DOJ Releases Two So-Called “Declination” Letters, Yet “Pursuant To” The Letters, HMT LLC And NCH Corp. Agree To Disgorge $2.7 Million And $335,000
Just when you think you’ve seen it all in connection with Foreign Corrupt Practices Act enforcement, along comes yesterday’s development.
In an e-mail to media, the DOJ stated that it sent letters to “counsel for HMT LLC and NCH Corporation outlining the department’s decision to close its inquiry into potential FCPA violations.”
But, and this is a big but, “pursuant to” the letters, HMT agreed to disgorge $2,719,412 “which represents the profit to HMT from the illegally obtained sales in Venezuela and China” and NCH Corp. agreed to disgorge $335,342 “which represents the profit to NCH from the illegally obtained sales in China.”
SEC Brings Historic FCPA Enforcement Action Against Daniel Och (CEO And Chairman Of Och-Ziff) and Joel Frank (CFO)
In connection with the $412 million Foreign Corrupt Practices Act enforcement action against Och-Ziff (the 4th largest of all-time – stay tuned for additional coverage as original source documents become available), the SEC also found that Daniel Och (CEO and Chairman of Och-Ziff – pictured) was a cause of certain of the company’s FCPA books and records violations and that Joel Frank (CFO) was a cause of certain of the company’s FCPA books and records and internal controls violations.
This represents, what is believed to be, the first time in FCPA history that the SEC also found the current CEO and CFO of the issuer company liable for company FCPA violations.
Without admitting or denying the SEC’s findings, Och agreed to pay approximately $2.2 million ($1,900,000 – reflecting his estimated share of gain to Och-Ziff resulting from the transactions with a Democratic Republic of Congo Partner and $273,718 in prejudgment interest). The $2.2 million Och agreed to pay is the largest settlement amount in FCPA history by an individual in an SEC action.
On National Drink Beer Day, AB InBev Agrees To Pay $6 Million To Resolve FCPA (And Related) Enforcement Action
Yesterday was National Drink Beer Day.
Fitting then that yesterday the SEC announced this administrative cease and desist order against Anheuser-Busch InBev, a Belgium brewer with American Depository Receipts traded on the New York Stock Exchange. The conduct at issue involved improper payments by an Indian joint venture “to Indian government officials to obtain beer orders and to increase brewery hours.” AB InBev held a minority interest in the joint venture which marketed and distributed the beer of AB InBev’s wholly-owned Indian subsidiary.
The SEC found that AB InBev violated the FCPA’s books and records and internal controls provisions. Without admitting or denying the SEC’s findings, AB InBev agreed to pay approximately $6 million to resolve the matter. As highlighted below, the SEC also found that AB InBev entered into a separation agreement with a former employee that violated an SEC Rule implementing Dodd-Frank’s whistleblower provisions.
A Blemish – Nu Skin Enterprises Resolves SEC FCPA Enforcement Action Based On Its Chinese Subsidiary’s “Charitable Donation”
A common theme in 2016 SEC Foreign Corrupt Practices Act enforcement actions has been foreign subsidiaries (often in China) engaging in conduct without the knowledge of the parent company, the subsidiary taking steps to conceal the conduct from the parent company, yet in what amounts to strict liability, the SEC holding the parent company liable for books and records and internal control violations.
The SEC returned to this theme yesterday in this administrative action against Nu Skin Enterprises Inc., a Utah based company in the business of manufacturing and marketing cosmetic and nutritional products primarily through direct selling, or multi-level marketing, channels.
SEC Brings FCPA Enforcement Action Against Former Executive Of Harris Corp’s Dissolved Chinese Subsidiary
As highlighted in this prior post, in April 2011 Harris Corporation completed an acquisition of Carefx and in the process acquired its subsidiaries including Carefx China. In connection with its integration activities and the subsequent audit of the financials of the Carefx China operations, Harris Corp. became aware that certain entertainment, travel and other expenses in connection with the Carefx China operations may have been incurred or recorded improperly. In response, Harris Corp. voluntarily disclosed to the DOJ and SEC.
As highlighted in this prior post, a few months ago Harris Corp. disclosed that “during the second quarter of fiscal 2016, the DOJ advised us that they have determined not to take any action against us related to this matter.” The same disclosure stated that the company is “continuing to cooperate with the SEC regarding its investigation.”
In the meantime, earlier this week the SEC announced this administrative action finding that Jun Ping Zhang (pictured – a U.S. citizen and former Chairman and CEO of CareFx China who was terminated in mid-2012) violated the Foreign Corrupt Practices Act. Zhang is currently Senior Vice President, Product Innovation and Chief Technology Officer at MedeAnalytics. (See also here).