Several 2013 year in review posts will be published in the coming days. But first, the fourth quarter of 2013 needs to be closed out.
This post provides a summary of Foreign Corrupt Practices Act enforcement actions and FCPA related events from the fourth quarter of 2013. See here for a similar post from Q1, here for Q2 and here for Q3.
DOJ Enforcement (Corporate)
The DOJ resolved 4 corporate FCPA enforcement actions in the fourth quarter. DOJ recovery in these enforcement action was approximately $162 million. All 4 enforcement actions were resolved via a deferred prosecution agreement (3) or a non-prosecution agreement (1). (Note: the ADM action and Weatherford actions also included plea agreements involving subsidiaries).
At present, none of the enforcement actions have resulted in any individual charges against company employees.
ADM (Dec. 20th)
See here for the prior post
Charges: Criminal information against Alfred Toepfler International Ukraine (ATCI Ukraine) charging conspiracy to violate the FCPA’s anti-bribery provisions.
Resolution Vehicle: Charges against ATCI Ukraine were resolved via a plea agreement; ADM agreed to a non-prosecution agreement (3 year term) which references violations of the FCPA’s internal controls provisions.
Guidelines Range: $27.3 million to $54.6 million
Penalty: $17.7 million
Disclosure: Voluntary disclosure
Monitor: No
Individuals Charged: No
Bilfinger (Dec. 9th)
See here for the prior post
Charges: Conspiracy to violate the FCPA’s anti-bribery provisions and two substantive FCPA anti-bribery charges
Resolution Vehicle: Criminal information resolved through a deferred prosecution agreement (3 year term)
Guidelines Range: $28 million to $56 million
Penalty: $32 million.
Disclosure: The enforcement action was the direct result of the 2008 Willbros enforcement action which was the result of a voluntary disclosure
Monitor: Yes (18 months)
Individuals Charged: No
Weatherford International (Nov. 26th)
See here for the prior post
Charges: Criminal information against Weatherford Services Ltd. charging a violation of the FCPA’s anti-bribery provisions, criminal information against Weatherford International Ltd. charging a violation of the FCPA’s internal controls provisions
Resolution Vehicle: The charges against Weatherford Services were resolved via a plea agreement, the charges against Weatherford International were resolved via a deferred prosecution agreement (3 year term)
Guidelines Range: $87.2 million to $174.4 million
Penalty: $87.2 million
Disclosure: The enforcement action was the result of the DOJ and SEC’s investigation of the company in connection with the Iraq oil-for-food program
Monitor: Yes (18 months)
Individuals Charged: No
Diebold (Oct. 22nd)
See here for the prior post
Charges: Conspiracy to violate the FCPA’s anti-bribery provisions and books and records provisions; and substantive FCPA books and records violations
Resolution Vehicle: Criminal information resolved via a deferred prosecution agreement (3 year term)
Guidelines Range: $36 million to $72 million
Penalty: $25.2 million
Disclosure: Voluntary disclosure
Monitor: Yes (18 months)
Individuals Charged: No
DOJ Enforcement (Individuals)
In the fourth quarter, the DOJ announced criminal charges against Alain Riedo, a Swiss citizen and former executive of Maxwell Technologies. (See here for the prior post). Riedo was charged with conspiracy and substantive violations of the FCPA’s anti-bribery provisions,
books and records and internal controls provisions based on the same core allegations concerning conduct in China alleged in the 2011 Maxwell Technologies enforcement action.
SEC Enforcement
The SEC resolved 4 corporate FCPA enforcement actions in the fourth quarter. Total recovery in these enforcement actions was approximately $138 million. At present, none of the enforcement actions have resulted in any individual charges against company employees.
The SEC did not bring any FCPA charges against individuals in the fourth quarter.
ADM (Dec. 20th)
See here for the prior post
Charges: Settled civil complaint charging violations of the FCPA’s books and records and internal controls provisions
Settlement: $36.5 million (disgorgement of $33,342,012 plus prejudgment interest of $3,125,354)
Disclosure: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Weatherford International (Nov. 26th)
See here for the prior post
Charges: Settled civil complaint charging violations of the FCPA’s anti-bribery provisions, books and records provisions, and internal controls provisions.
Settlement: Weatherford agreed to pay approximately $65.6 million, including a $1.9 million penalty assessed in part for lack of cooperation early in the investigation.
Disclosure: The enforcement action was the result of the DOJ and SEC’s investigation of the company in connection with the Iraq oil-for-food program
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Stryker (Oct. 24)
See here for the prior post
Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal control provisions
Settlement: $13.2 million (disgorgement of $7,502,635, prejudgment interest of $2,280,888, and a civil penalty of $3.5 million)
Disclosure: According to the company’s disclosure – “in October 2007, the Company disclosed that the SEC has made an informal inquiry of the Company regarding possible violations of the FCPA in connection with the sale of medical devices in certain foreign countries.”
Individuals Charged: No
Related DOJ Enforcement Action: No
Diebold (Oct. 22nd)
See here for the prior post
Charges: Settled civil complaint charging violations of the FCPA’s anti-bribery provisions and books and records and internal controls provisions.
Settlement: $22.9 million in disgorgement and prejudgment interest
Disclosure: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Other Developments
Speeches
There were a number of speeches in the fourth quarter by high-level DOJ or SEC enforcement officials or others concerning the FCPA or relevant to FCPA issues.
As highlighted here, speaking before an FCPA audience, the Deputy Attorney General employed the common lofty rhetoric in describing the DOJ’s FCPA enforcement efforts. At the same event, the SEC’s Co-Director of Enforcement acknowledged that “some important areas of FCPA law … [are] not well developed.”
As highlighted here, SEC Chair Mary Jo White spoke at great length as to the importance of trials. The irony of course is that – notwithstanding White’s sensible statements – the SEC has never been put to its burden of proof in a corporate FCPA enforcement and when the SEC has been put to its burden of proof in individual FCPA enforcement actions, the SEC has an overall losing record.
As highlighted here, Judge Jed Rakoff, an influential federal court judge, hit on many of the same issues discussed in “The Facade of FCPA Enforcement” and stated that the DOJ’s frequent use of DPAs – along with the general absence of individual prosecutions – is “both technically and morally suspect.”
Foreign Official Oral Arguments
As highlighted here, oral arguments took place in the 11th Circuit in the historic “foreign official” challenge – the first time in FCPA history in which an appellate court has the opportunity to weigh in on the prominent enforcement theory that employees of alleged state-owned or state-controlled entities are “foreign officials” under the FCPA.
The Guidance One Year Later
A year has passed since the DOJ and SEC released its FCPA Guidance. One of the more useful aspects of the Guidance is that it can be used as a measuring stick for future enforcement activity. As highlighted here, several post-Guidance enforcement actions raise the issue of whether the enforcement agencies are indeed acting consistent with their own Guidance, let alone the FCPA statue itself.
FCPA Settlements
Using the Diebold enforcement action from the fourth quarter, this post highlighted how FCPA settlement amounts have come a long way in a short amount of time. The question was posed – have FCPA settlement amounts increased … just because?
