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« Naaman: Credit For Time Served; Is He Headed For A Canadian Jail? | Main | Graft As Symptom And Disease »
Monday
Apr022012

Enforcement Report For Q1 '12

There were four FCPA corporate enforcement actions during the first quarter of the year (we lump parent and subsidiary companies together). That's a normal amount of activity. In both 2011 and 2010, there were also four corporate actions during the same period. In Q1 2009, there were two corporate actions.

But over the last three months, individual defendants captured most of the attention. There were acquittals, mistrials, dismissals, and sentencings that were all high-profile enforcement events.

We've included a Haiti Telco conviction for money laundering. The DOJ had to prove an FCPA violation was involved so we think it belongs on the list.

Here's what happened:

DOJ / SEC Enforcement Resolutions

Marubeni Corporation (January 17) of Japan paid a $54.6 million criminal penalty to resolve FCPA charges for its role as an agent of the KBR-led TSKJ joint venture. It pleaded guilty to one count of conspiracy and one count of aiding and abetting violations of the FCPA. The Tokyo-based trading company was given a two-year deferred prosecution agreement.

Smith & Nephew (February 6) paid $22.2 million to settle FCPA offenses committed by its U.S. and German subsidiaries. The medical device maker admitted bribing government-employed doctors in Greece.The U.K.-based parent company Smith & Nephew plc settled the SEC’s charges by paying $5.4 million in disgorgement and prejudgment interest. A U.S. subsidiary, Smith & Nephew Inc., paid a $16.8 million criminal fine to the DOJ and entered into a deferred prosecution agreement.

Thomas F. O’Rourke (February 24), a former controller and head of internal audit at Noble, was charged by the SEC in a civil complaint with violating the FCPA. He agreed to settle by paying a $35,000 civil penalty.

BizJet International Sales and Support Inc. (March 14) paid an $11.8 million criminal fine and entered into a three-year deferred prosecution agreement with the DOJ to resolve FCPA offenses in Latin America. The DOJ's one-count criminal information charged BizJet with conspiring to violate the FCPA’s anti-bribery provisions.

Lufthansa Technik AG (March 14), BizJet's German owner, entered into a three-year deferred prosecution with the DOJ. It agreed to provide ongoing cooperation and enhance its internal controls.

Biomet Inc. (March 26) paid a criminal fine of $17.3 million to resolve charges brought by the DOJ and $5.5 million in disgorgement of profits and pre-judgment interest to settle civil charges by the SEC. Indiana-based Biomet's deferred prosecution agreement required a compliance monitor for 18 months.

Convicted

Jean Rene Duperval (March 13), a former director of Telecommunications D’Haiti S.A.M. (Haiti Telco), by a federal jury in Miami on two counts of conspiracy to commit money laundering and 19 counts of money laundering. The laundered funds, the DOJ said, were the proceeds of violations of the FCPA, Haitian antibribery law, and the U.S. wire fraud statute. Duperval was remanded to the custody of the U.S. Marshals. Sentencing is scheduled for May 21.

Acquitted

John O'Shea (January 16), the former manager of ABB's Texas unit, was acquitted of all subsantive FCPA counts he faced. He was accused of bribing officials at Mexico's state-owned electric utility CFE and covering up the payments. The judge said the government’s chief witness knew almost nothing. The remaining charges against O'Shea -- conspiracy, money laundering, and obstruction -- were dismissed at the DOJ's request on February 9.

R. Patrick Caldwell (January 30), a former secret service agent, was acquitted by the jury in the second Africa sting trial in federal court in Washington, D.C.

John Gregory Godsey (January 30) was acquitted by the jury in the second Africa sting trial.

Mistrial Declared

Jeana Mushriqui (January 31), Judge Richard Leon declared a mistrial in the second Africa sting trial.

John Mushriqui (January 31), Judge Richard Leon declared a mistrial in the second Africa sting trial.

Marc Morales (January 31), Judge Richard Leon declared a mistrial in the second Africa sting trial.

Prosecution Dropped

Africa sting prosecution (February 24) dismissed with prejudice at the DOJ's request for sixteen unacquitted defendants who had pleaded not guilty. On March 27, the DOJ filed a motion to drop the indictments against the three defendants who had pleaded guilty, Jonathan M. Spiller, Haim Geri, and Daniel Alvirez.

Sentenced

Wojciech Chodan (February 22) the former U.K.-based KBR manager, recieved just one year of unsupervised probation and a $20,000 fine. He had pleaded guilty in December 2010 to one count of conspiracy to violate the FCPA.

Jeffrey Tesler (February 23), a London lawyer who acted as a middleman for KBR and its TSKJ partners, received 21 months in federal prison. He pleaded guilty in March last year to an FCPA conspiracy and to violating the FCPA. He also forfeited $149 million as part of his plea and was fined $25,000 and ordered to serve two years of supervised release after his prison term.

Albert 'Jack' Stanley (February 23), KBR's former chairman and CEO, was given 30 months in prison and three years probation following his release. He pleaded guilty in Houston in 2008 to a two-count criminal information charging him with conspiracy to violate the FCPA and to commit mail and wire fraud. He cooperated with prosecutors and helped them collect $1.65 billion from KBR and its three TSKJ partners and agents to settle FCPA charges.

Indicted / Charged

Cecilia Zurita (January 20) was charged in the Haiti telco case in a second superseding indictment filed in federal court in Miami. The former vice president of Cinergy Telecommunications Inc. became the seventh co-defendant in the case. She allegedly wrote checks for funds later used to bribe officials in Haiti, and covered up the payments with false documentation. Her husband is also a defendant in the case.

Mark A. Jackson (February 24), former CEO of Noble, charged by the SEC in a civil complaint with violations of the FCPA.

James J. Ruehlen (February 24), current head of Noble’s subsidiary in Nigeria, charged by the SEC in a civil complaint with violations of the FCPA.

__________________

Our 2011 Enforcement Index is here, the 2010 Index is here, the 2009 Index can be found here, and our 2008 Index is here.

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