Corruption Crime & Compliance

Global companies face a number of challenges and a myriad of regulatory obligations. In December 2019, the EU adopted a directive  to promote and protect persons who report violations of law. Companies will be required to implement compliance reporting channels and provide protection for certain whistleblowers from retaliation.  To the extent companies already maintain internal reporting systems may have to modify their programs to meet implementation requirements by member states. In this Episode, Michael Volkov reviews the EU Whistleblower Directive and the compliance requirements.

DOJ and the SEC settled concluded its long-pending FCPA investigation of Herbalife Nutrition Ltd (“Herbalife”). Herbalife entered into a 3-year deferred prosecution agreement (“DPA”) with DOJ and an administrative order with the SEC, and agreed to pay $55 million in criminal penalties and $67 million in disgorgement and prejudgment interest to the SEC. In this Episode, Michael Volkov reviews the Herbalife FCPA settlement.

In a surprise indictment, the US Attorney’s Office for the Southern District of New York announced that Steve Bannon, Brian Kolfage, Andrew Badolato and Timothy Shea were indicted for defrauding hundreds of thousands of donors in response to the “We Build The Wall” online fundraising campaign.  The indictment charges the defendants in defrauding donors from more than $25 million. In this Episode, Michael Volkov reviews the indictment and summarizes the facts.

It has been almost one year since the Business Roundtable Restatement of Corporate Purposes to underscore expansion of broad governance and sustainability principles.  Yet, one year later, not much has changed.  Corporate board governance needs to improve and initiate reforms in response to recurring problems and scandals. Corporate boards can no longer represent resting places for business executives at the end of their respective careers.  Shareholders and other stakeholders have to demand reforms that bring corporate boards up to a modern age where board members: engage management in promoting strategic directions; ensure that compensation issues for senior management are appropriately handled; ensure that board committees are staffed appropriately and carry out assigned responsibilities; and the board conducts a robust self-evaluation process. In this Episode, Michael Volkov reviews the state of corporate board performance and the need to enact broad reforms.

World Acceptance Corporation (“WAC”), a US-based consumer loan company, agreed to pay the SEC $21.7 million for FCPA violations in Mexico.  WAC’s cited violations covered the full gamut of FCPA violations, including bribery payments to government officials in Mexico, failure to keep accurate books and records and inadequate internal accounting controls. In this Episode, Michael Volkov discusses the WAC SEC settlement.

OFAC has brought several significant enforcement actions in last two years that are described as the result of “screening errors.” These screening errors are sometimes described as the fault of sanctions screening software or human error. In this Episode, Michael Volkov reviews several OFAC enforcement cases stemming from screening errors, including Apple, Amazon, American Express and Cobham Metelics.

On May 1, 2020, Blue Bell pleaded guilty to shipping contaminated ice cream linked to a 2015 listeria outbreak and agreed to pay a fine of $19.5 million ($17.4 million criminal fine and $2.1 million to settle civil false claims act violations).  Blue Bell’s former CEO, Paul Kruse, was separately indicted and charged in seven separate counts for conspiracy and wire fraud for concealing from customers information known to the company about the listeria contamination.  His case was later dismissed (but may return) because he was not charged by grand jury indictment. In this Episode, Tom Fox and Michael Volkov discuss the governance, compliance, and enforcement issues relating to the Blue Bell enforcement action and indictment of its former CEO.

Steele Compliance Solutions recently announced the global rollout of its new “Risk Intelligence Data” platform.  Companies are suffering from information overload -- with new technologies, companies can manage information to increase efficiency and accuracy in collecting and analyzing information needed for risk management purposes. Risk Intelligence Data, involves the hybridization of over 5 million of highly trusted risk and compliance sources worldwide, spanning global financial crime repositories, sanctions watchlists, state-owned entities lists, political exposure directories, and news media outlets, all delivered into an accessible central feed. Christian Focacci, Vice President Engagement, provides insight on artificial intelligence, machine learning and due diligence practices.  

Amazon joins the exclusive club of high-tech OFAC violators.  Last year, Apple settled with OFAC for sanctions violations.  This year, we can add Amazon to the list of OFAC violators. On July 8, 2020, Amazon settled with OFAC for $134,523 for violations of multiple OFAC sanctions programs.  Amazon’s violations stemmed from deficiencies from its sanctions screening processes.  As a result, Amazon provided goods and services: (1) to persons sanctioned by OFAC located in Crimea, Iran and Syria; (2) to individuals located in or employed by the foreign missions of the countries sanctioned by OFAC.  In addition, Amazon failed to timely report several hundred transactions conducted pursuant to a general license issued by OFAC. In this Episode, Michael Volkov reviews the sanctions enforcement matter for important issues, trends and lessons learned.

The Supreme Court, in two important decisions issued on the last day of the Term, rejected Trump and DOJ challenges to a New York Criminal Grand Jury subpoena and several Congressional subpoenas for Trump's financial records. In a decisive ruling, in Trump v. Vance, the Supreme Court rejected by a 7-2 vote, President Trump’s challenges to a New York State grand jury subpoena.  In a separate case, Trump v. Mazars, the Supreme Court rejected challenges by a vote of 7 to 2 to Congress’ subpoena for Trump’s financial records. In this Episode, Michael Volkov reviews the two Supreme Court decisions.