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Oracle Becomes The 20th Corporate FCPA Repeat Offender

oracle

As highlighted in this prior post, in 2012 Oracle resolved a $2 million SEC Foreign Corrupt Practices Act enforcement action finding that “Oracle violated the books and records and internal accounting controls provisions of the FCPA by failing to prevent Oracle India Private Limited from keeping unauthorized side funds at distributors from 2005 to 2007.”

As a condition of settlement, Oracle consented to the entry of a final judgment, among other things, “permanently enjoining it from future violations” of the books and records and internal controls provisions and in resolving the matter the SEC noted the “significant enhancements” Oracle made to its FCPA compliance program.

Yesterday, the SEC announced a $22.9 million FCPA enforcement action against Oracle “to resolve charges that it violated provisions of the FCPA when subsidiaries in Turkey, the United Arab Emirates, and India created and used slush funds to bribe foreign officials in return for business between 2016 and 2019.”

In resolving a second FCPA enforcement action, Oracle becomes the 20th corporate FCPA repeat offender (see here for the list).

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Bad Advertising – Ad Group WPP Resolves $19.2 Million FCPA Enforcement Action

WPP

Last Friday, the SEC announced that London-based WPP (the world’s largest advertising agency and a company with depositary shares traded on the New York Stock Exchange) agreed to resolve a $19.2 million Foreign Corrupt Practices Act enforcement action.

The enforcement action focused on WPP subsidiary conduct in India, China, Brazil and Peru.

In summary fashion, the SEC’s order finds:

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Scrutiny Of Indian Issuer Grows

dr.reddy's

There have been several Foreign Corrupt Practices Act enforcement actions regarding conduct in India (see here for some of the actions). Certain of those enforcement actions involved the conduct of Indian subsidiaries of U.S. issuers.

However, it is believed that there has never been an FCPA enforcement action against an Indian issuer.

That may change.

As highlighted in this prior post, in November 2020 Dr. Reddy’s Laboratories Ltd., (an India-based pharmaceutical company with ADRs listed on the New York Stock Exchange) disclosed that it “has commenced a detailed investigation into an anonymous complaint” alleging that “healthcare professionals in Ukraine and potentially in other countries were provided with improper benefits in violation of U.S. laws.”

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In A Highly Unusual Development, DOJ Brings A $19.6 Million Enforcement Action Against Beam Approximately 2.5 Years After The SEC’s Related Action

Beam

DOJ and SEC Foreign Corrupt Practices Act enforcement actions against issuers based on the same core conduct are relatively common. However, such actions are nearly always coordinated and announced on the same day.

In a highly unusual (although not unprecedented) development, the DOJ announced yesterday a $19.6 million FCPA enforcement action against Beam Suntory Inc. based on the same core conduct in India at issue in the SEC’s July 2018 FCPA enforcement action against the company (see here).

Another unusual aspect of the Beam DOJ action was the DOJ’s position that the company did not voluntarily disclose. In contrast, in the 2018 SEC enforcement action the SEC said that the company voluntarily disclosed.

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200,000 Permits And Approvals Each Year To Do Business

redtape

Why do Foreign Corrupt Practices Act enforcement actions happen?

Often times – as highlighted numerous times on these pages – the root cause of an FCPA enforcement action is a foreign law or regulation that results in a real point of contact between a real company’s employees or agents and a real “foreign official.”

Regulatory burdens (ranging from customs procedures, licensing and certification requirements, foreign government procurement policies, etc.) create bureaucracy, bureaucracy creates interactions with foreign officials, and the more interactions with foreign officials, the greater the FCPA risk will be. It really is not that complex of a formula.

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