Fox's Top Ten For 2011, Corporate Division

By Thomas Fox

As December is a time for reflection on the past twelve months, I have been considering the FCPA Enforcement Action year.

I submit for your consideration my Top 10 FCPA Enforcement Actions for 2011 in the Corporate Division.

Happy Holidays to all!

1.  Alcatel-Lucent ($137 million), or non-cooperation will cost you. -- The company lost between $10 million to $20 million in penalty reduction because its initial investigative counsel did not fully cooperate with the DOJ after self-disclosure.

2. Armor Holdings ($10.29 million), or you can step back from the abyss. -- The company had 92 separate instances of disguising bribes yet was able to obtain a NPA, through self-disclose, cleaning house, remediation and implementing a best practices compliance program.

3. Bridgestone ($28 million), don’t double down a FCPA violation by adding anti-trust violations. -- The company was found to have engaged in both bribery of foreign officials but using such corrupt acts in furtherance of bid-rigging.

4. JGC ($218.8 million), and then there were none. -- The final corporate conclusion of the infamous Bonny Island, Nigeria Bribery Scandal. Joining with previously settled defendants, Halliburton, Technip and Snamprogetti/ENI to bring a total settlement amount of over $1.5 billion.

5.  Johnson & Johnson ($77 million), enhanced compliance obligations, the new normal?-- Not only did J&J agree to implement a minimum best practices compliance program, it also agreed to “enhanced compliance obligations”.

6. Maxwell Technologies ($14.3 million), start your day with a risk assessment. -- One of several cases where the DOJ specified some of the parameters of the risks you should assess to inform your compliance program.

7.  SciClone ($2.5 million to date), or the plaintiff’s bar finds compliance. -- Not an enforcement action but the settlement of a shareholder derivative action during the pendency of a FCPA investigation, where the company agreed to implement a best practices compliance program.

8.  Tenaris ($8.9 million), or the SEC joins the DPA party. -- The first instance of the SEC entering into a Deferred Prosecution Agreement for the settlement of civil FCPA violations.

9.  Tyson’s Foods ($5.2 million) or don’t blame me, I only bribed the wife. -- The company received a DPA for a bribery scheme involving payments for Mexican government officials' wives.

10.  Watts Water ($3.7 million), or it is a good thing to keep up with the news. -- The company’s general counsel read about an enforcement action involving a non-related company in a different industry but with the same sales model as his company and wondered if it might be a FCPA problem for his company. It was.

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Thomas Fox is the creator and writer of the widely-read FCPA Compliance and Ethics Blog. He has practiced law in Houston for 25 years. Tom writes and speaks nationally and internationally on FCPA compliance, indemnities and other forms of risk management for a worldwide energy practice, tax issues faced by multi-national U.S. companies, insurance coverage issues, and protection of trade secrets. He can be contacted here.

Bon Anniversaire, Guys

The Wall Street Journal's Corruption Currents just turned one. It celebrated with a post about the top five corruption convictions of the past twelve months.

Two entries have FCPA ties.

Former KBR middleman Jeffrey Tesler's astounding $149 million forfeiture order appears at number three.

And at number two is Costa Rica's former president, Miguel Angel Rodriguez. He was sentenced to five years in prison by a Costa Rican court for taking $800,000 in bribes from French phone giant Alcatel.

Congratulations to Corruption Currents and its generous authors Joe Palazzolo and Sam Rubenfeld, above.

We look forward to many more years of their great coverage.

Who Paid FCPA-Related Fines Overseas?

Here's a list of fines paid overseas for bribery by companies that have settled FCPA enforcement actions.

There may be others but these are what a friend of the FCPA Blog has found so far.

Of the seventeen spots, Siemens occupies three and sits on top with a whopping $856 million fine paid in Germany.

Nigeria has most often followed FCPA enforcement actions. It appears seven times, the U.K. five times, Germany, Costa Rica, Italy, Norway, and the Holland once each.

The list points to a problem more global companies will face -- bribery prosecutions and penalties in multiple jurisdictions. We talked about the coming chaos in June.

	Company	Country	Total Fines (US$)	Date Reported
1	Siemens	Germany	856,000,000	Dec-08
2	BAE	UK	49,000,000	Feb-10
3	Siemens	Nigeria	46,500,000	Nov-10
4	Halliburton	Nigeria	35,000,000	Dec-10
5	Eni SpA / Snamprogetti	Nigeria	32,500,000	Dec-10
6	Technip	Nigeria	30,000,000	Feb-11
7	JGC Corp	Nigeria	30,000,000	Feb-11
8	Innospec	UK	12,700,000	Mar-10
9	MW Kellogg /KBR	UK	11,400,000	Feb-11
10	Alcatel Lucent	Costa Rica	10,000,000	Jan-10
11	Aon Ltd	UK	8,500,000	Jan-09
12	Johnson & Johnson / DePuy	UK	7,850,000	April-11
13	Tidewater Inc	Nigeria	6,300,000	Mar-11
14	Statoil	Norway	3,000,000	Oct-04
15	Nobel Corp	Nigeria	2,500,000	Jan-11
16	Siemens	Italy	1,200,000	Apr-09
17	Azko Nobel	Holland	600,000	Dec-07

Counsel To The Top Ten

What law firms and lawyers represented the companies from our list of the top ten corporate FCPA settlements of all time?

Here they are:

1. Siemens - Davis Polk (Scott W. Muller, Angela T. Burgess)

2. KBR - Paul Hastings (Timothy L. Dickinson, William F. Pendergast, Jennifer D. Riddle)

3. BAE - Linklaters (Lawrence Byrne)

4. Snamprogetti - Sullivan & Cromwell (Karen Patton Seymour, Nicolas Bourtin)

5. Technip - Patton Boggs (Robert D. Luskin) and Wachtell Lipton (John F. Savarese)

6. JGC Corporation - Latham & Watkins (Manuel A. Abascal)

7. Daimler - Willkie Farr (Martin J. Weinstein), Hogan & Hartson (Carl S. Rauh), and Skadden Arps (Gary DiBanco)

8. Alcatel-Lucent - Sale & Weintraub (Jon A. Sale) and Willkie Farr (Martin J. Weinstein, Robert J. Meyer)

9. Panalpina - Baker & McKenzie (Richard N. Dean, Douglas M. Tween)

10. Johnson & Johnson - Reed Smith (Eric A. Dubelier)

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Compiled from outside counsel of record on deferred and non-prosecution agreements, except in the case of Alcatel-Lucent, which was obtained from PACER.

ICE Loses 'Victim' Claim In Eleventh Circuit

The U.S. Court of Appeals for the Eleventh Circuit today said a lower court didn't make a mistake when it denied victim status to a Costa Rican state-owned utility.

"The district court identified the pervasive, constant, and consistent illegal conduct conducted by the 'principals' (i.e. members of the Board of Directors and management) of ICE . . . .," a two-judge panel wrote for the Atlanta-based Eleventh Circuit.

In a petition for mandamus filed Wednesday, ICE -- the Instituto Costarricense de Electricidad S.A. -- said the federal district court in Miami had been wrong to conclude earlier this month that ICE was a co-conspirator in Alcatel-Lucent's bribery and therefore could not have been a victim for purposes of U.S. federal law.

Following today's ruling, Alcatel-Lucent's $137 million FCPA settlement with the DOJ and SEC will go forward.

Under federal rules, petitions for mandamus -- requests for appellate courts to direct lower courts to take certain action -- have to be decided within 72 hours. ICE's mandamus petition asked the appellate court to stop the Alcatel-Lucent settlement and give victim status to ICE under federal law.

ICE was the first foreign government-linked entity to claim victim's rights in an FCPA enforcement action. If it had succeeded, the Costa Rican utility would have been entitled to restitution.

With potentially millions at stake, ICE's U.S. lawyers were aggressive in attacking the way the DOJ and SEC handled the case.

ICE accused them of ignoring federal victim-rights laws and holding an “imperialist” view of Latin America.

The DOJ said it always treated ICE and the Costa Rican government with courtesy and good faith, and that the mutual cooperation even resulted in Costa Rica receiving $10 million in restitution last year from Alcatel-Lucent France, S.A. for “moral damages” to the country's citizens.

"This marked the first time in Costa Rica’s history that a foreign corporation paid the Costa Rican government damages for corruption," the DOJ said.

Despite that record, the DOJ said, the case was marked by ICE's "vitriolic allegations and false accusations questioning the motives, competence, and conduct" of the DOJ and SEC.

ICE's failure to gain victim status will probably deter other foreign governments and state-owned enterprises from rushing to intervene in FCPA enforcement actions. 

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Download a copy of the Eleventh Circuit's June 17, 2011 order denying mandamus to ICE here.

Download a copy of ICE's June 15, 2011 petition for a writ of mandamus under the victim's rights act here.

Download a copy of ICE's May 2, 2011 petition for relief pursuant to 18 U.S.C. §3771(d)(3) and objection to plea agreements and deferred prosecution agreement in U.S. v. Alcatel-Lucent S.A. here.

Download a copy of the DOJ's reply brief here, and Alcatel-Lucent's reply brief here.