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Friday Roundup


Predictable, scrutiny alert, in the words of Attorney General Lynch, bankrupt, DOJ guidance, and for the reading stack. It’s all here in the Friday roundup.


It’s as predictable as the sun rising in the east.

A former FCPA enforcement official criticizes certain aspects of FCPA enforcement. As noted in this Law360 article, former DOJ Assistant Attorney General of the Criminal Division Lanny Breuer (who took a great interest in FCPA enforcement while in that position – see here for the article “Lanny Breuer and FCPA Enforcement”) recently observed as follows regarding the DOJ’s FCPA Pilot Program.

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Key Energy And The Parallel Universe

parallel universe

The conduct giving rise to last week’s FCPA enforcement action against Key Energy Services (see here and here for prior posts) was subject to judicial scrutiny once.

And it was not last week’s SEC administrative order.

As highlighted in this previous post, in March 2016 Judge Melinda Harmon (S.D.Tex.) dismissed securities fraud claims brought against Key Energy Services (See In re Key Energy Services Inc. Securities Litigation, 2016 WL 1305922 (March 31, 2016). The action touched upon, in part, the same general conduct alleged in the SEC’s order.

While there are obvious substantive and procedural differences between a securities fraud action and a finding of FCPA books and records and internal controls violations (what last week’s SEC order found), at the very least these two actions were part of the same parallel universe.

Thus, it is interesting to explore what happened in the action subjected to judicial scrutiny vs. last week’s SEC order.

In short, whereas the SEC found that Key Energy “failed to implement and maintain sufficient internal controls,” a federal court judge found (despite plaintiffs’ allegations to the contrary including statements from several confidential witnesses) that Key Energy’s “FCPA controls were adequate.” Whereas the SEC suggests, with the benefit of hindsight that there were controls that Key Energy should have had, a federal court judge found that certain of the controls Key Energy did not have were not even required for a company to have adequate internal controls.

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Issues To Consider From The Key Energy Enforcement Action


This prior post summarized the recent Foreign Corrupt Practices Act enforcement action against Key Energy Services. This post continues the analysis by highlighting additional issues to consider.

Pre-Enforcement Action Professional Fees and Expenses

As highlighted in “FCPA Ripples,” settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement in this new era.

According to Key Energy’s 10-K filed in February 2015, the company had “legal expenses related to the FCPA investigation of $41.1 million.” Key Energy’s 10-K filed in February 2016 did not mention a specific figure, but merely stated that there “lower expenses related to our FCPA investigations compared to the prior year.”

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Indirect Mexico Subsidiary Exposes Key Energy Services To $5 Million FCPA Enforcement Action

Key Energy

Last Friday, the SEC announced this administrative order finding that Key Energy Services violated the books and records and internal control provisions of the Foreign Corrupt Practices Act.

In pertinent part, the SEC found that certain employees of an indirect Mexico subsidiary “abused their privileges, approving suspect arrangements with and payments to consultants and gifts to Mexican government officials at Pemex, and concealing these arrangements and payments from Key Energy.”

Without admitting or denying the SEC’s findings, Key Energy agreed to pay $5 million in disgorgement.

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Friday Roundup


A plethora of scrutiny alerts and updates and for the reading stack. It’s all here in the Friday Roundup.

Scrutiny Alerts and Updates

Unaoil Related

The disclosures keep coming from companies mentioned in the recent Unaoil media reports (see here for the prior post).

FMC Technologies, an oil and gas services company, recently disclosed:

“On March 28, 2016 we received an inquiry from the United States Department of Justice (“DOJ”) related to the DOJ’s investigation of whether certain services Unaoil S.A.M. provided to its clients, including FMC Technologies, violated the Foreign Corrupt Practices Act. We are cooperating with the DOJ’s inquiry and are conducting our own internal investigation.”

KBR, a company which resolved an FCPA enforcement action in 2009 concerning conduct in Nigeria , recently disclosed:

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