Issue to ponder, scrutiny alert, laughable, silly, $50 million spent in approximately 9 months, and for the reading stack. It’s all here in the Friday roundup.
Issue to Ponder
If the FCPA and U.K. Bribery Act “have been broadly effective in addressing and remediating corrupt practices within … companies [subject to the laws]” as asserted in this article, then why – generally speaking – is there more (not less) enforcement actions under these laws over time?
Late April or early May is when foreign issuers tend to file Form 20-F’s with the SEC and as highlighted in this post several foreign issuers from Brazil, Peru, the U.K. and South Korea disclosed Foreign Corrupt Practices Act scrutiny.
But first, Cognizant Technology Solutions appears to continue to “boil the ocean” in terms of pre-enforcement action professional fees and expenses and Misonix is hit with a civil lawsuit connected to its FCPA scrutiny.
This prior post highlighted the Foreign Corrupt Practices Act scrutiny of Cognizant Technology Solutions first disclosed in late September 2016. This post discussed how the company’s FCPA scrutiny presented an interesting, albeit early, FCPA case study as to the FCPA’s many “ripples.” (See here for the article “FCPA Ripples“).
The case study has become all the more interesting given that Cognizant recently disclosed: “in 2016, we incurred $27 million in costs related to the FCPA investigation and related lawsuits. We expect to continue to incur expenses related to these matters in 2017 and future periods.”
The question ought to be asked: is Cognizant “boiling the ocean”?
Scrutiny alerts and updates, former Bio-Rad general counsel prevails, and light FCPA sentences. It’s all here in the Friday roundup.
Scrutiny Alerts and Updates
USANA Health Sciences
When putting together a list of companies that are likely to become the subject of FCPA scrutiny, small Utah-based companies that sell healthcare products is surely to be at the bottom of the list.
Yet, Nu Skin Enterprises resolved an FCPA enforcement action in 2016 and Nature’s Sunshine Products resolved an FCPA enforcement action in 2009.
In the latest instance of FCPA scrutiny involving this unique group, USANA Health Sciences Inc., a Utah based nutritional company that manufacturers supplements, personal care and healthy food products, recently disclosed:
As highlighted in this prior post, on September 30th Cognizant Technology Solutions disclosed that it voluntarily disclosed to the DOJ and SEC “certain payments relating to facilities in India [that] were made improperly and in possible violation of the FCPA and other applicable laws.”
Even though Cognizant’s FCPA scrutiny is a mere six weeks old, it presents an interesting FCPA case study as to the FCPA’s many “ripples.” (See here for the article “FCPA Ripples“). As stated in the article: “because of the many ripples of FCPA enforcement, it is important that FCPA enforcement be subjected to meaningful judicial scrutiny and that enforcement actions represent legitimate instances of provable FCPA violations, not merely settlements entered into for reasons of risk aversion.”
On this issue, it is interesting to note that Cognizant’s FCPA scrutiny relates to permits in connection with certain facilities in India and you can read all about actual legal authority concerning this type of FCPA enforcement theory in this article.
