Tag Archives: corporate crime

Greensill Whistleblower Tips Warns German Regulators of Last Year’s Fraud | Instant News

The German banking regulator received a series of whistleblower tips over the past year that made “multiple allegations of fraud” at Greensill Bank, prompting it to sue for repairs at the bank, according to an internal German government report reviewed by The Wall Street Journal.

The regulator, known as BaFin, received the first series of warnings in the second quarter of 2020. The information alleges that some of Greensill’s assets were backed by fake invoices, according to the report, which outlines the regulator’s efforts over the past year to supervise banks.

BaFin received another alert in the third quarter of 2020 and three other submissions this year. The German-language report, which did not specify the origin of the filing, said the information raised “concerns about the financial situation of the Greensill Group as well as various allegations of fraud.”

There are mainly concerns about the loan Greensill Bank is making to the GFG Alliance, a metals company owned by the British-Indian steel magnate Sanjeev Gupta.

A Mr. spokesperson. Gupta declined to comment.


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Greensill-owned bank declared bankrupt, causing losses to small towns in Germany | Instant News

A German court ruled Tuesday that a small bank linked to the collapsed British financial company went bankrupt, triggering losses for dozens of small German cities.

Greensill Bank AG was deemed bankrupt by the local court, leaving the city as a likely creditor. Around Germany, at least 12 cities with a combined € 200 million, equivalent to about $ 238 million, in deposits are in a similar situation. Individual depositors are covered by insurance.

Among them is Keny, a small town in southwestern Germany. Like most cities that put money into banks, Ken tries to avoid the small losses that come with negative interest rates.

Bremen-based Greensill Bank, formerly known as NordFinanz Bank AG, was acquired in 2014 by Greensill Capital, which itself filed for bankruptcy on March 8. The bank offers slightly positive interest rates, beating the negative interest rates offered by a growing number of German banks.

The mayor of the city, Stefan Bubeck, said that the city is not trying to get high interest rates, but to avoid negative interest rates. Cities “don’t want our savings to decrease,” he said. Mr. Bubeck is worried that most of the money invested will be lost. We were shocked.

The city said it had diverted € 6 million into three banks offering slightly positive interest rates. He deposited € 3 million – a third of his total reserves – at Greensill in November. The bank offers an interest rate of 0.6%, compared to the minus 0.5% offered by other regional lenders in the city.

Other cities said they shifted reserves to Greensill at a lower price to avoid the guaranteed loss of negative prices. Schwalbach am Taunus, a municipality outside Frankfurt that has € 19 million in deposits in Greensill, estimates that negative rates could cost taxpayers half a million euros a year.

Greenshill Bank has attracted depositors by offering quite positive interest rates, as opposed to negative interest rates at many of its peers.


Dominik Reipka / Bloomberg News

Deposit fees have also forced a growing number of individual customers to shop for better prices elsewhere. In fact many park their money outside Germany, in countries such as Bulgaria and Latvia, use platform service providers. The European Union has domestic guarantees on retail deposits of up to € 100,000. Greensill retail customers will further be covered up to € 75 million each with a separate deposit insurance plan provided by commercial banks.

BaFin, Germany’s financial regulator, froze all bank accounts in Greensill earlier this month after an audit could find no evidence of specific collateral used by big customers to borrow money. BaFin has filed a criminal complaint against the bank with prosecutors, who will decide whether to carry out an investigation. On Tuesday, regulators said a local court started bankruptcy proceedings against the bank after BaFin determined the bank would not be able to repay all customer deposits.

A person familiar with the bank said it was currently estimated that up to € 700 million in deposits out of a total of € 3.6 billion would not be covered by insurance. The majority will likely come from local governments.

Cities have their deposit guarantees if they put their money in pseudo local and regional banks that charge negative rates. Their deposits at commercial banks like Greensill were protected until 2017, when insurance was canceled following an expensive bank failure in which many depositors were urban.

Local governments said they could not see the Greensill problem coming, and were confident about the bank’s investment grade rating from ratings agency Scope Ratings.

“Because of this bank’s rating, we had to take a very safe form of investment for time deposits,” said Schwalbach am Taunus Mayor Alexander Immisch.

In a statement, Scope said it now suspects relevant information about Greensill’s business and risks was withheld from analysts, and that misinformation was provided. A Greensill spokesman referred questions to Greensill Capital bankruptcy administrator Grant Thornton, who declined to comment.

In Giessen, a university town north of Frankfurt, Mayor Dietlind Grabe-Bolz said the city was taking all appropriate steps to deposit € 10 million – roughly one-fifth of the city’s reserves – in Greensill, including evaluating bids from banks brought by the institute. different finances. broker. The money is intended to help cover future expenses such as road repairs and school projects.

Miss Grabe-Bolz has raised concerns about BaFin, who began conducting forensic audits at the bank last summer, but her investigation was only announced this month. Giessen transferred his deposits to Greensill Bank in October and December last year for 0.09% and 0.1% interest.

“While BaFin has already started assigning special investigators without the knowledge of investors, Greensill’s bid is still continuing,” the mayor said. “All of this shows that BaFin has let us down.”

A BaFin spokesman said because of their confidentiality duties, they could not notify the city government and other investors about special audits or other surveillance measures. He added that cities are well aware that their deposits in commercial banks are not guaranteed.

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Probes Brazil Braskem Bribery Claims in Mexico | Instant News

Braskem TO

has opened an internal investigation into allegations of bribery made last year by the former chief executive of Mexico’s state-owned oil company, according to securities disclosures.

The Brazilian petrochemical company said in filings Friday that it hired an unnamed US law firm to review claims by Emilio Lozoya, former CEO of Petróleos Mexicanos, also known as Pemex.

The testimony Lozoya provided to Mexico’s attorney general, including allegations involving parent company Braskem, was leaked to the press last year, adding fuel to what had happened. the widest-reaching corruption investigation in the modern history of Mexico.

Braskem and its parent, construction giant Odebrecht SA, paid a combined $ 3.5 billion to settle widespread bribery allegations with US, Brazilian and Swiss authorities in 2016. A Braskem spokesman declined to comment further on the disclosures. Odebrecht did not respond to a request for comment.

In his filing, Braskem said the allegations of illicit payments centered on the ethylene project with Pemex. Mr. Lozoya said he was taking bribes from Odebrecht, according to a complaint filed with Mexican prosecutors previously reviewed by The Wall Street Journal.

Braskem and a joint venture subsidiary in Mexico opened an investigation into allegations of compliance with its global compliance and governance guidelines, the petrochemical company said.

Pemex earlier this month said it had reached an agreement with a subsidiary, Braskem Idesa, to change the terms under which Pemex supplies ethane to petrochemical plants in southern Mexico. The 2010 contract renegotiation came after the decline in Pemex’s production meant that the company was unable to supply the gas in the amount used to make plastics that was originally stipulated in the agreement.

Former Braskem chief executive, José Carlos Grubisich, faces criminal charges in the US over the 2016 company’s settlement. A Grubisich lawyer last month said executives were in discussion with prosecutors to settle the charges.

Write to Dylan Tokar at [email protected]

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Big Tech Wants To Change Patent Laws in Germany, a Popular Place for Litigation | Instant News

Now, a coalition of German blue-chip companies and foreign multinationals, including major US technology companies, is pushing for laws that will reduce the country’s appeal to those wanting to assert their intellectual property.

Germany’s major patent courts, in Munich, Mannheim and Düsseldorf, systematically order orders, or temporary sales bans, for products subject to a patent lawsuit. That makes them attractive legal venues for patent holders.

The primary targets of the legislation are so-called non-practical entities, or NPEs, that accumulate a portfolio of patents they license instead of using them in their own products. Critics call them patent trolls.

The proposed rules aim to make it harder for plaintiffs to win court decisions. The initiative has divided Germany’s usually united business community, pitting some of the country’s biggest patent users against its biggest patent holders.

Volkswagen AG



Deutsche Telekom AG

and others support the bill.

Bayer AG


Siemens AG

and BASF SE has opposed it.

Foreign companies have joined. Apple, Samsung,

Nvidia Corp.


Microsoft Corp.

, among others, have joined European lobby groups pushing for the move. On the other hand are similar companies

3M Together.


Panasonic Corp.



A band

Nokia Corp.

, which over the years has accumulated many patent libraries.

Multinational corporations often steer cases to lucrative legal venues around the world using their remote subsidiaries. Patent litigators say the ability to get a court order could be key for patent holders choosing jurisdiction for a lawsuit.

“In the German legal tradition, if you are doing something you shouldn’t be doing, then first you have to stop,” said Florian Mueller, an independent intellectual property analyst. “Repair is an afterthought.”

Such orders are more difficult to enforce in the US, following changes in law and a series of Supreme Court decisions. This is especially so if the plaintiff is an NPE. Other friendly legal venues for patent holders have emerged outside the US, including China, Turkey and Russia, all of which have established frameworks for intellectual property protection.

Germany’s almost automatic orders, its large consumer market, and the fast working speed of its patent courts compared to other European countries have made it the venue of choice for some of the biggest patent fights in the West.

“Germany has undeniably become a haven for patent trolls.”

– Deutsche Telekom executive Stephan Altmeyer

In December 2018, a court in Munich ordered Apple to stop selling some iPhone models after the chipmaker

Qualcomm Inc.

filed a lawsuit, alleging that a fellow California company had infringed on Qualcomm’s patents on the iPhone modem chip. That command forced Apple to briefly deliver a custom made phone to Germany. Both the company then settled down.

The previous year, chip maker

Broadcom Inc.

sued Volkswagen and its Audi subsidiary, accusing the automaker of infringing Broadcom’s patents in navigation and entertainment systems. Rather than risk an order that would stop production, Volkswagen paid nearly 500 million euros, the equivalent of about $ 598 million, according to people with knowledge of the matter. Volkswagen declined to comment on the settlement. Broadcom did not respond to a request for comment.

Proponents of the proposed law say that Germany’s patent law, which has its roots in the 19th century, is out of date. When Carl Benz received a patent for his car in 1886, “it was one patent for one product,” said Ludwig von Reiche, managing director of Nvidia in Germany. He heads Germany’s IP2Innovate branch, the European lobby group that pushed for the bill.

Today’s increasingly digital vehicles may involve more than 100,000 patents on everything from internet connectivity, sensors and algorithms to individual microchip circuits, he said.

Proponents of the bill say the current system puts too much pressure on companies to choose expensive solutions. They also said the changes would curb the NPE, which they accuse of preying on the company in German courts to increase licensing fees from its sometimes large patent portfolio.

“Germany has undeniably become a haven for patent trolls,” said Stephan Altmeyer, vice president of patent strategy at Deutsche Telekom.

Lawsuits in the European Union pursued by the NPE tripled between 2011 and 2017 – the last year for which figures were available – according to


a data provider that tracks intellectual property litigation. In Germany, one-fifth of patent cases were brought by the NPE in that period, compared with 4% to 6% in other European countries.

The bill currently being processed in the German parliament was drafted by Chancellor Angela Merkel’s government last year but has undergone changes following pressure from lobbyists on both sides. Proponents of the reshuffle hope the law can be adopted before general elections in September. Failure to do so could force subsequent governments to restart projects from scratch.

The law will require judges to carry out a proportionality check before rendering a decision, to ensure that the charges charged against the offender do not massively exceed the revenue claimed by the claiming party. It will also force courts to consider the impact of court orders on third parties – customers whose telephone service will be interrupted, for example, or patients who may not be given life-saving drugs.

It also promises to overcome the peculiarities of the German legal system. Patent infringement cases are handled in regional courts, which can reach a decision in less than one year. But a patent invalidity lawsuit – which tests whether the patents claimed by the plaintiffs are actually valid and is the preferred defense of companies sued for infringement – goes through the special German patent courts, which can take up to three times as long to render a decision.

The NPE says the planned changes are worrying. A ban on sales that the court imposed during the litigation level on the ground, they said. The order could “bring large companies to the negotiating table,” Pio Suh, managing director of IPCom GmbH, Germany’s NPE owned by Fortress Investment Group LLC, a New York-based investment management firm.

The pharmaceutical industry is particularly worrying, where investments to develop new drugs can run into billions of euros and patent infringements could wipe out revenue from certain drugs within months, according to industry executives, creating a strong disincentive to innovation.

Bill critics also argue that since damage in Germany is lower than in the US, and punitive damages do not exist at all, removing the automated order would skew the system and remove most of the barriers to abuses.

“It’s like making a fine for the fare of avoiding ticket prices,” said Beat Weibel, chief intellectual property advisor at Siemens. “We need serious consequences such as automated orders to balance the system.”

Write to Bertrand Benoit at [email protected]

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UK Sanctions Enforcement Releases Updated Penalty Guidelines | Instant News

Updated guidance on monetary penalties by UK sanctions enforcement this week provides more clarification on self-reporting and suggests the agency could adopt a more aggressive enforcement approach, compliance observers said.

The Office of Financial Sanctions Enforcement, the UK’s Finance unit tasked with implementing and enforcing the sanctions policy, on Wednesday released a guide outlining its enforcement powers and how to use them, effective April 1.

Observers expect the agency to play a more active role in enforcement of sanctions, in particular after the British withdrew from the European Union.

“The updated guidelines only provide clarity on the OFSI approach. It does not introduce new powers or change existing ones, “a Treasury Department spokesman said in a statement Thursday.

OFSI reiterates in its guidelines defining its jurisdiction to potentially include the actions of overseas subsidiaries of UK companies and transactions using clearing services in the UK.

The guidelines suggest OFSI take a broader interpretation of its range of enforcement, according to Susannah Cogman, a partner at the law firm Herbert Smith Freehills LLP in London.

In addition, OFSI in its direction said it would consider enforcing violations that might involve negligence, among other things, as one of the most serious types of cases.

“[OFSI is] kind of pushing the envelope in describing the extent of their strength, “said Ms. Cogman.” They want to be fairly aggressive enforcers and they want to make full use of that strength. “

The OFSI in its guidance also lists the factors to be considered in assessing monetary sanctions on companies and individuals. These factors include whether the possibility of a violation has been voluntarily disclosed to OFSI, the value of the violation, or the possible loss to the objectives of the sanction regime, according to the guidelines.


The guide also provides further clarity on OFSI’s expectations of self-reporting, which some companies have questions about, said Justine Walker, who leads global sanctions and risks at the Association of Certified Anti-Money Laundering Specialists.

It remains to be seen how OFSI will implement these guidelines in the long term, and how it applies to sanctions regimes with different interpretations of their scope, Walker said.

“People will look at the British regime to see if they are willing to enforce the regime, and for OFSI to take some enforcement action,” he said.

Write to Mengqi Sun at [email protected]

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