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Friday Roundup

By on November 13, 2015 in Alexion Pharmaceuticals, Brookfield Asset Management, Crawford & Company, H-P, Hines, Investigative Fees, Noble Corporation, SciClone Pharmaceuticals
Roundup2

A plethora of scrutiny alerts and updates, dismissed, quotable, and for the reading stack.  It’s all here in the Friday roundup.

Scrutiny Alerts and Updates

Crawford & Company

The company, a “provider of claims management solutions to the risk management and insurance industry, as well as to self-insured entities, with an expansive global network serving clients in more than 70 countries.” recently disclosed:

“The Company has voluntarily self-reported to the Securities and Exchange Commission (the “SEC”) and the Department of Justice (the “DOJ”) certain potential violations of the Foreign Corrupt Practices Act discovered by the Company during the course of its regular internal audit process. Upon discovery, the Company, with the oversight of the Audit Committee and the Board of Directors, proactively initiated an investigation into this matter with the assistance of external legal counsel and external forensic accountants. The Company has been cooperating fully, and expects to continue to cooperate fully, with the SEC and the DOJ in this matter. The Company cannot currently predict when or what, if any, action may be taken by the SEC or the DOJ, or other governmental authorities, or the effect any such actions may have on the Company’s results of operations, cash flows or financial position.”

In the same disclosure, the company disclosed approximately $3.4 million in “legal and professional fees … related to the ongoing investigation of potential violations of the Foreign Corrupt Practices Act.”

SciClone Pharmaceuticals

One of the longest instances of FCPA scrutiny concerns SciClone Pharmaceuticals. The company has been under FCPA scrutiny since August 2010 and recently disclosed:

“As previously disclosed, since 2010 the SEC and the US Department of Justice (“DOJ”) have each been conducting formal investigations of the Company regarding a range of matters, including the possibility of violations of the Foreign Corrupt Practices Act (“FCPA”), primarily related to certain historical sales and marketin g activities with respect to the Company’s China operations. I n response to these matters, the Company’sBoard appointed a Special Committee of independent directors (the “Sp ecial Committee”) to oversee its response to the government inquiry. Based on an initial review, the Special Committee decided to undertake an independent investigation as to matters reflected in and arising from the SEC and DOJ investigations in order to evaluate whether any violation of the FCPA or other laws occurred. The Company continue s to cooperate fully with the SEC and DOJ in the conduct of their investigations.

The Company has engaged in settlement discussions with the SEC related to its investigation into possible violations of the FCPA by the Company. The Company has finalized the terms of an offer of settlement of these matters, subject to final approval by the Commissioners of the SEC. Under the terms of the offer of settlement, the Company, without admitting or denying liability, would consent to the entry of an administrative order requiring that the Company cease and desist from any future violations of the FCPA. The Company also would pay disgorgement of $9.4 million, prejudgment interest of $0.9 million and a civil money penalty of $2.5 million. If the offer of settlement is approved by the Commissioners of the SEC, an administrative order will be issued by the SEC and $ 12,826,000   (which was placed in an escrow facility subsequent to September 30, 2015) will immediately be released to the SEC .

The Company has not yet reached a resolution of these matters with the DOJ and management continues to work diligently to obtain closure on this matter.”

Brookfield Asset Management

The company which previously disclosed FCPA scrutiny recently disclosed:

“[I]n 2012 we were notified by the SEC that it was conducting an anti-bribery and corruption investigation related to a Brazilian subsidiary of ours that allegedly made payments to certain third parties in Brazil and those payments were, in turn, allegedly used, with our knowledge, to pay certain municipal officials to obtain permits and other benefits. The U.S. Department of Justice (“DOJ”) opened an investigation in 2013. A civil action against our Brazilian subsidiary by a public prosecutor in Brazil has been ongoing since 2012. All involved have denied the allegations. The SEC and DOJ sought information from us and we cooperated with both authorities in this regard. In 2012, a leading international law firm conducted an independent investigation into the allegations, and based on the results of that investigation we have no reason to believe that our Brazilian subsidiary or its employees engaged in any wrongdoing. In June 2015 the SEC staff informed us in writing that it concluded its investigation and, based on the information it has to date, does not intend to recommend an enforcement action against us. We hope to resolve any remaining outstanding matters in due course and do not expect that any legal outcome will be financially material to the company.”

Alexion Pharmaceuticals 

The company which previously disclosed its FCPA scrutiny this past summer recently disclosed:

“As previously disclosed, in May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting information related to our grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA) in various countries. The SEC also seeks information related to Alexion’s recalls of specific lots of Soliris and related securities disclosures. In addition, in October 2015, Alexion received a request from the U.S. Department of Justice for the voluntary production of documents and other information pertaining to Alexion’s compliance with the FCPA. Alexion is cooperating with these investigations. At this time, Alexion is unable to predict the duration, scope or outcome of these investigations. Given the ongoing nature of these investigations, management does not currently believe a loss related to these matters is probable or that the potential magnitude of such loss or range of loss, if any, can be reasonably estimated.”

Alexion was founded by a Yale University professor and the above disclosure was viewed as a big deal by the Yale Daily News (see here).

Hines

According to various media reports (see here and here), Houston-based Hines, a privately-owned real estate firm, is conducting an internal investigation in connection with alleged payments in Brazil involving Petrobras officials.  According to reports, the internal investigation follows a report in a Brazilian newspaper that appeared over the summer alleging improper payments by Hines Brazil in relation to commissions for Petrobras office leases in Rio de Janeiro.

Noble Corp.

Noble Corporation recently disclosed:

“We have used a commercial agent in Brazil in connection with our Petróleo Brasileiro S.A. (“Petrobras”) drilling contracts.  We understand that this agent has represented a number of different companies in Brazil over many years, including several offshore drilling contractors. This agent has pled guilty in Brazil in connection with the award of a drilling contract to a competitor and has implicated a Petrobras official as part of a wider investigation of Petrobras’ business practices.  We are not aware of any improper activity by Noble in connection with contracts that Noble has entered into with Petrobras, and we have not been contacted by any authorities regarding such contracts or the investigation into Petrobras’ business practices.”

As highlighted in this previous post, in 2010 Noble Corp. resolved an $8.2 million FCPA enforcement action  ($2.6 million via a DOJ NPA and $5.6 million in disgorgement and interest via a SEC complaint) in connection with alleged conduct in Nigeria.

Dismissed

This recent post asked where does the truth lie in FCPA enforcement actions?

The post focused on the Mexico prong of the HP enforcement action in which the DOJ and SEC alleged that HP Mexico indirectly made cash payments to a Pemex Chief Information Officer. After the enforcement action, Pemex disclosed in an SEC filing that “the Internal Control Body of [Pemex] concluded its investigation after finding no improper payment.”

HP highlighted the Pemex disclosure in its defense of civil RICO claims brought by Pemex that accused HP of paying bribes to win contracts. As highlighted here, Pemex recently dismissed its lawsuit.

Quotable

Sound advice from Marcus Asner (Arnold & Porter) in this Law360 article titled “A Measured Approach to Internal Investigations” in which he rightly notes: “Outside law firms and vendors … have strong economic incentives to expand investigations.”

For the Reading Stack

From Clifford Chance, an updated version of “A Guide to Anti-Corruption Legislation in Asia Pacific.”

*****

A good weekend to all.

Friday Roundup

By on March 8, 2013 in Anything of Value, Bio-Rad, Brookfield Asset Management, Optimer Pharmaceutical, Teso Corporation, United Kingdom, World’s Most Ethical FCPA Violaters

Well represented, scrutiny alerts / updates, and a timetable.  It’s all here in the Friday roundup.

Well Represented

Companies that have resolved FCPA enforcement actions or have been otherwise the subject of FCPA scrutiny are well represented in Ethisphere’s recent World’s Most Ethical Companies list.

I point this out not to argue that Ethisphere’s methodology if flawed, but to demonstrate, consistent with this prior post, that just because a company resolves an FCPA enforcement action does not therefore mean that the company is a bad or unethical company.  To the contrary, many FCPA enforcement actions involve companies, such as those on World’s Most Ethical Companies list, that have pre-existing FCPA compliance policies and procedures, yet because of respondeat superior, face legal exposure based on the conduct of a small group of individuals.

Companies appearing on the list that have recently resolved FCPA enforcement actions, or have otherwise been the subject of FCPA scrutiny, are: ABB, Deere & Company, Dun & Bradstreet, General Electric, Rockwell Automation, and Sempra Energy.

Scrutiny Alerts / Updates

Optimer Pharmaceuticals

Christopher Matthews (Wall Street Journal – Corruption Currents) reported earlier this week (here) that Optimer Pharmaceuticals is “investigating whether an attempted grant of  stock options to the company’s co-founder violated the FCPA.  According to the company’s recent earnings call transcript, the conduct under investigation relates to an “attempted grant in September of 2011 to Dr. Michael Chang of 1.5 million technical shares of Optimer Biotechnology, Inc. (“OBI”) as well as “a potentially improper $300,000 payment in July 2011 to a research laboratory involving an individual who was also associated with the OBI share grant.”  The company has disclosed the results of its preliminary investigation to the DOJ and SEC.

As noted in this previous post, business interests or equity interests have previously been a basis for FCPA scrutiny and FCPA enforcement actions.

Tesco Corporation

Tesco (a Houston based oil services company) disclosed in a recent SEC filing as follows.

“On December 26, 2012, we received a request by the staff of the United States Securities and Exchange Commission (“SEC”) that the Company take steps to preserve and retain five categories of documents relating to commercial agents who perform services for the corporate group in a foreign jurisdiction, the Company’s general use of commercial agents in that jurisdiction, and compliance with the Foreign Corrupt Practices Act. This request stated that it “should not be construed as an indication by the Commission, or its staff, that any violations of law have occurred; nor should it be considered an adverse reflection upon any person, entity, or security.” We have, under the advice and through independent external legal counsel, cooperated with and have provided the SEC staff with specific information which it has requested. External legal counsel for the Company has been advised by the SEC staff that no formal order of investigation has been issued. The outcome of the SEC’s review and any future financial impact resulting from this matter are indeterminable at this time.”

Bio-Rad

Bio-Rad Laboratories Inc., a company that previously disclosed FCPA scrutiny, disclosed earlier this week (see here) that it would be unable to file its annual report for the year ended December 31, 2012 prior to the filing deadline.  The SEC filing states, in pertinent part, as follows.

“Bio-Rad is unable to file its Annual Report on Form 10-K for the year ended December 31, 2012 (the “Form 10-K”) prior to the filing deadline because the Company has not finalized its assessment of the effectiveness of its internal control over financial reporting due in part to recently raised issues and has not finalized an accrual for royalties payable by the Company as of December 31, 2012 under certain patent licenses from a third party.   As previously reported, the Company has implemented enhancements to its internal control over financial reporting and is continuing to evaluate and improve its internal controls, including processes and procedures relating to the Company’s compliance with the U.S. Foreign Corrupt Practices Act (“FCPA”). The Company is currently in the process of finalizing its assessment of the effectiveness of its internal control over financial reporting as of December 31, 2012 and will be unable to file the Form 10-K until the Company completes this assessment. “

Brookfield Asset Management

Prior posts here and here discussed the scrutiny of Brookfield Asset Management for conduct in Brazil.  Today, the Wall Street Journal reported (here) that the “SEC is looking into allegations that a Brazilian unit” of the company “paid bribes to win construction permits.”  According to the article, “a member of the SEC’s enforcement division is scheduled to interview a former executive in the Sao Paulo unit of Brookfield who made the allegations.”  According to the article “the allegations include that Brookfield employee hired an armored truck to deliver cash to two city officials to speed the permits.”

Timetable

Via thebriberyact.com, a timetable for DPAs becoming real in the U.K.  This is unfortunate, as discussed in this prior post.

*****

A good weekend to all.

Friday Roundup

By on February 15, 2013 in Brookfield Asset Management, Compliance, Compliance Defense, EADS, Enforcement Agency Speeches, ENI, Facilitating Payments, Finmeccanica, Foreign Official, Internal Controls, NCR Corp., Neither Admit or Deny

From the SEC Chairman, Congress is capable, adding to the list, scrutiny alerts, and for the reading stack.  It’s all here in the Friday Roundup.

From the SEC Chairman

SEC Chairman Elisse Walter stated as follows earlier this week (see here) in opening a Foreign Bribery and Corruption Training Conference for law enforcement officials from around the world.

“[W]e have found that corrupt practices by a registered company are generally indicators of larger problems within the business – problems with the potential to harm that business’s shareholder-owners.  Bribery and other corrupt practices may result in accounting fraud and falsified disclosures where shareholders are not getting an accurate picture of a company’s finances in their regulatory filings.  Bribery means losing control of – or deliberately falsifying – books and records.  Often, key executives or board members are kept in the dark, limiting their ability to make informed decisions about the company’s business. Obviously, engaging in corrupt practices means weakening or circumventing internal control mechanisms, leaving a company less able to detect and end not just corruption but other questionable practices. A company that has lost its moral compass is in grave danger of losing its competitive roadmap, as well – while shareholders are kept in the dark.”

Congress Is Capable

Well, at least as to certain issues.

Such as introducing and passing laws that expressly describe state-owned entities (“SOEs”).  In reading my historical account of the FCPA’s legislative history, “The Story of the Foreign Corrupt Practices Act” or my “foreign official” declaration here, you will learn that despite being aware of SOEs, despite exhibiting a capability for drafting a definition that expressly included SOEs in other bills, and despite being provided a more precise way to describe SOEs, Congress chose not to include such definitions or concepts in S. 305, the bill that ultimately became the FCPA in December 1977.

This prior post highlighted Congress’s capability in capturing SOEs in Dodd-Frank Section 1504 and along comes another example which demonstrates that Congress is capable of legislating as to SOEs.  Recently, H.R.491 – the Global Online Freedom Act of 2013 was introduced in the House.  The purpose of the bill is “To prevent United States businesses from cooperating with repressive governments in transforming the Internet into a tool of censorship and surveillance, to fulfill the responsibility of the United States Government to promote freedom of expression on the Internet, to restore public confidence in the integrity of United States businesses, and for other purposes.”

The bill defines “foreign official” as follows.

The term ‘foreign official’ means– (A) any officer or employee of a foreign government or of any department; and (B) any person acting in an official capacity for or on behalf of, or acting under color of law with the knowledge of, any such government or such department, agency, state-owned enterprise, or instrumentality.” (emphasis added).

It is a basic premise of statutory construction that Congress is presumed not to use redundant or superfluous language.  Granted, H.R.491 is not yet law, but let’s assume it becomes law as introduced.   If instrumentality includes SOEs (as the enforcement agencies maintain), then Congress will violate this legislative maxim by using redundant or superfluous language in H.R. 491.

Adding To The List

The Heritage Foundation recently published (here) a speech by Peter Hansen titled “Unleashing the U.S. Investor in Africa: A Critique of U.S. Policy Toward the Continent.”  Hansen critiqued U.S. government thinking about African development, including Ambassador statements that it is important to raise incentives for overly “cautious” U.S. companies to invest in Africa.  Hansen stated that this “mistaken assumption” assumed that “mainstream U.S. companies will be motivated more by the prospect of higher rewards than by the diminishment of risks.”  He noted that this view is not just wrong, but counterproductive and stated as follows.

“The problem with Africa is not a lack of attractive prospects, but rather Africa’s risk profile. With few exceptions, sensible U.S. direct investors (that is, those who run projects, not just take portfolio positions) have steered clear of Africa for the simple reason that Africa’s risks often exceed their risk tolerance. The African market has been left largely to non-Americans, to the unsophisticated seekers of El Dorado, and to a legion of “chancers” who seek sweetheart deals with no money down. The resulting tales of woe coming out of Africa, due largely to poor investment planning or thwarted get-rich-quick schemes, serve wrongly to tarnish Africa’s reputation.  By exclusively raising incentives and failing to reduce risks, Ambassador Carson’s approach simply encourages those already prone to failure, without inspiring broad-spectrum investment by serious U.S. companies. Such bedrock U.S. firms do not need higher incentives. Africa already presents high-return opportunities. What serious U.S. firms need instead is for Africa’s risks to be reduced. Rewards that cannot be obtained are, after all, just mirages. The easiest way for the U.S. government to reduce risks for U.S. investors in Africa is to provide them with legal protection.  The basic legal tools for protecting U.S. investors are double tax treaties (DTTs), often called double tax agreements (DTAs) and bilateral investment treaties (BITs).”

Query whether an FCPA compliance defense should be added to this list?  See here to download my article “Revisiting a Foreign Corrupt Practices Act Compliance Defense.”

Scrutiny Alerts and Updates

This previous post highlighted the scrutiny Brookfield Asset Management (a Toronto based global asset management company with shares traded on the NYSE) was facing in Brazil concerning allegations that its subsidiary paid bribes to win construction permits.  As the Wall Street Journal recently reported (here), Sao Paulo, Brazil prosecutors filed civil charges against the company’s Brazilian subsidiary, two of its top executives and a former employee.  The prosecutor is quoted in the WSJ as saying that “Brookfield has created a high system of bribery in order to obtain approval for its projects quickly and with irregularities.”  A spokesman for the company stated as follows.  “These are unproven allegations made by a former employee.  We don’t believe Brookfield did anything wrong and we are cooperating with authorities.”

This previous post highlighted scrutiny of EADS subsidiary, GPT Special Management Systems in the U.K.  The Financial Times recently reported here that the FBI is also probing corruption allegations against GPT “relating to a contract in Saudi Arabia.”  The article states as follows.  “The FBI has interviewed a witness and taken possession of documents in connection with allegations that GPT bribed Saudi military officials with luxury cars and made £11.5m of unexplained payments – some via the US – to bank accounts in the Cayman Islands.”

This recent Reuters article reports that Italian police arrested the head of defense group Finmeccanica SpA (Giuseppe Orsi) on a warrant alleging that he paid bribes to win an Indian contract.  According to the report, Prosecutors accuse Orsi of paying bribes to intermediaries to secure the sale of 12 helicopters in a 560 million euro ($749 million) deal when he was head of the group’s AgustaWestland unit.  Finmeccanica, which is approximately 30% owned by the Italian government, has ADRs registered with the SEC and AgustaWestland does extensive business in the U.S. (see here), including with the U.S. government.  According to this Wall Street Journal article, Italian prosecutors are also “investigating [Finmeccanica] on suspicion that it engaged in corrupt activities to win various types of contracts in Latin America, Asia, and at home.”

This recent Bloomberg article reports that “Eni SpA Chief Executive Officer Paolo Scaroni is being investigated for alleged corruption in an Italian probe of contracts obtained by its oil services company, Saipem SpA, in Algeria.”  Eni has ADRs registered with the SEC.  In 2010, Eni resolved (see here) an SEC FCPA enforcement action concerning Bonny Island, Nigeria conduct.  In resolving the action, Eni consented to the entry of a court order permanently enjoining it from violating the FCPA’s books and record and internal controls provisions.

NCR Corporation stated in a recent release here, in pertinent part, as follows concerning its FCPA scrutiny.

“Update regarding OFAC and FCPA Investigations

The Company and the Special Committee of the  Company’s Board of Directors have each completed their respective internal investigations regarding the anonymous allegations received from a purported whistleblower regarding certain aspects of the Company’s business practices in China, the Middle East and Africa. The principal allegations relate to the Company’s compliance with the Foreign Corrupt Practices Act (“FCPA”) and federal regulations that prohibit U.S. persons from engaging in certain activities in Syria.

[…]

The Company has made a presentation to the staff of the Securities and Exchange Commission(“SEC”) and the U.S. Department of Justice (“DOJ”) providing the facts known to the Company related to the whistleblower’s FCPA allegations, and advising the government that many of these allegations were unsubstantiated.  The Company’s investigations of the whistleblower’s FCPA allegations identified a few opportunities to strengthen the Company’s comprehensive FCPA compliance program, and      remediation measures were proposed and are being implemented.  As previously disclosed, the Company is responding to a subpoena of the SEC and requests of the DOJ for documents and information related to the FCPA, including matters related to the whistleblower’s FCPA allegations.”

Investigating the purported whistleblower’s allegations has been a costly exercise for NCR.  In a recent earnings conference call, company CFO Bob Fishman stated that the “overall cost” has been approximately $4.8 million.

Reading Stack

See here for the New York Times DealBook writeup of oral arguments in SEC v. Citigroup – an appeal which focuses of Judge Jed Rakoff’s concerns about common SEC settlements terms, including neither admith nor deny.

FCPA enforcement statistics are over-hyped for compliance assessments says Ryan McConnell (Morgan Lewis) in this Corporate Counsel article.  In this Corporate Counsel article, McConnell and his co-author compare 2012 to 2011 numbers in terms of facilitation payments data found in corporate policies.

The three types of employees one encounters when conducting FCPA training – here from Alexandra Wrage (President, Trace International).

If for no other reason, because of the picture associated with this recent post on thebriberyact.com.

*****

A good weekend to all.

Scrutiny Alerts

By on September 25, 2012 in Brookfield Asset Management, H-P, Kraft, Merger Issues, Permits / Licenses / Customs / Tax

This post provides updates on three company’s FCPA scrutiny:  Kraft, Brookfield Asset Management, and H-P.

Kraft

In February 2010, Kraft acquired Cadbury, and with that, Cadbury’s Baddi, India facility which churns out various chocolates.  Producing chocolates for the mouths of the masses is, all things considered, a low FCPA risk activity.  But alas, company employees had to interact with India’s legendary bureaucracy in regards to licenses, permits, and excise tax issues.  Therein was the FCPA risk as detailed in this recent Forbes India article.

In its most recent quarterly filing (here) the company stated as follows.

“A compliant and ethical corporate culture, which includes adhering to laws and industry regulations in all jurisdictions in which we do business, is integral to our success. Accordingly, after we acquired Cadbury in February 2010 we began reviewing and adjusting, as needed, Cadbury’s operations in light of U.S. and international standards as well as our policies and practices. We initially focused on such high priority areas as food safety, the Foreign Corrupt Practices Act (“FCPA”) and antitrust. Based upon Cadbury’s pre-acquisition policies and compliance programs and our post-acquisition reviews, our preliminary findings indicated that Cadbury’s overall state of compliance was sound. Nonetheless, through our reviews, we determined that in certain jurisdictions, including India, there appeared to be facts and circumstances warranting further investigation. We are continuing our investigations in certain jurisdictions, including in India, and we continue to cooperate with governmental authorities.  As we previously disclosed, on February 1, 2011, we received a subpoena from the SEC in connection with an investigation under the FCPA, primarily related to a Cadbury facility in India that we acquired in the Cadbury acquisition. The subpoena primarily requests information regarding dealings with Indian governmental agencies and officials to obtain approvals related to the operation of that facility. We are cooperating with the U.S. and Indian governments in their investigations of these matters.”

Brookfield Asset Management

The Wall Street Journal reported last week (here – “Brookfield Faces Brazil Accusations”) that “Brazilian authorities are investigating allegations that an executive at Brookfield bribed Sao Paulo officials to secure permits required for renovating three shopping malls in that city.”  According to the article, the allegations were made by the former CFO of a Brookfield subsidiary in Brazil who was fired in 2010, and who the company has sued in Brazil for embezzling funds.  The article further suggests that the former CFO has contacted the SEC about the matter.

Brookfield (here) is “global alternative asset manager with over $150 billion in assets under management … with a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity.”  The company’s common shares trade on three stock exchanges, including the New York Stock Exchange.

H-P

As noted in this previous post, H-P has been under FCPA scrutiny since April 2010.  Last week, the Wall Street Journal reported here (“German Prosecutors Name H-P in Bribery Indictment of Employees”) that German prosecutors named H-P in a criminal bribery case against one current and two former employees.  According to the article, the “German prosecutors asked the court to attach H-P to the case, a motion that could lead to fines and other penalties if the court finds that the company benefited from the crime.”  In the article, a H-P spokeswoman said current and former employees had been indicted on charges of “alleged conduct that occurred nearly 10 years ago by a former H-P company” and that H-P had been “only named as a side participant in the proceedings,” not indicted, and was fully cooperating with authorities.

The company’s most recent quarterly filing stated as follows.

“The German Public Prosecutor’s Office (“German PPO”) has been conducting an investigation into allegations that current and former employees of HP engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE GmbH in Germany, a former subsidiary of HP, and the General Prosecutor’s Office of the Russian Federation. The approximately €35 million transaction, which was referred to as the Russia GPO deal, spanned the years 2001 to 2006 and was for the delivery and installation of an information technology network. The U.S. Department of Justice and the SEC have also been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act (“FCPA”). Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation and equitable remedies, including disgorgement and other injunctive relief. In addition, criminal penalties could range from the greater of $2 million per violation or twice the gross pecuniary gain or loss from the violation. In addition to information about the Russia GPO deal, the U.S. enforcement authorities have requested (i) information related to certain other transactions, including transactions in Russia, Serbia and in the Commonwealth of Independent States (CIS) subregion dating back to 2000, and (ii) information related to two former HP executives seconded to Russia and to whether HP personnel in Russia, Germany, Austria, Serbia, the Netherlands or CIS were involved in kickbacks or other improper payments to channel partners or state-owned or private entities. HP is cooperating with these investigating agencies.”

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