SEC Posts Cases Eligible For Whistleblower Rewards

The SEC's Office of the Whistleblower (yes, it's real) published its first list of enforcement actions that might be eligible for whistleblower rewards. It includes FCPA-related cases.

On the November 1 list -- under the heading of 'Claim an Award' -- are completed enforcement actions against companies and people that resulted in judgments or orders issued after July 21, 2010 with sanctions of more than $1 million.

FCPA-related enforcement actions on the list include ABB, Alcatel-Lucent, S.A., Alliance One, Comverse Technology, GE, Diageo plc, GlobalSantaFe, Johnson & Johnson, Maxwell Technologies, Noble Corp, Panalpina, Pride Inc, RAE Systems, Rockwell Automation, Royal Dutch Shell plc, Tidewater, Transocean, Tyson Foods, and Universal Corporation. (Our posts about all of them can be found by following the tags below.)

'Subject to the Final Rules,' the Office of the Whistleblower said, 'individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.'

The SEC said that 'once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award by submitting a completed Form WB-APP to the Office of the Whistleblower by midnight on the claim due date listed for that action.'

Appearing on the list doesn't mean a whistleblower has or will be rewarded for information, only that it might happen.

As the SEC said in an 'Important Note:'

The inclusion of a Notice below means only that an order was entered with monetary sanctions exceeding $1 million. By posting a Notice for a particular case, we are not making any determinations either that (i) a whistleblower tip, complaint or referral led to the Commission opening an investigation or filing an action with respect to the case or (ii) an award to a whistleblower will be paid in connection with the case.

View the Office of the Whistleblower's 'Claim an Award' site here.

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Special thanks to a good friend for providing the link to the SEC's November 1 list.

Will Nigeria Take Another Bite?

By Marcus Cohen, David Elesinmogun & Obumneme Egwuatu

The penalty for paying bribes in Nigeria may increase following demands from a Nigerian NGO that the Nigerian government seek its share of the recent anti-graft bounty.  Maybe…

Multi-million dollar FCPA settlements based on bribery of Nigerian government officials have become commonplace in recent years, but only a tiny fraction of those penalty dollars are assessed by the Nigerian government.  In fact, the total amount of fines levied by the Economic and Financial Crimes Commission (EFCC), the body charged with prosecuting corruption cases in Nigeria, equates to less that 4% of the total penalties fines imposed by the United States, Germany, and the United Kingdom. (See the “Corruption Penalty Comparison Chart” below.) 

But should corporations that have already doled out tens of millions to the U.S. Department of Justice for violations of the Foreign Corrupt Practices Act (FCPA) really be concerned that the EFCC is going to take another bite?

The Nigerian people are the most direct victims of corrupt payments by foreign corporations.  In a recent statement, the Socio-Economic Rights and Accountability Project (SERAP), a non-profit Nigerian NGO, noted that bribery by foreign corporations “has caused immense damage and devastation to the economy and to institutions of governance, and directly undermined the full and effective enjoyment of internationally recognized human rights, especially economic, social and cultural rights by the citizens.

To redress this disparity, SERAP petitioned the EFCC on August 2 to ensure that multinational corporations pay commensurate damages to the Nigerian people for the foreign bribery committed in the country.  Specifically, SERAP’s petition demands that the EFCC “urgently take steps to seek adequate damages and compensation against multinational corporations who have been found guilty in the US of committing foreign bribery in Nigeria and to take all necessary steps to effectively bring to justice the Nigerian officials complicit in such cases of bribery.”  However, fears that the EFCC will suddenly seek millions in penalties from corporations that have already settled with the DOJ may be premature.

Apart from the public remonstrations of SERAP, there has been little outcry in Nigeria for bribery penalty parity.  The issue has gained little attention from either Nigerian government officials or in the press; which may be based on shrewd political and economic considerations.  Many Nigerians, both those serving in public office as well as those on the street, may not want to pursue multinational corporations already dinged for FCPA violations.  The underlying concern being that additional penalty demands by the EFCC may scare off foreign companies willing to invest in Nigeria.  Halliburton and Siemens continue to have a significant business presence in Nigeria, notwithstanding imposition of colossal penalties by the U.S, Germany, and Nigeria.  However, other multinational corporations may not stomach additional fines.

SERAP eloquently avers that the penalty disparity violates the fundamental provisions of the United Nations Convention against Corruption, ratified by Nigeria seven years ago.  Article 35 of the Convention provides that persons who have suffered damage as a result of an act of corruption have the right to adequate damages and compensation.  However, simply because the Nigerian government has the right to seek damages does not equate to a political wiliness to do so.  Further penalization of multinational companies may lead to corporate flight – the resulting loss of jobs ultimately, if unintentionally, punishing the Nigerian people.

Corruption Penalty Comparison Chart

Multinational Corp	Non-Nigerian Penalty Amt.	Nigerian Penalty Amt.
Siemens AG	$800M (US) & €796M (DE)	$46M
Halliburton/KBR	$727M (US)	$35M
Snamprogetti/ENI SpA	$365M (US)	$32.5M
JGC Corp	$218.8M (US)	$28.5M
Royal Dutch Shell	$48.2M (US)	$10M
Technip SA	$338M (US)	$0
Panalpina	$82M (US)	$0
Pride International	$56.1M (US)	$0
Willbros International	$41M (US)	$0
Tidewater Inc	$20.6M (US)	$0
Shell Nigerian Exploration	$18M (US)	$0
MW Kellogg (KBR)	£7M (UK)	$0
Noble Corp	$8.1M (US)	$0
Total Penalty Amt:	$3.87B	$152M

Marcus Cohen is of Counsel to Sandler, Travis & Rosenberg in Washington DC, where he advises clients on compliance with U.S. and international anti-corruption measures and export controls and sanctions laws. He can be reached at mcohen@strtrade.com.

David Elesinmogun and Obumneme Egwuatu are founding partners of Elesinmogun & Egwuatu, with offices in Lagos, Nigeria, and Washington DC. Elesinmogun's practice focuses on advising both Nigerian and international corporations in cross-border commercial ventures, banking, criminal law, securities regulation, environmental law and immigration. Egwuatu concentrates his practice on advising multinational corporations on investing in Nigeria and Africa and compliance with both Nigerian and U.S. law. They can be reached, respectively, at de@eandelawyers.com and oe@eandelawyers.com.

Japan's JGC Makes Top Ten

With yesterday's $218.8 million criminal fine, JGC joins the top ten FCPA cases of all time. Nine now involve non-U.S. companies, and the oldest -- Siemens from December 2008 -- is still the biggest.

Yokohama-based JGC -- the only Japanese company on the list -- knocks off Houston-based Pride and its $56.1 million settlement in 2010.

The current top ten are:

1. Siemens (Germany): $800 million in 2008.

2. KBR / Halliburton (USA): $579 million in 2009.

3. BAE (UK): $400 million in 2010.

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

5. Technip S.A. (France): $338 million in 2010.

6. JGC Corporation (Japan) $218.8 million in 2011.

7. Daimler AG (Germany): $185 million in 2010.

8. Alcatel-Lucent (France): $137 million in 2010.

9. Panalpina (Switzerland): $81.8 million in 2010.

10. ABB Ltd (Switzerland): $58.3 million in 2010.

[Editor's note: the list was updated here.]

Top Ten Disgorgements

There's been a lot of talk lately about the DOJ's "expansive enforcement practices" and practically none about the SEC's. So let's get started by taking a look at a remedy the SEC now uses in most FCPA cases: disgorgement.

As one commentator said a couple of years ago, disgorgement was never mentioned when the FCPA was first debated and adopted in 1977, nor when Congress amended the law in 1988 or 1998. In fact, as of 1977, the SEC had barely used disgorgement in any type of securities enforcement actions, and 27 years passed before disgorgement popped up in an FCPA case.

That was in 2004 when ABB Ltd disgorged $5.9 million to settle civil antibribery, books-and-records, and internal-controls offenses. Since then the SEC has used disgorgement in about three-quarters of its FCPA-related enforcement actions.

Here are the SEC's top ten FCPA-related disgorgements (including prejudgment interest):

1. Siemens $350 million in 2008.

2. KBR $177 million in 2009.

3. Snamprogetti $125 million in 2010.

4. Technip $98 million in 2010.

5. Daimler $91.4 million in 2010.

6. Alcatel-Lucent $45 million in 2010.

7. Chevron $25 million in 2007.

8. Pride $23.5 million in 2010.

9. GE $22.5 million in 2010.

10. Baker Hughes $23 million in 2007.

If we've missed any cases that should appear in this initial list, please let us know.

For comparison, take a look at our current list of the top ten FCPA enforcement actions of all time.

The cheesiest disgorgement of all time? SEC v. Tyco Int’l. Ltd., a 2006 case. For numerous charges including fraud by inflating its operating income by $567 million, and antibribery violations under the FCPA for payments to government officials in Brazil, the company paid a $50 million penalty and a $1 million disgorgement.

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Our thanks to a reader in D.C. who helped research this post.

Recent Cases, Foreign Companies Dominate New Top Ten

In the latest top ten FCPA settlements of all time, eight are from 2010 and eight also involve non-U.S. companies.

Paris-based Alcatel-Lucent is the latest addition at number seven, knocking Shell's November 2010 Panalpina-related enforcement action off the list. 

The current top ten are:

1. Siemens (Germany): $800 million in 2008.

2. KBR / Halliburton (USA): $579 million in 2009.

3. BAE (UK): $400 million in 2010.

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

5. Technip S.A. (France): $338 million in 2010.

6. Daimler AG (Germany): $185 million in 2010.

7. Alcatel-Lucent (France): $137 million in 2010.

8. Panalpina (Switzerland): $81.8 million in 2010.

9. ABB Ltd (Switzerland): $58.3 million in 2010.

10. Pride (USA): $56.1 million in 2010.

Just six months ago, the top-ten list included four older cases -- all involving U.S. companies -- that have now dropped off. They were Baker Hughes from 2007, Willbros from 2008, Chevron from 2007, and Titan Corporation from a distant 2005.

[Editor's note: the most recent list is here.]