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Foreign Corrupt Practices Act & Anti-Corruption

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  • Large International Bank Discloses SEC and DOJ Investigations Into its Hiring Practices in Asia

    On March 1, a large international bank based in the U.K. disclosed in its annual report that it is being investigated in connection with its hiring practices in Asia.  In disclosing both DOJ and SEC investigations, the bank noted that it is cooperating with the investigations and "keeping certain regulators in other jurisdictions informed." While not explicitly linking the hiring probe to the FCPA, the acknowledgement appears to be the latest by an international financial institution concerning U.S. investigations into FCPA implications of its hiring practices in Asia and continues the long-running "Sons and Daughters" investigations by the SEC.  Prior FCPA Scorecard coverage of other aspects of the "Sons and Daughters" investigation around the world is available here. Separately in its annual report, the U.K.-based financial institution also stated that the "DOJ and SEC are undertaking an investigation into whether the [bank's] relationships with third parties who assist [the bank] to win or retain business are compliant with the" FCPA.  The bank disclosed that it has briefed regulators in other jurisdictions about these investigations.

    Asia Sons and Daughters

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  • SEC Settles with Health Science Company Nordion and Former Employee Over Bribes to Russian Government Officials

    On March 3, the SEC announced it had settled FCPA charges with health science company Nordion (Canada) Inc. and a former engineer, Mikhail Gourevitch, for their role in bribing Russian government officials to obtain approvals for a liver cancer drug.  Nordion and Gourevitch settled their respective cases with the SEC via separate Administrative Orders Instituting Cease-and-Desist Proceedings.  Both Nordion (now a privately held company, but which was publicly-traded on the NYSE during the 2004-2011 time period at issue), and Gourevitch, consented to the SEC orders without admitting or denying the FCPA findings. In the order settling the charges against Nordion, the SEC found that the company violated the FCPA’s books and records and internal accounting controls provisions in connection with payments made to a Russian third-party agent.   According to the SEC, portions of the payments to the agent were used to bribe government officials in Russia to obtain government approval to license, register, and distribute TheraSphere, a Nordion liver cancer therapy drug.  Nordion never ultimately won approval to distribute TheraSphere and did not earn any profits as a result from the improper payments. The order found that Nordion mischaracterized the agent fees as legitimate business expenses and that the company did not (i) have adequate policies and procedures in places to detect corruption risks and (ii) provided little, if any, training regarding how to conduct business in high-risk jurisdictions.  Nordion, which is a leading provider of medical isotopes, targeted therapies, and sterilization technologies, agreed to pay a $375,000 penalty to settle the charges.  The SEC noted Nordion’s cooperation, self-reporting, and remedial acts in assessing the penalty. Gourevitch, a dual Canadian and Israeli citizen, agreed to pay $100,000 in disgorgement, $12,950 in prejudgment interest, and a $66,000 penalty to settle the charges that he violated the anti-bribery, books-and-records, and false records provisions of the FCPA.  The SEC found that Gourevitch facilitated and monitored the consulting contracts between Nordion and the Russian third-party agent, who was Gourevitch’s childhood friend.

    Russia Bribery Nordion

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  • VimpelCom Pays $795 Million to Settle FCPA Charges Both in US and Abroad

    On February 18, VimpelCom Ltd. and its Uzbek subsidiary, Unitel LLC, reached a global settlement with the SEC, DOJ, and Dutch regulators Openbarr Ministerie (OM) and the Fiscal Intelligence and Investigation Service (FIOD), in which VimpelCom will pay more than $795 million to resolve FCPA violations in Uzbekistan.  The Amsterdam-based telecommunications provider was charged with bribing an Uzbek government official related to the President of Uzbekistan in exchange for government-issued licenses.  Between 2006 and 2012, VimpelCom and Unitel made more than $114 million in bribe payments through an entity affiliated with the Uzbek official and disguised approximately half a million dollars as charitable donations made to charities affiliated with the Uzbek official. The terms of the settlement require VimpelCom to pay $397.5 million to Dutch regulators, $230.1 million to the DOJ, and $167.5 million to the SEC; VimpelCom must also retain an independent corporate monitor for three years.  DOJ also filed a forfeiture proceeding, seeking more than $550 million held in Swiss bank accounts which it alleged were funds that VimpelCom and two other telecommunications companies used to bribe and/or launder the bribe payments to the Uzbek official.  This forfeiture complaint follows the DOJ’s earlier forfeiture complaint filed on June 29, 2015, seeking forfeiture of more than $300 million in funds held in Belgium, Luxembourg, and Ireland.

    Bribery Uzbekistan Dutch

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  • Massachusetts-Based Technology Company PTC and Two Chinese Subsidiaries Pay $28 Million to Settle Civil and Criminal FCPA Charges; SEC Uses First DPA With Individual

    On February 16, the SEC and DOJ announced a settlement with a Massachusetts-based technology company, PTC Inc., for violations of the FCPA.  PTC and two Chinese subsidiaries agreed to pay $28 million to settle the parallel civil and criminal actions, with PTC paying approximately $13.5 million in disgorgement and prejudgment interest to settle the SEC’s charges, and its two Chinese subsidiaries paying approximately $14.54 million in penalties in a Non-Prosecution Agreement with the DOJ. PTC admitted that its subsidiaries in Shanghai and Hong Kong provided non-business related travel and other improper payments to Chinese government officials to win business.  Specifically, from 2006 to 2011, the two subsidiaries provided nearly $1.5 million to Chinese officials in improper travel, gifts, and entertainment.  The Chinese officials were employed by state-owned entities that were PTC customers.  The travel and entertainment expenses included overseas trips to visit PTC facilities, including corporate headquarters in Massachusetts, but the majority of the time on the trips was spent on recreational excursions unrelated to the purported business purpose.  For example, PTC paid for Chinese officials to visit New York, Las Vegas, San Diego, Los Angeles, and Honolulu, as well as guided tours, golfing, and other leisure activities during those trips.  Employees of PTC’s subsidiaries also provided gifts to the Chinese officials, including cell phones, iPods, gift cards, wine, and clothing.  The payments were recorded in the company’s books and records as legitimate commissions or business expenses. As part of the investigation, the SEC also entered into its first Deferred Prosecution Agreement (DPA) with an individual in an FCPA case.  The SEC announced that it would wait three years to bring any FCPA charges against a former employee of one of the subsidiaries, Yu Kai Yuan, because of the cooperation he provided during the SEC’s investigation.

    China DAP PTC Inc.

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  • Former SAP Executive Sentenced for Conspiracy to Bribe Panamanian Government Officials

    On December 16, the U.S. District Court for the Northern District of California sentenced a former regional director of SAP International Inc. for his involvement in a conspiracy to bribe Panamanian government officials to obtain technology contracts.  U.S. District Judge Charles R. Breyer sentenced Vicente Eduardo Garcia to 22 months in prison for his role in the bribery scheme.  In August 2015, Garcia pleaded guilty to conspiracy to violate the FCPA, admitting that in 2009 he and others conspired to bribe two Panamanian government officials directly and a third official through an agent in order to obtain a contract to provide a Panamanian state agency with a technology upgrade package.  Garcia and his co-conspirators used sham contracts and false invoices to conceal the bribes, and Garcia personally received over $85,000 for arranging the bribes.  Garcia previously settled with the SEC and agreed to pay disgorgement of $85,965 plus prejudgment interest.

    Bribery SAP International

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  • Former Russian Government Official Sentenced For Nuclear Energy Conspiracy Involving FCPA Violations

    On December 15, a former Russian government official, Vadim Mikerin, was sentenced to 48 months in prison for conspiracy to commit money laundering in connection with $2 million in bribe payments he accepted to award government contracts with a Russian state-owned nuclear energy corporation.  U.S. District Judge Theodore D. Chuang of the District of Maryland also ordered Mikerin, who resides in Maryland, to forfeit $2.1 million.  Between 2004 and October 2014, Mikerin received bribe payments intended to improperly influence him in his role as a key official at a subsidiary of Russia’s State Atomic Energy Corporation and to secure improper business advantages for U.S. companies that did business with the subsidiary.  Mikerin admitted that, in connection with the FCPA violations, he conspired with others to transmit approximately $2,126,622 from the United States to shell company bank accounts in Cyprus, Latvia and Switzerland.  Mikerin also admitted to using consulting agreements and code words to conceal the bribes.  Two of Mikerin’s co-conspirators – Daren Condrey and Boris Rubizhevsky – also pleaded guilty to conspiracy charges and are awaiting sentencing.

    Russia Bribery

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  • 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.

    China Bristol-Myers Squibb Pharmaceutical

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  • Imaging Company Offers $1.6 Million to Settle SEC FCPA Investigation

    Analogic Corp., a manufacturer of airport security equipment, offered the SEC $1.6 million to settle the agency's FCPA investigation of the company, according to a company press release.  The company previously reported that the DOJ and SEC had "substantially" completed their investigations of potential bribery involving transactions by the company's Danish subsidiary, BK Medical ApS.  The transactions at issue involved distributors paying BK Medical more than was owed, and then BK Medical transferring the excess money to third parties identified by the distributors.  At the time of its 2011 disclosure of the potentially problematic transactions, the company stated that it had not ascertained the ultimate beneficiaries or purpose of the transfers.  According to the company it had not yet engaged in similar settlement discussions with the DOJ or Danish government.

    Analogic Corp.

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  • Russian Nuclear Official Pleads Guilty in FCPA-Related Case

    On August 31, 2015, the DOJ announced that Vadim Mikerin, the former president of TENAM Corporation and a director of the Pan American Department of JSC Techsnabexport (TENEX), pleaded guilty to conspiracy to commit money laundering in connection with arranging over $2 million in bribes for contracts with the Russian state-owned nuclear energy corporation.  TENEX, a subsidiary of Russia’s State Atomic Energy Corporation, is based in Moscow and acts as the sole supplier and exporter of Russian Federation uranium and uranium enrichment services to nuclear power companies worldwide.  Mr. Mikerin admitted to conspiring to transfer funds from the United States to offshore accounts with the intent to perpetuate a bribery scheme in violation of the FCPA.  These bribes were made to influence the award of contracts to transport down-blended uranium to US nuclear utility providers.   As part of Mr. Mikerin’s plea agreement, he agreed to forfeit over $2.1 million he received in bribes.  Mr. Mikerin is expected to be sentenced in December, and faces up to five years in prison and a $250,000 fine. In addition to Mr. Mikerin, two other individuals, Darren Condrey and Boris Rubizhevsky, have pleaded guilty for their respective involvement in the scheme, including conspiracy to violate the FCPA and commit wire fraud, and conspiracy to commit money laundering, respectively.

    Russia TENAM Corporation

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  • Former SAP Executive Pleads Guilty to Paying "Necessary" Bribes

    On August 12, the DOJ and SEC announced joint enforcement actions against software giant SAP International's former head of Latin American sales, Vicente Garcia.  Garcia pleaded guilty to conspiracy to violate the FCPA and will be sentenced on December 16, 2015 in the Northern District of California.  The DOJ alleges that SAP paid bribes to Panamanian officials to secure software license sales in late 2009, using sham contracts and fake invoices.  Garcia "admitted that he believed paying such bribes was necessary" to secure the contracts.

    The SEC simultaneously issued an administrative cease and desist order against Garcia describing a scheme by which Garcia, in violation of SAP's internal controls, gave discounts to a local business partner to generate excess earnings, which were used to create the slush fund used to pay at least $145,000 in bribes to secure approximately $3.7 million in sales.  Garcia and others also arranged to receive kickbacks from the sales.  Garcia agreed to pay disgorgement of the kickbacks he received plus prejudgment interest, totaling $92,395.

    SAP International

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