The federal government plans to create new corporate penalties and abandon the discretionary principle which has thus far applied in corporate prosecutions. Further, the upper limit of penalties will be significantly increased. At the same time, the government aims to establish legal requirements for internal investigations that provide an incentive for investigation support.
In one comprehensive bill, the Federal Council addressed the concerns of the Financial Action Task Force and the Global Forum on Transparency and Exchange of Information for Tax Purposes with regard to the transparency of legal entities. The proposed measures would not only replace a system that was introduced merely three years ago and has proven to be effective, but would also entail severe consequences for approximately 60,000 companies in Switzerland.
In response to the significant corporate scandals that have come to light in recent years, Japanese authorities and regulators have been working to improve compliance awareness within corporate Japan. The Japan Exchange Regulation (JPX-R) recently published the Principles for Preventing Corporate Scandals, which provide valuable insight into the views of the JPX-R and, by extension, other Japanese regulators.
Compliance officers often report to the legal department or are staffed with qualified lawyers, making it difficult to distinguish when the compliance officer is serving in a legal capacity, rather than a compliance one. However, drawing a clear distinction between these functions, conducting internal investigations under the direction of counsel and making the legal purpose of communications or documents clear will make the best possible record to show that documents should be protected by privilege.
In 2014 $321 million which had been amassed in Luxembourg by Nigeria's former head of state was frozen. Although the government did not need to enlist external counsel to recover the money, the federal attorney general engaged local lawyers, whose only qualifications were alleged to have been that they had both worked with the attorney general while he was legal adviser to President Buhari's political party. This is just one in a series of embarrassing situations involving Buhari's government.
The absence of attorney-client privilege protections in Japan means that regulatory investigations must be handled with particular care. Various industry parties have argued that the absence of such protections unfairly damages the interests of companies active in Japan. However, the government has refused to introduce such protections out of concern that they could limit the regulators' broad investigative powers or otherwise adversely affect the Japanese regulatory environment.
Transparency International recently published the 2017 Corruption Perceptions Index, which reflects the public sector corruption perspective of non-governmental organisations and representatives of the business world. Turkey came 81st out of 180 countries. This is the fourth consecutive year in which Turkey's ranking has fallen; it has lost 10 points and fallen 28 places over the past five years.
With few Foreign Corrupt Practices Act (FCPA) corruption investigations resolved under the Trump administration's watch, it is too early to weigh up how the administration will affect enforcement or settlements in the long term. On its face, the new FCPA Corporate Enforcement Policy signals a more business-friendly approach by removing the spectre of a monitor in many situations and by committing to a presumption of a declination in certain circumstances.
If the evaluation of a whistleblower report is completed without taking fundamental steps or necessary planning, it may result in an improper investigation and the inability to resolve the issue, or even the undertaking of an unnecessary investigation. It is therefore vital to adopt a policy on how to evaluate and treat future whistleblowers, inform employees accordingly and train decision makers in the company.
The Federal Supreme Court recently rendered a landmark decision preventing the Swiss Federal Tax Administration from transmitting un-redacted bank files to the US Internal Revenue Service (IRS) which contained information on third parties which had allegedly helped a US taxpayer to defraud the IRS. What is of particular interest to white collar crime practitioners is the emphasis put on the distinction between administrative assistance in tax matters versus legal assistance in criminal matters.
Although corruption in the ranks of Nigerian judicial officers has long been considered an issue, the authorities have been accused of lacking any genuine desire to address the problem. Although the National Judicial Council occasionally penalised judges, no judges were prosecuted. All that changed in 2016, when a number of Nigerian judges were arrested on suspicion of corruption. More recently, the Court of Appeal dismissed corruption charges against another Federal High Court judge.
German businesses have steadily expanded their compliance structures and internal training programmes and have never been in a better position than they are now. However, declining support for compliance issues among management is giving compliance officers cause for concern, and recent compliance scandals appear to indicate that further work is necessary to make management fully acknowledge the significance of compliance matters.
Companies now have even greater incentives to have strong, meaningful Foreign Corrupt Practices Act compliance programmes. When the deputy attorney general recently announced the new enforcement policy that will guide the US Department of Justice, he made it clear that the government wants to create incentives for companies to police themselves when it comes to bribery and corruption.
In a recent case, the Supreme Court stated that the test for dishonesty in fraud and other acquisitive offences – known as the 'Ghosh test' – did not correctly represent the law. Although this case was decided on principles of civil law, it arguably has further reaching implications as it represents a fundamental change to a basic tenet of criminal law and means that judges in future criminal trials will be required to give a different jury direction when summing up cases involving dishonesty.
Following the judgment in the Serious Fraud Office's (SFO's) declaratory relief application against the Eurasian Natural Resources Corporation, it appeared that the mining company would have to disclose documents which it claimed were subject to legal professional privilege. The judgment was widely scrutinised because of the impact that many expected it to have on the conduct of internal investigations and dealings with the SFO.
In August 2017 the Financial Reporting Council launched a consultation on amendments to its Guidance on the Strategic Report, which encourages businesses to consider a number of issues, including non-financial reporting. The guidance was first published in 2014, but is being revised in light of new regulations that came into effect for reporting periods commencing January 1 2017.
When the Federal Ministry of Finance's new whistleblowing programme was announced, an issue was identified with regard to the lack of clarity around how rewards will be calculated. Following this, there has recently been significant controversy surrounding a reward which may have been paid to an informant following the recovery of approximately $43 million under the programme. If the matter proceeds to litigation, it may provide some indication as to how the programme is actually being implemented.
The Serious Fraud Office (SFO) Annual Report for the year 2016-2017 will be the last report overseen by David Green, who is due to step down as director in April 2018. In 2017 12 new criminal investigations were opened, with Airbus and Unaoil joining the list of high-profile investigations. The report provides an overview of the SFO's performance, covering matters such as stakeholder engagement, digital and technological capabilities and the statistical analysis of casework.
In July 2017 the Financial Conduct Authority notified RBS plc that it had commenced an investigation into RBS's compliance with the Money Laundering Regulations 2007. The investigation concerned a number of UK and US companies and the passing of huge sums of Russian money through British banks. In addition to RBS, 16 other UK-based financial institutions and certain US banks were allegedly involved in the scheme.
Under new anti-money laundering legislation, the list of activities classed as relevant financial businesses has been expanded. Unregulated investment funds and some insurance entities have now been given a grace period until May 31 2018 to establish anti-money laundering compliance programmes. This is a welcome move, particularly for unregulated investment funds which were not bound by the preceding regulations and therefore may not have policies and procedures in place.