Failure to prevent bribery catches up with Sweett, ICBC Standard Bank

An independent provider of construction and infrastructure management services has admitted that it failed to prevent staff from offering bribes in the Middle East.

The Sweett Group operates services in the Asia Pacific, Europe and the United States.

According to the UK Serious Fraud Office (SFO), the Sweett Group acknowledges that its employees offered to award an American architecture firm a USD$100 million construction contract for a hospital in Morocco if the architects agreed to bribe an Arab Emirates official.

The company in effect admitted to breaching Section 7 of the UK Bribery Act which recognises the failure of commercial organisations to prevent bribery as an offence.

The same offence was recently used for the first time by any UK prosecutor in a case involving allegations against ICBC Standard Bank of overseas bribery.

On Monday 1 December, ICBC Standard Bank finally settled its case in the UK by agreeing to pay USD$33 million. Earlier this year, it already agreed to pay $4.2 million to resolve similar charges in the United States by the Securities & Exchange Commission (SEC) in relation to the same case.

These cases highlight how widely the UK Bribery Act’s enforcement extends around the world, and how severe the penalties are for companies that fail to prevent bribery on their watch.

The Sweett Group case in particular sounds an alarm for the engineering and construction industry: unless you adopt the necessary due diligence measures, you remain exposed to a full range of bribery and third party risks.

Source: FCPA Blog

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Kroll fraud report highlights third party bribery and corruption risk

Half of the executives polled in an international survey have expressed concern over the risk their companies faced when dealing with overseas third parties, the recent Kroll Global Fraud Report revealed.

The Kroll Global Fraud Report surveyed over 750 senior executives from a variety of industries and countries worldwide.

Two in five respondents said they felt moderately or highly vulnerable to bribery and corruption risks.

Four in five respondents believed their organisations had become more vulnerable to fraud over the past year.

The report also found that companies had restrained their own expansion due to fears associated with third party bribery and corruption risk. Kroll found that almost 75 percent of those polled “were dissuaded from operating in a particular country or region because of the heightened exposure it would bring to fraud.”

The US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act confer forum courts with extraterritorial reach – that is, the laws can catch businesses incorporated in countries other than the US and the UK – so long as there’s some connection with the jurisdiction.

So when working with third parties, companies must comply with anti-bribery and corruption frameworks to avoid detrimental reputational and legal consequences.

This means that companies must have processes in place for scoping, risk assessment due diligence and risk mitigation.

In 2013, 99 percent of all foreign bribery criminal prosecutions under the FCPA involved third parties.

Penalties under the wide-reaching FCPA and UK Bribery Act are severe.

Breaches of the FCPA may result in company fines of up to USD$2 million per violation of the Act. Penalties for individuals include up to USD$250,000 and/or sentences of up to five years’ imprisonment.

In 2013, Parker Drilling Company paid over USD$4 million to settle charges with the Securities and Exchange Commission for authorising improper payments totalling USD$1.25 million to a Nigerian agent who would later use the funds to bribe Nigerian officials.

Individuals that commit an offence under the UK Bribery Act may be subject to an unlimited fine and/or up to 10 years’ imprisonment.

GRC Solutions provides off-the-shelf and customised training in Anti-Bribery and Corruption across Australia and other jurisdictions.

Contact us today for more information.

Source: FCPA Blog

Macau real estate billionaire latest charged in UN bribery case

Billionaire real estate developer Ng Lap Seng is the latest person to have been indicted in the US for involvement in a scheme to bribe former president of the United Nations General Assembly, John Ashe.

Three other people have been named in the indictment, including former chief executive of the Global Sustainability Foundation and Australia-China social queen, Shiwei Yan, and Francis Lorenzo, a suspended deputy Dominican Republic ambassador to the UN.

According to prosecutors, Lorenzo was one of several intermediaries used by Ng to pay Ashe more than USD$500,000. The bribes were intended to elicit Ashe’s help in acquiring UN support to build a UN conference centre in Macau, where Ng is based.

Ashe is alleged to have taken more than USD$800,000 in bribes from other Chinese businessmen to support business deals in Antigua. Although covered by diplomatic immunity, he faces tax charges for under-reporting his income by more than USD$1.2 million.

Ng also faces money laundering charges after making false statements to custom officials about why they brought USD$4.5 million in cash from China into the US.

US authorities deemed Ng to be a flight risk due to his financial resources, which include USD$1 billion in real estate holdings. He has since been released on a USD$50 million bail and currently lives under 24-hour house arrest in his apartment in Manhattan, pending trial.

The US Foreign Corrupt Practices Act (FCPA) has a wide extraterritorial reach. Under the FCPA, individuals may be subject to fines of up to USD$250,000 per act of corruption and/or five years’ imprisonment.

GRC Solutions is the leading provider of online compliance training on Anti-Bribery and Corruption and Anti-Money Laundering. Contact us today for more information about out off-the-shelf and bespoke options.

Sources: Sydney Morning Herald, Yahoo! News, CNN