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Friday Roundup

Nigeria drops charges against Dick Cheney after Halliburton reportedly pays $250 million; James Giffen is sad, though not bitter; an Iraqi Oil for Food prosecution … in Scotland; International Anti-Corruption Day is “marred”; and another voice joins “the FCPA simply means what the enforcement agencies say it means” chorus … it’s all here in the Friday Roundup.

Charges Against Cheney in Nigeria Dropped

On December 7th, Nigerian authorities apparently filed criminal charges against Dick Cheney, and others, in connection with the Bonny Island bribery scheme. As discussed in this prior post, Cheney was CEO of Halliburton from 1995 until 2000. In February 2009, Halliburton, Kellogg Brown & Root LLC, and KBR Inc. agreed to pay $579 million in combined DOJ/SEC FCPA enforcement action to resolve charges related to Bonny Island. According to the DOJ, the improper conduct took place between 1994 and 2004. The case remains the largest ever FCPA enforcement action against a U.S. company.

Farida Mzamber Waziri, the executive chairwomen of Nigeria’s Economic and Financial Crimes Commission stated, “Dick Cheney was head of Halliburton” “There’s no way such amount of money would’ve been moved to bribe Nigeria without his approval and without his knowledge, this is what we’re saying.” (See here for a video).

In a swift conclusion to the matter, it is been reported (see here among other places) that Nigeria has dropped charges against Cheney after his former employer, Halliburton, agreed to pay a $250 million fine. According to the report, the sum consists of $120 million in penalties and the repatriation of $130 million.

According to this report in the U.K. Telegraph, former U.S. President George H.W. Bush and former Secretary of State James Baker helped in the negotiations.

A Halliburton spokesman is quoted as saying “we have no comment to make on this.”

Sad, But Not Bitter

David Glovin (Bloomberg) recently sat down with James Giffen and penned this article. For more on the Giffen enforcement action and its mysterious conclusion see here for numerous prior posts.

Giffen is sad, though not bitter about what he terms the DOJ’s “selective” prosecution of him and he asks “in whose interest was the investigation in the first place.” Given Giffen’s “public authority” defense, much of the case focused on classified documents. Not even Giffen’s lawyer, William Schwartz (here) had access to many of the documents – one person did and that was Judge William Pauley (S.D.N.Y.) “who made his feelings known.” (see here).

Wehr Group

Glasgow, Scotland based engineering firm Wehr Group plc (here) recently pleaded guilty to two charges of breaching UN sanctions in connection with a number of UN sanctioned Iraqi Oil for Food contracts awarded between 2000 and 2002. As noted in the company’s release (here), “following the guilty plea, Weir has been subject to a confiscation order in the sum of £13,945,962. In addition it has been fined £3 million.” For more see here.

International Anti-Corruption Day “Marred”

Raymond Baker (here), the Director of Global Financial Integrity, says here that “this year’s International Anti-Corruption Day [was] marred by a U.S. Chamber of Commerce attempt to weaken the Foreign Corrupt Practices Act.” In November, the Chamber released a paper (here) authored by Andrew Weissman and Alixandra Smith titled “Restoring Balance – Proposed Amendments to the Foreign Corrupt Practices Act.”

According to Baker, “the short answer” to various issues raised by the current era of FCPA enforcement is simple: “don’t bribe anyone, whether she/he is a public official, a private citizen, or someone in between.”

Gee, thanks for that guidance, problem solved!

The FCPA’s Big Lesson

Richard Cassin, creator of the FCPA Blog and a pioneer of the FCPA’s blogosphere, hit the ball out of the park with this recent column for Ethisphere.

Among other things, Cassin writes as follows: “I know there’s practically no FCPA-related case law, no precedent to follow, no stare decisis to light the way. So the FCPA is pretty much what the enforcement agencies say it is. And that’s what’s so very different and difficult about it. It’s what I call the FCPA’s Big Lesson.”

*****

A good weekend to all.

Friday Roundup

Nigeria drops charges against Dick Cheney after Halliburton reportedly pays $250 million; James Giffen is sad, though not bitter; an Iraqi Oil for Food prosecution … in Scotland; International Anti-Corruption Day is “marred”; and another voice joins “the FCPA simply means what the enforcement agencies say it means” chorus … it’s all here in the Friday Roundup.

Charges Against Cheney in Nigeria Dropped

On December 7th, Nigerian authorities apparently filed criminal charges against Dick Cheney, and others, in connection with the Bonny Island bribery scheme. As discussed in this prior post, Cheney was CEO of Halliburton from 1995 until 2000. In February 2009, Halliburton, Kellogg Brown & Root LLC, and KBR Inc. agreed to pay $579 million in combined DOJ/SEC FCPA enforcement action to resolve charges related to Bonny Island. According to the DOJ, the improper conduct took place between 1994 and 2004. The case remains the largest ever FCPA enforcement action against a U.S. company.

Farida Mzamber Waziri, the executive chairwomen of Nigeria’s Economic and Financial Crimes Commission stated, “Dick Cheney was head of Halliburton” “There’s no way such amount of money would’ve been moved to bribe Nigeria without his approval and without his knowledge, this is what we’re saying.” (See here for a video).

In a swift conclusion to the matter, it is been reported (see here among other places) that Nigeria has dropped charges against Cheney after his former employer, Halliburton, agreed to pay a $250 million fine. According to the report, the sum consists of $120 million in penalties and the repatriation of $130 million.

According to this report in the U.K. Telegraph, former U.S. President George H.W. Bush and former Secretary of State James Baker helped in the negotiations.

A Halliburton spokesman is quoted as saying “we have no comment to make on this.”

Sad, But Not Bitter

David Glovin (Bloomberg) recently sat down with James Giffen and penned this article. For more on the Giffen enforcement action and its mysterious conclusion see here for numerous prior posts.

Giffen is sad, though not bitter about what he terms the DOJ’s “selective” prosecution of him and he asks “in whose interest was the investigation in the first place.” Given Giffen’s “public authority” defense, much of the case focused on classified documents. Not even Giffen’s lawyer, William Schwartz (here) had access to many of the documents – one person did and that was Judge William Pauley (S.D.N.Y.) “who made his feelings known.” (see here).

Wehr Group

Glasgow, Scotland based engineering firm Wehr Group plc (here) recently pleaded guilty to two charges of breaching UN sanctions in connection with a number of UN sanctioned Iraqi Oil for Food contracts awarded between 2000 and 2002. As noted in the company’s release (here), “following the guilty plea, Weir has been subject to a confiscation order in the sum of £13,945,962. In addition it has been fined £3 million.” For more see here.

International Anti-Corruption Day “Marred”

Raymond Baker (here), the Director of Global Financial Integrity, says here that “this year’s International Anti-Corruption Day [was] marred by a U.S. Chamber of Commerce attempt to weaken the Foreign Corrupt Practices Act.” In November, the Chamber released a paper (here) authored by Andrew Weissman and Alixandra Smith titled “Restoring Balance – Proposed Amendments to the Foreign Corrupt Practices Act.”

According to Baker, “the short answer” to various issues raised by the current era of FCPA enforcement is simple: “don’t bribe anyone, whether she/he is a public official, a private citizen, or someone in between.”

Gee, thanks for that guidance, problem solved!

The FCPA’s Big Lesson

Richard Cassin, creator of the FCPA Blog and a pioneer of the FCPA’s blogosphere, hit the ball out of the park with this recent column for Ethisphere.

Among other things, Cassin writes as follows: “I know there’s practically no FCPA-related case law, no precedent to follow, no stare decisis to light the way. So the FCPA is pretty much what the enforcement agencies say it is. And that’s what’s so very different and difficult about it. It’s what I call the FCPA’s Big Lesson.”

*****

A good weekend to all.

Cheney Reportedly To Be Charged By Nigerian Authorities In Connection With Bonny Island

During Tuesday’s Senate subcommittee FCPA hearing, Senator Christopher Coons noted, in connection with other nations ramping up enforcement of their own bribery laws, that “today we are the only nation that is extending extraterritorial reach and going after the citizens of other countries, we may some day find ourselves on the receiving end of such transnational actions.”

Prescient statement.

Bloomberg is reporting (here) that Nigeria’s Economic and Financial Crimes Commission will soon files charges against former Vice President Dick Cheney and officials from five foreign companies, including Halliburton Co., in connection with the Bonny Island bribery scheme.

Bloomberg reports that indictments will be filed in a Nigeria court and that an arrest warrant for Cheney “will be issued and transmitted through Interpol” for enforcement. As noted by Bloomberg, Cheney was CEO of Halliburton from 1995 until 2000.

In February 2009, Halliburton, Kellogg Brown & Root LLC, and KBR Inc. agreed to pay $579 million in combined DOJ/SEC FCPA enforcement action to resolve charges related to Bonny Island. According to the DOJ, the improper conduct took place between 1994 and 2004. The case remains the largest ever FCPA enforcement action against a U.S. company.

See here for the DOJ resolution and here for the SEC resolution.

The DOJ’s press release (here) states that the “successful prosecution of KBR […] demonstrates that no one is above the law” and that the FBI “will continue to investigate these matters by working in partnership with other law enforcement agencies, both foreign and domestic, to ensure that corporate executives who have been found guilty of bribing foreign officials in return for lucrative business contracts, are punished to the full extent of the law.”

Over the summer, Technip and Snamprogetti/Eni, joint venture partners with KBR, also agreed to settle FCPA enforcement actions in connection with Bonny Island.

Technip agreed to pay $338 million in a joint DOJ / SEC enforcement action (see here and here).

Snamprogetti/ENI agreed to pay $365 million in a joint DOJ / SEC enforcement action (see here and here).

The fourth joint venture partner, JGC of Japan, has yet to resolve its exposure although it has been reported that it is settlement discussions with the DOJ.

For a complete run-down of “Bonny Island Bribery Club Statistics” see here.

The only individual charged thus far has been Albert Jack Stanley (see here). Stanley pleaded guilty and was originally scheduled to be sentenced in May 2009, but has not yet been sentenced.

Two joint venture agents, Jeffrey Tesler and Wojciech Chodan (both U.K. citizens) have also been charged (see here). Tesler and Chodan have been fighting extradition.

Yesterday, the U.K. Guardian (here) reported that Chodan, who had given up his extradition battle, is to arrive in the U.S. in the next 10 days to stand trial. The Guardian reports that Tesler will seek to overturn his extradition today.

Bonny Island Bribery Club Statistics

Bonny Island.

It is located at the southern edge of the Niger delta of Nigeria. (see here).

It is the location featured in several corporate and individual FCPA enforcement actions – actions that have thus far resulted in approximately $1.3 billion in fines, penalties and disgorgement.

This number is sure to grow as one member of the joint venture at the center of bribery scheme – JGC of Japan – has yet to resolve its exposure although (as noted in this post from the FCPA Blog) it has confirmed that it is discussions with the DOJ.

In addition, the DOJ, in its indictments of Jeffrey Tesler and Wojciech Chodan, is seeking forfeiture of $132 million.

Further, as noted in this prior post, Halliburton has disclosed that it faces exposure in the U.K. in connection with a Serious Fraud Office investigation of M.W. Kellogg Company (“MWKL”), a United Kingdom joint venture 55% owned by KBR. In its most recent 10-Q (here) Halliburton stated:

“MWKL is cooperating with the SFO’s investigation. Whether the SFO pursues civil or criminal claims, and the amount of any fines, restitution, confiscation of revenues or other penalties that could be assessed would depend on, among other factors, the SFO’s findings regarding the amount, timing, nature and scope of any improper payments or other activities, whether any such payments or other activities were authorized by or made with knowledge of MWKL, the amount of revenue involved, and the level of cooperation provided to the SFO during the investigations. MWKL has informed the SFO that it intends to self-report corporate liability for corruption-related offenses arising out of the Bonny Island project. MWKL has received confirmation that it has been admitted into the plea negotiation process under the Guidelines on Plea Discussions in Cases of Complex or Serious Fraud, which have been issued by the Attorney General for England and Wales.”

While the Bonny Island Bribery Club statistics are not yet final, this post provides a detailed breakdown of the current statistics.

Kellogg Brown & Root LLC / Halliburton Company / KBR Inc. (Feb. 2009)

Attorneys: Paul, Hastings, Janofsky & Walker LLP

DOJ

Entity: Kellogg Brown & Root LLC

Charges: Conspiracy to Violate the FCPA (1 Count), Substantive FCPA Anti-Bribery Violation (4 Counts)

Resolution Vehicle: Criminal Information and Plea Agreement

Benefit Received From Improper Payments: $235.5 Million

Sentencing Guidelines Range: $376.8 Million – $753.6 Million

Amount of Fine: $402 Million

Monitor: Yes – Three Years

SEC

Entity: Halliburton Company, KBR Inc.

Charges: FCPA Books and Records and Internal Controls Violation (Halliburton Company), Substantive FCPA Anti-Bribery Violation, Aiding and Abetting Halliburton’s FCPA Books and Records and Internal Controls Violation, Knowingly Falsifying Books and Records and Knowingly Circumventing Internal Controls (KBR Inc.),

Disgorgement Amount: $177 Million

Technip S.A. (June 2010)

Attorneys: Patton Boggs LLP; Wachtell, Lipton, Rosen & Katz

DOJ

Charges: Conspiracy to Violate the FCPA (1 Count), Substantive FCPA Anti-Bribery Violation (1 Count)

Resolution Vehicle: Criminal Information and Deferred Prosecution Agreement (Term – 2 Years, 7 Months)

Value of Benefit Received From Improper Payments: $199 Million

Sentencing Guidelines Range: $318.4 Million – $636.8 Million

Amount of Fine: $240 Million (25% Below Minimum Guidelines Range)

Monitor: Yes – Two Years

SEC

Charges: Substantive FCPA Anti-Bribery Violation, FCPA Books and Records and Internal Controls Violation

Disgorgement Amount: $98 Million

Snamprogetti Netherlands BV, ENI S.p.A (July 2010)

Attorneys: Sullivan & Cromwell LLP

DOJ

Entity: Snamprogetti Netherlands BV

Charges: Conspiracy to Violate the FCPA (1 Count), Aiding and Abetting FCPA Anti-Bribery Violation (1 Count)

Resolution Vehicle: Criminal Information and Deferred Prosecution Agreement (Term 2 Years)

Value of Benefit Received From Improper Payments: $214.3 Million

Sentencing Guidelines Range: $300 Million – $600 Million

Amount of Fine: $240 Million (20% Below Minimum Guidelines Range)

Monitor: No

SEC

Entity: Snamprogetti Netherlands BV, ENI S.p.A.

Charges: Substantive FCPA Anti-Bribery Violation, Knowingly Falsifying Books and Records and Knowingly Circumventing Internal Controls (Snamprogetti Netherlands BV), FCPA Books and Records and Internal Controls Violation (ENI S.p.A.)

Disgorgement Amount: $125 Million

[Note in all three of the above corporate actions, the entity received a -2 reduction in the culpability score for cooperation. Snamprogetti’s total culpability score (and thus base fine multiplier) was below that of Kellogg, Brown & Root LLC, and Technip given that the company has fewer employees].

Albert Jackson Stanley (August 2008)

Attorney: Larry Veselka (Smyser, Kaplan & Veselka LLP)

DOJ

Charges: Conspiracy to Violate the FCPA (1 Count), Conspiracy to Commit Mail and Wire Fraud (1 Count)

Resolution Vehicle: Criminal Information and Plea Agreement

Plea Agreement Contemplates an $10.8 Million Restitution Order (the amount Stanley agreed the victim – his former employer – incurred as a monetary loss because of his conduct)

Plea Agreement Contemplates a Sentence of 84 months (subject to a downward departure for cooperation)

SEC

Charges: Substantive FCPA Anti-Bribery Violation, Knowingly Falsifying Books and Records and Knowingly Circumventing Internal Controls

Permanent Injunction

Jeffrey Tesler (March 2009)

Indictment Charges: Conspiracy to Violate the FCPA (1 Count), Substantive FCPA Anti-Bribery Violations (10 Counts)

Indictment Seeks Forfeiture $132 Million

Wojciech Chodan (March 2009)

Indictment Charges: Conspiracy to Violate the FCPA (1 Count), Substantive FCPA Anti-Bribery Violations (10 Counts)

Indictment Seeks Forfeiture $132 Million

Friday Roundup

Some FCPA news to pass along on this Friday.

SFO Defends BAE Settlement

Richard Alderman, the Director of the U.K. Serious Fraud Office (“SFO”) recently defended the SFO settlement with BAE (see here).

Among other things, Alderman argued that any suggestion BAE “got off lightly” ignores “London’s contribution in enabling the U.S. to impose a $400 million fine.”

Point taken.

Alderman then says that the DOJ “would not have achieved what they achieved without [the SFO] and [the SFO] would not have achieved what [the SFO] achieved without [the DOJ].”

Point not taken.

What actually did the DOJ and SFO achieve in the BAE matter? What is achieved when a company settles a case invovling allegations of worldwide bribery, per the allegations in the public documents, WITHOUT being held accountable bribery?

What is achieved when you charge BAE’s agent (presumably based on evidence that the following did occur) for “conspiracy to corrupt” and for “conspiring with others to give or agree to give corrupt payments […] to unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of goods to them, namely SAAB/Gripen fighter jets, by BAE Systems Plc” and then a few days later withdraw the charges and state “[t]his decision brings to an end the SFO’s investigations into BAE’s defence contracts.”

As to this issue, Alderman stated that “the public interet lay in drawing a line under the whole investigation.”

The article notes that “two campaigning groups said they would launch a legal challenge to Mr. Alderman’s decision, saying it failed to reflect the scale and scope of the bribery allegations relating to BAE’s network of hundreds of agents on four continents.” If anyone knows who these groups are, or the legal framework (including standing) under U.K. law to allow such a challenge, please do share.

For prior posts on BAE, includng the DOJ’s non-bribery, bribery allegations see here.

Alderman did also suggest that additional joints DOJ/SEC settlements are being negotiated.

The Pipes May Soon Burst

Ocassionaly, I have covered “cases” reportedly in the FCPA pipeline (see here). Set forth below is some “pre-news” about some coming attractions.

Given the above, it seems fitting to start with KBR, Inc.

KBR, Inc.

Here’s what Halliburton had to say earlier this week regarding its exposure via M.W. Kellogg / KBR for the SFO piece of the investigation into Bonney Island (Nigeria)(pgs. 35-36, 63-64). For a prior post see here.

Pride International Inc.

Earlier this week, Pride disclosed (here) that:

“it has accrued $56.2 million in the fourth quarter of 2009 in anticipation of a possible resolution with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) of potential liability under the U.S. Foreign Corrupt Practices Act. {…] The accrual in the fourth quarter 2009 represents the company’s best estimate of potential fines, penalties and disgorgement related to settlement of the matter with the DOJ and SEC. The monetary sanctions ultimately paid by the company to resolve these issues, whether imposed on the company or agreed to by settlement, may exceed the amount of the accrual.”

For prior posts about Pride see here.

Innospec, Inc.

Here is what Innospec had to say about its on-going FCPA matter:

“”We have made substantial progress, but not yet completed, negotiations of final settlements of the Oil for Food Program and FCPA investigations, in either the U.S. or United Kingdom. However, we have charged a further $21.9 million in the quarter, based on the status of ongoing discussions, to bring the total amount accrued to $40.2 million. The Company will make no further comments on the ongoing proceedings.”

Alcatel-Lucent

Alcatel-Lucent recently provided (here) details (see pg. 112) on its FCPA (and other) exposure concerning conduct in Costa Rica and other places. In pertinent part the company stated:

“As previously disclosed in its public filings, Alcatel-Lucent has engaged in settlement discussions with the DOJ and the SEC with regard to the ongoing FCPA investigations. These discussions have resulted in December 2009 in agreements in principle with the staffs of each of the agencies. There can be no assurances, however, that final agreements will be reached with the agencies or accepted in court. If finalized, the agreements would relate to alleged violations of the FCPA involving several countries, including Costa Rica, Taiwan, and Kenya. Under the agreement in principle with the SEC, Alcatel-Lucent would enter into a consent decree under which Alcatel-Lucent would neither admit nor deny violations of the antibribery, internal controls and books and records provisions of the FCPA and would be enjoined from future violations of U.S. securities laws, pay U.S.
$45.4 million in disgorgement of profits and prejudgment interest and agree to a three-year French anticorruption compliance monitor to evaluate in accordance with the provisions of the consent decree (unless any specific provision therein is expressly determined by the French Ministry of Justice to violate French law)
the effectiveness of Alcatel-Lucent’s internal controls, record-keeping and financial reporting policies and procedures. Under the agreement in principle with the DOJ, Alcatel-Lucent would enter into a three-year deferred prosecution agreement (DPA), charging Alcatel-Lucent with violations of the internal controls and
books and records provisions of the FCPA, and Alcatel-Lucent would pay a total criminal fine of U.S. $ 92 million—payable in four installments over the course of three years. In addition, three Alcatel-Lucent subsidiaries—Alcatel-Lucent France, Alcatel-Lucent Trade and Alcatel Centroamerica—would each plead guilty to
violations of the FCPA’s antibribery, books and records and internal accounting controls provisions. The agreement with the DOJ would also contain provisions relating to a three-year French anticorruption compliance monitor. If Alcatel-Lucent fully complies with the terms of the DPA, the DOJ would dismiss the charges upon
conclusion of the three-year term.”

For the trials and tribulations on both sides of this corporate hyphen see here and here.

Thirsty for more? OK, here is the last one.

Maxwell Technologies Inc.

Here is what the company’s CEO had to say about its $9.3 million accural for a potential FCPA settlement:

“Unfortunately, all this good news is tempered by the GAAP required $9.3 million accrual we recorded in Q4 for the potential settlement of FCPA violations in connection with the sale of high-voltage capacitor products in China by our Swiss subsidiary. As we reported previously, after we became aware of questionable payments made to an independent sales agent in China, we disclosed that discovery and initiated an internal review and we have been voluntarily sharing information with the SEC and the Justice Department.”

See also here.

*****

A good weekend to all.

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