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« Eight stories from 2015 that moved the needle | Main | Will Wal-Mart change India? »
Monday
Jan042016

The 2015 FCPA Enforcement Index

In 2015, 11 companies paid about $133 million to resolve FCPA cases. In the year's biggest enforcement action (which wasn't big by historical standards), BHP Billiton paid $25 million to the SEC to settle Olympics-related FCPA offenses.

For comparison:

  • In 2014, ten companies paid $1.56 billion to resolve FCPA cases.
  • In 2013, twelve companies paid $731.1 million.
  • In 2012, twelve companies paid $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 2015, eight individuals were sentenced for criminal FCPA offenses (seven received prison sentences and one received probation only).

Four individuals pleaded guilty to DOJ charges and haven't been sentenced. Two were indicted on new charges.

Two individuals settled FCPA offenses with the SEC.

Nine companies reported declinations during the past year. In 2014, ten companies reported declinations, and  in 2013, eleven companies reported declinations.

*     *     *

DOJ / SEC Enforcement Resolutions

PBSJ Corporation  (January 21) agreed to pay $3.4 million to the SEC for violating the Foreign Corrupt Practices Act by paying bribes and employing foreign officials to win Qatari government contracts. Tampa-based PBSJ is now known as Atkins North America Holdings Corporation and no longer offers public stock in the U.S.

Walid Hatoum (January 21), a former international marketing director for PBSJ, agreed to pay a penalty of $50,000 to the SEC. The agency charged him with violating the FCPA's anti-bribery, internal controls, and books and records provisions, and with false records offenses. Hatoum settled without admitting or denying the SEC's findings.

Goodyear Tire & Rubber Co. (February 23) agreed to pay $16.2 million to settle SEC charges that subsidiaries in Kenya and Angola paid bribes to increase tire sales. The SEC said in an administrative order that Goodyear violated the books and records and internal controls provisions of the FCPA by failing to prevent more than $3.2 million in bribes from 2007 and 2011. The bribes went to employees of state-owned and private companies.

BHP Billiton (May 20) paid $25 million to the SEC to settle Olympics-related FCPA offenses. The SEC settled the case through an internal administrative order without going to court. The SEC said BHP improperly sponsored foreign government officials as guests at the 2008 Summer Olympics in Beijing.

IAP Worldwide Services (June 16) paid a $7.1 million criminal fine to settle FCPA offenses. The Florida-based defense and government contracting company resolved the DOJ's investigation into an alleged conspiracy to bribe Kuwaiti officials to win a contract.

Louis Berger International Inc. (July 20) paid $17.1 million to resolve FCPA criminal offenses. The New Jersey-based construction management company admitted bribing foreign officials in India, Indonesia, Vietnam, and Kuwait to win contracts. Louis Berger entered into a deferred prosecution agreement that requires a compliance monitor for at least three years.

Mead Johnson (July 28) paid $12 million to settle FCPA-related charges. The SEC said a China unit paid $2 million in bribes to healthcare professionals at state-owned hospitals.

Vicente Eduardo Garcia (August 12), a former regional director of SAP International Inc., settled SEC charges that he violated the antibribery and internal controls provisions of the FCPA by bribing officials in Panama and taking kickbacks. He agreed to pay $92,395 in disgorgement and prejudgment interest. He also pleaded guilty to criminal charges (see below).

BNY Mellon (August 18) paid $14.8 million to settle SEC charges that it violated the FCPA by providing valuable student internships to family members of foreign government officials affiliated with a Middle East sovereign wealth fund.

Hitachi Ltd. (September 28) paid $19 million to resolve SEC charges that it inaccurately recorded improper payments to South Africa’s ruling political party in connection with contracts to build two multi-billion dollar power plants.

Hyperdynamics Corporation (September 29) paid $75,000 to resolve SEC allegations of books and records and internal controls offenses linked to payments in the African country of Guinea. In May this year, the company said the DOJ had closed its FCPA investigation without bringing any charges.

Bristol-Myers Squibb (October 5) paid $14 million to resolve FCPA charges by the SEC that its joint venture in China made cash payments and provided other benefits to health care providers at state-owned and state-controlled hospitals in exchange for prescription sales.

ICBC Standard Bank (November 30) paid a $4.2 million penalty to settle SEC charges that it failed to disclose payments by an affiliate in Tanzania in 2013 that were intended to influence a government decision. The SEC settled the matter through an internal administrative order and didn't go to court. The SEC order also required disgorgement of $8.4 million but deemed it satisfied by the disgorgement in a related $33 million UK enforcement action.

Sentenced

Benito Chinea (March 27), the former chief executive officer of New York-based Direct Access Partners LLC, was sentenced to four years in prison for bribing a Venezuela state bank official in return for bond trading business. Chinea, 48, also forfeited $3.6 million. He pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.

Joseph DeMeneses (March 27), Chinea's co-defendant and a former managing director of Direct Access Partners, was sentenced to four years in prison after pleading guilty. DeMeneses, 45, was ordered to forfeit nearly $2.7.

Joseph Sigelman (June 16), the former co-CEO of PetroTiger, was sentenced to probation and no jail time. Sigelman, 44, pleaded guilty to one count of conspiracy to violate the FCPA during the third week of his FCPA trial.

James Michael Rama (October 9), a former vice president of defense contractor IAP Worldwide Services, was sentenced to 120 days in prison. Rama, 69, of Lynchburg, Virginia, pleaded guilty in June to one count of conspiracy to violate the antibribery provisions of the FCPA.

Ernesto Lujan (December 4), a former managing partner of broker-dealer Direct Access Partners in charge of its Miami office, was sentenced to two years in prison for bribing an official at a state-owned bank in Venezuela. Lujan, 52, was also ordered to forfeit $18.5 million. He pleaded guilty in mid 2013 to conspiracy, money laundering, and violating the FCPA.

Tomas Clarke (December 8), a former senior vice president at New York-based Direct Access Partners who worked in the firm's Miami office, pleaded guilty and was sentenced to two years in prison for his role in bribing a Venezuela bank official. Clarke, 46, was also ordered to forfeit nearly $5.8 million.

Jose Alejandro Hurtado (December 15), a Miami-based broker for Direct Access Partners, was sentenced to three years in prison for being the middleman in a scheme to bribe a Venezuela state bank official in exchange for bond trading work. Hurtado, 40, was also ordered to forfeit nearly $11.9 million. He pleaded guilty in 2013 to conspiracy and substantive violations of the Foreign Corrupt Practices Act, the Travel Act, and money laundering laws.

Vicente Eduardo Garcia (December 16), a former regional director of enterprise software firm SAP International Inc., was sentenced to 22 months in prison for bribing officials in Panama to win government contracts. Garcia, 65, of Miami, had pleaded guilty in August 2015 to one count of conspiracy to violate the FCPA.

Guilty Pleas

Daren Condrey ( June 17) pleaded guilty to conspiring to violate the FCPA and conspiring to commit wire fraud. Condrey and his wife Carol were principals of Transport Logistics International, based in Fulton, Maryland. They paid over $2 million in bribes in exchange for transport contracts from the Russian state-owned nuclear energy corporation, JSC Techsnabexport (Tenex). Sentencing is scheduled for January 19 before Judge Theodore Chuang in Greenbelt, Maryland.

Richard Hirsch (July 20), the former senior vice president of Louis Berger International Inc. responsible for operations in Indonesia, Thailand, the Philippines, and Vietnam, pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA. He's scheduled to be sentenced on February 10 by Judge Mary Cooper in Chicago.

James McClung (July 20), the former senior vice president of Louis Berger International responsible for the company’s operations in India and later for Vietnam, pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA. He's scheduled to be sentenced on February 9 by Judge Mary Cooper in Chicago.

Andres Truppel (September 30), the former chief financial officer of Siemens S.A. – Argentina, pleaded guilty in Manhattan to conspiring to violate the anti-bribery, internal controls, and books and records provisions of the FCPA, and to commit wire fraud. No date has been set for sentencing.

Arrests

Roberto Rincon (December 16), the president of Texas-based Tradequip Services & Marine, was arrested in Houston and charged with Foreign Corrupt Practices Act and money laundering offenses. The DOJ said the charges relate to a scheme to secure contracts from Petroleos de Venezuela S.A. (PDVSA), Venezuela's state-owned energy company.

Abraham Jose Shiera Bastidas (December 16) of Coral Gables, Florida was arrested on the same charges as Rincon.

DPA Extended

Biomet Inc. (March 18) said in an SEC filing that the DOJ extended for another year its deferred prosecution agreement that was part of a 2012 FCPA enforcement action. The orthopedic device maker's three-year DPA was set to expire on March 26. The Indiana-based company self reported more possible FCPA violations in Brazil and Mexico that pre-dated the 2012 settlement.

Declinations

Cobalt International Energy, Inc. (January 29) said it received a letter from the SEC advising that the agency's FCPA investigation relating to Cobalt’s operations in Angola has concluded and that the SEC staff doesn't intend to recommend any enforcement action.

21st Century Fox Inc. and News Corp (February 2) said they won't be prosecuted by the DOJ for hacking voice mails or making payments to officials in the UK for access to police records. News Corp spun off 21st Century Fox in 2013. Fox now holds the entertainment assets and News Corp holds the publishing assets.

Eli Lilly (February 12) said the DOJ closed its FCPA investigation of the company. In late 2012, Lilly resolved civil FCPA charges brought by the SEC. The company paid $29.4 million for offenses related to bribes to government officials in Russia, Brazil, China, and Poland. The SEC launched its investigation in mid 2003. The DOJ later joined the investigation.

Hyperdynamics Corporation (May 26) said the DOJ closed its FCPA investigation without bringing any charges against the company. The Houston-based oil and gas company received a subpoena from the DOJ in September 2013 requesting documents relating to its business in the African country of Guinea.

Net 1 UEPS Technologies (June 1) said in a securities filing that the SEC isn't recommending an enforcement action after investigating possible FCPA violations. South Africa-based Net1 said in December 2012 that the SEC, DOJ, and FBI were investigating payments to South African government officials to win a contract with the Social Security Agency. The company said it believes the DOJ investigation is ongoing.

PetroTiger (June 16) was the subject of a public announcement by the DOJ after the guilty plea by former CEO Joseph Sigelman (see above). The DOJ said: "Based on PetroTiger’s voluntary disclosure, cooperation, and remediation, among other factors, the department declined to prosecute PetroTiger."

Gold Fields Ltd. (June 24) issued a statement saying the SEC closed its FCPA investigation and won't recommend an enforcement action against the company. The SEC launched an investigation of the South African miner in 2013 regarding the propriety of a nine percent stake granted by Gold Fields to the ruling ANC party chairwoman.

NCR Corp. (August 6) received notice from the SEC that the agency doesn't intend to recommend an FCPA enforcement action. The SEC's decision came after a three-year investigation.

Bristol-Myers Squibb (November 2) said the DOJ closed its FCPA investigation into the company and won't bring an enforcement action. In October (see above), Bristol-Myers Squibb paid $14.7 million to resolve FCPA charges brought by the SEC.

 Related Actions

Asem Elgawhary (March 23) of Potomac, Maryland was sentenced to 42 months in prison for taking $5.2 million in kickbacks to rig bids for state power contracts in Egypt. The ex-Bechtel Corporation vice president pleaded guilty in December 2014 to mail fraud, conspiracy to commit money laundering, obstruction, and interference with the administration of the tax laws. He took bribes from three power companies, including Alstom SA. In December 2014, Alstom paid $772 million in criminal fines for FCPA violations, including bribes to Elgawhary.

Vadim Mikerin (December 15), a former director of a Russian state-owned nuclear energy firm, was sentenced to 48 months in federal prison for taking $2 million in bribes to award uranium transportation contracts to an American company. Mikerin, 56, was also ordered to forfeit $2.1 million. He pleaded guilty in August to a money laundering conspiracy. Mikerin conspired with Daren Condrey and others to transfer bribe money used to bribe Mikerin from Maryland and other places in the United States to shell company bank accounts in Cyprus, Latvia, and Switzerland. Condrey pleaded guilty in June 2015 (see above) to conspiracy to violate the FCPA and conspiracy to commit wire fraud.

*     *     *

Our 2014 FCPA Enforcement Index is here.

2013 is here.

2012 is here.

2011 is here.

2010 is here.

2009 is here.

2008 is here.

All of our lists are here.

___________

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

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