Enhancing anti-bribery and corruption programmes

Given the regulatory pressures companies find themselves under today, they cannot afford to neglect anti-bribery and corruption requirements.

The most effective way to fight corporate corruption is to design, implement and maintain a compliance programme that promotes ethical business practices from within. However, this is often easier said than done. The uncomfortable truth is that bribery and corruption is still a blight which affects a wide spectrum of industries. In Transparency International’s latest report into global corruption, two-thirds of the 168 countries listed scored below 50 on a scale from 0 (considered highly corrupt) to 100 (considered very clean).

According to data from the International Monetary Fund, around $1.5 trillion worth of bribes change hands every year, the equivalent of around 5 percent of global GDP. But the impact of this malfeasance is not restricted to just financial cost: bribery and corruption is often linked to a laundry list of other criminal activities, including drug and human trafficking. Accordingly, companies and regulators must do more to ensure their efforts are coordinated. Aread more »

U.S. judge approves Braskem $633 mln fine in record corruption case

A U.S. judge on Thursday sentenced the Brazilian petrochemical company Braskem SA to pay a $632.6 million criminal fine, in connection with a corruption case that led to the largest foreign bribery settlement in U.S. history.

Braskem had agreed to the penalty when it pleaded guilty on Dec. 21 to a conspiracy charge over a scheme that also involved Brazil's Odebrecht SA, Latin America's largest construction company. read more »

Eike Batista, Once Brazil’s Richest Man, Is Sought in Corruption Inquiry

The Brazilian police announced on Thursday that they were seeking the arrest of Eike Batista, the oil and mining tycoon who was once the country’s richest man, in an expansion of the vast corruption investigation that has ensnarled dozens of politicians and business leaders.

Police officers went to Mr. Batista’s mansion in Rio de Janeiro on Thursday morning but did not find him there. Sérgio Bermudes, a lawyer for Mr. Batista, said his client was out of the country, either in the United States or the Cayman Islands, to seek access to blocked bank accounts.

The arrest warrant could signal a new phase in the downfall of Mr. Batista, 60, whose global prominence had long been associated with Brazil’s booming economy. His personal wealth reached $34.5 billion as recently as 2012, but his fortunes, and those of Brazil, crashed amid falling global commodities prices.

“Eike was a symbol of that moment of nationalist exaltation when the stars seemed to be aligning for Brazil,” said Gerson Moraes, a professor of ethics at Mackenzie Presbyterian University in the Brazilian city of Campinas. “But it turns out he was involved in the same old rotten schemes involving large corporations and the Brazilian state.” read more »

Accountancy giant that signed off Rolls Royce's accounts as it bribed its way around the world faces its own investigation

KPMG was the auditor for Rolls-Royce during almost all of the 24-year period in which employees secretly paid off middlemen and officials in 11 developing countries to win lucrative business.

Last week Rolls agreed to pay £671-million in total to UK, US and Brazilian authorities to settle the allegations of bribery, false accounting and corruption from 1989 to 2013 in countries including Russia, Iraq and China.

KPMG was auditor of Rolls-Royce accounts from 1990. But today the Mail can reveal that Rolls-Royce stopped using the firm just days before it reached the landmark settlement with the Serious Fraud Office.

Now accounting watchdog the Financial Reporting Council (FRC) is planning its own probe in to Rolls-Royce. read more »

Threadneedle trader guilty of £141m fraud

Two City traders, including one who worked for Threadneedle Asset Management, have been sentenced for conspiring to defraud a Russian bank of more than £141m.

The series of complex frauds was uncovered following an investigation by the City of London Police’s fraud teams.

Georgy Urumov, 37, of Greenberry Street in London, was sentenced to 12 years imprisonment and Vladimir Gersamia, 33, of Kinnerton Street, London, to seven years after being found guilty of multiple fraud offences following a four-month trial at Southwark Crown Court.

The complex nature of the fraud presented a challenge for investigators but through painstaking analysis of financial transactions, prosecutors and investigators were able to outline the individual roles played by the two defendants. read more »

Does the Imperial revolt herald a new health warning for executive greed?

Shareholders were right to rebel against tobacco firm’s boardroom plan – but few pay rises will be as shameless as that planned for CEO Alison Cooper

Alison Cooper, chief executive of Imperial Brands, will presumably now quit her employer of 17 years, to be followed out of the fags factory by an unhappy crew of fellow executives who have lost the chance to earn (even) bigger pay packages.

That, or something like that, was the prospect raised by Imperial’s chairman, Mark Williamson. The tobacco firm’s shareholders have revolted by indicating they would vote down a proposed new pay policy next week, so Imperial has pulled the scheme to avoid a formal drubbing.

But Williamson thinks the owners must be smoking something stronger than Golden Virginia. “The board continues to believe that revising the policy is necessary for retaining and attracting the right calibre of talent to ensure the continued sustainable growth of the business,” he says.

Before he embarks on his mission to “re-engage” with shareholders, Williamson should take a cold look at how he and David Haines, the hapless chair of the remuneration committee, misread the mood so badly. read more »

Citigroup Paying $18 Million for Overbilling Clients

The Securities and Exchange Commission today announced that Citigroup Global Markets has agreed to pay $18.3 million to settle charges that it overbilled investment advisory clients and misplaced client contracts.

The SEC’s order finds that at least 60,000 advisory clients were overcharged approximately $18 million in unauthorized fees because Citigroup failed to confirm the accuracy of billing rates entered into its computer systems in comparison to fee rates outlined in client contracts, billing histories, and other documents.  Citigroup also improperly collected fees during time periods when clients suspended their accounts.  The billing errors occurred during a 15-year period, and the affected clients have since been reimbursed. read more »

German prosecutors open fraud inquiry into former VW CEO

German prosecutors are investigating former Volkswagen chief executive Martin Winterkorn on suspicion of fraud, looking into when he first knew that the carmaker was rigging diesel emissions tests.

It is the second investigation into Winterkorn's role in the scandal by prosecutors in the German town of Braunschweig near Volkswagen's (VW) Wolfsburg headquarters. The former CEO is already being investigated over possible market manipulation.

VW's acknowledgement in September 2015 that it had used software to reduce emissions levels when cars were being tested in the United States wiped billions of euros from its market value.

BT loses almost £8bn in value as Italy accounting scandal deepens

Shares plunge 21% after bill for mismanagement at Italian division almost quadruples to £530m

Almost £8bn or more than a fifth was wiped off the stock market value of BT after the telecoms group revealed that an accounting scandal at its Italian business was much worse than originally thought.

It also emerged that Italian prosecutors were opening their own investigation into BT Italia over alleged false accounting and embezzlement.

But Williamson thinks the owners must be smoking something stronger than Golden Virginia. “The board continues to believe that revising the policy is necessary for retaining and attracting the right calibre of talent to ensure the continued sustainable growth of the business,” he says.

Before he embarks on his mission to “re-engage” with shareholders, Williamson should take a cold look at how he and David Haines, the hapless chair of the remuneration committee, misread the mood so badly. read more »

U.S. consumer financial agency's backers seek to fight for it in court

Two lawmakers and six consumer advocacy groups on Thursday sought to join a court case involving the U.S. consumer financial watchdog as worries that President Donald Trump will dismantle the agency reached a fever pitch.

Democratic Senator Sherrod Brown of Ohio and Representative Maxine Waters of California petitioned a federal court to be allowed to intervene on behalf of the Consumer Financial Protection Bureau in its appeal of a decision that its structure is unconstitutional.

Meanwhile, six groups including U.S. Public Interest Research Group made a similar request.

The ruling, that the president should be able to remove CFPB Director Richard Cordray at will, has been stayed pending appeal. Currently the director can only be fired for cause. read more »

How Uber and Airbnb Bent Laws and Made Billions

How have Uber and Airbnb, two companies known for sparring with local governments over regulations, ended up as the new models of success in Silicon Valley? Bloomberg Businessweek's Brad Stone introduces a theory he calls "Travis' Law" to explain why  read more »