Corporate Advisory

Danske Bank – Audit firms to be investigated over AML rules breach

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The Danish government has reported Big Four auditor EY to the domestic fraud squad to investigate whether the firm broke money laundering rules when it audited Danske Bank in 2014.

The Danish Business Authority, a government agency, said it had conducted its own investigation into EY’s 2014 audit of Danske and found the firm had discovered information about potential money laundering issues at the bank.

The firm should have made further inquiries and reported the matter to the authorities at the time, according to the business authority. It said on Friday it had asked the Danish state prosecutor to launch a police investigation into whether EY violated laws against money laundering and terrorist financing.

Danske’s money laundering scandal started in 2007 and stretched until 2015, with €200bn of non-resident money — much of it suspicious and from Russia — passing through its Estonian branch during the period.

The referral to Denmark’s fraud investigators is a fresh blow to EY and the wider audit industry, which has come under heavy criticism during the past 18 months following a series of high profile corporate scandals involving the Big Four firms.

EY was one of a number of audit firms that vetted Danske’s financial statements during the period when money laundering activities allegedly took place at the bank.

The Danish Business Authority launched an investigation of EY, as well as Deloitte, KPMG, PwC and Grant Thornton, in October to assess whether they had fulfilled their anti-money laundering duties with respect to their audit work for Danske up to 2015.

The Danish Business Authority has not explained why it is focusing on 2014, which is just after the peak year for the scandal in 2013, when about €35bn flowed through the Estonian branch. The government agency said it was still investigating the audit conducted in 2013.

See full article here

Corporate Advisory

Lloyds – How whistleblower exposed UK regulation failings

A former employee’s evidence suggests the bank frustrated a police investigation into large-scale fraud

In the summer of 2011, an employee of Lloyds Banking Group based in Scotland emailed three senior colleagues about an ongoing police investigation into an alleged fraud at the bank.

Sally Masterton had worked for the lender since 1998, first under HBOS and then Lloyds after the rescue of the foundering Scottish lender during the financial crisis. An accountant and insolvency practitioner, she was part of the bank’s “high risk” unit, which looked after small business customers seen as likely to default.

Conscious that the police inquiry involved her department, she wanted to report a worrying conversation. Ms Masterton told the bankers, senior figures in the commercial lending division how she had been urged by a senior colleague in the high risk unit to shred documents and delete electronic records in an unrelated case involving an HBOS client.

She hadn’t done it, of course, she said, but the colleague had warned her that a “DTI investigation” was imminent and they should cover their tracks.

The story Ms Masterton told shook the bankers. The senior colleague and would-be shredder was also a key police witness in the fraud case. Data about the incident, uncovered by Ms Masterton, showed unauthorised lending and evidence of possible money laundering and theft.

The note of a follow-up conversation with two members of the bank’s legal department took four months to finalise. Ms Masterton claimed her boss later told her that the lawyers hadn’t handed the note to the police because it might damage the would-be shredder’s credibility as a witness in the case.

But that first email and what followed would have far-reaching consequences that are still unfolding. It would lead to claims that Lloyds frustrated a police investigation, flouting its duty to report wrongdoing to the authorities.

See full article here

Corporate Advisory

AML – New EU third country risk list published

European Commission – Press release

European Commission adopts new list of third countries with weak anti-money laundering and terrorist financing regimes

Strasbourg, 13th February 2019

Today, the Commission has adopted its new list of 23 third countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks.

The aim of this list is to protect the EU financial system by better preventing money laundering and terrorist financing risks. As a result of the listing, banks and other entities covered by EU anti-money laundering rules will be required to apply increased checks (due diligence) on financial operations involving customers and financial institutions from these high-risk third countries to better identify any suspicious money flows. On the basis of a new methodology, which reflects the stricter criteria of the 5th anti-money laundering directive in force since July 2018, the list has been established following an in-depth analysis. 

Věra Jourová, Commissioner for Justice, Consumers and Gender Equality said: “We have established the strongest anti-money laundering standards in the world, but we have to make sure that dirty money from other countries does not find its way to our financial system. Dirty money is the lifeblood of organised crime and terrorism. I invite the countries listed to remedy their deficiencies swiftly. The Commission stands ready to work closely with them to address these issues in our mutual interest. ”   

The Commission is mandated to carry out an autonomous assessment and identify the high-risk third countries under the Fourth and Fifth Anti-Money Laundering Directives.

The list has been established on the basis of an analysis of 54 priority jurisdictions, which was prepared by the Commission in consultation with the Member States and made public on 13 November 2018. The countries assessed meet at least one of the following criteria:

  • They have systemic impact on the integrity of the EU financial system,
  • They are reviewed by the International Monetary Fund as international offshore financial centres;
  • They have economic relevance and strong economic ties with the EU.

For each country, the Commission assessed the level of existing threat, the legal framework and controls put in place to prevent money laundering and terrorist financing risks and their effective implementation. The Commission also took into account the work of the Financial Action Task Force (FATF), the international standard-setter in this field.

The Commission concluded that 23 countries have strategic deficiencies in their anti-money laundering/ counter terrorist financing regimes. This includes 12 countries listed by the Financial Action Task Force and 11 additional jurisdictions. Some of the countries listed today are already on the current EU list, which includes 16 countries.

Next steps

The Commission adopted the list in the form of a Delegated Regulation. It will now be submitted to the European Parliament and Council for approval within one month (with a possible one-month extension). Once approved, the Delegated Regulation will be published in the Official Journal and will enter into force 20 days after its publication.

The Commission will continue its engagement with the countries identified as having strategic deficiencies in the present Delegated Regulation and will further engage especially on the delisting criteria. This list enables the countries concerned to better identify the areas for improvement in order to pave the way for a possible delisting once strategic deficiencies are addressed.

The Commission will follow up on progress made by listed countries, continue monitoring those reviewed and start assessing additional countries, in line with its published methodology. The Commission will update this list accordingly. It will also reflect on further strengthening its methodology where needed in light of experience gained, with a view to ensuring effective identification of high-risk third countries and the necessary follow-up.

Background 

The fight against money laundering and terrorist financing is a priority for the Juncker Commission. The adoption of the Fourth – in force since June 2015- and the Fifth Anti-Money Laundering Directives – in force since 9 July 2018 – has considerably strengthened the EU regulatory framework.

Following the entry into force of the Fourth Anti-Money Laundering Directive in 2015, the Commission published a first EU list of high-risk third countries based on the assessment of the Financial Action Task Force. The Fifth Anti-Money Laundering Directive broadened the criteria for the identification of high-risk third countries, including notably the availability of information on the beneficial owners of companies and legal arrangements. This will help better address risks stemming from the setting up of shell companies and opaque structures which may be used by criminals and terrorists to hide the real beneficiaries of a transaction (including for tax evasion purposes). The Commission developed its own methodology to identify high-risk countries, which relies on information from the Financial Action Task Force, complemented by its own expertise and other sources such as Europol. The result is a more ambitious approach for identifying countries with deficiencies posing risks to the EU financial system. The decision to list any previously unlisted country reflects the current assessment of the risks in accordance with the new methodology. It does not mean the situation has deteriorated since the list was last updated.

The new list published today replaces the one currently in place since July 2018. A

The 23 jurisdictions are:

Afghanistan

American Samoa

The Bahamas

Botswana

Democratic People’s Republic of Kore

Ethiopia

Ghana

Guam

Ira

Iraq

Libya

Nigeria

Pakistan

Panama

Puerto Rico

Samoa

Saudi Arabia

Sri Lanka

Syria

Trinidad and Tobago

Tunisia

US Virgin Islands

Yemen

Corporate Advisory

Driving Change in Uk’s post-FATF Evaluations AML Regime

The surge of activity in the UK’s anti-money laundering (AML) regime between 2015 and 2018 was notable, with a huge range of new strategies, initiatives and AML architecture being created largely, a cynic might say, in preparation for the decennial Financial Action Task Force (FATF) evaluation of the UK, which reported its findings in December 2018. In PR terms at least, the government’s efforts seem to have paid off, with the UK receiving the highest aggregate scorings under the revised FATF evaluation methodology to date. 

The chapters in this Whitehall Report examine specific elements of the UK’s AML response and seek to challenge the intimation that the UK AML regime can be judged largely effective in real terms as the 2018 mutual evaluation report (MER) appears to suggest. On this basis, the report aims to focus post-evaluation efforts by making a series of recommendations for the government’s AML efforts in the post-MER policy cycle.

Policy

Chapter I examines the evolving AML strategic landscape and suggests that priority should be given to refreshing the UK’s AML and Asset Recovery Action Plans, and ensuring that progress is properly monitored through Parliament and/or an Independent Commissioner for Economic Crime. In terms of new structural innovations, it makes the case for giving political support to the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), adequate technical and human resourcing to the National Economic Crime Centre (NECC), and reinvesting in the depleted law enforcement response.

Chapter II examines the gap between the UK’s high aggregate scorings under the FATF ‘effectiveness’ methodology and the reality on the ground, which recognises the UK’s implication in various global money-laundering scandals. The chapter poses the question as to whether the UK’s place at the top of an invented ‘league table’ equates to an effective system overall and concludes that perhaps not all of the Immediate Outcomes (IOs) from the FATF’s evaluation methodology are created equal. It argues that the areas of identified weakness within the UK system – IO3 (supervision) and IO6 (use of financial intelligence) – best demonstrate the ‘wicked’ nature of the money-laundering problem; poor scorings in these areas drag down overall systemic effectiveness in a way that others do not. It calls on the UK government to focus on these areas to achieve effectiveness in real rather than abstract terms.

Prevention

Chapter III examines the issue of AML supervision of the UK’s non-financial regulated sectors, in particular those supervised by their own professional bodies, noting that this has been a perennial weak spot. The chapter notes the creation of new architecture, in the form of OPBAS, which was created to raise standards in professional body supervision, but missed an opportunity to include Her Majesty’s Revenue and Customs (HMRC), a statutory supervisor of accountants and estate agents, in its remit. As OPBAS readies itself to release its first annual report, the chapter asks whether it is time to consider an independent review of HMRC’s role alongside OPBAS’s work to ensure a level playing field.

Chapter IV looks at the innovations in the sphere of public–private information exchange since the inception of the Joint Money Laundering Intelligence Taskforce (JMLIT) in 2015. While JMLIT is a welcome innovation, the chapter cautions against complacency and calls for developments which expand the two-way information flow to the wider regulated sector (albeit in a fit-for-purpose form, rather than simple JMLIT expansion); firm the legal foundations for the partnership; extend existing bank-to-bank information-sharing provisions; and champion the conversation at the global level on the balance to be had between data privacy and financial crime objectives.

Chapter V looks at the need for the AML regime to evolve to tackle the challenges posed by new technologies. It discusses the next frontier for AML regulation – ‘the virtual asset economy’ – noting that the government will need to decide on the parameters of the regulation necessary to contain potential threats. It also discusses the need to consider regulation not only of fiat-to-virtual currency exchanges, but also of virtual-to-virtual exchanges. The chapter encourages the government to develop responses which are fit for purpose, rather than simply extending existing rules.

Disruption

Chapter VI examines the UK’s place as the destination of choice for the proceeds of grand corruption and explores whether political commitments, including new anti-corruption and transparency legislation, are being actioned in practice. It welcomes the new Unexplained Wealth Order (UWO) established in 2017, but notes that without law enforcement and prosecutorial resourcing, its impact will be largely symbolic; it notes that the new People with Significant Control register is good in theory, but has problems with accuracy in practice; and it notes the need to push forward with whistle-blower reforms to generate much-needed intelligence. 

Finally, chapter VII looks at the UK’s track record on the use of financial intelligence and finds cause to both agree and disagree with the 2018 MER’s findings in this regard. The chapter strongly agrees with the 2018 MER’s conclusion that the UK Financial Intelligence Unit (UKFIU) is in need of considerable reform and suggests that the government bolsters human and technological resources and reforms the ‘devolved analysis’ operating model. The chapter disagrees with the finding that ‘LEAs [law enforcement agencies] at the national, regional and local levels integrate the use of SARs and other financial intelligence into their standard practice’, and recommends regional resources to improve SAR exploitation.

In conclusion, this report notes that the recent FATF evaluation served one of its purposes well – that of focusing attention on the area of AML and broader financial crime – but urges the government to continue its reform programme to ensure it achieves systemic effectiveness in practice, rather than on paper. 

12 Recommendations for Policymakers

Policy and Coordination: ‘Policy, coordination and cooperation mitigate the money laundering and financing of terrorism risks’ – FATF Intermediate Outcome 1

Recommendation 1: Refresh and publish the AML and Asset Recovery Action Plans and provide annual reports to Parliament setting out progress.

Recommendation 2: Appoint an Independent Commissioner for Economic Crime to drive progress across government.

Recommendation 3: Prioritise funding of human and technological intelligence capabilities within the NECC.

Recommendation 4: Prioritise addressing deficiencies in the AML supervisory regime and use of financial intelligence over the next three years to improve systemic effectiveness overall.

Prevention and Detection: ‘Proceeds of crime and funds in support of terrorism are prevented from entering the financial and other sectors or are detected and reported by these sectors’ –  FATF Intermediate Outcome 2

Recommendation 5: Provide an independent assessment of HMRC’s AML supervisory activities, alongside work OPBAS is undertaking in relation to professional body supervisors.

Recommendation 6: Review the legislative information-sharing pathways between JMLIT members and consider building fit-for-purpose gateways to support the operating model. 

Recommendation 7: Support FATF efforts to champion a conversation, at the global level, regarding the balance to be had between data privacy and financial crime policy objectives.

Recommendation 8: On bringing the virtual asset economy under the purview of the AML regime, ensure that provisions are tailored to the new regime, rather than simply extending existing provisions.

Disruption: ‘Money laundering threats are detected and disrupted, and criminals are sanctioned and deprived of illicit proceeds. Terrorist financing threats are detected and disrupted, terrorists are deprived of resources, and those who finance terrorism are sanctioned, thereby contributing to the prevention of terrorist acts’ – FATF Intermediate Outcome 3

Recommendation 9: Provide training to prosecutors and financial investigators on the use of Part 5 (civil confiscation) Proceeds of Crime Act (POCA) powers in furtherance of their objective to expand use of UWOs.

Recommendation 10: Increase UKFIU headcount to 200 as promised during the 2007 FATF evaluation.

Recommendation 11: Expedite plans to update or replace the ELMER database.

Recommendation 12: Establish proactive SARs data-mining capabilities within the Regional Organised Crime Unit (ROCU) network.

Read the Report

Corporate Advisory

Apple and Facebook call for EU-style privacy laws in US

Facebook and Apple have called on the US government to adopt tough EU-style data privacy laws, challenging White House objections that European regulation is imposing red tape on American technology businesses.

In separate addresses in Brussels on Wednesday, Apple’s chief executive Tim Cook and Erin Egan, Facebook’s privacy chief, threw their weight behind legislation that would give American citizens equivalent protections to those given to Europeans under the EU’s General Data Protection Regulation.

GDPR, which came into force in May, is one of the toughest personal privacy regimes in the world, giving EU citizens the right to demand companies disclose and delete information held about them. The regulation also gives Europe’s national regulators the power to impose fines of as much as €20m, or 4 per cent of annual revenues, on companies that break the law.

The Trump administration has complained GDPR risks creating barriers to international trade by imposing unnecessary burdens on companies struggling to comply with the rules. Writing in the Financial Times in May, US commerce secretary Wilbur Ross said the criteria for applying GDPR was “too vague” and would impose a “significant cost” on small businesses.

In a meeting with Vera Jourova, EU justice commissioner, in Brussels last week, Mr Ross expressed concerns GDPR was creating difficulties for US business and law enforcement, according to an EU official familiary with the matter. Mr Ross also invited Brussels to send comments on how GDPR operates to the White House for its consultations on drafting a US privacy law.

See full article here

Corporate Advisory

CFTC Announces Largest-Ever Whistleblower Award – $30 Million

 

The Commodity Futures Trading Commission recently announced two awards to whistleblowers under its Whistleblower Program pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  These awards represent the Commission’s largest ever award and its first award to a foreign national.

In one case, a whistleblower is set to receive approximately $30 million for alerting the Commission to potential violations of the Commodity Exchange Act (“CEA”) and providing key original information about those violations that led to a successful enforcement.  In assessing the whistleblower’s claim to an award, the Commission noted that the individual was extensively involved in the investigation and provided ongoing, extensive, and timely assistance that helped to conserve Commission resources.  Noting the size of the award, Christopher Ehrman, Director of the CFTC’s Whistleblower Office, said “The award today is a commitment to reward those who provide quality information to the CFTC…We hope that this award will continue to facilitate the upward momentum and success of the CFTC’s Whistleblower Program by attracting those with knowledge of wrongdoing to come forward.”

In a separate case announced on the same day, a whistleblower will receive more than $70,000 for significantly contributing to an ongoing investigation and aiding the CFTC in securing a successful settlement.  This is the first CFTC award to a whistleblower living outside the United States.  In trumpeting the award, James McDonald, Director of the CFTC’s Division of Enforcement, stated:  “This award is significant because it signals to whistleblowers around the world that anyone with information about potential violations of the Commodity Exchange Act can participate in the CFTC’s Whistleblower Program.”  He further noted that the award, “serves as another example of the increasing significance of whistleblowers in our enforcement program, a trend I expect to continue going forward.”

As is standard in these cases, the CFTC withheld all specifics of the awards that could be used to identify the whistleblowers’ identities or the enforcement actions with which they were associated.  The CFTC also declined to state the percentage of sanctions represented by the awards – which, under the Dodd-Frank Act, may range from 10 to 30 percent of the amount recovered.  Notably, the Commission highlighted in its orders that award amounts may be based on collected sanctions ordered to be paid by the CFTC even if those sanctions are not collected by the CFTC directly.

The Dodd-Frank Act created similar programs providing monetary incentives for individuals to report legal violations to the CFTC and the Securities and Exchange Commission (“SEC”).  Eligible whistleblowers under the SEC Whistleblower Program are subject to the same general requirements as those established under the CFTC’s program, but the SEC’s Whistleblower Program has been much more active, issuing 55 awards to date totaling more than $266 million stemming from almost $1.5 billion in monetary sanctions ordered against wrongdoers based on actionable information received from whistleblowers.  Conversely, the CFTC has issued only six awards award, and the awards issued last week are the first in nearly two years.  In 2017, the CFTC amended its rules relating to whistleblowers, strengthening anti-retaliation protections and streamlining the award claims process.   The two newest awards were the first issued under these enhanced rules.

In light of the continued efforts of both the CFTC and the SEC to publicise monetary awards to whistleblowers, companies should ensure they have compliance programs in place to prevent and detect potential violations of the CEA and the securities laws, and to mitigate penalties that may result from inadvertent violations.  The Dodd-Frank Act prohibits retaliation against employees who provide regulators with information about possible violations, so companies also should ensure they have appropriate policies prohibiting whistleblower retaliation and providing a complaint procedure for any employee who believes he or she has suffered from retaliation.

See full article here

Corporate Advisory

Conduct Issues forces Clarks CEO to Resign

Clarks chief executive Mike Shearwood has resigned following an investigation into “complaints of conduct contrary to the family owned company’s code of business ethics”.

Stella David, the company’s senior independent director, has been named as the interim chief executive officer, effective immediately.

In a statement today Clarks said that aspects of Shearwood’s “conduct, conversations and expressions” fell short of the behaviours expected of employees on a number of occasions. “In these circumstances the board has accepted Mr Shearwood’s resignation,” the group added.

See full article here

Corporate Advisory

Corporate Governance – The Road to Revamp

A financial watchdog is starting to comb through more than 250 responses to its proposed overhaul of the UK’s best practice rules for listed companies.

Companies, investors and politicians have made submissions to the Financial Reporting Council, which is consulting on the first big revamp of the 25-year-old corporate governance code since 2014. Theresa May pledged action against corporate excess shortly before she became prime minister, although some of her most radical proposals have been ditched.

Against this backdrop, the FRC’s update to the corporate governance code, companies must comply with, or explain why they do not,  is nevertheless expected to unleash some significant changes when it takes effect in the summer.

 1. Board independence

One of the most contentious proposals outlined by the FRC in December was the introduction of a nine-year tenure limit for independent chairs and directors in the code, in an attempt to put an end to stale and insular boards.

This revision could prove embarrassing for the chairs of dozens of listed companies who have already served more than nine years on the board when their time as a non-executive director is taken into account.

Aviva, the insurer that has a big investment management arm, said it was happy for the FRC proposal to apply to non-executive directors, but not chairs.

The International Corporate Governance Network, a coalition of investors managing assets worth $26tn, said: “We are concerned that this more rigid definition of independence might be overly prescriptive and could result in unintended consequences, particularly if applied equally to the company’s chairman as to other non-executive directors.”

2. Executive pay

With investors increasing their focus on excessive executive pay, the FRC is proposing new provisions in the code on bonuses, in order to promote long-term decision making at companies.

The FRC says in normal circumstances, shares received as part of an executive bonus should be held for at least five years, a proposal welcomed by many big investors, including Norges Bank, which oversees Norway’s sovereign wealth fund.

Aviva said: “We believe that five years should be considered the minimum. We still consider there to often be a gap between the business and capex cycle and the periods in which management teams are evaluated and rewarded.”

The Pensions and Lifetime Savings Association, the UK trade body for 1,300 pension schemes with £1tn in assets, called for tougher rules, saying many of its members and the public believe executive pay is out of control.

3. Financial reporting

The collapse of Carillion has raised fresh concerns about the quality of companies’ financial reporting as well as the work done by their internal and external auditors, and the FRC has been urged to update the code to improve confidence in accounting.

The Chartered Institute of Internal Auditors said the new code should explicitly require “regular monitoring and reviewing of the independence and objectivity of internal audit”.

Old Mutual Global Investors, the UK asset manager, said some corporate viability statements, which provide an assessment of a company’s long-term solvency and liquidity, have recently proven to be “fatally flawed”.

It suggested that companies should be required to disclose what stress testing they undertook, and the results, when formulating these statements.

4. Diversity drive

Under the proposed revamp to the code, companies will be asked to disclose what action they have taken to increase ethnic and social diversity in their “executive pipeline”.

This revision has been backed by ShareAction, a charity campaigning for better practice by investors, although it called for the focus to extend beyond company managers tipped to reach the top.

The Investment Association, the UK trade body that represents 200 asset managers overseeing a combined £6.9tn, urged caution, saying that more work needed to be done on the best ways for companies to report on diversity.

Meanwhile, Rachel Reeves, Labour chair of the Commons business select committee, urged the FRC to require companies to explain how their remuneration policy “will address any gender pay gap in the company”.

5. Contribution to society

The FRC is proposing that companies should for the first time disclose how they “contribute to wider society”, alongside their efforts to promote the long-term success of their businesses and generate value for shareholders.

Richard Buxton, one of Britain’s best-known fund managers who runs Old Mutual Global Investors, has described this revision as “radical” and “terrific”. “This makes it clear that generating value for shareholders is not the sole raison d’être [for companies] but equal to contributing to wider society,” he said in December.

But many rival fund managers strongly disagree, including those represented by the Investment Association.

“We are concerned that the wording of the [proposed] code does not fully acknowledge shareholder primacy reflected in [the Companies Act], as it puts contributions to society on the same level as generating value for shareholders,” said the Investment Association.

See full article here

 

Corporate Advisory

DOJ to Apply FCPA Corporate Enforcement Policy as “Nonbinding Guidance” to Other Crimes

DOJ’s Acting Head of the Criminal Division, John Cronan, announced publicly that the FCPA Corporate Enforcement Policy, which is now part of the U.S. Attorney’s Manual and is considered formal guidance for FCPA cases, would be used as “nonbinding guidance” in all criminal division cases.  This policy provides specific incentives for companies to voluntarily report wrongdoing to the DOJ.  As described by Deputy Attorney General Rod Rosenstein, “when a company satisfies the standards of voluntary self-disclosure, full cooperation, and timely and appropriate remediation, there will be a presumption that the Department will resolve the company’s case through a declination”.

In his remarks, Mr. Cronan touted the application of the Policy to the resolution of a manipulation of foreign currency options trading case against a large financial institution.  The financial institution voluntarily disclosed the misconduct to the DOJ, cooperated completely and remediated the issue.  As a result, the DOJ declined to prosecute, and the financial institution agreed to pay $12.9 million in restitution and disgorgement of profits.   It should be noted that the DOJ criminally charged an individual at the financial institution for the alleged misconduct.

Although this expansion of the FCPA Corporate Enforcement Policy may benefit some companies, there are certain drawbacks.  Most important is that the decision whether to decline is not guaranteed – it is a presumption only.  DOJ is the sole arbiter whether the company has (1) “timely” self-disclosed; (2) “fully cooperated” (including, for example, giving up individuals, “proactively” cooperating, preserving documents, de-conflicting witness interviews); and (3) timely and appropriately “remediated” (including, for example, disciplining employees, enhancing compliance program, and conducting a root cause analysis).

Moreover, the DOJ may decide that “aggravating circumstances” (such as involvement of executive management, excessive profits or pervasiveness of misconduct) exist, in which case a company would not be entitled to the presumption at all.

Finally, the Policy itself states:  “To qualify for the FCPA Corporate Enforcement Policy, the company is required to pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct at issue.”  So, once a company has made a decision to voluntarily disclose to the government, there will be monetary penalties (in addition to the increased legal fees associated with dealing with government cooperation demands).

We issued an alert that discusses in detail the FCPA Corporate Enforcement Policy, which can be found here. The expansion to general crimes is generally a good thing for companies – they need to consider the potential benefits that attach to a voluntary disclosure.  The policy, however, does not always mitigate in favour of a voluntary disclosure.

See full article here

Corporate Advisory

Asset managers step up gender diversity drive

 

Pimco, Fidelity International, Vanguard and two other asset managers have joined forces with the body for investment professionals to tackle the woeful underrepresentation of women in the UK’s fund industry.

The Gender Diversity Partner Programme, which also includes Royal London Asset Management and Allianz Global Investors, will meet for the first time this week under the leadership of CFA UK, the British arm of the global investment body.

Will Goodhart, chief executive of CFA UK, said many chief executives of asset managers had spoken out about the need to improve gender diversity over the past few years, but real changes had been slow in the industry.

“We feel like the case for diversity has been made. The commitment has been clear. But one of the things that is missing is a collaborative approach to look at how these commitments can be implemented across organisations,” he said.

Mr Goodhart said women account for only a fifth of CFA members, although he added that women made up about a third of the individuals taking the initial qualifications offered by the professional body, suggesting the membership could change over time.

Juliet Bullick, global head of consultant relations at Fidelity International and chair of the CFA UK gender diversity network, said the newly formed group would consider issues such as how to develop and retain existing female talent, how to attract more women to the industry and how to improve company cultures.

“The partner companies we are working with [have identified] that middle management is a key area to focus on. The tone from the top is set. The grassroots work fairly well. But it is a gap at the middle,” she said. “There is a huge amount of work yet to be done.”

See full article here