wednesday, 18 january of 2017

UK tackles corporate criminal liability

The U.K.’s much-anticipated move to reform its laws to make it easier to bring criminal charges against corporations was finally launched Friday, with a chance of bringing the country’s corporate liability laws much closer to those in the U.S.

Making a U.K corporation liable for criminal acts committed by its employees is much harder than in the U.S., as a prosecutor needs to prove the involvement of a “directing mind and will” in corporate offending. In a “call for evidence” published Friday, the Ministry of Justice is seeking views on whether such need of proof is “hindering the prosecution of companies for wrongdoing,” and “on alternatives to proving ‘directing mind’ complicity in criminal conduct.” According to the Ministry, these alternatives could include a U.S.-style “vicarious” liability offense, which makes companies guilty through the actions of their staff without the need to prove complicity; strengthening existing regulatory regimes; and the extension of the failure-to-prevent model, whereby a company is liable unless it shows it has taken steps to prevent the conduct. The failure to prevent is already available to prosecutors specifically in cases of bribery, and in failure to prevent tax evasion, and its expansion has been proposed heartily by David Green, the director of the U.K.’s Serious Fraud Office. But a liability for failing to prevent economic crime is too wide-ranging, said Louise Hodges, a partner in the criminal litigation team at Kingsley Napley in London. “This much broader economic crime offense will make it much harder for a company to focus on a particular risk,” she said. “It’s in the interest of a company to prevent crime and to prevent being a victim of crime, but this would create a difficult decision as to where to focus on prevention, and even where to locate their business.”

The “failure to prevent” option came into U.K. statute in the Bribery Act of 2010, under which a company is criminally liable if it cannot prove it had adequate systems and controls in place to prevent payment of bribes. In the Criminal Finances Bill currently being debated by Parliament there is a similar provision under failure to prevent tax evasion. Ms. Hodges said that when the Bribery Act was implemented, it led to the creation of an “industry of compliance”, including monitoring and training of individuals that came with high costs. But it was linked to a specific offense–bribery. “If you cannot focus on a particular type of offending, there’s always the risk that your procedures didn’t cover that,” she said. If the U.K. veers toward the U.S.-style “vicarious liability” it would represent “the greatest regime change” and “strike fear in the corporate world,” said Ms. Hodge.


U.K. sanctions agency discusses priorities. Rena Lalgie heads the Office of Financial Sanctions Implementation, or OFSI, which was created within the U.K. Treasury in 2016 to implement and enforce financial sanctions and to help firms better understand them. In Ms. Lalgie’s first interview with a major publication, she discusses OFSI’s new enforcement capabilities, the impact of Brexit on the U.K.’s financial sanctions programs, and corporate best practices.

BlackRock urges pay-performance link. As the majority of U.K. companies prepare pay policies for a binding vote for the first time in the 2017 annual general meeting season, investment giant BlackRock Inc. is urging them to link executive pay to long-term performance and to mind shareholders’ views on remuneration.

Directors rate courage highest. A survey of 369 supervisory directors from 12 countries by search and advisory firm Russell Reynolds Associates asked which behaviors they thought are most important to creating a board culture that drives effectiveness and company performance—and 13% said possessing the courage to do the right thing for the right reasons, with another 13% saying willing to constructively challenge management.


Rolls settles probe for $800 million. Rolls-Royce Holdings PLC said Monday that it had settled a longstanding corruption probe with U.S., British and other authorities at a cost of more than $800 million, the WSJ reports. Under the agreement, the U.K.-based maker of jet and marine engines admits to guilt in some of its business dealings overseas. The U.K.’s Serious Fraud Office, the country’s corruption investigator, began examining the alleged wrongdoing in 2012 and opened a formal probe the following year. U.S. and other regulators joined the investigation. The initial probe focused on Rolls-Royce’s business dealings in China and Indonesia. The company said Monday that the case involved “intermediaries in a number of overseas markets.” Allegations of business wrongdoing spread to Brazil as part of a wider corruption probe in that country.

Moody's settles over mortgage ratings. Moody’s Corp. said Friday it agreed to pay $864 million to the U.S. Department of Justice and several states in connection with bond grades it issued before the 2008 housing-market collapse, the WSJ reports. Moody’s had said in October it expected the Justice Department to sue the company in connection with its mortgage-bond ratings, but many companies—and government officials—have scrambled to close out long-running investigations in advance of President-elect Donald Trump taking office next week.

Odebrecht pays Panama. Brazilian construction conglomerate Odebrecht SA agreed to pay at least $59 million as part of the Panamanian government’s probe into alleged bribery payments by the company, Panama’s attorney general said, the WSJ reports. “I received verbally a formal commitment to deliver in a short time $59 million and/or guarantees of payment,” Attorney General Kenia Porcell said. “I must clarify that this does not affect the results of the investigations carried out by the prosecutors.” An Odebrecht spokesman declined to confirm or deny any agreement with Panamanian authorities. The company said it is collaborating with Brazilian and foreign officials to advance their investigations.

Uzbek ex-president’s daughter questioned. The elder daughter of Uzbekistan’s late President Islam Karimov was questioned recently over money-laundering accusations by Swiss prosecutors while under house arrest in Tashkent, according to a lawyer who attended the meetings, the WSJ reports. The account provides the first tangible information on Gulnara Karimova’s situation since the once globe-trotting popstar and businesswoman disappeared from public sight nearly three years ago. Uzbek officials couldn’t be reached over the weekend.

Brokerage fined over retail orders. U.S. regulators made Citadel Securities LLC pay $22.6 million for failing to fill customer orders at the best price, nabbing their first offender in the lucrative side market for executing retail stock orders, the WSJ reports. Citadel Securities, which handles more retail trades than any other brokerage, agreed to settle claims that it didn’t always obtain the best price for orders despite giving assurances that it would.

Trial to hear from whistleblower lawyer. A trial set to begin Tuesday in San Francisco will put on rare public display sensitive material entrusted to an in-house corporate lawyer, sending a cautionary note to companies facing whistleblower claims from their own counsel, the WSJ reports. The trial stems from a wrongful-termination lawsuit filed in federal court in 2015 by Sanford Wadler, the former general counsel of life-sciences research company Bio-Rad Laboratories The 25-year Bio-Rad veteran says he was fired for blowing the whistle on what he said were signs that the publicly traded company had possibly engaged in bribery in China. Bio-Rad says he was fired for legitimate reasons, including botching securities filings and failing to detect bribery in three other countries that led the company to pay a $55 million fine to the U.S. government.

J.P. Morgan automating some compliance. Efinancialcareers reports “banks are going all out to cut compliance costs through automation.” It cites comments by J.P. Morgan Chief Financial Officer Marianne Lake, who said during the bank’s recent earnings call that the firm’s compliance spending will start “bending down” as J.P. Morgan’s processes “mature” and are automated.


China introduces app rules. Plugging a gap in the Great Firewall, China on Monday began requiring internet app stores to register with the state, the WSJ reports. China has long censored websites, barring outlawed content such as pornography, the promotion of illegal activity including terrorism and “rumors,” a term regulators often apply to antigovernment statements. But apps create a special challenge for government censors, experts say, because they often incorporate a wide variety of functions and serve as platforms for users to exchange information, making them harder to oversee. They are also multiplying quickly.

Facebook tries to stop Germany regulation. Reuters reports Facebook is stepping up attempts to halt tougher regulation by Germany, with senior managers visiting Germany and committing to do more to stop fake news and hate speech. German lawmakers have proposed forcing Facebook to remove incitements to hate crimes from its web pages within 24 hours or be fined.

India’s supreme court seeks WhatsApp restriction. PC World reports India’s Supreme Court has asked WhatsApp, the messaging service owned by Facebook, to stop sharing user data with Facebook until the hearing of a petition over the company’s privacy policy. Indian users of WhatsApp have sued the company, alleging its procedures for consent to use customer data are inadequate.


Disney CEO pay falls. Walt Disney Co. Chief Executive Robert Iger’s compensation dipped slightly last fiscal year to a total of $43.9 million, according to a regulatory filing Friday, the WSJ reports. The decline primarily hit Mr. Iger’s bonus, which totaled $20 million in the fiscal year ended Oct. 1, compared with $22.3 million in the year prior. His salary of about $2.5 million remained essentially unchanged.


Trump says he sets tone for companies. The WSJ’s Gerry Seib reports on his recent interview with Donald Trump that the president-elect sees his pressure on companies as setting the right tone. “I’m not in the weeds,” Mr. Trump said. “I’m setting a tone for hundreds of companies.” He cited in particular his jawboning of Ford Motor to not move a production line to Mexico.


Markets await Brexit news. Stocks extended losses, bonds strengthened and the British pound recovered from a 31-year low ahead of a speech later Tuesday by U.K. Prime Minister Theresa May, in which she is expected to declare that the country wants a clean break from the European Union, the WSJ reports. Market participants widely expect Mrs. May to push for a hard initial stance in her speech that prioritizes control of the U.K.’s borders over its trading relationship with the bloc.

Samsung probe could hinder company. Prosecutors’ decision to seek the arrest of Samsung Group heir Lee Jae-yong on suspicion of bribery, embezzlement and perjury linked to South Korea’s president threatens to knock one of the world’s biggest companies off course—just as its scion was trying to chart a new path for the conglomerate, the WSJ reports. The move, announced Monday, strikes at the country’s corporate champion, a group that includes the world’s largest smartphone maker, accounts for nearly one-third of South Korea’s stock-market value and is the nation’s biggest exporter.

Germany carmaker shares fall. Shares in German auto companies tumbled Monday after the U.S. President-elect singled out BMW, Daimler and Volkswagen, threatening to impose a 35% import tariff on their exports from Mexican plants to the U.S., the WSJ reports. Donald Trump raised concerns in Germany following comments published Monday in an interview with leading daily Bild newspaper suggesting the country’s biggest industry could be hit hard by tougher trading rules with the U.S.

Chrysler allegations complicate turnaround. Accusations that car maker Fiat Chrysler Automobiles cheated on emissions tests open an arduous final stretch for Chief Executive Sergio Marchionne, an industry outsider who had hoped to crown his career with a turnaround of the once-ailing group, the WSJ reports. U.S. regulators’ probe throws a wrench into Mr. Marchionne’s bid to complete a restoration of Fiat Chrysler’s fortunes. It most likely erases the already-dwindling chances of a mega-merger, which the CEO has sought to secure the future of the frailest of Detroit’s big car makers. And it may scramble the race to succeed him.

Funds sue Lynn Tilton. The Zohar investment funds at the heart of Lynn Tilton’s $2.5 billion distressed-debt empire sued their founder Monday, accusing Ms. Tilton of pillaging more than $1 billion from investors and the troubled companies she manages, the WSJ reports. Through a “toxic mix of fraud, theft and mismanagement,” Ms. Tilton stole money from the Zohar funds and from the troubled companies, siphoning hundreds of millions of dollars in fees and assets from a souring loan portfolio and failing businesses, according to the lawsuit filed in federal court in New York. A Tilton spokesman said Monday he was not immediately able to comment on the lawsuit.


U.S. supreme court to rule on worker suits. The Supreme Court said Friday it would decide whether employers can prohibit groups of workers from suing over labor disputes by requiring each employee to submit individual claims through private arbitration, the WSJ reports. The case was one of 13 new matters the justices added to their docket, breaking with a monthslong pattern in which the court—operating with an open seat that leaves it more vulnerable to tie votes—has generally accepted few new cases for review. The arbitration case amounts to a dispute over which of two federal laws takes precedence: the National Labor Relations Act, which authorizes employees to take collective action for “mutual aid or protection,” or the Federal Arbitration Act, which provides that arbitration clauses generally are “valid, irrevocable and enforceable.”

Companies eye U.S. production. Companies are increasingly exploring the economics of moving production to the U.S., as an overhaul of the U.S. tax code looms and President-elect Donald Trump calls out their peers for expanding abroad, the WSJ reports. A proposal to apply a border-adjustment tax to products that are imported into the U.S. while exempting exports is encouraging businesses to re-examine their supply chains. Contract manufacturers, which make products or components based on a client’s specifications, say there has been an uptick in calls asking them about the possibility of shifting some production to the U.S. since the election.


Lenovo falters in Motorola turnaround. When China’s Lenovo Group took over fading mobile-phone pioneer Motorola Mobility in October 2014, Chief Executive Yang Yuanqing vowed to restore the brand as a global leader. Two years after buying Motorola, Lenovo has axed at least 2,000 U.S. jobs, the WSJ reports. It has fallen to as low as No. 8 globally in the smartphone world, from No. 3. In May, Lenovo reported its first annual loss since 2009, which Mr. Yang blamed partly on restructuring costs after the acquisition of Motorola, with its iconic batwing logo. “We underestimated the differences of the culture and the business model,” Mr. Yang said in a recent interview.

(Published by The Wall Street Journal - January 17, 2017)

latest top stories

subscribe |  contact us |  sponsors |  migalhas in portuguese |  migalhas latinoamérica