October 26, 2016
Today’s post is from Mike Madigan, Paul Calli, and Chas Short who represented individuals in the DOJ’s failed Africa Sting Foreign Corrupt Practices Act enforcement action.
Convicted federal felon Richard Bistrong is speaking at an FCPA Blog conference today about his role in the failed Africa Sting prosecution. In Bistrong’s tout about the occasion, he said “it will be the first time I’ve publicly discussed my role in the Sting” and he dubbed it “one more cross examination about the Africa Sting.”
You may remember the Africa Sting case, in which the government manufactured a fake “crime” with Bistrong at the center and every accused person was vindicated. The truth won out; Bistrong and his FBI puppeteers were unsuccessful.
We won’t be paying money to attend the FCPA Blog conference to hear Bistrong have “one more cross examination.”
We’re familiar with the real cross examination. We were there.
In this post, we share our observations regarding Bistrong’s real cross examination and highlight various facts from information and records in the public domain.
October 25, 2016
Yesterday, the DOJ and SEC announced resolution of a Foreign Corrupt Practices Act enforcement action against Embraer, a Brazil-based aircraft manufacturer with American Depositary Shares listed on the New York Stock Exchange.
According to the DOJ and SEC, Embraer engaged in bribery schemes between 2008 through 2011 in the Dominican Republic, Saudi Arabia, and Mozambique in which the company approved bribe payments, through various third-parties, to various alleged “foreign officials.” According to the DOJ and SEC, Embraer’s wholly-owned U.S. subsidiary was active in the bribery schemes including by making payments from its New York based bank account. In addition, the enforcement action also involved improper conduct in India between 2005 and 2009. In total, the government alleges that Embraer made approximately $84 million as a result of the improper conduct.
The enforcement action involved a DOJ component in which the company agreed to pay a criminal penalty of approximately $107.3 million and an SEC component in which the company agreed to pay $83.8 million in disgorgement and $14.4 million in prejudgment interest. The SEC agreed to credit a disgorgement amount that Embraer agreed to pay to Brazilian authorities and this filing suggests that disgorgement amount is approximately $18.6 million. Thus, the net FCPA settlement amount was approximately $187 million.
This post goes in-depth into the enforcement action by summarizing the approximate 115 pages of resolution documents.
October 24, 2016
Last week the International Organization for Standardization (ISO) released ISO 37001 anti-bribery management systems – requirements with guidance for use. (See here for ISO’s release and here for a summary document. To obtain the actual document you have to pay for it which I regret that I did).
One’s view of ISO 37001 likely depends on one’s background, experience and motivation.
If you are familiar with the numerous sources of best practices in the anti-bribery space, then ISO 37001 is a complete yawner, indeed a disappointment as several best practices are not even captured in the purported best practices document.
If you are not familiar with the numerous sources of best practices in the anti-bribery space, and/or you are seeking to market your compliance practice, then ISO 37001 is probably a big deal.
October 21, 2016
The above headline may be a bit confusing, but it is instructive as to the basic point that the Foreign Corrupt Practices Act has always been a law much broader than its name suggests because of its books and records and internal controls provisions.
These provisions, applicable to issuers, are among the most generic substantive legal provisions one can find and the fact is most FCPA enforcement actions (using that term in the most technical sense) do not even involve foreign bribery.
Case in point is yesterday’s SEC enforcement action finding that FMC Technologies violated the FCPA’s books and records and internal controls provisions when it overstated profits in one of its business segments.
The name of this company might ring a bell because earlier this year FMC Technologies disclosed FCPA scrutiny of the more traditional type.
October 20, 2016
Lennox International is involved in the heating, air conditioning, and refrigeration markets.
The question needs to be asked: what made the company so hot as to recently disclose to the DOJ and SEC an investigation into a $475 payment in Russia to release a shipment of goods being held by customs officials?
The disclosure is arguably one of the most absurd FCPA disclosures ever.
There is of course no legal obligation to voluntarily disclose, something even the DOJ acknowledges in its April 2016 FCPA Pilot Program. But then again, returning to an issue first highlighted in this 2009, voluntary disclosure is the fuel that feeds FCPA enforcement and is extremely lucrative for FCPA Inc. Indeed, who can forget the words of the former DOJ Fraud Section Chief in this Wall Street Journal article “if you get two of these [FCPA investigations] a year as a partner, you’re pretty much set.”
Lennox’s decision to disclose was presumably a business decision made by the board of directors or audit committee based on the advise of FCPA counsel. If FCPA counsel did indeed advise company leaders to disclose, that advise needs to be seriously questioned.