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A Look At The French Enforcement Action Against Airbus

airbus

Previous posts here and here looked at the U.S. Foreign Corrupt Practices Act enforcement action against Airbus.

This previous post looked at the U.K. Bribery Act enforcement action against Airbus.

This post completes the enforcement trilogy, bylooking at the French enforcement action against Airbus.

Like the prior U.S. and U.K. bribery enforcement action, the French enforcement action against Airbus (see here for the Judicial Public Interest Agreement) focused on the use of business partners in connection with sales or attempted sales in various countries.

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Facade Of Enforcement Across The Pond

Laughable

A facade of Foreign Corrupt Practices Act enforcement is when a business organization – often for reasons of risk aversion and efficiency – agrees to resolve an enforcement action in the absence of any judicial scrutiny even though no employee or agent of the company (business organizations obviously can only act through real human beings) was charged. (See here for the article “The Facade of FCPA Enforcement” and here for the article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement.”)

Even more troubling is when employees are charged, put the government to its burden of proof, are acquitted yet the business organization still resolves an enforcement action based on the same underlying conduct.

This 2014 post, published after the United Kingdom formally adopted deferred prosecution agreements, was titled “The U.K. Enters the Facade Era.” As discussed below, recently there was a major facade moment in the U.K.

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United Technologies Corp. Resolves $13.9 Million Enforcement Action

UTC

Yesterday, the SEC announced that United Technologies Corporation resolved a $13.9 million Foreign Corrupt Practices Act enforcement action.

The conduct at issue concerned Otis Elevator Co. (a wholly-owned subsidiary of UTC), Pratt & Whitney (an operating division of UTC), and International Aero Engines (a joint venture of five aerospace companies including Pratt & Whitney) regarding a Russian and Azerbaijani improper payment scheme, a China aviation scheme, improper payments for Otis Elevator sales in China, and leisure travel for foreign officials from several countries including China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia.

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With Chi Guilty Verdict, Focus Shifts To Kinemetrics And Guralp Systems

focus

The DOJ recently announced that Heon-Cheol Chi (Chi) of South Korea, “the Director of South Korea’s Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources (KIGAM) was convicted … following a four-day jury trial of laundering bribes that he received from two seismological companies based in California and England through the U.S. banking system.”

As noted here, according to court documents the companies are Kinemetrics (a California company that designs technologies, products, and solutions for monitoring earthquakes and their effects on people and structures) and Guralp Systems Ltd. (a U.K. company that designs, manufactures and delivers products, services, systems and solutions for a wide range of applications for the seismological research community as well as the the oil & gas, civil engineering and energy sectors.)

With the Chi guilty verdict, focus shifts to Kinemetrics and Guralp Systems and when asked if there would be an FCPA enforcement action against these companies a DOJ spokesperson informed me via e-mail that “the investigation is ongoing.”

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Friday Roundup

Scrutiny alert, potential fallout, act like a cop be treated like a cop, and for the reading stack.  It’s all here in the Friday Roundup.

Scrutiny Alert

Leighton Holdings Limited (an Australia-based holding company with ADRs registered in the U.S.) has been the focus of much recent media attention concerning business conduct in Iraq, Indonesia, Malaysia, as well as other Asian and Middle Eastern countries (see here and here for instance).  In response, the company issued statements here and here.

Potential Fallout?

As noted here, earlier this week South Korea criminally charged “100 people, including senior executives at state-run energy companies, on corruption charges.”  According to the article, “parts suppliers are suspected of bribing officials to accept their products with faked certification.”  Among the companies mentioned is Korea Hydro and Nuclear Power Co.  This company, along with other alleged state-owned or state-controlled energy companies, was mentioned in the 2009 Foreign Corrupt Practices Act enforcement action against Control Components Inc.

Time will tell if the South Korea charges might implicate various part suppliers subject to the FCPA.

Cop-Like

In this recent speech, SEC Chair Mary Jo White stated:

“The SEC is, in very important part, a law enforcement agency, and should be seen by investors to be ‘their cop.’  And, the SEC must continue to be the tough cop because in many cases, particularly when there is no criminal violation, it is the only agency that can play that role.”

White’s comment reminded me of this excellent guest post by Russell Ryan (King & Spalding and previously an Assistant Director of the SEC Enforcement Division) in which he notes, among other things, that “if the SEC’s enforcement role is more like that of a criminal prosecutor than a private plaintiff, why shouldn’t the SEC be held to some of the same procedural and evidentiary burdens of a prosecutor rather than benefitting from the more relaxed standards accorded to private plaintiffs?”

Reading Stack

An interesting Q&A with Andreas Pohlmann (Chief Compliance Officer at SNC-Lavalin Group Inc) including the following spot-on statement.

“[W]e need one global compliance program.  That means that what we are doing at the time being is not establishing a Canadian compliance program, or a North American compliance program, but we are establishing a global compliance program for all of our associates all over the world, and that’s the challenge. To get out a compliance program in Montreal at the headquarters of SNC-Lavalin is still easy. It becomes challenging when we go to the more difficult regions of this world, like Latin and South America, Africa, Eastern Europe and Southeast Asia. We have to get to the hearts and minds of our people and have them live up to our worldwide standards; otherwise, the compliance program would not be credible.”

*****

A good weekend to all.

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