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FCPA Blog Daily News

Entries in Baker Hughes (22)


Job: Chief Compliance Officer

Job Title: Chief Compliance Officer

Employer: Baker Hughes

Location: Houston, Texas USA

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Tom Fox has a tribute to Jay Martin, the CCO of Baker Hughes

Today the Houston Greater Business and Ethics Roundtable (GHBER) will hold its first Ethics and Compliance Awards Dinner in honor of the 20-year anniversary of the organization’s founding. We will award the Bette Stead Leadership Award (Stead is the founder of GHBER) to Jay Martin, Vice President, Chief Compliance Officer and Senior Deputy General Counsel at Baker Hughes Inc.

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John Zinsser: An ombuds program is a cost effective mechanism to enhance global compliance

Those posters and coffee mugs in the home office challenging employees to “Speak UP! We are ALL Ethics” don't have much impact in field offices eight or ten thousand miles away.

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Is this the world's best compliance disclosure?

Texas-based oil and gas services firm Baker Hughes once held the record for the biggest FCPA settlement of all time.

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Pfizer Joins Our Top Ten Disgorgement List

We haven't had to update our list of corporate FCPA cases with the biggest disgorgements since March 2011. But now we do, thanks to Pfizer.

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Top Ten Disgorgements (March 2012)

Since we first listed the top ten FCPA disgorgements a year ago, two new companies joined the list -- Johnson & Johnson and Magyar Telekom. They replaced GE and Baker Hughes.

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Corporate Enforcement Since 2006 

Yesterday we posted our 2011 FCPA enforcement index. Today we look at corporate enforcement for all the years from 2006.

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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 uses in most FCPA cases: disgorgement.

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In New Top Ten, Eight Are Foreign

With Panalpina, Pride, and Shell joining the top ten FCPA settlements of all time, there are now eight foreign companies on the list.

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ABB In, Titan Out

ABB joins the list of top ten FCPA settlements of all time, and Titan Corporation drops to number eleven. Here's the latest list, with a few candidates that may join soon.

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Graft Buster Enters French Politics

Eva Joly, a Norwegian-born former French magistrate, is running for the French presidency under the Green Party banner.

She became famous across Europe for being a fearless anti-corruption campaigner, even taking on former minister Bernard Tapie and Crédit Lyonnais bank.

Her best-known case involved French oil giant Elf Aquitaine. She uncovered fraud leading to criminal convictions of Elf’s top two executives and to the resignation of Roland Dumas, president of France’s Constitutional Court. She received death threats during the eight-year investigation.

She moved from Norway to France at 18. After working her way through night law school and then practicing law, in 1990 she became an investigating magistrate in Paris.

She's also worked for the Icelandic government, helping it uncover white collar crime that contributed to the country's financial collapse.

Last year, Joly, 66, was elected as a French member of the European Parliament. Now she wants to run for president of France in the 2012 elections.

She told the France24 news site: “I am going into politics because I recognise the limitations of voluntary action … I have a strong desire to improve relations between the developed and developing world. I want to change power structures within society. I am desperate to see a more just and more united society.

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Why say it? It's fashionable these days for critics -- we won't name them -- to say there's no evidence the FCPA has reduced bribery. But saying there's no evidence of crimes not committed isn't exactly, you know, conclusive of anything.

Then again, there's plenty of evidence of less bribery because of the FCPA at companies like Siemens, BAE, Daimler, KBR, ABB, Baker Hughes, Willbros, Chevron, and so on. For us, that's the evidence that counts.

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In whose interests? Great post today from Kevin LaCroix at the D&O Diary -- Do Defendant Companies Financially Underperform Following Securities Lawsuit Settlements? 


More Math For The General Counsel

Bruce Hinchey's post No Good Deed Goes Unpunished kicked up some dust around here. His effort to make sense of FCPA settlement numbers produced some exciting scholarship, which doesn't often happen.

We had meandered down that path a couple of years ago in our post Handicapping The FCPA, which looked at the amount of bribes paid compared to fines levied. That's one way to see things. But the settlements can also be viewed differently. Here's why.

The federal sentencing guidelines (chapter 8, part c) set out how fines should be calculated for organizations. There's a lot to consider. Like the size of the company, the number of employees, involvement of high-level management, prior history, whether there was voluntary disclosure, cooperation, and acceptance of responsibility, and finally the amount of gain or profit produced by the bribes (minus the amount paid through disgorgement).

Technically, then, disgorgement paid to the SEC is not part of the fine calculation under the sentencing guidelines. And removing disgorgement changes some of the ratios Bruce talked about.

In Baker Hughes' case, for example, the penalties without disgorgement were $21 million instead of $44 million. Baker's DPA at paragraph 24 of the statement of facts says: "Net revenues realized by Baker Hughes on the Karachaganak project were $189.2 million. After offsetting net revenues by the company's expenses, Baker Hughes recognized a profit of approximately $19.9 million."

The sentencing guidelines, then, would use the $19.9 million profit and not the amount of the bribes, which was $4.1 million. So the ratio for the penalty would be 1.05 -- not 10.73, as when looking just at the bribe paid. So is Baker Hughes an outlier and a harsh result as Bruce says? We're not too sure.

Schnitzer Steel is sometimes mentioned as an example of a self-reporting company not receiving any benefits. That appears to be true because it paid only $204,537 in bribes and $15.2 million in penalties. But $7.7 million was disgorgement. And, as the DOJ said in its June 2007 press release, the net profit to Schnitzer's subsidiary was $6.3 million, which would be a basis of the penalty calculation under the guidelines. (There was also a lot of management-level involvement in the bribery by Schnitzer's home-office people; as we said in an earlier post, the company "replaced the chairman of the board, hired a new CEO, and brought in a fresh team of senior management" as part of its corrective actions.)

One more thing to keep in mind. No study can account for cases where the DOJ doesn't charge a company that has voluntarily disclosed potential FCPA offenses. Those decisions aren't public but companies occasionally mention it themselves, Digi International being the latest. The ratios for them would be zero.

To be fair, Bruce didn't have the space in his post to get into a lot of detail. In his full paper, however, he talked about the sentencing guidelines and some of the issues we've mentioned above. And he'll have a chance to respond to this post soon, which we look forward to.