It’s not every day that …, denied, scrutiny alerts, and a kleptocracy forfeiture action.  It’s all here in the Friday roundup.

It’s Not Every Day …

It’s not every day that a U.S. Senator takes to the Senate floor to accuse a company of violating the Foreign Corrupt Practices Act.

However, as noted here by the Hill, on Tuesday Senator Harry Reid (D-NV) did just that.

“Senate Majority Leader Harry Reid (D-Nev.) on Tuesday accused the Koch  brothers of unlawful business practices in an effort to portray the conservative  billionaires as election-year bogeymen.  Reid charged that Charles and David Koch, who are tied for fourth place on the Forbes list of 400 richest people in the United States, violated the Foreign  Corrupt Practices Act, citing a 2011 report by Bloomberg Markets magazine.  “These are the same brothers whose company, according to a Bloomberg  investigation, paid bribes and kickbacks to win contracts in Africa, India and the Middle East,” Reid said on the Senate floor. “These are the same brothers  who, according to the same report, used foreign subsidiaries to sell millions of  dollars of equipment to Iran, a state sponsor of terrorism.”  Representatives of the Kochs’s business empire fired back quickly in what has  become an escalating battle between the top Democrat in Congress and the press-shy business titans.  A lawyer for Koch Industries said the allegations in the Bloomberg article have been subsequently debunked and did not result in any legal penalty. “Nothing has ever come of any of the allegations that Mr. Reid referred to,” said Mark Holden, general counsel of Koch Industries. “Sen. Reid’s allegations are false,” he added.”

See here for a prior post regarding the referenced Bloomberg article.

Of course it is not just executives or companies that support Republican causes that have come under FCPA scrutiny.  As noted in this prior post the CEO of DreamWorks Animation and the co-founder of Qualcomm Inc., are big spenders for President Obama and the Democratic Party.  Both companies have been the subject of FCPA scrutiny.

Denied

The goal of FCPA Professor is to be a forum in which various views of the FCPA and FCPA enforcement can be expressed.  I frequently extend invitations for guest posts and for years have extended such an invitation to the DOJ.  The answer has always been no.  With Patrick Stokes becoming the new FCPA Unit Chief, I extended the invitation once again.  The DOJ response?  While Mr. Stokes ”appreciates the invitation he’ll decline the opportunity.”

You could however, if you are willing to pay over $1,000, have heard Stokes speak yesterday about FCPA “Recent Developments and New Trends” at the ABA National Institute on White Collar Crime in Miami.

As highlighted in this previous post, one should not have to pay to hear public servants speak about the law they enforce.

Scrutiny Alerts

Cisco

This February 14th post was the first to highlight Cisco’s discreet blog post concerning its FCPA scrutiny.  Recently in its quarterly SEC filing the company disclosed:

“At the request of the U.S. Securities and Exchange Commission and the U.S. Department of Justice, the Company is conducting an investigation into allegations which the Company and those agencies received regarding possible violations of the U.S. Foreign Corrupt Practices Act involving business activities of the Company’s operations in Russia and certain of the Commonwealth of Independent States, and by certain resellers of the Company’s products in those countries.  The Company takes any such allegations very seriously and is fully cooperating with and sharing the results of its investigation with the Commission and the Department.  While the outcome of the Company’s investigation is currently not determinable, the Company does not expect that it will have a material adverse effect on its consolidated financial position, results of operations, or cash flows. The countries that are the subject of the investigation collectively comprise less than two percent of the Company’s revenues.”

Citigroup

As has been widely reported (see here from Reuters for instance):

“The SEC is investigating Citigroup for accounting fraud after it disclosed bogus loans in its Mexican Banamex unit, a source familiar with the investigation said.  The securities regulator is also examining whether Citigroup violated the Foreign Corrupt Practices Act, the source said.”

I think it is important to emphasize at times like this, that the FCPA contains generic books and records and internal controls provisions that can be implicated in the absence of any FCPA anti-bribery issues.  (See here for a prior post on this subject).

Rolls Royce Holdings

Rolls Royce Holdings, previously known to be under investigation by the U.K. Serious Fraud Office (see here for the prior post) added the Department of Justice to its recent annual report disclosure.

“A large part of the Group’s business is characterised by competition for individually significant contracts with customers which are often directly or indirectly associated with governments and the award of individually significant contracts to suppliers. The procurement processes associated with these activities are highly susceptible to the risk of corruption. In addition the Group operates in a number of territories where the use of commercial intermediaries is either required by the government or is normal practice. The Group is currently under investigation by law enforcement agencies, primarily the Serious Fraud Office in the UK and the US Department of Justice. Breaches of laws and regulations in this area can lead to fines, penalties, criminal prosecution, commercial litigation and restrictions on future business.”

Rolls Royce later clarified its disclosure as follows.

“Rolls-Royce has been co-operating with regulatory authorities on both sides of  the Atlantic in regard to allegations of bribery and corruption. The Serious  Fraud Office in the UK has launched a formal investigation. The Department of  Justice is also investigating these matters, however we have received no  notification of a formal inquiry being launched in the United States.”

Kleptocracy Forfeiture Action

It receives scant attention compared to FCPA enforcement, but another prong of the DOJ’s efforts to combat bribery and corruption is its Kleptocracy Asset Recovery Initiative under which prosecutors in the DOJ Asset Forfeiture and Money Laundering Section work in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption. (See this 2009 post highlighting Attorney General Holder’s announcement of the program).

Earlier this week, the DOJ announced:

“[The DOJ has] frozen more than $458 million in corruption proceeds hidden in bank accounts around the world by former Nigerian dictator Sani Abacha and conspirators. A civil forfeiture complaint unsealed today in the United States District Court in the District of Columbia seeks recovery of more than $550 million in connection with the largest kleptocracy forfeiture action brought in the department’s history. The restraint of funds announced today includes approximately $313 million in two bank accounts in the Bailiwick of Jersey and $145 million in two bank accounts in France.   In addition, four investment portfolios and three bank accounts in the United Kingdom with an expected value of at least $100 million have also been restrained, but the exact amounts in the accounts will be determined at a later date.”

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A good weekend to all.