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SEC Extracts $15 Million From Rio Tinto In First Corporate Enforcement Action Of 2023


In the minds of some (including former FCPA enforcement officials – see here), Foreign Corrupt Practices Act enforcement is a convenient cash cow for the U.S. government.

Those who believe this will find new support in the first corporate FCPA enforcement action of 2023.

The basic findings are as follows.

Approximately 12 years ago, Rio Tinto (a metal and mining company with headquarters in Australia and the United Kingdom) hired a French investment banker and close friend of a former senior Guinean government official as a consultant to help the company retain mining rights in Guinea.

Even though both Australia and the United Kingdom have laws and law enforcement resources to adequately address the conduct at issue, the U.S. nevertheless extracted $15 million from Rio Tinto because the company had American Depository Shares that traded on a U.S. exchange.

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Friday Roundup


Scrutiny alerts and updates, Goldman ripples, and for the reading stack. It’s all here in the Friday roundup.

Scrutiny Alerts and Updates


As highlighted in this 2015 post, the Uzbekistan telecom bribery scheme involved several companies. In 2016, VimpelCom resolved an FCPA enforcement action with a net settlement amount (after accounting for various credits and deductions for related foreign law enforcement action) of approximately $398 million. In 2017, Telia resolved an FCPA enforcement action with a net settlement amount of $483 million.

Next up will be Russia-based Mobile TeleSystems PJSC, a company with shares traded on the New York Stock Exchange, which recently disclosed:

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DOJ Criminally Charges Gabonese National Connected To Och-Ziff With FCPA Conspiracy In Connection With African Mining Projects


Och-Ziff, a publicly-traded hedge fund that has been under Foreign Corrupt Practices Act scrutiny since 2011 for its business dealings in Africa, recently disclosed that it is in discussions with the DOJ and SEC regarding resolution of the matter. As noted in this recent post, Och-Ziff has reserved over $400 million in anticipation of the resolution. (For the latest on this expected resolution see here).

In the meantime, a criminal complaint was recently unsealed charging Samuel Mebiame, a Gabonese national connected to Och-Ziff, with conspiracy to violate the FCPA’s anti-bribery provisions.

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Kansas, Africa, FCPA

Kansas, Africa, Foreign Corrupt Practices Act. It’s likely you probably never saw these words in the same sentence.

That is until earlier this month when Kansas based Layne Christensen (here), “a world leader in non-oil field contract drilling and manufacturing” disclosed in its December 8th 10-Q filing (here) as follows.

“In connection with the Company updating its Foreign Corrupt Practices Act (“FCPA”) policy, questions were raised internally in late September 2010 about, among other things, the legality of certain payments by the Company to customs clearing agents in connection with importing equipment into the Democratic Republic of Congo (“DRC”) and other countries in Africa. The Audit Committee of the Board of Directors has engaged outside counsel to conduct an internal investigation to review these and other payments with assistance from an outside accounting firm. Although the internal investigation is ongoing, based on the results to date, the Company currently believes the amount of such questionable payments is not material with respect to the Company’s results of operations or its financial statements.”

Elsewhere, the filing states as follows.

“The Company has contacted the Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”) to inform them of this matter and intends to cooperate fully with these governmental authorities. At this stage of the internal investigation, the Company is unable to predict whether the SEC and DOJ will open separate investigations of this matter, or any potential remedies or actions these agencies may pursue. Although the Company has had a long-standing published policy requiring compliance with the FCPA and broadly prohibiting any improper payments by the Company to foreign or U.S. officials, the Company has adopted additional policies and procedures to enhance compliance with the FCPA and related books and records requirements. Further measures may be required once the investigation is concluded. Although the internal investigation is ongoing and no conclusions have yet been reached, based on the results to date, the Company currently believes the amount of such questionable payments is not material with respect to the Company’s results of operations or its financial statements. The Company has concluded that it is premature for it to make any financial reserve for any potential liabilities that may result from these activities given the status of the internal investigation. Additional potential FCPA violations or violations of other laws or regulations may be uncovered through the investigation.”

Among other things, the filing notes that “if it is determined that a violation of the FCPA has occurred, such violation may give rise to an event of default under the agreements governing our debt instruments.”

According to its website (here), Layne Christensen has offices in Tanzania, Congo, Zambia and Mali. According to Layne Christensen’s 2010 annual report (here) the company’s mineral exploration division ” relies heavily on mining activity in Africa where 29% of total division revenues were generated for fiscal 2010.”

As I noted in this 2007 article, mining companies are increasingly doing business in countries where corruption and bribery are endemic thereby increasing FCPA risk exposure. Indeed, as stated in Layne Christensen’s annual report, “as mineral resources in developed countries are exhausted and new discoveries begin to slow, mining companies have focused attention on underdeveloped nations as an important source of future production.”

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