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Issues To Consider From The Legg Mason Enforcement Action

Issues

This previous post went in-depth into the DOJ’s recent Foreign Corrupt Practices Act enforcement action against Legg Mason. This post continues the analysis by highlighting additional issues to consider.

SEC Enforcement Action Is Forthcoming

Given Legg Mason’s recent disclosure (see here for the prior post), it was a bit of a surprise that this week’s enforcement action included only a DOJ component. FCPA enforcement actions against issuers that involve a DOJ and SEC component are almost always announced on the same day.

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SETAR Describes Itself As A “Private Sector Business,” But The DOJ Alleges That It Is A Foreign Government “Instrumentality”

What's the Difference

As highlighted here, in last week’s Foreign  Corrupt Practices Act enforcement action against Lawrence Parker in connection with a telecommunications bribery scheme in Aruba the DOJ alleged that Servicio di Telecommunicacion di Aruba N.V. (SETAR) was an instrumentality of the Aruban government such that Egbert Yvan Ferdinand Koolman (a product manager at SETAR) was a “foreign official.”

That’s interesting because since 2003 SETAR has described itself as a “private sector business.”

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The “Foreign Officials” Of 2017

shadows

A “foreign official.”

Without one, there can be no FCPA anti-bribery violation (civil or criminal).  Who were the alleged “foreign officials” of 2017?

This post highlights the alleged “foreign officials” from 2017 corporate DOJ and SEC FCPA enforcement actions.

There were 13 core corporate enforcement actions in 2017. Of the 13 enforcement actions 7 (54%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs) with an additional 2 actions (15%) involving, in whole or in part, individuals associated with foreign health care systems.

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“Foreign Official” Notable

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This previous post highlighted various issues to consider in the recent SBM Offshore enforcement action.

Buried deep in the approximate 170 pages of resolution documents was another important issue to consider deserving of its own post.

This important issue was likely not a significant factor in the overall resolution of the matter (after all, as highlighted in the previous post, the conduct at issue “lasted over 16 years, was carried out by employees at the highest level of the organization, including two high-level executives who were at times directors of a wholly-owned U.S. domestic concern, involved large bribe payments, and included deliberate efforts to conceal the scheme”).

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Friday Roundup

Roundup

Offensive use of the FCPA, a weekend homework assignment, already answered, scrutiny alert, and for the reading stack. It’s all here in the Friday roundup.

Offense Use of the FCPA

FCPA Ripples highlights, among other things, how the FCPA is increasingly being used offensively including in connection with battles for corporate control.

The latest example concerns Elliott Management Corporation’s efforts to unseat board members at Arconic Inc. The recent departure of Arconic’s CEO Klaus Kleinfeld for apparently threatening Elliott Management (an existing Arconic shareholder) was all over the news (see here for example) and this recent Elliott Management letter to Arconic shareholders assails the “poor judgment” of Arconic’s board including the following.

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