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What You Need To Know From Q3

This post provides a summary of FCPA enforcement actions and FCPA related events from the third quarter of 2012.  See here [1] for a similar post from Q1 and here [2] for Q2.  For a similar post regarding Q3, see here [3] from the FCPA Blog.

DOJ Enforcement

The DOJ resolved 4 corporate FCPA enforcement action in the second quarter.  DOJ recovery in these enforcement action was approximately $32.9 million.   All 4 enforcement actions were resolved via a deferred prosecution agreement (2) or a non-prosecution agreement (2).  (Note the Tyco enforcement action involved an NPA as to Tyco and a plea agreement as to an indirect subsidiary).  At present, none of the enforcement actions have resulted in any individual charges against company employees.

DOJ statistics through Q3 are as follows.

9 core corporate enforcement actions resolved.

$142.2 million in total fines and penalties recovered.

All 9 corporate enforcement actions have been resolved with either a DPA or NPA. (Note the Tyco clarification above).

At present, none of the corporate enforcement actions have resulted in any individual charges against company employees.

Tyco International (September 24th)

See here [4] for the prior post.

Charges:  Tyco Valves & Controls Middle East Inc. – conspiracy to violate the FCPA’s anti-bribery provisions, Tyco International – none.

Resolution Vehicle: Criminal information against Tyco Valves & Controls Middle East Inc. resolved through a plea agreement and a non-prosecution agreement (three year term) as to Tyco International.

Guidelines Range:  As to Tyco Valves & Controls $2.1 million – $4.2 million.  As to Tyco International, not set forth in the NPA.

Penalty:  Tyco agreed to pay a $13.68 million penalty (the $2.1 million penalty Tyco Valves & Controls agreed to pay pursuant to the plea agreement is included in this figure).

Disclosure:  Voluntary disclosure.

Monitor: No.

Individuals Charged: No.

Pfizer (August 7th)

See here [5] for the prior post.

Charges:  Conspiracy to violate the FCPA’s anti-bribery and books and records provisions and a substantive FCPA anti-bribery violation.

Resolution Vehicle: Criminal information against Pfizer HCP resolved through a deferred prosecution agreement (two year term).

Guidelines Range: $22.8 – $45.6 million.

Penalty: $15 million (34% below the minimum amount suggested by the Guidelines).

Disclosure: Voluntary disclosure.

Monitor: No.

Individuals Charged: No.

NORDAM Group (July 17th)

See here [6] for the prior post.

Charges: None.

Resolution Vehicle: Non-prosecution agreement (three year term).

Guidelines Range: Not set forth in the NPA.

Penalty: $2 million.

Disclosure: Voluntary disclosure.

Monitor: No.

Individuals Charged: No.

Orthofix International (July 10th)

See here [7] for the prior post.

Charges: FCPA internal controls violation.

Resolution Vehicle: Criminal information resolved through a deferred prosecution agreement (three year term).

Guidelines Range: $2.22 – $4.44 million.

Penalty: $2.2 million.

Disclosure: Voluntary disclosure.

Monitor: No.

Individuals Charged: No.

SEC Enforcement

The SEC resolved 4 corporate FCPA enforcement actions in the third quarter.  Total recovery in these enforcement actions was approximately $65.4  million.  At present, none of the enforcement actions have resulted in any individual charges against company employees.

SEC statistics through Q3 are as follows.

6 core corporate enforcement actions resolved.

$76.3 million in total fines and penalties recovered.

At present, none of the corporate enforcement actions have resulted in any individual charges against company employees.

Tyco International (September 24th)

See here [4] for the prior post.

Charges:  Settled civil complaint charging violations of the FCPA’s anti-bribery provisions, and books and records and internal controls provisions.

Settlement:  Approximately $13.1 million ($10.5 million in disgorgement and approximately $2.6 million in prejudgment interest).

Disclosure: Voluntary disclosure.

Individuals Charged:  No.

Related DOJ Enforcement Action:  Yes.

Oracle  (August 16th)

See here [8] for the prior post.

Charges: Settled civil complaint charging violations of the FCPA’s books and records and internal controls provisions.

Settlement: $2 million civil penalty.

Disclosure: Voluntary disclosure.

Individuals Charged: No.

Related DOJ Enforcement Action: No.

Pfizer (August 7th)

See here [5] for the prior post.

Charges: Settled civil complaint against Pfizer charging violations of the FCPA’s books and records and internal controls provisions.  Settled civil complaint against Wyeth charging violations of the FCPA’s books and records and internal controls provisions.

Settlement: As to Pfizer, approximately $26.3 million ($16 million in disgorgement and $10.3 in prejudgment interest).  As to Wyeth, approximately $18.8 million ($17.2 million in disgorgement and $1.6 million in prejudgment interest).

Disclosure: Voluntary disclosure.

Individuals Charged: No.

Related DOJ Enforcement Action: Yes as to Pfizer, no as to Wyeth.

Orthofix International (July 10th)

See here [7] for the prior post.

Charges: Settled civil complaint charging violations of the FCPA’s books and records and internal controls provisions.

Settlement: $5.2 million (approximately $5 million in disgorgement and approximately $240,000 in prejudgment interest).

Disclosure: Voluntary disclosure.

Individuals Charged: No.

Related DOJ Enforcement Action:  Yes.

Other Developments

Breuer Defends NPAs / DPAs

As indicated by the above Q3 statistics, the vast majority of corporate FCPA enforcement actions are resolved via NPAs or DPAs.  As noted in this [9]recent post, Assistant Attorney General Lanny Breuer recently defended the DOJ’s frequent use of such alternative resolution vehicles.  In short, Breuer’s defense of DPAs and NPAs was unconvincing.  The Assistant Attorney General is clearly troubled by traditional notions of corporate criminal liability.  However, rather than seek substantive solutions to this issue, Breuer instead defended an alternate reality that is equally problematic.  This alternative reality benefits the DOJ, benefits the private bar, but harms other stakeholders and undermines the rule of the law and justice.

Bistrong Sentenced

As noted in this [10] post, over the summer the DOJ suffered a final embarrassing setback in the Africa Sting cases as Judge Leon rejected the DOJ’s recommendation of no jail time for Richard Bistrong and sentenced the conductor of the manufactured sting to 18 months in prison followed by three years of supervised release.  As noted in yesterday’s post (here), Bistrong recently reported to federal prison.

Deep Within Section 1504

As noted in this [11] post, in late August, the SEC adopted final rules implementing Section 1504 of Dodd-Frank, the so-called Resource Extraction Disclosure Provisions.  Deep within the 232 pages of Section 1504 SEC final rules, the SEC adopted an FCPA reform proposal advanced by the Chamber of Commerce as well as contradicted an enforcement theory at issue in several of its prior FCPA actions.  Specifically, the SEC concluded in its Section 1504 final rules that a company owned by a foreign government is a company that is at least majority-owned by a foreign government.  With this conclusion, he SEC will be hard pressed to allege in future FCPA enforcement actions that an entity with less than 50% foreign government ownership or control is an instrumentality of a foreign government and that its employees are “foreign officials” under the FCPA.  This is assuming of course that the SEC cares about intellectual honesty and consistency.

Looking ahead to the fourth quarter, the DOJ’s long promise of FCPA guidance will likely be issued (perhaps this week), briefing in the historic 11th circuit “foreign official” appeal will soon be complete, and oral arguments (as well as perhaps a decision) will be forthcoming in the Jackson / Ruehlen challenge.