced on Thursday that it filed criminal charges against two former Goldman Sachs bankers and Malaysian financier Low Taek Jho in relation to the sprawling 1MDB sovereign development fund scandal. The first banker, Tim Leissner, pleaded guilty to conspiring to launder money and violate the Foreign Corrupt Practices Act. Leissner agreed to forfeit USD 43.7 million. The second banker, Roger Ng, was arrested in Malaysia. It is estimated that USD 4.5 billion was misappropriated from the development fund, in which former Malaysian Prime Minister Najib Razak has been implicated. Goldman Sachs did not immediately comment on the news. It is estimated that the bank generated about USD 600 million in fees for its work with 1MDB.
  • Cognizant nearing resolution of FCPA probe over conduct in India: Multinational IT services firm Cognizant said this week that it believes it is getting closer to a resolution with the U.S. DOJ and SEC in relation to an FCPA probe. Malcolm Frank, Head of Strategy at Cognizant, said that the company recorded a loss of USD 28 million on its balance sheet in anticipation of the settlement. The company earlier said in its 2017 annual report that it has identified about USD 6 million in bribes paid in India between 2009 and 2016. The company’s former president Gordon Coburn stepped down when the bribery was disclosed in September 2016. The company said it has spent US 60 million on its investigation of the bribery allegations thus far.
  • Former U.K. oil executives convicted last week sentenced to a combined 30 years of imprisonment: A London judge sentenced Osman Shahensah, former CEO of Afren plc, and Shahid Ullah, Afren’s former CEO, to long prison sentences. Since they will service their sentences concurrently, Shahensha will serve up to six years and Ullah up to five years. The two were convicted last week of tricking Afren’s board into pouring USD 300 million into a deal in Nigeria from which they earned an undisclosed USD 45 million kickback deposited into a Caribbean shell company in their control. The SFO’s new director Lisa Osofsky said Monday that the U.S. DOJ “greatly assisted with our investigation”. Afren has gone defunct since an internal investigation uncovered the fraud in 2014.
  • Swiss banker jailed for 10 years for involvement in USD 1.2 billion PDVSA money-laundering plot: Matthias Krull, a former banker with Julius Baer, was sentenced to 10 years of imprisonment in a federal court in Miami this week after he pleaded guilty over his involvement in August. Krull admitted that he was part of a network that laundered money stolen from Venezuela’s national oil company, known as PDVSA, through real estate and false investment schemes. Krull was also slapped with a USD 50,000 fine and ordered to forfeit the USD 600,000 in fees he charged for helping to launder the funds. In July, the U.S. DOJ charged a total of eight people in relation to the matter. Julias Baer, the third largest Swiss wealth management fund, is currently in the final year of a deferred prosecution agreement after it admitted in 2016 that it had helped thousands of Americans hide billions of dollars in assets. While the charges against Krull are unrelated to the DPA, the bank has initiated an internal investigation to see whether others at the bank were involved in the scandal.

 

Government

  • Singaporean commodities trader put on U.S. sanctions for laundering North Korean money: Tan Wee Beng was charged this week with laundering tens of millions of dollars to pay for shipments to North Korea, the U.S. Department of Justice said this week. Tan started the money-laundering in 2011; coached by North Korean banks, Tan moved millions of dollars through the international banking system towards Pyongyang. U.S. Attorney Geoffrey Berman alleged that Tan lied to major U.S banks to cover for North Korea. The DOJ has said that it is working with international partners to attempt to bring him to the U.S. to answer the allegations.
  • Bangladesh’s former Prime Minister jailed for 7 years on corruption charges: Khaleda Zia, former Prime Minister of Bangladesh, was sentenced to 7 years of imprisonment this week. Khaleda was already jailed for five years in February in another case. The charges relate to the misappropriation of USD 371,550 from an orphanage when Khaleda was Prime Minister between 2011 and 2006. Three others were sentenced to seven years in jail each for not declaring the sources of money collected for the Zia Charitable Trust Fund. Khaleda’s son, the acting chief of the Bangladesh Nationalist Party (BNP) who lives in exile in London, was given a life sentence earlier this month over a plot to assassinate Prime Minister Sheikh Hasina in 2004.
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