Invoice Schemes
To “fund” a bribery scheme, money often needs to be “generated” within a business organization.
In several Foreign Corrupt Practices Act enforcement actions, invoice schemes have been that mechanism.
For instance, in the BIT Mining (500.com) enforcement action, the SEC stated: “During the relevant period, 500.com failed to properly verify that payments to consultants were used for their stated purposes, and it failed to have mitigating controls to verify that services were properly rendered before paying the consultants and corresponding expense reimbursements. Executives at 500.com were able to direct employees to pay invoices without having supporting documented deliverables and to pay cash bribes.”
Issues To Consider From The Moog Enforcement Action
This previous post highlighted the $1.7 million Foreign Corrupt Practices Act enforcement actions against Moog Inc. concerning subsidiary conduct in India.
This post highlights additional issues to consider.
No Prior Disclosure
It is rarely a surprise when a publicly-traded company (an issuer under FCPA speak) resolves an FCPA enforcement action because most issuers disclose FCPA scrutiny in an SEC filing.
Invoice Schemes
To “fund” a bribery scheme, often times money needs to be “generated” within a business organization.
As highlighted below, in numerous Foreign Corrupt Practices Act enforcement actions the money is “generated” through an invoicing scheme with a third party.
The below enforcement actions are not the complete list of enforcement actions to involve an invoicing scheme, but rather representative examples.
SAP Joins The Repeat Offender Club
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).
Freepoint Commodities Resolves FCPA Enforcement Action
In February 2023, the DOJ announced that Glenn Oztemel (previously employed by Freepoint Commodities LLC) and Eduardo Innecco (an agent for the company) were charged with FCPA and related offenses for an alleged Brazil bribery scheme. (See here for the prior post).
In summary fashion, the indictment alleged:
“Between in or about 2010 and continuing until in or about 2018, Glenn Oztemel and Eduardo Innecco, together and with others, agreed to pay, and did pay, bribes to foreign officials at Brazil’s state-owned and state-controlled oil and gas company, Petroleo Brasileiro S.A. – Petro bras (“Petrobras”), on behalf of Trading Company #1 and Trading Company #2. In exchange for the bribes, foreign officials at Petrobras, including Rodrigo Berkowitz (“Berkowitz”), who has been charged separately, provided Oztemel, Innecco and others with confidential information related to Petrobras’s business. The inside information and other improper assistance Berkowitz provided to Oztemel, Innecco and others gave Trading Company #1 and Trading Company #2 improper business advantages in trades with Petrobras.