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« China Corruption Blotter (December 28, 2012) | Main | China survey: bribes eat big chunk of developers’ profits »
Thursday
Dec272012

2012: The year in declinations

Graphic reprinted with permission of Miller & Chevalier CharteredFCPA declinations -- decisions not to prosecute a company after an investigation -- are hard to track.

Generally the DOJ and SEC don't reveal anything about declinations. Companies can disclose them and some do. But an unknown number do not.

Washington, D.C. law firm Miller & Chevalier has been tracking known declinations since 2008.

In 2010, they identified 12, and last year 4.

So far in 2012, we've noted these 10 declinations:

Morgan Stanley (April 25), the year's best-known declination and one the biggest FCPA stories of 2012. At a press conference to announce charges against Garth Peterson, Morgan Stanley's head of real estate investments in China, both the DOJ and SEC said Morgan Stanley itself would not be prosecuted because of its strong compliance program (for example, it sent Peterson 35 reminders to comply with the FCPA). It was the first time the agencies publicly credited a pre-existing compliance program in a decision not to take enforcement action against a company. 

Academi LLC (July 19), formerly known as Blackwater Worldwide, received word from the DOJ that it would not be prosecuted for alleged bribery in Iraq.

Sensata Technologies Holding N.V. (July 27), was the subject of DOJ and SEC investigations for potential FCPA violations in China. It said the DOJ closed its inquiry but could reopen it if new evidence shows up. The company also said it hasn't heard any news from the SEC about the investigation.

Huntsman Corporation (August 1) said in an SEC filing that the DOJ and SEC won't take enforcement action against the company for bribes paid in India by employees of a joint venture there. Huntsman's internal investigation showed less than $11,000 in illegal payments in 2009 and early 2010. It self disclosed the payments to the SEC and DOJ in 2010. It also fired management employees involved in the illegal payments.

Hercules Offshore, Inc. (August 7), an oil and gas services contractor that provides drilling, barge, and boat services, said both the SEC and DOJ will take no enforcement action for possible FCPA violations. The DOJ terminated its investigation 'based on a number of factors, including, but not limited to, the thorough investigation undertaken by Hercules and the steps that Hercules has taken in the past and continues to take to enhance its compliance program, including efforts to ensure compliance with the FCPA.' 

W.W. Grainger, Inc. (August 14) said the DOJ won't prosecute the company for giving pre-paid gift cards to some customers in China. Grainger said its internal investigation didn't substantiate 'significant use of gift cards for improper purposes in China.' 'On August 14, 2012,' Grainger said, 'the DOJ closed its inquiry into this matter.'

Schlumberger N.V. (October 24), was under investigation as part of the Panalpina-related sweep of the oil and gas services industry (see Nabors Industries below). The company said it was advised that the DOJ would not bring charges. No SEC investigation was disclosed.

Nabors Industries Ltd. (November 2), an oil and gas services company, was a customer of Panalpina but not among the seven companies that settled FCPA cases on the same historic day in November 2010. Panalpina, a Swiss logistics firm, admitted paying bribes to help customers move their drill rigs and other equipment in and out of Kazakhstan, Saudi Arabia, Algeria, and Nigeria, among others. Nabors launched a Panalpina-related investigation in 2007 and shared the results with the feds. Nabors said the SEC won't bring an enforcement action. The company said it hasn't heard from the DOJ.

The Allied Defense Group, Inc (November 13), implicated in the Africa sting case, was advised by the SEC of a declination. No word from the DOJ.

Grifols SA (December 7), the Spanish pharma, said the DOJ issued an 'official declination to all inquiries related to the possible violation of the Foreign Corrupt Practices Act (FCPA) that were underway since July 2009.' The investigation related to Talecris, acquired by Grifols in 2011.

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