Multinational retailer settles FCPA claims by DOJ and SEC for $282 million
On June 20, the DOJ announced a $137 million settlement with a U.S.-based multinational retailer (the Retailer) and its wholly owned Brazilian subsidiary (the Subsidiary) to resolve claims they violated the FCPA. The Retailer entered into a non-prosecution agreement, while the Subsidiary pleaded guilty. On the same day, the SEC issued an administrative order requiring the Retailer to pay $144 million in disgorgement and interest. The SEC stated that the Retailer failed to “operate a sufficient anti-corruption compliance program for more than a decade as the retailer experienced rapid international growth.” In total, the Retailer will pay more than $282 million to settle the charges.
According to the DOJ announcement, from 2001 to 2011, the Retailer failed to implement and maintain internal accounting controls related to anti-corruption, and senior officials were aware of the failures. The failures allegedly allowed the Retailer’s foreign subsidiaries in Mexico, India, Brazil and China to hire third-party intermediaries (TPIs) “without establishing sufficient controls to prevent those TPIs from making improper payments to government officials in order to obtain store permits and licenses,” which, in turn, allowed the foreign subsidiaries to open stores faster, earning the company additional profits. In its non-prosecution agreement with the DOJ, in addition to the monetary penalty, the Retailer agreed to: (i) appoint an independent compliance monitor for a two-year term; and (ii) continue to cooperate with the DOJ’s investigation. The monetary penalty amount was calculated by reducing by 25 percent the bottom of the U.S. Sentencing Guidelines fine range for the portion of the penalty applicable to conduct in Brazil, China, and India, and reducing by 20 percent the bottom of the U.S. Sentencing Guidelines fine range for the portion of the penalty applicable to conduct in Mexico.