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Issues To Consider From The Rolls-Royce Enforcement Action

Issues

This previous post went in-depth into the $170 million Foreign Corrupt Practices Act enforcement action against U.K. based Rolls-Royce announced on January 17th. This post continues the analysis by highlighting additional issues to consider.

Unusual Aspect of the DPA

The Rolls-Royce DPA contains an unusual feature. Of the approximate $170 criminal penalty “$30 million will be paid to the Consumer Financial Fraud Fund.”

This has never happened before in an FCPA enforcement and set forth below is my e-mail exchange with the DOJ press office on this issue.

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FCPA Flash Podcast – A Conversation With Marc Bohn Regarding Disgorgement And Statute Of Limitations

FCPA Flash

The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from written posts on FCPA Professor.

Since the SEC first sought a disgorgement remedy in an FCPA enforcement action in 2004, disgorgement has become the dominant remedy sought by the SEC in corporate FCPA enforcement actions. This FCPA Flash episode is a conversation with Marc Bohn (Miller & Chevalier) in which he previews Kokesh v. SEC, a case recently accepted by the Supreme Court which presents the issue of whether the five-year statute of limitations in 28 U.S.C. § 2462 [the same limitations period at issue in FCPA civil matters] applies to claims for disgorgement. Although not an FCPA matter, Bohn discusses the potential impact of the Supreme Court’s decision on FCPA compliance, internal investigation, and enforcement issues. More broadly, the podcast also discusses statute of limitation issues given that many corporate FCPA enforcement actions involve “old” conduct.

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Across The Pond, Rolls-Royce Also Resolves A $625 Million U.K. Enforcement Action

Rolls

This recent post went in-depth into the $170 million Foreign Corrupt Practices Act enforcement action against Rolls-Royce. As mentioned in the post, the FCPA enforcement action against Rolls-Royce was part of a broader $800 million global resolution that also included a U.K. Serious Fraud Office component as well as Brazil law enforcement action.

The approximate $625 million U.K. enforcement action comprised the bulk of $800 million global resolution (that would seem to make sense, Rolls-Royce is after all a U.K. company) and is summarized below including the several failure to prevent bribery counts under the Bribery Act.

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Odebrecht / Braskem Bribery Schemes Net Approximate $420 Million FCPA Enforcement Action

oder

Yesterday, the DOJ and SEC announced (here and here) a Foreign Corrupt Practices Act enforcement action against Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company in which Odebrecht owns 50.1% of the voting shares, 38.1% of the total share capital and which Odebrecht “effectively controlled” according to the DOJ). Braskem has American Depositary Receipts registered with the SEC and traded on the NYSE and thus the enforcement action also included an SEC component.

Perhaps because of the less than clear DOJ release (clear once one actually reads the original source documents), this action is being reported in various places as a $3.5 billion FCPA enforcement action. While that figure represents the overall global settlement amount (Brazil and Swiss law enforcement also brought related actions), yesterday’s action was most certainly not a $3.5 billion FCPA enforcement action. Not even close.

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FCPA Jurisprudence Alert

Judicial Decision

This recent post highlighted the SEC’s long-standing Foreign Corrupt Practices Act enforcement action against former Magyar Telekom executives Elek Straub, Tamas Morvai, and Andras Balogh and how Judge Richard Sullivan (S.D.N.Y) seemed poised to issue rulings that point towards a trial (which is scheduled for May 8, 2017). The procedural posture of the case was motions for summary judgment whereas Judge Sullivan’s 2013 ruling in the case (see here) was on motions to dismiss.

Last week, Judge Sullivan issued this opinion and order. The decision represents a rare instance of actual FCPA case law (albeit a trial court decision).

On the FCPA front, the decision goes into the weeds on a rather esoteric issue, that being what does “use” of an instrumentality of interstate commerce mean in connection with the FCPA’s jurisdictional element relevant to foreign issuers and those acting on its behalf.

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