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  • FCPA class action against Embraer dismissed

    A class action against Embraer, the Brazilian aerospace firm, was recently dismissed by U.S. District Judge Richard Berman. The class action, which was brought in federal district court in New York, alleged that Embraer had failed to adequately disclose the scope and possible financial impact of ongoing corruption investigations by the DOJ and SEC, harming the company’s investors.

    In granting Embraer’s motion to dismiss, Judge Berman held that the company’s disclosures were sufficient as a matter of law, and that requiring disclosures advocated by the putative class plaintiffs would effectively require reporting companies to acknowledge guilt for conduct that was still being investigated and had not yet been charged.

    The underlying bribery alleged in the complaint (and being investigated by regulators) involves Embraer’s October 2016 admissions that from 2007 to 2011, company executives made payments to government officials in several countries, including the Dominican Republic, Saudi Arabia, Mozambique, and India, totaling $11.5 million. Embraer received government contracts resulting in profits over $83 million in exchange.

    This decision is a clear win for publicly traded companies currently under investigation for corruption-related conduct. Had the case proceeded, companies may have faced difficult choices between making more detailed disclosures to investors regarding the potential merits of ongoing investigations and protecting themselves against incriminatory public statements about these same matters.

    International Bribery Embraer Anti-Corruption

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  • Former media executive pleads guilty to bribing UN official

    Julia Vivi Wang, a Chinese-born naturalized U.S. citizen, reportedly pleaded guilty this week to violations of the FCPA related to a scheme to bribe the UN General Assembly’s former president John Ashe. Wang is a former executive of a media group that focused on promoting UN development goals, but she was accused of paying the bribe to secure diplomatic postings. She pleaded guilty this week in the SDNY to three counts, including violating and conspiring to violate the FCPA, as well as income tax fraud. 

    The charges relate to Wang’s payment of $500,000 to Ashe in April 2013 in exchange for receiving a diplomatic posting within the government of Antigua, where Ashe previously served as a UN representative. Wang is just the most recent in a line of other individuals who have faced FCPA repercussions for bribes paid to Ashe (who died in 2016), including Ng Lap Seng, who was found guilty of paying Ashe and another individual bribes worth at least $1 million, and Shiwei (Sheri) Yan who also pleaded guilty to paying Ashe bribes in excess of $800,000. As part of her plea, Wang admitted that she had failed to report approximately $2 million in income to the IRS.

    This guilty plea illustrates how prosecutors are able to unwind even complex bribery schemes by methodically targeting individual participants. The criminal charges against Wang were likely bolstered by the string of preceding bribery cases involving similar payments to Ashe that likewise resulted in a guilty pleas and verdicts.

    FCPA Enforcement Action Bribery FCPA

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  • Second executive pleads guilty to FCPA violations in Siemens case involving bribes in Argentina

    On March 15, Eberhard Reichert, a former executive of a Siemens AG subsidiary, pleaded guilty in the U.S. District Court for the Southern District of New York to conspiracy to violate the Foreign Corrupt Practices Act, including conspiracy to commit bribery, falsify corporate books and records, circumvent internal controls, and commit wire fraud. According to the DOJ press release, Reichert “admitted that he and his co-conspirators concealed the illicit payments through various means, including using shell companies associated with intermediaries to disguise and launder the funds.” Reichert was indicted with seven others in 2011.

    Reichert was part of a decade-long scheme during which Siemens paid tens of millions of dollars in bribes to Argentine government officials to secure a contract to create national identity cards. A Siemens subsidiary was awarded a contract worth more than $1 billion to provide the ID cards in 1998. The Argentine government ended the project in 2001. Since then, Siemens and its employees have faced prosecutions and enforcement actions around the world as a result of the bribes and related conduct. Siemens pleaded guilty in the U.S. to violating the books and records provisions of the FCPA in 2008 for its conduct, and subsidiaries in Argentina and other countries pleaded guilty to similar crimes.  Siemens also paid $350 million to resolve an SEC case and paid a fine of $800 million to resolve charges brought by the Munich Public Prosecutor’s Office.

    Prior FCPA Scorecard coverage of the case can be found here, here, here, and here.

    DOJ FCPA Bribery

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  • Kinross Gold Corporation settles SEC FCPA charge

    The SEC fined Kinross Gold Corporation $950,000 for its failure to implement and maintain adequate accounting controls at two subsidiaries in Ghana and the Islamic Republic of Mauritania. Kinross neither admitted nor denied the allegations. According to the SEC, Kinross acquired the subsidiaries in 2010 understanding that they lacked anti-corruption compliance programs. After three years of internal audits raising red flags, Kinross did implement adequate controls, however it did not maintain them. The SEC found that Kinross then awarded a contract to a sub-standard company preferred by Mauritanian officials, despite Kinross’s internal bidding and tendering procedures. Kinross also failed to conduct required due diligence when it awarded a politically connected consultant a contract to facilitate government contracts.

    SEC Anti-Corruption

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  • UK Serious Fraud Office recovers bribe from diplomat from Chad

    In what the UK’s Serious Fraud Office (SFO) is calling a first, a £4.4 million recovery from a corruption case will be returned overseas. The SFO prevailed in a trial before the UK High Court and recovered the money from Chadian diplomats, including the wife of the former Deputy Chief of the Chadian Embassy to the United States who was received the money in the form of discounted shares of Canadian oil company Griffiths Energy International, Inc. Griffiths also paid “consultancy fees” to diplomats through a front company called “Chad Oil” set up five days before the agreements with the diplomats. In exchange for the payments, Griffiths received exclusive development rights in Chad.

    The case has continued for some time—Griffiths paid a C$10 million criminal fine in Canada in 2013. After Griffiths was taken over by a UK corporation, the U.S. DOJ filed an In Rem. complaint and later requested SFO assistance.

    This recovery will be “transferred to the Department for International Development who will identify key projects to invest in that will benefit the poorest in Chad.”

    UK Serious Fraud Office Anti-Corruption

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  • Maryland-based Transport Logistics International Inc. enters deferred prosecution agreement for violations of FCPA antibribery provisions

    On March 13, a Maryland federal court unsealed bribery-related charges filed in January 2018 against Transport Logistics International, Inc. (“TLI”), a Maryland-based company which is part of France’s Daher Group, as well as a three-year deferred prosecution agreement filed on March 12. The government alleges that TLI conspired to violate the FCPA by arranging and paying bribes to Russian officials to obtain uranium transportation contracts between 2004 and 2014. Pursuant to the deferred prosecution agreement, TLI agreed to pay a $2 million criminal fine, adopt a compliance program, and provide periodic reporting to DOJ. According to the agreement, TLI received credit for its substantial cooperation with the investigation and for its remedial actions, including firing all employees involved in the criminal conduct.

    As we covered here, in 2015 three individuals entered into guilty pleas in this matter: Vadim Mikerin, a former Russian official based in Maryland; Daren Condrey, a former co-president of TLI; and Boris Rubizhevsky, an alleged intermediary between TLI and Mikerin. Most recently and as covered here, Mark Lambert, the other former co-president of TLI, was charged in an 11-count indictment, unsealed in January 2018, alleging numerous violations of the FCPA and conspiracy to violate the FCPA.

    DOJ FCPA Bribery

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  • Israeli real estate conglomerate to pay $500,000 to resolve SEC allegations of FCPA books and records and internal controls violations

    On March 9, an Israeli-based real estate conglomerate agreed with the SEC, pursuant to an administrative order, to pay $500,000 to resolve alleged violations of FCPA books and records and internal controls provisions. According to the order, the SEC found that from 2007 through 2012, Elbit Imaging Ltd (“Elbit” or the “Company”) and its Netherlands-based subsidiary, Plaza Centers NV, paid millions of dollars to third party consultants and agents for purported services related to a Romanian real estate project and the sale of a real estate asset portfolio in the United States. The SEC found that these payments were made with no indication that any services were actually provided.

    Elbit did not admit or deny the SEC’s findings, but agreed to resolve this matter with a civil money penalty. In accepting Elbit’s offer for resolution, the SEC took into consideration Elbit’s self-reporting in 2016 to authorities in Romania and in the United States, as well as its full cooperation with the investigation, including the hiring of outside counsel to conduct an internal investigation, the findings of which were shared with the SEC. The SEC also considered the extensive remedial measures Elbit has put into place as a result of those findings and the Commission’s suggestions.

    SEC FCPA

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  • Several companies report developments in FCPA investigations

    In the second half of February, at least three unrelated companies have publicly disclosed the existence and/or status of various FCPA investigations in forms filed with the SEC:

    • Teradata Corporation: On February 23, data analytics company Teradata disclosed that the DOJ and SEC have both declined to pursue FCPA enforcement actions in connection with a subsidiary’s “questionable expenditures for travel, gifts and other expenses” in Turkey. As the Dayton, Ohio-based company previously disclosed on August 4, 2017, Teradata initiated an internal investigation after discovering the questionable expenditures, self-reported the issues to the DOJ and SEC, cooperated with the agencies, and undertook certain remedial actions.
       
    • Fresenius Medical Care AG & Co. KGaA: On February 27, dialysis provider Fresenius Medical Care disclosed that the DOJ and SEC are investigating potential FCPA violations related to “certain conduct in the company’s products business in a number of countries,” and that it has reserved €200 million for a potential settlement with the agencies. After receiving “certain communications alleging conduct in countries outside the U.S. that might violate the FCPA or other anti-bribery laws” in 2012, the Bad Homburg, Germany-based company conducted an internal investigation, self-reported the issues to the DOJ and SEC, cooperated with the agencies, and undertook certain remedial actions.
       
    • Exterran Corporation: On February 28, energy company Exterran disclosed that the DOJ and SEC have both declined to pursue FCPA enforcement actions in connection with “self-reported [accounting] errors and possible irregularities” at an Italian subsidiary conducting business in the Middle East. In April 2016, Houston-based Exterran previously disclosed that it was restating its 2015 financial statements and conducting an internal investigation related to the accounting issues. Although “the SEC’s investigation related to the circumstances giving rise to the restatement is continuing,” the FCPA piece of the investigation has concluded.

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  • Sanofi announces DOJ declination in FCPA investigation

    As previously covered, French pharmaceutical company Sanofi S.A. announced in October 2014 that it was investigating whether certain payments made by company employees to healthcare professionals in the Middle East and Africa violated the FCPA. Sanofi launched an investigation to review payments made from 2007 to 2012 as a result of anonymous whistleblower allegations, and self-reported the allegations to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). On March 7, 2018,  Sanofi announced in its Form 20-F SEC filing that the DOJ notified Sanofi in February 2018 that it was closing the inquiry into the self-reported whistleblower allegations. Sanofi is continuing to cooperate with the SEC’s review of the allegations.

    DOJ SEC FCPA Whistleblower

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  • Houston-based energy company sues former Venezuelan government officials for bribery related conduct related to Petroleos

    On February 16, 2018, Harvest Natural Resources and HNR Energia B.V (collectively, “Harvest”), a Houston-based energy corporation that formally dissolved in May 2017, filed suit in the Southern District of Texas against two former presidents of Venezuela’s national oil company Petroleos de Venezuela, S.A. (“PDVSA”), Rafael Dario Ramirez Carreno (“Ramirez”) and Eulogio Antonio Del Pino Diaz (“Del Pino), and others who allegedly worked for Ramirez and PDVSA. According to the complaint filed by Harvest, Venezuela’s Ministerio del Poder Popular de Petroleo y Mineria twice refused to allow Harvest to sell energy assets co-owned with PDVSA because Harvest refused to pay bribes requested by the defendants. According to Harvest, the denials forced the company to sell the same assets at a loss of $470 million. Harvest has sued the defendants alleging civil violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Sherman Act, the Robinson-Patman Act, and the Texas Free Enterprise and Antitrust Act.

    This suit was filed days after the DOJ unsealed charges against five former Venezuelan government officials for their involvement in a money laundering scheme at PDVSA. Previous FCPA Scorecard coverage of the ongoing DOJ and ICE-HIS investigation into bribery at Petroleos can be found here.

    DOJ Harvest Natural Resources Petroleos de Venezuela Bribery

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