Read on for the latest news and updates in bribery and corruption; fraud; health and safety and more...

Bribery and Corruption

US Department of Justice releases first FCPA advisory opinion in six years 

The US Department of Justice (DoJ) has released an advisory opinion on the Foreign Corrupt Practices Act. This is the first advisory opinion issued by the DoJ since 2014. The DoJ opinion states that a US-based investment adviser did not violate foreign bribery rules when it paid a transaction fee to a foreign government entity for services. The transaction involved an investment adviser seeking to purchase assets from a subsidiary of a foreign investment bank and receiving assistance from another of the foreign bank's subsidiaries, to whom the investment adviser paid a fee in exchange for such services. The DoJ said in its opinion that the payment to a subsidiary of the foreign investment bank would be deemed to have been paid to a foreign government agency, not a foreign official, and therefore did not reflect a corrupt intent to influence a foreign official. 

Wall Street Journal, 17 August 2020

US Judge rejects General Motor's bid to reinstate racketeering case against Fiat Chrysler Automobiles NV

A US District Judge has rejected a bid by General Motors Co (GM) to reinstate a racketeering lawsuit against Fiat Chrysler Automobiles NV (FCA), one of GM's smaller rivals. GM initially filed its lawsuit against FCA last year which alleged that FCA bribed officials of the United Auto Workers union in order to corrupt the bargaining process and gain advantages, which cost GM billions of US dollars. GM claimed to have new information relating to FCA's involvement in the alleged bribery scheme. However, GM's bid to reopen the case was rejected by a District Judge on the basis that the new information put forward was too speculative to warrant reopening the case.   

Reuters, 14 August 2020

Money Laundering

Woman arrested on suspicion of receiving fraudulent loans under the Bounce Back scheme

A 35-year-old woman has been arrested on suspicion of fraud and money laundering. Investigations revealed that a number of mule bank accounts had been used to receive proceeds from fraudulent applications to the Bounce Back scheme. The Bounce Back scheme was established in May 2020 for the purpose of helping small businesses during Covid-19. Officers of the Metropolitan police were successful in applying to a London Magistrate's Court to detain £115,000 of cryptocurrency which is believed to be the proceeds of fraudulent loans claimed under the Bounce Back scheme. 

BBC News, 14 August 2020

Fraud

Tech company and its CEO charged for fraud and registrations violations in connection with a $5 million initial coin offering

Virginia-based Boon.Tech and its chief executive officer Rajesh Pavithran have been charged by the US Securities and Exchange Commission (SEC) for violating the antifraud and registration provisions of the federal securities laws in connection with a $5 million initial coin offering (ICO). Between November 2017 and January 2018, Boon.Tech and Pavithran raised approximately $5 million by selling Boon Coins to more than 1,500 investors in the US and worldwide on the basis of false and misleading statements. The Boon Coins were offered and sold to investors as investment contracts and are therefore considered securities. The SEC order found that Boon.Tech and Pavithran also failed to register the ICO.  

Boon.Tech and Pavithran agreed to settle the charges. As part of the settlement, Boon.Tech is required to disgorge the $5 million raised in the ICO plus prejudgment interest of $600,334. Further to this, the SEC ordered Boon.Tech and Pavithran to destroy all Boon Coins in their possession, issue requests to remove Boon Coins from any further trading on all third-party digital asset trading platforms, and refrain from participating in any future offerings of digital asset securities. Additionally, the SEC order requires Pavithran to pay a penalty of $150,000 and imposes a bar on Pavithran serving as an officer or director of a public company.  

US Securities and Exchange Commission, 13 August 2020

Former Hertz CEO charged for aiding and abetting the company’s financial reporting and disclosure violations

The US Securities and Exchange Commission (SEC) has charged former Hertz CEO and Chairman Mark Frissora with aiding and abetting the company in its filing of inaccurate financial statements disclosures. The SEC alleges that Frissora pressured Hertz's staff to make accounting changes that rendered the company's financial reports materially inaccurate. Frissora is alleged to have also failed to disclose to investors that Hertz was lowering its depreciation expenses by holding rental cars in its fleet for longer periods. In November 2013, Frissora allegedly approved Hertz's reaffirmation of its earning guidance, despite Hertz's internal calculations projecting lower earnings per share figures – the financial results were revised in 2014 and restated in July 2015. 

Frissora has agreed to settle the charges, reimburse Hertz $1,982,654 in bonus and other incentive-based compensation, and to pay a $200,000 civil penalty. 

US Securities and Exchange Commission, 13 August 2020

Cyber Crime 

Taiwan government agencies and officials are targeted by cyber hacking groups 

The Taiwan Investigation Bureau’s Cyber Security Investigation Office has announced that it has become the target of cyber hacking groups, which allegedly have links to the Chinese government. It is alleged that since the attacks started in 2018, at least ten government agencies and approximately 6,000 email accounts of government officials have been attacked in an "infiltration to steal important data". Four Taiwan technology companies that provide information services to the Taiwan government have been targeted by the cyber hacking groups. The announcement noted that the cyber hackers had concealed their tracks and as a result it has not been possible to identify what data may have been stolen. 

Reuters, 19 August 2020

US Justice Department seizes cryptocurrency from three terror finance cyber-enabled campaigns

The US Department of Justice (DoJ) has announced its largest-ever seizure of cryptocurrency in a terrorism context. The DoJ announced that three terrorist financing cyber-enabled campaigns, involving the al-Qassam Brigades, Hamas’ military wing, al-Qaeda, and Islamic State of Iraq and the Levant (ISIS) had been dismantled. The US enforcement authorities were granted judicially-authorised warrants and subsequently seized millions of dollars, over 300 cryptocurrency accounts, four websites, and four Facebook pages all related to the criminal enterprise. 

US Department of Justice, 13 August 2020 

Sanctions

US Department of Commerce imposes further restrictions on Huawei and its affiliates

The Bureau of Industry and Security (BIS) in the US Department of Commerce (Commerce) has imposed further restrictions on Huawei Technologies and its non-US affiliates to restrict access to electronic components produced domestically and abroad from US technology and software. BIS added another 38 Huawei affiliates from across 21 countries to the Entity List and modified four existing Huawei Entity List entries. Huawei and its affiliates on the Entity List are subject to licensing requirements for the export, re-export or transfer of items subject to the Export Administration Regulations (EAR). An entity on the Entity List is subject to the licensing requirements in respect of any transaction that it is involved with that involves items subject to Commerce export control jurisdiction. These actions prevent Huawei’s attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology. 

US Department of Commerce, 17 August 2020

Environmental 

The Joint Unit for Waste Crime (JUWC) conducts a successful raid in Lancashire

JUWC and Lancashire Police have raided a large-scale illegal waste dumping site in Great Harwood near Blackburn, where approximately 50,000 tonnes of waste has been illegally landfilled with mixed household and business waste. The site was being run by two skip hire companies. The requisite permits were not in place to undertake the handling and storage of scrap metal, the landfilling of mixed waste and illegal burning, therefore the site was not legally authorised to undertake any of these activities. 

The JUWC was set up in January 2020 and is a taskforce made up of the UK’s four environmental regulators, the National Crime Agency, HMRC and the police. The JUWC's remit is to challenge and reduce the impact of illegal waste networks, and has the power to inspect sites, make arrests and take enforcement action (which may include criminal prosecution of individuals). 

Gov.uk, 18 August 2020

Health and Safety

UK Government announces that Public Health England is to be replaced with National Institute for Health Protection

The Health Secretary has announced that Public Health England (PHE) is to be replaced with a new pandemic response agency, the National Institute for Health Protection (NIHP). The new body brings together PHE and NHS Test and Trace and will initially be established and led by Baroness Dido Harding. NIHP will focus on a rigorous science-led approach to public health protection and aims to boost the UK’s ability to deal with and recover from COVID-19 and meet health challenges of the coming winter. It is expected that NIHP will be formalised and operating from spring 2021 but its work would commence immediately.

SHP, 18 August 2020

Scottish Water fined £140,000 after worker breaks back in fall

Scottish Water has been fined £140,000 after a worker broke his back when he fell through an insecure floor into sewage at a pumping station. Safety investigators found the floor had been damaged by floods over a number of years. Scottish Water admitted breaching health and safety at work regulations.

BBC, 18 August 2020

Building Contractor fined after subcontractor sustained significant head injuries in fall from height

Brebner and Williamson Limited has been fined following an incident where a subcontractor fell 15 feet from a temporary platform. He sustained multiple fractures and a brain injury. The company pleaded guilty to breaching the Work at Height Regulations 2005, Regulation 4 and Section 33(1)(c) of the Health and Safety at Work Etc. Act 1974 and were fined £5,000.

HSE, 14 August 2020