Has the general increase in Foreign Corrupt Practices Act enforcement over the past decade done anything to deter future FCPA violations? Why in this current era of purported increased FCPA compliance does there seem to be more, not less, FCPA inquiries? Does effective compliance reduce FCPA scrutiny or does effective compliance uncover more FCPA issues? If the latter, does that argue in favor of a compliance defense?
If every company hired FCPA counsel to do a thorough review of its world-wide operations – given the current enforcement theories – would 50% of companies find technical FCPA violations? 75%? 95%? If the answer is any one of those numbers is that evidence of how corrupt business has become or is that evidence of how unhinged FCPA enforcement theories have become?
While pondering the above questions, do recognize that a company disclosing or otherwise being the subject of FCPA scrutiny has become as common as the sun rising and a dog barking (hence the picture).
This post highlights recent disclosures and scrutiny from just the past week involving the following companies: Fairmont Santrol, Platform Speciality Products, Alere, Aegerion Pharmaceuticals and Tabcorp.
“In December 2015, we were notified by the Securities and Exchange Commission (the “SEC”) that the Company was being investigated for possible violations of the FCPA and other securities laws relating to matters concerning certain of our international operations. We had previously retained outside legal counsel to investigate the subject matter of the SEC’s investigation, and at that time, determined that no further action was necessary. We cannot predict what, if any, further action the SEC may take regarding its investigation, and cannot provide an estimate of the potential costs of the SEC’s investigation or any possible fines, penalties or other remedial actions that might result, if any, at this time.”
Platform Speciality Products
“In connection with the implementation of internal controls at Arysta, a newly acquired subsidiary, we discovered certain payments made to third-party agents in connection with Arysta’s government tender business in West Africa which may be illegal or otherwise inappropriate. We have engaged outside counsel and an outside accounting firm to conduct an internal investigation to review the legality of these and other payments made in Arysta’s West Africa tender business, including Arysta’s compliance with the FCPA. We contacted the SEC and the U.S. Department of Justice to voluntarily inform them of this matter and we are fully cooperating with these governmental authorities as the investigation continues and as they review the matter. Although the internal investigation is ongoing, based on the results to date, management does not currently believe that the amount of the payments in question, or any revenue or operating income related to those payments, are material to our business, results of operations, financial condition or liquidity.”
“On March 11, 2016, the Company received a grand jury subpoena from the United States Department of Justice requiring the production of documents relating to, among other things, sales, sales practices and dealings with third-parties (including distributors and foreign governmental officials) in Africa, Asia and Latin America and other matters related to the U.S. Foreign Corrupt Practices Act. The Company is in the process of responding to the subpoena and intends to cooperate with the government’s investigation.”
Previously, in November 2015 Alere disclosed:
“On August 28, 2015, we received a subpoena from the U.S. Securities and Exchange Commission, or SEC, which indicated that it is conducting a formal investigation of Alere. The SEC’s subpoena relates to, among other things, (i) our previously filed restatement and revision to our financial statements, including the accounting for deferred taxes for discontinued operations, as well as our tax strategies and policies and (ii) our sales practices and dealings with third-parties (including distributors and foreign government officials) in Africa relating to sales to government entities.”
“In late 2013, we received a subpoena from the Department of Justice, represented by the U.S. Attorney’s Office in Boston, requesting documents regarding our marketing and sale of JUXTAPID in the U.S., as well as related disclosures. We believe the Department of Justice is seeking to determine whether we, or any of our current or former employees, violated civil and/or criminal laws, including, but not limited to, the securities laws, the Federal False Claims Act, the Food and Drug Cosmetic Act, the anti-Kickback Statute and the FCPA.
In late 2014, we received a subpoena from the SEC requesting certain information related to our sales activities and disclosures related to JUXTAPID. The SEC also has requested documents and information on a number of other topics, including documents related to the investigations by government authorities in Brazil into whether our activities in Brazil violated Brazilian anti-corruption laws, and whether our activities in Brazil violated the U.S. Foreign Corrupt Practices Act. We believe the SEC is seeking to determine whether we, or any of our current or former employees, violated securities laws. The investigation is continuing.
We believe the SEC and the Department of Justice are coordinating with one another concerning their investigations. We have provided a broad range of information to the government in response to their requests, including materials related to our past disclosure statements related to the prevalence of HoFH and other disclosures, our U.S. marketing and promotional practices, and our activities in Brazil. Although we are unable to determine how these investigations will be finally resolved, we believe that it is probable that we will face an enforcement action or enter into a settlement with the government related to these issues. Assuming we face an enforcement action or enter into a settlement with the government, this will have material negative consequences for our business, financial condition, results of operations and/or cash flows. Such an action or settlement may include a variety of potential resolutions, which could include some or all of the following: federal and/or state civil and/or administrative liabilities, federal criminal liability and/or significant fines and/or other penalties against us, or if a settlement is not reached, a criminal charge that could give rise to exclusion from government healthcare programs. We are in discussions with the government in an effort to resolve potential claims arising from these investigations. During the quarter ended December 31, 2015, we recorded a charge of $12 million, representing our current estimate of the minimum amount required to resolve these investigations …”
“[P]aid $200,000 to the family of Cambodian Prime Minister Hun Sen – a transaction that is being examined by Australian and overseas anti-bribery agencies. The $200,000 payment was allegedly made as part of a since abandoned strategy to secure a lucrative online gaming licence in Cambodia, and in the face of internal Tabcorp advice that it may be illegal.”
The $200,000 was channelled via the United States to Cambodia in early 2010 … [and] US anti-corruption authorities responsible for enforcing the Foreign Corrupt Practices Act – which prohibits the United States being used to facilitate possible bribery – identified the payment at least 12 months ago.”