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Hui Chen, Theranos, and Fyre Fest

Katherine O'Hara | July 3, 2017

It's been another busy week in the world of compliance. Here is a digest of some of the news stories from outside of Compliance Week that you might have missed.

DOJ corporate compliance watchdog resigns citing Trump's conduct. The DoJ recently lost one of its top compliance officials. Hui Chen resigned in June, citing she felt the “do what I say, not what I do,” motto wasn’t working for her anymore, and that it felt akin to “shuffling the deck chair on the Titanic.” Leading up to her resignation Chen would tweet out against the White House, calling out their ethical oversights, which wasn’t sitting well with management. Last week she finally broke her silence in a LinkedIn post, detailing exactly why she felt she had to leave.

U.N. Ambassador Nikki Haley's retweet prompts call for investigation. Nikki Haley is catching some ethical heat for a potential social media slip up. The U.N. ambassador retweeted President Trump’s post endorsing Ralph Norman for South Carolina's 5th District special election, which is being touted as improperly using “Twitter for political activity”. Citizens for Responsibility and Ethics in Washington are saying “rules are rules,” and are asking for a special investigation to be launched.

WH ethics office asked to investigate top Trump ethics aide. A top aide is getting some scrutiny for a(nother) possible ethics goof. Five democratic senators are miffed about Stefan Passantino allegedly giving his former client, Carl Icahn, a pass on an ethics check. This isn’t the first time the White House has been in the hot seat for handing out waivers, but the jury is still out on whether the Office of Government Ethics has a leg to stand on this time around.

Feds must prosecute Volkswagen for cheating, environment groups say. Canadian environmental groups are tapping their feet and watching the clock. Two years ago its government promised to prosecute Volkswagen for fudging some test results, but no action has been taken since. In the same time-period the U.S. has gotten billions in settlements and penalties, and now advocates are done waiting. Last week they said, “enough is enough,” and sent letters to Environment Minister Catherine McKenna, which are considered an official call for investigation under Canadian law. But McKenna’s office is still cautious moving forward, saying that just because the U.S. gained some headway doesn’t mean they can take the same path.

Supreme Court to consider how broadly a whistleblower provision applies. The Supreme Court is going to look into broadening some definitions. Currently some federal courts say whistleblowers are only protected if they report wrongdoings directly to the SEC, not if they bring up issues internally. This poses some problems for employees (looking at you, Wells Fargo). The high court will hear the case this upcoming fall.

Theranos, Walgreens reportedly reach a deal to settle suit for under $30 million. The Theranos/Walgreens saga may finally be coming to an end. Theranos, a tech-startup that promised accurate blood tests using only a pinprick, was accused of breaching its contract with Walgreens after reports of faulty tech and customer risk came out. The settlement is over $100m less than what was originally filed for in November, but Theranos may still not get off so easily—the SEC and DoJ are still going through with civil and criminal investigations.

IBM is telling Congress not to fear the rise of an AI ‘overlord.’ IBM is swearing up and down that they haven’t just released Skynet unto us all. Last week they took the show to Washington where they tried to lobby lawmakers who have just a few concerns about what this could mean for—well, everything. Privacy, security, and safety risks are just a few issues at the top of their lists, but IBM claims their worries are just “fantasy.”

Bernie Sanders and his wife hire lawyers as FBI probes fraud in her $10M loan. The Sanders family have hired a lawyer in the wake of accusations of fraud. In 2010 Jane Sanders got a loan of $10m to expand Burlington College, where she was president at the time. Officials say she claimed there was money in the kitty from donors to repay that loan—but it was off by a cool $2m. Bernie Sanders is calling shenanigans, but they’ve still elected to get a hard-punching lawyer in their corner.

Google fined $2.7 billion in European antitrust ruling. In more European-crackdown news, Google has just been fined a record-breaking $2.7b for a bit of self-nepotism. European antitrust officials claim the Silicon Valley giant has been favoring its own services. Google, on the other hand, says there’s still loads of competition from companies like Amazon and eBay. The case, launched in 2010, is just one of three against Google and a handful more against other big-name companies like Starbucks, Apple and McDonald’s.

World Cup 2022: Suppressed report into corruption allegations published. German media say they have a report that suggests the 2022 World Cup bid was rigged. The suppressed 402-page report by an independent ethics investigator is just a piece of a large, pretty shady puzzle that suggests Qatar may have bought the rights to host the cup. This is just the latest in a string of bad press for Qatar, who were also accused of exploiting migrants to build the stadium for the World Cup.

Fyre Fest’s organizer has been arrested and charged with wire fraud. Fyre Festival’s leading man has been officially charged with fraud. Earlier this year, in the first world problems to end all first world problems, attendees arrived in Exuma, Bahamas expecting an exclusive, luxurious music festival, only to find it one step away from a refugee camp. Besides the $100m class-action lawsuit filed by angry customers who were stranded and forced to eat fake cheese slices, Fyre’s organizer is also being charged with wire fraud. Billy McFarland is accused of doctoring some stock statements to make it seem like they had a bit more money than they really had in an effort to entice investors.

Corporate governance looms as an issue for Nestlé. Nestlé is trying to shake up its governance tactics, but it isn’t going so hot. Earlier this year a new chief exec—the first one in decades—was appointed, and he’s been trying to implement more better strategies and growth goals for the company. But before he can move ahead with any new plans, his predecessor has to give a stamp of approval—a tradition at the company that’s been around since the 1970’s. Investors want the European giant to show them what they’ve got, but it’s looking like Nestlé’s got some deep-seeded problems that have to change first.