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Claims Management Company Discloses Possible FCPA Violations
On November 9, an Atlanta-based claims management firm disclosed that it reported possible FCPA violations to DOJ and SEC. The company discovered the possible violations during an internal audit and has since launched an investigation, using outside counsel and external forensic accountants. The company stated that it intends to cooperate with the SEC and the DOJ in this matter, but the filing did not elaborate on the nature or location of the potential violations.
Developments in Uzbekistan Telecommunications FCPA Investigations: Dutch Telecommunications Company Makes Provision in Connection with Investigation; DOJ Names Russian Telecommunications Company in Civil Forfeiture Action
On November 3, a Dutch telecommunications company announced that, based on its assessment of ongoing FCPA investigations, it would make a provision in the amount of $900 million in its third quarter financial statements. The company previously disclosed that the SEC, the DOJ, and the Dutch Public Prosecution Service were conducting investigations related to its business in Uzbekistan and prior dealings with a Gibralter-registered company that negotiates mobile phone licenses on behalf of the Uzbek government.
On November 5, another company under investigation for its conduct in Uzbekistan disclosed that the DOJ referenced it in a civil forfeiture complaint. The DOJ’s complaint was directed at an unnamed Uzbek government official, but the complaint alleged that the company and certain other parties made corrupt payments to the unnamed official to gain access to the Uzbek telecommunications market.
DOJ Joins SEC's Investigation of Pharmaceutical Company
On November 2, a pharmaceutical company disclosed that the DOJ requested documents and other information related to the company’s compliance with the FCPA. The SEC is also investigating the company’s compliance with the FCPA, a fact the company disclosed in May. The SEC’s subpoena sought information about the company’s grant-making activities worldwide, specifically naming Japan, Brazil, Turkey and Russia in its request, and also addressed non-FCPA items. The company said that it plans to cooperate with DOJ’s investigation.
Former Vice President of Defense Contractor Jailed for Bribing Kuwaiti Officials
On October 9, James Rama, a former Vice President of Florida-based defense contractor IAP Worldwide Services, Inc., was sentenced in the U.S. District Court for the Eastern District of Virginia to 120 days in prison for conspiracy to violate the anti-bribery provisions of the FCPA. Rama pleaded guilty to the conspiracy charge on June 16 for his role in a scheme by IAP to pay more than $1.7 million in bribes to Kuwaiti officials to win a government contract intended to provide nationwide surveillance capabilities for several Kuwaiti government agencies. Rama had faced a recommended sentence under the Sentencing Guidelines of between 57 and 60 months, but received a substantially shorter sentence in part due to his cooperation with authorities during their investigation. Prosecutors had recommended that Rama receive a one year sentence, while the defense had requested just supervised release. IAP previously entered into a non-prosecution agreement with the DOJ and agreed to pay $7.1 million to resolve the allegations against the company.
Bristol-Myers Squibb Pays $14 Million to SEC to Resolve China FCPA Offenses
On October 5, the SEC announced a settlement with Bristol-Myers Squibb to resolve allegations that the pharmaceutical company’s Chinese joint venture, BMS China, gave cash, jewelry, and other benefits to health care providers in order to boost prescription sales at state-owned or controlled hospitals. The SEC proceeded via an administrative cease and desist order. The SEC’s order found that the company violated the internal controls and books and records provisions of the FCPA. Bristol-Myers consented to the SEC’s order without admitting or denying the findings, and agreed to disgorge profits of $11.4 million plus $500,000 in pre-judgment interest and pay a civil penalty of $2.75 million. Bristol-Myers also agreed to report to the SEC for two years regarding the status of its efforts to implement anti-corruption compliance controls.
The SEC’s order states that Bristol-Myers failed to investigate red flags and claims by terminated BMS China employees that raised the possibility that sales personnel were making improper payments. The order also states that Bristol-Myers was too slow to fill gaps in its internal controls regarding interactions with health care providers.
Kinross Gold Discloses FCPA Investigation by SEC and DOJ
On October 2, Canadian mining company Kinross Gold Corp. announced that the SEC and DOJ are investigating potentially improper payments to government officials in West Africa. The company’s announcement states that it received subpoenas from the SEC in 2014 and 2015, and a request for information from the DOJ in December 2014. The subpoenas came after the company launched an internal investigation in August 2013 to investigate a whistleblower complaint alleging improper payments to government officials and internal control deficiencies in the company’s West African mining operations.
Former CEO of Siemens-Argentina Pleads Guilty to FCPA Offenses
On September 30, the former CFO of Siemens S.A.-Argentina pleaded guilty in a federal court in New York to conspiring to pay nearly $100 million dollars in bribes to Argentinian officials. The former executive, Andres Truppel, who is a German and Argentinian citizen, pleaded guilty to conspiracy to violate the antibribery, internal controls, and books and records provisions of the FCPA, and conspiracy to commit wire fraud. As described in the U.S. Attorney’s Office for the Southern District of New York’s press release, the violations stemmed from Siemens’ bid to win an Argentine government contract worth $1 billion to create a national identity card system. Mr. Truppel faces up to five years in prison and three years of supervised release when he is sentenced; there is no information on when sentencing will occur.
Truppel was one of eight former Siemens executives indicted in 2011 on charges of conspiring to violate the FCPA and other statutes (see previous BuckleySandler coverage here and here). Siemens itself reached a record $800 million resolution in 2008 with the DOJ and SEC related to FCPA violations in numerous countries, including Argentina. Siemens S.A.-Argentina pleaded guilty to conspiracy to violate the FCPA’s books and records provisions as part of that resolution.
Hyperdynamics Resolves FCPA Investigation with SEC Settlement
On September 29, Hyperdynamics Corp. announced a settlement with the SEC, fully resolving the SEC’s FCPA investigation into the Houston-based oil and gas company’s operations in the Republic of Guinea. The SEC proceeded via an administrative cease and desist order. Hyperdynamics consented to the SEC’s order without admitting or denying the findings, and agreed to pay a $75,000 penalty. The SEC’s order describes books and records and internal control offenses based on the lack of supporting documentation related to $130,000 the company paid for public relations and lobbying services in the Republic of Guinea during 2007 and 2008.
Hyperdynamics first disclosed that the DOJ was investigating alleged FCPA violations by the company in the Republic of Guinea in 2013. In May of this year, the company announced that the DOJ’s investigation had concluded without enforcement action, and released the DOJ’s declination letter, which noted Hyperdynamics’s cooperation with the investigation. At that time, the company acknowledged that a parallel SEC investigation was ongoing. Previous BuckleySandler coverage of this investigation can be found here.
Hitachi Settles SEC FCPA Case for $19M
On September 28, the SEC filed a settled complaint in Washington, D.C. federal court against Tokyo-based Hitachi, Ltd. for alleged FCPA books and records and internal controls offenses. According to the SEC’s Complaint, the company failed to accurately report payments made to the African National Congress (ANC), South Africa’s ruling political party, in connection with a multi-billion dollar plan to build new power stations in the country. Hitachi purportedly sold a 25-percent stake in a South African subsidiary to a company that was a front to funnel funds to the ANC. The SEC alleges that Hitachi was (i) aware that it had partnered with a “funding vehicle” for the ANC; (ii) encouraged the front company to continue using its political influence to obtain additional government contracts; and (iii) agreed to pay “success fees” to the front company. Hitachi did not admit wrongdoing in the settlement and agreed to pay a $19 million penalty.
In its announcement, the SEC’s Director of Enforcement, Andrew Ceresney, cited Hitachi’s “lax internal control environment” as the factor that led to the conduct described in the complaint. Continuing the trend of international cooperation in FCPA investigations, the SEC also thanked the African Development Bank and the South African Financial Services Board for their assistance with the investigation.
FIFA Investigation Ensnares President Blatter
After months of speculation about potential legal ramifications for FIFA President Joseph (“Sepp”) Blatter, the Office of the Attorney General of Switzerland announced that Mr. Blatter is the subject of criminal proceedings in that country. The allegations include criminal mismanagement related to a contract with the Caribbean Football Union that was purportedly against the interests of FIFA, as well as misappropriation related to a payment to the President of the Union of European Football Associations (UEFA). The Office of the Attorney General also reported that Mr. Blatter was interrogated and his offices were searched.
Previous FCPA Scorecard coverage of this investigation can be found here.