(Bloomberg) -- Archer-Daniels-Midland Co. agreed to pay about $54.3 million to U.S. regulators and the Justice Department to resolve allegations it bribed officials in Ukraine to win tax refunds.
ADM paid about $22 million to Ukranian government administrators in order to obtain more than $100 million in value-added tax refunds in violation of U.S. anti-bribery laws, the SEC said Dec. 20 in a complaint filed with the proposed settlement in federal court in Urbana, Illinois. The agreement must be approved by a federal judge.
An ADM unit in the Ukraine also pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act while ADM entered into a non-prosecution agreement with the Justice Department.
ADM units in Hamburg and Ukraine allegedly made the payments to third-party vendors from 2002 to 2008 and improperly recorded them on their financial statements in violation of the books and records provisions of the FCPA, according to the complaint. The units reaped about $41 million in benefits from the refunds, according to a Justice Department statement.
In order to disguise the payments, the ADM units logged the transactions as export-related services and insurance premiums to third parties, the SEC said.
Under the agreements, ADM will pay about $36.5 million to the SEC and $17.8 million in criminal fines to the Justice Department.
ADM reported the conduct to authorities in 2009, fired employees who were involved and put in place new compliance measures, ADM Chairman and Chief Executive Officer Patricia Woertz said in a statement.
The conduct that led to this settlement was regrettable, but I believe we handled our response in the right way, and that the steps we took, including self-reporting, underscore our commitment to conducting business ethically and responsibly, Woertz said.
Compliance Policy
EU Clinches Deal on Jail Terms for Punishing Market-Riggers
European Union lawmakers clinched a deal on jail sentences for market manipulation and insider dealing, giving judges the power to send the worst offenders to prison for at least four years.
Nations would also be obliged to ensure that their longest available prison sentences for improper disclosure of information are at least two years, according to a statement on the deal published by the European Parliament.
EU regulators fined six companies a record 1.7 billion euros ($2.3 billion) this month for rigging interest rates linked to the London Interbank Offered Rate, or Libor, taking global fines linked to the scandal to more than $6 billion.
Michel Barnier, the EUs financial services chief, cited the rigging as one reason why the bloc should toughen its sanctions against market abuse. He proposed stiffer minimum penalties in 2011, with the goal of closing loopholes in national laws.
The Dec. 20 deal on Barniers proposals was reached by the parliament and by national governments. The accord complements an agreement on minimum administrative sanctions for punishing market abuse that was brokered earlier this year.
Covered Bonds Get Second-Class Status in EU Liquidity Review
The European Unions top banking regulator said that covered bonds shouldnt be considered a top-tier asset for banks emergency liquidity buffers, dealing a blow to Denmarks $530 billion mortgage-bond market.
Covered bonds, debt securities backed by cash flows from other assets such as mortgages, arent as stable as European Union sovereign debt for the purpose of building up banks liquidity buffers, the London-based European Banking Authority said Dec. 20. Corporate bonds, equities and some local government debt were also considered less liquid than state bonds.
The decision goes against the EBAs own preliminary study into the liquidity of different assets, published in October, which found covered bonds are more likely to hold their value than corporate bonds and equities over a 30-period. The EBA submitted recommendations on liquid assets to the European Commission, the executive arm of the EU, which must approve them next year.
Banks in Denmark have warned that excluding the securities would leave lenders virtually unable to meet liquidity requirements, and drive up the price of credit.
Denmarks covered bond market is more than three times the size of the countrys sovereign debt. Denmarks Financial Supervisory Authority said Dec. 20 it wont tell banks to follow the EBAs proposal unless the EU commission approves it, an outcome the regulator in Copenhagen doesnt expect.
Sovereign bonds issued by EU countries, including Greece, Spain and the U.K., must be treated as equally liquid because to do otherwise would reinforce the fragmentation of the single market and the sovereigns-banks loop, the EBA said.
The liquidity coverage ratio, which requires banks to hold enough easy-to-sell assets to survive a 30-day credit crunch, split opinions of Basel Committee on Banking Supervision members last year.
Some central bankers and regulators warned that an early version of the standard risked causing a credit crunch, while others urged against a wholesale watering down of the measure.
The U.S. Federal Reserve earlier this year proposed tougher liquidity rules than those agreed on by the committee in January, proposing a narrower list of assets that they can use to pad the buffer.
Compliance Action
Benchmark Probes See U.K. Market Manipulation Reports Rise 43%
Reports of suspected market manipulation soared by 43 percent this year as the U.K. financial regulator investigated the rigging of multiple benchmark rates.
The Financial Conduct Authority received 117 reports of suspected distortion and manipulation of markets in the 12 months to August, compared with 82 in 2012, according to Bovill Ltd, a financial services consultant in London.
The FCA in 2013 has opened investigations into currency- rigging, issued a second wave of fines for manipulation of the London interbank offered rateib and levied its first fine against a high-frequency trader for manipulating commodities markets.
The FCA isnt the only U.K. agency to investigate market manipulation. The first three individuals to face criminal proceedings filed by the Serious Fraud Office in a probe related to Libor entered not guilty pleas in a London court last week.
Tom Hayes, a former trader at UBS AG and Citigroup Inc., is scheduled to stand trial in January 2015. RP Martin Holdings Ltd. brokers, Terry Farr and James Gilmour, are set to follow in September of that year.
Courts
Deutsche Bank Pays $1.9 Billion to Settle U.S. Mortgage Suit
Deutsche Bank AG will pay 1.4 billion euros ($1.9 billion) to settle claims that it didnt provide adequate disclosure about mortgage-backed securities sold to Fannie Mae and Freddie Mac.
The agreement with the Federal Housing Finance Agency covering the period 2005 to 2007 resolves Deutsche Banks largest mortgage-related litigation case, the Frankfurt-based company said in a statement on its website Dec. 20.
Europes biggest investment bank by revenue is grappling with legal issues stretching from the U.S. housing market to the alleged manipulation of benchmark interest rates. The settlement follows similar agreements UBS AG and JPMorgan Chase & Co. struck with U.S. regulators for mortgage-backed debt sold during the housing bubble that preceded the 2008 financial crisis.
While Deutsche Bank has increased its reserves for litigation by 1.2 billion euros to 4.1 billion euros at the end of the third quarter compared with June, legal costs are piling up, hurting share performance.
The bank has still to reach a settlement with regulators outside the euro area for its role in rigging benchmark interest rates. Further U.S. mortgage-related cases are still pending.
Comings and Goings
Sharon Bowen to Be Obama Nominee to Follow Chilton at New CFTC
Sharon Y. Bowen, a securities lawyer at Latham & Watkins LLP, will be nominated by President Barack Obama as a member of the Commodity Futures Trading Commission.
Bowen would assume the seat being vacated by Bart Chilton, a Democrat, according to a statement issued Dec. 19 by the Obama administration. She must be confirmed by the Senate before joining the regulator. The agency was empowered by the 2010 Dodd-Frank Act to bring oversight of swaps traded by firms including Goldman Sachs Group Inc. and JPMorgan Chase & Co.
CFTC Chairman Gary Gensler will step down at the end of the year when his term expires. Timothy Massad, the Treasury Department official nominated to succeed Gensler, has yet to have a confirmation hearing in the Senate. Chilton, who had planned to depart by year-end, has said he may stay longer.
Bowen is a partner representing clients including corporations and buyout firms in the New York office of Latham & Watkins, according to a biography on the law firms website. She holds a legal degree from the Northwestern University School of Law in Chicago.
