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The Origins Of 2019 Corporate Enforcement Actions

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This recent post compared corporate FCPA enforcement actions in 2019 to prior years. However, before a Foreign Corrupt Practices Act enforcement action is announced, scrutiny must first arise.

This post highlights the origins of the 14 core corporate enforcement actions in 2019. (See here for a similar post highlighting the origins of 2018 corporate enforcement actions; here for 2017 corporate enforcement actions and here for 2016 corporate enforcement actions).

As highlighted in the post, like prior years, 2019 corporate enforcement actions originated in a variety of ways from voluntary disclosures, to pro-active government investigations and industry sweeps, to foreign law enforcement investigations and foreign media reporting.

Voluntary Disclosures (7)

  • Cognizant Technology Solutions
  • Fresenius
  • Walmart. 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.” However, 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.” Likewise, Walmart’s 8-K filing on the day of the enforcement action stated: “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.” (Emphasis added).
  • Telefonica Brasil. 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.”
  • Juniper Networks. The company’s blog post announcing the enforcement action stated that the company “entered into an administrative settlement with the SEC that resolves an internal and government investigation with respect to matters involving the FCPA that Juniper Networks self-reported.” (Emphasis added).
  • Quad Graphics
  • Barclays

Pro-Active Government Investigation / Subpoena (3)

  • TechnipFMC. The company disclosed that it “received an inquiry from the DOJ.”
  • Westport Fuel Systems.
  • Ericsson

Foreign Media Reporting / Foreign Law Enforcement Investigation (2)

  • MTS
  • Samsung Heavy Industries

Industry Sweep (1)

  • Deutsche Bank. Likely industry sweep after JPMorgan became the subject of FCPA scrutiny.

Unclear (1)

  • Microsoft. Unclear from the resolution documents, but not a voluntary disclosure. As stated by the DOJ: “MS Hungary did not receive voluntary disclosure credit because it did not voluntarily and timely disclose to the Fraud Section and the Office the conduct described in the Statement of Facts.”

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