FCPA Activity: What You Need To Know From Q1

FCPA Activity: What You Need To Know From Q1

 This article was reprinted with permission from FCPA Professor

This post provides a summary of Foreign Corrupt Practices Act activity and related events from the first quarter of 2014.

DOJ Enforcement (Corporate)

The DOJ brought two corporate enforcement actions in the first quarter.  DOJ recovery in these enforcement action was approximately $311 million.   Both enforcement actions were resolved via plea agreements. At present, none of the enforcement actions have resulted in any individual charges against company employees.

Marubeni (March 19th)

See here for the prior post

Charges:  Conspiracy to violate the FCPA’s anti-bribery provisions and 7 substantive FCPA anti-bribery violations

Resolution Vehicle:  Criminal information resolved via a plea agreement

Guidelines Range:  $63.7 million to $127.4 million

Penalty:  $88 million

Disclosure:  Related to the April 2013 FCPA enforcement action against various current and former employees of Alstom

Monitor:  No

Individuals Charged:  No

Alcoa (January 9th)

See here for the prior post

Charges:  One count of violating the FCPA’s anti-bribery provisions.

Resolution Vehicle:  Criminal information against Alcoa World Alumina LLC resolved via a plea agreement.

Guidelines Range:  $446 million – $892 million.

Penalty:  $209 million (plus administrative forfeiture of $14 million)

Disclosure:  A 2008 civil lawsuit between Alba and Alcoa.

Monitor:  No

Individuals Charged:  No

DOJ Enforcement (Individual)

As noted in this post, on January 6th the DOJ announced criminal charges against three former executives of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey, “for their alleged participation in a scheme to pay bribes to foreign government officials in violation of the FCPA, to defraud PetroTiger, and to launder proceeds of those crimes.” The individuals charged were former co-CEOs of PetroTiger Joseph Sigelman and Knut Hammarskjold and former general counsel Gregory Weisman.  As noted here, Hammarskjold and Weisman have pleaded guilty and the charges against Sigelman remain pending.

SEC Enforcement (Corporate)

The SEC resolved 1 corporate FCPA enforcement action in the first quarter.  SEC recovery in this enforcement action was approximately $161 million.  At present, none of the enforcement actions have resulted in any individual charges against company employees.

Alcoa (January 9th)

See here for the prior post.

Charges:   None.  Administrative cease and desist order finding violations of the FCPA’s anti-bribery provisions and books and records and internal control provisions.

Settlement:  $175 million in disgorgement (of which $14 million will be satisfied by the payment of the forfeiture in the criminal action).

Disclosure:   A 2008 civil lawsuit between Alba and Alcoa.

Individuals Charged:  No

Related DOJ Enforcement Action:  Yes

SEC Enforcement (Individual)

The SEC did not bring any FCPA charges against individuals in the first quarter.

Other Developments

As noted in this post, the DOJ released FCPA Opinion Procedure Release 14-01 in which the DOJ gave a company the green light to purchase a foreign businessman’s (turned “foreign official”) minority interest in a company for fair market value.

As noted in this post, a judicial decision in a civil case between Chevron and a plaintiffs’ lawyer representing Ecuadorian villagers alleging environmental contamination at oil fields in the Amazon touched upon FCPA issues.  Specifically, a federal court judge found that the lawyer  ”violated the Travel Act through the use of facilities of interstate or foreign commerce with the intent to facilitate violations of the anti-bribery provisions of the Foreign Corrupt Practices Act” and the decision most squarely addressed the FCPA’s “obtain or retain business” element.

As highlighted in this post, Congress remains interested in FCPA issues as Senator Charles Grassley (R-IA), Ranking Member of the Senate Judiciary Committee, asked several FCPA-related questions for the record in connection with the confirmation hearing of a nominee for Assistant Attorney General of the Criminal Division.

As discussed in this post, the U.K. formally entered the facade era as DPAs officially became available to U.K. prosecutors.  Why did the U.K. adopt DPAs?  In short, the U.K. agencies tell us that doing things the old-fashioned way (i.e. proving a criminal violation in an adversarial system) is too difficult and takes too long.  The SFO Director’s language on this issue is blunt as he states that “one of the principal purposes of DPAs is to bring resolution to cases of corporate criminality more quickly.” The U.K.’s justification for DPAs is really quite sad as ease and efficiency are not concepts normally associated with the rule of law and justice.  Yet, when politicians and civil society groups are clamoring for more prosecutions this is the end result.

During the first quarter, the DOJ’s FCPA Unit Chief became the latest in a long line of DOJ and SEC FCPA enforcement attorneys to leave government service for FCPA Inc. to provide defense and compliance services to business organizations subject to the enforcement climate they helped create.  For more information see posts here, here and here.

As highlighted here, FCPA lawyers would be wise to review a recent Third Circuit decision in which the court upholds an order from the district court enforcing a grand jury subpoena issued to a corporation’s FCPA lawyer concerning oral advice the lawyer gave to the client regarding the application of the Foreign Corrupt Practices Act.

Finally, as noted in this post, sometimes it takes the Supreme Court to remind us … well … what the law is! Dig into certain corporate FCPA enforcement actions and it would appear that legal liability seems to hop, skip, and jump around a multinational company.  This of course would be inconceivable in other areas, such as contract liability, tort liability, etc. absent an “alter ego” / “piercing the veil” analysis for the simple reason that is what the black letter law commands.  In Daimler v. Bauman, the Supreme Court, in a non-FCPA case, slammed the “agency” theory seemingly serving as the basis for several recent corporate FCPA enforcement actions.

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

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