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On June 4, the DOJ announced that Legg Mason, a Baltimore-based investment management firm, had entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve FCPA allegations in connection with the firm’s involvement in Libya through Permal, a London-based fund purchased by the firm. Between 2004 and 2010, Permal, a Legg Mason subsidiary, partnered with Société Générale S.A., a Paris-based multinational bank, “to solicit business from state-owned financial institutions in Libya.” As admitted by Société Générale in its own resolution with the DOJ, Société Générale paid bribes of over $90 million through the use of a Libyan broker with respect to 14 investments made by Libyan state-owned financial institutions. For seven of the transactions, Société Générale made payments to the Libyan broker to benefit Legg Mason, through Permal. Permal managed the investments and earned profits of approximately $31 million.
Legg Mason’s resolution includes a penalty of $32.625 million and disgorgement of $31.617 million. As part of the agreement, Legg Mason agreed to continue to cooperate with the DOJ in related investigations and prosecutions, as well as to enhance its compliance program. According to the DOJ, the resolution is based on factors including Legg Mason’s cooperation in the investigation, as well as the fact that the company “did not voluntarily and timely disclose the conduct at issue.” The DOJ also found that the misconduct was “not pervasive throughout Legg Mason or Permal,” but rather that Société Générale was responsible for running the scheme, noting that Legg Mason and Permal earned less than one-tenth of the profits earned by Société Générale.
As FCPA Scorecard previously reported, Legg Mason had announced the near completion of the agreement in a recent SEC filing.
On June 4, the DOJ announced that Société Générale S.A., a Paris-based multinational bank, and its wholly owned subsidiary SGA Société Générale Acceptance N.V., agreed to pay $585 million to resolve charges in the United States and France involving bribes to Libyan officials. According to the DOJ, Société Générale will enter into a deferred prosecution agreement related to charges of conspiracy to violate the FCPA’s anti-bribery provisions. Société Générale’s subsidiary will also plead guilty in the Eastern District of New York to similar charges. Almost $293 million of the resolution will be paid to France and credited by the U.S. This is the first coordinated anti-bribery enforcement action by the DOJ and French authorities.
Société Générale admitted that it had paid over $90 million in bribes through a Libyan broker in connection with 14 investments made by state-owned financial institutions in Libya. For each transaction, Société Générale paid the Libyan broker a commission, some of which the Libyan broker then paid to high ranking Libyan officials to secure the investments for Société Générale from the state institutions. This scheme resulted in Société Générale obtaining 13 investments and one restructuring from the Libyan state institutions, and earning approximately $523 million in profits. The scheme also involved payments for the benefit of a Legg Mason subsidiary; Legg Mason resolved its FCPA issues with the DOJ on the same day.
As part of the same deferred prosecution agreement, Société Générale also agreed to pay $275 million to resolve charges arising from manipulation of U.S.-dollar and Japanese yen LIBOR.
On May 30, Legg Mason, a Baltimore-based investment management firm, announced in a 10-K SEC filing that it will soon complete negotiations with the DOJ and SEC to resolve FCPA allegations stemming from how Permal, a London-based fund purchased by Legg Mason in 2005, managed assets of Libyan governmental entities in 2005-2007. Legg Mason reserved $67 million for the settlement, which reflects, in part, the net revenues of approximately $31 million earned by Permal for managing the assets.