This post provides a summary of FCPA enforcement actions and FCPA related events from the third quarter of 2011. For a similar post regarding Q1 and Q2 of 2011 – see here and here.
As to enforcement actions, this post covers DOJ and SEC enforcement separately and only covers enforcement actions initiated and resolved during the third quarter of 2011. For a summary of other indictments, guilty pleas and sentences during the third quarter see here – the FCPA Blog’s Q3 Enforcement Report.
DOJ Enforcement
The DOJ resolved two FCPA enforcement actions in the third quarter. Total DOJ recovery in these enforcement actions was approximately $32 million (this figure apportions approximately 80% of Bridgestone’s $28 million fine to FCPA conduct – see below). Both of the enforcement actions were based on voluntary disclosures.
Year to date, the DOJ has resolved eight FCPA enforcement actions. Total DOJ recovery year to date has been approximately $289 million (same Bridgestone estimate as above). All of the enforcement actions have been based on voluntary disclosures or (in the case of JGC of Japan) disclosure based on a previous foreign law enforcement investigation. Only two enforcement actions (Bridgestone – Misao Hioki) and Armor Holdings – Richard Bistrong) have resulted, at present, in related individual prosecutions of company employees.
Bridgestone (Sept. 15th)
See here for the prior post.
Charges: Conspiracy to violate the FCPA’s anti-bribery provisions (and conspiracy to violate the Sherman Act).
Resolution Vehicle: Criminal information resolved via a plea agreement.
Guidelines Range: For the FCPA conduct, the guidelines range (see here) was approximately $40 million – $80 million.
Penalty: $28 million (it would appear that approximately 80% of this figure – approximately $22 million was based on the FCPA conduct)
Disclosure: Yes, voluntary disclosure.
Monitor: No.
Individuals Charged: Yes.
Armor Holdings (July 13th)
See here for the prior post.
Charges: None
Resolution Vehicle: Non-Prosecution Agreement – term two years.
Guidelines Range: Not set forth in the NPA.
Penalty: $10.3 million
Disclosure: Yes, voluntary disclosure.
Monitor: No (although Armor Holdings is now part of BAE and falls under the monitorship in the BAE FCPA-related enforcement action).
Individuals Charged: Yes.
SEC Enforcement
The SEC resolved two FCPA enforcement actions in the third quarter. Total recovery in these enforcement actions was $22.1 million. Of the $22.1 million, $17 million (77%) has been disgorgment and prejudgment interest. Both of the enforcement actions were based on voluntary disclosure.
Year to date, the SEC has resolved eleven FCPA enforcement actions. Total recovery year to date has been $98.4 million. Of the $98.4 million, $90.8 million (92%) has been disgorgment and prejudgment interest. All of the corporate enforcement actions have been based on voluntary disclosures.
Diageo (July 27th)
See here for the prior post.
Charges: Settled civil complaint charging FCPA books and records and internal controls violations.
Settlement: Approximately $16.4 million (approximately $11.3 million in disgorgment, approximately 2.1 million in prejudgment interest; and a $3 million civil penalty)
Disclosure: Yes, voluntary disclosure and/or based on previous foreign law enforcement investigation.
Individuals Charged: No.
Related DOJ Enforcement Action: No.
Armor Holdings (July 13th)
See here for the prior post.
Charges: Settled civil complaint charging FCPA anti-bribery, books and records and internal controls violations.
Settlement: approximately $5.7 million (approximately $1.5 million in disgorgment; $458,000 in prejudgment interest; and a $3.7 million civil penalty)
Disclosure: Yes, voluntary disclosure.
Individuals Charged: No.
Related DOJ Enforcement Action: Yes.
Other Events
News Corp. Scrutiny
July witnessed the most intense worldwide media coverage of the FCPA in its nearly 35 year history. As detailed in this prior post, one aspect of the News Corporation scandal implicated the FCPA given allegations of payments to U.K. police officers. Major newspapers dissected FCPA details (see here) and some made the senseless assertion that the First Amendment makes an FCPA inquiry of News Corporation “inappropriate.” (See here). While there would appear to be a firm foundation for a News Corp. FCPA inquiry based on the enforcement agencies’ theories of enforcement, what the News Corp. inquiry has accomplished, perhaps more than any other FCPA event in recent history, is to focus attention on the enforcement theories common in this new era of FCPA enforcement. That focus is a good thing and it is in the public interest for that focus to continue as the New Corp. FCPA inquiry develops over the coming months – and likely – years.
Africa Sting Mistrial
In January 2010, a new type of DOJ FCPA enforcement action was unveiled. While not the first use of undercover techniques in an FCPA enforcement action, the new type of case was certainly the largest and most dramatic use of pro-active, undercover investigative techniques in the FCPA’s history. In announcing the indictments in the Africa Sting case, Assistant Attorney General Lanny Breuer called the action a “turning point.”
On July 7th, in the first Africa Sting trial involving defendants Andrew Bigelow, Pankesh Patel, John Benson Weir, Judge Richard Leon declared a mistrial in the DOJ’s “turning point” prosecution. Before the mistrial, Judge Leon also dismissed a substantive FCPA count as to Patel (see here for the prior post) and dismissed a money laundering count as to all defendants. As detailed here, the second Africa Sting trial began last week.
Bribery Act Finally Goes Live
With much hype preceding it, on July 1st the U.K. Bribery Act finally went live. While there has been one enforcement action under the Bribery Act’s domestic bribery provisions (see here), to date there has not been a foreign bribery prosecution. However, this is not surprising and of little significance. The Bribery Act only applies to conduct occurring after July 1st and, as with any new law, there is likely to be a learning phase for both the enforcement agencies and those subject to the law. Thus, it very well may be the case that there are no enforcement actions for some time (recognizing that it often takes a few years from beginning of an inquiry to resolution of an action).
