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.

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

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.

Compliance And Enforcement: By The Book

The case made headlines last month when seven companies settled FCPA-related charges for $236.5 million dollars. 

Logistics company Panalpina was named, along with its customers Shell, Transocean, Pride, Tidewater, Noble, and GlobalSantaFe.

There was no mentioned, however, of another Panalpina customer from the oil-and-gas services industry --  Global Industries. It was named in the first reports from 2007 about the case but disappeared from the story. Why?

Because for Global Industries, the case had a different ending.

The company suspected problems with Panalpina even before the Vetco Gray case -- which triggered the investigations into Panalpina -- was announced. Once alerted to the potential problems, the company took immediate action through its executive management and board of directors. Outside FCPA counsel was hired and the matter was self-disclosed to the DOJ and SEC. The board of directors authorized, and the company and outside counsel conducted, a thorough internal investigation of its operations in West Africa and turned the results over to the government.

In March, Global Industries announced that, "Early this year, representatives of the Securities and Exchange Commission and the Department of Justice informed the Company that each agency had concluded its FCPA investigation. Neither agency recommended any enforcement action or the imposition of any fines or penalties against the Company."

How did Global achieve that result?

Its general counsel and director of compliance gave these reasons:

• Historical evidence of a strong FCPA compliance program

• Global’s internal controls identified the FCPA issues

• Management took prompt and effective action

• Implementation of an enhanced compliance program

• Thorough investigation and cooperation with the enforcement authorities

What's the lesson?

The general counsel told us: "Having gone through a two-and-a-half year investigation has been an eye opener. But it proved to us that a good compliance program does help, not only to identify potential problems when they arise, but also when you're in front of the DOJ and SEC."

Kudos to Global Industries, and to the DOJ and SEC.

Seven Companies Settle For $236.5 Million (Updated)

Making history today for the most companies to simultaneously settle FCPA-related violations, Global logistics firm Panalpina and five of its oil-and-gas services customers resolved charges with the DOJ and SEC, and another customer settled with the SEC only.

The companies will pay $156.5 million in criminal fines and about $80 million in civil disgorgement, interest and penalties.

Panalpina. Switzerland-based Panalpina World Transport (Holding) Ltd. and its U.S.-based subsidiary, Panalpina Inc., bribed foreign officials on behalf of customers for customs clearance. Between 2002 and 2007, Panalpina said it paid "thousands of bribes totaling at least $27 million . . . in at least seven countries, including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan."

The DOJ charged Panalpina World Transport with conspiring to violate and violating the anti-bribery provisions of the FCPA. The company entered into a deferred prosecution agreement.

Panalpina Inc. was charged with conspiring to violate the books and records provisions of the FCPA and with aiding and abetting customers in violating the books and records provisions of the FCPA.

The Panalpina companies were fined $70.5 million.

In its SEC settlement, Panalpina Inc. agreed to pay $11.3 million in disgorgement of profits.

Panalpina's $81.8 million settlement, Pride's $56.1 million deal, and Shell's $48.1 million settlement (discussed below) land them all in the top ten FCPA settlements of all time.

Shell. SNEPCO, a Nigerian subsidiary of Royal Dutch Shell plc , was charged with conspiring to violate the antibribery and books and records provisions of the FCPA, and with aiding and abetting a violation of the books and records provisions. SNEPCO paid $2 million to its subcontractors knowing some or all of the money would be paid as bribes to Nigerian customs officials by Panalpina to import materials and equipment into Nigeria.

Shell entered into a deferred prosecution agreement and will pay a $30 million criminal penalty. 

In their SEC settlement, Royal Dutch Shell and U.S. subsidiary Shell International Exploration and Production Inc. agreed to pay $18.1 million in disgorgement of profits and prejudgment interest

Transocean. The DOJ charged a Caymans Island subsidiary of Swizerland-based Transocean Ltd. with conspiring to violate the antibribery and books and records provisions of the FCPA, violating the anti-bribery provision of the FCPA, and aiding and abetting the violation of the books and records provisions of the FCPA.

The company paid about $90,000 in bribes through its freight forwarding agents to clear drill rigs through customs.

Transocean entered into a deferred prosecution agreement and will pay a $13.4 million criminal penalty.

In its SEC settlement, Transocean agreed to disgorge $7.2 million in profits and prejudgment interest.

GlobalSantaFe. In a related SEC enforcement action, GlobalSantaFe Corp., which in 2007 merged with a subsidiary of Transocean Inc. to later form Transocean Ltd, agreed to pay $5.9 million to resolve civil antibribery and record keeping and internal controls violations. 

Tidewater. A Cayman Island subsidiary of New Orleans-based Tidewater Inc. was charged with conspiring to violate the antibribery and books and records provisions of the FCPA, and with violating the books and records provisions of the FCPA.

The company paid $160,000 in bribes through its employees and agents to tax inspectors in Azerbaijan to improperly secure favorable tax assessments. It also paid $1.6 million through Panalpina to Nigerian customs officials to clear vessels into Nigerian waters.

Tidewater entered into a deferred prosecution agreement and will pay a $7.35 million criminal penalty.

In its SEC settlement, Tidewater Inc. agreed to pay $8.3 million in disgorgement of profits, prejudgment interest and civil penalties.

Pride. Houston-based Pride International Inc. and a French subsidiary paid $800,000 in bribes directly and indirectly to government officials in Venezuela, India and Mexico. The bribes were paid to extend drilling contracts for three rigs operating offshore in Venezuela, to secure a favorable decision relating to a customs dispute for a rig imported into India, and to avoid the payment of customs duties and penalties relating to a rig and equipment operating in Mexico.

Pride was charged with conspiring to violate the antibribery and books and records provisions of the FCPA, violating the anti-bribery provisions of the FCPA, and violating the books and records provisions of the FCPA.

Pride International entered into a deferred prosecution agreement but did not pay any criminal penalties. During the course of the investigation, the DOJ said, Pride "provided information and substantially assisted in the investigation of Panalpina."

Its French subsidiary, Pride Forasol, was charged with conspiring to violate the anti-bribery provisions of the FCPA, violating the anti-bribery provisions of the FCPA, and aiding and abetting the violation of the books and records provisions of the FCPA.

Pride Forasol paid a $32.6 million criminal penalty.

In its SEC settlement, Pride International agreed to pay $23.5 million in disgorgement of profits and prejudgment interest.

Noble. Noble Corporation, organized in Switzerland, paid $74,000 to a Nigerian freight forwarding agent, knowing that some of the payments would be passed on as bribes to Nigerian customs officials. It  falsely recorded the bribe payments as legitimate business expenses in its corporate books.

Noble received a non-prosecution agreement and will pay a $2.59 million criminal penalty.

The DOJ said Noble's non-prosecution agreement recognizes the firm's "early voluntary disclosure, thorough self-investigation of the underlying conduct, full cooperation with the department and extensive remedial measures undertaken by the company. As a result of these factors, among others, the department agreed not to prosecute Noble or its subsidiaries for the bribe payments, provided that Noble satisfies its ongoing obligations under the agreement."

In its SEC settlement, Noble Corporation agreed to pay $5.5 million in disgorgement of profits and prejudgment interest.

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View the DOJ's November 4, 2010 release here.

Download the SEC's civil complaints against Panalpina here, Shell here, Noble here, Tidewater here, Pride here, Transocean here, and GlobalSantaFe here.