Corruption Crime & Compliance

OFAC has brought several significant enforcement actions in last two years that are described as the result of “screening errors.” These screening errors are sometimes described as the fault of sanctions screening software or human error. In this Episode, Michael Volkov reviews several OFAC enforcement cases stemming from screening errors, including Apple, Amazon, American Express and Cobham Metelics.

On May 1, 2020, Blue Bell pleaded guilty to shipping contaminated ice cream linked to a 2015 listeria outbreak and agreed to pay a fine of $19.5 million ($17.4 million criminal fine and $2.1 million to settle civil false claims act violations).  Blue Bell’s former CEO, Paul Kruse, was separately indicted and charged in seven separate counts for conspiracy and wire fraud for concealing from customers information known to the company about the listeria contamination.  His case was later dismissed (but may return) because he was not charged by grand jury indictment. In this Episode, Tom Fox and Michael Volkov discuss the governance, compliance, and enforcement issues relating to the Blue Bell enforcement action and indictment of its former CEO.

Steele Compliance Solutions recently announced the global rollout of its new “Risk Intelligence Data” platform.  Companies are suffering from information overload -- with new technologies, companies can manage information to increase efficiency and accuracy in collecting and analyzing information needed for risk management purposes. Risk Intelligence Data, involves the hybridization of over 5 million of highly trusted risk and compliance sources worldwide, spanning global financial crime repositories, sanctions watchlists, state-owned entities lists, political exposure directories, and news media outlets, all delivered into an accessible central feed. Christian Focacci, Vice President Engagement, provides insight on artificial intelligence, machine learning and due diligence practices.  

Amazon joins the exclusive club of high-tech OFAC violators.  Last year, Apple settled with OFAC for sanctions violations.  This year, we can add Amazon to the list of OFAC violators. On July 8, 2020, Amazon settled with OFAC for $134,523 for violations of multiple OFAC sanctions programs.  Amazon’s violations stemmed from deficiencies from its sanctions screening processes.  As a result, Amazon provided goods and services: (1) to persons sanctioned by OFAC located in Crimea, Iran and Syria; (2) to individuals located in or employed by the foreign missions of the countries sanctioned by OFAC.  In addition, Amazon failed to timely report several hundred transactions conducted pursuant to a general license issued by OFAC. In this Episode, Michael Volkov reviews the sanctions enforcement matter for important issues, trends and lessons learned.

The Supreme Court, in two important decisions issued on the last day of the Term, rejected Trump and DOJ challenges to a New York Criminal Grand Jury subpoena and several Congressional subpoenas for Trump's financial records. In a decisive ruling, in Trump v. Vance, the Supreme Court rejected by a 7-2 vote, President Trump’s challenges to a New York State grand jury subpoena.  In a separate case, Trump v. Mazars, the Supreme Court rejected challenges by a vote of 7 to 2 to Congress’ subpoena for Trump’s financial records. In this Episode, Michael Volkov reviews the two Supreme Court decisions.

On July 2, 2020, DOJ and the SEC issued revised FCPA Guidance.  The Revised Guidance continues to be a valuable document, which contains important discussions of relevant cases, DOJ and SEC policies, and enforcement principles relating to the FCPA. In this Episode, Tom Fox and Michael Volkov discuss the Revised FCPA Guidance and highlight important changes and trends.

Novartis is the new poster-child of corporate misconduct.  In the space of two weeks, Novartis settled domestic False Claims Act and Anti-Kickback violations for $729 million, and settled FCPA violations for foreign bribery for $337 million. In the domestic False Claims Act and AKS cases, Novartis resolved two separate cases: one for illegal payments made to three foundations used to pay for patients' co-payments in order to increase sales; and another for illegal payments to doctors through a false speaker program which was used to shower physicians with lavish meals, events, gifts and other benefits to induce them to increase prescriptions for Novartis drugs. In this episode, Michael Volkov discusses the recent FCA and AKS enforcement action against Novartis.  

Notwithstanding the pandemic and remote working arrangements, the Securities and Exchange Commission is continuing to bring FCPA enforcement actions.  In its latest action, the SEC settled with Alexion Pharmaceuticals for $21 million for foreign bribery and books and records violations. In this Episode, Michael Volkov reviews the Alexion FCPA enforcement action and the lessons learned for compliance professionals.

Even during this difficult time of the pandemic, economic uncertainty and social unrest, the Justice Department and the SEC have concluded a major FCPA enforcement action. Novartis and Alcon (which was a Novartis subsidiary at the time of the misconduct) agreed to pay a total of $345 million in criminal and civil penalties.  Novartis spun off Alcon in 2019. Under the DOJ settlement, Novartis and Alcon each entered into a deferred prosecution agreement; Novartis agreed to pay a fine of $225 million and Alcon agreed to pay $8.9 million in criminal penalties.  Novartis also entered into a settlement with the SEC under which they agreed to pay a total of $112 million. In this Episode, Michael Volkov reviews the FCPA settlement and the lessons learned.

The Justice Department’s recent revisions to the Evaluation of Corporate Compliance Programs highlights an important trend and evolution of prosecution focus.  DOJ’s Revised Corporate Compliance Guidance recognized and reinforced the continuing focus on post-acquisition integration versus pre-acquisition due diligence.  For years, DOJ and compliance professionals placed significant emphasis on pre-acquisition due diligence.  This balance has been adjusted over the last ten years to raise the importance of post-acquisition integration planning and implementation. In this Episode, Michael Volkov reviews the revised compliance guidance and the impact on pre-cquisition due diligence and post-acquisition integration.