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Richard L. Cassin Publisher and Editor

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Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

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Shruti J. Shah Contributing Editor

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FCPA Blog Daily News

« At Keppel, it wasn't a rogue employee. It was widespread corruption | Main | Job: Corporate Counsel, Global Legal Compliance »
Tuesday
Jan022018

2017 FCPA Enforcement Index

Last year 11 companies paid just over $1.92 billion to resolve FCPA cases.

Two blockbusters finished the year on our top ten list -- Telia Company and Keppel Offshore & Marine.

For comparison:

In 2016, 27 companies paid $2.48 billion to resolve FCPA cases.

In 2015, 11 companies paid $133 million.

In 2014, 10 companies paid $1.56 billion.

In 2013, 12 companies paid $731.1 million.

In 2012, 12 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 million.

(Telia and Keppel followed the new structure for global resolutions, with the DOJ and SEC assessing total penalties, but allowing the companies to pay some of the penalties to enforcement agencies and regulators in other countries.)

In 2017, four individuals settled civil FCPA charges brought by the SEC.

Eight individual criminal defendants were sentenced during the year, 11 pleaded guilty, and one was convicted at trial. Seven individuals were indicted.

There were 17 reported declinations in 2017, including two declinations with disgorgement under the Pilot Program.

*     *     *

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 FCPA 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 FCPA 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." The payments continued even after a Sands finance department employee and an outside auditor warned that some of the money paid to the consultant couldn't be accounted for.

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. 

Odebrecht (April 14) -- The DOJ said in a Sentencing Memorandum the U.S. share of Odebrecht's "global" criminal penalty for its December 2016 FCPA resolution would be reduced to $93 million. In its original announcement on December 21, the DOJ said Odebrecht would pay at least $260 million for criminal penalties.

Elek Straub (April 24), a Hungarian citizen and former CEO of Magyar Telekom, paid the SEC a $250,000 penalty to settle FCPA offenses. He was also barred for five years from serving as an officer or director of any SEC-registered public company.

Andras Balogh (April 24), a Hungarian citizen and former chief strategy officer of Magyar Telekom, paid the SEC a $150,000 penalty to settle FCPA offense. He was also barred for five years from serving as an officer or director of any SEC-registered public company.

Halliburton Company (July 27) paid the SEC $29.2 million for violating the FCPA's books and records and internal accounting controls provisions. In the settlement, Halliburton paid $14 million in disgorgement plus $1.2 million in prejudgment interest, and a $14 million penalty.

Jeannot Lorenz (July 27), Halliburton’s former vice president, paid the SEC a $75,000 penalty for causing the company’s FCPA violations, circumventing internal accounting controls, and falsifying books and records.

Telia Company AB (September 21) agreed with the DOJ and SEC to pay $965 million to resolve FCPA violations in Uzbekistan. An Uzbek subsidiary, Coscom LLC, agreed to plead guilty. Some of the penalties and disgorgement ordered by the DOJ and SEC will be paid to Dutch and Swedish authorities.

Alere Inc. (September 28) agreed to pay the SEC more than $13 million to settle charges that it bribed foreign officials and committed accounting fraud. Alere subsidiaries in India and Colombia used distributors and consultants to make improper payments to officials of government agencies or entities under government control.

SBM Offshore N.V. (November 29) agreed to pay a criminal penalty of $238 million to resolve FCPA offenses in Brazil, Angola, Equatorial Guinea, Kazakhstan, and Iraq. SBM entered into a deferred prosecution agreement with the DOJ. Prosecutors filed a criminal information in federal court in Texas charging the company and a U.S. subsidiary with conspiracy to violate the anti-bribery provisions of the FCPA. The subsidiary, SBM Offshore USA Inc., pleaded guilty.

Keppel Offshore & Marine Ltd. (December 22) and its U.S. subsidiary agreed to pay a total penalty of more than $422 million to authorities in the United States, Brazil, and Singapore. The U.S. unit, Keppel Offshore & Marine USA Inc., pleaded guilty in connection with the resolution. The DOJ charged Keppel in a criminal information in the Eastern District of New York with conspiracy to violate the anti-bribery provisions of the FCPA. The U.S. portion of the criminal penalties will be $105 million. If Keppel pays less than the allocated amounts in Brazil or Singapore, it's obligated to pay the difference to the United States.

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 FCPA and conspiracy to commit wire fraud. He was also ordered to pay $590,000 in restitution when he appeared in federal court in Houston.

Samuel Mebiame (June 1), 43, a consultant to a mining company owned by an Och-Ziff joint venture, was sentenced to two years in prison for conspiring to violate the FCPA by bribing government officials in Africa. Mebliame is the son of a former Prime Minister of Gabon. He worked for the Och-Ziff joint venture from 2007 to 2012.

Dmitrij Harder (July 18), 42, a Russian national living in Huntingdon Valley, Pennsylvania, was sentenced in federal court in Philadelphia to 60 months in prison for bribing an officer at the European Bank for Reconstruction and Development. He pleaded guilty in 2016 to two counts of violating the FCPA. He was also ordered to forfeit $1.9 million.

Amadeus Richers (September 25), 66, a German citizen living in Brazil, was sentenced to time served plus three years of supervised released. He pleaded guilty in July in federal court in Miami to one count of conspiracy to violate the FCPA. He admitted that from 2001 until 2004, he and his co-conspirators paid $3 million in bribes to officials at Telecommunications D’Haiti. He had been a fugitive until his extradition from Panama ealier in 2017.

Frederic Pierucci (September 25), 49, a French citizen, was sentenced to 30 months in prison for bribing officials in Indonesia. Pierucci was vice president of global sales for an Alstom SA subsidiary in Windsor, Connecticut. He was also fined $20,000 by the federal court in New Haven, Connecticut. He pleaded guilty in 2013 to an FCPA conspiracy and a substantive FCPA offense.

Convicted

Ng Lap Seng (July 27), 69, of Macau, was found guilty by a federal jury in Manhattan of bribing two United Nations officials in exchange for help promoting development of a conference center. He was convicted of one count of conspiracy to commit bribery and to violate the Foreign Corrupt Practices Act, one count of paying illegal bribes and gratuities (domestic bribery), two counts of violating the FCPA, one count of conspiracy to commit money laundering, and one count of money laundering. Sentencing is pending.

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, 2018.

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, 2018.

Fernando Ardila Rueda (October 10), 49, of Miami, Florida pleaded guilty in federal court in Houston to one count of conspiracy to violate the Foreign Corrupt Practices Act and one count of violating the FCPA for payments to officials at PDVSA. Sentencing is scheduled for February 8, 2018.

James Finley (November 7), 66, a UK citizen living in Taiwan. Charges and plea unsealed after the former senior executive of Rolls-Royce pleaded guilty on July 28 in federal court in Ohio to one count of conspiracy to violate the FCPA and one count of violating the FCPA.

Keith Barnett (November 7), 48, of Houston, Texas, a former regional director of energy at Rolls-Royce. Charges and plea unsealed after he pleaded guilty to one count of conspiracy to violate the FCPA on December 20, 2016. 

Aloysius Johannes Jozef Zuurhout (November 7), 53, of the Netherlands. Charges and plea unsealed after he pleaded guilty to one count of conspiracy to violate the FCPA on June 13, 2017. He was a former energy sales employee at Rolls-Royce. 

Andreas Kohler (November 7), 53, of Austria. Charges ande plea unsealed after he pleaded guilty to one count of conspiracy to violate the FCPA on June 6, 2017. The DOJ said he was a managing director at an international engineering and consulting firm. The firm wasn't named. 

Anthony Mace (November 10), 65, of the UK, the former CEO of SBM Offshore, pleaded guilty in federal court in Houston to one count of conspiring to violate the FCPA. He authorized $16 million in bribes to officials at state-owned energy firms in Brazil, Angola, and Equatorial Guinea.

Robert Zubiate (November 10), 66, American, former sales and marketing director for SBM Offshore's Houston subsidiaries, pleaded guilty to one count of conspiring to violate the FCPA.

Colin Steven (December 21), 61, a UK citizen living in the United Arab Emirates, was charged with bribing a foreign official to help his employer, Embraer, sell jets to Saudi Aramco. He was charged with one count of violating the Foreign Corrupt Practices Act and one count of conspiracy to violate the FCPA. He was also charged with one count of wire fraud, one count of conspiracy to commit wire fraud, one count of money laundering, one count of conspiracy to launder money, and one count of making a false statement. No sentencing date was set.

Jeffrey Chow (December 22), 59, a U.S. citizen living in Singapore, had his guilty plea unsealed. The former senior member of Keppel Offshore & Marine Ltd’s legal department, pleaded guilty on August 29, 2017 to conspiring to violate the Foreign Corrupt Practices Act. He's scheduled to be sentenced on May 2, 2018 by a federal court in New York.

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, and is also known as Dennis Bahn. He 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), 35, also known as John Woo, 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.

Joseph Baptiste (August 29), 64, of Fulton, Maryland, a retired U.S. Army colonel, was charged for his alleged role in a foreign bribery and money laundering scheme in connection with a planned $84 million port development project in Haiti. Baptiste was arrested on a criminal complaint filed in federal court in Boston. He was first charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and to launder money. On October 4, the DOJ filed a new indictment charging Baptiste with one count of conspiracy to violate the FCPA and the Travel Act, one count of violating the Travel Act, and one count of conspiracy to commit money laundering. The indictment also seeks forfeitures from Baptiste under the Travel Act and money laundering counts.

Petros Contoguris (November 7), 70, a Greek citizen living in Turkey. He's the founder and chief executive officer of Gravitas & CIE. International Ltd. He was indicted on October 12. The charges were unsealed November 7. He faces one count of conspiracy to violate the FCPA, one count of conspiracy to launder money, seven counts of violating the FCPA and 10 counts of money laundering. The DOJ said he is is believed to be outside of the United States.

Chi Ping Patrick Ho (aka Patrick C.P. Ho) (November 20), 68, of Hong Kong, the head of a Hong Kong and Virginia NGO, was charged with bribing high-level officials in Chad and Uganda to help a Chinese oil and gas company. He was charged with conspiring to violate the FCPA, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering. Ho served as Hong Kong's Secretary for Home Affairs from 2002 to 2007.

Cheikh Gadio (November 20), 61, of Senegal, was charged with helping Ho (see above). He was also charged with conspiring to violate the FCPA, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering. He formerly served as the  former foreign minister of Senegal. 

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 2017 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 same 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 payments 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."

Newmont Mining (April 24) said in a securities filing that it received a declination letter from the SEC "in late February 2017." A year earlier Newmont said it was investigating some business activities in countries outside the United States. The investigation included a review of compliance with the requirements of the Foreign Corrupt Practices Act and involved the company and its affiliates and contractors. The disclosure in April 2017 didn't mention the DOJ and that agency's investigation.

Harris Corporation (May 4) said in a securities filing it received a declination from the DOJ "during the second quarter of fiscal 2017." Harris said it received an SEC declination in September 2016. The agencies investigated improperly recorded travel and other expenses in connection with Harris subsidiary Carefx China's operations. Harris said it learned through an internal investigation that certain employees of  Carefx China provided pre-paid gift cards and other gifts and payments to certain customers, potential customers, consultants, and government regulators. Company disclosure published on FCPA Tracker.

Platform Specialty Products (May 9) said it received declinations from the DOJ and SEC. The company discovered at a business acquired in 2015, Arysta, that "certain payments made to third-party agents in connection with Arysta’s government tender business in West Africa might have been illegal or otherwise inappropriate." PSP conducted an investigation and voluntarily informed the SEC and DOJ. Following the dual declinations, the company said it "considers the matter closed." Company disclosure published on FCPA Tracker.

Linde Group (June 20) received a declination with disgorgement from the DOJ for FCPA offenses in the Republic of Georgia. Under the FCPA Pilot Program, Linde North America Inc. and Linde Gas North America LLC paid the DOJ about $11.2 million in disgorgement. Linde Group trades on German stock exchanges. Neither it nor the U.S. units have securities registered with the SEC.

CDM Smith Inc. (June 29) paid $4 million for a declination with disgorgement to resolve FCPA offenses in India. The Boston-based company paid $1.18 million in bribes to government officials in exchange for highway construction supervision and design contracts and a water project contract. Privately held CDM Smith received the declination with disgorgement under the DOJ's Pilot Program.

International Business Machines Corporation (July 25) or IBM said it received notices in June 2017 from the DOJ and the SEC that, based on the information to date, the agencies closed their respective investigations into allegations related to Poland, Argentina, Bangladesh and Ukraine without pursuing any enforcement action against the company.

Newmont Mining (July 26) said the DOJ is closing its FCPA investigation. Newmont disclosed earlier in 2017 that it received a declination letter from the SEC for the same matter. Newmont said in 2016 that it was investigating some business activities outside the United States. The investigation included a review of compliance with the FCPA by Newmont and its affiliates and contractors.

Net 1 UEPS Technologies, Inc. (July 27), based in Johannesburg, South Africa, said its legal counsel received a letter from the DOJ that it has closed its investigation concerning possible violations of the Foreign Corrupt Practices Act. The DOJ investigation started in November 2012. In June 2015, the SEC sent a letter to Net1 stating that it had concluded its investigation and that it did not intend to recommend an enforcement action. Company disclosure published on FCPA Tracker.

MTS Systems Corporation (August 7) said it was notified by the DOJ and SEC that their respective investigations were closed without further action. MTS said the investigation confirmed that former managers in China violated the conflict of interest provisions of MTS's  Code of Conduct through their involvement with an independent business that competed with MTS in the China market. Company disclosure published on FCPA Tracker.

Vantage Drilling International (August 16) said it received a letter from the DOJ indicating that the agency closed its investigation without any action. The investigation arose in 2015 from allegations of improper payments to former officials of Petrobras in connection with the contracting of a drillship to Petrobras. Vantage said a parallel investigation by the SEC remains open. Company disclosure published on FCPA Tracker.

Core Laboratories N.V. (October 25) said it received a letter dated October 4 from the DOJ about the investigation of possible violations of the Foreign Corrupt Practices Act related to the company’s interactions with Unaoil. The letter said the DOJ closed its inquiry without taking any action. An SEC investigation is apparently still pending.

*     *     *

Here are prior full-year enforcement reports:

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

_______

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

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