Ironic, scrutiny update, and for the reading stack. It’s all here in the Friday roundup.
As highlighted in this previous post, in February 2016 SAP (a German company with American Depository Shares registered with the SEC) resolved a $3.9 million FCPA enforcement action based on conduct in Panama and was ordered to cease and desist from committing or causing any violations and any future violations of the FCPA’s books and records and internal controls case.
That SAP said “that an internal probe of its South African unit found “indications of misconduct” as well as more payments to companies tied to a family at the center of a political corruption scandal.
SAP said Thursday that between December 2014 and June 2017 it paid a total of 112.7 million rand ($9.5 million) to three companies tied to the Guptas as “commission” for contracts with South Africa’s state-owned rail and port operator, Transnet, and state power company Eskom. In October, SAP, which is listed in the U.S. and Germany, said it discovered 94 million rand in payments made between December 2015 and November 2016.
Philipp Klarmann, head of investigations and anticorruption at SAP, said the company was in constant contact with U.S. authorities, which have asked for documents and indicated that they want to question individuals tied to the South Africa payments. But he said that it was too early to say whether SAP could face fines or other sanctions over its behavior in South Africa.”
Against this backdrop, it’s a tad bit ironic that SAP that “has introduced SAP Business Integrity Screening, an application that helps reduce financial risk within business transactions. It analyzes data for suspicious transactions and patterns in real time to spot exceptions, potential fraud and compliance failures.” (See here).
As highlighted in this previous post, in 2014 the France-based pharmaceutical company Sanofi became the subject of FCPA scrutiny regarding its business practices in the Mideast and East Africa. Recently the company disclosed:
“Sanofi has been engaged in discussions with the US Department of Justice (“DOJ”) and the US Securities and Exchange Commission regarding allegations that certain subsidiaries outside the United States made improper payments in connection with the sale of pharmaceutical products and whether those payments, if made, fall within the US Foreign Corrupt Practices Act. Sanofi has voluntarily provided information to the DOJ and the SEC and proactively cooperated in both agencies’ review of the allegations. In February 2018, the DOJ notified Sanofi that it had decided to close its inquiry into the allegations. Sanofi is still cooperating with the SEC’s review of the allegations.”
True to form, the FCPA Blog termed this a “declination” and once again muddied the conversational waters ignoring of course that in its November 2017 FCPA Corporate Enforcement Policy the DOJ actually defined “declination” and said that “declinations awarded under the FCPA Corporate Enforcement Policy will be made public.” (Note: the DOJ has not made public a Sanofi declination – see here for the DOJ’s declination page).
Meanwhile, in the Philippines some are calling for the U.S. to investigate Sanofi for violations of the FCPA in connection with clinical trials and regulatory approvals of a drug. (See here for the news article).
An interesting read here from Bloomberg regarding the U.K. Serious Fraud Office and its Director David Green.
The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here. Regarding the 2017 CDM Smith “declination with disgorgement” (see here and here for prior posts), the Update states:
“Although the CDM Smith Declination resolved the DOJ’s investigation, it was followed by the opening of investigations in India.
While it is unknown what legal jeopardy CDM Smith and CDM India may ultimately face in connection with the ongoing Indian investigations, the case highlights one of the perils of self-reporting: the lack of closure often associated with FCPA corporate enforcement actions. Even in this era of multinational cooperation, foreign follow-on investigations of anti-corruption matters resolved with U.S. authorities remain common. Although declinations with disgorgement allow companies to avoid ongoing reporting obligations commonly associated with NPAs and DPAs, the public nature of declinations with disgorgement give rise to a risk of ongoing investigations and legal jeopardy in other jurisdictions, as occurred in the CDM Smith case.
From the point of view of the international fight against corruption, follow-on investigations associated with publicly disclosing declinations with disgorgement may also be seen as a positive, not a negative. Such publicity can encourage enforcement action by other jurisdictions, including, as is suggested in the Economic Times’ investigation, the possibility of eventual punishment of corrupt officials. This policy benefit – the prompting of enforcement activity by other authorities – also raises the question of why the DOJ felt it necessary to use an aggressive jurisdictional theory to reach actions that took place in India and to demand the payment of four million dollars in disgorgement to the U.S. Treasury. It is, of course, open to doubt whether the Indian authorities would have commenced investigations if not spurred into action by the DOJ’s enforcement action. While the lack of facts in the CDM Smith declination letter leaves open the question as to whether it is truly an appropriate instance, there are times – even leaving aside the question of subject matter jurisdiction – when the DOJ should defer to local authorities. This is especially the case in the context of a relatively limited amount of improper payments apparently confined to a single country with, despite its imperfections, a strong independent judiciary and rule of law tradition. The declination with disgorgement vehicle should not absolve the DOJ of its responsibility to exercise the type of prosecutorial discretion traditionally associated with a declination.”
An informative post here regarding conducting foreign interviews / investigations. While the post is specific to Thailand, the general themes are applicable to most other countries as well.
See here for “The Evolution and Status of ‘Carbon Copy Prosecutions’: An Anticorruption Phenomenon Here to Stay” by Andrew Boutros (Seyfarth Shaw) and T. Markus Funk (Perkins Coie).
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