What is a compliance professional’s worst nightmare? Last week in Episode 49 of This Week in FCPA, Howard Sklar and I speculated on why the UK Serious Fraud Office (SFO) would announce it was opening an investigation into the activities of the UK defense contractor, EADS. On Tuesday, in a Financial Times (FT) article, entitled “Emails tell of fears over EADS payments”, reporter Carola Hoyos identified some of the reasons that EADS may be under investigation. Hoyos reported that almost five years ago, senior executives of the company were “alerted to questionable payments made to Cayman Island bank accounts and lavish gifts given to the Saudi Arabian royal family and military…”
There were two different instances where an employee brought up these payments to senior officials in the company. Mike Patterson, a senior controller for GPT, a subsidiary of the company, was concerned about “unexplained payments to the Cayman Island bank accounts for Simec International and Duranton International, which totaled £11.5M between 2007 and 2009.” Hoyos reported that Patterson “alerted his superiors about the payments as early as 2007” regarding the payments and his concerns. Patterson continued to raise his concerns internally within the company and by 2010 he had notified EADS Chief Compliance Officer (CCO) Pedro Montoya of these concerns.
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