Hiring Illegal Aliens 636



  • Hi gang. This is a change.
    I’m talking about a multinational corporation, headquartered in the USA. It has branch offices in several other countries.
    I’m referring to one of those branch offices NOT in the USA.
    The question is hiring, as an independent contractor, a person in that foreign country. The person in question is a US citizen but does NOT have permission to work in that foreign country.
    Not considering local laws here, just Sarbanes-Oxley. Would such an arrangement violate Sarbanes-Oxley?
    Thanks



  • The question is hiring, as an independent contractor, a person in that foreign country. The person in question is a US citizen but does NOT have permission to work in that foreign country
    The worst case scenario:
    *We have a contract.
    *It contains financial information (compensation etc.)
    *It will be audited.
    *Auditors perhaps will examine the contract. They may find that it is illegal.
    *They will report what they found.
    *There will examine everything else thoroughly in your organization. They will not accept anything from your internal auditors after that
    *They will believe that there is something serious here - perhaps somebody who:

    1. Signs that takes money for a certain task
    2. He is illegal, so he may sign everything just to take a few USD
    3. Someone insire the organization takes most of these money
    • a fraud?
      *Legal implications
      *C level executives must report it. Don’t forget that 10K form has a section entitled LEGAL PROCEEDINGS…‘We are engaged in the following legal actions’… ‘any possible range of loss can not be estimated at that time’…‘there can be no assurance that unfavorable outcomes would not have a material adverse effect on our financial position’…
      *Becomes a major problem
      My suggestion
      Persuade the headquarters in the USA to hire him and to send him in Europe. He is reported to work in the USA, he is allowed to work in the USA, there is no problem. Accountants will find the way to transfer the cost to the proper cost center.


  • Not considering local laws here, just Sarbanes-Oxley. Would such an arrangement violate Sarbanes-Oxley?
    A company utilises a US citizen as a contractor in a branch office outside the US. The contractor’s status is the contractor’s problem. And even if it were the Company’s problem it would not even remotely be a SOX issue.



  • I have a different opinion Denis. I know that you are a very experienced person and you are a real asset for this forum, so a different opinion is not at all offensive.
    If you hire someone and you pay him, you have some responsibilities as a company - especially when you know that the contract is illegal. This case described by Wetback is a clear money laundering case to the eyes of every investigator and many auditors.
    In order to comply with Sarbanes Oxley you must meet the requirements of anti money laundering legislation.
    Money laundering is the criminal practice of filtering ill-gotten gains or ‘dirty’ money through a series of transactions, so the funds appear to be proceeds from legitimate activities.
    The last couple of years has seen the media focus substantial attention on reports of widespread money laundering activities. Respected financial institutions, consumer goods companies and professional services firms all have been implicated in money laundering schemes.
    Consequences
    As many recent high-profile cases have shown, money laundering activities can create serious financial, legal and reputational risks for the companies involved.
    Penalties can be severe. For example, company officials and employees convicted of money laundering are subject to fines and may face substantial prison terms, up to 14 years’ imprisonment in the U.K. and up to 20 years imprisonment in the U.S. and Australia.
    The reputational risk to businesses is more difficult to measure, but the adverse publicity from being involved in a high-profile money laundering case can pose a major threat to the firm due to potential loss of confidence of regulators, depositors, creditors, shareholders and the market.
    You must report all these things according to SOX, even in the 10K form.
    Just one case
    Example
    Operators of Restaurants in Five New York Counties Charged, USD4 Million Seized ? On Nov. 18, 2004, ICE agents in Albany detained 80 illegal aliens and arrested eight individuals who operated China Buffet restaurants in five New York counties. The leaders of this organization were accused of illegally employing Chinese and Mexican aliens for substandard wages and then using bank and investment accounts to launder the proceeds from this operation. ICE agents seized 50 bank and investment accounts as well as vehicles, real estate and other assets worth some USD4 million. As part of the scheme, the defendants operated a tour bus to routinely pick up illegal aliens in New York City and transport them to Albany where they were housed and put to work.



  • George, respectfully I have to disagree with you.
    I think you raise some valid points and they are issues. But really it’s stretching things to an extreme to turn it into a SOX issue.
    Hiring an independent contractor who does not have a work permit is potentially a breach of labour regulations - depending on the basis on which they are hired. In many (most) cases this would be a customer/supplier relationship and the supplier’s immigration status would be a problem for the supplier i.e. the contractor. Were the person an employee then it is a problem for the company.
    This is not money laundering.
    Money laundering is the criminal practice of filtering ill-gotten gains or ‘dirty’ money through a series of transactions, so the funds appear to be proceeds from legitimate activities.
    Quite right. In this case the transaction with the independent contractor is still legitimate even if the contractor does not have a work permit. The money is coming from legitimate sources and is not being disguised.
    In the example you give it was not merely the employing of the illegals that gave rise to the money laundering charge. This resulted because they were actually using the restaurant to launder the proceeds of crime
    In order to comply with Sarbanes Oxley you must meet the requirements of anti money laundering legislation.
    All company’s have to comply with money laundering regulations. Money laundering is a crime. These regulations are important and the penalties can be severe but money laundering is nothing to do with the Sarbanes-Oxley Act at all
    And feel free to disagree. I f we all agreed life would be pretty boring 😉



  • Denis, a discussion with you is always interesting and your opinion is valuable to the forum.


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