One reason to read FCPA Professor is to stay ahead of the curve and to learn about issues others will be focused on in the weeks and months ahead.
For instance, this January 19th post highlighted a disclosure by Calavo Growers, Inc. “a global leader in quality produce, including avocados, tomatoes and papayas, and a pioneer of healthy fresh-cut fruit, vegetables and prepared foods.”
Although the disclosure did not mention the Foreign Corrupt Practices Act, the post surmised that the disclosure was likely FCPA related given that a recent FCPA enforcement action concerned a guacamole manufacturing plant in Mexico. The post mentioned that, in certain instances, when one company resolves an FCPA enforcement action based on a certain issue in a specific country, it then leads to scrutiny of other companies in the same industry operating in the same country.
Sure enough.
In its recent annual report Calavo Growers stated:
“On January 16, 2024, the Company announced that its internal audit process had identified to the Audit Committee of the Board of Directors certain matters that the Board of Directors determined after fiscal year end merited enhanced evaluation. A Special Committee of the Board of Directors (the “Special Committee”) was established to commence an investigation, with the assistance of external legal counsel and external forensic accountants. The Special Committee determined that certain of those matters related to the Company’s operations in Mexico raised potential issues under the Foreign Corrupt Practices Act (“FCPA”). The Company voluntarily disclosed this ongoing investigation to the SEC and the DOJ, and the Company intends to fully cooperate with the SEC and the DOJ in connection with these matters.
Any determination that the Company’s operations or activities are not or were not in compliance with laws, including the FCPA, could result in a broad range of civil and criminal sanctions against the Company and certain of its personnel, including injunctive relief, disgorgement, substantial fines or penalties, imprisonment, interruptions of business, loss of supplier, vendor or other third-party relationships, termination of necessary licenses and permits, and other legal or equitable sanctions. Other internal or government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, may also follow as a consequence. Violations of these laws may result in criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on our reputation, business, results of operations or financial condition. Moreover, our ongoing internal investigation, and cooperating with and responding to the SEC and the DOJ in connection with potential investigations they may undertake, as well as responding to any future U.S. or foreign governmental investigations or whistleblower lawsuits, have resulted in, and may continue to result in, substantial expenses, and have diverted and may continue to divert management’s attention from other business concerns, and could have a material adverse effect on our business and financial condition and growth prospects.”
Following the disclosure the stock price of Calavo Growers dropped.
As sure as the sun rises in the east and dogs bark, firms representing shareholders announced “investigations” of the company. (See here, here, here).
Stay ahead of the curve.
Read FCPA Professor.
