Lord Justice Thomas’s Innospec Sentencing Remarks
Given the frequency in which U.S. judges seem to be rubber-stamping FCPA settlements – including plea deals agreed to by the DOJ under circumstances which arguably violate the DOJ’s own policy as set forth in the US Attorneys’ Manual (see here for a prior post), it is refreshing to read Lord Justice Thomas’s stern rebuke of the DOJ-SFO’s joint settlement in the Innospec matter (see here for more on the Innospec matter).
Lord Justice Thomas (Britain’s second most senior criminal judge) concluded that the Director of the SFO “had no power to enter into the arrangements made” to settle the matter and he warned that “no such arrangements should be made again.” (See here for Lord Justice Thomas’s sentencing remarks).
With the SFO publicly stating on numerous occasions that it seeks to adopt DOJ-like enforcement strategies and procedures and given that the SFO’s conduct in the Innospec mater was very “DOJ-like”, Lord Justice Thomas’s remarks, while heavy on English law, should be more broadly viewed as an indictment of DOJ enforcement strategies as well.
The sentencing remarks begin by providing an interesting glimpse into the “negotiations” between the DOJ and SFO in the Innospec matter – the “first case where a ‘global settlement’ had been sought in respect of concurrent criminal proceedings in the UK and the US.”
The conduct at issue largely centered on Indonesia and Iraq. The sentencing remarks note that “both the SFO and DOJ agreed that the fines and other penalties which might be imposed in the US and the UK might exceed $400m in the US and $150m in the UK.”
However because any such amount “would exceed by many times the ability of Innospec to pay” “both the SFO and the DOJ agreed that, in light of Innospec’s full admission and full co-operation, they should not seek to impose a penalty which would drive the company out of business.”
The sentencing remarks then state:
“In September 2009, when it was anticipated that an acceptable settlement would be reached, discussions began between the SFO and the DOJ about the manner in which the authorities in the US and the SFO should proceed to implement any settlement and divide up the monetary amount to be paid. The discussions took place against the background that it had been agreed that the SFO would have primacy in respect to the Indonesian corruption and the DOJ in respect of the Iraq corruption.”
The sentencing remarks note that “the SFO began by suggesting a 50:50 split based upon the fact that the criminality had been orchestrated and arranged from the UK in respect of the corruption in both Iraq and Indonesia.”
However, the “DOJ would not accept this,” but rather proposed a “methodology that in the result produced a split which was approximately one third to the DOJ, one third to the SFO and one third to the SEC and the OFAC.”
As noted in the sentencing remarks, “after much further discussion on 28 January 2010 the SFO agreed to a split that was approximately one third to the DOJ, one third to the SEC and OFAC and one third to the SFO. It was agreed that the DOJ would ask the court to approve a fine of $14.1m with the balance of the US proportion going to the SEC ($11.2m) and OFAC ($2.2m); $12.7m would be the SFO’s share.”
Lord Justice Thomas next turns to the Innospec-SFO plea (see here) and states that “it became quickly apparent … that a number of difficult issues was raised by the process adopted.”
In his remarks, Lord Justice Thomas cites a paper delivered by Nicholas Purnell QC “The Risk of Abusing A Dominant Position” delivered to the International Bar Association at its New York Conference in June 2009 (see here) which notes, among other things, that newly enacted SFO guidance on “alternative methods to the disposal of criminal investigations by way of negotiated pleas or other resolutions by corporate defendants” may “introduce some unintended risks of abuse.”
Lord Justice Thomas next touches upon such issues.
Among other things, he notes that the “question has arisen as to the extent of [the SFO’s Director’s] powers and duties in the light of the constitutional position of a prosecutor, the role of the courts in the UK and the rules relating to plea agreements in the U.K.” Lord Justice Thomas specifically notes that “it is clear” that the “SFO cannot enter into an agreement … with an offender as to the penalty in respect of the offence charged,” but that a reading of the papers submitted in connection with Innospec-SFO plea “suggests that a penalty had in fact been agreed.”
In language that all U.S. judges who have rubber-stamped DOJ FCPA settlements (without inquiring into the factual and legal basis for the settlement including whether other charges more accurately fit the crime – see here) should read, Lord Justice Thomas states:
“Principles of transparent and open justice require a court sitting in public itself first to determine by a hearing in open court the extent of the criminal conduct on which the offender has entered the plea and then, on the basis of its determination as to the conduct, the appropriate sentence. It is in the public interest, particularly in relation to the crime of corruption, that … there may be discussion and agreement as to the basis of plea” and that a court “must rigorously scrutinise in open court in the interests of transparency and good governance the basis of that plea and to see whether it reflects the public interest.”
Lord Justice Thomas then states that “those who commit such serious crimes as corruption of senior government officials must not be viewed or treated in any different way to other criminals.” (See here, here and here for my prior posts on the increasing and alarming trend of bribery, yet no bribery FCPA prosecutions).
Lord Justice Thomas states that the $12.7m SFO fine is “wholly inadequate as a fine to reflect the criminality displayed by Innospec” and that if it were up to him the fine would have measured in the “tens of millions.” Nevertheless, because of Innospec’s apparent inability to pay a larger fine, he “reluctantly concluded that, on this occasion, it would neither be just nor fair in the unusual circumstances of this case for this court to impose a penalty greater than the amount allocated to the UK.”
Even so, Lord Justice Thomas is stinging in his final remarks.
He notes:
“The court was faced with an agreement made between the DOJ, the SEC, the OFAC and SFO as to the division of the sum these bodies had considered Innospec was able to pay. This was not a matter that received judicial determination in either the UK or the US (save that inherent in the Federal District Court’s approval of the plea agreement). As it is the position in both the US and the UK that it is for the court ultimately to determine the sanction to be imposed for the criminal conduct, an agreement between prosecutors as to the division, even if it had been within the power of the Director of the SFO (which as I have explained it was not), cannot be accordance with basic constitutional principles.”
Lord Justice Thomas concludes that “the Director of the SFO had no power to enter into the arrangements made and no such arrangements should be made again.”
He notes that “it is essential for the future that, unless any change is made to the rule of procedure or to the practice direction, it is appreciated this court must and will sentence in the way set out in the law, as that is what the rule of law requires” and that “this applies as much to companies as to individual defendants.”
A couple of other interesting tidbits from Lord Justice Thomas’s sentencing remarks.
With cross-border investigations and global corruption settlements seemingly becoming a new norm, Lord Justice Thomas’s comments on uniform financial penalties also bear mention. He states, “there is every reason for states to adopt a uniform approach to financial penalties for corruption of foreign government officials so that the penalties in each country do not discriminate either favourably or unfavourably against a company in a particular state.” He notes that “if the penalties in one state are lower than in another, business in the state with lower penalties will not be deterred so effectively from engaging in corruption in foreign states, whilst businesses in states where the penalties are higher may complain that they are disadvantaged in foreign states.”
Lord Justice Thomas concludes his sentencing remarks with one final dig, a dig aimed at a common feature in all DOJ FCPA pleas, non-prosecution agreements and deferred prosecution agreements – and that is the “don’t issue a press release about this unless you first approve it with us” clause.
Lord Justice Thomas notes: “It would be inconceivable for a prosecutor to approve a press statement to be made by a person convicted of burglary or rape; companies who are guilty of corruption should be treated no differently to others who commit serious crimes.”
*****
A couple of final notes about the SFO’s enforcement action against Innospec. Unlike a typical DOJ FCPA charging document, the SFO “names names.” In its previous Mabey & Johnson prosecution (see here for a prior post), the SFO specifically named the foreign official recipients of the bribe payments. That trend continues in the SFO’s charging documents against Innospec (see here).
Finally, in many cases, FCPA fines and penalties are just one “cost” to a company. While I disagree with the notion that the “costs of getting caught” should somehow factor into the final penalty amount (see here for a prior post), this is a cost that can not be ignored by companies. On this issue, para. 32 of the SFO charging document notes that “at this stage … Innospec’s internal investigation and cooperation with the SFO, DOJ, and SEC globally has cost the Company in excess of US$32 million in costs …”
Innospec Gets Hit on Both Sides of the Atlantic
Last month (see here) Innospec, Inc. disclosed that it accured $40.2 million for potential settlement of corruption investigations on both sides of the Atlantic. Yesterday, on both sides of the Atlantic, it was announced that Innospec agreed to resolve these enforcement actions by, among other things, paying $40.2 million in combined fines and penalties. How’s that for an accurate corporate disclosure!
See here for the DOJ release and criminal information, here for the SEC release and complaint, and here for the SFO release and supporting documents.
If you are looking for additional evidence / validation that the DOJ and SFO cooperate in enforcement actions, this would be it!
As explained more fully below, the Innospec enforcement action is part Iraqi Oil for Food, part payment of excessive travel and entertainmet expenses, part Cuba, part Indonesia and it involves U.S. companies, U.K. entities, Swiss entities, U.S. citizens, British citizens, German citizens, South African citizens, and Iraqi citizens.
Innospec manufacturers and sells speciality chemicals and is apparently the “world’s only manufacturer of the anti-knock compound tetraethyl lead, used in leaded gasoline.”
DOJ
According to the DOJ criminal information (here), Innospec, Innospec Limited (a wholly-owned U.K. subsidiary), Alcor Chemie Vertriebs GmbH (a wholly-owned Swiss subsidiary), Ousama Naaman (an agent for Innospec and Alcor in Iraq and elsewhere), and others, knowingly conspired: (i) to defraud the U.N. Oil for Food Program; (ii) to violate the FCPA’s antibribery provisions; and (iii) to violate the FCPA’s books and records provisions.
According to the information, the primary purpose of the conspiracy was to “obtain and retain lucrative business with the government of Iraq through payment and promise of payment of kickbacks and bribes to the Iraqi government and its officials.
In addition to the “standard” Oil for Food allegations found in previous enforcement actions (i.e. inflated commission payments to an agent which were then used to pay kickbacks to the government of Iraq), the information further alleges that “Naaman, on behalf of Innospec, paid approximately $150,000 in bribes to officials of the [Ministry of Oil (“MoO”)] to ensure” that a competitor’s product “failed a field trial test and therefore would not be used by the [MoO]…”
In addition, the information alleges that “Innospec and Naaman agreed to pay and promise to pay bribes, including but not limited to money, travel, gifts, and entertainment, to officials of the MoO to obtain and retain contracts.”
Among other overt acts, the information details an e-mail Naaman sent to, among others, Executive B (a U.S. citizen and former senior Innospec executive) that indicates “with [Director’s (a U.K. citizen and former Innospec Division Managing Director)] instructions, we proceeded, as we don’t want to discuss this issue in writing any further because it is so delicate, and as per [Director’s] instructions that we don’t elaborate in writing, for which I agree.”
According to the information, Innospec paid Naaman over $700,000 to reimburse him for payments to Iraqi officials.
The information also contains “travel” allegations including: that Innospec paid approximately $35,000 for eight Iraqi officials to travel to Switzerland for a morning meeting and “four days of sightseeing” complete with “9,000 in pocket money” for the officials;” that Naaman arranged for cash filled envelopes to be given to Iraqi officials visiting the U.K.; that Innospec paid for an Iraqi official’s “vacation with his wife in Thailand” a trip with cost approximately $13,000 including “pocket money” for the official; and that Alcor reimbursed Naaman $35,000 “to cover the cost of the travel of the three Iraqi MoO officials to Lebanon for the half-day meeting to finalize the 2008 Long Term Purchase Agreement, including hotel accomodations for six days, $1,800 for ‘entertainment, lunches, & dinners in Lebanon,’ $1,650 for ‘mobile phone cards for international calling + 3 cameras’ and $15,000 in ‘pocket money.'”
According to the information, all of these payments were improperly recorded on Alcor’s books and records (which were consolidatd with Innospec’s for purposes of financial reporting) as “commissions” or “sales promotion expenditures.”
In addition to the above described conspiracy charge, the information also charges five counts of wire fraud, five counts of FCPA antibribery violations and an FCPA books and records violation.
The DOJ release notes that, pursuant to a yet to be released plea agreement, “Innospec also admitted to selling chemicals to Cuban power plants in violation of the U.S. embargo against Cuba.” The DOJ release further notes that Innospec acknowledged paying “approximately $2.9 million in bribes to officials of the Indonesian government to secure sales.”
According to the DOJ release, as part of the plea agreement, “Innospec agreed to pay a $14.1 million criminal fine and to retain an independent compliance monitor for a minimum of three years to oversee the implementation of a robust anti-corruption and export control compliance program and report periodically to the DOJ.” According to the release, “Innospec also agreed to fully cooperate with the DOJ and other U.S. and foreign authorities in ongoing investigations of corrupt payments by Innospec employees and agents.”
In other words, stayed tuned for more. Previously, Naaman (the agent) was indicted (see here).
In annoucing the charges, Assistant Attorney General Lanny Breuer noted that “[t]oday’s case is a win for law-abiding companies trying to compete fairly in the marketplace” and that “fraud and corruption cannot be viewed simply as a cost of doing business.”
For more on the Innospec plea hearing, including Judge Ellen Segal Huvelle’s concern about the compliance monitor, see here for Christopher Matthew’s piece from Main Justice. For more on compliance monitors, and the controversy often associated with them, see here.
SEC
In its complaint (here), the SEC alleges that “[f]rom 2000 to 2007, Innospec violated the anti-bribery, books and records and internal control provisions of the FCPA when it routinely paid bribes in order to sell Tetra Ethyl Lead (“TEL”) … to government owned refineries and oil companies in Iraq and Indonesia.”
According to the SEC, “Innospec’s former management did nothing to stop the bribery activity, and in fact authorized and encouraged it.” The SEC alleges that “Innospec’s internal controls failed to detect the illicit conduct, which continued for nearly a decade.”
According to the SEC, “[i]n all, Innospec made illicit payments of approximately $6,347,588 and promised an additional $2,870,377 in illicit payments to Iraqi ministries, Iraqi government officials, and Indonesian government officials in exchange for contracts worth $176,717,341 in revenues and profits of $60,071,613.”
The SEC’s charges relating to Iraqi are substantively similar to the DOJ’s allegations in the criminal information and include both Iraqi Oil for Food conduct as well as additional improper conduct after the Oil for Food Program was terminated in late 2003.
The SEC’s complaint has more detail than the DOJ’s criminal information concerning Indonesia and alleges: (i) that “[f]rom 2000 until approximately 2005, Innospec used [a] Indonesian Agent [an Indonesian citizen] and his company to pay bribes of approximately $1,323,507 to Official X [a senior official at BP Migas, an Indonesian state owned oil and gas company … who previously was a senior official at the Ministry of Energy and Mineral Resources]”; (ii) that “in 2000 and 2001, Innospec also made payments [totaling $700,000] to government officials at Pertamina, another state owned oil compay related to BP Migas” through a “privately owned bank in Geneva, Switzerland;” and (iii) that Innospec “also bribed other officials at Pertamina in order to influence their decisions regarding TEL purchases.”
The SEC charged that “at least one U.S. person and officer was complicit in the scheme” and that “[m]any of the bribes were mischaracterized as legitimate commissions, travel and legal fees in Innospec’s books and records.”
According to the SEC, “as evidenced by the extent and duration of the improper payments to foreign officials made by Innospec, the improper recording of these payments in Innospec’s books and records, and the significant involvement of certain members of management at the highest levels of the company, Innospec failed to devise and maintain an effective system of internal controls to prevent or detect these anti-bribery and books and records violations.
The SEC release (here) notes that Innospec, without admitting or denying the SEC’s allegations, was ordered to pay $60,071,613 in disgorgement, but because of Innospec’s “sworn Statement of Financial Condition” all but $11,200,000 of that disgorgement will be waived. The release states that “[b]ased on its financial condition, Innospec offered to pay a reduced criminal fine of $14.1 million to the DOJ and a criminal fine of $12.7 million to the SFO. Innospec will pay $2.2 million to OFAC for unrelated conduct concerning allegations of violations of the Cuban Assets Control Regulations.
***
Stay tuned for additional analysis of the SFO – U.K. prong of this enforcement action.
Tetraethyl Lead v. Fighter Jets
The folks at Innospec Inc. may be wishing it sold things like fighter jets in places like Saudi Arabia than what it actually sells – things like Tetraethyl Lead in places like Indonesia. When bribery and corruption take place in the former instance, there is no exposure for bribery and corruption (see here), but when it takes place in the later instance, there is exposure for bribery and corruption.
Today, the U.K. SFO announced (here) that “Innospec Limited, a UK subsidiary of Innospec Inc., a U.S. NASDAQ listed company, has appeared before [a City of Westminster Magistrates’ Court] in response to a summons from the court on application from the Serious Fraud Office alleging conspiracy to corrupt …”. According to the release, the case “concerns bribery on a significant scale by Innospec and its agents in Indonesia” and the charges relate to Innospec Limited conspiring “with certain of its directors, executives, employees and agents to give or agree to give corrupt payments … to public officials and other agents of the Government of Indonesia as inducements to secure, or as rewards for having secured, contracts from the Government of Indonesia for the supply of Tetraethyl Lead …” According to the release, “details of the alleged offense” will be available on March 4, 2010.
This is perhaps just the first of many hammers to drop on Innospec. See here for its recent disclosure.
Friday Roundup
Some FCPA news to pass along on this Friday.
SFO Defends BAE Settlement
Richard Alderman, the Director of the U.K. Serious Fraud Office (“SFO”) recently defended the SFO settlement with BAE (see here).
Among other things, Alderman argued that any suggestion BAE “got off lightly” ignores “London’s contribution in enabling the U.S. to impose a $400 million fine.”
Point taken.
Alderman then says that the DOJ “would not have achieved what they achieved without [the SFO] and [the SFO] would not have achieved what [the SFO] achieved without [the DOJ].”
Point not taken.
What actually did the DOJ and SFO achieve in the BAE matter? What is achieved when a company settles a case invovling allegations of worldwide bribery, per the allegations in the public documents, WITHOUT being held accountable bribery?
What is achieved when you charge BAE’s agent (presumably based on evidence that the following did occur) for “conspiracy to corrupt” and for “conspiring with others to give or agree to give corrupt payments […] to unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of goods to them, namely SAAB/Gripen fighter jets, by BAE Systems Plc” and then a few days later withdraw the charges and state “[t]his decision brings to an end the SFO’s investigations into BAE’s defence contracts.”
As to this issue, Alderman stated that “the public interet lay in drawing a line under the whole investigation.”
The article notes that “two campaigning groups said they would launch a legal challenge to Mr. Alderman’s decision, saying it failed to reflect the scale and scope of the bribery allegations relating to BAE’s network of hundreds of agents on four continents.” If anyone knows who these groups are, or the legal framework (including standing) under U.K. law to allow such a challenge, please do share.
For prior posts on BAE, includng the DOJ’s non-bribery, bribery allegations see here.
Alderman did also suggest that additional joints DOJ/SEC settlements are being negotiated.
The Pipes May Soon Burst
Ocassionaly, I have covered “cases” reportedly in the FCPA pipeline (see here). Set forth below is some “pre-news” about some coming attractions.
Given the above, it seems fitting to start with KBR, Inc.
KBR, Inc.
Here’s what Halliburton had to say earlier this week regarding its exposure via M.W. Kellogg / KBR for the SFO piece of the investigation into Bonney Island (Nigeria)(pgs. 35-36, 63-64). For a prior post see here.
Pride International Inc.
Earlier this week, Pride disclosed (here) that:
“it has accrued $56.2 million in the fourth quarter of 2009 in anticipation of a possible resolution with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) of potential liability under the U.S. Foreign Corrupt Practices Act. {…] The accrual in the fourth quarter 2009 represents the company’s best estimate of potential fines, penalties and disgorgement related to settlement of the matter with the DOJ and SEC. The monetary sanctions ultimately paid by the company to resolve these issues, whether imposed on the company or agreed to by settlement, may exceed the amount of the accrual.”
For prior posts about Pride see here.
Innospec, Inc.
Here is what Innospec had to say about its on-going FCPA matter:
“”We have made substantial progress, but not yet completed, negotiations of final settlements of the Oil for Food Program and FCPA investigations, in either the U.S. or United Kingdom. However, we have charged a further $21.9 million in the quarter, based on the status of ongoing discussions, to bring the total amount accrued to $40.2 million. The Company will make no further comments on the ongoing proceedings.”
Alcatel-Lucent
Alcatel-Lucent recently provided (here) details (see pg. 112) on its FCPA (and other) exposure concerning conduct in Costa Rica and other places. In pertinent part the company stated:
“As previously disclosed in its public filings, Alcatel-Lucent has engaged in settlement discussions with the DOJ and the SEC with regard to the ongoing FCPA investigations. These discussions have resulted in December 2009 in agreements in principle with the staffs of each of the agencies. There can be no assurances, however, that final agreements will be reached with the agencies or accepted in court. If finalized, the agreements would relate to alleged violations of the FCPA involving several countries, including Costa Rica, Taiwan, and Kenya. Under the agreement in principle with the SEC, Alcatel-Lucent would enter into a consent decree under which Alcatel-Lucent would neither admit nor deny violations of the antibribery, internal controls and books and records provisions of the FCPA and would be enjoined from future violations of U.S. securities laws, pay U.S.
$45.4 million in disgorgement of profits and prejudgment interest and agree to a three-year French anticorruption compliance monitor to evaluate in accordance with the provisions of the consent decree (unless any specific provision therein is expressly determined by the French Ministry of Justice to violate French law)
the effectiveness of Alcatel-Lucent’s internal controls, record-keeping and financial reporting policies and procedures. Under the agreement in principle with the DOJ, Alcatel-Lucent would enter into a three-year deferred prosecution agreement (DPA), charging Alcatel-Lucent with violations of the internal controls and
books and records provisions of the FCPA, and Alcatel-Lucent would pay a total criminal fine of U.S. $ 92 million—payable in four installments over the course of three years. In addition, three Alcatel-Lucent subsidiaries—Alcatel-Lucent France, Alcatel-Lucent Trade and Alcatel Centroamerica—would each plead guilty to
violations of the FCPA’s antibribery, books and records and internal accounting controls provisions. The agreement with the DOJ would also contain provisions relating to a three-year French anticorruption compliance monitor. If Alcatel-Lucent fully complies with the terms of the DPA, the DOJ would dismiss the charges upon
conclusion of the three-year term.”
For the trials and tribulations on both sides of this corporate hyphen see here and here.
Thirsty for more? OK, here is the last one.
Maxwell Technologies Inc.
Here is what the company’s CEO had to say about its $9.3 million accural for a potential FCPA settlement:
“Unfortunately, all this good news is tempered by the GAAP required $9.3 million accrual we recorded in Q4 for the potential settlement of FCPA violations in connection with the sale of high-voltage capacitor products in China by our Swiss subsidiary. As we reported previously, after we became aware of questionable payments made to an independent sales agent in China, we disclosed that discovery and initiated an internal review and we have been voluntarily sharing information with the SEC and the Justice Department.”
See also here.
*****
A good weekend to all.
Friday Roundup
Some FCPA news to pass along on this Friday.
SFO Defends BAE Settlement
Richard Alderman, the Director of the U.K. Serious Fraud Office (“SFO”) recently defended the SFO settlement with BAE (see here).
Among other things, Alderman argued that any suggestion BAE “got off lightly” ignores “London’s contribution in enabling the U.S. to impose a $400 million fine.”
Point taken.
Alderman then says that the DOJ “would not have achieved what they achieved without [the SFO] and [the SFO] would not have achieved what [the SFO] achieved without [the DOJ].”
Point not taken.
What actually did the DOJ and SFO achieve in the BAE matter? What is achieved when a company settles a case invovling allegations of worldwide bribery, per the allegations in the public documents, WITHOUT being held accountable bribery?
What is achieved when you charge BAE’s agent (presumably based on evidence that the following did occur) for “conspiracy to corrupt” and for “conspiring with others to give or agree to give corrupt payments […] to unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of goods to them, namely SAAB/Gripen fighter jets, by BAE Systems Plc” and then a few days later withdraw the charges and state “[t]his decision brings to an end the SFO’s investigations into BAE’s defence contracts.”
As to this issue, Alderman stated that “the public interet lay in drawing a line under the whole investigation.”
The article notes that “two campaigning groups said they would launch a legal challenge to Mr. Alderman’s decision, saying it failed to reflect the scale and scope of the bribery allegations relating to BAE’s network of hundreds of agents on four continents.” If anyone knows who these groups are, or the legal framework (including standing) under U.K. law to allow such a challenge, please do share.
For prior posts on BAE, includng the DOJ’s non-bribery, bribery allegations see here.
Alderman did also suggest that additional joints DOJ/SEC settlements are being negotiated.
The Pipes May Soon Burst
Ocassionaly, I have covered “cases” reportedly in the FCPA pipeline (see here). Set forth below is some “pre-news” about some coming attractions.
Given the above, it seems fitting to start with KBR, Inc.
KBR, Inc.
Here’s what Halliburton had to say earlier this week regarding its exposure via M.W. Kellogg / KBR for the SFO piece of the investigation into Bonney Island (Nigeria)(pgs. 35-36, 63-64). For a prior post see here.
Pride International Inc.
Earlier this week, Pride disclosed (here) that:
“it has accrued $56.2 million in the fourth quarter of 2009 in anticipation of a possible resolution with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) of potential liability under the U.S. Foreign Corrupt Practices Act. {…] The accrual in the fourth quarter 2009 represents the company’s best estimate of potential fines, penalties and disgorgement related to settlement of the matter with the DOJ and SEC. The monetary sanctions ultimately paid by the company to resolve these issues, whether imposed on the company or agreed to by settlement, may exceed the amount of the accrual.”
For prior posts about Pride see here.
Innospec, Inc.
Here is what Innospec had to say about its on-going FCPA matter:
“”We have made substantial progress, but not yet completed, negotiations of final settlements of the Oil for Food Program and FCPA investigations, in either the U.S. or United Kingdom. However, we have charged a further $21.9 million in the quarter, based on the status of ongoing discussions, to bring the total amount accrued to $40.2 million. The Company will make no further comments on the ongoing proceedings.”
Alcatel-Lucent
Alcatel-Lucent recently provided (here) details (see pg. 112) on its FCPA (and other) exposure concerning conduct in Costa Rica and other places. In pertinent part the company stated:
“As previously disclosed in its public filings, Alcatel-Lucent has engaged in settlement discussions with the DOJ and the SEC with regard to the ongoing FCPA investigations. These discussions have resulted in December 2009 in agreements in principle with the staffs of each of the agencies. There can be no assurances, however, that final agreements will be reached with the agencies or accepted in court. If finalized, the agreements would relate to alleged violations of the FCPA involving several countries, including Costa Rica, Taiwan, and Kenya. Under the agreement in principle with the SEC, Alcatel-Lucent would enter into a consent decree under which Alcatel-Lucent would neither admit nor deny violations of the antibribery, internal controls and books and records provisions of the FCPA and would be enjoined from future violations of U.S. securities laws, pay U.S.
$45.4 million in disgorgement of profits and prejudgment interest and agree to a three-year French anticorruption compliance monitor to evaluate in accordance with the provisions of the consent decree (unless any specific provision therein is expressly determined by the French Ministry of Justice to violate French law)
the effectiveness of Alcatel-Lucent’s internal controls, record-keeping and financial reporting policies and procedures. Under the agreement in principle with the DOJ, Alcatel-Lucent would enter into a three-year deferred prosecution agreement (DPA), charging Alcatel-Lucent with violations of the internal controls and
books and records provisions of the FCPA, and Alcatel-Lucent would pay a total criminal fine of U.S. $ 92 million—payable in four installments over the course of three years. In addition, three Alcatel-Lucent subsidiaries—Alcatel-Lucent France, Alcatel-Lucent Trade and Alcatel Centroamerica—would each plead guilty to
violations of the FCPA’s antibribery, books and records and internal accounting controls provisions. The agreement with the DOJ would also contain provisions relating to a three-year French anticorruption compliance monitor. If Alcatel-Lucent fully complies with the terms of the DPA, the DOJ would dismiss the charges upon
conclusion of the three-year term.”
For the trials and tribulations on both sides of this corporate hyphen see here and here.
Thirsty for more? OK, here is the last one.
Maxwell Technologies Inc.
Here is what the company’s CEO had to say about its $9.3 million accural for a potential FCPA settlement:
“Unfortunately, all this good news is tempered by the GAAP required $9.3 million accrual we recorded in Q4 for the potential settlement of FCPA violations in connection with the sale of high-voltage capacitor products in China by our Swiss subsidiary. As we reported previously, after we became aware of questionable payments made to an independent sales agent in China, we disclosed that discovery and initiated an internal review and we have been voluntarily sharing information with the SEC and the Justice Department.”
See also here.
*****
A good weekend to all.