"Prof.Goodman" Only

Law of Financial Institutions

First Draft

03/20/2016

Teacher Comments - I am attaching some comments on the paper, but realized that detailed comments didn't touch the real problem. As you mentioned today, you have written a scatter-gun outpouring of lots of issues, without delving into one in real detail. Originally, I thought this was about the Foreign Corrupt Practices Act, but you started in with FATCA, then anti-trust, then finally got around to FCPA - but didn't use any of the source material you should have. I think you can still focus in on the SEC settlement regarding FCPA violations, but use some of the original source material that I linked into my sidebar comments and the actual federal law that is applicable. I still think this is a good topic. You just need to get rid of a lot of other miscellaneous material and zero in on the one issue. Try to organize your paper to lead the reader through the story and expand your resources to look at other write-ups (e.g. there was a Wall Street Journal article when it happened, etc.) and the actual law and regulation (the US Code section is 15 U.S.C. § 78dd-1, et seq< https://www.law.cornell.edu/uscode/text/15/78dd-1 >., which ought to at least be a bibliography cite somewhere.)

When you said you send me a draft of your paper, remember there is an intermediate step (spelled out in the description of the final project in Blackboard.) Specifically, by the 22nd, you need to provide me with a 1 or 2paragraph description of the company and thesis, followed by an annotated bibliography of resources. I do need this as it is part of the grading matrix - so if you haven't submitted anything yet, I'd focus on that. If you have, you will have to backtrack to create that filing. Again, look at the instructions in Blackboard and follow that.

Under the FATCA, Allianz as a non-U.S Foreign Financial Institutions (“FFI”) should complain about their provision. The company understands that the FATCA requires that to detect any bribery in their systems. The provision of the law expects Allianz to enter into an agreement with the IRS to search through their customer databases to identify U.S person who is suspected of tax fraud (Hunter, 2010). The disclosure of customer’s name should include their account or policy they hold, addresses and transaction of most types in the accounts. The company must complain about this law to ensure that majority of their customers are not suspected of any wrongdoing . However, Allianz as an FFI , maybe a beneficial of fraudulent activity, the law provide that they are not permitted to a refund or credit for the withheld taxes (Hunter, 2010). Therefore, the company must be careful to ensure all their customers do not engage in fraudulent activities. Since the company might be a victim of absent of treaty override.

The FATCA helps the company to facilitate the implementation of the preceding statutory requirement. Since they are an FFI, it is affected by intergovernmental place between the home country and the USA to authorize an alternative method of certification. The FATCA also give the company provisions such that their total assets and their foreign accounts must be reported to the IRS (Hunter, 2010). Therefore, they are subjected to 40% penalty on any understatement of their income in foreign markets. It helps the company to regulate their financial dealings and pay accurate taxes.

The antitrust programme at Allianz is made up of a minimum standard for antitrust compliance measures that should be adopted locally as well as a set code of behaviour rules that is, the Allianz Antitrust Code (Carnell, Macey, & Miller, 2013). The programme explains the rules of conduct that the employees must observe when relating to customers, competitors and business partners as well. Allianz provides local training for its employees to ensure that the programme is implemented efficiently (Hunter, 2010).

The antitrust compliance programs ensure that the company do not engage in unscrupulous business activities. It is also meant to protect the consumers so as to avoid monopoly (Hunter, 2010). Allianz is a faces a business ethical dilemma. The compliance programs at Allianz might be a paradoxically simple and exceedingly complex to the business management. The simple element of Antitrust Compliance is its core elements. These elements include the commitment of the management of Allianz always to do the right thing at the right time in the right quality. The second core element is the steps that the management is taking towards their operational activities.

On the other the complex elements of the antitrust program exist because of the steps were taken by the management to get things done. Each company has its own way of doing things. Therefore, Allianz has the liberty of using any strategy that might or might not violate the antitrust compliance program (Hunter, 2010). However, the company uses effective compliance programs that explore the use of tools that indicate the history of the company. The antitrust compliance program is effective because it helps the company to

Recently, the Allianz Company was charged with violation of US foreign bribery law . The US exchange commission reported that the business failed to comply with the Foreign Corrupt Practices Act (FCPA) (Hunter, 2010). The Company is said to have been found with improper financial records of payments to some government officials. The violations of the act are said to have occurred for seven years between 2001 and 2008.

When the situation blew out of proportion, Allianz decided to delist from the New York stock exchange. However, the SEC still insisted on charging the insurer since the violations had occurred while it was still under the oversight of the United States of America.it was such a surprise that Allianz neither accepted nor denied the claims which created a period of suspense from all the related parties (Hunter, 2010). Reports show that the company’s spokesman Mr. Michael Marten said that Allianz already investigated the issue and had updated its anti-corruption policies and enhancing its due diligence process (Hunter, 2010). According to the reports by SEC, there were improper payments made to employees of a state-owned group by a subsidiary of the Allianz group in Indonesia which totalled up to more than $650000 (Hunter, 2010).

The improper payments helped Allianz to gain about 295 insurance contracts on highly ranked government projects. Kara Brockmeyer, who is the leader of the FCPA unit of the SEC enforcement division, said that the Allianz’s subsidiary in Indonesia had an “off the books” account which was a slush fund for bribery to foreign officials who would, in turn, give them insurance contracts that were worth millions of dollars (Carnell, Macey, & Miller, 2013). Also, SEC reports of 2005 established that managers of the Indonesia subsidiary had special accounts that they used to pay off government officials. The issue also arose again in 2009 when Allianz could not account for some payments that had been recorded in its books of accounts. SEC discovered that the improper payments contributed so much to the overall profits of the company. For instance, in 2009, the improper payments contributed over $5.9million to the company’s profits (Hunter, 2010).

From the reports by SEC , the corruption and bribery issue is a continuous trend for Allianz Company. The company has over and over again failed to comply with the Foreign Corrupt Practices Act (FCPA) of the US (Allianz Group, 2013). The act prohibits any persons or company’s operating within the US territory from engaging in any corruption practises.

The Foreign Corrupt Practises Act is a US law that is well known by two provisions. One of its provisions addresses the requirements for accounting transparency while the other one is concerned with bribery of foreign officials (Hunter, 2010). The act was established in 1977 when issues regarding corruption and individuals paying bribes and receiving rewards from foreign officials were on the rise (Hunter, 2010). The law applies to any person or cooperation that has some connection to the US and is involved in corrupt foreign activities. The law is also applicable to foreign corporations that trade securities in the US and also American citizens and residents that engage in foreign corrupt practises (Jackson & Symons, 1999). Whenever any business may decide to engage in any unethical practises regarding corruption, there are usually penalties including financial penalties or incarceration for particular individuals.

The law is directly linked to the Allianz Company because the company is a financial institution that deals with insurance businesses as well. Thus, it handles securities, and it is important that it complies with the Act (Hunter, 2010). Moreover, the company is a German company that operates in the US. Therefore, it is regarded as a foreign company. Hence, it is also affected by the FCPA act by the virtue of it being a foreign company in the US jurisdiction.in that case; the Allianz business will be affected by the Act for as long as it continues to operate in the US. The Act strongly prohibits any acceptance and payment of bribes to foreign officials (Hunter, 2010). However, that it the specific practice that Allianz engaged in to obtain rewards from government officials. Therefore, is evident that the company did not comply in any way with the Foreign Corrupt Practices Act (FCPA).

Violation of the FCPA impacted significantly on Allianz’s reputation all over the world. The company failed to comply with its anti-corruption policies as well as the United States’ regulatory policy on Anti-corruption and anti-bribery (Lovett & Malloy, 2014). The incidences hit the news severally, and it is obvious that the company lost many their customers as a result of the corruption and bribery claim. The company was forced to agree to pay $12.4 million to resolve the charge since it violated the US laws and there had to be consequences and adverse implications before the issue is put away (Hunter, 2010).

The FCPA requires the Allianz to maintain accurate books of record. The company should have an internal control that is sufficient to the provision of reasonable assurance that shows transactions on assets (Carnell, Macey, & Miller, 2013). Just like other act, Allianz is an international firm that must show their total wealth. The sanctions are very many. The SEC may file a civil case in the court of the law (Carnell, Macey, & Miller, 2013).

Allianz SE is a European financial institution based in Germany with its headquarters in Munich. The company’s primary business is insurance and asset management as per reports in the Forbes magazine in 2014; Allianz was the world’s largest insurance company. In 1990, the company emerged as the first insurance company to acquire a licence to supply corporate policies in the world.as at now, the company operates globally in Australia, Belgium, Bulgaria Colombia, Canada, India, Indonesia, in the United Kingdom, the US, Italy, Slovakia, Pakistan and Italy.

References

Allianz Group. (2013). 125 years of Allianz:1890 - The birth of Allianz. Retrieved 2016, from Allianz: https://www.allianz.com/job-blog/articles/career-advice/125/1890/

Carnell, R. S., Macey, J. R., & Miller, G. P. (2013). The Law of Financial Institutions. Wolters Kluwer Law & Business.

Hunter, D. B. (2010). International Financial Institutions and International Law. Kluwer Law International.

Jackson, H. E., & Symons, E. L. (1999). Regulation of Financial Institutions. West Group.

Lovett, W., & Malloy, M. (2014). Banking and Financial Institutions Law in a Nutshell. West Academic.

�I have commented on the first couple of pages in Blackboard

�I think this is where you start on the legal issue, but you should use some method of organizing the paper so a reader knows where he/she is. Para headers maybe?

�If you are going to use acronym later, you should define the term. Wee below.

�Poor sentence – they must “complain” in order to ensure customers are not suspected??

�Defined term

�??

�Unclear and awkward. What do you mean here?

�I’m not sure why you call it Antitrust Code, as that is only one component of a Compliance Code. Do you understand that anti-trust is different than FATCA? Did you go look at the Allianz Compliance Code directly? See: � HYPERLINK "https://www.allianz.com/en/sustainability/sustainability_at_allianz/company/compliance.html" ��LINK�

It isn’t in your bibliography.

�?

�You have already mentioned FATCA and anti-trust – too many distractions here

�Nothing in your bibliography. Did you go find these reports or legal actions?

�I thought this was what you would be writing about, but there isn’t any original source material. See � HYPERLINK "https://www.sec.gov/News/PressRelease/Detail/PressRelease/1365171486902" ��SEC LINK�

Also see the � HYPERLINK "https://www.sec.gov/litigation/admin/2012/34-68448.pdf" ��SEC Cease and Desist Order�