AFDB DEBARS UK COMPANY FOR FRAUDULENT PRACTICES

The African Development Bank (AfDB) has banned a British education equipment and training company from doing business with it for 30 months because of alleged corruption in a bank-funded contract with Eritrea. Following an investigation the AfDB reached a settlement with the company, Eduteq Limited, and its director, Katrina Grant, after the company admitted “fraudulent practices”. Ms Grant was barred from doing business with the development bank for a year. In 2012, Eduteq had participated in bank financed tenders for the delivery and installation of equipment to an education and training project, but failed to disclose its association with a consultant providing support to the government in the context of the tenders.

SFO DIRECTOR'S SPEECH AT CAMBRIDGE SYMPOSIUM ON ECONOMIC CRIME

At the Cambridge Symposium on Economic Crime at Jesus College Tuesday, David Green QC, the Director of the Serious Fraud Office, described what he called a cross section of the SFO's current caseload. It was Green's third presentation to the Cambridge Symposium as director of the SFO. The cases were said to represent "the top tier of fraud and bribery work", many of which concerned blue chip UK companies, and many of which are very large and require "resilience and focus" from the investigations team. The cross section included:

  • Libor
  • Forex
  • Barclays/Qatar
  • Rolls Royce
  • GlaxoSmithKline
  • G4S and Serco
  • GPT
  • Alstom
  • The Sweett Group
  • Ukrainian old regime politician (ongoing money laundering investigation)

David Green noted that the Weavering Capital trial is scheduled for October and the first LIBOR trial for January, and that as of the date of the speech there were 37 defendants awaiting trial in the 12 cases. These were also cases which "might prove suitable" for the SFO's first Deferred Prosecution Agreement. A copy of the speech is available here.

SFO GENERAL COUNSEL'S SPEECH AT CAMBRIDGE SYMPOSIUM ON ECONOMIC CRIME

The General Counsel of the SFO, Alun Milford, delivered a speech to the Cambridge Symposium on Economic Crime. In his speech, he reviewed the framework within which the SFO operates criminal investigations and also discussed cooperation by defendants in SFO investigations. Mr Milford also discussed the question of waiver of privilege in internal investigations and, in particular, in the "first accounts" of witnesses, as provided to internal investigations teams. A copy of the speech is available here.  

REPORTING BY EXTRACTIVE COMPANIES ON GOVERNMENT PAYMENTS – EARLY UK IMPLEMENTATION FROM 1 JANUARY 2015

Two EU Directives were passed in 2013 which mandate annual reports on payments to governments by companies in the extractive industries which are incorporated or listed in the European Union.

The UK government has issued its response paper following its consultation on implementing the provisions of the Accounting Directive. It sets out how those aspects of the law over which EU Member States have some control, including timing of implementation of the requirements, format and timing of publication of reports, and the penalty regime, will be addressed in the UK.  The UK Financial Conduct Authority has also now issued its corresponding consultation paper (CP14/17) on amendments to the Transparency Rules to implement the equivalent provisions in the Transparency Directive and apply them to companies listed in the UK.

In the UK, the requirements will be implemented earlier than required and will apply to listed and other large extractive companies for financial years beginning on or after 1 January 2015.

We have produced detailed briefings on the EU Directives and on early UK implementation. If you are a client who would like a copy of either or both, please contact Sarah Hawes, Professional Support Consultant, London.

FCA REMOVES HIGH RISK COUNTRIES LIST

We reported in a previous update on the FCA's publication, following a Freedom of Information Act request, of a list of countries considered to be "high risk" for financial crime purposes, which was used by its supervisory teams on visits to regulated firms. The list has now been removed from the FCA's website, reportedly after the Cayman government objected to inclusion of the Cayman Islands on the list. This highlights the political sensitivity of such lists, and the difficulties for firms in assessing jurisdictional risk, if even the regulator (reportedly) has difficulty in doing so in a transparent yet defensible way.

NCA ANNOUNCEMENT ON SEEKING CONSENT FOR FINANCIAL TRANSACTIONS

The National Crime Agency (NCA) has issued an announcement regarding authorised disclosures submitted under section 338 of the Proceeds of Crime Act 2002 (POCA).  From 15 September 2014, disclosures that omit either the reasons for suspicion or a statement regarding criminal property will be rejected. When a disclosure is rejected, the reporter will be sent a notification of closure letter outlining the reasons for rejection.

INNOSPEC COURT OF APPEAL JUDGMEMT

The convictions against two defendants in the Innospec bribery case have been upheld by the Court of Appeal. The Court of Appeal reduced the sentence handed down to Dennis Kerrison from four years to three. The sentences of the other defendants remain unaffected.

EU EXPANDS SECTORAL SANCTIONS AGAINST RUSSIA

The EU has enacted new legislation expanding its existing sanctions against Russia. We have published a briefing providing an overview of the new measures, namely:

  • an expansion of the restrictions on dealing in transferable securities issued by listed Russian banks;
  • the application of these restrictions to listed Russian companies in the military and oil sectors;
  • additional trade restrictions, including in relation to dual use goods and certain services necessary for particular oil projects; and
  • an expansion of the existing asset freeze.

Our briefing also summarises recent UK legislation criminalising breach of certain EU trade sanctions against Russia and provides an overview of recent developments in Australia. Finally, we consider possible future developments in this area.

Please click here for the full briefing.