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Approximately 7.5 Years After Disclosing FCPA Scrutiny, Walmart FINALLY Resolves FCPA Enforcement Action

Wal-Mart

As highlighted in this prior post, in late 2011 Walmart disclosed that it began “an internal investigation into whether certain matters, including permitting, licensing and inspections, were in compliance” with the FCPA.

So began arguably one of the most high-profile instances of corporate scrutiny in Foreign Corrupt Practices Act. history. The scrutiny FINALLY came to an end yesterday as the DOJ and SEC announced (here and here) a coordinated $282 million enforcement action. As highlighted in this prior post, Walmart disclosed this likely settlement amount in November 2017,  yet it still took approximately 1.5 additional years to formally resolve the matter.

This post summarizes the DOJ and SEC’s enforcement action concerning alleged improper conduct in the following countries: Mexico, Brazil, India and China.  Future posts will explore numerous other issues relevant to the enforcement action.

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Fresenius Medical Care Pays Approximately $232 Million To Resolve Its Long-Standing FCPA Scrutiny

fresenius

German healthcare firm Fresenius Medical Care AG (a company with American Depositary Receipt shares traded on the NYSE) has been under FCPA scrutiny since 2012 (no that is not a typo).

Today the DOJ and SEC announced (here and here) an approximate $232 million enforcement action ($84.7 million to the DOJ and $147 million to the SEC) against the company for alleged bribery schemes involving physicians and other healthcare personnel in Angola, Saudi Arabia, Morocco, Spain, Turkey, Gabon, Benin, Burkina Faso, Senegal, Ivory Coast, Niger, Cameroon China, Serbia, Bosnia, and Mexico.

While not specified in any of the resolution documents, the DOJ’s non-prosecution agreement and SEC’s administrative order make generic reference to the Angola and Saudi Arabia conduct involving ‘agents and employees utiliz[ing] the means and instrumentalities of U.S. interstate commerce, including the use of internet-based email accounts hosted by numerous service providers located in the United States.”

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Next Up – MTS Resolves $850 Million FCPA Enforcement Action

mts

First it was Netherlands-based VimpelCom which resolved a net $398 million FCPA enforcement action in February 2016 for bribing an alleged Uzbekistan telecom official (see here and here for prior posts).

Then it was Sweden-based Telia which resolved a net $483 million FCPA enforcement action in September 2017 based on the same alleged core conduct. (see here and here for prior posts).

Recently, the SEC and DOJ announced (see here and here) that Russia-based Mobile TeleSystems PJSC (MTS) agreed to resolve an $850 million DOJ/SEC FCPA enforcement action based on the same alleged core conduct. This is the largest settlement amount in an FCPA enforcement action in history. (See here for a list of the top ten corporate enforcement actions).

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Ho Convicted Of FCPA And Related Offenses

Ho

As highlighted in this previous post, in November 2017 Chi Ping Patrick Ho (pictured) and Cheikh Gadio were criminally charged with conspiring to violate the Foreign Corrupt Practices Act, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering in connection with alleged bribery schemes in Chad and Uganda on behalf of China Energy Fund Committee, an entity funded by CEFC China Energy Company Ltd.

In July 2018, Ho’s motion to dismiss was denied (see here), in September 2018 the DOJ quietly dismissed charges against Gadio (see here), and in late November Ho’s trial began with Gadio as a primary DOJ witness.

Yesterday, the DOJ announced that after a one week trial a federal jury found Ho guilty of one count of conspiring to violate the FCPA, four counts of violating the FCPA, one count of conspiring to commit international money laundering and one count of committing international money laundering.

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The Charitable Donation That Did Not Occur

StopSign

After the introductory comments in italics, the remainder of this post is from Corporate Counsel at a well-known U.S. based publicly traded company.

Do Foreign Corrupt Practices Act enforcement actions based on foreign charitable donations (such as Schering-Plough, Nu Skin Enterprises and several others that include such allegations) represent a net positive or net negative?

The FCPA Guidance contains the unobjectionable statement that companies “cannot use the pretense of charitable contributions as a way to funnel bribes to government officials.” However, seldom are the circumstances as black and white as the government portrays and query whether business organizations, because of this guidance and because of the above enforcement actions involving charitable donations, have become excessively risk averse and have stopped contributing to humanitarian causes or otherwise pulled back from supporting communities or institutions in need. According to the below guest post, the answer is yes and query whether the world is a better place because of this.

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