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On May 9, the DOJ issued a new policy to discourage “piling on” in corporate enforcement cases, including those involving the FCPA. The new policy directs the DOJ to “consider the totality of fines and penalties” being imposed by the DOJ and other law enforcement agencies on a company for the same misconduct. In a speech delivered to a New York City bar organization, Deputy Attorney General Rod Rosenstein described the new policy as encouraging “coordination among Department components and other enforcement agencies” with the aim of “avoiding unfair duplicative penalties.”
The new policy contains four main elements. First, the DOJ should not threaten criminal prosecution solely to persuade a company to pay a larger settlement in a civil case. Second, DOJ components must coordinate with one another to achieve an overall equitable result. Third, the DOJ should coordinate with other federal, state, local, and foreign enforcement authorities. Finally, the DOJ should consider several factors, including the egregiousness of the wrongdoing and the adequacy of the company’s cooperation with the DOJ, in determining whether multiple penalties serve the interests of justice in a particular case.
Rosenstein specifically noted in his address that the DOJ’s “FCPA Unit [had recently] announced its first coordinated resolution with . . . Singapore.” See FCPA Scorecard post. The new policy does not prohibit the DOJ from considering additional remedies in “appropriate circumstances.”
On April 30, Clear Channel Outdoor, one of the world’s largest outdoor advertising companies, disclosed that it had self-reported potential FCPA violations to the SEC and DOJ. The San Antonio-based company had previously disclosed that Chinese police were investigating “several employees” of its subsidiary, Clear Media Limited, for the misappropriation of funds in China. A related internal investigation purportedly found that three unauthorized bank accounts were opened in the name of the subsidiary and “certain transactions were recorded therein.” In the most recent disclosure, the company newly reported that: (i) “discrepancies” related to the misappropriation resulted in more than $10 million in “accounting errors”; (ii) it determined that there was a “material weakness” in the subsidiary’s internal controls over financial reporting, namely “falsification of bank statements and other supporting documentation used to complete bank reconciliations,” “collusion,” and “circumvention of controls”; and (iii) these issues “could implicate the books and records, internal controls and anti-bribery provisions” of the FCPA, making “possible . . . monetary penalties and other sanctions.” The company said it would cooperate with any investigation by the SEC or DOJ.
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.
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.
The DOJ announced on Thursday, April 19, that a former Venezuelan official had pleaded guilty to one count of conspiracy to commit money laundering. The charge arose from Cesar David Rincon Godoy’s role in a bribery scheme involving bribes paid by the owners of U.S. companies to Venezuelan government officials to secure energy contracts and payments on outstanding invoices. As the former general manager of the procurement subsidiary of the Venezuelan state-owned energy company, Petroleos de Venezuela S.A. (PDVSA), Rincon had solicited and accepted bribes. The judge entered a personal money judgment of $7,033,504.71. As a government official receiving the bribes, Rincon could not be charged himself with FCPA offenses (which are targeted at those paying the bribes). Related charges against four other individuals remain pending, including charges of conspiracy to violate the FCPA; 11 individuals have already pleaded guilty in the PDVSA cases.
For prior coverage of the PDVSA enforcement actions, please see here.
Egbert Yvan Ferdinand Koolman, an official of Servicio di Telecommunicacion di Aruba N.V. (Setar), pleaded guilty to money laundering charges in connection with a scheme to arrange and receive corrupt payments to influence the awarding of contracts in Aruba. The DOJ’s press release describes Setar as an Aruban state-owned company. According to his plea agreement, Koolman, a Dutch citizen living in Florida, operated a money laundering conspiracy between 2005 and 2016 in his position as Setar’s product manager. Lawrence W. Parker, Jr., who owned several Florida-based telecommunications companies, previously pleaded guilty to paying bribes to Koolman and Koolman’s wife.
Koolman admitted that he conspired with Parker and others to transmit funds from Florida and elsewhere in the United States to Aruba and Panama with the intent to promote a wire fraud scheme and a corrupt scheme that violated the FCPA. Koolman was promised and received bribes from individuals and companies located in the United States and abroad in exchange for using his position at Setar to award lucrative mobile phone and accessory contracts. Koolman also admitted to providing favored vendors with confidential Setar information in exchange for the more than $1.3 million in corrupt payments.
Setar filed a civil complaint against Koolman and other parties on March 3 in U.S. District Court for the Southern District of Florida, which contains a few points of note. First, Setar describes itself in the complaint as a privatized company, whereas the DOJ’s press release called it an instrumentality of the Aruban government. Second, the complaint states that Setar became aware of some of Koolman’s alleged activities via the Panama Papers, the 2016 leak of over 11 million documents from Panamanian law firm and financial services provider Mossack Fonseca.
Julia Vivi Wang, a Chinese-born naturalized U.S. citizen, reportedly pleaded guilty this week to violations of the FCPA related to a scheme to bribe the UN General Assembly’s former president John Ashe. Wang is a former executive of a media group that focused on promoting UN development goals, but she was accused of paying the bribe to secure diplomatic postings. She pleaded guilty this week in the SDNY to three counts, including violating and conspiring to violate the FCPA, as well as income tax fraud.
The charges relate to Wang’s payment of $500,000 to Ashe in April 2013 in exchange for receiving a diplomatic posting within the government of Antigua, where Ashe previously served as a UN representative. Wang is just the most recent in a line of other individuals who have faced FCPA repercussions for bribes paid to Ashe (who died in 2016), including Ng Lap Seng, who was found guilty of paying Ashe and another individual bribes worth at least $1 million, and Shiwei (Sheri) Yan who also pleaded guilty to paying Ashe bribes in excess of $800,000. As part of her plea, Wang admitted that she had failed to report approximately $2 million in income to the IRS.
This guilty plea illustrates how prosecutors are able to unwind even complex bribery schemes by methodically targeting individual participants. The criminal charges against Wang were likely bolstered by the string of preceding bribery cases involving similar payments to Ashe that likewise resulted in a guilty pleas and verdicts.
On March 15, Eberhard Reichert, a former executive of a Siemens AG subsidiary, pleaded guilty in the U.S. District Court for the Southern District of New York to conspiracy to violate the Foreign Corrupt Practices Act, including conspiracy to commit bribery, falsify corporate books and records, circumvent internal controls, and commit wire fraud. According to the DOJ press release, Reichert “admitted that he and his co-conspirators concealed the illicit payments through various means, including using shell companies associated with intermediaries to disguise and launder the funds.” Reichert was indicted with seven others in 2011.
Reichert was part of a decade-long scheme during which Siemens paid tens of millions of dollars in bribes to Argentine government officials to secure a contract to create national identity cards. A Siemens subsidiary was awarded a contract worth more than $1 billion to provide the ID cards in 1998. The Argentine government ended the project in 2001. Since then, Siemens and its employees have faced prosecutions and enforcement actions around the world as a result of the bribes and related conduct. Siemens pleaded guilty in the U.S. to violating the books and records provisions of the FCPA in 2008 for its conduct, and subsidiaries in Argentina and other countries pleaded guilty to similar crimes. Siemens also paid $350 million to resolve an SEC case and paid a fine of $800 million to resolve charges brought by the Munich Public Prosecutor’s Office.
Maryland-based Transport Logistics International Inc. enters deferred prosecution agreement for violations of FCPA antibribery provisions
On March 13, a Maryland federal court unsealed bribery-related charges filed in January 2018 against Transport Logistics International, Inc. (“TLI”), a Maryland-based company which is part of France’s Daher Group, as well as a three-year deferred prosecution agreement filed on March 12. The government alleges that TLI conspired to violate the FCPA by arranging and paying bribes to Russian officials to obtain uranium transportation contracts between 2004 and 2014. Pursuant to the deferred prosecution agreement, TLI agreed to pay a $2 million criminal fine, adopt a compliance program, and provide periodic reporting to DOJ. According to the agreement, TLI received credit for its substantial cooperation with the investigation and for its remedial actions, including firing all employees involved in the criminal conduct.
As we covered here, in 2015 three individuals entered into guilty pleas in this matter: Vadim Mikerin, a former Russian official based in Maryland; Daren Condrey, a former co-president of TLI; and Boris Rubizhevsky, an alleged intermediary between TLI and Mikerin. Most recently and as covered here, Mark Lambert, the other former co-president of TLI, was charged in an 11-count indictment, unsealed in January 2018, alleging numerous violations of the FCPA and conspiracy to violate the FCPA.
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.
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