Scrutiny alerts and updates, facts not narratives please, wrong, and silly. It’s all here in the Friday roundup.
Scrutiny Alerts and Updates
McKinsey & Co.
BNY Mellon, Qualcomm and JPMorgan were all FCPA enforcement actions concerning alleged improper internship and hiring practices. Could McKinsey & Co. eventually added to this list?
The Wall Street Journal reports:
“McKinsey & Co. has been paid millions of dollars in recent years advising Saudi Arabia’s government on an ambitious economic transformation. Over the same period, the global consultancy has hired at least eight relatives of high-ranking Saudi officials.
The consulting company has employed, among others, at least two children of the man who serves as the Saudi energy minister and head of the state oil company, a son of the finance minister and a son of the CEO of government-controlled Saudi Arabian Mining Co.
“McKinsey is a meritocracy. We hire exceptional people and are confident in the robust policies and practices that underpin our recruiting and development both globally and locally,” the company said. The Wall Street Journal uncovered no allegations by U.S. or Saudi officials of wrongdoing by McKinsey in its Saudi hiring.
The company, a diversified industrial company providing a range of onsite services and engineered products to the global steel, energy and railway sectors, recently disclosed:
“The Company recently began an internal investigation, with the assistance of outside counsel, after it became aware of allegations involving an employee and an agent of the Harsco Rail subsidiary in China (“Harsco Rail China”). During this investigation, which remains ongoing, the Company learned about certain payments that potentially violate the Foreign Corrupt Practices Act. Revenues attributed to Harsco Rail China were approximately 2% of the Company’s consolidated revenues for each of the past two years and through the third quarter of this year.
The Company has voluntarily self-reported its initial findings to the Securities and Exchange Commission (the “SEC”) and the U.S. Department of Justice (the “DOJ”) and intends to fully cooperate with these agencies in their review. Based on information known to date, we believe the amounts of the potential improper payments are not material to our consolidated financial statements. Any determination that our operations or activities were not in compliance with existing laws or regulations could result in the imposition of fines and penalties. No provision with respect to this matter has been made in the Company’s consolidated financial statements. At this time, the Company cannot predict the outcome or impact of its investigation or the reviews by the SEC and the DOJ. However, based on information available at this time, we do not believe any potential liability would be material to our consolidated financial position, although an amount recorded, if any, could be material to the results of operations for the period in which it may be recorded.”
The French bank recently disclosed:
“In April 2014, the DOJ served a subpoena requesting that Société Générale produce documents relating to potential violations of the Foreign Corrupt Practices Act (“FCPA”) in connection with certain transactions involving Libyan counterparties, including the Libyan Investment Authority (“LIA”). In October 2016, the Securities and Exchange Commission (“SEC,” together with the DOJ, “US Authorities”) issued a subpoena to Société Générale and its U.S. broker-dealer requesting substantially the same information. Société Générale is cooperating with the US Authorities in connection with this matter. Société Générale is in discussions with them in order to reach an agreement to resolve this matter. Any such agreement would include a requirement that Société Générale pay a monetary fine and may in addition impose other sanctions. It is possible, without it being certain, that the pending discussions lead to an agreement in the next weeks or months. It is furthermore impossible to determine with certainty the amount of the fine or the other sanctions that may be imposed on Société Générale. In September and October 2017, Societe Generale also received two judicial requests to produce documents regarding its relations with the LIA in the scope of a preliminary investigation opened by the French National Financial Prosecutor’s office regarding possible violations of French anticorruption laws. The requested documents are being communicated to the French authorities.”
Horizontal Well Drillers
CNBC raises questions about the Oklahoma company’s business dealings in Venezuela.
Facts Not Narratives Please
On Oct. 12th, I spent approximately 15 minutes on the phone with the NPR reporter and directed him to the following facts.
“In the first 8 months of the Trump administration there have been more DOJ corporate FCPA enforcement actions than certain prior years in the Obama administration. In the first 8 months of the Trump administration there have been 5 corporate FCPA enforcement actions with over $535 million in aggregate FCPA settlement amounts. This aggregate settlement amount exceeds aggregate FCPA settlement amounts secured during three years of the Obama administration: 2015, 2012, and 2011 (see here for more information). True, the bulk of this approximate $535 million amount comes from one enforcement action, but this dynamic has always been present in FCPA enforcement statistics regardless of administration.”
Apparently these facts did not fit the narrative that NPR wanted to create in this broadcast earlier this week titled “Trump Used to Disparage an Anti-Bribery Law; Will He Enforce It Now?
As you will see, the NPR report is largely based on a New York Law Journal article that is highly misleading. You can check for yourself the political donations of the lead author of that article here.
Funny that, as highlighted in this recent post, this week the DOj brought two FCPA enforcement actions involving 7 individuals. Will Trump enforce the FCPA? I think we can now move on to other topics please.
Fox News gets it wrong when it states:
“In 2009, Louisiana Representative William J. Jefferson was charged with violating the Foreign Corrupt Practices Act (which was originally designed to prevent U.S. corporations from engaging in foreign bribery) for bribes he solicited from third-world governments to promote their business interests in the U.S.”
Jefferson was indeed criminally charged and convicted for soliciting bribes in his capacity as a U.S. politician, but these were not FCPA charges.
Jefferson was indeed criminally charged for FCPA violations, but not in his role as a U.S. politician. Rather, the FCPA charge was principally based on allegations that Jefferson attempted to bribe Nigerian officials (including the former Nigerian Vice President) to assist himself and others obtain or retain business for a Nigerian telecommunications joint venture.
See here to learn more.
This recent post from the FCPA Blog which asks “is the SEC targeting foreign companies” is rather silly in that it demonstrates a poor understanding of the origins of the many FCPA enforcement actions against foreign companies.
The vast majority of those enforcement actions originated in foreign law enforcement investigations / foreign media reports that the U.S. then “hopped” on to, not exactly “targeting.”
For why many foreign companies are in the top ten list of FCPA settlement amounts, see this post (info current when published).
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