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Foreign Corrupt Practices Act & Anti-Corruption

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  • Panasonic settles parallel FCPA actions for $280 million

    On April 30, a DOJ deferred prosecution agreement and SEC settlement with Japan-based Panasonic Corporation and a subsidiary were announced, with Panasonic agreeing to pay $280 million in total. The resolutions related to Panasonic’s U.S.-based subsidiary, Panasonic Avionics Corporation (PAC), and allegations that senior management of PAC orchestrated a bribery scheme to help secure over $700 million in business from a state-owned airline, in which PAC paid a Middle East government official nearly $900,000 for a “purported consulting position, which required little to no work,” and concealed the payment “through a third-party vendor that provided unrelated services to PAC.” PAC is then alleged to have falsely recorded the payments in its books and records, as well as similar payments made to other purported consultants and sales agents in Asia.

    Under the DPA with PAC, PAC agreed to pay the DOJ a $137.4 million criminal penalty for knowing and willful violations of the FCPA’s accounting provisions. The DOJ gave PAC a 20 percent discount off the low end of the U.S. Sentencing Guidelines fine range because of its cooperation and remediation, which, although untimely in certain respects, did include causing several senior executives who were either involved in or aware of the misconduct to be separated from PAC or Panasonic.” However, because many of PAC’s remediation efforts were “more recent, and therefore have not been tested,” the deferred prosecution agreement subjects the company to two years of scrutiny by an independent compliance monitor, followed by a year of self-reporting. The SEC‘s simultaneous settlement included violations of the anti-bribery as well as accounting provisions, and the payment of $143 million to the SEC.

    As FCPA Scorecard previously reported, Panasonic disclosed the investigations in February 2017, though they were first reported as early as 2013.

    DOJ SEC Panasonic DPA FCPA

  • DOJ declines to prosecute Dun & Bradstreet, SEC issues $9 million fine for FCPA violations in China

    On April 23, Dun & Bradstreet, a commercial data and analytics firm, secured a declination letter from the DOJ regarding FCPA violations stating that, “consistent with the FCPA Corporate Enforcement Policy,” the DOJ would be declining to bring criminal charges against the company. Dun & Bradstreet simultaneously agreed to settle with the SEC regarding books and records and internal controls violations regarding the same conduct, and pay a total of $9 million, including a $2 million civil penalty and $6 million of disgorgement. Dun & Bradstreet had self-disclosed payments made by two Chinese subsidiaries through third party agents. One of the subsidiaries, part of a joint venture with a Chinese company, made payments to Chinese government officials to acquire non-public financial statement information on Chinese entities. The other subsidiary made improper payments both to obtain specific business and to acquire non-public personal data. The SEC noted that there were pre-acquisition concerns regarding the subsidiaries, but Dun & Bradstreet failed to take appropriate action to stop the payments or the false entries, which continued for several years after the acquisition.

    This is the first instance we are aware of a company receiving a full declination from the DOJ under the new policy. The policy, which grew out of the FCPA Pilot Program, states that when a company voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, there will be a presumption that the DOJ will issue a declination. The Dun & Bradstreet declination letter notes the company’s self-identification and disclosure, thorough investigation, and full cooperation, including identifying all individuals involved in the misconduct. The DOJ also cited the company’s “full remediation,” in part by terminating 11 employees, including senior employees, and reducing compensation and other forms of discipline.

    DOJ FCPA FCPA Pilot Program SEC Dun & Bradstreet

  • Kinross Gold Corporation settles SEC FCPA charge

    The SEC fined Kinross Gold Corporation $950,000 for its failure to implement and maintain adequate accounting controls at two subsidiaries in Ghana and the Islamic Republic of Mauritania. Kinross neither admitted nor denied the allegations. According to the SEC, Kinross acquired the subsidiaries in 2010 understanding that they lacked anti-corruption compliance programs. After three years of internal audits raising red flags, Kinross did implement adequate controls, however it did not maintain them. The SEC found that Kinross then awarded a contract to a sub-standard company preferred by Mauritanian officials, despite Kinross’s internal bidding and tendering procedures. Kinross also failed to conduct required due diligence when it awarded a politically connected consultant a contract to facilitate government contracts.

    SEC Anti-Corruption

  • Israeli real estate conglomerate to pay $500,000 to resolve SEC allegations of FCPA books and records and internal controls violations

    On March 9, an Israeli-based real estate conglomerate agreed with the SEC, pursuant to an administrative order, to pay $500,000 to resolve alleged violations of FCPA books and records and internal controls provisions. According to the order, the SEC found that from 2007 through 2012, Elbit Imaging Ltd (“Elbit” or the “Company”) and its Netherlands-based subsidiary, Plaza Centers NV, paid millions of dollars to third party consultants and agents for purported services related to a Romanian real estate project and the sale of a real estate asset portfolio in the United States. The SEC found that these payments were made with no indication that any services were actually provided.

    Elbit did not admit or deny the SEC’s findings, but agreed to resolve this matter with a civil money penalty. In accepting Elbit’s offer for resolution, the SEC took into consideration Elbit’s self-reporting in 2016 to authorities in Romania and in the United States, as well as its full cooperation with the investigation, including the hiring of outside counsel to conduct an internal investigation, the findings of which were shared with the SEC. The SEC also considered the extensive remedial measures Elbit has put into place as a result of those findings and the Commission’s suggestions.

    SEC FCPA

  • Several companies report developments in FCPA investigations

    In the second half of February, at least three unrelated companies have publicly disclosed the existence and/or status of various FCPA investigations in forms filed with the SEC:

    • Teradata Corporation: On February 23, data analytics company Teradata disclosed that the DOJ and SEC have both declined to pursue FCPA enforcement actions in connection with a subsidiary’s “questionable expenditures for travel, gifts and other expenses” in Turkey. As the Dayton, Ohio-based company previously disclosed on August 4, 2017, Teradata initiated an internal investigation after discovering the questionable expenditures, self-reported the issues to the DOJ and SEC, cooperated with the agencies, and undertook certain remedial actions.
       
    • Fresenius Medical Care AG & Co. KGaA: On February 27, dialysis provider Fresenius Medical Care disclosed that the DOJ and SEC are investigating potential FCPA violations related to “certain conduct in the company’s products business in a number of countries,” and that it has reserved €200 million for a potential settlement with the agencies. After receiving “certain communications alleging conduct in countries outside the U.S. that might violate the FCPA or other anti-bribery laws” in 2012, the Bad Homburg, Germany-based company conducted an internal investigation, self-reported the issues to the DOJ and SEC, cooperated with the agencies, and undertook certain remedial actions.
       
    • Exterran Corporation: On February 28, energy company Exterran disclosed that the DOJ and SEC have both declined to pursue FCPA enforcement actions in connection with “self-reported [accounting] errors and possible irregularities” at an Italian subsidiary conducting business in the Middle East. In April 2016, Houston-based Exterran previously disclosed that it was restating its 2015 financial statements and conducting an internal investigation related to the accounting issues. Although “the SEC’s investigation related to the circumstances giving rise to the restatement is continuing,” the FCPA piece of the investigation has concluded.

    SEC DOJ FCPA

  • Sanofi announces DOJ declination in FCPA investigation

    As previously covered, French pharmaceutical company Sanofi S.A. announced in October 2014 that it was investigating whether certain payments made by company employees to healthcare professionals in the Middle East and Africa violated the FCPA. Sanofi launched an investigation to review payments made from 2007 to 2012 as a result of anonymous whistleblower allegations, and self-reported the allegations to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). On March 7, 2018,  Sanofi announced in its Form 20-F SEC filing that the DOJ notified Sanofi in February 2018 that it was closing the inquiry into the self-reported whistleblower allegations. Sanofi is continuing to cooperate with the SEC’s review of the allegations.

    DOJ SEC FCPA Whistleblower

  • DOJ concludes FCPA investigation into Juniper Networks

    California-based Juniper Networks, Inc. announced in a February 9 8K filing that the DOJ has concluded its investigation into possible FCPA violations without taking action against the company. The company disclosed the FCPA investigation by the DOJ and the SEC in August 2013, but has not publicly disclosed any further details about the possible FCPA violations. Juniper’s recent filing stated that the DOJ’s letter acknowledged the company’s “cooperation in the investigation.” The filing also noted that the FCPA investigation by the SEC is still pending. 

    DOJ FCPA SEC

  • GSK responding to inquiries from SFO, DOJ, and SEC regarding its use of third party advisors in China

    In a securities filing on Wednesday, Feb. 7, U.K.-based pharmaceutical company GlaxoSmithKline PLC (“GSK”) announced that it is responding to requests for information from the DOJ and SEC regarding third-party advisors that GSK engaged in China. These requests came about after GSK, pursuant to its continuing obligation to report to the SEC on its efforts to improve compliance following its September 2016 settlement of allegations that it violated the FCPA, informed the SEC and DOJ that the SFO had sought additional information in the course of its own investigation, which began in May 2014. GSK was also investigated by Chinese authorities and, in September 2014, GSK’s Chinese subsidiary was reportedly found guilty of bribery resulting in GSK’s payment of a $491.5 million fine. 

    Previous FCPA Scorecard coverage here and here.

    DOJ SEC FCPA SFO Bribery

  • Allegations by short seller lead to corruption investigation of OSI systems

    In a securities filing on Thursday, Feb. 1, California-based OSI Systems, Inc. revealed that the DOJ and SEC have launched investigations into its FCPA compliance and regarding trading by company employees in the OSI Systems securities. These investigations were spurred by a report issued in December 2016 by a short seller, Muddy Waters LLC, which accused OSI of paying bribes to win a major contract in Albania. OSI Systems has denied that allegation, and stated in its Form 8-K filing that it is cooperating with the government’s investigations.

    DOJ SEC FCPA

  • SEC declines enforcement against Cobalt in FCPA investigation for second time

    Houston-based Cobalt International Energy, Inc. announced in a January 29, 2018 8-K filing that the SEC had concluded its second investigation relating to the company’s operations in Angola, and that SEC staff did not intend to recommend an enforcement action. The SEC’s investigation began in March 2017. As detailed in previous FCPA Scorecard posts, this follows the DOJ’s February 2017 declination and the SEC’s January 2015 declination following other investigations of the company’s Angola operations.

    SEC Cobalt International Energy Angola

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