This article was reprinted with permission from FCPA Professor
Future enforcement actions, in the interest of completeness, and for the reading stack. It’s all here in the Friday Roundup.
Future Enforcement Actions
Stay tuned for future FCPA enforcement actions against Diebold and ADM in the approximate $50 million range.
Diebold recently stated as follows in this filing.
“Diebold continues to monitor its compliance with the FCPA. It also is continuing its cooperation with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) in their ongoing inquiries, and is making continued progress toward a timely resolution of this matter. The company has agreed in principle with the DOJ and the SEC to the terms of a proposed settlement of their inquiries, which terms remain subject to final approval by all parties. These proposed settlement terms include combined payments to the U.S. government of approximately $48.0 million in disgorgement, penalties and prejudgment interest, and the appointment of an independent compliance monitor for a minimum period of 18 months.”
Archer Daniels Midland Company recently stated as follows in this release.
“ADM has been 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. Based upon recent progress in these discussions, ADM believes it is appropriate to increase its provision to $54 million, a $29 million increase over the $25 million established in the first quarter.”
In the Interest of Completeness
This recent post generically referred to the SEC’s case against Fabrice Tourre. In the interest of completeness, the Wall Street Journal also stated as follows.
“For a chance, SEC attorneys went to trial against a real-live person and allowed a jury to decide whether he had violated the law. This is progress, and a welcome departure from the SEC’s custom of charging institutions and then demanding money paid by shareholders to settle case without having to go to court. And despite his loss, kudos to Mr. Tourre for manfully seeking to clear his name while accepting the risk of trial. (Here).
I also liked this recent editorial from the Wall Street Journal concerning the Tourre case.
“The Securities and Exchange Commission is doing a victory lap over last week’s verdict against former Goldman Sachs trader Fabrice Tourre, but its spin is revealing about the political motivation behind the case. Lead SEC prosecutor Matthew Martens keeps saying again and again that the case was ‘about Wall Street greed.’ Last time we checked, greed is not a crime under the securities laws or any other statutes in the federal code. [...] Greed has existed since man committed original sin, and no doubt it has always existed on Wall Street and most other places. Greed in moderation might even be called ambition. While the media most often attribute it to bonus-seeking traders on Wall Street, greed can exist in other locations, too. Perhaps you have noticed how frequently prosecutors leave their government jobs for higher pay as corporate attorneys. Mr. Martens may eventually be one of them.”
Speaking of which, this previous Friday roundup highlighted former SEC Enforcement Director of Enforcement Robert Khuzami’s new position at Kirkland & Ellis. This Bloomberg column states:
“The appalling — yet hardly surprising — news that Robert Khuzami, the former enforcement director at the Securities and Exchange Commission, has cashed in his four-year stint for a $5 million-plus salary at Kirkland & Ellis, a prominent Wall Street law firm, is the latest example of the corrupt relationship between money and power in the U.S.”
Speaking of which, in this post on his Corruption Crime and Compliance site, Michael Volkov states: “I am sure Justice Department and Securities and Exchange Commission lawyers sometimes sit back and marvel at the world they have helped create …”.
Indeed, this is why I have long argued that the unique attributes of FCPA enforcement and the special government policies that impact enforcement, and thus make it a highly niched area of law, warrant special solutions. As to DOJ and SEC FCPA enforcement attorneys who have supervisory and discretionary positions and articulate government FCPA policies, it is in the public interest that such individuals be prohibited, when leaving government service, from providing FCPA defense or compliance services in the private sector for a five-year period.
For the Reading Stack
See here for an article in the New York Times regarding fake receipts in China. Among other things, the article states:
“[The use of fake receipts] is so pervasive that auditors at multinational corporations are also being duped. The British pharmaceutical company GlaxoSmithKline is still trying to figure out how four senior executives at its China operation were able to submit fake receipts to embezzle millions of dollars over the last six years. Police officials say that some of the cash was used to create a slush fund to bribe doctors, hospitals and government officials. [...] China’s fapiao system took root in the late 1980s and early 1990s, when the government began requiring companies to use official receipts issued by the tax authorities for every business transaction. The receipts usually come with a number and government seal. But the tax receipt system was quickly exploited. Gangs began producing high-quality imitations of the official invoices using specially designed printers with markings that bore a striking likeness to red government seals. And at many companies, rogue employees started colluding with advertising, consulting and travel agencies to forge or falsify receipts for the purpose of embezzling corporate funds.”
Looking for a good slide show to spice up FCPA training? See here from the Huffington Post regarding companies that recently resolved FCPA enforcement actions.
This article is titled “False Claims Act Settlements Often are Business Deals” and states:
“But for contractors, the decision on whether to settle a case or to fight accusations and go to trial can have less to do with guilt or innocence and more to do with practical business considerations. ‘Often, it’s really just a cost-benefit analysis,’ said Jonathan Cone, counsel at the Crowell & Moring LLP law firm. ‘In some cases, it’s actually more cost-effective to settle a case rather than risk losing business with the federal government.’”
Spot-on and the logic is even more compelling the bigger and sharper the DOJ’s stick becomes (i.e. a criminal FCPA enforcement action vs. a civil False Claims Act action).
A good weekend to all.
Read more articles on the FCPA by Mike Koehler at FCPA Professor.
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