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Novartis Joins The Repeat Offender Club – This Time Paying Approximately $347 Million To Resolve An FCPA Enforcement Action

Novartis

What happens when the Greek, Swiss, and South Korean subsidiaries of a Swiss company engage in improper conduct in Greece, Vietnam and South Korea? Why of course, approximately $345 million flows into the U.S. treasury.

Yesterday, Novartis joined the long and growing list of FCPA repeat offenders as the DOJ and SEC announced (see here and here) a combined approximate $347 million enforcement action. (As highlighted in this prior post, in 2016 Swiss pharmaceutical company Novartis coughed up $25 million to resolve a SEC FCPA enforcement action focused on the conduct of its indirect Chinese subsidiaries).

Yesterday’s enforcement action included a DOJ component (in which the company agreed to pay approximately $234 million) and a SEC component (in which the company agreed to pay approximately $113 million).

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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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