Few question the U.S. foreign bribery surplus, but it should be asked: is the US Treasury the best place for fines and penalties when a foreign company bribes a foreign official?
In April 2011, JGC Corp. of Japan formally joined the Bonny Island (Nigeria) bribery club – see here  for the prior post. Some predicted this was the end of the Bonny Island enforcement actions, but I ended the post as follows. “This may not be the last we hear of Bonny Island bribery. Consulting Company B (based in Japan) was a key participant in the bribery scheme. Does anyone know anything about Consulting Company B and whether it might be next to resolve its Bonny Island exposure? If so, please share.”
Yesterday, the DOJ shared as it announced (here ) that Marubeni Corporation (a Japanese trading company headquartered in Tokyo) resolved an FCPA enforcement action by agreeing to pay a $54.6 million criminal penalty.
As the DOJ trumpets in the headline of its release, the U.S. Bonny Island bribery intake now stands at $1.7 billion. Previous enforcement actions were brought against the four TSKJ joint venture partners: Kellogg Brown & Root LLC / Halliburton Co. / KBR Inc. ($579 million in combined DOJ/SEC fines and penalties); Technip S.A. ($338 million in combined DOJ/SEC fines and penalties); Snamprogetti Netherlands BV / ENI S.p.A. ($365 million in combined DOJ/SEC fines and penalties); and JGC Corp. of Japan ($219 million in DOJ fines). In addition, as the DOJ notes in its release, is Jeffrey Tesler’s $149 million forfeiture, Wojciech Chodan’s $700,000 forfeiture, and Albert Jack Stanley’s guilty plea.
This post summarizes the Marubeni enforcement action, the first FCPA enforcement action of 2012.
The information focuses on the same Bonny Island (Nigeria) conduct at issue in the above referenced enforcement actions. According to the information, Marubeni is a “major Japanese trading company headquartered in Tokyo, Japan, with operations around the world, including in Nigeria.” The company’s shares are listed in Japan and the U.K.
According to the information, the TSKJ joint venture, in addition to hiring Jeffrey Tesler, “also hired Marubeni to help it obtain and retain business in Nigeria, including by offering to pay and paying bribes to Nigerian government officials.” The information further states as follows. “By the time TSKJ had stopped paying Marubeni in June 2005, TSKJ had paid Marubeni $51 million in part for use in bribing Nigerian government officials. Marubeni was an agent within the meaning of the FCPA of TSKJ and of each of the joint venture companies, including KBR and Technip. Thus, Marubeni was an agent of a “domestic concern” within the meaning of the FCPA and an agent of an “issuer” within the meaning of the FCPA.”
Based on the above allegations, the information charges one count of conspiracy and one count of aiding and abetting FCPA anti-bribery provisions. The information contains the following U.S. jurisdictional allegations. (1) “Marubeni met with Stanley and others in Houston, Texas to discuss Marubeni’s contracts with TSKJ and its fees;” (2) “Marubeni’s co-conspirators caused wire transfers totaling approximately $132 million to be sent from Maderia Company’s 3’s bank account in Amsterdam, The Netherlands, to bank accounts in New York, New York, to be further credited to bank accounts in Switzerland and Monaco controlled by Tesler for Tesler to use to bribe Nigerian government officials;” (3) “on or about April 7, 1999 Marubeni faxed a letter to Stanley in Houston, Texas, regarding Marubeni’s fee for Train 3.” The aiding and abetting charge is based on the following allegation: “Marubeni aided and abetted KBR in causing the following corrupt payments to be wire transferred from Madeira Company 3’s bank account in Amsterdam, The Netherlands, to Marunbeni’s bank accounts in Japan intending for Marubeni to use such funds in part to bribe Nigerian government officials: $17 million in payments between August 2002 and June 2004 “payments to Marubeni pursuant to Agreement for Trains 4 & 5.”
As in prior Bonny Island bribery enforcement actions, the “foreign officials” identified were Nigeria LNG Limited (“NLNG”) officers and employees, NLNG is majority owned by multinational oil companies and Nigerian National Petroleum Corporation (“NNPC”) owns 49% of NLNG and “through the NLNG board members appointed by NNPC, among other means, the Nigerian government exercised control over NLNG, including but not limited to the ability to block the award of EPC contracts.” In addition, the Marubeni enforcement action (like the prior enforcement actions) generically refer to the other Nigerian government officials.
Deferred Prosecution Agreement
The DOJ’s charges against Marubeni were resolved via a deferred prosecution agreement. Pursuant to the DPA, Marubeni admitted, accepted, and acknowledged “that it is responsible under U.S. law for acts of its employees and agents” as set forth in the information.
The term of the DPA is two years and it states that the DOJ entered into the agreement based “on the individual facts and circumstances presented by this case” and that “among the facts considered were that Marubeni has agreed to undertake remedial measures as contemplated by [the DPA], and the impact on Marubeni, including collateral consequences, of a guilty plea or criminal conviction.” When the DOJ cites the facts considered in resolving a matter via a DPA or NPA typically the facts are much more extensive than above.
As detailed in the DPA, the advisory Sentencing Guidelines range for the charges at issue was $54.6 million – $109.2 million. Pursuant to the DPA, Marubeni agreed to pay $54.6 million – a rare instance in which the fine amount is within the guidelines range.
Pursuant to the DPA, Marubeni represented that it “has implemented and will continue to implement a compliance and ethics program designed to prevent and detect violations of the FCPA, the anti-corruption provisions of Japanese law, and other applicable anti-corruption laws throughout its operations …”. The specifics of such a program are set forth in an attachment to the DPA. In the DPA, Marubeni agreed to annual reporting obligations to the DOJ regarding its compliance program and internal controls. In addition, Marubeni also agreed to engage a “corporate compliance consultant” for a two-year period.
As is common in FCPA DPA’s Marubeni expressly agreed that it shall not, directly or indirectly, “make any public statement … contradicting the acceptance of responsibility by Marubeni” set forth in the DPA.
In the DOJ’s release, Mythili Raman (Principal Deputy Assistant Attorney General, Criminal Division) stated as follows. “With today’s resolution, the department has held accountable all five of the corporations that participated in the massive, decade-long scheme to bribe Nigerian government officials in connection with the so-called Bonny Island project. As a result of this extensive investigation, the department and our partners have obtained more than $1.7 billion in penalties and forfeiture orders from the joint venture partners, their agents and individuals who sought illegally to obtain the Bonny Island contracts. Several individuals also have pleaded guilty for their roles in the scheme. Our FCPA enforcement efforts are an essential part of our comprehensive approach to rooting out corruption across the globe.”
In this  company release, Marubeni said that the effects of the enforcement action on its business forecasts “will not be material.” One interesting aside is that Marubeni states in its most recent annual report (here ) as follows. “FTSE4Good Global Index: The FTSE4Good Global Index is a stock price indicator developed and established by the Financial Times Stock Exchange (FTSE), a joint venture between the Financial Times Ltd. of the U.K. and the London Stock Exchange. Companies are evaluated on their environmental sustainability efforts, relationships with stakeholders, protection of human rights, safeguarding of labor standards in their supply chains, and commitment to preventing corruption. Marubeni has been consistently selected for inclusion in the index since 2001, when the index was initially established.” (emphasis added).