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July 7, 2010

Snamprogetti and Eni Settle FCPA Charges for Combined $365 Million in Penalties

Posted by wrageblog under Africa, FCPA, Nigeria, US Government, enforcement | Tags: , , , , , , , |
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On July 7, 2010, Snamprogetti Netherlands BV and Eni SpA settled FCPA charges with the U.S. Department of Justice and U.S. Securities and Exchange Commission for a combined $365 million in penalties.  Under the terms of a two-year deferred prosecution agreement with the DOJ, Snamprogetti agreed to pay a $240 million criminal fine and Snamprogetti, Eni and Saipem SpA agreed to ensure that their compliance programs satisfied certain standards and agreed to cooperate with the DOJ’s ongoing investigations.  Snamprogetti and Eni also reached a settlement of a related civil complaint with the SEC, agreeing jointly to pay $125 million in disgorgement of profits and prejudgment interest.  A long-running investigation and prosecution by the Milan Public Prosecutor’s Office appears to be ongoing.

Snamprogetti Netherlands BV (“Snamprogetti”) was part of the four-company “TSKJ” joint venture [Technip of France; Snamprogetti; KBR of the U.S.; and JGC Corporation of Japan] that was alleged to have paid hundreds of millions in bribes to Nigerian officials between 1995 and 2004 in order to secure four engineering, procurement and construction (EPC) contracts for the development of liquefied natural gas facilities on Bonny Island in Nigeria.  In February 2009, Halliburton and KBR settled FCPA charges related to its involvement in the scheme, resulting in $579 million in combined penalties.  The DOJ and SEC have been investigating other joint venture partners since.  Recently, on June 28, 2010, Technip settled with the DOJ and SEC for $338 million in combined penalties.

During the relevant time period, Snamprogetti was a wholly-owned indirect subsidiary of Italy’s oil and gas giant, Eni SpA.  Eni became a U.S. issuer in 1995 and remains a 43% owner in Snamprogetti’s current parent company, Saipem SpA.

To access the Compendium summary regarding this matter, please click here.

 

June 29, 2010

Veraz Networks Settles With SEC for $300,000

Posted by wrageblog under China, FCPA, Gift Hospitality & Travel, US Government, Vietnam, enforcement | Tags: , , , , , , , |
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On June 29, 2010, without admitting or denying the SEC’s allegations, Veraz Networks, Inc. consented to the entry of a final judgment permanently enjoining the company from future violations of the FCPA’s books and records and internal controls provisions.  Veraz was ordered to pay a $300,000 civil penalty.  The SEC alleged that Veraz made or offered improper payments to government officials in China and Vietnam following the company’s initial public offering in April 2007.  The improper payments included gifts and entertainment promised to employees of state-controlled telecommunications companies and, in most cases, were offered through third party intermediaries. 

The Compendium summary of this matter may be accessed here:  https://secure.traceinternational.org/compendium/view.asp?id=233

 

June 28, 2010

Technip Settles FCPA Charges for Combined $338 Million in Penalties

Posted by wrageblog under Africa, FCPA, France, Nigeria, US Government, enforcement | Tags: , , , , , , , |
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On June 28, 2010, Technip SA, the Paris-based engineering, construction and services company, settled FCPA charges with the U.S. Department of Justice and U.S. Securities and Exchange Commission for a combined $338 million in penalties.  Under the terms of a two-year deferred prosecution agreement with the DOJ, Technip agreed to pay a $240 million criminal fine, to retain an independent compliance monitor for a two-year period and to cooperate with the DOJ in its ongoing investigations.  Technip also reached a settlement of a related civil complaint with the SEC, agreeing to pay $98 million in disgorgement of profits and pre-judgment interest.  The French government’s investigation of the company appears to be ongoing.

Technip was part of the four-company “TSKJ” joint venture [Technip of France; Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy); KBR of the U.S.; and JGC Corporation of Japan] that was alleged to have paid hundreds of millions in bribes to Nigerian officials between 1995 and 2004 in order to secure engineering, procurement and construction (EPC) contracts for the development of liquefied natural gas facilities on Bonny Island in Nigeria.  In February 2009, Halliburton and KBR settled FCPA charges related to its involvement in the scheme, resulting in $579 million in combined penalties.  The DOJ and SEC have been investigating other joint venture partners since.  

Technip’s American Depository Receipts (“ADRs”) were traded on the New York Stock Exchange from 2001 until 2007.

The Compendium summary regarding this matter may be accessed here:  https://secure.traceinternational.org/compendium/view.asp?id=148

 

June 28, 2010

Virginia Businessman Sentenced in Panama Bribery Case

Posted by wrageblog under FCPA, Panama, US Government, enforcement | Tags: , , , , |
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On June 25, 2010, Virginia businessman John W. Warwick was sentenced to 37 months in prison for conspiring to violate the FCPA in connection with improper payments made to Panamanian officials in order to obtain maritime contracts.  Warwick was indicted on December 15, 2009 and pleaded guilty on February 10, 2010.  His prison term is to be followed by two years of supervised release.  He was also ordered to forfeit $331,000 in proceeds of the crime. 

The Compendium summary of this matter may be accessed here: https://secure.traceinternational.org/compendium/view.asp?id=132

 

June 25, 2010

Ousama Naaman Pleads Guilty

Posted by wrageblog under FCPA, Indonesia, Iraq, UK Government, US Government, United Nations, enforcement | Tags: , , , , , , , |
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On June 25, 2010, Ousama Naaman, a Lebanese and Canadian citizen and Innospec’s middleman in Iraq during the United Nations Oil-for-Food Program, pleaded guilty in U.S. District Court for the District of Columbia.  He pleaded guilty to a two-count superseding information charging him with one count of conspiracy to commit wire fraud, violate the FCPA and falsify the books and records of a U.S. issuer; and one count of violating the FCPA.  Naaman, initially indicted on August 7, 2008, was arrested in Frankfurt, Germany on July 30, 2009 and later extradited to the United States.  He had initially entered a plea of not guilty on May 3, 2010.

Naaman admitted to orchestrating an arrangement whereby Innospec paid a 10% kickback to the Iraqi government between 2001 and 2003 to obtain five contracts under the Oil-for-Food program to supply an anti-knock fuel additive (tetraethyl lead) to Iraq’s oil refineries.  According to the DOJ press release, Naaman also paid or promised to pay over $3 million in bribes (in the form of cash, travel, gifts and entertainment) between 2004 and 2008 to officials of the Iraqi Ministry of Oil and the Trade Bank of Iraq on Innospec’s behalf in order to secure sales of tetraethyl lead and to secure more favorable exchange rates, respectively. 

Naaman’s sentencing has not yet been scheduled.  He faces up to 10 years in prison. 

On March 18, 2010, Innospec pleaded guilty to a twelve-count information charging, agreeing to a $14.1 million criminal fine and three-year compliance monitorship.  The company also settled with the SEC, agreeing to disgorge $11.2 million, and with the Treasury Department’s Office of Foreign Assets Control (OFAC) for $2.2 million.  On the same day, Innospec’s UK subsidiary pleaded guilty to paying bribes in Indonesia, receiving a $12.7 million criminal fine.  The Corruption Eradication Commission (KPK) in Indonesia appears to be conducting an ongoing investigation into the company’s activities in the country.

Today’s DOJ press release can be accessed here:  http://www.justice.gov/opa/pr/2010/June/10-ag-747.html

 

June 25, 2010

The Latest FCPA Enforcement “Tea Leaves”

Posted by wrageblog under FCPA, US Government, enforcement | Tags: , , , , , |
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TRACE attends anti-corruption conferences in part to listen to presentations by representatives from the various government enforcement agencies so that we can report back on emerging trends and other hints they may drop.  With official guidance pretty sparse, those tea leaves become more important.   Julie Coleman of TRACE provides this summary of a busy week:

“Representatives from TRACE fanned out across the globe this week to attend anti-bribery conferences on three continents.  Alexandra was in Shanghai at the excellent American Conference Institute’s 3rd China Summit on Anti-Corruption, where she presented on effective anti-bribery training and led a workshop on tiered due diligence.  Carolyn presented on anti-corruption issues at the International Conference on Anti-Corruption, Good Governance and Human Rights in Paris.  Anne and Julie stayed closer to home, where  Anne attended the 4th FCPA & Anti-Corruption Conference and presented on the unique challenges of doing business in the “BRIC” countries (Brazil, Russia, India and China), and  Julie attended Ethical Corporation’s 3rd Annual Global Anti-Corruption Summit and presented on the benefits of benchmarking to create an effective compliance program.

Hank Walther, the Assistant Chief at the U.S. Department of Justice Fraud Section, appeared on three different panels in one day at Ethical Corporation’s conference, and provided his predictions about what the future of FCPA enforcement holds.  He noted that the following three trends will continue:

1.       The “Siemens Phenomena” is here to stay.  That is, the DOJ will continue to pursue large cases where the alleged misconduct spans multiple continents.  He noted that the Siemens case, with its billion-dollar-plus settlement, was not an outlier.  Hank pointed to other recent eye-catching settlements:  BAE ($400 million), Daimler ($93 million criminal penalty) and KBR ($402 million).

2.       However, the DOJ’s interest in pursuing marquee names does not mean private companies are off the hook.  Per Hank, the DOJ still likes the smaller cases.  Although the public company prosecutions grab the headlines, Hank was quick to note that more private companies have been prosecuted under the FCPA than public companies.

3.       Individuals remain squarely in the DOJ’s cross hairs.  Hank pointed out that, even as recently as four or five years ago, the DOJ rarely charged individuals with FCPA violations.  What has changed?  First, an apparent public policy shift at the DOJ has occurred.  The DOJ has come to realize that “it can’t build an enforcement regime on criminal fines alone.”  That is, if bribery convictions only impact corporate coffers, then paying bribes just becomes a cost of doing business.  If, instead, the specter of jail time is factored into the cost-benefit analysis, then the calculus changes dramatically.  Second, the DOJ has become more adept at gathering evidence in FCPA cases.  Resolutions of FCPA cases used to come about like this:  (a) a corporation uncovers an inappropriate payment,  (b) it then conducts an internal investigation and gathers its own evidence, and (c) it finally comes into the DOJ with hat in hand where a polite, if somewhat tense, negotiation ensues and a penalty is mutually agreed upon.  Now, corporate executives can expect a “knock and talk:”  awakened by a hard knocking on the front door of their home, opening the door and hearing “I’m a special agent from the FBI.  May I ask you some questions?”  According to Hank, the answer is always “yes.”"

Nathaniel Edmonds (Assistant Chief, Fraud Section) spoke in Shanghai about, among other things, the Las Vegas Sting.  He fascinated the audience with his description of the many hours of footage and provided a new piece of information: the propensity of the alleged bribe-payers involved to discuss not only the deal at hand, but past deals.

So, there you have it.  The DOJ is targeting individuals as well as companies of all sizes, – and those investigations may well provide enough material for the next round of investigations.

 

June 10, 2010

TRACE RELEASES FIRST SUMMARY OF GLOBAL ANTI-BRIBERY ACTIVITY

Posted by wrageblog under FCPA, OECD, TRACE, TRACE Compendium, UK Government, US Government, enforcement | Tags: , , |
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Global Enforcement Report 2010 Is First of Planned Annual Releases

The good news is enforcement of international anti-bribery laws is increasing. The bad news is many countries have yet to leave the anti-bribery enforcement starting line.

TRACE International released its first-ever summary of worldwide anti-bribery activity today, and it is evident from its data that enforcement is gaining momentum. The TRACE Global Enforcement Report (GER) 2010 summarizes 33 years of enforcement activity by nations around the world.

The TRACE GER 2010 is based on data collected in the TRACE Compendium, a compilation of information about international anti-bribery investigations, formal cases and legal decisions the organization maintains as a public, online tracking tool. The enforcement activities collected date to 1977, when the United States passed and began to enforce the Foreign Corrupt Practices Act (FCPA).

“There is considerable activity to report, which means that transparency is being prioritized and laws prohibiting bribery of foreign officials are increasingly being enforced,” said Alexandra Wrage, President of TRACE. “Although some of the conclusions from our analysis merely confirm expected enforcement trends, TRACE GER 2010 includes some surprises.”

One of those unexpected findings is that in terms of enforcing so-called “inbound” bribery – or enforcement actions brought against a foreign company or individual for offering a bribe to a country’s own officials – South Korea and Italy are the most aggressive enforcers. South Korea leads the enforcement pack in this category, with 12 of the 96 inbound global enforcements recorded; Italy has recorded nine.

The TRACE GER 2010 shows that the U.S.’s role as the anti-bribery first mover has given it a clear lead in terms of the number of total enforcement actions to date for “outbound” bribery; that is, cases and investigations brought against companies and individuals for offering to bribe government officials of other countries. Of the 515 outbound, or foreign, enforcement actions reported in the TRACE Compendium, more than 75 percent, representing 390 bribery enforcement actions, are U.S. matters. The remaining 25 percent are the result of the combined efforts of 21 other nations.

The United Kingdom ranks a distant second highest in the number of outbound bribery actions, with 4.3 percent of the total, comprising 22 bribery enforcement reports.

Although anti-bribery enforcement activity is increasing, and new entrants in the enforcement arena have emerged, much work remains. Of the 193 nations recognized by the United Nations, only 22 have enforced a foreign anti-bribery law in the past 25 years.

According to Wrage, TRACE will publish the GER on an annual basis, with TRACE GER 2010 serving as the organization’s baseline measurement.

“This report summarizes data on the key dimensions of international bribery enforcement, including outbound bribery, inbound bribery, the countries in which alleged bribes are most frequently paid, and the industries in which bribery enforcement cases originate,” she said. “Future Global Enforcement Reports will identify and update the trends in these areas, as well as include other timely analyses of emerging patterns of enforcement as such actions continue to increase around the world.”

To view the TRACE Global Enforcement Report 2010, please visit https://secure.traceinternational.org/documents/TRACEGlobalEnforcementReport2010.pdf.

 

May 28, 2010

TRACE UK Anti-Bribery Symposium

Posted by wrageblog under FCPA, TRACE, UK Government, US Government, enforcement, voluntary disclosure | Tags: , , , , , , |
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Yesterday, in London, TRACE conducted a full-day benchmarking symposium attended by over 60 company representatives and featuring speakers from government, the private bar and in-house legal and compliance departments.  Anne Richardson of TRACE reports the following findings:

“The TRACE UK Anti-Bribery Symposium featured discussions of the new Bribery Act and its anticipated impact on UK government enforcement and on the compliance programs of UK companies and foreign companies operating in the UK.  Several themes emerged over the course of the day.

First, the new Bribery Act has been greeted with a significant degree of uncertainty and confusion in the corporate world.  Interpretations of the act by different government speakers at recent public events have been vague and inconsistent.  With regard to the defense of adequate procedures, the business community awaits SFO guidance on the subject (which was originally to be delivered in July, but there are many rumors of delay).  At the same time, most expect the guidance to provide merely a broad outline of best practices already widely recognized and disseminated in the compliance community.

Second, the UK company attorneys, compliance officers and business managers at the event echoed the oft-stated frustration of their American counterparts when it comes to defining the parameters of acceptable business hospitality.  Companies on both sides of the Atlantic crave concrete guidance from enforcement authorities on where to draw the line with regard to gifts, entertainment or travel provided to foreign government customers.  The line between lavish and reasonable is impossible to identify with confidence, much less implement, but it is doubtful that the UK authorities will be any more forthcoming on this issue than authorities in the United States.

There is also widespread skepticism over the SFO’s voluntary disclosure and cooperation programs.  Judicial opinions in the recent Innospec and John Dougall cases call into question the SFO’s ability to enter into settlement or plea agreements with either corporate or individual defendants.  Companies considering voluntarily reporting a problem to the SFO, or individuals deciding whether to serve as cooperating witnesses, are justifiably doubtful that such actions will produce tangible benefits or true leniency when it comes to sentencing and penalties.

Finally, in response to a survey question, companies made it clear that they continue to fear investigation and prosecution by the DOJ and SEC in the US to a much greater extent than in the UK.  This presumably is driven by the shear number of cases brought by the US government and the much higher penalties imposed. (Even in multiple-jurisdictional cases involving UK companies, such as BAE and Innospec, the US-imposed penalties dwarfed those imposed by the UK).  There is also uncertainty surrounding the very future of the SFO and FSA, as the new Conservative-led government considers an agency reorganization.

The new UK Bribery Act has certainly created a lot of buzz, but it’s too soon to measure its impact.  For now, multinational companies will continue to look to US FCPA enforcement as the bellwether for evaluating corporate corruption risk and developing the necessary compliance response.”

 

April 30, 2010

SEC Charges Four Former Tobacco Company Employees With FCPA Violations in Kyrgyzstan and Thailand

Posted by wrageblog under FCPA, Kyrgyzstan, Thailand, US Government, enforcement | Tags: , , , , , |
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On April 28, 2010, the SEC filed a settled civil injunctive action against four former employees of Dimon, Inc. (now Alliance One International, Inc.) for violations of the FCPA in connection with tobacco purchases and sales in Kyrgyzstan and Thailand.  The SEC’s investigation remains ongoing.  For a summary of this enforcement action, please visit the TRACE Compendium.

 

April 9, 2010

TRACE Compendium Now Includes DOJ’s Opinion Procedure Releases

Posted by wrageblog under Opinion Release Procedure, TRACE, TRACE Compendium, US Government | Tags: , , , , , |
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We are pleased to announce that the TRACE Compendium now includes the Department of Justice’s Opinion Procedure Releases (as well as their predecessor Review Procedure Releases).  These entries are searchable by keyword or by numerous category tags, similar to the Compendium’s summaries of anti-bribery enforcement actions.  For example, a viewer can select the “Opinion Procedure Release” tag and the “Gifts, Hospitality & Travel” tag in the relevant Compendium search boxes, thereby pulling up entries for all OPRs addressing the provision of gifts, hospitality and travel to foreign officials.  In addition, each Opinion Procedure Release entry contains a “Key Takeaways” section that provides a concise summary of the guidance provided in the release. 

Opinion Procedure Releases are binding only on parties to a particular request and only with regard to the specific facts and circumstances disclosed to the DOJ.  Nevertheless, Opinion Procedure Releases provide valuable guidance to companies and individuals facing compliance dilemmas similar to those covered in the respective releases.  In adding the Opinion Procedure Releases to the Compendium’s existing database of enforcement actions, TRACE continues to provide its members and the public with a searchable and user-friendly tool for harnessing this important source of anti-bribery compliance guidance.

 

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