The European Parliament (EP) has announced that European countries' national parliamentarians and EP members will meet in Brussels on 7 May 2013 to "exchange views on the role and the experiences of national [p]arliaments in the fight against organised crime, corruption and money laundering".
The website of Lebanon-based newspaper Al Mustaqbal was hacked and replaced by a list of witnesses in the murder trial of former Prime Minister Rafik Hariri, reports The New York Times (NYT). The list reportedly included the names, pictures, professions and residence details of 167 witnesses that were to appear before the Special Tribunal for Lebanon in the murder trial.
ThyssenKrupp AG announced its intent to boost its compliance program by establishing a whistleblower program after the company has faced a string of corruption cases recently. The company has started an amnesty program that guarantees workers exemption from punishment if they assist in exposing legal infringements and compliance violations.
The United States (US) Securities and Exchange Commission (SEC) has announced that it has adopted rules mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring oil, gas and mining companies to disclose certain payments made to the US Government or foreign governments. The rules also apply to subsidiaries of these companies.
SEC's media release (22 August 2012)
Related news item:
Reuters: U.S. SEC forces disclosure of oil, mining payments abroad (22 August 2012)
(Source: SEC; Reuters)
The United States (US) Department of Justice (DoJ) has announced that pharmaceutical distribution company Altec Medical (Altec) has admitted to its role in a a multi-million dollar prescription drug scheme, and has been ordered to pay a US$2 million fine and to forfeit US$1 million. According to the DoJ, "Altec paid its supplier and co-conspirator William Rodriguez, approximately [US]$55 million for prescription drugs that it knew had been diverted from lawful channels of drug wholesale distribution", known as a "drug diversion" scheme. Altec was aware that Mr Rodriguez had purchased the drugs from individuals who did not possess a licence to sell prescription drugs on a wholesale basis. It was alleged that Mr Rodriguez diverted the drugs to his companies and resold the drugs to Altec, who in turn resold the drugs to various purchasers, including drug distributors. The US Government further charged that the defendants attempted to conceal their scheme by falsifying documents relating to the drugs' prior sales and transactions history.
DoJ's media release (10 August 2012)
Over the past week the Olympic Games have once again captured the world’s attention. According to its charter, the goal of the Olympic Movement “is to contribute to building a peaceful and better world by educating youth through sport practiced in accordance with Olympism and its values.” Part of that movement includes promoting ethics in sports. While there have been multiple displays of this mission in action over the past week, there have also been a few incidents that remind us that corruption can come in many forms and occur in many different arenas.
While testifying at a U.S. Senate hearing earlier this week, David Bagley, HSBC Holdings Plc (HSBA)’s head of group compliance, said he would step down from his position at the bank due to claims the bank failed to prevent money laundering and provided terrorists, drug cartels and other criminals access to the U. S. banking system. A total of six HSBC executives testified before the Senate’s Permanent Subcommittee on Investigations after the committee released a 335-page report detailing the compliance failures at the bank over the past decade. The executives expressed regret over the failings as they testified and promised changes in response to the allegations contained in the report. According to the report, HSBC ignored links to terrorists among its customer banks, including Al Rajhi Bank in Riyadh, Saudi Arabia which had previously been linked to terrorists through its owner. Additionally, the report claims that, between 2000 and 2009, HSBC gave its lowest risk rating to Mexico despite it being well known that Mexico was a high-risk location for drug trafficking and money laundering. The report also contained a 2007 email from a senior HSBC manager of group compliance denouncing HSBC’s Mexican affiliate for “rubber-stamping unacceptable risks.” The report went on to reference violations of the Treasury Department’s sanctions on business with Iran. According to an audit conducted by Deloitte LLP, 25,000 transactions totaling over $19.4 million involved Iran. HSBC has said it is cooperating with the Department of Justice, Federal Reserve, and Office of the Comptroller of the Currency with their investigations into the Iran sanction violations. The bank could face fines of up to $1 billion.
Bloomberg Businessweek: HSBC Executive Resigns at Senate Money-Laundering Hearing (23 July 2012)
(Source: Bloomberg Businessweek)
According to a new survey released by Ernst & Young, executives were more willing to make cash payments to win international business this year (15%) than they were last year (9%). The study also revealed that forty-seven percent of the chief financial officers (CFOs) surveyed felt they could justify unethical practices in order to survive during an economic downturn. Sixteen percent of CFOs did not know that their companies could be held liable for the actions of third parties. Eighty-one percent of all respondents indicated their companies have anti-corruption policies, but only forty-one perent received training on those policies. The study also found corruption continues to be a broadly-used business practice in the developing world. According to Ernst & Young, the survey results emphasize the need for stronger internal corporate controls.
Wall Street Journal: Survey Finds Unethical Business Practices On The Rise (23 May 2012)
(Source: Wall Street Journal)
The Hong Kong (HK) Securities and Futures Commission (SFC) has announced that it has fined Mega Capital (Asia) Company Limited (Mega Capital) US$42 million and revoked its licence to advise on corporate finance "for failing to discharge its duties in relation to the listing application on Hontex International Holdings Company Limited (Hontex) in 2009". The SFC investigation revealed a number of problems with Mega Capital's practices, including inadequate due diligence on Hontex and its subsidiaries' customers, suppliers and franchisees, failure to act independently, as "all interviews were arranged by Hontex and conducted in the presence of Hontex's representatives", and inadequate audit trail of due diligence work such as a lack of records. Furthermore, the SFC stated that "[m]ost of the due diligence work was handled by junior and inexperienced staff of Mega Capital without adequate supervision". Mega Capital also made an untrue declaration to The Stock Exchange of Hong Kong Limited (SEHK) "confirming that Mega Capital would/had made reasonable due diligence inquiries and believed that all information provided to the SEHK during the listing application process of Hontex, including the information contained in the [initial public offering] Prospectus, was true in all material respects and did not omit material information".
SFC's media release (22 April 2012)
The Financial Services Authority (FSA) has released the findings of its review into Anti-bribery and corruption systems and controls in investment banks (March 2012). The FSA visited 15 firms, including major global investment banks and smaller firms, to examine how they are managing bribery and corruption risk. The FSA found that "despite a long-standing regulatory requirement to mitigate financial crime risk, the majority of firms in our sample had more work to do to implement effective anti-bribery and corruption systems and controls", and identified a number of common weaknesses. FSA acting director of enforcement and financial crime Tracey McDermott said: "Overall, despite the high profile of the issue, the investment banking sector has been too slow and too reactive in managing bribery and corruption risks. Firms across all sectors must have appropriate controls to manage their financial crime risks, whether related to bribery and corruption or otherwise".
Comments Sought on Changes to Guide
As a result of the review, the FSA has released Proposed guidance and amendments to 'Financial crime: a guide for firms' (March 2012) for comment.
Comments on the proposed guidance should be sent to
at the FSA by 29 April 2012. FSA's media release (29 March 2012)
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