Welcome to This Week In Compliance: GAN’s weekly news roundup, where we curate the latest stories on compliance and anti-corruption to keep you informed. This week we cover Abu Dhabi's sovereign wealth fund's lawsuit against Goldman Sachs over 1MDB. Read the full story and more news below:
Abu Dhabi based sovereign-wealth fund sues Goldman Sachs over 'central role' in 1MDB scandal:
International Petroleum Investment Company (IPIC), a former investment partner in Malaysia’s 1MDB development fund, sued Goldman Sachs in New York state court this week over what it alleges is a ‘central role’ the bank played in enabling bribes to be paid to former top executives at IPIC and its subsidiary Aabar. The suit did not specify the amount of damages IPIC is seeking. IPIC officials entered into a number of deals with 1MDB between 2012 and 2014 which were supposed to fund development projects in the real estate and the energy sector. Prosecutors in the U.S. and Malaysia now maintain that these deals were elaborate schemes to embezzle money for the personal benefit of the individuals involved. The lawsuit follows the indictment of two former Goldman Sachs bankers earlier this month. These latest developments are a blow to Goldman Sachs, which relies on sovereign-wealth funds as a major part of its business strategy.
SEC whistleblowing program posts large results in its 2018 Annual Report to Congress:
The SEC detailed the results of its whistleblower program in its 2018 Annual Report to Congress this week. As described in the report, the commission was able to recover in excess of USD 1.7 billion in monetary sanctions, including USD 901 million in disgorgement of ill-gotten gains and interests, from wrongdoers in fiscal year 2018. This represents a strong increase over the USD 1 billion the SEC was able to recover in fiscal year 2017. The SEC received over 5,200 tips in fiscal year 2018, a jump of roughly 67 percent since fiscal year 2012. Awards totaling USD 168 million were paid to whistleblowers in fiscal year 2018. These awards included the three largest SEC whistleblower awards in the history of the program.
Carlos Ghosn, chairman of Nissan, Renault, and Mitsubishi Motors arrested for misconduct:
Japanese authorities detained Carlos Ghosn, chairman of a trio of global automakers, after an internal investigation at Nissan revealed “significant acts of misconduct”. The revelations came as a surprise, as Mr. Ghosn has been credited with turning around declining business at both Nissan and Renault. The exact details of the misconduct have not been publicized as of yet, but Nissan said Mr. Ghosn significantly underreported his compensation and misused company assets. Prosecutors in Tokyo said Mr. Ghosn underreported his income by about USD 44 million over a five-year period, in addition to not declaring housing paid for by the company in numerous cities around the world. In response to the revelations, Mr. Ghosn is all but certain to be voted out of his chairman position at the trio of carmakers. Greg Kelly, a board member and former senior executive at Nissan was also arrested this week on suspicion of having enabled Mr. Ghosn’s misconduct.
Societe Generale fined USD 1.3 billion for violating U.S. sanctions:
Societe Generale, the French banking giant, was slapped with a USD 1.3 billion fine for violating US sanctions on Cuba, Iran, and several other countries. The penalty is the second largest ever imposed on a financial institution for violating U.S. sanctions, according to the U.S. DOJ. Between 2004 and 2010, the bank engaged in more than 2,500 Cuba-related transactions involving nearly USD 13 billion. The irregular payments were not detected because the bank made “inaccurate or incomplete” notations on messages and deliberately concealed the Cuban nexus of the U.S. dollar payments. The bank received a deferred prosecution agreement with a three-year probation period. Societe Generale indicated it has hired additional compliance officers, enhanced training, and reorganized the teams handling sanctions and embargoes.
Facebook appeals GBP 500,000 fine over Cambridge Analytica scandal:
Facebook has appealed a GBP 500,000 fine imposed on the firm earlier this year in response to the Cambridge Analytica scandal. The social media giant appealed on the last possible day it could challenge the UK Information Commissioner’s ruling. Facebook is arguing that since the regular found no evidence that UK users’ personal data had been shared inappropriately, the penalty is not justified. Since the Cambridge Analytica scandal predated the entry into force of the GDPR, the GBP 500,000 fine represents the highest possible fine under the old regime. Facebook’s appeal will not be considered by an independent body called the General Regulatory Chamber tribunal. The BBC reports that Facebook is appealing because it is concerned that the ruling could form the basis for decisions taken by other regulators, which could be much more damaging in the future.
Venezuela's former national treasurer forfeits USD 1 billion in personal assets as part of plea deal helping to nab media tycoon:
Alejandro Andrade, Venezuela’s national treasurer from 2007 to 2010, pleaded guilty to conspiring to money-launder in a guilty plea entered in December 2017 but unsealed only this week. Andrade helped prosecutors bring an FCPA and money-laundering case against Venezuelan Raúl Gorrín, the owner of the Globovision news network. As part of his plea, Mr. Andrade agreed to forfeit USD 1 billion in personal assets, including aircraft, vehicles, horses, watches, and bank accounts. Prosecutors said Gorrin bribed officials at the national treasury, including Andrade, with money and private jets, homes, and other goods. Gorrin used a series of shell companies to hide the bribes. Andrade is set to be sentenced on November 27. Gorrin has been charged with one count of conspiracy to violate the FCPA, one count of conspiracy to commit money-laundering, and nine counts of money-laundering.
Colombia seeks to debar Brazilian construction firm Odebrecht for 20 years:
Colombian Vice President Marta Lucia Ramirez called on the Superintendency of Companies, the country’s business supervisory authority, to debar corruption-tainted Odebrecht for 20 years from bidding on public works contracts. Ramirez explained the request was made “taking into account that companies of the Odebrecht group have featured in the most notorious transnational bribery and corruption case in recent years in several countries, including Colombia.” Odebrecht has previously admitted to paying USD 32.5 million in bribes to Colombian politicians to help it secure contracts, including for the country’s Ruta del Sol II highway project. The company had previously offered to repay the bribes to the Colombian state, but Ramirez stated that “accepting an enormous compensation agreement would be a perverse incentive to continue committing this type of crime.” Six people have so far been convicted in Colombia as part of the investigation.
Israeli police recommend charges against Interior Minister:
This Tuesday, Israeli police recommended charges be brought against Interior Minister Aryeh Deri. The police investigation established that Deri committed fraud, breach of trust, tax offenses and money-laundering worth millions of shekels, and perjured himself in court with respect to his assets and income. Deri’s brother, Shlomo Deri, is also suspected of having committed millions of shekels in tax offenses. The investigation will now be handed over to the State Attorney’s Office for review. Most of the allegations stem to dates before his return to Israel’s parliament, the Knesset, in 2013 after a 13-year absence. Some allegations occurred under Deri’s recent tenure as interior minister.
DOJ issues further guidance, warnings on ephemeral messaging apps
Federal appeals court upholds 5.6B USD Visa and Mastercard settlement
The DOJ updates its guidance on corporate compliance programs