The day after Labor Day has always seemed like a second New Year.
In that spirit, let’s kick off the “new year” by reviewing what has happened thus far in 2015.
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August
Enforcement activity
There were three FCPA enforcement actions brought or announced in August.
As highlighted here, BNY Mellon became the first – of what is expected to be several financial services companies – to pony up millions ($14.8 million to be precise) in an SEC enforcement action based on its alleged internship practices. This follow-up post flagged various issues to consider from the enforcement action including that it was the first SEC FCPA enforcement ever not to include allegations or findings of books and records violations. This post used the recent BNY Mellon enforcement action to once again highlight why the meaning of “foreign official” matter. Finally, and accepting the SEC’s enforcement action for what it is, this post highlighted how business organizations would be wise to ask whether its hiring practices live up to the SEC’s new expectations.
As highlighted here, the DOJ and SEC brought a parallel enforcement action against Vicente Garcia (a U.S. citizen and former head of Latin America sales for SAP) for alleged conduct in Panama. Garcia pleaded guilty and is to be sentenced in December. Garcia agreed to resolve the SEC action by agreeing to pay approximately $93,000. This follow-up post highlights how rare the parallel DOJ and SEC enforcement action against an individual was.
As highlighted here, the DOJ quietly announced a June 2015 enforcement action against Daren Condrey (a former owner and executive of Maryland-based Transport Logistics International) for bribing an alleged Russian “foreign official” employed by entities involved in the supply of uranium to the nuclear industry. Condrey pleaded guilty and is to be sentenced in November. As highlighted in the post, the alleged Russian “foreign official” (Vadim Mikerin) pleaded guilty in a related enforcement action to money laundering offenses.
Other developments or items of interest from August included the following
As highlighted here, the DOJ once again stumbled when put to its burden of proof as a judge trimmed the DOJ’s FCPA enforcement action against Lawrence Hoskins (a foreign national and former Alstom executive criminally charged in August 2013) by granting his motion to dismiss and denying a DOJ motion in limine. The ruling primarily relied upon the FCPA’s legislative history regarding the category of defendants Congress sought to capture in the FCPA. As highlighted in this follow-up post, the recent ruling demonstrates once again the importance of the FCPA’s legislative history.
This post analyzes how the DOJ’s recent announcement of compliance counsel represents just the latest public relations move by the DOJ to hide its justified discomfort with respondeat superior corporate criminal liability principles and to make it appear that the DOJ is addressing the key core issue.
In this guest post, the adult daughter of Carlos Rodriguez reminds us that her father is more than just a name associated with the recent 11th Circuit “foreign official” decision.
Click here for an FCPA Summer Reading List that can help you elevate your FCPA knowledge, sophistication, and practical skills.
July
Enforcement Actions
There were two FCPA enforcement actions in July.
As highlighted here, the SEC brought an enforcement action against Mead Johnson Nutrition Company in which the company agreed, without admitting or denying the SEC’s findings, to pay approximately $12 million pursuant to an administrative cease and desist order concerning alleged conduct in China. The enforcement action was the latest in a long-line of enforcement actions premised on the theory that physicians of certain foreign health care systems are “foreign officials” under the FCPA.
As highlighted here and here, the DOJ brought an enforcement action against Louis Berger International Inc. and two former employees concerning alleged conduct in connection with projects in Indonesia, Vietnam, India and Kuwait. Pursuant to a deferred prosecution agreement, LBI agreed to pay $17.1 million and to engage a compliance monitor for a three year period. The former employees pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA and are to be sentenced in November.
Other developments or items of interest from July included the following
Several posts in July (see here, here, here and here) explored double standards when it comes to enforcement of U.S. domestic bribery laws compared to FCPA enforcement.
This post examined the DOJ’s seeming unwillingness to accepts its recent FCPA trial court debacles.
This guest post highlights lessons learned as an FCPA monitor.
June
Enforcement activity
There was one core FCPA enforcement action in June.
As highlighted here, the DOJ brought its first corporate enforcement action of 2015 against IAP Worldwide Services Inc. The conduct at issue focused on James Rama, who was IAP’s former Vice President of Special Projects and Programs, and concerned alleged improper conduct in connection with contracts with Kuwait’s Ministry of the Interior. Pursuant to an NPA, IAP agreed to resolve the enforcement action by paying a $7.1 million penalty. Based on the same conduct, the DOJ also announced a plea agreement with Rama to one count of conspiracy to violate the FCPA.
Other developments or items of interest from June included the following
For the first time since its trial court debacles in 2011 and 2012, the DOJ was put to its burden of proof in an individual FCPA enforcement action.
As highlighted here, U.S. v. Joseph Sigelman was in the early stages of trial when the DOJ’s star witness (an individual who previously pleaded guilty to the same core conduct and was cooperating with the DOJ in the hopes of achieving a lower sentence) ran into some problems on the witness stand. In short, the witness acknowledged giving false testimony during the trial prompting federal court judge Joseph Irenas (D.N.J.) to ask the witness “did you have a hallucination?” The trial adjourned as the DOJ contemplated what to do next and shortly thereafter the DOJ effectively pulled its case against Sigelman when it offered the defendant a plea agreement to substantially reduced charges.
As highlighted here, Judge Irenas refused to sentence Sigelman to any jail time and in doing so blasted the DOJ (see here). As highlighted here, U.S. v. Sigelman was just the latest DOJ FCPA trial court debacle.
May
Enforcement activity
There was one FCPA enforcement action in May.
As highlighted here and here, the SEC brought an administrative action against BHP Billiton in which the company agreed to pay $25 million. The conduct at issue concerned alleged internal control deficiencies regarding the company’s hospitality program in connection with its sponsorship of the 2008 Beijing Summer Olympic Games. While the $25 million enforcement action did not set any records in terms of overall settlement amount, the $25 million civil penalty represents the largest SEC FCPA penalty ever and the second largest SEC only FCPA enforcement action of all-time. That such largeness occurred in a travel and entertainment action is remarkable and further to the point that FCPA settlements (and components thereof) seem to be getting bigger each year … just because.
As relevant to the DOJ’s 2014 FCPA enforcement action against Ukrainian businessman Dmitry Firtash, as highlighted here an Austrian judge denied the DOJ’s extradition request and called the DOJ’s case “politically motivated” and lacking “sufficient proof.”
Other developments or items of interest from May included the following
A s highlighted here, here and here, May was (like prior months) an active month for speeches by DOJ and SEC enforcement officials regarding the FCPA and related topics. In particular, the war of words continued as to blame for exorbitant pre-enforcement action professional fees and expenses.
As highlighted here, in a civil defamation case in the aftermath of an FCPA enforcement action the Texas Supreme Court held that providing an internal investigation report to the DOJ was “absolutely privileged” under the defamation laws. The case was closely followed by the corporate community given its potential impact on conducting internal investigations and cooperating with government enforcement agencies.
For the reading stack, a new article here titled “Ten Seldom Discussed FCPA Facts That You Need to Know.”
April
Enforcement activity
There was one FCPA enforcement action in April.
As highlighted here and here the SEC brought an administrative action against FLIR Systems Inc. in which the company agreed to pay approximately $9.5 million. The conduct at issue was the same as the SEC’s November 2014 enforcement action against former FLIR Systems employees and concerned alleged expensive travel, entertainment and personal items being provided to Saudi officials.
Other developments or items of interest from May included the following
As highlighted here, Assistant Attorney General Leslie Caldwell delivered a speech in which she stated that although the DOJ expects “internal investigations to be thorough,” the DOJ does “not expect companies to aimlessly boil the ocean.” In the same speech, Caldwell spoke about the “Criminal Division’s efforts to increase transparency in its corporate prosecutions” and this post analyzes DOJ transparency in the FCPA context.
As highlighted here, in a foreign bribery case in the same general sphere of the FCPA, a federal court judge benchslapped the DOJ and stated that he had never seen more of a “misguided prosecution.”
In the spirit of March Madness, this post highlighted the likely outcome of Duke’s national championship season if the team was a business organization subject to various criminal or civil laws such as the FCPA.
March
Enforcement activity
There was no FCPA enforcement actions in March.
Other developments or items of interest from March included the following
It was an active speaking month for SEC enforcement officials. This post analyzes an FCPA speech given by the SEC’s Director of Enforcement at a pharmaceutical conference and this post analyzes how the same individual was on the hot seat during a Congressional hearing regarding the surge in SEC administrative actions. This post analyzes how the numbers do not support the SEC Chair’s recent statement that “the Commission is focused on holding individuals accountable in FCPA cases.”
Biomet announced that its 2013 deferred prosecution agreement was extended for a year based on the company’s fresh FCPA scrutiny and this post highlights two issues related to this development.
On the FCPA-related civil litigation front, as highlighted in this post, a federal court judge recently dismissed an Avon shareholder derivative complaint finding, among other things, that just because “the FCPA is not commonly the subject of litigation” does not create a substantial federal interest in state law claims related to the FCPA.
In the spirit of March Madness, this post called a timeout regarding certain commentary about the February FCPA enforcement action against Goodyear.
February
Enforcement activity
There was one FCPA enforcement action in February.
As highlighted here, without admitting or denying the SEC’s findings, Goodyear Tire & Rubber Co. agreed to pay approximately $16 million to resolve an SEC administrative action focused on alleged subsidiary conduct in Angola and Kenya. This post highlights various issues to consider from the enforcement action including how the SEC invoked a standard of liability that does not even exist under the FCPA.
Other developments or items of interest from February included the following
As highlighted here in connection with hearings of Attorney General Nominee Loretta Lynch, the Senate remains interested in FCPA issues.
As highlighted here, in an action related to U.S. v. Esquenazi (the 11th Circuit’s 2014 “foreign official” decision), the 11th Circuit discussed the “routine governmental action” prong of the FCPA’s facilitating payments exception.
As highlighted here, a federal court judge rejected a DOJ deferred prosecution agreement. While outside the FCPA context, given the prominence of DPAs (and NPAs) in the FCPA context, the case – and upcoming appeal – are certainly worth watching.
January
Enforcement activity
There were two FCPA enforcement actions in January.
As highlighted here, the DOJ announced criminal charges against Dmitrij Harder, the former owner and President of Chestnut Consulting Group Inc. for allegedly bribing an official with the European Bank for Reconstruction and Development. The enforcement action is notable in that it invoked the rarely used “public international organization” prong of the FCPA’s “foreign official” element.
As highlighted here, the SEC got creative in its first FCPA enforcement action of 2015 by agreeing to a deferred prosecution agreement with a legal entity that has not existed since April 2011 (PBSJ Corporation) and bringing a related administrative action against an individual (Walid Hatoum, a former executive of PBS&J International, Inc.) who agreed to resolve the action without admitting or denying the SEC’s findings. Never before has an SEC FCPA enforcement seen such a combination. PBSJ agreed to pay disgorgement and interest of $3,032,875 and a penalty of $375,000 and Hatoum agreed to pay a penalty of $50,000.
Other developments or items of interest from January included the following
FCPA Professor was the place to visit in January for in-depth FCPA enforcement statistics from 2014 as well as comparisons to historical statistics. If you missed the daily posts, no worries as this post consolidates in one place the statistics published on FCPA Professor in January.
As highlighted here the DOJ announced Andrew Weissmann has been selected as the Chief of the Criminal Division’s Fraud Section. In recent years, Weissmann has been a vocal advocate of FCPA reform and more broadly reforming corporate criminal liability principles.