So Much For That Tone At The Top Thing As SEC Returns To Bring Enforcement Action Against SQM’s Former CEO
Foreign Corrupt Practices Act enforcement often seems more robust than it actually is because, in the relatively rare instances in which there is an individual prosecution in connection with a corporate action, the individual action often (but not always) occurs long before or long after the corporate action. Many FCPA Inc. participants, who have a vested interest in portraying more not less FCPA enforcement, count these occurrences as multiple enforcement actions when in reality they are the same core enforcement action. (This article highlights this dynamic as well as other dubious and haphazard FCPA Inc. counting methods).
Reflective of the above dynamic, as highlighted in prior posts here and here in January 2017 the DOJ and SEC announced a $30.5 million enforcement action against Sociedad Quimica y Minera de Chile S.A. (SQM), a chemical and mining company based in Chile, in relation to its interactions with Chilean officials. The bulk of the enforcement action involved use of the CEO’s “discretionary fund to direct payments to Chilean politicians, political candidates, and individuals connected to them “many of which violated Chilean tax law and/or campaign finance limits” and falsely recording such payments in SQM’s books and records.
United Technologies Corp. Resolves $13.9 Million Enforcement Action
Yesterday, the SEC announced that United Technologies Corporation resolved a $13.9 million Foreign Corrupt Practices Act enforcement action.
The conduct at issue concerned Otis Elevator Co. (a wholly-owned subsidiary of UTC), Pratt & Whitney (an operating division of UTC), and International Aero Engines (a joint venture of five aerospace companies including Pratt & Whitney) regarding a Russian and Azerbaijani improper payment scheme, a China aviation scheme, improper payments for Otis Elevator sales in China, and leisure travel for foreign officials from several countries including China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia.
Judge Sentences Bahn To 6 Months And Rejects DOJ’s Request For A 70-87 Month Sentence, SEC Brings Related Enforcement Action
As highlighted in this previous post, in January 2017 the DOJ announced Foreign Corrupt Practices Act, and related charges, against four individuals for their roles in a scheme to pay $2.5 million in bribes to facilitate the $800 million sale of a commercial building in Vietnam (the so-called Landmark 72 pictured) to a Middle Eastern sovereign wealth fund.
It certainly was not a typical FCPA enforcement action. In fact it was downright strange in that the bribery scheme was unsuccessful and the third party intended to facilitate the bribery scheme simply pocketed the money for himself.
SEC Finally Announces Its FCPA Enforcement Action Against Legg Mason
Prior posts here and here highlighted the DOJ’s June FCPA enforcement action against Legg Mason regarding business conduct in Libya. It was noted in the prior post that FCPA enforcement actions against issuers that involve a DOJ and SEC component are almost always announced on the same day. Yet for some reason, back in June the i’s were not dotted or the t’s crossed at the SEC and the DOJ’s June enforcement action clearly had a placeholder for the forthcoming SEC prong.
That happened earlier today as the SEC finally announced its enforcement action.
It’s Been Over A Year Since The SEC Has Brought An Individual FCPA Enforcement Action
The SEC (like the DOJ) often talks about the importance of individual FCPA enforcement actions. For instance, SEC enforcement officials have stated:
“Companies cannot engage in bribery without the actions of culpable individuals. The Enforcement Division is broadly committed to holding individuals accountable when the facts and the law support doing so.”
“Pursuing individual accountability [in FCPA enforcement actions] is a critical part of deterrence.”