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No U.S. Nexus, No Problem As U.S. Brings $30.5 Million FCPA Enforcement Action Against Chilean Company In Relation To Its Conduct With Chilean Officials

SQM

Last week the DOJ and SEC announced (here and here) a $30.5 million Foreign Corrupt Practices Act enforcement action against Sociedad Quimica y Minera de Chile S.A. (SQM), a chemical and mining company based in Chile, in relation to its conduct with Chilean officials.

The enforcement action is rife with policy issues including the proper scope of FCPA enforcement given that there is no U.S. nexus alleged other than SQM having Series B shares, a form of American Depository Shares, listed on the New York Stock Exchange and thus being required to file periodic reports with the SEC.

The enforcement action included: (i) a DOJ criminal information charging SQM with violating the FCPA’s books and records and internal control provisions that was resolved via a deferred prosecution agreement in which the company agreed to pay a $15.5 million criminal penalty; and (ii) an SEC administrative order finding FCPA books and records and internal violations in which the company agreed to pay $15 million civil penalty.

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Why The Odebrecht / Braskem FCPA Enforcement Action Is Unique (And Interesting)

Unique

The Foreign Corrupt Practices Act enforcement action last week against Odebrecht / Braskem was unique – specifically the DOJ’s and SEC’s bribery charges against the companies relating to conduct with alleged Brazilian “foreign officials.”

What makes it unique is that it is believed to be the first FCPA enforcement action in history against a foreign issuer for allegedly bribing its own domestic officials. In other words, a large portion of the U.S. enforcement action against the Brazilian companies is that they bribed Brazilian officials.

All previous FCPA enforcement actions against foreign issuers have not addressed this dynamic. In other words, German companies Siemens and Daimler did not bribe German officials; French companies Alstom, Total and Technip did not bribe French officials; Japanese company JGC did not bribe Japanese officials, etc., etc.

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In Depth Into The $519 Million Teva FCPA Enforcement Action

Copaxone

Records continue to be set as 2016 Foreign Corrupt Practices Act enforcement enters its final days.

Yesterday, the DOJ and SEC announced (here and here) a $519 million enforcement action against Teva Pharmaceutical Industries Ltd. (an Israeli company with American Depository Receipts traded in the U.S.) and a related entity. The settlement amount included a $283 million DOJ component and a related $236 million SEC component.

The action is believed to be the first-ever FCPA enforcement action against an Israeli company and by far the largest-ever FCPA enforcement action against a pharmaceutical company. (The $70 million 2011 enforcement action against Johnson & Johnson is second on that list). You better go ahead and update your top ten list again because the Teva enforcement action is the 4th largest of all-time. (Odebrecht / Braskem held that spot for less than 24 hours and is now bumped to 5th largest FCPA settlement amount of all-time).

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Odebrecht / Braskem Bribery Schemes Net Approximate $420 Million FCPA Enforcement Action

oder

Yesterday, the DOJ and SEC announced (here and here) a Foreign Corrupt Practices Act enforcement action against Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company in which Odebrecht owns 50.1% of the voting shares, 38.1% of the total share capital and which Odebrecht “effectively controlled” according to the DOJ). Braskem has American Depositary Receipts registered with the SEC and traded on the NYSE and thus the enforcement action also included an SEC component.

Perhaps because of the less than clear DOJ release (clear once one actually reads the original source documents), this action is being reported in various places as a $3.5 billion FCPA enforcement action. While that figure represents the overall global settlement amount (Brazil and Swiss law enforcement also brought related actions), yesterday’s action was most certainly not a $3.5 billion FCPA enforcement action. Not even close.

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Embraer Bribery Schemes Result In Net $187 Million FCPA Enforcement Action

embraer

Yesterday, the DOJ and SEC announced resolution of a Foreign Corrupt Practices Act enforcement action against Embraer, a Brazil-based aircraft manufacturer with American Depositary Shares listed on the New York Stock Exchange.

According to the DOJ and SEC, Embraer engaged in bribery schemes between 2008 through 2011 in the Dominican Republic, Saudi Arabia, and Mozambique in which the company approved bribe payments, through various third-parties, to various alleged “foreign officials.” According to the DOJ and SEC, Embraer’s wholly-owned U.S. subsidiary was active in the bribery schemes including by making payments from its New York based bank account. In addition, the enforcement action also involved improper conduct in India between 2005 and 2009. In total, the government alleges that Embraer made approximately $84 million as a result of the improper conduct.

The enforcement action involved a DOJ component in which the company agreed to pay a criminal penalty of approximately $107.3 million and an SEC component in which the company agreed to pay $83.8 million in disgorgement and $14.4 million in prejudgment interest. The SEC agreed to credit a disgorgement amount that Embraer agreed to pay to Brazilian authorities and this filing suggests that disgorgement amount is approximately $18.6 million. Thus, the net FCPA settlement amount was approximately $187 million.

This post goes in-depth into the enforcement action by summarizing the approximate 115 pages of resolution documents.

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