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The Morning Risk Report: Brazil Prosecutors Charge Ex-Vale CEO With Homicide For Dam Collapse
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People took part in a march from Belo Horizonte to Brumadinho on Monday to mark one year since the Brumadinho dam collapsed on Jan. 25, 2019, killing 270 people. PHOTO: DOUGLAS MAGNO/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Good morning. Brazilian state prosecutors charged Vale’s former CEO Fabio Schvartsman and 10 others from the mining company with homicide in an effort to hold it to account for last year’s dam collapse that killed 270 people.
Prosecutors for the state of Minas Gerais also leveled homicide charges at five individuals at Germany’s TÜV SÜD, the auditing company that certified the mine-waste dam as safe only months before it gave way. All 16 individuals, as well as both companies as entities, were also charged with environmental crimes, according to a statement.
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A spokeswoman for Vale said the company didn’t have an immediate comment. TÜV SÜD didn’t comment on the charges but said it was cooperating with the authorities and was committed to clarifying the facts of the dam’s rupture, one of the world’s deadliest in recent history.
The Jan. 25 collapse came just over three years after another mine-waste dam that Vale owned with BHP Group ruptured in the nearby town of Mariana, killing 19 people, in another of Brazil’s worst environmental disasters. Prosecutors charged more than 20 people with homicide at the time, but courts have since watered down those charges or thrown them out.
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Lessons From Recent Compliance Failures
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Join Risk & Compliance Journal reporter Dylan Tokar and Kyle DeYoung, a partner at law firm Cadwalader Wickersham & Taft, at 11 a.m. ET on Thursday for a webinar reviewing corporate compliance failures of recent months and the key takeaways for compliance professionals. Register here.
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From Risk & Compliance Journal
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New York Lobbying Firm Settles on Allegations of Sanctions Violations
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A lobbying firm led by a former U.S. senator has settled allegations it provided services to a Somalia-based company that was designated by the U.S. as a terrorist organization, the Treasury Department said.
Park Strategies LLC, a company founded by former New York Sen. Alfonse D’Amato, paid $12,150 to settle allegations it violated sanctions by providing lobbying work in 2017 to Al-Barakaat Group of Companies Somalia Ltd., according to the Treasury’s Office of Foreign Assets Control, which enforces U.S. sanctions. Al-Barakaat Group, also known as Al-Barakat Financial Co., was designated as a global terrorist group by the U.S. in 2001, the Treasury said.
The fine illustrates the sanctions compliance risks facing professional services providers, including attorneys and law firms, which seek to represent blocked individuals or entities as clients, Risk & Compliance Journal’s Mengqi Sun reports.
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PHOTO: ANDREW HARRER/BLOOMBERG NEWS
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Cybersecurity experts hired by Amazon founder Jeff Bezos have alleged that his phone was probably hacked in 2018 by a WhatsApp account associated with Saudi Crown Prince Mohammed bin Salman, according to a person familiar with the matter.
A forensic audit of Mr. Bezos’ phone by FTI Consulting, a business advisory group based in Washington, found with “medium to high confidence” that the device began leaking data shortly after being sent a video file from the WhatsApp account linked to Prince Mohammed, the person said, as part of an operation that siphoned information for months.
Saudi Arabia on Tuesday denied the allegations. “Recent media reports that suggest the Kingdom is behind a hacking of Mr. Jeff Bezos’ phone are absurd,” the Saudi embassy in the U.S. said on Twitter. “We call for an investigation on these claims so that we can have all the facts out.”
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Sathish Muthukrishnan, Ally Financial’s new chief information officer, aims to update the company’s financial tools with more innovations made possible by artificial intelligence, with security baked into the development process.
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The investigation into potential fraud has echoes of the 2015 Volkswagen emissions scandal. PHOTO: FOCKE STRANGMANN/SHUTTERSTOCK
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German authorities raided facilities connected to the German subsidiary of Mitsubishi Motors as part of a probe into allegations the Japanese auto maker installed illegal emissions-management software on some diesel-powered vehicles sold in Germany.
The investigation into potential fraud—officially launched in mid-November but only made public by the prosecutor on Tuesday—has echoes of the emissions scandal of 2015. That year, U.S. authorities charged Volkswagen with using illegal software to cheat emissions tests on millions of diesel vehicles. The German auto maker later admitted to committing fraud and has paid more than $30 billion in fines, fees and penalties.
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A Chinese court sentenced a senior police official who had headed Interpol to 13½ years in prison for bribery, more than a year after he dramatically disappeared while still holding the international position.
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Boeing pushed back its timetable for regulators to clear the return of the troubled 737 MAX for commercial service, saying it doesn’t expect approval until at least the middle of the year. The company said its new estimate for the Federal Aviation Administration’s signoff takes into account the need for approving training for pilots and “experience to date with the certification process.”
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Iran is refusing to hand over the flight data recorders of a Ukrainian airliner it accidentally shot down, despite Kyiv’s demand the black boxes be sent back home for analysis. The brewing dispute follows domestic anger and international criticism over Tehran’s initial denial of responsibility for the jet’s downing.
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Carlos Ghosn’s arrest in November 2018 thrust his wife, Carole Ghosn, into battles she wasn’t expecting to fight: against Nissan Motor, the company her husband ran, as well as the Japanese justice system.
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The Trump administration plans to add seven countries to a group of nations subject to travel restrictions, including Nigeria, Africa’s most populous country, along with others in Africa and Asia, according to administration officials who have seen the list.
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PHOTO: THOMAS PETER/REUTERS
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Italy and Britain will face U.S. tariffs if they proceed with a tax on digital companies such as Alphabet’s Google and Facebook, U.S. Treasury Secretary Steven Mnuchin warned.
Mr. Mnuchin issued the warning after France agreed to delay the imposition of its own digital tax in the face of threats of steep U.S. tariffs on French exports. Mr. Mnuchin said French President Emmanuel Macron agreed to hold off on the tax through the end of the year while the two countries work out a permanent resolution.
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President Trump said he is serious about imposing tariffs on European automobiles if he can’t strike a trade agreement with the European Union. “They know that I’m going to put tariffs on them if they don’t make a deal that’s a fair deal,” Mr. Trump said in an interview with The Wall Street Journal on the sidelines of the World Economic Forum.
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Chief executives are hopeful that easing trade tensions around the world could give the economy a boost, despite some early dismal forecasts for global growth and business sentiment.
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Workers at South Korea’s international airport in Incheon spraying antiseptic in the arrival lobby. PHOTO: SUH MYUNG-GEON/YONHAP/ASSOCIATED PRESS
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The virus implicated in a mysterious outbreak of pneumonia in central China is in a class of pathogens that are a growing player in global infectious-disease epidemics. A leading Chinese health official said this week that the virus has spread between humans, confirming a chief concern of authorities as the disease is transmitted around the country and across Asia. The outbreak, which originated in the city of Wuhan, has sickened hundreds of people, and at least six have died, according to Chinese state media and health officials.
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Xerox Holdings is preparing to nominate as many as 11 directors to HP’s board. PHOTO: ELISE AMENDOLA/ASSOCIATED PRESS
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Xerox is preparing to nominate as many as 11 directors to HP’s board, according to people familiar with matter, in an aggressive move to push a $33 billion unsolicited takeover bid for the maker of computers and printers.
Xerox in recent weeks bought a small HP stake, which gives it the right to nominate directors for elections to be held at the company’s annual meeting this summer, the people said. The deadline for nominations to HP’s board is Friday. Xerox could still decide to not follow through with the nominations.
Xerox in November offered to buy its much larger rival for $22 a share in cash and stock. HP rejected the bid as too low and questioned Xerox’s ability to finance it. Xerox earlier this month said it had secured up to $24 billion in debt financing; in response, HP reiterated that the bid was too low.
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Starbucks wants to cut its water use and the amount of trash it sends to landfills over the next decade, the latest big company to set fresh targets for limiting its environmental impact.
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A member of Tyson Foods’ founding family is calling on the meat industry to address issues like resource conservation and food waste. John R. Tyson, the company’s chief sustainability officer and son of Chairman John Tyson, said the company is seeking to form a world-wide coalition to work together on social and environmental issues.
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General Electric stunned investors in 2018 by writing off $22 billion of goodwill from its 2015 purchase of Alstom’s power business. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
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A battle is brewing over the accounting concept of goodwill, the premium a company pays when it buys another for more than the value of its net assets.
The Financial Accounting Standards Board, the accounting-rules maker, is weighing whether to continue to assess goodwill by tests—or return to a similar approach to the guidelines of nearly 20 years ago, when companies wrote down a set portion of goodwill each year for up to 40 years. The FASB has asked for comments on the possible change, and companies haven’t been shy about weighing in.
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Tesla models on display at the company’s flagship store in Berlin. PHOTO: FABRIZIO BENSCH/REUTERS
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Elon Musk pulled off opening a brand-new car factory in China with breakneck speed, sending Tesla’s shares to record heights. A follow-up act in Germany faces potential speed traps.
Among the challenges for his German factory plan are two peculiar ones: colonies of bats and unexploded World War II bombs that would need to be removed from the factory site before construction can begin.
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