The business writers at The New York Times promise a bump in white-collar crime news in 2020. At the same time, a series of reports raises concerns about oversight of the accounting industry.

From The Times:

Goldman Sachs is negotiating with the Justice Department to pay a penalty of about $2 billion for its role in the 1Malaysia Development Berhad scandal, known as 1MDB.

Accounting fraud became a particular focus of the Justice Department toward the end of 2019. In December, federal prosecutors indicted executives from Outcome Health and MiMed, and opened an investigation into whether BMW, the German automaker, manipulated its sales figures.

The 1MDB case involves 17 Goldman Sachs executives accused by Malaysia of taking  $2.7 billion of the $6.5 billion raised for the 1MDB fund.

How that case will be resolved is an open question because the Malaysian authorities are looking to recoup all of the money raised on behalf of 1MDB.

In the United States, federal prosecutors are looking at possible money-laundering and Foreign Corrupt Practices Act violations by Goldman.

The Times reports the money raised by the fund was to finance infrastructure and other public development projects in Malaysia. But instead, it went to pay bribes and “fuel the lavish lifestyle” of a local financier involved in the case, according to charges.


Continue Reading 2020 may be a big year for white collar crime, but report cites poor oversight of accounting firms

The Christian Science Monitor offers an editorial that comes close to calling it the year of the whistleblower.

Congress has yet to determine the guilt or innocence of President Donald Trump over his alleged wrong behavior with Ukraine. Yet one thing is sure: The world has witnessed the powerful impact of a whistleblower calling out his or her boss.

They also offer a nice roundup of what is happening worldwide.

In October, the European Parliament approved a directive to protect from retaliation employees who report crime, corruption, and public health dangers from retaliation. Countries in the European Union have two years to implement the law. The mood in Europe shifted after a French accountant, Antoine Deltour, exposed widespread tax evasion by multinational businesses operating through shell companies in Luxembourg. Despite attempts to punish him for his actions, he endured. “The worst thing for a whistleblower,” Mr. Deltour said, “is not to be heard. The world then makes no sense.”

In February, Australia passed a new standard for whistleblower protection. Also this year, Lebanon and Tunisia became the first Middle East countries to pass such laws. And in June, the Group of 20, made up of leading rich and developing nations, further cemented a global norm by endorsing a set of principles for “effective” protection of whistleblowers. 

 FT: Whistleblowers fare poorly at accounting firms

The Financial Times spoke to 20 former employees of major accounting firms for a November 20 story on how the companies treat whistleblowers. Former staff from EY, Deloitte, KPMG and PwC said they were subject to “harassment, bullying and discrimination.” (Note: FT has a paywall.)


Continue Reading “The world has witnessed the powerful impact of a whistleblower”