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Issues To Consider From The Nu Skin Enforcement Action


This previous post highlighted the SEC’s Foreign Corrupt Practices Act enforcement action against Nu Skin Enterprises.

This post continues the analysis by highlighting additional issues to consider from last week’s enforcement action.

Similar, Yet Different

Before the Nu Skin action, there have been several FCPA enforcement actions that have included, in whole or in part, charitable donations as highlighted in this recent post.

All of the prior enforcement actions though appear to have been involved pre-existing, presumably bona fide charitable organizations that a “foreign official” nevertheless was involved in or was valued by the “foreign official.”

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Key Energy And The Parallel Universe

parallel universe

The conduct giving rise to last week’s FCPA enforcement action against Key Energy Services (see here and here for prior posts) was subject to judicial scrutiny once.

And it was not last week’s SEC administrative order.

As highlighted in this previous post, in March 2016 Judge Melinda Harmon (S.D.Tex.) dismissed securities fraud claims brought against Key Energy Services (See In re Key Energy Services Inc. Securities Litigation, 2016 WL 1305922 (March 31, 2016). The action touched upon, in part, the same general conduct alleged in the SEC’s order.

While there are obvious substantive and procedural differences between a securities fraud action and a finding of FCPA books and records and internal controls violations (what last week’s SEC order found), at the very least these two actions were part of the same parallel universe.

Thus, it is interesting to explore what happened in the action subjected to judicial scrutiny vs. last week’s SEC order.

In short, whereas the SEC found that Key Energy “failed to implement and maintain sufficient internal controls,” a federal court judge found (despite plaintiffs’ allegations to the contrary including statements from several confidential witnesses) that Key Energy’s “FCPA controls were adequate.” Whereas the SEC suggests, with the benefit of hindsight that there were controls that Key Energy should have had, a federal court judge found that certain of the controls Key Energy did not have were not even required for a company to have adequate internal controls.

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In Connection With A 2006 Argentine Labor Dispute, Chilean Airline Pays U.S. Government $22 Million


Five months ago, the SEC brought a Foreign Corrupt Practices Act enforcement action against Ignacio Cueto Plaza (“Cueto”), the Chilean CEO of Santiago, Chile based LAN Airlines S.A. (“LAN”) for authorizing payments in 2006 and 2007 to a third party consultant in Argentina in connection with LAN’s attempts to settle disputes on wages and other work conditions between LAN Argentina S.A. (“LAN Argentina”), a subsidiary of LAN, and its employees.

Yesterday, the DOJ and SEC returned to the same conduct by announcing (here and here) parallel FCPA enforcement actions against LAN.

In short, the end result of an old labor dispute between a Chilean airline and Argentine workers is approximately $22 million flowing into the U.S. Treasury because LAN has shares that are traded on a U.S. exchange.

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Criminal Books And Records And Internal Controls Enforcement Actions

books and records

I sometimes read certain FCPA commentators and just shake my head in disbelief. Does the author have any regard for facts and/or any interest in conducting basic research to discover the facts?

For instance, in this recent post a commentator states:

“Until now, the Justice Department has not brought a criminal circumvention of internal controls case. If the Justice Department brings such a case, it will be subject to scrutiny. The Justice Department has been very careful when conducting enforcement actions against individuals under the FCPA, and I am sure they will look for the “right set of facts” to bring such a precedent setting case. A criminal prosecution of internal controls and books and records violations will raise the stakes on the wisdom and applicability of the provisions. It is one thing to bring a civil action – it is quite another to bring a criminal action, especially against individuals for violating so-called internal rules and regulations.”

The notion that the DOJ has never brought a criminal enforcement action involving books and records and internal controls violations is just plain false.

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Issues To Consider From The Johnson Controls Enforcement Action


Prior posts here and here concerned the Foreign Corrupt Practices Act enforcement action earlier this week against Johnson Controls (JCI). This post continues the analysis by highlighting additional issues to consider.


According to the SEC’s Order “JCI self-reported the potential FCPA violations to the SEC staff and DOJ in June 2013.” Thus, from start to finish JCI’s FCPA scrutiny lasted 3 years and 1 month.

If the DOJ/SEC want the public to have confidence in their FCPA enforcement programs, they must resolve instances of FCPA scrutiny much quicker.

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