FCPA enforcement report for Q3 2018
Monday, October 1, 2018 at 9:08AM
Richard L. Cassin in enforcement report

During the third calendar quarter there were seven corporate FCPA enforcement actions with penalties and disgorgement totaling about $1.97 billion, including $1.78 billion for Petrobras.

Two individuals reached civil settlements with the SEC and three were sentenced for criminal FCPA violations.

Two people pleaded guilty and are waiting to be sentenced.

There was a new arrest, and an important dismissal in an SEC civil action.

The DOJ posted two new declination letters under its FCPA Corporate Enforcement Policy (we're calling those "declinations with disgorgement," although one of them didn't require a disgorgement).

There were also three other declinations.

Here's what happened:

DOJ / SEC Enforcement Resolutions

Stryker Corp. (September 28) paid the SEC a $7.8 million penalty to resolve FCPA books and records and internal accounting controls offenses in India, China, and Kuwait. It was Stryker's second FCPA settlement with the SEC.

Petróleo Brasileiro S.A. – Petrobras (September 27) entered into a non-prosecution agreement with the DOJ that assessed a criminal penalty of $853.2 million and an administrative order with the SEC that required disgorgement of $933.5 million. The DOJ and SEC will each collect $85.3 million from the criminal penalty and the rest will be paid to the Ministerio Publico Federal in Brazil. The SEC disgorgement was offset against payments Petrobras had already made to a U.S. class action settlement fund.

Patricio Contesse González (September 25), the former CEO of Sociedad Química y Minera de Chile, S.A. or SQM, paid the SEC $125,000 to resolve civil charges that he violated the FCPA. The SEC said he caused SQM to make nearly $15 million in improper payments to Chilean political figures and others connected to them. Last year SQM paid $30 million to settle civil and criminal FCPA charges.

United Technologies Corporation (September 12) paid the SEC $13.9 million to resolve charges that it violated the FCPA by making illicit payments in its elevator business in Azerbaijan and aircraft engine businesses in China and elsewhere. United Technologies provided trips and gifts to various foreign officials in China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia through its Pratt & Whitney (aviation) division and Otis (elevator) subsidiary. UT settled without admitting or denying the SEC's findings. It disgorged $9 million plus pre-judgment interest of about $919,000, and paid a penalty of $4 million.

Joo Hyun Bahn (September 6), also known as Dennis Bahn, 39, of Tenafly, New Jersey, a former Colliers broker, agreed to disgorge $225,000 to the SEC to settle civil FCPA violations for trying to bribe a Middle Eastern official to finance the sale of a high-rise building complex in Vietnam. See his criiminal sentencing below.

Sanofi (September 4) paid the SEC $25 million to resolve charges that it bribed officials across the Middle East and in Kazakhstan to win business. The SEC said Sanofi violated the FCPA's books and records and internal accounting controls provisions. Without admitting or denying the findings, Sanofi agreed to pay a civil penalty of $5 million, plus $17.5 million in disgorgement and $2.7 million in prejudgment interest. Paris-based Sanofi said in March the DOJ had closed its four-year FCPA investigation without bringing an enforcement action.

Legg Mason Inc. (August 27). The Securities and Exchange Commission issued an administrative order that completed the feds' earlier $64 million FCPA enforcement action against the investment manager On June 4, Maryland-based Legg Mason entered into a non-prosecution agreement with the DOJ to resolve FCPA violations in Libya. The NPA required Legg Mason to pay $64.2 million, consisting of a criminal penalty of $32.6 million and disgorgement of $31.6 million. But to avoid piling on, the DOJ said the disgorgement would be "credited against disgorgement paid to other law enforcement authorities within the first year of the [non-prosecution] agreement." Under the SEC's order, the firm agreed to pay $34 million to settle the civil offenses, with $27.6 million in disgorgement and $6.9 million in prejudgment interest.

Credit Suisse Group AG (July 5) and its Hong Kong unit paid the DOJ and SEC $76.7 million for a referral hiring scheme that violated the Foreign Corrupt Practices Act. Credit Suisse (Hong Kong) Limited entered into a non-prosecution agreement and paid a $47 million criminal penalty for "awarding employment to friends and family of Chinese officials" to win banking business. Zurich-based Credit Suisse Group AG settled with the SEC by disgorging almost $24.9 million of profits and more than $4.8 million in prejudgment interest.

Beam Suntory Inc. (July 2) paid the SEC $8.2 million to resolve Foreign Corrupt Practices Act charges for improper payments by its Indian subsidiary. Beam settled without admitting or denying the SEC's allegations. Beam Suntory Inc., a subsidiary of Suntory Holdings of Osaka, Japan, was created in 2014 when Suntory bought Beam Inc.

Sentenced

Anthony Mace (September 28), the former chief executive of Dutch oil-services firm SBM Offshore, was sentenced to 36 months in prison and fined $150,000. He had pleaded guilty in November 2017 to one count of conspiracy to violate the FCPA involving bribes to officials in Brazil, Angola and Equatorial Guinea.

Robert Zubiate (September 28), a former SBM Offshore sales executive, was sentenced to 30 months in prison and fined $50,000. He also had pleaded guilty in November 2017 to one count of conspiracy to violate the FCPA involving bribes to officials in Brazil, Angola and Equatorial Guinea.

Joo Hyun Bahn (September 6) was sentenced in federal court in Manhattan to six months in prison. The former Colliers broker pleaded guilty in January 2018 to one count of conspiracy to violate the Foreign Corrupt Practices Act and one count of violating the FCPA for trying to bribe a Middle Eastern official to finance the sale of a high-rise building complex in Vietnam. See his civil resolution with the SEC above.

Guilty Pleas

Juan Carlos Castillo Rincon (September 13), 55, of Conroe, Texas, was the former manager of a Houston-based logistics and freight forwarding company. He pleaded guilty to one count of conspiracy to violate the FCPA. Castillo admitted bribing an official at Venezuela’s state energy company, Petroleos de Venezuela S.A. or PDVSA. He's scheduled to be sentenced in Houston on February 21, 2019.

Luis Carlos De Leon-Perez (July 16), 42, a dual U.S.-Venezuela citizen, pleaded guilty in federal court in Houston to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering. De Leon was arrested in Spain in October 2017. He admitted bribing officials at PDVSA and laundering bribe money others paid to the officials.

Arrested / Indicted

Jose Manuel Gonzalez Testino (July 31), 48, a dual U.S.-Venezuelan citizen, was arrested at Miami International Airport for bribing an official at PDVSA. He was charged with conspiring to violate the Foreign Corrupt Practices Act and with substantive FCPA offenses.

Dismissal

Lawrence Hoskins, (August 24), 67, a British national and former Alstom UK executive based in Paris, won dismissal in the Second Circuit of his indictment for conspiracy to violate the Foreign Corrupt Practices Act and aiding and abetting a violation of the FCPA. The federal appeals court ruled that non-resident foreign nationals cannot be charged with those offenses unless the government can show that they acted as an agent of a “domestic concern” or while physically present in the United States. The 2013 charges against Hoskins related to allegations of bribery to win a power station project in Indonesia. He still faces money laundering charges.

Declinations wth Disgorgement

The Insurance Corporation of Barbados Limited (August 23) received a declination with disgorgement from the DOJ for FCPA offenses related to bribing a Barbadian official. Under the terms of the declination pursuant to the DOJ's Corporate Enforcement Policy, ICBL paid the DOJ about $93,900 in disgorged profits.

Guralp Systems Limited (August 20) based in Reading, UK, received a declination letter from the DOJ that said: " Based upon the information known at this time and consistent with the FCPA Corporate Enforcement Policy, the Department has closed its inquiry into GSL, notwithstanding evidence of violations of the FCPA arising from GSL's payments to" the former director of a South Korea government entity." The DOJ said the company " is the subject of an ongoing parallel investigation by the UK's Serious Fraud Office for violations of law relating to the same conduct and has committed to accepting responsibility for that conduct with the SFO."

Other Declinations

Sinovac Biotech Ltd. (September 17), a China biopharmaceutical maker, said the DOJ closed its investigation, with no charges into possible violations of the Foreign Corrupt Practices Act related to allegations that certain Sinovac employees made improper payments to Chinese government officials. The company had said in August the SEC ended its related investigation. (Company disclosure courtesy of FCPA Tracker.)

ING Groep N.V. (September 5) said the SEC closed its investigation a day after the big bank reached a $900 million settlement with Dutch authorities to resolve criminal investigations for lapses in client on-boarding and anti-money laundering practices, and corrupt practices. In an SEC filing, ING said: "As previously noted, in connection with the investigations ING also received information requests from the U.S. Securities and Exchange Commission (SEC). ING has received a formal notification from the SEC that it has concluded its investigation. In the letter the Division of Enforcement states that, based on information as of this date, it does not intend to recommend an SEC enforcement action against ING."

Ensco plc (September 4), a UK-based drill-rig operator, said it received a letter from the SEC saying the agency concluded its investigation into "alleged irregularities related to a drilling services contract . . . and does not intend to recommend any enforcement action." The company said it received a letter on August 31 from the DOJ "stating that the DOJ had closed its inquiry into the matter and acknowledging Ensco’s full cooperation in the investigation."

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Our FCPA enforcement report for Q2 2018 is here.

Our FCPA enforcement report for Q1 2018 is here.

Our prior full-year enforcement reports are here:

2017 FCPA Enforcement Index

2016 FCPA Enforcement Index

2015 FCPA Enforcement Index

2014 FCPA Enforcement Index

2013 FCPA Enforcement Index

2012 FCPA Enforcement Index

2011 FCPA Enforcement Index

2010 FCPA Enforcement Index

2009 FCPA Enforcement Index

2008 FCPA Enforcement Index

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Richard L. Cassin is the publisher and editor of the FCPA Blog.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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