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Daily Compliance News

Daily Compliance News: February 26, 2024 – The Guilty Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day, we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

In today’s edition of Daily Compliance News:

  • Ex-Vitol Trading trader was found guilty of bribery.  (WSJ)
  • Exec’s husband pleads guilty to insider trading. (WSJ)
  • UAE removed from the Global Watch List for AML. (WSJ)
  • Ukraine still has more work to do on the corruption front. (Fortune)

For more information on Ethico and a free White Paper on top compliance issues in 2024, click here.

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10 For 10

10 For 10: Top Compliance Stories For The Week Ending February 24, 2024

Welcome to 10 For 10, the podcast that brings you the week’s Top 10 compliance stories in one podcast each week. Tom Fox, the Voice of Compliance, brings to you, the compliance professional, the compliance stories you need to be aware of to end your busy week. Sit back, and in 10 minutes, hear about the stories every compliance professional should be aware of from the prior week. Every Saturday, 10 For 10 highlights the most important news, insights, and analysis for the compliance professional, all curated by the Voice of Compliance, Tom Fox. Get your weekly filling of compliance stories with 10 for 10, a podcast produced by the Compliance Podcast Network.

  1. Alexei Navalny was killed in prison. (Bloomberg)
  2. Ohio residents paid the price for FirstEnergy corruption.  (Ohio Capital Journal)
  3. More child labor in the US. (NYT)
  4. A former head of the Bank of China was arrested for corruption. (NikkeiAsia)
  5. The Shadow Insider Trading case goes to trial.  (WSJ)
  6. Former Stericycle executive to plead guilty. (WSJ)
  7. Morgan Stanley is accused of using fake job titles. (FT)
  8. The Wells Fargo Consent Order was terminated. (WaPo)
  9. Deliberations begin in the NRA corruption trial. (The Guardian)
  10. If you can’t answer the question, don’t sit for an interview. (BBC)

For more information on Ethico and a free White Paper on top compliance issues in 2024, click here.

You can check out the Daily Compliance News for four curated compliance and ethics-related stories each day here.

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Daily Compliance News

Daily Compliance News: December 1, 2023 – The Data – Driven Enforcement Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen in to the Daily Compliance News. all from the Compliance Podcast Network. Each day we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition:

  • The DOJ will use more data-driven enforcement in FCPA cases. (DOJ Press Release)
  • Sam Altman outlines plans for OpenAI going forward. (NYT)
  • Russian soldiers are using bribery to escape combat. (Novaya Gazeta)
  • Ohio Governor DeWine to be deposed in FirstEnergy civil litigation (Ohio Capitol Journal)
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Daily Compliance News

Daily Compliance News: October 25, 2023 – The Taco Tuesday Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day, we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition:

  • Meta was sued by state AGs for addicting children. (NYT)
  • Is Trump guilty of accepting bribes?  (NYT Magazine)
  • Ex Homeland Security Investigator sentenced for corruption. (Chicago Tribune)
  • Taco Tuesday freed. (Reuters)
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Blog

Albemarle FCPA Enforcement Action: Part 2 – How to Hire Corrupt Agents

Last week, Albemarle Corporation (Albemarle), agreed to pay more than $218 million to resolve investigations by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) into violations of the Foreign Corrupt Practices Act (FCPA) stemming from Albemarle’s participation in corrupt schemes to pay bribes to government officials in multiple foreign countries.

According to a Non-Prosecution Agreement (NPA) with the DOJ, between 2009 and 2017, Albemarle, through its third-party sales agents and subsidiary employees, conspired to pay bribes to government officials to obtain and retain chemical catalyst business with state-owned oil refineries in Vietnam, Indonesia, and India. According to the SEC Administrative Order (Order), the bribery schemes extended into China and the UAE.

 Vietnam-His Friends

The company sales model in Vietnam included using third-party agents. The initial commission rate for the corrupt agent in question was 4.25%. However, according to the NPA, quite quickly, the corrupt agent said he needed an increase in the commission rate from 4.25 percent to “4.25% + 4% extra,” which would be used to “settle down” PetroVietnam officials and to “contribute to his friends.” Internally, the company’s Vietnam sales team “sent this information – including Vietnam Intermediary’s warning that “if ALB could not provide such extra 4% commission,” Albemarle’s competitor that had the business before Albemarle “will be kept in BSR still” – to four Albemarle sales employees who were pursuing the Company’s first business in Vietnam.”

The corrupt sales agent kept pushing for an increase in the commission rate. He next emailed “Albemarle Vietnam Sales Representative, stating, “I have received a strong message from our friend that the total commission must be fixed [sic] at 7%” and that it did not matter how the commission was allocated; only the total amount, adding, “Please find the way to add to somewhere.” The corrupt agent then tried to move the commission rate up to 10%. Finally, the Albemarle Regional Sales Director emailed the corporate VP in Europe with the following, “it is clear that ash problem is more a way to keep great attention from Albemarle and [Albemarle’s competitor].” In his response, the Albemarle vice president wrote, “If [an Albemarle global business director] agrees to pay that amount of money (which I would never do), then I will not object,” but cautioned that “if just commission increases and job for us remains the same then you have an issue…” The NPA stated, “Albemarle ultimately agreed to increase Vietnam Intermediary Company’s commission from 4.25 percent to 6.5 percent.” 

Indonesia-The Big Boss

In Indonesia, another third-party agent was used. According to the NPA, “In or around 2012, following a change in leadership at Pertamina, Albemarle engaged Indonesia Intermediary Company to act as its local agent in return for four percent commission on sales to Pertamina. According to an Albemarle memorandum, Albemarle decided to replace its third-party agent in Indonesia at the “strong[] request[]” of Pertamina Official, the “big boss” of Pertamina, because the president of the new third-party agent was a close friend of Pertamina Official, despite the fact that the third-party agent was a small company and posed a “medium” risk.”

In or around November or December 2012, the corrupt Indonesian agent “paid bribes to Pertamina officials to obtain samples of a competitor’s product, which Albemarle used to craft its bids and improve its product.” The company’s Senior Sales Manager learned about these bribes “but did not report this to Albemarle’s compliance function and did not consider terminating Albemarle’s relationship with Indonesia Intermediary Company.”

Then, in February 2013, the corrupt agent asked Albemarle to increase its commission from 4% to 10% so the agent “could pay bribes to Pertamina officials. The request was made during a meeting at Albemarle’s Singapore office and was attended by, among others, a close relative of Pertamina Official, who purportedly was a director of Indonesia Intermediary Company.

In response to the request at the meeting, Albemarle personnel told Indonesia Intermediary Company that they refused to increase the commission and that no bribes should be paid per Albemarle policy, but maintained its relationship with Indonesia Intermediary Company and never reported the conversation to Albemarle legal, compliance, or supervisory personnel. Albemarle Senior Sales Manager was aware that Indonesia Intermediary Company paid “tips” to Pertamina officials, but directed that such category not be listed in expenses.” Most ominously, the NPA concluded, “Albemarle continued to receive inside information on the bidding process from Indonesia Intermediary Company.

India-On the Holiday List

In India, the company used another corrupt agent to illegally “retain catalyst business with India’s state-owned oil company, IOCL, by avoiding Albemarle being blacklisted. This agent “which had no prior relationship or contact with Albemarle, sent a “most urgent” email to Albemarle Regional Sales Manager stating that it was aware that Albemarle had been sent a letter from IOCL asking why Albemarle should not be “sent on Holiday list. You may be required to supply six months of catalyst-free of cost.” India Intermediary further stated in the email that “[w]e can definitely help you to come out of this situation and get the orders for you in the refineries.”

The Regional Sales Manager then sent an email to the company VP, “copying four others at Albemarle, regarding “IOCL developments” and multiple consultants who had contacted Albemarle to offer “assistance to influence and get in contact with higher level to discuss on a non-official basis.” The corrupt agent knew “much detail” and as “more aggressive” and noted that India Intermediary Company “do[es] confirm, no bribing and we can put that in the agreement.”

The Regional Sales Manager stated that the company held discussions with IOCL but at each stage was “blocked by top” and that this may have been because IOCL “want us to use [sic] consultant.” He further stated that to date, IOCL had not accepted Albemarle’s “‘reasonable’ arguments” and that “indications are mostly that they will put us on the holiday list. As I see it, the time has come to consider using a consultant seriously, and if so, it must be done very fast.”

This section of the NPA dryly concluded, “Notwithstanding multiple red flags, Albemarle entered into a consulting contract with India Intermediary Company, effective July 15, 2009, signed by Albemarle Vice President. Following the engagement of India Intermediary Company, Albemarle was not put on the “holiday list” by IOCL.”

China-a Thorny Uncle

In China, the company hired yet another corrupt agent based on the recommendation of an official from China State-Owned Customer. According to the SEC Order, “Emails among Albemarle Subsidiary personnel described a senior official at China State-Owned Customer as the “uncle” of China Agent’s principal, a situation they recognized was “thorny.” Neither China Agent nor Albemarle Subsidiary personnel identified China Agent’s Principal or reported the possible familial connection to China Official in the due diligence questionnaire or other documents submitted to Albemarle compliance personnel conducting due diligence on China Agent. However, Albemarle compliance department’s due diligence revealed that China Agent had no website and was authorized to do business only a few weeks before China Agent’s Principal first met with Albemarle personnel.”

UAE-Close Friends of the (Royal) Family

In the UAE, in violation of company policy, due diligence was conducted on UAE agents only after entering sales agency agreements with the agent, including an addendum increasing its commission. The UAE Agent had close and well-publicized ties to the UAE government and royal family, contrary to the UAE Agent’s representations in its due diligence questionnaire. Although certain company personnel in the Middle East and the Netherlands knew of the UAE Agent’s involvement, they did not inform Albemarle Legal or Compliance personnel of the relationship, and no due diligence was conducted on the UAE Agent. He provided no discernable services other than conveying confidential tender evaluations and competitors’ bids obtained from the refinery and the EPC firm.

In addition to commissions that Albemarle paid to the UAE Agent, the company paid the UAE Agent an “undefined “administrative charge” equal to ten percent of its invoices for customs clearance and other non-sales services. These undocumented charges fell outside the scope of Albemarle’s agreement with the UAE Agent. Albemarle’s system of internal accounting controls provided inadequate assurances that payments to UAE agents were used for legitimate services. Moreover, Albemarle Netherlands and Albemarle Middle East, whose books and records were consolidated into Albemarle’s financial statements, lacked support for payments to UAE Agent that were recorded as legitimate commissions and business expenses.”

I have gone through all these miss-steps, prevarications, neglected red flags, and outright leadership and compliance failures to follow the most basic internal company compliance policies to show how and why these actions occurred. They present the compliance professional with numerous data points to pressure test your compliance regime.

Join us tomorrow, where we take a deep dive into actions taken by Albemarle to remediate, cooperate, and obtain the fines and penalties.

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Blog

Albemarle FCPA Enforcement Action: Part 1 – Background

Last week, Albemarle Corporation (Albemarle), a publicly traded specialty chemicals manufacturing company headquartered in North Carolina, agreed to pay more than $218 million to resolve investigations by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) into violations of the Foreign Corrupt Practices Act (FCPA) stemming from Albemarle’s participation in corrupt schemes to pay bribes to government officials in multiple foreign countries.

According to the DOJ Press Release, between 2009 and 2017, Albemarle, through its third-party sales agents and subsidiary employees, conspired to pay bribes to government officials to obtain and retain chemical catalyst business with state-owned oil refineries in Vietnam, Indonesia, and India. Albemarle illegally obtained profits of approximately $98.5 million as a result of the scheme.

What They Said

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division said, “Albemarle earned nearly $100 million by participating in schemes to pay bribes to government officials in multiple countries. As today’s announcement makes clear, the Justice Department will work tirelessly with our partners in the ongoing fight against international corruption. Today’s resolution also demonstrates the real benefits that companies can receive if they self-disclose misconduct, substantially cooperate, and extensively remediate.”

U.S. Attorney Dena J. King for the Western District of North Carolina said, “Corruption has no borders, but neither does justice. Companies are expected to adhere to the same ethical and legal standards whether they are doing business on U.S. soil or overseas. Albemarle’s eventual voluntary disclosure of fraud and subsequent efforts to remedy its business practices abroad is a step in the right direction for the company. Above all, today’s announcement underscores our commitment to fight corruption affecting the United States no matter where it occurs.”

IRS-CI Chief Jim Lee said, “The $218 million resolution announced today reflects IRS Criminal Investigation (IRS-CI) special agents’ commitment to working with our law enforcement partners to expose and disrupt organizations engaged in unscrupulous business practices aggressively. Thanks to our domestic and international law enforcement partners, we’ve ensured Albemarle will be held accountable for their misdeeds.”

Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said in an SEC Press Release, “Despite repeated and glaring bribery-related red flags, Albemarle failed for many years to implement sufficient internal accounting controls relevant to the use of agents by its global refining solutions business to make sales to state-owned customers around the world. This failure set the stage for wide-ranging misconduct.”

The Bribery Schemes

The bribery schemes were in multiple countries and varied in execution. The DOJ said, “In Vietnam, Albemarle corruptly obtained contracts at two state-owned oil refineries through an intermediary sales agent who requested increased commissions to pay bribes to Vietnam officials and to structure tender requirements to favor Albemarle. In Indonesia, Albemarle used a third-party intermediary to corruptly obtain catalyst business with Indonesia’s state-owned oil company, even after that third-party intermediary had informed Albemarle that it was necessary to pay bribes to Indonesian officials to obtain business. In India, Albemarle used a third-party intermediary to corruptly retain catalyst business with India’s state-owned oil company by avoiding Albemarle being blacklisted.”

The SEC said, “According to the SEC’s Order, despite significant red flags, Albemarle used agents from at least 2009 through 2017 that paid bribes to obtain sales of refinery catalysts to public-sector oil refineries in Vietnam, India, and Indonesia and private-sector oil refineries in India.” The SEC went on to note that “Albemarle violated the FCPA’s recordkeeping requirements and failed to devise and maintain a sufficient system of internal accounting controls to provide reasonable assurances that payments made to agents in Vietnam, Indonesia, India, China, and the United Arab Emirates were for legitimate services.”

The Penalties

According to the FCPA Blog, Albemarle agreed to pay the “DOJ and SEC $218 million in penalties and disgorgement to resolve FCPA offenses related to bribing government officials at state-owned oil refineries around the world.” With regard to the DOJ, Albemarle entered into a three-year non-prosecution agreement (NPA) to pay a penalty of approximately $98.2 million and administrative forfeiture of approximately $98.5 million.

This DOJ penalty included a reduction of $763,453 under Part II of the Criminal Division’s March 2023 Compensation Incentives and Clawbacks Pilot Program for bonuses that the company withheld from qualifying employees. Additionally, Albemarle agreed to pay approximately $103.6 million in disgorgement and prejudgment interest as part of the resolution of the SEC’s parallel investigation. The DOJ credited approximately $81.9 million of the forfeiture to be paid to the Department against disgorgement Albemarle has agreed to pay to the SEC.

According to the SEC, “Albemarle consented to the SEC’s Order finding that it violated the anti-bribery, recordkeeping, and internal accounting controls provisions of the Securities Exchange Act of 1934. Albemarle has agreed to cease and desist from committing or causing any future violations of these provisions and to pay disgorgement of more than $81.8 million plus prejudgment interest of more than $21.7 million, totaling more than $103.6 million.”

Join us tomorrow, where we take a deep dive into the bribery schemes.

Additional Resources

DOJ- Non-Prosecution Agreement

SEC Order

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Daily Compliance News

Daily Compliance News: August 15, 2023 – The All FT Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance brings to you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen in to the Daily Compliance News. All, from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

  • African Development Bank not using ABC funds. (FT)
  • Aide to Madagascar leader arrested for corruption. (FT)
  • Bosses must take the time to learn from mistakes. (FT)
  • China de-coupling? (FT)
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Daily Compliance News

Daily Compliance News: June 3, 2023 – The It’s Going to be Bad Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition:

  • Ja Morant punishment is to be levied after NBA Finals. (ESPN)
  • The law department of the future. (WSJ)
  • A white-collar prison in El Salvador? (Reuters)
  • Ex-Novartis execs cleared in Greece. (Fierce Pharma)
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Daily Compliance News

March 18, 2023 – The Corrupt Client Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition of Daily Compliance News:

  • My client is the speaker. (Law360)
  • The US sanctions the former Bosnia Intelligence Chief for corruption. (Balkan Insights)
  • Lessons from the Householder conviction. (Cincinnati Enquirer)
  • Jes Staley to be deposed over Epstein connections. (Reuters)
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Sunday Book Review

February 26, 2023 – The Bribery Edition

In the Sunday Book Review, I consider books that interest the compliance professional, the business executive, or anyone curious. It could be books about business, compliance, history, leadership, current events, or anything else that might interest me. In today’s edition of the Sunday Book Review, we consider some of the top books on bribery which every compliance professional should read in 2023:

·       The Ethics of Bribery Theoretical and Empirical Studies by Robert W. McGee and Serkan Benk

·       The UK Anti-Bribery Handbook by Christopher Sallon and Sam Tate

·       Bribery and Corruption in International Business: Cases, Causes, and Cures by Rajib Sanyal

·       Anti Bribery A Complete Guide – 2020 Edition by Gerardus Blokdyk

Resources

Best New Bribery Books To Read In 2023 on BookAuthority.org