World News

SEC Announces Largest-Ever Whistleblower Award
SEC Announces Largest-Ever Whistleblower Award (photo: SEC)

Washington D.C. — The Securities and Exchange Commission today announced an expected award of more than $30 million to a whistleblower who provided key original information that led to a successful SEC enforcement action. 

The award will be the largest made by the SEC’s whistleblower program to date and the fourth award to a whistleblower living in a foreign country, demonstrating the program’s international reach.

“This whistleblower came to us with information about an ongoing fraud that would have been very difficult to detect,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.  “This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement.”

Sean McKessy, Chief of the SEC’s Office of the Whistleblower, added, “This award of more than $30 million shows the international breadth of our whistleblower program as we effectively utilize valuable tips from anyone, anywhere to bring wrongdoers to justice.  Whistleblowers from all over the world should feel similarly incentivized to come forward with credible information about potential violations of the U.S. securities laws.”

The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million.  Whistleblower awards can range from 10 percent to 30 percent of the money collected in a case.  The money paid to whistleblowers comes from an investor protection fund established by Congress at no cost to taxpayers or harmed investors.  The fund is financed through monetary sanctions paid by securities law violators to the SEC.  Money is not taken or withheld from harmed investors to pay whistleblower awards.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.  The previous high for an SEC award to a whistleblower was $14 million, which was announced in October 2013.   

The SEC awarded its first whistleblower under the program following its inception in fiscal year 2012.  The program awarded four more whistleblowers in FY 2013, and has awarded nine whistleblowers in FY 2014. 

“We’re pleased with the consistent yearly growth in the number of award recipients since the program’s inception,” Mr. McKessy said.

For more information about the whistleblower program and how to report a tip, visit

U.S. Securities and Exchange Commission           September 22, 2014

GlaxoSmithKline Found Guilty of Bribery in China

GlaxoSmithKline Found Guilty of Bribery in China (photo: ALAMY)

LONDON— GlaxoSmithKline PLC said Friday that a Chinese court found its subsidiary in the country guilty of bribing nongovernment personnel and fined the company close to £300 million ($491.5 million).

The penalty is the largest ever corporate fine in China, according to the official Chinese news agency Xinhua, and draws a line under an issue that has hung over the U.K. drug maker for more than a year. Chinese authorities initiated investigations against the company last June.

"The illegal activities of GSKCI [GSK China Investment Co. Ltd.] are a clear breach of GSK's governance and compliance procedures; and are wholly contrary to the values and standards expected from GSK employees," GSK said in a statement Friday.

The company added that it has cooperated fully with the authorities and has taken steps to comprehensively rectify the issues identified at the operations of the unit. Glaxo issued a separate apology to the people of China in English and Mandarin on Friday, saying "GSK PLC sincerely apologizes to the Chinese patients, doctors and hospitals and to the Chinese Government and the Chinese people."

Separately, Xinhua, China's main state media outlet, reported that Glaxo's former China head, Mark Reilly, was sentenced to three years in prison, though it also reported the sentence was suspended for four years. Xinhua didn't disclose details of the legal procedures surrounding Mr. Reilly, including what he was charged with and what he plead to the charges. He couldn't be reached for comment.

The fate of the British national wasn't immediately clear. Chinese legal experts said that, according to established procedure, Mr. Reilly would be required to remain in China for the four years his sentence is suspended.

Mr. Reilly was the former head of Glaxo's China business. Although he stepped down from his position shortly after authorities launched their investigation, he remained a Glaxo employee.

Mr. Reilly has been in China for about a year, after saying he was returning there to help Chinese authorities probing the case. The company didn't comment on Mr. Reilly's sentence in a statement early Friday.

Chinese authorities in May accused Mr. Reilly of ordering his subordinates, his sales team and other employees to bribe hospital doctors, health-care organizations and other parties on "a large scale" to boost Glaxo's drug sales in China. That helped Glaxo reap billions of yuan in additional revenue between 2009 and 2012, they said.

"Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this," Chief Executive Andrew Witty said in a statement Friday.

The company reiterated that it remains "fully committed" to China. The country makes up less than 5% of group sales, but before the investigation started was an important and fast-growing market for the drug maker.

Glaxo said the fine would be funded out of existing cash resources, and the charge would be included in its third quarter update. While the total fine is large, it is dwarfed by Glaxo's latest quarterly earnings of £1.4 billion. In China alone its latest quarterly sales were around £60 million.

But the fine will increase pressure on Mr. Witty, whose six-year tenure as chief executive has been marked by a move to expand the company further into emerging markets.

Some investors spoken to by The Wall Street Journal have started to question Mr. Witty's performance, questioning whether the China issues might represent a systemic problem for Glaxo, as well as expressing concern over the company's recent weak U.S. sales and slow new drug launches.

Separately, Glaxo has been investigating claims that its employees bribed doctors in Iraq, Jordan, Lebanon and Syria.

Glaxo could still potentially face a fine in the U.S. or U.K. The U.K.'s Serious Fraud Office opened a criminal investigation into the commercial practices of Glaxo in May. The U.S. Securities and Exchange Commission and the Justice Department are both investigating the company, according to people familiar with the matter.

Investors didn't take fright at the fine Friday, with Glaxo's shares up just under 1%, in line with gains seen for drug company peers AstraZeneca PLC and Roche Holding.

Friday's sentences and fine come amid what business groups say is an increasingly chilly environment for foreign companies in China.

Last month a Shanghai court convicted two foreign private investigators who had worked for Glaxo for illegally purchasing personal information on Chinese citizens. The case raised questions about the limits of due diligence and other efforts to collect information in China, a market where industry data and corporate and executive backgrounds can be hard to come by.

In recent weeks the U.S. Chamber of Commerce and other business groups have criticized what they said was a singling out of foreign companies for a growing number of antitrust probes. The probes have ensnared a number of foreign car and car-parts makers as well as technology companies such as Microsoft Corp. and Qualcomm Co. The companies have said they will cooperate and abide by Chinese law.

China has said it treats foreign and domestic parties equally according to the law and that stepped-up enforcement is part of an effort to help consumers and to bring more market forces into its economy.

In August, foreign direct investment in China reached its lowest level in more than four years, a drop experts attributed to China's slowing economic growth as well as nervousness by some foreign companies. But they said the slowdown is likely to be temporary given that China remains a solid growth market with a growing consumer base.

The Wall Street Journal            September 19, 2014

Rakintzis Accuses Politicians For Enjoying Immunity in Corruption Cases
Rakintzis Accuses Politicians For Enjoying Immunity in Corruption Cases (photo: GreekReporter)

Greek General Inspector of Public Administration Leandros Rakintzis, responsible for battling corruption in the public sector, confirmed that high-profile politicians continue to benefit from concerted efforts to write-off charges of wrong-doing that allow statute of limitations to lapse before they can be prosecuted.

The comment was given in response to a question asked by SYRIZA MP Thodoris Dritsas.

“Have you seen high-profile politicians go to court?” he asked and described what he called his ‘complaint’ to the parliament as, “in my efforts to do something about the high-profile, I always run into a wall of exculpatory measures.”

However, Rakintzis refused to bend to Dritsas’ pressure to reveal names, stressing that he was not in a legal position to do so. But he made clear that he feels that an entirely different set of rules apply for the political class elite that render prosecutions nearly impossible.

Rakintzis was also revealing about NGOs and corruption in the public sector. He said that he had submitted questions to the relevant Ministry and tax offices, but they protested that they didn’t have the time to conduct audits so none ever took place. The operation of NGOs throughout the first decade of 2000s is mired in scandal. Many different development aid organizations received generous grants from the government under the Foreign Ministry’s ‘Hellenic Aid’ program but with dubious outcomes.

Regarding the Greece ‘s public sector, he reminded the committee that Parliament itself had passed laws legitimizing illegal spending of state funds.

He noted, however, that the dismissal of public employees found guilty of abusing their positions had been accelerated and that the new body of Public Administration Inspectors was a valuable institution, as the framework of internal audits that had existed until recently had been largely inactive.

GreekReporter     September 17, 2014

Napthine government to overhaul anti-corruption watchdog IBAC

THE Napthine government will overhaul its anti-corruption framework after a wave of concern about its failure to do the job.

Premier Denis Napthine today vowed to loosen the threshold test for the $170 million anti-corruption commission to begin inquiries.

The government will also back a uniform requirement for all public sector bodies to notify the Independent Broad-based Anti-corruption Commission if they suspect corruption.

This would include the state’s parliamentarians.

Dr Napthine also flagged draft legislation to expunge historical convictions for consensual homosexual acts, after the decriminalisation of gay sex in 1981.

The decision to hand more teeth to IBAC comes after years of criticism of the body’s legislative framework, which was set up to minimise any political fallout.

The biggest challenge to the IBAC’s reforms will be the fact there are only six sitting days to go before parliament rises for the November 29 election.

Dr Napthine said that IBAC would be empowered to undertake preliminary investigations before determining whether to dismiss, investigate or refer a complaint.

The reforms will introduce misconduct in public office as one of the common law offences that can constitute corrupt conduct.

The planned new laws also would require IBAC and the Ombudsman to provide information to a parliamentary committee to help investigate a possible breach of privilege or contempt of parliament arising from an IBAC or Ombudsman’s report.

Shadow attorney-general Martin Pakula said he had not been briefed on the IBAC legislation and accused the government of treating the parliament with contempt.

Mr Pakula questioned whether extra sitting days would be needed to ensure the legislation’s passage.

The Australian                        September 16, 2014

Africa: Is Africa Losing the Battle Against Corruption?

Corruption remains one of the most pressing challenges facing developing states and Africa in particular, as it substantially undermines development and general prosperity on the continent.

This is despite the emergence of strong international legal frameworks, such as the United Nations Convention Against Corruption (UNCAC), which was adopted in 2003 and has been ratified by 140 countries. This was quickly followed by the African Union Convention on Preventing and Combating Corruption (AUCPCC), which the Africa Union (AU) adopted in 2003 and which has been ratified by 35 AU member states.

Indeed, the past decade has seen the proliferation of national anti-corruption commissions and the establishment of offices of ombudsmen, as prescribed by the above conventions.

The donor community has provided millions of dollars to governments and civil society to bolster efforts to address corruption and its root causes. Nevertheless, it seems as though little, if any, positive results have been accrued. Given that the theory and practice in this field are clearly not working, it may be time to revisit this problem and explore alternative options.

According to most of the available indicators, the war on corruption is at a standstill. In fact, these indicators show that corruption is actually increasing in countries where its impact is likely to be most harsh. Globally, the average country scores produced by Transparency International (used for their ranking system), between 2000 and 2013 have gone down by 0,5 on a scale of 1 to 10 (1 representing low levels of perceived corruption, and 10 the highest).

The World Bank indicators on control of corruption provide a more nuanced variation. These indicators show that between 1996 and 2012, corruption has become worse in low and high-income states that are members of the Organisation for Economic Cooperation and Development (OECD), while lower-middle, upper-middle and high-income non-OECD countries show marginal improvements. For sub-Saharan Africa, the score dropped from 33,213 to 30,515 (out of 100, where a high score indicates less corruption).

To be fair, much criticism has been levelled at these indicators, as they are primarily based on perception surveys and don't provide any quantitative evidence for actual levels of corruption.

The ranking system used by Transparency International's Corruption Perceptions Index, in particular, has been heavily criticised for its methodological bias against African and other developing states.

That said, measuring corruption is problematic, as by its very nature it is a concealed and secretive practice, and can thus only be measured by public perceptions or proxy indicators. Similarly, efforts to combat corruption have increasingly focused on contextual factors, such as transparency, accountability, and rule of law; an absence of which allows corrupt practices to flourish.

Closer consideration of such contextual indicators can help better explain the lack of progress in fighting corruption. Of the 46 sub-Saharan African states tracked by the Mo Ibrahim Foundation from 2000 to 2012, progress in the field of accountability has also stagnated, with only a marginal average increase (1,36 on a scale of 100). Some 21 of the 46 countries show negative results since the year 2000.

Although human development has risen significantly (an average increase of 10,8, on a scale of 100), both rule of law and human rights have experienced an average decrease (-1,8 and -2,4, respectively).

ISS          September 16, 2014

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