I hope this Thanksgiving finds you being thankful for many things in your life.
Among the many things I am thankful for are your readership and I hope FCPA Professor elevates your FCPA knowledge and skills.
May your turkey be golden brown.
The following FCPA enforcement actions have involved, in whole or in part, alleged improper conduct in Turkey.
In September 2022, the company resolved a $22.9 million SEC FCPA enforcement action “to resolve charges that it violated provisions of the FCPA when subsidiaries in Turkey, the United Arab Emirates, and India created and used slush funds to bribe foreign officials in return for business between 2016 and 2019.” (See here and here for prior posts).
As to Turkey, the SEC’s administrative order finding violations of the FCPA’s anti-bribery, books and records, and internal controls provisions states: “From 2009 – 2019, Oracle Turkey used both excessive discounts and sham marketing reimbursement payments to create off-book slush funds at its two VADs [value added distributors]. Internally, Oracle Turkey sales employees referred to the accounts as “havuz,” which means “pool” or “kumbara,” which means “moneybox,” and used the accounts for purposes that were prohibited under Oracle’s internal policies. Oracle Turkey employees routinely used the slush funds to pay for the travel and accommodation expenses of end-user customers, including foreign officials, to attend annual technology conferences in Turkey and the United States, including Oracle’s own annual technology conference. In some instances, these funds were also used to pay for the travel and accommodation expenses of foreign officials’ spouses and children, as well as for side trips to Los Angeles and Napa Valley. Oracle Turkey employees used these slush funds for roughly a decade. Oracle Turkey’s management, including the country leader, knew of and condoned the practice. Given how these schemes were implemented, Oracle lacks records regarding the full size and scope of how these off-book slush funds were used.”
Alexion Pharmaceuticals (2020)
In July 2020, the company resolved a $21.5 million SEC FCPA enforcement action based on the actions of foreign subsidiaries in Turkey, Russia, Brazil and Colombia involving the company’s primary drug Soliris. (See here and here for prior posts).
As to Turkey, the SEC’s administrative order finding violations of the FCPA’s books and records and internal controls provisions states: “Alexion began selling Soliris through Turkey’s named patient sales (“NPS”) program in 2009. Under Turkish law, each patient’s application to begin Soliris therapy required review and approval by health care providers (“HCPs”) appointed to serve on commissions in Turkey’s Ministry of Health, separate approvals to pay for the prescription, and recurring approvals to continue the patient on Soliris therapy. Alexion Turkey paid HCPs employed at state-owned healthcare institutions for services, including research and educational events. Alexion initially struggled to get these approvals for Soliris. In January 2010, a senior Ministry of Health official suggested to an Alexion Turkey regional account manager that, to obtain more patient approvals, Alexion Turkey may need to make payments to government officials. Thereafter, Alexion Turkey hired a consultant (“Consultant”) to assist Alexion Turkey with the patient approval process. The Consultant was hired in significant part due to the Consultant’s connections to top Ministry of Health officials. From 2010 to 2015, Alexion Turkey paid the Consultant over $1.3 million, consisting of consulting fees and purported expense reimbursements. The Consultant passed a portion of these funds on to Turkish government officials, in the form of cash, meals, or gifts, to secure favorable treatment for Soliris. As a result of these payments, Alexion Turkey not only secured approvals for patient prescriptions, but also received confidential information and advance feedback from government officials on regulatory submissions. Alexion Turkey recorded these improper payments inaccurately, claiming them as legitimate expenses.
In July 2019, Microsoft resolved a parallel DOJ and SEC enforcement action concerning conduct in Hungary, Saudi Arabia, Thailand and Turkey by agreeing to pay approximately $25.3 million. (See here and here for prior posts).
As to Turkey, the SEC’s administrative order finding violations of the FCPA’s books and records and internal controls provisions states: “In July 2014, Turkey’s Ministry of Culture issued a public tender for Microsoft licenses and related services. The tender was awarded to a system integrator that was not an authorized MS Turkey LSP. An MS Turkey employee did not disclose the role of the system integrator in the transaction, and instead directed an authorized LSP to work on the transaction with the system integrator. The MS Turkey employee also negotiated the payments terms between the system integrator and LSP. In connection with the deal, MS Turkey approved an additional 7% discount on the transaction beyond the standard discount. Microsoft’s records do not reflect what services, if any, the system integrator provided, and the authorized reseller informed Microsoft that it provided the services on the transaction. Moreover, there is no evidence the additional discount was passed on to the government customer.”
Fresenius Medical Care (2019)
In March 2019, Fresenius Medical Care agreed to pay approximately $232 million to resolve a parallel DOJ and SEC enforcement action involving physicians and other healthcare personnel in Angola, Saudi Arabia, Morocco, Spain, Turkey, Gabon, Benin, Burkina Faso, Senegal, Ivory Coast, Niger, Cameroon China, Serbia, Bosnia, and Mexico. (See here and here for prior posts).
As to Turkey, the DOJ’s NPA stated: “Between in or around 2005 until in or around 2014, FMC Turkey [a wholly-owned subsidiary of FMC] entered into joint ventures with publicly-employed doctors in exchange for those doctors directing business from their public employer to FMC Turkey clinics. […] As a result of FMC’s lack of reasonable internal controls, improper payments were made to publicly-employed doctors in Turkey through joint ventures and FMC benefitted by approximately $1.3 million during the relevant period.”
The SEC’s administrative order stated: “Between 2005 and 2014, FMC Turkey entered into four separate joint ventures with publicly employed doctors in exchange for those doctors directing business from their public employer to FMC clinics. The doctors did not provide any capital in exchange for their shares. In some cases, doctors’ shares were held in the names of other individuals.”
Smith & Wesson (2014)
In July 2014, Smith & Wesson agreed to resolve an SEC administrative order finding violations of the FCPA’s anti-bribery provisions, books and records provisions and internal controls provisions. The SEC’s findings included business conduct in Pakistan, Indonesia, Turkey, Nepal and Bangladesh.
As to Turkey, the SEC’s order states: “Similarly, Smith &Wesson made improper payments in 2009 to its third party agent in Turkey, who indicated that part of the payments would be provided to Turkish officials in an attempt to secure two deals in Turkey for sale of handcuffs to Turkish police and firearms to the Turkish military. Neither of these interactions resulted in the shipment of products, as Smith & Wesson was unsuccessful bidding for the first deal, while the latter deal was ultimately canceled.”
Without admitting or denying the SEC’s findings, Smith & Wesson agreed to pay approximately $2.0 million. (See here).
Tyco International (2012)
In September 2012, Tyco International agreed to resolve a wide-ranging DOJ/SEC enforcement action regarding alleged conduct in the following countries: China, India, Thailand, Laos, Indonesia, Bosnia, Croatia, Serbia, Slovenia, Slovakia, Iran, Saudia Arabia, Libya, Syria, the United Arab Emirates, Mauritania, Congo, Niger, Madagascar, and Turkey.
As to Turkey, the enforcement action stated as follows. The products of a division of an indirect subsidiary of Tyco “were sold through a sales representative to government entities in Turkey. The sales representatives sold the SigInt equipment in Turkey at an approximately twelve to forty percent mark-up over the price at which he purchased the equipment from M/A-Com and also received a commission on one of the sales. The sales representative transferred part of his commission and part of his mark-up to a government official in Turkey to obtain orders. In connection with these improper transactions, M/A-Com earned approximately $71,770 in gross proft.” The SEC’s complaint cites an internal e-mail which stated: “hell, everyone knows you have to bribe somebody to do business in Turkey.”
Total fines and penalties in the enforcement action were approximately $26.8 million (approximately $13.7 million in the DOJ enforcement action and approximately $13.1 million in the SEC enforcement action). (See here).
Daimler AG (2010)
In March 2010, Damiler AG agreed to settle a wide-ranging FCPA enforcement action alleging that “between 1998 and January 2008, Daimler made hundreds of improper payments worth tens of milions of dollars to foreign officials in at least 22 countries – including China, Croatia, Egypt, Greece, Hungary, Indonesia, Iraq, Ivory Coast, Latvia, Nigeria, Russia, Serbia and Montenegro, Thailand, Turkey, Turkmenistan, Uzbekistan, Vietnam, and others – to assist in securing contracts with government customers for the purchase of Daimler vehicles valued at hundreds of milions of dollars.”
As to Turkey, the criminal information (here) charges that Daimler’s Corporate Audit Department “discovered three binders located in a safe at MB Turk’s [a Daimler subsidiary in Turkey] offices in Istabul” that, along with other evidence, demonstrated that “MB Turk made approximately €6.05 million in payments to third parties in connection with vehicle export transactions that involved the sale of vehicles to non-Turkish government customers in North Korea, Latvia, Bulgaria, Libya, Romania, Russia, Saudi Arabia, Yemen, and other countries in deals with revenues of approximately €95 million.” According to the information, at least €3.88 million of the €6.05 million comprised of “improper payments and gifts […] paid to foreign government officials or to third parties with the understanding that the payments and gifts would be passed on, in whole or in part, to foreign government officials to assist in securing the sale of Daimler vehicles to government customers.”
Daimler agreed to pay $185 million in combined DOJ and SEC fines and penalties (see here).
York International Corp. (2007)
In October 2007, York International Corporation (York), a global provider of heating, ventilation, air conditioning, and refrigeration products and services, agreed to pay approximately $22 million in combined fines and penalties to settle DOJ and SEC enforcement actions principally relating to improper payments made by various subsidiaries to the Iraqi government under the United Nations Oil-for-Food Program. The enforcement action also involved certain other improper payments made in connection with government projects in Bahrain, Egypt, India, Turkey and the United Arab Emirates. (see here).
Delta & Pine Land Co. (2007)
In July 2007, the SEC announced a settled FCPA enforcement action against Delta & Pine Land Company, a Mississippi-based cottonseed company, and its subsidiary, Turk Deltapine, Inc. According to the SEC, between 2001 – 2006, Turk Deltapine made payments of approximately $43,000 to officials of the Turkish Ministry of Agricultural and Rural Affairs in order to obtain various governmental reports and certifications that were necessary for Turk Deltapine to obtain, retain and operate its business in Turkey. Per the complaint, the improper payments were discovered by Delta & Pine, but instead of halting the payments, the payments continued via a third party supplier and pursuant to an inflated invoice scheme. Based on the above conduct, Delta & Pine and Turk Deltapine jointly agreed to pay a $300,000 civil penalty and engage an independent compliance consultant. (see here and here).
Micrus Corp. (2005)
In March 2005, Micrus Corporation, a privately-held California medical device manufacturer, agreed to a two year non-prosecution agreement with the DOJ to resolve its FCPA liability in connection with over $100,000 in payments (disguised in the company’s books and records as stock options, honorariums and commissions) to physicians employed at publicly owned and operated hospitals in France, Turkey, Spain, and Germany.(see here) and here).
FCPA Institute Online
The most comprehensive online FCPA training course available. Over 12 hours of narrated instruction from Professor Koehler allowing professionals to elevate their FCPA knowledge and practical skills at their own pace.