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The Hidden Employee Costs Of FCPA Scrutiny And Enforcement

fired

As highlighted in the article “FCPA Ripples,” settlement amounts in an actual Foreign Corrupt Practices Act enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement. Other ripples include, most prominently, pre-enforcement action professional fees and expenses, post-enforcement action professional fees and expenses as well as a host of other negative business consequences.

As long as there has been FCPA enforcement, it has been known that culpable employees have been terminated or disciplined in connection with FCPA investigations and enforcement actions.

Yet, as highlighted in this post, in certain recent FCPA enforcement actions (but not all – the SQM and Las Vegas Sands enforcement actions were silent on this topic) the DOJ has quantified the number of employees terminated or disciplined. According to DOJ resolution documents, in six recent enforcement actions approximately 160 employees have been terminated or disciplined. (This figure is in addition to numerous third parties terminated by companies resolving FCPA enforcement actions).

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FCPA Institute – Nashville (May 4-5)

Featured Image FCPA Institute

Could you or someone in your organization benefit from a two-day, active learning experience devoted to the Foreign Corrupt Practices Act?

If so, please consider the FCPA Institute which is next making a stop in Nashville on May 4-5.

Since 2014, the FCPA Institute has elevated the FCPA knowledge and practical skills of over 100 diverse professionals through active learning and the below video introduces you to the FCPA Institute; how the FCPA Institute is different than other FCPA conferences; and the substantive knowledge and practical skills participants will gain by attending the FCPA Institute.

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Friday Roundup

Roundup

Odebrecht / Braskem settlement amount is significantly trimmed, a form of bribery?, quotable, deficient internal controls, and scrutiny alerts and updates. It’s all here in the Friday roundup.

Odebrecht / Braskem Settlement Amount Significantly Trimmed

There was much false and misleading reporting about the FCPA settlement amount in the December 2016 FCPA enforcement action against Odebrecht / Braskem.

As highlighted in this post, after accounting for various credits and deductions (including for payments to Brazil and Swiss law enforcement agencies and a claimed inability to pay) the net FCPA settlement amount (subject to potential future adjustments) was approximately $420 million. The $420 settlement amount consisted of approximately $260 million in connection with the Odebrecht criminal information and plea agreement; $94.8 million in connection with the Braskem criminal information and plea agreement; and $65 million in connection with the SEC’s related enforcement action against Braskem.

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Fifth Circuit Affirms Dismissal Of “LNG Consultant’s” Due Process Claims Against The U.S. Arising From The Bonny Island, Nigeria FCPA Action

Judicial Decision

It’s not too difficult to reverse engineer the basic facts of a Fifth Circuit opinion issued earlier this week.

In 2008, the DOJ criminally charged Albert Jackson Stanley (the former CEO of KBR Inc.) with conspiracy to violate the FCPA and commit mail and wire fraud in connection with lucrative liquefied natural gas projects at Bonny Island, Nigeria. Various consultants were generically mentioned in the criminal information and a subsequent criminal indictment would reveal that those consultants were Jeffery Tesler and Wojciech Chodan.

The Stanley charging document also mentioned “LNG Consultant” – a citizen of the U.S. and a citizen of Lebanon – who was also involved in the bribery scheme. This individual, referred to as “John Doe” in the Fifth Circuit opinion, filed suit in 2015 against the United States in the Southern District of Texas, asserting that the Government violated his Fifth Amendment due process rights by accusing him of a crime during the course of a criminal proceeding in which he was not named as a defendant. Doe sought a declaratory judgment that his Fifth Amendment rights had been violated, expungement of court records, and other forms of nonmonetary relief.

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Wal-Mart Five Years Later

Wal-Mart

Five years ago today, the New York Times published an article (here) titled “Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle.”

The conduct at issue in the Times article related to Wal-Mart’s largest foreign subsidiary, Wal-Mart de Mexico (“Wal-Mart Mexico), and suggested that Wal-Mart Mexico “orchestrated a campaign of bribery to win market dominance” and that the entity “paid bribes to obtain permits in virtually every corner” of Mexico.

The April 2012 NY Times article resulted in intense world-wide media scrutiny of Wal-Mart. However, it was known months before the NY Times article, that Wal-Mart was under FCPA scrutiny.  (See here for the December 2011 FCPA Professor post highlighting Wal-Mart’s FCPA disclosure). Like in many facets of modern life, the narrative that Wal-Mart’s FCPA scrutiny began with the NY Times article became more important than actual facts.

Thus, today is a false five year anniversary of Wal-Mart’s FCPA scrutiny, but a meaningful anniversary nevertheless.

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