FCPA enforcement report for Q1 2017
Monday, April 3, 2017 at 7:18AM
Richard L. Cassin in Declinations, Las Vegas Sands, Mondelez International, Orthofix International N.V., Rolls-Royce Holdings Plc, Zimmer Holdings, enforcement report

During the first calendar quarter, there were six corporate FCPA enforcement actions and one individual resolution.

The six settling companies paid a total of $256.5 million for the resolutions. All six were announced in January.

For comparison, in Q1 2016 there were eight corporate FCPA resolutions and three involving individuals.

In both Q1 2015 and Q1 2014, there were two corporate FCPA enforcement actions.

During the first quarter this year, two individuals pleaded guilty to FCPA-related charges and four were sentenced.

Three individuals were indicted for criminal FCPA offenses and two for FCPA-related civil charges.

There was also six corporate declinations.

Here's what happened:

DOJ / SEC Enforcement Resolutions

Mondelēz International, Inc. (January 9) paid the SEC $13 million to resolve FCPA offenses related to payments by its Cadbury unit in India. The SEC said both Cadbury India and Mondelēz violated the internal controls and books-and-records provisions of the FCPA. Mondelēz, formerly known as Kraft Foods, Inc., acquired Cadbury Limited and its subsidiaries in February 2010.

Zimmer Biomet Holdings Inc. (January 12) agreed to pay more than $30 million to resolve DOJ and SEC investigations into the company’s "repeat" violations of the Foreign Corrupt Practices Act. The medical device maker paid a criminal fine of $17.46 million and civil penalties and disgorgement of $13 million. Biomet previously resolved FCPA offenses in 2012 when it paid the DOJ and SEC nearly $23 million. Zimmer bought Biomet in 2015.

Sociedad Química y Minera de Chile SA (January 13) paid $30.5 million to resolve criminal and civil Foreign Corrupt Practices Act offenses for bribes to Chilean politicians. SQM paid a criminal penalty to the DOJ of nearly $15.5 million and a civil penalty to the SEC of $15 million. The SEC said "virtually all of the improper payments to [Politically Exposed Persons] were directed and authorized by a senior SQM executive."

Rolls-Royce plc (January 17) agreed to pay the United States a criminal penalty of $170 million for a global conspiracy to violate the Foreign Corrupt Practices Act. The DOJ action was part of an $800 million resolution of investigations by U.S., UK, and Brazilian authorities. The DOJ filed a criminal information and deferred prosecution in federal court in Columbus, Ohio on December 20. The documents were under seal until January 17.

Orthofix International (January 18) paid the SEC more than $6 million in disgorgement and penalties to settle FCPA charges related to illegal payments to doctors at government hospitals in Brazil. Orthofix was involved in another FCPA enforcement action in 2012 for illegal payments to doctors at government hospitals in Mexico. It paid $7.4 million to the DOJ and SEC to resolve the earlier FCPA offenses.

Las Vegas Sands Corp. (January 19) paid a criminal fine of nearly $7 million for Foreign Corrupt Practices Act offenses in China and Macau. The casino and resort operator admitted paying $5.8 million to a China consultant "without any discernable legitimate business purpose." A Sands finance department employee and an outside auditor warned the company that some of the money paid to the consultant couldn't be accounted for, but the payments continued.

Tamas Morvai (February 13), a Hungarian citizen who was an executive of Magyar Telekom, agreed to pay the SEC a $60,000 penalty. The SEC alleged he violated or aided and abetted violations of the FCPA by using sham consultancy contracts with a Greek intermediary to pay €4.875 million ($5.2 million) that was passed on to Macedonian officials. Morvai didn't admit or deny the charges.

Sentenced

Victor Hugo Valdez Pinon (February 2), 54, a Texas-based citizen of Mexico, was sentenced to a year and a day in federal prison for a plot to bribe Mexican officials in exchange for airplane maintenance contracts. He had pleaded guilty to conspiracy to violate the FCPA and conspiracy to commit wire fraud. He was also ordered to forfeit $250,000 and pay restitution of about $90,000.

Daniel Perez (February 2), 69, a co-defendant of Pinon, was sentenced to three years’ probation after pleading guilty to conspiracy to violate the FCPA.

Kamta Ramnarine (February 2), 69, a co-defendant of Pinon, was sentenced to three years’ probation after pleading guilty to conspiracy to violate the FCPA.

Douglas Ray (March 30), 55, a co-defendant of Pinon, was sentenced to 18 months in prison after pleading guilty to conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to commit wire fraud. He was also ordered to pay $590,000 in restitution when he appeared in federal court in Houston.

Guilty Pleas

Juan Jose Hernandez Comerma (January 10), 51, of Weston, Florida pleaded guilty in federal court in Houston to one count of conspiracy to violate the FCPA and one count of violating the FCPA for payments to officials at Venezuela’s state oil company, Petroleos de Venezuela S.A. (PDVSA). He's a former general manager and part owner of a Florida-based company. Sentencing was set for July 14.

Charles Quintard Beech III (January 10), 46, of Katy, Texas pleaded guilty in federal court in Houston to one count of conspiracy to violate the FCPA for payments to officials at PDVSA. He owns several Texas-based companies. Sentencing was set for July 14.

Indicted by DOJ

Ban Ki Sang (January 10), 69, of Seoul, South Korea -- the brother of former United Nations Secretary-General Ban Ki-moon -- was charged in federal court in Manhattan with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, one count of conspiracy to commit money laundering, and one count of money laundering. He allegedly plotted to bribe a man posing as an agent for a Middle East sovereign wealth fund in exchange for financing a building sale in Vietnam. He's at large and presumed to be in Korea.

Joo Hyun Bahn (January 10), 38, is Ban Ki Sang's son. He also goes by Dennis Bahn and lives in Tenafly, New Jersey. He was charged in federal court in Manhattan with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, one count of conspiracy to commit money laundering, one count of money laundering, and one count of aggravated identity theft. He was arrested in Tenafly and released on bail.

San Woo (January 10), also known as John Woo, 35, of Edgewater, New Jersey, was charged with conspiracy to violate the FCPA. He was arrested at New York's JFK Airport and released on bail. He allegedly helped secure $500,000 for a bribe from Ban Ki Sang and Dennis Bahn to the man posing as an agent for a Middle East sovereign wealth fund.

Charged by SEC

Michael L. Cohen (January 26), 45, a partner in Och-Ziff Capital Management Group and member of the firm's management committee, was charged in an SEC civil complaint filed in federal court in New York with violating the FCPA and aiding and abetting Och-Ziff’s violations. He was also charged with violating the Investment Advisers Act. He lives in London and holds dual UK/U.S. citizenship. The SEC alleged he caused Och-Ziff  to pay tens of millions of dollars in bribes to high-level government officials in Libya, Chad, Niger, Guinea, and the DR Congo.

Vanja Baros (January 26), 44, a former analyst in the private investments group at Och-Ziff’s European office and a member of the firm's African Special Investment Team, was charged in an SEC civil complaint filed in federal court in New York with violating the FCPA and aiding and abetting Och-Ziff’s violations. He's an Australian citizen living in the UK. He reported to and worked closely with Michael Cohen.

Declinations

Orthofix International (January 18) said when announcing its $6 million FCPA resolution with the SEC for payments to doctors at government hospitals in Brazil (see above) that the DOJ had "decided to take no further action with respect to this matter."

Cobalt International Energy, Inc. (February 9) said it received a letter from the DOJ formally concluding its investigation. That was "the last remaining FCPA investigation by any U.S. regulatory agency into Cobalt’s Angolan operations," the Houston-based energy firm said. The SEC issued a declination to Cobalt in January 2015.

Merck & Co., Inc. (February 28) received letters in 2010 from the DOJ and the SEC seeking "information about activities in a number of countries and reference the Foreign Corrupt Practices Act." Merck said in a recent filing that it had "recently been advised by the SEC that it has closed its inquiry into this matter." Merck received a declination in the matter from the DOJ in February 2014.

Crawford & Company (March 2), a claims management firm, said in its annual report that the Securities and Exchange Commission finished its FCPA investigation and won't bring an enforcement action against the company.

Platform Specialty Products Corporation (March 10) said in an SEC filing that, in connection with an investigation into payment in West Africa by an acquired company, "The SEC has advised that they have closed out the matter, and the U.S. Department of Justice has advised that they have no further requests at this time."

Innodata Inc. (March 15) said in its annual report that the DOJ and SEC advised the company that "they have closed their inquiry" into an investigation of payments overseas, "made by or at the direction of certain foreign employees of a foreign subsidiary in connection with the inspection of the subsidiary’s compliance with local employment-related tax requirements."

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Our prior full-year enforcement reports are here:

2016 FCPA Enforcement Index

2015 FCPA Enforcement Index

2014 FCPA Enforcement Index

2013 FCPA Enforcement Index

2012 FCPA Enforcement Index

2011 FCPA Enforcement Index

2010 FCPA Enforcement Index

2009 FCPA Enforcement Index

2008 FCPA Enforcement Index

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Richard L. Cassin is the publisher and editor of the FCPA Blog.

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