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The First Time Baker Hughes Resolved An FCPA Enforcement Action

bakerhughes

[This post is part of a periodic series regarding “old” FCPA enforcement actions]

As highlighted in this prior post, in 2001 KPMG Siddharta Siddharta & Harsono (KPMG-SSH) and Sonny Harsono resolved a joint DOJ/SEC civil FCPA enforcement regarding alleged improper payments in connection with an Indonesia tax assessment.

As detailed in the prior post, it was a unique FCPA enforcement action at the time (believed to be the first time the DOJ/SEC had ever brought an FCPA action against a professional services firm – i.e. a law firm or accounting firm) and still remains unique in that the DOJ/SEC are believed to have never again brought an FCPA enforcement action against a professional services firm. As further detailed in the prior post, KPMG-SSH was an agent of Baker Hughes and thus it was not surprising that a related FCPA enforcement action against Baker Hughes soon followed.

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A Unique FCPA Enforcement Action Then And Still Unique Now

unique2

[This post is part of a periodic series regarding “old” FCPA enforcement actions]

As highlighted in this prior post, the DOJ used to civilly enforce the Foreign Corrupt Practices Act. One of enforcement actions highlighted, indeed the last time the DOJ used this express statutory provision, was a 2001 enforcement action against KPMG Siddharta Siddharta & Harsono and Sonny Harsono.

It was a unique FCPA enforcement action at the time (believed to be the first time the DOJ/SEC had ever brought an FCPA action against a professional services firm – i.e. a law firm or accounting firm) and still remains unique in that the DOJ/SEC are believed to have never again brought an FCPA enforcement action against a professional services firm.

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FCPA Flash Podcast – A Conversation With Sherbir Panag Regarding Compliance In India

FCPA Flash

The FCPA Flash podcast provides 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 written posts on FCPA Professor.

This FCPA Flash episode is a conversation with Sherbir Panag (founding partner of the Law Offices of Panag & Babu and manager of the firm’s New Delhi office). In the podcast, Panag: addresses the question of whether doing business in India is possible without paying bribes; talks about the “bribery panic” that often results in India; discusses how companies can best navigate India’s “Licence Raj”; and provides advice for how companies can “Indianise” FCPA compliance programs.

Any lawyer or compliance professional with clients doing business in India would be well-served by listening to the podcast.

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Biomet Becomes An FCPA Repeat Offender

zimmer

For many years, the DOJ has advanced the policy position that DPAs and NPAs “have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe.” (See here for the prior post). Specifically in the Foreign Corrupt Practices Act context, the DOJ has stated that “the companies against which DPAs and NPAs have been brought have often undergone dramatic changes.”  (See here for the prior post).

As highlighted here, in March 2012 Biomet resolved an FCPA enforcement action involving alleged conduct in Brazil, Argentina, and China by agreeing to pay approximately $22.8 million ($17.3 million via a DOJ deferred prosecution agreement, and $5.5 million via a settled SEC civil complaint).

Since then, FCPA Professor has chronicled (herehere and here) how Biomet’s DPA was extended, how the DOJ ultimately came to conclude that Biomet had breached its DPA based on subsequent improper conduct, and how an additional FCPA enforcement was expected.

Last week, the DOJ and SEC announced (here and here) the additional FCPA enforcement action against Zimmer Biomet Holdings (in 2015 Zimmer Holdings acquired Biomet) and Biomet. As highlighted below, a portion of the improper conduct involved the same distributor in Brazil that gave rise to the 2012 FCPA enforcement action.

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The First FCPA Enforcement Action Of 2017 Is A $13 Million Joke

mondelez

On Friday, the SEC announced the first Foreign Corrupt Practices Act enforcement action of 2017 against Mondelēz International, Inc.

The basic findings in this short administrative action are the following: (i) in February 2010, Kraft Foods (which re-named itself Mondelez International in 2012) acquired Cadbury (a U.K.-based confectionary and snack beverage company that had securities registered with the SEC) and its subsidiaries, including Cadbury India; (ii) in early 2010 Cadbury India retained an agent to interact with Indian government officials to obtain licenses and approvals for a chocolate factory; (iii) Cadbury India failed to conduct appropriate due diligence on and monitor the activities of the agent which “created the risk” that funds paid to the agent (approximately $100,000) could be used for improper or unauthorized purposes and (iv) Cadbury’s India’s books and records did not accurately and fairly reflect the natures of the services rendered by the agent.

Without admitting or denying the SEC’s findings, Mondelez agreed to pay a $13 million civil penalty.

This enforcement action is a complete joke (as is the fact that the scrutiny began in February 2011).

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