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Deutsche Bank Sanctioned in Connection with Jeffrey Epstein Banking Relationship: Financial Institutions Must Be Vigilant in BSA/AML Compliance

Program on Compliance and Enforcement, New York University School of Law -

by Matthew Levine

The New York Department of Financial Services (“NYDFS”) recently sanctioned Deutsche Bank (“DB”) $150 million for BSA/AML deficiencies.  According to the regulator’s factual findings, the compliance failures arose in connection with the bank’s private wealth relationship with Jeffrey Epstein, and correspondent banking relationships with Danske Bank Estonia (“Danske Estonia”) and FBME Bank (“FBME”), both located in Eastern Europe.

This latest enforcement action (PDF: 1.62 MB) against DB follows several others issued against the bank by NYDFS since 2015, including for improper conduct arising from LIBOR manipulation, sanctions violations, improper foreign exchange trading practices, and BSA/AML deficiencies in connection with money laundering arising out of equity trades at its London and Moscow branches.

Here are a few takeaways from the regulator’s factual findings:

  1. DB did a number of things right.  It designated its relationships with Jeffrey Epstein, and with Danske Estonia and FBME as high risk, and issues relating to Epstein were properly elevated to senior management at times.  But the good was undone by several key deficiencies.
  2. One noted failure: relying too much on the customer’s word.  NYDFS findings indicate DB managers did little to verify the information provided by Epstein and his lawyer offered to explain the business uses of the accounts or justify suspicious transactions.  For example, although bank managers met with Epstein personally to question the veracity of allegations against him concerning relationships with underage girls, there was no contemporaneous record of that meeting or any effort to verify the statements he provided to the bank.
  3. Another key failure was poor execution. Following the in person meeting with Epstein, the bank’s “Americas Reputational Risk Committee,” put in place several conditions to police suspicious transactions by Epstein and his lawyer, including barring “any unusual and/or suspicious activity or [transactions that] are in a size that is unusually significant or novel in structure.”  These conditions, however, were never transmitted to the day-to-day relationship managers for the Epstein accounts.  Additionally, an AML compliance officer misinterpreted the conditions, believing it to mean that as long as future transactions in the Epstein accounts were consistent with past transactions, they were acceptable.  Instead, the condition set an absolute standard of suspicion — not a relative one — and as a result the limitation was not properly communicated to the transaction monitoring team responsible for the Epstein accounts.   Nor were any of these execution failures detected by a compliance review or internal audit.
  4. A third shortcoming was a deficiency seen frequently in major enforcement actions. Here, senior managers declined to follow the very solid advice of experienced compliance personnel – in this case advice to restrict or end high-risk correspondent banking relationships with Danske Estonia and FBME.  NYDFS found regarding the Danske Estonia relationship, “[d]espite this recommendation [that the account be closed] from a high-ranking and seasoned compliance professional, Deutsche Bank continued its relationship with Danske Estonia yet again.”
  5. Cooperation still counts. NYDFS recognized DB for its exemplary cooperation and indicated that it did not presently intend to extend the monitorship currently in place at DB. Bank Hapoalim did not get as much credit for cooperation in a recent NYDFS enforcement action. In fact, the Consent Order (PDF: 1.62 MB) in the Bank Hapoalim matter specifically criticized the bank’s initial lack of cooperation, and indicated that the penalty in that case, $220 million, would have been less if full cooperation had been provided. 
  6. Finally, NYDFS remains solidly in the business of BSA/AML enforcement. This is the second major BSA/AML enforcement action from the regulator in the last several months.  It thus remains important that financial institutions of all sizes and stripes regulated by NYDFS be vigilant about maintaining adequate systems and controls, including through revised risk assessments, strong internal auditing, and, as appropriate, periodic checkups from outside consultants.

Matthew Levine is the president of the financial and regulatory compliance services practice at Guidepost Solutions, and previously served as the Executive Deputy Superintendent for Enforcement at the New York Department of Financial Services. 


The views, opinions and positions expressed within all posts are those of the author alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of New York University School of Law.  PCCE makes no representations as to the accuracy, completeness and validity of any statements made on this site and will not be liable for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with the author.

Alexion FCPA Violations: Lessons Learned (Part II of II)

Corruption, Crime & Compliance Blog -

The Alexion Pharmaceutical SEC FCPA enforcement action represents another in the long line of enforcement actions against drug and device companies.  The drug and device industries have been – and will continue to be — easy marks for prosecutors to investigate and prosecute for foreign bribery.  There are a number of reason for this.

First, global drug and device depend on interactions with foreign healthcare professionals (“HCPs”).  The law is well established that HCPs are “foreign officials” under the FCPA.  As a result, drug and device companies face extraordinary risks in dealing with HCPs in foreign countries.

Second, foreign physicians are usually underpaid in comparison to private HCPs and thereby “expect” additional compensation for their services.  Foreign HCPs also demand sponsorships for foreign medical events.  Global drug and device companies are subjected to demands for such sponsorships.  Drug and device companies have to reinforce a culture of ethics and make it clear that the company will not “pay” HCPs in response to demands and for sponsorships to medical conferences.

Third, drug and device companies have legitimate reasons to engage HCPs for research, consulting and educational purposes.  There are a number of positive and beneficial services that HCPs can provide to promote drug and device products by educating other HCPs about the use of certain drugs and devices and enhance the quality of care for patients in foreign countries.

In this context, the Alexion enforcement case underscores some important lessons:

HCP Interactions: Companies have to design and implement a robust policy and related controls governing interactions with HCPs.  Such a strategy has to incorporate more than just a policy statement, which is reinforced by senior leadership.  To ensure compliance, companies have to assign compliance resources, build procedures for review, approval and monitoring protocols.

HCP Controls:  For each category of interactions (e.g. marketing, research, educational, regulatory, sponsorships), companies have to design and implement specific controls.  For example, if the company intends to sponsor an HCP to attend a medical conference there has to be a legitimate reason for the HCP to attend in connection with an existing relationship with the HCP who may be consulting, providing educational services, or research. 

If the HCP intends to speak about his/her work for the company at the medical congress, this may fall within the legitimate side of the sponsorship spectrum.  On the other hand, if the company is seeking to ingratiate itself with the HCP to induce the HCP to increase prescriptions for the company, then simply paying for the sponsorship for some flimsy reason would not pass the test.

To ensure compliance with an HCP sponsorship program, any request for sponsorship should be carefully scrutinized, preferably by an internal committee established to review such requests.

Monitoring:  An ongoing monitoring system for HCP interactions is the new and cutting-edge area for compliance programs.  In this respect, a proactive approach to monitoring HCP interactions through regular reporting, review of expense reports and related financial controls and documentation is imperative.  A robust monitoring program is critical because of the need to distinguish and confirm legitimate expenditures, such as consulting services, documentation and reports.  Drug and device companies are behind the curve on proactive programs.  They need to assign resources, monitor interactions and of course focus on financial expenditures used for illegitimate purposes.

Invoice and Service Confirmation:  The SEC’s focus on “invoice to payment” processes requires drug and device companies to scrutinize payments to HCPs and use of third parties who often assist in promoting drug and device products.  To ensure appropriate review of invoices, companies have to include contractual provisions in HCP engagements or third-party relationships that condition payments on adequate documentation and justification of the services provided.  Otherwise, HCP payments may be improper and third parties could be used to funnel illegal payments.

The post Alexion FCPA Violations: Lessons Learned (Part II of II) appeared first on Corruption, Crime & Compliance.

Compliance Alone Won’t Prevent Wirecard-Like Scandals

Corporate Compliance Insights -

Allegations of financial misconduct dogged German payment processing giant Wirecard AG since its inception; why did it take so long to uncover the fraud? Michael Toebe muses here about the perils of ego and unchecked greed. Wirecard’s gross financial misconduct and resulting scandal and crisis has been dubbed the Enron of Germany by some analysts. […] The post Compliance Alone Won’t Prevent Wirecard-Like Scandals appeared first on Corporate Compliance Insights.

(This is only a summary. Click on the headline to view the entire article at Corporate Compliance Insights and participate in the discussion.)

New Compliance Software? Here Are 5 Ways To Ensure Complete Adoption

The Compliance & Ethics Blog -

Post By: John Grgurich, Content Manager, StarCompliance A new year, and a new decade, calls for new thinking. Here’s a fresh approach to get people enthusiastic about your new compliance platform Powerful experiences power transformation. Put the customers—in this case compliance platform end users—at the forefront of every compliance experience, and you’re more likely to […]

Woman Pleads Guilty to Using Kool-Aid Packet to Help Shoplift

Loss Prevention Media -

An Artesia woman pleaded guilty to using a Kool-Aid packet to shoplift more than $100 in merchandise from the Artesia Walmart earlier this year, according to Artesia Municipal Court records. Sandra Sosa, 59, was arraigned Monday by Artesia Municipal Judge Sarah Gallegos on charges of shoplifting, petty larceny and fraud, per court records. Sosa was […]

Opening Remarks by Commissioner Roisman at the Emerging Markets Roundtable

The Harvard Law School Forum on Corporate Governance and Financial Regulation -

Posted by Elad L. Roisman, U.S. Securities and Exchange Commission, on Friday, July 10, 2020 Editor's Note: Elad L. Roisman is a Commissioner at the U.S. Securities and Exchange Commission. The following post is based on Commissioner Roisman’s recent opening remarks at the Emerging Markets Roundtable. The views expressed in this post are those of Mr. Roisman and do not necessarily reflect those of the Securities and Exchange Commission or its staff.

Good morning, and welcome to everyone who is joining us today [July 9, 2020]. Thank you to the panelists who are participating virtually and a very big thank you to the SEC staff for organizing and hosting this event. Today’s agenda covers a wide array of issues that affect the work of many SEC divisions and offices, as well as the functioning of several different parts of our markets. The issues we will discuss today are not new, but have arisen in separate contexts for many years. I am happy that we have a forum to focus on these topics altogether, convening experts from different areas of our markets to share their perspectives.

The world economy is growing ever more interconnected—a development which bodes well for wealth creation for investors around the world, including for U.S. investors. Promoting investor access to potentially lucrative investments is something I advocate for regularly. However, I never suggest that such investment opportunity should be provided without regard to investor protection, and it is clear that these growth prospects come with certain risks. Different jurisdictions implement different regulatory regimes in their markets, making for a complicated and constantly shifting landscape in which investor protections may be uneven. We at the SEC must continually consider how this agency can best protect U.S. investors as they encounter these new opportunities.


Do Bank Insiders Impede Equity Issuances?

The Harvard Law School Forum on Corporate Governance and Financial Regulation -

Posted by Martin Goetz (Goethe University Frankfurt), Luc Laeven (European Central Bank), Ross Levine (University of California, Berkeley), on Friday, July 10, 2020 Editor's Note: Martin Goetz is Associate Professor at Goethe University Frankfurt; Luc Laeven is Director-General, Research Department at the European Central Bank; and Ross Levine is the Willis H. Booth Chair in Banking and Finance at the University of California, Berkeley Haas School of Business. This post is based on their recent paper.

(This post reflects our own views, see disclaimer).

Banks with more equity tend to lend more, create more liquidity, and have higher probabilities of surviving crises. Moreover, adverse shocks to bank equity predict contractions in lending and aggregate output, and lower bank equity ratios slow recoveries from crises. The strong linkages between bank equity, bank lending, and economic activity raise a critical question: what factors shape the differing degrees to which banks issue new stock to replenish bank equity in response to crises?

In this paper, we address a debate concerning the impact of bank ownership structure on the degree to which banks sell stock to replenish equity following adverse shocks. In the presence of large private benefits of control, a bank’s controlling owners may resist new stock issuances to protect those rents. From this “dilution reluctance” perspective, greater insider ownership will reduce stock sales, potentially making the economy less resilient to aggregate shocks. In contrast, other research suggests that banks with greater insider ownership can more effectively coordinate the actions of diverse stakeholders with differing interests during crises, allowing such banks to sell more stock than banks with less insider ownership. The overall impact of insider ownership on stock sales in times of crisis, therefore, is an open empirical question.


Weekly Roundup: July 3–9, 2020

The Harvard Law School Forum on Corporate Governance and Financial Regulation -

Posted by the Harvard Law School Forum on Corporate Governance, on Friday, July 10, 2020 Editor's Note: This roundup contains a collection of the posts published on the Forum during the week of July 3–9, 2020. COVID-19 and Executive Pay
Posted by Joseph Bachelder, McCarter & English LLP, on Friday, July 3, 2020 Tags:  Does Common Ownership Explain Higher Oligopolistic Profits?
Posted by Edward B. Rock and Daniel L. Rubinfeld (NYU), on Friday, July 3, 2020 Tags:  An Analysis of the Supreme Court’s Decision in Liu v. SEC
Posted by Kyle DeYoung, Lex Urban, and Wesley Wintermyer, Cadwalader, Wickersham and Taft LLP, on Saturday, July 4, 2020 Tags:  Roadmapping Practical Human Capital Management Considerations
Posted by Pamela Marcogliese, Elizabeth Bieber and Thomas Lair, Freshfields Bruckhaus Deringer LLP, on Saturday, July 4, 2020 Tags:  Chancery Court Denies Motion to Dismiss and Application of MFW Safe Harbor
Posted by Meredith Kotler, Paul Tiger, and Marques Tracy, Freshfields Bruckhaus Deringer LLP, on Sunday, July 5, 2020 Tags:  The Information Content of Corporate Earnings: Evidence from the Securities Exchange Act of 1934
Posted by Oliver Binz (INSEAD) and John R. Graham (Duke University), on Monday, July 6, 2020 Tags:  Five Ways a Sustainability Strategy Provides Clarity During a Crisis
Posted by Thomas Singer, The Conference Board, Inc., on Monday, July 6, 2020 Tags:  Fiduciary Duty of Disclosure Does Not Apply to Individual Transactions with Equityholders
Posted by Taylor B. Bartholomew, Matthew M. Greenberg and Joanna J. Cline, Pepper Hamilton LLP, on Tuesday, July 7, 2020 Tags:  DOL Proposes New Rules Regulating ESG Investments
Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on Tuesday, July 7, 2020 Tags:  The Role of Long-Term Institutional Investors in Activism
Posted by Bhakti Mirchandani and Victoria Tellez, FCLTGlobal, on Wednesday, July 8, 2020 Tags:  The Spread of Covid-19 Disclosure
Posted by Daniel J. Taylor (Wharton), on Wednesday, July 8, 2020 Tags:  Keynote Speech at the Society for Corporate Governance National Conference
Posted by Elad L. Roisman, U.S. Securities and Exchange Commission, on Wednesday, July 8, 2020 Tags:  8 Steps for Audit Committees to Navigate the Pandemic
Posted by Hille R. Sheppard, Brian J. Fahrney, and Dave A. Gordon, Sidley Austin LLP, on Thursday, July 9, 2020 Tags:  Proposed Sweeping Changes to the Taxation of Executive Compensation
Posted by John R. Ellerman and Ira T. Kay, Pay Governance LLC, on Thursday, July 9, 2020 Tags:  What Board Members Need to Know about the “E” in ESG
Posted by Sheila M. Harvey, Reza S. Zarghamee, and Jonathan M. Ocker, Pillsbury Winthrop Shaw Pittman LLP, on Thursday, July 9, 2020 Tags: 

FCPA Risks for Renewable Energy in Latin America

Program on Compliance and Enforcement, New York University School of Law -

by John F. Walsh, Alejandro N. Mayorkas, Kimberly A. Parker, Jay Holtmeier, Michael Connor, Lillian Howard Potter, Heidi K. Ruckriegle, and Noah Guiney 

The renewable energy market[1] in Latin America is booming, and the region’s natural resources make it one of the most attractive areas in the world for investment. Latin American countries, including Brazil, Mexico and Chile, have been recognized as some of the top global renewable energy markets. Between 2010 and 2015, $80 billion was invested in green energy in Latin America, excluding large-scale hydropower.[2] Further regulatory and policy developments, such as the deregulation of national energy markets and the desire to meet the goals of the Paris Climate Accord, have only increased this trend.[3] Prior to the onset of the COVID-19 pandemic, 2020 had been a banner year for renewable energy development in Latin America. Experts predict that in 2020, Mexico will see 11 new wind farms begin operation, representing a $1.6 billion investment.[4] In Brazil, approximately 3.2 GW of unsubsidized solar projects have been permitted and are currently in development.[5] Not to be outdone, Colombia recently announced that there are 9.47 GW of solar projects currently underway.[6] While the COVID-19 pandemic has upended the global economy—including the renewable energy market globally[7] and in Latin America—the region’s economic, political and geographic characteristics suggest that wind and other renewable power sources will have an increasingly important role to play in its energy mix.

However, this opportunity is not without risks. Continuing government involvement in project finance, partial government ownership of utilities, and the importance of major construction, mining and industrial companies as institutional consumers of renewable energy all pose potential Foreign Corrupt Practices Act (FCPA) compliance problems for foreign companies looking to invest in the region. These risks have been made all the more notable by the unique conditions posed by the ongoing pandemic.[8]

Renewable Energy and Foreign Investment Opportunities

Much of Latin America’s renewable energy development relies on partnerships with foreign companies. For example, some of the larger solar plants in Colombia are being developed by foreign companies such as Chicago-based Invenergy, Spanish developer Diverxia, and an Anglo- Colombian partnership between Cubico and Celsia.[9] In Chile’s Atacama desert—uniquely suitable for large-scale solar power as one of the most irradiated areas of the world—Miami-based Atlas Renewable Energy is investing $450 million in a massive 854 MW solar plant, and Spanish developer Ibereolica Renovables and Italian energy giant Enel are each developing solar projects that will generate approximately 500 MW. In 2018, foreign backers invested nearly $6.9 billion in renewable energy projects in Latin America.

Like much of the rest of the global economy, Latin America’s renewable energy industry has been hard hit by COVID-19. Brazil and Mexico are expected to be particularly challenged, as the rapid depreciation in their respective currencies could lead to a sharp increase in the cost of projects already in development.[10] Time will tell whether this slump will be short-lived, and Latin American governments are seeking to breathe life back into their economies. Governments across Latin America also remain committed to their ambitious decarbonization goals,[11] and the clean skies in the region’s cities—prompted by factory closures and reduced car traffic—are showing that a future with clean air is indeed possible.[12]

Finally, despite the opportunity it presents, renewable energy does face political opposition in the region. For example, Mexico’s president Andrés Manuel López Obrador used a recent press event at La Rumorosa Wind Farm in Baja California to decry wind farms as “visual pollution” and to declare that the government will not grant permits to new projects that impact the environment.[13] Whether this is political posturing or marks a genuine change in government policy remains to be seen.

FCPA Risks

Although the Latin American region offers a unique business opportunity for renewable energy investment, companies must also be aware of FCPA risks.

First, despite the deregulation of much of the region’s electricity industry over the past several decades, governments remain major players in the sector. Government-run development banks have been an important component in project finance, and these government-backed loans are often conditioned on the developer hiring local contractors or manufacturers.[14] Arrangements where contracts require foreign companies to hire preferred local contractors should ring compliance alarm bells, as without proper supervision these preferred local operators may present FCPA risks.

Of course, organizations should be proactive about managing relationships with all third parties in Latin America. In recent years, companies have faced significant FCPA exposure due to the conduct of third parties that they hire to facilitate their operations.[15] This is especially significant in Latin America, where the success of a project may depend on relationship building and local contacts. Companies looking to develop renewable energy projects in Latin America would be well advised to consult with counsel experienced in FCPA matters to develop adequate compliance programs governing these projects well in advance of taking any significant project steps.

Raising further FCPA compliance risks is the fact that many power utilities in the region are themselves at least partly owned by the government. State-owned electricity and other energy companies dominate energy markets throughout the region; it is almost impossible to do energy – related business in Latin America without dealing with government officials.[16] For example, the Brazilian government has a majority stake in Eletrobras, one of the country’s largest electricity companies, while some of the company’s shares are also traded on the New York Stock Exchange.[17] Depending on the precise structure of the utility in question, the utility could be a bribery target, an agent facilitating bribes or an issuer regulated by the FCPA—or all of the above simultaneously. These concerns are not unfounded. In 2018, Eletrobras itself had to pay a $2.5 million fine to the Securities and Exchange Commission for violating the books and records provisions of the FCPA.[18]

Complicating matters further, the definition of a government official under the FCPA is quite broad, extending to employees of minority-owned government ventures and joint ventures with private companies.[19] This can lead to compliance problems in places foreign investors might not expect. For example, the Mexican Constitution requires that power transmission and distribution be handled by the government, although this dictate was significantly relaxed by constitutional amendments in 2014.[20] Under the FCPA, as a result, employees of Mexican power utilities would be considered government officials. Similarly, officials at energy utilities founded by their respective governments and never fully privatized would also be covered by the FCPA.[21]

Finally, some of the region’s largest consumers of renewable energy are major construction, mining and industrial companies—many of which are also state owned. The revelations from Operation Car Wash (Operação Lava Jato) in Brazil, the Cuadernos (Notebook) Scandal in Argentina and other anticorruption probes in Latin America have revealed these industries as some of the region’s worst offenders.[22] For instance, Braskem,[23] a partly state-owned Brazilian petrochemical company, is the largest customer of a proposed expansion to the Serra do Mel solar farms in the Brazilian state of Rio Grande do Norte (currently being developed by French developer Votalia). Braskem was at the center of the largest corruption scandal in Latin American history. In 2016, Braskem and one of its parent companies, Odebrecht S.A., agreed to pay $3.5 billion to regulators in the United States, Brazil and Switzerland to settle bribery charges.[24] Braskem pled guilty to conspiracy to violate the bribery provisions of the FCPA and paid a total criminal penalty of $632 million.[25]

Further, many of the region’s largest state-owned oil companies are involved in energy production and distribution—either directly through subsidiaries or indirectly through a web of trading arrangements. Petrobras, the partially Brazilian-state-owned oil giant, owns several subsidiaries dealing in materials used for energy production. In 2018, Petrobras agreed to pay over $850 million to the Department of Justice to settle FCPA claims arising out of the company’s payment of millions of dollars’ worth of bribes to Brazilian politicians.[26] Other state petroleum giants with similar involvement in energy trading—such as PEMEX in Mexico[27] and PetroEcuador in Ecuador[28]—have become embroiled in similar corruption scandals, reflecting that Latin American energy trading remains a corruption hotbed.[29]

Reducing Corruption Risk in Latin American Renewable Energy Investment

Fortunately, businesses considering—or indeed already involved in, investing in or developing— renewable energy projects in Latin America can take several concrete steps to protect themselves from FCPA compliance risks. Moreover, investors should bear in mind that in addition to the FCPA, local anticorruption laws have in recent years been more vigorously enforced by countries across Latin America as they begin to combat corruption in earnest.[30] Further, anticorruption probes have become increasingly international in scope, as various regulators work across international boundaries to combat international corruption.[31] Some steps that companies can take to mitigate these risks include:

  1. Involve counsel early and often: As alluded to above, counsel skilled and knowledgeable in the FCPA can help guide businesses through the process of financing and building green power projects in Latin America and then selling the generated power in the market while steering clear of regulatory risk. They will also be able to help develop functioning compliance programs and spot any risks associated with the partners and government agencies businesses work with on the ground. Early involvement and continuity of communication with FCPA counsel will help reduce or eliminate larger, more resource-intensive concerns.
  2. Ensure that internal compliance controls are robust: Adequate internal controls are crucial in preventing bribery from occurring in the first place, and spotting and ending it quickly if it does occur. FCPA lawyers can help craft these policies as businesses seek to invest in Latin America. Even where Latin American operations already exist, FCPA counsel should be engaged on an as-needed basis for in-depth evaluation on the adequacy and function of preexisting policies to ensure they are sufficiently robust. This process may include on-site interviews, document collection and review, analysis of the relative maturity of a program as compared with industry peers, and recommendations for closing any gaps in the policies and programs.
  3. Closely monitor local agents and third parties: A consistent theme in FCPA investigations and enforcement actions is liability stemming from a lack of control of agents or third parties on the ground in foreign countries.[32] If a business employs local agents to help it navigate the often complex process of gaining approval and building renewable energy projects in Latin America it must maintain adequate control over their activities, including by requiring them to acknowledge FCPA compliance requirements and to agree to abide by compliance policies. Bad behavior on their part can quickly turn into FCPA liability for the investor or developer.

[1] For the purposes of this note, “renewable energy” refers to wind, solar, geothermal and biofuels. While hydropower has historically been an important energy source in the region, the wind and solar development markets have been far more dynamic in recent years.

[2] “Renewable Energy Market Analysis: Latin America,” International Renewable Energy Agency (IRENA) (2016).

[3] “Latin America and the Caribbean Announce Ambitious New Renewables Target, ” IRENA (Dec. 10, 2020),

[4] “There Is Room to Raise Private Investment in Clean Energy” CE Noticias Financieras English (Mar. 28, 2020), (subscription required).

[5] Pilar Sanchez Molina, “A 20-Year Power Supply Deal for 238 MW of Solar in Brazil,” PV Magazine (Mar. 4, 2020), brazil.

[6] Jose Rojo Martin, “Solar Aspires to Capture Colombia’s Energy Future with 9.47GW Pipeline,” PV Tech (Apr. 16, 2020), 9.47gw-pipeline.

[7] See, e.g., “With Much of the World’s Economy Slowed Down, Green Energy Powers On,” New York Times (June 30, 2020), energy.html?searchResultPosition=6.

[8] See generally Natalie Kitroeff and Mitra Taj, “Latin America’s Virus Villains: Corrupt Officials Collude With Price Gougers for Body Bags and Flimsy Masks ,” New York Times (June 20, 2020),

[9] Id.

[10] “Covid-19 to Wreck Economics of New Solar, Wind Projects,” PV Magazine (Apr. 1, 2020),

[11] See Valerie Volcovici, “Latin America Pledges 70% Renewable Energy, Surpassing EU: Colombia Minister,” Reuters (Sept. 25, 2019), america-pledges-70-renewable-energy-surpassing-eu-colombia-minister-idUSKBN1WA26Y.

[12] Luis Felipe López-Calva, “Back to Cleaner?: Covid-19, Lockdowns, and Pollution in LAC Cities,” United Nations Development Programme (May 27, 2020), cleaner—covid-19–lockdowns–and-pollution-in-lac-citi.html.

[13] Mariana Morales Urbina, “The Future of Green Energy in Mexico,” Mexico Business (Mar. 10, 2020),

[14] See IRENA at 17.

[15] See, e.g., US Department of Justice Press Release No. 19-167: Two Businessmen Charged with Foreign Bribery in Connection with Venezuela Bribery Scheme (Feb. 26, 2019), businessmen-charged-foreign-bribery-connection-venezuela-bribery-scheme (in which individuals were charged with violating the FCPA for facilitating bribes to Venezuelan government officials); indictment, United States v. Armengol Alfonso Cevallos Diaz and Alarcon, No. 19-20284-RS (S.D. Fla. May 9, 2019) (charging two individuals with conspiracy to violate the FCPA for their part in a scheme to bribe Ecuadorian officials).

[16] See generally Latin American Power Overview: Outlook, Financial Performance, Regulatory Risk and Investments, Fitch Ratings (Sept. 2019) (finding that companies operating in Latin America, with the exception of Chile, suffer heightened regulatory risk due to the central government’s involvement in the energy sector), 767/images/Fitch_10086090.pdfmkt_tok=eyJpIjoiTXpsaFl6QTBNMlExWlRJMCIsInQiOiJwVHBVZjVncDZoT29zcFZTM0JadVlcL1VjaWN1dDM2bnJHR3phU1lJSkpkVU5qNlE5OXB6MXgxSmE4ejRzcjJIVHhI ZWJEaXZBYm92amtFYW81UUZObmc9PSJ9 (PDF: 4.26 MB).

[17] “Centrais Eletricas Brasileiras SA,” Reuters,

[18] Richard L. Cassin, “Eletrobras Pays $2.5 Million to Resolve FCPA Offenses,” FCPA Blog (Dec. 26, 2018),

[19] See 15 U.S.C. §§ 78dd-1-78dd-3.

[20] See José Ramón Cossío Díaz and José Ramón Cossío Barragán, The Rule of Law and Mexico’s Energy Reform: The New Energy System in the Mexican Constitution, James A. Baker III Institute for Public Policy of Rice University (2017), (PDF: 3.88 MB).

[21] See, e.g., “About Eletrobras: History,” Eletrobras,

[22] See “Global Anti-Bribery Year-in-Review: 2019 Developments and Predictions for 2020,” Wilmer Cutler Pickering Hale and Dorr (Jan 30, 2020), global-anti-bribery-year-in-review-2019-developments-and-predictions-for-2020.

[23] Pilar Sanchez Molina, “A 20-Year Power Supply Deal for 238 MW of Solar in Brazil,” PV Magazine (Mar. 4, 2020), solar-in-brazil.

[24] US Department of Justice Press Release No. 16-1515: Odebrecht and Braskem Plead Guilty and Agree to Pay at Least $3.5 Billion in Global Penalties to Resolve Largest Foreign Bribery Case in History (Dec. 21, 2016), global-penalties-resolve.

[25] Id.

[26] US Department of Justice Press Release No. 18-1258: Petróleo Brasileiro S.A.—Petrobras Agrees to Pay More Than $850 Million for FCPA Violations (Sept. 27, 2018), brasileiro-sa-petrobras-agrees-pay-more-850-million-fcpa-violations.

[27] Robbie Whelan, “Secret Recordings Describe Extensive Bribery at Mexico’s Pemex,” The Wall Street Journal (Oct. 11, 2019), mexicos-pemex-11570804717.

[28] US Department of Justice Press Release No. 20-75: Miami-Based Businessman Pleads Guilty to FCPA and Money Laundering Violations in Scheme Involv ing PetroEcuador Officials (Jan. 23, 2020), violations-scheme-involving.

[29] See generally “Foreign Corrupt Practices Act Enforcement in the Energy Sector,” Wilmer Cutler Pickering Hale and Dorr (Mar. 7, 2019), corrupt-practices-act-enforcement-in-the-energy-sector.

[30] See “Combating Corruption in Latin America: Congressional Considerations,” Congressional Research Service (May 21, 2019), (PDF: 1.62 MB).

[31] See “Global Anti-Bribery Year-in-Review: 2019 Developments and Predictions for 2020,” Wilmer Cutler Pickering Hale and Dorr (Jan 30, 2020), global-anti-bribery-year-in-review-2019-developments-and-predictions-for-2020.

[32] Id.

John F. Walsh, Alejandro N. Mayorkas, Kimberly A. Parker, Jay Holtmeier, and Michael Connor are partners, Lillian Howard Potter is special counselHeidi K. Ruckriegle is a senior associate, and Noah Guiney is an associate, at WilmerHale. 


The views, opinions and positions expressed within all posts are those of the author alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of New York University School of Law. PCCE makes no representations as to the accuracy, completeness and validity of any statements made on this site and will not be liable for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with the author.

The US Is Slipping Behind Europe in Corporate Diversity

BRINK News -

The Black Lives Matter movement has revealed a clear gap between the United States and Europe in corporate disclosures on diversity and inclusion. Analysis by Datamaran has revealed what Datamaran CEO Marjella Lecourt-Alma called a “red flag” for investors: “When we see a lack of transparency on important issues like diversity and inclusion, which should have a place in the boardroom, we have to question the company’s governance and culture.”

Corporate disclosures on diversity depend on having the right internal controls and processes in place — and the U.S. is clearly lagging behind. Datamaran analyzed corporate reporting data using a natural language processing algorithm to visualize and quantify the emphasis companies are putting on this issue.

Source: Datamaran

Following the Rules — a Missed Opportunity

One of the contributing factors to the U.S. lag is regulation. Regulation isn’t ticking up in the U.S. the way it is in Europe. In fact, today, European companies are subject to roughly double the number of regulations facing U.S. companies, as Datamaran insights show. 

Take filing regulations, for example. Annual reports and financial filings give a good indication of what’s material to a company, as the topics disclosed there are important enough to have reached strategic level. In the U.S., the Securities & Exchange Commission (SEC) requires companies to disclose the policies they have in place to promote diversity, as well as their directors’ “self-identified” racial, ethnic and gender profiles.

While there have been calls for the SEC to take a “comply or explain” approach to regulating diversity, which would involve companies disclosing policies they have or explaining their lack of transparency, the current rules are not particularly stringent, and as a result, emphasis on this issue in annual reports is at a low level.

Meanwhile, in Europe, the Non-Financial Reporting Directive — which does operate a “comply or explain” system — appears to be having a positive effect on transparency around diversity and inclusion. Since it was rolled out to all European Union member states in 2018, disclosure on diversity and inclusion in the region has increased to a high level.

When it comes to corporate disclosure, more European regulations incorporate diversity and inclusion as a mandatory field. Looking at voluntary initiatives reveals an even bigger push in Europe — an additional signal of how this issue is becoming institutionalized. While we also see signs of regulatory uptake in the U.S., this is much slower. 

The Courtroom of Public Opinion

Regulation is evolving, and companies have a choice to make: Do they hold back and wait to be pushed by mandatory reporting measures, or do they open the doors to voluntary ones, pulling the field as leaders? 

In the U.S., we’ve yet to see an industry taking the lead, though some are showing improvements. When we look at sector reporting on diversity and inclusion, there is a low level of emphasis across the board, notably in male-dominated industries such as oil and gas and utilities.

Source: Datamaran

As investors look more closely for double standards on diversity and inclusion, companies will need to start investing more capital, time and resources into strengthening their governance processes. As Manju Seal, head of sustainable finance at BMO reiterated, companies that fail to incorporate environmental, social and governance (ESG) issues into their overall business strategy risk their ability to access capital markets easily.

Combine this with fast-changing social contexts and real-time social media platforms with a global reach, and it’s a perfect storm for companies under pressure to not only report more openly on issues like diversity and inclusion, but also ensure that sufficient internal controls and processes are in place. A story without a backbone will never last.

According to Dr. Jutta Kissel, sustainability manager at BASF SE, “Things change much faster than ever before due to media digitization and the rise of social media. Individuals and their opinions have become more influential in the development of certain non-financial topics. This can have a much more profound impact on corporate reputation.”

Subjective Judgements Are Not Enough

Keeping your finger on the pulse — not just of today’s regulation, but of the signs that point to its future direction — is essential, and provides real financial opportunities.  

This is where stakeholder listening and engagement comes in. Too often, this business-critical process relies on outdated approaches — manual research, limited surveys and ad-hoc discussions — that ultimately lead to subjective judgments. These subjective judgments are not enough and need to be supplemented by solid data. “With a data-driven approach,” said Simon Braaksma, senior director of reporting at Philips, “we have incorporated a wider range of data and stakeholders than before and managed to get an evidence-based perspective into regulatory, strategic and reputational risks and opportunities.” 

Tjeerd Krumpelman, head of business advisory, reporting and stakeholder engagement at ABN AMRO, echoed this sentiment: “Having a holistic approach to capturing all unfolding issues is tremendously important for getting your [risk and opportunity] analysis right. It also means that the issues identified could have more significance for the company’s strategy overall.”

The World Is Watching

“There’s clearly a need for more transparency and action around diversity and inclusion in the corporate world,” Lecourt-Alma said, “and one of the first steps is for every company to look around. What are peers and competitors doing? What are stakeholders, including policy makers and regulators, saying? What are investors demanding? What issues are important in the wider world? With robust data underpinning this emerging story, companies can begin to build a better strategy — one that elevates the issue to a strategic position in the boardroom, where it belongs.” 

Which companies will take the lead? Only time will tell, but the world is certainly watching. 

International: COVID-19 Global guide on public contracting

Global Compliance News -

In brief

In light of the global pandemic, governments across the globe are faced with urgent needs whose immediate coverage is a matter of life and death. Hence, these unusual and uncertain times call for rare and exceptional measures, and without much ado, governments around the globe have provided them. Common to all approaches is the will to enable public contractors to procure the urgently needed supplies to save lives and contain the pandemic without major bureaucratic hurdles.

Contents Key takeaways

Against that background, Baker McKenzie’s public procurement team is pleased to provide you with the COVID-19 Global Guide on Public Contracting, which provides an overview of the measures made available for public contracting authorities in light of the global pandemic.

In this guide, Baker McKenzie lawyers from several jurisdictions share their high-level input on these key questions:

  • How so we accelerate standard procedures?
  • Are direct awards permissible?
  • What other options are available to contracting authorities?
Asia Pacific








Czech Republic







United Kingdom

Latin America




North America


The post International: COVID-19 Global guide on public contracting appeared first on Global Compliance News.

31 Days to a More Effective Compliance Program – Evaluation of due diligence and clearing red flags

FCPA Compliance & Ethics -

An important part of the job duties of any compliance practitioner is clearing red flags which might appear for a proposed third-party relationship during the due diligence process. It is mandatory that not only must all red flags be cleared but there also be evidence of the decision-making process to show to a regulator if [...]

The post 31 Days to a More Effective Compliance Program – Evaluation of due diligence and clearing red flags appeared first on Compliance Report.

The Affiliated Monitors Expert Podcast

Corporate Compliance Insights -

The Affiliated Monitors Expert Podcast Affiliated Monitors provides professional independent integrity monitoring and ethics and compliance assessments nationally and internationally and across almost all industries. With its knowledge of effective ethics and compliance programs and cultures, Affiliated Monitors is respected for its work as the corporate monitor on matters ranging from multi-national corporations to small […] The post The Affiliated Monitors Expert Podcast appeared first on Corporate Compliance Insights.

(This is only a summary. Click on the headline to view the entire article at Corporate Compliance Insights and participate in the discussion.)

RILA Asks for Mandatory Mask Requirement

Loss Prevention Media -

The Retail Industry Leaders Association (RILA), which represents Walmart, Target, Best Buy and other major chains, says local health orders have only created confusion for them and their customers. Additionally, they blame that confusion for creating conflict between customers and store employees. A number of recent videos have gone viral online, including a woman refusing […]

Women Pepper-Sprayed Employee; Made off with $100K Worth of Designer Handbags

Loss Prevention Media -

Charges were filed Monday against two women accused of stealing $100,000 worth of designer purses from a Salt Lake City store. Akaija Mshea-Beverli Elder,18, and Akaila Maisunxian Elder, 20, both of Fairfield, California were charged with aggravated robbery, a first-degree felony, in the Third District Court, according to the documents. One of the women tried […]


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