In a recent roundtable as part of the World Bank Office of Suspension and Debarment’s Fifth International Debarment Colloquium, panelist Joseph Mauro (an Integrity Compliance Specialist with the Bank’s Integrity Vice Presidency (INT)) discussed efforts to move from a “stick” to a “carrot” approach with respect to corporate compliance programs.

Under the Bank’s current system, while implementation of a compliance program is a remedial measure for which mitigating credit may apply, individuals within the Integrity Compliance Office were rarely involved in reviewing a compliance program to any significant extent until after a company has already been sanctioned. Under this process, a company’s compliance program was typically reviewed in-depth only as a condition for release from sanction.

Continue Reading World Bank Purports to Move From “Stick” to “Carrot” Approach on Compliance

The US Department of Education issued a highly anticipated report concluding that US colleges and universities have failed to disclose billions of dollars in foreign funding, as required by federal law.[1] The report provides greater detail on the Department’s ongoing probe of foreign influence in US higher education and highlights new compliance risks faced by colleges and universities.
Continue Reading Department of Education Report Highlights the Compliance Risks of Unreported Foreign Funding for US Colleges and Universities

On 21 October 2020, Her Majesty’s Revenue and Customs (HMRC) – the UK’s tax authority – released updated figures regarding the number of investigations that it has open into potential offences under Part 3 of the Criminal Finances Act 2017 (the Act). Part 3 of the Act makes it a criminal offence for businesses to fail to put in place reasonable procedures to prevent their employees and associated persons – i.e. those who act for or on behalf of them – from criminally facilitating tax evasion.

According to the information released by HMRC, as at 13 October 2020, HMRC had 13 investigations into potential offences under the Act and a further 18 cases currently under review. HMRC also report that its investigations span 10 different business sectors, including financial services, oils, construction, labour provision and software development, and that those investigations span all HMRC customer groups from small business through to some of the UK’s largest businesses.

The number and range of investigations appear to show that HMRC is actively enforcing the Act across businesses of all shapes and sizes, even despite the pressures on workload and resources caused by the COVID-19 pandemic. This reach, together with potentially unlimited fines for businesses found guilty of the offences, is a salutary reminder that businesses must take their responsibilities seriously and put in place reasonable procedures to stop the facilitation of tax evasion.

Continue Reading The Future of the Facilitation of Tax Evasion Offences in the UK

Following a recent rise, the price of Bitcoin once again exceeds $10,000, a key resistance level which, if sustained, could see it rising even further. Interest in cryptocurrencies is, according to some observers, likely to rise as measures taken by Central Banks to combat the effects of the coronavirus pandemic result in the devaluing of their own fiat currencies, and while Central Banks themselves experiment with digital currencies. The Libra Association continues to work on Libra, a token designed to be used on Facebook. Rumors swirl of imminent support by the global payments giant PayPal for cryptocurrencies, supported by recent job listings for cryptocurrency engineers. Whilst it might not yet have returned to the levels of mania seen during 2017-2018, cryptocurrency appears likely to continue to grow in both maturity and usage. Such a rise will inevitably be marked with a corresponding increase in the debate over the extent of regulation needed in the area. Should it be a case of caveat emptor or should government regulators take greater steps to introduce guard rails in this area?

Continue Reading Sheriffs of the Wild West? Regulators will Likely Continue Debating the Necessity of Greater Cryptoasset Regulation

The US Department of Homeland Security’s Customs and Border Protection agency (CBP) announced on September 14 the issuance of five new withhold release orders (WROs) on entities allegedly using forced labor in or from China’s western Xinjiang Uyghur Autonomous Region (XUAR). The WROs bar the import into the United States of various goods alleged to be produced by forced, indentured, and convict labor (“Forced Labor”), including cotton, apparel, hair, and technology products.

CBP’s announcement is just the latest in a wider US government interagency effort to crack down on alleged human rights abuses related to ethnic minorities in XUAR. Companies are encouraged to take a fresh look at how their existing compliance programs address the risks of Forced Labor and related labor and human rights issues in their supply chains, as well as related economic sanctions and export controls risks.

For more information, click here to read the full client alert.

The DC Circuit issued an opinion in late August that could significantly disrupt decades of Congressional investigations practice. In Comm. on the Judiciary of United States House of Representatives v. McGahn, No. 19-5331, 2020 WL 5104869 (D.C. Cir. Aug. 31, 2020), the DC Circuit effectively put an end to the US House Judiciary Committee’s attempt to enforce judicially a subpoena against former White House Counsel Donald McGahn. Pending rehearing en banc and/or appeal,[1] the decision could eliminate the force and effect of subpoena authority—the authority underlying every House investigation.

For more information, click here to read the full client alert.

[1] House Democratic leaders have vowed to seek a rehearing en banc.

 

The Trump administration is considering a ban on US imports of Xinjiang-origin cotton and other products due to allegations of widespread forced labor. The scope of the possible restrictions has not been made public but credible reporting suggests that it could include cotton and tomato products from the Xinjiang Uyghur Autonomous Region (XUAR) or wider prohibitions covering cotton products from across China and third-countries relying on XUAR-sourced materials or labor.

XUAR produces an estimated 20% of the world’s cotton and 85% of China’s cotton. The far western province is also the site of alleged human rights violations, including the detention and internment of ethnic Uyghur and Turkic Muslim minorities, surveillance of local populations, and use of forced and prison labor from the XUAR.

A ban on Xinjiang-sourced cotton products could radically impact global supply chains and the apparel industry, and further escalate the US-China trade war. The Trump Administration has aggressively employed sanctions and export controls against Chinese officials and entities. This advisory discusses Customs and Border Protection’s processes for implementing and enforcing such an import ban, as well as related investigative and enforcement risks under customs, sanctions, export control, and other laws and regulations

For more information on this issue, click here to read the full Client Alert.

The Department of Justice Antitrust Division’s investigation into price-fixing by generic drug companies continues to remain one of the Antitrust Division’s most active matters. This week the Antitrust Division announced that it had indicted Teva Pharmaceuticals USA Inc. (Teva), the seventh company to reach a resolution with the Antitrust Division in this investigation. Teva is one of the largest pharmaceutical companies in the world.

Teva Pharmaceuticals was charged for its role in three separate conspiracies to fix prices for generic drugs. Specifically, it alleges that Teva, in three separate conspiracies, engaged in the sharing with competitors of pricing information for certain generic drugs in advance of price increase announcements. The first alleged conspiracy involved pravastatin, which is a cholesterol medicine, and other generic drugs; the second alleged conspiracy involved drugs used to treat and manage arthritis, seizures, pain, skin conditions, and blood clots; and the third alleged conspiracy involved drugs used to treat brain cancer, cystic fibrosis, arthritis, and hypertension. The Antitrust Division alleges that the conspiracies lasted for a little over two years and began as early as May 2013 and lasted until around December 2015. The estimated amount of gain/loss for each conspiracy is $200 million, $75 million, and $75 million, respectively.

Continue Reading Another Generic Drug Company Accepts a Criminal Indictment Alleging Collusion

Please join Steptoe for an interactive discussion with Congressman Jamie Raskin and current and former senior staff from Capitol Hill and the Department of Justice on congressional and DOJ investigations into fraud and waste related to the CARES Act and COVID-19 relief funds.

Date: Monday, September 14, 2020

Time: 12:00 p.m. – 1:15 p.m. EDT

Register for the webinar here.

Investigations and enforcement actions have already begun, and companies and individual recipients of stimulus funds need to take defensive action and position themselves to demonstrate compliance and manage risk – even years after the COVID-19 pandemic ends.

To use current trends to help forecast your potential risk, it is critical to first understand the type of conduct Congress and DOJ are targeting today.

This panel will touch on these topics and more, including:

  • Criminal securities fraud prosecutions related to the COVID-19 pandemic
  • Limitations in the rollout of the SBA Paycheck Protection Program and how to ensure contracts are being awarded to those who are most in need
  • Potential areas for most COVID-19 related fraud and waste
  • How the lessons learned from TARP investigations will portend possible similarities for COVID-19 relief participants
  • How companies can manage enforcement and litigation risk by adopting good compliance practices

Speakers:

  • Jim Barnette, Partner in Steptoe’s Government Affairs & Public Policy Group, and former General Counsel, US House of Representatives Committee on Energy and Commerce
  • Patrick Linehan, Partner in Steptoe’s White-Collar and Securities Enforcement practice
  • Rep. Jamie Raskin, represents Maryland’s 8th Congressional District in the US House of Representatives and serves on the House Select Committee on the Coronavirus Crisis
  • Moderator Reem Sadik, Associate in Steptoe’s White-Collar and Securities Enforcement practice
  • Donald Sherman, Deputy Director, Citizens for Responsibility and Ethics in Washington (CREW); former Senior Counsel on the Senate Homeland Security and Governmental Affairs Committee; former Chief Oversight Counsel for Rep. Elijah Cummings, Ranking Member of the House Committee on Oversight and Government Reform
  • Justin Weitz, Assistant Chief, Securities and Financial Fraud Unit of the US Department of Justice’s Criminal Division, Fraud Section

Yet another prosecution alleging that an academic failed to report ties to China illustrates the government’s multi-agency focus on this issue and the costs and pressures imposed on U.S. universities.

A Texas A&M engineering professor and NASA researcher was arrested and charged with several crimes stemming from allegedly hiding his ties to Chinese companies and universities.[1] In a criminal complaint unsealed on August 23, 2020, the DOJ charged Zhengdong Cheng with making false statements, conspiracy, and wire fraud based on allegations that he willfully deceived NASA and Texas A&M in connection with obtaining a NASA research grant.[2] Federal law prohibits NASA from entering into collaboration or coordination with China or any Chines-owned company.[3]

The case against Cheng represents only a part of Texas A&M’s interactions with the government on this issue. Over a year ago, on June 13, 2019, the U.S. Department of Education sent letters to Texas A&M and Georgetown explaining that the agency believed the schools were not fully reporting all funding received from other countries, including China.[4] At that time, Texas A&M said in a statement that school officials “are reviewing it and hope to have this resolved soon.”[5]

Continue Reading Another Talents Program Indictment Underscores Importance of Strong Compliance Program and Cooperation with Law Enforcement