Halliburton Joins FCPA Repeat Offender Club As The SEC Also Finds That A Former VP Violated The FCPA
July 28, 2017
In 2009, Halliburton Company, KBR Inc. (a wholly-owned subsidiary of Halliburton during the relevant time period) and Kellogg, Brown & Root, LLC (a wholly-owned subsidiary of KBR) resolved parallel DOJ and SEC Foreign Corrupt Practices Act enforcement actions in connection with a bribery scheme involving a $6 billion liquefied natural gas plant on Bonny Island, Nigeria. (See here and here).
The combined $579 million settlement amount (DOJ – $402 million / SEC $177 million) remains the third largest FCPA settlement of all-time. The SEC’s resolution contained the perfunctory condition of permanently enjoining Halliburton from violating the FCPA’s books and records and internal controls provisions.
However, yesterday Halliburton joined the ever-increasing (see here and here for recent posts) FCPA repeat offender club as the SEC announced an FCPA enforcement action concerning alleged conduct in Angola. Without admitting or denying the SEC’s findings in this administrative order that it violated the FCPA’s books and records and internal controls provisions, Halliburton agreed to pay $29.2 million. In the same order, the SEC also found that Jeannot Lorenz (Halliburton’s former vice president) causing the company’s violations, circumvented internal accounting controls, and falsified books and records. Without admitting or denying the SEC’s findings, Lorenz agreed to pay a $75,000 penalty.
July 28, 2017
Guilty plea, scrutiny alerts, and for the reading stack. It’s all here in the Friday roundup.
As highlighted in this prior post, in July 2011 the DOJ criminally charged Amadeus Richers (a former director of Cinergy Telecommunications with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering) in the sprawling Haiti Teleco enforcement action.
Although Richers was indicted, he remained a fugitive until his arrest and ultimately his extradition from Panama on February 23, 2017.
July 27, 2017
In the aftermath of a recent Foreign Corrupt Practices Act disclosure by Newmont Mining, this post reboots a proposal first suggested in August 2010 (see here), further proposed in August 2016 (see here), and proposed again in March 2017 (see here).
The proposal is this: when a company voluntarily discloses an FCPA internal investigation to the DOJ and/or SEC and when one or both of the enforcement agencies do not bring an enforcement action, have the “declining” enforcement agency publicly state, in a thorough and transparent manner, the facts the company disclosed and why the “declining” agency did not bring an enforcement action based on those facts.
July 26, 2017
The internal controls provisions of the Foreign Corrupt Practices Act require issuers to “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that” the specific financial objectives of the statute are met.
Besides these vague objectives such as “transactions are executed in accordance with management’s general or specific authorization” or “access to assets is permitted only in accordance with management’s general or specific authorization” the FCPA does not specify what issuers are supposed to do. Nor does any implementing rule or regulation.
Rather, enforcement of the internal controls provisions often amounts to the government – with the perfect of hindsight – adopting a theory of enforcement that represents little more than ipse dixit (an unsupported statement that rests solely on the authority of the individual who makes it). In other words, the failure to do x, y or z is an internal controls violations merely because the government says it is.
July 25, 2017
Acting Assistant Attorney General Kenneth Blanco recently delivered this speech which focused largely on foreign law enforcement cooperation in bribery investigations. The bulk of the speech concerned U.S. – Brazil cooperation with portions also dedicated to the DOJ’s Kleptocracy Asset Recovery Initiative.
In his speech, Blanco used much of the same rhetoric as prior DOJ officials have in talking about bribery and corruption and once again the notion that the U.S. will “push forward hard against corruption, wherever it is” is subject to interpretation.