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Friday Roundup


Sentenced, another one dismissed, scrutiny alerts, clawback, and pardon me for being that guy but … It’s all here in the Friday roundup.


As highlighted in prior posts here and here, in January 2017 the DOJ announced a $170 million Foreign Corrupt Practices Act enforcement action against U.K. based Rolls-Royce concerning conduct in Thailand, Brazil, Kazakhstan, Azerbaijan, Angola, Iraq and elsewhere.

As highlighted in this prior post, in November 2017 the DOJ announced an FCPA enforcement action against five individuals based on the same Kazakhstan conduct alleged in the prior corporate action. That is, bribery in connection with a contract to supply gas turbine units to Asia Gas Pipeline LLC (AGP) for approximately $145 million.

Several of the individuals were recently sentenced. As noted here:

  • James Finley was sentenced to four months in prison and eight months of home confinement.
  • Andreas Kohler was sentenced to four months in prison and four months of home confinement.
  • Keith Barnett was sentenced to three years probation including six months of home confinement.
  • Louis Zuurhout was sentenced to five years probation.

Another One Dismissed

It is as predictable as the sun rising in the east and dogs barking.

In the aftermath of a Foreign Corrupt Practices Act enforcement action (or mere instances of FCPA scrutiny), plaintiffs’ lawyers representing shareholders on a contingent fee basis file securities fraud claims against the company and/or certain officers or directors. Such FCPA-related claims are frequently dismissed, but the claims nevertheless continue to be filed.

For instance, in late 2016 Cemex SAB de CV, a multinational building-materials company, announced that an internal audit process revealed that Cemex Colombia had made approximately $20 million in payments to a Colombian company’s legal representative in connection with the acquisition of land and mining rights.

Thereafter, Cemex disclosed that it had received subpoenas from the DOJ and SEC as part of an investigation into whether the payments had violated the FCPA.

Thereafter, plaintiff shareholders alleged that the company and individual officers fraudulently failed to disclose the alleged bribery scheme in several of its disclosures and that several of the officer’s statements were false and misleading in light of the alleged bribery scheme.

However, as often happens, a court recently granted the defendants’ motion to dismiss (see 2019 WL 3066487) holding that most of the alleged false or misleading statements or omissions were not actionable and that in connection with certain actionable statements that the plaintiffs failed to adequately plead scienter.

Scrutiny Alerts


The company disclosed in its quarterly filing:

“The Company, through its internal processes, discovered certain travel activities and related funding and record keeping issues raising concerns, arising from marketing efforts by certain business groups based in China. The Company initiated an internal investigation to determine whether the expenditures may have violated the U.S. Foreign Corrupt Practices Act (“FCPA”) or other potentially applicable anti-corruption laws. The Company has retained outside counsel and a forensic accounting firm to assist with the investigation. On July 23, 2019, the Company voluntarily disclosed this investigation to both the Department of Justice and Securities and Exchange Commission and is cooperating with both agencies. The Company cannot predict at this time the outcome of its investigation or what potential actions may be taken by the Department of Justice or Securities and Exchange Commission.”

As highlighted in this prior post, between 2009 and 2013 3M was under FCPA scrutiny for conduct in Turkey.


Honeywell recently disclosed:

“Petrobras and Unaoil

We are cooperating with certain investigations by the U.S. Department of Justice (the “DOJ”), the U.S. Securities and Exchange Commission (the “SEC”) and Brazilian authorities relating to our use of third parties who previously worked for our UOP business in Brazil in relation to Petróleo Brasileiro S.A. (“Petrobras”). The investigations are focused on compliance with the U.S. Foreign Corrupt Practices Act and similar Brazilian laws, and involve, among other things, document production and interviews with former and current management and employees. The DOJ and the SEC are also examining a matter involving a foreign subsidiary’s prior engagement of Unaoil S.A.M. in Algeria. We are cooperating with the authorities in each of the above matters. While we cannot predict the outcome of these matters, based on the facts currently known to us, we do not anticipate that these matters will have a material adverse effect on our financial condition, results of operations, or cash flows.”

Deutsche Bank

According to this article:

“The U.S. Justice Department is investigating whether [Deutsche Bank] violated foreign corruption or anti-money-laundering laws in its work for the 1Malaysia Development Bhd. fund, which included helping the fund raise $1.2 billion in 2014 as concerns about the fund’s management and financials had begun to circulate, according to people familiar with the matter. The investigation into Deutsche Bank has been helped in part by a former Goldman Sachs Group Inc. executive, Tim Leissner, who is cooperating with authorities, according to the people familiar with the matter. Prosecutors have been investigating similar issues at Goldman, where Mr. Leissner, a former managing director, pleaded guilty last year and admitted to earlier helping siphon off billions of dollars from the fund.”

For more on the Leisnner et al matter, see prior posts here and here.

According to the article:

“Meanwhile, the Justice Department is set to begin negotiations with Goldman soon to try to resolve allegations through a possible criminal settlement, a senior official said. “We do anticipate getting into active discussions with Goldman, at this point, in the near future,” Assistant Attorney General Brian Benczkowski, who runs the agency’s criminal division, said in an interview.”

De La Rue Group

The U.K. Serious Fraud Office recently announced that “it has opened an investigation into the activities of the De La Rue group and its associated persons in relation to suspected corruption in South Sudan.”

De La Rue Group is the world’s largest designer and commercial provider of banknotes and passports.


As reported here:

“Teva Pharmaceutical Industries Ltd. will receive $50 million from former senior Teva executives, directors and board members as partial compensation for fines the Israeli pharmaceutical company was forced to pay for bribery charges to the US and Israel, according to Israeli business reports on Thursday. In 2016, Teva admitted using bribery to promote sales of Copaxone, an immunomodulator medication used to treat multiple sclerosis, in Russia, Mexico, and Ukraine. The Israeli drug company was ultimately forced to pay over $500 million to the US on charges of conspiracy to violate the anti-bribery provision of the Foreign Corrupt Practices Act. In 2018, Teva paid $22 million to Israel to avoid being charged by similar bribery violations in the same case. A settlement was reached in a Tel Aviv court on Thursday for insurance companies of the Teva executives involved in the bribery to pay $50 million in compensation to shareholders in exchange for complete elimination of liability for any remaining lawsuits in the affair.”

Pardon Me For Being That Guy, But 

Recently Assistant Attorney General Brian Benczkowski delivered this speech on the DOJ Criminal Division’s 100th anniversary. In it, he stated:

“Our Fraud Section, established in 1955, has set the gold standard for how to prosecute large-scale economic frauds.  Since the Foreign Corrupt Practices Act was passed in the 1970s, paving the way for companies and persons to be held criminally responsible for corrupt business practices abroad, our Fraud Section has not hesitated to hold major international companies accountable – from BAE Systems and Hewlett Packard to Siemens A.G. and Petrobras.”

Pardon me for being that guy, but BAE was not charged with any FCPA offenses.

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