In Connection With A 2006 Argentine Labor Dispute, Chilean Airline Pays U.S. Government $22 Million
Five months ago, the SEC brought a Foreign Corrupt Practices Act enforcement action against Ignacio Cueto Plaza (“Cueto”), the Chilean CEO of Santiago, Chile based LAN Airlines S.A. (“LAN”) for authorizing payments in 2006 and 2007 to a third party consultant in Argentina in connection with LAN’s attempts to settle disputes on wages and other work conditions between LAN Argentina S.A. (“LAN Argentina”), a subsidiary of LAN, and its employees.
Yesterday, the DOJ and SEC returned to the same conduct by announcing (here and here) parallel FCPA enforcement actions against LAN.
In short, the end result of an old labor dispute between a Chilean airline and Argentine workers is approximately $22 million flowing into the U.S. Treasury because LAN has shares that are traded on a U.S. exchange.
Criminal Books And Records And Internal Controls Enforcement Actions
I sometimes read certain FCPA commentators and just shake my head in disbelief. Does the author have any regard for facts and/or any interest in conducting basic research to discover the facts?
For instance, in this recent post a commentator states:
“Until now, the Justice Department has not brought a criminal circumvention of internal controls case. If the Justice Department brings such a case, it will be subject to scrutiny. The Justice Department has been very careful when conducting enforcement actions against individuals under the FCPA, and I am sure they will look for the “right set of facts” to bring such a precedent setting case. A criminal prosecution of internal controls and books and records violations will raise the stakes on the wisdom and applicability of the provisions. It is one thing to bring a civil action – it is quite another to bring a criminal action, especially against individuals for violating so-called internal rules and regulations.”
The notion that the DOJ has never brought a criminal enforcement action involving books and records and internal controls violations is just plain false.
Issues To Consider From The Johnson Controls Enforcement Action
Prior posts here and here concerned the Foreign Corrupt Practices Act enforcement action earlier this week against Johnson Controls (JCI). This post continues the analysis by highlighting additional issues to consider.
Timeline
According to the SEC’s Order “JCI self-reported the potential FCPA violations to the SEC staff and DOJ in June 2013.” Thus, from start to finish JCI’s FCPA scrutiny lasted 3 years and 1 month.
If the DOJ/SEC want the public to have confidence in their FCPA enforcement programs, they must resolve instances of FCPA scrutiny much quicker.
Issues To Consider From The Analogic Enforcement Action
This previous post went in-depth regarding last week’s $14.9 million Foreign Corrupt Practices Act enforcement action against Analogic Corp. and a related entity.
This post continues the analysis by highlighting various issues to consider.
Sparse Allegations
Rarely has an SEC enforcement action against an issuer contained such few allegations against, well, the issuer.
FCPA Flash – A Conversation With Thomas Gorman
The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from the written posts on FCPA Professor.
This FCPA Flash episode is a conversation with Thomas Gorman, a lawyer with Dorsey & Whitney. Prior to private practice, Gorman spent several years at the SEC including as Senior Counsel in the SEC’s Division of Enforcement. Gorman focuses his practice on SEC and related public company issues including those arising under the Foreign Corrupt Practices Act. In addition, Gorman founded and runs the informative SEC Actions blog.
In the episode, Gorman talks about the FCPA’s books and records and internal controls provisions using the recent Las Vegas Sands enforcement action as a guide (see prior posts here and here). In addition, Gorman responds to the following questions: whether the books and records and internal controls provisions are essentially standardless and whether the SEC, with the perfect benefit of hindsight, advances expansive theories of liability; and whether with ever-expanding theories of enforcement, the time has come for an issuer to put the SEC to its burden of proof in an FCPA enforcement action.