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Issues To Consider From The Samsung Heavy Industries Enforcement Action


This prior post highlighted the DOJ’s recent net $37.5 million Foreign Corrupt Practices Act enforcement action against Samsung Heavy Industries (a South Korea-based company with a branch office in Houston) focused on its relationship with Pride International (now part of Valaris plc) through which it sold a drillship to Petrobras.

This post highlights additional issues to consider from the enforcement action.

What About Pride?

The primary beneficiary, it would seem, of the conduct alleged in the SHI enforcement action is the “Chartering Company” described by the DOJ as an “offshore oil drilling company headquartered in Houston, Texas which provided contract drilling and related services to oil and gas companies.”

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Friday Roundup


DOJ seeks legislative changes, a focus on FCPA Inc., credit ratings, across the pond, scrutiny update, and for the reading stack.

It’s all here in the Friday Roundup

DOJ Seeks Legislative Changes

The DOJ’s efforts to eradicate corruption and bribery is broader than just Foreign Corrupt Practices Act enforcement and includes: “public integrity prosecutions, bribery prosecutions, prosecutions of taxpayers who seek to conceal foreign accounts, money laundering prosecutions, [and its] Kleptocracy Initiative.”

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Friday Roundup


FCPA trial starts, scrutiny alerts, ripples, and job alert.  It’s all here in the Friday roundup.

FCPA Trial Starts

The DOJ is rarely put in a position to actually prove FCPA offenses.

Sure, there have been some DOJ successes in recent years, but more often than not the DOJ has failed when put to its burden of proof.  See here for the article “What Percentage of DOJ FCPA Losses Is Acceptable?”  See this prior post for the six most recent instances of the DOJ being put to its burden of proof.

Earlier this week, the first criminal FCPA trial since 2012 began in New Jersey.  The defendant is former PetroTiger CEO Joseph Sigelman. For media coverage of the beginning of the trial, see here and here.

As noted by Bloomberg:

“[O]pening arguments confirmed that the government’s case against Sigelman relies heavily on the testimony of the defendant’s former lawyer. Under pressure from the FBI, the lawyer, Gregory Weisman, implicated Sigelman in wrongdoing and then tried to get his former client to incriminate himself during a covertly recorded conversation.

Lead prosecutor Patrick Stokes, who heads the Justice Department’s FCPA unit, told the jury in his opening remarks that Weisman’s testimony—supplemented by surveillance tape of the witness’s encounter with Sigelman in December 2012—would demonstrate that the defendant knew he had broken the law and was afraid of getting caught. At one point during the December 2012 conversation, Sigelman demanded that Weisman lift his shirt to show he wasn’t wearing a wire. Weisman complied. Sigelman didn’t notice, however, that the FBI had equipped his former attorney with a “button camera” that captured the entire episode.

Sigelman’s behavior, Stokes told the jury, was “something an innocent man doesn’t do.”

In fact, when viewed in its entirety, the grainy undercover tape is ambiguous. When Weisman informed Sigelman that the FBI was asking questions about their actions in Colombia, Sigelman said: “Whatever this is about, I’m ready to be with you.”

“And I’m with you, but I’m extremely scared,” Weisman responded.

“I don’t think there’s anything to be concerned about,” Sigelman said. “We paid a guy. We paid a consultant. … The point is, this wasn’t a bribe in any way, shape, or form.”

In his opening argument yesterday, Sigelman’s defense attorney, William Burck, a partner with the law firm Quinn Emanuel Urquhart & Sullivan, told the jury: “We want you to see that tape.” Burck indicated that in cross-examining government witnesses, he would show jurors that in its zeal to find corruption, the Justice Department has transformed a series of corporate and personal entanglements into a criminal conspiracy that never existed. If anyone was truly trying to fight corruption at PetroTiger, it was Sigelman, the defense lawyer said. Resentful of Sigelman’s finger-pointing, the company’s board turned the tables and fed information to U.S. prosecutors, making the ex-CEO out to be the villain, Burck added.”

For a main issue in the case (the status of Colombia’s Ecopetrol S.A.) , see this prior post.

For additional coverage of the trial, see here.

Scrutiny Alerts

CBCNews reports:

“[Canadian authorities] are investigating allegations from a whistleblowing accountant at [Toronto Stock Exchanged]-listed mining company MagIndustries that his bosses paid bribes to officials in the Republic of Congo to win approvals tied to a potash mine development in that country. According to newly unsealed court documents, the RCMP’s sensitive and international investigations unit raided the Toronto offices of MagIndustries in January. The company has been developing a $1.5-billion potash mine and processing facility in the West African country for several years. Search warrant materials obtained by CBC News tell a cautionary tale about the company, which is registered in Toronto but controlled by Chinese interests since a takeover in 2011. Those investors and managers are now ensnared in an international police bribery investigation. The RCMP believe four top executives with the company, including CEO Longbo Chen who took over in 2012, ignored warnings from Canadian financial advisers and signed off on a string of illegal payments to Congolese officials.”

Bloomberg reports:

“Prosecutors investigating Brazil’s largest corruption scandal say they notified the U.S. Department of Justice of evidence that at least four foreign companies allegedly paid bribes to win Petroleo Brasileiro SA contracts. The allegations are against units or affiliates of Samsung Heavy Industries Co., Skanska AB, AP Moeller-Maersk A/S and Toyo Engineering Corp., Carlos Lima, the senior prosecutor in a nine-member task force, said in an interview. Companies could face charges in Brazil that would restrict local operations as well as possible sanctions under the U.S. Foreign Corrupt Practices Act, he said last week from Curitiba, Brazil.”


Further evidence of FCPA ripples (in other words –  how 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).

Moody’s Investors Service recently downgraded Key Energy Services.

Among the reasons? According to this release:

“The negative outlook reflects significant ongoing cash expenditures (~$59 million as of Q1-2015) associated with the ongoing Foreign Corrupt Practices Act (FCPA) investigations, the uncertainty around final resolution of these legal matters and the severity of any potential penalties or fines that could further pressure liquidity and credit metrics.”

See here for here for the full article “Foreign Corrupt Practices Act Ripples”

Job Alert

Exactech (a company based in Gainesville, Fla. that develops and markets orthopaedic implant devices, related surgical instruments and biologic materials and services to hospitals and physicians) is looking for a Senior Director of Legal to “to provide legal expertise to guide the company’s actions and transactions with particular emphasis on its Anti-Corruption Compliance program.” See here for the full job description.


A good weekend to all.

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