Archive for the ‘FCPA Sentences’ Category

Friday Roundup

Friday, January 22nd, 2016

Roundup2Listening in, for the reading stack, and time served.  It’s all here in the Friday Roundup.

Listening In

This previous post about the $75,000 FCPA enforcement action against Hyperdynamics highlighted that the company spent approximately $12.7 million in pre-enforcement action professional fees and expenses (a shocking 170:1 ratio).

In this recent investor conference call, company executives stated:

“The FCPA investigations restricted our available opportunities to raise capital and significantly increased our legal bills.

[...]

Speaking of legal fees I do want to address the fees we incurred during the FCPA investigation.  As you know, we spent $12 MM from inception to closure of that investigation.  We were unhappily aware that FCPA investigations can take years to conclude but that we only had until September 2016 because of the date for the conclusion of the concession.  We therefore determined that our only option was to do everything in our power to facilitate a resolution of the investigation, and ultimately were able to close the investigations in 20 months. This came at a very heavy legal cost to say the least, but again it was the best option we saw to move forward on the path to drilling the well.”

Dear Hyperdynamics executives and shareholders, you ought to be asking some serious questions about the extent of your pre-enforcement action professional fees and expenses.

To learn more how settlement amounts in an FCPA enforcement action are often only a relatively minor component of the overall financial consequences of FCPA scrutiny and enforcement, see here for “Foreign Corrupt Practices Act Ripples.”

Reading Stack

In 2015, the UC-Davis Law Review and Fordham Law Review both held events focused on bribery and corruption topics. The articles from those events were recently published and are available below.

UC-Davis Law Review

Fordham Law Review

Time Served

In 2013 and 2014 the DOJ brought FCPA and related charges against various individuals associated with broker dealer Direct Access Partners in connection with alleged improper payments to Maria Gonzalez (V.P. of Finance / Executive Manager of Finance and Funds Administration at Bandes, an alleged Venezuelan state-owned banking entity that acted as the financial agent of the state to finance economic development projects).

As recently noted here by Reuters:

“Gonzalez “avoided prison time beyond the 16-1/2 months she already served after admitting that she accepted millions of dollars in bribes from a Wall Street brokerage to which she steered business. Maria de los Angeles Gonzalez de Hernandez, who was a senior official at Caracas-based Banco de Desarrollo Económico y Social de Venezuela, also known as Bandes, was further ordered by U.S. District Judge Denise Cote to forfeit the roughly $5 million she garnered from the scheme. Cote said she was “affected by the degree of remorse” Gonzalez showed in a statement she read to the court through an interpreter. ”We’re enormously grateful for the court’s compassion and understanding,” said Jane Moscowitz, Gonzalez’s attorney, after the sentencing.”

Previously in connection with the same core action:

  • Jose Hurtado was sentenced to three years in prison, followed by three years of supervised release, and consented to a $11.9 million forfeiture.
  • Ernesto Lujan was sentenced to two years in prison, followed by three years of supervised release, and consented to a $18.5 million forfeiture.
  • Tomas Clarke was  sentenced to two years in prison, followed by three years of supervised release, and consented to a $5.8 million forfeiture.
  • Benito Chinea was sentenced to four years in prison, followed by three years of supervised release, and consented to a $3.6 million forfeiture; and
  • Joseph DeMeneses was sentenced to four years in prison, followed by three years of supervised release, and consented to a $2.7 million forfeiture.

*****

A good weekend to all.

 

Friday Roundup

Friday, December 18th, 2015

Roundup2Double standard (sports edition), recent sentencing activity, and scrutiny alerts.  It’s all here in the Friday roundup.

Double Standard (Sports Edition)

A public official wants tickets to a high-profile sporting event. So, through his aides, he asks the entity hosting the event for free tickets. The entity obliges because it needs the public official’s support in a variety of contexts.

A prudent FCPA practitioner would spot the “red flags” as the free tickets (mostly certainly something of value) could be viewed as a way to curry favor with the public official.  Indeed, the competent FCPA practitioner will recall that several FCPA enforcement actions have been based, in whole or in part, on free tickets to sporting events.

However, the public officials in the above example are not “foreign officials,” they are current U.S. officials who want tickets to high-profile college sporting events.

Bribery? Silly you for even mentioning the “b” word.  This is the US of A.

For the latest edition of the double standard, see this Wall Street Journal article titled “Why Tickets Come Easy on Capitol Hill.”

Why do interactions with “foreign officials” seem to be subject to different standards than interactions with U.S. officials? Why do we reflexively label a “foreign official” who receives “things of value” from private business interests as corrupt, yet generally turn a blind eye when it happens here at home? Is the FCPA enforced too aggressively or is enforcement of the U.S. domestic bribery statute too lax? Ought not there be some consistently between enforcement of the FCPA and the domestic bribery statute?

As you contemplate these questions, just remember in the words of the DOJ - ”we in the United States are in a unique position to spread the gospel of anti-corruption”

For additional reading, see here for the recent article “The Uncomfortable Truths and Double Standards of Bribery Enforcement.” In addition, for approximately 50 other posts highlighting double standards, see this subject matter tag.

Sentencing Activity

Vicente Garcia

The DOJ announced:

“Vicente Eduardo Garcia, 65, … was sentenced to 22 months in prison by U.S. District Judge Charles R. Breyer of the Northern District of California.  On Aug. 12, 2015, Garcia pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA).  On July 15, 2015, Garcia and the U.S. Securities and Exchange Commission (SEC) entered into a settlement of the parallel SEC investigation in which Garcia agreed, among other things, to pay disgorgement of $85,965 plus prejudgment interest.  For this reason, the United States did not request, and the court did not order, forfeiture in the criminal action.”

For the specifics of the underlying actions, see this prior post.

Garcia’s sentencing memo contains a section titled “Why Vicente Did It.” It states:

“Vicente participated in the bribery scheme here for two reasons: first, to get $150,000 that Advanced [a Third Party] owed him and, second, to secure the Panamanian government as a new customer for his employer SAP.

Vicente’s did not start his business dealings with the Panamanian government intending to commit a crime. But Vicente ultimately did conspire to bribe Panamanian officials.

He has cooperated with authorities since FBI and IRS agents confronted him at his offices. Other than this instance, Vicente’s business dealings have all been above board and legal.

However, here, once the Minister of Technology made clear to Vicente and his colleagues that for Advanced to receive the contract he would require a bribe, Vicente, rather than refuse, acceded and assisted in the scheme—a decision that he deeply regrets. Though not an excuse, he rationalized it at the time as a way to correct his failure in trying to run his own business.”

Vadim Mikerin

This previous post highlighted the FCPA enforcement action against Daren Condrey, an owner and executive of a Maryland Transportation Company, for allegedly bribing Vadim Mikerin, an alleged foreign official employed by an alleged Russian state-owned / controlled entity.

As highlighted in the prior post, Mikerin was also criminally charged and pleaded guilty to money laundering offenses. Earlier this week, the DOJ announced that Mikerin was sentenced to four years in prison and order to forfeit approximately $2.1 million dollars.

As noted in the release, Condrey awaits sentencing.

Jose Hurtado

In 2013 and 2014 the DOJ brought FCPA and related charges against various individuals associated with broker dealer Direct Access Partners in connection with alleged improper payments to Maria Gonzalez (V.P. of Finance / Executive Manager of Finance and Funds Administration at Bandes, an alleged Venezuelan state-owned banking entity that acted as the financial agent of the state to finance economic development projects).

Recently Jose Hurtado was sentenced to three years in prison, followed by three years of supervised release, and consented to a $11.9 million forfeiture .

Previously:

  • Ernesto Lujan was sentenced to two years in prison, followed by three years of supervised release, and consented to a $18.5 million forfeiture.
  • Tomas Clarke was  sentenced to two years in prison, followed by three years of supervised release, and consented to a $5.8 million forfeiture.
  • Benito Chinea was sentenced to four years in prison, followed by three years of supervised release, and consented to a $3.6 million forfeiture; and
  • Joseph DeMeneses was sentenced to four years in prison, followed by three years of supervised release, and consented to a $2.7 million forfeiture.

Scrutiny Alerts

Sociedad Química y Minera de Chile S.A.

Santiago, Chile based Sociedad Química y Minera de Chile S.A. (SQM), a company with shares traded on the New York Stock Exchange, recently issued this release stating:

“[The] Company’s Board of Directors met … to receive and review a report presented by the U.S. law firm Shearman & Sterling LLP (the Report) for SQM’s AdHoc Committee, which was appointed by the Company’s board in a meeting held February 26, 2015.

[...]

SQM previously informed the relevant authorities and markets that this Committee had been formed and that it had hired the professional services of Shearman & Sterling LLP to investigate and analyze the possible liability for SQM under the Foreign Corrupt Practices Act (FCPA), a United States of America law that applies to the Company as an issuer of securities in the U.S. market. The Chilean law firm Grupo Vial / Serrano Abogados and the international forensic services firm FTI Consulting, Inc. assisted Sherman & Sterling.

The investigation specifically analyzed: (a) Whether the Company had made any payment defined as corrupt for FCPA purposes. (b) Whether the Company had breached the accounting provisions of the FCPA.

The Company’s Management was fully cooperative and transparent during the investigation. Among other procedures, investigators collected more than 3.5 million documents and selected approximately 930,000 for review. In addition, 24 individuals were interviewed, including members of the board prior to April 2015, as well as SQM’s senior executives and other relevant employees. A forensic analysis of the Company’s accounting since 2008 was also conducted. Interviews were also requested from Mr. Patricio Contesse G.—former CEO of SQM—and Mr. Patricio Contesse F.—former director of SQM, but they declined.

After close to nine months of investigation, Shearman & Sterling, assisted by Grupo Vial / Serrano Abogados and FTI Consulting, informed the Committee that for FCPA purposes: (a) payments were identified that had been authorized by SQM’s former CEO, Mr. Patricio Contesse G., for which the Company did not find sufficient supporting documentation; (b) no evidence was identified that demonstrates that payments were made in order to induce a public official to act or refrain from acting in order to assist SQM obtain economic benefits; (c) regarding the cost center managed by SQM’s former CEO, Mr. Patricio Contesse G., it was concluded that the Company’s books did not accurately reflect transactions that have been questioned, notwithstanding the fact that, based on the amounts involved, these transactions were below the materiality threshold defined by the Company’s external auditors determined in comparison to SQM’s equity, revenues, expenses or earnings within the reported period; and (d) SQM’s internal controls were not sufficient to supervise the expenses made by the cost center managed by SQM’s former CEO and that the Company trusted Mr. P. Contesse G. to make a proper use of resources.

Throughout this process, SQM has taken and will continue to take the proper measures to strengthen its corporate governance and internal controls in order to correct the issues identified in the Report. The measures that have already been adopted include: (i) dismissing Mr. P. Contesse G. from his position as SQM’s CEO; (ii) filing corrected tax returns with the Chilean Internal Revenue Service; (iii) creating SQM’s Corporate Governance Committee, which is comprised of three of its directors; (iv) separating and strengthening the team and responsibilities of the Internal Audit and Compliance departments, both of which report to SQM’s board of directors, while the latter also reports to the Company’s CEO; (v) hiring KPMG, the auditing firm, to review SQM’s payment process controls; (vi) improving the Company’s payment process controls and approvals; and, (vii) reformulating SQM’s Code of Ethics.

Lastly, after acknowledging receipt of the Report, the directors expressed that the Company will continue to cooperate with authorities and adopt the appropriate measures to improve its corporate governance and internal controls.”

SNC Lavalin

One reason SNC Lavalin has been pouting about Canada’s lack of deferred prosecution agreements is because of the collateral consequences of a criminal conviction.

On that front, the company recently announced:

“[The Company] has signed an administrative agreement with Public Services and Procurement of the Government of  Canada  (PSP) under the Government of  Canada’s  new Integrity Regime. The administrative agreement allows companies – that have federal charges pending against them – to continue to contract with or supply the Government of  Canada

“This is another example of our commitment to move forward. I thank PSP for recognizing SNC-Lavalin’s significant efforts and dedication to continuous improvement in ethics and compliance, which have allowed us to meet the difficult criteria of the new Integrity Regime. I am proud of our ethics and compliance program that is an integral part of the way we work every day, here in Canada  and globally. Our clients and partners have recognized our concrete actions, efforts and accomplishments over the past three years,” stated Neil Bruce, President and CEO, SNC-Lavalin. “This agreement is a milestone that allows us to continue to be an important contributor to the Canadian economy. It protects the public, and is good for our employees, clients, investors and all of  Canada.”

The administrative agreement is due to the federal charges filed against three of the company’s legal entities in , which SNC-Lavalin contests. SNC-Lavalin confirms that, provided the company complies with the terms of the administrative agreement, it will be able to continue to bid on and win contracts to provide procurement goods and services to all Canadian government departments and agencies, in Canada  and abroad, until the final conclusion of those charges.”

*****

A good weekend to all.

Friday Roundup

Friday, December 11th, 2015

Roundup2Standard Bank roundup, recent FCPA sentences, scrutiny alert, and for the reading stack.  It’s all here in the Friday roundup.

Standard Bank Roundup

A roundup within the Friday roundup.

The development of the month so far was the U.K. (and related) enforcement action against Standard Bank – a first in two regards.

(i) the first use of Section 7 of the Bribery Act (the so-called failure to prevent bribery offense) in a foreign bribery action; and

(ii) the first use of a deferred prosecution agreement in the U.K..

  • This post highlighted “what” was resolved - an alleged violation of Sec. 7 of the Bribery Act for failure to prevent bribery.
  • This post highlighted “how” the enforcement action was resolved – the U.K.’s first deferred prosecution agreement.
  • This post highlighted the creativity of the SEC in also bringing an enforcement action against Standard Bank.
  • This post highlighted the thoughts of others about the enforcement action.

Recent FCPA Sentences

In 2013 and 2014 the DOJ brought FCPA and related charges against various individuals associated with broker dealer Direct Access Partners in connection with alleged improper payments to Maria Gonzalez (V.P. of Finance / Executive Manager of Finance and Funds Administration at Bandes, an alleged Venezuelan state-owned banking entity that acted as the financial agent of the state to finance economic development projects).

Recently, Tomas Clarke and Ernesto Lujan were sentenced after pleading guilty to FCPA and related offenses.

Lujan was sentenced to two years in prison, followed by three years of supervised release, and consented to a $18.5 million forfeiture “representing the proceeds and property involved in the commission of the offenses alleged.”

Clarke was also sentenced to two years in prison, followed by three years of supervised release, and consented to a $5.8 million forfeiture “representing the proceeds and property involved in the commission of the offenses alleged.”

Previously, Benito Chinea and Joseph DeMeneses were sentenced to four years in prison and consented to $3.6 million and $2.7 million forfeiture.

Scrutiny Alert

Analogic

The company which has been under FCPA scrutiny since 2011 recently disclosed:

“As initially disclosed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2011, we identified certain transactions involving our Danish subsidiary BK Medical ApS, or BK Medical, and certain of its foreign distributors, with respect to which we have raised questions concerning compliance with law, including Danish law and the U.S. Foreign Corrupt Practices Act, and our business policies. These have included transactions in which the distributors paid BK Medical amounts in excess of amounts owed and BK Medical transferred the excess amounts, at the direction of the distributors, to third parties identified by the distributors. We have terminated the employment of certain BK Medical employees and also terminated our relationships with the BK Medical distributors that were involved in the transactions. We have concluded that the transactions identified to date have been properly accounted for in our reported financial statements in all material respects. However, we have been unable to ascertain with certainty the ultimate beneficiaries or the purpose of these transfers. We have voluntarily disclosed this matter to the Danish Government, the U.S. Department of Justice, or DOJ, and the SEC, and are cooperating with inquiries by the Danish Government, the DOJ and the SEC. We believe that the SEC, DOJ, and Danish Government have substantially completed their investigation into the transactions at issue. We are continuing our discussions with the SEC and have commenced discussions with the DOJ and Danish Government concerning a possible resolution of these matters. During the three months ended July 31, 2015, we accrued a $1.6 million charge in connection with a settlement proposal that we made to the SEC, which proposal was rejected by the SEC. In the first quarter of fiscal 2016, the SEC and DOJ made separate settlement proposals that would include payments in the aggregate amount of approximately $15 million. We are uncertain whether the Danish Government will seek to impose sanctions or penalties against us. We further believe that, under Danish law, amounts paid to the SEC and/or the DOJ would be taken into account in determining penalties that may be sought by the Danish Government. There can be no assurance that we will enter into any settlement with the SEC, the DOJ or the Danish Government, and the cost of any settlements or other resolutions of these matters could materially exceed our accruals. During the three months ended October 31, 2015 and 2014, we incurred inquiry-related costs of approximately $0.03 million and $0.8 million, respectively, in connection with this matter.”

Reading Stack

This Law360 article by Gerry Zack (Managing Director in BDO’s global forensics practice) titled “Implicit Bias – the Hidden Investigation Killer” caught my eye.

“Everyone carries a variety of biases around with them on a daily basis. Yet, many people are confident they can set their biases aside when it comes time to perform a workplace investigation, even referring to the final product as an “unbiased investigation.” But science has repeatedly proven that we aren’t nearly as good at setting our biases aside as we’d like to think  …”

The article touches upon affinity bias, confirmation bias, and priming.

Having conducted numerous internal investigations around the world (in the FCPA context and otherwise), I think there is merit to the issues discussed in the article – issues that contribute to the divide between the DOJ and SEC “processing” corporate FCPA internal investigations and the general struggles of the enforcement agencies proving FCPA offenses in the context of an adversarial proceeding.

*****

From outgoing SEC Commissioner Luis Aguilar – “Commissioner Aguilar’s (Hopefully) Helpful Tips for New SEC Commissioners.”

*****

A good weekend to all.

Friday Roundup

Friday, October 16th, 2015

Roundup2Rama sentenced but what is the back story, scrutiny alert, and for the reading stack.  It’s all here in the Friday roundup.

Rama Sentenced, But What is the Back Story?

As noted here, last week James Rama, a former executive at defense contractor IAP Worldwide Services, was sentenced to four months in federal prison for his role in a bribery scheme involving a security systems project with the Kuwaiti Ministry of the Interior.

In its sentencing memo, the DOJ requested that Rama be sentenced to one year.  That the judge rejected the DOJ’s sentencing recommendation is not the story – judges frequently reject DOJ sentencing recommendations in individual FCPA cases.

Rather, according to a knowledgeable source who was unable to provide specifics, there is a more interesting back story in connection with the Rama prosecution.  Indeed, as noted in this article:

“Mr. Rama said he was disappointed that after a long investigation the case wasn’t pursued to its “proper conclusion.” Defense counsel William Brennan said the elaborate system required for the bribery reached higher at IAP than the Justice Department prosecuted. “There are people…that should have been prosecuted in this case and for whatever reason they were not,” Mr. Brennan said about the bribery scheme Mr. Rama helped engineer on the ground in Kuwait. The Justice Department lawyers present didn’t respond to the allegations at the hearing. The government said in its settlement with IAP that a “variety of factors, including but not limited to IAP’s cooperation,” led to the non-prosecution agreement.”

Consistent with the above, Rama’s lawyers stated in this sentencing memo as follows.

“Mr. Rama was a minor, albeit integral, part of a much larger scheme concocted by more senior executives at IAP – none of whom will be prosecuted in this case. In addition, IAP has entered into a non-prosecution agreement with the government and agreed to pay a $7.1 million penalty to resolve the matter. It would appear that Mr. Rama is the only individual who will face criminal prosecution in this matter.” (Emphasis in original).

Consistent with there being an interesting backstory in the IAP / Rama prosecution, on the same day the DOJ filed its sentencing memo, the court docket indicates that the DOJ also filed a motion under seal, a motion that will likely never see the light of day.

Just remember as Assistant Attorney General Leslie Caldwell recently stated, “greater transparency benefits everyone.”  (See here for the prior post).

Scrutiny Alert

Approximately four years ago (see here for the prior post), Kraft Foods disclosed FCPA scrutiny resulting from its acquisition of Cadbury in connection with a manufacturing facility in India.  Kraft, now known as Mondelēz International, Inc., was recently the focus of this Wall Street Journal article which states:

“[The SEC] preparing civil charges against snack-food maker Mondelez International Inc. in connection with a long-running investigation of payments its Cadbury unit made in India, said people familiar with the matter. [...]  The company concluded in an internal report by its lawyers in 2011 that Cadbury had used a consultant to funnel bribes to Indian officials in return for factory approvals and permits, which ultimately allowed Cadbury to claim a tax exemption valued at more than $90 million, according to the report, which was reviewed by The Wall Street Journal. The report says Cadbury also paid fees to eight other consultants from May 2008 to October 2010 “for which the only reasonable explanation is that they have been used to mask payments to government officials.” [...] Mondelez’s outside attorneys at Baker & McKenzie have told government investigators that they identified suspicious payments to consultants but couldn’t determine what ultimately became of the money, according to a person familiar with the matter. [...]  The most serious allegations centered on a tax break available to companies that began production in new plants in the Northern Indian state of Himachal Pradesh,where Cadbury’s Baddi plant is located, by March 31, 2010. Cadbury had planned to build a new standalone factory in Baddi, but instead it decided to add a second floor to its existing plant in 2008, with three new production lines for chocolate candies. The company gave the second floor its own entrance and claimed it as an independent unit on paper to qualify for the tax exemption, which would save the company more than $90 million over a decade, according to legal documents the company filed in India. But Cadbury’s lawyers determined in late 2009 that, in order to claim the exemption, the company needed to get separate licenses and approvals for the second-floor unit from Indian authorities, a process that typically takes more than six months, according to a timeline created as part of the internal investigation. With the sunset of the tax break just a few months off, Cadbury hired a consultant to “get all necessary approvals to start-up Unit 2 at Baddi…urgently,” the 2011 report said. Internal investigators concluded that the consultant’s fees—about $55,000—were passed on to Indian officials as bribes, according to their report. [...]  In March, an Indian tax commissioner fined Cadbury more than $90 million, rejecting the company’s argument that the addition of a second floor was the legal equivalent, for tax purposes, of a new plant. [A Mondelez spokesman] said the company is appealing the commissioner’s order. “We continue to believe that the decision to claim the excise-tax benefit is valid.”

Reading Stack

An informative read from Morgan Lewis regarding the European Court of Justice opinion in Maximillian Schrems v. Data Protection Commissioner, in which the court struck down a US-EU agreement that allowed companies to move personal electronic data between the European Union and the United States.

“This ruling, which is final and cannot be appealed, is likely to have far-reaching effects on how US corporations investigate allegations of wrongdoing by affiliates and subsidiaries based in Europe, including investigations of potential violations of the US Foreign Corrupt Practices Act (FCPA).”

Among those critical of the DOJ’s recently released Yates Memo is James Koukios (previously the Senior Deputy Chief of the Fraud Section in the DOJ Criminal Division and an Assistant Chief in the Fraud Section’s FCPA Unit).  In this Corporate Crime Reporter interview, Koukios offers his perspectives on the Yates Memo and other issues relevant to FCPA enforcement.

*****

A good weekend to all.

Friday Roundup

Friday, September 18th, 2015

Roundup2DOJ compliance counsel identified, additional lenient PetroTiger exec sentences, scrutiny alerts and updates, and for the reading stack. It’s all here in the Friday roundup.

DOJ Compliance Counsel

As highlighted in this previous post, last month word spread that “the [DOJ] is hiring a compliance counsel who will help prosecutors determine whether companies facing corruption allegations are victims of rogue employees or willfully blind.”

According to this Global Investigations Review article:

“According to two people familiar with the matter, the US Department of Justice (DoJ) has hired Hui Chen, Standard Chartered’s former head of anti-bribery and corruption compliance, as its new compliance counsel. [...] Before joining Standard Chartered, Chen served as an assistant general counsel at US pharmaceutical company Pfizer between June 2010 and September 2013. In this position, she oversaw the drug-maker’s internal investigations in the Asia-Pacific region, and also led compliance reviews in Latin America, Europe and the Middle East. Chen previously worked for Microsoft for 13 years, serving first in the intellectual property litigation team and later as a compliance officer in China. During the 1990s, Chen worked as a DoJ trial lawyer in Washington, DC, and as an assistant US attorney in Brooklyn.”

PetroTiger Exec Sentences

The DOJ’s FCPA enforcement action against former PetroTiger executives has concluded with additional thuds.

By way of background, the DOJ’s prosecution of Joseph Sigelman fell apart after a key cooperating witness acknowledged giving false testimony. The DOJ effectively pulled its case although Sigelman did plead guilty to substantially reduced charges.  In sentencing Sigelman to probation, Judge Joseph Irenas (D.N.J.) blasted the DOJ.  (See here for the prior post).

Recently, Judge Irenas sentenced the two remaining defendants in the case: Gregory Weisman and Knut Hammarskjold.

Weisman was sentenced to two years probation and ordered to pay a $30,000 fine.  Hammarskjold was likewise sentenced to two years probation and ordered to pay a $15,000 fine as well as approximately $106,000 in restitution for the benefit of PetroTiger.

According to a media source: “before pronouncing the sentence[s], Judge Irenas said he had to reflect the reality that the ultimate sentence here is influenced by the Sigelman case.”

Scrutiny Alerts and Updates

NextEra Energy

In the “you don’t see this everyday” category, as indicated in this press release, it appears someone hired a public relations company to issue a release stating:

“[C]omplaints were [recently] filed with the United States Department of Justice regarding the conduct of NextEra Energy Inc. and RES Americas subsidiaries under the Foreign Corrupt Practices Act related to each company’s attempts to win renewable energy contracts in Addington Highlands, Ontario and North Frontenac, Ontario, from the Government of Ontario through the Independent Electricity System Operator.”

Analogic

The company which has been under FCPA scrutiny since 2011 recently disclosed:

“As initially disclosed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2011, we identified certain transactions involving our Danish subsidiary BK Medical ApS, or BK Medical, and certain of its foreign distributors, with respect to which we have raised questions concerning compliance with law, including Danish law and the U.S. Foreign Corrupt Practices Act, and our business policies. We have commenced discussions with the Securities and Exchange Commission concerning the resolution of the SEC inquiry into the matter and have proposed a payment of $1.6 million in settlement of such inquiry. During the three months ended July 31, 2015, we accrued a $1.6 million charge in connection with our settlement proposal. We are uncertain whether the U.S. Department of Justice or the Danish Government will seek to impose any sanctions or penalties against us and have not engaged in settlement discussions with either of these entities. There can be no assurance that we will enter into any settlement with the SEC, the DOJ or the Danish Government, and the cost of any settlements or other resolutions of these matters could materially exceed our accruals.”

Listening In

A fruitful source of unscripted, “real-person” talk about FCPA issues is earnings conference calls and other investor calls.  A recent Expeditors (a global logistics company headquartered in Seattle, Washington) investor day conference call caught me eye.

During the call, an analyst asked:  ”Do you see any limits to, whether it’s Europe or Africa or any other geographies, where maybe that’s a difficult – that’s a barrier that kind of prevents as much growth or marketplace capture as you would like, that there’s maybe less receptivity to that?”

Jeff Musser, Senior V.P. and CFO stated:

“When we look at other markets [besides Europe], some of the challenges that we have seen in other markets really have nothing to do with our model and how we roll out our model. The bigger concerns are compliance in some of those markets.So you look at places like Africa, you look at places like Russia. There’s tremendous pressure on us and on our customers to deal with things like the Foreign Corrupt Practices Act. We may — as we decide to go into those markets, we may have to do it in a little bit different way that incentivizes the right behavior and drives the right thing, so those are things that are in the back of our mind as we start thinking about these markets. We don’t think that we are limited in these markets. It just may take a little bit different approach.”

For the Reading Stack

Consistent with my own observations in “The Facade of FCPA Enforcement” (2010) and numerous articles and posts thereafter, Brian Whisler (Baker & McKenzie) writes in “Why DOJ Struggles to Convict Individuals in FCPA Cases” as follows.

“Given the enormous litigation and reputational risk, companies are generally averse to contesting criminal charges at trial. As a result, the FCPA practice has primarily evolved through a series of corporate settlement agreements, over which courts have little to no supervision and in which the burden of proof for evidentiary purposes has less impact. The relative absence of case law in the field has meant that the Justice Department has been able to advance expansive views regarding the scope and applicability of the FCPA, largely unhindered by skeptical juries and contrary case law. However, these settlements carry little to no precedential value, and if individual prosecutions multiply as the Justice Department has promised, then prosecutors will increasingly be held to the high burden of proof and forced to defend their theories before judges. It is already clear that the Justice Department will face difficulties in advancing some of its more aggressive theories in court. Last month, a federal judge rejected the Justice Department’s contention that a nonresident foreign national who worked for a U.S. company’s foreign affiliate could be convicted of conspiracy to violate the FCPA based on traditional accomplice liability theories. See United States v. Lawrence Hoskins, 3:12cr238 (D. Conn. Aug. 13, 2015). Instead, the Justice Department must show that the defendant acted as an agent for the U.S. company itself, a harder task given the defendant’s lack of a direct relationship to the U.S. company. Over the last few years, the Justice Department has used increasingly expansive views of conspiracy and accomplice liability to assert jurisdiction over potentially improper payments paid by employees and agents of foreign subsidiaries and affiliates of U.S.-listed companies. As a result, companies have routinely entered into massive FCPA settlements regarding conduct that has only minimal connections to the United States, U.S. citizens or even U.S. companies. The court’s ruling may ultimately encourage other nonresident foreign nationals, and corporations that only face exposure due to the conduct of their foreign affiliates’ employees, to resist settling future charges with the government. Hoskins is likely to be one of a number of adverse legal rulings regarding the scope of the FCPA if the Justice Department maintains its commitment to increase individual FCPA prosecutions. Adverse case law seems to beget more adverse case law for the DOJ; Hoskins heavily relied on the reasoning of one of the other rare FCPA cases to go to trial, United States v. Castle, 925 F.2d 831 (5th Cir. 1991), which rejected prosecutors’ efforts to charge officials who accept bribes under the FCPA.”

*****

A good weekend to all.