Buying influence in China

JP Morgan Chase agrees to pay $264 million to settle bribery probe

The US Justice Department called Chase's shady scheme "bribery by any other name" and a threat to national security

These actions violate the Foreign Corrupt Practices Act, which prohibits American companies from paying officials in foreign governments to secure business. Although JP Morgan Chase rewarded foreign officials by employing their loved ones instead of directly paying them, the Justice Department effectively argued that this still constituted bribery, particularly because there were many cases in which the unqualified candidate was hired due to a pre-existing understanding that the bank would be awarded business in return. read more »

India: Maha home dept asks US govt if Louis Berger paid kickbacks for infra contracts

The state government wrote to the US government a few days ago, asking whether consultancy firm Louis Berger made any “dubious payments” to individuals or firms in Maharashtra to bag contracts for infrastructure projects in Mumbai.

If US authorities confirm such payments, the state home department will hand over the investigation to the Central Bureau of Investigation (CBI) or Intelligence Bureau.

The department has asked for account details of the New Jersey based-construction management firm, which was found guilty of having allegedly paid bribes to win contracts. After the reports emerged, the Maharashtra government announced a probe by KP Bakshi, additional chief secretary (home) in August last year.

Louis Berger was the project management consultant for many major infrastructure projects in Mumbai, including the monorail, metro rail, Navi Mumbai International Airport Project and the Santacruz-Chembur Link Road.

The company is facing trial in the US under the Foreign Corrupt Practices Act for paying bribes in various countries to bag contracts. The Goa and Assam governments too had announced a probe when the allegations of bribery came to the fore in July 2015. read more »

Barclays in bid to keep lid on whistleblower

Former Gulf boss gave evidence to SFO inquiry on 2008 fundraising

Barclays is attempting to prevent evidence from a former executive being heard in public in a legal hearing this week, over concerns related to a Serious Fraud Office (SFO) investigation into the bank’s emergency fundraising in 2008.

Richard Boath, who was co-head of Barclays’ financial institutions group in Europe, the Middle East and Asia from 2013 until last March, is bringing an employment tribunal action against the bank, which is due to begin tomorrow. He alleges unfair dismissal and is demanding bonuses he claims to be owed by the bank. He is also making a claim under whistleblower protection laws.

The SFO has already filed papers requesting that Boath’s case be heard in private or reporting restrictions imposed. read more »

Whistleblower payouts reach $111 million

Under America’s whistleblower scheme, individuals can be paid up to 30 per cent of the fines levied on companies by the US SEC

Whistleblowers in America have won a record $35 million in rewards for exposing corporate wrongdoing.

The US Securities and Exchange Commission has awarded more than $111 million to those who have come forward with sensitive information since it began the payouts in 2011.

Under the scheme, individuals can be paid up to 30 per cent of the fines levied on companies and this year’s total included one award of $22 million, the second highest ever. A payment of $17 million and four awards between $2 million and $6 million were also made this year. read more »

U.S. regulator reverses course, tightens controls on Wells Fargo after scandal

A leading U.S. bank regulator on Friday reversed course and positions the agency to claw back pay of former executives at Wells Fargo & Co after a phony-accounts scandal.

The lender must also now seek prior approval before naming new bank leadership, said the Office of the Comptroller of the Currency, the main regulator for federal banks.

Friday's move puts executive pay at Wells Fargo within reach at a time when some lawmakers complain bank bosses have not paid a fair price for their part in financial scandals.

Wells Fargo in September agreed to pay $190 million to settle charges that bank employees opened as many as 2 million accounts without customers' knowledge.

The fraud went on for at least five years, said the San Francisco-based bank that fired 5,300 employees involved. read more »

U.S. consumer agency seeks full court review of ruling against its structure

The U.S. Consumer Financial Protection Bureau late on Friday asked the entire U.S. Court of Appeals for the District of Columbia to review an October decision that its structure is unconstitutional.

The review will involve all the court's judges, a group generally seen as more liberal on the whole than the three-judge panel that decided that the agency vests too much power in its sole director. The panel had also said the president should be able to fire the director at will but stayed the decision pending appeal.

In its petition, the agency said last month's ruling overrides Congress's "explicit determination" to create an independent agency in the 2010 Dodd-Frank Wall Street reform law. Also, it said the decision could affect similar agencies with single directors who can only be removed for cause, such as the Social Security Administration. read more »

Ex-JPMorgan executive who fled to Argentina pleads guilty in U.S.

A former JPMorgan Chase & Co executive who spent eight years on the run in Argentina pleaded guilty on Friday to U.S. charges that he embezzled $5.4 million from clients at the bank and at a prior employer, UBS AG.

Hernan Arbizu, who became involved in a tax-evasion probe involving JPMorgan, pleaded guilty in Manhattan federal court to charges including wire fraud and embezzlement. He was extradited in June from Argentina.

"I knew what I was doing was wrong," he said in court. "I'm very sorry and am ashamed by my actions."

The 48-year-old citizen of Argentina faces a mandatory-minimum two-year prison sentence and a maximum of 422 years. read more »

Ex-S&P exec goes on trial before SEC over mortgage bond ratings

The Securities and Exchange Commission on Monday took a former Standard & Poor's executive to trial over claims that she engaged in a fraud that inflated ratings of commercial mortgage-backed securities.

At the start of an administrative trial in Manhattan, SEC lawyer Stephen McKenna said Barbara Duka, the former head of S&P's commercial mortgage-backed securities group, failed to disclose to investors a change she made in 2011 in how her team calculated ratings.

She instituted that change, he said, after S&P lost market share following the 2008 financial crisis for rating newly issued commercial-backed securities due to what Duka in an email said was its "more conservative criteria."

To generate more business, Duka switched to ratings criteria that were friendlier to issuers, McKenna said. That change went undisclosed to investors, who believed S&P's ratings remained conservative, he said. read more »

Whistleblower tips, recoveries on the rise

SPECIAL REPORT: White-Collar Crime

Statutory enactments by federal financial regulatory and various state enforcement agencies have made it easier, safer and financially enticing for employees and former employees to report corporate wrongdoing.

According to the U.S. Securities and Exchange Committee, whistleblower tips have been on the increase over the past few years as legislation has provided whistleblowers incentives to report fraud to the Securities and Exchange Commission and Commodity Futures Trading Commission and give protection against retaliation and disclosure of their identities. The SEC, using the whistleblower program developed after the recession in 2010 under the Dodd-Frank Act, has issued more than $130 million in rewards. read more »

Businessman Sentenced for Offering Millions to DoD Procurement Official

Razak A. Dosunmu, 61, of Washington, D.C, was sentenced today to 15 months in prison for offering bribes to a procurement official with the U.S. Department of Defense (DoD), Defense Logistics Agency (DLA), while negotiating aviation fuel contracts worth over $1 billion.

Dosunmu was found guilty by a federal jury on August 18.  According to court documents, Dosunmu was the owner and operator of United Globe Auto Body, LLC, a classic cars restoration and auto repair shop and international trade and business development company located in Takoma Park, Maryland.  Beginning in mid-2014, on behalf of United Globe, Dosunmu solicited government contracts with DLA-Energy.  DLA-Energy is responsible for the procurement of large volumes of aviation and marine diesel fuel for the military services.  In May 2015, investigators received an allegation that Dosunmu, while negotiating for a supply contract with DLA-Energy, offered to buy a procurement official a house in exchange for awarding the contract to United Globe. read more »

Indians Rush Frantically to Launder Their ‘Black Money’

Indians’ ingenuity is being mightily tested as they rush to save their “black money,” stashes of hundreds of thousands, even millions, of rupees they have accumulated without paying taxes.

For decades, Indians have stuffed their mattresses with 500- and 1,000-rupee notes, the most widely circulated bills, worth the equivalent of a few dollars.

But Prime Minister Narendra Modi wanted to tax that money. His strategy was to force Indians to reveal what they had been hoarding. How? He banned the bills and told people that they had to exchange them for new ones.

The ban, which was announced on Nov. 8, has thrown the economy into chaos and sent Indians on a desperate search for some way, any way, to launder their accumulated money and avoid a financially disastrous loss. read more »

Massachusetts man convicted of fraud over 'Kung Fu Panda' drawings, lawsuit

A Massachusetts man was found guilty by a federal jury on Friday of back-dating drawings he relied on as evidence in his lawsuit against DreamWorks Animation that claimed he had invented the title character in the 2008 film "Kung Fu Panda."

A federal jury in Boston convicted Jayme Gordon, 51, on four counts of wire fraud and three counts of perjury after prosecutors accused him of lying in a 2011 lawsuit against the Hollywood studio, the U.S. Attorney's Office in Massachusetts said in a statement.

Prosecutors charged that Gordon back-dated drawings of a high-kicking bear named Po in 2008 after seeing an early trailer for the film, and then used them to try to extract a $12 million settlement from DreamWorks Animation SKG Inc. read more »

United Airlines Escapes Whistleblower FCA Suit For Now

A South Carolina federal judge on Friday dismissed a whistleblower False Claims Act suit accusing United Airlines of shoddy work under a U.S. Air Force maintenance deal, saying the relator failed to show any specific false claims, while leaving the door open for a new complaint.

Relator David Grant had not adequately backed his broad allegations that United defrauded the Air Force on an aircraft engine maintenance contract with actual specific false claims the company had allegedly submitted to the government, U.S. District Judge David C. Norton ruled, dismissing the complaint.

“Grant’s first amended complaint fails the False Claims Act’s pleading standard because at no point does it tether any of the broad allegations of a fraudulent scheme to an actual claim that United submitted to the government,” the judge said. “The lack of specifics such as payments, dates, or other reliable indicia from which the court could infer that a specific claim was submitted is persuasive.” read more »

3rd Circ. Ruling Could Spur Meritless FCA Suits, Pipe Co. Says

Pipe fittings manufacturer Victaulic Co. urged the Third Circuit on Friday to reconsider its decision to revive a relator's False Claims Act suit alleging the company dodged tax duties on imported goods, saying the ruling alters the pleading standard for FCA suits and paves the way for outsiders to file “an onslaught of frivolous claims."

Victaulic argued in a petition for en banc rehearing that the FCA allegations were brought by an outsider with no actual knowledge of the company and the claims were based on inconclusive observations instead of facts. The panel’s decision to revive the suit, therefore, alters the FCA's pleading standard and paves the way for meritless suits filed by outsiders, Victaulic said. read more »