Included in this issue: Growth on the horizon as legal merger completes; Bank of Ireland fined €3.15 million for money laundering breaches; SFO again delays charging decision on Barclays 2008 fundraising and more...


Growth on the horizon as legal merger completes

The merger between Addleshaw Goddard and Scottish practice, HBJ, completed on 1 June 2017.

The full Addleshaw Goddard article in relation to the merger can be read here.

Addleshaw Goddard, 1 June 2017

Bribery and Corruption

Arrests in the Dominican Republic over bribery allegations

On 29 May 2017, over ten people were arrested in the Dominican Republic over bribery allegations. Amongst those arrested were both current and former officials of the Dominican Republic. It is reported that the arrests relate to an alleged $92 million paid in bribes by the Brazilian construction company, Odebrecht, to gain public works contracts.

These arrests follow admissions made late last year by Odebrecht and its subsidiary, Braskem, in respect of it bribing officials in a number of countries. The companies reached a $3.5 billion settlement agreement with Brazilian, US and Swiss authorities in December 2016.

Reuters, 29 May 2017

Money Laundering

European Banking Authority Consultation

On 31 May 2017, the EBA issued a consultation on the measures credit and financial institutions should implement to mitigate the risks associated with money laundering and terrorist financing where a third country's law does not permit the application of group-wide policies and procedures.

In circumstances where a third country's law does not permit the application of group-wide policies and procedures and the supervisor's ability to assess the group's compliance with anti-money laundering and counter-terrorist financing requirements, additional policies and procedures will be required to manage anti- money laundering and counter-terrorist financing effectively.

The consultation sets out proposed guidance that is intended to provide minimum standards that credit and financial institutions should apply.

The consultation period ends on 11 July 2017.

European Banking Authority, 31 May 2017

Bank of Ireland fined €3.15 million for money laundering breaches 

The Central Bank has fined the Bank of Ireland €3.15 million for money laundering failings.

It is reported that, between July 2010 and December 2015, the Bank of Ireland failed to undertake adequate risk assessments in respect of money laundering and terrorist financing, had inadequate systems and controls to mitigate against the risks of money laundering and terrorist financing, including in relation to its due diligence policies and processes. In particular, the Bank of Ireland failed to carry out satisfactory due diligence in respect of a correspondence bank situated outside of the EU.

Irish Times, 30 May 2017

Banamex USA forfeits $97 million in non-prosecution agreement 

On 22 May 2017, the Department of Justice announced that it had entered into a non-prosecution agreement (NPA) with Citigroup's subsidiary, Banamex USA. Banamex USA agreed to pay $97 million as part the settlement.

The NPA relates to the accusation that Banamex USA failed to maintain an effective anti-money laundering compliance programme and wilfully failed to file Suspicious Activity Reports.

Department of Justice, 22 May 2017


SFO again delays charging decision on Barclays 2008 fundraising

It is reported that any decision by the SFO in respect of its probe into the circumstances surrounding an emergency fundraising by Barclays from a unit of Qatar’s sovereign wealth fund will be delayed until mid-June 2017.

The investigation focuses on the commercial arrangements between Barclays and Qatar Holding – an investment vehicle for the state – which purchased shares in Barclays over two fundraisings during the financial crisis.

The Guardian, 26 May 2017

SFO launches investigations into several storage pod investment schemes

On 22 May 2017, the Serious Fraud Office (SFO) announced that it was opening an investigation into several storage pod investment schemes. A storage pod investment scheme is where funds are used to purchase a unit within a self-store warehouse. These units are then rented to members of the public on a temporary basis.

The SFO will be investigating Capita Oak Pension and Henley Retirement Benefit schemes, Self-Invested Personal Pensions (SIPPS) as well as number of other schemes.

The total amount invested into the schemes is over £120 million, and it is estimated that the alleged fraud has affected over a thousand investors.

Kate Smith, head of pensions at Aegon, commented "The SFO investigation into storage pod investment schemes is a timely reminder that unregulated unusual investments at home or aboard come with a high risk that people could lose all their hard-earned pension and other savings".

SFO, 22 May 2017

Airbus reveals a new compliance panel as fraud probe continues

Airbus has revealed a new independent review panel, amid allegations of corruption.

The newly established panel will explore how to improve Airbus’ compliance processes and culture and will report to the Chief Executive.

The new compliance review panel will include David Gold, who also reviewed compliance proceedings at Rolls-Royce Holdings PLC, Noëlle Lenoir, a former French Minister of European Affairs, and Theo Waigel, an ex-German finance minister.

Market Watch, 22 May 2017

SFO fraud investigation prompts Petrofac to suspend COO until further notice 

On 25 May 2017, Petrofac announced that it had suspended its Chief Operating Officer, Marwan Chedid. Chedid had been arrested and interviewed (later released) in relation to the SFO's investigations into Unaoil. This announcement led to a 17% drop in Petrofac shares, which means that its shares have now hit their lowest value since April 2009.

Between 2002 and 2009, Petrofac used Unaoil to provide consultancy services in Kazakhstan.

As part of its announcement, Petrofac stated that it had set up a committee to deal with the SFO investigation and that it would be appointing a senior external specialist to review its compliance processes.

Petrofac made the following statement "These actions do not in any way seek to pre-judge the outcome of the SFO's investigation".

It has separately been reported that legal funding group, Bentham Ventures, has approached shareholders with the prospect of launching a claim against Petrofac, arguing that "… Petrofac misled shareholders over its role in the scandal…"

Reuters, 25 May 2017

The Telegraph, 30 May 2017


Cyber Crime cited as the biggest financial crime risk companies will face in the next 12 months

It is reported that companies believe that "… cyber-crime and geopolitical changes are the biggest financial crime risk…" they will face.

In a report carried out by LexisNexis Risk Solutions, nearly 90 per cent of professionals cited technology systems that do not inter-operate or process data properly as a significant challenge. Further 87 per cent of respondents said "that their businesses weren't able to enhance their technology fast enough to counter evolving criminal methods".

City AM, 30 May 2017

UN experts investigating sanction violations hacked during cyber-attack

UN experts who are investigating North Korean sanctions violations, have confirmed that their computer systems were hacked recently. An email to UN officials and the UN Security Council's North Korea Sanctions Committee stated that "… the hackers have very detailed insight into the panel’s current investigations structure and working methods".

No further details on who might be responsible for the hack were immediately available.

The UN Security Council first imposed sanctions on North Korea in 2006 and has strengthened the measures in response to the country’s five nuclear bomb tests and two long-range rocket launches. Pyongyang is threatening a sixth nuclear test.

Guardian, 22 May 2017

Financial Regulation

FCA's investigation 'Operation Cotton' leads to 8 confiscation orders 

The Central Criminal Court ordered 8 confiscation orders in relation to the FCA's investigation 'Operation Cotton'. The confiscation orders total £2,195,496 and were issued against all eight of the defendants.

'Operation Cotton' related to an unauthorised collective investment scheme which operated between July 2008 and November 2011. The scheme was operated through three companies - Plott Investments Ltd, European Property Investments (UK) Ltd and Stirling Alexander Ltd. Salesmen for the companies would cold-call potential investors to sell them land at inflated prices or land which they did not own.

The scheme took over £5 million from investors and did not return the profits promised to investors.

His Honour Judge Leonard QC ordered that the £2,195,496 be paid by way of compensation to the victims.

FCA, 24 May 2017

Health and Safety

Timber company and individual fined a total of £43,000 in a case involving no reported injuries or ill health

Cambridge Timbertec Ltd have been fined after failing to maintain standards despite receiving six previous improvement notices and written advice.

A 2015 inspection resulted in a number of prohibition and improvement notices being issued. The inspection also found that the company should have adopted standards identified in previous inspections and should have ensured standards were not allowed to lapse.

The company pleaded guilty to beaching a number of Regulations and was fined £40,000 plus costs of £4000. General Manager, Mr Craig Butler, pleaded guilty to breaching Section 37 of the Health and Safety at Work etc. Act 1974 and was fined £3000 plus costs of £70.

SHP, 17 May 2017

Company fined £115,000 following fall from height

Eco NRG Solutions Ltd and its director have been fined a total of £120,000 after a worker fell from a height whilst fitting solar panels on a fragile roof.

Lewis Harding fell 3 metres through a skylight braking his back in three places. The company had not provided edge protection, under roof netting or boarding and instead relied on the use of an ineffective harness.

Eco NRG Solutions pleaded guilty to breaching section 4 (1) of the Work at Height Regulations 2005 and Section 33 (1) of the Health and Safety at Work Act etc. 1974 and was fined £115,000 plus costs of £2,879.60.

Director Jon Luke Antoniou pleaded guilty to breaching Section 37 of the Health and Safety at Work Act etc. 1974 and was fined £5,000 plus costs of £1,957.40

HSE, 18 May 2017

Two companies fined £700,000 and suspended sentence for director following a fatal accident involving four workers

Two companies have been fined and a director has received a suspended sentence after four workers were killed following a crushing incident at an excavation site in Norfolk.

The men, who were working for Hazegood Construction Ltd, were constructing a large steel structure forming part of the foundations for a large Pressure Test Facility at Claxton Engineering Services.

The structure, which was partially built and weighed several tonnes, collapsed on top of the workers. Emergency services were unable to free them and all four men were pronounced dead at the scene.

Claxton Engineering Services Ltd pleaded guilty to breaching Regulation 9(1)(a) of the Construction (Design and Management) Regulations 2007. The company was fined £500,000 plus costs of £100,000.

Encompass Project Management Ltd, the principle contractor, pleaded guilty to breaching Section 3 (1) of the Health and Safety at Work etc. Act 1974 and fined £200,000 plus costs of £50,000.

Director David Groucott pleaded guilty to breaching Section 37(1) of Health and Safety at Work Act. He was sentenced to a seven and a half month custodial sentence, suspended for two years and ordered to complete 200 hours of unpaid community work plus costs of £7,500. Charges against Hazegood Construction Ltd were ordered to lie on file.

HSE, 25 May 2017

Manufacturing firm fined following forklift truck accident

A manufacturing firm has been fined after an employee was struck by a forklift truck.

An investigation found that the employee was hit by the forklift truck due to inadequate segregation of workers from the forklift trucks. The company had been served with an improvement notice in 2007 for poor segregation in the yard and warehouse areas and there had been a previous incident in 2008 involving another employee who was also injured by a forklift truck.

Encirc Ltd pleaded guilty to a breach of Regulation 17 of The Workplace (Health, Safety and Welfare) Regulations and was fined £500,000 with £7,290 costs.

HSE, 22 May 2017

Key Contacts

Nichola Peters

Nichola Peters

Partner, Global Investigations

View profile
Erin Shoesmith

Erin Shoesmith

Partner, Health & Safety
United Kingdom

View profile