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« From Alstom: Six reasons why non-U.S. companies dominate the FCPA top ten list | Main | Israel arrests six state power company execs for taking Siemens bribes »
Monday
Jan052015

The 2014 FCPA Enforcement Index

In 2014, ten companies paid $1.56 billion to resolve FCPA cases. Two of the corporate actions -- Alstom and Alcoa -- landed on our top ten list.

For comparison,

  • In 2013, twelve companies paid $731.1 million to resolve FCPA cases
  • 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.

In 2014, six individuals settled FCPA offenses with the SEC and six pleaded guilty to DOJ charges.

The U.S. Supreme Court let stand the FCPA convictions of Joel Esquenazi and Carlos Rodriguez. A federal appeals court had held that employees of state-owned enterprises can be "foreign officials" under the FCPA.

Ten companies reported declinations during the past year, and there were two DOJ opinion procedure releases.

*     *     *

DOJ / SEC Enforcement Resolutions

Alcoa World Alumina LLC (January 9) pleaded guilty to one count of violating the anti-bribery provisions of the FCPA with a 2004 corrupt transaction. It agreed to pay a criminal fine of $209 million and forfeit $14 million to settle the DOJ’s charges. Alcoa Inc. (January 9) agreed to resolve civil charges brought by the SEC by disgorging $161 million. The $384 million enforcement action ranked 5th on our list of the Top Ten FCPA cases of all time.

(January 9) pleaded guilty to one count of violating the anti-bribery provisions of the FCPA with a 2004 corrupt transaction. It agreed to pay a criminal fine of $209 million and forfeit $14 million to settle the DOJ’s charges.

Alcoa Inc. (January 9) agreed to resolve civil charges brought by the SEC by disgorging $161 million.

Stephan Signer (February 5), a former executive of Siemens in Argentina, was ordered in a default judgment to pay a $524,000 civil penalty in an enforcement action brought by the SEC.

Ulrich Bock (February 5), a former executive of Siemens in Argentina, was ordered in a default judgment to pay a $524,000 civil penalty in an enforcement action brought by the SEC. Bock was also ordered to pay an additional $413,957 for disgorgement.

Marubeni Corporation (March 20) of Tokyo, Japan paid a fine of $88 million after pleading guilty to one count of conspiracy to violate the FCPA and seven substantive FCPA offenses. It admitted bribing Indonesian officials to win an electricity contract for itself and its partner, Alstom SA. Marubeni paid a $54.6 million criminal penalty in early 2012 to resolve FCPA charges for its role as an agent of the KBR-led TSKJ joint venture.

Indicted / Arrested

Joseph Sigelman (January 6) former co-CEO of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey, was charged with FCPA-related offenses, fraud, and money laundering. He allegedly bribed an official at Ecopetrol SA, Colombia’s state-controlled oil company, to win a services contract worth $39 million.

Guilty Pleas

Gregory Weisman (January 6), the former general counsel of PetroTiger Ltd., pleaded guilty to bribery and fraud.

Knut Hammarskjold (February 18) former co-CEO of PetroTiger Ltd., pleaded guilty in federal court in Camden, New Jersey to one count of conspiracy to violate the FCPA and to commit wire fraud. He's scheduled for sentencing on May 16.

Charges Dismissed

Elek Straub, Andras Balogh, and Tamas Morval (March 11), former executives of Magyar Telekom, the Hungarian unit of Deutsche Telekom, had some charges brought by the SEC dismissed. The SEC dropped allegations about bribing officials in Montenegro. Other allegations concerning bribes to government officials in Macedonia are still pending.

Mark A. Jackson and James J. Ruehlen (March 31), the former CEO of Noble Corporation, and the head of Noble’s Nigeria unit, had some charges dismissed by the SEC. The SEC dropped internal controls charges in a civil FCPA action to “streamline the presentation” of the case, the agency said. Jackson and Ruehlen still face other charges. Their trial is set for July.

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

LyondellBasell Industries NV (February 20), a Netherlands-based petrochemical maker, said the DOJ closed its investigation into a payment made in Kazakhstan that had raised compliance concerns. The company had disclosed the investigation in late 2012. The DOJ ended its investigation without assessing any fine or penalty.

Baxter International (February 21) said the DOJ and SEC closed their FCPA investigations and won't take further action. Baxter disclosed in 2010 that it received inquiries from the SEC and DOJ requesting information about business activities in “a number of countries” as part of an industry-wide FCPA investigation.

Merck (March 3) said the DOJ closed its FCPA investigation of the company. Merck first disclosed in 2010 that it received letters from the DOJ and SEC asking for FCPA-related information about its activities in a number of countries.

SL Industries Inc. (March 21) said the DOJ dropped its FCPA probe without filing charges. SL Industries first disclosed an internal investigation in May 2012. The investigation focused on whether employees of three China subsidiaries had improperly provided gifts and entertainment to government officials. The company said it had contacted the DOJ and the SEC "voluntarily to disclose . . . an internal investigation, and agreed to cooperate fully."

DOJ Release

DOJ Opinion Procedure Release 14-01 (March 24). The Requestor was "a United States financial services company and investment bank." The DOJ gave the OK for the Requestor to buy the shares of an overseas partner who had become a foreign official.

Related Enforcement Actions

General Sani Abacha (March 6), former president of Nigeria, was the subject of a civil forfeiture action brought under the DOJ's Kleptocracy Asset Recovery Initiative. More than $458 million in corruption proceeds hidden in bank accounts around the world by former Nigerian dictator Sani Abacha and his co-conspirators were frozen.

Frederic Cilins (March 10), a French citizen, pleaded guilty in the Southern District of New York to obstructing a federal criminal investigation into whether a mining company paid bribes to win mining rights in the Republic of Guinea. Cilins admitted he agreed to pay money to induce a witness to destroy documents sought by the FBI. The documents related to allegations of bribes to obtain mining concessions in the Simandou region of the Republic of Guinea, located in West Africa.

Alfonso Portillo (March 19), the former president of Guatemala, pleaded guilty in federal court in New York to taking $2.5 million in bribes from Taiwan in exchange for continuing to recognize the country diplomatically. He was extradited from Guatemala by the United States.

- See more at: http://www.fcpablog.com/blog/2014/4/1/enforcement-report-for-q1-14.html#sthash.lzYdzOIR.dpufDOJ / SEC Enforcement ResolutionsAlcoa World Alumina LLC (January 9) pleaded guilty to one count of violating the anti-bribery provisions of the FCPA with a 2004 corrupt transaction. It agreed to pay a criminal fine of $209 million and forfeit $14 million to settle the DOJ’s charges. Alcoa Inc. agreed to resolve civil charges brought by the SEC by disgorging $161 million. The $384 million enforcement action ranked 5th on our list of the Top Ten FCPA cases of all time.

Stephan Signer (February 5), a former executive of Siemens in Argentina, was ordered in a default judgment to pay a $524,000 civil penalty in an enforcement action brought by the SEC.

Ulrich Bock (February 5), a former executive of Siemens in Argentina, was ordered in a default judgment to pay a $524,000 civil penalty in an enforcement action brought by the SEC. Bock was also ordered to pay an additional $413,957 for disgorgement.

Marubeni Corporation (March 20) of Tokyo, Japan paid a fine of $88 million after pleading guilty to one count of conspiracy to violate the FCPA and seven substantive FCPA offenses. It admitted bribing Indonesian officials to win an electricity contract for itself and its partner, Alstom SA. Marubeni paid a $54.6 million criminal penalty in early 2012 to resolve FCPA charges for its role as an agent of the KBR-led TSKJ Nigeria joint venture.

Hewlett Packard (April 9) paid $108 million to settle DOJ and SEC charges for bribes in Mexico, Russia, and Poland. HP paid fines of $74.2 million to resolve the DOJ's criminal case and $29 million in disgorgement.

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.

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 settled the case through an internal, administrative order.

Layne Christensen Company (October 28) paid just over $5 million to resolve FCPA charges brought by the SEC for bribes in a half dozen Africa countries to reduce taxes and speed up customs inspections and work permits. The SEC and Layne settled the FCPA allegations through an administrative order without going to court.

Bio-Rad Laboratories (November 3) agreed to pay a total of $55 million to settle DOJ and SEC allegations that subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand to win business. It paid a $14.35 million criminal penalty to resolve DOJ allegations of falsifying its books and records and failing to have adequate internal controls in connection with sales in Russia. In a parallel SEC enforcment action, Bio-Rad agreed to pay $40.7 million in disgorgement and prejudgment interest.

Stephen Timms (November 18) agreed to pay $50,000 to settle the SEC's administrative enforcement action that alleged the former employee of FLIR violated the FCPA by taking government officials in Saudi Arabia on a “world tour” to help win business for the company.

Yasser Ramahi (November 18), another FLIR employee, agreed to pay $20,000 to the SEC in the same enforcement action. Timms and Ramahi settled without admitting or denying the SEC's findings.

Dallas Airmotive Inc. (December 11), an aircraft engine maintenance firm based in Grapevine, Texas, paid a $14 million criminal penalty to resolve FCPA offenses. It bribed Latin American officials to win government contracts. The DOJ charged it with one count of conspiring to violate the FCPA and one count of violating the FCPA’s anti-bribery provisions.

Bruker Corporation (December 16) paid about $2.4 million to settle the SEC’s charges that it violated the FCPA by paying for sightseeing trips and shopping expenses for Chinese government officials responsible for buying the company's products. The SEC used an administrative order to settle the case and didn't go to court.

Avon (December 17) paid $135 million to resolve FCPA violations in China. A China subsidiary pleaded guilty in federal court in Manhattan to one count of conspiring to violate the Foreign Corrupt Practices Act. It paid a $67.7 million criminal fine to the DOJ. Parent company Avon Products Inc. settled FCPA civil charges brought by the SEC with a payment of more than $67 million.

Alstom (December 22) pleaded guilty to bribing officials in Indonesia, Saudi Arabia, Egypt, and the Bahamas. It paid $772 million in criminal penalties to settle the charges. The penalty is the biggest criminal fine ever levied for FCPA offenses and the second biggest FCPA enforcement action overall.

Guilty Pleas

Gregory Weisman (January 6), the former general counsel of PetroTiger Ltd., pleaded guilty to bribery and fraud.

Knut Hammarskjold (February 18) former co-CEO of PetroTiger Ltd., pleaded guilty in federal court in Camden, New Jersey to one count of conspiracy to violate the FCPA and to commit wire fraud.

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 Tarahan power project in Indonesia.

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.

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 the $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.

Benito Chinea (December 17), the former chief executive officer of U.S. broker-dealer Direct Access Partners LLC, pleaded guilty to one count of conspiracy to violate the FCPA and the Travel Act, for bribing an official of a state-owned Venezuelan bank in exchange for bond trading business.

Joseph DeMeneses (December 17), the former managing director Direct Access, pleaded guilty to one count of conspiracy to violate the FCPA and the Travel Act, for bribing an official of a state-owned Venezuelan bank in exchange for bond trading business.

Indicted / Arrested

Joseph Sigelman (January 6) former co-CEO of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey, was charged with FCPA-related offenses, fraud, and money laundering. He allegedly bribed an official at Ecopetrol SA, Colombia’s state-controlled oil company, to win a services contract worth $39 million.

Dmitry Firtash (April 2), 48, a Ukraine national, was arrested in March 2014 in Vienna, Austria. He was released on March 21 after posting bail equivalent to $174 million. The DOJ is trying to extradite him to face U.S. charges for a racketeering conspiracy with FCPA violations in an alleged scheme to pay $18.5 million in bribes to officials in India to gain titanium mining rights.

Andras Knopp (April 2), 75, a Hungarian businessman, indicted with Firtash and charged with conspiracy to violate the Foreign Corrupt Practices Act, among other offenses. He's at large.

Suren Gevorgyan (April 2), 40, of Ukraine, indicted with Firtash and charged with conspiracy to violate the FCPA, among other offenses. He's at large.

Gajendra Lal (April 2), 50, an Indian national and permanent resident of the United States who formerly resided in Winston-Salem, North Carolina, was indicted with Firtash and charged with conspiracy to violate the FCPA, among other offenses. He's at large.

Periyasamy Sunderalingam (April 2), 60, of Sri Lanka, indicted with Firtash and charged with conspiracy to violate the FCPA, among other offenses. He's at large.

Appeals

Joel Esquenazi and Carlos Rodriguez (October 6) were denied U.S. Supreme Court review of their FCPA convictions. The former executives of Terra Telecommunications Corp. were convicted by a Miami jury of bribing officials at Haiti’s state-owned telecom company. They were also convicted of money-laundering related offenses. Esquenazi and Rodriguez had unsuccessfully appealed to 11th Circuit about whether "instrumentalities" under the FCPA include SOEs. Esquenazi is serving a 15-year jail sentence, the longest FCPA-related sentence ever imposed. Rodriguez was jailed for 7 years.

Charges Dismissed

Elek Straub, Andras Balogh, and Tamas Morval (March 11), former executives of Magyar Telekom, the Hungarian unit of Deutsche Telekom, had some charges brought by the SEC dismissed. The SEC dropped allegations about bribing officials in Montenegro. Other allegations concerning bribes to government officials in Macedonia are still pending.

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

LyondellBasell Industries NV (February 20), a Netherlands-based petrochemical maker, said the DOJ closed its investigation into a payment made in Kazakhstan that had raised compliance concerns. The company had disclosed the investigation in late 2012. The DOJ ended its investigation without assessing any fine or penalty.

Baxter International (February 21) said the DOJ and SEC closed their FCPA investigations and won't take further action. Baxter disclosed in 2010 that it received inquiries from the SEC and DOJ requesting information about business activities in “a number of countries” as part of an industry-wide FCPA investigation.

Merck (March 3) said the DOJ closed its FCPA investigation of the company. Merck first disclosed in 2010 that it received letters from the DOJ and SEC asking for FCPA-related information about its activities in a number of countries.

SL Industries Inc. (March 21) said the DOJ dropped its FCPA probe without filing charges. SL Industries first disclosed an internal investigation in May 2012. The investigation focused on whether employees of three China subsidiaries had improperly provided gifts and entertainment to government officials.

Smith & Wesson (June 23) said the DOJ has ended its FCPA investigation of the company and won't bring criminal charges. The DOJ launched its investigation into the gun maker after the 2010 indictment of its VP for sales at the start of the bungled Africa sting prosecution. Smith & Wesson wasn't charged but it received a grand jury subpoena for its records.

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.

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 notified Layne that it considers the matter closed," an SEC filing said. Layne said the SEC's parallel investigation remains open.

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.

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.

SBM Offshore (November 12) said the DOJ dropped its investigation into the company. In a civil settlement with Dutch authorities, Holland-based SBM agreed to pay $240 million to settle allegations that it bribed government officials in Angola, Brazil, and Equatorial Guinea.

DOJ Opinion Procedure Releases

Opinion Procedure Release 14-01 (March 24). The Requestor was a United States financial services company and investment bank. The DOJ gave the OK for the Requestor to buy the shares of an overseas partner who had become a foreign official.

Opinion Procedure Release 14-02 (November 17), the DOJ restated boundaries around successor liability. Successor liability makes an acquiring company responsible for criminal acts of the acquired company before the acquisition.

Related Enforcement Actions

General Sani Abacha (March 6), former president of Nigeria, was the subject of a civil forfeiture action brought under the DOJ's Kleptocracy Asset Recovery Initiative. More than $458 million in corruption proceeds hidden in bank accounts around the world by the former Nigerian dictator and his co-conspirators were frozen.

Alfonso Portillo (March 19), the former president of Guatemala, pleaded guilty in federal court in New York to taking $2.5 million in bribes from Taiwan in exchange for continuing to recognize the country diplomatically. He was extradited from Guatemala by the United States.

K.V.P. Ramachandra Rao (April 2), 65, a member of parliament in India and former official of the state of Andhra Pradesh, was indicted with Dmitry Firtash (see above). Rao is charged with one count each of a racketeering conspiracy and a money laundering conspiracy, and two counts of interstate travel in aid of racketeering. The DOJ has asked India to arrest him.

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 a DOJ investigation into bribery allegations. He 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.

Teodoro (Teddy) Nguema Obiang Mangue (October 13) agreed to forfeit $30 million in a settlement of the DOJ's civil forfeiture cases against assets in the United States owned by Obiang, a vice president of the Republic of Equatorial Guinea. The DOJ alleged he purchased the assets with the proceeds of corruption. 

Mahamoud Adam Bechir (November 12), former Chad ambassador to the U.S. and Canada. The Justice Department filed a civil forfeiture complaint seeking $106,488.31 allegedly traceable to a $2 million bribe by a Canadian energy company, Griffiths Energy, to Bechir and his wife.

Mamadie Touré (December 1), a federal court in Florida granted a request by prosecutors to seize three properties and various restaurant equipment from Touré. She's the widow of Lansana Conté, a dictator who ruled the west African country of Guinea for 24 years before he died in 2008. She moved to Florida after her husband's death. Prosecutors alleged in the forfeiture action that Touré received bribes of $5.3 million to help a mining company win iron-ore rights Guinea's mining areas of Simandou and Zogota. (See Frederic Cilins above).

*     *     *

Our 2013 FCPA Enforcement Index is here.

2012 is here.

2011 is here.

2010 is here.

2009 is here.

2008 is here.
___________

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

Reader Comments (1)

2008 -- $890 million. Looked just a little too good to be true.

Keep up the great work here.
January 6, 2015 | Unregistered CommenterRob McCully

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