2008 FCPA Enforcement Index

Eleven organizations were named in Foreign Corrupt Practices Act enforcement actions during 2008 by the Justice Department, the Securities and Exchange Commission, or both. All of the companies on our list resolved their enforcement actions, except privately-held Nexus Technologies Inc.

The twenty-six individuals we've listed were charged with new FCPA offenses this year, or they settled enforcement actions or had charges amended, reinstated or affirmed in rehearings or on appeal. In the case of David Kay and Douglas Murphy, the U.S. Supreme Court refused to review their FCPA convictions. In U.S. v. Kozeny the prosecution against Frederic Bourke is going ahead, while his co-defendant Victor Kozeny has stayed in the Bahamas fighting extradition to the United States and another co-defendant, David Pinkerton, was dismissed from the case.

During the year, parties acting as private litigants filed five suits in U.S. federal court alleging behavior by defendants that, if true, would likely violate the FCPA. Our list of private litigation doesn't include the FCPA-related class action lawsuits that Kevin LaCroix has written about at the D&O Diary (here).

The pace of FCPA enforcement during 2008 was uneven. There were no enforcement actions against individuals until April. And during the first four months of the year -- while Congress investigated how corporate compliance monitors are appointed and paid -- just a couple of actions against organizations were announced.

There are now around 50 pending FCPA investigations at the DOJ and SEC, according to most estimates, with some investigations involving up to a dozen companies from single-industry segments, such as oil and gas services and orthopedic device makers.

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Organizations (countries involved) / U.S. enforcement agencies / financial penalties including fines, disgorgement and interest:

• Fiat (Iraq, U.N. oil for food program) / DOJ, SEC / $17.7 million

• Siemens (Iraq, U.N. oil for food program) (Other violations related to Argentina, Bangladesh, Venezuela, Iraq, Israel, Nigeria, Vietnam, China, Russia, Mexico) / DOJ, SEC / $800 million

• Aibel (Nigeria) / DOJ / $4.2 million

• AGA Medical Corp. (China) / DOJ / $2 million

• Con-Way Inc. (Philippines) / SEC / $300,000

• Faro Technologies (China) / DOJ, SEC / $2.95 million

• Willbros Group (Bolivia, Ecuador, Nigeria) / DOJ, SEC / $32.3 million

• AB Volvo (Iraq, U.N. oil for food program) / DOJ, SEC / $19.6 million

• Flowserve Corp. (Iraq, U.N. oil for food program) / DOJ, SEC / $10.5 million

• Westinghouse Air Brake Technologies Corporation (India) (DOJ, SEC) $675,000

• Nexus Technologies Inc. (Vietnam) / DOJ / Pending

Individuals:

• Misao Hioki (Bridgestone) Two years in prison, $80,000 fine

• Paul G. Novak (Willbros) Trial pending

• James K. Tillery (Willbros) Trial pending

• Shu Quan-Sheng (rocket scientist / AMAC International Inc) Guilty plea, sentencing pending

• William J. Jefferson (former member, U.S. House of Representatives) Trial pending

• Frederic Bourke (U.S. v. Kozeny) Trial pending

• Gerald Green (Hollywood movie producer) Trial pending

• Patricia Green (Hollywood movie producer) Trial pending

• Richard John Novak (diploma mill syndicate) Three-years probation, three hundred hours of community service

• Christian Sapsizian (Alcatel) Thirty months in prison, three-years supervised release, forteiture of $261,500

• Jason Edward Steph (Willbros) Guilty plea, sentencing pending

• Gerald Jansen (Willbros) $30,000 civil penalty

• Lloyd Biggers (Willbros) No financial penalty

• Carlos Galvez (Willbros) $35,000 civil penalty

• David Kay (American Rice) Thirty-seven months in prison

• Douglas Murphy (American Rice) Sixty-three months in prison

• Nam Nguyen (Nexus Technologies Inc) Trial pending

• Joseph Lukas (Nexus Technologies Inc) Trial pending

• Kim Nguyen (Nexus Technologies Inc) Trial pending

• An Nguyen (Nexus Technologies Inc) Trial pending

• Albert “Jack” Stanley (KBR) Eighty-four months in prison (subject to reduction) and $11 million restitution

• Martin Eric Self (Pacific Consolidated Industries) Guilty plea, sentencing pending

• Roger Michael Young (ITXC Corporation) Five-years probation, three-months home confinement, three months in a community confinement center, $7,000 fine

• Yaw Osei Amoako (ITXC Corporation) Eighteen months in prison, two-years of supervised release, $7,500 fine

• Steven J. Ott (ITXC Corporation) Five-years probation, six months home confinement, six months in a community confinement center, $10,000 fine

• Ramendra Basu (The World Bank) Fifteen months in prison, two-years supervised released, fifty hours of community service

Private litigants:

• Supreme Fuels v. Harry Sargeant III et al

• Republic of Iraq v. ABB et al

• Grynberg v. BP et al

• Aluminum Bahrain BSC ("Alba") v. Alcoa et al

• Argo-Tech Corp v. Yamada Corp.

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If we've missed any names that should be included in the 2008 index, please let us know.
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Comments

[Yogesh Goel]

The index is a good referencer. Thnx, but i do not read anything on a latest potential problem with Satyam Computers (an Indian Software Services Company) that is banned for 8 years by World Bank on Corruption charges and colluding with the CIO of World Bank.

[The FCPA Blog]

Satyam has not been subject to an FCPA enforcement action.

[Anonymous]

You listed Grynberg vs. BP et al. In a more recent case, on 20 November 2008, the same Mr. Grynberg included a RICO Cause of Action tied to an alleged FCPA violation, in Grynberg, et al. vs Ivanhoe Energy Inc., et al., in the Federal Dist. Ct. for the District of Colorado, File: 1:08-cv-02528 -WDM-BNB. The Complaint, among other things, alleges that at least one of the Defendants violated the FCPA in order to gain a competitive business advantage.

The scheduling conference is set for February 10, 2009, at 10:00 a.m in Courtroom A-401, Fourth Floor, United States Courthouse, 901 19th Street, Denver, Colorado.

The referrence to the FCPA is contained in paragraph 39: "Upon information and belief, ... violated the U.S. Foreign Corrupt
Practices Act, 15 U.S.C. § 78 et seq. ..., by bribing government officials, ...." This allegation is apparently tied to the RICO Cause of Action in paragraph 64(a) of the Complaint.

[Anonymous]

In the enforcement actions listed, do we know whether any Books and Records (B&R) violations were alleged without allegations made under the anti-bribery (AB) provisions?

It is unclear to me whether the B&R provisions are used primarily as a fall back when DOJ/SEC can't tie the payments to a public official or show the requisite quid pro quo (and thus, I assume, there would be cases without AB allegations). Or whether the B&R provisions are used primarily as part of DOJ/SEC negotiations once they can show that the AB provisions have been violated.

Thanks

KER