This previous post  went in-depth into the recent Foreign Corrupt Practices Act enforcement action against Russia-based MTS for bribing alleged Uzbekistan telecom officials. As highlighted in this prior post , the overall $850 million FCPA settlement amount is the largest in history.
This post continues the analysis by highlighting additional issues to consider.
MTS and the other companies that resolved related FCPA enforcement actions (VimpelCom and Telia) were under FCPA scrutiny since approximately 2014. Thus from start to finish, MTS’s scrutiny lasted approximately five years. At the risk of sounding like a broken record, if the DOJ and SEC want the public to have confidence in their FCPA enforcement programs, FCPA scrutiny must be resolved much faster. This is particularly true, given the following statement from the DOJ regarding MTS:
“the Company ultimately provided to the Fraud Section and the Office all relevant facts known to it, including information about the individuals involved in the conduct described in the Statement of Facts and fully cooperated as that term is used in the Sentencing Guidelines, including by voluntarily providing documents located outside the United States, providing summaries of the Company’s internal investigation, translating foreign-language documents, and providing counsel for certain witnesses.”
That’s a Bummer
As stated by the DOJ:
“the Uzbek government expropriated the Company’s telecommunications assets in Uzbekistan, resulting in no realized pecuniary gain to the Company as a result of the misconduct ….”.
This action demonstrates that once again, even unsuccessful bribery schemes are actionable under the FCPA.
Largest Ever FCPA Civil Penalty
No doubt due to the above, the SEC enforcement action did not include a disgorgement amount (as if often the case in SEC corporate FCPA enforcement actions). Rather the $100 million settlement amount consisted entirely of a $100 million civil penalty. This is believed to be the largest ever civil penalty assessed in an SEC FCPA enforcement action eclipsing the $25 million civil penalty assessed in the BHP Billiton enforcement action.
The MTS enforcement action is believed to be the first ever against a Russian issuer.
Maybe, just maybe this will silence those who brought Russia hysteria to the FCPA context by complaining that there has never been a Trump administration enforcement action against a Russian company. (See here ).
No Set Off For Related Foreign Law Enforcement Action
As mentioned in the DOJ’s release, the MTS enforcement action was the “third installment in a trilogy of cases arising from an almost $1 billion bribery scheme that reached the highest echelons of the Uzbekistan government and was orchestrated by some of the largest telecommunications companies in the world.”
Given deductions and credits for related foreign law enforcement actions, the net FCPA settlement amount in the VimpelCom matter was “merely” approximately $398 million and the net FCPA settlement amount in the Telia matter was “merely” $483 million.
There was no set off for a related Russia law enforcement action in the MTS matter, thus the larger (and indeed record-setting) FCPA settlement amount.
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