Good lord, scrutiny alert and updates, across the pond, and for the reading stack. It’s all here in the Friday roundup.
Here is how Rep. Jackie Speier (an individual with a law degree) described the Foreign Corrupt Practices Act on a recent CNN program – “It is a requirement that anyone doing business with a foreign entity make sure that none of the money that comes into a project has been laundered.”
Good lord, get it right or stop talking about the FCPA.
Scrutiny Alert and Updates
As highlighted here and here, in September 2018 United Technologies resolved a $13.9 million FCPA enforcement action concerning conduct in various countries. Recently the company disclosed:
“Rockwell Collins’ Voluntary Disclosure
In 2018, and before its acquisition by UTC, Rockwell Collins voluntarily disclosed to the United States Department of Justice (DOJ) and the SEC Division of Enforcement that it was conducting an internal investigation regarding meal, entertainment, and gift expenditures of B/E Aerospace sales employees that may not have complied with then-applicable company policy, as well as a potential conflict of interest involving a third party sales agent for B/E Aerospace in China. The internal investigation, which is ongoing, resulted from Rockwell Collins’ post-acquisition compliance review of B/E Aerospace. UTC continues to cooperate fully with the DOJ and SEC. Because the matter is ongoing, we cannot predict the outcome or the consequences thereof at this time. Rockwell Collins previously disclosed this matter in its public SEC filings, beginning in April 2018.”
Vitol, Glencore, Trafigura
According to Retuers:
“The U.S. Justice Department is investigating a former U.S.-based oil trader for Brazil’s Petrobras already charged in his home country with taking part in a corruption scheme involving commodity companies Vitol SA, Glencore PLC and Trafigura AG.
The U.S. Attorney’s office for the Eastern District of New York is talking to Rodrigo Garcia Berkowitz, a Houston-based oil trader wanted on charges in Brazil for accepting millions of dollars in kickbacks for himself and others, according to one of the people familiar with the matter.
Brazilian prosecutors said executives of the commodities companies, including some in the United States, were involved in improper payments to executives at state-run Petroleo Brasileiro SA, and that Berkowitz and others worked directly with those firms.”
The Sweden-based telecom company with shares trades on a U.S. exchange, has been under FCPA scrutiny since 2015 and recently disclosed:
“The discussions with these authorities continue. While the length of these discussions cannot be determined, the company’s previous assessment, that the resolution of these matters will likely result in monetary and other measures, the magnitude of which at this time cannot be reliably estimated but may be material, remains. Ericsson continues its efforts to improve on its compliance program.”
World Acceptance Corp.
The company has been under FCPA scrutiny since mid-2017 and recently disclosed:
“As previously disclosed, we promptly retained outside legal counsel and forensic accountants, upon receipt of an anonymous letter regarding compliance matters, to conduct an investigation of our operations in Mexico. The investigation focuses on the legality under the US Foreign Corrupt Practices Act and certain local laws of certain payments related to loans, the maintenance of the Company’s books and records associated with such payments, and the treatment of compensation matters for certain employees. We voluntarily contacted the SEC and the US Department of Justice (“DOJ”) in June 2017 to advise both agencies that an investigation was underway. We are committed to compliance with applicable laws and regulations and intend to cooperate fully with both the SEC and the DOJ.”
The company has been under FCPA scrutiny since early 2019. The Wall Street Journal reports:
“Richard Goudis resigned last month as chief executive of Herbalife Nutrition after a recording of comments he made years ago about bypassing internal accounting policies recently ended up in the hands of federal investigators, according to people familiar with the matter. When Mr. Goudis was Herbalife’s chief financial officer about a decade ago, he told a colleague working in Hong Kong or mainland China to ignore the company’s expense-account limit on entertainment spending, the people said. The phone call was recorded by another employee, they said, and last year a copy reached the Justice Department, which has been investigating whether the Los Angeles-based nutritional supplement seller violated foreign bribery laws in its business dealings in China. It couldn’t be determined why the conversation was recorded.”
USANA Health Services
The company has been under FCPA scrutiny since early 2017 and recently disclosed:
“As the Company first disclosed in February 2017, it is voluntarily conducting an internal investigation of its China operations, BabyCare Ltd. The investigation focuses on compliance with the Foreign Corrupt Practices Act and certain conduct and policies at BabyCare, including BabyCare’s expense reimbursement policies. The Audit Committee of the Company’s Board of Directors has assumed direct responsibility for reviewing these matters and has hired experienced counsel to conduct the investigation. While the Company does not believe that the subject amounts are quantitatively material, or will materially affect its financial statements, it cannot currently predict the outcome of the investigation on its business, results of operations, or financial condition. The Company’s internal investigation is substantially complete, however, the Company continues to cooperate with the Securities and Exchange Commission and the United States Department of Justice. The Company cannot currently predict the duration, scope, or result of the investigation.”
Across the Pond
The U.K. Serious Fraud Office recently announced:
“In connection with the SFO’s ongoing investigation into Petrofac Limited and its subsidiaries (“Petrofac”), on 6 February 2019 David Lufkin, 51, a British national, and previously Global Head of Sales for Petrofac International Limited, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to sections 1(1) and 1(2) of the Bribery Act 2010. These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of USD $730 million in Iraq and in excess of USD $3.5 billion in Saudi Arabia.”
For the Reading Stack
Miller & Chevalier’s FCPA Winter Update is here.
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