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In Depth Into The JP Morgan FCPA Enforcement Action

JPMorgan

Yesterday, the DOJ and SEC announced (here and here) a $202.6 million FCPA enforcement action against J.P. Morgan (and a related entity) based on its alleged improper hiring and internship practices that the U.S. government has labeled bribery and corruption.

While the enforcement action was expected to focus on alleged improper hiring and internship practices involving so-called Chinese “princelings” (family members of alleged Chinese foreign officials), a meaningful component of the DOJ’s enforcement action involves hiring and internship practices involving family members of private individuals. Specifically, the DOJ’s non-prosecution agreement highlights 5 examples of “Quid Pro Quo Hiring” and 2 examples (40%) concern private companies: “a private Chinese manufacturing company” and a “Taiwanese private financial holding company.”

Numerous ironies, contradictions, and rule of law concerns abound in the enforcement action that will be explored in more detail in future posts. (In this clip, I talk to National Public Radio about one).

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Embraer Bribery Schemes Result In Net $187 Million FCPA Enforcement Action

embraer

Yesterday, the DOJ and SEC announced resolution of a Foreign Corrupt Practices Act enforcement action against Embraer, a Brazil-based aircraft manufacturer with American Depositary Shares listed on the New York Stock Exchange.

According to the DOJ and SEC, Embraer engaged in bribery schemes between 2008 through 2011 in the Dominican Republic, Saudi Arabia, and Mozambique in which the company approved bribe payments, through various third-parties, to various alleged “foreign officials.” According to the DOJ and SEC, Embraer’s wholly-owned U.S. subsidiary was active in the bribery schemes including by making payments from its New York based bank account. In addition, the enforcement action also involved improper conduct in India between 2005 and 2009. In total, the government alleges that Embraer made approximately $84 million as a result of the improper conduct.

The enforcement action involved a DOJ component in which the company agreed to pay a criminal penalty of approximately $107.3 million and an SEC component in which the company agreed to pay $83.8 million in disgorgement and $14.4 million in prejudgment interest. The SEC agreed to credit a disgorgement amount that Embraer agreed to pay to Brazilian authorities and this filing suggests that disgorgement amount is approximately $18.6 million. Thus, the net FCPA settlement amount was approximately $187 million.

This post goes in-depth into the enforcement action by summarizing the approximate 115 pages of resolution documents.

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In Depth Into The Och-Ziff FCPA Enforcement Action

och ziff

Last week, the DOJ and SEC announced (here and here) a Foreign Corrupt Practices Act enforcement action against Och-Ziff Capital Management Group (and a related entity) for improper business practices in various African countries. The aggregate settlement amount was $412 million (a $213 million DOJ criminal penalty and a $199 million SEC resolution consisting of disgorgement and prejudgment interest), the 4th largest FCPA settlement amount of all-time.

As highlighted in this previous post, the SEC also found Daniel Och (CEO) and Joel Frank (CFO) culpable for certain of the improper conduct. As indicated in the post, this represents what is believed to be the first time in FCPA history that the SEC also found the current CEO and CFO of the issuer company liable, to some extent, for company FCPA violations. Moreover, the $2.2 million Och agreed to pay, without admitting or denying the SEC’s findings, is the largest settlement amount in FCPA history by an individual in an SEC action.

Whether the Och-Ziff enforcement action is the “first time a hedge fund has been held to account for violating the FCPA” (as the DOJ stated in its release) is a debatable point. (See here for the 2007 FCPA enforcement action on the DOJ’s FCPA website against hedge fund Omega Advisors).

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GlaxoSmithKline Coughs Up $20 Million In SEC FCPA Enforcement Action Based On China Conduct

GSKChina

In this 2016 preview post, I noted that the end of September was likely to be an active period for FCPA enforcement.

Why? Because the SEC’s fiscal year ends on September 30th that’s why.

In the third SEC FCPA enforcement action of the week, the SEC announced this enforcement action in which GlaxoSmithKline plc (a U.K. company with shares traded on the NYSE) will cough up $20 million to resolve an administrative cease and desist order based on employees and agents of its China-based subsidiary and China-based joint venture providing various things of value to healthcare professionals in China.

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On National Drink Beer Day, AB InBev Agrees To Pay $6 Million To Resolve FCPA (And Related) Enforcement Action

ABInBev

Yesterday was National Drink Beer Day.

Fitting then that yesterday the SEC announced this administrative cease and desist order against Anheuser-Busch InBev, a Belgium brewer with American Depository Receipts traded on the New York Stock Exchange. The conduct at issue involved improper payments by an Indian joint venture “to Indian government officials to obtain beer orders and to increase brewery hours.” AB InBev held a minority interest in the joint venture which marketed and distributed the beer of AB InBev’s wholly-owned Indian subsidiary.

The SEC found that AB InBev violated the FCPA’s books and records and internal controls provisions. Without admitting or denying the SEC’s findings, AB InBev agreed to pay approximately $6 million to resolve the matter. As highlighted below, the SEC also found that AB InBev entered into a separation agreement with a former employee that violated an SEC Rule implementing Dodd-Frank’s whistleblower provisions.

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