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Friday Roundup

Consistently damaged, across the pond, scrutiny alerts and updates, and for the reading stack. It’s all here in the Friday roundup.

“Consistently Damaged”

In this 12 minute video [1], Neil Bruce (CEO and President of SNC-Lavalin) describes his frustration for how the company is not being offered a remediation agreement (Canada’s term for a deferred prosecution agreement) in connection with its long-standing scrutiny. (See here [2] and here [3] for prior posts).

During the interview Bruce also explains how the company is being “consistently damaged” because  of its scrutiny, how competitors are using the scrutiny “mercilessly” against the company, and how the company has lost out on $5 billion dollars worth of business.

More broadly, the video is an interesting case study on the ripple effects of scrutiny, the long-time periods associated with scrutiny, and remedial actions companies under scrutiny often take.

Across the Pond

The U.K. Serious Fraud Office recently announced [4]:

“Nicholas Reynolds [a U.K. national and former Global Sales Director for Alstom Power Ltd.’s Boiler Retrofits Unit] was found guilty of conspiracy … following an extensive investigation and prosecution brought by the Serious Fraud Office.

The conviction brings to four the number of total convictions in relation to this conspiracy to bribe officials in a Lithuanian power station and senior Lithuanian politicians in order to win two contracts worth €240 million. These individuals falsified records to avoid checks in place to prevent bribery and between them, the Alstom companies paid more than €5 million in bribes to secure the contracts.”

Lisa Osofsky (Director of the Serious Fraud Office) stated:

“The culture of corruption evident within the Alstom Group was widespread. Their illicit activities to win lucrative contracts were calculated and sustained, undermining legitimate business and public trust. These convictions were a result of a truly global investigation and I thank our case team for their effort and persistence in bringing the individuals and companies involved to justice.”

As stated in the release, the Reynolds conviction follows:

“a guilty plea from former Business Development Manager at Alstom Power Ltd John Venskus on 2 October 2017 and former Regional Sales Director at Alstom Power Sweden AB Göran Wikström on 22 June 2018 on the same charge. Alstom Power Ltd entered a guilty plea to conspiracy to corrupt on 10 May 2016.”

“Venskus was sentenced to 3 years and 6 months imprisonment on 4 May 2018. Wikström was sentenced to 2 years and 7 months imprisonment on 9 July 2018. He was also ordered to pay £40,000 in costs. Alstom Power Ltd was ordered to pay a total of £18,038,000 which included: a fine of £6,375,000; compensation to the Lithuanian government of £10,963,000; and prosecution costs of £700,000.”

In the same release, the SFO also announced:

“Alstom Network UK Ltd was found guilty of one count of conspiracy to corrupt on 10 April 2018 for making corrupt payments to win a tram and infrastructure contract in Tunisia. In return for its work in securing the €85 million contract, Alstom Network UK Ltd paid €2.4 million to a company called Construction et Gestion Nevco Inc, which Alstom Network UK Ltd itself acknowledged was a front for corruption when it decided not to make a final payment of €240,000 in its contract. Staff within the Alstom Group helped the consultants produce paperwork to satisfy internal compliance checks, cobbling together ‘evidence’ of the services provided, which at best were of a nominal nature because the company was, in reality, just a conduit for bribes. Graham Hill, Robert Hallett and Alstom Network UK Ltd were acquitted of other charges in this case, relating to alleged corruption to win transport contracts in India and Poland, on 10 April 2018. Alstom Network UK Ltd along with Michael Anderson, Terence Watson and Jean-Daniel Lainé were acquitted of a charge in a linked investigation into alleged corruption relating to a Budapest Metro rolling stock contract.”

[5]

As the above information makes clear, the SFO’s Alstom prosecutions were hardly a resounding success. Indeed, in this Law360 article [6] WilmerHale attorney Christopher David — who represented Lainé, Alstom’s former senior vice president of ethics and compliance — said that the Alstom trials have been a mixed bag for the SFO, and might encourage companies to risk court rather than reach a settlement with the agency.

“While some trials have resulted in convictions, the acquittal of a number of senior executives calls into question the SFO’s approach to the prosecution of corporate crime. Without the conviction of a sufficiently senior executive, it can be extremely difficult to establish liability for a company.”

As highlighted here [7] in 2014 Alstom resolved an FCPA enforcement action concerning conduct in Indonesia, Saudi Arabia, Egypt, the Bahamas, and Taiwan. As highlighted here [8] in 2013, the DOJ announced FCPA charges against various current and former Alstom executives concerning conduct in Indonesia.

Scrutiny Alerts and Updates

Airbus

As highlighted here [9]:

“Airbus, the European aerospace and defence group, said it was co-operating with US authorities following a report that the Department of Justice had officially opened an investigation into alleged corruption.  Shares in the group fell as much as 6 per cent on Thursday morning after French newspaper Le Monde reported that the DoJ had informed Airbus in the summer about the investigation, which would come on top of ongoing probes by the UK’s Serious Fraud Office and France’s Parquet National Financier into the alleged use of agents internationally. A spokesperson for Airbus declined to comment on the potential investigation but noted that it had previously disclosed that the US authorities had “requested information relating to conduct forming part of the SFO/PNF investigation that could fall within US jurisdiction”.  “Here, too, Airbus is co-operating with the US authorities in close co-ordination with the SFO and PNF,” the spokesperson added.”

Glencore

Glencore has been under scrutiny in recent years by Canadian, U.S. and U.K. law enforcement concerning its business practices in the Democratic Republic of Congo, among other places. According to this Wall Street Journal article [10]:

“A Glencore PLC-controlled mining company and some of its current and former directors and executives have agreed to pay more than $22 million to settle Canadian allegations that they hid the risks of doing business with a controversial Israeli businessman closely linked to Congolese President Joseph Kabila, according to a person familiar with the matter.

The expected settlement between the Ontario Securities Commission, Canada’s biggest stock-market regulator, and Toronto-listed Katanga Mining is related to the company’s business activities in Congo between 2014 and 2016, the person said.

The regulator is expected to name several of Katanga’s current and former executives and directors in the settlement and will focus, at least in part, on Katanga’s longstanding ties with Dan Gertler, the Israeli businessman who first invested in Katanga alongside Glencore in 2008, the person said.

The OSC is also expected to allege that Katanga lacked proper internal financial controls, leading it to overstate copper production and understate mining costs, potentially inflating the miner’s performance, according to the person familiar with the matter.”

As highlighted here [11], Gertler was a middleman involved in the Och-Ziff FCPA enforcement action as well.

Acacia Mining

As highlighted here [12],

“The U.K.’s Serious Fraud Office is investigating Acacia Mining an Africa-focused miner that is majority owned by gold giant Barrick Gold, over allegations of corruption in Tanzania, according to people familiar with the matter.

The interest of British law enforcement in Acacia marks a heightening of scrutiny over the company—and another headache for Canada’s Barrick, the world’s largest gold producer by output. The British investigations into Acacia focus around accusations that employees of the company, which was called African Barrick until 2014, bribed Tanzanian government officials and consultants, according to the people familiar with the matter.”

Barrick Gold, a Toronto-based company, has shares traded on the New York Stock Exchange.

Goldman Sachs

As highlighted here:

“Malaysian authorities filed criminal charges against Goldman Sachs …, alleging the Wall Street bank was involved in a conspiracy to launder $2.7 billion from an investment fund.

The charges escalate the legal troubles facing Goldman Sachs. U.S. authorities have already filed criminal charges against former Goldman Sachs employees [see here [13] for the prior post], but this is the first time the New York bank has been directly blamed for wrongdoing.

“Having held themselves out as the pre-eminent global adviser … the highest standards are expected of Goldman Sachs. They have fallen far short of any standard,” Malaysian Attorney General Tommy Thomas said in a statement [14].

Goldman Sachs has said it is cooperating with the investigations and denied wrongdoing. “We believe these charges are misdirected and we will vigorously defend them and look forward to the opportunity to present our case,” the bank said in a statement.”

Why can U.S. companies “vigorously defend” against foreign criminal charges, yet generally roll over and play dead when the subject of U.S. criminal charges?

For the Reading Stack

The recent edition of the always informative FCPA Update by Debevoise & Plimpton is here [15] with articles on M&A transactions and the recent tweak in DOJ policy regarding corporate cooperation (see here [16] for the prior post).

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