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The Gray Cloud Of FCPA Scrutiny Lasted Too Long In 2017

Gray Cloud

This recent post highlighted the origins of corporate Foreign Corrupt Practices Act enforcement actions in 2017.

Continuing with the FCPA statistical feast, this post follows the chronology of FCPA scrutiny to FCPA enforcement and highlights one of the most troubling policy issues when it comes to FCPA enforcement.

That is – FCPA scrutiny simply lasts too long. Specifically, as highlighted below, 4.5 years was the median length of time companies that resolved FCPA enforcement actions in 2017 were under scrutiny. (See here for the prior post highlighting that 4.25 years was the media length of time companies that resolved FCPA enforcement actions in 2016 were under scrutiny).

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Issues To Consider From The Alere Enforcement Action

Issues

This prior post went in-depth into the recent Foreign Corrupt Practices Act (and related) enforcement action against Alere and this post continues the analysis by highlighting additional issues to consider.

“Then Some” Enforcement Action

The majority of SEC FCPA enforcement actions are “just” FCPA enforcement actions. However, the Alere enforcement action was a “then some” enforcement action as the majority of the enforcement action (and indeed the bulk of the overall $13 million settlement) concerned findings of other securities laws violations regarding revenue recognition and related practices.

While not common, “then some” FCPA enforcement actions are not unheard of either.

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Issues To Consider From The Telia Enforcement Action

Issues

This previous post went in-depth into the Telia Foreign Corrupt Practices Act enforcement action which contemplates a net $483 million settlement (after accounting for various credits and deductions for contemplated Swedish and Dutch enforcement actions) – the 5th largest net FCPA settlement of all-time.

Set forth below are several additional issues to consider from the enforcement action.

No Books and Records Findings

Off the top of my head, I can recall only one prior instance (BNY Mellon) of an SEC FCPA enforcement action not involving books and records violations or findings. The Telia action is the second instance which is odd given that the SEC found that the “bribe payments were funneled through payments for sham lobbying and consulting services to a front company controlled by the official.”

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Issues To Consider From The Halliburton Enforcement Action

Issues

This prior post went in-depth into last week’s $29.2 million Foreign Corrupt Practices Act enforcement action against Halliburton and this post continues the analysis by highlighting additional issues to consider.

Timeline

Halliburton disclosed to the DOJ / SEC in December 2010 or perhaps early 2011. Regardless of the precise date, Halliburton’s FCPA scrutiny lasted approximately 6.5 years.

If the SEC wants the public to have confidence in its FCPA enforcement program, it must resolve instances of FCPA scrutiny much quicker. Having FCPA scrutiny linger for 6.5 years is inexcusable particularly since Halliburton, in the words of the SEC, “[cooperated] including making foreign witnesses available, compiling financial data and analysis relating to the transactions at issue, and making substantive presentations on key topics at the staff’s request.”

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Issues To Consider From The CDM Smith Enforcement Action

Issues

This previous post highlighted the DOJ’s recent Foreign Corrupt Practices Act enforcement action against CDM Smith Inc. Pursuant to a so-called “declination” with disgorgement, CDM Smith agreed to disgorge approximately $4 million based on DOJ findings “that CDM Smith, through its employees and agents, and those of its wholly owned subsidiary in India paid approximately $1.18 million in bribes to government officials in India in exchange for highway construction supervision and design contracts and a water project contract…”.

This post highlights additional issues to consider.

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