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  • Alere Settles FCPA Violations With SEC for $13 Million

    On September 28, the SEC announced that diagnostic test manufacturer Alere Inc. had settled a variety of FCPA books and records and internal control allegations stemming from its sales practices in Africa, Asia, and Latin America, including the failure to improperly characterize and record payments made to government officials in Columbia and India. In concluding the more than two year investigation, Alere agreed to pay a civil monetary penalty of $9.2 million, and disgorgement and interest of approximately $3.8 million. As part of the settlement agreement, Alere did not admit or deny the SEC’s findings of fact. As discussed in a previous FCPA Scorecard post, the DOJ announced in March 2016 that it is also investigating the company’s foreign sales practices. That investigation is ongoing. 

    Ongoing FCPA investigations can of course have costly business implications beyond reputational damage; the ongoing FCPA investigation of Alere appears to have taken a toll, likely playing a role in the reduced price paid by Abbott Laboratories in April 2017 to acquire Alere.

    SEC Alere Inc. FCPA

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  • Telia to Pay $965 Million to DOJ and SEC to Settle Bribery Claims

    On September 21, the Swedish telecom Telia Company AB agreed to pay $965 million as a result of criminal and civil actions brought by the DOJ and SEC charging the company with paying bribes to an Uzbek government official from 2007 to 2010. Telia entered into a deferred prosecution agreement with the DOJ that required the company to pay a $548.6 million criminal penalty for violating the anti-bribery provisions of the FCPA, $274 million of which will be paid to the Swedish Prosecution Authority and credited by the DOJ. $40 million of the total criminal penalty consisted of forfeiture by Telia on behalf of its indirect subsidiary Coscom. According to the criminal information, around 2007, Telia began operating a mobile telecommunications business in Uzbekistan through Coscom, and the companies allegedly then conspired to make approximately $331 million in bribes to an Uzbek government official to expand their share of the telecommunications market. 

    On the same day, the SEC issued a cease-and-desist order finding that Telia violated the anti-bribery and internal accounting controls provisions of the FCPA and ordering the company to disgorge $457 million in illicit profits (but also agreeing to credit up to half that amount if disgorged to the Swedish Prosecution Authority). The SEC found that over the relevant time period, “Telia paid bribes to a government official in Uzbekistan in order to obtain and retain business that generated more than $2.5 billion in revenues.” It found that Telia paid the Uzbek official $330 million in bribes “funneled through payments for sham lobbying and consulting services to a front company controlled by the official.” The SEC agreed that the $40 million forfeiture to the DOJ would also offset.

    DOJ SEC Bribery FCPA Telia Uzbek Swedish Prosecution Authority

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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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  • 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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  • SFO Announces Charges Against a Global Bank and Four Former Executives in Qatar Capital Raising Matter

    On Tuesday, June 20, the UK Serious Fraud Office (“SFO”) announced charges against a global bank and four former executives for conspiracy to commit fraud and provision of unlawful financial assistance in violation of the Companies Act 1985. These charges relate to the bank’s capital raising arrangements with Qatar Holding LLC and Challenger Universal Ltd in June and October 2008, as well as to a $3 billion loan facility made available to the State of Qatar acting through the Ministry of Economy and Finance in November 2008. According to the SFO press release, the investigation was first announced in 2012, and the individuals charged include a former Chief Executive Officer of the bank, a former Executive Chairman of the bank's Capital Investment Banking and Investment Management in Middle East and North Africa, a former Chief Executive of the bank's Wealth and Investment Management, and a former European Head of the bank’s Financial Institutions Group.

    While no US-based charges have been announced, the SFO’s announcement comes on the heels of the bank’s March 2017 disclosure to the SEC in which the company stated that “the DOJ and SEC are undertaking an investigation into whether the Group’s relationships with third parties who assist the bank to win or retain business are compliant with the U.S. Foreign Corrupt Practices Act.”

    SEC UK Serious Fraud Office Fraud Qatar Holding Challenger Universal

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  • Supreme Court Limits SEC Disgorgement

    On June 5, the Supreme Court ruled in Kokesh v. SEC that the SEC’s authority to disgorge profits from defendants is subject to the five-year statute of limitations applicable to penalties and fines. The Court rejected the SEC’s position that disgorgement is an equitable remedy and not a penalty, resolving a circuit split on the issue. Writing for the unanimous Court, Justice Sotomayor said that disgorgement “bears all the hallmarks of a penalty,” reasoning that it “is intended to deter, not to compensate.” The defendant in Kokesh was an investment adviser who had been ordered to disgorge approximately $35 million for allegedly misappropriating investor funds.

    The SEC routinely seeks disgorgement in FCPA enforcement actions. The Kokesh decision may lead the SEC to seek tolling agreements sooner and in more circumstances, particularly where the alleged conduct occurred over a long period of time. The decision may also impact defendants’ ability to claim insurance coverage for disgorgement because insurers might deny coverage for payment of penalties.

    SEC FCPA Enforcement Action Kokesh

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  • Reports: Wal-Mart Nearing Resolution of Bribery Probe

    Bloomberg reports that Wal-Mart is nearing a resolution of a five-year old joint inquiry by the DOJ and SEC. Citing an unnamed source familiar with the matter, Bloomberg reports that the company is preparing to pay $300 million to settle allegations that company employees paid bribes in Mexico, China, and India. The same source reported that the resolution will also include at least one guilty plea by a Wal-Mart subsidiary, a non-prosecution agreement for the parent company, and a monitorship.

    In March of 2015, a federal district court in Arkansas dismissed with prejudice a consolidated shareholder derivative suit accusing Wal-Mart Stores Inc.’s (Wal-Mart) board of directors of concealing Mexican bribery claims from investors. The lawsuit was filed after a 2012 article by the New York Times reported that top officials at Wal-Mart’s Mexican subsidiary oversaw millions of dollars in bribes in connection with the company’s expansion in Mexico. See previous Scorecard coverage here. The same article is believed to have touched off the DOJ’s and SEC’s inquiry. If true, a $300 million resolution would not be near the top end of FCPA resolutions.

    DOJ SEC Score Card Bribery Wal-Mart

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  • Former Guinean Mining Minister Convicted on Bribery and Money Laundering Charges

    A former Guinean mining minister was found guilty earlier this week on bribery and money laundering charges following a seven-day jury trial in Manhattan federal court. He was charged with receiving and laundering $8.5 million in bribes allegedly for securing mining rights for two Chinese companies. 

    The conviction came one day after the former minister took the stand in his own defense and admitted to lying to banks about his status as a government official, as well as failing to report the payments on his IRS tax return.

    The conviction also follows other notable enforcement actions involving the mining industry in the Republic of Guinea. Earlier this year, the SEC charged former Och-Ziff executives with bribing government officials across Africa to secure mining deals, including in Guinea.

    SEC Guinea Africa China Och-Ziff Bribery Anti-Money Laundering

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