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The Morning Risk Report: Herbalife Executive Told Colleague to Ignore Expense Limits |
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Investigators at the Justice Department and the SEC have been probing Herbalife’s anticorruption practices in China. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS
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Hello. News out of Herbalife Nutrition Ltd. underscores the critical risk-management role played by internal accounting rules governing corporate expense accounts.
When Herbalife’s former chief executive served as finance chief a decade ago, he told a colleague in Hong Kong or mainland China to bypass expense-account limits on entertainment spending, people familiar with the matter told The Wall Street Journal.
The remarks were recorded, the people said, and they reached the Justice Department, which is investigating whether the company violated foreign-bribery laws in its business dealings in China. Herbalife has said the U.S. probe has focused on entertainment and gift expenditures by the company’s local China external affairs department.
[Continued below...]
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Entertainment spending, if seen as excessive or without a business purpose, can be a foreign-bribery risk. Companies should have clear and accessible guidelines and processes in place for gift-giving or entertainment spending by employees, officers, directors and agents, according to the 2012 guidance from the Justice Department and Securities and Exchange Commission.
Prosecutors have brought multiple cases of Foreign Corrupt Practices Act violations over the years for excessive spending on gifts, entertainment or travel for foreign officials. The FCPA doesn’t prohibit gift-giving, the guidance notes, but it bars bribes, including those disguised as gifts. “Clear guidelines and processes can be an effective and efficient means for controlling gift-giving, deterring improper gifts, and protecting corporate assets,” the guidance says.
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| From Risk & Compliance Journal |
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PHOTO: ANDREW CABALLERO-REYNOLDS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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A settlement reached Thursday by a Virginia company over alleged efforts by a Turkey-based affiliate to evade U.S. sanctions on Iran demonstrates the difficulty of keeping far-flung units in line with corporate policy. Kollmorgen Corp. of Radford, Va., bought the Turkish affiliate, Elsim Electrotechnical Systems AS, in March 2013. Elsim continued to do business in Iran for two years after the deal, despite Kollmorgen’s efforts to get Elsim to comply with U.S. sanctions regulations, according to the U.S. Treasury Department.
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A former sales executive at a unit of oil-services firm Petrofac PLC pleaded guilty to 11 counts of bribery relating to projects in Iraq and Saudi Arabia that netted the company more than $4 billion.
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Danske Bank A/S said Thursday it was placed under formal investigation by a judge in France over suspicions of money laundering related to terminated business at its Estonian branch.
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Son Of Former Moldovan Prime Minister Ordered to Forfeit Assets |
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The son of former Moldovan Prime Minister Vladimir Filat was ordered by U.K. authorities to forfeit more than £466,000 ($532,000) in assets, after investigators raised suspicions the funds were derived from illegal activity.
After moving to London in July 2016 to begin his studies, Vlad Luca Filat led an extravagant lifestyle, spending large sums of money on luxury goods, U.K. authorities said. He was hit with forfeiture orders on three accounts held at HSBC Holdings PLC. Efforts to reach him for comment were unsuccessful.
Mr. Filat, the former prime minister, is serving a nine-year prison sentence after he was convicted in June 2016 for his role in the disappearance of $1 billion from three Moldovan banks, funds equivalent to one-eighth of the country’s gross domestic product.
A judge at City of London Magistrates Court said he was satisfied “on the balance of probabilities” that the cash belonging to the son was derived from his father’s conduct.
—Samuel Rubenfeld
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Jeff Bezos, founder and chief executive officer of Amazon.com, at a Golden Globe Awards event last month. PHOTO: EMMA MCINTYRE/GETTY IMAGES
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Jeff Bezos, founder of Amazon.com Inc., accused National Enquirer’s publisher of trying to blackmail him by threatening to release embarrassing photos, escalating a fight that began with the tabloid’s revelations of his alleged extramarital affair. In a lengthy and highly personal post on the web platform Medium, Mr. Bezos alleges that American Media Inc. demanded that he call off investigators he brought in to determine how the Enquirer obtained his personal text messages for the initial article it published and whether it had untoward motives in pursuing the article. A spokesman for AMI didn’t return messages seeking comment.
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The Japanese CEO who plans to fly around the moon on Elon Musk’s spacecraft has found a way to send his struggling company’s shares skyward: He said he would stop tweeting. Yusaku Maezawa, until now a frequent Twitter user like Mr. Musk, made an announcement on the social-media platform on Thursday. “I will focus on my main business. My challenge continues. I will achieve good results whatever it takes. Please let me take some time off from Twitter,” Mr. Maezawa wrote, concluding with an emoji of a man bowing deeply. The tweet immediately sent shares of Mr. Maezawa’s fashion e-commerce company, Zozo Inc., higher. Still, they ended the day lower.
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Geologist Svetlana Deys standing on the main ridge at Sukhoi Log, where gold mining is expected to begin in the early 2020s. PHOTO: THOMAS GROVE/THE WALL STREET JOURNAL
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A vast source of gold under a plot of land in southeastern Siberia could provide the Russian central bank with a huge and nearly sanction-proof backstop for its currency. Tests commissioned by Polyus, Russia’s biggest gold producer, determined there are 63 million ounces of gold at Sukhoi Log, Russia, where open-pit gold production is expected to begin in the mid-2020s. Polyus sells its gold exclusively to large Russian state banks, which then resell it to the country’s central bank. Once mining begins, the bank can use the mine’s gold to support its ruble currency or sell it for extra foreign currency in times of crisis.
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China’s Huawei Technologies Co. said it could take up to five years to fully address concerns raised by the U.K. government about its software and engineering processes. The telecom giant also said in a letter to the U.K. Parliament that its board of directors has signed off on a companywide overhaul of its software engineering, budgeting $2 billion over five years for the effort.
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Vale SA, the world’s largest iron ore miner, said Friday it is removing 500 residents from a rural town near a dam containing mining waste in Minas Gerais state. The company said in a statement the move was ordered by the country’s mining regulator ANM after a local consulting firm refused to corroborate the dam’s safety.
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Employees of the Smithsonian National Zoo return to work following a partial federal government shutdown. PHOTO: CHIP SOMODEVILLA/GETTY IMAGES
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Economists say a fresh government shutdown would take a toll on U.S. economic growth as well as business and consumer sentiment, as a deadline to reach a deal over border-wall funding approaches next week.
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Europe’s economy faces a daunting combination of weaker demand for its exports from China and elsewhere, the prospect of a messy divorce with the U.K. and political problems closer to home, the European Union warned Thursday.
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A slowing global economy, coupled with weak demand from China over the Lunar New Year and from Brazil after Vale SA’s iron ore disaster, is dragging shipping rates to near record lows, and few in the industry expect things to improve any time soon.
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Michele Thompson and her son, Grant. Apple said it plans to compensate the Thompson family for discovering a bug in the FaceTime software. PHOTO: MICHELE THOMPSON
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Apple Inc. plugged a flaw in its FaceTime video-chat software Thursday, and said it would pay a 14-year-old from Arizona for reporting the problem.
Grant Thompson, a freshman at Tucson’s Catalina Foothills High School, found the bug as he chatted with friends while playing the videogame “Fortnite.” His mother, Michele Thompson, spent the better part of a week unsuccessfully trying to notify the tech giant of the flaw.
The bug allowed one FaceTime user calling another in a group chat to listen in—or even see video—while the recipient’s Apple device was still ringing. Apple last week apologized for the flaw, an embarrassing vulnerability for a company that heavily markets the security and privacy of its devices.
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Behind one of the biggest bank deals in a decade is a recognition that BB&T and SunTrust would be more competitive with a bigger tech budget. PHOTO: DAVID ROLFE/ASSOCIATED PRESS
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Behind one of the biggest bank deals in a decade is a recognition that BB&T Corp. and SunTrust Banks Inc., both dominant banks in the South, would be more competitive with a bigger tech budget. The all-stock, $28.2 billion deal, announced Thursday, is expected to help the rivals close a widening digital gap that is fueling one of the biggest threats to their business: losing relevance among younger customers.
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Amazon.com Inc. has invested in high-profile autonomous-vehicle startup Aurora, giving the online retailer insight into the fast-developing world of driverless cars as it navigates its growing logistics operation.
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Saudi Aramco executives traveled to the U.S. this week to court investors ahead of a potential $10 billion bond sale, reviving an idea to partially fund the acquisition of Saudi Arabia’s national petrochemical firm, according to people familiar with the matter.
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Delivery company Postmates Inc. has filed confidentially for an initial public offering, the company said Thursday.
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A sign in front of Gannett Co Inc., headquarters in Tysons Corner, Va. in 2016. PHOTO: MARK WILSON/GETTY IMAGES
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Digital First Media, the hedge-fund-backed newspaper chain whose takeover bid for Gannett Co. was rejected, has launched a proxy fight in an attempt to remake Gannett’s board, according to people familiar with the matter.
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Pernod Ricard SA chief Alexandre Ricard defended against criticism from activist investor Elliott Management Corp., setting out his own plan to boost profit at the maker of Chivas Regal whisky and Absolut vodka.
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