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We usually comment on news and current events here on the blog, but we'd like to take a moment to point you all to our entry in a recent video contest.

We entered a video contest for small businesses (under 50 employees), sponsored by SCORE (a nonprofit organization that provides business mentoring services to entrepreneurs in the US), in partnership with the Small Business Administration (SBA).

We found out about the contest only a short while before the deadline for entry but decided to give it a try. We learned a lot and had a lot of fun putting it together. We feel pretty happy with the result!

Australia, like many countries, is looking at overhauling and strengthening its various anti-corruption laws. A number of new laws have been proposed recently that would change the way Australia handles corruption and bribery cases. If adopted these new proposed laws could be a big step toward making action on corruption in Australia much easier and more effective.

FCPA Blog has a great article about the proposed new laws, and we very much suggest you read the full article there, but here we provide a summary of a few of the bigger changes these laws would bring about:

  • A new offence would be introduced called “Failure to prevent bribery of foreign officials.” This would broaden the possible actions (or inactions) that could lead to a convition. As with a similar law in the UK, companies would be able to defend themselves if they could show that they had instituted “adequate procedures” to prevent bribery.

Blockchains and cryptocurrencies are a major topic at this year’s World Economic Forum in Davos, Switzerland. While cryptocurrencies such as Bitcoin are not always held in high regard due to their volatility, lack of a supportive financial structure, and history of association with illicit trade, the blockchain, one of the technologies behind bitcoin and other cryptocurrencies, is being hailed by some as a potential tool to increase financial security and transparency. This potential for blockchain is now being tested within Brazil to combat corruption in land allocation.

A blockchain is a continuously-growing list of records (called blocks) of transactions that are publicly held on every computer involved in the blockchain. Since the blockchain records who records and when they were and is publicly viewable by anyone, it is used by cryptocurrencies such as Bitcoin to track and record transactions without worry that records are being fraudulently altered.

In mid-January 2018, Carillion, the UK’s second largest construction company that provides business support services as well as public services in schools, prisons, hospitals, transportation systems, and ministry of defense sites, announced that it was forced into compulsory liquidation.  Carillion, which has debts and liabilities totaling roughly US $3 billion, stated that the company was unable to secure funding to continue its business plan.

Carillion is a major government contractor with approximately 450 current contracts and several unfinished projects in the works.  The company had reportedly issued three profit-warnings in the preceding six months, though it continued to be granted public contracts; as a result, government funding will need to be used to ensure government services are maintained by Carillion public-sector staff.  However, thousands of the company’s employees working in the private sector will not receive the same wage protection. 

Keppel Offshore & Marine Ltd. (KOM), a Singapore-based shipyard operator and oil-rig builder, and its wholly-owned US subsidiary Keppel Offshore & Marine USA Inc. (KOM USA) have agreed to pay $422 million in penalties for violations against the US Foreign Corrupt Practices Act (FCPA). These penalties, which will be paid to authorities in the US, Singapore, and Brazil are the result of more than a decade of bribery payments made by KOM and KOM USA to Brazilian officials.

The bribe payments allowed KOM and KOM USA to amass profits of roughly $350 million from illicitly secured contracts in Brazil. According to the Department of Justice, from 2001 to 2014 the companies paid out more than $50 million in bribes to Brazilian officials. In order to obscure the payments, they were issued as commissions for consulting services and were passed through various shell companies and banks before reaching their intended recipients.

We are approaching the 40th anniversary of the enactment of the Federal Corrupt Practices Act (FCPA). The Department of Justice has released new guidance to further encourage companies to voluntarily disclose FCPA violations.

Self-Reporting: A Step Forward

At the 34th International Conference on the Foreign Corrupt Practices Act on November 29, 2017 Deputy Attorney General Rod Rosenstein announced the FCPA’s new Corporate Enforcement Policy (CEP). This new policy will make permanent and expand upon the Obama administration’s FCPA Pilot Program under which the Department of Justice would “consider” declining to prosecute companies that self-report violations and comply with investigations.

A new anti-corruption committee has been established in Saudi Arabia, which has the power to conduct investigations, make arrests, issue travel bans, and freeze assets of individuals and companies. This committee is headed by Crown Prince Mohammed Bin Salman, son of King Salman bin Abdulaziz Al-Saud. However, rather than instilling confidence in foreign investors this anti-corruption committee has led to some uncertainty and confusion in Saudi business circles.

Mohammed Bin Salman is described by his supporters as a reformist with a desire to transform and modernize Saudi Arabia, get rid of extremist ideologies, ease restriction on women, and root out corruption. On the other hand, he is described by more traditional and conservative Saudis who disagree with his views as someone attempting to consolidate his power by purging political leaders and business leaders from the kingdom.

A year and a half after the release of the Panama Papers, another large data leak regarding offshore entities has been published. In November 2017 the International Consortium of Investigative Journalists released the Paradise Papers in cooperation with the German newspaper Süddeutsche Zeitung. The Paradise Papers primarily consist of documents leaked from the prominent offshore law firm Appleby, and contains names of more than 120,000 people and companies with holdings in offshore tax havens.

The leaks include holdings of corporate giants like Apple, Facebook, Disney, and McDonalds; current world leaders including Queen Elizabeth II and Prince Charles; sports team owners like Robert Kraft and Micky Arison; and even celebrities such as U2 singer Bono. Also named are US Secretary of Commerce Wilbur Ross and 12 others connected to the Trump Administration. Ross in particular has been named as a financial stakeholder in a Russian shipping firm with connections to Russian President Vladimir Putin.

It's not enough to avoid risky behavior in your own business, it's important to take the time to check on your business partners, vendors, and even clients to be sure they aren't engaging in risky behavior either.  Federal regulators with the Financial Crimes Enforcement Network (FinCEN) recently fined a small Texas bank for violations of the Bank Secrecy Act for a failure to conduct requisite due diligence and a lack of controls on foreign accounts. Essentially they didn't check out their depositors ahead of time and didn't monitor their activities once they had opened accounts.

Lone Star National Bank was fined $2 million dollars, though an earlier $1 million penalty the bank had already paid will credited toward that total. This case is interesting because FinCEN found no indication of actual money laundering; rather they noted suspicious activity involving a Mexican depositor, and found that Lone Star had not put in place adequate controls to serve foreign clients. The FinCEN assessment says "Without sufficient internal controls or experienced BSA staff, the Bank engaged in high-risk foreign correspondent banking services without conducting appropriate due diligence, and without adequately monitoring and reporting suspicious activity." This underscores the need to conduct due diligence on foreign clients.

We were saddened to see that Daphne Caruana Galizia, a journalist who focused on corruption in Malta, was killed in a car bomb attack.

She was extremely well known and popular in Malta. Her blog entries sometimes attracted more readers than the combined circulation of Malta's newspapers. The website Politico has described here as "a one woman wiki leaks."

Her work focused on rooting out corruption and holding politicians accountable. Her work focused not only on politicians, but also on banks that facilitated money laundering, and Malta's online gaming industry and it's links to organized crime. In the past several years she had written extensively about revelations regarding Maltese politicians that came from Panama Papers. Her work on the Panama Papers is credited with causing Malta's Prime Minister, Joseph Muskat, to have to go to the polls a year early.

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