1. FIFA
December of last year saw two of the most powerful figures in football, Sepp Blatter and Michael Platini banned for 8 years from football and fined 130,000 Swiss francs between them. The main charge brought against the two was for a "disloyal payment" of 2 million Swiss francs made to Platini in 2011, signed off by Blatter. Other charges included offering and accepting gifts, conflict of interest, and violating their fiduciary duty to FIFA. Platini was president of UEFA, the European footballing body, while Blatter was the president of FIFA. A recent appeal has seen both men get there ban from the sport reduced from 8 to 6 years.
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2. Goldman Sachs
October saw Goldman Sachs embroiled in a high profile case of insider trading. The investment bank agreed to pay a $50 million fineand to admit failure to supervise. An employee, Rohit Bansal gained insider information from his previous employer the federal reserve bank of New York, which he then used to advise clients. Goldman Sachs has been cooperative with the New York Department of Financial Services who administered the fine, and has pledged to implement new compliance procedures. A spokesperson for the NYSDFS said,
“This case underscores the critical need for financial institutions to put in place strong controls and policies for employee conflicts screening and the use of confidential regulatory information”
3. Toshiba
December also saw Japanese conglomerate Toshiba fined a record $60 million for allegedly falsifying its books, with profits inflated to the tune of somewhere in the region of $1.9 billion. It is believed that former CEO HisaoTanaka was putting pressure on the business divisions to meet difficult targets, and was aware that accounting was overstating profits. He has since quit, leading Toshiba to sue three former chief executives and two other officials, seeking $2.4 million in damages over the scandal. Apart from the record proposed fine, Toshiba has seen its share price drop 37% and net losses for the quarterly period were $102 million. The new CEO Masashi Muromachi had to say on the matter, “I see this as he most damaging event for our brand in the company's 140-year history”.
4. OCZ Technology Group
In October a similar case to Toshiba, former OCZ Technology Group CEO Ryan Peterson and former CFO Arthur Knapp were charged by the SEC for overstating profits. Knapp agreed to pay a fine of $130,000 for failing to prevent the misclassification of sales discounts, which saw OCZ raise $200 million in funding off the back of falsified financial statements. Regardless of which employee was responsible, The SEC places the blame firmly on the CEO in instances like this, “CEOs and CFOs are responsible for reporting accurate financial information”. OCZ has since gone into liquidation.
These cases highlight the importance of having a strong compliance culture and system in place to monitor your employee’s dealings.
Learn more about how MCO can help improve the compliance culture at your organization
