This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related developments from the third quarter of 2019. (See here for a similar post for Q1 2019 and here for Q2 2019).
DOJ Enforcement (Corporate)
The DOJ brought one corporate FCPA enforcement action in the third quarter. DOJ recovery in this action was $8.8 million.
Microsoft (July 22)
See here and here for prior posts.
Charges: None.
Resolution Vehicle: Non-prosecution agreement with MS Hungary.
Guidelines Range: Not set forth in the NPA.
Settlement: $8.8 million.
Origin: Unclear, but not a voluntary disclosure. As stated by the DOJ: “MS Hungary did not receive voluntary disclosure credit because it did not voluntarily and timely disclose to the Fraud Section and the Office the conduct described in the Statement of Facts.”
Monitor: No
Individuals Charged: No
DOJ Enforcement (Individual)
The DOJ brought or announced three core individual actions in the third quarter against five individuals.
As highlighted here, in connection with the long-standing PDVSA bribery actions, Daisy Rafoi Bleuler (a citizen of Switzerland and partner in a Swiss Wealth Management firm), and Paulo Caqueiro Murta (a citizen of Portugal and Switzerland and employee in a Swiss Management firm) were charged with conspiracy to violate the FCPA’s anti-bribery provisions as well as other offenses.
As highlighted here, Robin Longoria (an individual who managed aspects of an international program at an Ohio-based adoption agency) pleaded guilty to one count of conspiring to violate the FCPA’s anti-bribery provisions and to commit wire fraud and visa fraud “for her role in a scheme to corruptly facilitate adoptions of Ugandan children through bribing Ugandan officials and defrauding U.S. adoptive parents and the U.S. Department of State.”
As highlighted here, in connection with the long-standing PetroEcuador bribery actions, Armengol Alfonso Cevallas Diaz (an Ecuadorian citizen) and Jose Melquiades Cisneros Alarcon (an Ecuadorian citizen and permanent resident of the U.S.) were criminally charged.
SEC Enforcement (Corporate)
The SEC brought seven corporate FCPA enforcement actions in the third quarter. SEC recovery in these actions was approximately $70 million.
Microsoft (July 22)
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: $16.5 million (disgorgement of $13,780,733 and prejudgment interest of $2,784,417)
Origin: Unclear from the resolution documents.
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Deutsche Bank (August 22)
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: $16.2 million (disgorgement of approximately $10.8 million, prejudgment interest of approximately $2.4 million; and a civil monetary penalty of $3 million).
Origin: Likely industry sweep after JPMorgan became the subject of FCPA scrutiny.
Individuals Charged: No
Related DOJ Enforcement Action: No
Juniper Networks (August 29)
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: $11.7 million ($4 million in disgorgement, $1.245 million in prejudgment interest, and a $6.5 million civil penalty).
Origin: The SEC’s order is silent on this topic, but the following sentence from the order suggests that there was no voluntary disclosure: “Juniper’s cooperation included timely disclosure of facts developed during an internal investigation initiated after learning of the investigation being conducted by Commission staff.” Moreover, Juniper’s original disclosure of its FCPA scrutiny in mid-2013 stated: “The U.S. Securities and Exchange Commission and the U.S. Department of Justice are conducting investigations into possible violations by the Company of the U.S. Foreign Corrupt Practices Act.” However, the company’s blog post announcing last week’s enforcement action stated that the company “entered into an administrative settlement with the SEC that resolves an internal and government investigation with respect to matters involving the FCPA that Juniper Networks self-reported.”
Individuals Charged: No
Related DOJ Enforcement Action: No
TechnipFMC (September 19)
See here for a prior post.
Charges: None (administrative order findings violations of the FCPA’s anti-bribery provisions, books and records and internal controls provisions)
Settlement: $5.06 million (disgorgement of $4,427,194 and prejudgment interest of $734,712).
Origin: The company disclosed that it “received an inquiry” from the DOJ/SEC.
Individuals Charged: No
Related DOJ Enforcement Action: Yes.
Quad Graphics (September 26)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s anti-bribery provisions, books and records and internal controls provisions)
Settlement: $10 million ($6.94 million in disgorgement, $960,000 in prejudgment interest, and a $2 million civil penalty).
Origin: Voluntary disclosure.
Individuals Charged: No
Related DOJ Enforcement Action: No.
Barclays (September 27)
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: $6.3 million ($3.8 million in disgorgement; prejudgment interest of $984,000; and a $1.5 million civil penalty).
Origin: Voluntary disclosure.
Individuals Charged: No
Related DOJ Enforcement Action: No.
Westport Fuel Systems (September 27)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s anti-bribery provisions, books and records and internal controls provisions)
Settlement: $4 million (disgorgement of $2.35 million, prejudgment interest of $196,000 and a $1.5 million civil penalty).
Origin: SEC inquiry/subpoenas.
Individuals Charged: Yes.
Related DOJ Enforcement Action: No.
SEC Enforcement (Individual)
The SEC brought two core individuals actions against two individuals in the third quarter.
As highlighted here, in connection with the previous Cognizant Technologies enforcement action, the SEC brought an additional enforcement action against Sridhar Thiruvengadam (an Indian national and resident who previously served as Cognizant’s Chief Operating Officer). Thiruvengadam agreed to pay a $50,000 civil penalty.
As highlighted here, in connection with the Westport Fuel Systems enforcement action, the SEC also found that Nancy Gougarty (a U.S. citizen who previously served as Chief Operating Officer and from mid-2016 until early 2019 as the CEO and member of the board of directors) caused the company’s books and records violations and internal controls violations and that Gougarty knowingly circumvented or knowingly failed to implement a system of internal controls. Gougarty agreed to pay a $120,000 civil penalty.
Other Developments or Items of Interest
As highlighted here, a bill titled the “Foreign Extortion Prevention Act” was introduced in the House of Representatives. The bill seeks to prohibit a “foreign official” from demanding a bribe – not through amending the FCPA – but through amending 18 USC 201 (the domestic bribery statute). If enacted in its current form, the bill would result in several odd areas of incongruous between liability for the “bribe” payor (under the FCPA’s anti-bribery provisions) and the “bribe” demander. Thus, to the extent Congress wants to capture “bribe” demands, the demand prohibition belongs in the FCPA and this post highlights FCPA amendments to accomplish this task. This post contains additional perspectives on the bill and this post highlights how the policy rationale for the bill largely mirrors the policy rationale of those who in the mid-1970’s who supported addressing the so-called foreign corporate payments problem through a disclosure approach and not the criminalization approach that ultimately became the FCPA.
As discussed in this post, a bill introduced in Congress seeks to fund an anti-corruption action fund with 5% of “each civil and criminal fine and penalty imposed pursuant to actions brought” under the FCPA.
As highlighted here, SEC Chairman Jay Clayton offered candid observations that seemingly conflict with much of the government’s FCPA enforcement rhetoric over the last several years including his observation that “in many areas of the world, our [FCPA] work may no be having the desired effect.”
As highlighted here, a court found that former shareholders of an entity were “victims” of Och-Ziff’s bribery. While each case is factually unique, the ruling is important as it may open a door to other business entities who lose out on opportunities because of the conduct of business organizations resolving an FCPA enforcement action.
As highlighted here, in a speech Deputy Assistant Attorney General Matthew Miner touched upon international cooperation; the DOJ’s so-called “no piling on” policy; the DOJ’s “Evaluation of Corporate Compliance Programs” guidance document; gathering evidence in foreign countries; voluntary disclosure, cooperation and so-called declinations; and enforcement actions against foreign companies. As highlighted here, in another speech Miner talked about the “two primary goals of white collar criminal enforcement.”
As highlighted here, following a United Kingdom DPA, company executives were acquitted of the same alleged underlying conduct calling into question the suitability of the entire DPA process.
Save Money With FCPA Connect
Keep it simple. Not all FCPA issues warrant a team of lawyers or other professional advisers. Achieve client and business objectives in a more efficient manner through FCPA Connect. Candid, Comprehensive, and Cost-Effective.
Connect
