Saudi Arabian Prosecution Service: Failure to Give Required Vaccines to Children Under 18 Is Abuse

One of the more hotly debated issues, in the global welter of reporting (and misinformation) about COVID-19 vaccines, is whether children below the age of majority should be given the COVID-19 vaccine.  Even as infection from the Delta variant is surging among children in multiple countries, a Kaiser Family Foundation poll recently calculated that approximately half of parents are holding off on COVID vaccinations for their children and found “significant opposition to schools mandating the vaccines for children ages 12-17.”

In the midst of this global debate, the Saudi Arabian Public Prosecution Service (PPS) has taken an exceptionally bold step to ensure that children receive all required vaccinations, including COVID.  According to Arab News, the PPS has declared that every child under age 18 “has the right to be vaccinated against diseases and failure to do so amounts to abuse.”   This statement is firmly based in Saudi law.

Article 1 of Saudi Arabia’s Child Protection System, any failure to provide a child’s “basic needs or failure to do so, including: physical, health, emotional, psychological, educational, intellectual, social, cultural and security needs” is considered neglect.  The Child Protection System also provides that a child must be provided with vaccines “as specified by the relevant health authorities and in accordance with the scheduled dates and periods prescribed in this regard.”  Under Article 3/3 of the Child Protection System, not completing a child’s required health vaccinations is considered abuse or neglect.

Moreover, Article 18 of the Child Protection System directs the relevant authorities to take “all appropriate measures” for “[p]revention of infectious and dangerous diseases of the child” and “[s]upporting the school health system to play its full role in the field of prevention and health guidance.”  In that regard, the Saudi government has previously directed that only fully vaccinated students could return to the classroom when the new school year begins at the end of August.

Under Saudi law, providing vaccinations to a child is the duty of the child’s father or guardian, and authorities “are obliged to create a medical file for every child to register the required vaccinations and the development of his or her health conditions.”  In addition, school health or substitute health authorities are required, at least annually, to conduct periodic medical checkups for school students throughout pre-university education levels.

This announcement by the PPS is not surprising, in light of the global surge of the Delta variant and the fact that only 30 percent of Saudi Arabia’s population has received full COVID vaccination.  Nonetheless, few countries are likely to take as strong a position on child COVID vaccination as Saudi Arabia has – at least until after clinical trials, perhaps this fall, further establish that children can safely be vaccinated and health authorities can establish how great a risk COVID continues to pose to children.

UK Financial Reporting Council Reports Increases in Investigations and Enforcement Division

Over the past year, the United Kingdom Financial Reporting Council (FRC) has been showing substantial vigor in its efforts to oversee auditors, accountants, and actuaries.  In addition to the widely publicized £15 million fine against Deloitte and sanctioning of two former Deloitte partners in relation to Deloitte’s audit of Autonomy Corporation’s financial reporting, the FRC has been seeking a joint-record £15 million fine against another leading audit firm, KPMG, relating to KPMG’s role in the sale of mattress company Silentnight and recently declared, in its annual audit quality inspection results, that nearly one-third of audits that it inspected “still require improvement.”

The FRC’s Annual Enforcement Review 2021, published July 29, provides a detailed review of the FRC’s commitment to increased enforcement.  The Review noted that the FRC had opened more investigations in the past year than the previous two years combined, had an increase in the number of open investigations/enforcement actions at year end, and a 44 percent growth in its Enforcement Division.  In particular, it stated that the FRC had opened 95 cases in the preceding year (compared to 88 in 2019/20 and 46 in 2018/19), and closed 103 cases in the preceding year (compared to 83 in 2019/20 and 53 in 2018/19).

The Review also reported on a number of misconduct-related “themes” that it identified from concluded investigations of accountants over the past six years:

  • Accountants’ fraudulent use of company funds;
  • Misleading financial reporting (e.g., fabrication of revenue streams, wrongly recognizing revenue, premature recognition of revenue, inappropriate capitalization of costs, failure to account appropriately for bad debts, and inappropriate categorization of liabilities as operational rather than financial);
  • “[I]ncorrect and sometimes reckless work” by management on goodwill; and
  • Management misleading auditors, for example by withholding key information and even providing false documents.

Chief Compliance Officers in United Kingdom accounting, auditing, and actuarial firms should peruse the Review, and use specific examples of firm and individual misconduct cited in the Review in their internal briefings and training materials.  While the future leadership of the FRC has yet to be determined, firms should expect that the FRC will remain vigorous in its enforcement work as it moves toward transformation into a still more robust and independent regulator, the Audit, Reporting and Governance Authority (ARGA).

UK Competition and Markets Authority Fines Two Drug Companies More Than £260 Million for Drug Overcharging and Market-Sharing Practices

Since 2017, the United Kingdom (UK) Competition and Markets Authority (CMA) has been investigating the UK pharmaceutical sector for possible anticompetitive agreements and concerted practices in relation to pharmaceutical products.  A recent action by the CMA provides some clarity regarding the CMA’s core concerns under the Competition Act 1998 (CA98).

On July 16, the CMA announced that it had imposed fines totaling more than £260 million on two UK pharma firms, Auden Mckenzie and Actavis UK (now Accord-UK) for two sets of CA98 violations.  First, the CMA reported that both firms had charged the National Health Service (NHS) “excessively high prices for hydrocortisone tablets for almost a decade.”  Accord-UK (and, for their respective ownership periods, its parent companies Intas and Accord and its former parent firm Allergan) were fined £155 million for charging the NHS excessive and unfair prices for hydrocortisone tablets for nearly 10 years, from 2008 to 2018.  Although Auden Mckenzie sold hydrocortisone tablets from 2008 to 2015, the CMA stated that Actavis UK (now Accord-UK) took over the business in 2015 “and is held liable for Auden Mckenzie’s conduct before that date.”

The CMA found that Auden Mckenzie and Actavis UK increased the price of 10mg and 20mg hydrocortisone tablets by more than 10,000 percent, compared to the original branded version of hydrocortisone, which the drug’s previous owner sold prior to April 2008.  As a result, the amount that the NHS had to pay for a single pack of 10mg hydrocortisone tablets rose from 70p in April 2008 to £88.00 by March 2016, and for a single pack of 20mg hydrocortisone tablets rose from £1.07 to £102.74 per pack over the same period.  Even after competitors entered the market and prices fell gradually, “Actavis UK continued to charge high prices and higher prices than its rivals.”

The financial impact on the NHS (and, by extension, UK taxpayers) “was significant. Before April 2008, the NHS was spending approximately £500,000 a year on hydrocortisone tablets. This had risen to over £80 million by 2016.”

These actions, in the CMA’s view, violated Chapter I of the CA98, which prohibits anti-competitive agreements and concerted practices between businesses that have as their object or effect the prevention, restriction, or distortion of competition within the United Kingdom.

Second, the CMA fined Accord-UK and Allergan (as former parent) an additional £66 million for paying two would-be competitors to stay out of the market.  According to the CMA,

Auden Mckenzie paid pharmaceutical companies Waymade and AMCo (now known as Advanz Pharma) not to enter the market with their own generic versions of hydrocortisone tablets. Waymade was set to enter with 10mg and 20mg versions and AMCo with a 10mg version. In exchange for staying out of the market, Auden Mckenzie paid the companies on a monthly basis – paying AMCo £21 million and Waymade £1.8 million in total over the duration of the relevant agreement. After taking over sales of hydrocortisone tablets in 2015, Actavis UK continued to pay off AMCo.”

The CMA also fined Advanz and its former parent Cinven a total of £43 million, and Waymade £2.5 million.

These actions, in the CMA’s view, violated Chapter II of the CA98, which prohibits the abuse of a dominant position by one or more companies which may affect trade within the United Kingdom or a part of it.

In its announcement, the CMA did not specify how it had calculated the fines.  Under the CA98, the CMA may impose a financial penalty on any business found to have infringed either the Chapter I or Chapter II provisions of up to 10 percent of its annual worldwide group turnover.  In these cases, the CMA explained only that “[i]n calculating financial penalties, the CMA takes into account a number of factors including seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors.”

Antitrust and competition law compliance teams at pharmaceutical firms – not only in the United Kingdom – should include the details of these CMA actions in briefings to senior executives and in internal training sessions.  While pharma firms have often sought to blame the high costs of drugs on “middlemen”, future actions such as those highlighted in the CMA’s decision are certain to attract the attention of competition enforcement agencies.

London Metropolitan Police Seize Nearly £180 Million In Cryptocurrency

For many cybercriminals, it has been an article of faith that Bitcoin is preferable to conventional currency in obtaining fraudulent or extortionate payments because Bitcoin is untraceable.  In recent weeks, however, law enforcement authorities in the United States and the United Kingdom have demonstrated that Bitcoin transactions, though anonymous while making their way through the blockchain, are indeed traceable.

On June 8, the U.S. Department of Justice announced that it had seized 63.7 bitcoins, valued at more than $2.3 million, that were part of the ransom that Colonial Pipeline paid to its ransomware attackers.  Shortly thereafter, on June 24 the London Metropolitan Police (Met) announced that it had seized £114 million – then the largest cryptocurrency seizure in the United Kingdom – in connection with an international money laundering investigation.

On July 13, the Met announced that it had set a new record for UK cryptocurrency seizures, with the seizure of nearly £180 million.  The Met indicated that this seizure was connected with the same investigation in which the £114 million seizure took place.  The focus and direction of that investigation are still unclear.  The Met reported, however, that a woman who had been arrested in connection with the £114 million seizure was “interviewed under caution” in relation to the discovery of the £180 million of cryptocurrency that was seized.

These incidents are significant accomplishments for law enforcement.  They may also be, for more astute cybercriminal organizations, a signal that they need to change their money laundering strategies.  Law enforcement, as well as anti-money laundering teams at financial institutions, will need to watch for such changes, which may include switching to other widely-recognized cryptocurrencies, more rapid extraction of funds from the blockchain, greater use of financial institutions in higher-risk jurisdictions to do so, and tighter controls over the criminals’ private keys.  In the meantime, law enforcement should take full advantage of the techniques it has developed to pursue crypto-related money laundering on a broader front.

Charity Commission Issues Formal Regulatory Alert to International Aid Charities on Safeguarding People

Since 2018, the international aid sector has lived under the shadow of the long-running scandal involving Oxfam GB, one of the components of the global charitable confederation Oxfam.  At that time, initial media reports that Oxfam had covered up an investigation into the hiring of sex workers for orgies by Oxfam staff who were working in Haiti after the 2010 earthquake quickly led to a cascade of problems for Oxfam GB: a statutory inquiry by the Charity Commission for England and Wales, widespread international criticism, the loss of thousands of its donors, and ultimately a three-year ban on receipt of overseas development funding from the United Kingdom government.

Moreover, even though Oxfam GB regained its eligibility to bid for UK government funds this spring, almost immediately the UK government again suspended Oxfam GB’s eligibility when new allegations of Oxfam workers’ sexual exploitation and bullying of people in the Democratic Republic of the Congo came to light.  As a spokesman for the UK Foreign and Development Office explained, “All organisations bidding for UK aid must meet the high standards of safeguarding required to keep the people they work with safe.”

The Charity Commission has now taken the extraordinary step of issuing a formal regulatory alert to assist trustees of international aid charities in improving their safeguarding practices.  The Commission noted that international aid charities had delivered “tangible safeguarding improvements” in various areas, but cautioned that “further work is required to deliver transformative change.” It also stated that “[a]nalysis of recent safeguarding serious incident reports, including those related to activities in the Democratic Republic of the Congo, has also identified specific areas of ongoing risk.”

Accordingly, the Commission directed three sets of recommendations to trustees of international aid charities to achieve more effective safeguarding arrangements:

  1. Strengthening safeguarding risk prevention and risk management measures: On this issue, the Commission advised that every trustee “should have clear oversight of how safeguarding and protecting people from harm are managed within their charity,” including monitoring performance with statistics and supporting information.  In particular, the Commission offered five key steps for trustees to consider:
    • “making sure policies, communications and ongoing performance management help maintain appropriate behaviours by charity staff and workers to each other and the beneficiaries they serve
    • joining the Steering Committee for Humanitarian Response’s Misconduct Disclosure Scheme to help protect charities and other organizations in the sector “from individuals who pose a safeguarding risk”;
    • exploring whether gender and diversity imbalances in a charity’s trustee board and senior management “are potential safeguarding risk factors which require proactive management”;
    • determining whether trustees “can use the sector-led safeguarding culture tool as part of developing and modelling a positive safeguarding culture”; and
    • reviewing the UK charity Keeping Children Safe’s “summary findings from safeguarding-specific central assurance assessments of charities” to identify any relevant lessons for a charity, such as whistleblowing and safeguarding risk management.
  2. Improving reporting by local beneficiaries: On this issue, the Commission reported that it had recently contacted a sample of international aid charities “and found that several had not received any safeguarding reports from third parties or partner agencies.”  Recognizing that “underreporting of safeguarding incidents directly to international aid charities persists,” it offered four key steps for trustees to consider:
    • “giving victims and survivors, and their families and friends, a safe means to report their concerns and complaints”;
    • “designing reporting mechanisms that are sensitive to the local context, considering face-to-face reporting and safe spaces for witnesses and survivors to report”;
    • “where appropriate, using community-based organisations to hold open and frank conversations with beneficiaries about any concerns in a safe and trusted environment”; and
    • “reviewing the reporting arrangements in place with any third parties or partner agencies and assessing what steps can be taken to develop them.”
  3. Developing management responses including victim and survivor support:  On this issue, the Commission urged trustees to ensure that support is available to victims and survivors.  It offered four key steps for trustees to consider:
    • “developing a survivor-centred approach to safeguarding that accurately reflects the range of potential harms faced and considers possible victim and survivor support services from programme/project conception”;
    • “clearly communicating what support is available to victims and survivors and how it is accessed”;
    • “acting quickly to prevent or minimise any further harm or damage when incidents or allegations occur”; and
    • “launching robust and timely investigations into allegations or concerns where they arise.”

All of the Commission alert’s recommendations are salutary.  What the alert omits to address is that charities’ trustees and senior leaders must also unequivocally state, in codes of conduct and periodic internal training, that any form of exploitation, such as sexual or financial, of beneficiaries is strictly forbidden and may result in severe disciplinary action, including termination.  The future credibility of the international aid sector will depend substantially on how well aid charities communicate their commitment to safeguarding vulnerable populations and demonstrate that commitment through concrete action.