Compliance Insider

Issue 12 > Compliance Alerts

China to close gift loophole in corruption fight

The Chinese Government is likely to close a loophole that allows officials to claim that money or luxury goods they receive are merely gifts, and not bribes. Receiving money, or goods such as watches and cars, is currently only considered a crime if it can be linked to an abuse of power. This is the latest in a widespread corruption crackdown in China that started when President Xi Jingping promised to take down “tigers and flies”: a reference to low and high level offenders.

Issue 12 > Compliance Alerts

Rousseff admits embezzlement at Petrobras

Brazil President Dilma Rousseff has admitted that embezzlement did take place at Petroleo Brasileiro (Petrobras), having previously denied any allegations of corruption at the state-owned oil producer. Petrobras has been at the centre of an ongoing corruption scandal that has involved Rousseff’s Worker’s Party, with the investigation taking centre stage amid recent election campaigns.

Issue 12 > Compliance Alerts

Spain introduces anonymous whistleblowing email

The Spanish competition authority, the Comision Nacional de los Mercados y de la Competencia (CNMC), has introduced an email address to allow whistleblowers to report alleged anti-competitive behaviour. The new system allows people to report misconduct informally without having to comply with normal reporting requirements. Any customer, competitor or employee can use the email address to report their suspicions. And the whistleblower will not be required to provide their name, any evidence or details to support their allegations.

Issue 12 > Compliance Alerts

United Kingdom banks should embrace more compliance

Banks in the United Kingdom have been complaining about the increasing number of regulations they face in the coming years, warning that they will cost the country its reputation as a global financial centre. Banks with deposits of at least US$40 billion will be required to ‘ring fence’ their retail banking activities from their investment banking activities by 2019. In addition, senior managers will be held more accountable for the misconduct of staff. And provisions will be introduced to control and rein in bonuses.

Issue 12 > Compliance Alerts

Data protection must extend to vendor systems

The latest revelation in the JP Morgan hacking scandal is that participants in ‘Corporate Challenge’ charity races organised by the bank may have had their details hacked via the races’ website, which was run by an outside vendor. The revelation demonstrates that every system and vendor can potentially be chinks in the armour of even the most robust data protection programme.

Issue 12 > Compliance Alerts

Oil producer’s bookkeeping oversight leads to executive dismissals

Nigeria-focused oil producer Afren has fired its chief executive and chief operating officer, and is pursuing US$17 million that the two former employees paid themselves via special purpose vehicles (SPVs) in the British Virgin Islands and Bermuda. The company has confirmed to the Financial Times that it is considering the best strategy by which it can recover the money from the dismissed Osman Shahenshah and Shahid Ullah.

Issue 12 > Compliance Alerts

Supplier agreements under microscope in ground-breaking legal case

Judges in a court case involving Apple and one of its suppliers are considering the rights of corporate confidentiality against those of creditors in a bankrupt company, in a dispute that could break new legal ground. New Hampshire-headquartered component maker GT Advanced Technologies has filed for Chapter 11 bankruptcy protection, and is accusing Apple of insisting on oppressive supplier agreements.

Issue 12 > Compliance Alerts

Yet another retailer hit with data breach

Retailers must do a better job of detecting data breaches quickly before large numbers of customer payment data are stolen. That was the message from security specialists following the news from discount retailer Kmart that cash registers at 1,200 of its stores had been infected with malware that compromised certain debit and credit card numbers.

Issue 12 > Compliance Alerts

Boeing to settle false claims allegations

The Boeing Company has agreed to settle a lawsuit involving allegations that it knowingly filed false claims for maintenance work. The company is alleged to have overcharged the United States Air Force while working on a C-17 Globemaster aircraft.

Issue 12 > Compliance Alerts

Italian executives given jail time for falsifying invoices

The former chairman and CEO of Finmeccanica and the former CEO of Augusta Westland have been sentenced to two years in jail in Italy for falsifying invoices despite being acquitted of more serious corruption charges. Finmeccanica’s Giuseppe Orsi and Augusta Westland’s Bruno Spagnolini were accused of paying tens of millions of euros to India, officials to win a contract to construct 12 helicopters for the Indian Government.

Issue 12 > Compliance Alerts

Defence contractor overcharges for underqualified employees

DRS Technical Services (DRS) has agreed pay US$13.7 million to settle allegations that it violated the United States False Claims Act. The company has been accused of overcharging the United States Government for personnel that were underqualified to do the jobs they were required to perform. Between 2003 and 2012, DRS won contracts to provide services and supplies for the United States Army’s Communication and Electronics Command in Iraq and Afghanistan, as well as the Coast Guard for aircraft maintenances. However, the company provided labourers who were not qualified for the job.

Issue 12 > Compliance Alerts

Nigerian transactions come back to haunt Eni

At least half of the $1.1 billion paid by Italian oil company Eni SpA to the Nigerian Government to purchase an oil field in the country was used to bribe local politicians, intermediaries and others. The allegation was made by Italian prosecutors, who have placed the state-backed firm and both its former and current chief executives under investigation for alleged international corruption.

Issue 12 > Compliance Alerts

No institution safe from bribery as United States army personnel charged

The United States Department of Justice (DOJ) has charged four retired and one current member of the Army National Guard, as well as one civilian, with bribery. They are all alleged to have taken part in a scheme to illegally award marketing contracts in exchange for bribes.

Issue 12 > Compliance Alerts

Lack of internal controls proves costly for Bank of America

The United States Securities and Exchange Commission (SEC) has fined Bank of America Corporation (BoA) for lacking internal controls, which led to the bank overstating its regulatory capital. While BoA was acquiring Merrill Lynch in January 2009, it did not record inherited notes at a discount to par despite the fact it was required to realise the loss on the notes. As a result, BoA failed to report the correct regulatory capital.

Issue 12 > Compliance Alerts

Apple knew about hole before hackers stole celebrity photos

Apple knew about deficiencies in its iCloud security as early as March 2014 but failed to address the hole. The company was warned by a London-based software developer, who even made Apple aware of how he hacked iCloud, but nothing was done until hundreds of celebrities had private photographs stolen from their computers and distributed worldwide.

Issue 12 > Compliance Alerts

Links to T&Cs are not binding

The United States Ninth Circuit Court has sided with a consumer in a dispute over the terms and conditions on a website. Barnes & Noble’s website uses a ‘browsewrap’ agreement, in which customers are deemed to have agreed its terms without having to click an ‘I have read and agree to the terms and conditions’ box.

Issue 12 > Compliance Alerts

Changing of the guard as GSK rebuilds reputation

GlaxoSmithKline (GSK) has confirmed that Sir Philip Hampton will be the next chairman of the company as he leaves his role with the Royal Bank of Scotland (RBS). The appointment comes soon after the drug manufacturer was fined almost £300 million (US$491.5 million) by Chinese authorities amid an ongoing investigation into bribery.

Issue 12 > Compliance Alerts

EU issues final antitrust warning to Google

Google will face fines if it fails to make changes to allow competition to flourish. Complaints have mounted from competitors and pressure is being exerted by the European Union (EU).