This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related events from the second quarter of 2015. (See here for a similar post from Q1).
DOJ Enforcement (Corporate)
There was one DOJ corporate FCPA enforcement in the second quarter. DOJ recovery is this enforcement action was $7.1 million. Year-to-date, the DOJ has brought one corporate enforcement action. DOJ recovery in this enforcement action was $7.1 million.
IAP Worldwide Services Inc. (June 16th)
See here for the prior post
Charges: Not applicable.
Resolution Vehicle: NPA
Guidelines Range: None set forth in the NPA.
Penalty: $7.1 million.
Disclosure: Unclear, the NPA makes no mention of voluntary disclosure or other potential origins of the action.
Individuals Charged: Yes
DOJ Enforcement (Individual)
In the second quarter, the DOJ brought one individual enforcement action against James Rama in connection with the IAP Worldwide Services Action.
Year-to-date, the DOJ has brought two individual FCPA enforcement action. As highlighted here, in the first quarter 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.
SEC Enforcement (Corporate)
The SEC brought two corporate FCPA enforcement actions via administrative orders in the second quarter. SEC recovery in these enforcement actions was approximately $34.5 million.
Year-to-date, the SEC has brought four corporate enforcement actions, all via administrative orders. SEC recovery in these enforcement actions has been approximately $54.1 million.
BHP Billiton (May 20)
Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal control provisions.
Settlement: $25 million civil penalty.
Disclosure: The company disclosed that it received information requests from the SEC in August 2009.
Individuals Charged: No
Related DOJ Enforcement Action: No.
FLIR Systems (April 8th)
Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery, books and records and internal control provisions.
Settlement: Approximately $9.5 million (disgorgement of $7,534,000, prejudgment interest of $970,584 and a penalty of $1 million).
Disclosure: Voluntary disclosure.
Individuals Charged: Yes in November 2014 (see here for the prior post).
Related DOJ Enforcement Action: No.
SEC Enforcement (Individual)
The SEC did not bring any FCPA charges against individuals in the second quarter.
Year-to-date there has been one FCPA enforcement action against an individual. In connection with the PBSJ enforcement action, Walid Hatoum (a former executive of PBS&J International, Inc.) agreed, without admitting or denying the SEC’s findings, to resolve an administrative action finding violations of the FCPA’s anti-bribery, books and records, and internal controls provisions. Hatoum agreed to pay a $50,000 civil penalty.
Other Developments or Items of Interest
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. In other respects, as highlighted here, here and her
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.”
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 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.