The SEC has brought two Foreign Corrupt Practices Act enforcement actions based on internship and other hiring practices involving family members of alleged “foreign officials.”
As highlighted here and here, in August 2015 BNY Mellon agreed, without admitting or denying the SEC’s findings in an administrative order, to pay $14.8 million to resolve findings that the company provided “valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.”
As highlighted here and here, in March 2016 Qualcomm agreed, without admitting or denying the SEC’s findings in an administrative order, to pay $7.5 million to resolve findings that the company “provided or offered full-time employment and paid internships to family members and other referrals” of alleged “foreign officials” at state-owned or state-controlled enterprises.
The narrative in both enforcement actions was that providing an internship or job to a family member of an alleged “foreign official” represented an attempt to improperly influence the “foreign official” who then exercised discretion – presumably because of the internship or job provided to a family member – to benefit the company.
It is this narrative that has resulted in several other companies, including Goldman Sachs, being under FCPA scrutiny. Yet last week this narrative was rejected by a London judge in a closely watched civil action between the Libyan Investment Authority (LIA) and Goldman Sachs.