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The Morning Risk Report: Energy Trader Vitol Paying $163 Million to Settle Corruption, Manipulation Charges
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Vitol Group CEO Russell Hardy speaking in Kuala Lumpur, Malaysia, last year. PHOTO: LAI SENG SIN/REUTERS
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Good morning. Swiss energy firm Vitol agreed to pay $163 million to settle criminal and civil charges that its employees paid bribes to gain an advantage when bidding for oil in Brazil, Mexico and Ecuador. Vitol’s deal with the Justice Department is the first in what is expected to be a series of similar settlements involving global commodity trading companies. Some of the claims grew out of a sweeping corruption scandal in Brazil that focused on bribery of officials at state-controlled Petróleo Brasileiro SA, also known as Petrobras.
The deal includes a deferred-prosecution agreement with the Justice Department, allowing Vitol to escape charges if it stays out of trouble for three years. The company will pay a $90 million fine to the DOJ and an additional $45 million in a coordinated settlement with Brazilian authorities, according to U.S. prosecutors. Vitol, accused of paying millions in bribes over a decade, also settled a probe by the Commodity Futures Trading Commission. It will pay at least $28 million to the CFTC.
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The CFTC’s involvement in a foreign-corruption case is novel. The regulator, which typically regulates derivatives, doesn’t directly enforce the U.S. Foreign Corrupt Practices Act. But in early 2019, it said overseas corruption could violate laws it enforces. The agency’s enforcement director at the time, James McDonald, said the CFTC would be selective about opening investigations, but couldn’t tolerate venal practices in the markets it oversees.
“This historic enforcement action demonstrates that the CFTC will actively pursue fraud tied to foreign corruption and manipulation that impacts the U.S. derivatives and related physical markets,” CFTC Chairman Heath Tarbert said.
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From Risk & Compliance Journal
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Utility Agrees to $137.5 Million Settlement to Resolve Fraud Charges
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Scana Corp. and a subsidiary agreed to a $137.5 million settlement to resolve civil-fraud charges related to a failed nuclear power plant expansion, federal prosecutors said Thursday.
Scana misled investors, regulators and consumers about the status of a $10 billion expansion at the Virgil C. Summer nuclear power plant, the SEC said in a February complaint. The regulator said Scana and subsidiary South Carolina Electric & Gas claimed the project would qualify for more than $1 billion in tax credits when they actually knew the delays would make it unlikely to qualify. The expansion was abandoned in July 2017. Dominion Energy Inc., which bought Scana in 2019, declined to comment.
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The Justice Department’s lawsuit said Facebook inadequately advertised at least 2,600 positions between 2018 and 2019 that were filled by H-1B visa holders. PHOTO: TOM BRENNER/REUTERS
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The Trump administration sued Facebook, accusing the social-media company of illegally reserving high-paying jobs for immigrant workers it was sponsoring for permanent residence, rather than searching adequately for available U.S. workers who could fill the positions. The lawsuit reflects a continuing Trump administration push to crack down on alleged displacement of American workers.
The Justice Department’s civil-rights division said Facebook inadequately advertised at least 2,600 positions between 2018 and 2019 that were filled by foreign professionals on H-1B visas when the company was looking to sponsor them for permanent residency permits. The lawsuit also reflects long-running tensions between Silicon Valley and the Trump administration over the use of foreign workers in key technology roles.
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The Justice Department is discussing a deal to allow Huawei Technologies finance chief Meng Wanzhou to return to China, in exchange for admitting wrongdoing in a criminal case, people familiar with the matter said.
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Lawyers for Ms. Meng, who faces wire and bank fraud charges related to alleged violations of U.S. sanctions on Iran on Huawei’s behalf, have spoken to DOJ officials about the possibility of reaching a deferred prosecution agreement, the people said. Ms. Meng would be required to admit to some of the allegations against her but prosecutors would agree to potentially defer and later drop the charges if she cooperated, the people said.
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Media mogul Jimmy Lai faces months in jail after a Hong Kong court denied him bail while awaiting trial on a fraud charge, the latest in a procession of China critics to be put behind bars. Mr. Lai and two aides face charges related to the lease of a property, about three months after a high-profile raid involving national-security police on the offices of his pro-democracy newspaper, Apple Daily.
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As governments are preparing to roll out Covid-19 vaccines, criminal organizations are planning to infiltrate or disrupt supply chains. PHOTO: SALVATORE LAPORTA/IPA/ZUMA PRESS
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Criminal gangs will likely attempt to get their hands on the new Covid-19 vaccines, Interpol warned, potentially disrupting supplies of the crucial shots as they become available. The agency issued a global orange notice—which it describes as a serious and imminent threat to public safety—calling the vaccines “liquid gold.” It warned that counterfeit vaccines or fake coronavirus tests could become a growing problem.
“It is essential that law enforcement is as prepared as possible for what will be an onslaught of all types of criminal activity linked to the Covid-19 vaccine,” Interpol Secretary-General Jürgen Stock said.
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Pfizer’s expectation to ship half the Covid-19 vaccines it had originally planned for this year highlights the challenges drug makers face in rapidly building supply chains to meet the high demand. Britain’s authorization of the vaccine, meanwhile, is also likely to test the capabilities of its state-run National Health Service.
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Facebook updated its misinformation policy around the coronavirus crisis to include vaccine-related content, as the company looks to continue its fight against claims that it isn’t doing enough to protect its billions of users.
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Covid-19-related deaths reported in a single day hit a record in the U.S. as hospitalizations surpassed 100,000 for the first time this week, leaving hospitals in some regions of the country without enough beds in intensive-care units to meet their patients’ needs.
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The U.S. is increasing the portion of the spying budget devoted to China by nearly one-fifth this year, U.S. officials said, reflecting rising concern over what the Trump administration says is a top economic, security and counterintelligence threat from Beijing.
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Five years after the largest U.S. IPO on record, Chinese tech giant Alibaba added a secondary listing. PHOTO: BRENDAN MCDERMID/REUTERS
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New legislation that is likely to force some Chinese companies off U.S. exchanges will accelerate a migration under way since last year. The U.S. House of Representatives this week approved a bill that would ban trading in shares of foreign companies whose audit papers aren’t inspected by U.S. regulators for three consecutive years.
Since November 2019, 10 U.S.-listed Chinese companies have added secondary listings in Hong Kong, raising a total of $29.9 billion, according to Refinitiv. Led by Alibaba, their market capitalizations now total about $1 trillion. Bankers, analysts and securities lawyers expect more to follow, either in Hong Kong or Shanghai.
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Google AI research scientist Timnit Gebru speaking onstage during TechCrunch Disrupt SF 2018 in San Francisco. PHOTO: KIMBERLY WHITE/GETTY IMAGES FOR TECHCRUNCH
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A prominent artificial-intelligence researcher says she was fired by Google after she refused to retract a research paper and complained about the company in an email to colleagues. Timnit Gebru, the co-head of Google’s Ethical Artificial Intelligence team, wrote in an email to a wide group inside the search giant that Google executives squelched her research and ignored her feedback on issues like the proportion of female employees in the company.
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Including typical quarterly bonuses, Walmart said it has paid more than $2.8 billion in cash bonuses this year. PHOTO: ETIENNE LAURENT/EPA/SHUTTERSTOCK
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Walmart said it would pay another round of bonuses to U.S. workers as the retailer, like rival Amazon, seeks to retain and reward staffers managing a surge in sales during the coronavirus pandemic. Walmart said it would pay $300 cash bonuses to full-time workers and $150 bonuses to part-time associates in the U.S. on Dec. 24. Last week, Amazon.com said it would pay its employees a round of cash bonuses. Like Amazon, Walmart has been hiring aggressively this year to handle the increased business.
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