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  • Global bank settles FCPA allegations concerning “sons and daughters” investigation into hiring practices

    On June 6, a global bank announced it had entered into a non-prosecution agreement with the DOJ to resolve an FCPA investigation into hiring practices in the Asia Pacific region between 2007 and 2013. As part of the agreement, the bank agreed to pay a $46 million penalty to the DOJ. According to the bank, it has already provisioned for the penalty and expects the payment to have “no material impact” on its second quarter financial results. The bank further stated that it has implemented multiple enhancements to its compliance and control functions since 2013. 

    U.S. authorities have investigated several other financial services institutions over their hiring practices in Asia, which have become known as the “sons and daughters” investigations because of the allegations that banks widely hired the children of elite Chinese political families to secure an advantage in obtaining business. Prior Scorecard coverage of those investigations can be found here.

    DOJ FCPA Sons and Daughters

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  • Legg Mason settles FCPA allegations with DOJ

    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.

    DOJ FCPA Legg Mason Société Générale S.A.

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  • Legg Mason preparing for FCPA settlement

    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.

    DOJ SEC FCPA Legg Mason

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  • Macau real estate developer sentenced for bribing UN officials

    On May 11, Judge Vernon S. Broderick of the SDNY sentenced Macau real estate developer Ng Lap Seng to 48 months in prison and ordered him to pay a $1 million fine, $302,977 in restitution, and forfeiture of $1.5 million.  In July 2017, a jury convicted Ng of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering, and two counts of conspiracy.  The conduct centered on Ng’s role in bribing UN officials in order to build a new multi-billion dollar conference center in Macau.   

    Five other defendants have been charged; four have pleaded guilty to various charges, and one passed away and the charges against him were dismissed.  Of the guilty pleas, two are awaiting sentencing.  The other two received sentences of seven months (conspiracy to defraud the United States) and 20 months (bribery).

    Prior Scorecard coverage of this matter can be viewed here.

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  • DOJ issues new policy against “piling on” in corporate enforcement, FCPA cases

    On May 9, the DOJ issued a new policy to discourage “piling on” in corporate enforcement cases, including those involving the FCPA.  The new policy directs the DOJ to “consider the totality of fines and penalties” being imposed by the DOJ and other law enforcement agencies on a company for the same misconduct.  In a speech delivered to a New York City bar organization, Deputy Attorney General Rod Rosenstein described the new policy as encouraging “coordination among Department components and other enforcement agencies” with the aim of “avoiding unfair duplicative penalties.”

    The new policy contains four main elements.  First, the DOJ should not threaten criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.  Second, DOJ components must coordinate with one another to achieve an overall equitable result.  Third, the DOJ should coordinate with other federal, state, local, and foreign enforcement authorities.  Finally, the DOJ should consider several factors, including the egregiousness of the wrongdoing and the adequacy of the company’s cooperation with the DOJ, in determining whether multiple penalties serve the interests of justice in a particular case.

    Rosenstein specifically noted in his address that the DOJ’s “FCPA Unit [had recently] announced its first coordinated resolution with . . . Singapore.” See FCPA Scorecard postThe new policy does not prohibit the DOJ from considering additional remedies in “appropriate circumstances.” 

    DOJ FCPA

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  • Clear Channel Outdoor discloses potential FCPA violations

    On April 30, Clear Channel Outdoor, one of the world’s largest outdoor advertising companies, disclosed that it had self-reported potential FCPA violations to the SEC and DOJ. The San Antonio-based company had previously disclosed that Chinese police were investigating “several employees” of its subsidiary, Clear Media Limited, for the misappropriation of funds in China. A related internal investigation purportedly found that three unauthorized bank accounts were opened in the name of the subsidiary and “certain transactions were recorded therein.” In the most recent disclosure, the company newly reported that: (i) “discrepancies” related to the misappropriation resulted in more than $10 million in “accounting errors”; (ii) it determined that there was a “material weakness” in the subsidiary’s internal controls over financial reporting, namely “falsification of bank statements and other supporting documentation used to complete bank reconciliations,” “collusion,” and “circumvention of controls”; and (iii) these issues “could implicate the books and records, internal controls and anti-bribery provisions” of the FCPA, making “possible . . . monetary penalties and other sanctions.” The company said it would cooperate with any investigation by the SEC or DOJ.

    DOJ SEC FCPA Clear Channel Outdoor

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  • Panasonic settles parallel FCPA actions for $280 million

    On April 30, a DOJ deferred prosecution agreement and SEC settlement with Japan-based Panasonic Corporation and a subsidiary were announced, with Panasonic agreeing to pay $280 million in total. The resolutions related to Panasonic’s U.S.-based subsidiary, Panasonic Avionics Corporation (PAC), and allegations that senior management of PAC orchestrated a bribery scheme to help secure over $700 million in business from a state-owned airline, in which PAC paid a Middle East government official nearly $900,000 for a “purported consulting position, which required little to no work,” and concealed the payment “through a third-party vendor that provided unrelated services to PAC.” PAC is then alleged to have falsely recorded the payments in its books and records, as well as similar payments made to other purported consultants and sales agents in Asia.

    Under the DPA with PAC, PAC agreed to pay the DOJ a $137.4 million criminal penalty for knowing and willful violations of the FCPA’s accounting provisions. The DOJ gave PAC a 20 percent discount off the low end of the U.S. Sentencing Guidelines fine range because of its cooperation and remediation, which, although untimely in certain respects, did include causing several senior executives who were either involved in or aware of the misconduct to be separated from PAC or Panasonic.” However, because many of PAC’s remediation efforts were “more recent, and therefore have not been tested,” the deferred prosecution agreement subjects the company to two years of scrutiny by an independent compliance monitor, followed by a year of self-reporting. The SEC‘s simultaneous settlement included violations of the anti-bribery as well as accounting provisions, and the payment of $143 million to the SEC.

    As FCPA Scorecard previously reported, Panasonic disclosed the investigations in February 2017, though they were first reported as early as 2013.

    DOJ SEC Panasonic DPA FCPA

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  • DOJ declines to prosecute Dun & Bradstreet, SEC issues $9 million fine for FCPA violations in China

    On April 23, Dun & Bradstreet, a commercial data and analytics firm, secured a declination letter from the DOJ regarding FCPA violations stating that, “consistent with the FCPA Corporate Enforcement Policy,” the DOJ would be declining to bring criminal charges against the company. Dun & Bradstreet simultaneously agreed to settle with the SEC regarding books and records and internal controls violations regarding the same conduct, and pay a total of $9 million, including a $2 million civil penalty and $6 million of disgorgement. Dun & Bradstreet had self-disclosed payments made by two Chinese subsidiaries through third party agents. One of the subsidiaries, part of a joint venture with a Chinese company, made payments to Chinese government officials to acquire non-public financial statement information on Chinese entities. The other subsidiary made improper payments both to obtain specific business and to acquire non-public personal data. The SEC noted that there were pre-acquisition concerns regarding the subsidiaries, but Dun & Bradstreet failed to take appropriate action to stop the payments or the false entries, which continued for several years after the acquisition.

    This is the first instance we are aware of a company receiving a full declination from the DOJ under the new policy. The policy, which grew out of the FCPA Pilot Program, states that when a company voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, there will be a presumption that the DOJ will issue a declination. The Dun & Bradstreet declination letter notes the company’s self-identification and disclosure, thorough investigation, and full cooperation, including identifying all individuals involved in the misconduct. The DOJ also cited the company’s “full remediation,” in part by terminating 11 employees, including senior employees, and reducing compensation and other forms of discipline.

    DOJ FCPA FCPA Pilot Program SEC Dun & Bradstreet

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  • Guilty plea from former Venezuelan official in bribery scheme

    The DOJ announced on Thursday, April 19, that a former Venezuelan official had pleaded guilty to one count of conspiracy to commit money laundering. The charge arose from Cesar David Rincon Godoy’s role in a bribery scheme involving bribes paid by the owners of U.S. companies to Venezuelan government officials to secure energy contracts and payments on outstanding invoices. As the former general manager of the procurement subsidiary of the Venezuelan state-owned energy company, Petroleos de Venezuela S.A. (PDVSA), Rincon had solicited and accepted bribes. The judge entered a personal money judgment of $7,033,504.71. As a government official receiving the bribes, Rincon could not be charged himself with FCPA offenses (which are targeted at those paying the bribes). Related charges against four other individuals remain pending, including charges of conspiracy to violate the FCPA; 11 individuals have already pleaded guilty in the PDVSA cases.  

    For prior coverage of the PDVSA enforcement actions, please see here.

    DOJ Petroleos de Venezuela Venezuela Bribery FCPA Anti-Money Laundering

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  • Aruban telecom official pleads guilty to money laundering conspiracy involving FCPA violations

    Egbert Yvan Ferdinand Koolman, an official of Servicio di Telecommunicacion di Aruba N.V. (Setar), pleaded guilty to money laundering charges in connection with a scheme to arrange and receive corrupt payments to influence the awarding of contracts in Aruba.  The DOJ’s press release describes Setar as an Aruban state-owned company.  According to his plea agreement, Koolman, a Dutch citizen living in Florida, operated a money laundering conspiracy between 2005 and 2016 in his position as Setar’s product manager.   Lawrence W. Parker, Jr., who owned several Florida-based telecommunications companies, previously pleaded guilty to paying bribes to Koolman and Koolman’s wife.

    Koolman admitted that he conspired with Parker and others to transmit funds from Florida and elsewhere in the United States to Aruba and Panama with the intent to promote a wire fraud scheme and a corrupt scheme that violated the FCPA.  Koolman was promised and received bribes from individuals and companies located in the United States and abroad in exchange for using his position at Setar to award lucrative mobile phone and accessory contracts.  Koolman also admitted to providing favored vendors with confidential Setar information in exchange for the more than $1.3 million in corrupt payments.

    Setar filed a civil complaint against Koolman and other parties on March 3 in U.S. District Court for the Southern District of Florida, which contains a few points of note.  First, Setar describes itself in the complaint as a privatized company, whereas the DOJ’s press release called it an instrumentality of the Aruban government.  Second, the complaint states that Setar became aware of some of Koolman’s alleged activities via the Panama Papers, the 2016 leak of over 11 million documents from Panamanian law firm and financial services provider Mossack Fonseca.

    DOJ FCPA Anti-Money Laundering

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