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SEC Brings FCPA Enforcement Action Against Former Executive Of Harris Corp’s Dissolved Chinese Subsidiary

Ping

As highlighted in this prior post, in April 2011 Harris Corporation completed an acquisition of Carefx and in the process acquired its subsidiaries including Carefx China. In connection with its integration activities and the subsequent audit of the financials of the Carefx China operations, Harris Corp. became aware that certain entertainment, travel and other expenses in connection with the Carefx China operations may have been incurred or recorded improperly. In response, Harris Corp. voluntarily disclosed to the DOJ and SEC.

As highlighted in this prior post, a few months ago Harris Corp. disclosed that “during the second quarter of fiscal 2016, the DOJ advised us that they have determined not to take any action against us related to this matter.” The same disclosure stated that the company is “continuing to cooperate with the SEC regarding its investigation.”

In the meantime, earlier this week the SEC announced this administrative action finding that Jun Ping Zhang (pictured – a U.S. citizen and former Chairman and CEO of CareFx China who was terminated in mid-2012) violated the Foreign Corrupt Practices Act. Zhang is currently Senior Vice President, Product Innovation and Chief Technology Officer at MedeAnalytics. (See also here).

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The Yates Memo – One Year Later

Sally Yates, during her confirmation hearing before the Senate Judiciary Committee to be Deputy Attorney General at the U.S. Department of Justice.  March 24, 2015.  Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL.

As highlighted in this prior post, last September 10th DOJ Deputy Attorney General Sally Yates delivered this speech and released this memo titled “Individual Accountability for Corporate Wrongdoing. (See here for the video of the speech). Like prior DOJ policy memos, the memo took the name of the author and quickly became known as the “Yates Memo.”

The Yates Memo attracted substantial press, particularly the portion of the memo and associated speech that focused on individual liability for alleged corporate wrongdoing. (For instance, this post highlighted what others were saying about the Yates Memo).

While some called this a “new” focus on DOJ individual prosecutions, the prior post highlighted that the Yates Memo merely continued the DOJ’s rhetoric as to the importance of individual prosecutions and was substantively similar to this September 2014 speech delivered by then Principal Deputy Attorney General Marshall Miller, this September 2014 speech delivered by then Attorney General Eric Holder, not to mention several other DOJ speeches going back nearly a decade.

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DOJ Criminally Charges Gabonese National Connected To Och-Ziff With FCPA Conspiracy In Connection With African Mining Projects

Mining

Och-Ziff, a publicly-traded hedge fund that has been under Foreign Corrupt Practices Act scrutiny since 2011 for its business dealings in Africa, recently disclosed that it is in discussions with the DOJ and SEC regarding resolution of the matter. As noted in this recent post, Och-Ziff has reserved over $400 million in anticipation of the resolution. (For the latest on this expected resolution see here).

In the meantime, a criminal complaint was recently unsealed charging Samuel Mebiame, a Gabonese national connected to Och-Ziff, with conspiracy to violate the FCPA’s anti-bribery provisions.

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Danish Subsidiary Exposes Analogic To $14.9 Million Enforcement Action

analogic

Yesterday the DOJ and SEC announced (see here and here) a parallel Foreign Corrupt Practices Act enforcement action against medical device manufacturer Analogic Corp. and BK Medical ApS (Analogic’s Danish subsidiary) in which the entities agreed to pay approximately $14.9 million.

The conduct at issue involved alleged improper payments by BK Medical, primarily in Russia through distributors, and the government alleged that BK Medical took various steps to conceal its conduct from Analogic.

The enforcement action involved a DOJ non-prosecution agreement with BK Medical in which the company agreed to pay a $3.4 million criminal penalty and an SEC administrative order against Analogic in which the company agreed to pay approximately $11.5 million in disgorgement and prejudgment interest. In connection with the same administrative order, the SEC also announced that “Lars Frost, BK Medical’s former Chief Financial Officer, agreed to pay a $20,000 civil penalty to settle charges that he knowingly circumvented the internal controls in place at BK Medical and falsified its books and records.

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FCPA Flash – A Conversation With Paul Calli

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The new FCPA Professor contains a new feature – the FCPA Flash podcast.

The goal of FCPA Flash is to provide, in an audio format, the same fresh, candid and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from the written posts on FCPA Professor.

This FCPA Flash episode is a conversation with Paul Calli.

Calli has done something few FCPA practitioners have done, and that is on behalf of a client, put the DOJ to its burden of proof in an FCPA case. Like other such instances of defense counsel doing just that, Calli prevailed on behalf of his client and in the podcast Calli discusses the DOJ’s rather dismal FCPA trial court record and what it says about the DOJ’s modern FCPA enforcement program and how the DOJ measures success.

FCPA Flash is sponsored by the Red Flag Group. The Red Flag Group assists companies in developing and maintaining efficient and effective corporate governance and compliance programs, and has a proven track record in providing integrity due diligence investigations in 194 countries.

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