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Friday Roundup

Odebrecht / Braskem settlement amount is significantly trimmed, a form of bribery?, quotable, deficient internal controls, and scrutiny alerts and updates. It’s all here in the Friday roundup.

Odebrecht / Braskem Settlement Amount Significantly Trimmed

There was much false and misleading reporting about the FCPA settlement amount in the December 2016 FCPA enforcement action against Odebrecht / Braskem.

As highlighted in this post [1], after accounting for various credits and deductions (including for payments to Brazil and Swiss law enforcement agencies and a claimed inability to pay) the net FCPA settlement amount (subject to potential future adjustments) was approximately $420 million. The $420 settlement amount consisted of approximately $260 million in connection with the Odebrecht criminal information and plea agreement; $94.8 million in connection with the Braskem criminal information and plea agreement; and $65 million in connection with the SEC’s related enforcement action against Braskem.

Based on information in a recent DOJ filing, and confirmed by knowledgeable sources, Odebrecht is now “only” paying $93 million to the U.S. In other words, the overall Odebrecht / Braskem net FCPA settlement amount has been trimmed by $167 million and now stands at $252 million.

Time to update the top ten list of FCPA settlements (Odebrecht / Braskem is no longer in the top ten) and various 2016 FCPA enforcement statistics.

Is This a Form of Bribery?

Recently the DOJ/SEC have brought three enforcement actions (BNY Mellon, Qualcomm, and JPMorgan) based on the enforcement theory that business organizations which offer or provide internships or job opportunities to family members of certain customers or potential customers are engaged in a form of bribery.

What if a business organization offers or provides internships or job opportunities to students at public universities as a way perhaps to secure sponsorship deals with those universities.

Is this a form of bribery? See here [2] for a recent Wall Street Journal article:

“Companies often pay colleges for the right to sell sweatshirts or pour coffee on campus. Now, schools are increasingly looking to leverage those deals into internship slots, sponsorships for food pantries and other projects. [Recently], the University of California, Berkeley, will announce a 10-year, $8 million campuswide partnership with Peet’s Coffee & Tea under which the Bay Area chain will have retail locations and a presence in dining halls and athletic facilities. The company also must provide funds for a campus farm and garden and classes on low-cost healthy cooking. The Peet’s deal, which includes a handful of internships a year and sponsorships for graduate student travel, is part of a broader push by schools to deepen their relationships with firms doing business on campus.”

[3]

Quotable

It’s hard to ignore the fact that some of the most forceful comments concerning the notion that FCPA enforcement may be a convenient cash cow for the U.S. government have come from former government enforcement attorneys. (See here [4] for a collection of certain statements).

In the latest example, James McGovern, who headed Brooklyn U.S. Attorney’s Office Criminal Division, stated [5]: “FCPA enforcement represents a strong revenue stream for the Department of Justice.”

Deficient Internal Controls

It’s always interesting to pause and contemplate what would happen if the U.S. government were an issuer subject to the FCPA’s books and records and internal controls provisions. (See here [6] for a prior post).

The violations would be so plentiful they would be hard to track. Here would be one example [7]. According to the New York Times:

“Agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives used a secret, off-the-books bank account to rent a $21,000 suite at a Nascar race, take a trip to Las Vegas and donate money to the school of one of the agents’ children, according to records and interviews. […] The revelations highlight the lax oversight at the A.T.F. that allowed agents and informants to spend millions while avoiding the normal accounting process.”

Scrutiny Alerts and Updates

Yin Plea

As highlighted in this previous post [8], in late 2016 the DOJ filed a superseding indictment adding Foreign Corrupt Practices Act charges to its existing 2015 enforcement action against Ng Lap Seng and Jeff Yin in connection with alleged bribery at the United Nations.

Recently Yin pleaded guilty, but only to Count 7 of the superseding indictment which charged conspiracy to commit tax offenses.

Royal Dutch Shell

In 2010, Royal Dutch Shell, along with several other oil and gas companies, resolved a Foreign Corrupt Practices Act enforcement action regarding business conduct in Nigeria. (See this prior post [9] for specifics of the $48 million DOJ and SEC FCPA enforcement).

For a number of years, Shell has been under additional scrutiny for business conduct in Nigeria and earlier this week this scrutiny escalated with this in-depth report [10] by BuzzFeed.

According to the report:

“Recent recordings and documents made public “reveals that Shell’s top executives at the time signed off on the deal [the acquisition of the exploration licence for an offshore oil block known as OPL 245] with full knowledge that the money would go to a front company connected to a former Nigerian oil minister, Dan Etete. The documents also show that Shell employees knew of – and explicitly discussed – the risk payments could be used by Etete to pay people off.”

As noted in the report, “in a statement, Shell said it did not believe the company or any of its current or former colleagues had acted illegally.”

For additional reporting, see here [11].

Elevate Your FCPA Research

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Elevate Your Research [12]