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The FOREIGN Corrupt Practices Act

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Since 2021, the DOJ has resolved 19 corporate Foreign Corrupt Practices Act enforcement actions.

The “Foreign” in Foreign Corrupt Practices Act refers to the location of the bribe recipient (as in “foreign” non-U.S. officials).

However, the “Foreign” in Foreign Corrupt Practices Act might as well refer to the location of the bribe payor as well – in other words the location of the company resolving the FCPA enforcement.

As highlighted below, of the 19 DOJ corporate FCPA enforcement actions since 2021, 14 of the 19 enforcement actions (74%) have involved foreign companies.

Set forth below are the 19 corporate DOJ FCPA enforcement actions since 2021 along with a general description of the company involved.

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China Based Issuer Resolves Books And Records And Internal Controls Matter

Cloopen

The Foreign Corrupt Practices Act has always been a law much broader than its name suggests.

Sure, the FCPA contains anti-bribery provisions which concern foreign bribery.

Sure, the FCPA’s books and records and internal controls provisions can be implicated in foreign bribery schemes.

However, the fact remains that most FCPA enforcement actions (that is enforcement actions that charge or find violations of the FCPA’s books and records and internal controls provisions) have nothing to do with foreign bribery. For lack of a better term, these enforcement actions have longed been called non-FCPA, FCPA enforcement actions by this site.

The latest example involves Cloopen Group Holding Limited. Cloopen (a Cayman Islands corporation headquartered in China) is a provider of cloud-based communication products and services. As stated by the SEC: “Cloopen does not operate in the United States and has no employees based in the United States. However, because Cloopen has American depositary shares that traded on the NYSE, it was required to file periodic reports” with the SEC.

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SAP Joins The Repeat Offender Club

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In 2016 SAP (a German software company with American Depository Shares registered with the SEC) resolved a $3.9 million Foreign Corrupt Practices Act enforcement action.

As highlighted here, in 2019 the company disclosed additional FCPA scrutiny and stated: “SAP has received communications and whistleblower information alleging conduct that may violate anti-bribery laws in South Africa, the United States (including the U.S. Foreign Corrupt Practices Act (FCPA)), and other countries.”

Yesterday, SAP joined the ever-growing FCPA repeat offender club as the DOJ and SEC announced (here and here) related FCPA enforcement actions against the company. The net FCPA settlement amount is $102.5 million: DOJ ($63.6 million) and SEC ($38.9 million).

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Issues To Consider From The Corficolombiana / Grupo Aval Enforcement Action

Issues

This previous post highlighted the net $60.6 million Foreign Corrupt Practices Act enforcement action against Colombian entities Corficolombiana / Grupo Aval.

This post continues the analysis by highlighting additional issues to consider.

Cash Cow?

In the minds of some (including former FCPA enforcement officials), FCPA enforcement is a convenient cash cow for the U.S. government.

Those who believe this will find support in the Corficolombiana / Grupo Aval enforcement action.

The allegations were basically as follows.

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Colombian Entities Resolve Net $60.6 Million FCPA Enforcement Action

Corfi

Once upon a time, a Colombian company (owned and controlled by another Colombian company with shares registered in the U.S.), through a wholly-owned and controlled subsidiary, agreed with a Brazilian company to form a joint venture and consortium to bid for public contracts with the Colombian government.

An executive of the Brazilian company informed an executive of the Colombian company that a Colombian lobbyist would help win projects by making bribe payments to Colombian officials and the Colombian company executive agreed.

That, in a nutshell, describes last week’s net $60.6 million Foreign Corrupt Practice Act enforcement action against Corporacion Financiera Colombiana S.A. (Corficolombiana) and Grupo Aval Acciones y Valores S.A. (Grupo Aval).

The enforcement action involved a DOJ component (in which the entities agreed to pay a net $20.3 million criminal penalty) and an SEC component (in which the entities agreed to pay approximately $40.3 million in disgorgement and prejudgment interest).

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