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What You Need To Know From Q2

This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related developments from the second quarter of 2019. (See here [1] for a similar post for Q1 2019).

DOJ Enforcement (Corporate)

The DOJ brought two corporate FCPA enforcement actions in the second quarter. DOJ recovery in these actions was approximately net $219 million.

 TechnipFMC (June 25)

See here [2] for the prior post.

Charges: As to Technip USA a criminal information charging conspiracy to violate the FCPA’s anti-bribery provisions; as to TechnipFMC criminal information charging two counts of conspiracy to violate the FCPA’s anti-bribery provisions.

Resolution Vehicle: As to Technip USA, plea agreement; as to TechnipFMC, deferred prosecution agreement.

Guidelines Range: $282 million – $564 million

Settlement: Net $81.9 million after a credit of $214 million paid to Brazil law enforcement in connection with a related matter.

Origin: The company disclosed that it “received an inquiry from the DOJ.”

Monitor: No

Individuals Charged: No

Walmart (June 20)

See here [3], here [4] and here [5] for prior posts.

Charges: As to Walmart Brasilia, violations of the books and records provisions; as to Walmart none (but reference is made in the NPA to the internal controls provisions).

Resolution Vehicle: As to Walmart Brasilia, plea agreement; as to Walmart NPA

Guidelines Range: Not set forth in the NPA, but it does state: “Walmart agreed to pay a total monetary penalty in the amount of approximately $138 million which reflects a discount of 25% off of the bottom of the U.S. Sentencing Guidelines fine range for the portion of the penalty applicable to conduct in Brazil, China, and India, and 20% off of the bottom of the U.S. Sentencing Guidelines fine range for the portion of the penalty applicable to conduct in Mexico.”

Settlement: $138 million.

Origin: The NPA states: “The Defendant did not receive voluntary disclosure credit because it did not voluntarily and timely disclose, through the Parent Company, to the Fraud Section and the Office the conduct … Although the Parent Company disclosed the conduct related to Brazil prior to the Fraud Section or the Office learning of that conduct, such disclosure was after the Fraud Section and the Office had already begun investigating the Parent Company relating to conduct in another country.” The SEC order states: ““Walmart made an initial self-disclosure of the potential FCPA violations in Mexico to the Commission’s staff in November 2011, after it retained outside counsel to conduct an internal investigation under the direction of the Audit Committee of Walmart’s Board of Directors. Subsequently, Walmart voluntarily expanded its investigation and disclosed its findings concerning Brazil, China, and India to the Commission staff, although such disclosure was after the Commission staff had already begun investigating the Company related to conduct in Mexico.” Walmart’s 8-K filing [6]on the day of the enforcement action states: “As previously reported, the Audit Committee of the Board of Directors (the “Audit Committee”) of Walmart Inc. (the “Company”) conducted an internal investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) and other alleged crimes or misconduct in connection with the Company’s foreign subsidiaries, including Wal-Mart de México, S.A.B. de C.V., and whether prior allegations of such violations and/or misconduct were appropriately handled by the Company. In November 2011, the Company voluntarily disclosed that investigative activity to the U.S. Department of Justice (the “DOJ”) and the Securities and Exchange Commission (the “SEC”), with the DOJ and the SEC opening related investigations of the Company. The Audit Committee and the Company also investigated allegations of FCPA violations in foreign subsidiaries in Brazil, India, and China, and engaged outside counsel from a number of law firms and other advisors who assisted the investigation of all of these matters.”

Monitor: Yes

Individuals Charged: No

DOJ Enforcement (Individual)

The DOJ brought or announced one core individual action in the second quarter against two individuals.

As highlighted here [7], in yet another FCPA and related enforcement action concerning conduct in Venezuela, the DOJ charged Jesus Ramon Veroes and Luis Alberto Chacin Haddad with conspiracy to violate the FCPA’s anti-bribery provisions in connection with obtaining various contracts with Corporacion Electric Nacional S.A. (Corpoelec), Venezuela’s state-owned electric company.

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SEC Enforcement (Corporate)

The SEC brought two corporate FCPA enforcement actions in the second quarter. SEC recovery in these actions was approximately $149 million.

Walmart (June 20)

See here [3]here [4] and here [5] for prior posts

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $144 million in disgorgement prejudgment interest

Origin: The DOJ NPA states: “The Defendant did not receive voluntary disclosure credit because it did not voluntarily and timely disclose, through the Parent Company, to the Fraud Section and the Office the conduct … Although the Parent Company disclosed the conduct related to Brazil prior to the Fraud Section or the Office learning of that conduct, such disclosure was after the Fraud Section and the Office had already begun investigating the Parent Company relating to conduct in another country.” The SEC order states: ““Walmart made an initial self-disclosure of the potential FCPA violations in Mexico to the Commission’s staff in November 2011, after it retained outside counsel to conduct an internal investigation under the direction of the Audit Committee of Walmart’s Board of Directors. Subsequently, Walmart voluntarily expanded its investigation and disclosed its findings concerning Brazil, China, and India to the Commission staff, although such disclosure was after the Commission staff had already begun investigating the Company related to conduct in Mexico.” Walmart’s 8-K filing  [6]on the day of the enforcement action states: “As previously reported, the Audit Committee of the Board of Directors (the “Audit Committee”) of Walmart Inc. (the “Company”) conducted an internal investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) and other alleged crimes or misconduct in connection with the Company’s foreign subsidiaries, including Wal-Mart de México, S.A.B. de C.V., and whether prior allegations of such violations and/or misconduct were appropriately handled by the Company. In November 2011, the Company voluntarily disclosed that investigative activity to the U.S. Department of Justice (the “DOJ”) and the Securities and Exchange Commission (the “SEC”), with the DOJ and the SEC opening related investigations of the Company. The Audit Committee and the Company also investigated allegations of FCPA violations in foreign subsidiaries in Brazil, India, and China, and engaged outside counsel from a number of law firms and other advisors who assisted the investigation of all of these matters.”

Individuals Charged: No

Related DOJ Enforcement Action: Yes

Telefonica Brasil (June 20)

See here [9] and here [10] for prior posts.

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $4.125 million civil penalty.

Origin: The company previously disclosed: “The Company is currently conducting an internal investigation regarding possible violations of applicable anticorruption laws. The Company has been in contact with governmental authorities about this matter and intends to cooperate with those authorities as the investigation continues. It is not possible at this time to predict the scope or duration of this matter or its likely outcome.” The SEC order states: “Telefônica Brasil’s cooperation included timely sharing of facts developed during the course of an internal investigation by its board and voluntarily producing and translating documents.”

Individuals Charged: No

Related DOJ Enforcement Action: No

SEC Enforcement (Individual)

The SEC did not bring any additional enforcement actions in the second quarter.

Other Developments or Items of Interest

As highlighted here [11], in the long-standing Firtash et al enforcement action concerning alleged bribery in connection with Indian licenses, a judge recently denied a defense motion to dismiss and in doing so disagreed with the Second Circuit’s decision in Hoskins.

As highlighted here [12], the DOJ secured FCPA and related convictions of Joseph Baptiste and Roger Boncy in connection with a Haitian bribery scheme.

As highlighted here [13], in a recent decision a federal court judge stated that she was “deeply troubled” by the DOJ’s outsourcing of investigations.

As highlighted here [14], DOJ Principal Deputy Associate Attorney General Claire McCusker Murray recently stated that “subregulatory guidance isn’t law – it’s just paper.

This post [15] discusses how the DOJ appears to be lost when it comes to resolving alleged FCPA violations by business organizations.

As highlighted in this post [16] , the DOJ released a guidance document titled “The Evaluation of Corporate Compliance Programs.” While not FCPA specific, the guidance is FCPA relevant as it is meant to assist prosecutors in making decisions for purposes of determining the appropriate form of any resolution or prosecution, money penalty, and compliance obligations contained in any corporate criminal resolution. (See here [17] for an additional post).

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Connect [18]