There Have Been 30 FCPA Enforcement Actions Regarding Alleged Improper Travel And Entertainment Of Chinese “Foreign Officials”
Approximately 20 years ago, while in private practice, I was involved in an internal investigation involving the Chinese subsidiary of a U.S. issuer providing travel and entrainment to individuals who the DOJ/SEC considered Chinese “foreign officials.”
It culminated in the 2007 FCPA enforcement action against Lucent Technologies in which the SEC alleged that the company violated the FCPA’s books and records and internal controls provisions based on its Chinese subsidiary arranging for non-business travel for “employees of Chinese state-owned or state-controlled telecommunications enterprises, to travel to the United States and elsewhere.”
According to the SEC, “the majority of the trips were ostensibly designed to allow the Chinese foreign officials to inspect Lucent’s factories and to train the officials in using Lucent equipment” however “during many of these trips, the officials spent little or no time in the United States visiting Lucent’s facilities” but rather visited various tourist destinations.
At the time, it was one of the first “pure” FCPA travel and entertainment type of enforcement actions.
Bribery And Basketball
My two interests, bribery and basketball (I am a Varsity head coach in Wisconsin and run my own club program), intersect in this recent indictment charging “26 individuals in connection with an alleged bribery and point-shaving scheme to fix NCAA Division I men’s basketball games and Chinese Basketball Association games.” (See here for the DOJ release).
This post focuses on the allegations concerning the Chinese Basketball Association (CBA).
As highlighted in prior posts here and here, the 2016 SEC FCPA enforcement action against Las Vegas Sands as well as the 2017 DOJ FCPA enforcement action against Las Vegas Sands involved, in part, the CBA.
500.com and the Specter of “Chinese-Issuer” Enforcement
A guest post from Eric Harris (a White Collar Defense Attorney and Anti-Corruption Compliance Consultant).
The DOJ and SEC recently announced an enforcement action against BIT Mining Ltd., which is the successor entity of 500.com. The action was brought against Bit Mining Ltd. due to 500.com’s migration from the online sports lottery business in 2021 to focus on cryptocurrency mining. 500.com’s activities are the focus of the agencies’ enforcement action against BIT Mining Ltd. as it is the responsible entity due to the nature of inherited FCPA violations. As such, 500.com is referred to as the entity at issue here.
Since the release of 500.com’s enforcement action, some have wondered whether the 500.com enforcement action is the first FCPA enforcement against a “Chinese issuer” (while acknowledging that 500.com was not technically a Chinese issuer). However, there are some practical reasons a similar enforcement action has not previously been brought with the fact pattern therein. Moreover, there are additional likely causes for the lack of a similar fact pattern in prior FCPA enforcement activity.
Chemical Company Albemarle Resolves A Net $218.4 Million Enforcement Action
As highlighted in this prior post, in February 2018 Albemarle Corp. (a North Carolina based chemical company) disclosed Foreign Corrupt Practices Act scrutiny.
More than 5.5 years later, the DOJ and SEC announced a net $218.4 million FCPA enforcement action against the company.
The resolution included a DOJ non-prosecution agreement (pursuant to which the company agreed to pay a $98.2 million criminal penalty and $16.6 million in forfeiture) and an SEC administrative order (pursuant to which the company agreed to pay approximately $103.6 million in disgorgement and prejudgment interest).
Billboard Worthy: Clear Channel Outdoor Resolves $26.1 Million Enforcement Action
Approximately 5.5 years ago (see here for the prior post), Clear Channel Outdoor Holdings (a public subsidiary of iHeartMedia and one of the world’s largest outdoor advertising corporations) disclosed FCPA scrutiny based on the conduct of “several employees of Clear Media Limited, an indirect, non-wholly-owned subsidiary of the Company whose ordinary shares are listed …. on the Hong Kong Stock Exchange.”
Today, the SEC (an enforcement agency whose officials have previously stated that it “should focus on bringing matters to resolution swiftly”) announced a $26.1 million FCPA enforcement action against the company.
In summary fashion, this administrative order finds: