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What Is A So-Called “Declination”? A Big, Muddy Mess That’s What It Is

mud

There are some issues in the Foreign Corrupt Practices Act space that really should be simple.

For instance, the question “what is an FCPA enforcement action” really should be simple.

However, as highlighted in the article “A Common Language to Remedy Distorted FCPA Enforcement Statistics” various FCPA Inc. participants have adopted (for self-interested reasons perhaps) creative and haphazard counting methods regarding “what is an FCPA enforcement action.”

The end result is a muddy conversation about many FCPA enforcement issues and the creative and haphazard counting methods infect the quality and reliability of FCPA enforcement and related statistics of interest to many in the legal and business communities.

Another question that should be simple is “what is a declination.”

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Friday Roundup

Roundup

A focus on the numbers, scrutiny alerts and updates, legal extortion?, and who said shareholder meetings are dull. It’s all here in the Friday roundup.

A Focus on the Numbers

Earlier this week, the SEC announced its FY2016 enforcement results and how it filed 868 enforcement actions, a “new single year high for SEC enforcement actions.” As noted in this Wall Street Journal article, this “marks the third year in a row the 82-year old agency has filed the most cases in its history.”

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DOJ Releases Two So-Called “Declination” Letters, Yet “Pursuant To” The Letters, HMT LLC And NCH Corp. Agree To Disgorge $2.7 Million And $335,000

Surprise

Just when you think you’ve seen it all in connection with Foreign Corrupt Practices Act enforcement, along comes yesterday’s development.

In an e-mail to media, the DOJ stated that it sent letters to “counsel for HMT LLC and NCH Corporation outlining the department’s decision to close its inquiry into potential FCPA violations.”

But, and this is a big but, “pursuant to” the letters, HMT agreed to disgorge $2,719,412 “which represents the profit to HMT from the illegally obtained sales in Venezuela and China” and NCH Corp. agreed to disgorge $335,342 “which represents the profit to NCH from the illegally obtained sales in China.”

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Circling Back On The Ping / Harris Corp. Matter

Harris

This September 15th post regarding the SEC’s enforcement action against Jun Ping Zhang (the former Chairman and CEO of CareFx China, a dissolved Chinese subsidiary of Harris Corp) noted that the SEC, in the Ping Order, found that as a result of Ping’s conduct “Harris violated the FCPA’s books and records provisions.”

Elsewhere, the Order stated that as a result of the alleged improper conduct CareFx was awarded over $9.6 million in contracts.

Accordingly, the prior post wondered whether a future Foreign Corrupt Practices Act enforcement action against Harris Corp. would be forthcoming. Indeed, there have been several examples of the SEC first bringing an FCPA enforcement action against an individual and then following up with an FCPA enforcement action against the company. (For instance, in August 2015 the SEC brought an FCPA enforcement action against Vicente Garcia (a former head of Latin American sales for SAP) followed by SAP enforcement action in February 2016- see here).

It turns out that the answer to the question: will there be an FCPA enforcement action against Harris Corp. is no because in this SEC release issued on September 12th (a day before the September 13th Ping Order) the SEC states:

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Friday Roundup

Roundup

Checking in on Wal-Mart, DOJ “declinations,” another installment of as we say not as we do, scrutiny alerts, and cashing in. It’s all here in the Friday roundup.

Wal-Mart

In its recent 2Q FY2017 earnings call presentation Wal-Mart disclosed $28 million in Foreign Corrupt Practices Act and compliance related expenses ($23 million for ongoing investigations and inquiries and $5 million for global compliance program and organizational enhancements). The Q2 expenses of $28 million are higher than the Q1 expenses of $25 million.

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