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« BAE Bribe Suit Tossed On Appeal | Main | UTStarcom Pays $3 million To Settle Asia Bribes »
Thursday
Dec312009

2009 FCPA Enforcement Index

[Updated December 31, 2009] In 2009, prosecutors kept their promise to pursue individuals who violated the Foreign Corrupt Practices Act. Thirty-three were named in enforcement actions brought by the DOJ or SEC -- the most for any year since enactment of the law in 1977. This year's list includes those indicted, arrested, convicted, sentenced, or civilly charged. Last year, we counted 24 individuals involved in similar enforcement actions, plus David Kay and Douglas Murphy, whose petition for certiorari to the U.S. Supreme Court was denied.

This year, 11 organizations (counting Halliburton and its one-time subsidiary KBR as one) were named in enforcement actions. Last year, our count was also 11. 

We're listing six new private lawsuits based on FCPA-related allegations; there were five in 2008. For more information about the securities class actions, we recommend Kevin LaCroix's D&O Diary (here). Mike Koehler has also covered Pride's suit here.

There were three FCPA-related trials, the most to occur in a year. The defendants were Frederic Bourke, William Jefferson, and Gerald and Patricia Green. As usual, no corporations contested FCPA charges in court.

The SEC expanded FCPA liability during the year. It filed a settled enforcement action against two officers of Nature's Sunshine Products Inc. -- Douglas Faggioli and Craig Huff. The complaint alleged that Faggioli and Huff, in their capacities as control persons, violated the books and records and internal controls provisions. It was the first time control-person liability was used in the FCPA context.

The dollar value of the corporate enforcement actions in 2009 -- including criminal penalties, civil fines, disgorgements and interest -- was just over $641 million, with Halliburton / KBR paying $579 million, the most for a U.S. company in an FCPA case. Last year's dollar value was about $890 million, swelled by Siemens' $800 million settlement, the largest ever.

The DOJ's Mark Mendelsohn said in November there are 130 FCPA cases open at the DOJ. They include industry-wide investigations of pharmaceutical companies, oil and gas services firms, and orthopedic device makers. 

A note on our count: Enforcement actions brought against a company and its affiliates by the DOJ, SEC or both are tabulated as a single case. So our numbers may be lower than those mentioned by the government, but they're consistent year-on-year.

_______________ 

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

AGCO Corporation (Iraq, U.N. oil for food program) / DOJ, SEC /$19.9 million

Avery Dennison Corporation  (China) / SEC / $518,000

Control Components Inc.  (China, Korea, Malaysia, United Arab Emirates) / DOJ / $18.2 million

Helmerich & Payne Inc. (Argentina, Venezuela) / DOJ, SEC / $1.375 million

ITT Corporation (China) / SEC / $1.7 million

Kellogg Brown & Root LLC and Halliburton (Nigeria) / DOJ, SEC / $579 million

Latin Node Inc. (Honduras, Yemen) / DOJ / $2 million

Nature's Sunshine Products Inc. (Brazil) / SEC / $600,000 

Novo Nordisk A/S (Iraq, oil for food program) / DOJ, SEC / $18 million

United Industrial Corporation (Egypt) / SEC / $337,679

UTStarcom, Inc. (China, Thailand) / DOJ / SEC /$3 million

 

Individuals:

Fernando Maya Basurto (ABB sales agent) Guilty plea, sentencing pending

Bobby Benton (Pride International) Charged in SEC civil complaint, trial pending

Frederic Bourke (entrepreneur, co-founder of Dooney & Bourke) Convicted, sentenced to a year and a day in prison and fined $1 million, free on bail pending appeal

Hong (Rose) Carson (Control Components Inc.) Indicted, trial pending

Stuart Carson (Control Components Inc.) Indicted, trial pending

Wojciech Chodan (KBR) Indicted, arrest in U.K. pending

Paul Cosgrove (Control Components Inc.) Indicted, trial pending

Mario Covino (Control Components Inc.) Guilty plea, sentencing pending

Juan Diaz (J.D. Locator Services) Guilty plea, sentencing pending

David Edmonds (Control Components Inc.) Indicted, trial pending

Joel Esquenazi (Terra Telecommunications Corp.) Indicted, trial pending

Douglas Faggioli (Nature's Sunshine Products), Civil enforcement action resolved, $25,000 civil penalty

Marguerite Grandison (Telecom Consulting Services Corp.) Indicted, trial pending

Gerald Green (movie producer), Convicted, sentencing pending

Patricia Green (movie producer), Convicted, sentencing pending

Craig D. Huff (Nature's Sunshine Products), Civil enforcement action resolved, $25,000 civil penalty

William Jefferson (former member, U.S. House of Representatives) Convicted, sentenced to 13 years in prison, free on bail pending appeal

Charles Paul Edward Jumet (Ports Engineering Consultants Corporation, Overman Associates) Indicted, trial pending

Han Yong Kim  (Control Components Inc.) Indicted, trial pending

Joseph T. Lukas (Nexus Technologies Inc.) Guilty plea, sentencing pending

Oscar H. Meza (Faro Technologies, Inc.) Civil enforcement action resolved, $56,707 civil penalty, disgorgement, prejudgment interest

Richard Morlok (Control Components Inc.) Guilty plea, sentencing pending

Ousama Naaman (intermediary for U.S. chemical company) Arrested in Frankfurt, Germany, extradition pending

Paul G. Novak (consultant, Wilbros Group), Guilty plea, sentencing pending

John Joseph O'Shea (ABB) Indicted, trial pending

Antonio Perez (Telecom Consulting Services Corp.) Guilty plea, sentencing pending

Flavio Ricotti (Control Components Inc.) Indicted, trial pending

Carlos Rodriguez (Terra Telecommunications Corp.) Indicted, trial pending

Shu Quan-Sheng (rocket scientist / AMAC International Inc) Sentenced to 51 months in prison

Leo Winston Smith (Pacific Consolidated Industries) Guilty plea, sentencing pending

Jeffrey Tesler (KBR agent) Indicted, extradition from U.K. pending

John W. Warwick (Ports Engineering Consultants Corporation, Overman Associates) Indicted, trial pending

Thomas Wurzel (United Industrial Corporation) Civil enforcement action resolved, $35,000 civil penalty

 

Private FCPA-related litigation:

Aluminium Bahrain BSC filed a $31 million civil suit against Sojitz Corp. and Sojitz Corporation of America.

FARO Technologies resolved securities class action litigation.

Halliburton and  KBR sued in a securities class action.

Panalpina World Transport (Holding) Ltd. sued by an investment fund.

Pride International Inc. sued in a securites class action.

Siemens AG sued in a securities class action.

_______________________

If we've missed any names that should be included in the 2009 index, please let us know. If necessary because of late announcements from the government or suggestions from readers, we'll amend this post to keep it accurate and complete.

The 2008 FCPA Enforcement Index can be found here.

[Post updated on December 31, 2009]

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  • Response
    2009 was an eventful year, with significant developments across a wide variety of economic, financial, judicial and legislative fronts. With the arrival of the New Year, it seems appropriate to take a look back at the past year’s most significant...

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