From Healthcare Providers to Customs Officials to SOE Employees – The “Foreign Officials” of 2013

From Healthcare Providers to Customs Officials to SOE Employees – The “Foreign Officials” of 2013

 This article was reprinted with permission from FCPA Professor

A “foreign official.”

Without one, there can be no FCPA anti-bribery violation (civil or criminal).  Who were the “foreign officials” of 2013 (at least from an enforcement perspective – recognizing of course that the meaning of this key FCPA element is the subject of on-going dispute including a historic appellate court challenge – see here for links to the briefing).

This post, describes the alleged “foreign officials” from 2013 corporate DOJ and SEC FCPA enforcement actions.

There were 9 core corporate enforcement actions in 2013.  Of the 9 enforcement actions, 5 (55%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs”).  These entities ranged from oil and gas companies to banks .

In 2012, 42% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 348-353).  In 2011, 81% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 29-41).  In 2010, 60% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 108-119).  In 2009, 66% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 410-44).  As to whether Congress intended employees of SOEs to be “foreign officials” under the FCPA, see here for my “foreign official” declaration.

Another notable “foreign official” enforcement theory from 2013 was that various foreign health care providers are “foreign officials” under the FCPA.  Of the 9 core corporate enforcement actions in 2012, 2 (22%) involved, in whole or in part, foreign health care providers.  In 2012, 50% of corporate enforcement actions involved, in whole or in part, this enforcement theory.  See here for a prior post on the origins and prominence of this enforcement theory.

Combining enforcement actions that involved, in whole or in part, SOE employees with enforcement actions that involved, in whole or in part, foreign health care providers, the result is 7 of 9 corporate enforcement actions (78%).   Last year, this figure was 10 of 12 (83%).

The remainder of this post describes (as per DOJ/SEC allegations) the “foreign officials” of 2013.  As is apparent from the specific descriptions below, in certain instances the enforcement agencies describe the “foreign official” with reasonable specificity; in other instances with virtually no specificity.

[Note:  certain of the enforcement actions below technically only involved FCPA books and records and internal control charges.  As most readers know, actual charges in most FCPA enforcement actions hinge on voluntary disclosure, cooperation, collateral consequences, and other non-legal issues.  Thus, even if an FCPA enforcement action is resolved without FCPA anti-bribery charges, the actions remain very much about the "foreign officials" involved.  As I've said before, if an employee of a U.S. company consistently entertains his brother-in-law in the corporate suite and seeks reimbursement for "client entertainment" you will not be reading about this FCPA books and records and internal controls violation]

Philips Electronics

SEC

“public officials of Polish healthcare facilities”

Parker Drilling

DOJ

Employees of the Nigerian Customs Service (“NCS”)

Employees of the “Panel of Inquiry for the Investigation of All Cases of Temporary Import Permits Issued Between 1984 to Year 2000 (the “TI Panel”) (a board empanelled for the purpose of examining certain duties and tariffs that the NCS collected or failed to collect; the TI Panel was presidentially appointed, operated under the auspices of the Nigerian President’s office, and possessed the power to issue subpoenas and levy fines)”

Employees of “Nigeria’s State Security Service, a Nigerian intelligence and law enforcement agency that operated as a department within the Nigerian government’s executive”

SEC

Employees of the Nigerian Customs Service (“NCS”)

Employees of the “Panel of Inquiry for the Investigation of All Cases of Temporary Import Permits Issued Between 1984 to Year 2000 (the “TI Panel”) (a board empanelled for the purpose of examining certain duties and tariffs that the NCS collected or failed to collect; the TI Panel was presidentially appointed, operated under the auspices of the Nigerian President’s office, and possessed the power to issue subpoenas and levy fines)”

Employees of “Nigeria’s State Security Service, a Nigerian intelligence and law enforcement agency that operated as a department within the Nigerian government’s executive”

Ralph Lauren

DOJ

“customs and other government officials [in Argentina] to assist in improperly obtaining paperwork necessary for goods to clear customs, to permit clearance of items without the necessary paperwork, to permit the clearance of prohibited items, and to avoid inspection”

SEC

 ”Argentine customs officials to secure the importation of RLC’s products into Argentina”

 ”Argentine government officials to improperly secure the importation of RLC’s products into Argentina”

Total

DOJ

An Iranian Official described as “the Chairman of an Iranian engineering company that was more than 90% owned by the Government of Iran and substantially controlled by the Government of Iran” and also described as follows.  “The Iranian Official was [also] the head of an Iranian organization concerned with fuel consumption, which was a wholly  owned subsidiary of NIOC, and was a government advisor to a high-ranking Iranian  official.”  NIOC is described as a “government-owned corporation operating under the direction and control of the Ministry of Petroleum of Iran.”

SEC

An Iranian Official described as follows. ”Between 1995 and 2004 the Iranian Official was first the head of one wholly owned subsidiary of the National Iranian Oil Company (“NIOC”) and later the head of another NIOC wholly owned subsidiary. The Iranian Official was also a government advisor to a high-ranking Iranian official.”

Diebold

DOJ

Employees of Bank 1 and Bank 2 described as follows.  “[The Banks] were controlled and approximately 70% owned by the [Chinese government] … and were [two] of several state-owned banks in [China] that together maintained a monopoly over the banking system in [China] and provided core support for the government’s projects and economic goals.  The government retained a controlling right in [the Banks], including appointing or nominating a majority of board of directors and top managers at the bank.  [The Banks] were an ‘instrumentality’ of a foreign government [under the FCPA].”

Inferences to employees of banks owned or controlled by the government of Indonesia

SEC

Employees of banks owned or controlled by the government of China

Employees of banks owned or controlled by the government of Indonesia

Stryker

SEC

“various government employees including public health care professionals in Mexico, Poland, Romania, Argentina, and Greece”

“foreign officials employed by a Mexican governmental agency responsible for providing social security for government employees”

“foreign official then employed as the director of a public hospital in Poland,” “a state-employed healthcare professional” in Poland

a person “waiting to be confirmed as chief physician” at a public hospital in Romania

“physicians employed in the public healthcare system” of Argentina

“a foreign official who served as a prominent professor at the Greek University, and was the director of medical clinics at two public hospitals affiliated with the Greek University”

Weatherford

DOJ

Employees of Sonangol, a company wholly owned, controlled, and managed by the Angolan government

Angolan Officials 1, 2, and 3 (described as “high-level, senior officials of Sonangol” with influence over contracts), a “relative of Angolan Official 4 (described as a “high-level, senior official of Angola’s Ministry of Petroleum” with influence over contracts entered into by the Angolan government), Angolan Official 5 (described as “a Sonangol official with decision-making authority in Angola’s Cabinda region”), Angolan Official 3′s wife, Angolan Official 4′s daughter and son-in-law.”

“Decision makers at the national oil company” in the Middle East

SEC

A Sonangol Drilling Manager, Sonangol officials

“Decision makers at the national oil company” in the Middle East

Employees of Sonatrach, an Algerian state-owned company

Albanian tax auditors

the tax director and two members of Albania’s National Petroleum Agency

Bilfinger

DOJ

Employees of the Nigerian National Petroleum Corporation (NNPC), employees of National Petroleum Investment Management Services (a subsidiary of NNPC), the dominant political party in Nigeria, and an official in the executive branch of the Government of Nigeria

ADM

DOJ

Ukrainian government officials in exchange for those officials’ assistance in obtaining VAT refunds

An employee of Industrias Diana (an oil company headquartered in Venezuela that was wholly owned by Petroleos de Venezuela, Venezuela’s state-owned and controlled national oil company)

SEC

Ukrainian government officials in exchange for obtaining VAT refunds

 Read more articles on the FCPA by Mike Koehler at FCPA Professor.

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