No Shut Down For FCPA Enforcement
The last week of December has traditionally been an active week for Foreign Corrupt Practices Act enforcement. However, with the partial government shutdown there was an open question what would happen with the end of 2018.
Yesterday, the SEC answered that question by announcing two enforcement actions: (i) a $2.5 million action against Brazil-based Centrais Elétricas Brasileiras S.A. (Eletrobras); and (ii) a $16 million action against Polycom.
This post highlights the Electrobras enforcement action and another post will highlight the Polycom enforcement action
SEC Finds That Former Panasonic Executive Authorized Conduct Causing Company’s FCPA Violations, Another Former Executive Found To Engage In Improper Revenue Recognition Practices
As highlighted in prior posts (here, here and here) in April 2018 the DOJ and SEC announced a $280 million Foreign Corrupt Practices Act enforcement action against Japan-based Panasonic Corp. and a U.S. subsidiary Panasonic Avionics Corp. (PAC).
In the words of the government “between 2007 and 2013, PAC employees, including senior executives, engaged in a scheme to retain consultants for improper purposes other than for providing actual consulting services.”
Earlier this week, the SEC returned to the same core conduct to bring administrative actions (here and here) against Paul Margis (pictured – a former President and CEO of PAC) and Takeshi Uonaga (PAC’s former CFO). The Margis action finds that he authorized various conduct giving rise to the company’s FCPA liability, whereas the Uonaga matter is materially different in that it is a revenue recognition matter.
Vantage Drilling Resolves Rather Unusual $5 Million FCPA Enforcement Action
Yesterday, the SEC announced this rather unusual Foreign Corrupt Practices Act enforcement action against Vantage Drilling.
What made it rather unusual is that the administrative action only found violations of the FCPA’s internal controls provisions concerning its unique relationship with a former outside director and shareholder that “created a risk that [the company] was providing or reimbursing funds that [the Director] intended to use to make improper payments to officials at Petrobras” in connection with obtaining a drilling services contract.
Stryker Joins The FCPA Repeat Offender Club
The end of September is traditionally an active period for Foreign Corrupt Practices Act enforcement as the SEC’s fiscal year comes to a close.
On the heels of yesterday’s Petrobras enforcement action (see here and here for prior posts), the SEC announced a $7.8 million enforcement action against medical device company Stryker for not having internal accounting controls “sufficient to detect the risk of improper payments in sales of Stryker products in India, China, and Kuwait” and because “Stryker’s India subsidiary failed to maintain complete and accurate books and records.”
In doing so, Stryker joins the list of FCPA repeat offenders (see here). As highlighted in this prior post, in 2013 Stryker resolved a $13.2 million enforcement action based on alleged conduct in Mexico, Poland, Romania, Argentina, and Greece.
Brazil State-Owned Co. Allegedly Facilitates Payments To Brazilian Politicians And Political Parties And U.S. Collects Net $170 Million In FCPA Enforcement Action
This morning the DOJ and SEC announced (here and here) that Petrobras, a Brazilian state-owned and state-controlled energy company, entered into agreements with U.S. and Brazilian authorities “in connection with Petrobras’s role in facilitating payments to politicians and political parties in Brazil, as well as a related Brazilian investigation.”
After various credits and deductions for a related law enforcement action in Brazil, the net FCPA settlement is approximately $170 million ($85.3 million DOJ, $85.3 million SEC). Brazil will collect $682.6 million. The remainder of this post provides an in-depth summary of the enforcement action.