Microsoft Resolves Long-Standing FCPA Scrutiny By Agreeing To Pay $25.3 Million
Microsoft has been under Foreign Corrupt Practices Act scrutiny since early 2013 (see here for the prior post). Yesterday, the DOJ and SEC announced here and here an aggregate $25.3 million enforcement action against the company and a Hungarian subsidiary concerning conduct in Hungary, Saudi Arabia, Thailand and Turkey.
The enforcement action involved a DOJ component involving a non-prosecution agreement involving MS Hungary in which the entity agreed to pay a $8.8 million criminal penalty and an SEC administrative order against Microsoft finding violations of the FCPA’s books and records and internal controls provisions in which the company agreed, without admitting or denying the SEC’s findings, to pay disgorgement and prejudgment interest of approximately $16.5 million.
Approximately 7.5 Years After Disclosing FCPA Scrutiny, Walmart FINALLY Resolves FCPA Enforcement Action
As highlighted in this prior post, in late 2011 Walmart disclosed that it began “an internal investigation into whether certain matters, including permitting, licensing and inspections, were in compliance” with the FCPA.
So began arguably one of the most high-profile instances of corporate scrutiny in Foreign Corrupt Practices Act. history. The scrutiny FINALLY came to an end yesterday as the DOJ and SEC announced (here and here) a coordinated $282 million enforcement action. As highlighted in this prior post, Walmart disclosed this likely settlement amount in November 2017, yet it still took approximately 1.5 additional years to formally resolve the matter.
This post summarizes the DOJ and SEC’s enforcement action concerning alleged improper conduct in the following countries: Mexico, Brazil, India and China. Future posts will explore numerous other issues relevant to the enforcement action.
The Percentage Of SEC FCPA Enforcement Actions That Also Involve A DOJ Component
In this recent Corporate Crime Reporter interview, former SEC FCPA Unit Chief Kara Brockmeyer was asked: “are you noticing since you left the SEC a shift to the Justice Department not joining the SEC as much on FCPA cases?”
Borckmeyer responded: “When you are at the government for a long period of time, you see the pendulum swing back and forth. Yes, we are in a period, particularly in the FCPA area, where we saw the Department of Justice step away from a number of cases that were SEC only FCPA enforcement actions. There was a period of time where the Department was on every case that the SEC brought in the FCPA area. Now, the Department seems to be picking their battles on where they want to expend their resources.”
What do the numbers actually show? As highlighted below, between 2010 and 2014 the DOJ was involved in approximately 70% of SEC enforcement actions. Between 2015 to the present, the DOJ was involved in approximately 40% of SEC enforcement actions. [Keep in mind that the universe of enforcement actions (i.e. the denominator) is not that large and each enforcement action comprises approximately 2% of the total]
A Brazilian Telecom Company Hosted Brazilian Government Officials For Soccer Tournaments In Brazil – Five Years Later, U.S. Collects $4.1 Million In FCPA Enforcement Action
It is only fitting that one day after publishing this post regarding the SEC’s inconsistent enforcement of the Foreign Corrupt Practices Act (and how the SEC resolved an FCPA books and records and internal controls case for $0 against a U.S. company for engaging in accounting misconduct including the CEO of the company making misrepresentations to the market concerning $307 million) that the SEC brings this $4.1 million administrative action against Telefonica Brasil (a company with ADRs traded on the NYSE).
The conduct at issue?
You better sit down for this … the company “failed to devise and maintain sufficient internal accounting controls over a hospitality program that the company hosted in connection with the 2014 World Cup and 2013 Confederations Cup” both held in Brazil.
Fresenius Medical Care Pays Approximately $232 Million To Resolve Its Long-Standing FCPA Scrutiny
German healthcare firm Fresenius Medical Care AG (a company with American Depositary Receipt shares traded on the NYSE) has been under FCPA scrutiny since 2012 (no that is not a typo).
Today the DOJ and SEC announced (here and here) an approximate $232 million enforcement action ($84.7 million to the DOJ and $147 million to the SEC) against the company for alleged bribery schemes involving physicians and other healthcare personnel in Angola, Saudi Arabia, Morocco, Spain, Turkey, Gabon, Benin, Burkina Faso, Senegal, Ivory Coast, Niger, Cameroon China, Serbia, Bosnia, and Mexico.
While not specified in any of the resolution documents, the DOJ’s non-prosecution agreement and SEC’s administrative order make generic reference to the Angola and Saudi Arabia conduct involving ‘agents and employees utiliz[ing] the means and instrumentalities of U.S. interstate commerce, including the use of internet-based email accounts hosted by numerous service providers located in the United States.”