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The Morning Risk Report: Coronavirus Hobbles Corporate Compliance Monitoring
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An empty office building in Arlington, Va. Because of lockdowns, corporate compliance monitors haven’t been able to assess progress at companies. ANDREW CABALLERO-REYNOLDS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Good morning. Lockdowns intended to blunt the spread of the coronavirus are delaying the work of corporate monitors who rely on visits to companies and access to sensitive data to ensure that regulator-mandated changes to compliance regimes are being upheld.
With travel restricted as well, monitors have reached for digital tools to continue their work. But observing corporate culture and day-to-day operations at a virtual remove is less than ideal. “When you do a site visit and you’re actually there, you can see how people interact and how they relate,” said Pam Davis, a partner at law firm Winston & Strawn LLP in San Francisco who has been an independent monitor and consultant in foreign bribery cases.
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Recently appointed monitors—those just getting to know a company and developing plans—will likely face the biggest hurdles, said John Melican, a managing director at financial crime compliance consultant Exiger LLC in New York, who has worked as an independent monitor. More mature monitorships might benefit from this period to write up observations and reports and conduct analysis.
“Monitorships that are currently in process in many respects are being slowed down almost to a complete halt,” said John Hanson, president of the International Association of Independent Corporate Monitors. “They can continue in some capacity, but not in a full capacity.”
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From Risk & Compliance Journal
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Alstom agreed to pay $772 million to resolve violations of the Foreign Corrupt Practices Act in Indonesia and elsewhere in December 2014. PHOTO: PASCAL GUYOT/AGENCE FRANCE-PRESSE/GETTY IMAGES
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A former Alstom SA executive who cooperated with prosecutors and served as a witness against one of his former colleagues at trial was sentenced to two years of supervised release.
Larry Puckett, a U.S. sales manager for an Alstom subsidiary in Windsor, Conn., was sentenced by District Judge Janet Bond Arterton of New Haven via videoconference Monday, having waived his right to be sentenced in court. He was ordered to pay a $5,000 fine and complete 100 hours of community service.
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Irving Picard, the trustee who has spent more than a decade clawing back money for victims of the Bernard Madoff Ponzi scheme, in 2010. PHOTO: SHANNON STAPLETON/REUTERS
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The Justice Department is backing efforts to force European banks and other overseas investors to give back roughly $3 billion they received from foreign investment funds that moved money in and out of Bernard Madoff’s Ponzi scheme.
The U.S. solicitor general urged the U.S. Supreme Court to pave the way for continued litigation against these foreign institutions, some of the last remaining targets in the global hunt for stolen cash from Mr. Madoff’s $20 billion fraud.
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A former banker at Goldman Sachs arranged for millions of dollars in bribes to be paid to government officials in Ghana to help a client win a power-plant contract, U.S. regulators said in a civil lawsuit. The Securities and Exchange Commission alleges that Asante Berko, a former executive at Goldman’s London subsidiary, facilitated as much as $4.5 million in bribes to help a Turkish energy company win a contract to build a power plant. An attorney for Mr. Berko declined to comment on the lawsuit.
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U.S. air-safety regulators, seeking to make it easier for airlines to ramp up transportation of cargo aimed at combating the pandemic, are poised to allow such shipments in the cabins of passenger planes, according to people familiar with the issue. The new guidance is slated to be issued in the coming days, they said, and is expected to resemble earlier moves by carriers and foreign aviation authorities from Canada to Ethiopia and the Middle East.
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The Supreme Court, breaking with longstanding tradition because of the coronavirus pandemic, said it will hear oral arguments by teleconference in May, including in cases about the potential disclosure of President Trump’s financial records. The court’s statement said it anticipated providing a live audio feed to the news media, but it didn’t say whether it would allow broader public access.
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Three states and New York City asked the Supreme Court Monday to block Trump administration regulations that penalize immigrants for seeking public benefits, arguing that noncitizens shouldn’t be deterred from seeking health care during the coronavirus pandemic.
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An employee works a New Orleans restaurant’s pickup window on April 8. Restaurants and other small businesses have been hurt by the spread of the new coronavirus. PHOTO: SOPHIA GERMER/BLOOMBERG NEWS
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Insurers are starting to take heat in Washington, D.C., over denials of claims for business income losses tied to government-ordered shutdowns.
Business owners’ frustrations are reaching the nation’s capital partly because some other avenues aren’t working, at least for now. More than a dozen policyholders have sued their insurers, but those actions could take months just to get hearing dates, lawyers said. Courts themselves have limited operations under the shelter-in-place orders covering much of the nation, they said.
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Personal-computer shipments fell in the first quarter as production and logistical challenges offset higher demand, driven by remote work and school orders in response to the coronavirus pandemic, according to preliminary data from two industry research firms.
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About 2 million homeowners are skipping their monthly mortgage payments, according to industry data, a number that is forecast to rise further as more Americans lose their jobs as a result of the coronavirus pandemic. Approximately 3.74% of home loans are in forbearance as of April 5, according to Mortgage Bankers Association data, up from about 2.73% the prior week.
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SoftBank Group is on track for its worst annual performance in its 39-year history as the tech conglomerate said it expected to lose nearly $17 billion in its Vision Fund for the fiscal year just ended. The investment loss means the $100 billion fund, the world’s biggest tech investment vehicle, is likely down since its launch three years ago.
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The head of one of the world’s largest ad-agency conglomerates warned the industry is facing a far more severe pullback in advertising spending than the one that buffeted Madison Avenue in the wake of the financial crisis.
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Amazon had curtailed shipments to its warehouses of items not deemed essential for consumers as they responded to the coronavirus outbreak. PHOTO: JOHANNES EISELE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Amazon will begin allowing third-party sellers on its platform to resume shipping so-called nonessential items this week, a signal that the company is ramping up to meet broader consumer needs, according to people familiar with the matter. Amazon said it was hiring an additional 75,000 employees to help fill the mounting demand. Last month, Amazon made a decision to prioritize at its warehouses those items deemed essential during the coronavirus outbreak, such as cleaning products, health-care items and shelf-stable food.
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Industrial real-estate operators expect the disruption of consumer supply chains caused by the coronavirus pandemic to drive a new surge in warehousing demand. Warehouse developers now helping some retail and logistics customers secure additional storage space as lockdowns trigger an upheaval in consumer buying patterns believe the rapid adjustments will give way to longer-term changes in how companies manage their supply chains.
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The state discovered the breach on Jan. 28. Pictured, the Assembly Chamber in Albany, N.Y. PHOTO: MIKE GROLL/ASSOCIATED PRESS
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Hackers compromised the computer network serving New York’s state government in late January, officials said, prompting the state to hire an outside firm and change thousands of employee passwords.
The state’s Office of Information Technology Services discovered the breach on Jan. 28. Hackers built “tunnels” into several servers that are used to transmit encrypted information, officials said. In mid-February, the state brought in CrowdStrike, a cybersecurity firm, to assess the scope of the intrusion.
Mr. Azzopardi said the state was working with the Federal Bureau of Investigation to determine the hackers’ identities. Two people familiar with the matter said they believed the perpetrator was a foreign actor.
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Jamie Iannone has also served as the CEO of SamsClub.com, the e-commerce arm of the company that runs Sam’s Club warehouse stores. PHOTO: HARRY MURPHY/SPORTSFILE FOR WEB SUMMIT/GETTY IMAGES
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EBay named Jamie Iannone its new chief executive, in a move that will provide the e-commerce pioneer an industry veteran as it tries to reignite growth during a tumultuous period.
Mr. Iannone, who will join eBay on April 27, was most recently the chief operating officer of Walmart’s e-commerce division. He has also served as the CEO of SamsClub.com, the e-commerce arm of the company that runs Sam’s Club warehouse stores. Mr. Iannone previously worked for eBay from 2001 to 2009, including as a vice president.
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AutoNation Inc.’s chief executive Cheryl Miller has taken a leave of absence for health reasons, adding to the challenges confronting the nation’s largest car-dealership chain as the coronavirus outbreak has pummeled sales and dented business. The company said in a filing with the Securities and Exchange Commission that Chairman Mike Jackson will serve as president and chief executive officer until Ms. Miller returns.
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Chief financial officers are playing a crucial role as companies try to navigate the economic fallout from the pandemic, which has upended supply chains, revenue forecasts and liquidity plans and is forcing some businesses into bankruptcy. The job is particularly daunting for finance chiefs joining their companies amid the crisis, and doubly so for those who are their company’s first finance chiefs, as is the case with Andrew Casey, CFO of WalkMe Inc.
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Airlines that unload miles to their card partners sacrifice future revenue. PHOTO: ORIT BEN-EZZER/ZUMA PRESS
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U.S. airlines have mortgaged gates, flight paths and just about any asset they could find in the back of a hangar to weather the coronavirus crisis. Now, they are considering selling miles in bulk to their credit-card partners to raise cash.
United Airlines and Delta Air Lines and their respective credit-card partners, JPMorgan Chase and American Express, have discussed unloading miles ahead of schedule and for less than the lenders would ordinarily pay, according to people familiar with the matter.
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Baker Hughes said it is pursuing a restructuring plan that will result in about $1.8 billion in charges and expects to book a roughly $15 billion goodwill impairment charge for the first quarter as the company faces the coronavirus pandemic and declines in oil and gas prices. The oil-field services company said Monday it will book $1.5 billion of those charges for the first quarter. Future cash expenditures related to those charges are projected to be about $500 million with an expected payback within a year, it said.
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Hydraulic fracturing company FTS International Inc. has engaged restructuring advisers to help navigate the threat to its balance sheet caused by the slump in commodity prices amid the coronavirus pandemic, said people familiar with the matter. FTS, which provides shale drilling and well completion services for energy companies, has hired Lazard Ltd. and Kirkland & Ellis LLP as financial adviser and legal counsel, respectively, the people said.
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