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Inside Compliance (Jul 31st, 2019)

1. Abraaj Group, the Dubai-based private equity group that experienced a financial meltdown last year, was fined a record $314.6 million by Dubai regulators for misusing funds. Once the region's largest private-equity firm, Abraaj borrowed money before reporting dates to inflate its balances and sent money to its executives. "Senior management rode roughshod over their compliance function and the misconduct and deceit were pervasive and persistent,” said a Dubai official. Meanwhile, founder Arif Naqvi and other executives have been charged by the United States with racketeering and fraud. - WALL STREET JOURNAL

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2. Chinese steel companies are struggling to keep up with international competitors on carbon compliance and energy efficiency, according to a report published on Wednesday. The report by the Climate Disclosure Project, based in London, indicated that Chinese steel mills have reaped price advantages by falling short of low-carbon standards. But those costs undoubtedly will rise when the country enacts its national emissions trading program next year. "China produced 492.17 million tonnes of crude steel in the first half of 2019, up 9.9% from a year ago," Reuters reported. "Industry officials said earlier this month that smaller steel mills with poor environmental compliance records were taking advantage of lax enforcement to ramp up production." - REUTERS

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3. The Bank of England on Tuesday set a 2021 deadline for major British banks to inform investors if they are too big to fail. The move comes a decade after the global financial crisis, which saw Britain bail out Royal Bank of Scotland and Lloyds. “Increased transparency about the resolution regime is in the public’s interest and also incentivizes firms to make further progress on their resolvability,” said a Bank of England senior official. All banks with retail deposits of more than $61 billion must comply with the mandate. - REUTERS

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4. The Justice Department appointed Robert Zink fraud section chief, a position he had held on an interim basis for the past two years. Prior to Zink, Andrew Weissman, a President Obama supporter, held the position, but he left in 2017 to work on Robert Mueller's team. Zink oversees a team of 150 lawyers, who are tasked with prosecuting foreign bribery and other fraudulent behavior, including in the health care sector. - FINANCIAL TIMES

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5. A Japanese electronics maker plead guilty to price fixing and agreed to pay $28.5 million in penalties, the Justice Department announced on Monday. NHK Spring makes parts for hard disk drives, and it shared pricing information to competitors to profit illegally from its customers in the U.S. and elsewhere. The scheme lasted from 2008 until 2016. The company said it had improved its compliance department and is committed “to regain trust from stakeholders which may have been lost." - THE REGISTER

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6. German prosecutors charged a top former Audi executive with fraud for his role in the diesel emissions scandal. Rupert Stadler, the former chief executive of Volkswagen's luxury unit, along with three other unnamed executives, stands accused of employing illegal software to cheat emissions tests. The charges come days after The New York Times uncovered company documents revealing that Audi's role in the scandal was larger than previously known. Stadler was arrested in 2018 and later released on bail. He could face up to five years in prison if convicted. - NEW YORK TIMES

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7. A compliance officer in Minnesota's Department of Human Services says her compliance concerns were not taken seriously by her superiors, who retaliated against her for raising compliance issues. "It’s my experience that any information or recommendation I make that does not validate what leadership has already decided to do is characterized as disrespectful and is met with accusations or insinuations that I’m failing to do my job correctly," wrote Faye Bernstein in an email to colleagues. Minnesota Gov. Tim Walz said he encouraged state employees to report improper conduct. “Especially if there’s a deficiency, we want to know that," he said. - PIONEER PRESS

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8. Master Halbert, the son-in-law of Micronesian president Peter Christian, was sentenced this week to 18 months in prison. In March, Halbert pled guilty to money laundering. Halbert, who worked at Micronesia's Department of Transportation, allegedly took bribes from a Hawaiian engineer in exchange for $8 million in government contracts. - HAWAII NEWS NOW

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9. Wells Fargo seeks a financial crimes consultant. The position will support the company's emerging risk portfolio review team. Also, the person hired will help identify customers with heightened financial crime risks.

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10. Howard University seeks a privacy officer in its compliance office. The officer will be in charge of the university's health sciences privacy program and work closely with the administration and legal staff.

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Paul Wachter is a California-based journalist who has written for The New York Times Magazine, Harper's, ESPN, and other publications. 

Editor: Kim Lyons (Pittsburgh-based journalist and managing editor at Inside).

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