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FCPA “Tips” Continue To Be A Minor Component Of The SEC’s Whistleblower Program

sec-whistle

The Dodd-Frank Act enacted in July 2010 contained whistleblower provisions applicable to all securities law violations including those under the Foreign Corrupt Practices Act.

In this prior post from July 2010, I predicted that the whistleblower provisions would have a negligible impact on FCPA enforcement.  As noted in this prior post, my prediction was an outlier (so it seemed) compared to the flurry of law firm client alerts that predicted that the whistleblower provisions would have a significant impact on FCPA enforcement.  Many FCPA Inc. participants seemed so eager for a marketing opportunity to sell compliance services, that some even called the generic whistleblower provision the FCPA’s “new” whistleblower provisions.

Whatever your initial view on how the whistleblower provisions may impact FCPA enforcement, it was previously noted that the best part of the whistleblower provisions were that its impact on FCPA enforcement could be monitored and analyzed because the SEC is required to submit annual reports to Congress.

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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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Friday Roundup

Roundup

Scrutiny alert, a potential increase FCPA statutory penalty amounts, Second Circuit appeal begins, SEC enforcement chief on whistleblowers, marketing the black hole, of note, and a ripple. It’s all here in the Friday roundup.

Scrutiny Update

VimpelCom was not the only company involved in the Uzbek telecommunications bribery scheme. As highlighted in this prior post, Swedish telecom company (a company with ADRs registered with the SEC) and Russia-based Mobile TeleSystems PJSC (a company with shares traded on the New York Stock Exchange) have also been scrutiny.

Recently, Telia issued this release:

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Purported BHP Billiton Whistleblower Bounty Raises Several Questions

Tough Question

According to this Australian Financial Review report (also covered by Reuters) the SEC paid approximately $3.75 million “to a former employee of Australian mining giant BHP Billiton” apparently in connection with the May 2015 Foreign Corrupt Practices Act enforcement action against the company.

As highlighted in prior posts here and here, the $25 million SEC FCPA enforcement action involved findings that BHP Billiton violated the FCPA’s books and records and internal controls provisions in connection with a global hospitality program that the company had related to its sponsorship of the 2008 Beijing Summer Olympic Games.

According to the report, “legal sources have confirmed that the whistleblower was a BHP Billiton insider” who “provided detailed information to U.S. investigators about the mining firm’s activities overseas several years ago.”

If true (BHP Billton made the following statement to Reuters – “we are not aware of the involvement of any whistleblower as part of the SEC’s or DOJ’s investigation,”), it would represent the first publicly reported instance of a whistleblower being paid an SEC whistleblower bounty in connection with an FCPA enforcement action.

Yet, as highlighted below, if true the purported bounty raises several questions.

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Friday Roundup

Roundup

Checking in on Wal-Mart, DOJ “declinations,” another installment of as we say not as we do, scrutiny alerts, and cashing in. It’s all here in the Friday roundup.

Wal-Mart

In its recent 2Q FY2017 earnings call presentation Wal-Mart disclosed $28 million in Foreign Corrupt Practices Act and compliance related expenses ($23 million for ongoing investigations and inquiries and $5 million for global compliance program and organizational enhancements). The Q2 expenses of $28 million are higher than the Q1 expenses of $25 million.

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