As highlighted in this prior post, in February 2018 Albemarle Corp. (a North Carolina based chemical company) disclosed Foreign Corrupt Practices Act scrutiny.
Specifically the company disclosed:
“Following receipt of information regarding potential improper payments being made by third party sales representatives of our Refining Solutions business, we promptly retained outside counsel and forensic accountants to investigate potential violations of the Company’s Code of Conduct, the Foreign Corrupt Practices Act (“FCPA”), and other potentially applicable laws. Based on this internal investigation, we have voluntarily self-reported potential issues relating to the use of third party sales representatives in our Refining Solutions business to the U.S. Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”), and intend to cooperate with the DOJ and SEC in their review of these matters. In connection with our internal investigation, we have implemented, and are continuing to implement, appropriate remedial measures. At this time, we are unable to predict the duration, scope, result or related costs associated with any investigations by the DOJ or SEC. We also are unable to predict what, if any, action may be taken by the DOJ or SEC or what penalties or remedial actions they may seek.”
Fast forward and approaching 4.5 years later, Albemarle is still under FCPA scrutiny.
The company recently disclosed:
“As first reported in 2018, following receipt of information regarding potential improper payments being made by third-party sales representatives of our Refining Solutions business, within our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potential violations of the Company’s Code of Conduct, the Foreign Corrupt Practices Act, and other potentially applicable laws. Based on this internal investigation, we have voluntarily self-reported potential issues relating to the use of third-party sales representatives in our Refining Solutions business, within our Catalysts segment, to the U.S. Department of Justice (“DOJ”), the SEC, and the Dutch Public Prosecutor (“DPP”), and are cooperating with the DOJ, the SEC, and the DPP in their review of these matters. In connection with our internal investigation, we have implemented, and are continuing to implement, appropriate remedial measures. We have commenced discussions with the SEC about a potential resolution. At this time, we are unable to predict the duration, scope, result, or related costs associated with the investigations. We also are unable to predict what action may be taken by the DOJ, the SEC, or the DPP, or what penalties or remedial actions they may ultimately seek. Any determination that our operations or activities are not, or were not, in compliance with existing laws or regulations could result in the imposition of fines, penalties, disgorgement, equitable relief, or other losses. We do not believe, however, that any such fines, penalties, disgorgement, equitable relief, or other losses would have a material adverse effect on our financial condition or liquidity. However, an adverse resolution could have a material adverse effect on our results of operations in a particular period.”
Albemarle’s long-lasting scrutiny is not unique as 4-4.5 years is the approximate median amount of time companies that disclose FCPA scrutiny remain under scrutiny in the FCPA’s modern era (and this was occurring long before any potential COVID-19 impact on government inquiries).
It’s a joke that companies are under FCPA scrutiny for so long particularly companies that voluntarily disclose and cooperate (as to the later issue something nearly all companies do).
Long-lasting FCPA scrutiny also completely undermines DOJ and SEC rhetoric on this issue.
As highlighted here, a notable development from 2017 was when Acting Principal Deputy Assistant Attorney General Trevor McFadden stated it was the DOJ’s “intent … for our FCPA investigations to be measured in months, not years.”
As highlighted here, in 2020 Stephanie Avakian (Director of the SEC’s Division of Enforcement) stated that the SEC was focused on maximizing resource allocation ” to shorten the amount of time it takes to complete investigations and bring cases.”
As highlighted here, in 2021 Gary Gensler (SEC Chair) talked about “timeliness” and stated: “I think we should focus on bringing matters to resolution swiftly. As the old legal saying goes, justice delayed is justice denied. […] We’ve got precious resources, we need to move the docket, and we will be bringing cases expeditiously.”
As highlighted above, Albemarle’s recent disclosure states that it has “commenced discussions with the SEC about a potential resolution.”
In case you are wondering, Albemarle said the same thing in February 2022 and prior to that in November 2021.
