In April the High Court in England approved the Deferred Prosecution Agreement (“DPA”) agreed between the Serious Fraud Office (“SFO”) and Tesco Stores Limited (“TSL”), a wholly owned subsidiary of Tesco PLC (“Tesco”), the UK’s biggest retailer, in connection with the much-publicised accounting scandal in 2014. Whilst the DPA itself has not been published because of reporting restrictions (due to the on-going prosecution of individuals by the SFO in relation to this matter), it was approved by Sir Brian Leveson, the same judge that has so far approved all of four of the SFO’s DPAs.

Continue Reading Every Little Bit Helps: Progress for Tesco as it secures DPA on criminal liability

The final weeks of 2016 saw an uptick in activity in the bribery and money laundering investigations surrounding mining rights in the West African country of Guinea.

On December 13, 2016, the U.S. Department of Justice arrested and charged Guinea’s former Minister of Mines and Geology, Mahmoud Thiam, with laundering $8.5 million in bribes he allegedly received from a Chinese conglomerate in exchange for, among other things, near total control of Guinea’s mining sector. Continue Reading Allegations of Corruption Continue to Surround Guinea’s Simandou Mines

Earlier this year, the Organization for Economic Cooperation and Development (the “OECD”) launched its latest round of reviews to monitor the anti-bribery efforts of signatory countries to the OECD’s Anti-Bribery Convention (the “Convention”). The Convention, in force since 1999 and adopted by 41 countries, including all 35 OECD member states, requires signatories to criminalize the bribery of foreign public officials engaged in international business transactions. The OECD monitors each signatory’s implementation and enforcement of the Convention through a peer-review system, administered by the OECD Working Group on Bribery (the “Working Group”).

In previous monitoring rounds, the Working Group had in turn: (1) evaluated the adequacy of each country’s implementing legislation, (2) assessed policy effectiveness, and (3) tracked ongoing enforcement efforts and considered progress against earlier recommendations.

This newest round of successive monitoring (“Phase 4”) continues to focus on efforts to implement and enforce the Convention and the supplemental guidelines for combating bribery that parties to the Convention have since adopted. Additionally, Phase 4 takes a “tailored approach” to “identify the unique challenges and achievements of the evaluated country and to assist the country in addressing challenges in a way that is suitable and feasible within its legal system.”  Accordingly, Phase 4 aims to highlight country-specific achievements, including practices that have proved effective in combating foreign bribery, and to flag any issues raised by changes in domestic legislation.

In a December 2016 Wall Street Journal interview, the Working Group’s executive, Patrick Moulette, offered that signatory countries have struggled most with implementing Article 2 of the Convention, which calls for imposing liability against “legal,” and not just natural, persons.  “[E]nact[ing] a regime for prosecuting companies,” according to Mr. Moulette, “is very easy to say but it’s much more difficult to design in practice,” especially in civil law countries.  As a result, “many countries in the [W]orking [G]roup have struggled to enact a regime for holding companies liable for foreign bribery.”  The latest round of monitoring will oversee these challenges.

Each Phase 4 evaluation will proceed through a series of evaluative steps involving input from the evaluated country, at least two peer reviewer countries (also known as “lead examiner countries”), and OECD staff. To ensure fairness as well as sensible historical perspective, “[w]herever possible,” Phase 4 aspires for peer-reviews by countries with similar legal systems to and with previous experience in reviewing the evaluated country.

The process is designed to be collaborative and iterative, with ample opportunity for the evaluated country to set the record straight. During the Phase 4 review, evaluated countries will respond to general and country-specific questionnaires, host on-site visits by examiner countries and OECD staff, and submit comments in response to draft preliminary reports.  Phase 4 envisions that the on-site visits will “address concrete cases that have arisen under . . . implementing legislation or any other legislation . . . with regard to the bribery of foreign public officials” and generate confidential discussions to “determine how the foreign bribery offence is being prosecuted, what investigative techniques are being utilised, and what hurdles are being faced by countries in the fight against the bribery of foreign public officials.” The latter may include, for instance, difficulties with “establish[ing] a good system to protect whistleblowers,” a “complex area,” in Mr. Moulette’s estimation.

The Phase 4 capstone is the Working Group’s evaluation report, which will set out “core recommendations” the evaluated country is expected to implement. Each country will then have up to two years to submit a responsive report explaining its implementation efforts. Failure to adequately address the Working Group’s recommendations could lead to additional reporting requirements.

The OECD conducted on-site visits in October in the United Kingdom and in Finland, the first two countries reviewed under Phase 4. The United States is not scheduled for review until 2019. The Phase 4 monitoring guide is available here. And the complete calendar of evaluations is available here.

On December 9, 2016, Assistant Attorney General of the Department of Justice’s (“DOJ”) Criminal Division Leslie R. Caldwell announced that DOJ was seeking applicants for an attorney dedicated to enhancing cooperation with the United Kingdom’s Financial Conduct Authority (“FCA”) and the Serious Fraud Office (“SFO”) in London. This initiative signals DOJ’s continued efforts to fight fraud and economic crime on a global and interconnected scale.  Caldwell remarked that international crime and worldwide fraud schemes have become the “new normal,” compared to when she began working at DOJ.  Continue Reading DOJ Attorney to be Assigned to Work with FCA and SFO on Fraud

The UK’s Serious Fraud Office (“SFO”) Chief David Green has reported a high demand for deferred prosecution agreements (“DPAs”) by companies since the introduction of the DPA law in early 2014. Despite a low number of settlements reached by the SFO thus far, Green reports that both the SFO and courts want to make DPAs work for companies that cooperate and voluntarily self-report misconduct. Continue Reading U.K. Sees High Demand for DPAs by Companies

An investment bank brought a legal malpractice claim against Morrison & Foerster after the law firm failed to inform the bank that Puda Coal, Inc. was a shell company, despite receiving a report detailing that fact. A Judge of the New York Supreme Court, however, dismissed the case because the investment bank received the same report, and, as a sophisticated company, could not absolve itself of its own responsibilities. Continue Reading No malpractice claim against underwriter’s counsel for failing to inform client of information already in the client’s possession

This week, the U.K.’s Serious Fraud Office (“SFO”), officially announced that it has been conducting a criminal investigation into Monaco-based Unaoil SAM, an oil industry consultancy firm. The investigation was launched in March of this year, spurring police raids of the offices and homes of the company’s officials. The investigation began on the heels of media reports by The Huffington Post and its Australian partner Fairfax Media which alleged that the company engaged in international bribery schemes to secure contracts in high-risk countries for its multinational clients. The SFO, however, does not cite specifically to these media outlets as their source, but instead contends that the agency has been approached by a number of sources. Continue Reading SFO Announces Investigation into Unaoil Bribe-for-Contracts Scheme

On July 5, 2016, the European Commission published a proposal for a directive that will amend the Fourth Anti-Money Laundering Directive (“4AMLD”) in an effort to counter terrorist financing and increase transparency to prevent tax avoidance and money laundering. The Commission determined that the evolving terrorism threat in Europe and the large-scale concealment of funds in offshore jurisdictions revealed by the Panama Papers necessitated these proposed amendments aimed at addressing gaps in the oversight of financial systems.

Continue Reading European Commission Proposes Amendments to Fourth Anti-Money Laundering Directive

The U.K. Ministry of Justice (“MoJ”) is considering extending the existing offences of “failing to prevent” bribery and tax evasion to other economic crimes such as money laundering and fraud. The proposals were announced by David Cameron at the recent Anti-Corruption Summit hosted by the United Kingdom on May 12, 2016 and confirmed that same day by the MoJ. Continue Reading The United Kingdom Considers Extending Corporate Criminal Liability to Failing to Prevent Money Laundering and Fraud

Authorities in Switzerland announced on May 24, 2016, that they initiated criminal proceedings against private bank BSI due to allegations of money laundering. The Swiss attorney general’s office stated that it suspected “deficiencies in the internal organization of the BSI S.A. bank” and that these organizational deficiencies resulted in the bank’s inability to prevent certain criminal offenses under investigation relating to 1Malaysia Development Berhad (1MDB), a Malaysia state investment fund. BSI was ordered by Swiss authorities to hand over 95 million Swiss francs (approximately U.S. $96 million) in profits. The Monetary Authority of Singapore (“MAS”) also ordered BSI Bank to shut down its Singapore operations, the first time in 32 years that it has withdrawn a license from a merchant bank, and also imposed $13.3 million in financial penalties. The MAS also referred six senior BSI managers to prosecutors for further criminal investigation.

Continue Reading Sovereign Investment Funds and AML Violations