This article was reprinted with permission
from FCPA Professor
Additional individual defendant added to
Alstom-related enforcement action, a mere $110,000 per working day, a
focus on international philanthropy, scrutiny alerts, and for the reading
stack. It's all here in the Friday roundup.
Additional Alstom-Related Charges
post highlighted the recently unsealed criminal charges against Frederic
Pierucci (a current Alstom employee) and David Rothschild (a former
Alstom employee) concerning alleged conduct in connection with the Tarahan
coal-fired steam power plant project in Indonesia. The post highlighted
several other individuals generically referred to in the charging documents.
Earlier this week, the DOJ announced (here) that
William Pomponi (a former executive of Alstom Power Inc., a
Connecticut-based subsidiary of Alstom) was charged for his alleged
participation in the same scheme. Pomponi, previously identified as
"Employee A," is now described as "a Vice President of Regional Sales" at
Alstom Power Inc. and "was one of the people responsible for approving the
actions of, and authorizing payments to, Consultants A and B, knowing that a
portion of the payments [to the consultants] was intended for Indonesian
officials in exchange for their influence and assistance in awarding the
Tarahan Project ...".
Like the original Pierucci indictment, all of the
alleged overt acts in the superseding indictment against Pomponi allegedly
occured between 2002 and 2004, although the information does allege wire
transfers from Alstom Power Inc.'s bank account to the bank account of
Consultant A until 2009.
Like Pierucci, Pomponi is also charged with one
count of conspiracy to violate the FCPA, four substantive counts of FCPA
anti-bribery violations, money laundering conspiracy and four substantive
counts of money laundering.
Kudos to the DOJ for including a link to the charging
document in the release. This used to be DOJ's practice, but when its new
site launched a few years ago, it stopped doing this. Let's hope this is
a new practice!
Avon's FCPA Expenses
Nearly five years ago - in June 2008 - Avon launched an
internal investigation concerning FCPA compliance in China and other
countries. In many respects, the most notable aspect of Avon's FCPA
scrutiny has been its pre-enforcement action professional and expenses -
approaching $350 million (see here
In its most recent quarterly filing, Avon stated as
follows. "Professional and related fees associated with the FCPA
investigations and compliance reviews ... amounted to approximately $7 during the
three months ended March 31, 2013."
Headlines read "Avon FCPA Costs Down to $7 Million for Q1″
and "Avon Slows Spending on Bribery Probe."
Both accurate headlines, but it is amazing to note
nevertheless that - five years into Avon's FCPA scrutiny - the
company is still spending approximately $110,000 per working day on
its FCPA issues. (See this prior post
concerning Wal-Mart's pre-enforcement action professional fees and expenses and
asking "does it really need to cost this much?").
FCPA material pops up in a variety of places. Such
article in www.wealthmanagement.com concerning
the perils of global giving. With two FCPA enforcement actions (Schering-Plough and
Lilly) based, in whole or in part, on donations made to a Polish castle
foundation and with Wynn Resorts under FCPA scrutiny for a donation to the
University of Macau (see here),
FCPA scrutiny based on international charitable giving is no mere hypothetical.
Scrutiny alerts concerning IBM, ADM, Total, and ENRC.
post highlighted a ProPublica report regarding the relationship between
various tech companies including H-P, IBM and Oracle with a "senior technology
officer for Poland's national police and, later, the nation's Interior
Ministry, [who] set the terms for hundreds of millions of dollars in technology
contracts and decided which ones should be awarded without competitive
In a recent quarterly filing, IBM disclosed as follows.
"In early 2012, IBM notified the SEC of an investigation
by the Polish Central Anti-Corruption Bureau involving allegations of illegal
activity by a former IBM Poland employee in connection with sales to the Polish
government. IBM is cooperating with the SEC and Polish authorities in this matter.
In April 2013, IBM learned that the U.S. Department of Justice (DOJ) is also
investigating allegations related to the Poland matter, as well as allegations
relating to transactions in Argentina, Bangladesh and Ukraine. The DOJ is also
seeking information regarding the company's global FCPA compliance program and
its public sector business. The company is cooperating with the DOJ in this
In 2011, IBM resolved an FCPA enforcement action
concerning alleged conduct in South Korea and China. (See here).
The settlement is still pending the approval of Judge Richard Leon
(D.D.C.). In 2000, IBM resolved an FCPA enforcement action concerning
alleged conduct in Argentina. (See here).
Archer Daniels Midland Company recently stated as follows
"ADM is in discussions with the U.S. Department of
Justice and the U.S. Securities and Exchange Commission regarding a previously
disclosed FCPA matter dating back to 2008 and earlier, and expects a resolution
sometime this year. Based upon recent discussions, ADM believes it is
appropriate to establish a provision of $25 million ($0.04 per share) to cover
the potential assessments that may be imposed by these government agencies."
France-based Total recently stated as follows (here) concerning
its long-running FCPA scrutiny concerning business conduct in Iran.
"In 2003, the United States Securities and Exchange
Commission (SEC) followed by the Department of Justice (DoJ) issued a formal
order directing an investigation in connection with the pursuit of business in
Iran by certain oil companies including, among others, TOTAL. The inquiry
concerns an agreement concluded by the Company with consultants concerning gas
fields in Iran and aims to verify whether certain payments made under this
agreement would have benefited Iranian officials in violation of the Foreign
Corrupt Practices Act (FCPA) and the Company's accounting obligations. The
Company fully cooperates with these investigations. Since 2010, the
Company has been in discussions with U.S. authorities (DoJ and SEC) to
consider, as it is often the case in these kinds of proceedings, an
out-of-court settlement, which would terminate the investigation in exchange
for TOTAL respecting a number of obligations, including the payment of a fine
and civil compensation, without admission of guilt. U.S. authorities have
proposed draft agreements that could be accepted by TOTAL. Consequently, and
although discussions have not yet been finalized, a provision of $398 million,
unchanged since its booking as of June 30, 2012 and reflecting the best
estimate of potential costs associated with the resolution of these
proceedings, remains booked in the Group's consolidated financial statements as
of March 31, 2013. In this same affair, TOTAL and its Chief Executive
Officer, President of the Middle East at the time of the facts, have been
placed under formal investigation, following a judicial inquiry initiated in
France in 2006. At this point, the Company considers that the resolution of
these cases is not expected to have a significant impact on the Group's
financial situation or consequences on its future planned operations."
A $398 million FCPA enforcement action would be the
third-highest of all-time.
Last week the U.K. Serious Fraud Office announced here
"The Director of the SFO has accepted [Eurasian Natural
Resources Corp.] ENRC Plc. for criminal investigation. The focus of
the investigation will be allegations of fraud, bribery and corruption relating
to the activities of the company or its subsidiaries in Kazakhstan and Africa."
In a statement, the U.K. company, stated as
"The Board of Directors (the 'Board') of Eurasian Natural
Resources Corporation PLC ('ENRC' or, together with its subsidiaries, the
'Group') today notes that the SFO has moved to a formal investigation. ENRC
confirms that it is assisting and cooperating fully with the SFO. ENRC is
committed to a full and transparent investigation of its procedures and
ENRC has ADRs listed with the SEC and thus could
also be subject to the FCPA.
recent article in the Wall Street Journal states as follows.
"U.K.-listed Eurasian Natural Resources Corp. PLC said ...
allegations of wrongdoing over minerals sales conducted through a Russian
network of agents were thoroughly investigated and dismissed" in 2007.
Tom Fox (FCPA Compliance and Ethics Blog) has penned a
new book - "Best
Practices Under the FCPA and Bribery Act: How to Create a First Class
Compliance Program." I was pleased to contribute the foreword to the
book and noted that Tom's "use of real events as learning devices to
demonstrate compliance best practices make [the] book an engaging and
Inside the NY Times Wal-Mart investigation (here) from the
perspective of the Mexican journalist who assisted in the investigative
Read more articles on the FCPA by Mike
Koehler at FCPA
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