From The Dockets
This previous post mentioned that the DOJ filed a superseding indictment adding Foreign Corrupt Practices Act charges to its existing 2015 enforcement action against Ng Lap Seng and Jeff Yin.
This previous post highlighted the May 2015 civil case brought by Sanford Wadler (the former General Counsel of Bio-Rad) asserting various employment claims against the company in the aftermath of the company’s 2014 FCPA enforcement action in which it agreed to pay approximately $55 million to resolve DOJ and SEC FCPA enforcement actions.
This post further highlights the DOJ’s individual criminal charges against Ng and Yin as well as the strange twist in the Wadler – Bio-Rad litigation.
Cognizant Technology Solutions – An Interesting, Albeit Early, FCPA Case Study
As highlighted in this prior post, on September 30th Cognizant Technology Solutions disclosed that it voluntarily disclosed to the DOJ and SEC “certain payments relating to facilities in India [that] were made improperly and in possible violation of the FCPA and other applicable laws.”
Even though Cognizant’s FCPA scrutiny is a mere six weeks old, it presents an interesting FCPA case study as to the FCPA’s many “ripples.” (See here for the article “FCPA Ripples“). As stated in the article: “because of the many ripples of FCPA enforcement, it is important that FCPA enforcement be subjected to meaningful judicial scrutiny and that enforcement actions represent legitimate instances of provable FCPA violations, not merely settlements entered into for reasons of risk aversion.”
On this issue, it is interesting to note that Cognizant’s FCPA scrutiny relates to permits in connection with certain facilities in India and you can read all about actual legal authority concerning this type of FCPA enforcement theory in this article.
Issues To Consider From The Och-Ziff Enforcement Action
Previous posts here and here went in-depth into the recent Foreign Corrupt Practices Act enforcement action against Och-Ziff, Daniel Och and Joel Frank.
This post continues the analysis by highlighting additional issues to consider. As highlighted below, embedded in the approximately 175 pages of resolution documents were several notable issues.
Time Line
According to Och-Ziff’s prior disclosures “beginning in 2011, and from time to time thereafter, we have received subpoenas from the SEC and requests for information from the U.S. Department of Justice (the “DOJ”) in connection with an investigation involving the FCPA and related laws.”
Friday Roundup
No comment, scrutiny alert, when the obvious is not so obvious, quotable, undercover, follow-up, and for the reading stack. It’s all here in the Friday roundup.
No Comment
The recent FCPA enforcement action against Chile-based LAN Airlines (in which the company paid $22 million to resolve DOJ and SEC enforcement actions concerning an alleged payment to resolve an Argentina labor dispute) suggested that both Argentine and Chilean law enforcement officials had commenced investigations of the conduct approximately five years ago.
I’ve tried to find information in the public domain regarding these apparent law enforcement investigations but have generally struck out.
For instance, I contacted LAN’s investor relations office and posed the following question:
Key Energy And The 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.