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Recently the Swedish Telecom company Telia Company AB has agreed to pay $965 Million in penalties for violating the FCPA. Some of that money will go to Swedish and Dutch prosecutors, with the rest going to the Department of Justice and the SEC. This is, by the reckoning of the authors over at the website FCPA Blog, the largest ever FCPA settlement.

The penalties stem from actions taken by the company after it purchased Coscom LLC, a company providing telecom services in Uzbekistan. After the purchase the company paid numerous bribes to government officials, including Gulnara Karimova, daughter of late Uzbek president Islam Karimova, in order to expand it's share of the Uzbek telecom market. Telia allegedly made payments to Karimova alone of up to $300 Million. A number of companies were also implicated in a bribery scandal involving Gulnara Karimova and dozens of her associates. The Amsterdam based company VimpelCom was also implicated in the bribery scandal in Uzbekistan, and itself paid $795 Million in penalties to US and Dutch authorities last year.

Guatemala is currently in political upheaval over a recent events related to anti-corruption efforts in the country. Last month, President Morales tried to expel Ivan Velasquez, the head of a UN commission (The International Commission Against Impunity in Guatemala, or CICIG) set up to expose political corruption in Guatemala. However, the country's top court quickly moved to stop the expulsion. The president has argued that the UN commission violated Guatemala's sovereignty, but protesters and other groups feel that the commission is the country's best hope to curb corruption in the country.

More recently the legislature passed a law to protect President Morales from prosecution, which triggered protests and the constitutional court stepping in and provisionally blocking the law from taking effect. On Thursday the Guatemala's congress announced it would be repealing the laws. What happens next is anyone's guess, but the protests were reported to be quite large, and many say that they are now disappointed in Morales. Morales was elected as an outsider who would clean up corruption, and many say they feel betrayed by the recent actions of Morales and the legislature. If the government pushes things too far it may face huge protests. Two years ago the capitals central plaza was filled with protesters for 20 straight weekends to protest corruption, and led to the resignation of former President Otto Pérez Molina. It's anyone's guess if the same thing will happen to President Morales, but it's clear that many people in the country take anti-corruption efforts seriously.

Despite common perceptions, public corruption is a problem which plagues even the most developed countries, including the United States. Elected officials can be bribed, as appears to be the case with New Jersey Senator Robert Menendez (D). Wednesday, September 6, 2017 marked the start of the federal case against Menendez, who is one of the highest-ranking Democrats in the US Senate. Menendez is on trial for bribery, and could face a lengthy prison sentence.

Menendez is accused of accepting lavish trips, jet flights, gifts, and campaign donations from Saloman Melgan, a Florida-based ophthalmologist, in exchange for political favors. These favors include helping Melgen’s girlfriends obtain US visas, attempting to resolve an $8.9 million billing dispute between Melgen and Medicare, and helping Melgen profit off a port security contract in the Dominican Republic. Menendez, who is the first US Senator to stand trial for bribery since 1981, asserts that he has never dishonored the public office and believes that he will be exonerated.

The Financial Crimes Enforecement Network (FinCEN), a division of the Treasury Department, has ordered new reporting and record keeping requirements for some real estate transactions in Honolulu, Hawaii. With this order, Honolulu joins six other areas in what's called a Geographic Targeting Order (GTO). FinCEN also extended the reporting requriments for all areas under GTOs through March of 2018.

GTOs are aimed at curbing the use of real estate transactions to launder money. Title Insurance companies in the effected areas are required to keep more detailed records on, and report to FinCEN, the ultimate beneficial owners involved in real estate transactions made with cash. Some areas of the United States have become notorious as places where individuals and organizations can launder money through cash real estate purchases made via shell companies and other means of obfuscating their identity. This order shines some sunlight on these transactions.

We talk a lot about the FCPA and US anti-corruption and anti-bribery laws, but other countries have their own sets of anti-corruption laws that firms have to keep in mind. In Canada the Corruption of Foreign Public Officials ActCorruption of Foreign Public Officials Act (CFPOA) is often referred to as the Canadian FCPA. This law impacts not just Canadian businesses but any business that engages activity in and with Canada.

The CFPOA has been criticized in the past for not going far enough in what it covers or in how it is enforced. However, a recent appeals court decision upheld a 2013 conviction in the R. v. Karigar case, and in so doing may have added some "teeth" to the law. FCPA Blog has a good summary of the case generally, and Canadian Law Firm McCarthy Tétrault has an in depth analysis of the original decision. The full text of the original decision can be read here, and the appeals court decision can be read on the here.

On this blog we often highlight scandals and other problems arising from corruption. Sometimes it feels like corruption is everywhere and maybe the fight against it is hopeless. But it's not all bad news, while corruption and fraud is still all too common, according to a recent study companies are beginning to do more about it. The latest edition of the Annual "CEO Success Study," which is published by Strategy& – the Strategy arm of PwC's Consulting Practice points out that boards are increasingly forcing out Executives for unethical behavior.

Strategy& provides a pretty good summary of this section of the report in their article "Are CEO's less ethical than in the past?" One point they make is that while it's hard to know if corruption and unethical behavior among CEO's is actually more common, it's clear that companies are doing more about it. From the article:
Our data cannot show — and perhaps no data could — whether there’s more wrongdoing at large corporations today than in the past. However, we doubt that’s the case, based on our own experience working with hundreds of companies over many years. In fact, our data shows that companies are continuing to improve both their processes for choosing and replacing CEOs and their leadership governance practices — especially in developed countries.

We’ve talked about the Panama Papers before, but the changes they are bringing to the international political landscape are still taking shape. Last week, the Panama Papers led to the fall of another world leader.

On July 28th, the Prime Minister of Pakistan Nawaz Sharif resigned after the Supreme Court ruled that the corruption allegations stemming from the Panama Papers disqualified him from the position. The information leaked in the Panama Papers led to the accusation that Sharif engaged in money laundering through offshore companies owned by his children in order to purchase high-end properties in London. On July 31st, The National Accountability Bureau in Pakistan announced that Sharif and his three children will face four counts of corruption charges over these revelations.

Money laundering is a serious issue that impacts businesses, large and small, all over the world. Money laundering, simply put, is the act of making illegitimate funds appear to come from legitimate sources. Businesses that deal in high volumes of cash, such as restaurants, are most commonly used to launder money, though any kind of business, including those that deal in electronic payments can be used for money laundering. There is even a recent case of a meatpacking business that allegedly bought and sold cattle to launder drug money. Typically the business doing the laundering will mix legitimate money in with the illegitimate funds, in an attempt to make it more difficult to detect. That can mean trouble for you if you’re working with a business that is also laundering money.

Here at Smith Brandon, we’ve been following the 1MDB scandal with great interest. The sheer scale of funds misappropriated from the beleaguered Malaysian sovereign wealth fund is just staggering; estimates peg it at roughly $4.5 billion. Recently, three new revelations came to light.

On Monday, June 12th, news broke that the US Department of Justice is investigating improprieties in the 2013/2014 sale of the Houston based Coastal Energy Company to Compañía Española de Petróleos, S.A.U. (CEPSA), a subsidiary of the Abu Dhabi sovereign wealth fund International Petroleum Investment Co. The $2.2 billion sale was orchestrated by Jho Low, a Malaysian financier close to the family of Malaysian Prime Minister, Najib Tun Razak. Low reportedly supplied $50 million for the deal (believed to have been misappropriated from 1MDB); one week later CESPA transferred $350 million back to Low’s shell company. Jho Low has been at the center of several lawsuits related to the scandal.

Christopher Wray, the nominee for the Directorship of the FBI has a history of work on white collar crimes including FCPA and trade sanctions violations and money laundering. During his time as United States Assistant Attorney General for the Criminal Division from 2003 to 2005, much of his work focused on white collar crime. After leaving the DOJ he continued to work on white collar crime, government investigations, and regulatory issues at the law firm King & Spalding. A speech he gave in 2005 outlines some of the work he did in various anti-corruption cases, including FCPA violations. In it he focused on how he and the DOJ began focusing on faster enforcement and sometimes on prosecuting cases piecemeal as they found violations they could prosecute rather than trying to build one grand case that encompassed everything.

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