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

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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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Fresh Off Its 2016 FCPA Enforcement Action, SAP Is Again Under FCPA Scrutiny

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As highlighted in this previous post, in February 2016 SAP (a German company with American Depository Shares registered with the SEC) resolved an FCPA enforcement action based on conduct in Panama. Without admitting or denying the SEC’s finding’s in an administrative order the company agreed to pay approximately $3.9 million and the SEC ordered the company to cease and desist from committing or causing any violations and any future violations of the FCPA’s books and records and internal controls case.

Fresh off this 2016 FCPA enforcement action, SAP is again under FCPA scrutiny.

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Corporate FCPA Repeat Offenders

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As highlighted in this post, twelve companies have resolved FCPA enforcement actions – not once – but twice. Thus far in 2017 there have been three FCPA repeat offenders.

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 the enforcement action (plea agreement, NPA, administrative order, etc.) and regardless of the charges or findings (anti-bribery provisions vs. books and records and internal controls provisions).

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Halliburton Joins FCPA Repeat Offender Club As The SEC Also Finds That A Former VP Violated The FCPA

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In 2009, Halliburton Company, KBR Inc. (a wholly-owned subsidiary of Halliburton during the relevant time period) and Kellogg, Brown & Root, LLC (a wholly-owned subsidiary of KBR) resolved parallel DOJ and SEC Foreign Corrupt Practices Act enforcement actions in connection with a bribery scheme involving a $6 billion liquefied natural gas plant on Bonny Island, Nigeria. (See here and here).

The combined $579 million settlement amount (DOJ – $402 million / SEC $177 million) remains the third largest FCPA settlement of all-time. The SEC’s resolution contained the perfunctory condition of permanently enjoining Halliburton from violating the FCPA’s books and records and internal controls provisions.

However, yesterday Halliburton joined the ever-increasing (see here and here for recent posts) FCPA repeat offender club as the SEC announced an FCPA enforcement action concerning alleged conduct in Angola. Without admitting or denying the SEC’s findings in this administrative order that it violated the FCPA’s books and records and internal controls provisions, Halliburton agreed to pay $29.2 million. In the same order, the SEC also found that Jeannot Lorenz (Halliburton’s former vice president) causing the company’s violations, circumvented internal accounting controls, and falsified books and records. Without admitting or denying the SEC’s findings, Lorenz agreed to pay a $75,000 penalty.

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