Whistled For A Foul: Las Vegas Sands Agrees To Pay $9 Million To Resolve Books And Records And Internal Controls Action
The Foreign Corrupt Practices Act has always been a law much broader than its name suggests.
In addition to anti-bribery provisions, the FCPA also contains more generic books and records and internal controls provisions. While there are a few sentences in this 15 page administrative order released yesterday against Las Vegas Sands (LVS) that touch upon issues relevant to the anti-bribery provisions, the enforcement action was on balance a pure books and records and internal controls action.
Among other things, the SEC found that LVS lacked supporting documentation or appropriate authorization concerning the company’s involvement with a Chinese basketball team, the purchase of a building, a high-speed ferry service, and other aspects of its casino business in Macau.
The substance of yesterday’s enforcement action has been in the public domain for years. (See this 2012 New York Times article and this 2012 Wall Street Journal article). Indeed, FCPA Professor has been following LVS’s scrutiny since November 2010 upon the “noisy exist” of Steven Jacobs (the former President of Macau Operations) from the company. (See here for the original post).
In summary fashion, the order states:
Novartis Coughs Up $25 Million To Resolve FCPA Enforcement Action Based On Conduct Of Indirect Chinese Subsidiaries
What happens when a Swiss corporation, with over 120,000 employees, has two indirect Chinese subsidiaries and a few employees of those subsidiaries, who concealed their conduct from the parent corporation, allegedly provided various things of value (such as an excursion to Niagara falls, spa and sauna sessions, and cover charges to a strip club) to various Chinese healthcare professionals?
Why of course, $25 million to the U.S. treasury because the Swiss corporation has shares traded on the New York Stock Exchange.
Yesterday, the SEC announced this Foreign Corrupt Practices Act enforcement action against Novartis.
By my count, it is the 22nd FCPA enforcement against a healthcare related company (i.e. pharma, medical device, etc.) premised on the enforcement theory (regardless of whether the action was resolved “merely” through books and records and internal controls issues) that employees of certain foreign health care systems are “foreign officials” under the FCPA and thus occupy a status similar to Presidents and Prime Ministers and other bona fide government officials.
Just When You Think You’ve Seen It All – Along Comes The Nordion (Canada) Inc. Enforcement Action
There have been several Foreign Corrupt Practices Act enforcement actions in the past 30 days or so.
But, just when you think you’ve seen it all in FCPA enforcement-land, along comes the Nordion (Canada) Inc. enforcement action announced yesterday by the SEC.
The basic findings, as set forth in this administrative order, were as follows.
Approximately 16 years ago, Mikhail Gourevitch (a dual Canadian and Israeli citizen who was fired years ago by Nordion) represented to the company that “his purported childhood friend from Russia” could help the company’s business in Russia.
Gourevitch and this eventual agent “conspired to use a portion of the funds Nordion paid the Agent to bribe Russian government officials to obtain approval for TheraSphere” a liver cancer therapy.
Gourevitch also received kickbacks from the Agent and otherwise “hid the scheme from Nordion” through, among other things, misrepresentations to his employer. In the words of the SEC, through his conduct Gourevitch “secretly enrich[ed] himself” and received “at least $100,000 for his role in the arrangement which was not disclosed to Nordion.”
In August 2014, Nordion was acquired by Nordion (Canada) Inc., a privately held company. The SEC’s order finds that Nordion (not the actual Respondent in the action Nordion (Canada) Inc.) violated the FCPA’s books and records and internal controls provisions and Nordion (Canada) Inc. agreed, without admitting or denying the SEC’s findings, agreed to pay $375,000.
Olympus Latin America Pays $22.8 Million In Latest FCPA Enforcement Action To Allege That Health Care Professionals Are “Foreign Officials”
Earlier this week, the DOJ announced (as part of a much larger enforcement action) a Foreign Corrupt Practices Act action against Olympus Latin American Inc. (OLA), a Miami-headquartered company that distributes medical imaging equipment in the Caribbean, Central America, and South America for Olympus Corporation (a Japanese company).
This post highlights the OLA enforcement action (the latest FCPA enforcement based on the theory that certain health care professionals are “foreign officials” under the FCPA) in which the DOJ charged the company in this criminal complaint with conspiring to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions. The charges were resolved via this deferred prosecution agreement in which OLA agreed to pay $22.8 million.
According to the charging documents, from 2006 to 2011 OLA provided approximately $3 million in “hundreds of unlawful payments” to publicly employed healthcare professionals in Brazil, Bolivia, Colombia, Argentina, Mexico, and Costa Rica to “induce the purchase of Olympus products, influence public tenders, or prevent public institutions from purchasing or converting to the technology of competitors.” According to the charging documents, OLA recognized approximately $7.5 million in profits as a result of the alleged unlawful payments.
Qualcomm Caves – Pays $7.5 Million In Connection With Alleged Improper Hiring And Other Practices In China
It was a “two for Tuesday” yesterday as the DOJ announced a Foreign Corrupt Practices Act (and related) enforcement action against Olympus Latin America Inc. and related entities and the SEC announced an FCPA enforcement action against Qualcomm.
This post highlights the Qualcomm action and a future post will highlight the Olympus action.
FCPA Professor has been following Qualcomm’s FCPA scrutiny since it was announced in January 2012 (see here).
Qualcomm maintained then that it “believes that it is in compliance with the requirements of the FCPA.” As highlighted in this prior post, things escalated in March 2014 when Qualcomm disclosed that it had received a Wells Notice from the SEC. As noted in the prior post, Wells Notices are rare in the the FCPA context for the simple reason that few issuers actually publicly push back against the SEC. Shortly after receiving the Wells Notice, Qualcomm disclosed that it responded to the SEC “explaining why the Company believes it has not violated the FCPA and therefore enforcement action is not warranted.”
As highlighted in this prior post, Qualcomm disclosed in November 2015 that “the DOJ notified the Company that it was terminating its [related] investigation and would not pursue charges in this matter.” As to the SEC investigation, Qualcomm continued to maintain that it had not violated the FCPA and that an enforcement action was not warranted.
However, when push came to shove the party holding the stick prevailed and Qualcomm caved by agreeing to pay a $7.5 million civil penalty via an SEC administrative order in which the company neither admitted nor denied the SEC’s findings.