This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related events from the third quarter of 2015. (See similar posts here and here for Q1 and Q2).
DOJ Enforcement (Corporate)
There was one DOJ corporate FCPA enforcement action in the third quarter. DOJ recovery in this enforcement action was $17.1 million.
Year-to-date, the DOJ has brought two corporate enforcement actions. DOJ recovery in these enforcement actions has been approximately $24.2 million.
Louis Berger Int’l. (July 17th)
See here for the prior post
Charges: Conspiracy to violate the FCPA’s anti-bribery provisions
Resolution Vehicle: DPA
Guidelines Range: $17.1 million – $34.2 million
Penalty: $17.1 million.
Disclosure: The DPA states: “after the government had made [the company] … aware of a False Claim Act investigation, [the company] conducted an internal investigation, discovered potential FCPA violations, and voluntarily self-reported to the [DOJ] the misconduct”
Monitor: Yes
Individuals Charged: Yes
DOJ Enforcement (Individual)
In the third quarter, the DOJ: (i) brought an individual enforcement action against Richard Hirsch and James McClung in connection with the Louis Berger corporate enforcement action (see here); (ii) brought an enforcement action against Vicente Garcia, a former SAP sales exec, (see here); and (iii) announced an enforcement action against Daren Condrey, a former owner and executive of Maryland-based Transport Logistics International, (see here).
Year-to-date, the DOJ has brought five core individual enforcement actions. The three mentioned above, in the second quarter, the DOJ brought an individual enforcement action against James Rama in connection with the IAP Worldwide Services Action, and in the first quarter the DOJ announced criminal charges against Dmitrij Harder, the former owner and President of Chestnut Consulting Group Inc.
SEC Enforcement (Corporate)
The SEC brought four corporate FCPA enforcement actions in the third quarter. SEC recovery in these actions was approximately $46 million.
Year-to-date, the SEC has brought eight corporate enforcement actions, all via administrative orders with the exception of Hitachi. SEC recovery in these enforcement actions has been approximately $100 million.
Hyperdynamics (Sept. 29th)
See here for the prior post
Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal controls provisions
Settlement: $75,000
Disclosure: According to the company’s disclosure – “the SEC had issued a subpoena to Hyperdynamics concerning possible violations of the FCPA”
Individuals Charged: No
Related DOJ Enforcement Action: No.
Hitachi (Sept. 28th)
See here and here for prior posts
Charges: Settled civil complaint charging FCPA books and records and internal controls violations.
Settlement: $19.1
Disclosure: Not specified in the resolution documents.
Individuals Charged: No
Related DOJ Enforcement Action: No.
BNY Mellon (August 18th)
See here and here for prior posts.
Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery and internal control provisions.
Settlement: $14.8 million ($8.3 million in disgorgement, $1.5 million in prejudgment interest, and a $5 million penalty).
Disclosure: Unclear from the resolution documents (perhaps the industry sweep of the financial services industry)
Individuals Charged: No.
Related DOJ Enforcement Action: No.
Mead Johnson (July 28th)
See here and here for prior posts.
Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal controls provisions.
Settlement: Approximately $12 million ($7.77 million in disgorgement, $1.26 million in prejudgment interest, and a $3 million penalty).
Disclosure: The resolution documents state: “In 2011, Mead Johnson received an allegation of possible violations of the FCPA in connection with the Distributor Allowance in China. In response, Mead Johnson conducted an internal investigation, but failed to find evidence that Distributor Allowance funds were being used to make improper payments to HCPs. Thereafter, Mead Johnson China discontinued Distributor Allowance funding to reduce the likelihood of improper payments to HCPs, and discontinued all practices related to compensating HCPs by 2013. Mead Johnson did not initially self-report the 2011 allegation of potential FCPA violations and did not thereafter promptly disclose the existence of this allegation in response to the Commission’s inquiry into this matter.
Individuals Charged: No.
Related DOJ Enforcement Action: No.
SEC Enforcement (Individual)
The SEC brought one individual enforcement action in the third quarter against Vicente Garcia based on the same core conduct alleged in the DOJ action. Garcia agreed to resolve the SEC action by agreeing to pay approximately $93,000
Year-to-date there has been two FCPA enforcement actions against individuals. The above Garcia action and in the first quarter, in connection with the PBSJ enforcement action, the SEC also charged Walid Hatoum (a former executive of PBS&J International, Inc.).
Other Developments or Items of Interest
As highlighted here, after the Labor Day holiday the DOJ released a memo titled “Individual Accountability for Corporate Wrongdoing” – the so-called “Yates Memo.” Many viewed the Yates Memo as articulating new DOJ policy – and because of this – the memo generated significant news coverage. However, the memo really did not articulate new DOJ policy and moreover merely restated DOJ’s long-standing rhetoric about the importance of individual prosecutions. For additional posts about the “Yates Memo” and related topics see here, here, here and here.
A basic rule of law principle is consistency. In other words, the same legal violation ought to be sanctioned in the same way. However, as highlighted in this post, the SEC routinely sanctions alleged FCPA books and records and internal controls violations in materially different ways.
To commemorate the start of the football season, this post discusses an article which highlights how understanding the game of football is not just a professional diversion, but one that can actually add professional value as well. The reason is because understanding what makes a football organization successful can also inform FCPA compliance in a business organization.
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.
