Financial Conduct Authority fines auditing firm for failing to report fraud
In August 2024, an auditing firm was fined USD 19,500,000 (US Dollars nineteen million five hundred thousand) by the Financial Conduct Authority ("FCA") for failing to report suspicions of fraud taking place at investment firm at London Capital and Finance Plc. The fine marks the first time the FCA has penalised an auditing firm.
U.S. Securities and Exchange Commission charges John Deere for violation under Foreign Corrupt Practices Act violations in bribery scheme
John Deere, agreed to pay nearly USD 10,000,000 (US Dollars ten million) to resolve U.S. Securities and Exchange Commission ("SEC") charges that it violated the Foreign Corrupt Practices Act ("FCPA") arising out of a bribes paid by its wholly owned subsidiary in Thailand. The Thai subsidiary had bribed Thai government officials (including the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads) to win multiple government contracts and bribed employees of a private company to win sales to that company. The improper payments were inaccurately recorded as legitimate expenses in Deere's books and record and violated recordkeeping and internal accounting controls provisions of the FCPA.
U.S. Department of Justice overhauls its corporate compliance guidance
In September 2024 the U.S. Department of Justice ("DOJ") updated its Evaluation of Corporate Compliance Programs ("ECCP"). The update aims to provide a clearer framework for companies to ensure their compliance programs are robust and aligned with DOJ expectations. Some of the key highlights/areas of focus include:
- Risks associated emerging technology: ECCP now includes criteria for evaluating how companies manage risks related to new technologies, such as artificial intelligence (AI). This includes assessing the impact of these technologies on compliance and implementing policies to mitigate associated risks.
- Protecting Whistleblowers: The update emphasises the importance of promoting internal whistleblowing and protecting individuals who report misconduct. Companies are expected to have adequate policies and training to encourage whistleblowing and prevent retaliation. Prosecutors will now assess whether companies engage in practices that discourage whistleblowers or fail to train employees on reporting and whistleblower laws.
- Access to data for compliance functions: The DOJ stresses that effective compliance programs must be well-resourced and have access to necessary data and technology. This includes leveraging data analytics to enhance the efficiency/effectiveness of compliance programs and to proactively monitor risks, ensuring the quality and accuracy of the data involved.
- Including lessons learned: Compliance programs should evolve based on lessons learned from both the company's own experiences and issues faced by other companies in similar industries.
- Post-transaction compliance integration: The update highlights the importance of involving compliance functions in mergers and acquisitions, particularly in post-transaction integration.
Danske Bank pays USD 7,000,000 (US Dollars seven million) to settle Estonia money-laundering with French authorities
Danske Bank cooperated with the French authorities and reached a resolution with the French National Financial Prosecutor to settle the ongoing money laundering investigation by agreeing to pay EUR 6,330,000 (Euro six million three hundred and thirty thousand) (approx. USD 7,000,000 (US Dollars seven million)).
The bank became the subject of several investigations after an internal probe in September 2018 uncovered about EUR 200 billion (Euro two hundred billion) of payments made through its now-shuttered Estonian branch between 2007 to 2014, with many payments appearing suspicious. Subsequently, the French authorities had commenced a formal investigation in 2019. Previously, in December 2022, Danske Bank pled guilty and agreed to a USD 2 billion (US Dollars two billion) fine in a case from the DOJ.
SEC charges former executives of tech company 'Kubient' with fraud and lying to auditors
Earlier this month, the SEC brought accounting fraud charges against the former chief executive officer, chief financial officer ("CFO"), and audit committee chair of Kubient for their roles in a scheme where they made false statements and overstated/misrepresented its revenue (amounting to USD 1,300,000 (US Dollars one million three hundred thousand) in connection with 2 (two) public stock offerings. According to the SEC's complaints, Kubient raised approximately USD 33,000,000 (US Dollars thirty-three million) in the 2 (two) stock offerings using offering materials that touted the misrepresentations. This case serves an important signal to gatekeepers like CFOs and audit committee members that the SEC and the investing public expect responsible behavior when critical issues are brought to their attention.
Australia's adequate procedures guidelines comes into force
In August 2024, Australia's attorney general's department released preliminary guidance on compliance procedures for the newly enacted 'failure to prevent' foreign bribery law, introduced through the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023. The amendment has now come into effect on September 8, 2024, marking a pivotal shift in Australia's corporate liability landscape.
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