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Reboot – Russian Nuclear Industry Bribery Scheme

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Unfortunately in this day and age it is difficult to analyze the news. It seems that approximately 40% of Americans have their preferred news sources which report (and do not report) certain things, approximately 40% of other Americans have their preferred news sources which report (and do not report) certain things, which leaves approximately 20% Americans trying to figure what is actually going on.

For instance, certain media outlets this week (but not others) have devoted substantial coverage of the Obama administration approving “a controversial deal in 2010 giving Moscow control of a large swath of American uranium” [even though] the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States.”

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Bio-Rad Appeals Approximate $11 Million FCPA-Related Civil Verdict In Favor Of Its Former General Counsel

Bio-Rad

As highlighted in this previous post, in November 2014 Bio-Rad agreed to pay $55 million to resolve a parallel DOJ and SEC FCPA enforcement action based on alleged conduct in Russia, Thailand and Vietnam.

As highlighted in this previous post, in May 2015 Sanford Wadler, the former General Counsel and Secretary of Bio-Lab Laboratories, filed a civil complaint against the company and certain executive officers and board members alleging various unfair employment practices including that Wadler was terminated for blowing the whistle on certain potential FCPA issues.

As highlighted in this previous post, Wadler’s claims were fully litigated and in February 2017 a jury awarded Wadler $2.9 million in back pay and stock compensation and $5 million for punitive damages. The district court doubled the compensatory award pursuant to Dodd-Frank for a total award of approximately $11 million.

Recently Bio-Rad filed this appeal in the Ninth Circuit challenging various aspects of the trial court decision.

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From The Dockets

Judicial Decision

As highlighted in this previous post, Misonix has been under FCPA scrutiny since September 2016 and in March 2017 Cicel (Beijing) Science & Technology Co. Ltd. brought a variety of civil claims against Misonix concerning its business relationship with the company.

Among the claims brought by Cicel was a breach of contract claim. Misonix acknowledged that it terminated the contract, but argued that it “was justified in doing so because of Misonix’s FCPA investigation” regarding Cicel. In response, Cicel claimed that the investigation “was a ruse for breaching the contract.” Recently, U.S. District Court Judge Arthur Spatt (E.D.N.Y.) allowed Cicel’s claim to proceed beyond the motion to dismiss stage. (See 2017 WL 4535933).

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Are FCPA Third-Party “Best Practices” Xenophobic?

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There is often discussion of “victims” of Foreign Corrupt Practices Act violations. Yet, I genuinely  believe that one of the seldom-discussed “victim” categories of this new era of FCPA enforcement and resulting compliance “best practices” is foreign third parties.

For starters, a business organization can be exposed to FCPA anti-bribery violations based on the conduct of various third parties (assuming the “knowledge” component of the third-party payment provisions is met). Moreover, based on current enforcement theories, the mere “improper” recording of foreign third-party transactions may constitute a books and records violation and the enforcement agencies frequently find internal controls violations based on various alleged deficiencies concerning a business organization’s relationship with foreign third parties.

Because of these legal provisions (and aggressive and dubious enforcement of these provisions), an extensive and elaborate series of “best practices” have developed around pre-engagement, engagement, and post-engagement of foreign third parties.

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BellSouth Gets Hung Up In Latin America

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[This post is part of a periodic series regarding “old” FCPA enforcement actions]

In 2002, the SEC announced the filing of a settled civil complaint against BellSouth Corporation charging the telecommunications company with violations of the FCPA’s books and records and internal controls provisions.

The conduct at issue focused on an indirect subsidiary in Venezuela (and BellSouth’s inability to “reconstruct the circumstances of purpose” of certain payments) and an indirect subsidiary in Nicaragua (which retained the wife of the chairman of a Nicaraguan legislative committee with oversight of telecommunications).

As frequently highlighted on these pages, the root cause of many FCPA enforcement actions are foreign trade barriers and restrictions and in this regard, as the complaint notes, Nicaraguan law prohibited foreign companies from acquiring a majority interest in Nicaraguan telecommunications companies.”

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