2013 FCPA Enforcement Index
Thursday, January 2, 2014 at 7:28AM
Richard L. Cassin in 2008 Enforcement Index, 2009 Enforcement Index, 2010 Enforcement Index, 2011 Enforcement Index, 2012 Enforcement Index, 2013 Enforcement Index

In 2013, twelve companies paid $731.1 million to resolve FCPA cases (that includes IBM's $10 million settlement from 2011 that received final court approval in 2013). Two of the twelve corporate actions -- Total SA and Weatherford -- landed in the top ten FCPA cases of all time.

For comparison, in 2012 twelve companies settled FCPA enforcement actions by paying a total of $259.4 million. In 2011, 15 companies paid $508.6 million; in 2010 23 companies paid $1.8 billion; in 2009 11 companies paid $644 million; and in 2008 11 companies paid $890.

Thirteen individuals pleaded guilty or were indicted in FCPA-related actions in 2013.

Three Viktor Konzeny-related defendants were finally sentenced for their FCPA offenses from more than a decade ago.

Two FCPA-related appeals were decided against individual defendants in 2013, with one of them sending Frederic Bourke to prison for his 2009 conspiracy conviction.

Eleven issuers reported declinations during the past year.

Here's what happened:

DOJ / SEC Enforcement Resolutions

Keyuan Petrochemicals Inc. (February 28), a China-based firm, jointly settled FCPA books and records and internal controls offenses with the SEC. Keyuan paid civil penalties of $1 million.

Aichun Li (February 28), the former CEO of Keyuan Petrochemicals, jointly settled FCPA books and records and internal controls offenses with the SEC. Li paid $25,000 in civil penalties.

Koninklijke Philips Electronics N.V. (April 9), reached a final settlement with the SEC through an administrative order (out of court). Philips agreed to pay $4.5 million, with disgorgement of $3.1 million and prejudgment interest of $1.4 million.

Uriel Sharef (April 16), the former officer and board member of Siemens AG, settled civil FCPA charges with the SEC. He agreed to pay a $275,000 penalty. He was charged for his role in Siemens' decade-long bribery scheme to win and retain a $1 billion government contract to produce national identity cards for Argentine citizens.

Parker Drilling Company (April 16), resolved DOJ and SEC charges for bribes paid to Nigerian officials through logistics agent Panalpina to circumvent customs and tax laws. Parker agreed to pay $15.9 million when it pleaded guilty to a one-count information charging it with violating the FCPA’s anti-bribery provisions.

Ralph Lauren Corporation (April 22), agreed in a DOJ and SEC settlement to pay $1.6 million in combined penalties in exchange for unprecedented dual non-prosecution agreements. The company admitted its Argentina subsidiary paid bribes to government and customs officials. It was the first time the SEC has resolved an FCPA case using a non-prosecution agreement.

Dejun 'David' Zou (May 15), settled with the SEC  by paying penalties of $150,000 and disgorging $3.5 million for FCPA books and records violations. He was CEO of China-based Rino International Corporation. The case didn't involve allegations of bribery.

Jianping 'Amy' Qiu (May 15), settled with the SEC  by paying penalties of $100,000 and disgorging (with her husband David' Zou) $3.5 million. She was chairman of the board of Rino International Corporation.

Rino International Corporation (May 15), settled with the SEC but was not assessed separate penalties from Zou and Qiu.

Total S.A. (May 29), settled with the DOJ and SEC  in the fourth biggest FCPA case ever. The French oil giant agreed to pay $398 million in penalties and disgorgement for bribing an Iran official to gain access to oil and gas fields.

Subramanian Krishnan (July 2), the former CFO of Digi International, Inc., agreed to settle civil charges that he evaded internal controls to pay for unauthorized travel and entertainment expenses. He was first charged in September 2012 in federal court in Minnesota with multiple offenses under the books and records and internal controls provisions of the FCPA.

IBM (July 24), received final court approval for its 2011 settlement with the SEC of civil FCPA charges. U.S. District Judge Richard Leon granted final approval for the $10 million settlement he first rejected in March 2011. The new settlement terms included enhanced reporting by IBM to the court about its compliance program and any potential FCPA violations.

Diebold Inc. (October 22), paid $48 million to the DOJ and SEC to settle public and private overseas bribes. It paid a criminal fine of $25.2 million to the DOJ and $23 million in disgorgement and prejudgment interest to the SEC to resolve allegations it violated the Foreign Corrupt Practices Act by covering up bribes to bank officials in China, Indonesia and Russia.

Stryker Corporation (October 24), paid the SEC $13.2 million to resolve FCPA violations. Michigan-based Stryker bribed doctors and administrators at government controlled hospitals in Argentina, Greece, Mexico, Poland, and Romania, the SEC said. The SEC settled the case through an administrative order and didn't file a civil complaint in court. Stryker wasn't required to make any admission of guilt regarding the allegations.

Weatherford International (November 26), paid $152.6 million to the DOJ and SEC for FCPA offenses in the Middle East and Africa and violation of the Iraq oil-for-food program. The Switzerland-based company also paid $100 million for export controls violations under the International Emergency Economic Powers Act and the Trading with the Enemy Act. The FCPA portion of the settlement ranks as the ninth biggest FCPA enforcement action of all time. The settlement landed our top ten list.

Bilfinger SE (December 9), a Mannheim, Germany-based engineering and services company in the energy sector, agreed to pay a $32 million penalty to resolve charges that it violated the Foreign Corrupt Practices Act by bribing government officials in Nigeria. The DOJ filed a three-count criminal information in U.S. District Court for the Southern District of Texas charging Bilfinger with violating and conspiring to violate the FCPA’s anti-bribery provisions. Bilfinger entered a deferred prosecution agreement with the DOJ for three years.

A unit of Archer Daniels Midland Company (ADM) (December 20), pleaded guilty to violating the FCPA by bribing Ukrainian government officials through vendors in exchange for value-added tax (VAT) refunds. Alfred C. Toepfer International Ukraine Ltd. paid a criminal fine of $17.8 million to the DOJ. ADM also paid $36.5 million in disgorgement and prejudgment interest to resolve civil charges brought by the Securities and Exchange Commission.

Guilty Pleas

Peter DuBois (January 5), the former vice president of sales and marketing at BizJet, pleaded guilty on January 5, 2012, to a criminal information, and his plea was unsealed April 5 in federal court.

Neal Uhl (January 5), the former vice president of finance at BizJet, pleaded guilty on January 5, 2012, to a criminal information, and his plea was unsealed April 5 in federal court.

David Rothschild (April 16), a former vice president of sales for Alstom USA, pleaded guilty on November 2, 2012. In his plea deal unsealed in April, he was charged with one count of conspiracy to violate the FCPA.

Frederic Pierucci (July 29), an Alstom executive, pleaded guilty to an FCPA conspiracy and to a substantive FCPA offense. Charges against Pierucci, a French citizen who headed global sales for Paris-based Alstom, were unsealed in April. He became the second company executive to plead guilty.

Tomas Alberto Clarke Bethancourt (also known as Tomas Clarke) (August 29), a former senior vice president of Direct Access Partners, pleaded guilty in federal court in New York City to conspiracy, money laundering, and violating the Foreign Corrupt Practices Act. Clarke was also charged in an SEC civil complaint with fraud and manipulation.

Ernesto Lujan (August 29), a former managing partner of Direct Access Partners, pleaded guilty to bribing an official of a state-owned Venezuelan bank in exchange for bond trading business.

Jose Alejandro Hurtado (August 30), a broker from Direct Access Partners, pleaded guilty to six counts of conspiring to violate the Foreign Corrupt Practices Act, to violate the Travel Act, and to commit money laundering, as well as substantive counts of the offenses. Clarke was also charged in an SEC civil complaint with fraud and manipulation.

Maria de los Angeles Gonzalez de Hernandez (November 18), a former vice president from Venezuela's state economic development bank pleaded guiltyin federal court in New York to taking $5 million in kickbacks from Direct Access Partners LLC in exchange for bond-trading business from her employer, Banco de Desarrollo Económico y Social de Venezuela (Bandes). Gonzalez, a former vice president of finance at Caracas-based Bandes, pleaded guilty to conspiracy to violate the Travel Act and commit money laundering, as well as two substantive counts of the offenses. She wasn't charged under the FCPA.

Indicted / Arrested

Bernd Kowalewski (April 5), the former president and chief executive officer of BizJet, was charged with conspiring to violate the FCPA and to launder money, as well as substantive FCPA and money laundering offenses. He was indicted in January 2012 and the indictment unsealed on April 5. He's believed to be living outside the United States.

Jald Jensen (April 5), the former sales manager at BizJet, charged with conspiring to violate the Foreign Corrupt Practices Act and to launder money, as well as substantive charges of violating the FCPA and money laundering. He was indicted in January 2012, with the indictment unsealed on April 5. He's believed to be living outside the United States.

Frederic Cilins (April 14), a French citizen, was arrested and charged with trying to obstruct a federal investigation into whether a mining company violated the FCPA by paying bribes to win mining rights in the Republic of Guinea. He wasn't charged with FCPA violations.

William Pomponi (May 1), a former vice president of sales for Alstom's U.S. subsidiary, became the third exec from the company charged with overseas bribery and related offenses. He was indicted for conspiring to violate the FCPA and to launder money, as well as substantive FCPA and money laundering offenses. The DOJ said in a superseding indictment that the three Alstom defendants and others bribed a member of Indonesian Parliament and officials at Perusahaan Listrik Negara (PLN), the Indonesian state-owned electricity company.

Lawrence Hoskins (July 30), formerly Alstom's senior vice president for the Asia region, was charged in federal court in Connecticut with conspiring to violate the FCPA and to launder money, as well as substantive FCPA and money laundering offenses.

Alain Riedo (October 15), a Swiss citizen who worked for California-based Maxwell Technologies Inc, was indicted for bribing officials at state-owned companies in China.  He was charged in San Diego with nine counts of violating the FCPA, conspiracy, falsifying records, and evading Maxwell's internal controls. He was the general manager of Maxwell's Swiss subsidiary during the six-year conspiracy, the DOJ said, and left Maxwell in 2009. He's now at large, the DOJ said.

Sentenced

Hans Bodmer (March 6), the Swiss lawyer who pleaded guilty in 2004 to helping move money used to bribe officials in Viktor Kozeny's Azeri privatization scheme, was sentenced to the time he already served in jail. Bodmer, 57, was jailed in Korea after his arrest there in 2003 and in the United States following his extradition. He was released when he agreed to plead guilty and cooperate with prosecutors.

Clayton Lewis (April 4), the former hedge fund executive who pleaded guilty nine years ago to conspiracy to violate the FCPA in connection with an investment in Viktor Kozeny's Azerbaijan privatization scheme, was sentenced to time served. He was jailed for six days after his 2003 arrest. Lewis, 48, faced up to five years in prison after his guilty plea in 2004.

Thomas Farrell (April 26), a former employee of Viktor Kozeny, was sentenced to time served after pleading guilty to an FCPA conspiracy and aiding and abetting.

Paul G. Novak (May 6), the former consultant for pipeline contractor Willbros International Inc., was sentenced to serve 15 months in prison and pay a $1 million fine for his role in a scheme to pay more than $6 million in bribes to government and political party officials in Nigeria. He had pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and one substantive FCPA offense.

Charges Dismissed

Herbert Steffen (February 19), a German citizen and former chief executive officer of Siemens SA Argentina, won dismissal of the SEC's civil suit against him, proving he did not have minimum contacts with the United States necessary to subject him to personal jurisdiction. He was accused of helping pay $100 million in bribes to officials in Argentina to help Siemens win national ID contracts.

Appeals Dismissed

Frederic Bourke (April 16), lost a bid for the Supreme Court to review his 2009 conviction for conspiracy to violate the FCPA and lying to FBI agents. In May, a federal appellate court denied his request to rehear an appeal of his 2009 FCPA conspiracy conviction. On May 17, Bourke reported to Englewood Camp, a minimum-security facility in the southwest suburbs of Denver, Colorado, to begin serving a one-year sentence.

Gerald and Patricia Green (July 11), lost an appeal of part of their FCPA-related sentence when a three-judge panel denied their request for relief from a $250,000 restitution order. The Greens were convicted in a jury trial in Los Angeles of FCPA and related violations in 2009. The charges against them arose out of bribes they paid to land contracts for the Bangkok film festival. They were the first husband and wife convicted of FCPA offenses and each served six-month jail terms.

Declinations

 (Disclosed investigations by the DOJ or SEC or both followed by either or both agencies declining to bring an enforcement action)

Deere & Company (January 10), said the SEC won't bring an FCPA action following an investigation into alleged payments to foreign officials in Russia and surrounding countries. The SEC inquiry was first reported in August 2011.

Dyncorp International Inc. (March 27), via its parent Delta Tucker Holdings, said the DOJ won't bring an enforcement action following an investigation into payments by two subcontractors to speed up the issuance of visas and permits. Dyncorp first disclosed in November 2009 that it had found about $300,000 in payments by third parties to 'expedite the issuance of a limited number of visas and licenses from foreign government agencies.'

Zimmer Holdings Inc. (February 27), disclosed that the DOJ and SEC won't bring any FCPA enforcement actions after a five-year investigation into overseas marketing and sales practices. Zimmer received letters of declination from the SEC in December 2012 from the DOJ on February 1, 2013.

Nabors Industries Ltd. (February 20) said the DOJ won't bring an FCPA enforcement action after an investigation first launched more than five years ago. Nabors was a customer of Panalpina but not among the seven companies that settled simultaneous FCPA cases in November 2010. In 2012, the SEC told Nabors it would not bring an enforcement action.

Raytheon Company (February 13), said in its annual report that 'the SEC staff and the DOJ have completed their review' of potential FCPA matters 'without recommending enforcement action.' Raytheon said last year it had completed a self-initiated internal review of certain international operations and had voluntarily disclosed the results to SEC and DOJ.

3M Company (February 14), said the DOJ and SEC won't bring an FCPA enforcement action following an internal investigation into allegations of bid rigging and bribery by a subsidiary in Turkey. The investigation had been pending since 2009.

IDT Corporation, a telecommunications provider, disclosed (June 10) that it was informed in March 2013 by the DOJ and SEC that they had closed their two-year investigations into possible FCPA violations.

Medtronic Inc. won a double declination (June 27) following an FCPA probe that lasted more than five years. The medical device maker said it received word in June from the DOJ and SEC that they've closed their investigations and won't pursue enforcement actions.

Wynn Resorts (July 2), received a letter from the SEC stating that the investigation into a donation by affiliate Wynn Macau Limited to the University of Macau Development Foundation had been completed with the SEC not intending to recommend any enforcement action.

Owens-Illinois Group Inc. (July 15), received word from the DOJ that the agency doesn't intend to pursue criminal enforcement and is ‘closing its inquiry into the matter.’ In its quarterly filing, the Ohio-based company said it can't predict if the SEC will take action or what civil sanctions it might impose.

Allied Defense Group (August 15), a munitions maker implicated in the failed Africa sting prosecution, received a declination from the DOJ. That allowed the company to complete its stalled dissolution and distribute to shareholders $43 million in cash.

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2012 FCPA Enforcement Index

2011 FCPA Enforcement Index

2010 FCPA Enforcement Index

2009 FCPA Enforcement Index

2008 FCPA Enforcement Index

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Our 2012 Enforcement Index is here.

2011 is here.

2010 is here.

2009 is here.

2008 is here.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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