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This article was reprinted with permission from FCPA Professor
A plethora of scrutiny alerts and updates, dismissed, quotable, and for the reading stack. It’s all here in the Friday roundup.
Scrutiny Alerts and Updates
Crawford & Company
The company, a “provider of claims management solutions to the risk management and insurance industry, as well as to self-insured entities, with an expansive global network serving clients in more than 70 countries.” recently disclosed:
“The Company has voluntarily self-reported to the Securities and Exchange Commission (the “SEC”) and the Department of Justice (the “DOJ”) certain potential violations of the Foreign Corrupt Practices Act discovered by the Company during the course of its regular internal audit process. Upon discovery, the Company, with the oversight of the Audit Committee and the Board of Directors, proactively initiated an investigation into this matter with the assistance of external legal counsel and external forensic accountants. The Company has been cooperating fully, and expects to continue to cooperate fully, with the SEC and the DOJ in this matter. The Company cannot currently predict when or what, if any, action may be taken by the SEC or the DOJ, or other governmental authorities, or the effect any such actions may have on the Company’s results of operations, cash flows or financial position.”
In the same disclosure, the company disclosed approximately $3.4 million in “legal and professional fees … related to the ongoing investigation of potential violations of the Foreign Corrupt Practices Act.”
One of the longest instances of FCPA scrutiny concerns SciClone Pharmaceuticals. The company has been under FCPA scrutiny since August 2010 and recently disclosed:
“As previously disclosed, since 2010 the SEC and the US Department of Justice (“DOJ”) have each been conducting formal investigations of the Company regarding a range of matters, including the possibility of violations of the Foreign Corrupt Practices Act (“FCPA”), primarily related to certain historical sales and marketin g activities with respect to the Company’s China operations. I n response to these matters, the Company’sBoard appointed a Special Committee of independent directors (the “Sp ecial Committee”) to oversee its response to the government inquiry. Based on an initial review, the Special Committee decided to undertake an independent investigation as to matters reflected in and arising from the SEC and DOJ investigations in order to evaluate whether any violation of the FCPA or other laws occurred. The Company continue s to cooperate fully with the SEC and DOJ in the conduct of their investigations.
The Company has engaged in settlement discussions with the SEC related to its investigation into possible violations of the FCPA by the Company. The Company has finalized the terms of an offer of settlement of these matters, subject to final approval by the Commissioners of the SEC. Under the terms of the offer of settlement, the Company, without admitting or denying liability, would consent to the entry of an administrative order requiring that the Company cease and desist from any future violations of the FCPA. The Company also would pay disgorgement of $9.4 million, prejudgment interest of $0.9 million and a civil money penalty of $2.5 million. If the offer of settlement is approved by the Commissioners of the SEC, an administrative order will be issued by the SEC and $ 12,826,000 (which was placed in an escrow facility subsequent to September 30, 2015) will immediately be released to the SEC .
The Company has not yet reached a resolution of these matters with the DOJ and management continues to work diligently to obtain closure on this matter.”
Brookfield Asset Management
The company which previously disclosed FCPA scrutiny recently disclosed:
“[I]n 2012 we were notified by the SEC that it was conducting an anti-bribery and corruption investigation related to a Brazilian subsidiary of ours that allegedly made payments to certain third parties in Brazil and those payments were, in turn, allegedly used, with our knowledge, to pay certain municipal officials to obtain permits and other benefits. The U.S. Department of Justice (“DOJ”) opened an investigation in 2013. A civil action against our Brazilian subsidiary by a public prosecutor in Brazil has been ongoing since 2012. All involved have denied the allegations. The SEC and DOJ sought information from us and we cooperated with both authorities in this regard. In 2012, a leading international law firm conducted an independent investigation into the allegations, and based on the results of that investigation we have no reason to believe that our Brazilian subsidiary or its employees engaged in any wrongdoing. In June 2015 the SEC staff informed us in writing that it concluded its investigation and, based on the information it has to date, does not intend to recommend an enforcement action against us. We hope to resolve any remaining outstanding matters in due course and do not expect that any legal outcome will be financially material to the company.”
The company which previously disclosed its FCPA scrutiny this past summer recently disclosed:
“As previously disclosed, in May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting information related to our grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA) in various countries. The SEC also seeks information related to Alexion’s recalls of specific lots of Soliris and related securities disclosures. In addition, in October 2015, Alexion received a request from the U.S. Department of Justice for the voluntary production of documents and other information pertaining to Alexion’s compliance with the FCPA. Alexion is cooperating with these investigations. At this time, Alexion is unable to predict the duration, scope or outcome of these investigations. Given the ongoing nature of these investigations, management does not currently believe a loss related to these matters is probable or that the potential magnitude of such loss or range of loss, if any, can be reasonably estimated.”
Alexion was founded by a Yale University professor and the above disclosure was viewed as a big deal by the Yale Daily News (see here).
According to various media reports (see here and here), Houston-based Hines, a privately-owned real estate firm, is conducting an internal investigation in connection with alleged payments in Brazil involving Petrobras officials. According to reports, the internal investigation follows a report in a Brazilian newspaper that appeared over the summer alleging improper payments by Hines Brazil in relation to commissions for Petrobras office leases in Rio de Janeiro.
Noble Corporation recently disclosed:
“We have used a commercial agent in Brazil in connection with our Petróleo Brasileiro S.A. (“Petrobras”) drilling contracts. We understand that this agent has represented a number of different companies in Brazil over many years, including several offshore drilling contractors. This agent has pled guilty in Brazil in connection with the award of a drilling contract to a competitor and has implicated a Petrobras official as part of a wider investigation of Petrobras’ business practices. We are not aware of any improper activity by Noble in connection with contracts that Noble has entered into with Petrobras, and we have not been contacted by any authorities regarding such contracts or the investigation into Petrobras’ business practices.”
As highlighted in this previous post, in 2010 Noble Corp. resolved an $8.2 million FCPA enforcement action ($2.6 million via a DOJ NPA and $5.6 million in disgorgement and interest via a SEC complaint) in connection with alleged conduct in Nigeria.
This recent post asked where does the truth lie in FCPA enforcement actions?
The post focused on the Mexico prong of the HP enforcement action in which the DOJ and SEC alleged that HP Mexico indirectly made cash payments to a Pemex Chief Information Officer. After the enforcement action, Pemex disclosed in an SEC filing that “the Internal Control Body of [Pemex] concluded its investigation after finding no improper payment.”
HP highlighted the Pemex disclosure in its defense of civil RICO claims brought by Pemex that accused HP of paying bribes to win contracts. As highlighted here, Pemex recently dismissed its lawsuit.
Sound advice from Marcus Asner (Arnold & Porter) in this Law360 article titled “A Measured Approach to Internal Investigations” in which he rightly notes: “Outside law firms and vendors … have strong economic incentives to expand investigations.”
For the Reading Stack
From Clifford Chance, an updated version of “A Guide to Anti-Corruption Legislation in Asia Pacific.”
A good weekend to all.
Read more articles on the FCPA by Mike Koehler at FCPA Professor.
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