With fewer recent cases there has been a lot of
speculation suggesting that perhaps enforcement officials were easing-up on the
FCPA. That supposition just ended with a new addition to the FCPA Top 10,
maintained by the excellent FCPA blog. French oil and gas giant Total S.A.
jumped to number four on the list, paying $398 million to settle corruption
charges with the DOJ and the SEC. U.S. v. Total (E.D. Va.); In the
Matter of Total, S.A., Adm. Proc. File No. 3-15338 (May 29, 2013). And, the
company still has to deal with French authorities.
The charges stem from the efforts of the company to
re-enter the Iranian oil market. In 1995 the Total negotiated a development
contract with the National Iranian Oil Company or NIOC for the development of
the Sirri A and E oil and gas fields. NIOC is a government instrumentality and
its employees are foreign officials, according to the charging papers.
Prior to executing the agreement, Total met with an
Iranian Official and agreed to enter into a consulting arrangement. That
official served as the Chairman of an Iranian state-owned and state-controlled
engineering company. He had the ability to influence the decision regarding
contract for the Siri fields.
The consulting contracts had no real substance. Rather,
they were used as a conduit for corrupt payments over the next two and one half
years. The day the agreements were executed $500,000 was paid from an account
held at a U.S. bank in New York City to a Swiss bank. The remaining payments
were made from accounts in Switzerland to a Swiss bank at the direction of the
Iranian official. Those payments totaled about $16 million.
In 1997 the company entered into an second arrangement
with NIOC. This agreement was to develop phases 2 and 3 of the South Pars gas
field which was a joint venture with a number of other multinational oil and
gas companies. Total secured a 40% interest in the project.
As with the initial project, Total entered into a
consulting arrangement with the Iranian official. Over the next several years
the company made a series of payments under this agreement which totaled about
$44 million. The payments, according to the charging papers, were to influence
the decision on the award of the contract.
None of the payments were properly recorded in the books
and records of the company. The consulting contracts were designed to
circumvent the internal controls of the company. Total also "had inadequate
systems for reviewing these [the consulting] documents and lacked controls
sufficient to provide reasonable assurances . . . " that they complied with
U.S. law, according to the SEC.
Total resolved the criminal charges by entering into a
deferred prosecution agreement. The underlying indictment contains three
counts: One of conspiracy to violate the anti-bribery provisions of the FCPA;
one of violating the internal controls provisions of the FCPA; and one of
violating the books and records provisions of the FCPA. The firm also agreed to
pay a criminal fine of $245.2 million, retain a monitor for three years,
continue to enhance its compliance systems and cooperate with enforcement
To resolve the SEC administrative proceeding the company
consented to the entry of a cease and desist order based on Exchange Act Sections
30A, 13(b)(2)(A) and 13(b)(2)(B), and pay disgorgement of $153 million and
retain a consultant.
ABA Seminar: Fifth
Annual FCPA Update: Protecting Your Business in the Future: Lessons from the
New DOJ-SEC FCPA Guide, June 19, 2013 from 1:00 -2:30 p.m. EST. The discussion
will focus on building effective compliance systems and conducting M&A due
diligence. Co-moderators: Thomas Gorman and Frank Razzano. Panel: John Buretta,
Principal Deputy to the Assistant AG, DOJ; Charles Cain, Assistant Director, FCPA
Unit, SEC Division of Enforcement; Catherine Razzano, Assistant General
Counsel, General Dynamics Corporation; Steve Siegal, Senior Counsel, Northrop
Grumman Corporation; Ryan Ong, President, U.S. China Business Counsel. Live in
Washington, D.C at 600 14th St. N.W., Penthouse (no charge for ASECA
members attending live in Washington who pre-register by sending an e-mail to
firstname.lastname@example.org). Webcast Nationally by the ABA. For further
information please click here.
For more commentary on developing securities
issues, visit SEC Actions, a blog by Thomas
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