Biomet Becomes An FCPA Repeat Offender
For many years, the DOJ has advanced the policy position that DPAs and NPAs “have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe.” (See here for the prior post). Specifically in the Foreign Corrupt Practices Act context, the DOJ has stated that “the companies against which DPAs and NPAs have been brought have often undergone dramatic changes.” (See here for the prior post).
As highlighted here, in March 2012 Biomet resolved an FCPA enforcement action involving alleged conduct in Brazil, Argentina, and China by agreeing to pay approximately $22.8 million ($17.3 million via a DOJ deferred prosecution agreement, and $5.5 million via a settled SEC civil complaint).
Since then, FCPA Professor has chronicled (here, here and here) how Biomet’s DPA was extended, how the DOJ ultimately came to conclude that Biomet had breached its DPA based on subsequent improper conduct, and how an additional FCPA enforcement was expected.
Last week, the DOJ and SEC announced (here and here) the additional FCPA enforcement action against Zimmer Biomet Holdings (in 2015 Zimmer Holdings acquired Biomet) and Biomet. As highlighted below, a portion of the improper conduct involved the same distributor in Brazil that gave rise to the 2012 FCPA enforcement action.
The First FCPA Enforcement Action Of 2017 Is A $13 Million Joke
On Friday, the SEC announced the first Foreign Corrupt Practices Act enforcement action of 2017 against Mondelēz International, Inc.
The basic findings in this short administrative action are the following: (i) in February 2010, Kraft Foods (which re-named itself Mondelez International in 2012) acquired Cadbury (a U.K.-based confectionary and snack beverage company that had securities registered with the SEC) and its subsidiaries, including Cadbury India; (ii) in early 2010 Cadbury India retained an agent to interact with Indian government officials to obtain licenses and approvals for a chocolate factory; (iii) Cadbury India failed to conduct appropriate due diligence on and monitor the activities of the agent which “created the risk” that funds paid to the agent (approximately $100,000) could be used for improper or unauthorized purposes and (iv) Cadbury’s India’s books and records did not accurately and fairly reflect the natures of the services rendered by the agent.
Without admitting or denying the SEC’s findings, Mondelez agreed to pay a $13 million civil penalty.
This enforcement action is a complete joke (as is the fact that the scrutiny began in February 2011).
In-Depth – General Cable Resolves $75.8 Million FCPA Enforcement Action, Former Senior VP Also Resolves SEC Action
Don’t yet close the books on 2016 Foreign Corrupt Practices Act enforcement.
Yesterday, the DOJ and SEC announced (here and here) an FCPA (and related) enforcement action against Kentucky-based General Cable Corporation (a manufacturer and distributor of cable and wire). The conduct at issue occurred in Angola, Bangladesh, Indonesia, Thailand, China, and Egypt.
The $75.8 million enforcement action involved a DOJ non-prosecution agreement in which the company agreed to pay an approximate $20.5 million penalty and an SEC administrative cease and desist order in which the company agreed to pay approximately $55.3 million in disgorgement and prejudgment interest.
In addition, the SEC also announced that Karl Zimmer, General Cable’s former Senior Vice President responsible for sales in Angola, agreed to pay a $20,000 civil penalty without admitting or denying the SEC’s findings that he knowingly circumvented internal accounting controls and caused FCPA violations when he approved certain improper payments.
In Depth Into The $519 Million Teva FCPA Enforcement Action
Records continue to be set as 2016 Foreign Corrupt Practices Act enforcement enters its final days.
Yesterday, the DOJ and SEC announced (here and here) a $519 million enforcement action against Teva Pharmaceutical Industries Ltd. (an Israeli company with American Depository Receipts traded in the U.S.) and a related entity. The settlement amount included a $283 million DOJ component and a related $236 million SEC component.
The action is believed to be the first-ever FCPA enforcement action against an Israeli company and by far the largest-ever FCPA enforcement action against a pharmaceutical company. (The $70 million 2011 enforcement action against Johnson & Johnson is second on that list). You better go ahead and update your top ten list again because the Teva enforcement action is the 4th largest of all-time. (Odebrecht / Braskem held that spot for less than 24 hours and is now bumped to 5th largest FCPA settlement amount of all-time).
Odebrecht / Braskem Bribery Schemes Net Approximate $420 Million FCPA Enforcement Action
Yesterday, the DOJ and SEC announced (here and here) a Foreign Corrupt Practices Act enforcement action against Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company in which Odebrecht owns 50.1% of the voting shares, 38.1% of the total share capital and which Odebrecht “effectively controlled” according to the DOJ). Braskem has American Depositary Receipts registered with the SEC and traded on the NYSE and thus the enforcement action also included an SEC component.
Perhaps because of the less than clear DOJ release (clear once one actually reads the original source documents), this action is being reported in various places as a $3.5 billion FCPA enforcement action. While that figure represents the overall global settlement amount (Brazil and Swiss law enforcement also brought related actions), yesterday’s action was most certainly not a $3.5 billion FCPA enforcement action. Not even close.