Failure to prevent bribery catches up with Sweett, ICBC Standard Bank

An independent provider of construction and infrastructure management services has admitted that it failed to prevent staff from offering bribes in the Middle East.

The Sweett Group operates services in the Asia Pacific, Europe and the United States.

According to the UK Serious Fraud Office (SFO), the Sweett Group acknowledges that its employees offered to award an American architecture firm a USD$100 million construction contract for a hospital in Morocco if the architects agreed to bribe an Arab Emirates official.

The company in effect admitted to breaching Section 7 of the UK Bribery Act which recognises the failure of commercial organisations to prevent bribery as an offence.

The same offence was recently used for the first time by any UK prosecutor in a case involving allegations against ICBC Standard Bank of overseas bribery.

On Monday 1 December, ICBC Standard Bank finally settled its case in the UK by agreeing to pay USD$33 million. Earlier this year, it already agreed to pay $4.2 million to resolve similar charges in the United States by the Securities & Exchange Commission (SEC) in relation to the same case.

These cases highlight how widely the UK Bribery Act’s enforcement extends around the world, and how severe the penalties are for companies that fail to prevent bribery on their watch.

The Sweett Group case in particular sounds an alarm for the engineering and construction industry: unless you adopt the necessary due diligence measures, you remain exposed to a full range of bribery and third party risks.

Source: FCPA Blog

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Macau real estate billionaire latest charged in UN bribery case

Billionaire real estate developer Ng Lap Seng is the latest person to have been indicted in the US for involvement in a scheme to bribe former president of the United Nations General Assembly, John Ashe.

Three other people have been named in the indictment, including former chief executive of the Global Sustainability Foundation and Australia-China social queen, Shiwei Yan, and Francis Lorenzo, a suspended deputy Dominican Republic ambassador to the UN.

According to prosecutors, Lorenzo was one of several intermediaries used by Ng to pay Ashe more than USD$500,000. The bribes were intended to elicit Ashe’s help in acquiring UN support to build a UN conference centre in Macau, where Ng is based.

Ashe is alleged to have taken more than USD$800,000 in bribes from other Chinese businessmen to support business deals in Antigua. Although covered by diplomatic immunity, he faces tax charges for under-reporting his income by more than USD$1.2 million.

Ng also faces money laundering charges after making false statements to custom officials about why they brought USD$4.5 million in cash from China into the US.

US authorities deemed Ng to be a flight risk due to his financial resources, which include USD$1 billion in real estate holdings. He has since been released on a USD$50 million bail and currently lives under 24-hour house arrest in his apartment in Manhattan, pending trial.

The US Foreign Corrupt Practices Act (FCPA) has a wide extraterritorial reach. Under the FCPA, individuals may be subject to fines of up to USD$250,000 per act of corruption and/or five years’ imprisonment.

GRC Solutions is the leading provider of online compliance training on Anti-Bribery and Corruption and Anti-Money Laundering. Contact us today for more information about out off-the-shelf and bespoke options.

Sources: Sydney Morning Herald, Yahoo! News, CNN

Hitachi hit with USD$19 million fine for bribery

Tokyo conglomerate Hitachi was forced to pay USD$19 million in penalties, following a Securities and Exchange Commission (SEC) investigation which revealed the company had inaccurately recorded improper payments to South Africa’s ruling political party, the African National Congress (ANC).

Hitachi knowingly sold a 25% stake in one of its South African subsidiaries to a front company for the ANC, which allowed the pair to share profits from any contracts the subsidiary secured, the SEC alleged.

The subsidiary was ultimately awarded two contracts to build a pair of multi-billion dollar power stations in South Africa. The ANC and its front company turned an immediate profit of approximately USD $5 million in ‘dividends’, based on the profits from the contracts.

“Hitachi’s lax internal control environment enabled its subsidiary to pay millions of dollars to a politically-connected front company for the ANC to win contracts with the South African government,” SEC Enforcement Division Director Andrew Ceresney is quoted as saying in a SEC press release.

“Hitachi then unlawfully mischaracterized those payments in its books and records as consulting fees and other legitimate payments.”

A separate, confidential arrangement also saw the ANC front company receive a one-off USD$1 million ‘success fee’ that was later misleadingly marked as a “consulting fee”.

Accordingly, the SEC found Hitachi had breached provisions of Securities Exchange Act, relating to proper book-keeping and record-keeping obligations.

This case demonstrates the expansive extraterritorial reach and sizeable fines the SEC possesses, in relation to corruption and bribery offences.

GRC Solutions provides off-the-shelf and customised training in Anti-Bribery and Corruption across Australia and other jurisdictions.

Contact us today for more information.

Source: Securities and Exchange Commission.


Sony investigated for Chinese bribery allegation

According to documents leaked during its recent hacking, Sony Pictures Entertainment is under investigation for allegedly bribing a Chinese official to secure distribution of its 2010 film, Resident Evil: Afterlife, in China.

The Wall Street Journal reported that the United States Securities and Exchange Commission (SEC) subpoenaed Sony in 2013 for allegedly violating a US law that outlaws bribing a foreign government official.
For many years, Sony has allegedly used the Dynamic Marketing Group, a Beijing-based firm, to get around China’s quotas and strict censorship systems, which inevitably hinder film distribution in China. The SEC is now looking into the precise methods employed by DMG to secure distribution of the blockbuster that grossed $296 million worldwide, of which $21.6 million came from China.

Once the subpoena was issued, the SEC stated that an email sent by a Sony employee showed that DMG resorted to using “special influence” to ensure the blockbuster be shown in theatres across China.
The documents revealing the bribery probe were a result of a cyberattack on Sony in November 2014, which also leaked confidential data such as personal information about Sony employees, internal emails between Sony workers and executive salary information.

Contact GRC Solutions today for more information about our Anti-Bribery and Data Protection online compliance training courses.

Source: Wall Street Journal

Department of Justice announces historic USD $772 million fine over FCPA violations

In late 2014, the United States Department of Justice (DOJ) fined Alstom, a French power and transportation titan, USD $772 million for multimillion dollar bribes the company paid to government officials worldwide.

The bribes helped Alstom secure lucrative energy contracts worth billions of dollars in countries including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.

Alstom admitted to charges brought under the US Foreign Corrupt Practices Act. It confessed to falsifying its books and business records and failing to implement adequate internal controls to monitor and prevent corruption conduct.

In brokering a plea agreement, the Justice Department factored in Alstom’s reluctance to disclose its misconduct, its refusal to cooperate, the breadth of its misconduct, the company’s prior criminal misconduct and its lack of an effective compliance and ethics program. Several senior individuals within the company have also had charges brought against them.

DOJ Attorney General James Cole said the historic fine sent an “unmistakable message to other companies around the world: that this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.”

The substantial penalties and preceding criminal investigation brought by the DOJ demonstrate the broad scope of American anti-bribery and corruption legislation.

Does your organisation comply with corporate misconduct and white collar crime laws? Speak to GRC Solutions today about our Anti-Bribery and Corruption courses.

Source: Compliance Week

First charges under the UK Bribery Act

Britain’s Serious Fraud Office (SFO) has secured its first charges under the UK Bribery Act. The SFO’s criminal investigation revealed Gary West, 52, James Whale 38, and Stuart Stone, 28, of Sustainable AgroEnergy (‘SAE’) masterminded a 23 million pound biofuel investment scam.

The three men falsely and deliberately misled investors between 2011 and 2012 into thinking that SAE owned property in Cambodia. Investors were told Jatropha trees, once considered a promising plant in the quest for oil, were planted on the land and that an insurance policy in place protected the investors from loss in case the crops failed.

David Green, Director of the SFO, was reported as saying, “These three individuals preyed on investors, many of whom were duped into investing life savings and pension funds”.

While Whale was charged and convicted of conspiracy to commit fraud by false representation and fraudulent trading, West and Stone were convicted of bribery offences, in addition to other charges such as conspiracy to furnish false information, making it the first time the SFO secured convictions under UK’s Bribery Act. Specifically, West and Stone were both found guilty of offences of bribing another person and being bribed under the legislation.

London’s Southwark Crown Court sentenced West, Whale and Stone to prison for 13, 9 and 6 years respectively.

The UK Bribery Act is considered one of the world’s toughest laws against bribery and corruption. Individuals can face up to 10 years’ imprisonment and an unlimited fine and have their assets confiscated. The legislation also grants the SFO with extraterritorial jurisdiction that is the power to prosecute any company or individual, even if the alleged bribery took place outside of the UK, provided there is still a sufficient link to the UK.

Contact GRC Solutions today for more information about our anti-bribery and corruption training courses.

Also find out more about our UK Bribery Act training course.

Source: Yahoo News UK and the Serious Fraud Office

Anonymous shell companies* siphon USD $1trillion from developing countries

$1 trillion, enough money to employ half a million primary school teachers, is lost to corrupt activities undertaken by multinational companies in developing countries, according to a study by international advocacy group ONE.

The group states the lost money could alternately educate an extra 10 million children every year, provide antiretroviral medication for over 11 million people living with HIV/AIDS, or pay for 165 million vaccinations in sub-Saharan Africa alone.

A 2011 report by the World Bank, titled The Puppet Masters, estimates anonymous shell companies made an appearance in 70 per cent of major corruption cases between 1980 and 2010.

Director and co-founder of Global Witness, a London-based anti-corruption NGO, Charmian Gooch told the Sydney Morning Herald the group had turned up similar results: shell companies were consistently at the centre of all sorts of scandals, from suspect oil deals to blood diamond transactions.

Research from the World Bank indicates setting up a shell company is a low-cost enterprise, costing corporations between $900 and $7,000 AUD. In countries like the United States, where regulations are particularly lax, large corporations can create shell companies within an hour.

The crusade against shell companies has recently found new life as G20 leaders recently pledged to pursue tougher anti-corruption policies and chase illegal tax evaders and money launderers. The G20 recently released an anti-corruption action plan for 2015-2016.

“At the end of 2014, corruption continues to represent a significant threat to global growth and financial stability,” the plan reads. “Corruption destroys public trust, undermines the rule of law, skews competition, impedes cross-border investment and trade, and distorts resource allocation.”

“As a group of the world’s largest economies, the G20 remains committed to reducing the incidence of corruption and building a global culture of intolerance towards corruption.”

* A shell company refers to a non-trading company used as a vehicle for various financial manoeuvres.



Dates for your Diary!

Support our leaders in their mission to reduce corruption by attending the G20 High Level Principles on Beneficial Ownership Transparency. It is a ‘high priority’ pledge.

TI Corruption Perception Index 2014 Launch
Date: 4 December
Location: Brisbane, Melbourne, Perth and Sydney

International Anti-Corruption Day
United Nations Campaign
Date: 9 December

Secret sex tape reveals £90million bribery and corruption probe

A secret sex tape involving a senior executive and his Chinese girlfriend was filmed and anonymously emailed to board members at GlaxoSmithKline.

The £76 billion global pharmaceutical company has been accused of bribing doctors to prescribe Glaxo’s drugs in return for £320 million worth of gifts.

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Read the full article here.