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“Our Stellar FCPA Unit Continues To Go Gangbusters, Bringing Case After Case”

Monday, May 6th, 2013

Last Friday, Acting Assistant Attorney General Mythili Raman delivered prepared remarks (here) at a Corporate Crime Reporter sponsored conference in Washington, D.C. The conference focused on DOJ and SEC resolution policies and procedures. While Raman’s remarks were broad in scope, a portion of her remarks focused on the FCPA, and in her first publicly released statements on the FCPA, Raman continued to employ much of the same FCPA rhetoric that defined Lanny Breuer’s tenure as Assistant Attorney General. (See here for an article summarizing Breuer’s many FCPA speeches).

Raman began her FCPA remarks by stating as follows. “Our stellar FCPA Unit continues to go gangbusters, bringing case after case.” [Note, Raman's delivered remarks deviated from her prepared remarks as to this sentence].

Stellar?

The last three times the DOJ has been put to its ultimate burden of proof in FCPA cases, the end results were either acquittals or dismissals, including for prosecutorial misconduct.

In the Africa Sting cases, Judge Richard Leon stated as follows. “This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement. . . . I for one hope this very long, and I’m sure very expensive, ordeal will be a true learning experience for both the [DOJ] and the FBI as they regroup to investigate and prosecute FCPA cases against individuals in the future.”

In the John O’Shea case, Judge Lynn Hughes stated as follows: ‘‘The problem here is that the principal witness against Mr. O’Shea . . . knows almost nothing … [ ] The government should have been prepared before they brought the charges to the Grand Jury. . . . You shouldn’t indict people on stuff you can’t prove.’’

In the Lindsey Manufacturing case, Judge Howard Matz stated as follows. “The instances of misconduct were so varied and occurred over such a long time that they add up to an unusual and extreme picture of a prosecution gone badly awry.”

[For more on the above cases, see my article "What Percentage of DOJ FCPA Losses Is Acceptable?"]

As to the FCPA, Raman further stated as follows [the remainder of the post is from the DOJ's release].

“Just in the last month, we announced charges against several key defendants in ongoing, active FCPA investigations, one case – with the U.S. Attorney’s Office in Manhattan – involving an alleged bribery scheme to secure mining rights in the Republic of Guinea, and another – with the U.S. Attorney’s Office in Connecticut – involving an alleged bribery scheme to secure power contracts in Indonesia.”

[...]

“In our FCPA prosecutions, too, we aggressively use all the tools available to us. As is evident in our many recent foreign bribery cases, individual targets all over the globe are being charged and arrested, and many companies across a variety of industries have entered into guilty pleas and exacting deferred prosecution agreements with the government. In reaching these dispositions, we can and do require companies to remediate their criminal practices – sometimes with the oversight of a corporate monitor. By demanding remediation as part of such a resolution, we can clean up the misdeeds at a corporation in a lasting way. Corporate leadership is often replaced. We frequently require businesses to implement and sustain rigorous internal controls and compliance programs. And the implementation of these sorts of internal controls by one company in a particular industry can often have a cascading, beneficial effect at other companies that follow suit. You need only look to the effects of our FCPA enforcement program on corporate compliance culture to see that this is true.”

“Additionally, it is important to note that no matter how we proceed in any particular case, we always put a premium on securing cooperation from corporate entities, because meaningful cooperation enables us to hold criminally accountable to the fullest extent possible the widest possible range of bad actors, from individuals responsible for the criminal conduct to other business entities. Simply put, a company’s cooperation – which can lead us to critical information about wrongdoing by executives and employees – can absolutely make the difference as we assess whether there is proof beyond a reasonable doubt sufficient to charge an individual. Moreover, the value of this cooperation is only enhanced when our investigations cross international borders, as they frequently do. We routinely face the reality that in many foreign jurisdictions there are legal roadblocks, including data privacy limits, to what U.S. law enforcement can obtain if it seeks to build a case; in those circumstances, the company’s cooperation can be the critical factor in our ability to hold individual wrongdoers to account.”

“Let me give you a recent example from the FCPA context. In March 2012, we announced that we had entered into a DPA with BizJet International Sales and Support Inc., an aircraft services company, and an NPA with its parent company, Lufthansa Technik AG. As part of the resolution, BizJet admitted to bribing Latin American officials in order to secure various services contracts. And, critically for our prosecutors, BizJet also agreed, together with Lufthansa, to cooperate in our ongoing investigation, continue implementing an enhanced compliance program and internal controls, and pay $11.8 million in criminal penalties. Our agreements with BizJet and Lufthansa laid the groundwork for us to bring felony charges against high-ranking corporate executives. Just last month, we announced charges against four former BizJet executives, including the former president and CEO, and the former sales manager. This example, among many others, proves that, no matter what form of criminal resolution we reach with a company, it decidedly does not mean immunity for its culpable employees – indeed, the opposite is true.”

*****

Despite several individual enforcement actions in April, the fact remains that since 2008 approximately 75% of DOJ FCPA enforcement actions, have not (at least yet) resulted in any DOJ charges against company employees. (See here for the prior post with statistics through 2012).

Moreover, as indicated in this prior post, contrary to Raman’s remarks regarding the “form of criminal resolution,” since NPAs and DPAs were first introduced to the FCPA context in 2004, only 6.5% of corporate DOJ FCPA enforcement actions resolved solely with an NPA or DPA have resulted in related criminal charges of company employees. This compares to 83% of corporate DOJ enforcement actions that were the result of a criminal indictment or resulted in a guilty plea by the corporate entity resulting in related criminal charges of company employees.

I presented these numbers at the conference during a panel on NPAs and DPAs. Denis McInerney (DOJ, Deputy Assistant Attorney General) was on the panel and I stated that the ball was now in his court to explain this wide gap. He described two enforcement actions resolved via an NPA or DPA in which there were indeed related individual prosecutions, but otherwise said that he did not know where these numbers are coming from.

The numbers are described in this prior post. It was really quite easy calculating the numbers. One simply takes all DOJ corporate enforcement actions since 2004 and then looks to see if there have been related individual actions against company employees.

During the panel, McInerney made an important acknowledgment. After I discussed Gabrial Markoff’s excellent article “Arthur Anderson and the Myth of the Corporate Death Penalty” (see here for the prior post), McInerney agreed that there is a very small chance that a company would be put out of business as a result of actual DOJ criminal charges. This was a notable acknowledgment in that the so-called “Arthur Anderson” effect has always been a central justification for the DOJ’s frequent use of NPAs and DPAs. For instance, see this prior post regarding Lanny Breuer’s September 2012 NPA / DPA speech. As fellow panelist Professor David Uhlmann (a frequent critic as well on DOJ’s use of NPAs and DPAs – see here) stated, the DOJ’s policy on NPAs and DPAs is a “policy is search of a rationale.”

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In other DOJ news, last Friday the DOJ announced (here) that Paul Novak (a former consultant for Willbros International who previously pleaded guilty – see here for the prior post) was sentenced by U.S. District Court Judge Simeon Lake (S.D.Tex.) to 15 months in prison and two years of supervised release.

Of perhaps greater note, Novak was ordered to pay a $1 million fine. This is among the top individual FCPA criminal fines in history.

The DOJ’s release states that in sentencing Novak, “the court took into consideration the assistance Novak provided the government in ongoing investigations.” Novak’s sentencing documents are under seal and not publicly available.

In May 2008, Willbros resolved parallel DOJ (here) and SEC (here) FCPA enforcement actions and agreed to pay approximately $32 million in combined fines and penalties.

Friday Roundup

Friday, April 13th, 2012

A costly monitor, Daimler’s DPA debacle, meeting releases, and another addition to the list (in an unusual way), it’s all here in the Friday roundup.

Willbros Monitor Costs

Earlier this week, Willbros Group announced (here) “that in connection with the Company’s completion of the requirements of the DPA and expiration of the term of the monitorship, on March 30, 2012, the DOJ filed a motion to dismiss the criminal charges filed previously against the Company stemming from legacy issues in Nigeria and South America in 2005 and prior years, which led to the DPA.” In May 2008, Willbros resolved parallel DOJ (here) and SEC (here) FCPA enforcement actions and agreed to pay approximately $32 million in combined fines and penalties.

Pursuant to the May 2008 DOJ DPA, the monitor was supposed to be engaged by Willbros within 60 days. However the company disclosed that its monitor was not engaged until September 25, 2009 – an astounding year plus delay in engaging the monitor. Furthermore, although the monitor was supposed to serve a three year term per the DPA, the early termination provisions of the DPA apparently were triggered. Even though the monitor got a late start and its three year term was trimmed, the Willbros monitor had a nice assignment. Doing the math from figures disclosed in various SEC filings, the Willbros monitor cost has been approximately $10.2 million subject to increase for 1st quarter 2012 expenses ($3.6 million for the year ended Dec. 31, 2011; $4 million for the year ended Dec. 31, 2010; and $2.6 million for the year ended Dec. 31, 2009).

During a recent earnings conference call, Randy Harl (President and CEO of Willbros) stated as follows. “The DOJ monitorship brought great positive change to Willbros in the form of a stronger compliance culture. The cost of the monitor and the major spending to establish the required controls and processes are behind us. However, we will continue to invest in a compliance culture.”

Daimler DPA Debacle

While Willbros’s DPA expired, Daimler’s DPA was extended. As noted by Christopher Matthews in this Wall Street Journal Corruption Currents report, the two year DPA was set to expire, but was extended until December 31st. As noted in this prior post, in April 2010, Daimler agreed to pay approximately $185 million to resolve parallel DOJ and SEC FCPA enforcement actions. The prior post, along with this post, noted that the prosecution was a joke from the start, among other things, U.S. District Court Judge Richard Leon approved settlement on April Fool’s Day. The DOJ’s release noted that Daimler (and three of its subsidiaries) “brazenly offered bribes in exchange for business around the world” and that Daimler “saw foreign bribery as a way of doing business.” The DOJ alleged improper conduct all the way up to senior levels of the company, yet Daimler was not required to plead guilty to anything.

Instead Daimler was offered a two-year DPA. The term of the DPA could be extended if Daimler “knowingly violated any provision of the Agreement.” This recently filed amendment to the DPA is silent as to the reason for the extension.

I intended, but forgot, to include the above Daimler development in yesterday’s post (here) regarding NPAs and DPAs. Needless to say, the Daimler DPA debacle furthers the rationale for abolishing such resolution vehicles.

Chamber Sponsored FCPA Roundtable

Earlier this week, the U.S. Chamber of Commerce Institute for Legal Reform hosted a roundtable discussion regarding the FCPA and upcoming FCPA guidance with Assistant Attorney General Lanny Breuer, SEC Enforcement Division chief Robert Kuzami and Commerce Department General Counsel Kameron Kerry.

In this release, Lisa Rickard (President of the U.S. Chamber Institute for Legal Reform) stated as follows. “The business community is pleased with today’s frank and productive discussion on the significant uncertainty that many U.S. businesses face when attempting to comply in good faith with the FCPA. We are encouraged by the thoughtful dialogue that helped us reach a mutual understanding on many of these important issues. We look forward to working with the administration as it prepares the forthcoming guidance.” As noted in the release, the roundtable was attended by the following business groups or trade associations: the Advanced Medical Technology Association, the American Insurance Association, the International Association of Drilling Contractors, the International Stability Operations Association, the National Association of Criminal Defense Lawyers, the National Association of Manufacturers, the National Foreign Trade Council, PhRMA, the Professional Services Council, the Retail Industry Leaders Association, and The Financial Services Roundtable.

In this release, Rosario Palmieri (Vice President for Infrastructure, Legal and Regulatory Policy of the National Association of Manufacturers) stated as follows. “Manufacturers are facing a great deal of uncertainty when it comes to complying with the Foreign Corrupt Practices Act. Today we had a very productive discussion and were able to share manufacturers’ concerns. We are hopeful that a continuing dialogue with the Administration will help us meet our mutual goals of increasing exports, stamping out corruption and providing clear rules of the road for international business.”

Another Addition to the List

In this recent release, Transparency International urges the DOJ to investigate the conduct of Walters Power International (an Oklahoma based company that supplies, develops, services and manages electrical generation power plants around the world see here) in connection with power plant projects in Pakistan. It is certainly not the traditional way in which companies become the subject of FCPA scrutiny, but even so it makes the list, and according to my tally, in the last seven weeks, eight companies have newly become the focus of FCPA scrutiny.

Also, last week’s post (here) discussed recent Libya related disclosures by Total S.A. and Eni S.p.A. It turns out that Marathon Oil Corp. can be added to that list. In its recent annual report, the company stated as follows. “On May 25, 2011, we received a subpoena issued by the SEC requiring production of documents related to payments made to the government of Libya, or to officials and persons affiliated with officials of the government of Libya. We have been and intend to continue cooperating with the SEC in its investigation.”

*****

A good weekend to all.

Friday Roundup

Friday, August 20th, 2010

The Bribery Act is not the only thing delayed in the U.K., where in the world is James Tillery, Thai authorities looking into Alliance One and Universal Corp bribe recipients, and corporate directors appear satisfied … it’s all here in the Friday roundup.

BAE U.K. Plea Agreement Delayed

In a recent article in The Times (London), Alex Spence and David Robertson report that the BAE – SFO plea agreement “is unlikely to come before the courts for approval before November.”

In February (see here) the SFO announced that it “reached an agreement with BAE Systems that the company will plead guilty” to the offense of “failing to keep reasonably accurate accounting records in relation to its activities in Tanzania.” The SFO resolution was controversial given that BAE was viewed by many to have engaged in bribery around the world.

The Times reports “that the SFO fears that a judge may now refuse to approve the BAE settlement or increase the penalties imposed on the company.” The article indicates that “BAE, which has always denied bribery, is understood to be frustrated by the slow progress of the SFO case, but the delay is not thought to have had an impact on the company’s operations.”

James Tillery

In December 2008, James Tillery, a former executive of Willbros International Inc., and Paul Novak, a consultant to the company, were criminally charged “in connection with a conspiracy to pay more than $6 million in bribes to government officials in Nigeria and Ecuador …” (see here).

In November 2009, Novak pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA (see here).

Tillery has apparently been hanging out in Nigeria, but is now apparently in custody according to various Nigerian news outlets. According to the sources, “Tillery was believed to have been handed over by officials of Interpol to officials of the US Federal Bureau of Investigation (FBI).”

Apparently this occurred “without the knowledge of Attorney-General of the Federation and Minister of Justice, Mr. Mohammed Adoke, who is supposed to be notified before such action is taken. Under section 6 of the Extradition Act, a request for extradition is supposed to be sent to the AGF who is supposed to arraign such a deportee before a magistrate court and upon the declaration of the magistrate, the deportee is deported accordingly.”

Then it was reported that Tillery’s extradition “was stopped by immigration officials at the Murtala Muhammed International Airport, Lagos because he did not have a travel document.”

Then Tillery’s Nigerian lawyer apparently stepped in and said that the attempted extradition was a “grave assault on the sovereignty of Nigeria” and a violation of Nigeria’s Extradition Act because Tillery renounced his U.S. citizenship and became a Nigerian by naturalization in 2009. Thus, the lawyer argued that the U.S. needed to follow legal steps in Tillery’s extradition.

Then it was reported that Justice Abang Okon of the Federal High Court in Lagos ordered the Federal Government to halt its alleged plan to extradite Tillery from Nigeria to the U.S.

For more on Willbros Group and other individuals involved in related enforcement actions (see here and here).

Thai Authorities Investigating Alliance One / Universal Corp. Bribe Recipients

Earlier this month, the DOJ and SEC announced a joint FCPA enforcement action against tobacco companies Alliance One International Inc. and Universal Corporation. Certain of the allegations against both companies involved bribe payments to “Thai government officials to secure contracts with the Thailand Tobacco Monopoly (TTM), a Thai government agency, for the sale of tobacco leaf.” (See here).

In this prior post, I noted that it is potentially embarrassing for a foreign country to have “one of its own” profiled in a U.S. FCPA enforcement action. With increasing frequency, the end result is that the alleged “foreign official” bribe recipient becomes the subject of an “in-country” investigation.

As noted in this Bangkok Post article:

“A local investigation is expected into US allegations that Thailand Tobacco Monopoly staff accepted US$1.93 million (62 million baht) in bribes to buy Brazilian tobacco. The Department of Special Investigation has asked the Finance Ministry to file a complaint against the TTM staff so it can look into the allegations. DSI director-general Tharit Pengdit told the Bangkok Post yesterday the Finance Ministry, which supervises the state-owned cigarette maker, should file a complaint with the DSI so it can look into the US claims. [...] Sathit Limpongpan, permanent secretary for finance, said his ministry would work with the Justice Ministry to seek information from the US Justice Department and would conduct an initial investigation.”

Corporate Directors Are Satisfied

According to a recent legal survey by Corporate Board Member and FTI Consulting (see here), 90% of directors “are satisfied with their in-house legal department’s management” of FCPA issues.

A good weekend to all.

FCPA Enforcement and Credit Ratings

Wednesday, June 9th, 2010

Fitch Ratings (see here) is a global rating agency that provides credit opinions, research and data to the world’s credit markets.

It recently issued a report titled “U.S. Foreign Corrupt Practices Act – No Minor Matter.”

The report contains some interesting and informative non-legal perspectives on FCPA enforcement which are excerpted below.

*****

“Aside from management distraction and reputational risk, additional compliance costs and fines [arising from FCPA violations] could have rating implications for those companies with modest FCF [free cash flow] and/or liquidity. It should also be noted that it can take years from the discovery of a violation to the time a plea agreement is reached. In the interim, corporate credit profiles, liquidity, and ratings may weaken. The fine that could be easily paid with cash on hand today might not be readily payable years down the road if a company’s credit profile has weakened and liquidity becomes constrained.”

The report notes that many FCPA fines are “imposed on large investment grade corporations whose substantial cash balances easily afforded them the ability to absorb the payments with no or minimal increases in leverage.”

However, the report notes, “there have also been violations by non-investment grade companies.”

The report then discusses Willbros Group, Inc. “which borrowed from banks on a secured basis.” The report notes that when the company became aware of its FCPA issues (see here for prior posts on Willbros) the issues resulted “in the restatement of its annual financial statements at December 2002 and 2003, as well as the first, second, and third fiscal quarters iof 2004 and 2003.”

The report continues:

“In its 2005 10-K [Willbros] noted that it required an amendment on an indenture due to late filing and several amendments on its bank credit facility. In the July 1, 2005 Second Amendment and Waiver Agreement the credit facility was reduced from $150 million to $100 million.”

*****

The report also discusses the fiscal consequences of “deferring the legal consequences” of an FCPA violation – as so often happens given the frequency in which non-prosecution and deferred prosecution agreements are used to resolve FCPA enforcement actions. Pursuant to these agreements, the non-prosecuted or deferred charges could go “live” if the company fails to adhere to its obligations under the agreement. “This means,” according to the report, “that investors and analysts cannot take a deep breath or relax until” the time period in the NPA or DPA has expired.

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The report also discusses how FCPA issues can become a “sticking point in acquisitions/dispositions of businesses.”

The report notes:

“Sellers may have contingent liabilities related to violations even after assets or businesses are sold. Prices could be less than expected and may hamper sellers who need to receive a certain level of cash or offload debt to deleverage or meet covenants. Additionally, buyers who have not done enough due diligence up front may find themselves with an unexpected obligation and higher litigation expenses in the future.”

For a recent example of a company halting a planned acquisition because of an FCPA issue (see here).

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As to “management distraction” resulting from an FCPA inquiry, the report notes:

“Fines, penalties, widespread adverse publicity with potential damage to corporate reputations, having an independent compliance monitor, and building up the compliance organization can all pose an enormous distraction to management. More importantly, while many companies tend to have significant financial resources at the
start of an inquiry, it generally takes years before there is a conclusion. In that interim, it is possible that a corporation’s financial profile could weaken.”

*****

The report contains an informative chart detailing “Fitch-Rate Issuers” that tracks the date the FCPA issue first went public.

Noteworthy examples include:

Accenture Ltd. (identified a potential FCPA issue in July 2003 – in its March 2010 SEC filing the company stated that there has been no new developments);

Bristol-Myers Squibb Company (the SEC notified the company in October 2004 of an inquiry of certain pharma subsidiaries in Germany – in its 2009 10-K the company stated that it is cooperating with the SEC);

Eli Lilly & Co (the SEC notified the company in 2003 that it was investigating whether certain Polish units has violated the FCPA – in its 2009 10-K the company stated that the DOJ and SEC had issued subpoenas relating to other countries).

*****

As to “credit implications,” the report notes, among other things:

That, because the time from discovery of FCPA violations to resolution can take years, a company’s credit profile could weaken – perhaps reflecting a weak economic cycle. When allegations of bribery separately arise, “for most corporations if the credit profile weakens, potential fines and/or legal contingencies would be among the items of concern in the Rating or Outlook.”

The report then talks specifically about Avon and its FCPA issues (see here for a prior post).

The report notes:

“The cost of investigations and ongoing compliance can be sizeable, and each company’s liquidity and metrics over the medium term would need to be considered. Avon, with $10 billion in 2009 revenues, had $120 million in FCF. In April 2010 the company disclosed that the cost of the investigation would be in the $85 million – $95 million range, up from $35 million in 2009. The additional cost of widening the investigation represents a significant percentage of the company’s 2009 FCF. While the company has more than $1 billion in cash on hand, Fitch’s expectation of moderate FCF in the medium term was part of the rationale for the downgrade to ‘A-’ from ‘A’ on Feb. 2, 2010. Additional layers of investigatory or compliance-related expenses could hamper FCF for Avon and other companies that violate the FCPA. Continued relative weakness in FCF and/or increased leverage typically can provide the impetus for a downgrade or change in outlook for many corporations.”

All in all, the Fitch Report is an interesting and informative read.

A couple of observations.

Some FCPA enforcement actions, per the enforcement agencies’ allegations, involve conduct that goes “all the way to the top” – the Siemens enforcement action comes to mind. In this type of FCPA enforcement action, the company’s credit ratings, and much else about the company’s business, ought to be negatively impacted by the FCPA enforcement action.

However, enforcement actions like Siemens are clearly outliers.

The far more common FCPA enforcement action involves allegations of improper conduct by a single employee or a small group of employees – often in a foreign subsidiary. Even so, because of respondeat superior, the parent company issuer faces FCPA exposure. In such a situation – a common FCPA scenario – is it proper for company’s credit rating to be negatively impacted by the enforcement action?

Add to this the fact that most FCPA enforcement actions are resolved through non-prosecution or deferred prosecution agreements. These agreements are privately negotiated, subject to no (or little) judicial scrutiny, and do not necessarily represent the triumph of one party’s legal position over the other. In such a situation – again a very common FCPA scenario – is it proper for the company’s credit rating to be negatively impacted by the enforcement action?

In my forthcoming piece “The Facade of FCPA Enforcement,” I discuss why the facade of FCPA enforcement matters.

The Fitch Report has informed me of another reason why the facade of FCPA enforcement matters – and that is because FCPA enforcement actions can negatively impact a company’s credit rating.

What Did the Willbros Monitor Find?

Tuesday, June 1st, 2010

In May 2008, Willbros Group Inc. settled joint DOJ and SEC enforcement actions. See here and here.

The DOJ criminal information (see here) charges “Willbros with one count of conspiring to make bribe payments to Nigerian and Ecuadoran officials, two counts of violating the FCPA in connection with the authorization of specific corrupt payments to officials in those countries and three counts of violating the FCPA by falsifying books and records relating to corrupt payments and a tax fraud scheme.” See here for the DOJ release.

As is frequently the case, these criminal charges were not actually prosecuted, but were deferred pursuant to a deferred prosecution agreement (DPA) (see here).

The DPA lasts for approximately three years.

If the company fully complies with all of its obligations during the term of the DPA, the DOJ will dismiss the criminal charges against Willbros.

On the other hand, if the company fails to comply with all of its obligations during the term of the DPA, such as by violating the FCPA again, Willbros will “be subject to prosecution for any federal criminal violation of which the [DOJ] has knowledge.”

In addition, the DPA “does not provide any protection against prosecution
for any corrupt payments or false accounting, if any, made in the future” by Willbros “or any of their directors, officers, employees, agents or consultants, irrespective of whether disclosed by [Willsbros] pursuant to the terms” of the DPA. Nor does the DPA “provide any protection against prosecution for any corrupt payments made in the past which are not described in the [deferred charges] or were not disclosed to the [DOJ] prior to the date on which [the DPA] was signed.”

Enter the Willbros compliance monitor – a condition often imposed on a company pursuant to an FCPA DPA (or NPA).

In the FCPA context, a monitor does many things.

Most of these things are forward-looking – such as ensuring that the company “gets it” – that it is adhering to the terms of the DPA, and making the changes it said it was going to make so that it will never again be subject to FCPA scrutiny.

Like most monitors, the Willbros monitor was authorized to disclose to the DOJ should the monitor “discover credible evidence that questionable or corrupt” may have been offered, promised, paid, or authorized by Willsbros.

Fast forward to May 20th.

Willbros Group filed an 8-K (see here).

The filing includes an update on the company’s DPA obligations and the work of the monitor. Much of the discussion is fairly routine.

Except this paragraph.

“The [monitor's report recently delivered to the DOJ] also sets out for the DOJ’s review the monitor’s findings relating to incidents that came to the monitor’s attention during the course of his review which he found to be significant, as well as recommendations to address these incidents. We and the monitor have met separately with the DOJ concerning certain of these incidents. The monitor, in his report, did not conclude whether any of these incidents or any other matters constituted a violation of the FCPA. We do not believe that any of these incidents or matters constituted a violation of the FCPA based on our own investigations of the incidents and matters raised in the report. Notwithstanding our assessment, the DOJ could perform further investigation at its discretion of any incident or matter raised by the report.”

It is unusual, so soon after an FCPA enforcement action, for a monitor to find additional facts that require investigation.

Why?

Because during settlement of an FCPA enforcement action, it is common for the enforcement agencies to ask the “where else” question. Thus, if the Willbros enforcement action followed the usual course, once DOJ/SEC got comfortable with the Nigeria and Ecuador facts, it is likely the enforcement agencies said something to the effect “well, if you did it in Nigeria and Ecuador, convince us you didn’t do it as well in countries x,y, and z.” To answer that question, the company is then often forced to conduct a general, high-level world-wide review of its entire operations. If problematic facts are found, it is in the company’s best interest (and the best interest of the enforcement agencies as well) to wrap-up these “tag-a-long” facts into the same enforcement action.

Against this backdrop, it is a bit surprising that problematic facts have arisen so soon after the Willbros FCPA enforcement action.

Was the assumed high-level world-wide review insufficient? Did Willbros perhaps commit another FCPA violation post-enforcement action, yet while still subject to the DPA.?

As indicated by Willbros’ filing, the company states its opinion that none of this new conduct constitutes a violation of the FCPA.

However, it is unusual to have a monitor find additional problematic facts, and for the DOJ to investigate those facts, so soon after an FCPA enforcement action.

If the “new” facts do indeed give rise to an independent FCPA violation, Willbros could be subject to prosecution on the “new” facts and the current criminal charges deferred against Willbros could again become active.