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Friday Roundup

Roundup

Interesting, from the DOJ’s perspective, pay them more, sanctioned, scrutiny update, exit, and for the reading stack. It’s all here in the Friday roundup.

Interesting

As highlighted here, in December 2016 Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company in which Odebrecht owns a majority of voting shares) resolved a large FCPA and related enforcement action largely concerning conduct in Brazil including the companies relationships with Petrobras as well as allegations of improper payments in Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.

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Friday Roundup

Roundup

Consistently damaged, across the pond, scrutiny alerts and updates, and for the reading stack. It’s all here in the Friday roundup.

“Consistently Damaged”

In this 12 minute video, Neil Bruce (CEO and President of SNC-Lavalin) describes his frustration for how the company is not being offered a remediation agreement (Canada’s term for a deferred prosecution agreement) in connection with its long-standing scrutiny. (See here and here for prior posts).

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Friday Roundup

Roundup

Scrutiny alerts and updates, Goldman ripples, and for the reading stack. It’s all here in the Friday roundup.

Scrutiny Alerts and Updates

MTS

As highlighted in this 2015 post, the Uzbekistan telecom bribery scheme involved several companies. In 2016, VimpelCom resolved an FCPA enforcement action with a net settlement amount (after accounting for various credits and deductions for related foreign law enforcement action) of approximately $398 million. In 2017, Telia resolved an FCPA enforcement action with a net settlement amount of $483 million.

Next up will be Russia-based Mobile TeleSystems PJSC, a company with shares traded on the New York Stock Exchange, which recently disclosed:

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Wal-Mart’s Pre-Enforcement Action Professional Fees And Compliance Enhancements Top $900 Million

Wal-Mart

In yesterday’s 3Q FY2019 earnings call presentation, Wal-Mart disclosed $9 million in Foreign Corrupt Practices Act and compliance related expenses ($6 million for ongoing investigations and inquiries and $3 million for global compliance program and organizational enhancements). The 3Q figures are higher than 2Q figures and 1Q figures.

Doing the math, Wal-Mart’s 3Q FY2019 FCPA and compliance-related costs are approximately $145,000 per working day.

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The FCPA’s Impact On Raising Capital

raising capital

The 2014 article “FCPA Ripples” goes in-depth, using various case studies, to demonstrate how 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. Numerous prior posts have done so as well (see here).

In addition to pre and post-enforcement action professional fees and expenses, market capitalization, credit ratings, M&A activity, lost or delayed business opportunities, and offensive use of the FCPA (to name just a few ripples) this post highlights how FCPA scrutiny and enforcement can also negatively impact a company’s ability to raise capital.

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