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FCPA Blog Daily News

« China nabs 88 runaways in global ‘fox hunt’ | Main | SEC ends Dialogic probe that was based on successor liabilty »
Wednesday
Oct012014

Enforcement report for Q3 2014

During the third calendar quarter, there was one corporate settlement of an FCPA enforcement action and two individual resolutions. (The third quarter last year was less active, with no corporate resolutions.)

Hewlett Packard's Russia subsidiary pleaded guilty in federal court to four felonies for bribery. (The parent company now faces a 10-year ban on selling good or services to the Canadian government.)

There were a couple of individual guilty pleas, a sentencing for obstructing an FCPA investigations, and four companies reported declinations.

Joel Esquenazi and Carlos Rodriguez, jailed in the Haiti teleco prosecution, asked the U.S. Supreme Court to consider whether employees of state-owned enterprises are "foreign officials" under the FCPA.

Here's the full report for the third quarter:

DOJ / SEC Enforcement Resolutions

Smith & Wesson Holding Corporation (July 28) agreed in an out-of-court settlement with the Securities and Exchange Commission to pay $2 million to resolve Foreign Corrupt Practices Act offenses. The gun maker paid bribes in Pakistan, Indonesia and other countries to win sales to military and police forces, the SEC said. The SEC didn't file a civil complaint against or go to court. Instead it settled the case through an internal, administrative order.

Mark Jackson (July 2), Noble's Corporation's former CEO, settled with the SEC without paying any penalties, according to a stipulation filed with the federal district court in Houston. He was charged in February 2012 with bribing officials in Nigeria in exchange for illegal import permits for drilling rigs.

William Ruehlen (July 2), the head of Noble's Nigeria unit, settled with the SEC without paying any penalties, according to a stipulation filed with the federal district court in Houston. He was charged in February 2012 with bribing officials in Nigeria in exchange for illegal import permits for drilling rigs.

Guilty Pleas

ZAO Hewlett-Packard A.O. (September 12),a  Russia subsidiary of Palo Alto-based Hewlett Packard Company, pleaded guilty in federal court in San Francisco to conspiracy and substantive violations of the anti-bribery and accounting provisions of the Foreign Corrupt Practices Act. The plea to four felonies was part of a $108 million settlement reached in April by Hewlett Packard and three overseas subsidiaries with the DOJ and SEC. H-P Russia was sentenced to pay a fine of $58.8 million. That amount had been agreed in the April deal.

Bernd Kowalewski (July 24), the former chief executive of Lufthansa's BizJet subsidiary, pleaded guilty to conspiracy to bribe government officials in Mexico and Panama. He  appeared in federal court in Tulsa, Oklahoma. Kowalewski was arrested in Amsterdam in March 2014. He waived extradition on June 20, 2014.

William Pomponi (July 17), a former vice president of regional sales at Alstom Power Inc., the Connecticut-based power subsidiary of France-based Alstom SA, pleaded guilty to conspiracy to violate the FCPA. He entered his plea in federal court in New Haven, Connecticut. A criminal information charged him with conspiracy to violate the Foreign Corrupt Practices Act in connection with the awarding of the Tarahan power project in Indonesia. 

Sentenced

Frederic Cilins (July 25), a French citizen who used to work for mining giant BSG Resources, was sentenced to two years in prison for obstructing an investigation into bribery allegations. He had pleaded guilty in March in federal court in New York. The DOJ said he tried to obstruct an ongoing federal grand jury investigation concerning potential violations of the Foreign Corrupt Practices Act and money laundering laws. Investigators wanted to know if BSG, controlled by Israeli billionaire Beny Steinmetz, paid bribes to win mining concessions in the Simandou region of the Republic of Guinea, located in West Africa.

Appeals

Joel Esquenazi (August 14) petitioned the U.S. Supreme Court Thursday to review his conviction on FCPA-related charges for a scheme to bribe officials at Haiti’s state-owned telecom company. In May, the U.S. Court of Appeals for the 11th Circuit Eleventh Circuit affirmed his conviction. It ruled that an "instrumentality" under the FCPA is "an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own." Esquenazi is serving a 15-year prison sentence.

Carlos Rodriguez (August 14), is Esquenazi's co-defendant. He also the Supreme Court to review his conviction. Rodriquez is serving a 7-year prison sentence.

Declinations

Agilent Technologies (September 29) said in a securities filing that a year-long FCPA investigation into sales practices in China by third-party intermediaries and company employees had ended, with both the SEC and DOJ saying they wouldn't bring an enforcement action.

Image Sensing Systems (September 10), a Minnesota-based developer of traffic light camera systems, said the DOJ has "closed its inquiry" into potential Foreign Corrupt Practices Act violations and the SEC has also closed its investigation.

Layne Christensen (August 15), a Texas-based water treatment firm, said that after a four-year investigation, the DOJ won't file any charges for violations of the Foreign Corrupt Practices Act. "The DOJ has notified Layne that it considers the matter closed," the filing said. Layne said the SEC's parallel investigation remains open.

Dialogic Inc. (August 14) said the SEC ended an informal investigation of potential FCPA violations by a company Dialogic acquired in 2010 and won't take any enforcement action. A few months before Dialogic acquired VOiP company Veraz Networks, Inc., Veraz paid $300,000 to settle SEC charges that it violated the FCPA's books and records and internal controls provisions by making illegal payments to officials in China and Vietnam. About six months after the acquisition, the SEC told Dialogic it was the target of an informal FCPA investigation for possible offenses that had been committed by Veraz.

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Our prior enforcement reports are here:

Enforcement Report for Q2 2014

Enforcement Report for Q1 2014   

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2013 FCPA Enforcement Index

2012 FCPA Enforcement Index

2011 FCPA Enforcement Index

2010 FCPA Enforcement Index

2009 FCPA Enforcement Index

2008 F CPA Enforcement Index

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