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Foreign Corrupt Practices Act & Anti-Corruption

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  • Two Former SBM Offshore Executives Plead Guilty to FCPA Violations

    The Department of Justice announced last week that two former executives of SBM Offshore (“SBM”), a Dutch oil and gas services company, pleaded guilty in U.S. District Court for the Southern District of Texas. Anthony Mace, SBM’s CEO from 2008 to 2011, and Robert Zubiate, a former U.S.-based sales and marketing executive, admitted their involvement in a scheme to bribe government officials in Brazil, Angola, and Equatorial Guinea. The government’s allegations relate to payments made and kickbacks provided to foreign officials in exchange for their assistance in securing contracts in those countries.

    Zubiate is scheduled for sentencing on January 31, 2018, and Mace is scheduled for sentencing on February 2, 2018.

    Click here for FCPA Scorecard’s prior coverage of this matter.

    DOJ SBM Offshore N.V. Bribery

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  • Wal-Mart Sets Aside $283 Million for Potential Resolution of FCPA Allegations

    On Thursday, November 16, 2017, Wal-Mart Stores, Inc. (“Wal-Mart”) disclosed in an SEC filing that it has set aside $283 million for a potential resolution with DOJ and SEC of alleged FCPA violations. The investigation into possible FCPA violations in Mexico was first disclosed in Wal-Mart’s December 2011 SEC filing and, in subsequent filings, Wal-Mart stated that the allegations had been expanded to include possible violations in Brazil, China, and India, among others.

    In its November 16 filing, Wal-Mart reiterated that it has been cooperating with the DOJ and SEC in their investigations, and the discussions with these government agencies has progressed such that Wal-Mart can reasonably estimate a probable loss of $283 million, although it noted that the company cannot assure that its efforts to resolve these matters will ultimately succeed as anticipated.

    Click here for FCPA Scorecard’s prior coverage of this matter.

    SEC DOJ FCPA Wal-Mart

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  • DOJ Charges Five Individuals With FCPA Violations Involving Rolls-Royce

    On November 7, the DOJ unsealed FCPA charges against five individuals for their alleged participation in a foreign bribery scheme involving Rolls-Royce plc and its U.S. subsidiary (Rolls-Royce). Of the five individuals, one was indicted while the remaining four pleaded guilty for their roles in an alleged scheme to pay bribes to a Kazakhstan official in order to secure a supply contract for a gas pipeline from Kazakhstan to China.  The charges and guilty pleas were unsealed in Ohio federal district court. 

    These charges follow on the heels of the company’s January 2017 settlement with DOJ in which Rolls-Royce agreed to a three-year deferred prosecution agreement and agreed to pay $170 million to resolve charges that it conspired to violate the anti-bribery provisions of the FCPA around the world. As part of the DOJ settlement, Rolls-Royce agreed to continue to cooperate fully with the DOJ’s investigation, including its investigation of individuals. The DOJ settlement comprised just a fraction of the $800 million total penalty Rolls-Royce agreed to pay as part of a global resolution related to the corrupt conduct.  

    Of the four guilty pleas, three individuals (a former executive of Rolls-Royce, a former employee of Rolls-Royce, and an executive at an international engineering consulting firm) pleaded guilty to one count of conspiracy to violate the FCPA. The fourth individual (a former senior executive of Rolls-Royce) also pleaded guilty to one count of violating the FCPA in addition to conspiracy. The indicted individual, a former CEO of a Rolls-Royce intermediary, was charged with one count of conspiracy to violate the FCPA and seven counts of violating the FCPA, along with various money laundering charges. 

    The DOJ’s announcement noted the “significant cooperation and assistance” from the UK SFO and Brazil law enforcement.  This continues the increased trend of DOJ receiving and then highlighting cooperation efforts by its international counterparts.

    DOJ FCPA Enforcement Action Rolls Royce UK Serious Fraud Office

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  • Charles Cain Named New SEC FCPA Chief

    After serving as Acting Chief of the SEC’s Enforcement Division’s Foreign Corrupt Practices Act Unit for more than six months, SEC veteran Charles Cain will now officially take on the position of head of the FCPA Unit. According to an SEC press release, Cain intends “to build[] upon the important work the unit has done to combat corruption and level the playing field globally.” The SEC named Cain to the Acting Chief role in April 2017 after his predecessor, Kara Brockmeyer, left the agency

    After graduating with honors from The George Washington University Law School, Cain spent two years in the private sector before joining the SEC in 1999. In addition to serving as Deputy Chief of the FCPA Unit since 2011, Cain co-authored A Resource Guide to the U.S. Foreign Corrupt Practices Act, an effort for which he received the Irving M. Pollack Award.

    SEC FCPA

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  • SAP Self-Discloses Approximately $6.8 Million in Payments to Gupta Family-Related South African Entities

    On October 26, SAP, a German multinational software corporation, announced that it has voluntarily disclosed commission payments of approximately $6.8 million to Gupta family-related entities to the U.S. Department of Justice and the Securities and Exchange Commission.  The voluntary disclosure in July has led to an ongoing DOJ and SEC investigation into SAP’s conduct. 

    SAP acknowledged that between December 2014 and June 2017, contracts with Transnet and Eskom, both South African state-owned companies, were closed with the assistance of Gupta family-related entities.   SAP’s internal investigation has also led to the initiation of disciplinary proceedings against three employees in South Africa.  The Gupta family, which is connected to South African president Jacob Zuma, has previously denied wrongdoing associated with receiving such kickbacks.  While acknowledging cooperation with the DOJ and the SEC, SAP stated that it has had no interaction with South African authorities and has not decided whether the company will approach South African authorities in the future.  The U.S. investigation is ongoing and SAP has acknowledged that it has begun the process of sharing documents with authorities.

    SEC DOJ Anti-Corruption

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  • Former Guatemalan Soccer Executive and Judge Sentenced in FIFA Investigation

    On October 25, Judge Chen of the U.S. District Court for the E.D.N.Y. sentenced Hector Trujillo, the former general secretary of Guatemala’s soccer federation and a former judge, to eight months in prison and ordered restitution of $415,000 and forfeiture of $175,000. His sentence comes after a guilty plea to wire fraud and conspiracy in June 2017. Mr. Trujillo was arrested in 2015 as part of the U.S. government’s investigation into FIFA corruption. Trujillo’s sentencing marks the first individual sentenced among a group of more than 40 individuals who have been indicted or pleaded guilty since 2015.

    This sentencing comes as part of the U.S. government’s ongoing investigation into corruption in international soccer which has been ongoing. Previous FCPA Scorecard coverage of the FIFA investigation can be found here.

    FCPA Enforcement Action Anti-Corruption FIFA Fraud

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  • Deputy Attorney General Rod Rosenstein Issues Remarks on Individual Accountability for Corporate Wrongdoing

    Deputy Attorney General Rod Rosenstein recently issued remarks highlighting the importance of the DOJ’s consistency in enforcing policies “hold[ing] individuals accountable for corporate wrongdoing.” In particular, Deputy AG Rosenstein stated that the agency should focus on improving the recent track record of bringing criminal proceedings against company employees and commented that “consistency promotes fairness and enhances respect for the rule of law.”  His remarks also touched on the Yates Memo and the FCPA Pilot Program, noting the appropriateness of focusing on individual officer or director liability.

    The comments are yet another in the steady drumbeat of calls, both internal and external to the DOJ, for DOJ enforcement strategy to hold individual corporate employees accountable for FCPA violations, although how much that strategy is being implemented remains to be seen. A recent review of DOJ corporate FCPA enforcement actions notes that the last 20 such actions have lacked related criminal charges against company employees, and going back to 2008, approximately 80% of DOJ corporate FCPA enforcement actions have lacked related criminal charges against company employees.  As Deputy AG Rosenstein’s comments concluded: “When we are serious about wanting people to follow rules, it does no good merely to post them. We need to make clear our intent to enforce the rules, with sufficient vigor that people fear the consequences of violating them.”

    FCPA Enforcement Action State AG DOJ FCPA Pilot Program

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  • Bio-Rad Appeals $11 Million Verdict Awarded to FCPA Whistleblower

    Following a $55 million civil and criminal FCPA settlement by Bio-Rad, a life science research and diagnostics company, in November 2014, the company’s former General Counsel and Secretary, Sanford Wadler, filed a civil complaint against Bio-Rad and executive officers and board members alleging that he was fired for blowing the whistle on FCPA issues. In February 2017 a jury awarded Wadler a total of $11 million in punitive and compensatory damages (including double back-pay under Dodd-Frank).

    Bio-Rad recently appealed that verdict to the Ninth Circuit on the grounds that the trial court should have directed the verdict in favor of Bio-Rad because, it argues, the alleged FCPA violations were the result of Wadler’s lack of due diligence, because Wadler did not first consult the company’s compliance officers and FCPA lawyers before reporting, and because his allegations were discredited by trial witnesses. Bio-Rad also claims that the trial court wrongly excluded certain impeachment testimony, and that Wadley did not qualify as a “whistleblower” under Dodd-Frank in light of his internal reporting. 

    FCPA Enforcement Action Whistleblower FCPA Bio-Rad

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  • Florida Energy Company Owner Pleads Guilty to Conspiracy to Violate the FCPA in Venezuelan Bribery Scheme

    On October 11, the DOJ announced that Fernando Ardila Rued – a co-owner of several Florida-based energy companies – pleaded guilty to FCPA charges that he conspired to bribe foreign officials in exchange for obtaining contracts from Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). In his plea, Ardila admitted to conspiring with two other individuals – Abraham Jose Shiera Bastidas and Roberto Enrique Rincon Fernandez – from 2008 through 2014 to bribe PDVSA purchasing analysts through cash payments and other entertainment in order to win contracts for Shiera and Rincon’s companies. Ardila is the tenth individual who has pleaded guilty in connection with the PDVSA scheme.    

    This investigation has been a collaboration between the DOJ, ICE-HSI, and IRS-Criminal Investigation Division. Previous FCPA Scorecard coverage of the PDVSA investigation can be found here.

    Score Card Bribery FCPA DOJ Petroleos de Venezuela Financial Crimes International

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  • South Korean Earthquake Research Official Sentenced for Laundering Bribes

    On October 2, the former director of the earthquake research center of South Korea’s Institute of Geoscience and Mineral Resources, Mr. Hoen-Cheol Chi, was reportedly sentenced in U.S. federal court to 14 months in prison for laundering bribes he had received in South Korea from seismology companies. Prosecutors argued to the federal jury, which convicted Mr. Chi in July, that Mr. Chi had demanded and received more than $1 million in bribes from two seismological companies in exchange for providing them with insider information and directed some of the funds to be transferred to his personal bank account in California.

    Mr. Chi has not been charged in South Korea, and his conviction and sentencing in the United States illustrate the US DOJ’s continued focus on targeting foreign officials who receive bribes and then travel to the US or use its financial system.

    DOJ Anti-Money Laundering Bribery

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