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Corporate FCPA Repeat Offenders

repeatoffender

As highlighted in this post, 13 companies have resolved FCPA enforcement actions – not once – but twice. Four of these instances have occurred in just the past approximate 1.5 years.

Note: this post uses the term repeat offender to mean a business organization that has resolved more than one FCPA enforcement action regardless of which agency (the DOJ or SEC) brought the enforcement action; regardless of the form of resolution (plea agreement, NPA, DPA, administrative order, etc.) and regardless of whether the charges or findings were anti-bribery violations vs. books and records and internal controls violations in connection with foreign bribery issues). 

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Issues To Consider From The Stryker Enforcement Action

Issues

This previous post highlighted the SEC’s recent $7.8 million enforcement action against medical device company Stryker.

This post continues the analysis by highlighting additional issues to consider.

Two Ways to Look at Repeat Offenders

As highlighted in the prior post, Stryker is now in the FCPA repeat offender club. There are two ways to look at certain of the companies on the list.

On the one hand, one could view these companies as corrupt companies without a commitment to compliance who did not learn any lesson from the first time the company resolved an FCPA enforcement action.

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Stryker Joins The FCPA Repeat Offender Club

stryker

The end of September is traditionally an active period for Foreign Corrupt Practices Act enforcement as the SEC’s fiscal year comes to a close.

On the heels of yesterday’s Petrobras enforcement action (see here and here for prior posts), the SEC announced a $7.8 million enforcement action against medical device company Stryker for not having internal accounting controls “sufficient to detect the risk of improper payments in sales of Stryker products in India, China, and Kuwait” and because “Stryker’s India subsidiary failed to maintain complete and accurate books and records.”

In doing so, Stryker joins the list of FCPA repeat offenders (see here). As highlighted in this prior post, in 2013 Stryker resolved a $13.2 million enforcement action based on alleged conduct in Mexico, Poland, Romania, Argentina, and Greece.

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Maxwell Technologies Becomes A Repeat Offender Of The FCPA’s Books And Records And Internal Controls Provisions

repeatoffender

As highlighted in this previous post, in 2011 Maxwell Technologies (a California-based manufacturer of energy storage and power delivery products) resolved parallel DOJ and SEC Foreign Corrupt Practices Act enforcement actions concerning alleged business conduct in China by agreeing to pay approximately $14 million.

As noted in the previous post, the SEC’s charges included disclosure violations not often seen in FCPA enforcement actions, based on allegations that Maxwell’s bribe payments allowed the company to offset losses and fund product expansions that are now a source of revenue for the company. Specifically the SEC alleged: ““Maxwell greatly depended on the revenue from Maxwell SA’s high-voltage capacitor sales to China in order to help fund Maxwell’s expansion into new product lines that are now expected to become Maxwell’s future source of revenue. Maxwell engaged in the bribery scheme because it enabled the company to obtain material revenue needed to financially position itself to help fund the very products that today are sustaining Maxwell’s future growth.”

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