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  • MTS Systems Announces Closure of FCPA Investigations

    On August 7, MTS Systems announced in its Form 10-Q the closure of DOJ and SEC FCPA investigations related to gift, travel, entertainment, and other expenses incurred in connection with its Asia-Pacific operations. Minnesota-based MTS Systems initially informed the DOJ and SEC about this matter in 2012 and thereafter provided the government periodic updates. According to MTS Systems’ 10-Q, the government’s investigations were closed “without further action taken by either [the SEC or DOJ].”

    FCPA Enforcement Action DOJ SEC MTS Systems

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  • Teradata Discloses FCPA Investigation in Quarterly Filing

    On August 4, Ohio-based Teradata Corporation disclosed in its 10-Q that the DOJ and SEC are conducting investigations concerning potential violations of the FCPA related to a subsidiary’s operations in Turkey. Teradata operates in more than 70 countries and develops and sells technology-enabled solutions, including data warehouse management and database technologies. 

    According to Teradata’s 10-Q, the company “discovered certain questionable expenditures for travel, gifts and other expenses at one of its international subsidiaries” doing business in Turkey. Teradata stated that it promptly launched an internal investigation and, in February 2017, self-disclosed the investigation to the SEC and DOJ. According to its 10-Q, Teradata has periodically updated the government about its investigation and plans to “continue to cooperate fully.” Teradata also noted that it already has “taken remedial actions,” including terminations, and that the FCPA issues “involved specific individuals who are no longer with the Company.” 

    It appears that Teradata is making a case for full cooperation credit under the DOJ’s Pilot Program, which encourages companies to “voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs.”

    FCPA Enforcement Action Teradata DOJ SEC

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  • Three Companies Announce the Close of FCPA Investigations

    During the week of July 24, 2017, three different companies announced the closure of DOJ and/or SEC FCPA investigations: IBM, Net 1 UEPS Technologies, Inc. (“Net 1”), and Newmont Mining. 

    In a Form 10-Q filed with the SEC on July 25, 2017, IBM disclosed that the DOJ and SEC had each informed the company in June 2017 of the closure of their respective investigations into “alleged illegal activity by a former IBM Poland employee in connection with sales to the Polish government.” The company initially informed the SEC in 2012 that the Polish Central Anti-Corruption Bureau was looking into the matter, and the DOJ followed up with its own investigation in April of 2013. The DOJ expanded the investigation from Poland to Argentina, Bangladesh, and Ukraine. The 2012 issues came on the heels of a 2011 settlement in which IBM paid the SEC $10 million to settle separate FCPA allegations for alleged cash payments to Chinese and Korean officials.

    South African alternative payment systems provider Net 1 made a similar announcement on July 27, stating that the DOJ had written a letter to the company closing its investigation of alleged FCPA and disclosure violations. According to the announcement, the DOJ, along with the SEC and South African authorities, began looking into a 2012 contract award process involving a Net 1 subsidiary, Cash Paymaster Services Proprietary Limited, after an unsuccessful bidder for the same contract “refer[ed] unsubstantiated South African press articles to the DOJ.” The SEC was the first to bow out of the investigation, closing its inquiry through a letter in 2015, followed six months later by the South African government. Net 1 is traded on NASDAQ’s Global Select Market, providing a jurisdictional hook into a case otherwise about payments made by a South African company in South Africa to South African citizens who were South African government employees. Our additional coverage of this matter can be viewed here.

    In a Form 10-Q filed on July 25, 2017, Newmont Mining also announced the end of a DOJ investigation into alleged violations of the FCPA “relating to certain business activities of [Newmont Mining] and its affiliates and contractors in countries outside the U.S.” According to the announcement, the Colorado company had already received a similar declination from the SEC earlier this year. Our additional coverage of this matter can be viewed here

    The DOJ simultaneously reportedly confirmed to the Wall Street Journal that the agency was still actively enforcing the FCPA. The Journal cited an anonymous source at the DOJ for assurances that “though there haven’t been any new corporate FCPA cases since mid-January, there is no letup in U.S. enforcement efforts.”

    DOJ SEC IBM Net 1 UEPS Technologies Newmont Mining Corporation FCPA Enforcement Action

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  • Macau Real Estate Developer Convicted of Violating FCPA

    On July 27, 2017, a federal jury in the Southern District of New York convicted Ng Lap Seng of Macau of bribery, money laundering, and conspiracy, for his role in a widespread plan to bribe United Nations officials in order to establish a new conference facility in Macau. Five other defendants have also been charged; four have pleaded guilty, and one passed away. A sentencing date has not yet been set.

    As pointed out on the FCPA Professor, this is a significant win for the DOJ because it marks the first time since 2011 that the DOJ has successfully taken an FCPA case to verdict. Our additional coverage of this matter can be viewed here.

    FCPA Enforcement Action Anti-Money Laundering Bribery

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  • Justice Department Official Stresses International Cooperation in FCPA Enforcement

    In a recent speech before the Atlantic Council Inter-American Dialogue Event, Acting Assistant Attorney General Kenneth Blanco discussed the importance of foreign law enforcement cooperation in FCPA investigations. Blanco focused his remarks on cooperation between the United States and Brazil and also touched on the Justice Department’s Kleptocracy Asset Recovery Initiative. 

    Blanco noted: “As transnational crime continues to grow in scope and complexity, we increasingly find ourselves looking across the globe to collect evidence and identify witnesses necessary to build cases, requiring greater and closer collaboration with our foreign counterparts. As a result, we find ourselves relying more and more on the use of the various mechanisms of international cooperation with our foreign partners that permit for evidence exchange, fugitive apprehension, and asset recovery.” 

    Blanco’s remarks highlight the DOJ’s continued focus on international and transnational conduct with the cooperation of foreign law enforcement agencies. He concluded: “We at the Department of Justice will continue, like we have for years, pushing forward hard against corruption, wherever it is, and we welcome our fellow counterparts around the world who are fighting this important fight against corruption.”

    DOJ Enforcement Brazil Kleptocracy Asset Recovery Initiative Corruption

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  • Halliburton Agrees to Settle FCPA Claim for $29 Million in Disgorgement and Penalties

    Halliburton Company recently settled allegations that the company improperly steered business to the friend of an Angolan official in exchange for that official awarding various oil contracts to the company. In total, Halliburton agreed to pay the SEC $29.2 million, comprising $14 million in disgorgement, $1.2 million in prejudgment interest, and a $14 million penalty. Halliburton’s former vice president also agreed to pay the SEC a $75,000 penalty related to these violations and other accounting irregularities.  

    This is the most recent settlement in a series of FCPA enforcement actions focusing on Halliburton’s procurement processes and operations in various countries. Former Halliburton subsidiary KBR settled similar FCPA allegations in 2009 related to alleged bribes paid to Nigerian officials to procure contracts in that country.    

    This settlement also highlights the role of whistleblowers in driving FCPA and other enforcement actions. A Halliburton whistleblower first alerted the company to potential FCPA issues in 2010, which resulted in the launching of an investigation into the allegations.

    SEC FCPA Enforcement Action Angola Disgorgement Bribery Nigeria Whistleblower

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  • DOJ Files Suit to Seize $144 Million in Laundered Nigerian Oil Bribes

    The U.S. Department of Justice announced Friday, July 14, that prosecutors filed a civil complaint seeking to seize $144 million in assets that were allegedly the proceeds of corruption in Nigeria and were laundered in and through the U.S. According to the complaint, from 2011 to 2015, Nigerian businessmen Kolawole Akanni Aluko and Olajide Omokore bribed Nigeria’s former Minister for Petroleum Resources, Diezani Alison-Madueke, who oversaw Nigeria’s state-owned oil company. In return, Alison-Madueke steered lucrative oil contracts to companies owned by Aluko and Omokore. The proceeds were then allegedly used to purchase assets subject to seizure and forfeiture, including a $50 million New York City condominium and an $80 million yacht.

    “The United States is not a safe haven for the proceeds of corruption,” said Acting Assistant Attorney General Blanco. “The complaint announced today demonstrates the Department’s commitment to working with our law enforcement partners around the globe to trace and recover the proceeds of corruption, no matter the source. Corrupt foreign officials and business executives should make no mistake: if illicit funds are within the reach of the United States, we will seek to forfeit them and to return them to the victims from whom they were stolen.”

    The suit was part of the Kleptocracy Asset Recovery Initiative.

    DOJ Anti-Money Laundering Corruption Nigeria

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  • Former DOJ Fraud Compliance Counsel Resigns, Criticizes President

    Hui Chen, formerly Compliance Counsel Expert in the DOJ Fraud Section, is speaking out about the reasons for her May 2017 resignation, which she has attributed to unacceptable conduct by the President and his Administration. Chen was hired by DOJ in November 2015 after serving as Global Head for Anti-Bribery and Corruption and Standard Chartered Bank. She was the first lawyer to hold this position at the DOJ.

    In a June 25 LinkedIn post, Chen unleashed several criticisms against the President, including regarding lawsuits, conflicts of interest, and ongoing investigations. She said that she would “not tolerate” those conducts in a company, but “worked under an administration that engaged in exactly those conduct.” Chen further elaborated on her criticisms in a July 4, 2017 interview with CNN, stating that the firing of FBI James Comey tipped the scales in favor of resignation. 

    The DOJ had previously posted an opening to hire a new Compliance Counsel, but that listing has now expired. It is not clear if anyone has been hired to replace Ms. Chen. 

    DOJ Trump Fraud

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  • CDM Smith Receives Declination of FCPA Charges

    On June 21, the DOJ issued a declination letter to attorneys for CDM Smith, Inc., in which the DOJ declined prosecution and closed an investigation of CDM regarding potential FCPA violations that occurred in India between 2011 and 2015. CDM, a Boston-based privately held engineering and construction firm, agreed to pay DOJ approximately $4 million in disgorgement. The DOJ announced the declination on June 29 with a link posted on its website, making it the second FCPA declination that the DOJ announced in June 2017. Prior to June, the DOJ had last issued an FCPA declination letter in September 2016. 

    According to the DOJ Letter, CDM paid approximately $1.18 million in bribes to India government officials in exchange for contracts that resulted in approximately $4 million in net profits (the disgorgement amount). The payments were made by CDM’s division responsible for India operations and by CDM’s wholly-owned subsidiary in India through fraudulent subcontractors and generally equaled two to four percent of the contract price. 

    The DOJ’s letter stated that its decision to close its investigation is consistent with the FCPA Pilot Program, launched in April 2016 to encourage companies to “voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs.” Accordingly, the DOJ determined that CDM had, among other things, made a “timely and voluntary self-disclosure” of potential FCPA violations, conducted and “thorough and comprehensive investigation,” fully cooperated with the DOJ, and performed full remediation, including the termination of all of the executives and employees involved in the conduct at issue. However, the letter provides little detail about these factors. 

    The DOJ letter makes clear that it does not foreclose future prosecution of any individuals connected to this matter, whether affiliated with CDM or otherwise.

    DOJ India Bribery FCPA Enforcement Action CDM Smith FCPA Pilot Program

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  • U.K. Banker Receives Six-Year Sentence for Taking Bribes

    On June 20, 2017, a former banker at the European Bank for Reconstruction and Development (EBRD) in London received a six year prison sentence for accepting more than $3.5 million in bribes. According to the Crown Prosecution Service, Andrey Ryjenko also received two years (to run concurrently) for "concealing, disguising, converting and transferring criminal property."  

    Reuters reports that Ryjenko conspired with a U.S. consultant to direct EBRD investments towards certain companies in exchange for bribes deposited into a bank account in the name of Ryjenko's sister. The consultant, Dmitrji Harder, pleaded guilty in 2016 in the U.S. to two counts of violating the FCPA. For additional coverage and analysis of the U.S. Department of Justice's enforcement action against Harder, see the previous posts here.

    Both the Harder case and the Ryjenko prosecution were the result of a multinational investigation with cooperating agencies in several countries. Indeed, the CPS praised the cooperation, stating that Ryjenko's "conviction was made possible through effective cross-border partnerships between a number of jurisdictions, including the United States." According to Reuters, it was the bank that first contacted authorities in 2010 when its internal systems identified irregularities. 

    The Ryjenko conviction is part of a growing trend of foreign jurisdictions taking action against bribe recipients, who are not covered under the FCPA’s prohibitions in the U.S. (although U.S. authorities can sometimes try to pursue those bribe recipients under money laundering and other theories, if the bribe recipients can be brought under U.S. jurisdiction).

    FCPA Enforcement Action EBRD Ryjenko Dmitrij Harder Bribery

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