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Friday Roundup

Funny, scrutiny alerts and updates, and for the reading stack. It’s all here in the Friday roundup.


According to the FCPA Blog [1], there is “nothing too complicated or expensive” about FCPA compliance.

That’s funny because on a daily basis FCPA Blog content is flanked by approximately 20 blinking and flashing ads from FCPA Inc. participants.

Scrutiny Alerts and Updates

Societe Generale

As highlighted in this 2014 post [2], Societe Generale, among other companies, has been under FCPA scrutiny regarding its dealings with Libya’s government-run investment fund. Bloomberg recently reported [3]:

“Societe Generale is nearing an agreement to pay as much as $1 billion to resolve two U.S. probes — into the rigging of benchmark interest rates and allegations of bribery in Libya — according to people familiar with the matter. […] As part of a resolution, Societe Generale will enter into a deferred prosecution agreement, and a subsidiary will plead guilty in the U.S. to violations of the Foreign Corrupt Practices Act, the people said.”


As highlighted in this previous post [4], in November 2015 Transocean disclosed:

“We are currently investigating allegations made by a former Petrobras employee relating to the award of a drilling services contract to us. These allegations were made public through an investigation being conducted by Brazilian authorities in response to allegations of corrupt practices involving Petrobras business. To date, we have not identified any wrongdoing by any of our employees or agents in connection with our business in Brazil. We will continue to investigate these types of allegations and, if contacted, will cooperate with governmental authorities. Through the process of monitoring and proactive investigation, we strive to ensure no violation of our policies, code of integrity or law has, or will, occur; however, there can be no assurance as to the outcome of these matters.”

The company recently disclosed [5]:

“We previously disclosed that we completed an internal investigation into statements made by a former employee of Petroleo Brasilerio S.A. (“Petrobras”) related to the award to us of a drilling services contract in Brazil, and that our investigation did not identify any wrongdoing by any of our employees or agents in connection with our business.  We further disclosed that we had voluntarily met with governmental aurthorities in the U.S. to discuss the statements made by the former Petrobras employee, our internal investigation, as well as our findings.  On March 5, 2018, we received a letter from the U.S. Securities and Exchange Commission (“SEC”) Division of Enforcement stating that the SEC’s investigation had been concluded and that the SEC did not intend to recommend any enforcement action against Transocean by the SEC.  On April 4, 2018, we received a letter from the U.S. Department of Justice (“DOJ”) stating that the DOJ had closed its inquiry into the matter.  Based upon our findings and the statements from the SEC and DOJ, we do not expect further inquiries from U.S. governmental authorities regarding this matter.”

As highlighted in this previous post [6], in 2010 Transocean resolved a $20.7 million FCPA enforcement action based on alleged conduct in Nigeria.


OSI Systems

During a recent investor conference call, an OSI executive was asked: “I assume there’s no update [on the FCPA matter], is that correct? The executive responded:

“That’s true. The investigations are progressing. We are cooperating fully. What I can tell you is that OSI is very proud to do business with honesty and transparency and that we have very strong compliance programs to address the legal requirements we operate under. That is how we have earned the trust of leading security, defense and health care agencies around the world and here in the U.S. More than that, it’s an active thing going. We are working it out, and there’s not much more to add to it.”

Clear Channel Outdoor Holdings

Texas-based Clear Channel Outdoor Holdings, a public subsidiary of iHeartMedia, and one of the world’s largest outdoor advertising corporations recently disclosed [8]:

“China Investigation

As previously disclosed, several employees of Clear Media Limited, an indirect, non-wholly-owned subsidiary of the Company whose ordinary shares are listed, but are currently suspended from trading on, the Hong Kong Stock Exchange, are subject to an ongoing police investigation in China for misappropriation of funds. Such misappropriation resulted in discrepancies between actual cash balances and cash amounts included in the Company’s accounting records. Included in Selling, general and administrative expenses and Interest expense is $9.6 million and $1.4 million, respectively, recorded in the fourth quarter of 2017 to correct for the accounting errors resulting from the discrepancies. Such corrections are not considered to be material to the current year or prior year financial statements. Clear Media Limited has conducted additional procedures and processes, including a special investigation by forensic accountants and an external law firm appointed by Clear Media Limited’s board of directors and approved by the CCOH’s Audit Committee, into the misappropriation of funds. During the course of the special investigation, it was discovered that three bank accounts were opened in the name of Clear Media Limited entities, which were not authorized, and certain transactions were recorded therein. These matters have been referred to the police in China for investigation.

The Company advised both the United States Securities and Exchange Commission and the United States Department of Justice of the investigation at Clear Media Limited, and the Company intends to cooperate with both agencies in connection with any investigation that may be conducted in this matter.

In 2017, Clear Media Limited accounted for 9.8% of the Company’s net revenue and 9.9% of its consolidated total assets. Based on information known to date, we believe any contingent liabilities arising from potential misconduct that has been or may be identified by the investigations are not material to the consolidated financial statements of the Company.

The investigation could implicate the books and records, internal controls and anti-bribery provisions of the U.S. Foreign Corrupt Practices Act, which statute and regulations provide for potential monetary penalties as well as criminal and civil sanctions. It is possible that monetary penalties and other sanctions could be assessed on the Company in connection with this matter. The nature and amount of any monetary penalty or other sanctions cannot reasonably be estimated at this time.”

United Technologies 

As highlighted in this previous post [9], United Technologies Corp. has been under FCPA scrutiny since late 2013. The company recently disclosed [10]:

“As previously disclosed, in December 2013 and January 2014, UTC made voluntary disclosures to the United States Department of Justice (DOJ), the Securities and Exchange Commission (SEC) Division of Enforcement and the United Kingdom’s Serious Fraud Office to report the status of its internal investigation regarding a non-employee sales representative retained by United Technologies International Operations, Inc. (UTIO) and IAE for the sale of Pratt & Whitney and IAE engines and aftermarket services, respectively, in China. On April 7, 2014, the SEC notified UTC that it was conducting a formal investigation and issued a subpoena to UTC. The SEC issued a second subpoena on March 9, 2015 seeking documents related to internal allegations of violations of anti-bribery laws from UTC’s aerospace and commercial businesses, including but not limited to Otis businesses in China. On March 7, 2018, the DOJ notified UTC that it had decided to close its investigation of this matter. We have engaged in discussions with the SEC staff to resolve this matter. Because these discussions are ongoing, we cannot predict the outcome or the consequences thereof at this time.”

For the Reading Stack

The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here [11]. Regarding the recent enforcement action against Transport Logistics International (see here [12] for the prior post) the update notes:

“This case and other recent cases brought by the DOJ and the SEC raise the question of whether the fine levels now customarily levied by the DOJ and the SEC in FCPA cases are reasonable and sustainable, in particular with regard to small and midsize companies. The increased need for inability-to-pay analyses in FCPA matters in recent years underscores this concern.”

See here [13] for a recent post titled “Inability to Pay.”

Elevate Your FCPA Research

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Elevate Your Research [14]