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Issues To Consider From The United Technologies Enforcement Action


This prior post went in-depth into the SEC’s $13.9 million Foreign Corrupt Practices Act enforcement action against United Technologies Corp. and this post continues the analysis by highlighting additional issues to consider.


As highlighted in this prior post, UTC’s FCPA scrutiny began in late 2013/early 2014. Thus, from start to finish its scrutiny lasted approximately 4.5 years.

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United Technologies Corp. Resolves $13.9 Million Enforcement Action


Yesterday, the SEC announced that United Technologies Corporation resolved a $13.9 million Foreign Corrupt Practices Act enforcement action.

The conduct at issue concerned Otis Elevator Co. (a wholly-owned subsidiary of UTC), Pratt & Whitney (an operating division of UTC), and International Aero Engines (a joint venture of five aerospace companies including Pratt & Whitney) regarding a Russian and Azerbaijani improper payment scheme, a China aviation scheme, improper payments for Otis Elevator sales in China, and leisure travel for foreign officials from several countries including China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia.

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Judge Finds The Term Instrumentality “Unclear” And Narrowly Construes “Foreign Official” Element Contrary To The DOJ’s Position

Judicial Decision

There is little substantive Foreign Corrupt Practices Act case law, even fewer judicial decisions of precedent. Nevertheless, in the aftermath of FCPA enforcement actions or merely FCPA scrutiny, plaintiffs counsel (no doubt representing shareholders on a contingent fee basis) frequently file securities fraud class actions hoping some get past the motion to dismiss stage.

In deciding motions to dismiss, federal trial court judges occasionally directly comment upon FCPA issues and this post highlights a recent example in a matter involving Rio Tinto. As discussed below, a federal court judge found the term “instrumentality” in the FCPA’s “foreign official” definition “unclear” and otherwise narrowly construed the term in a way contrary to the DOJ’s current position.

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Issues To Consider From The Sanofi Enforcement Action


This previous post highlighted the SEC’s $25.2 million FCPA enforcement action against Sanofi and this post continues the analysis by highlighting additional issues to consider.


Sanofi’s FCPA scrutiny began in mid-2014 (see this prior post). Thus, from start to finish, its scrutiny lasted approximately 4 years.

At the risk of sounding like a broken record to regular readers … if the FCPA enforcement agencies want the public to have confidence in their FCPA enforcement programs, they must resolve instances of FCPA scrutiny much quicker. The validity and credibility of FCPA enforcement depends on this. Having FCPA scrutiny linger for over four years is inexcusable particularly since Sanofi, in the words of the SEC:

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On Measuring The Effectiveness Of A Compliance Program …


A reader (a compliance professional at a large publicly traded company with operations around the world) asks:

“One of the things I am struggling with is how to measure the effectiveness of a compliance program.  I find it easy to measure activity, but the real value is in the avoidance of penalties and pre/post expenses, negative publicity, customer retention, share value reduction, etc.  A good compliance program for a global company is a significant and costly investment and one that is always being reviewed and squeezed as business cycles fluctuate.  The catch-22 is that the more effective the compliance program, the less issues that are identified, equaling more questions as to why we need such a significant investment.  The programs own success can be its biggest challenge. Thoughts on ideas on effective measurements of a compliance program?”

Set forth below are my thoughts on this difficult issue – difficult because of what legal authority (as well enforcement agency guidance) actually say vs. seemingly conflicting actual FCPA enforcement actions and enforcement agency double-speak.

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