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

KBR In £7 Million UK Settlement

KBR's wholly-owned subsidiary, M.W. Kellogg Limited, has settled civil corruption charges with the U.K. Serious Fraud Office.

Kellogg will pay US$11,238,886 (£7,000,028). The civil fine -- similar to an SEC-imposed disgorgement -- equals Kellogg's share of dividends payable from profits generated by contracts for work on Nigeria's Bonny Island project.

The SFO said Kellogg self-reported "concerns" and cooperated in the subsequent investigation. "The SFO, working in partnership with the U.S. Department of Justice, reviewed the conduct of [Kellogg] and decided that the most appropriate approach was to remove the funds which will become due to the company through the unlawful conduct. This reflects the finding that [Kellogg] was used by the parent company and was not a willing participant in the corruption."

KBR, Technip S.A., Snamprogetti Netherlands B.V., and JGC, a Japanese engineering and construction company, were part of a four-company joint venture known as TSKJ. It paid about $180 million in bribes to Nigerian officials and was awarded contracts worth $6 billion by Nigeria LNG Ltd. between 1995 and 2004 to build the Bonny Island facilities.

In the U.S., the DOJ and SEC have recovered $1.28 billion in FCPA-related penalties and disgorgement from the TSKJ consortium members: $579 million from KBR / Halliburton, $365 million from Snamprogetti / ENI, and $338 million from Technip. The final TSKJ partner, JGC corporation, a Japanese construction firm, said in January it has reserved around $220 million for an expected settlement with U.S. authorities.

KBR tried to insulate itself from FCPA exposure by creating a special purpose vehicle for the Bonny Island project that was owned by Kellogg.

Former KBR boss Albert "Jack" Stanley pleaded guilty in Houston in 2008 to a two-count criminal information charging him with conspiracy to violate the FCPA and to commit mail and wire fraud. He's free on bail until at least March 30. His 84-month prison sentence is subject to review based on his cooperation. He was also ordered to pay $10.8 million in restitution.

Wojciech Chodan, KBR's former employee in the U.K., pleaded guilty in December last year to one count of conspiracy to violate the FCPA. Chodan, who holds a Polish passport, is set to be sentenced on April 27.

Chodan's co-defendant, Jeffrey Tesler, a London lawyer, was also charged with helping KBR and its partners bribe Nigerian officials. Last month, the British High Court refused to block Tesler's extradition to the U.S.

The Director of the Serious Fraud Office, Richard Alderman, said today: "The SFO will continue to encourage companies to engage with us over issues of bribery and corruption in the expectation of being treated fairly. In cases such as this a prosecution is not appropriate. Our goal is to prevent bribery and corruption or remove any of the benefits generated by such activities. This case demonstrates the range of tools we are prepared to use."

View the SFO's February 16, 2011 release here.

FCPA Conspiracy Theories

Enforcement actions by the DOJ against companies and individuals are often resolved by the defendant pleading guilty to a conspiracy count. We had assumed the DOJ used conspiracy instead of substantive FCPA offenses solely to give cooperating defendants a break.

But that might be wrong.

Pete from DC, a source of much FCPA knowledge, said a member of the DOJ's FCPA enforcement team talked a few weeks ago about the conspiracy statute ( 18 U.S.C. § 371). The prosecutor said it's sometimes used to avoid jurisdictional problems that come up with substantive FCPA charges.

For example, if an FCPA defendant is neither an issuer nor a domestic concern, establishing jurisdiction requires a territorial nexus. See 15 U.S.C. §§ 78dd-1(a), 78dd-2(a). But under the conspiracy statute, the territorial nexus doesn't need to be proved.

Case in point, according to the DOJster, is Snamprogetti. In July, the Dutch unit of Italian parent company ENI agreed to pay a $240 million criminal fine after pleading guilty to one count of conspiracy to violate the FCPA and one count of aiding and abetting. The charges arose from Snamprogetti's role in the TSKJ-Nigeria joint venture.

(Snamprogetti and ENI also agreed with the SEC to pay $125 million in disgorgement to settle civil charges that they violated the FCPA's anti-bribery and recordkeeping and internal controls provisions in Sections 30A and 13(b)(5) of the Securities Exchange Act of 1934 and Rule 13b2-1.)

Although Pete from DC didn't mention it, we've said before that while the statute of limitations for substantive FCPA offenses is five years, the period for FCPA-related conspiracies can reach back to criminal behavior that's much older. The U.S. Attorneys Criminal Resource Manual puts it this way: 

Conspiracy is a continuing offense. For statutes such as 18 U.S.C. § 371, which require an overt act in furtherance of the conspiracy, the statute of limitations begins to run on the date of the last overt act. See Fiswick v. United States, 329 U.S. 211 (1946); United States v. Butler, 792 F.2d 1528 (11th Cir. 1986).

Prosecutors might also use the conspiracy statute when their evidence of a substantive violation has gaps. Under U.S. v. Pinkerton, 328 U.S. 640 (1946), if a member of a criminal conspiracy does at least one overt act, then all of the members of the conspiracy are considered to have committed the crime ("the hand of one is the hand of all to the conspiracy"). That can make conspiracy charges easier to prove.

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Download the July 7, 2010 criminal information in U.S. v. Snamprogetti Netherlands B.V. here.

Download Snamprogetti's July 7, 2010 deferred prosecution agreement here.

See our posts on jurisdiction here, and aiding and abetting here.

But Is It Right?

Something big, very big, is happening in FCPA enforcement. The top ten FCPA settlements of all time involve penalties of $2.8 billion. The top six happened in just the past 20 months and account for 95% of that, or $2.67 billion.

So far this summer, Snamprogetti / ENI of Italy and Technip of France each paid more than a third of a billion dollars to resolve FCPA offenses. Just three years ago, the biggest settlement on record was Baker Hughes' $44.1 million payment, and that amount electrified the FCPA world. Who could have guessed that only a few years later, settlements that size would hardly get a glance, and payouts eight times bigger would become the norm.

As we ride this hockey stick toward heaven, we need to ask some questions. Like, are mega-settlements good for compliance or do they simply put a price tag on non-compliance? What about shareholders? They're innocent of the corruption but ultimately pay the tab. Why do five of the top six settlements involve non-U.S. corporations? Do giant penalties punish wrongdoers or shield top executives from criminal prosecution? And do they distort enforcement decisions in ways we don't yet understand?

Those are some of the questions. Ruminations to follow.

The FCPA's Top Ten

Here are the top ten FCPA settlements of all time. If our math is right, the financial penalties (criminal fines, civil disgorgement, and prejudgment interest) add up to $2.8 billion, with almost 50% of that coming from the top two settlements. Five of the top six involve non-U.S. companies. The oldest case on the list is Titan Corporation's from 2005; the newest is Snamprogetti / ENI's from July 7, 2010.

They are:

1. Siemens: $800 million in 2008.

2. KBR / Halliburton: $579 million in 2009.

3. BAE: $400 million in 2010.

4. Snamprogetti Netherlands B.V. / ENI S.p.A: $365 million in 2010.

5. Technip S.A.: $338 million in 2010.

6. Daimler AG: $185 million in 2010.

7. Baker Hughes: $44.1 million in 2007.

8. Willbros: $32.3 million in 2008.

9. Chevron: $30 million in 2007.

10. Titan Corporation: $28.5 million in 2005.

Editor's note: This post was updated here.