This post highlights Foreign Corrupt Practices Act enforcement and related developments at the mid-point of 2018.
For a similar post at the mid-point of 2017 see here, for 2016 see here.
This post breaks down FCPA enforcement into the following categories: DOJ (corporate); DOJ (individual); SEC (corporate); and SEC (individual). Thereafter, this post highlights other FCPA developments or items of interest thus far in 2018.
DOJ Enforcement (Corporate)
The DOJ has brought 4 corporate FCPA enforcement actions thus far 2018. DOJ recovery in these actions has been approximately $465 million. This figure represents net FCPA settlement amounts after accounting for credits or deductions in the SoGen enforcement action for related foreign law enforcement actions and the expected SEC prong of the Legg Mason enforcement action.
The Societe Generale enforcement action (net FCPA settlement amount of $293 million) accounts for approximately 65% of the $465 million.
Only 1 (25%) of these enforcement actions (Transport Logistics Int’l) has resulted (at least yet) in any related DOJ individual FCPA enforcement actions.
Societe Generale (June 4th)
See here, here and here for prior posts
Charges: SGA Société Générale Acceptance N.V. (“SGA”) conspiracy to violate the FCPA’s anti-bribery provisions; Société Générale S.A. (SoGen) conspiracy to violate the FCPA’s anti-bribery provisions
Resolution Vehicle: As to SGA, criminal information resolved through a plea agreement; as to SoGen criminal information resolved through a deferred prosecution agreement
Guidelines Range: $731.9 million to $1.46 billion
Penalty: $$585 million to be offset by $293 million for related French enforcement action based on the same conduct (net FCPA settlement amount equals $293 million).
Origin: Pro-active government investigation and subpoena
Monitor: No
Individuals Charged: No
Legg Mason (June 4th)
See here and here for prior posts
Charges: Although the non-prosecution agreement technically does not charge anything, it makes generic reference to “corrupt payments, false books and records, failure to implement adequate internal accounting controls, and circumvention of internal controls.”
Resolution Vehicle: NPA
Guidelines Range: Not mentioned in the NPA, however the NPA mentions a “discount of 25% off of the bottom of U.S. Sentencing Guidelines fine range.”
Penalty: The NPA states: “The Company agrees to pay a monetary penalty in the amount of $32,625,000.00 to the United States Treasury no later than five business days after the Agreement is fully executed, and to pay $31,617,891.90 in disgorgement of profits no later than one year after the Agreement is fully executed. […] The Offices will credit any disgorgement paid by the Company to another law enforcement authority in connection with the resolution of this matter, so long as such disgorgement is paid within one year of the execution of this Agreement.” In connection with the DOJ action, Legg Mason disclosed: “Legg Mason expects to resolve its case with the U.S. Securities and Exchange Commission for this same matter shortly.” Thus, the $31,617,891.90 referenced in the DOJ action is a “placeholder” for the SEC action and the net DOJ settlement amount is $32.6 million.
Origin: Pro-active government investigation and subpoena
Monitor: No
Individuals Charged: No
Panasonic Avionics (April 30th)
See here, here and here for prior posts
Charges: knowing and willful violations of the FCPA’s books and records provisions
Resolution Vehicle: Criminal information resolved through a deferred prosecution agreement
Guidelines Range: $172 million – $344 million
Penalty: $137.4 million
Origin: Pro-active government investigation and subpoena
Monitor: Yes
Individuals Charged: No
Transport Logistics Int’l (March 13th)
See here for the prior post
Charges: Conspiracy to violate the FCPA’s anti-bribery provisions
Resolution Vehicle: Criminal information resolved through a deferred prosecution agreement
Guidelines Range: $28.5 million to $57 million
Penalty: $21.4 million reduced to $2 million based on inability to pay
Origin: Unclear from the resolution documents
Monitor: No.
Individuals Charged: Yes
DOJ Enforcement (Individual)
The DOJ brought or announced 5 core individual actions thus far in 2018 against 6 individuals.
As highlighted here, in connection with the Ng Lap Seng / United Nations enforcement action, the DOJ charged Julia Vivi Wang, a U.S. citizen, with conspiracy to violate the FCPA, a violation of the FCPA, and tax offenses.
As highlighted here, the DOJ charged Lawrence Parker with conspiracy to violate the FCPA’s anti-bribery provisions, among other charges, in connection with an Aruba telecom bribery scheme.
As highlighted here, in an enforcement action that flew under the radar, the DOJ charged Frank Chatburn with conspiring with others by making corrupt payments to PetroEcuador officials in order to obtain and retain contracts for Galileo (described as an Ecuadorian company that provided services in the oil and gas industry) from PetroEcuador.
As highlighted here, in connection with its long-standing Russia nuclear bribery scheme enforcement action (the same core action as the Transport Logistics Int’l enforcement action and prior individual enforcement actions) the DOJ announced criminal charges against Mark Lambert.
As highlighted here, in connection with is long-standing PDVSA bribery scheme enforcement action, the DOJ announced criminal FCPA charges against Luis Carlos De Leon Perez and Nervis Gerardo Villalobos Cardenas.
SEC Enforcement (Corporate)
The SEC has brought 4 corporate FCPA enforcement actions thus far in 2018. SEC recovery in these actions has been approximately $162 million. The Panasonic enforcement action ($143 million) accounts for approximately 90% of this amount.
Of the 4 corporate enforcement actions, 4 were resolved via administrative cease and desist orders. Of the 4 corporate enforcement actions, none of the enforcement actions have (at least yet) resulted in related individual charges.
Panasonic (April 30)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery, books and records, and internal controls provisions. In addition, based on the underlying conduct the SEC also found that Panasonic fraudulently reported revenue and found violations of Section 10(b) and Rule 10b-5 as well as other reporting violations.
Settlement: $143.2 million ($126.0 million in disgorgement and $16.3 million in prejudgment interest).
Origin: The order states: The Company did not receive voluntary disclosure credit because the Company’s disclosures occurred only after the Securities and Exchange Commission (“SEC”) requested documents from Panasonic related to possible violations of anti-corruption laws and several years after the Company and Panasonic first became aware of the allegations of bribery through a whistleblower complaint and civil lawsuit, which the Company took steps to investigate internally but chose not to voluntarily report to the relevant authorities;
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Dun & Bradstreet (April 23)
See here, here, here, here and here for prior posts.
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.
Settlement: $9.2 million (disgorgement of $6,077,820, prejudgment interest of $1,143,664, and a civil money penalty in the amount of $2 million).
Origin: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: No (as highlighted here the DOJ publicly issued a so-called declination letter).
Kinross Gold (March 26th)
See here for the prior post
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.
Settlement: $950,000 civil penalty
Origin: SEC subpoena
Individuals Charged: No
Related DOJ Enforcement Action: No
Elbit Imaging (March 9th)
See here for the prior post
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.
Settlement: $500,000 civil penalty (an amount reflective of the fact that Elbit is currently winding down its operations).
Origin: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: No
SEC Enforcement (Individual)
The SEC has not brought an individual enforcement action thus far in 2018. The last SEC individual enforcement action was in July 2017 (see here).
Other Developments or Items of Interest
As highlighted here, in an FCPA-related civil claim, a court concluded that causation matters. See here for a refreshing judicial reminder that the failure to act consistent with “best practices” is NOT a legal violation.
As highlighted here, the DOJ announced a non-binding policy discouraging “piling on” regarding corporate resolution penalties. The policy is FCPA relevant and this post notes that discouraging “piling on” sounds great, but it all depends on what “piling on” means. This post asserts, in the FCPA context, that business organizations should not take the DOJ’s latest voluntary disclosure bait.
This post highlights a recent speech by Deputy Attorney General Rod Rosenstein in which he discussed the FCPA, foreign law enforcement cooperation, and a recent DOJ so-called “declination.” As highlighted here, Rosenstein also gave a speech about compliance and this post highlights a dandy FCPA relevant speech by SEC Commissioner Hester Peirce.
As highlighted here, the Supreme Court questioned whether dollar-denominated transactions or other financial transactions in the U.S. are sufficient to assert jurisdiction over foreign corporations. Although not an FCPA case, the decision is FCPA relevant as FCPA enforcement actions against foreign companies commonly assert such jurisdictional theories.
As highlighted here, the Supreme Court’s recent unanimous decision in a restitution case provides yet another reason not to voluntarily disclose.
It has been a year since the Supreme Court’s unanimous decision in Kokesh holding that disgorgement is subject to a five year limitations period. Although Kokesh was not an FCPA enforcement action, it most certainly was FCPA relevant because disgorgement is a dominant remedy sought by the SEC in corporate FCPA enforcement actions. Yet, as highlighted in this post Kokesh’s impact on actual FCPA enforcement actions seems to be minimal to non-existent because issuers continue to roll-over-and-play-dead when subject to FCPA scrutiny.
Related to the above, as highlighted here the House held a hearing that touched upon FCPA issues – namely disgorgement, statute of limitations and tolling agreements, the long time periods associated with issuer scrutiny, and “regulation by enforcement.”
As highlighted in this guest post, a UK court recently decided the first contested prosecution of a corporate for failing to prevent bribery under section 7 of the Bribery Act 2010.
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