Earlier this week, the DOJ announced that Sargeant Marine Inc. (SMI – an asphalt company based in Florida) “pleaded guilty and agreed to pay $16.6 million to resolve foreign bribery charges stemming from conduct by the company and its employees and agents in Brazil, Venezuela and Ecuador.”
The total criminal penalty was actually $90 million, but because of SMI’s “inability to pay” the settlement amount was only $16.6 million.
Companies doing business in the global marketplace engage all types of third parties. Generally, Foreign Corrupt Practices Act compliance tends to focus, with good reason, on third parties such as agents, representatives, distributors and others that assist a company in obtaining or retaining business.
However, given the DOJ and SEC’s broad interpretation of that element of the FCPA’s anti-bribery provisions, any third party that has a point of contact with foreign officials – even if outside the context of foreign government procurement – can potentially expose a business organization to scrutiny and enforcement.
This includes foreign lawyers as the recent FCPA enforcement action against various individuals associated with adoption agency European Adoption Consultants once again highlights. Indeed, in this enforcement action a foreign lawyer herself was charged with FCPA violations – although it remains to be seen whether the jurisdictional basis will be challenged.
As highlighted in this prior post, in August 2019 the DOJ announced that Robin Longoria (an individual associated with European Adoption Consultants – an Ohio-based adoption agency) pleaded guilty to one count of conspiring to violate the FCPA’s anti-bribery provisions and to commit wire fraud and visa fraud “for her role in a scheme to corruptly facilitate adoptions of Ugandan children through bribing Ugandan officials and defrauding U.S. adoptive parents and the U.S. Department of State.”
Yesterday, the DOJ announced additional individual FCPA criminal charges, among others, in connection with the same Ugandan bribery scheme.
The Foreign Corrupt Practices Act when enacted directed the DOJ Attorney General to establish a procedure to provide responses to specific inquiries by those subject to the FCPA concerning conformance of their conduct with the DOJ’s “present enforcement policy.”
Pursuant to the governing regulations of the so-called DOJ Opinion Procedure Release Program, only “specified, prospective—not hypothetical—conduct” is subject to a DOJ opinion. While the DOJ’s opinion has no precedential value, its opinion that contemplated conduct conforms with the FCPA is entitled to a rebuttable presumption should an FCPA enforcement action be brought as a result of the contemplated conduct.
As highlighted below, last week (for the first time since November 2014) the DOJ issued an opinion procedure release.
In this recent post, Richard Cassin (Founder and Editor at Large of the FCPA Blog) asks “are agents ever ‘legal’ under the FCPA?” He writes:
“My serious purpose in asking if agents are legal under the FCPA is about compliance with the accounting standards. […] Concerning the FCPA internal controls provisions, my question is: Can issuers meet the requirement if they use intermediaries? Or, is the use of an agent, which necessarily involves some loss of control, always non-compliant with management’s legal duty to provide reasonable assurance that transactions are accurately recorded, lawful, and in accordance with management’s authorization?”
These are absurd questions.
