- FCPA Professor - http://fcpaprofessor.com -

Friday Roundup

Scrutiny alerts, across the pond, for the reading stack, and congrats.  It’s all here in the Friday Roundup.

Scrutiny Alerts And Updates

FedEx

The Wall Street Journal reports here [1]:

“FedEx Corp. told U.S. authorities that it received allegations that its Kenya operation paid bribes to government officials, according to a statement the company issued to The Wall Street Journal. The shipping company has told the U.S. Department of Justice and Securities and Exchange Commission about the allegations it potentially violated the Foreign Corrupt Practices Act, the statement said. FedEx also said it is investigating the allegations, and has “not found anything to substantiate the allegations.” The anonymous person contacted the firm through email in December 2013 with allegations of bribery in Kenya, according to an email reviewed by the Journal. […] FedEx told the Journal it approached the SEC and DOJ “shortly after” receiving the December allegations, but didn’t say when specifically it went to authorities. The firm also said it has brought in a U.S. law firm and an external audit team in East Africa as a part of its investigation. The person alleged that FedEx’s Kenya operation bribed government officials in the country between 2010 and 2013, according to the email. FedEx operates through a so-called nominated service contractor in Kenya and other countries in the region, according to the allegations and the company’s website. The alleged bribes went to customs officials to clear shipments without inspection, as well as to government vehicle inspectors and others, the person alleged, according to the email.  The person also wrote that the same notification would go to the DOJ and SEC, according to the email …  FedEx said in its statement that it has been “engaged in a cooperative dialogue with both agencies” since it approached them about the allegations.”

Barrick Gold

Barrick Gold Corp. [2] (a Toronto-based company with shares traded on the New York Stock Exchange) and African Barrick Gold [3] (and entity Barrick Gold holds an approximate 65% ownership interest in) were the focus of this [4] recent Wall Street Journal article.  The article states, in pertinent part:

“As part of a process to buy land near [a Tanzania] mine starting last year, African Barrick paid more than $400,000 in cash mostly to Tanzanian government officials and consultants responsible for valuing the land, according to company invoices and copies of checks reviewed by The Wall Street Journal. An anonymous person said the payments were bribes to officials in position to influence African Barrick’s business interests, according to an email sent to the company last year and reviewed by the Journal. The person didn’t describe any quid pro quo behind the payments. African Barrick and Toronto-based Barrick Gold said payments they made weren’t bribes and were legitimate payments for expenses and allowances tied to an agreement with the Tanzanian government.”

In response to the WSJ article, African Barrick Gold released this [5] statement.

Smith & Wesson

The company disclosed in its most recent annual report:.

“On January 19, 2010, the DOJ unsealed indictments of 22 individuals from the law enforcement and military equipment industries, one of whom [Amaro Goncalves] was our former Vice President-Sales, International & U.S. Law Enforcement. We were not charged in the indictment. We also were served with a Grand Jury subpoena for the production of documents. Since that time, the DOJ has been conducting an investigation to determine whether we have violated the FCPA and we have continued to cooperate fully with the DOJ in this matter. On February 21, 2012, the DOJ filed a motion to dismiss with prejudice the indictments of the remaining defendants who are pending trial, including our former Vice President-Sales, International & U.S. Law Enforcement. On February 24, 2012, the district court granted the motion to dismiss. Following extensive investigation and evaluation, the DOJ declined to pursue any FCPA charges against us and closed its investigation. The DOJ has noted our “thorough cooperation” in correspondence to the company.

In May 2010, we received a letter from the staff of the SEC giving notice that the SEC was conducting a non-public, fact-finding inquiry to determine whether there have been any violations of the federal securities laws. It appears this civil inquiry was triggered in part by the DOJ investigation into potential FCPA violations. We have always taken, and continue to take seriously, our obligation as an industry leader to foster a responsible and ethical culture, which includes adherence to laws and industry regulations in the United States and abroad. We are cooperating fully with the SEC in this matter and have undertaken a comprehensive review of company policies and procedures. We are in the final stages of discussions with the SEC staff that have brought us close to a resolution. Any future agreement is subject to final review and approval by the SEC Commissioners. Based upon the status of current discussions, we have estimated and accrued an expense of approximately $2.0 million in fiscal 2014.”

Across The Pond

Earlier this week, the U.K. Serious Fraud Office announced [6]:

“[That a jury convicted] Dennis Kerrison and Miltiades Papachristos of conspiracy to commit corruption, following an investigation conducted by the Serious Fraud Office.  The convictions of Mr Kerrison, a former CEO of Associated Octel Corporation (subsequently renamed Innospec Limited) and Dr Papachristos, former Regional Sales Director for the Asia Pacific region, complete the SFO’s six year investigation into Innospec, which led to two other individuals and Innospec entering guilty pleas.

Innospec itself pleaded guilty in March 2010 to bribing state officials in Indonesia and was fined $12.7 million. The bribes were intended to secure, or serve as rewards for having secured, contracts from the Government of Indonesia for the supply of Innospec products including Tetraethyl Lead, also known as TEL, a highly dangerous organo-lead compound that was created as an octane booster to be added to engine fuel. Leaded fuel, i.e. fuel that contains TEL, was banned in the UK in 2000 due to links between the compound and severe neurological damage.”

As noted in the SFO release, the Kerrison and Papachristos matter was the “first contested overseas corruption case brought by the SFO concerning the bribery of foreign public officials.”

As further noted in the SFO release:

“Another former Innospec CEO, Paul Jennings, pleaded guilty in June 2012 to two charges of conspiracy to commit corruption and a further charge of conspiracy to commit corruption in July 2012. David Turner, former Innospec Sales and Marketing Director pleaded guilty to three charges of conspiracy to commit corruption in January 2012.”

The Innospec enforcement action also had a U.S. prong involving both the company and individuals (see here [7], here [8], and here [9] for prior posts).

For The Reading Stack

An informative read here [10] from Trevor McFadden (Baker & McKenzie) titled “The U.S. Sentencing Guidelines in FCPA Matters:  Understanding the True Impact on Settlement Discussions.”

Congrats

Congrats to Thomas Fox for his 1,000th post [11] on the FCPA Compliance and Ethics Blog.  I second many of the big-picture observations he makes.  Over the years, Tom has become a good friend and trusted colleague and his “long strange trip” (as he puts it) is a testament that out of adversity can come opportunity.

*****

A good weekend to all.