In July 2020, NewAge Inc. (a health and organic products company) announced a definitive agreement to acquire ARIIX, together with four additional companies in the e-commerce and direct selling channels, to “create a global firm with estimated pro forma revenues in excess of $500 million across more than 75 countries worldwide.”
As highlighted in this prior post, in August 2021, NewAge disclosed:
Cannabis industry, fooled me, questions abound, investigative fees and expenses, survey says, scrutiny alert, and for the reading stack.
It’s all here in the Friday roundup.
Cannabis Industry
This recent FBI public recording states: “As an increasing number of states change their marijuana legislation, the FBI is seeing a public corruption threat emerge in the expanding cannabis industry. States require licenses to grow and sell the drug—opening the possibility for public officials to become susceptible to bribes in exchange for those licenses.”
This prior post went in-depth into the long-awaited Walmart Foreign Corrupt Practices Act enforcement action in which the company agreed to pay the DOJ/SEC approximately $283 million. This post highlights additional issues to consider from the enforcement action.
Timeline
Walmart was under FCPA scrutiny since approximately mid-2011. Thus, from start to finish its FCPA scrutiny lasted an unconscionable approximate 8 years. There is simply no excuse for this and the DOJ/SEC have long-recognized the issues associated with long-drawn out investigations.
In today’s 4Q earnings call presentation, Wal-Mart disclosed $6 million in Foreign Corrupt Practices Act and compliance related expenses ($3 million for ongoing investigations and inquiries and $3 million for global compliance program and organizational enhancements).
Doing the math, Wal-Mart’s 3Q FY2019 FCPA and compliance-related costs are approximately $97,000 per working day.
Previous posts here and here highlighted the recent Foreign Corrupt Practices Act enforcement action against Cognizant Technology Solutions and two of its former executives.
This post continues the analysis by highlighting several issues to consider.
Timeline
As highlighted in this prior post, Cognizant disclosed its FCPA scrutiny in a September 2016 SEC filing. Thus from start to finish, Cognizant’s FCPA scrutiny lasted approximately 2.5 years. While 2.5 years is shorter than recent medians of over 4 years (see here), 2.5 years is still too long for FCPA scrutiny to last.
