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« Colloquium on suspension and debarment: towards an integrative approach? | Main | Digi International CFO charged for unauthorized travel and entertainment expenses »
Monday
Oct012012

Enforcement Report for Q3 '12

During the quarter just ended, there were five corporate FCPA enforcement actions, one enforcement against an individual by the SEC, four criminal sentencings of individuals, and three and a half corporate declinations.

Here's what happened:

DOJ / SEC Enforcement Resolutions

Subramanian Krishnan (September 28), the former CFO of Digi International, Inc., was charged by the SEC for books and records and internal controls violations under the FCPA. He consented to a final judgment barring him from serving as a director or officer of an issuer. His civil penalty and disgorgement will be determined later by stipulation or on motion by the SEC. Krishnan allegedly approved unauthorized travel and entertainment expenses through Digi's Hong Kong office.

Tyco International Ltd. (September 24) resolved criminal and civil charges with the DOJ and SEC, paying more than $26 million in penalties. The Switzerland-based maker of fire security products paid $13.6 million in criminal penalties to the DOJ, and $13 million in civil penalties to the SEC (consisting of $10.5 million in disgorgement and $2.5 million in prejudgment interest).

Oracle Corporation (August 16) paid $2 million civil penalties to the SEC to settle FCPA charges arising from a slush fund in India used to pay bribes.

Pfizer Inc. and its subsidiary Wyeth (August 7) paid $60 million to resolve DOJ and SEC charges, including a $15 million criminal penalty, $26.3 in disgorgement from Pfizer, and $18.8 million in disgorgement from Wyeth, for  FCPA violations in Bulgaria, Croatia, Kazakhstan, and Russia.

Nordam Group Inc. (July 17) agreed with the DOJ to pay $2 million and enter into a three-year non-prosecution agreement to resolve FCPA violations in China. The NPA required Nordam to push compliance training to all third parties that represent a compliance risk.

Orthofix International N.V. (July 10) paid $7.4 million to settle FCPA charges with the DOJ and SEC for violations in Mexico. The company paid the SEC $5.2 million, including $4.98 million in disgorgement and $242,000 in prejudgment interest. And it paid the DOJ a $2.22 million criminal penalty.

Sentenced

Paul Cosgrove (September 13), the former director of worldwide sales for Control Components Inc., was sentenced to 13 months home confinement and fined $20,000 for bribing Chinese officials. Cosgrove, 65, pleaded guilty in May to one count of violating the FCPA. In passing sentence, the court considered his serious health issues.

Garth Peterson (August 16), Morgan Stanley's former managing director for real estate in China, was sentenced to nine months in federal prison. He pleaded guilty in April to a one-count criminal information charging him with conspiring to evade internal accounting controls that Morgan Stanley was required to maintain under the FCPA. He also agreed in April to pay about $250,000 in disgorgement and forfeit Shanghai real estate worth $3.4 million to settle civil FCPA charges filed by the SEC.

Richard Bistrong (July 31), the government's cooperating witness in the failed Africa sting prosecution, was sentenced to 18 months in federal prison followed by 36 months probation. The DOJ had asked that Bistrong be spared jail based on his 'extraordinary' cooperation. He pleaded guilty in 2010 to one count of conspiracy to violate FCPA's antibribery and books and records provisions, and to export military products without proper authorization.

Patrick Joseph (July 9), a former official at state-owned Telecommunications D’Haiti S.A.M., was sentenced to a year and a day in prison. Joseph pleaded guilty in February to conspiring to launder money. Although Joseph wasn't charged with violating the FCPA, the government had to prove FCPA offenses as a predicate to his money-laundering conspiracy charge.

Declinations

Hercules Offshore, Inc. (August 7), an oil and gas services contractor that provides drilling, barge and boat services, said in an SEC filing that following investigations, both the SEC and DOJ will take no enforcement action for possible FCPA violations. The DOJ terminated its investigation 'based on a number of factors, including, but not limited to, the thorough investigation undertaken by Hercules and the steps that Hercules has taken in the past and continues to take to enhance its compliance program, including efforts to ensure compliance with the FCPA.'

Huntsman Corporation (August 1) said in an SEC filing that the DOJ and SEC won't take enforcement action against the company for bribes paid in India by employees of a joint venture there. Huntsman's internal investigation showed less than $11,000 in illegal payments in 2009 and early 2010. It self disclosed the payments to the SEC and DOJ in 2010. It also fired management employees involved in the illegal payments.

Sensata Technologies Holding N.V. (July 27), the subject of DOJ and SEC investigations for potential FCPA violations in China, said the DOJ has closed its inquiry but could reopen it if new evidence shows up. The company also said it hasn't heard any news from the SEC about the investigation.

Academi LLC (July 19), formerly known as Blackwater Worldwide, received word from the DOJ that it would not be prosecuted for alleged bribery in Iraq.

*     *     *

Our Enforcement Report for Q2 '12 is here and for Q1 '12 here.

Our 2011 Enforcement Index is here, the 2010 Index is here, the 2009 Index can be found here, and our 2008 Index is here.

________________

Andrew Reichardt, and editorial intern with the FCPA Blog, contributed to this post.

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