Odebrecht’s plea agreement and obligations extended, scrutiny alerts, victims, and spot on. It’s all here in the Friday roundup.
As highlighted in this prior post, in December 2016 Odebrecht (a Brazilian holding company) and Braskem (a related entity) resolved a high-profile FCPA enforcement action. Odebrecht was criminally charged with conspiracy to violate the FCPA’s anti-bribery provisions and resolved the charges through a plea agreement.
Under the plea agreement, Odebrecht agreed to, among other things, implement and maintain a compliance and ethics program and to retain an independent compliance monitor. The plea agreement provided that Odebrecht would be in breach of the plea agreement if it failed to fulfill the monitorship obligations or failed to implement and maintain a compliance and ethics program, among other commitments. In the event the government determined that Odebrecht failed to perform or fulfill completely each of its obligations under the plea agreement, an extension of the term could be imposed by the government, in its sole discretion, for up to one year.
In a recent filing, the DOJ informed the court that Odebrecht failed to fulfill is obligations under the plea agreement and that the plea agreement has been extended. As stated by the DOJ:
“Specifically, the government’s determination was premised on: (1) Odebrecht’s failure to fulfill the monitorship obligations, including failing to adopt and implement the agreed upon recommendations of the monitor and failing to allow the monitor to complete the monitorship; and (2) Odebrecht’s failure to implement and maintain a compliance and ethics program designed to prevent and detect violations of the FCPA and other applicable anticorruption laws throughout its operations.”
In mid-2015 (see here for the prior post) Alexion Pharmaceuticals disclosed:
“[W]e received a subpoena in connection with an investigation by the Enforcement Division of the SEC requesting information related to our grant-making activities and compliance with the Foreign Corrupt Practices Act in various countries. The SEC also seeks information related to Alexion’s recalls of specific lots of Soliris and related securities disclosures. Alexion is cooperating with the SEC’s investigation, which is in its early stages. At this time, Alexion is unable to predict the duration, scope or outcome of the SEC investigation. Any determination that our operations or activities are not, or were not, in compliance with existing United States or foreign laws or regulations, including by the SEC pursuant to its investigation of our compliance with the FCPA and other matters, could result in the imposition of a broad range of civil and criminal sanctions against Alexion and certain of our directors, officers and/or employees, including injunctive relief, disgorgement, substantial fines or penalties, imprisonment, interruptions of business, debarment from government contracts, loss of supplier, vendor or other third-party relationships, termination of necessary licenses and permits, and other legal or equitable sanctions. Other internal or government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, may also follow as a consequence. Violations of these laws may result in criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on its reputation, business, results of operations or financial condition. Cooperating with and responding to the SEC in connection with its investigation of our FCPA practices and other matters, as well as responding to any future U.S. or foreign governmental investigation or whistleblower lawsuit, could result in substantial expenses, and could divert management’s attention from other business concerns and could have a material adverse effect on our business and financial condition and growth prospects.”
Nearly five years later (yes you read that right), the company recently disclosed:
“The investigations have focused on operations in various countries, including Brazil, Colombia, Japan, Russia and Turkey, and Alexion’s compliance with the FCPA and other applicable laws.
Preliminary discussions have begun with the SEC to resolve the investigation [focused on operations in various countries including Brazil, Colombia, Japan, Russia and Turkey]. However, at this time, Alexion is unable to predict the duration, scope or outcome of these preliminary discussions with the SEC or the investigations at the SEC or DOJ. There can be no assurance that any current or future discussions with the SEC or DOJ to resolve these matters will be successful or that any potential settlement terms or amount will be agreed to or finalized. While it is possible that a loss related to these matters may be incurred, given the ongoing nature of the discussions with the SEC and these investigations at the SEC and DOJ, management cannot reasonably estimate the potential magnitude of any such loss or range of loss, or the cost of the ongoing investigation.”
As highlighted in this prior post, in mid-2019 Panama based Avianca Holdings S.A. (a company with shares traded on the New York Stock Exchange) disclosed:
“Internal investigation to determine whether we may have violated the U.S. Foreign Corrupt Practices Act and other laws
Through its internal processes, Avianca Holdings discovered a business practice whereby company employees, which may include members of senior management, as well as certain members of the board of directors, provided things of value, which as of today Avianca Holdings believes to have been limited to free and discounted airline tickets and upgrades, to government employees in certain countries. Avianca Holdings commenced an internal investigation and retained outside counsel and a forensic investigatory firm to determine whether this practice may have violated the U.S. Foreign Corrupt Practices Act (“FCPA”) or other potentially applicable U.S. and non-U.S. anti-corruption laws. Additionally, Avianca Holdings implemented policies designed to prevent such practice from occurring in the future. On August 13, 2019, Avianca Holdings voluntarily disclosed this investigation to both the U.S. Department of Justice and the SEC, and Avianca Holdings is cooperating with both agencies. On the same date, Avianca Holdings voluntarily disclosed this investigation to the Colombian Financial Superintendence through the National Registry of Securities and Issuers. Based on the progress of the matter to date, management has not provided for any potential liability that may result from the investigation or related regulatory proceedings.”
See here for more.
As noted in this recent Wall Street Journal article:
“[Avianca has] opened a probe into its business relationship with Airbus SE after the European plane maker reached a record $4 billion bribery settlement with authorities in three countries.
Avianca Holdings SA said it retained a law firm to conduct an investigation into its relationship with Airbus, which was charged with making illicit payments to intermediaries to secure contracts for its planes and other products in violation of the U.S.’s Foreign Corrupt Practices Act and antibribery laws in France and the U.K.
The law firm would investigate whether Avianca was a victim of Airbus’s alleged bribery schemes, the airline said, adding that it would take legal actions if necessary to defend the interests of the company and its shareholders.”
This presents a most interesting dynamic. A company under FCPA scrutiny while at the same time claiming that it was a victim of a competitor’s conduct in violation of the FCPA (and related laws).
Speaking of victims, Transparency International asks “why don’t the victims of bribery share in the record-breaking Airbus settlement?” (See here and here for prior posts). As stated by Transparency International:
“Notably absent in the Airbus agreements are any plans to share the penalty payment with the countries where the company was paying bribes, including Colombia, Ghana, Indonesia and Sri Lanka. Foreign bribery, especially on this scale, has a pernicious and devastating effect on the countries where the bribes are paid – the so-called ‘demand side’ of the bribery equation. Governments pay higher prices for lower quality or incomplete goods and services. They may even waste millions on completely unnecessary procurements. Essential services like education and healthcare are deprived of much needed funds as a result. Especially in poorer countries, the impact can be a matter of life and death.”
This recent post discussed, once again, the need for an FCPA common language. Among other things, the post noted the creative and haphazard ways in which certain FCPA commentators keep FCPA enforcement statistics including FCPA settlement amounts.
Consistent with how FCPA Professor keeps statistics (as well as certain other commentators) the DOJ stated in this recent Fraud Section report that “total U.S. monetary amounts” in 2019 corporate FCPA enforcement actions was approximately $2.6 billion.
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