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The Morning Risk Report: Microsoft to Pay $25 Million to Settle Bribery Probe
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People lined up outside a Microsoft store opening in London earlier this month. PHOTO: PETER SUMMERS/GETTY IMAGES
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Good morning. Microsoft Corp. agreed to pay $25 million to settle a probe into potential violations of a law prohibiting the bribery of foreign government officials, the U.S. Securities and Exchange Commission said.
The computer behemoth settled the alleged Foreign Corrupt Practices Act violations by four Microsoft subsidiaries in agreements with the SEC and the U.S. Department of Justice. Microsoft, as part of its settlement with the SEC, neither admitted nor denied the misconduct described by the agency.
[Continued below…]
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In an internal email to company employees on Monday that was viewed by The Wall Street Journal, Microsoft President Brad Smith said the misconduct involved a small number of employees that were no longer with the company. “We were deeply disappointed and embarrassed when we first learned about these events several years ago, and we hope that all of the steps we’ve since taken, including today’s settlement, send a strong message,” Mr. Smith said.
Microsoft likely wasn’t eligible for a declination under the department’s corporate enforcement program because the company didn’t voluntarily self-report the bribery allegations, Ephraim Wernick, a former member of the Justice Department’s FCPA unit and partner at Vinson & Elkins LLP, told Risk & Compliance Journal’s Dylan Tokar.
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SFO Suffers From Neglectful Management, Report Says
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The Serious Fraud Office, the U.K.’s major economic crime investigator, is suffering from poor morale, according to a government watchdog.
A focus on delivering casework has led to a culture that tolerates “neglectful approaches to management” and sometimes even “unacceptable behaviors,” the inspector general of the country’s prosecution service said in a report released Friday. The independent assessment of staff engagement was requested by SFO Director Lisa Osofsky, after she took control of the agency.
Priorities set by Ms. Osofsky in initial speeches were recognized among SFO staff, the report said. But the messages that resonated the most were about the pace of investigations, rather than about encouraging personal development, or having zero tolerance for bullying, the report added.
The SFO didn’t immediately respond to a request for comment. Ms. Osofsky told the Evening Standard that the report “doesn’t make comfortable reading” but that it was “necessary to understand where we are” as the agency attempts to improve its performance.
—Dylan Tokar
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Facebook CEO Mark Zuckerberg. PHOTO: MARCIO JOSE SANCHEZ/ASSOCIATED PRESS
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Facebook Inc.’s expected settlement with U.S. regulators will create a board committee to help ensure senior-level scrutiny of the company’s privacy-related efforts.
The Federal Trade Commission is expected as soon as this week to announce a settlement with the tech giant over its privacy practices, according to people familiar with the matter.
The settlement, which includes a roughly $5 billion fine and other requirements of Facebook, would end a lengthy probe into whether the company kept its promises to protect user data. As part of the agreement, Facebook plans to form a new board committee focused on privacy oversight, one of the people said.
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The U.S. is imposing new sanctions against a Chinese company for transporting Iranian crude, a move that widens the U.S. campaign of pressure on the Islamic Republic amid weeks of escalating tensions. A spokesman from the Chinese embassy in Washington said Beijing opposes such unilateral sanctions.
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McKinsey & Co. won the backing of a federal judge in Virginia over the consulting firm’s efforts to navigate potential conflicts of interest arising from its work in large corporate bankruptcy cases. In a decision filed with the U.S. Bankruptcy Court in Richmond, Va., Judge Kevin Huennekens accepted a certification from McKinsey showing it won’t directly benefit from a $5 million penalty the firm agreed to pay to settle allegations of improper disclosure practices. Last month, McKinsey lawyers said they couldn’t guarantee the firm wouldn’t indirectly benefit from the payment because of how it invests billions of dollars on behalf of current and former employees.
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Bank bosses in Australia could lose past annual bonuses if misconduct on their watch is revealed, under new rules proposed by the industry regulator. The Australian Prudential Regulation Authority wants to defer parts of their bonuses for several years and change the structure of bonuses, with at least half of variable pay measured against risks other than financial performance. The new measures are aimed at aligning executive pay with the interests of customers, shareholders and others with stakes in the financial industry.
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Equifax to Pay Up to $700 Million in Data Breach Settlement
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Equifax Inc. struck a settlement of up to $700 million to resolve investigations and lawsuits stemming from its 2017 data breach that exposed the personal data of nearly 150 million Americans. The credit-reporting company settled with the Consumer Financial Protection Bureau, the Federal Trade Commission, 48 states, the District of Columbia and Puerto Rico.
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An image released by Iranian media purports to show boats from Iran’s Islamic Revolutionary Guard Corps moving around the British-flagged oil tanker Stena Impero. PHOTO: MORTEZA AKHOONDI/TASNIM NEWS AGENCY/ASSOCIATED PRESS
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The speed and ease with which Iran seized the Stena Impero, a British-flagged ship in the Strait of Hormuz, demonstrates the wide latitude Tehran has to disrupt global trade as it fights against U.S. economic pressure. The threat of ship seizures has roiled markets, sparked new Western security measures and capsized shipping-industry schedules. Oil prices on Monday, however, maintained their muted reaction to mounting tensions between Iran and the West, moving modestly higher.
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The prolonged grounding of the Boeing Co. 737 MAX is rippling through the U.S. economy, hurting the nation’s trade balance and clouding the outlook for airlines, suppliers and their tens of thousands of workers. Companies ranging from General Electric Co., which is the sole manufacturer of the engine for the MAX through a joint venture, to smaller parts suppliers have cited the halt in deliveries of the aircraft for some financial damage, or suspended profit guidance.
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Boris Johnson’s last act as Britain’s foreign secretary was to gather a host of European dignitaries in London and fail to turn up. Mr. Johnson may now be set to return this week, this time as Britain’s prime minister, and European officials say they don’t know what to expect. Over the course of his career—including his leadership of the Brexit campaign and his rocky tenure as Britain’s foreign secretary—Mr. Johnson has proved to be unpredictable.
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Cotton exports to China have tumbled, and the domestic price for the crop has fallen roughly 30% since China slapped retaliatory 25% tariffs on U.S. farm commodities last summer. Some Chinese enterprises, meanwhile, have made inquiries with U.S. exporters about purchasing agricultural products and have applied to Beijing for tariff exemptions, according to a Sunday report from China’s official news agency Xinhua.
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Tech giant Apple Inc. shut its stores early in Hong Kong, as fears of escalating violence and spiraling lawlessness linked to weekslong protests spurred concern among businesses and the public. A day after police fired tear gas in clashes with thousands of protesters, Hong Kong remains on edge as officials conceded no ground and activists accused the government of coddling a rise in vigilante justice.
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A robotic hand holding a cube at an OpenAI research lab in San Francisco last year. PHOTO: ERIC LOUIS HAINES/ASSOCIATED PRESS
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Microsoft Corp. said it would invest $1 billion in artificial-intelligence startup OpenAI LP, as the software giant seeks to enhance its Azure cloud-computing platform. The companies said they would jointly develop supercomputing technologies for Azure, a fast-growing system that has helped propel Microsoft’s growth as the world’s most valuable public company.
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Apple Inc. is in advanced talks to buy Intel Corp.'s smartphone-modem chip business, according to people familiar with the matter, a move that would jump-start the iPhone maker’s push to take control of developing the critical components powering its devices.
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German pharmaceuticals and chemicals group Bayer AG has agreed to sell its Dr. Scholl’s foot-care business to a U.S. private-equity firm for $585 million. The unit is among assets Bayer marked for disposal last fall, aiming to boost profitability and address investor worries about the company and mounting legal liabilities tied to its Roundup herbicide.
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Starbucks Corp. said it is taking a stake in a digital technology company to speed up its offering of mobile ordering and payment options at its global stores to improve customer convenience. The coffee giant is making an investment and securing a board seat in Brightloom, a company founded in 2015 under the earlier name eatsa, as it seeks to accelerate the adoption of technology by its stores around the world.
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Coca-Cola Co. plans to sell an alcoholic, lemon-flavored fizzy drink nationwide in Japan, following what it says was a successful test of the 133-year-old company’s first cocktail.
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Billionaire activist investor Carl Icahn has pushed to replace four board directors at Occidental. PHOTO: BRENDAN MCDERMID/REUTERS
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Leaders of Occidental Petroleum Corp. are pushing their shareholders to reject billionaire investor Carl Icahn’s bid to replace four directors at the company, urging them to not sign Mr. Icahn’s written requests for a board shake-up.
Last week, Mr. Icahn and his multiple affiliates filed a solicitation statement with the U.S. Securities and Exchange Commission for the board reorganization.
Mr. Icahn said the company’s current directors made a number of mistakes in pursuing Anadarko Petroleum Corp. Occidental is set to acquire Anadarko for $38 billion, after waging a bidding war with Chevron Corp. In a letter, Mr. Icahn echoed his criticism of Occidental’s planned acquisition.
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