Tsurisawa, a former official at Mitsui & Co.'s pension fund, which had been a client of Deutsche Securities. Accordi
Global Anti-Corruption Insights Update on Recent Enforcement, Litigation, and Compliance Developments
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Table of contents EXECUTIVE SUMMARY: RECENT DEVELOPMENTS AND TRENDS_________________________________________ 3 KEY US ENFORCEMENT AND INVESTIGATIVE DEVELOPMENTS______________________________________ 7 Notable Corporate FCPA Enforcement Actions Resolved by the Justice Department and/or SEC____________ 7 Justice Department and SEC Enforcement Actions against Individuals for Violations of the FCPA___________________ 12
Top US Enforcement Officials Comment on FCPA__________ 17
DOJ Releases Opinion on Lawyer’s Payment of Medical Expenses for a Foreign Official’s Daughter________________ 18
Update on Industry-Wide Investigations__________________ 18
Rounding Out the Enforcement Docket___________________ 19
Court Vacates SEC Rule Requiring Oil Companies to Disclose Foreign Payments____________________________________ 22
FCPA-Related Civil Litigation__________________________ 23
US House of Representatives Establishes a Task Force to Review Over-Criminalization__________________________ 24 GLOBAL ANTI-CORRUPTION UPDATE_________________ 25
Developments in the United Kingdom____________________ 26
Canada Takes Steps to Increase Anti-Corruption Enforcement__ 29
Japan Launches Investigation of Deutsche Securities Inc.____ 31
BRIC Countries Enhance Anti-Corruption Efforts__________ 31
G20 Leaders Adopt New Anti-Bribery Principles___________ 32 Transparency International Releases Its 2013 Corruption Perceptions Index and Its Annual Progress Report__________ 33 CONCLUSION_________________________________________ 34
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EXECUTIVE SUMMARY: RECENT DEVELOPMENTS AND TRENDS Following a first quarter in which neither the United States Department of Justice (DOJ or Justice Department) nor the Securities and Exchange Commission (SEC or Commission) brought a Foreign Corrupt Practices Act (FCPA) enforcement action, in 2013 the DOJ and the SEC combined to bring enforcement actions against nine companies (and certain of their subsidiaries), collecting US$720 million in criminal fines, civil monetary penalties, and disgorgement—including approximately US$300 million from five companies in the second half of 2013, after the publication of our summer newsletter. These enforcement actions and other anti-corruption developments in the US, the UK, and around the rest of the world highlighted ten significant trends:
DOJ And SEC Obtain US$720 Million in FCPA-Related Sanctions in 2013 The US$720 million in criminal fines, civil monetary penalties, and disgorgement obtained by the Justice Department and the Commission through FCPA enforcement actions amounts to almost three times the US$260 million obtained in 2012 and is the third highest yearly total ever, trailing only 2010 and 2008. 2000
1804.2
1800
25
1600
1200
901.5
1000
15
0
3
10
600
200
5
720.6
657
645.8
800
400
5
20
1400
260.6
5
141
2007
2008
2009
2010
2011
2012
2
2013
0
5
14 8
5
6 1 2009
4 2010 DOJ Only
4
2
3
2
2011
2012
2013
DOJ + SEC
SEC Only
Two actions resolved in 2013 resulted in sanctions that ranked among the top 10 in the history of FCPA enforcement: Total S.A.’s US$398 million settlement now ranks fourth all time and Weatherford International’s US$152.6 million now ranks tenth all time. At the other end of the range, Ralph Lauren Corp. resolved DOJ and SEC enforcement actions through non-prosecution agreements (NPAs) for a combined US$1.6 million in sanctions. In terms of the year ahead, 2014 opened with a third top 10 FCPA settlement—Alcoa’s US$384 million settlement now ranks fifth all time. Furthermore, senior DOJ and SEC officials have stated publicly that a number of FCPA enforcement actions are working their way through the enforcement “pipeline,” which may result in 2014 being another significant year for FCPA enforcement.
Cooperation Continues to Yield Reduced Sanctions As in past years, voluntary disclosure of FCPA violations, cooperation with government investigations, and remediation reportedly resulted in NPAs or deferred prosecution agreements (DPAs) and credit in determining fines and penalties. For example, the DOJ accepted criminal fines discounted by approximately 30% from the bottom of the United States Sentencing Guidelines range from three cooperating companies, and it agreed to fines at or close to the bottom of the Sentencing Guidelines for three other cooperating companies, though what, exactly, differentiates these companies and the outcomes they received is not entirely clear.
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Furthermore, Ralph Lauren’s cooperation with the authorities led to the first ever SEC NPA in an FCPA matter. As discussed in our Summer 2013 newsletter, Ralph Lauren’s cooperation included (1) an amended anticorruption policy and translation of the policy into eight languages, (2) enhanced due diligence procedures for third parties, (3) an enhanced commissions policy, (4) an amended gift policy, and (5) in-person anti-corruption training for certain employees. By contrast, the SEC penalized Weatherford International US$1.875 million for its lack of cooperation early in the SEC’s investigation. The underlying misconduct cited in support of the penalty included informing the SEC staff that an employee was missing or dead when he remained employed by Weatherford, allowing employees to delete emails prior to the imaging of their computers, and permitting potentially complicit employees to collect documents subpoenaed by the SEC staff.
Hybrid Monitoring Emerges as a Condition of Settlement In the second half of 2013, the DOJ required compliance monitors in three of the last four FCPA enforcement actions that it resolved. In each case—Diebold, Inc.; Weatherford International; and Bilfinger SE—the DOJ acknowledged the company’s cooperation and agreed to a hybrid arrangement—an independent compliance monitor for half the term of the companies’ DPAs, followed by self-reporting for the other half. The DOJ also imposed hybrid monitoring in two of the three enforcement actions resolved in 2012 that included monitoring requirements. In other enforcement actions concluded in 2013, Total agreed to retain a compliance monitor for the full term of its threeyear DPA. The DOJ did not require compliance monitors in the other three enforcement actions (Parker Drilling Co., Ralph Lauren Corp., and Archer Daniels Midland), noting the voluntary remediation undertaken by the companies involved. The emergence of hybrid monitors, as well as cases in which independent monitoring was not required at all, reflects the DOJ’s credit for companies’ efforts to enhance their compliance programs as part of their remediation.
The DOJ Continues Its Pursuit of Individuals In addition to pursuing enforcement actions against companies, the DOJ continued its efforts to hold individuals accountable for violations of the FCPA. The DOJ charged 14 individuals for FCPA and related violations in 2013, obtaining guilty pleas from eight to date. Charges against the other six defendants are pending, with two cases—one alleging substantive FCPA violations and money laundering against a former executive of Alstom, S.A. (which has not been the subject of an FCPA enforcement action) and one alleging obstruction of a grand jury investigation engaged in by a French national— scheduled for trial in 2014. These prosecutions demonstrate the DOJ’s willingness to pursue, among others, individuals whose companies are not the subject of enforcement action, foreign citizens, and foreign government officials to whom the FCPA does not apply but who have been targeted for FCPA-related violations, including money laundering.
Certain Industries Remain a Focus of Enforcement Efforts While the enforcement actions brought by the DOJ and the SEC in 2013 reached companies in diverse lines of business, specific industries remain well represented in year-end tallies. Energy companies Parker Drilling, Total, and Weatherford International and medical device company Stryker joined other members of their industries that have been the subject of FCPA enforcement. Given the success the DOJ and the SEC have had in targeting specific industries, this industryspecific focus is unlikely to wane any time soon. Indeed, investigations into a number of pharmaceutical companies and into financial institutions reportedly remain ongoing.
China Remains a Focus of Enforcement Efforts The world’s second largest economy continues to be both a source of great opportunity and great risk, with several companies being sanctioned for their conduct in China in 2013. The DOJ’s and SEC’s parallel enforcement action against Diebold, and the DOJ’s prosecution of former Maxwell Technologies and former Alstom employees, all involve conduct that occurred in China. Moreover, the industry-wide investigations into pharmaceutical companies and financial institutions noted previously all reportedly involve particular business practices prevalent in China. With Global Anti-Corruption Insights | 4
foreign investment in China growing rapidly year after year, and with China itself beginning to take a greater role in investigating and prosecuting bribery by foreign corporations, this trend is expected to continue.
US Authorities Team with Foreign Enforcement Officials to Conduct Multijurisdictional Investigations Consistent with public pronouncements by senior Justice Department and Commission officials, the DOJ and the SEC continue to work with their counterparts abroad to investigate potential violations of the FCPA. The DOJ, for example, received assistance from British, French, and German authorities in connection with its investigations of Parker Drilling, Total, and Archer Daniels Midland, respectively. This trend continued in early 2014, as the DOJ acknowledged the cooperation of Swiss, Guernsey, Australian, and British authorities in the DOJ’s investigation of Alcoa.
The SEC Plans to Bring More Enforcement Actions in Administrative Proceedings At a conference held in November, Kara Brockmeyer, Chief of the SEC Division of Enforcement’s FCPA Unit, stated that the SEC plans to bring more of their FCPA enforcement actions in SEC administrative proceedings, rather than in federal court. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) expanded the SEC’s ability to obtain civil monetary penalties in SEC administrative proceedings, including in actions taken to enforce the FCPA, and unlike actions filed in federal court, the settlements of SEC administrative proceedings do not require judicial approval. While the SEC plans to use administrative proceedings more frequently in the future, to date no clear trend has emerged. Of the corporate enforcement actions taken by the SEC in 2013 that involved charges being filed (excluding the SEC’s NPA with Ralph Lauren), four—Parker Drilling, Diebold, Weatherford, and Archer Daniels Midland—were brought in federal court, the latter two in December. This compares to three actions—Philips Electronics, Total, and Stryker —brought in SEC administrative proceedings. In 2012, only one of eight corporate SEC enforcement actions was brought administratively; in 2011, four of thirteen corporate SEC enforcement actions were brought administratively.
UK’s Serious Fraud Office Brings First Bribery Act Prosecution In the United Kingdom, the Serious Fraud Office (SFO) brought its first bribery case under the Bribery Act and another case under its predecessor, the Prevention of Corruption Act. Senior SFO officials continued to emphasize in public statements the agency’s commitment to prosecuting bribery. 2013 ended with a disappointing development for the SFO, however, when it was forced to dismiss its prosecution of Victor Dahdaleh, an alleged middleman who funneled bribes in Bahrain, because it was unable to present witnesses to prove its charges.
Anti-Corruption Enforcement Efforts Continue around the World One of the most significant developments in recent years may well be the evolution of anti-corruption efforts by countries other than the US and UK. While still in their nascent stages, these efforts indicate a growing seriousness by countries to hold companies and individuals accountable for corruption and bribery. Germany and Switzerland, for example, have both become key players and are likely to remain so. Of particular note, new anti-corruption efforts are being undertaken by emerging market countries that are considered especially prone to corruption. The BRIC countries—Brazil, Russia, India, and China—have all recently enacted more stringent anti-corruption laws and have begun taking tentative steps to enforce them. Xi Jinping, the president of China, for example, vowed at the beginning of 2013 to crack down on what he termed “tigers” and “flies”—the most and least powerful—in a nationwide anti-corruption drive. It remains to be seen just how vigorously these countries actually investigate and prosecute corruption. We analyze these trends, focusing on developments from the second half of 2013, and more in this edition of Arnold & Porter’s Global Anti-Corruption Insights.
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KEY ENFORCEMENT AND INVESTIGATIVE DEVELOPMENTS
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KEY ENFORCEMENT AND INVESTIGATIVE DEVELOPMENTS Notable Corporate FCPA Enforcement Actions Resolved by the Justice Department and/or SEC
information for the DOJ; and remedial efforts undertaken by Alcoa, including hiring new legal and ethics compliance officers and implementing enhanced due diligence reviews of third-party consultants.3 The total settlement amount of US$384 million is the fifth largest FCPA settlement of all time. US authorities have been investigating Alcoa’s business dealings with Aluminum Bahrain B.S.C. (Alba), a statecontrolled aluminum smelting company, since at least 2008. The investigation came on the heels of a private lawsuit that Alba filed against Alcoa in Pennsylvania federal court seeking US$1 billion in damages from Alba’s overpayment for raw materials as a result of Alcoa’s alleged bribery—which, Alba asserted, violated the Racketeer Influenced and Corrupt Organizations Act (RICO). In October 2012, after four years of litigation, Alcoa paid US$85 million to settle this suit.4
On January 8, 2014, Alcoa World Alumina LLC (Alcoa World), which is controlled by US-based aluminum producer Alcoa, Inc. (Alcoa), pled guilty in a Pennsylvania federal court to violating the FCPA’s anti-bribery provision. Alcoa World agreed to pay the DOJ US$209 million in criminal fines and to forfeit US$14 million to resolve charges that it paid millions of dollars in illicit payments to officials in the Kingdom of Bahrain through a middleman in London.1 Alcoa agreed to pay the SEC an additional US$161 million in disgorgement—US$175 million less the US$14 million forfeiture to the DOJ—to resolve civil violations of the FCPA’s anti-bribery, books and records, and internal controls provisions.2
According to the DOJ and the SEC, Alcoa subsidiaries agreed to use a London-based middleman with “close ties” to certain members of Bahrain’s royal family in order to obtain long-term alumina supply agreements with Alba. Through this middleman, his shell companies, and his offshore bank accounts, the subsidiaries funneled kickbacks to government officials with influence over Alba’s contracting decisions. As part of its guilty plea, Alcoa World admitted to securing long-term supply agreements by causing Alcoa’s Australian subsidiary to enter into a sham distributorship with various shell companies owned by the middleman, who, from 2005 to 2009, marked up the price of alumina by approximately US$188 million. In its court filings, the DOJ alleged that the middleman used this money to make tens of millions of dollars in illicit payments. In its administrative ceaseand-desist order, the SEC made findings that Alcoa failed to conduct due diligence to determine whether there was a legitimate business purpose for using the middleman.5
Alcoa World’s criminal fine is less than half of the bottom of the fine range calculated under the Sentencing Guidelines (US$446 million). The DOJ agreed that this reduced fine was appropriate in light of such factors as the financial condition of Alcoa; the remedies imposed on Alcoa by the SEC; Alcoa’s substantial cooperation with the DOJ, including making employees available for interviews and collecting, analyzing, and organizing
Although neither the DOJ nor the SEC named the middleman, he is reported to be billionaire Victor Dahdaleh, whom British authorities charged with paying bribes to former Alba managers in connection with supply agreements.6 As we discuss in Section III.A.1 below, the SFO’s prosecution of Dahdaleh ended in dismissal in December 2013 after one witness changed his testimony and two other witnesses declined to appear.
Alcoa Resolves Charges of Criminal and Civil FCPA Violations
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The DOJ acknowledged the assistance of foreign enforcement authorities including the SFO, the Office of the Attorney General of Switzerland, the Guernsey Financial Intelligence Service, and the Australian Federal Police.7 The SEC also acknowledged the assistance of the Office of the Attorney General of Switzerland and the Australian Federal Police, as well as the assistance of foreign authorities including the Ontario Securities Commission, the Guernsey Financial Services Commission, and the United Kingdom Financial Control Authority.8
subsidiaries in their books and records as insurance premiums and other business expenses.14 The SEC’s Complaint alleges that the subsidiaries’ misconduct went unchecked by ADM for several years because of its “insufficient” system of FCPA oversight.15 According to the DOJ, “concerns were expressed to ADM executives, including an email calling into question potentially illegal ‘donations’ by ACTI Ukraine and ACTI Hamburg to recover the VAT refunds, yet [ADM] nonetheless failed to implement sufficient anti-bribery compliance policies and procedures.”16
Archer Daniels Midland Pays More than US$54 Million to Resolve Parallel DOJ and SEC Enforcement Actions
To settle the DOJ’s charges, ACTI Ukraine pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA and agreed to pay a US$17.8 million criminal fine.17 The criminal fine amount reflects an approximately 30% reduction from the bottom of the fine range calculated under the Sentencing Guidelines as well as a US$1.3 million deduction commensurate with the fine imposed by German authorities on ACTI Hamburg, in recognition of ACTI Ukraine’s “timely, voluntary, and thorough disclosure of the conduct,” its cooperation with the DOJ, and its “early, extensive, and unsolicited remedial efforts.”18
On December 20, 2013, the DOJ and the SEC announced the resolution of parallel enforcement actions against Archer Daniels Midland Company (ADM), a global food processor based in Decatur, Illinois, and a subsidiary involving allegations of FCPA violations.9 The DOJ and the SEC alleged in actions filed in the US District Court for the Central District of Illinois that ADM subsidiaries paid roughly US$22 million to two vendors to pass on bribes to Ukrainian government officials between 2002 and 2008 as part of a scheme to obtain over US$100 million in value-added tax (VAT) refunds, and that ADM failed to implement policies and procedures sufficient to prevent these bribes. According to the SEC’s Complaint, Ukraine imposed a 20 percent VAT on goods purchased in country, but exporters could apply for a refund of the VAT already paid on exported goods.10 At times, however, the Ukrainian government delayed paying VAT refunds it owed or did not make any refund payments at all.11 The SEC alleged that in order to receive VAT refunds, between 2002 and 2008, two subsidiaries of ADM, Alfred C. Toepfer International Ukraine Limited (ACTI Ukraine) and Alfred C. Toepfer, International G.m.b.H. (ACTI Hamburg), “made improper payments, which were generally 18-20% of the corresponding VAT refunds, to two third-party vendors so that they could pass on nearly all of the money to Ukrainian government officials … .”12 In total, the two subsidiaries paid approximately US$22 million to obtain over US$100 million in VAT refunds, resulting in a benefit to the subsidiaries of approximately US$33 million.13 These payments were recorded by the
ADM entered into an NPA with the DOJ “in connection with the company’s failure to implement an adequate system of internal financial controls to address the making of improper payments both in Ukraine and by an ADM joint venture in Venezuela.”19 In its press release, the DOJ acknowledges ADM’s voluntary disclosure of the conduct at issue and its extensive cooperation with the DOJ, “including conducting a world-wide risk assessment and corresponding global internal investigation, making numerous presentations to the department on the status and findings of the internal investigation, voluntarily making current and former employees available for interviews, and compiling relevant documents by category for the department; and ADM’s early and extensive remedial efforts.”20 To settle the SEC’s charges, ADM consented to the entry of a final judgment ordering the company to pay disgorgement of approximately US$33.3 million plus prejudgment interest of US$3.1 million.21 The final judgment, which is subject to court approval, also requires ADM to report on its FCPA compliance efforts for a threeyear period. Like the DOJ, the SEC took into account
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ADM’s cooperation and significant remedial measures, “including self-reporting the matter, implementing a comprehensive new compliance program throughout its operations, and terminating employees involved in the misconduct.”22 The DOJ’s Press Release acknowledged the cooperation and assistance of German law enforcement authorities, who reached a separate resolution with ACTI Hamburg regarding its role in the scheme.23
Bilfinger Resolves Criminal FCPA Enforcement Action by Paying US$32 Million Fine On December 9 and 11, 2013, the FBI and the DOJ announced the resolution of their investigation into Bilfinger SE (Bilfinger), an international engineering firm based in Mannheim, Germany, through a three-year DPA.24 Bilfinger agreed to pay a US$32 million penalty to resolve charges that it violated the FCPA by bribing government officials in Nigeria to obtain and retain contracts related to the Eastern Gas Gathering System (EGGS) project, which was valued at approximately US$387 million.25 According to the three-count criminal information filed by the DOJ in the US District Court for the Southern District of Texas, from late 2003 through June 2005, Bilfinger conspired with Willbros Group Inc. (Willbros) and others to pay more than US$6 million in bribes to Nigerian government officials to obtain and retain contracts related to the EGGS project.26 The
government alleged that Bilfinger and Willbros formed a joint venture consortium and agreed to inflate the price of their bid on the EGGS project by three percent to cover the cost of paying bribes to Nigerian officials.27 The conspirators referred to the bribes paid to Nigerian officials as “landscaping” payments or “commitments,” and Bilfinger employees used money that was mailed or flown from Germany to Nigeria to pay the bribes.28 “When Willbros employees encountered difficulty
obtaining enough money to make their share of promised bribe payments, Bilfinger loaned Willbros US$1 million” to pay some of the promised bribes.29 Bilfinger’s US$32 million fine falls within the US$28 US$56 million fine range calculated under the Sentencing Guidelines and takes into account the company’s cooperation and remediation. Under the terms of the DPA, Bilfinger also agreed to continue cooperating fully with the Justice Department, continue to implement a compliance and ethics program, implement rigorous internal controls, and retain an independent compliance monitor for at least 18 months.30 The Bilfinger enforcement action is the latest in a series of actions the DOJ has filed in connection with the EGGS project. In May 2008, Willbros and its subsidiary Willbros International Inc. entered into a DPA related to the EGGS Project (as well as a separate issue in Ecuador) that required them to pay a US$22 million criminal penalty.31 The terms of the Willbros DPA were satisfied in 2012.
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In addition, three former Willbros executives and a former Willbros consultant were charged for their participation in the conspiracy: In September 2006, former Willbros executive Jim Bob Brown pleaded guilty to one count of conspiracy to violate the FCPA in connection with the EGGS project.32 He was sentenced on January 28, 2010, to one year and one day in prison, two years of supervised release, and a US$17,500 fine.33 In November 2007, former Willbros executive Jason Steph pleaded guilty to one count of conspiracy to violate the FCPA in connection with the EGGS project.34 He was sentenced on January 28, 2010, to 15 months in prison, two years of supervised release, and a US$2,000 fine.35 In January 2008, former Willbros executive Kenneth Tillery and Willbros consultant Paul Novak were charged with conspiring to violate the FCPA antibribery provisions, violating the FCPA anti-bribery provisions, and conspiring to launder the payments used to violate the FCPA’s anti-bribery provisions, in connection with the EGGS project.36 Novak pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA and was sentenced to serve 15 months in prison, two years of supervised release, and a US$1 million fine.37 Tillery remains a fugitive.38 It remains to be seen whether the DOJ (or the SEC) will pursue charges against individual Bilfinger employees.
Weatherford International Pays Over US$150 Million to Resolve Parallel DOJ and SEC Enforcement Actions On November 26, 2013, Weatherford International (Weatherford), a Swiss-based oilfield services company with significant operations in Houston, Texas, and its subsidiaries resolved parallel enforcement actions brought by the DOJ and the SEC based on allegations that the company failed to implement an effective system of controls to prevent officials at Weatherford subsidiaries from providing “bribes and improper travel and entertainment for foreign officials in the Middle East and Africa to win business, including kickbacks in Iraq to obtain United Nations Oil-forFood contracts.”39
The DOJ alleged that Weatherford “knowingly failed to establish effective corruption-related internal accounting controls designed to detect and prevent corruption-related violations, including FCPA violations.”40 For example, due to Weatherford’s failure to implement effective internal controls, subsidiary Weatherford Services Limited (Weatherford Services) allegedly retained a freightforwarding and logistics services company in 2006 to pay bribes to an official in Africa to approve the renewal of an oil services contract with a non-governmental entity, and it set up a joint venture with two local entities controlled by foreign officials and their relatives for the “sole purpose” of “funnel[ing] hundreds of thousands of dollars to the foreign officials.”41 Further, from 2005 through 2011, employees of the Weatherford Oil Tools Middle East Limited subsidiary gave improper “volume discounts” to a distributor, believing the distributor was creating a more than US$11.8 million “slush fund” for bribe payments.42 Weatherford allegedly realized over US$50 million in profits from business obtained through the use of illicit payments in Africa and the Middle East.43 To settle the FCPA charges, Weatherford Services pleaded guilty to violating the anti-bribery provisions of the FCPA.44 In addition, Weatherford agreed to pay US$152.8 million to the US government—(1) US$87.2 million in criminal fines to the DOJ pursuant to a DPA involving one count of violating the accounting provisions of the FCPA, which is the bottom of the fine range calculated under the Sentencing Guidelines and (2) US$65.6 million in disgorgement, prejudgment interest, and civil penalties to the SEC, which includes “a $1.875 million penalty assessed in part for lack of cooperation early in the investigation.”45 Weatherford’s combined monetary settlement ranks as the ninth highest in the history of FCPA enforcement. As part of the settlement, Weatherford also agreed to cease and desist from violating the anti-bribery and accounting provisions of the FCPA, to retain an independent corporate compliance monitor for a period of 18 months, and to selfreport to the SEC for an additional 18 months. At the same time the DOJ resolved the FCPA charges, Weatherford also resolved an investigation conducted by the DOJ, the Department of Commerce’s Bureau of Industry and Security, and the Department of Treasury’s Office of Foreign Assets Control. Pursuant to that settlement, Weatherford and four of its subsidiaries also agreed to pay a combined US$100 million to Global Anti-Corruption Insights | 10
resolve potential criminal and administrative export controls charges concerning potential violations of the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemy Act (TWEA).46
Stryker Corporation Settles SEC Charges with US $13.2 Million Penalty The SEC announced on October 24, 2013, the resolution of its investigation into Stryker Corporation (Stryker), a Michigan-based medical technology company, through an order instituting settled administrative proceedings. Without admitting or denying the findings in the SEC’s Order, Stryker agreed to pay more than US$13.2 million in disgorgement, prejudgment interest, and penalties.47 According to the SEC, from approximately August 2003 to February 2008, employees of Stryker’s subsidiaries made hundreds of improper payments totaling approximately US$2.2 million to various government officials in Mexico, Poland, Romania, Argentina, and Greece in order to win or keep the right to sell medical products to public hospitals.48 Stryker reportedly earned approximately US$7.5 million in illicit profits as a result of these payments.49 For example, the SEC found that in 2006, Stryker’s Mexican subsidiary directed a law firm to pay approximately US$46,000 to a Mexican government employee in order to secure the winning bid on a contract that resulted in US$1.1 million in profits for Stryker.50 Similarly, the SEC found that in 2007, Stryker’s subsidiary in Greece made a purported “donation” of approximately US$200,000 to a public university to fund a laboratory and, in exchange for the payment, a public hospital doctor agreed to provide business to Stryker.51 The SEC also found that Stryker’s subsidiaries bribed a foreign official by paying for trips that lacked any legitimate business purpose. Specifically, the SEC found that in May 2004, Stryker paid travel costs totaling approximately US$7,000, including a six-night stay at a New York City hotel, two Broadway shows, and a five-day trip to Aruba, for the director of a public hospital in Poland and her husband. In exchange for payment of these travel expenses, the director promised Stryker future business.52 The SEC also found that between 2005 and 2008, Stryker’s Argentine subsidiary made 392 “honoraria” payments totaling close to US$1 million to “physicians employed in the public healthcare system in order to obtain or retain
business with affiliated public hospitals.” Unlike traditional honorarium payments made for a service such as making a speech, the SEC alleged that “these honoraria were commissions that were calculated as a percentage (typically 20 to 25 percent) of a total sale to a particular hospital and then paid to the doctor associated with the sale.”53 In its Order, the SEC noted Stryker’s cooperative response to the investigation and the remedial measures Stryker implemented, which included (1) retaining outside counsel to conduct an internal investigation; (2) implementing a company-wide anti-corruption compliance program; and (3) engaging a third-party consultant to perform FCPA compliance assessments and compile written reports for Stryker’s operations across the world at least annually.54 The SEC’s Order noted that Stryker “has demonstrated a commitment to designing and funding a meaningful compliance program in order to prevent and detect violations of the FCPA and other applicable anti-bribery laws.”55 Stryker first disclosed in 2007 that the SEC and the DOJ had made inquiries regarding possible FCPA violations.56 Stryker’s director of communications has said that the DOJ has advised the company that the Department’s investigation is closed.57
Diebold Agrees to Pay US$48 Million to Resolve Parallel DOJ and SEC Enforcement Actions On October 22, 2013, the DOJ and the SEC announced that Diebold, Inc. (Diebold) had resolved charges of FCPA offenses based upon the conduct of Diebold’s subsidiaries in China, Indonesia, and Russia.58 The resolution consists of (a) a three-year DPA with the DOJ based upon allegations of violations of the FCPA’s books and records provisions and conspiracy to violate the FCPA’s anti-bribery and books and records provisions, and (b) entry of a permanent injunction against future violations of the FCPA’s anti-bribery, books and records, and internal controls provisions. Diebold also agreed to retain an independent compliance monitor for at least 18 months, and to pay a US$25.2 million penalty to the DOJ and US$22.97 million in disgorgement and pre-judgment interest to the SEC. The DPA acknowledges Diebold’s voluntary disclosure of the matter, “extensive internal investigation,” commitment to enhancing its compliance program and internal controls, Global Anti-Corruption Insights | 11
and agreement to continue to cooperate with the DOJ in any ongoing investigation of company officers and employees.59 In this regard, the US$25.2 million fine reflects a 30% discount from the bottom of the fine range calculated under the Sentencing Guidelines.60 On the other hand, the DPA also states that, with respect to the need for an independent monitor, “in light of the specific facts and circumstances of this case and the Company’s recent history, including a previous accounting fraud enforcement action by the Securities and Exchange Commission, the Department believes that the Company’s remediation is not sufficient to address and reduce the risk of recurrence of the Company’s misconduct and warrants the retention of an independent corporate monitor.”61 The Ohio-based provider of ATMs and bank security systems was charged with making approximately US$3 million in payments in China, Indonesia, and Russia from 2005 to 2010 to win contracts with government-owned and government-controlled banks in China and Indonesia and private banks in Russia. In China, for example, Diebold provided bank officials with lavish overseas vacations, including trips to Europe, the Grand Canyon, Las Vegas, Napa Valley, Disneyland, and “other popular tourist destinations.”62 In Russia, the recipients of the bribes were not government officials but were employed at privately owned banks, and the bribes, paid through a distributor, were for contracts for the sale of ATMs to those private banks.63 In conjunction with this conduct, Diebold was charged with violating the FCPA’s accounting provisions by falsely recording the contracts with the distributor as legitimate business expenses when, in fact, they were used to funnel the bribes to the private banks.64 The use of the FCPA’s accounting provisions to punish Diebold’s commercial, as opposed to public, bribery comports with recent guidance from the US enforcement agencies. The DOJ’s and SEC’s jointly issued Resource Guide, for example, warns that “commercial[] bribery may still violate the FCPA’s accounting provisions, the Travel Act, anti-money laundering laws, and other federal or foreign laws” and that “[a]ny type of corrupt payment thus carries a risk of prosecution.”65 More recently, SEC FCPA Unit Chief Kara Brockmeyer, speaking to the American Conference Institute’s 30th International Conference on the FCPA on November 19, 2013, confirmed that the SEC
would use the FCPA’s accounting provisions to pursue charges against companies for commercial bribery.66
Justice Department and SEC Enforcement Actions against Individuals for Violations of the FCPA
Two Former Oil Executives Charged; Former General Counsel Pleads Guilty in Bribery Scheme Two former chief executive officers of PetroTiger Ltd.—a British Virgin Islands oil-and-gas company with offices in New Jersey—have been charged for their alleged roles in a scheme to bribe Colombian government officials in exchange for a lucrative oil services contract. Former CEO Knut Hammarskjold was arrested on November 20, 2013, at Newark Liberty International Airport, and former CEO Joseph Sigelman was arrested on January 3, 2014 in the Philippines, then brought before a US Magistrate Judge in Guam. Furthermore, PetroTiger’s former general counsel, Gregory Weisman, pled guilty on November 8, 2013 to a criminal information charging one count of conspiracy to violate the FCPA and to commit wire fraud in connection with the bribery scheme.67 According to the DOJ, the defendants attempted to make payments to the bank account of a Colombian government official’s wife for consulting services she did not provide. When this attempt failed because of incorrect account information, the defendants allegedly transferred approximately US$333,500 from PetroTiger’s US bank Global Anti-Corruption Insights | 12
account directly to the foreign official’s bank account in Colombia. The payments purportedly were for the official’s assistance in securing approval from Ecopetral SA, Colombia’s state oil company, for a roughly US$39.6 million oil services contract with PetroTiger.68 The DOJ also has accused the defendants of attempting to defraud PetroTiger board members who were helping fund an acquisition that the defendants negotiated on behalf of PetroTiger. In exchange for kickbacks, the defendants agreed to PetroTiger paying a higher purchase price. The kickbacks allegedly were diverted to Sigelman’s bank account in the Philippines and concealed through a side letter purporting to justify the payments. As a result of these allegations, Sigelman and Hammarskjold now face charges for conspiracy to commit wire fraud and to launder money, in addition to FCPA-related charges.69 In announcing these charges, the DOJ noted that it received significant assistance from Colombian law enforcement officials.70 It also thanked the Republic of the Philippines, including the Bureau of Immigration, for its assistance.
Former Maxwell Technologies Executive Indicted Alain Riedo, a citizen of Switzerland, was indicted on October 15, 2013 in the United States District Court for the Southern District of California on charges of conspiracy to violate the FCPA and substantive violations of the FCPA’s anti-bribery, books and records, and internal controls provisions.71 Riedo is a former General Manager and Senior Vice President of Maxwell Technologies S.A., a wholly owned subsidiary of Switzerland-based Maxwell Technologies, and his indictment is based on the same conduct in China that resulted in Maxwell’s January 2011 parallel DOJ and SEC FCPA enforcement actions.72 According to the indictment, Riedo conspired with others to make corrupt payments to Chinese government officials “in order to obtain and retain business, prestige and increased compensation,” and to secure the officials’ assistance in obtaining contracts for the sale of Maxwell Technologies’ high voltage capacitor products to stateowned manufacturers of electrical-utility infrastructure.73 Riedo and a co-conspirator engaged an agent to sell Maxwell’s products to Chinese consumers, including state-owned entities. That agent “would and did ensure that the quotes [obtained from Maxwell Technologies S.A.]
contained a secret mark-up of approximately 20 percent, resulting in a higher total price to the Chinese customers for Maxwell S.A.’s equipment,” which the agent then corruptly paid to employees at state-owned enterprises.74 Riedo and another individual caused Maxwell S.A.’s books and records to “falsely record the ‘extra amount’ bribe payments as commissions, sales expenses, or consulting fees.”75 Riedo is currently a fugitive and a warrant for his arrest has been issued.
Four Individuals Enter Guilty Pleas in Broker-Dealer Scheme Federal authorities have secured convictions against four individuals affiliated with Direct Access Partners LLC (DAP), a now-defunct broker-dealer that was headquartered in New York, for their roles in a scheme to bribe officials at two state-owned banks in Venezuela. On August 30, 2013, the DOJ announced that Tomas Alberto Clarke Bethancourt (known as Tomas Clarke), Jose Alejandro Hurtado, and Ernesto Lujan—former DAP executives based in Miami—had each pled guilty to charges of conspiracy, money laundering, violating the Travel Act, and violating the FCPA. These three defendants admitted to paying over US$5 million in bribes to officials at Venezuelan state-owned banks in order to steer bond trading business to DAP. They concealed their scheme by using intermediary corporations and offshore accounts in Switzerland. Clarke and Lujan have been granted bail on the condition that each post a US$1.5 million bond pending sentencing in February 2014. Clarke and Lujan are scheduled to be sentenced in February 2014, and Hurtado is scheduled to be sentenced in October 2014.76 In addition, on November 18, 2003, Maria de Los Angeles Gonzalez De Hernandez (Gonzalez), a former official at Venezuela’s state development bank, pled guilty to conspiracy, money laundering, and Travel Act charges for directing over US$60 million in business to DAP in exchange for illicit payments.77 Gonzalez is scheduled to be sentenced on August 15, 2014.78 She is reportedly cooperating with authorities. As reported in our Summer 2013 newsletter, the SEC has brought non-FCPA fraud charges against Clarke and Hurtado, as well as against Haydee Leticia Pabon, Hurtado’s wife, and Iuri Rodolfo Bethancourt, an apparent relative of Clarke.79 The DOJ also has filed a
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civil action seeking the forfeiture of assets held in bank accounts associated with the scheme and the forfeiture of properties in the Miami area that were purchased using proceeds generated from the scheme. The federal investigation of DAP reportedly began with a periodic examination of the broker-dealer by the SEC.80
Justice Department Prosecution of Four Current or Former Alstom Employees Continues As we previously reported in our Summer 2013 newsletter, on April 16, 2013, the DOJ announced the unsealing of FCPA charges filed in Connecticut federal court against Frederic Pierucci and David Rothschild, a current and a former executive of the Connecticut-based US subsidiary of Alstom, S.A. (Alstom), a French transportation infrastructure and power generation company.81 Pierucci and Rothschild pled guilty.82 The DOJ brought additional charges against two more former Alstom executives, William Pomponi on April 30, 2013 and Lawrence Hoskins on July 30, 2013, respectively.83 The DOJ has charged that Pomponi and Hoskins, along with Pierucci and Rothschild, participated in the payment of bribes to Indonesian officials—including a member of the Indonesian Parliament and high-ranking officials of the Perusahaan Listrik Negara, a state-owned and -controlled electricity company—for assistance in securing a US$118 million contract known as the “Tarahan Project” to provide power-related services in Indonesia.84 The defendants allegedly attempted to conceal the bribes by funneling payments through two consultants. On October 8, 2013, Pomponi filed various discovery motions asking the government to disclose, among other items, any evidence bearing on knowledge, intent, absence of mistake, and modus operandi under Rule 404(b) of the Federal Rules of Evidence.85 In response, the government indicated that it might introduce evidence relating to corrupt payments made in China and India during the course of the trial.86 Examples of this evidence include (1) expense reports allegedly demonstrating large entertainment costs in connection with Indian and Chinese officials and (2) emails allegedly demonstrating that improper payments were made to Indian officials and executives from Sinopec Ltd., the state-run Chinese energy company.87 On November 8, 2013, Pomponi also
moved to postpone the trial until September 2014, citing the amount of documents that it needs to review prior to trial—at least 1,013,033 documents and 50 hours of recordings—as the reason for the requested continuance.88 By order dated November 21, 2013, United States District Judge Janet Bond Arterton granted Pomponi’s motion for disclosure of Rule 404(b) evidence and scheduled the commencement of trial for June 16, 2014.89 Alstom has been the subject of multiple allegations of bribery. Investigations either have been closed or are still ongoing in Switzerland and the United Kingdom,90 and more recently, in August 2013, a Brazilian newspaper reported that Alstom’s French subsidiary had “paid millions of dollars in bribes to secure lucrative contracts in Sao Paulo state in 1998” and that “Alstom executives were among 10 people facing charges.”91 This report comes approximately five years after Brazilian federal prosecutors, as well as French and Swiss authorities, investigated Alstom for allegedly paying bribes to secure contracts between 1995 and 2003. One incident, reported by the press at the time, was an alleged bribe of US$6.8 million to secure a US$45 million contract for extending the Sao Paulo metro. The federal police documents state that the “Swiss authorities seized €7.5 million in bribe money from a joint account in the name of [ ] two officials linked to the Sao Paulo state government and to the Brazilian Social Democratic Party”—Jorge Fagali Neto and Jose Geraldo Villas Boas. Fagali has been “charged with money laundering, tax evasion, and racketeering, while Alstom officials have been charged with active corruption, money laundering, tax evasion, and racketeering.” Alstom did not comment on the bribery allegations.
Trial Scheduled for French National Facing Obstruction of Justice Charges Relating to FCPA Probe Frederic Cilins, the French national who was arrested on April 14, 2013 for allegedly obstructing a grand jury’s investigation of potential FCPA and money-laundering violations, is currently scheduled to go to trial in federal court in New York on March 31, 2014. According to the DOJ, Cilins offered to pay a cooperating witness US$5 million to destroy copies of contracts reflecting a mining company’s agreement to pay millions of dollars in bribes to former government officials of the Republic of Guinea Global Anti-Corruption Insights | 14
in exchange for valuable mining concessions in that country’s Simandou Region. Prosecutors have identified their cooperating witness as Mamadie Toure, the fourth wife of deceased Guinean dictator Lansana Conte, who awarded the mining rights to BSG Resources Ltd. (BSG) in 2008.92 Cilins pled not guilty and has challenged the authenticity of the alleged contracts.93 BSG reportedly is subject to ongoing investigations in a number of jurisdictions. In August, Swiss police searched the Geneva offices of Onyx Financial Advisors, a company that provides management services for BSG, while French police searched the home of a director of the management firm. These coordinated raids were allegedly carried out at the request of US and Guinean authorities.94
Judge Denies Former Magyar Executives’ Request for Interlocutory Appeal As we have previously reported, on February 8, 2013, Judge Richard Sullivan of the Southern District of New York denied a motion to dismiss an SEC lawsuit filed by three former executives from the Hungarian telecommunications company Magyar Telekom (Magyar)—Elek Straub (former Chairman and CEO), Andras Balogh (former Director of Central Strategic Organization), and Tamas Morvai (former Director of Business Development and Acquisitions)—charged with scheming to bribe government officials in Macedonia and Montenegro.95 The three defendants, all foreign nationals who worked and lived outside the US when the alleged bribery took place, had argued in their motion that the court lacked personal jurisdiction over them, the SEC’s action was time-barred by the applicable statute of limitations, and their conduct lacked a sufficient nexus with the US to satisfy the FCPA’s jurisdictional requirement.96 After Judge Sullivan denied their motion to dismiss, the defendants asked the court to certify an interlocutory appeal of its order.97 Judge Sullivan denied this motion as well on August 5, 2013, disagreeing with the defendants that a “substantial ground for difference of opinion exists [on the legal issues] … or that an interlocutory appeal is likely to result in reversal by the Second Circuit and thus termination of [the] litigation.”98 The judge noted that his decision to deny the defendants’ motion to dismiss was not inconsistent with a decision from Judge Shira Scheindlin, also of the Southern District
of New York, in a similar case decided just a few weeks later. In that case, Judge Scheindlin granted a former Siemens executive’s motion to dismiss SEC charges that he had violated the FCPA, holding that the defendant did not have the necessary minimum contacts with the US to establish personal jurisdiction: he neither authorized the bribe, directed, or was even aware of the cover-up, nor played any role in the falsification of SEC filings.99 Both judges agreed that “there is ample (and growing) support in case law for the exercise of jurisdiction over individuals who played a role in falsifying or manipulating financial statements relied upon by U.S. investors in order to cover up illegal actions directed entirely at a foreign jurisdiction.”100 In the Straub case, according to Judge Sullivan, since the SEC alleged that the defendants had signed off on misleading management representation letters and signed SEC filings as part of the bribery scheme, the SEC had made a prima facie showing of jurisdiction.101 Defendants also raised statute of limitations and FCPA jurisdictional arguments in support of their request that the judge certify the interlocutory appeal, but Judge Sullivan rejected them, holding that even a reversal by the Second Circuit on both of these issues would not entirely dispose of the case, nor would the scope of discovery and length of trial be significantly reduced because the SEC had also alleged three counts of books and records violations.102
SEC Obtains Default Judgments against Two Former Siemens Executives The SEC has obtained a default judgment against two former employees of Siemens AG—Ulrich Bock (Commercial head of Major Projects for Siemens Business Services from 1995 to 2001) and Stephan Signer (Bock’s successor as head of Major Projects).103 The two German nationals have not appeared in connection with the SEC’s case against them relating to bribes paid in Argentina, despite service by publication in the International Herald Tribune and by mail delivered to their German counsel. The judgment enjoins the two from violating the FCPA, and it orders Signer to pay a civil penalty of US$524,000 and Bock to pay a civil penalty in the same amount plus US$316,452 in disgorgement and US$97,505, for a total of US$937,957. The SEC also reached a settlement with a third former Siemens employee, Andres Truppel, to resolve the Global Anti-Corruption Insights | 15
SEC’s FCPA claims against him for a civil penalty of US$80,000,104 and voluntarily dismissed charges against a fourth defendant, Carlos Sergi.105
Eleventh Circuit Hears Oral Argument on Who Is a “Foreign Official” under the FCPA On October 11, 2013, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit in Miami heard oral argument in the appeal brought by Joel Esquenazi and Carlos Rodriguez, former executives of Florida-based Terra Telecommunications Corp. The two defendants are challenging their convictions on the ground that Telecommunications D’Haiti S.A.M. (Haiti Teleco) is not an “instrumentality” of the Haitian government and therefore the officials they allegedly bribed are not “foreign officials” within the meaning of the FCPA. The judges pressed both sides for the definition of “instrumentality” that the district court should have used to instruct jurors. Defense counsel argued that an “instrumentality” must perform a government function, while prosecutors advocated for the broader definition used by the district court that considered an array of factors, including state ownership and control. The Eleventh Circuit’s ruling, which is expected in the coming months, will mark the first time that a federal appellate court has addressed who counts as a “foreign official” under the FCPA.106
Ninth Circuit and Supreme Court Deny Greens’ Appeal of Restitution Order On November 11, 2013, the United States Supreme Court rejected Los Angeles-based film producers Gerald and Patricia Green’s petition to review a district court’s order that they pay US$250,000 in restitution to the government of Thailand for violations of the FCPA under the Mandatory Victims Restitution Act (MVRA).107 The Greens were convicted in 2010 of paying over US$1.8 million to the governor of Thailand’s Tourism Authority to secure contracts to run the Bangkok International Film Festival from 2003 to 2006.108 They were sentenced to six-month jail sentences and ordered to pay restitution to the victim, the government of Thailand.109 The MVRA requires defendants convicted of violent crimes, “offenses against property” under Title 18 of
the U.S. Code, and certain other crimes, to compensate victims for “the full amount of each victim’s losses.”110 It requires a showing that “an identifiable victim or victims has suffered a physical injury or pecuniary loss.”111 The Greens appealed the district court’s order of restitution to the Ninth Circuit, arguing that the “identifiable victim” who suffered a “pecuniary loss” must be identified by the jury, not the judge, under the Supreme Court’s decisions in Apprendi v. New Jersey, which held that “[o]ther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt,”112 and Southern Union v. United States, which applied Apprendi to criminal fines.113 On July 11, 2013, the Ninth Circuit rejected these arguments, upholding the district court’s order.114 The court noted that Ninth Circuit precedent categorically held that Apprendi does not apply to restitution, and that it could not overrule this precedent based only on “strong signals” that the Supreme Court would apply Apprendi to restitution.115 The court also noted, however, that Ninth Circuit precedent in this area was not “well-harmonized” with Southern Union, effectively inviting the Greens’ petition for Supreme Court review.116 But in denying the Greens’ request, the Supreme Court leaves intact for now Ninth Circuit precedent holding that a judge, rather than a jury, may identify the victim who suffered injury or loss in connection with a violation of the FCPA.
Settlement Terms Set for Former Digi CFO Last year, the SEC filed a complaint in the United States District Court for the District of Minnesota against Subramanian Krishnan, former Chief Financial Officer of Minnesota-based computer hardware manufacturer Digi International Inc. (Digi). In its complaint, the SEC alleged that Krishnan oversaw an inadequate system of internal controls that permitted him to use corporate funds for unauthorized travel and entertainment expenses and that he had engaged in conduct that ultimately led Digi to make inaccurate annual and quarterly filings. At the time the SEC’s complaint was filed, Krishnan consented to a final judgment without admitting or denying the allegations, in addition to being permanently enjoined from future violations of various provisions of the securities laws. On July 2, 2013, the SEC announced that Krishnan
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also had agreed not to act as a public company’s officer or director for a period of five years from the date the SEC’s complaint was filed, to a suspension from appearing or acting as an accountant before the SEC during that time period, and to pay a US$60,000 civil penalty.
Top US Enforcement Officials Comment on FCPA In recent months, top officials from the DOJ and SEC have discussed FCPA enforcement at conferences in the Washington, D.C. area. These officials all emphasized the US government’s continued commitment to FCPA enforcement. On September 19, 2013, Kara Brockmeyer, chief of the SEC’s FCPA Unit, and Charles Duross, Deputy Chief of the Fraud Section of the DOJ’s Criminal Division, spoke at a conference sponsored by the American Bar Association. They addressed, among other topics, resources devoted to FCPA enforcement, sources of information on potential FCPA violations, challenges dealing with foreign authorities, and the rationale behind the resolution of the DOJ’s and the SEC’s enforcement action against Ralph Lauren Corp.117
Brockmeyer noted that the SEC has about three dozen full-time staff members around the country devoted to FCPA enforcement. The DOJ has about 20 prosecutors working full-time on FCPA enforcement, according to Duross. Both officials stated that they frequently deploy additional attorneys and work with specialists from across the government on particular cases.
According to Brockmeyer, about 30-40 percent of the SEC’s cases come from voluntary disclosures. Additional sources include information learned during other investigations, media reports, tips from foreign authorities, and whistleblower complaints. Although Duross did not offer the same level of detail about the DOJ’s cases, he observed that less than 50 percent of cases originate from voluntary disclosures. Both officials addressed the difficulties that can arise from foreign evidence collection, foreign data privacy laws that restrict the transfer of information, and the increasing involvement of foreign authorities in bribery cases. Brockmeyer and Duross discussed the SEC’s firstever FCPA-related NPA, which it entered into with Ralph Lauren. Brockmeyer explained that the SEC decided to enter into a NPA in order to reward Ralph Lauren’s cooperation and remediation. The SEC decided against a declination, however, because Ralph Lauren did not have a pre-existing compliance program and because the alleged misconduct spanned multiple years. In the same vein, Duross commented on how the lack of a pre-existing compliance program may influence enforcement decisions.
In addition, on November 19, 2013, Duross, Brockmeyer, and other high-level enforcement officials spoke at the International Conference on the FCPA. Duross told attendees that the DOJ expects to bring “very significant cases, top 10 quality type cases” in 2014.118 In a keynote address at the conference, Deputy Attorney General James Cole echoed Duross’s comments, saying that the DOJ would continue to bring major FCPA cases.119 Deputy Attorney General Cole also warned that “there will be serious consequences” for those who “choose to conceal misconduct, obstruct investigations and attempt to mislead investigators,” and he discussed the DOJ’s efforts to gain international partners in its fight against bribery.120 In particular, Cole cited training sessions that US authorities are holding with their counterparts in Mexico and Brazil.121 Andrew Ceresney, co-director of the SEC’s Division of Enforcement, delivered another keynote address at the conference. Ceresney reflected on the large increase in FCPA enforcement actions that the SEC has seen over the last 10 years. He mentioned the SEC’s establishment
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of a specialized FCPA unit, which includes forensic accountants as well as attorneys, and the SEC’s strong partnerships with other agencies such as the DOJ and FBI. He then described four fronts in the SEC’s enforcement efforts: “(1) the creation of a culture of FCPA compliance among professionals and corporations; (2) international collaboration in combating bribery; (3) the focus on individual FCPA misconduct; and (4) fostering cooperation with our investigations from companies and individuals.” Ceresney concluded by saying that the SEC “will remain the vigilant cop on the beat when it comes to the FCPA.”122
Update on Industry-Wide Investigations
DOJ Releases Opinion on Lawyer’s Payment of Medical Expenses for a Foreign Official’s Daughter On December 19, 2013, the Justice Department issued Opinion Procedure Release No. 13-01—its only release of the year—in response to a request from a US law firm. The Requestor sought to pay the medical expenses of the daughter of a foreign official, whom the Requestor had befriended and who happened to work in the office responsible for selecting and contracting with international counsel, including the Requestor’s law firm. The DOJ concluded that the proposed benefit to the foreign official’s daughter “will have no impact on Requestor’s or Requestor’s Law Firm’s present or future business” with the foreign country. In reaching this conclusion, the DOJ noted that (1) the foreign official “does not and will not play any role in the decision to award … legal business to Requestor’s Law Firm”; (2) the Requestor and foreign official “informed their respective employers of the proposed gift and neither has objected”; (3) the proposed gift is not illegal under the foreign country’s laws; (4) the foreign country’s laws “require transparent reasoning in contracting for legal work and criminally punish corrupt behavior”; and (5) the “Requestor intends to reimburse the medical provider directly, ensuring that the payments will not be improperly diverted” to the foreign official. Based on these facts, the DOJ stated that it does not intend to take any enforcement action.123
China-Related Investigations Embroil Pharmaceutical Companies In addition to the Stryker settlement with the SEC discussed above, other pharmaceutical and medical devices companies have found themselves in the news recently because of corruption-related investigations. As US authorities continue their scrutiny of the industry, Chinese authorities also have begun investigating the conduct of multi-national pharmaceutical companies.124 While details of the investigations are still unfolding, the Chinese government’s inquiries, often initiated by whistleblowers, reportedly center on the companies’ selling practices, such as providing doctors with speaking fees, cash payments, and entertainment allegedly in exchange for prescribing the companies’ products.125 According to the Chinese government, in some cases travel agents, industry associations, and third party business consultants were used to disguise and funnel allegedly illicit payments to doctors to increase prescriptions.126 While China is a lucrative market for the pharmaceutical industry, it presents enhanced risks because the healthcare system is government run and managed. Doctors, nurses, pharmacists, and hospital administrators working in the Chinese healthcare system may be government officials under the FCPA, and providing them with improper benefits in exchange for prescriptions could, therefore, be considered bribery.127
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China’s National Health and Family Planning Commission (NHFPC), the successor agency to the Ministry of Health, announced in late December that it is instituting a blacklist for pharmaceutical and medical devices companies charged with, investigated for, or sanctioned for bribery. Beginning in March 2014, blacklisted companies will be barred from selling in the Chinese province responsible for the charge, investigation, or sanction for two years, and any company blacklisted twice in the span of five years will be barred from selling in all provinces.128 Around the same time, the NHFPC promulgated “Nine Prohibitions for Strengthening the Healthcare Industry’s Ethics” that restrict the types of payments healthcare professionals and institutions may accept.129
Financial Institutions’ Hiring Practices Come under Investigation Several major international banks have recently come under investigation by US enforcement authorities for hiring practices in China.130 Over the past decade, the banks’ Chinese branches allegedly hired employees closely related to officials high in the Chinese government, such as, in one instance, the grandson of Jiang Zemin, the former Chinese president, in order to assist them in getting business in China’s lucrative financial markets.131 According to news reports, the banks competed extensively among themselves for the most well-connected “princelings,” as the relatives of high-ranking Chinese officials are informally called.132 While the FCPA does not prohibit hiring employees based on political connections, since hiring the relative of a government official could be considered a benefit to the official, authorities are investigating whether the banks improperly hired these “princelings” in exchange for winning business with stateowned or -controlled Chinese companies.133 None of the banks has been accused of any wrongdoing so far, and there is evidence that many of the princelings were in fact highly qualified for the positions that they were hired for.134
Alcoholic Beverage Industry – InBev Several alcoholic beverage manufacturers and distributors remain under investigation for potential FCPA violations. On August 2, 2013, Anheuser-Busch InBev SA/NV disclosed that the DOJ and the SEC are investigating the company’s affiliates in India, including its Indian joint venture, InBev Indian Int’l Private Ltd., to determine
whether violations of the FCPA may have occurred. Anheuser-Busch reported that it continues to conduct an internal investigation and to cooperate with U.S. authorities.135
Rounding Out the Enforcement Docket Wal-Mart Investigation Continues In its SEC filings, Wal-Mart Stores Inc. disclosed that its FCPA-related litigation and compliance fees continue to mount. In the first nine months of 2013, Wal-Mart reported spending US$224 million in the first nine months of 2013: US$135 million for ongoing government investigations and US$89 million for its global compliance program and organizational improvements.136 This amount reportedly includes fees Wal-Mart is paying for lawyers representing more than 30 of its executives.137 The company also acknowledged in its quarterly SEC filings that part of its inquiry includes evaluating whether the “prior allegations of such violations and/or misconduct were appropriately handled.”138 In addition to alleged misconduct in Mexico, Wal-Mart is facing inquiries or investigations regarding allegations of potential FCPA violations in foreign markets including Brazil, China, and India. Wal-Mart announced in October that it is ending its Indian joint venture, leaving the company with control over wholesale operations in India while turning over retail operations to its former Indian partner Bharti Enterprises.139
Embraer Expands FCPA Investigation Embraer S.A., a Brazil-based aircraft manufacturer, has expanded its investigation into potential FCPA violations resulting from the sale of aircraft to foreign governments. Following a subpoena from the SEC in September 2010, the company launched an investigation into transactions that took place in three unnamed countries. In its most recent annual report to the SEC, Embraer disclosed that it had voluntarily begun reviewing transactions in two additional countries as well.140 On November 1, 2013, the Wall Street Journal reported that both US and Brazilian authorities are looking into whether Embraer bribed foreign officials in the Dominican Republic in connection with a US$90 million contract for eight military aircraft. The Wall Street Journal’s Global Anti-Corruption Insights | 19
information allegedly came from a review of Brazilian authorities’ request, pursuant to a mutual legal-assistance treaty, for evidence from US authorities.141 Meanwhile, Reuters reported that Embraer is also investigating sales of 20 passenger jets to a state-owned airline in Argentina.142
Microsoft Probe by DOJ and SEC Develops The DOJ and the SEC probe into kickback allegations made by a former Microsoft representative in China, as well as the company’s relationship with certain resellers and consultants in Romania and Italy, reportedly has expanded, reaching certain of Microsoft’s sales in Pakistan and Russia as a result of tips given directly to Microsoft in the last eight months.143 An anonymous tipster in Russia reportedly told Microsoft that kickbacks to executives of a state-owned company were allegedly made by resellers of the company’s software in order to secure a deal. Similarly, in Pakistan, a tipster reportedly told Microsoft that the company had authorized a consulting firm to pay for a five-day trip to Egypt for a government official and his wife in order to secure a tender. Microsoft has not been accused of any wrongdoing with respect to these tips, and both the DOJ and the SEC have declined to comment.
Layne Christensen Likely Nearing FCPA Settlement Layne Christensen Company—a Kansas-based water management, construction, and drilling business—has been investigating potential FCPA violations in connection with payments made to agents and third parties interacting with government officials in certain African countries since 2010. The company disclosed in its quarterly report filed with the SEC on December 10, 2013 that it “currently estimates a potential settlement range for resolving these matters [with the DOJ and SEC] of US$10.4 million to US$16.0 million.” Based on this estimate, the company increased its settlement reserve from US$4.8 to US$10.4 million.144
Companies Disclosing the End of Government Investigations In the second half of 2013, several companies disclosed that the DOJ and/or the SEC had concluded bribery-related investigations without the commencement of enforcement proceedings. For example, in its quarterly report filed
with the SEC on July 25, 2013, Ohio-based glass bottle manufacturer Owens-Illinois, Inc. disclosed that on July 18, 2013 “the Company received a letter from the DOJ indicating that it presently did not intend to take any [FCPA criminal] enforcement action and is closing its inquiry into the matter.”145 Owens-Illinois had voluntarily disclosed to the DOJ and the SEC in October 2012 that it was conducting an internal investigation into conduct in certain overseas operations that might have violated the FCPA. OwensIllinois did not indicate in which countries FCPA violations might have occurred, nor did it disclose the conduct or the amounts of payments involved. It acknowledged that the company could still face SEC enforcement. Maryland-based ammunitions maker, The Allied Defense Group, Inc., disclosed in its quarterly report filed with the SEC on August 14, 2013 that the DOJ would not pursue a criminal FCPA enforcement action against the company.146 Allied was notified by the SEC in late 2012 that the SEC “would not pursue a civil enforcement action against the [c]ompany.” A former Allied Defense Group employee and 21 other individuals were arrested in 2010 in a “largescale undercover operation that targeted foreign bribery in the military and law enforcement products industry” in Africa—the SHOT show sting—but the DOJ later dropped the criminal charges against all individuals. The company explained that with resolution of the DOJ’s investigation, it planned to move forward with plans for dissolution and begin distribution of about US$43 million in assets to shareholders at the end of 2013. Italian oil and gas producer, Eni S.p.A., disclosed in a September 3, 2013 SEC filing that on April 29, 2013, the SEC notified Eni that it was closing its anti-bribery investigation of the company’s activities in Libya, “without further claims or other observations.”147 In June 2011, Eni received a subpoena for documents dating back to 2008 as part of the SEC’s investigation into certain illicit payments to Libyan officials, possibly in violation of the FCPA, and in December 2011, the company received an additional request for documents. Eni’s legal team then met with the SEC staff in October 2012 to provide additional documentation and clarification.
Companies Disclosing New Investigations In the second half of 2013, other companies disclosed that the DOJ and/or the SEC had commenced bribery-related investigations. For example, infant and child nutrition Global Anti-Corruption Insights | 20
company Mead Johnson & Company LLC stated in a quarterly report filed with the SEC on October 24, 2013 that it was complying with an SEC request for documents relating to its Chinese subsidiary’s promotional activities, which may have included the payment of bribes.148 On September 10, 2013, Gold Fields, a South African gold producer with a secondary listing on the New York Stock Exchange, disclosed that the SEC is investigating payments made in connection with efforts to obtain a license to mine South Deep, one of the world’s largest gold deposits in South Africa. According to Gold Fields, the SEC is looking into the company’s payment of US$210 million, in the form of a 9 percent stake in the South Deep mine, to a fund called Black Economic Empowerment. Black Economic Empowerment was established to create economic opportunities “to redress inequalities” created by South Africa’s former apartheid regime, but the fund has attracted criticism in recent years for benefiting only a politically connected elite. News reports suggest that Baleka Mbete, chairwoman of South Africa’s ruling African National Congress party, may have improperly benefited from the 2010 deal between Gold Fields and Black Economic Empowerment.149 Gold Fields has stated that an independent investigation found that implementation of the 2010 deal did not meet the company’s own standards.150 Texas-based Hyperdynamics Corporation disclosed that on September 13, 2013 it received a subpoena from the DOJ seeking documents relating to the oil and gas company’s business dealings in the Republic of Guinea.151 According to Hyperdynamics, the DOJ is investigating whether the company’s activities in obtaining and retaining concession rights for offshore exploration, and its relationships with charitable organizations, violate the FCPA and anti-moneylaundering laws. The company reported that it is fully cooperating with the government’s investigation. As discussed above, US authorities reportedly are also investigating the activities of another company, BSG Resources, in Guinea. Park Ohio Holdings Corporation, a diversified manufacturing services and products holding company, reported that in August 2013, the company received a subpoena from the SEC in connection with the SEC’s investigation of a third party. The company also learned at that time that the DOJ was conducting a criminal investigation of the third party. Park Ohio indicated that it intended to cooperate with the SEC and the DOJ and,
in connection with responding to the SEC’s subpoena, disclosed that in November 2007, the third party participated in a payment on behalf of the company to a foreign tax official that implicates the FCPA.152
Canellos Leaving SEC; Duross Leaving DOJ On January 3, 2014, the SEC announced that George Canellos, co-director of its Enforcement Division, will be stepping down.153 Canellos has headed the SEC’s Enforcement Division since January 2013, initially on an interim basis and then as co-director, and before that he was director of the SEC’s New York regional office. The Division will now be led solely by Andrew Ceresny, who has served as Canellos’s co-director since April. In addition, Charles Duross, Deputy Chief of the Fraud Section of the DOJ’s Criminal Division, is leaving the Department for private practice. Duross has led the DOJ’s FCPA unit since April 2010. He will be succeeded by Patrick Stokes, who previously was the co-head of the Fraud Section’s Securities and Financial Fraud unit.
SEC Whistleblower Program Update The SEC granted two more whistleblower awards in October 2013, including one for US$14.8 million, in matters not involving the FCPA.154 In its 2013 annual report, the SEC reported that it has received 3,238 tips in 2013, 149 related to the FCPA. These numbers are up from 2012, when the SEC received 3,001 tips, 115 of which related to the FCPA.155
International Enforcement Involving Companies That Previously Resolved FCPA Enforcement Actions Investigations by the countries in which alleged FCPA violations occurred continued in the second half of 2013. The FCPA enforcement action against Siemens AG was based in part on charges in Argentina stemming from alleged bribery to win an ID card contract. On December 27, 2013, Argentine Judge Ariel Lijo ordered the prosecution of nine individuals affiliated with Siemens’s efforts to win the ID card contract, three individuals who acted as intermediaries, and five individuals associated with the SOCMA group, the competing bidder that intentionally lost the ID contract
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award.156 Of these 17, Uriel Sharef, a former Siemens officer and board member who previously settled the SEC’s civil charges,157 now faces criminal prosecution in both the US and Argentina. Former Siemens executives Ulrich Bock, Andreas Truppel and Eberhard Reichert, and one of the Siemens intermediaries, Miguel Czysch, face both criminal and civil charges in the US. Judge Lijo also charged current Siemens employee Bernd Regendantz, who was not charged criminally in the US and who settled the SEC’s civil charges in 2011.158 Separately, Siemens subsidiary Siemens Industrial Turbomachinery agreed to pay US$10.6 million to Swiss prosecutors for failing to prevent payment of bribes between 2004 and 2006 to a Russian gas company. In exchange for the bribes, the company reportedly received “contracts to supply gas turbines for the construction of the Yamal gas pipeline.”159 Italian and Algerian authorities are investigating whether Saipem SpA, which is controlled by Italian energy company Eni SpA, paid kickbacks to officials at Algeria’s state-owned oil company in exchange for billions of dollars in contracts. The investigation has included Eni’s CEO, Paolo Scaroni, as well as Algeria’s former energy minister, Chekib Khelil. Eni has denied any wrongdoing by it or its CEO.160 In 2010, Eni and its subsidiary Snamprogetti Netherlands B.V. paid US$365 million to resolve FCPA-related charges relating to the subsidiary’s conduct in Nigeria.161
Court Vacates SEC Rule Requiring Oil Companies to Disclose Foreign Payments
vacated a rule promulgated by the SEC under DoddFrank.162 The new rule would have required oil, gas, and mining issuing companies to include information in their annual reports about certain payments related to resource extraction that were made to foreign governments or the US government for the purpose of commercial development of oil, natural gas, or minerals.163 According to SEC estimates, compliance with the rule would have cost issuers about US$1 billion.164 The rule would have required issuers to disclose payments to foreign governments that they were not previously required to disclose. On October 10, 2012, the American Petroleum Institute, the US Chamber of Commerce, and several other groups filed a lawsuit challenging the rule in the District Court for the District of Columbia. On July 2, 2013, the District Court invalidated the rule. The District Court first found that the SEC had misread Section 1504 of Dodd-Frank, which added Section 13(q) to the Securities and Exchange Act of 1934. The SEC interpreted Section 13(q) as requiring public disclosure of the annual reports. But the District Court held that because the plain language of the section “says nothing about the public filing of these reports,” the SEC had not exercised its “own judgment” to interpret the requirements of the section.165 In this connection, the District Court gave no deference to the SEC’s reliance on Congressional intent. The Court then turned to the SEC’s refusal to grant exemptions for reports relating to countries that prohibit the disclosure of payment information—such as Angola, Cameroon, China, and Qatar—despite express Congressional authority to make “necessary or appropriate” exemptions.166 In sustaining plaintiffs’ challenge to the rule, the District Court held that the SEC had failed to undertake “specific analysis” of the facts at issue, and the SEC’s refusal to grant an exemption was arbitrary and capricious.167 The District Court’s decision returned the implementation of Section 13(q) to the SEC for additional rulemaking. The SEC declined to appeal the decision.168
Issuers recently scored a victory when, on July 2, 2013, the U.S. District Court for the District of Columbia
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FCPA-Related Civil Litigation
issue. District courts in other circuits have reached the opposite conclusion.
Fifth Circuit Holds Whistleblower Must Disclose Concerns to SEC to Qualify for Protection under Dodd-Frank
DOJ Intervenes in Ongoing FCPARelated Litigation against Wynn Resorts; Shareholder Actions against Sands Also Continue
On July 17, 2013, the United States Court of Appeals for the Fifth Circuit held that, in order to qualify as a whistleblower protected from retaliation under DoddFrank, an employee must disclose his or her concerns to the SEC; internal disclosures within the company are insufficient.169 Khaled Asadi, a G.E. Energy (USA), LLC’s Iraq Country Executive working in Jordan, was told by Iraqi officials that GE Energy had hired a woman closely associated with an Iraqi senior official to curry favor with that official. Concerned that this employment arrangement might constitute an FCPA violation, Asadi reported it to his supervisor and company ombudsperson, after which he received a negative performance review and was, according to Asadi, pressured to accept a reduced role. A year later, he was fired and Asadi sued the company for wrongful termination under Dodd-Frank.170 The district court dismissed Asadi’s case on the ground that his extraterritorial whistleblowing was not within the purview of Dodd-Frank.171 The Fifth Circuit, reviewing the case de novo, affirmed the dismissal of Asadi’s case, finding that Asadi was not a whistleblower as defined by Dodd-Frank because he failed to raise his concerns directly with the SEC. While several district courts have held that DoddFrank does not require disclosure to the SEC, the Fifth Circuit held that “[u]nder Dodd-Frank’s plain language and structure, there is only one category of whistleblowers: individuals who provide information relating to a securities law violation to the SEC.”172 The Fifth Circuit rejected Asadi’s invocation of Dodd-Frank’s description of “protected activity in a whistleblower-protection claim,” holding that the description of protected activity did not “define which individuals qualify as whistleblowers.”173 Significantly, the Fifth Circuit’s holding, based on what it characterized as the “plain language” of DoddFrank expressing Congress’s clear intent, refused to defer to SEC regulations answering this very same question in Asadi’s favor.174 Currently, this case is the only circuit court-level decision to address the
As detailed in our Summer 2013 newsletter, the DOJ intervened in the ongoing dispute between Wynn Resorts, Ltd. and Kazuo Okada, a former executive and former board member.175 On October 29, 2013, the DOJ requested a six-month delay to continue its ongoing investigation into Okada’s activities in the Philippines, which the court granted on the basis of an affidavit provided under seal that raised concerns for witness safety. In the meantime, however, the court ordered the parties to engage in discovery.176 Another casino, Las Vegas Sands Corp. (LVSC), is also embroiled in FCPA-related litigation. On February 9, 2011, LVSC received a subpoena from the SEC relating to allegations made by a former executive that LVSC’s subsidiary, Sands China Limited, had failed to comply with the FCPA. The company was also advised that the DOJ was conducting a similar inquiry. Shortly thereafter, various shareholders filed actions in both federal and state court alleging that the LVSC directors breached their fiduciary duties by failing to ensure that LVSC installed and maintained adequate internal controls to prevent violations of the FCPA and state gaming regulations.177 Both cases were stayed at various times to give a special litigation committee composed of LVSC directors time to investigate the alleged FCPA violations. On November 7, 2013, LVSC reported in its quarterly filing that the Audit Committee of the Company’s Board of Directors had reached preliminary findings, including that “there were likely violations of the books and records and internal controls provisions of the FCPA and that in recent years, the Company has improved its practices with respect to books and records and internal controls.”178 LVSC stated that it did not believe that the preliminary findings (1) had a material impact on the financial statements of the Company, (2) warranted any restatement of the Company’s past financial statements or (3) represented a material weakness in the Company’s internal controls over the financial reporting as of September 30, 2103. It is unclear how these findings will impact the ongoing SEC and DOJ investigations or the shareholder derivative actions.
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US House of Representatives Establishes a Task Force to Review Over-Criminalization On May 5, 2013, the Judiciary Committee of the US House of Representatives announced the creation of a bipartisan “Over-Criminalization Task Force” to review the estimated 4,500 federal crimes in the U.S. code and make recommendations for improvements to federal criminal law.179 At the Task Force’s first hearing on June 14, 2013, two witnesses testified about the need for reforms to the FCPA. George J. Terwilliger III, former Deputy Attorney General and acting Attorney General, argued that the FCPA “presents a significant impediment to businesses and uncertainty in FCPA enforcement standards represents a ready example of the adverse affect on businesses of poorly formed statutes.” He advocated for Congress to amend the FCPA to include
an affirmative defense for companies that have adequate compliance procedures and a repose for companies that complete post-transaction due diligence on an acquisition within a defined period of time.180 Steven D. Benjamin, the president of the National Association of Criminal Defense Lawyers, cited the FCPA as an example of poor legislative draftsmanship. He expressed concern that the statute’s “overly broad language has created an enforcement climate where the statute means whatever the government says it means.”181 Moreover, at a Task Force hearing on July 19, 2013, Professor John S. Baker, Jr. lamented the wide prosecutorial discretion that has resulted from Congress’s failure to establish clear mens rea requirements in the FCPA and other criminal statutes.182 As the OverCriminalization Task Force continues to assess how federal criminal laws might be improved, the FCPA is sure to remain an area of interest.
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GLOBAL ANTI-CORRUPTION UPDATE
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GLOBAL ANTI-CORRUPTION UPDATE
Developments in the United Kingdom SFO Prosecution of Alcoa Middleman Falters The SFO suffered another setback in December 2013 when it was forced to offer no evidence in the prosecution of Victor Dahdaleh, resulting in a verdict of not guilty. The SFO alleged that Dahdaleh paid bribes totaling £38 million to members of the Bahraini Royal Family in return for US$3 billion worth of contracts between the stateowned aluminum company, Aluminum Bahrain (Alba), and Alcoa.183 Its case collapsed after a key prosecution witness, Bruce Hall, the former chief executive of Alba, provided testimony that “differed markedly from the witness statement he had provided to the SFO.”184 Hall had previously pleaded guilty to being involved in the bribery conspiracy with Dahdaleh and Sheikh Isa bin Ali-al-Kalifa, the former Bahraini Petroleum Minister. In addition, two US-based lawyers from the law firm Akin Gump Strauss Hauer & Feld LLP, which represents Alba in litigation against Dahdaleh and Alcoa in the US, “were unwilling to attend trial in the UK and face
cross-examination,” after previously confirming their willingness to appear.185 Judge Nicholas Loraine-Smith of the Southwark Crown Court questioned whether the SFO effectively had delegated its investigation in Bahrain to Akin Gump, which he described as the “defendant’s opponent in a hotly contested, ongoing civil action in America.”186 In light of the lack of witness testimony against Dahdaleh, the SFO “concluded that there is no longer a realistic prospect of conviction in this case.”187 The Dahdaleh case has clear parallels with the Tchenguiz litigation, in which the defendants alleged that the SFO placed greater significance than was appropriate on a report authored by the accounting firm Grant Thornton, itself involved in a £2 billion civil suit with the defendants.188 As we have reported previously, in July 2012, the High Court of Justice sharply criticized the SFO’s prosecution of the Tchenguiz brothers, questioning whether the SFO had the proper resources to conduct its investigation.189
UK SFO’s First Bribery Act Prosecution On August 14, 2013, the SFO announced bribery charges against three employees of Sustainable Agroenergy Plc, the first bribery charges brought by the SFO under
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the Bribery Act.190 Gary Lloyd West, the company’s former Director and Chief Commercial Officer; Stuart John Stone, an independent financial advisor associated with the company; and Fung Fong Wong, the company’s former Financial Controller, are charged with “making and accepting a financial advantage” contrary to sections 1(1) and 2(1) of the Bribery Act. In addition, these individuals, along with James Brunel Whale, the company’s former Chief Executive Officer, are charged with fraud-based offences involving the promotion of bio-fuel products linked to Jatropha-tree plantations in Southeast Asia. They are due to stand trial on September 22, 2014. The SFO is currently investigating Sustainable Agroenergy Plc, which could be the first company charged under Section 7 of the Bribery Act for failing to prevent bribery.191 Sustainable Agroenergy Plc is a subsidiary of the Sustainable Growth Group, which was placed in administration in March 2012. This is not the first Bribery Act prosecution in the UK, however, as the Crown Prosecution Service has already successfully prosecuted a court clerk, a taxi-driver, and a university student under the Act. These prosecutions involving small scale criminal conduct by individuals were not what was expected when the Bribery Act was brought into force, as it was designed as a tool for the SFO to tackle large, complex, and multi-jurisdictional bribery and corruption investigations.
Smith & Ouzman Indicted for Alleged Bribery in Africa UK-based printing company Smith & Ouzman Limited, which produces, among other products, millions of ballot papers for African elections, has been charged by the SFO with making corrupt payments. According to a news report, the company and its employees allegedly made payments totaling £413,552.12 to influence the awarding of contracts in Ghana, Kenya, Mauritania and Somalia between November 2006 and December 2010.192 The company’s alleged conduct occurred before the effective date of the Bribery Act and, accordingly, the defendants face charges under Section 1 of the Prevention of Corruption Act 1906. In addition to indicting the company, the SFO indicted its former Chairman Chris Smith, its Sales and Marketing Director Nick Smith (Chris Smith’s son), its International Sales Manager
Tim Forrester, and its agent Abdirahman Omar. The defendants have yet to enter formal pleas and will next appear in court on January 27, 2014, with the trial currently set for November 10, 2014.193
SFO Confirms Criminal Investigation of Rolls Royce plc In September 2013, SFO Director David Green stated at the International Symposium on Economic Crime conference at Cambridge University that the SFO is currently engaged in eight investigations in relation to suspected bribery offenses.194 On December 23, 2013, the SFO confirmed “that the Director has opened a criminal investigation into allegations of bribery and corruption at Rolls Royce.”195 As we discussed in our Summer 2013 newsletter, Rolls Royce had previously announced that it was conducting an internal investigation into allegations of bribery in Indonesia and in China.196
FCA Fines JLT Specialty for Insufficient Anti-Bribery Controls On December 19, 2013, the Financial Conduct Authority (FCA) imposed a financial penalty of £1,876,000 on JLT Specialty Limited (JLT) for failing to have sufficient antibribery and anti-corruption procedures between February 19, 2009, and May 9, 2012, in breach of Principle 3 of the Authority’s Principles for Business.197 JLT provides insurance brokering, risk management and claims consulting services to both national and international corporate clients. As part of its business operations, JLT uses thirdparty introducers to gain international business. The FCA found that JLT failed to conduct adequate due diligence before entering into a relationship with an overseas introducer, to adequately assess the risk associated with each piece of new business introduced by an overseas introducer, and finally to adequately implement its own anti-bribery and anti-corruption policies.198 It is important to note that the FCA did not find that JLT had, in fact, bribed anyone or authorized any bribes, but that the company’s procedures were either inadequate or not properly implemented so as to mitigate the risk of being potentially involved in bribery or corruption. This case serves as a reminder that companies can be fined under UK anti-bribery and anti-corruption legislation for lack of adequate anti-corruption procedures even in the absence of any criminal bribery.
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A month later, on October 24, 2013, in front of the Pinsent Masons and Legal Week Regulatory Reform and Enforcement Conference, Green further elaborated on SFO’s new self-reporting guidance and prosecution of corporations:200 Green explained that the change in guidance regarding self-reporting reflected only a change back to the historic policy that the SFO would apply the full code test to self-reported conduct. According to Green, even though the new guidance does not guarantee a civil settlement, self-reporting still mitigates the chances of prosecution. Furthermore, corporations that engage in a cover-up risk additional charges and penalties. Green recommended that corporations that decide to self-report should do so as soon as the misconduct is discovered, to lessen the chances that the SFO discovers the misconduct before the corporation self-reports. Green suggested extending the principle contained in Section 7 of the Bribery Act, which holds a corporation liable if the company fails to prevent bribery by its employees, to corporate failures to prevent crimes of dishonesty or fraud. In Green’s view, this change would improve corporate culture and would force large institutional shareholders to be vigilant about their investments. Green concluded by telling attendees that in his view, prosecution of a corporation would be appropriate where a corporation profited from fraud by its employees, where illegal practices were tolerated, where deterrence was needed, and where senior management failed to enforce a company’s compliance regime.
Director Green Discusses SFO’s Focus, Approach by Self-Reporting In two recent speeches, SFO Director David Green described the approach the SFO is taking under his leadership. On September 2, 2013, speaking before the Cambridge Symposium, Green described several “radical changes” the SFO has made since he took office in April 2012.199 After reiterating that the SFO is an investigatory and prosecutorial agency, “not a regulator, a deal-maker or a confessor,” Green explained that:
The SFO is focused on cases that “undermine UK commercial and financial [business] in general and the reputation of the City of London in particular.” The SFO also will pursue cases where there is either a “strong public interest element” or a new type of serious fraud. The SFO has revised its guidance on corporate self-reporting. While old guidance implied that a corporation that self-reported would be “guaranteed a civil rather than criminal outcome,” in Green’s view no prosecutor should give that guarantee. Instead, under SFO’s current guidance, decisions to prosecute corporations that self-report will be made under the full code test. Green explained that a “genuine selfreport” can still be a decisive factor in choosing not to prosecute. The SFO is implementing new prosecutorial tools, including Deferred Prosecution Agreements. The SFO was working on 68 cases at the time of his speech, including eight Bribery Act matters.
National Crime Agency Replaces the Serious Organised Crime Agency The National Crime Agency (NCA) is a national law enforcement agency in the UK, which became fully operational on October 7, 2013 and replaced the Serious Organised Crime Agency (SOCA). The NCA was conceived under provisions granted by the Crime and Courts Act 2013 to “lead the UK’s fight to cut serious and organised crime,” including bribery and corruption.201 There have been two previous agencies with similar mandates: the National Crime Squad was created in 1998
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and SOCA in 2006, making the NCA the third such agency in 15 years. This has resulted in claims that the creation of the NCA is simply a rebranding exercise. There are some differences, however, between the NCA and its predecessors. The most significant example is that, unlike SOCA, the Director General of the NCA has the power to command local police forces in England, Scotland and Wales to allocate their resources to assist the NCA carry out its functions, which include crime reduction, intelligence gathering, and overseeing immigration, customs and counter-terrorism efforts. In Northern Ireland, due to policing provisions in the 1998 Good Friday Agreement, the NCA’s remit covers only borders and customs. The NCA has approximately 4,000 officers and a budget of £494 million. Unlike local police forces, the NCA will oversee policing across the whole of the UK, in addition to working in co-ordination with other national agencies, both domestic and international. With its allocation of resources and broad mission, it is perhaps unsurprising that the NCA has been compared to the US Federal Bureau of Investigation by the British media.202
international corruption. The NCA would be responsible for addressing bribery and corruption linked to organized crime and would have its own team of investigators to do so. Finally, the SFO would retain its status as the primary prosecutorial body for complex domestic and international investigations and prosecutions.204 The proposal also states that the Ministry of Justice would be “consider[ing] the case for incentivising whistle blowing, including the provision of financial incentives to support whistle blowing in cases of fraud, bribery and corruption.” There is only fleeting reference to this potential new policy in the report, but a clear desire to discover “what lessons can be drawn from the successful ‘Qui Tam’ provisions in the US.”205 Qui tam provisions similar to those of the US False Claims Act could be a substantial weapon in the UK prosecutors’ arsenal. The implementation date for the strategy document has yet to be announced, but it is clear that the UK government wishes to send out a strong message that it is committed to pursuing bribery and corruption and increasing the number of enforcement actions and prosecutions.
Home Office Publishes “Serious and Organised Crime Strategy” On October 7, 2013, the Home Office published a new strategy document entitled the “Serious and Organised Crime Strategy,” which sets out how the UK intends to tackle serious and organized crime. The strategy document is important because it sets out the proposed new enforcement regime for bribery and corruption investigations and prosecutions, and suggests that a US-style “qui tam” whistle-blowing incentive could be introduced.203 Under the current enforcement system, the SFO has primary responsibility for investigating and prosecuting complex domestic and international bribery and corruption cases. The Crown Prosecution Service prosecutes less-complex and smaller cases, and the FCA pursues enforcement actions against those companies that fail to adequately address bribery and corruption risks through their internal controls. The new Home Office proposal would see the Home Office taking control of all domestic anti-bribery and corruption policy, and, together with other governmental bodies, coordinating the investigation of
Canada Takes Steps to Increase Anti-Corruption Enforcement Canada’s efforts to combat foreign corruption continued to make headlines in the second half of 2013, as Canadian prosecutors obtained a conviction under Canada’s recently strengthened Corruption of Foreign Public Officials Act (CFPOA) and pursued charges of corruption against officials previously employed by a prominent engineering company. Global Anti-Corruption Insights | 29
Nazir Karigar Awaits Sentencing Following the First CFPOA Conviction
SNC-Lavalin Group Inc. Investigation Continues
On August 15, 2013, Nazir Karigar, a Canadian resident acting as an agent for CryptoMetrics Canada, became the first individual convicted under the CFPOA.206 Karigar’s case was the first CFPOA prosecution to proceed to trial; three previous CFPOA convictions resulted from guilty pleas entered by corporations.207
Additional revelations and developments concerning alleged bribery at SNC-Lavalin Group Inc. (SNCLavalin) continue to surface. As we have previously reported,212 Pierre Duhaime, the former CEO, was arrested in late 2012 and charged by Canadian authorities with fraud, conspiracy to commit fraud, and using forged documents in connection with a contract worth an estimated C$1.3 billion (approximately US$1.25 billion) the company procured to build McGill University Health Centre in Montreal in 2010.213
Karigar entered into a conspiracy to bribe Indian government officials between June 2005 and January 2008 in a failed bid-rigging plot to win an airline security contract.208 Karigar worked for CryptoMetrics in its bid to sell biometric facial recognition technology to Air India, an airline the court found was owned and controlled by the government of India.209 In June 2006, CryptoMetrics’ US parent transferred US$200,000 to Karigar’s account-purportedly to bribe Air India officials. An additional US$250,000 was later transferred to Karigar to ensure that the Minister of Civil Aviation would support CryptoMetrics’ bid. The evidence against Karigar included an email Karigar sent to the DOJ, he believed anonymously, reporting bribery allegations against CryptoMetrics. An official at the Canadian Consulate in Mumbai also testified that Karigar told her that CryptoMetrics had bribed India’s Minister of Civil Aviation. The Air India contract was not awarded to CryptoMetrics, and there was no evidence of what became of the funds received by Karigar.210 The court held, however, that the CFPOA covered the conspiracy to offer a bribe to a foreign official. In addition, the court found that the definition of “foreign public official” under the CFPOA is broad and includes employees of state-owned enterprises controlled by the government, such as the Air India officials, and that Canada had territorial jurisdiction over the crime because Karigar acted as an agent of a Canadian company, he was a resident in Canada, the benefit of the bribery would have accrued to a Canadian company, and the prosecution did not offend international comity. Karigar is still awaiting sentencing. He is subject to a sentence of up to 14 years in prison and monetary fines.211
As we have also previously reported, two other executives at SNC-Lavalin were charged in June 2012 with bribing officials in Bangladesh in connection with bidding for the US$1.2 billion Padma Multipurpose Bridge Project in Bangladesh. This, as well as misconduct in relation to the World Bank-financed Rural Electrification and Transmission project in Cambodia by SNC-Lavalin, led the World Bank Group to debar SNC-Lavalin—in addition to over 100 of its affiliates—for a period of 10 years.214 More recently, in September 2012, the Royal Canadian Mounted Police (RCMP) arrested and charged another former SNC-Lavalin executive, Kevin Wallace, with bribery in connection with the Bangladesh bridge construction project.215 A fourth former SNC-Lavalin executive, Riadh Ben Aissa, has now been extradited to Canada from Switzerland, where he had been held since April 2012, for allegedly orchestrating the payment of more than US$160 million in bribes to Saadi Gadhafi, the son of the late Libyan leader Moammar Gadhafi, in exchange for engineering contracts in Libya.216 According to an affidavit filed by the RCMP in April 2012, since at least 2001 Ben Aissa lavished gifts on Saadi Gadhafi, including a US$2.5 million yacht, as a reward for steering lucrative contracts to SNC-Lavalin, such as one for a US$275 million prison near Tripoli.217 The affidavit also alleges that Gadhafi had been offered a job at SNC-Lavalin as “VP Maghreb,” with a US$150,000 starting salary,218 and that one of Ben Aissa’s subordinates had plotted to smuggle Gadhafi out of Libya to Mexico during the unrest that ultimately toppled his father’s government.219 The RCMP also alleges that Ben Aissa “orchestrated the transfer” of US$22.5 million from SNC-Lavalin to a Bahamian company, which Canadian
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investigators say was then used to bribe public officials to award SNC-Lavalin the health center contract.220 In addition to the alleged misconduct in Libya, SNCLavalin’s bribery-related troubles may extend into Algeria.221 In June 2013, Algerian police raided SNCLavalin’s office in Algiers amid an investigation into the company’s alleged use of bribes and kickbacks to Algerian officials to secure infrastructure projects.222 In May 2013, the company announced that it was offering amnesty to any employees, excluding top executives or anyone who profited from misconduct, who, between June and August of 2013, reported any corrupt activity that they had observed at the company.223 The company also announced in September 2013 that it was “making rapid progress toward its goal of implementing a company-wide ethics and compliance framework,” listing such initiatives as the implementation of an employee anti-corruption manual and new third-party due diligence measures.224
Japan Launches Investigation of Deutsche Securities Inc. In September 2013, during a regularly scheduled audit of Deutsche Securities Inc., Deutsche Bank AG’s Japanese investment arm, the Japanese Securities and Exchange Surveillance Commission (SESC) uncovered large expenses made by bank employees for the entertainment of three Japanese pension fund executives from 2010 to 2012.225 Since these pension fund executives manage part of the Japanese national pension system, they are considered public employees under Japanese law, and, as a result, providing them with excessive entertainment could be a violation of Japanese anti-bribery statutes.226 According to news reports, Deutsche Securities had raised concerns about its entertainment practices to the SESC earlier in the year after an internal review, but it is not clear what impact this had on the SESC’s audit.227 An SESC official commented during a news conference that the Deutsche Securities sales team responsible for selling products to pension funds “offered such entertainment with a clear purpose to sell their financial products-indexlinked bond that the brokerage has developed … and we understand that during their overseas trip, they solicited sales of financial products.”228 On December 5, 2013, the Tokyo police arrested Shigeru Echigo, a Deutsche Securities employee, and Yutaka
Tsurisawa, a former official at Mitsui & Co.’s pension fund, which had been a client of Deutsche Securities. According to police, Echigo spent around US$8,800 in 2012 on Tsurisawa, paying for meals, entertainment, overseas trips, and golf outings, as a reward for Tsurisawa having invested US$9.7 million of the pension fund money with Deutsche Securities.229 One week later, the Japanese Financial Services Agency (FSA), Japan’s securities regulator, on the recommendation of the SESC, ordered Deutsche Securities to improve its business practices and develop a plan by January 14, 2014 to prevent similar “excessive entertainment” expenditures.230 Deutsche Securities apologized for its actions and announced that its CEO will receive a 20 percent pay cut for six months, its COO and Chairman will receive 30 percent pay cuts for six months, and two other executives will receive pay cuts as well.231
BRIC Countries Enhance Anti-Corruption Efforts Brazil’s Clean Company Act Takes Effect As we reported in our Summer 2013 FCPA Newsletter, Brazil’s Clean Company Act will take effect on January 29, 2014.232 The Act permits Brazilian authorities to pursue civil and administrative liability against corporations, including foreign corporations operating in Brazil, found to have engaged in corruption, whether foreign or domestic. The Act does not recognize an exception for facilitation payments, though it contemplates that Brazilian enforcement authorities will recognize the existence of a company’s compliance function and a company’s willingness to cooperate with Brazilian authorities as potential mitigating factors in determining any sanctions. Other developments in Brazil include an investigation into alleged bribery and price-fixing launched by Sáo Paolo state prosecutors in August 2013, in connection with the construction and maintenance of Sáo Paolo’s metro rail systems between 1999 and 2009. The companies under investigation for price-fixing and forming a cartel include Siemens AG and Alstom SA, as well as Spain’s CAF, Japan’s Mitsui, and Canada’s Bombardier.233 In connection with this investigation, in November 2013, Brazilian judges froze assets worth US$26 million dollars. Siemens AG, Alstom SA, and five individuals, including Global Anti-Corruption Insights | 31
three former heads of Sáo Paolo’s commuter rail company were among the parties with assets frozen.234
Russia’s Supreme Court Issues Guidance Regarding Anti-Corruption Laws
to combat fraud and bribery by providing for, among other measures, improved auditing standards, whistleblower protection, and sanctions.237 It also creates the National Financial Reporting Authority, which will prescribe and enforce accounting and auditing standards; creates the National Company Law Tribunal, which will hear certain cases involving corporations alleged to have violated the Companies Bill; and grants to India’s Serious Fraud Investigation Office new tools to arrest suspected violators and to seize corporate books and papers.238
Chinese Investigations of Suspected Bribery
On July 9, 2013, the Russian Federation’s Supreme Court issued Resolution Number 24 on Court Practice in Bribery Cases and Corruption Crimes, which provides guidance to judges regarding Russia’s anti-corruption law.235 While the guidance reflects that Russia’s anti-corruption laws have similarities to the FCPA and the Bribery—consistent with Russia’s ascension to the OECD’s Anti-Bribery Convention in 2012—it also reflects a divergence from the FCPA and the Bribery Act in one key respect. Section 23 of the Resolution provides that payments or other benefits provided to third parties, rather than to a government official or a member of the government official’s family, do not constitute bribes if the government official or a member of the government official’s family does not obtain a material benefit. In this regard, charitable donations, even if made at the request of a government official, may not constitute bribes under Russian law, though they may still violate US, UK, or other countries’ anti-corruption laws.
India Enacts Law Addressing Corporate Accounting In August 2013, India’s Companies Bill passed through the upper house of India’s Parliament and received presidential assent, replacing the Companies Act of 1956, which had long been criticized as inadequate.236 The new law seeks
Chinese efforts to investigate and prosecute corruption also have continued in 2013. For example, in addition to their investigation of pharmaceutical companies,239 Chinese authorities revealed in August 2013 that senior executives of PetroChina Co. Ltd., the country’s largest oil and gas distributor, have come under investigation for “serious disciplinary violations,” which is often used as shorthand for corruption. News outlets have reported that the executives under investigation include the former chairman of PetroChina and its parent, China National Petroleum Corp., as well as the former manager of PetroChina’s Indonesian business. PetroChina shareholders have filed putative class action lawsuits against PetroChina in New York federal court, alleging that the company artificially inflated its stock price by misrepresenting the strength of its corporate policies.240
G20 Leaders Adopt New Anti-Bribery Principles At the G-20 Summit in September 2013, the G-20 AntiCorruption Working Group released guiding principles for enforcing foreign bribery offenses, including both the “Guiding Principles on Enforcement of the Foreign Bribery Offense” and the “Guiding Principles to Combat Solicitation.” The “Guiding Principles on Enforcement of the Foreign Bribery Offense” call for countries wishing to increase their anti-bribery regimes to create a robust legislative framework, with generous statutes of limitations, broad jurisdiction over the offense, and effective sanctions for violations; to ensure effective domestic coordination
Global Anti-Corruption Insights | 32
between agencies, as well as appropriate protections for whistleblowers; and to establish procedures to give adequate investigative and enforcement powers to law enforcement authorities.241 The “Guiding Principles to Combat Solicitation” call for countries to create a legal framework that prohibits domestic bribery, promotes a strong culture of integrity in public service, and adopts strict punitive measures for those who fail to comply; to ensure that there are easily accessible reporting channels for those who wish to report bribery offenses; and to engage with the public sector to fight against solicitation.242
Transparency International Releases Its 2013 Corruption Perceptions Index and Its Annual Progress Report In the second half of 2013, Transparency International—a global non-profit organization headquartered in Berlin, Germany with over 90 chapters worldwide—released several reports to further its goal of combating global corruption and increasing government oversight, transparency, and accountability. Transparency International’s Corruption Perceptions Index and its Annual Progress Report provide insights into how countries are, or are not, combating corruption.
Transparency International Releases Its 2013 Corruption Perceptions Index On December 3, 2013, Transparency International released its 2013 Corruption Perceptions Index, an annual survey of global corruption that ranks countries from low (very corrupt) to high (very clean) based on perceptions of public sector corruption.243 Transparency International prepares its index using surveys completed by independent institutions specializing in governance and business climate analysis.244 According to Huguette Labelle, the Chair of Transparency International, the 2013 Index “demonstrates that all countries still face the threat of corruption at all levels of government, from the issuing of local permits to the enforcement of laws and regulations.” 245 Of the 177 countries surveyed—an increase of one (South Sudan) from 2012—just two earned scores within the top 10 percentile: Denmark and New Zealand, both scoring a 91, up one point from the year before.246 As with its 2012 Index, more than
two-thirds of the 177 countries in the 2013 Index scored below 50, which according to Transparency International “indicates a serious, worldwide corruption problem.”247 Afghanistan, North Korea, and Somalia were this year’s worst performers, each with scores of 8. The United States remained in 19th place, once again earning a score of 73, and the United Kingdom rose to 14th place, up three spots, with a score of 76.248 With respect to the so-called “BRICS” countries, only South Africa, which ranked 46th in the Index, received a score of higher than 50 (55). Brazil ranked 72nd with a score of 42; Russia ranked 127th with a score of 28; India ranked 94th with a score of 36; and China ranked 80th with a score of 40.
Transparency International Releases Its 9th Annual Progress Report On October 7, 2013, Transparency International’s Working Group on Bribery released its 9th Annual Progress Report on OECD Anti-Bribery Convention enforcement by the Convention’s 40 Parties.249 According to the report, just eight of the Convention’s signatories are complying with the terms of the Convention through either active or moderate enforcement of laws making foreign bribery a crime. Countries actively enforcing the Convention are the United States, Germany, United Kingdom, and Switzerland, which account for a combined 26.2 percent of the world’s exports. Moderate enforcement of the Convention was reported for Italy, Australia, Austria, and Finland, representing 6.1 percent of exports. Limited enforcement, however, was found in countries including France, South Africa, and Argentina, while little or no enforcement was found in countries including Japan, Russia, Mexico, Brazil, and Turkey.250 The Annual Progress Report also includes the Working Group on Bribery’s recommendations for increasing enforcement of the Convention. Those recommendations include (1) ensuring corporations are held responsible for the actions of their employees, agents and foreign subsidiaries, (2) ensuring settlements of enforcement actions are subject to court approval and published for public review, and (3) encouraging G20 countries China, India, Indonesia, and Saudi Arabia, as well as Hong Kong, Malaysia, Singapore, and Thailand to join the Convention, in view of their growing involvement in international business.251
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CONCLUSION Developments in the second half of 2013 and the beginning of 2014 confirm that efforts to combat foreign corruption will continue to make headlines in the US, UK, and around the world in 2014.252
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Endnotes 1
Press Release, DOJ, Alcoa World Alumina Agrees to Plead Guilty to Foreign Bribery and Pay $223 Million in Fines and Forfeiture (Jan. 9, 2014), available at http://www.justice.gov/opa/pr/2014/January/14-crm-019.html [hereinafter “DOJ Alcoa Release”].
2
Press Release, SEC, SEC Charges Alcoa With FCPA Violations (Jan. 9, 2014), available at http://www.sec.gov/News/PressRelease/Detail/ PressRelease/1370540596936#.UtCHsdJDu-M [hereinafter “SEC Alcoa Release”]; see also Cease and Desist Order, In the Matter of Alcoa, Inc. (Jan. 9, 2014), available at http://www.sec.gov/litigation/admin/2014/34-71261.pdf. Alcoa’s joint venture partner Alumina Limited is responsible for 37.5% of the FCPA settlement. See Alumina Ltd., Report of Foreign Issuer (Form 6-K), at 1 (July 9, 2013), available at http://www.sec.gov/Archives/edgar/ data/857071/000119312513285422/d565756d6k.htm.
3
Plea Agreement, ¶ 35, United States v. Alcoa World Alumina LLC, No. 2:14-cr-00007 (W.D. Pa. Jan 9, 2014), available at http://www.post-gazette.com/ attachment/2014/01/09/ALCOA-World-Alumina-Plea-Agreement.pdf [hereinafter “Alcoa World Plea”].
4
See Dionne Searcey and Samuel Rubenfeld, Alcoa Settles RICO Suit with Bahrain Company, Wall St. J. (Oct. 9, 2012), available at http://blogs.wsj.com/ corruption-currents/2012/10/09/alcoa-settles-rico-suit-with-bahrain-company/.
5
See DOJ Alcoa Release; Alcoa World Plea; SEC Alcoa Release.
6
See John W. Miller and Andrew Grossman, Alcoa Affiliate Pleads Guilty to Bribery, Wall Wall St. J. (Jan. 9, 2014), available at http://online.wsj.com/ news/articles/SB10001424052702303393804579310382812824444 (subscription required)
7
See DOJ Alcoa Release.
8
See SEC Alcoa Release.
9
Press Release, DOJ, ADM Subsidiary Pleads Guilty to Conspiracy to Violate the Foreign Corrupt Practices Act (Dec. 20, 2013), available at http://www. justice.gov/opa/pr/2013/December/13-crm-1356.html [hereinafter “DOJ ADM Release”]; Press Release, SEC, SEC Charges Archer-Daniels-Midland Company With FCPA Violations (Dec. 20, 2013), available at http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370540535139#.UrTJVlKA1dh [hereinafter “SEC ADM Release”].
10
Complaint, ¶ 12, SEC v. Archer-Daniels-Midland Co., No. 2:13-cv-02279 (C.D. Ill. Dec. 20, 2013), Dkt. Entry 1, available at http://www.sec.gov/litigation/ complaints/2013/comp-pr2013-271.pdf.
11
Id.
12
Id. ¶ 13.
13
Id. ¶¶ 1, 38.
14
Id. ¶¶ 1-2.
15
Id. ¶¶ 3, 37.
16
DOJ ADM Release, supra note 9.
17
Id.
18
Plea Agreement at ¶ 16, United States v. Alfred C. Toepfer Int’l (Ukraine) Ltd., No. 2:13-cr-20062 (C.D. Ill. Dec. 23, 2013), Dkt. Entry 9, available at http:// www.justice.gov/criminal/fraud/fcpa/cases/alfred-c-toepfer-international/acti-plea-agreement.pdf.
19
DOJ ADM Release, supra note 9.
20
DOJ ADM Release, supra note 9.
21
SEC ADM Release, supra note 9.
22
Id.
23
Id.
24
Press Release, FBI, German Engineering Firm Bilfinger Resolves Foreign Corrupt Practices Act Charges and Agrees to Pay $32 Million Criminal Penalty (Dec. 9, 2013), available at http://www.fbi.gov/washingtondc/press-releases/2013/german-engineering-firm-bilfinger-resolves-foreign-corrupt-practicesact-charges-and-agrees-to-pay-32-million-criminal-penalty; Press Release, DOJ, German Engineering Firm Bilfinger Resolves Foreign Corrupt Practices Act Charges and Agrees to Pay $32 Million Criminal Penalty (Dec. 11, 2013), available at http://www.justice.gov/opa/pr/2013/December/13-crm-1297. html [hereinafter “DOJ Bilfinger Release”].
25
DOJ Bilfinger Release, supra note 24.
26
Information, ¶¶ 19-20, United States v. Bilfinger SE, No. 4:12-cr-00745 (S.D. Tex. Dec. 9, 2013), Dkt. Entry 1, available at http://www.justice.gov/criminal/ fraud/fcpa/cases/bilfinger/bilfinger-information.pdf [hereinafter “Bilfinger Information”].
27
Id. ¶¶ 21a-b.
28
Id. ¶¶ 21b-c.
29
Id. ¶ 21e.
30
Deferred Prosecution Agreement, ¶¶ 5-13, United States v. Bilfinger SE, No. 4:12-cr-00745 (S.D. Tex. Dec. 9, 2013), Dkt. Entry 3, available at http://www. justice.gov/criminal/fraud/fcpa/cases/bilfinger/bilfinger-dpa.pdf.
31
Deferred Prosecution Agreement, United States v. Willbros Group, Inc., No. 4:08-cr-00287 (S.D. Tex. May 14, 2008), available at http://www.justice. gov/criminal/fraud/fcpa/cases/willbros-group/05-14-08willbros-deferred.pdf; Order, United States v. Willbros Group, Inc., 4:08-cr-00287 (S.D. Tex. Apr. 2, 2012), Dkt. Entry 11, available at http://www.justice.gov/criminal/fraud/fcpa/cases/willbros-group/2012-04-02-willbros-group-order-grantingmotion-to-dismiss.pdf.
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32
Plea Agreement, United States v. Brown, No. 4:06-cr-00316 (S.D. Tex. Sept. 14, 2006), Dkt. Entry 15, available at http://www.justice.gov/criminal/fraud/ fcpa/cases/brownj/09-14-09brown-plea-agree.pdf.
33
DOJ Bilfinger Release, supra note 24; Press Release, DOJ, Former Willbros International Executives Sentenced to Prison for Their Roles in $6 Million Foreign Bribery Scheme (Jan. 28, 2010), available at http://www.justice.gov/opa/pr/2010/January/10-crm-102.html [hereinafter “Brown and Steph Sentencing Release”].
34 Plea Agreement, United States v. Steph, No. 4:07-cr-00307 (S.D. Tex. Nov. 5, 2007), Dkt. Entry 43, available at http://www.justice.gov/criminal/fraud/ fcpa/cases/stephj/11-05-07steph-plea-agree.pdf. 35
Brown and Steph Sentencing Release, supra note 33.
36 Indictment, United States v. Tillery, No. 4:08-cr-00022 (S.D. Tex. Jan. 17, 2008), Dkt. Entry 1, available at http://www.justice.gov/criminal/fraud/fcpa/ cases/tilleryj/01-17-08tillery-indict.pdf; Bilfinger Information, supra note 26, ¶¶ 19-20. 37
DOJ Bilfinger Release, supra note 24.
38
Id.
39
Press Release, SEC, SEC Charges Weatherford International With FCPA Violations (Nov. 26, 2013), available at http://www.sec.gov/News/PressRelease/ Detail/PressRelease/1370540415694 [hereinafter “SEC Weatherford Release”]; see also Press Release, DOJ, Three Subsidiaries of Weatherford International Limited Agree to Plead Guilty to FCPA and Export Control Violations (Nov. 26, 2013), available at www.justice.gov/opa/pr/2013/November/13-crm-1260. html [hereinafter “DOJ Weatherford Release”]; Deferred Prosecution Agreement at Attachment A, Statement of Facts, ¶¶ 14-32, United States v. Weatherford Int’l Ltd., No. 4:13-cr-00733 (S.D. Tex. Nov. 26, 2013), Dkt. Entry 4, available at www.justice.gov/criminal/fraud/fcpa/cases/weatherford-international-ltd/ Weatherford-International-DPA.pdf [hereinafter “Weatherford DPA”]; Complaint, SEC v. Weatherford Int’l Ltd., ¶ 2, No. 4:13-cv-03500 (S.D. Tex. Nov. 26, 2013), Dkt. Entry 1, available at www.sec.gov/litigation/complaints/2013/comp-pr2013-252.pdf [hereinafter “SEC Weatherford Complaint”].
40
Weatherford DPA, supra note 39, at Statement of Facts ¶ 7.
41
Weatherford DPA, supra note 39, at Statement of Facts ¶¶ 15-23; SEC Weatherford Complaint, supra note 39, ¶¶ 11-27.
42
Weatherford DPA, supra note 39, at Statement of Facts ¶¶ 24-28; SEC Weatherford Complaint, supra note 39, ¶¶ 28-35.
43
SEC Weatherford Complaint, supra note 39, ¶ 2; Weatherford DPA, supra note 39, at Statement of Facts ¶ 33.
44 Plea Agreement, United States v. Weatherford Servs., Ltd., No. 4:13-cv-00734 (S.D. Tex. Nov. 26, 2013), Dkt. Entry 4, available at www.justice.gov/ criminal/fraud/fcpa/cases/weatherford-services-ltd/Weatherford-Services-Plea-Agreement.pdf; Weatherford DOJ Release, supra note 39. Under the plea agreement, Weatherford Services Limited agreed to pay the United States a fine of $420,000, which is the bottom of the fine range calculated under the United States Sentencing Guidelines. Weatherford’s DPA recognizes that any criminal penalty imposed upon Weatherford Services Limited will be deducted from Weatherford’s penalty. 45
SEC Weatherford Release, supra note 39; DOJ Weatherford Release, supra note 38; see also SEC Weatherford Complaint, supra note 39, ¶ 52 (alleging Weatherford and its employees failed to provide complete and accurate information resulting in significant delay by, for example, (1) informing the SEC staff that an employee was missing or dead when he remained employed by Weatherford, (2) deleting emails prior to the imaging of their computers, and (3) allowing potentially complicit employees to collect documents subpoenaed by the SEC staff).
46
Weatherford DOJ Release, supra note 39.
47
Press Release, SEC, SEC Charges Stryker Corporation with FCPA Violations (Oct. 24, 2013), available at http://www.sec.gov/News/PressRelease/Detail/ PressRelease/1370540044262.
48 Cease and Desists Order, ¶ 1, In re Stryker Corp., No. 3-15587 (Oct. 24, 2013), available at http://www.sec.gov/litigation/admin/2013/34-70751.pdf [hereinafter “Stryker Order”]. 49
Id. ¶ 1.
50
Id. ¶¶ 6-12.
51
Id. ¶¶ 27-33.
52
Id. ¶ 15.
53
Id. ¶¶ 23-26.
54
Stryker Order, ¶¶ 38-40. According to the Order, “Stryker voluntarily produced documents that permitted the Commission staff to assess how Stryker’s internal audit and compliance functions used the results of each of the assessments to implement additional enhancements to its infrastructure, to target jurisdictions for future assessments, and to create management action plans in collaboration with local management.” Id. ¶ 40.
55
Id. ¶ 41.
56 Samuel Rubenfeld, Stryker Corp. Settles FCPA Case, Pays $13 Million, Wall St. J. (Oct. 24, 2013), available at http://blogs.wsj.com/ riskandcompliance/2013/10/24/stryker-corp-settles-fcpa-case-pays-13-million/. 57
Id.
58
Press Release, SEC, SEC Charges Diebold with FCPA Violations in China, Indonesia, and Russia (Oct. 22, 2013), available at http://www.sec.gov/litigation/ litreleases/2013/lr22849.htm [hereinafter “SEC Diebold Release”]; Press Release, DOJ, Diebold Incorporated Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $25.2 Million Criminal Penalty (Oct. 22, 2013), available at http://www.justice.gov/opa/pr/2013/October/13-crm-1118.html.
59
Deferred Prosecution Agreement, United States v. Diebold, Inc., Case No. 5:13CR464 (N.D. Ohio Oct. 22, 2013), Dkt. Entry 1, available at http://www. justice.gov/criminal/fraud/fcpa/cases/diebold/combined_dpa.pdf.
60 Id. ¶ 6.
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61
Id. ¶ 4.
62
Id. see also SEC Diebold Release, supra note 58; Complaint ¶ 2, SEC v. Diebold, Inc. (D.D.C. Oct. 22, 2013), Dkt. Entry 1, available at http://www.sec. gov/litigation/complaints/2013/comp-pr2013-225.pdf [hereinafter “SEC Diebold Complaint”].
63
See SEC Diebold Complaint, supra note 62.
64 Id. 65
Guidance at 21.
66
Mary Jacoby, Remarks of Kara Brockmeyer at Annual Conference on the U.S. Foreign Corrupt Practices Act, Main Justice (Nov. 22, 2013), available at http://www.mainjustice.com/justanticorruption/2013/11/22/remarks-of-kara-brockmeyer-at-annual-conference-on-the-u-s-foreign-corrupt-practices-act/.
67
Press Release, DOJ, Foreign Bribery Charges Unsealed Against Former Chief Executive Officers of Oil Services Company (Jan. 6, 2014), available at http://www.justice.gov/opa/pr/2014/January/14-crm-007.html [hereinafter “DOJ PetroTiger Release”].
68
Id.; see also Criminal Complaint, United States v. Hammarskjold, Case No. 13-mj-2086 (D.N.J. Nov. 8, 2013), available at http://www.justice.gov/iso/opa/ resources/793201416163330616623.pdf [hereinafter “Hammarskjold Complaint”]; Criminal Complaint, United States v. Sigelman, Case No. 13-mj-2087 (D.N.J. Nov. 8, 2013), available at http://www.justice.gov/iso/opa/resources/964201416163538382506.pdf [hereinafter “Sigelman Complaint”].
69
See Hammarskjold Complaint, supra note 68; Sigelman Complaint, supra note 68.
70
DOJ PetroTiger Release, supra note 67.
71
See Indictment, United States. v. Riedo, Case No. 13CR3789 (S.D. Cal. Oct. 15, 2013), Dkt. Entry 1, available at http://www.justice.gov/criminal/fraud/ fcpa/cases/reidoa/Riedo_Indictment.pdf [hereinafter “Riedo Indictment”].
72
See Deferred Prosecution Agreement, United States v. Maxwell Techs., Inc., Case No. 11CR0329 (S.D. Cal. Jan. 31, 2011), available at http://www.justice. gov/criminal/fraud/fcpa/cases/maxwell/01-31-11maxwell-tech-dpa.pdf; SEC Charges Maxwell Technologies Inc. for Bribery Scheme in China - Maxwell to Pay Over $6.3 Million in Disgorgement and Interest, SEC Litigation Release No. 21832 (Jan. 31, 2011), available at https://www.sec.gov/litigation/ litreleases/2011/lr21832.htm.
73
Riedo Indictment, supra note 71, ¶ 7.
74
Id. ¶¶ 17A-L.
75
Id. ¶ 17H.
76
See Samuel Rubenfeld, Venezuelan Bank Official Pleads Guilty to Laundering Bribes, Wall St. J. (Nov. 18, 2013), available at http://blogs.wsj.com/ riskandcompliance/2013/11/18/venezuelan-bank-official-pleads-guilty-to-laundering-bribes/; Press Release, DOJ, Three Former Broker-dealer Employees Plead Guilty in Manhattan Federal Court to Bribery of Foreign Officials, Money Laundering and Conspiracy to Obstruct Justice (Aug. 30, 2013), available at http://www.justice.gov/opa/pr/2013/August/13-crm-980.html; Richard Vanderford, Ex-DAP Employees Cop Pleas In FCPA Kickback Cases, Law360 (Aug. 29, 2013), available at http://www.law360.com/newyork/articles/468910?nl_pk=33df8c29-c5d8-476c-9838-48caea2dfb20&utm_source=newsletter&utm_ medium=email&utm_campaign=newyork.
77
See Minute Entry, United States v. De Los Angeles Gonzalez De Hernandez 1:13-cr-00901-PAE-1 (S.D.N.Y. Nov. 18, 2013); Information, United States v. De Los Angeles Gonzalez De Hernandez 1:13-cr-00901-PAE-1 (S.D.N.Y. Nov. 18, 2013), Dkt. Entry 43.
78
See Oral Order, United States v. De Los Angeles Gonzalez De Hernandez 1:13-cr-00901-PAE-1 (S.D.N.Y. Nov. 18, 2013).
79
Arnold & Porter LLP, FCPA, Bribery Act & Other Global Anti-Corruption Insights (Summer 2013) at 8, available at http://www.arnoldporter.com/ resources/documents/FcpaNewsletterAugust2013.pdf [hereinafter “A&P Summer 2013 FCPA Newsletter”].
80
See Press Release, SEC, SEC Charges Traders in Massive Kickback Scheme Involving Venezuelan Official (May 7, 2013), available at http://www. sec.gov/news/press/2013/2013-84.htm; Press Release, DOJ, Two U.S. Broker-Dealer Employees And Venezuelan Government Official Charged In Manhattan Federal Court For Massive International Bribery Scheme (May 7, 2013), available at http://www.justice.gov/usao/nys/pressreleases/May13/ ClarkeetalComplaintPR.php.
81
A&P Summer 2013 FCPA Newsletter, supra note 79, at 8-9; Press Release, DOJ, Foreign Bribery Charges Unsealed Against Current and Former Executives of French Power Company (Apr. 16, 2013), available at http://www.justice.gov/opa/pr/2013/April/13-crm-434.html [hereinafter “DOJ Alstom Release”].
82
DOJ Alstom Release, supra note 81; see also Plea Agreement, United States v. Pierucci, Crim. No. 3:12CR238 (D. Conn. July 29, 2013), Dkt. Entry 46, available at http://www.justice.gov/criminal/fraud/fcpa/cases/pieruccif/de46-pierucci-plea-agreement.pdf; Plea Agreement, United States v. Rothschild, No. 3:12CR223 (D. Conn. Nov. 2, 2012), Dkt. Entry 8, available at http://www.justice.gov/criminal/fraud/fcpa/cases/rothschildd/rothschild-guilty-plea. pdf.
83
See Superseding Indictment, United States v. Pierucci and Pomponi, Crim. No. 3:12CR238 (D. Conn. Apr. 30, 2013), Dkt. Entry 15, available at http:// www.justice.gov/iso/opa/resources/971201351113654342378.pdf; Press Release, DOJ, Former Executive of French Power Company Subsidiary Charged in Connection with Foreign Bribery Scheme (May 1, 2013), available at http://www.justice.gov/opa/pr/2013/May/13-crm-496.html; Second Superseding Indictment, United States v. Hoskins and Pomponi, Crim. No. 3:12CR238 (D. Conn. July 30, 2013), Dkt. Entry 50, available at http://www.justice.gov/ criminal/fraud/fcpa/cases/pomponi/de50-second-superseding-indictment.pdf [hereinafter “Second Pomponi Indictment”].
84
Second Pomponi Indictment, supra note 83.
85
See Mot. for Disclosure of 404B Material, Mot. for Early Disclosure of Gov’t Trial Exhibits, Mot. for Release of Brady Materials, and Mot. for Bill of Particulars, United States v. Pierucci, Case No. 3:12CR238 (D. Conn. Oct. 8, 2013), Dkt. Entry 68-71.
86
See Mem. in Opp’n, United States v. Pierucci, Case No. 3:12CR238 (D. Conn. Oct. 23, 2013), Dkt. Entry 72.
87
Id.; see also Supplemental Notice of Intent to Offer Evid. Pursuant to F.R.E. 404(b), United States v. Pierucci, Case No. 3:12CR238 (D. Conn. Dec. 18, 2013), Dkt. Entry 86.
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88
Mot. to Continue Jury Selection and Trial, United States v. Pierucci, Case No. 3:12CR238 (D. Conn. Nov. 8, 2013), Dkt. Entry 76.
89 Order, United States v. Pierucci, Case No. 3:12CR238 (D. Conn. Nov. 21, 2013), Dkt. Entry 83. 90
Press Release, Swiss Office of the Attorney General, Criminal proceedings against Alstom entities are brought to a close (Nov. 22, 2011), available at http:// www.news.admin.ch/message/index.html?lang=en&msg-id=42300; see also Christopher M. Matthews, Alstom Executive Arrested on Bribery Charges, Wall St. J. (Apr. 16, 2013), available at http://online.wsj.com/article/SB10001424127887324345804578427100228043378.html (subscription required).
91 AFP, French firm Alstom in Brazil corruption probe: Report, Yahoo, (Aug. 8, 2013), available at http://au.finance.yahoo.com/news/french-firm-alstombrazil-corruption-133324579.html (reporting on published report in Estadio de Sao Paolo). 92
Press Release, DOJ, Manhattan U.S. Attorney Announces Arrest Of French Citizen For Obstructing Foreign Bribery And Money Laundering Investigation (Apr. 15, 2013), available at http://www.justice.gov/usao/nys/pressreleases/April13/FredericCilinsArrestPR.php; see also Samuel Rubenfeld, Trial Date Set in FCPA Obstruction Case, Wall St. J. (Dec. 6, 2013), available at http://blogs.wsj.com/riskandcompliance/2013/12/06/trial-date-set-in-fcpa-obstructioncase/.
93
See Bob Van Voris, Frenchman Linked to BSG Resources Says Contracts Are Fake, Bloomberg News (Sept. 12, 2013), available at http://www.businessweek. com/news/2013-09-12/frenchman-linked-to-bsg-resources-says-contracts-are-fake.
94
Ian Cobain, Swiss and French police raid offices linked to billionaire Steinmetz, The Guardian (Aug. 29, 2013), available at http://www.theguardian.com/ world/2013/aug/29/swiss-french-police-raids-linked-beny-steinmetz.
95
See A&P Summer 2013 FCPA Newsletter, supra note 79, at 10-11; Memorandum and Order, SEC v. Straub, No. 11 Civ. 9645 (Feb. 8, 2013), Dkt. Entry 48.
96
See Mem. of Law in Supp. of Defs.’ Joint Mot. to Dismiss the Complaint, SEC v. Straub, No. 11 Civ. 9645 (S.D.N.Y. Oct. 29, 2012), Dkt. Entry 35.
97
Mem. and Order, SEC v. Straub, No. 11 Civ. 9645 (Aug. 5, 2013), Dkt. Entry 68 [hereinafter “Straub Interlocutory Order”].
98
Id. at 4.
99
Straub Interlocutory Order, supra note 97, at 5 (citing SEC v. Sharef, 924 F. Supp. 2d 539).
100 Id. at 4-5 (citing SEC v. Sharef, 924 F. Supp. 2d at 547). 101 Id. at 4-5. 102 Id. at 7-8. 103 Final Judgment as to Defendants Ulrich Bock and Stephan Signer, SEC v. Sharef, No. 11 Civ. 9073 (S.D.N.Y. Feb. 4, 2014), Dkt. Entry 50; see also Mot. for Default Judgment as to Defendants Ulrich Bock and Stephan Signer, Dkt. Entry 38, and Dkt. Entries 45, 46 (Nov. 16, 2013) (resubmission after withdrawal). 104 Final Judgment as to Defendant Andres Truppel, SEC v. Sharef, No. 11 Civ. 9073 (S.D.N.Y. Feb. 3, 2014), Dkt. Entry 48; Mot. to Withdraw Motion for Default Judgment, Dkt. Entry 44. As we reported in our last newsletter, two other former Siemens executives—Uriel Sharef and Bernd Regendantz— previously resolved SEC charges. See A&P Summer 2013 FCPA Newsletter, supra note 79, at 12. 105 Notice of Voluntary Dismissal, SEC v. Sharef, No. 11 Civ. 9073 (S.D.N.Y. Oct. 25, 2013), Dkt. Entry 40. 106 Zach Warren, 11th Circuit primed to issue key FCPA ruling, Inside Counsel (Oct. 16, 2013), available at http://www.insidecounsel.com/2013/10/16/11thcircuit-primed-to-issue-key-fcpa-ruling; Samuel Rubenfeld, FCPA ‘Foreign Official’ Question Reaches Appellate Spotlight in Esquenazi Case, Wall St. J. (Oct. 10, 2013), available at http://blogs.wsj.com/riskandcompliance/2013/10/10/fcpa-foreign-official-question-reaches-appellate-spotlight/. 107 Order Denying Petition for a Writ of Certiorari, Green v. United States, 134 S. Ct. 658 (Nov. 11, 2013), available at http://www.supremecourt.gov/Search. aspx?FileName=/docketfiles/13-472.htm; United States v. Green, 722 F.3d 1146 (9th Cir. 2013). 108 Id. at 1147-48. 109 Id. 110 MVRA, Pub. L. No. 104-132, § 204, 110 Stat. 1214, 1227 (codified principally at 18 U.S.C. §§ 3663A and 3664) (MVRA). 111 Id. 112 530 U.S. 466, 490 (2000). 113 — U.S. —, 132 S. Ct. 2344, 2357 (2012). 114 Green, 722 F.3d. at 1149-51. 115 Id. at 1150. 116 Id. at 1151. 117 Remarks of Charles Duross and Kara Brockmeyer at the ABA’s 2013 FCPA Conference, Main Justice (Oct. 2, 2013), available at http://www.mainjustice. com/justanticorruption/2013/10/02/remarks-of-charles-duross-and-kara-brockmeyer-at-the-abas-2013-fcpa-conference/. 118 Brian Mahoney, Expect More Big FCPA Cases In 2014: DOJ, SEC Officials, Law360 (Nov. 19, 2013), available at http://www.law360.com/articles/489940/ doj-sec-officials-say-more-major-fcpa-cases-coming-in-2014. 119 Brian Mahoney, FCPA Crackdown Relies On Business Attys, Deputy AG Says, Law360 (Nov. 19 2013), available at http://www.law360.com/ internationaltrade/articles/490063/fcpa-crackdown-relies-on-business-attys-deputy-ag-says-. 120 Id. 121 Andrew Ramonas, FCPA Partnership Efforts Take DOJ to Mexico, Brazil, Law.com: Corporate Counsel (Nov. 20, 2013), available at http://www.law. com/corporatecounsel/PubArticleCC.jsp?id=1202628867255&FCPA_Partnership_Efforts_Take_DOJ_to_Mexico_Brazil&slreturn=20131026172519.
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122 Andrew Ceresney, Co-Director of the Division of Enforcement, SEC, Keynote Address at the International Conference on the Foreign Corrupt Practices Act (Nov. 19, 2013), available at http://www.sec.gov/News/Speech/Detail/Speech/1370540392284. 123 Justice Dep’t Opinion Procedure Release No. 13-01 (Dec. 19, 2012), available at http://www.justice.gov/criminal/fraud/fcpa/opinion/2013/13-01.pdf. 124 Adam Jordan, Shanghai Pharma opens bribery probe after whistleblower report, Reuters (Dec. 17, 2013), available at http://www.reuters.com/ article/2013/12/17/shanghaipharma-corruption-idUSL3N0JW1CS20131217; China: A Risky Bet for Drug Makers, Wall St. J. (Oct. 21, 2013), available at http://blogs.wsj.com/chinarealtime/2013/10/21/china-an-increasingly-risky-bet-for-drug-makers. 125 Christopher Matthews and Jessica Hodgson, GlaxoSmithKline Probes Bribe Allegations in China, Wall St. J. (June 12, 2013), available at http://online.wsj.com/news/articles/SB10001424127887324798904578529413574312372. (subscription required) 126 Dav id Voreacos, China’s Br iber y Cult ure Pose s Risk s for Mult inat ionals, Bloomberg News ( Nov. 21, 2013), available at http://www.bloomberg.com/news/2013-11-21/china-s-bribery-culture-poses-risks-for-multinationals.html. 127 See, e.g., Complaint, ¶ 15, SEC v. Pfizer Inc., 1:12-cv-01303 (D.D.C. Aug. 7, 2012), available at http://www.sec.gov/litigation/complaints/2012/comp-pr2012-152-pfizer.pdf (“In those countries with national healthcare systems, hospitals, clinics, pharmacies, doctors, and other healthcare professionals and institutions are generally government officials or instrumentalities within the meaning of the FCPA.”). 128 NHFPC, Provisions on the Establishment of Commercial Bribery Records in the Purchase and Sale of Medicines (Dec. 25, 2013), available at http://www. nhfpc.gov.cn/fzs/s3577/201312/ef92cb05dee341a18fff7b3e00eb1156.shtml [Chinese]. 129 NHFPC, Nine Prohibitions for Strengthening the Healthcare Industry’s Ethics (Dec. 26, 2013), available at http://www.nhfpc.gov.cn/jcj/s3577/201312/0 9bd7a8be8f8420d91997a0041aa868e.shtml [Chinese]. 130 Ben Protess and Jessica Silver-Greenberg, On Defensive, JPMorgan Hired China’s Elite, N.Y. Times (Dec. 29, 2013), available at http://dealbook.nytimes. com/2013/12/29/on-defensive-jpmorgan-hired-chinas-elite/ [hereinafter “JPMorgan China Article”]; Justin Baer and Christopher M. Matthews, Morgan Stanley and Citi Got SEC Inquiries on Foreign Hiring, Wall St. J. (Nov. 26, 2013), available at http://online.wsj.com/news/articles/SB100014240527023 03281504579222650642701942. 131 JPMorgan China Article, supra note 130. 132 Id.; see also, e.g., David Barboza, Many Wall St. Banks Woo Children of Chinese Leaders, N.Y. Times (Aug.20, 2013), available at http://dealbook.nytimes. com/2013/08/20/many-wall-st-banks-woo-children-of-chinese-leaders/ [hereinafter “Barboza Wall St. Banks Article”]. 133 Barboza Wall St. Banks Article, supra note 132. 134 Id. 135 Anheuser-Busch InBev SA/NV, Report of Foreign Private Issuer (Form 6-K), at 23 (July 31, 2013), available at http://www.sec.gov/Archives/edgar/ data/1140467/000119312513311563/0001193125-13-311563-index.htm. 136 Wal-Mart, Quarterly Report (Form 10-Q/A), at 15 (Oct. 21, 2013), available at http://www.sec.gov/Archives/edgar/data/104169/000010416913000039/ wmt7311310-q.htm [hereinafter “Wal-Mart 10/21/13 10-Q”]; Wal-Mart, Quarterly Report (Form 10-Q), at 15 (Dec. 6, 2013), available at http://www.sec. gov/Archives/edgar/data/104169/000010416913000051/wmt10311310-q.htm [hereinafter “Wal-Mart 12/6/13 10-Q”]. 137 Aruna Viswanatha, Wal-Mart pays lawyer fees for dozens of executives in bribery probe, Reuters (Dec. 4, 2013), available at http://www.reuters.com/ article/2013/12/04/us-walmart-bribery-lawyers-idUSBRE9B305W20131204. 138 Wal-Mart 10/21/13 10-Q at 15; Wal-Mart 12/6/13 10-Q at 15. 139 Press Release, Wal-Mart, Bharti Enterprises and Wal-Mart Stores, Inc. Announce Agreement to Independently Own and Operate Separate Business Formats in India (Oct. 9, 2013), available at http://news.walmart.com/news-archive/2013/10/09/bharti-enterprises-walmart-stores-inc-announce-agreementto-independently-own-operate-separate-business-formats-in-india. 140 Embraer S.A., Report of Foreign Issuer (Form 6-K), at 9 (Oct. 31, 2013), available at http://ri.embraer.com.br/show.aspx?idCanal=ot7Nt0WpZOINWPlkPZrBOw==. 141 Joe Palazzolo and Paulo Winterstein, Plane Maker Embraer Faces Bribery Inquiries, Wall St. J. (Nov. 1, 2013), available at http://online.wsj.com/news/ articles/SB10001424052702303618904579172070636222040. 142 Brad Haynes and Aruna Viswanatha, Embraer investigated for bribery in Argentine, Dominican deals, Reuters (Nov. 2, 2013), available at http://www. reuters.com/article/2013/11/02/us-embraer-probe-idUSBRE9A100W20131102. 143 Christopher M. Matthews and Shira Ovide, Microsoft Bribe Probe Reaches into Pakistan, Russia Deals, Wall St. J. (Aug. 21, 2013), available at http://online.wsj.com/news/articles/SB10001424127887324619504579027200320722342#. 144 Layne Christensen Co., Quarterly Report (Form 10-Q), at 24 (Dec. 10, 2013), available at http://investor.laynechristensen.com/secfiling.cfm?filingID=119312513-467033&CIK=888504. 145 Owens-Illinois, Inc., Quarterly Report (Form 10-Q), at 19 (July 25, 2013), available at http://services.corporate-ir.net/SEC.Enhanced/SecCapsule. aspx?c=88324&fid=8930683. 146 The Allied Defense Grp., Inc., Quarterly Report (Form 10-Q), at 13 (Aug. 14, 2013), available at http://www.sec.gov/Archives/edgar/ data/3952/000119312513333545/d544799d10q.htm. 147 Eni S.p.A., Report of Foreign Issuer (Form 6-K), at 113 (Sept. 3, 2013), available at http://www.sec.gov/Archives/edgar/data/1002242/000131143513000011/ sj0813en6k.htm. 148 Mead Johnson Nutrition Co., Quarterly Report (Form 10-Q), at 17 (Oct. 24, 2013), available at http://www.sec.gov/Archives/edgar/ data/1452575/000145257513000015/form10-qx3q20139302013.htm#sA96ACEB73C1F95CE3CFA78F4C1A51B7B; see also Drew Armstrong, Baby Food Maker Mead Johnson Opens China Bribery Probe, Bloomberg (Oct. 24, 2013), available at http://www.bloomberg.com/news/2013-10-24/baby-foodmaker-mead-johnson-opens-internal-china-bribery-probe.html.
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149 Christopher M. Matthews, SEC Investigates Gold Fields For South African Deal, Wall St. J. (Sept. 12, 2013), available at http://blogs.wsj.com/ riskandcompliance/2013/09/12/sec-investigates-miner-gold-fields-for-south-african-deal/. 150 David Dolan and Ed Stoddard, South Africa’s Gold Fields says under U.S. SEC investigation, Reuters (Sept. 10, 2013), available at http://www.reuters. com/article/2013/09/10/us-safrica-goldfields-idUSBRE9890JX20130910. 151 Hyperdynamics Corp., Quarterly Report (Form 10-Q), at 16 (Nov. 12, 2013), available at http://investors.hyperdynamics.com/secfiling. cfm?filingID=1104659-13-83334. 152 Park Ohio Holdings Corp., Quarterly Report (Form 10-Q), at 16 (Nov. 12, 2013), available at http://www.sec.gov/Archives/edgar/ data/76282/000007628213000058/pkoh20130930-10q.htm. 153 See Press Release, SEC, Enforcement Co-Director George Canellos to Leave SEC (Jan. 3, 2014), available at http://www.sec.gov/News/PressRelease/ Detail/PressRelease/1370540587386#.UssUJtJDu-M. 154 See Press Release, SEC, SEC Rewards Whistleblower With $150,000 Payout (Oct. 30, 2013), available at http://www.sec.gov/News/PressRelease/Detail/ PressRelease/1370540158194#.UswSv9JDst0; Press Release, SEC, SEC Awards More Than $14 Million to Whistleblower (Oct. 1, 2013), available at http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539854258#.UswUpdJDst1. 155 U.S. Securities and Exchange Commission, 2013 Annual Report to Congress on the Dodd-Frank Whistleblower Program 8 and Appendix B (Nov. 15, 2013), available at http://www.sec.gov/about/offices/owb/annual-report-2013.pdf. 156 See Carreras, Aldo Omar and others regarding defrauding of the public administration, Case Number 2.645/98 pending in the National Federal Criminal and Correctional Court, Number 4 (Dec. 27, 2013), which is accessible through a link available at http://www.cij.gov.ar/nota-12824-Caso-Siemens--eljuez-Ariel-Lijo-dispuso-el-procesamiento-de-diecisiete-imputados-por-el-delito-de-cohecho-activo.html (Spanish) [hereafter “Siemens Argentine Case”]; see also SEC v. Sharef, No. 11 Civ. 9073; United States v. Sharef, No. 1:11-CR-01056. 157 Former Siemens Executive Uriel Sharef Settles Bribery Charges, SEC Litigation Release No. 22676 (Apr. 16, 2013), available at http://www.sec.gov/ litigation/litreleases/2013/lr22676.htm; see also Final Judgment, SEC v. Sharef, No. 11 Civ. 9073 (S.D.N.Y. Apr. 16, 2013), Dkt. Entry 36. 158 Siemens Argentine Case, supra note 157; see also SEC Charges Seven Former Siemens Executives with Bribing Leaders in Argentina, SEC Litigation Release No. 22190 (Dec. 13, 2011), available at http://www.sec.gov/litigation/litreleases/2011/lr22190.htm. 159 Associated Press, Siemens subsidiary fined over Russian bribes (Nov. 12, 2013), available at http://bigstory.ap.org/article/siemens-subsidiary-fined-overrussian-bribes. 160 See Liam Moloney, Eni Repeats No Irregularities by CEO, Company in Algeria Probe, Wall St. J. (Dec. 4, 2013), available at http://online.wsj. com/article/BT-CO-20131204-708670.html; AFP, Chekib Khelil: Algeria ex-minister wanted for corruption, Fox News (Aug. 13, 2013), available at http://www.foxnews.com/world/2013/08/13/chekib-khelil-algeria-ex-minister-wanted-for-corruption/. 161 See Securities and Exchange Commission v. ENI, S.p.A. and Snamprogetti Netherlands, B.V., Case No. 4:10-cv-02414, S.D. Tex. (Houston), SEC Litigation Release No. 21588 (July 7, 2010), available at http://www.sec.gov/litigation/litreleases/2010/lr21588.htm. 162 Am. Petroleum Inst. v. SEC, -- F. Supp. 2d --, 2013 WL 3307114, at *6 (D.D.C. July 2, 2013). 163 Disclosure of Payments by Resource Extraction Issuers, 77 Fed. Reg. 56,365 (Sept. 12, 2012). 164 Id. at 56,398. 165 Am. Petroleum Inst., 2013 WL 3307114, at *12. 166 Am. Petroleum Inst., 2013 WL 3307114, at *13. 167 Id. at *15. 168 For a lengthier discussion of the issues, see Federal Court Vacates SEC’s Extraction Payment Disclosure Rule, Arnold & Porter LLP Advisory (July 8, 2013), available at http://www.arnoldporter.com/publications.cfm?action=advisory&u=FederalCourtVacatesSECsExtractionPaymentDisclosureRule& id=1047. 169 Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620 (5th Cir. 2013). 170 Id. at 621. 171 Asadi v. G.E. Energy (USA) LLC, Civ. A. No. 4;12-345, 2012 WL 2522599 (S.D. Tex. June 28, 2012). 172 720 F.3d at 625. 173 Id. 174 Id. at 629-30 (discussing 17 C.F.R. § 240.21F-2(b)(1)). 175 See A&P Summer 2013 FCPA Newsletter, supra note 79, at 26. 176 Wynn Resorts, Ltd., Quarterly Report (Form 10-Q), at 26 (Nov. 12, 2013), available at http://www.sec.gov/Archives/edgar/data/1174922/000119312513438301/ d599412d10q.htm. 177 The federal cases were consolidated and the consolidated case is Moradi v. Adelson, et al., No. 2:11-cv-490 (D. Nev.). The consolidated state case is Kohanim v. Adelson, et al., No. A-11-636656-B (Nev.). 178 Las Vegas Sands Corp., Quarterly Report (Form 10-Q) at 20, (Nov. 11, 2013), available at http://www.sec.gov/Archives/edgar/data/1300514/000119312513431316/ d601184d10q.htm. 179 Press Release, United States House of Representatives Judiciary Committee, House Judiciary Committee Creates Bipartisan Task Force on OverCriminalization (May 5, 2013), available at http://judiciary.house.gov/index.cfm/press-releases?ID=1B5BE8BE-FFD6-6D66-5887-4B51307CAF64.
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180 Defining the Problem and Scope of Over-Crimilization and Over-Federalization: Hearing Before Task Force on Over-Criminalization of the H. Comm. on the Judiciary, 113th Cong. (June 14, 2013) (Prepared Statement of George J. Terwilliger III, Partner at Morgan, Lewis & Bockius LLP), available at http://judiciary.house.gov/_files/hearings/113th/06142013/Terwilliger%2006142013.pdf. 181 Defining the Problem and Scope of Over-Crimilization and Over-Federalization: Hearing Before Task Force on Over-Criminalization of the H. Comm. on the Judiciary, 113th Cong. (June 14, 2013) (Written Statement of Steven D. Benjamin, President, Nat’l Assoc. of Crim. Defense Lawyers), available at http://judiciary.house.gov/_files/hearings/113th/06142013/Benjamin%2006142013.pdf. 182 Mens Rea: The Need for a Meaningful Intent Requirement in Federal Criminal Law: Hearing Before Task Force on Over-Criminalization of the H. Comm. on the Judiciary, 113th Cong (July 19, 2013) (Testimony, Dr. John S. Baker, Jr.), available at http://judiciary.house.gov/_files/hearings/113th/07192013/ Baker%2007192013.pdf. 183 Press Release, SFO, Bruce Hall and Victor Dahdaleh\ (Dec. 10, 2013), available at http://www.sfo.gov.uk/our-work/our-cases/case-progress/bruce-halland-victor-dahdaleh.aspx. See supra II.A.1 for a discussion of the recently resolved Alcoa matter. 184 Id. 185 Id. 186 Jane Croft and Caroline Binham, Victor Dahdaleh corruption trial collapses, Fin. Times (Dec. 10, 2013), available at http://www.ft.com/cms/s/0/8337c2a66195-11e3-b7f1-00144feabdc0.html#axzz2qNosxVfo [hereinafter “FT Dahdaleh Article”]; Tom Harper, Victor Dahdaleh corruption case: Billionaire’s fraud trial collapses after key SFO witnesses refuse to give testimony, The Independent (Dec. 10, 2013), available at http://www.independent.co.uk/ news/business/news/victor-dahdaleh-corruption-case-billionaires-fraud-trial-collapses-after-key-sfo-witnesses-refuse-to-give-evidence-8995972.html [hereinafter “Independent Dahdaleh Article”]. 187 Independent Dahdaleh Article, supra note 187. 188 See Nick Goodway, Tchenguiz brothers poised to sue accountants Grant Thornton, London Evening Standard (July 26, 2013), available at http://www.standard.co.uk/business/business-news/tchenguiz-brothers-poised-to-sue-accountants-grant-thornton-8733901.html, 189 See 2013 Summer FCPA Newsletter, supra note 79, at 31. 190 Press Release, SFO, Four charged in ‘bio fuel’ investigation (Aug. 14, 2013), available at http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2013/four-charged-in-bio-fuel-investigation.aspx. 191 Press Release, SFO, Sustainable Agroenergy Plc and Sustainable Wealth Investments UK Ltd (Nov. 15, 2013), available at http://www.sfo.gov.uk/ourwork/our-cases/case-progress/sustainable-agroenergy-plc-and-sustainable-wealth-investments-uk-ltd.aspx. 192 Jo Francis, Security printer charged with corruption, Print Week (Oct. 24, 2013), available at http://www.printweek.com/print-week/news/1139827/ security-printer-charged-corruption. 193 Press Release, SFO, Printing Company Corruption Charges (Oct. 23, 2013) available at http://www.sfo.gov.uk/press-room/latest-press-releases/pressreleases-2013/printing-company-corruption-charges.aspx 194 David Green, Speech to Cambridge Symposium (Sept. 2, 2013) available at http://goo.gl/GGPfNv [hereinafter “Green Cambridge Speech”]. 195 Press Release, SFO, Statement - Rolls Royce (Dec. 23, 2013), available at http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2013/ statement---rolls-royce.aspx. 196 See A&P Summer 2013 FCPA Newsletter, supra note 79, at 31-32. 197 FCA Final Notice 2013: JLT Specialty Limited (Dec. 19, 2013), available at http://www.fca.org.uk/your-fca/documents/final-notices/2013/jlt-specialtylimited. 198 Id. 199 Green Cambridge Speech, supra note 195. 200 David Green, Director of SFO, Speech before the Pinsent Masons and Legal Week Regulatory Reform and Enforcement Conference (Oct. 24, 2013), available at http://www.sfo.gov.uk/about-us/our-views/director’s-speeches/speeches-2013/pinsent-masons-and-legal-week-regulatory-reform-and-enforcement-conference-.aspx. 201 See NCA website, available at http://www.nationalcrimeagency.gov.uk/. 202 Philip Johnston, The National Crime Agency: Does Britain need an FBI?, The Telegraph (Oct. 7, 2013) available at http://www.telegraph.co.uk/news/ uknews/law-and-order/10361009/The-National-Crime-Agency-Does-Britain-need-an-FBI.html. 203 Home Department, Serious and Organised Crime Strategy 61 (Oct. 2013), https://www.gov.uk/government/publications/serious-organised-crime-strategy. 204 Id. 205 Id. at 61. 206 R. v. Karigar, 2013 ONSC 5199, available at http://www.canlii.org/en/on/onsc/doc/2013/2013onsc5199/2013onsc5199.html; Chloé Fedio, Businessman guilty of bribing Indian officials; Nazir Karigar first person convicted under foreign anti-corruption law, Ottawa Citizen (Aug. 16, 2013), available at http://www.vancouverdesi.com/news/businessman-guilty-of-bribing-indian-officials-nazir-karigar-first-person-convicted-under-foreign-anti-corruptionlaw/609049/ [hereinafter “Karigar Article”]. 207 Karigar Article, supra note 207. 208 Id.; R. v. Karigar, 2013 ONSC 5199, supra note 206; Mark Brownlee, Man pleads not guilty at bribery trial; Accused allegedly tried to get Air India contract, Postmedia News (Sept. 25, 2013), available at http://www.vancouverdesi.com/news/courts-man-pleads-not-guilty-to-bribing-air-india-officials/313729/. 209 R. v. Karigar, 2013 ONSC 5199.
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210 Id.; PM gives clean chit to Praful Patel, Fin. Express, (Feb. 16, 2012), available at http://www.financialexpress.com/news/pm-gives-clean-chit-to-prafulpatel/912582; Karigar Article, supra note 207. 211 Karigar Article, supra note 207. 212 See A&P Summer 2013 FCPA Newsletter, supra note 79, at 33. 213 Accused SNC-Lavalin execs appear in Toronto court, Reuters (June 26, 2013), available at http://in.reuters.com/article/2012/06/25/snc-briberyidINL2E8HP5MO20120625. 214 See Press Release, The World Bank, World Bank Debars SNC-Lavalin Inc. and its Affiliates for 10 years, The World Bank Group (Apr. 17, 2013), available at http://www.worldbank.org/en/news/press-release/2013/04/17/world-bank-debars-snc-lavalin-inc-and-its-affiliates-for-ten-years. 215 Canadian Police charge SNC exec with bribery over Bangladesh project, Reuters (Sept. 18, 2013), available at http://www.reuters.com/article/2013/09/18/ snc-lavalin-bribery-idUSL2N0HE0YW20130918. 216 Sophie Cousineau and Greg McArthur, Former SNC-Lavalin executive funnelled $160-million to Gadhafi son, RCMP says, The Globe and Mail (Jan. 25, 2013), available at http://www.theglobeandmail.com/news/national/former-snc-lavalin-exec-funnelled-160-million-to-gadhafi-son-rcmp-says/ article7865504/ [hereinafter “SNC-Lavalin Gadhafi Article”]. 217 Id.; Graeme Smith, SNC-Lavalin developed close relationship with Gadhafi son: documents, The Globe and Mail (Jan. 14, 2012), available at http://www. theglobeandmail.com/news/world/snc-lavalin-developed-close-relationship-with-gadhafi-son-documents/article4197566/. 218 John Nicol and Dave Seglins, SNC-Lavalin letter says Gadhafi son was offered VP post, CBCNews (May 23, 2013), available at http://www.cbc.ca/news/ canada/snc-lavalin-letter-says-gadhafi-son-was-offered-vp-post-1.1343262. 219 SNC-Lavalin Gadhafi Article, supra note 218. 220 Catherine McLean and Stewart Bell, Former SNC-Lavalin executive Riadh Ben Aissa returning to Canada to face fraud, bribery and money laundering charges, National Post (Sept. 25, 2013), available at http://news.nationalpost.com/2013/09/25/former-snc-lavalin-executive-riadh-ben-aissa-returning-tocanada-to-face-fraud-bribery-and-money-laundering-charges/. 221 Dave Seglins and John Nicol, SNC-Lavalin offices in Algeria raided amid bribery probe, CBC (June 3, 2013), available at http://www.cbc.ca/news/canada/ snc-lavalin-offices-in-algeria-raided-amid-bribery-probe-1.1348485. 222 Id. 223 Press Release, SNC-Lavalin, SNC-Lavalin Offers Amnesty To Current Employees In Exchange For Cooperation (May 27, 2013), available at http://www.snclavalin.com/news.php?lang=en&id=2104. 224 Press Release, SNC-Lavalin, Toward Ethics And Compliance Excellence: SNC-Lavalin Announces Latest Measures (Sept. 30, 2013), available at http://www.snclavalin.com/news.php?lang=en&id=2233. 225 Securities and Exchange Surveillance Commission, Recommendation for Administrative Action based on Findings of the Inspection of Deutsche Securities Inc. (Dec. 5, 2013), available at http://www.fsa.go.jp/sesc/english/news/reco/20131205-1.htm; Nathan Layne, Exclusive: Japan regulator probing Deutsche Bank entertainment of pension clients - sources, Reuters (Sept. 9, 2013), available at http://www.reuters.com/article/2013/09/09/us-deutsche-japan-probeidUSBRE9880CF20130909 [hereinafter “Layne DB Entertainment Article”]; Takahiko Hyuga and Takako Taniguchi, Deutsche Securities Said to Face Penalty in Japan, Bloomberg (Dec. 4, 2013), available at http://www.bloomberg.com/news/2013-12-04/deutsche-securities-said-to-face-penalty-in-japan.html. 226 Layne DB Entertainment Article, supra note 227. 227 Alice Ross and Daniel Schäfer, Deutsche Bank in Tokyo anti-bribery probe, Fin. Times (Sept. 9, 2013), available at http://www.ft.com/intl/cms/s/0/13afcb901974-11e3-80ec-00144feab7de.html. 228 Atsuko Fukase, Japan SESC Asks for Sanction on Deutsche Securities, Wall St. J. (Dec. 5, 2013), available at http://online.wsj.com/news/articles/SB100 01424052702304096104579238952738814392. 229 Tokyo police arrest Deutsche Sec employee, client on suspected bribery, Reuters (Dec. 5, 2013), available at http://www.reuters.com/article/2013/12/05/ deutsche-japan-bribe-idUSL4N0JK05M20131205; Takahiko Hyuga, Deutsche Bank Tokyo Employee Arrested as Firm Faces Penalty, Wash. Post (Dec. 5, 2013), available at http://washpost.bloomberg.com/Story?docId=1376-MXB3KP6JTSEK01-7DRGITKRHR5IPEH1UV7M5S138H. 230 Atsuko Fukase, Japan FSA: Have Issued Business Improvement Order to Deutsche Securities, Wall St. J. (Dec. 12, 2013), available at http://online.wsj.com/article/DN-CO-20131212-001248.html. 231 Takahiko Hyuga and Takako Taniguchi, Deutsche Bank Unit Cuts Pay for Five Executives on Japan Penalty, Bloomberg (Dec. 12, 2013), available at http://www.bloomberg.com/news/2013-12-12/deutsche-bank-unit-cuts-pay-for-five-executives-on-japan-penalty.html. 232 See A&P Summer 2013 FCPA Newsletter, supra note 79, at 34. For a detailed discussion of Brazil’s Clean Company Act, see K. Korenchuk, M. Asner, S. Witten, and B. Spiewak, Responding to Anti-Corruption Concerns in Brazil: Considerations for the Pharmaceutical and Medical Device Sectors, Pharmaceutical Compliance Monitor (Jan. 2, 2014), available at http://www.pharmacompliancemonitor.com/responding-to-anti-corruption-concerns-inbrazil-considerations-for-the-pharmaceutical-and-medical-device-sectors/6069/. 233 Siemens bribery case spreads to Brazilian politics, Deutsche Welle (Dec. 3, 2013), available at http://www.dw.de/siemens-bribery-case-spreads-tobrazilian-politics/a-17268276. 234 Brazil freezes assets tied to Alstom, Siemens price-fixing claims, Agence France-Presse (Nov. 9, 2013), available at http://www.globalpost.com/dispatch/ news/afp/131109/brazil-freezes-assets-tied-alstom-siemens-price-fixing-claims. 235 The text of the resolution is available in Russian at http://www.rg.ru/2013/07/17/verhovny-sud-dok.html. For a detailed discussion of Russia’s anti-corruption law, see K. Korenchuk, M. Asner, S. Witten, and J. Wiesner, Doing Business in Russia: Managing Anti-Corruption Risk, Pharmaceutical Compliance Monitor (Nov. 26, 2013), available at http://www.pharmacompliancemonitor.com/doing-business-in-russia-managing-anti-corruption-risks/5963/.
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236 See Parliament passes Companies Bill 2012 (Update), Asian News Int’l (Aug. 8, 2013), available at http://in.news.yahoo.com/parliament-passes-companiesbill-2012-155346651.html; Companies Bill 2013 receives President’s assent, The Indian Express (Aug. 31, 2013), available at http://www.indianexpress. com/news/companies-bill-2013-receives-presidents-assent/1162742/. 237 Jen Swanson, India Seeks to Overhaul a Corporate World Rife with Fraud, N.Y. Times (Aug. 15, 2013), available at http://dealbook.nytimes.com/2013/08/15/ india-seeks-to-overhaul-a-corporate-world-rife-with-fraud/?_r=0. 238 For additional information about anti-corruption developments in India, see K. Korenchuk, M. Asner, S. Witten, and M. Davar, Developing an India Strategy: Practical Considerations to Seek Opportunities and Mitigate Corruption Risks in the Medical Products Sector, Pharmaceutical Compliance Monitor (Nov. 1, 2013), available at http://www.pharmacompliancemonitor.com/developing-an-india-strategy-practical-considerations-to-seek-opportunities-andmitigate-corruption-risks-in-the-medical-products-sector/5803/. 239 For additional information about the Chinese government’s investigation, see K. Korenchuk, M. Asner, and S. Witten, Responding to Anti-Corruption Compliance Challenges in China: The Way Forward in Light of the Ongoing Investigations in the Pharmaceutical Industry, Pharmaceutical Compliance Monitor (Sept. 26, 2013), available at http://www.pharmacompliancemonitor.com/responding-to-anti-corruption-compliance-challenges-in-china-theway-forward-in-light-of-the-ongoing-investigations-in-the-pharmaceutical-industry/5571/. 240 See China questions two more PetroChina parent officials in graft probe: sources, Reuters (Dec. 17, 2013), available at http://www.reuters.com/ article/2013/12/17/us-china-cnpc-corruption-idUSBRE9BG02W20131217; Charlie Zhu and Chen Aizhu, PetroChina’s former Indonesia chief under investigation: sources, Reuters (Oct. 16, 2013), available at http://www.reuters.com/article/2013/10/16/us-petrochina-corruption-idUSBRE99F0EI20131016; Kathryn Brenzel, PetroChina Says Reports Of New Corruption Probe Are False, Law360 (Sept. 9, 2013), available at http://www.law360.com/securities/ articles/470923?nl_pk=f5bd3fb5-b0c5-48b0-bf1e-f79cceb607c7&utm_source=newsletter&utm_medium=email&utm_campaign=securities. 241 G20 Guiding Principles on Enforcement of the Foreign Bribery Offence, available at www.en.g20russia.ru/load/783340272. 242 G20 Guiding Principles to Combat Solicitation, available at www.en.g20russia.ru/load/783340276. 243 Transparency Int’l, 2013 Corruption Perceptions Index (Dec. 3, 2013), available at http://www.transparency.org/cpi2013/results [hereinafter “Corruption Perceptions Index”]. 244 Transparency Int’l, Corruption Perceptions Index: In Detail (Dec. 3, 2013), available at http://cpi.transparency.org/cpi2013/in_detail/#myAnchor1. 245 Press Release, Transparency Int’l, Corruption Perceptions Index: Corruption Around the World in 2013 (Dec. 3, 2013), available at http://cpi.transparency. org/cpi2013/press/. 246 Corruption Perceptions Index, supra note 245. 247 Id. 248 Id. 249 Transparency Int’l, Exporting Corruption: Progress Report 2013: Enforcement of the OECD Convention On Combating Foreign Bribery (Oct. 7, 2013), available at http://issuu.com/transparencyinternational/docs/2013_exportingcorruption_oecdprogre. 250 Id. at 4-5. 251 Id. at 10-11. 252 We thank Davina Banks, Daniel Bernstein, Alex J. Berz, Brittany E. Hamelers, Dorian L. Hurley, Ryan M. Keats, Meghan C. Martin, Brittany McClure, Lucy S. McMillan, James McSweeney, Tatiana Medyanik, William W. Miller, Alexandra L. Mitter, Daniel T. Ostrow, Carmela Romeo, Jocelyn Wiesner, Tara Williamson, and Nellie C. Wigfall for their contributions to this publication.
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