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Mid-Year FCPA Report

This post highlights Foreign Corrupt Practices Act enforcement and related developments at the mid-point of 2020. As highlighted below, in four core corporate enforcement actions, the government has secured $674 million. None of the enforcement actions have resulted in any related charges against company employees.

For a similar post at the mid-point of 2019 see here [1], for 2018 see here [2], for 2017 see here [3], and for 2016 see here [4].

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 2020.

DOJ Enforcement (Corporate)

Thus far in 2020, the DOJ has brought two core corporate enforcement actions with settlement amounts totaling $528 million.

Airbus (Jan. 31)

See here [5] and here [6] for prior posts.

Charges: Criminal information charging conspiracy to violate the FCPA’s anti-bribery provisions.

Resolution Vehicle: Deferred Prosecution Agreement

Guidelines Range: $2.8 billion – $5.6 billion

Settlement: $294 million (after the DOJ allowed credits for satisfaction of payments to other foreign law enforcement agencies)

Origin: Foreign law enforcement investigation (prompted by the company seeking export credit financing)

Monitor: No

Individuals Charged: No

Novartis (June 25)

See here [7] and here [8] for prior posts.

Charges: As to Novartis Hellas S.A.C.I. (Novartis Greece), a criminal information charging one count of conspiracy to violate the FCPA’s anti-bribery provisions and one count of conspiracy to violate the FCPA’s books and records provisions. As to Alcon Pte Ltd., a subsidiary of Novartis at the time of the misconduct, a criminal information charging conspiracy to violate the books and records provisions.

Resolution Vehicles: Deferred Prosecution Agreements

Guidelines Range: As to Novartis Greece, $180 – $360 million. As to Alcon, $11.9 – $23.8 million.

Settlement: Novartis Greece – $225 million. Alcon – $8.9 million.

Origin: Based on the company’s disclosure, apparent foreign law enforcement investigation and/or subpoeneas and document requests from the DOJ/SEC.

Monitor: No

Individuals Charged: No

DOJ Enforcement (Individual)

Thus far in 2020, the DOJ has brought or announced two core individual enforcement actions against four individuals.

As highlighted in this post [9], in connection with the long-standing Alstom matter, the DOJ announced the unsealing of a criminal indictment harging Reza Moenaf (the former president of Alstom’s subsidiary in Indonesia), Eko Sulianto (the former director of sales of Alstom’s subsidiary in Indonesia) and Junji Kusunoki (the former deputy general manager of Marubeni’s Overseas Power Project Department) with conspiracy to violate the FCPA and conspiracy to commit money laundering in connection with the same core allegations found in the previous enforcement actions.

In connection with the sprawling PDVSA related enforcement actions [10], the DOJ brought additional charges against Tulio Anibal Farias-Perez. (See here [11]).

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SEC Enforcement (Corporate)

Thus far in 2020, the SEC has brought three corporate enforcement actions with settlement amounts totaling $146 million.

Cardinal Health  (Feb. 28)

See here [13] and here [14] for prior posts

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $8.8 million

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: No

Eni  (April 17)

See here [15] and here [16] for prior posts

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $24.5 million in disgorgement and prejudgment interest ($19.75 million in disgorgement and $4.75 million in prejudgment interest).

Origin: Voluntary disclosure. As stated by the company: “In 2012, Eni contacted the U.S. Department of Justice (DoJ) and the U.S. SEC in order to voluntarily inform them about this matter, and has kept them informed about the developments in the Italian Prosecutors’ investigations and proceedings. Following Eni’s notification, both the U.S. SEC and the DoJ started their own investigations regarding this matter.”

Individuals Charged: No

Related DOJ Enforcement Action: No

Novartis (June 25)

See here [7] and here [8] for prior posts.

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $112.8 million.

Origin: Based on the company’s disclosure, apparent foreign law enforcement investigation and/or subpoeneas and document requests from the DOJ/SEC.

Individuals Charged: No

Related DOJ Enforcement Action: Yes

SEC Enforcement (Individual)

Thus far in 2020, the SEC has brought one individual enforcement action. See here [17] for a summary of the SEC’s civil complaint against Asante Berko (a former Executive Director of Goldman Sachs International) for arranging a bribery scheme in Ghana on behalf of a Turkish energy company.

Other Developments or Items of Interest

As discussed in this post [18], the COVID-19 crisis once again demonstrates the difference between the FCPA (the statute as written by Congress and interpreted by courts) and the FCPA as enforced by the DOJ and/or SEC. This post [19] reminds compliance professionals that the internal controls standard is “reasonable.” This post [20] rounds up other FCPA or related articles about COVID-19. This post [21] discusses the impact of the COVID-19 crisis on FCPA enforcement and this post [22] assesses the narrative that FCPA enforcement will increase post COVID-19 crisis because that’s what happened post-financial crisis (short answer – there is no evidence that FCPA enforcement increased circa 2010-2012 because of the financial crisis ). As highlighted here [23], FCPA enforcement officials addressed various COVID-19 related questions. In addition, the DOJ’s Senior Deputy Chief of the Fraud Section addressed [24] the oft-cited personal protective equipment FCPA hypothetical.

A judge ordered a new trial for FCPA defendants Joseph Baptiste and Roger Boncy who were previously convicted for an alleged Haitian bribery scheme. (See here [25]).

As highlighted here [26], in a significant setback for the DOJ a judge granted Lawrence Hoskins’s motion for acquittal on the seven FCPA charges he was convicted of by a jury in 2019. (The judge denied Hoskin’s motion for acquittal on the five money laundering charges he was convicted of by the jury). This post [27] highlights what others are saying about the FCPA acquittal. On the money laundering conviction, as discussed here [28] the judge significantly rejected the DOJ’s sentencing recommendation and sentenced Hoskins to approximately one year. The post further describes how the DOJ press release announcing the sentencing omitted much material information. This post [29] wonders why the DOJ is appealing the FCPA acquittals to the Second Circuit.

In an FCPA issue of first impression, a judge ruled that separate e-mails in furtherance of the same alleged bribery scheme are separate “units of prosecution.” (See here [30]).

As highlighted  here [31], a bill introduced in the House seeks to transfer pharma FCPA civil settlement amounts to fund pediatric disease research.

As highlighted here, [32] the Supreme Court held in Liu v. SEC that for purposes of a statute concerning SEC actions in federal court that a “disgorgement amount that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable relief permissible” under the statutory scheme. This post [33] highlights an important question relevant to FCPA enforcement (recognizing that the vast majority of SEC FCPA enforcement actions against issuers are resolving administratively). As highlighted here [34], during oral argument in Liu v. SEC (a disgorgement case with potential FCPA implications) the Deputy Solicitor General stated that “there really is no obvious universe of individual victims from an FCPA violation.”

As highlighted here [35], the DOJ revised its “Evaluation of Corporate Compliance Programs” guidance document. As discussed in this post [36], big picture the revised guidance now uses the terms “effective” or “effectively” 54 times compared to 51 times and poses 168 questions compared to 151 questions.

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