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Friday Roundup


Affirmed, very distressing, scrutiny updates, and for the reading stack. It’s all here in the Friday roundup.


As highlighted in this previous post, in July 2017 Dmitrij Harder was sentenced to 60 months (5 years) in federal prison and also ordered to forfeit $1.9 million after pleading guilty to two counts of violating the FCPA for “bribing an official at the European Bank for Reconstruction and Development (EBRD).”

As highlighted in this previous post, in October 2017 Harder appealed his sentence on two issues: (i) that the trial court judge erred in declaring that the absence of loss to any victim from the defendant’s criminal conduct, coupled with exceptionally positive economic results flowing from the defendant’s nevertheless criminal conduct, was not a potentially mitigating factor for sentencing in a bribery case; and (ii) that the trial court judge erred in not granting a downward variance to avoid unwarranted disparities among offenders convicted of similar conduct.

Yesterday in this opinion, the Third Circuit rejected Harder’s arguments and affirmed his sentence. The decision makes generic reference to a law professor who provided data regarding FCPA sentences. I am that law professor and I provided services to defense counsel in connection with sentencing issues.

As highlighted in this prior post, in the Gerald & Patricia Green FCPA sentencing, the judge did seem persuaded by argument (1) highlighted above.

“Very Distressing’

In case you are wondering, Goldman Sachs CEO David Solomon finds it “very distressing to see two former Goldman Sachs employees went so blatantly around our policies and so blatantly broke the law.” (See here for the video; see here and here for prior posts on the recent enforcement action against individuals associated with Goldman).

I find this FCPA Blog headline “Goldman Sachs: Our Sick Business Culture, Weak Controls Allowed 1MDB Abuses” very distressing. The post states: “Perhaps previewing the basis for an eventual FCPA settlement with the feds, Goldman describes among other things its own weak internal controls and sick business culture.”

This is a 100% false and misleading statement and inaccurate summary of Goldman’s disclosure. (See here for the prior post).

Scrutiny Updates

As highlighted here, Cognizant Technology Solutions has been under FCPA scrutiny since September 2016.

The company recently disclosed:

“We have substantially completed our internal investigation focused on whether certain payments relating to Company-owned facilities in India were made improperly and in possible violation of the U.S. Foreign Corrupt Practices Act, or FCPA, and other applicable laws. The investigation, which began in 2016, has also examined various other payments made in small amounts in India that may not have complied with Company policy or applicable law. In September 2016, we voluntarily notified the U.S. Department of Justice, or DOJ, and Securities and Exchange Commission, or SEC, and are cooperating fully with both agencies. The investigation has been conducted under the oversight of the Audit Committee, with the assistance of outside counsel. In connection with the investigation, during the year ended December 31, 2016, we recorded out-of-period corrections related to $4 million of potentially improper payments between 2009 and 2016 that had been previously capitalized when they should have been expensed. These out-of-period corrections were not material to any previously issued financial statements. There were no adjustments recorded during 2018 and 2017 related to the amounts under investigation. The Company’s discussions with the DOJ and SEC have progressed to a point where the Company can now reasonably estimate a probable loss and has recorded an accrual of $28 million, or FCPA Accrual, in the caption “Accrued expenses and other current liabilities” in our consolidated statements of financial position. There can be no assurance as to the timing of a final resolution of these matters with the DOJ and SEC.”

In addition, for the quarter ended September 30, 2017 Cognizant disclosed $5 million “in costs related to the FCPA investigation and related lawsuits.”

Vantage Drilling has been under FCPA scrutiny since Summer 2015 (see here for the prior post).

Here is what a company executive stated on a recent investor conference call:

“There are no updates regarding the investigation of the company by the SEC concerning possible violations of the FCPA Act with connection with the contracting the Titanium Explorer Drillship to Petrobras. As previously reported, we have reached an agreement in principle with the staff relating to terms of an offer of settlement, which is being presented to the commission for approval. While there can be no assurance that the offer settlement will be accepted by the commission, the company continues to believe the proposed resolution will become final in 2018. In connection with the offer of settlement, we have accrued a liability in the amount of $5 million. If the commission does not accept the offer of settlement, and the SEC determines the violations — that violations of the FCPA have occurred, the company could be subject to civil and criminal sanctions, including monetary penalties as well as additional requirements or changes to our business practices and compliance programs, any or all of which could have a material adverse effect on our business and financial condition.”

For the Reading Stack

The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here with articles concerning the recent Petrobras enforcement action and the U.K. SFO’s extraterritorial powers.

See here for Miller & Chevalier’s FCPA Autumn Review. (Note though that the firm’s FCPA enforcement statistics are a bit wacky).

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