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Friday Roundup

Fear mongering and the dark empire, FCPA scrutiny of Hamid Karzai’s brother, the DOJ’s kleptocracy unit takes shape, and survey findings … it’s all here in the Friday roundup.

Fear Mongering and the Dark Empire

What does Sharie Brown (here), Chair of DLA Piper’s Foreign Corrupt Practices Act, Anti-Corruption and Corporate Compliance Practice, think about the U.K. Bribery Act, the surge in FCPA Inc., and the revolving door? See here for a recent interview with Corporate Crime Reporter.

A Future Afghanistan Related FCPA Enforcement Action?

A federal grand jury in the Southern District of New York is reportedly hearing evidence against Mahmood Karzai (a dual Afghan and U.S. citizen and the brother of Afghan President Hamid Karzai) including possible evidence that Afghan Investment Co. (incorporated in Virgina until 2010) bribed Afghanistan’s then mining minister to secure a lease on the country’s only cement factory. See Matthew Rosenberg “Grand Jury Investigates Karzai Brother) (Wall Street Journal – Feb. 16th).

If evidence exists that Karzai did indeed violate the FCPA, one can only imagine the political / foreign policy considerations of criminally indicting the brother of the Afghan President. I like to think that the government blindly goes where the evidence leads them, but the BAE and James Giffen enforcement actions suggests that may not always be the case.

To my knowledge, there has never been an FCPA enforcement action involving conduct in Afghanistan.

DOJ Kleptocracy Unit

Joe Palazzolo (Wall Street Journal Corruption Current) recently spoke with several officials involved in the DOJ’s nascent kleptocracy unit. See here for previous discussion and other links regarding the kleptocracy initiative.

Palazzolo reports (here) that the unit will be housed in the DOJ’s Asset Forfeiture and Money Laundering Section and staffed by five lawyers. The FBI’s Asset Forfeiture and Money Laundering Unit will also divert two agents to the new unit. According to the report, “U.S. officials expect that most cases will involve foreign politicians who have left office and are no longer in a position to obstruct investigations.” Palazzolo reports that the unit’s “first major case could be ready in the next month and several more are expected this year.”

Survey Findings

Among the findings in Deloitte and Forbes Insights 4th annual “Look Before You Leap” survey (here) is the following:

“Almost two-thirds (63%) of total survey respondents identified Foreign Corrupt Practices Act (FCPA) and anti-corruption issues that led to an aborted deal or a renegotiation over the past three years. Lack of transparency or unusual payment structures in contracts was cited by one in five and 18% pointed to the use of agents, consultants, distributors, or third parties to obtain or facilitate business.”

The survey results indicate that strategic buyers are more impacted (and perhaps more sensitive to FCPA issues) than financial buyers such as private equity firms and hedge funds.

*****

A good weekend to all.

DOJ Enforcement of the FCPA – Year in Review

A few weeks ago I ran a SEC FCPA enforcement year in review (here).

Today I highlight facts and figures from the DOJ’s FCPA enforcement program in 2010.

And what it year it had.

As noted in this recent DOJ release, “the Criminal Division’s Foreign Corrupt Practices Act (FCPA) enforcement involved imposition of $1 billion in penalties in FY 2010, the largest in the history of FCPA enforcement.”

In comparison, in 2000 the DOJ did not bring one FCPA enforcement action. The past decade has thus witnessed a remarkable transformation – not as to the FCPA itself (the statute has not changed since 1998), but as to FCPA enforcement and theories of prosecution both at the DOJ and the SEC.

As the DOJ’s former Assistant Chief for FCPA enforcement candidly stated (here), “the government sees a profitable program, and it’s going to ride that horse until it can’t ride it anymore.”

This post highlights the 16 DOJ corporate FCPA enforcement actions from 2010. Not included are BAE (an enforcement action (see here) in which the DOJ did not even charge FCPA offenses) or Lindsey Manufacturing (see here) given that the company was indicted and thus the enforcement action remains open.

Of the 16 enforcement actions, 6 of the actions were in Panalpina related actions; 2 were the related Bonny Island, Nigeria actions; and 2 were the related Alliance One and Universal actions. Thus, if one looks at unique enforcement actions (the best way to analyze FCPA facts and figures in my opinion), the DOJ broght 9 unique corporate FCPA enforcement actions in 2010.

In the 16 corporate FCPA enforcement actions from 2010, the DOJ brought in $870 million in criminal fines – thrown in the $400 million BAE enforcement action if you insist and the number is $1.27 billion.

Tack on the SEC’s recovery (both civil penalties and disgorgement) in 2010 corporate FCPA enforcement actions of approximately $530 million and one finds $1.8 billion in corporate FCPA fines, penalties and disgorgement in 2010.

DOJ FCPA enforcement in 2010 was both large ($240 million in criminal fines against both Technip and Snamprogetti, $93.6 million in criminal fines against Daimler) and small ($32,000 against Mercator Corporation in the bizarre James Giffen related case involving two snowmobiles, and $1.7 million against RAE Systems).

The numbers present some interesting results.

Despite aggressive DOJ rhetoric and despite the DOJ seeking a sentencing guidelines enhancement applicable to FCPA offenses (see here) in 10 of 12 FCPA enforcement actions where an analysis was possible, the DOJ agreed to a criminal fine below the minimum range suggested by the sentencing guidelines.

In these 10 cases, the average was approximately 25% below the minimum guidelines range and the distribution range was 55% below the minimum guidelines range (Pride International) and 5% below the minimum guidelines range (Panalpina).

The only two corporate FCPA enforcement actions from 2010 where the company paid a criminal fine within the guidelines range were Alliance One (the company voluntarily disclosed and receive a non-prosecution agreement) and Alcatel-Lucent.

[Note – why are only 12 of the 16 enforcement actions included in the above analysis? I excluded Innospec because the company’s claimed inability to pay (but see here) resulted in an invalid fine to guidelines analysis; I excluded Mercator Corp. because the DOJ and the company could not even agree on what guidelines to use; and I excluded Noble Corp. and RAE Systems (both enforcement actions resolved via an NPA) because the DOJ never set forth a guidelines range in the agreement or related documents].

During the November 2010 Senate FCPA hearing (see here) an issue discussed was the general lack of individual DOJ FCPA prosecutions.

How many corporate FCPA enforcement actions involved related individual prosecutions of company employees (not talking agents here such as in Innospec) by the DOJ (recognizing that such prosecutions may be forthcoming in the future)?

Of the 17 corporate DOJ enforcement actions or indictments (Lindsey Manufacturing is back in the mix here) 12 of the 17 enforcement actions (70%) have not involved (at least thus far) DOJ prosecutions of company employees. Included in the 12 enforcement actions are the top 3 from 2010 from a criminal fine perspective: Technip, Snamprogetti, and Daimler.

What about non-prosecution and deferred prosecutions vs. old fashioned law enforcement (i.e., if a company committed a crime the DOJ charged it and if the company did not commit a crime the DOJ did not charge it)?

2010 saw 15 such resolution vehicles (4 NPAs) and (11 DPAs).

As Gibson Dunn highlighted in this recent report, FCPA enforcement actions comprised approximately 50% of all DOJ NPA or DPA agreements.

Among the criticisms noted in the Gibson Dunn report is that “by continually entering DPAs and NPAs, the DOJ can shield its expansive interpretation of important statutes from judicial review.” As to the FCPA the report states, “because FCPA allegations against corporations rarely, if ever, go to trial, and DPAs and NPAs are subject to only minimal judicial scrutiny, the DOJ’s sometimes expansive interpretations of the FCPA is never truly tested.”

Spot on!

As evident from the material below, a typical way for DOJ to resolve corporate FCPA enforcement actions in 2010 was for the parent company to enter into an NPA or DPA and for a subsidiary (usually a foreign subsidiary) to plea to a criminal charge. Daimler, Alliance One, Universal, ABB, Panalpina, Pride International, Royal Dutch Shell, and Alcatel-Lucent all involved such hybrid resolution vehicles.

In the SEC year in review piece, I noted that 97% of the $529,967,294 collected in SEC FCPA enforcement actions in 2010 appears to be in enforcement actions that were voluntarily or otherwise publicly disclosed and not the result of original investigation by either the SEC or DOJ.

What does this number look like for DOJ FCPA enforcement actions in 2010 – recognizing that by disclosure I am talking about voluntary disclosure in the traditional sense (i.e. the company disclosing the conduct at issue to the enforcement agencies) as well as other forms of public disclosure (such as identification in the U.N. Oil for Food Report, the result of a whistleblower complaint to U.S. authorities, the result of prior foreign law enforcement agency investigations, or based on disclosures by other companies)?

Of the $870 million in criminal fines collected by the DOJ in FCPA enforcement actions, 97% would appear to fit this description as well.

Thus, much like the SEC, the DOJ also appears to be a reactive agency when it comes to corporate FCPA enforcement.

Set forth below are facts and figures from each 2010 DOJ corporate FCPA enforcement action.

Innospec (March 2010)

See here for the prior analysis and principal allegations.

Charges: Conspiracy to commit wire fraud and to violate the FCPA’s anti-bribery and books and records provisions; wire fraud; and FCPA anti-bribery and books and records violations.

Resolution Vehicle: Plea.

Guidelines Range: $101.5 – $203 million.

Penalty: $14.1 million (based on claimed inability to pay).

Disclosure: Yes.

Monitor: Yes – three years.

Individuals Charged by DOJ: No.

Daimler (March 2010)

See here for the prior analysis and principal allegations.

Charges: Daimler AG (conspiracy to violate the FCPA’s books and records provisions and violating the FCPA’s books and records provisions); DaimlerChrysler China Ltd. (conspiracy to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions); DaimlerChrysler Automotive Russia SAO (conspiracy to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions); Daimler Export and Trade Finance GmbH (conspiracy to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions).

Resolution Vehicle: Daimler AG (deferred prosecution agreement); DaimlerChrysler China Ltd. (deferred prosecution agreement); DaimlerChrysler Automotive Russia SAO (plea); Daimler Export and Trade Finance GmbH (plea).

Guidelines Range: $116 – $232 million.

Penalty: $93.6 million (20% below the minimum guidelines range).

Disclosure: Yes.

Monitor: Yes – three years.

Individuals Charged by DOJ: No.

Technip (June 2010)

See here for the prior analysis and principal allegations.

Charges: Conspiracy to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions.

Resolution Vehicle: Deferred prosecution agreement.

Guidelines Range: $318.4 – $636.8 Million

Penalty: $240 million (25% below the minimum guidelines range).

Disclosure: Yes.

Monitor: Yes – two years.

Individuals Charged by DOJ: No.

Snamprogetti (July 2010)

See here for the prior analysis and principal allegations.

Charges: Conspiracy to violate the FCPA’s anti-bribery provisions and aiding and abetting FCPA anti-bribery violations.

Resolution Vehicle: Deferred prosecution agreement.

Guidelines Range: $300 Million – $600 Million

Penalty: $240 million (20% below the minimum guidelines range)

Disclosure: Yes.

Monitor: No.

Individuals Charged by DOJ: No.

Alliance One (August 2010)

See here for the prior analysis and principal allegations.

Charges: Alliance One International AG (conspiracy to violate the FCPA, violations of the FCPA’s anti-bribery provisions, and violations of the FCPA’s books and records provisions); Alliance One Tobacco Osh LLC (conspiracy to violate the FCPA, violations of the FCPA’s anti-bribery provisions and books and records provisions).

Resolution Vehicle: Alliance One International Inc. (non-prosecution agreement); Alliance One International AG (plea); Alliance One Tobacco Osh LLC (plea).

Guidelines Range: $8.4 – $16.8 million.

Penalty: $9.45 million.

Disclosure: Yes.

Monitor: Yes – three years.

Individuals Charged by DOJ: Yes.

Universal Corp. (August 2010)

See here for the prior analysis and principal allegations.

Charges: Universal Leaf Tabacos Ltd. (conspiracy to violate the FCPA’s anti-bribery and books and records provisions and violating the FCPA’s anti-bribery provisions).

Resolution Vehicle: Universal Corporation (non-prosecution agreement); Universal Leaf Tabacos Ltd. (plea).

Guidelines Range: $6.3 – $12.6 million

Penalty: $4.4 million (30% below the minimum guidelines range).

Disclosure: Yes.

Monitor: Yes – three years.

Individuals Charged by DOJ: No.

Mercator Corp. (August 2010)

See here for the prior analysis and principal allegations.

Charges: FCPA anti-bribery violations.

Resolution Vehicle: Plea.

Guidelines Range: The parties disagreed as to whether the 2009 or 2008 guidelines applied. If 2009, $650,000 – $1.3 million; If 2008, $30,000 to $60,000.

Penalty: $32,000.

Disclosure: Unclear.

Monitor: No.

Individuals Charged by DOJ: Yes (but Giffen pleaded to a misdemeanor tax violation).

ABB Ltd. (September 2010)

See here for the prior analysis and principal allegations.

Charges: ABB Inc. (conspiracy to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions); ABB Ltd. – Jordan (conspiracy to commit wire fraud and to violate the FCPA’s books and records provisions).

Resolution Vehicle: ABB Ltd. (deferred prosecution agreement); ABB Inc. (plea); ABB Ltd. – Jordan (plea).

Guidelines Range: $30.42 – $60.2 million.

Penalty: $19 million (approximately 38% below the minimum guidelines range).

Disclosure: Yes.

Monitor: Company agreed to follow the recommendations of an independent compliance consultant.

Individuals Charged by DOJ: Yes.

Lindsey Manuf. (October 2010)

See here for the prior analysis and principal allegations.

Charges: Conspiracy to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions.

Resolution Vehicle: N/A

Guidelines Range: N/A

Penalty: N/A

Disclosure: Unclear.

Monitor: N/A

Individuals Charged by DOJ: Yes.

Panalpina (November 2010)

See here for the prior analysis and principal allegations.

Charges: Panalpina World Transport (Holding) Ltd. (conspiracy to violate and violating the FCPA’s anti-bribery provisions) ; Panalpina Inc. (conspiracy to violate the FCPA’s books and records provisions and aiding and abetting certain customers in violating the FCPA books and records provisions).

Resolution Vehicle: Panalpina World (deferred prosecution agreement); Panalpina Inc. (plea).

Guidelines Range: 72.8 million to $145.6 million.

Penalty: 70.6 million (approximately 5% below the minimum guidelines range).

Disclosure: Yes.

Monitor: No.

Individuals Charged by DOJ: No.

Pride International (November 2010)

See here for the prior analysis and principal allegations.

Charges: Pride International Inc. (conspiracy to violate the FCPA’s anti-bribery and books and records provisions and violating the FCPA’s anti-bribery and books and records provisions); Pride Forasol S.A.S. (conspiracy to violate the FCPA’s anti-bribery and books and records provisions, violating the FCPA’s anti-bribery provisions, and aiding and abetting violations of the FCPA’s books and records provisions).

Resolution Vehicle: Pride International Inc. (deferred prosecution agreement); Pride Forasol (plea).

Guidelines Range: $72.5 – $145 million.

Penalty: $32.6 million (approximately 55% below the minimum guideline range).

Voluntary Disclosure: Yes.

Monitor: No.

Individuals Charged: No.

Tidewater (November 2010)

See here for the prior analysis and principal allegations.

Charges: Tidewater Marine International Inc. (conspiracy to violate the FCPA’s anti-bribery and books and records provisions and violating the FCPA’s books and records provisions).

Resolution Vehicle: Deferred prosecution agreement.

Guidelines Range: $10.5 – $21 million.

Penalty: $7.4 million (30% below the minimum guidelines range).

Disclosure: Yes.

Monitor: No.

Individuals Charged by DOJ: No.

Transocean (November 2010)

See here for the prior analysis and principal allegations.

Charges: Transocean Inc. (conspiracy to violate the FCPA’s anti-bribery and books and records provisions; violating the FCPA’s anti-bribery provisions; and aiding and abetting FCPA books and record violations).

Resolution Vehicle: Deferred prosecution agreement.

Guidelines Range: $16.8 – $33.6 million.

Penalty: $13.4 million (20% below the minimum guidelines range).

Disclosure: Yes.

Monitor: No.

Individuals Charged by DOJ: No.

Noble Corp. (November 2010)

See here for the prior analysis and principal allegations.

Charges: N/A

Resolution Vehicle: Non-prosecution agreement.

Guidelines Range: Not addressed.

Penalty: $2.6 million.

Disclosure: Yes.

Monitor: No.

Individuals Charged by DOJ: No.

Royal Dutch Shell (November 2010)

See here for the prior analysis and principal allegations.

Charges: Shell Nigeria Exploration and Production Company Ltd. (conspiracy to violate the FCPA’s anti-bribery and books and records provisions; aiding and abetting FCPA books and records violations).

Resolution Vehicle: Deferred prosecution agreement.

Guidelines Range: $34.2 – $68.4 million.

Penalty: $30 million (approximately 15% below the minimum guidelines range).

Disclosure: No.

Monitor: No.

Individuals Charged by DOJ: No.

RAE Systems (December 2010)

See here for the prior analysis and principal allegations.

Charges: Although a non-prosecution agreement, the agreements states “knowing violations of the FCPA’s books and records and internal controls provisions.”

Resolution Vehicle: Non-prosecution agreement.

Guidelines Range: Not addressed.

Penalty: $1.7 million.

Disclosure: Yes.

Monitor: No.

Individuals Charged by DOJ: No.

Alcatel-Lucent (December 2010)

See here for the prior analysis and principal allegations.

Charges: Alcatel-Lucent S.A. (FCPA books and records and internal control provisions); Alcatel-Lucent France S.A., Alcatel-Lucent Trade International A.G., and Alcatel Centroamerica S.A. (conspiracy to violate the FCPA’s anti-bribery, books and records, and internal control provisions).

Resolution Vehicle: Alcatel-Lucent S.A. (deferred prosecution agreement); Alcatel-Lucent France S.A., Alcatel-Lucent Trade International A.G., and Alcatel Centroamerica S.A. pleas.

Guidelines Range: $86.58 – $173.16 million.

Penalty: $92 million.

Disclosure: Yes.

Monitor: Yes – three years.

Individuals Charged by DOJ: Yes.

The Akim Of Nookat, Lots Of Nigerian Customs Officials, The Congo Merchant Marine, And Lots Of Telecom Employees – The “Foreign Officials” Of 2010

A “foreign official”.

Without one, there can be no FCPA anti-bribery violation (civil or criminal).

Besides the fake Gabonese “foreign official” in the Africa Sting cases, who where the “foreign officials” of 2010?

This post describes the categories of “foreign officials” from 2010 corporate FCPA enforcement actions.

By my count, there were 21 corporate FCPA enforcement actions in 2010 (DOJ and SEC). (See here for my SEC FCPA Enforcement Year in Review – stay tuned for a similar DOJ FCPA Enforcement Year in Review).

I excluded from the tally, the General Electric SEC enforcement action as it related only to Iraqi Oil for Food conduct (and alleged kickback payments to the Iraqi government – not to any specific “foreign official) and thus resulted in FCPA books and records and internal controls charges only. There were other Iraqi Oil for Food cases in 2010, including Innospec, Daimler, and ABB, but these enforcement actions stayed on the list because the allegations related to other conduct as well.

In addition to the GE action, there were two additional FCPA books and records and internal controls only cases in 2010 – Natco Group and Veraz Networks. However, these enforcement actions stayed on the list because, let’s face it, if an employee from either of these companies consistently entertained their brother-in-law in the corporate suite and sought reimbursement for “client entertainment” you wouldn’t be reading about it – even if such conduct would nevertheless likely constitute an FCPA books and records and internal control violation. In other words, Natco Group and Veraz Networks, even if only FCPA books and records and internal controls cases, remain very much about the “foreign officials” in those cases.

Of the 20 corporate enforcement actions, 12 enforcement actions (60%) involved (in whole or in part) employees of alleged state-owned or state-controlled enterprises (“SOE”). In these cases, the enforcement agencies generally allege that such enterprises are “instrumentalities” of a foreign government and that such employees are therefore “foreign officials” under the FCPA. However, as I noted in my prepared Senate testimony (here) this central feature of FCPA enforcement contradicts the intent of Congress in enacting the FCPA.

The 60% figure from 2010 FCPA enforcement is similar to the 66% figure I calculated from 2009 FCPA enforcement (see here pages 410-414). As in 2009, the impact of this dubious “foreign official” interpretation extends beyond corporate FCPA enforcement actions as this interpretation is also at the core of several individual FCPA prosecutions – most notably in 2010, the many individual prosecutions (Lindsey, Lee, Aguilars, O’Shea, and Basurto) involving officials of Comision Federal de Electricidad – an alleged Mexican SOE.

Not only did SOE employees comprise the bulk of “foreign officials” in 2010, but so too did individuals with apparent ministerial or clerical duties.

Of the 20 corporate enforcement actions, 10 enforcement actions (50%) – including most notably all the Panlapina-related enforcement actions – involved (in whole or in part) officials with apparent ministerial or clerical duties such as customs, immigration and tax matters

Why is this noteworthy?

The FCPA’s original definition of “foreign official” was as follows. “… any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or any person acting in an official capacity for or on behalf of such government or department, agency or instrumentality. Such terms does not include any employee of a foreign government or any department, agency, or instrumentality thereof whose duties are essentially ministerial or clerical.”

This last sentence was the FCPA’s original (albeit indirect) facilitating payment or grease exception. The relevant House Report states in pertinent part as follows: “… a gratuity paid to a customs official to speed the processing of a customs document would not be reached by this bill. Nor would it reach payments made to secure permits, licenses, or the expeditious performance of similar duties of an essentially ministerial or clerical nature which must be performed in any event.”

When Congress amended the FCPA in 1988 it, among other things, amended the definition of foreign official by removing this indirect facilitating payment exception from the “foreign official” definition by creating a stand-alone facilitating payment exception currently found in the statute.

The relevant House Report indicates that Congress did not seek to disturb Congress’s original intent. “The policy adopted by Congress in 1977 remains valid, in terms of both U.S. law enforcement and foreign relations considerations. Any prohibition under U.S. law against this type of petty corruption would be exceedingly difficult to enforce, not only by U.S. prosecutors but by company officials themselves. Thus while such payments should not be condoned, they may appropriately be excluded from the reach of the FCPA. U.S. enforcement resources should be devoted to activities have much greater impact on foreign policy.”

The remainder of this post describes (as per DOJ/SEC allegations) the “foreign officials” of 2010. As apparent from the descriptions below, in certain instances the enforcement agencies describe the “foreign official” with reasonable specificity; in other instances with virtually no specificity.

Natco Group

Kazakhstan immigration authorities; employees of the Kazakh Ministry of Labor

Innospec

Iraqi Ministry of Oil and its component oil refineries (MoO) officials;

Official X of the Indonesian Ministry of Energy and Mineral Resources who later became a senior official at BP Migas, an Indonesian state owned oil and gas company; officials at Pertamina, another state owned oil company related to BP Migas.

Daimler

Russian government officials employed at Russian government customers (Russian Ministry of Internal Affairs, the Russian military, the City of Moscow, the City of Ufa, and the City of Novi Urengoi); Machinoimport and Dorinvest, both Russian government purchasing agents for the City of Moscow; Russian government officials employed by state-owned customers; Russian military officials; official with the Department of Communal Economy and Town Improvements for the City of Ufa, a Russian municipal government official; a senior municipal government official with the city of Novi Urengoi.

Chinese government customers – including principally the Bureau of Geophysical Prospecting, a division of the China National Petroleum Corporation, a Chinese state-owned oil company and Sinopec, a Chinese state owned energy company; Changqing Petroleum – a Chinese state-owned or controlled entity in the energy sector.

Saigon Passenger Transport Company a government entity in Vietnam; government official with the government owned Saigon High Tech Park; officials of a Vietnamese government office associated with import licensing; Ministry of Public Security official.

High-level executive official of Turkmenistan’s government; various officials of the Turkmenistan government.

Nigerian government officials; Nigerian officials to secure a State House (Nigerian Presidential Complex) contract; high-level executive branch official of Nigeria; chief buyer for the State House contract; Savannah Sugar Company Ltd – a Nigerian sugar company that was then majority owned by the Nigerian government; Nigerian police force; government official with the Ministry of Industry and an employee of the Ministry; Comite d’ Organisation de Jeux Africains – a state controlled agency organization committee for the All-Africa games; a senior Nigerian diplomat in Brazil.

Government officials at customers in the Ivory Coast and elsewhere in West Africa.

Ghanaian army officials.

Senior executive branch official in Liberia.

Members of the Riga City Council; members of the political party in control of the Riga City council; members of a different political party that was in control of the Riga City Council.

Volanbusz – a state owned regional public transport company in Budapest.

An executive of Mangyong Trading Corporation, an instrumentality of the North Korean government.

E.S.H.O.T. – a public transport agency for the municipality of Izmir in Turkey; Turkish police through the Ministry of Interior.

Perum Damri – an Indonesian state-owned bus company; tax officials in Indonesia.

Croatian government officials; Croatian Ministry of the Interior official; IM Metal – a Croatian government controlled and partially owned former weapons manufacturer and an instrumentality of the Croatian government.

Technip

“The Nigerian National Petroleum Corporation (“NNPC”) was a
Nigerian government-owned company charged with development of Nigeria’s oil and gas wealth and regulation of the country’s oil and gas industry. NNPC was a shareholder in certain joint ventures with multinational oil companies. NNPC was an entity and instrumentality of the Government of Nigeria and officers and employees of NNPC were “foreign officials” within the meaning of the FCPA.” “Nigeria LNG Limited (‘NLNG’) was created by the Nigerian government to develop the Bonny Island Project and was the entity that awarded the related EPC contracts. The largest shareholder of NLNG was NNPC, which owned 49% of NLNG. The other owners of NLNG were multinational oil companies. Through the NLNG board members appointed by NNPC, among other means, the Nigerian government exercised control over NLNG, including but not limited to the ability to block the award of EPC contracts. NLNG was an entity and instrumentality of the Government of Nigeria and its officers and employees were “foreign officials.”

Nigerian government officials, including officials of the executive branch of the government of Nigeria; a political party in Nigeria; a senior official of the Ministry of Petroleum.

Eni / Snamprogetti

Same as Technip described above.

Veraz Networks

Employees of government-controlled telecommunications companies in China and Vietnam

Alliance One

“… The government of Kyrgyzstan established the Kyrgyz Tamekisi an agency and instrumentality of the government, to manage and control the government-owned share of the tobacco processing facilities throughout Kyrgyzstan. Kyrgyz Official A served as the General Director of the Tamekisi and as such was a foreign official within the meaning of the FCPA.” “In Kyrgyzstan, each municipal, district or provincial government unit was headed by a public official known as an “akim” who was appointed to the post by the President of Kyrgyzastan on the advice of the Prime Minister. Accordingly, the Akims were ‘foreign officials’ within the meaning of the FCPA. Each Akim could exercise authority over the sale of tobacco by the growers within the local geographical area.”

The following Akims are referenced: the Akim of Nookat; the Akim of Alabuka; the Akim of Alafuko; and the Akim of Chilik. Kyrgyz tax inspection police foreign officials.

“The government of Thailand established the Thailand Tobacco Monopoly as an agency and instrumentality of the government, to manage and control the government-owned tobacco industry in Thailand. The TTM supervised the cultivation of domestic tobacco crops, purchased imported tobacco and manufactured cigarettes and other tobacco products in Thailand. The TTM was headed by a managing director appointed by the Finance Ministry, who reported through a board of directors directly to the Minster of Finance of Thailand and, as such, was a ‘foreign official’ within the meaning of the FCPA.”

Universal

Same TTM officials as Alliance One.

Five Mozambiquen government officials and/or their family members; wife of an official in the Mozambique Ministry of Agriculture and Fisheries; brother of an official in Ministry of Agriculture and Fisheries; Governor in Mozambique.

High-ranking Malawian government officials; political opposition leader.

ABB

“Comision Federal de Electricidad was an electric utlility company owned by the United Mexican states and responsible for supplying electricity to all of Mexico other than Mexico City. CFE officials N, J, C, and G held official positions a CFE and had influence over decisions concerning ABB’s contracts with CFE. CFE officials N,J,C and G, were “foreign officials” as that term is defined in the FCPA.”

Panalpina

“Officials of the Nigerian Customs Service [NCS], a Nigieran government agency within the Ministry of Finance of the Federal Republic of Nigeria. The NCS was responsible for assessing and collecting duties and tariffs on goods imported into Nigeria. The NCS was an agency and instrumentality of the government of Nigiera and its employees were foreign officials within the meaning of the FCPA”; Nigerian government officials, most of the payments were paid to NCS officials; Nigeria Port Authority officials; Maritime Authority officials, police officials, Department of Peteroleum officials, immigration authority officials, and National Authority for Food and Drug Control officials;

“Nigerian National Petroleum Investment Management Services [NAPIMS] officials. NAPIMS is a component of Nigeria National Petroleum Corporation [NNPC], a Nigerian government owned oil company, that supervises and manages Nigeria’s investment in the oil and gas industry. NNPC was an agency and instrumentality of the government of Nigiera and its employees were foreign officials within the meaning of the FCPA. As part of its oversight authority, NAPIMS officials had the authority to approve or disapprove logistics contracts awarded for joint venture projets. NAPIMS employees were foreign officials.”

Angolan government officials responsible for customs and immigration matters; Angolan government officials responsible for Angolan oil and gas operations; customs officials, Economic Police, Port Authority officials, and other Angolan officials; Angolan immigration and/or Ministry of Petroleum officials; Angolan military officials.

Azeri government officials responsible for assessing and collecting duties and tariffs on imported goods; Azeri tax officials.

Brazilian government officials responsible for assessing and collecting duties and tariffs on imported goods.

Kazakh government officials, including officials responsible for assessing and collecting duties and tariffs on imported goods and officials responsible for administering and enforcing Kazakh tax policy.

Russian government officials responsible for assessing and collecting duties on imported goods.

Turkmen government officials responsible for assessing and collecting duties and tariffs on imported goods to expedite the release of shipments and undocumented shipments and to cirucumvent the official Turkmen customs and immigration regulations; Turkmen government officials responsible for auditing, assessing, and collecting taxes on economic activity in Turkmenistan; and Turkmen government officials responsible for enforcing Turkmenistan labor, health, and safety laws.

Pride International

Same NCS officials as described above.

“Petroleos de Venezuela S.A. [PDVSA] was a Venezuelan state-owned oil company. In 1975, the government of Venezuela established PDVSA, an agency and instrumentality of the government, to manage and control the exploration, production, refinement, and transport of oil as well as the exploration and production of natural gas in Venezuela. Officals and members of the board of directors of PDVSA were foreign officials within the meaning of the FCPA.”

“The customs, excise and gold appellate tribunal [CEGAT] in India was an administrative judicial tribunal. Judges who were members of the CEGAT were ‘foreign officials’ within the meaning of the FCPA.”

“The Mexico customs official was a customs administrator operations assistant for the Mexican Customs Service. The Mexico customs official was a foreign official within the meaning of the FCPA.”

Kazakh customs officials; Kazakh tax officials; Nigerian tax officials; Saudi customs officials; Congo Merchant Marine official; officials of Libya’s social security agency, INAS.

Tidewater

Same NCS officials as described above.

“The general state tax inspection office within the Ministry of Finance for the Republic of Azerbaijian (later renamed the Ministry of Taxes for the Republic of Azerbaijan – collectively referred to as the Azeri Tax Authority) was responsible for administering and collecting tax assessments and duties for the Republic of Azerbaijan. The Azeri Tax authority was an agency and instrumentality of the Republic of Azerbaijan and its employees, including tax inspectors, were foreign officials.

Transocean

Same NCS officials as described above.

GlobalSantaFe

Same NCS officials as described above.

“Government officials in Gabon, Angola, and Equitorial Guinea.”

Noble

Same NCS officials as described above.

Royal Dutch Shell

Same NCS officials as described above.

RAE Systems

“A significant number of RAE-KLH’s and RAE Fushun’s customers were [China] government departments and bureaus and large state-owned agencies and instrumentalities.”

“The Lanzhou City Honggu Mining Safety Bureau, for example, was a government customer. Other government clients included regional fire departments, emergency response departments, and entities under the supervision of the provincial environmental agency.”

“officials of a state-owned enterprise doing business in the Dagang Oil Field.”

“Deputy Director of a state-owned chemical plant.”

Alcatel Lucent

“Instituto Costarricense de Electricidad S.A. was a wholly state-owned telecommunications authority in Costa Rica responsible for awarding and administering public tenders for telecommunications contracts. ICE was governed by a seven member board of directors that evaluated and approved, on behalf of the government of Costa Rica, all bid proposals submitted by telecommunications companies. The board of directors was led by an executive president, who was appointed by the President of Costa Rica. The other members of the board of directors were appointed by the President of Costa Rica and the Costa Rican cabinet. Accordingly, officers, directors and employees of ICE were foreign officials.”

“High ranking official in the Costa Rican executive branch. Legislator in the legislative assembly.”

“Empresa Hondurena de Telecomunicaciones [Hondutel] a wholly state-owned telecommunications authority in Honduras, established under Honduran law, and it was responsible for providing telecommunications services in Honduras which until late 2002, included evaluating and awarding telecommunications contracts on behalf of the government of Honduras. Several senior government officials sat on Hondutel’s board of directors. Hondutel’s operations were overseen by another Honduran government entity, Comision Nacional de Telecomunicaciones. Profits earned by Hondutel belonged to the government of Honduras, though part of the profit was permitted to be used by Hondutel for its operations. Accordingly, employees of Hondutel were “foreign officials.”

“Comision Nacional de Telecomunicaciones [Contal] was the Honduran government agency that regulated the telecommunications sector in Honduras. Contal was part of the Honduran executive branch under the Secretariat of Finance. Conatel’s commissioners were appointed by the President of Honduras. Accordingly, officers, commissions and employees were foreign officials.”

“High ranking government officials in the Honduran executive branch.”

“Telekom Malaysia Berhad (‘Telekom Malaysia’) was a state-owned and controlled telecommunications provider in Malaysia. Telekom Malaysia was responsible for awarding telecommunications contracts during the relevant time period. The Malaysian Ministry of Finance owned approximately 43% of Telekom Malaysia’s shares, had veto power over all major expenditures, and made important operational decisions. The government owned its interest in Telekom Malaysia through the Minister of Finance, who had the status of a ‘special shareholder.’ Most senior Telekom Malaysia officers were political appointees, including the Chairman and Director, the Chairman of the Board of the Tender Committee, and the Executive Director. Accordingly, officers, directors and employees of Telekom Malaysia were ‘foreign officials’ within the meaning of the FCPA.”

“Taiwan Railway Administration was the wholly state-owned authority in Taiwan responsible for managing, maintaining and running passenger freight service on Taiwan’s railroad lines. It was responsible for awarding and administering all public tenders in connection with Taiwan’s railroad lines, including contracts to design, manufacture, and install an axle counting system to control rail traffic. TRA was an agency of Taiwan’s Ministry of Transportation and Communications, a cabinet level governmental body responsible for the regulation of transportation and communications networks and operations. Accordingly, officers and employees of TRA were foreign officials.”

“Members of the Legislative Yuan, the unicameral legislative assembly of the Republic of China.”

“Kenyan government officials who had played a role in awarding the original contract to French telecom.”

Government officials in Nigeria including the Nigerian police, a former Nigerian Ambassador to the United Nations to arrange a meeting with Nigerian Senior Government Official 1 – a high-ranking official in the Nigerian executive branch, and People Democratic Party officials.

“Bangladesh Telegraph and Telephone Board” – the state-controlled telecommunications services provider.

“Andinatel, Pacifictel, and Empressa Muncipal de Telecomunicaciones, Agua Potable, Alcantarillados y Saneamiento – all state-owned telecommunications companies.”

Empresa Nicaraguense de Telecomunicaciones S.A., state owned during the relevant time period

Angolan telecommunications company with close ties to Angolan senior government official – a high-ranking Angolan executive branch official.

An Ivory Coast company – registered in the Ivory Coast with ooperations in Ivory Coast and Burkina Faso. Company was owned by an Ivory Coast government official. Government official ran Ivory Coast Company’s operations from his government office and was a close advisor to a high-ranking official in the Ivory Coast excecutive branch.

Uganda company registered in Uganada with operations in that country. One of the owners was a close friend of an advisor to a high-ranking official in the Uganadan executive.

Senior executive of the state controlled celluar telephone company in Mali.

Lindsey Manufacturing

“Comision Federal de Electricidad [CFE] was an electric utlity company owned by the government of Mexico. During the time period relevant to this indictment, CFE was responsible for supplying electricity to all of Mexico other than Mexico City.”

“Official 1 was a Mexican citizen who held a senior level position at CFE. Official 1 became the sub-director of generation for CFE in 2002 and the Director of operations in 2007. Officials 1’s position at CFE made him a foreign official.”

“Official 2 was a Mexican citizen who also held a senior level position at CFE. Official 2 was the Director of Operations at CFE until that position was taken over by Offical 1 in 2007. Officials 2’s position at CFE made him a foreign official.”

Mercator Corp.

“three senior officials of the Kazakh Government”

Friday Roundup

FCPA enforcement down 100% and some items for the weekend watch/read list.

Enforcement Down 100%

Last year at this time there were already 23 FCPA enforcement actions (22 defendants in the Africa Sting case and the Natco Group enforcement action).

So far this year there have been 0.

Thus, FCPA enforcement is down 100%.

I don’t expect you to take this statistic seriously and I don’t intend it to be. Rather, it is meant as a commentary on the often times odd obsession some have with FCPA enforcement statistics (misleading as they may be in many cases).

On to more meaningful commentary by others.

For Your Viewing Pleasure

Two titans of the FCPA bar, Homer Moyer (here) and Martin Weinstein (here) were recently the focus of separate interviews on the BulletProofBlog as to various FCPA topics.

Informative views here and here.

For Your Reading Pleasure

Gary Stein (here – Schulte Roth & Zable) has an informative overview (here) of “Sentencing of Individuals in FCPA Cases.”

I’ve been documenting the growing trend of judges significantly rejecting DOJ sentencing recommendations in FCPA cases (see here) and Stein “hits the nail on the head” with this paragraph:

“The DOJ exercises virtually unlimited discretion in deciding who gets charged in FCPA cases and, for all practical purposes, in deciding the amount of the financial penalty imposed against corporate violators. But sentencing of individual defendants, particularly after U.S. v. Booker, is ultimately a matter of judicial, not prosecutorial discretion. And it has become apparent that there is a wide and growing rift between the views of the DOJ and the courts as to the appropriate sentences for individual violators in FCPA cases.”

Tired of all the “are you ready” hysteria surrounding the U.K. Bribery Act?

If so, you will want to read “Keep Calm and Carry On” (here) by Alexandra Wrage (President of Trace) recently published by In Compliance Magazine. Among other things, Wrage states that “the argument that companies that have navigated FCPA waters for a decade or more are unprepared for the new UK Act is unfounded.”

See here for my “bold” prediction that implementation of the U.K. Bribery Act (whenever that occurs) is not that big of deal for most companies and that U.K. enforcement of the Bribery Act is likely to be measured and disciplined.

*****

A good weekend to all.

Friday Roundup

FCPA enforcement down 100% and some items for the weekend watch/read list.

Enforcement Down 100%

Last year at this time there were already 23 FCPA enforcement actions (22 defendants in the Africa Sting case and the Natco Group enforcement action).

So far this year there have been 0.

Thus, FCPA enforcement is down 100%.

I don’t expect you to take this statistic seriously and I don’t intend it to be. Rather, it is meant as a commentary on the often times odd obsession some have with FCPA enforcement statistics (misleading as they may be in many cases).

On to more meaningful commentary by others.

For Your Viewing Pleasure

Two titans of the FCPA bar, Homer Moyer (here) and Martin Weinstein (here) were recently the focus of separate interviews on the BulletProofBlog as to various FCPA topics.

Informative views here and here.

For Your Reading Pleasure

Gary Stein (here – Schulte Roth & Zable) has an informative overview (here) of “Sentencing of Individuals in FCPA Cases.”

I’ve been documenting the growing trend of judges significantly rejecting DOJ sentencing recommendations in FCPA cases (see here) and Stein “hits the nail on the head” with this paragraph:

“The DOJ exercises virtually unlimited discretion in deciding who gets charged in FCPA cases and, for all practical purposes, in deciding the amount of the financial penalty imposed against corporate violators. But sentencing of individual defendants, particularly after U.S. v. Booker, is ultimately a matter of judicial, not prosecutorial discretion. And it has become apparent that there is a wide and growing rift between the views of the DOJ and the courts as to the appropriate sentences for individual violators in FCPA cases.”

Tired of all the “are you ready” hysteria surrounding the U.K. Bribery Act?

If so, you will want to read “Keep Calm and Carry On” (here) by Alexandra Wrage (President of Trace) recently published by In Compliance Magazine. Among other things, Wrage states that “the argument that companies that have navigated FCPA waters for a decade or more are unprepared for the new UK Act is unfounded.”

See here for my “bold” prediction that implementation of the U.K. Bribery Act (whenever that occurs) is not that big of deal for most companies and that U.K. enforcement of the Bribery Act is likely to be measured and disciplined.

*****

A good weekend to all.

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