SEC Assesses Millions in FCPA Fines

Lax record keeping results in SEC fines

Lax record keeping results in SEC fines

In the last fiscal quarter, the Securities and Exchange Commission ramped up its prosecution of Foreign Corrupt Practices Act (FCPA) cases imposing fines totaling $37 million against U.S. companies engaging in business overseas. It is part of an aggressive stance by the SEC to counter what it sees as laxity in record keeping and financial controls over payments made by U.S. entities to overseas agents. While bona fide agent fees may pose no problem, failure to abide by strict FCPA rules can lead to charges of conducting corrupt practices on foreign soil.

Resort Operator to Pay $9 Million Fine

In April, the SEC announced that the Las Vegas Sands Corporation agreed to pay a $9 million penalty in settlement of charges that it failed to properly document payment of millions of dollars to an overseas consultant hired to facilitate business dealings in China and the port of Macao. The defendant corporation owns or operates five luxury resorts in that locale, and the SEC alleged that the $62 million in consultant’s payments were not accurately noted in corporate records or were lacking in proper supporting documentation.

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New EU Regs in Wake of “Panama Papers” Scandal

The Panama Papers scandal prompted changes to tax laws

The Panama Papers scandal prompted changes to tax laws

In the aftermath of the global tax evasion scandal known as the “Panama Papers,” the European Commission has proposed sweeping new changes to the reporting and disclosure requirements for corporations doing business throughout the twenty-eight European Union member countries. While the use of offshore entities is not illegal, utilizing them to breach tax laws is. The disclosures gleaned from the massive leak of confidential information from a leading Panamanian law firm revealed a scope—in dollar amounts and number of entities and world figures involved—which was previously unheard of. The resulting media clamor left the EU little choice but to come down hard and fast.

The Panamanian Epicenter

In early 2015, an anonymous whistleblower leaked over eleven million documents from a Panamanian law firm to a German newspaper, which then organized a team of four hundred investigative journalists to conduct in-depth research and document review. Fourteen months later, the investigative consortium exposed the use of 214,000 offshore companies set up in Panama, the British Virgin Islands, Hong Kong, and elsewhere by account holders and offshore operators, ranging from five heads of state to numerous high government officials and managers of multinational companies.

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The LPO Dilemma: Centralization Versus Segregation

Choose the ideal type of Legal Process Outsourcing for your business

Choose the ideal type of Legal Process Outsourcing for your business

For over a decade, the significant cost and productivity advantages of outsourcing a firm’s legal processes to a legal processing vendor have become indisputable. Both the savings to an organization’s legal spending as well as the flexibility and scalability that determine competitiveness dictate that strong firm-provider partnerships be maintained. But as recovery from the global economic crisis continues at a slower than expected pace, the pressure on law firms and businesses to further fine-tune LPO dynamics has taken center stage. The question is no longer whether to outsource, but rather, which processes and to how many locations?

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