Subscribe to our FinCrimes Update for news about the Foreign Corrupt Practices Act and related prosecutions and enforcement actions.
On April 5, 2013, Koninklijke Philips Electronics, N.V., the Dutch parent of the Philips group of companies, settled an SEC administrative proceeding for more than $4.5 million. The SEC alleged that Philips violated the internal controls and books and records provisions of the FCPA based on improper payments by employees of its Polish subsidiary to Polish government officials from 1999-2007 in connection with contracts for medical equipment. The SEC cited Philipss voluntary disclosure of the improprieties and subsequent remedial measures in deciding to accept the settlement.
Keyuan Petrochemicals Inc. and Former CFO Settle FCPA Books and Records Action with SEC for $1.025 million
On February 28, 2013, Keyuan Petrochemicals Inc., a China-based issuer with US-trading stock, and its former CFO, settled an enforcement action with the SEC for a total of $1.025 million. The SEC alleged numerous violations primarily related to a failure to disclose related party transactions, but also alleged the use of an off-balance sheet cash account to pay various expense including gifts to Chinese government officials, and a failure to properly record such transactions.
Judge Refuses to Find Personal Jurisdiction over Siemens Executive, in Conflict with SDNY Colleagues Ruling in Prior Week
On February 19, 2013, a federal judge granted the motion to dismiss filed by a Siemens executive, Herbert Steffen, on the grounds that the SEC's civil FCPA complaint had failed to adequately allege personal jurisdiction over him, because the allegations were "far too attenuated from the resulting harm to establish minimum contacts." A week earlier, a different judge on the same court had refused to dismiss charges against executives of Magyar Telekom on similar personal jurisdiction grounds.
On February 8, 2013, a federal judge denied the motion to dismiss of several Magyar Telekom executives facing civil FCPA allegations, holding that the SEC had adequately alleged personal jurisdiction because the defendants' alleged conduct was “designed to violate” U.S. securities laws and thus was “directed toward the United States.” On February 22, the Defendants filed a motion to certify the order for interlocutory appeal to the Second Circuit, which was denied on procedural grounds without prejudice to re-file.
On December 20, 2012, Eli Lilly & Co. settled an enforcement action filed the same day by the SEC for nearly $29.4 million. The SEC alleged that Lilly subsidiaries in Russia, Brazil, China and Poland made improper payments to government officials to obtain or retain business and that Lilly itself knew of the payments by the Russian subsidiary but did not act to stop the conduct for more than five years.
On December 17, 2012, German insurance and asset management company Allianz SE settled an administrative proceeding brought by the SEC for more than $12.3 million. The SEC alleged that Allianz violated the internal controls and books and records provisions of the FCPA in connection with improper payments to government officials by its Indonesian subsidiary over a seven-year period.
On November 14, 2012, the US DOJ and SEC released A Resource Guide to the Foreign Corrupt Practices Act, almost a year to the day that Assistant Attorney General Lanny Breuer announced that the SEC and DOJ would prepare an FCPA Guidance document (click here and here for previous Buckley Sandler posts on this issue). Overall, the FCPA Guide is a helpful compilation of previously-issued guidance and litigation positions set forth by the DOJ and SEC, and a useful starting point for constructing, testing or revising an FCPA compliance program.
On November 14, 2012, the US DOJ and SEC released A Resource Guide to the Foreign Corrupt Practices Act, almost a year to the day that Assistant Attorney General Lanny Breuer announced that the SEC and DOJ would prepare an FCPA Guidance document (click here and here for previous BuckleySandler posts on this issue). Overall, the FCPA Guide is a helpful compilation of previously-issued guidance and litigation positions set forth by the DOJ and SEC, and a useful starting point for constructing, testing or revising an FCPA compliance program.
In Fall 2012 the US DOJ issued FCPA Opinion Release 12-02, regarding whether US adoption agencies could pay for and host foreign government officials visiting the US. The trip would involve the officials interviewing the adoption agencies staff and meeting with US families who had previously adopted children from the foreign country. Payment would be made directly to service providers, with no money, including per diems, given to the officials. The DOJ opined that under the circumstances, the trips were reasonable and bona fide expenditures directly related to the promotion, demonstration, or explanation of the adoption agencies products or services, and therefore permissible under the FCPA.
In Fall 2012, the former CFO of Digi International, Inc., Subramanian Krishnan, partially settled an SEC enforcement action stemming from the use of Divi funds to pay for unauthorized travel and entertainment expenses. The amount of any disgorgement, interest, and civil penalty is still to be determined.
- Warren W. Traiger to discuss "Community Reinvestment Act reform" at the New York State Bar Association Annual Meeting
- APPROVED Webcast: Periodic reporting: More than just clicking “submit”
- Buckley Sandler Webcast: Tips for this year’s FHA annual recertification and what the shutdown means
- Jessica L. Pollet to discuss "Your career is impacting your life..." at the Ark Group Women Legal Conference
- Melissa Klimkiewicz to discuss "RESPA-compliant marketing" at NEXT
- Daniel P. Stipano to provide "Update on AML/SAR reporting and enforcement" at an Mortgage Bankers Association webinar
- Daniel P. Stipano to discuss "Dynamic customer due diligence and beneficial ownership from KYC to ongoing CDD and the new rule implementation" at the Puerto Rican Symposium of Anti-Money Laundering
- Jon David D. Langlois to discuss "Successors in interest updates" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Brandy A. Hood to discuss "Keeping your head above water in flood insurance compliance" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Melissa Klimkiewicz to discuss "Servicing super session" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Moorari K. Shah to provide "Regulatory update – California and beyond" at the National Equipment Finance Association Summit
- Daniel P. Stipano to discuss "Lessons learned from ABLV and other major cases involving inadequate compliance oversight" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "A year in the life of the CDD final rule: A first anniversary assessment" at the ACAMS International AML & Financial Crime Conference