Halliburton Joins FCPA Repeat Offender Club As The SEC Also Finds That A Former VP Violated The FCPA
In 2009, Halliburton Company, KBR Inc. (a wholly-owned subsidiary of Halliburton during the relevant time period) and Kellogg, Brown & Root, LLC (a wholly-owned subsidiary of KBR) resolved parallel DOJ and SEC Foreign Corrupt Practices Act enforcement actions in connection with a bribery scheme involving a $6 billion liquefied natural gas plant on Bonny Island, Nigeria. (See here and here).
The combined $579 million settlement amount (DOJ – $402 million / SEC $177 million) remains the third largest FCPA settlement of all-time. The SEC’s resolution contained the perfunctory condition of permanently enjoining Halliburton from violating the FCPA’s books and records and internal controls provisions.
However, yesterday Halliburton joined the ever-increasing (see here and here for recent posts) FCPA repeat offender club as the SEC announced an FCPA enforcement action concerning alleged conduct in Angola. Without admitting or denying the SEC’s findings in this administrative order that it violated the FCPA’s books and records and internal controls provisions, Halliburton agreed to pay $29.2 million. In the same order, the SEC also found that Jeannot Lorenz (Halliburton’s former vice president) causing the company’s violations, circumvented internal accounting controls, and falsified books and records. Without admitting or denying the SEC’s findings, Lorenz agreed to pay a $75,000 penalty.
The First Time Baker Hughes Resolved An FCPA Enforcement Action
[This post is part of a periodic series regarding “old” FCPA enforcement actions]
As highlighted in this prior post, in 2001 KPMG Siddharta Siddharta & Harsono (KPMG-SSH) and Sonny Harsono resolved a joint DOJ/SEC civil FCPA enforcement regarding alleged improper payments in connection with an Indonesia tax assessment.
As detailed in the prior post, it was a unique FCPA enforcement action at the time (believed to be the first time the DOJ/SEC had ever brought an FCPA action against a professional services firm – i.e. a law firm or accounting firm) and still remains unique in that the DOJ/SEC are believed to have never again brought an FCPA enforcement action against a professional services firm. As further detailed in the prior post, KPMG-SSH was an agent of Baker Hughes and thus it was not surprising that a related FCPA enforcement action against Baker Hughes soon followed.
Will ABB Become a THREE-Time FCPA Violator?
As highlighted in recent posts here and here, there are several companies in the FCPA repeat offender club.
ABB (a Swiss-based power and automation technology company) may become a three-time FCPA violator.
First, some relevant background.
The first time ABB resolved a Foreign Corrupt Practices Act enforcement action was in 2004 concerning conduct in Nigeria, Angola and Kazakhstan. The $16.4 million enforcement action involved an SEC component ($5.9 million) and a DOJ component ($10.6 million).
Issues To Consider From The Zimmer Biomet Enforcement Action
This previous post went in-depth into the $30.4 million Foreign Corrupt Practices Act enforcement action against Zimmer Biomet announced on January 12th.
This post highlights additional issues to consider.
Repeat Offender
Biomet is not the first company to be a repeat FCPA criminal offender, just the latest. Other criminal examples include Aibel Group / Vetco entities and Marubeni (and there several other examples involving SEC civil violations such as Orthofix Int’l recently becoming a repeat FCPA offender). To learn more about these examples, see the article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement.”
Another Week, Another Repeat FCPA Offender As Orthofix International Joins The Club
In 2012, Orthofix International N.V. (“Orthofix”), a limited liability orthopedic medical device company formed under the law of Netherlands Antilles with administrative offices in Lewisville, Texas and common stock traded on Nasdaq, resolved a $7.4 million Foreign Corrupt Practices Act enforcement action ($2.2 million via a DOJ deferred prosecution agreement, and $5.2 million via a settled SEC civil complaint) based primarily on the conduct of its wholly-owned Mexican subsidiary.
In an enforcement action that was expected (see here for the August 2016 post highlighting how Orthofix International was poised to join the FCPA repeat offender club), the SEC announced yesterday that the company agreed to pay $6 million in disgorgement and penalties to settle FCPA books and records and internal controls findings “when its subsidiary in Brazil schemed to use high discounts and make improper payments through third-party commercial representatives and distributors to induce doctors under government employment to use Orthofix’s products.”
This is the second instance in the past week of a company resolving a second FCPA enforcement action in the span of approximately five years (see here for the prior post regarding Zimmer Biomet).