And Then There Were None-JGC Settles

The blog site International Construction reported, on January 31, 2011 that the Japanese company JGC announced has agreed to pay a $244 million penalty to the Department of Justice (DOJ) to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe the Nigerian government.

If this settlement is correct, the JGC resolution leads to an update to the monetary count paid to the US Treasury for the resolution of the Nigerian Bribery Scandal with the following Box Score:

SETTLEMENT BOX SCORE

So for those of you keeping score at home, there have been fines, penalties and profit disgorgement of over $1.526 billion. All of this for bribes paid on, by, or on behalf of, the four-company joint venture named TSJK, which totaled up to $180MM. This JV won four contracts, worth more than $6 billion, from the Nigeria government between 1995 and 2004 to build LNG facilities on Bonny Island.

This total settlement figure does not include any potential costs going forward such as reduction of credit ratings, the payment of legal fees and any forensic accounting fees during the pendency of the Deferred Prosecution Agreements (DPAs). The costs listed above do not include the total cost paid by JGC for its internal company investigation into this matter. However, based upon the reported fees to date paid by the other defendants, these investigation fees will surely be in the tens of millions of US$. Additionally the above Box Score does not take into account any fines or penalties paid by individuals, or the recent spate of fines paid by the defendants, to the Nigerian government. These last two sets of penalties will be explored in a subsequent blog.

As previously pointed out by the FCPA Professor, the amount of the settlement figure is quite a pretty penny for the US Treasury. He poses the question as to whether FCPA enforcement has become a "cash cow" for the US Treasury. As he has noted, this investigation started in a court in France, yet all the monies for fines and penalties are going to the US Treasury.

This question was also explored in a MainJustice posting by Chris Matthews, where he discussed the UK policy of making available some of the fines and penalties it collects as reparations to the country where the violative conduct occurred. Recently, the UK Serious Fraud Office (SFO) announced it would pay to the government of Tanzania almost €30 out of the BAE Systems resolution of its bribery and corruption matter.  Matthews reported Director Richard Alderman as saying "that compensating victims of corruption is a priority for the [SFO]".

The  DOJ takes a different view on the subject of reparations.  Mark Mendelsohn, the former head of the US Justice Department's Foreign Corrupt Practices Act team was quoted as saying, "There is a grave danger that you're returning money to the very people that took bribes in the first place. The last thing one wants to do is fuel corruption in the name of fighting it." Billy Jacobson, a former assistant chief on the US FCPA team and now Chief Compliance Officer at Weatherford International had a more nuanced view back in March, 2010 when he told MainJustice, "We've thought at DOJ from time to time about giving restitution, giving money to some of these governments," he also went on to say "The problem is, almost by definition, you're talking about corrupt governments. So we decided it really wasn't the way to go. Maybe in some FCPA cases it is OK and in other's it's not, but as a matter of course DOJ doesn't do it that way, and the SFO decided to do it that way."

To quote Agatha Christie -  and then there were none...

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© Thomas R. Fox, 2011