This post highlights Foreign Corrupt Practices Act enforcement and related developments at the mid-point of 2023.
As highlighted below, in six core corporate enforcement actions, the DOJ/SEC have secured net approximately $93 million in FCPA settlement amounts. For a similar post at the mid-point of 2022 see here; for 2021 see here; for 2020 see here; for 2019 see here; for 2018 see here; for 2017 see here; and 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 2023.
DOJ Enforcement (Corporate)
Thus far in 2023, the DOJ has brought one corporate enforcement action with a net settlement amount of $1.2 million.
Corsa Coal (March 8)
As discussed here, the DOJ released a so-called declination with disgorgement letter involving Corsa Coal in connection with an alleged bribery scheme in Egypt. As stated in the letter, “the Government calculated that Corsa earned profits totaling approximately $32.7 million from the criminal scheme. Corsa, however, met its burden of establishing an inability to pay the full disgorgement of ill-gotten gains sought by the Government, despite agreeing that the amount was otherwise appropriate based on the law and the facts. Accordingly, Corsa agrees to disgorge $1,200,000.”
Although not a new enforcement action, as highlighted here, the DOJ announced that Ericsson pled guilty and agreed to pay an additional $206 million in connection with its 2019 FCPA enforcement action after the DOJ alleged a breach of the 2019 deferred prosecution agreement . This post takes a closer look at the “factual basis” for breach as stated by the DOJ.
DOJ Enforcement (Individual)
Thus far in 2023, the DOJ has announced FCPA charges against three individuals.
As highlighted here, the DOJ added an FCPA conspiracy charge against Samuel Bankman-Fried (criminally charged in December 2022 with a variety of offenses in connection with an alleged financial fraud scheme). As alleged by the DOJ: “In or about 2021, Bankman-Fried authorized and directed a bribe of at least $40 million to one or more Chinese government officials. The purpose of the bribe was to influence and induce one or more Chinese government officials to unfreeze certain Alameda trading accounts containing over $1 billion in cryptocurrency, which had been frozen by Chinese authorities. Bankman-Fried and others sought to regain access to the assets to fund additional Alameda trading activity, in order to assist Bankman-Fried and Alameda in obtaining and retaining business.” As highlighted here, the FCPA charge was severed from the other criminal charges.
As highlighted here, Glenn Oztemel (an individual previously employed by Freepoint Commodities LLC) and Eduardo Innecco (a dual Brazilian and Italian citizen who worked as an oil and gas broker and agent for Freepoint) were charged with FCPA and related offenses for an alleged Brazil bribery scheme.
SEC Enforcement (Corporate)
Thus far in 2023, the SEC has brought five corporate enforcement actions with settlement amounts totaling approximately $92 million.
Rio Tinto (March 6)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)
Settlement: $15 million civil penalty.
Origin: Rio Tinto previously disclosed: “On 29 August 2016, Rio Tinto became aware of email correspondence from 2011 relating to contractual payments totalling US$10.5 million made to a consultant providing advisory services on the Simandou project in Guinea. The company launched an investigation into the matter led by external counsel. Based on the investigation to date, Rio Tinto has today notified the relevant authorities in the United Kingdom and United States and is in the process of contacting the Australian authorities.
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Flutter International (March 6)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)
Settlement: $4 million civil penalty.
Origin: The company previously disclosed: “By at least 2016, the Company’s Board undertook a review of whether the Company, any of its subsidiaries, or any of its personnel had made improper payments, directly or through external consultants, to government officials in certain foreign jurisdictions. As a result of this review, the Company voluntarily contacted the Commission and other U.S. and Canadian regulators …”.
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Frank’s International (April 26)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s anti-bribery, books and records, and internal controls provisions)
Settlement: Approximately $8 million (disgorgement of $4,176,858 and prejudgment interest of $821,863 and a civil money penalty in the amount of $3,000,000).
Origin: The company previously disclosed: “The Company is conducting an internal investigation of the operations of certain of its foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act, the Company’s policies and other applicable laws. In June 2016, the Company voluntarily disclosed the existence of its extensive internal review to the U.S. Securities and Exchange Commission and the United States Department of Justice.”
Individuals Charged: No
Related DOJ Enforcement Action: No
Philips (May 11)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)
Settlement: Approximately $62.2 million (disgorgement of $41,126,170, prejudgment interest of $6,047,633, and a civil monetary penalty of $15,000,000).
Origin: Unclear from the resolution document. In 2019, media reports stated: ““The U.S. Securities and Exchange Commission is investigating Siemens AG, Philips NV and General Electric Co for allegedly using local middlemen to negotiate bribes with Chinese government and hospital officials to sell medical equipment. The investigations into the companies’ business in China, along with an existing SEC probe into their sales in Brazil, are part of a new effort by U.S. regulators to crack down on alleged corruption in sales of costly medical equipment worldwide […] Siemens, GE and Philips all denied wrongdoing and said they were unaware of any SEC investigation concerning their operations in China.”
Individuals Charged: No
Related DOJ Enforcement Action: No
Gartner (May 26)
See here and here for the prior posts.
Charges: None (administrative order findings violations of the FCPA’s anti-bribery, books and records. and internal controls provisions)
Settlement: Approximately $2.5 million ($856,764 in disgorgement and prejudgment interest and a $1.6 million civil penalty).
Origin: The company previously disclosed: “During the second half of 2018 we fully cooperated with a South African government commission established to review a wide range of issues related to the country’s revenue service, including the procurement and fulfillment of consulting agreements we entered into with the revenue service through a sales agent from late 2014 through early 2017. In parallel, we commenced an internal investigation regarding this matter. We voluntarily disclosed the matter to the SEC and Department of Justice (DOJ) in November 2018.” The SEC’s order stated: “In determining to accept the Offer, the Commission considered Gartner’s self disclosure following press reports in South Africa …”.
Individuals Charged: No
Related DOJ Enforcement Action: No
SEC Enforcement (Individual)
Thus far in 2023, the SEC has not announced any individual FCPA enforcement actions. (The last SEC individual FCPA enforcement action occurred in October 2020).
Other Developments or Items of Interest
In April 2022, Roger Ng (a former Goldman Sachs managing director) was found guilty at trial of Foreign Corrupt Practices Act and related charges for paying bribes to various Malaysian and Abu Dhabi officials in connection with Malaysia’s state-owned and state-controlled investment development company. See here. During the first quarter of 2023, Ng was sentenced to ten years in prison (see here) and also ordered to forfeit $35.1 million (see here).
In another FCPA sentence during the first quarter of 2023, former Unaoil executive Saman Ahsani was sentenced to 366 days in prison. (See here). In 2019, the DOJ announced that Cyrus Ahsani and Saman Ahsani (the former CEO and Chief Operations Officer of Monaco-based Unaoil) pleaded guilty in March 2019 to one count of conspiracy to violate the FCPA for their roles in a scheme to corruptly facilitate millions of dollars in bribe payments to officials in multiple countries.
As discussed here, the DOJ announced changes to its Corporate Enforcement Policy (CEP). According to the DOJ, “these changes offer companies new, significant, and concrete incentives to self-disclose misconduct. And even in situations where companies do not self-disclose, the revisions to the policy provide incentives for companies to go far above and beyond the bare minimum when they cooperate with our investigations.” See here for additional analysis. A few weeks later, as highlighted here, the DOJ announced yet additional changes to DOJ policy. According to the DOJ, the changes concern how the DOJ “consider[s] a corporation’s approach to the use of personal devices as well as various communications platforms and messaging applications, including those offering ephemeral messaging.” In addition, the DOJ “updated its policies concerning corporate compensation systems” and issued a “revised memorandum on the selection of monitors in Criminal Division matters” including that “any submission of a monitor candidate by the company and selection of a monitor candidate by the Criminal Division should be made in keeping with the department’s commitment to diversity, equity, and inclusion.”
As highlighted here, in dismissing FCPA (and related) charges against Paulo Casqueiro Murta a judge found bad faith by the government and that the “government’s words and conduct breached the wall of credibility.”
As highlighted here and here, in recent months the Supreme Court has bench slapped the DOJ three times in rejecting overly expansive interpretations of a criminal statute by the DOJ.
As highlighted here, the SEC’s $279 million whistleblower award was reportedly made in connection with the Ericsson FCPA matter – even though the information provided by the whistleblower to the SEC occurred after the SEC had already opened an investigation of Ericsson. In other news involving Ericsson, as highlighted here an FCPA related securities fraud action against Ericsson was dismissed.
As highlighted here, Cary Yan was sentenced to 3.5 years in prison in connection with the Marshall Islands bribery scheme he pleaded guilty to.
As highlighted here, in a domestic bribery criminal trial, former ComEd executives and associates were convicted of FCPA books and records and internal controls charges.
