Included in this issue: Wall Street regulator bans former Goldman Sachs banker for sovereign wealth fund theft; Formula 1 tycoon arrested over money-laundering allegations; Tesco fraud investigation revealed a potential £600m 'black hole'; and more.. 


Wall Street regulator bans former Goldman Sachs banker for sovereign wealth fund theft

The Financial Industry Regulatory Authority (FINRA), the independent regulatory body for Wall Street, has banned a former Goldman Sachs banker for his links to the alleged looting of a Malaysian sovereign wealth fund after he refused to cooperate with the investigation. Tim Leissner, the former chief of Goldman Sachs' Southeast Asian branch, consented to a ban from the US securities industry but did not respond to requests for information from FINRA which related to his departure from the bank in 2016.

Leissner had previously confirmed in 2015 that sufficient due diligence and money laundering checks had been carried out on Mr Low Taek Jho, a Malaysian citizen who was investigated for the diversion of $3bn from the fund 1MDB. Goldman Sachs later revealed that Leissner's letter in which he vouched for Low was untrue and had been made without the bank's knowledge or consent.

FCPA Blog, 4 October 2017

Bribery and Corruption

Formula 1 tycoon arrested over money-laundering allegations

Vijay Mallya, the multimillionaire co-owner and boss of the Force India F1 team, has been arrested over allegations of financing the racing team with money-laundered cash. The Indian government has accused Mallya of fleeing to the UK in order to avoid arrest in relation to £1bn of unpaid debts. The CPS directed the arrest of the businessman on behalf of Indian authorities in order to ascertain where the unpaid debts are being kept, after allegations suggested some of the funds ended up invested within the Force India team.

Following arrest, Mallya was released on bail, but will be due back in court on 20 November, with an extradition hearing set for 4 December 2017.

The Guardian, 3 October 2017

BBC, 3 October 2017

Blackrock CEO points to the rise of digital currency as evidence of increases in money laundering

Larry Fink, the CEO of the world's largest investor, Blackrock, has stated in an interview with Bloomberg that he believes the explosive growth of bitcoin is evidence of the increasing levels of money laundering. The digital currency has seen growth of 350% this year, which Fink believes is evidence of 'nefarious behaviour' and the need for criminals to move currencies from one place to another.

Business Insider, 3 October 2017

Bloomberg, 3 October 2017


Tesco fraud investigation revealed a potential £600m 'black hole'

The ongoing fraud trial against three former Tesco directors has uncovered that the supermarket giant might have faced an accounting black hole of £600m in 2014 if misreporting had continued. It was also revealed that two finance staff quit due to their concerns over the unlawful accounting practices being used at the time.

The allegations surround Tesco's attempts to "pull forward" income from suppliers which should have been recognised in future years, in order to record it early on the year's accounts and overestimate profits by £250m. Sasha Wass,QC, prosecutor for the SFO, stated that if the process had been allowed to continue, the hole in the accounts may have been 'as large as £600m if nothing changed'. Despite being made aware of this, it is alleged that the three directors failed to inform Tesco's chairman, Dave Lewis, or raise the issue with the supermarket's auditors, PwC. It is understood a member of the finance team, Amit Soni, compiled a report on the unlawful practices that was eventually passed to Dave Lewis, who then commissioned an external review and reports from auditors.

The Guardian, 3 October 2017

Cyber Crime

National Cyber Security Centre records more than 1,000 incidents in its first year
The National Cyber Security Centre (NCSC), founded as part of intelligence agency GCHQ, has announced that 1,131 cyber-attacks were reported in its first year of existence. Of those, 590 were classed as "significant", with more than 30 considered serious enough to require cross-government response. However, none of the cyber incidents fell into category one level, which involves interfering with the democratic systems or damaging critical infrastructure.

In its first year, the NCSC has faced cyber-attacks on the NHS and a number of high-profile companies, costing millions of pounds to rectify or to prevent further damage. Jeremy Fleming, director of GCHQ, has warned that despite the NCSC's best work, the growing threat means the centre cannot prevent every attack.

BBC, 3 October 2017

Equifax hack larger than expected

Equifax has increased its estimate of potential US victims of the widespread hacking scandal identified in July by a further 2.5 million, upping the total number of US customers that might have been affected from 143 million to c.145.5 million. However, the credit report firm has lowered its estimate of Canadian victims from 100,000 to only 8,000 following further investigation, with the number of Britons affected remaining at c.400,000.

Former boss Richard Smith, who resigned last month following the security breach, is giving testimony before US Congress about the cyber-attack. He will be expected to answer critics' accusations that the company failed to take proper steps to guard the private information and then subsequently waited too long to inform the public.

BBC, 2 October 2017


US expected to lift sanctions on Sudan

Sudan expects the US to lift economic sanctions for the first time in over 20 years, following its fulfilment of Washington's required conditions. Sanctions were first imposed in 1993 due to Sudan's alleged support of global terrorism and subsequently its violent suppression of rebels in the south of the county. Amongst the conditions met is the ending of ties with North Korea, following the US's push to ensure global cooperation with sanctions against the rogue state.

The decision as to whether to lift sanctions was originally delayed by Donald Trump's administration in July due to fears of a public backlash over Sudan's poor civil rights record which include accusations of genocide being levelled against the President. However, with the 12 October 2017 deadline approaching, Sudanese ministers have indicated they expect a positive decision.

Reuters, 4 October 2017


Failure to prevent the facilitation of tax evasion offences come into force
From 30 September 2017, organisations have become liable if they fail to prevent individuals acting on their behalf from criminally facilitating tax evasion. The offence will apply if the organisation cannot raise the defence that it had reasonable procedures in place to prevent representatives from criminally facilitating tax evasion.
HMRC has published guidance advising companies on how to self-report instances where they have failed to prevent such facilitation. However, self-reporting will not guarantee that the organisation will not be prosecuted, although it may form part of a defence and may be taken into account by prosecutors or when passing any sentence., 29 September 2017

HMRC carries out investigations into Ryanair pilots over airline's complex employment structures

HMRC are investigating a number of Ryanair pilots over complex employment structures imposed on them by the airline as a condition of their employment. It is believed that, while allowing the airline to keep its costs low, the structures are leading to pilots seriously mishandling their tax affairs and facing investigations and potential fines.

When joining the airline, pilots are instructed to set up Irish limited companies of which they act as directors, with Ryanair recommended accountants guiding the process. These companies then supply pilots to a number of agencies, which in turn supply the pilots to Ryanair. The structure allows Ryanair to cut costs on certain employee obligations, such as sick pay. However, this has left a number of pilots not understanding their duties as directors or the tax implications of their complex employment structure, leading to the ongoing HMRC investigations and the possibility of increased unexpected tax bills or fines.

The Guardian, 3 October 2017

Health and Safety

Recycling Firm fined following numerous breaches

Monoworld Recycling Ltd of Irchester Road, Northamptonshire pleaded guilty to breaching Regulation 4(1) of the Work at Height Regulations 2005, Regulation 5(1) of the Use of Work Equipment Regulations 1998 and Regulation 4(1) of the Electricity at Work Regulations 1989 and has been fined £83,000 and ordered to pay costs of £7,000.

After several visits from the Health & Safety Executive, a total of 15 enforcement notices were served on the company and three served on each of the two company directors, in less than two years. Breaches included not managing the risks of working at height, maintaining work equipment and not controlling risks from electrical equipment.

Mr Dhanesh Ruparelia pleaded guilty to breaching Regulation 4(1) of the Work at Height Regulations 2005 and Section 33(1) (a) of Section 37(1) of the Health and Safety at Work etc. Act 1974 and was sentenced to 26 weeks imprisonment suspended for 12 months, he has also been fined £10,000 and ordered to pay costs of £7,000. Mr Nimaye Ruparelia of Irchester Road, Northamptonshire pleaded guilty to breaching Regulation 4(1) of the Work at Height Regulations 2005 and Section 33(1)(a) by virtue of Section 37(1) of the Health and Safety at Work etc. Act 1974 and has been ordered to complete a 150 hours community order as well as being fined £7,500 and ordered to pay £7,000 in costs.

SHP Online, 29 September 2017

Fuel company fined 100k following explosion

ESL Fuels Ltd has been fined after contractors cut into a pipe which caused a chemical explosion. The pipe, which was attached to a vessel, was being used as part of a waste oil recovery process at their North Blend Tank Farm. Flammable gases within the pipe ignited, resulting in the lid of the tank detaching due to pressure build up. The HSE found that the company was having difficulty with the waste oil recovery process which was foaming out of the vessel and filling its bund and had taken a decision to connect the vessel to an emergency relief dump tank which created a flammable atmosphere.

The company, based at the Stanlow Oil Terminal near Ellesmere Port, pleaded guilty to breaching Section 3(1) and Section 2(1) of the Health and Safety at Work Act 1974. They were fined £100,000 and ordered to pay costs of £17,000.

SHP Online, 27 September 2017

House contractor fined £115k for failure to manage risks

A London-based contractor and its project manager have been fined a total of £115,000 for repeatedly failing to manage and control multiple safety risks.
Concerns were raised by both workers and members of the public. HSE inspectors made a number of visits during 2015 to two project sites where In House Design & Build Ltd was the principal contractor. A number of serious safety failings were identified.

In House Design & Build Limited, of Dean Street, London, pleaded guilty to two breaches under the CDM Regulations and was fined £100,000. Project manager, Neil Crow, of London, who had been in charge of operations at both sites, pleaded guilty to two CDM and safety breaches and was fined £15,000.

SHP Online, 3 October 2017

Key Contacts

Nichola Peters

Nichola Peters

Partner, Global Investigations

View profile
Erin Shoesmith

Erin Shoesmith

Partner, Health & Safety
United Kingdom

View profile