Friday Roundup
Nigeria drops charges against Dick Cheney after Halliburton reportedly pays $250 million; James Giffen is sad, though not bitter; an Iraqi Oil for Food prosecution … in Scotland; International Anti-Corruption Day is “marred”; and another voice joins “the FCPA simply means what the enforcement agencies say it means” chorus … it’s all here in the Friday Roundup.
Charges Against Cheney in Nigeria Dropped
On December 7th, Nigerian authorities apparently filed criminal charges against Dick Cheney, and others, in connection with the Bonny Island bribery scheme. As discussed in this prior post, Cheney was CEO of Halliburton from 1995 until 2000. In February 2009, Halliburton, Kellogg Brown & Root LLC, and KBR Inc. agreed to pay $579 million in combined DOJ/SEC FCPA enforcement action to resolve charges related to Bonny Island. According to the DOJ, the improper conduct took place between 1994 and 2004. The case remains the largest ever FCPA enforcement action against a U.S. company.
Farida Mzamber Waziri, the executive chairwomen of Nigeria’s Economic and Financial Crimes Commission stated, “Dick Cheney was head of Halliburton” “There’s no way such amount of money would’ve been moved to bribe Nigeria without his approval and without his knowledge, this is what we’re saying.” (See here for a video).
In a swift conclusion to the matter, it is been reported (see here among other places) that Nigeria has dropped charges against Cheney after his former employer, Halliburton, agreed to pay a $250 million fine. According to the report, the sum consists of $120 million in penalties and the repatriation of $130 million.
According to this report in the U.K. Telegraph, former U.S. President George H.W. Bush and former Secretary of State James Baker helped in the negotiations.
A Halliburton spokesman is quoted as saying “we have no comment to make on this.”
Sad, But Not Bitter
David Glovin (Bloomberg) recently sat down with James Giffen and penned this article. For more on the Giffen enforcement action and its mysterious conclusion see here for numerous prior posts.
Giffen is sad, though not bitter about what he terms the DOJ’s “selective” prosecution of him and he asks “in whose interest was the investigation in the first place.” Given Giffen’s “public authority” defense, much of the case focused on classified documents. Not even Giffen’s lawyer, William Schwartz (here) had access to many of the documents – one person did and that was Judge William Pauley (S.D.N.Y.) “who made his feelings known.” (see here).
Wehr Group
Glasgow, Scotland based engineering firm Wehr Group plc (here) recently pleaded guilty to two charges of breaching UN sanctions in connection with a number of UN sanctioned Iraqi Oil for Food contracts awarded between 2000 and 2002. As noted in the company’s release (here), “following the guilty plea, Weir has been subject to a confiscation order in the sum of £13,945,962. In addition it has been fined £3 million.” For more see here.
International Anti-Corruption Day “Marred”
Raymond Baker (here), the Director of Global Financial Integrity, says here that “this year’s International Anti-Corruption Day [was] marred by a U.S. Chamber of Commerce attempt to weaken the Foreign Corrupt Practices Act.” In November, the Chamber released a paper (here) authored by Andrew Weissman and Alixandra Smith titled “Restoring Balance – Proposed Amendments to the Foreign Corrupt Practices Act.”
According to Baker, “the short answer” to various issues raised by the current era of FCPA enforcement is simple: “don’t bribe anyone, whether she/he is a public official, a private citizen, or someone in between.”
Gee, thanks for that guidance, problem solved!
The FCPA’s Big Lesson
Richard Cassin, creator of the FCPA Blog and a pioneer of the FCPA’s blogosphere, hit the ball out of the park with this recent column for Ethisphere.
Among other things, Cassin writes as follows: “I know there’s practically no FCPA-related case law, no precedent to follow, no stare decisis to light the way. So the FCPA is pretty much what the enforcement agencies say it is. And that’s what’s so very different and difficult about it. It’s what I call the FCPA’s Big Lesson.”
*****
A good weekend to all.
Cheney Reportedly To Be Charged By Nigerian Authorities In Connection With Bonny Island
During Tuesday’s Senate subcommittee FCPA hearing, Senator Christopher Coons noted, in connection with other nations ramping up enforcement of their own bribery laws, that “today we are the only nation that is extending extraterritorial reach and going after the citizens of other countries, we may some day find ourselves on the receiving end of such transnational actions.”
Prescient statement.
Bloomberg is reporting (here) that Nigeria’s Economic and Financial Crimes Commission will soon files charges against former Vice President Dick Cheney and officials from five foreign companies, including Halliburton Co., in connection with the Bonny Island bribery scheme.
Bloomberg reports that indictments will be filed in a Nigeria court and that an arrest warrant for Cheney “will be issued and transmitted through Interpol” for enforcement. As noted by Bloomberg, Cheney was CEO of Halliburton from 1995 until 2000.
In February 2009, Halliburton, Kellogg Brown & Root LLC, and KBR Inc. agreed to pay $579 million in combined DOJ/SEC FCPA enforcement action to resolve charges related to Bonny Island. According to the DOJ, the improper conduct took place between 1994 and 2004. The case remains the largest ever FCPA enforcement action against a U.S. company.
See here for the DOJ resolution and here for the SEC resolution.
The DOJ’s press release (here) states that the “successful prosecution of KBR […] demonstrates that no one is above the law” and that the FBI “will continue to investigate these matters by working in partnership with other law enforcement agencies, both foreign and domestic, to ensure that corporate executives who have been found guilty of bribing foreign officials in return for lucrative business contracts, are punished to the full extent of the law.”
Over the summer, Technip and Snamprogetti/Eni, joint venture partners with KBR, also agreed to settle FCPA enforcement actions in connection with Bonny Island.
Technip agreed to pay $338 million in a joint DOJ / SEC enforcement action (see here and here).
Snamprogetti/ENI agreed to pay $365 million in a joint DOJ / SEC enforcement action (see here and here).
The fourth joint venture partner, JGC of Japan, has yet to resolve its exposure although it has been reported that it is settlement discussions with the DOJ.
For a complete run-down of “Bonny Island Bribery Club Statistics” see here.
The only individual charged thus far has been Albert Jack Stanley (see here). Stanley pleaded guilty and was originally scheduled to be sentenced in May 2009, but has not yet been sentenced.
Two joint venture agents, Jeffrey Tesler and Wojciech Chodan (both U.K. citizens) have also been charged (see here). Tesler and Chodan have been fighting extradition.
Yesterday, the U.K. Guardian (here) reported that Chodan, who had given up his extradition battle, is to arrive in the U.S. in the next 10 days to stand trial. The Guardian reports that Tesler will seek to overturn his extradition today.
Offices of Deutsche Telekom Searched
According to this September 3rd Dow Jones Newswire story “a German public prosecutor’s office based in Bonn [recently] searched German telecommunications company Deutsche Telekom AG offices as part of an initial inquiry into bribery allegations involving eight people, in response to a request from U.S. authorities.”
Deutsche Telekom holds a 59% stake in Magyar Telekom (see here) and the article suggests that the search is in connection with Magyar Telekom’s previously disclosed FCPA inquiry.
As the article notes, Hungary-based Magyar Telekom (see here), a company with ADRs listed on the New York Stock Exchange, disclosed suspicious payments and in December 2009 the company released this detailed press release.
In its Presentation of Second Quarter Results 2010 (see here) Magyar Telekom stated as follows:
“As previously announced, the DOJ, the SEC and the Ministry of Interior of the Republic of Macedonia have commenced investigations into certain of the Company’s activities that were the subject of the internal investigation. Further, in relation to certain activities that were the subject of the internal investigation, the Hungarian Central Investigating Chief Prosecutor’s Office has commenced a criminal investigation into alleged corruption with the intention of violating obligations in international relations and other alleged criminal offenses. Also, as previously announced, the Hungarian National Bureau of Investigation (“NBI”) has begun a criminal investigation into alleged misappropriation of funds relating to payments made in connection with the Company’s ongoing internal investigation and the possible misuse of personal data of employees in the context of the internal investigation. These governmental investigations are continuing, and the Company continues to cooperate with those investigations.
The Company, through its external legal counsel, has recently engaged in discussions with the DOJ and the SEC regarding the possibility of resolving their respective investigations as to the Company through negotiated settlements. The Company has not reached any agreement with either the DOJ or the SEC regarding resolution of their respective investigations, and discussions with both agencies are continuing. We may be unable to reach a negotiated settlement with either agency. Any resolution of the investigations could result in criminal or civil sanctions, including monetary penalties and/or disgorgement, against the Company or its affiliates, which could have a material effect on the Company’s financial position, results of operations or cash flows, as well as require additional changes to its business practices and compliance programs. The Company cannot predict or estimate whether or when a resolution of the DOJ or SEC investigations will occur, or the terms, conditions, or other parameters of any such resolution, including the size of any monetary penalties or disgorgement, the final outcome of these investigations, or any impact such resolution may have on its financial statements or results of operations. Consequently, the Company has not made any provisions in its financial statements as of June 30, 2010 with respect to the investigations.
Magyar Telekom incurred HUF 1.4 bn expenses [approximately $6.3 million] relating to the investigations in the first half of 2010, which are included in other operating expenses of Group Headquarters.”
Friday Roundup
The Bribery Act is not the only thing delayed in the U.K., where in the world is James Tillery, Thai authorities looking into Alliance One and Universal Corp bribe recipients, and corporate directors appear satisfied … it’s all here in the Friday roundup.
BAE U.K. Plea Agreement Delayed
In a recent article in The Times (London), Alex Spence and David Robertson report that the BAE – SFO plea agreement “is unlikely to come before the courts for approval before November.”
In February (see here) the SFO announced that it “reached an agreement with BAE Systems that the company will plead guilty” to the offense of “failing to keep reasonably accurate accounting records in relation to its activities in Tanzania.” The SFO resolution was controversial given that BAE was viewed by many to have engaged in bribery around the world.
The Times reports “that the SFO fears that a judge may now refuse to approve the BAE settlement or increase the penalties imposed on the company.” The article indicates that “BAE, which has always denied bribery, is understood to be frustrated by the slow progress of the SFO case, but the delay is not thought to have had an impact on the company’s operations.”
James Tillery
In December 2008, James Tillery, a former executive of Willbros International Inc., and Paul Novak, a consultant to the company, were criminally charged “in connection with a conspiracy to pay more than $6 million in bribes to government officials in Nigeria and Ecuador …” (see here).
In November 2009, Novak pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA (see here).
Tillery has apparently been hanging out in Nigeria, but is now apparently in custody according to various Nigerian news outlets. According to the sources, “Tillery was believed to have been handed over by officials of Interpol to officials of the US Federal Bureau of Investigation (FBI).”
Apparently this occurred “without the knowledge of Attorney-General of the Federation and Minister of Justice, Mr. Mohammed Adoke, who is supposed to be notified before such action is taken. Under section 6 of the Extradition Act, a request for extradition is supposed to be sent to the AGF who is supposed to arraign such a deportee before a magistrate court and upon the declaration of the magistrate, the deportee is deported accordingly.”
Then it was reported that Tillery’s extradition “was stopped by immigration officials at the Murtala Muhammed International Airport, Lagos because he did not have a travel document.”
Then Tillery’s Nigerian lawyer apparently stepped in and said that the attempted extradition was a “grave assault on the sovereignty of Nigeria” and a violation of Nigeria’s Extradition Act because Tillery renounced his U.S. citizenship and became a Nigerian by naturalization in 2009. Thus, the lawyer argued that the U.S. needed to follow legal steps in Tillery’s extradition.
Then it was reported that Justice Abang Okon of the Federal High Court in Lagos ordered the Federal Government to halt its alleged plan to extradite Tillery from Nigeria to the U.S.
For more on Willbros Group and other individuals involved in related enforcement actions (see here and here).
Thai Authorities Investigating Alliance One / Universal Corp. Bribe Recipients
Earlier this month, the DOJ and SEC announced a joint FCPA enforcement action against tobacco companies Alliance One International Inc. and Universal Corporation. Certain of the allegations against both companies involved bribe payments to “Thai government officials to secure contracts with the Thailand Tobacco Monopoly (TTM), a Thai government agency, for the sale of tobacco leaf.” (See here).
In this prior post, I noted that it is potentially embarrassing for a foreign country to have “one of its own” profiled in a U.S. FCPA enforcement action. With increasing frequency, the end result is that the alleged “foreign official” bribe recipient becomes the subject of an “in-country” investigation.
As noted in this Bangkok Post article:
“A local investigation is expected into US allegations that Thailand Tobacco Monopoly staff accepted US$1.93 million (62 million baht) in bribes to buy Brazilian tobacco. The Department of Special Investigation has asked the Finance Ministry to file a complaint against the TTM staff so it can look into the allegations. DSI director-general Tharit Pengdit told the Bangkok Post yesterday the Finance Ministry, which supervises the state-owned cigarette maker, should file a complaint with the DSI so it can look into the US claims. […] Sathit Limpongpan, permanent secretary for finance, said his ministry would work with the Justice Ministry to seek information from the US Justice Department and would conduct an initial investigation.”
Corporate Directors Are Satisfied
According to a recent legal survey by Corporate Board Member and FTI Consulting (see here), 90% of directors “are satisfied with their in-house legal department’s management” of FCPA issues.
A good weekend to all.
When the Dust Settles
Documents used to resolve a typical FCPA enforcement action (whether a non-prosecution or deferred prosecution agreement, plea, or settled civil complaint) are often peppered with vague generalities.
This is not surprising given that there is little serious threat of defense challenges and/or judicial scrutiny.
One element that is often vaguely described is the “foreign official” recipient of the alleged bribe. (This is in contrast to what the U.K. SFO has been doing in some of its recent enforcement actions when it “names names” – see here and here).
For instance, in the recent Daimler action (see here), certain of the “foreign officials” are described simply as follows:
“Nigerian government officials,” “high-level members of the executive branch of the Nigerian government,” “high-level executive branch official of Nigeria,” and “a member of the Nigerian police force” and
“senior official of a [Egypt] government owned factory.”
Given the ease in which information now flows and the world-wide interest in corruption and bribery, FCPA enforcement actions are read around the world.
Not only by foreign government officials and law enforcement agencies, but also by foreign media, foreign-based non-governmental organizations, and just plain old people.
It is thus not surprising that when the dust settles on the U.S. FCPA enforcement action, many are left wondering … who are those “foreign officials”?
For the foreign government involved, it is potentially embarrassing to have “one of your own” (assuming that all “foreign officials” in FCPA enforcement actions are properly deemed as such) become the focus of a bribery investigation in the U.S. without doing something about it “at home.”
Thus, with increasing frequency, one sees stories such as this recent Reuters report which details how the Nigeria Economic and Financial Crimes Commission has begun to probe the alleged bribe payments to the Nigerian “foreign officials” mentioned above.
What about that “senior official of a [Egypt] government owned factory”?
I’ve been told that this issue has become sort of a guessing game in Egypt and that Egyptian authorities have launched an investigation (see here)
Whether such foreign government investigations are bona fide or merely politically expediate cover is a valid question.
However, the take-away point is that just because the U.S. Foreign Corrupt Practices Act enforcement action is over, does not necessarily mean that all the dust has settled. Often, other persons, for entirely different reasons, remain interested.