A Spectrum Of Third Party Compliance
Like many FCPA enforcement actions, the recent RTX (Raytheon) matter largely focused on a problematic third party used to facilitate the alleged bribery schemes.
The DOJ and SEC resolution documents make for an interesting read and tell a story across a wide spectrum of third party compliance from due diligence, to oversight and supervision, to payment.
The story demonstrates that when it comes to third parties, several things can be “true” (based on DOJ/SEC allegations findings) all at the same time.
It can be “true” that culpable employees knowingly circumvented existing third party compliance policies and procedures in place and it can also be “true” that others within the company were seemingly indifferent to the activities of a third party.
RTX Resolves Net $361 Million FCPA Enforcement Action
Raytheon (which changed its name to RTX in 2003) has been under Foreign Corrupt Practices Act (and related) scrutiny for several years.
As highlighted in this prior post, in late July 2024 the company disclosed that it would be resolving (among other things) an FCPA matter and that settlement would include a DOJ deferred prosecution agreement (with an independent compliance monitor requirement) and an SEC order.
Today, the DOJ and SEC announced resolution of the matter. Resolution involved various prongs including the False Claims Act, the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations.
Moog Inc. Resolves $1.7 Million FCPA Enforcement Action Based On Indian Subsidiary Conduct
Moog Inc. (“Moog”) is a worldwide designer and manufacturer of motion controls systems for a broad range of applications in aerospace, defense, industrial and medical markets. The New York headquartered company – with four operating segments: military aircraft, commercial aircraft, space and defense, and industrial – has shares traded on the New York Stock Exchange and has sales, engineering, and manufacturing facilities in twenty-six countries.
Moog is the latest company to resolve a Foreign Corrupt Practices Act enforcement action.
An Interesting Resolution To An Individual FCPA Matter
In 2011, the DOJ announced that Maxwell Technologies (a California-based manufacturer of energy-storage and power-delivery products) “agreed to pay an $8 million criminal penalty to resolve charges related to the FCPA for bribing Chinese government officials to secure sales of Maxwell’s products to state-owned manufacturers of electric-utility infrastructure in several Chinese provinces.”
In 2013, in connection with the same core conduct, the DOJ criminally charged Alain Riedo (a Swiss citizen and former executive of a Maxwell subsidiary in Switzerland) with nine criminal offenses: conspiracy to violate the FCPA’s anti-bribery, books and records, and internal controls provisions, two substantive violations of the FCPA’s anti-bribery provisions, five substantive violations of the FCPA’s books and records provisions; and one substantive violation of the FCPA’s internal controls provisions.
According to the court docket, nothing meaningful happened in the case for over a decade.
Boston Consulting Group Disgorges $14.4 Million In FCPA Matter
So-called “declinations with disgorgement” (first used by the DOJ in a Foreign Corrupt Practices Act in 2016) are just another resolution vehicle – among others – used by the DOJ to resolve alleged instances of FCPA scrutiny.
The latest example concerns Boston Consulting Group.
An August 27th letter from the DOJ to the company’s counsel (Cadwalader attorneys Jason Halper and Gina Catellano) and posted to the DOJ’s Corporate Enforcement Policy Declination Page on August 28th states in full: