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Next Up – MTS Resolves $850 Million FCPA Enforcement Action

mts

First it was Netherlands-based VimpelCom which resolved a net $398 million FCPA enforcement action in February 2016 for bribing an alleged Uzbekistan telecom official (see here and here for prior posts).

Then it was Sweden-based Telia which resolved a net $483 million FCPA enforcement action in September 2017 based on the same alleged core conduct. (see here and here for prior posts).

Recently, the SEC and DOJ announced (see here and here) that Russia-based Mobile TeleSystems PJSC (MTS) agreed to resolve an $850 million DOJ/SEC FCPA enforcement action based on the same alleged core conduct. This is the largest settlement amount in an FCPA enforcement action in history. (See here for a list of the top ten corporate enforcement actions).

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Cognizant Technology Solutions Resolves $25 Million SEC Enforcement Action In Connection With Various Licenses And Permits In India

cognizant

This previous post highlighted the DOJ and SEC’s individual enforcement action against Gordon Coburn and Steven Schwartz (former executives of Cognizant Technology Solutions) in connection with a planning permit in India.

This post highlights the SEC’s enforcement action (as well as the DOJ’s so-called declination letter) against the company based on the same core conduct in which the company, without admitting or denying the SEC’s findings, agreed to pay approximately $25 million in disgorgement and prejudgement interest.

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Former Cognizant Technology Solutions Executives Criminally And Civilly Charged In Connection With Indian Planning Permit – Company Resolves $25 Million SEC Enforcement Action

coburnschwartz

In this 2016 post highlighting Cognizant Technology Solutions’s disclosure of Foreign Corrupt Practices Act scrutiny it was also noted that Gordon Coburn resigned from his position as President of Cognizant Technology Solutions. This follow-up post noted that the two disclosures were likely related.

Sure enough as today the DOJ announced that Coburn and Steven Schwartz (Executive Vice President, Chief Legal and Corporate Affairs Officer) were criminally charged with FCPA violations. If the defendants choose to put the DOJ/SEC to its burden of proof, disputed issues will likely focus on corrupt intent, obtain or retain business and the facilitating payments exception.

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SEC FCPA Enforcement – 2018 Year In Review

SEC

Foreign Corrupt Practices Act enforcement, it’s not just about the DOJ.

Granted, as a civil enforcement agency the SEC’s sticks are less sharp than the DOJ’s, but the SEC also claims a significant piece of the FCPA enforcement pie (query whether it should – but that is a subject for another day – for instance as discussed in “The Story of the Foreign Corrupt Practices Act” the SEC wanted no part in enforcing the FCPA’s anti-bribery provisions).

This previous post highlighted various corporate enforcement statistics from 2018, this post focused more specifically on DOJ enforcement in 2018, and this post goes in-depth into various facts and figures relevant to SEC FCPA enforcement in 2018.

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Polycom Resolves A $36.6 Million Enforcement Action – SEC Believes That The FCPA Is A Strict Liability Statute And Just What Viable Criminal Charges Did The DOJ Decline?

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Earlier this week, Polycom (up until 2016 an issuer which was then acquired by a private equity firm and is now a wholly-owned subsidiary of Plantronics) resolved a $36.6 million Foreign Corrupt Practices Act enforcement action ($16.3 million pursuant to an SEC administrative order and $20.3 million pursuant to a so-called DOJ declination with disgorgement letter).

The conduct at issue concerned a Chinese subsidiary which created “a separate, parallel sales management system outside of Polycom’s company-approved systems, which was orchestrated by Polycom’s Vice President of China” and whose employees used “non-Polycom e-mail addresses when discussing deals with Polycom’s distributor.” According to the SEC, “Polycom personnel outside China were unaware of the existence of this parallel system.”

Yet, in another example of the SEC believing that the FCPA is a strict liability statute, the SEC found that Polycom violated the FCPA’s books and records and internal controls provisions. Moreover, without highlighting any additional substantive information the DOJ “declined prosecution … despite the bribery committed by employees of the Company’s subsidiaries in China, and these subsidiaries’ knowing and willful causing of false books and records at Polycom.” However, based on the information in the public domain (that is the SEC’s order) it remains an open question just what viable criminal charges the DOJ actually declined.

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