Quotable, scrutiny alerts and updates, and for the reading stack. It’s all here in the Friday roundup.
Royal Dutch Shell resolved an FCPA enforcement action in 2010 concerning conduct in Nigeria. At present, the company is under FCPA scrutiny again for its business practices in Nigeria.
During a recent investor conference call, an analyst asked “in light of the various corruption cases that hit the oil sector, which seem to be more and more frequent, is there anything you think needs to be done better at the industry level to deal with violations of the FCPA?”
Royal Dutch CEO Ben van Beurden stated:
“I think we are very clear about our business principles. We have had our business principles for a long time. We enforce them with vigor and conviction. There is absolutely no room for unethical conduct in our organization and definitely not when it comes to bribery and corruption. Everybody in our organization knows that and everybody knows also what the consequences of violating that rule is, which is, you do not work for us anymore, and we will refer you to the appropriate authorities, if need be. And there is absolutely no doubt in the organization that, that’s the culture that we would like to have, that’s the conduct that we would like to have, and that’s definitely the way we enforce it. So now having said that, is our industry an industry that operates in places where there is a troublesome environment here and there? Yes, absolutely. And that’s also exactly one of the reasons why we have to be so diligent when it comes to these values and these rules, precisely because it’s what people in the frontline of operations would actually like. They would much rather would have a black-and-white clarity than one of exercise your judgment, which basically means that you put the onus back on the people that are being confronted with the issues. So therefore, you will find that also in places where corruption in society is endemic or established, that the Shell people, who operate in there, find it actually quite good, pleasant and comforting that they have a company that has their back when they have to say, no, I work for Shell, I don’t do these things. And I think that’s a value that is not only sort of makes common sense for a company from a sort of a business perspective, et cetera. I think it is what we need to do if we want to be a company with long life and a company with a good standing and reputation. One of the key things we need to get right, in my mind, is that we are being seen as a welcome participant in society, and indeed, where possible, even a force for good.”
Scrutiny Alerts and Updates
The Ohio-based company recently disclosed:
“The Company, through internal processes, discovered certain questionable expenditures for travel, gifts and other expenses at one of its international subsidiaries doing business in a single foreign country, Turkey. Teradata promptly initiated an internal investigation into the matter, with the assistance of outside counsel and forensic accountants, to determine whether the expenditures may have violated the U.S. Foreign Corrupt Practices Act (“FCPA”) or other potentially applicable anti-corruption laws. In late February 2017, the Company voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to alert them to the relevant events and the Company’s internal investigation. Teradata has periodically updated the government regarding the status of the Company’s internal investigation and findings, including remedial actions and terminations, and plans to continue to cooperate fully.Based on information known at this time, it is currently believed that the questionable expenditures were limited to a single subsidiary’s business operations in Turkey and involved specific individuals who are no longer with the Company. Teradata’s operations in Turkey have constituted less than one half of one percent of consolidated revenues each year as reported by the Company since 2012. Under the circumstances, Teradata currently does not anticipate a material adverse effect on its business or financial condition as a result of this matter; however, the ultimate resolution of this matter with the DOJ and SEC cannot be predicted. Any determination that the Company’s operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, civil and criminal penalties, and equitable remedies, including disgorgement or injunctive relief.”
British American Tobacco
Reuters reports as follows regarding the London-based company with shares traded in the U.S.
“Britain has opened a formal investigation into suspicions of corruption at British American Tobacco (BAT) and its subsidiaries, nearly two years after allegations of bribery in Africa first surfaced. The world’s largest international tobacco company said in a statement it intended to cooperate with the investigation but did not provide further details. “The SFO confirms it is investigating suspicions of corruption in the conduct of business by BAT p.l.c., its subsidiaries and associated persons,” Britain’s Serious Fraud Office (SFO) said in a statement on Tuesday. The maker of brands including Dunhill and Lucky Strike said in February last year it had appointed a law firm to investigate allegations of historic misconduct in Africa and that it was liaising with the SFO. BAT said then it was aware of some of the allegations and had looked into them, but was bringing in outside lawyers given the number and nature of the allegations and its zero tolerance of corruption anywhere in the world. The 2016 move came after a November 2015 BBC program described cases of BAT employees bribing officials in East African countries including Rwanda and Burundi in an effort to undermine anti-smoking laws. The BBC cited internal documents provided by whistleblowing former employee Paul Hopkins. Spokeswomen for BAT and the SFO declined to say which countries were covered by the investigation. Earlier this year, BAT said it had created a board subcommittee to monitor matters relating to the investigation between board meetings. It also said it had started a project in 2016 to review and strengthen its global compliance procedures.”
The Wall Street Journal reports regarding the Swiss company with ADRs traded in the U.S.:
“Glencore PLC is under investigation by Canadian regulators looking into more than $100 million in payments a subsidiary made to a company owned by an Israeli businessman who has been accused of bribing Democratic Republic of the Congo officials, said people familiar with the investigation.
The investigation stems from payments that a Canada-based copper-mining company controlled by Glencore and that operates in Congo was expected to make to Congo’s state-run mining company, Gecamines, but instead sent to a Caymans Island company owned by the Israeli businessman, Dan Gertler. Glencore has acknowledged the shift in payments and said it was done at the request of Gecamines.
Canada’s Ontario Securities Commission, the country’s biggest regional securities regulator, is investigating whether the Glencore subsidiary, Katanga Mining, violated rules requiring that companies disclose business done with their own investors, said the people familiar with the investigation. Katanga is listed in Toronto and Mr. Gertler’s company has invested in its business.”
The German company with shares in the U.S. has been under FCPA scrutiny since August 2012 (not that is not a typo). The company recently disclosed:
“The Company has received communications alleging conduct in countries outside the U.S. that may violate the U.S. Foreign Corrupt Practices Act (‘‘FCPA’’) or other anti-bribery laws. The Company’s Supervisory Board, through its Audit and Corporate Governance Committee, has been conducting investigations with the assistance of independent counsel. The Company voluntarily advised the U.S. Securities and Exchange Commission (‘‘SEC’’) and the U.S. Department of Justice (‘‘DOJ’’). The Company’s investigations and dialogue with the SEC and DOJ are ongoing. The Company is cooperating with the government investigations.
The Company has identified and reported to the government, and has taken remedial actions including employee disciplinary actions with respect to, conduct that may result in monetary penalties or other sanctions under the FCPA or other anti-bribery laws. In addition, the Company’s ability to conduct business in certain jurisdictions could be negatively impacted. The Company has recorded in prior periods a non-material accrual for an identified matter. The Company has substantially concluded its investigations and has entered into discussions toward a possible resolution with the government agencies. There is no timetable for a possible resolution. Given the current status of the resolution discussions and remediation activities, the Company cannot reasonably estimate the range of possible loss that may result from identified matters or from the resolution or remediation activities.
The Company continues to implement enhancements to its anti-corruption compliance program, including internal controls related to compliance with international anti-bribery laws. The Company continues to be fully committed to FCPA and other anti-bribery law compliance.”
For the Reading Stack
A solid article from Smith Pachter McWhorter attorneys regarding causation when it comes to SEC disgorgement in FCPA enforcement actions.
“It is important to remember that the SEC does have a burden to show causation in order to obtain disgorgement. Thus, turning back to the FCPA context specifically, causation is clearly not required to prove an FCPA antibribery violation per se. However, that is different from what is required to prove that a defendant’s profits were obtained as a result of the corrupt act and thus are subject to disgorgement.”
FCPA Professor has been highlighting this important issue for years in various posts (see here as well as embedded links).
The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here.
Miller & Chevalier’s FCPA Summer Review is here.
FCPA Institute - Boston (Oct. 3-4)
A unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills through active learning. Learn more, spend less. CLE credit is available.