Thursday, March 18, 2010

Innospec - FCPA Plea - But Hats Off to Hon. Ellen Segal Huvelle

The DOJ reports that "Innospec Inc., a Delaware corporation, pleaded guilty today to defrauding the United Nations (UN), to violating the Foreign Corrupt Practices Act (FCPA) and to violating the U.S. embargo against Cuba."  The plea was to a "12-count information charging wire fraud in connection with Innospec’s payment of kickbacks to the former Iraqi government under the UN Oil for Food Program (OFFP), as well as FCPA violations in connection with bribe payments it made to officials in the Iraqi Ministry of Oil. Innospec also admitted to selling chemicals to Cuban power plants, in violation of the U.S. embargo against Cuba." The company agreed to pay $14.1 million and to retain an independent compliance monitor. It is interesting to see that the British subsidiary also plead guilty today in London and Innopec Ltd "will pay a criminal penalty of $12.7 million."  It is also interesting to see the international cooperation in securing this result.

Innospec has a "Foreign Corrupt Practices Act Policy" online that is dated February 2010.  

But Christopher Matthews. Main Justice, has an interesting story titled, Judge Blasts Compliance Monitors at Innospec Plea Hearing.

Many cases have deferred prosecution or non-prosecution agreements that allow the DOJ to oversee much of what happens, putting the companies at a disadvantage (see here).  But it is nice to see, here, in this plea agreement that the judiciary is questioning the costs of compliance monitors.

See also The FCPA Blog here

(esp)

March 18, 2010 in FCPA | Permalink | Comments (0) | TrackBack (0)

Sunday, February 14, 2010

Former Wilbros Execs

Two former executives of Wilbros were sentenced with one receiving 15 months and the other 12 months. The case arose under the FCPA (see DOJ Press Release here) and involved alleged bribes in Nigeria.  These two individuals plead to one conspiracy count but had guidelines exposure higher than the amount given to them. Most likely substantial assistance proved important to these former executives. Mark Weinhardt represented one of the individuals in this case.

See also Jesse Sunenblick, Main Justice, Former Willbros Executives Sentenced for Nigeria Bribery Scheme; Mary Flood, Houston Chronicle, Former Willbros executives get prison in bribery case; FCPA Blog,  Prison for Ex-Willbros Execs

(esp)

February 14, 2010 in FCPA, Sentencing | Permalink | Comments (0) | TrackBack (0)

Sunday, January 3, 2010

End of Year Deal - UTStarcom on FCPA

DOJ Press Release, UTstarcom Inc. Agrees to Pay $1.5 Million Penalty for Acts of Foreign Bribery in China states:

"UTStarcom Inc. (UTSI) has entered into an agreement with the Department of Justice, agreeing to pay a $1.5 million fine for violations of the Foreign Corrupt Practices Act (FCPA) by providing travel and other things of value to foreign officials, specifically employees at state-owned telecommunications firms in the People’s Republic of China."

...

"In a related matter, UTSI reached a settlement today with the U.S. Securities and Exchange Commission under which it agreed to pay an additional $1.5 million penalty and satisfy additional obligations for a period of four years."

See also David Barboza, NYTimes, Telecom Company to Pay $3 Million in China Bribe Case

(esp)

January 3, 2010 in Deferred Prosecution Agreements, FCPA | Permalink | Comments (0) | TrackBack (0)

Thursday, December 3, 2009

Site for Anti-Bribery Information

Interesting site - TRACE Compendium that catalogs Anti-Bribery Compliance Worldwide.  See here

(esp)

December 3, 2009 in FCPA | Permalink | Comments (0) | TrackBack (0)

Friday, November 13, 2009

Breaking News: William Jefferson Sentenced to 13 Years

Guest Blogger:  Tiffany M. Joslyn, National Association of Criminal Defense Lawyers (NACDL)

U.S. District Judge T.S. Ellis III has sentenced ex-congressman William Jefferson to 13 years in prison for his conviction on 11 counts of public corruption. See breaking news coverage below:

Bruce Alpert, Times-Picayune, William Jefferson sentenced to 13 years in prison

Matthew Barakat, The Washington Post (AP), Ex-congressman gets 13 years in freezer cash case

John Bresnahan, Politico, William Jefferson gets 13 years in prison

(tmj)

November 13, 2009 in Congress, Current Affairs, FCPA, Money Laundering, RICO, Sentencing | Permalink | Comments (1) | TrackBack (0)

Thursday, November 12, 2009

Year & A Day in FCPA Case - But Will It Hold on Appeal?

Guest Blog - Matthew Reinhard, Miller & Chevalier Chartered

Lost in this week’s maelstrom of white collar activity – the acquittal of the Bear Stearns bankers, the accusations that Blackwater bribed Iraqi officials, and the sentencing of former Congressman Jefferson this Friday – was the sentencing of handbag mogul turned would-be Caspian petroleum mogul Frederic Bourke. Convicted earlier this summer of conspiring to violate the Foreign Corrupt Practices Act ("FCPA") and making false statements to the FBI in connection with his investment in a consortium attempting to purchase the Azerbaijan state-owned oil company ("SOCAR"), Bourke’s trial was straight out of Hollywood and included testimony from a former U.S. Senator, allegations of suitcases full of cash changing hands, and an alleged co-conspirator nicknamed the "Pirate of Prague" who is currently fighting extradition from his estate in the Bahamas while freely admitting he bribed Azeri officials.

Judge Shira Scheindlin, of the Southern District of New York, sentenced Bourke to a year and one day (the "one day" being important in that it will allow Bourke to receive good behavior credit if he is ever incarcerated) and fined him $1 million. Any confinement in a federal prison is something to be avoided at all costs, but the 366 days doled out by the court is far less than the 10-year sentence prosecutors were seeking and could signal the court’s doubts about Bourke’s ultimate culpability. While any appeal from a jury verdict presents enormous challenges, I like Bourke’s odds at this point.

Bourke’s appeal will squarely frame important evidentiary issues concerning how the government must prove knowledge and, thus, intent, in FCPA and white-collar conspiracy contexts. The Government’s allegations against Bourke notably did not claim that Bourke himself paid bribes. Rather, the Government charged that, as an investor in a consortium attempting to gain control of SOCAR, Bourke had knowledge of the conspiracy’s "unlawful purpose" (i.e., to bribe Azeri officials). However, not only did the Government not charge Bourke with actually making the bribes, it set out to prove Bourke’s "knowledge" for the purpose of the conspiracy not by showing that he had "actual" knowledge of the unlawful purpose, but that he "consciously avoided" gaining actual knowledge – essentially that Bourke stuck his head in the sand to avoid "knowing" that he was engaging in a criminal enterprise.

The Government did not create the "conscious avoidance" standard out of whole cloth. Indeed, it is defined within the FCPA’s broader knowledge standard, which states that "when knowledge of the existence of a particular circumstance is required for an offense, such knowledge is established if a person is aware of a high probability of the existence of such circumstance, unless he actually believes the circumstance does not exist." 15 U.S.C. § 78dd-1(f)(2)(B) (2004) (emphasis added). When the government indicated its intention to travel on this standard, Judge Scheindlin appropriately ruled that to prevail on such a theory the Government would need to prove that Bourke decided not to learn a key fact, not that he was merely negligent in failing to learn it. To a lay-person (and perhaps even to many lawyers) that may seem like a tough distinction to make, but it is also the bright line that separates civil liability from criminal activity.

This distinction quickly became an issue during and after Bourke’s trial. During trial the court admitted testimony and evidence from the Government about Azeri officials’ general reputation for corruption, and conversations between Bourke and other investors regarding concerns that the head of the investor consortium was paying bribes. In objecting to this evidence Bourke’s lawyers specifically noted that the evidence could confuse the jury into believing that the "conscious avoidance" standard is the same as the "should have known" negligence standard. Such fears appear well founded. Interviewed after the verdict, the jury foreman sounded as if he was reading from a tort-law hornbook when he dismissed the need for the court to have even given the "conscious avoidance" instruction, stating: "We thought he knew and he definitely should have known. He’s an investor. It’s his job to know." See Entrepreneur Is Found Guilty of Conspiracy in Azerbaijan, Mark Hamblett, New York Law Journal, July 13, 2009 (emphasis added). That is a clear enunciation of the negligence standard, but it is notably not the "conscious avoidance" standard. I expect Bourke’s attorneys to include a judicially-appropriate re-phrasing of "we told you so" in their appeal briefs.

Next, at sentencing, Judge Scheindlin provided Bourke’s counsel with even more ammunition for appeal. In sentencing Bourke, Judge Scheindlin observed that: "After years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both." That sounds a lot like reasonable doubt to my ears. Judge Sheindlin obviously did not feel she had enough to overturn the jury verdict on a Motion for Judgment of Acquittal ("MJOA"), but when a sentencing judge says she is not sure whether a defendant is a "victim or a crook" that must raise substantial questions about the quality of the Government’s evidence.

This case may ultimately be proof that the road to Hell is paved with good intentions. Few would disagree with Judge Scheindlin’s admonition that "[b]ribes must and will result in jail sentences." Nonetheless, the Bourke case will now force the influential Second Circuit Court of Appeals to pass on the appropriate knowledge standard in FCPA and white-collar conspiracy cases, and what evidence can be used to prove that "knowledge." However, given the number of close facts, the apparent skepticism of the trial judge, and the confusion evidenced (perhaps unwittingly) by the jury itself, many observers may rightfully be left wondering whether this is really the case where the Government wants test these theories. We all know that jury verdicts are notoriously difficult to overturn on appeal, but I like Bourke’s chances here.

* For a terrific in-depth analysis of the "conscious avoidance" standard, as well as other important FCPA issues that arose during the Bourke trial, see the article written by my colleague, James Tillen, for Bloomberg Law Reports.

(mr)

November 12, 2009 in FCPA, Sentencing | Permalink | Comments (0) | TrackBack (0)

Thursday, October 1, 2009

NACDL's 5th Annual Defending the White Collar Case Seminar - "Keynote Address: Lanny A. Breuer, Assistant Attorney General, Criminal Division, U.S. Department of Justice," Thursday, October 1, 2009

Guest Blogger:  Ivan J. Dominguez, Assistant Director of Public Affairs & Communications, National Association of Criminal Defense Lawyers

Keynote Address:  Lanny A. Breuer, Assistant Attorney General, Criminal Division, U.S. Department of Justice*

Assistant Attorney General of the Criminal Division Lanny A. Breuer traveled from Washington, D.C., to deliver a lunchtime address to NACDL’s 5th Annual White Collar Seminar at Fordham Law School in New York City.

Breuer, who was confirmed almost six months ago, repeatedly emphasized his admiration for the professionalism and commitment of career prosecutors. He shared his perspective that, as a general proposition, career law enforcement officials have an “abiding commitment to the highest standards of ethical conduct.” He also told of how he recently returned from Mexico City where he met with a U.S. resident legal adviser and said that it is his goal to meet all resident legal adviserss around the world. 

The focus of his talk was an overview of some of the DOJ’s, and specifically the Criminal Division’s, law enforcement priorities, stating that “the risks we face from white collar criminals have never been greater.” This is so, he said, because of the ever-growing sophistication of white collar criminals combined with a financial intervention by the government “on a massive scale…unparalleled in our history.”  “We’ve already seen egregious instances of fraud and abuse on the road to [economic] recovery,” he said.

Breuer specifically identified the “unprecedented amounts” that Congress has made available to facilitate recovery as giving rise to the government’s focus here. Indeed, he further explained that Congress has expressed its concern that government be vigilant as it guards against those who would take advantage of the $787 billion American Recovery and Reinvestment Act. In order to accomplish its goals in the face of these challenges, Breuer explained that his mantra is that the Department be “smart, nimble and focused” in fighting white collar crime. Specifically, throughout his speech he emphasized (i) the importance of interagency cooperation and collaboration and (ii) the value of using vast storehouses of data to drive the Department’s work.

Breuer also individually explored the following “white collar crime priorities”: health care fraud, financial fraud (including mortgage fraud) and public corruption.

On the topic of health care fraud, which he called “particularly severe,” Breuer said that much of the $800 billion dollars per annum that the government spends on Medicare and Medicaid is lost to “waste, fraud and abuse,” which he estimated at a minimum of 3% of those expenditures. In this context, interagency efforts are being pursued in what he characterized as an “innovative, data driven approach.” For example, pointing to multiple recent indictments in Detroit, Mich., he said that government investigation is driven by data such as information about which geographic areas have higher Medicare billing. He promised that such enforcement action will be spreading to new cities, explaining that government data shows that Medicare billings go down after the strike force goes into cities.

“Nowhere do you see [interagency] collaboration as much as in [financial fraud] arena,” Breuer said. In the area of mortgage fraud, he said that the Department is focused on those exploiting the most vulnerable homeowners among us.” He pointed to the National Mortgage Fraud team’s access to a “warehouse” of FBI data to aid in their work, explaining that the team at the FBI has developed sophisticated techniques with the data and that law enforcement is using this intelligence to combat mortgage fraud in “a very targeted” way.

Continue reading

October 1, 2009 in Conferences, Current Affairs, FCPA, Forfeiture, Fraud, Investigations, Mortgage Fraud, Prosecutors | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 7, 2009

FCPA - Some New Items

Check out the FCPA Blog here for a discussion of the FCPA count in William Jefferson's trial.  The question is asked " Is William Jefferson still on trial for violating the Foreign Corrupt Practices Act?"

Andy Spaulding, Fulbright Scholar at the University of Mumbai, India, posted a piece on the FCPA on SSRN here.  Here's an abstract of the piece -

Unwitting Sanctions:  Understanding Anti-Bribery Legislation as Economic Sanctions Against Emerging Markets
 
Abstract
Although the purpose of international anti-bribery legislation, particularly the U.S. Foreign Corrupt Practices Act, is to deter bribery, empirical evidence demonstrates a more problematic effect:  in countries where bribery is perceived to be relatively common, the present enforcement regime goes beyond deterring bribery and actually deters investment.  Drawing on literature from political science and economics, this article argues that anti-bribery legislation, as presently enforced, functions as de facto economic sanctions.  A detailed analysis of the history of FCPA enforcement shows that these sanctions have most often occurred in emerging markets, where historic opportunities for economic and social development otherwise exist and where public policy should encourage investment.  This effect is contrary to the purpose of the FCPA which, as the legislative history shows, is to build economic and political alliances by promoting ethical overseas investment.


These perverse and unanticipated consequences create two policy problems.  First, the sanctions literature suggests that the resulting foreign direct investment void may be filled by capital-rich countries that are not committed to effectively enforcing anti-bribery measures.  This dynamic can be observed, for example, in China's aggressive investment in Africa, Latin America, and Central Asia, and creates myriad ethical, economic, and foreign policy problems.  Second, by enforcing these laws without regard to their sanctioning effects, developed nations are unwittingly sacrificing poverty reduction opportunities to combat bribery.  The paper concludes with various proposed reforms to the text and enforcement of international anti-bribery legislation that would further the goal of deterring bribery without deterring investment.
 
(esp)

July 7, 2009 in FCPA | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 12, 2009

Novo Nordisk Deferred Prosecution Agreement

A DOJ Press Releasereports on a deferred prosecution agreement entered into by "Novo Nordisk A/S (Novo), a Danish corporation based in Bagsvaerd, Denmark."  The agreement calls for the company to pay a penalty of "$9 million penalty for illegal kickbacks paid to the former Iraqi government."  This case is part of the DOJ's investigation "into the UN Oil-for-Food program." The DOJ filed "one count of conspiracy to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act (FCPA)."  The DOJ Press Release states:

"According to the agreement and the information filed today, between 2001 and 2003, Novo paid approximately $1.4 million to the former Iraqi government by inflating the price of contracts by 10 percent before submitting the contracts to the United Nations for approval and concealed from the United Nations the fact that the price contained a kickback to the former Iraqi government. Novo also admitted it inaccurately recorded the kickback payments as "commissions" in its books and records."

See also FCPA Blog here; Reuters here.

(esp)

May 12, 2009 in Deferred Prosecution Agreements, FCPA, Settlement | Permalink | Comments (0) | TrackBack (0)

Monday, March 2, 2009

Shortcuts on FCPA Due Diligence Today Will Be Costly Tomorrow

Guest Blogger, Sharie A. Brown of DLA Piper -

The current financial crisis and market volatility understandably focuses corporate executives and their employees on corporate survival and improved financial performance. In my experience, corporate consolidations, divestitures, restructurings, and employee layoffs create organizational distractions that can distort sound judgment and reward short-term, but ill-conceived business solutions. At a recent General Counsel Forum in Chicago last week focusing on fraud prevention and anticorruption strategies, the attendees from corporate legal departments and financial functions indicated that they will be required to operate with fewer compliance and internal controls resources. None of the attendees thought their companies will be more susceptible to fraud and corruption violations this year compared to other years. Yet, my observations over the years indicate that from late 2009 through 2012, we should expect to see several currently reputable, large U.S. companies and individual corporate managers under investigation for fraud, corruption, and other criminal and civil violations. These companies and individuals will face enforcement scrutiny because they did not fight the tendency of managers and business units to shortcut legal compliance, internal controls, and due diligence procedures designed to prevent and detect financial crimes, particularly violations of the US Foreign Corrupt Practices Act ("FCPA").

One of the most important FCPA compliance and internal controls involves the conduct of appropriate, risk-based due anticorruption diligence on third party intermediaries, agents and consultants, as well as overseas joint venture partners, and international merger and acquisition target companies in high risk countries and industries for public corruption. This risk-based approach requires companies to take into account the following factors, among others: i) the reputation of the party or agent for corruption in the industry; ii) the local country’s reported reputation for public corruption; iii) whether the party is the subject of local media scandal or enforcement scrutiny, or on any international governmental lists; iv) whether the acquiring company has industry contacts that have information about the targeted party; v) the apparent competence and qualifications of the party for the project or activity contemplated; vi) whether the party was referred by a foreign official; vii) the availability and reliability of information about the targeted party in public databases, websites, and business reporting services; viii) whether the party is a foreign government official within the meaning of the FCPA, and whether there is shareholding by a foreign official in the party ; ix) whether the party is an agency or instrumentality of a foreign government; and x) whether the party or its shareholders are a relative or close associate of a foreign government official. Appropriate FCPA anticorruption due diligence would take into account and address these issues.

A more rigorous due diligence is appropriate in situations where the third party relationship or target company acquisition is highly strategic and economic, but the public corruption risks for the country and the industry are well-documented. For this important high-risk acquisition or joint venture relationship, there is no substitute for an in-country review consisting of in-person interviews of the parties and their key personnel, as well as relevant document reviews and sampling by U.S. professionals who regularly apply U.S. FCPA standards, in consultation with local professionals, to ensure that local anticorruption, data protection, and related fraud laws and rules, are recognized. Yet, during times of tight corporate finances, some companies will forgo such FCPA due diligence in favor of database reviews only, or they will rely on background or financial investigators whose reports list "FCPA" in the report title, but unfortunately those reports do not recognize or actually examine high risk FCPA/anticorruption activities. These seemingly cost-effective due diligence shortcuts actually result in expensive FCPA legal exposure for the acquiring company due to the FCPA risk items overlooked or misunderstood by the background investigators.

U.S.enforcement agencies are watching companies, and seem more determined to ensure that FCPA compliance, and other U.S.legal and financial compliance requirements continue to be fulfilled during the financial crisis. The U.S. Securities and Exchange Commission ("SEC") Office of Compliance Inspections and Examinations issued a letter to CEOs of SEC-registered firms to remind them of the important role that compliance programs play in helping companies meet their obligations under the securities laws. The SEC emphasized that even with the current financial crisis, corporate cost cutting-measures should take into account the need to maintain adequate compliance programs and internal financial controls systems. See Lori Richards, Director, Office of Compliance Inspections and Examinations U.S. Securities and Exchange Commission, Open Letter to CEO's of SEC-Registered Firms (Dec. 2, 2008) (available here). Companies should consider this SEC notice to be an early indication that the financial crisis, standing alone, will not insulate a company against U.S. enforcement actions for fraud, FCPA violations, or other financial and reporting violations arising from a high risk environment created by the failure to maintain controls, or follow FCPA procedures, and test compliance systems.

Aggressive U.S. enforcement of financial fraud, corruption, and other criminal and civil violations is also forecast as a result of Congressional efforts with respect to the Supplemental Anti-Fraud Enforcement Markets Act ("SAFE Markets Act"). This anticipated legislation seeks to materially increase funding for investigative and prosecutorial resources by $110 million for enforcement actions involving financial fraud, corruption, ring the financial crisis may be particularly challenging for companies this year. Senator Charles E. Schumer (D-NY) and Senator Richard C. Shelby (R-Ala) of the Senate Banking Committee believe that 50 new assistant U.S. attorneys and 100 new SEC enforcement employees need to be hired to investigate and prosecute financial crimes.

Further, the U.S. Department of Justice ("DOJ") and the SEC are expected to continue aggressive investigation and enforcement of the FCPA, while imposing several millions (and possibly additional billions) of dollars in fines, penalties, and disgorgements for future violations. Thus, the lesson is clear: in the practice of FCPA due diligence for agents, joint venture partners, and merger and acquisition targets, a due diligence shortcut for savings, could ultimately become the most devastating and costly strategy for companies, managers, individual employees, and corporate boards under the FCPA.

(SAB)

March 2, 2009 in FCPA | Permalink | Comments (1) | TrackBack (0)

Wednesday, February 11, 2009

Kellogg, Brown & Root LLC Pleads on FCPA

According to a DOJ Press Release "Kellogg Brown & Root LLC (KBR), a global engineering, construction and services company based in Houston, pleaded guilty today to charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts. . ."  The company plead to a "five-count criminal information" and "agreed to pay a $402 million criminal fine." The company issued a press release that stated that:

"[u]nder the terms of the settlement announced earlier today, KBR will make payments totaling $20 million over the next eight quarters to the DOJ. The information contained in the DOJ and SEC settlements note aggregate financial penalties totaling $579 million. The remainder of the penalties will be paid by Halliburton pursuant to indemnities under the 2006 Master Separation Agreement between KBR and Halliburton."

KBR has also agreed "to retain a compliance monitor to review KBR's continued compliance with anti-corruption laws."  See also the FCPA Blog here

(esp)

February 11, 2009 in FCPA | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 28, 2009

Halliburton

Check out the FCPA Blog, Halliburton Announces Pending Settlement; Dan Slater, WSJ Blog, Halliburton Breaks FCPA Settlement Record for U.S. Companies.

How much can you fine a company for violating the law? At what point does the fine exceed a cost of doing business and become a deterrent for future conduct, not to mention a general deterrent to other companies?

(esp)

January 28, 2009 in FCPA | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 16, 2008

More on Siemens

Initially discussed here, the Siemens plea is an interesting one. The go-to place for information on this case is the FCPA Blog here. Some observations -

  • Unlike many cases involving a company, this does not appear to be a deferred prosecution agreement - but rather is a plea agreement with specified terms.
  • The fine is huge, but it allows the company to resolve the case and move forward and the plea is not to an anti-bribery act, but rather the reporting provisions.
  • The timing on this resolution is interesting - before the new administration takes over, before the end of the year - or is that reading too much into this.
  • Unlike the deferred prosecution agreement in KPMG (here -p. 26) there is no explicit statement in the agreement precluding debarment. Also in Titan (FCPA case) there was a statement by the company that spoke to there being no debarment. One can find a reference to that here:

"Titan announced that it had reached a settlement to avoid debarment from work on U.S. government contracts. Avoiding debarment was particularly important to Titan, which is a leading provider of information and communications systems to U.S. government agencies."

But here again, we are only discussing reporting provisions and not anti-bribery.  And certainly no one should want to hurt innocent people associated with the company.

  • At the government press conference it was stated - "Siemens' cooperation, in a word, has been exceptional.   Siemens has faced facts, accepted responsibility, retained experienced counsel to conduct thorough internal investigations, and has implemented real reforms."  And in the sentencing memo of the government there are repeated references to the extraordinary cooperation of the company.  For example, it states "[t]he reorganization and remediation efforts of Siemens have been extraordinary and have set a high standard for multi-national companies to follow."   The sentencing memo has an incredible description of the internal amnesty program of the company.
  • DOJ has a website that provides the FCPA, a lay person's guide, etc.  A key problem one finds is that because most of the cases are resolved, one is unlikely to find a significant body of reported decisions resolving issues involving companies who were alleged to violate the FCPA.  And as for individuals - the DOJ website lists 2 cases, but notes that they last updated the website in 2004.(here)
  • The plea agreement letter provides for cooperation, but does not call for providing any privileged material -  something that is good to see on the part of DOJ. (See FCPA Blog here)
  • The agreement does limit the ability of the company from disseminating information regarding this matter without first obtaining the approval of DOJ. It states:

"Press Releases: Defendant agrees that if Siemens AG or any of its direct or indirect affiliates or subsidiaries issues a press release in connection with this agreement, defendant shall first consult the Department to determine whether (a) the text of the release is true and accurate with respect to matters between the Department and defendant; and (b) the Department has no objection to the release. Statements at any press conference concerning this matter shall be consistent with this press release."

A waiver of first amendment rights - is the government fearful of the company saying something?  This may explain why the document on the Siemens website - to investors - is extremely brief -Download 20081215_settlement_eng.pdf

(esp)

Addendum - Jordan Weissmann, BLT Blog, Siemens AG Lawyers View $800 Million Fine As a Victory

December 16, 2008 in FCPA | Permalink | Comments (3) | TrackBack (0)

Monday, December 15, 2008

Siemens AG & 3 Subsidiaries Plead

A DOJ press release is titled - Siemens AG and Three Subsidiaries Plead Guilty to Foreign Corrupt Practices Act Violations and Agree to Pay $450 Million in Combined Criminal Fines - Coordinated Enforcement Actions by DOJ, SEC and German Authorities Result in Penalties of $1.6 Billion.  At a press conference called to announce this settlement, Acting Assistant Attorney General Friedrich stated:

"Under the terms of the plea agreement announced today, first, Siemens AG will plead guilty and has pled guilty to one count of failure to maintain internal controls and a one-count books and records violation.   In addition, three Siemens subsidiaries, those located in Bangladesh, Venezuela and Argentina, have pled guilty to conspiring to violate provisions of the FCPA. 

"Second, Siemens will pay a criminal fine to the United States in the amount of $450 million.   This is far and away the largest criminal fine in FCPA enforcement in U.S. history. 

"Third, Siemens will retain an independent monitor for a period of four years and will continue to implement enhanced controls."

With regard to this last point, the press release states that:

"Under the terms of the plea agreement, Siemens AG agreed to retain an independent compliance monitor for a four-year period to oversee the continued implementation and maintenance of a robust compliance program and to make reports to the company and the Department of Justice.  Siemens AG also agreed to continue fully cooperating with the Department in ongoing investigations of corrupt payments by company employees and agents."

See also FCPA Blog, Final Settlements for Siemens

(esp)

December 15, 2008 in FCPA | Permalink | Comments (0) | TrackBack (0)

Monday, November 3, 2008

KPMG Study Shows the Difficulties Faced By Companies in FCPA Matters

A KPMG study released today demonstrates the difficulties faced by companies trying to comply with the Foreign Corrupt Practices Act (FCPA). A Press Release accompanying the study notes that "[m]ost multinational U.S.companies have programs to meet Foreign Corrupt Practices Act (FCPA) guidelines, but many executives surveyed by the audit, tax and advisory firm KPMG LLP acknowledge they still may not know enough about those with whom they do business in other countries." For example, "78 percent said they had trouble identifying and assessing FCPA risk."  The report can be found here - Download postable_pdf.pdf

(esp)

November 3, 2008 in FCPA | Permalink | Comments (0) | TrackBack (0)

Friday, June 6, 2008

Non-Prosecution Agreement in FCPA Matter

Who gets prosecuted, who gets a deferred prosecution agreement, and better yet - who gets a non-prosecution agreement? Prosecutorial discretion plays an enormous role in answering this question.  And in many ways this is good when prosecutors are factoring in human aspects such as trying to avoid harm to innocent third parties. But many in the world would like the guidance of how to better their case to receive the least damaging result to their company when conduct within the company crosses the line.

Continuing to provide transparency to the process appears to be the best way to discern the nuances that allow for the differing results. But this can be difficult. 

DOJ just announced in a press release the agreement by Faro Technologies Inc. to a non-prosecution agreement. "Faro Technologies Inc. (Faro), a public company that specializes in computerized measurement devices and software, agreed to pay a $1.1 million criminal penalty in connection with corrupt payments to Chinese government officials in violation of the Foreign Corrupt Practices Act (FCPA)."  The non-prosecution agreement has a two year term and includes an agreement for an independent corporate monitor.

On its website, the company describes the resolution of this matter and also notes that "[w]ith approximately 17,000 installations and 7,600 customers globally, FARO Technologies, Inc. designs, develops, and markets portable, computerized measurement devices and software used to create digital models -- or to perform evaluations against an existing model -- for anything requiring highly detailed 3-D measurements, including part and assembly inspection, factory planning and asset documentation, as well as specialized applications ranging from surveying, recreating accident sites and crime scenes to digitally preserving historical sites." (see here)

As with so many white collar matters, there is also a parellel proceeding here. "[T]he Securities and Exchange Commission (SEC) today instituted a settled enforcement action against Faro.  Faro consented to the entry of a cease and desist order and agreed to pay approximately $1.85 million in disgorgement and prejudgment interest . . ." (see also SEC here)

(esp)

June 6, 2008 in Deferred Prosecution Agreements, FCPA | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 3, 2008

AGA Medical Corp. Gets Deferred Prosecution Agreement on FCPA Matter

A DOJ Press Release reports that "AGA Medical Corporation (AGA), a privately-held medical device manufacturer, has agreed to pay a $2 million criminal penalty in connection with corrupt payments to Chinese government officials in violation of the Foreign Corrupt Practices Act (FCPA)."  The 2 count Information filed by the government "charges AGA with one count of conspiring to make bribe payments to Chinese officials and one count of violating the FCPA in connection with the authorization of specific corrupt payments to officials in China." 

(esp)

June 3, 2008 in Deferred Prosecution Agreements, FCPA | Permalink | Comments (0) | TrackBack (0)

Monday, March 24, 2008

Alcoa Investigation

Glenn R. Simpson, of the Wall Street Journal, has an article this morning titled, "U.S. Opens Alcoa Bribery Probe." Alcoa, a global company, clearly has internal rules related to the giving and taking of company gifts. For example, one finds this one on the company website:

"Gifts, favors and entertainment may be given at company expense or accepted by directors, officers or employees from a competitor or an individual or firm doing or seeking to do business with the company only if they meet all of the following criteria:

  1. they are consistent with customary business practices and do not violate applicable law or ethical standards;
  2. they are not excessive in value;
  3. they cannot be construed as a bribe, payoff or improper inducement; and
  4. public disclosure of the facts would not embarrass the company or the director, officer or employee.

Payments or gifts of cash (or of cash equivalents such as stocks or commodities) to or from a competitor or an individual or firm doing or seeking to do business with the company are never permitted and may not be solicited, offered, made or accepted by directors, officers or employees"

Although a big believer in the presumption of innocence, one has to wonder what could happen if this investigation turns up a bribe to a foreign official.  The Foreign Corrupt Practices Act is easily explained in this DOJ Layperson's Guide discussed here.  But one notices in looking at the results of a good number of cases (see here) against companies, that if the DOJ does decide to proceed, there is little likelihood of a trial. When a company is involved, the matter tends to end with a payment of a fine and in some cases a deferred prosecution agreement. In a post-Arthur Andersen world, this is easily explained as the cost of fighting can be a death sentence to a company. If the government does find something here, one has to wonder if this will be the result. But, on the other hand, if there is nothing to this investigation - it is hoped that the press received will not hurt the company.

(esp)

March 24, 2008 in Deferred Prosecution Agreements, FCPA, Investigations | Permalink | Comments (0) | TrackBack (0)

Friday, March 21, 2008

AB Volvo Gets a Deferred Prosecution Agreement

A DOJ Press Release states that "AB Volvo has agreed to pay a $7 million penalty as part of an agreement with the U.S. Department of Justice regarding charges brought in connection with an ongoing investigation related to the U.N. Oil for Food program." The release describes the breadth of the investigation in stating:

"The Department of Justice today filed an agreement with AB Volvo, as well as criminal informations against AB Volvo subsidiaries, Renault Trucks SAS (Renault Trucks) and Volvo Construction Equipment AB (VCE), in the U.S. District Court for the District of Columbia. The informations charge that Renault Trucks and VCE engaged in separate conspiracies to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act.

According to the agreement, AB Volvo has acknowledged responsibility for the actions of its subsidiaries, whose employees, agents and distributors paid kickbacks to the Iraqi government in order to obtain contracts for the sale of trucks and heavy commercial construction equipment. The agreement requires the company to cooperate fully with the Department’s ongoing Oil for Food investigations.

The SEC press release also notes that the "SEC Files Settled Books and Records and Internal Controls Charges Against AB Volvo For Improper Payments to Iraq Under the U.N. Oil for Food Program - Company Agrees to Pay Over $12.6 Million in Civil Penalties, Disgorgement of Profits, and Interest."

The company issued a statement saying that "'[t]he incident is, of course, regrettable, but we do note with some satisfaction that the authorities spoke favorably of the cooperation by Volvo as well as Volvo’s own investigation and measures', says Volvo CEO Leif Johansson. 'It is important that we all now learn from what occurred.'”

SEC Complaint here

Information here

Information (Renault) here

(esp)

March 21, 2008 in Deferred Prosecution Agreements, FCPA | Permalink | Comments (1) | TrackBack (0)

Friday, March 14, 2008

Deferred Prosecution Agreements & Spitzer

The FCPA Blog appropriately notes we haven't being seeing many deferred prosecution agreements these days (see here).  As the FCPA Blog points out, there have been no reported agreements since Flowserve on February 21.(see here).  It is probably a wise move for the government to lay low on deferred prosecution agreements right now with the microscope focused on how monitors are being appointed on the agreements, and also looking at issues of who should have oversight - prosecutors or the courts.

And then to hear discussion of the possibility of former NY Governor Spitzer obtaining a deferred prosecution agreement sends an interesting message.  One finds this mention noticeably in an article in the Wall Street Journal by Laurie P. Cohen, Glen R. Simpson and Amir Efrati. (see here). In the corporate setting, it is rare that we see an individual obtaining a deferred prosecution agreement.  The last ones of major significance were Former Monster Worldwide CEO Andrew McKelvey (see here) and Frank Quattrone (see here). Now if they decide upon a deferred prosecution agreement with Spitzer, what kind of terms will they include, and will it include a clause used in the Quattrone agreement requiring that he "can only associate with law-abiding persons." 

(esp)

March 14, 2008 in Deferred Prosecution Agreements, FCPA | Permalink | Comments (1) | TrackBack (0)