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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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  • Additional Charges for Retired U.S. Army Colonel

    On October 4, the Department of Justice expanded the scope of its indictment against retired U.S. Army colonel Joseph Baptiste.  On August 29, Baptiste was charged with conspiracy to violate the Foreign Corrupt Practices Act after he allegedly solicited bribes from undercover agents who posed as potential investors for infrastructure projects in Haiti. The expanded charges include conspiracy to launder money and violate the Federal Travel Act. Prior FCPA Scorecard coverage of the initial indictment and the related FCPA sting operation can be found here.

    DOJ FCPA Score Card

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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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  • SFO Director Urges Department to Compete With DOJ on Home Turf

    In a September 4 speech, Serious Fraud Office (SFO) Director David Green urged the SFO to lead anti-corruption enforcement efforts against UK-connected companies, warning that “if we take our foot off the pedal . . . , others will fill the void.” Green noted that the DOJ “is not shy about enforcing the [FCPA] against foreign companies,” and emphasized that seven of the top ten highest-dollar FCPA cases since 2008 were brought against non-American companies. Green said that “it is surely right that the UK should lead enforcement in relation to UK companies or companies with strong connections here,” because it not only “demonstrates our commitment to the level playing field,” but it also “ensures that hefty financial penalties go to UK public coffers rather than elsewhere.”

    UK Serious Fraud Office DOJ FCPA

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  • Two Telecom Executives Pay FCPA Penalties

    Two former executives of a Hungarian telecommunications company, Magyar Telekom, recently agreed to settle their FCPA claims with the SEC and pay related penalties, along with five-year bars against serving as an officer or director of any SEC-registered public company. The company’s former CEO agreed to pay a $250,000 penalty, while its former Chief Strategy Officer agreed to pay a $150,000 penalty. The settlements are still subject to court approval.

    The SEC’s case against these individuals was heading to trial this month prior to this week’s settlement. The SEC’s complaint alleged that these individuals used sham contracts to funnel millions of dollars in bribes to foreign officials in Macedonia and Montenegro to win contracts and, importantly, block out competitors including U.S.-traded telecoms. This action was related to similar claims previously brought against Magyar Telekom and its majority owner Deutsche Telekom AG, who settled civil and criminal FCPA charges in December 2011 for $95 million. In February 2017, another former Magyar Telekom executive settled FCPA charges, agreeing to pay a $60,000 penalty without admitting or denying the charges.

    These settlements underscore the FCPA’s broad territorial and jurisdictional reach, which can encompass transactions that facially do not even involve U.S. companies. As the SEC’s Stephanie Avakian noted, these individuals were ultimately charged because they “spearhead[ed] secret agreements with a prime minister and others to block out telecom competitors,” and “[the SEC] persevered in order to hold these overseas executives culpable for corrupting a company that traded in the U.S. market”.

    SEC FCPA Magyar Telekom

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  • Senators Introduce Combating Global Corruption Act of 2017

    Senator Ben Cardin and Republican co-sponsors recently introduced a bill titled the “Combating Global Corruption Act of 2017,” which seeks “to identify and combat corruption in countries, to establish a tiered system of countries with respect to levels of corruption by their governments and their efforts to combat such corruption, and to assess United States assistance to designated countries in order to advance anti-corruption efforts in those countries and better serve United States taxpayers.”

    This bill, if enacted, would require the Secretary of State to publish annual rankings of foreign countries split up into three tiers that depend on whether those countries’ governments comply with “minimum standards for the elimination of corruption.” The introduced bill defines corruption as “the exercise of public power for private gain, including by bribery, nepotism, fraud, or embezzlement.”

    Once a country’s tier-rank is established, the bill would then require the Secretary of State, Administrator of USAID, and the Secretary of Defense to take various steps, including the creation of a “corruption risk assessment” and “corruption mitigation strategy” for U.S. foreign assistance programs; fortified anti-corruption and clawback provisions in contracts, grants and other agreements; disclosure of beneficial ownership for contractors and other participants; and mechanisms to investigate misappropriated funds.

    If passed into law, this bill would create substantial new enforcement powers to combat international corruption activities. And, unlike the current ambiguity under the FCPA regarding its applicability to state-owned or state-controlled enterprises (“SOEs”), as drafted, this bill expressly would cover SOEs. Like the FCPA, however, this bill also contains a broad national security waiver component, if the Secretary of State “certifies to the appropriate congressional committees that such waiver is important to the national security interest of the United States.”

    FCPA Update Anti-Corruption FCPA Bribery Fraud

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  • SEC’S FCPA Chief to Leave Agency Later in April

    On April 4, the SEC announced that FCPA Unit Chief Kara Brockmeyer will leave the agency later this month. Ms. Brockmeyer joined the SEC in 2000 and has led the FCPA Unit since September 2011. Under her supervision of the unit, the SEC brought 72 FCPA enforcement actions resulting in judgments and orders totaling more than $2 billion in disgorgement, prejudgment interest, and penalties.

    SEC FCPA

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  • Second Circuit Hears Oral Arguments on Accomplice Theory of Liability Under FCPA

    On March 2, 2017, a three judge panel for the United States Court of Appeals for the Second Circuit heard oral arguments in U.S. v. Hoskins.  The government charged U.K. citizen Lawrence Hoskins with FCPA violations as part of a larger scheme involving a U.S. subsidiary of French company Alstom S.A.  Hoskins, a non-resident foreign national who did not act on U.S. soil and who was an executive of a non-U.S. company (Alstom UK), argued in federal district court that Congress did not intend for people like him to be subject to direct FCPA liability, and that the government cannot circumvent Congressional intent by charging him with accomplice liability.  In August of 2015, the federal district court in Connecticut ruled in Hoskins’ favor, holding that the government would first have to show that Hoskins was subject to direct liability as an agent of a U.S. concern in order to reach accomplice liability.  The legal issues at hand are detailed in previous FCPA Scorecard posts here and here

    In addition to the important question of the scope of liability of foreign nationals under the FCPA, this argument has a secondary importance related to the right of the government to appeal criminal matters under Title 18 U.S.C. § 3731.  Section 3731 allows the government to appeal “from a decision, judgment, or order of a district court dismissing an indictment or information or granting a new trial after verdict or judgment, as to any one or more counts, or any part thereof….”  Here, Hoskins argues that the court did not dismiss any counts, so the government had no right to make the interlocutory appeal.  For its part, the government argues that the court’s ruling was effectively a dismissal of a portion of a count, making the matter appealable. 

    In ruling on the Hoskins case, the Second Circuit will have the potential to expand or limit both the reach of the FCPA, and the power of the federal government to bring interlocutory appeals when a trial court rules against it in a criminal matter. 

     

    FCPA Update FCPA Alstom SA

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