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  • Deputy AG Rosenstein Underscores Importance of Consistency in FCPA Enforcement

    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 brining criminal proceedings against company employees—noting that the last 20 DOJ corporate FCPA enforcement actions have lacked related criminal charges against company employees—and that, going back to 2008, approximately 80% of DOJ corporate FCPA enforcement actions have lacked related criminal charges against company employees. He noted that various DOJ policies, including the Yates Memo and the FCPA Pilot Program, have shifted the focus away from entity liability, and toward issues surrounding 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. 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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  • Brazilian Petrochemical Company Reaches $10 Million Settlement With Investors

    On September 14, Braskem SA, a Brazilian petrochemical company, agreed to pay its U.S. investors $10 million for concealing its role in a corruption scandal involving Petrobras. The settlement resolves a 2015 lawsuit brought by U.S. investors against Braskem, which alleged the company had misled investors into believing its operations were legitimate. The settlement follows the December 2016 guilty plea by the company and its affiliated construction firm Odebrecht SA to violating the Foreign Corrupt Practices Act. Together, the companies agreed to pay $3.5 billion in a combined global settlement with U.S., Brazilian, and Swiss authorities.

    FCPA Enforcement Action Anti-Corruption Braskem SA Petrobras

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  • Report: California-Based Ride Sharing Company Facing DOJ Scrutiny

    On August 29, the Wall Street Journal reported that a California-based ride sharing company is facing scrutiny from the DOJ, which has taken preliminary steps to investigate potential FCPA violations at the company. The company has expanded into more than 70 countries. A company spokesman confirmed the DOJ’s inquiry. The Wall Street Journal report stated that it was unclear whether DOJ would open a formal investigation.

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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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  • 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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  • 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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