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On February 1, 2016, the SEC agreed to a $3.7 million settlement with software company SAP SE regarding allegations that it violated the FCPA regarding the payment and offer of bribes to senior Panamanian government officials. The settlement, stemming from the actions of former SAP executive Vincente Garcia who pleaded guilty last August to one count of conspiracy to violate the FCPA, found that SAP lacked appropriate internal controls to detect the illegal activity. According to the SEC, Garcia arranged the sale of heavily discounted software licenses and used the savings to create a "slush fund." The money in this fund was then used to pay bribes and kickbacks. The SEC order also found that SAP lacked sufficient internal controls to prevent the violations. While SAP did not admit or deny the findings, it consented to the cease-and-desist order and agreed to disgorge $3.7 million in profits plus prejudgment interest of $188,896.
On January 22, 2016, the Ministerio Publico Federal (MPF), Brazil's Public Prosecutor's Office, reportedly entered into a settlement with Dutch drilling company SBM Offshore's CEO and a member of its supervisory board, resolving misdemeanor allegations apparently tied to the ongoing Petrobras probe in Brazil. If the settlement is approved by the Brazilian judge handling the case, both individuals will be fined approximately $60,000 each, with no admission of guilt. SBM Offshore stated in response that while it "believes that accepting the settlement offers a pragmatic opportunity to expeditiously resolve this matter that avoids long and costly legal proceedings," it remains of the opinion that the accusations are without merit and that it stands behind both individuals. While SBM Offshore declined to comment on the specific accusations of misconduct in this case, the settlement comes a little over a year after SBM Offshore resolved an enforcement action in the Netherlands involving alleged bribes in Angola, Brazil, and Equatorial Guinea between 2007 and 2011. Click here to view previous FCPA Scorecard coverage of SBM Offshore and Brazil's Petrobras investigation.
On January 11, Houston-based oil and gas company Hyperdynamics filed suit in the U.S. District Court for the Southern District of Texas against its drilling partners in the companys Guinean operations. Hyperdynamics claims that the drilling partners have unjustly delayed performing the work called for by their operating agreement because of uncertainty over whether the government of Guinea would terminate its drilling agreement with Hyperdynamics in light of the FCPA investigation into the company. That investigation was resolved by a declination letter issued by DOJ in May 2015 and a settlement with the SEC in October 2015. (See previous FCPA Scorecard coverage of that investigation here and here.) Hyperdynamics is seeking a ruling that the drilling partners are in violation of the operating agreement and an order forcing them to fulfill their obligations. In a November 2015 SEC filing, Hyperdynamics reported a complete lack of operating revenue and warned that further delays in fulfilling requirements imposed by the government of Guinea could result in a loss of the companys concession to drill in the country. This case illustrates the potential business risks posed by an FCPA investigationeven if it is resolved on relatively favorable terms.
According to news reports, a DOJ spokesman has confirmed the December 20 arrest of two contractors in connection with an ongoing probe of Venezuelas state-owned oil company, Petroleos de Venezuela. One of the contractors, Roberto Rincon, is the owner of a Houston-based oil-field supply company. The other, Abraham Jose Shiera-Bastidas, is a Venezuelan national living in Florida. The indictment, filed in a Texas federal court, alleges violations of the FCPAs anti-bribery provisions as well as money laundering offenses, and seeks forfeiture of several Swiss bank accounts. The indictment alleges that between 2009 and 2014, Rincon and Shiera-Bastidas conspired to bribe Venezuelan officials in exchange for rigging the bidding panels that award contracts from Petroleos de Venezuela. The indictment identifies nine alleged bribes paid by Rincon and Shiera-Bastidas totaling $790,000.
Analogic Corp., Massachusetts-Based Imaging Company, Discloses Settlement Offer to End FCPA Investigations
In a quarterly securities filing made on December 9, Analogic Corp. (Analogic), a Massachusetts-based manufacturer of airport security equipment, disclosed that the SEC and DOJ have made separate proposals to end their FCPA investigations into the company (see pages 26-27) that would include payments totaling approximately $15 million. The company had previously announced in a September 2015 press release that it had offered the SEC $1.6 million to settle the SEC's FCPA investigation of the company. Analogic's 10-Q disclosed that the SEC rejected that offer. The company stated that it remains in discussion with the SEC and DOJ about settlement and is also discussing a settlement with the Danish government concerning a resolution of these matters. As described in a prior FCPA Scorecard post, Analogic 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 BK Medical then allegedly 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.
On November 13 a federal district judge sentenced Alstom S.A., a French power and transportation company, to pay a record $772 million fine to resolve FCPA charges. The fine, agreed on by Alstom and various subsidiaries in December 2014 as part of its guilty plea, is the largest criminal FCPA fine ever paid. For other prior coverage on Alstom, please see here.
On November 13, Brookfield Asset Management Inc., an investment firm based in Canada, reiterated its announcement that the SEC declined to bring charges against the company for alleged bribery in Brazil. The SEC initiated its investigation of Brookfield in March 2013 to look into allegations that Brookfields Brazilian unit paid bribes to win construction permits. The company previously denied the allegations, describing them as stemming from a disgruntled former employee. The SEC's formal declination happened in June 2015, and Brookfield originally disclosed the declination in August 2015. The disclosure went largely unreported, so the company repeated the disclosure in its 3Q results filed November 13.
Developments in Uzbekistan Telecommunications FCPA Investigations: Dutch Telecommunications Company Makes Provision in Connection with Investigation and DOJ Names Russian Telecommunications Company in Civil Forfeiture Action
On November 3, VimpelCom, a Dutch telecommunications company, announced that based on the company's ongoing 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 Securities and Exchange Commission, the Department of Justice, and the Dutch Public Prosecution Service were conducting investigations related to VimpelCom's business in Uzbekistan and prior dealings with Takilant Ltd., 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, Mobile TeleSystems PJSC ("MTP"), disclosed that the DOJ had referenced it in a civil forfeiture complaint. DOJ's complaint was directed at an unnamed Uzbek government official, but the complaint alleged that MTP and certain other parties made corrupt payments to the unnamed official to gain access to the Uzbek telecommunications market.
On November 2, Alexion Pharmaceutical Inc. disclosed that the Department of Justice had requested documents and other information related to the companys compliance with the FCPA. The Securities and Exchange Commission is also investigating the companys compliance with the FCPA, a fact that Alexion disclosed in May. The SECs subpoena sought information about Alexions grant-making activities worldwide, specifically naming Japan, Brazil, Turkey and Russia in its request, and also addressed non-FCPA items. The drugmaker said that it planned to cooperate with DOJs investigation.
On November 9, Crawford & Co., an Atlanta-based claims management firm, disclosed that it had 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.