Category Archives: TRACE Compendium

Recent developments in anti-corruption enforcement Reply

Uncategorized, Africa, Asia, enforcement, FCPA, Indonesia, TRACE, TRACE Compendium, United Nations, US Government, voluntary disclosure, whistleblower, Investigations • Tags: , , , , , , , , , , , , , , , , , , , , , , , , , ,

Alstom subsidiaries debarred from development bank projects.  On 22 February 2012, a Negotiated Resolution Agreement was reached between Alstom and the World Bank.  This settlement includes (1) the debarment of Alstom Hydro France and Alstom Network Schweiz AG and their affiliates for a period of three years, and (2) payment of approximately USD 9.5 million in restitution by the two companies.  The period of debarment could be reduced to 21 months with enhanced oversight if all conditions are complied with.  Although the parent company, Alstom SA and its affiliates, are conditionally not to be debarred,  Alstom Hydro France and Alstom Network Schweiz are subject to cross-debarment by other development banks. The penalties are based on a finding that Alstom made an improper payment of a USD 145,000 (110,000 Euro) consultancy fee to an entity controlled by a former senior government official in Zambia in 2002.  Alstom did not admit the allegations.  The full Compendium summary for this case is accessible here.

No DOJ prosecution of Allianz.  On 22 February 2012, attorneys from the Department of Justice stated that the investigation into whether Allianz SE violated the FCPA or other bribery laws in Indonesia had been closed, and that the DOJ did not intend to take any enforcement action.  The investigation began when an employee alerted outside auditors of perceived corruption, precipitating disclosure by Allianz to the Frankfurt Prosecutor’s office.  Although the DOJ has closed its investigation, the SEC is still negotiating a settlement with Allianz  on other charges.  The full Compendium summary for this case is accessible here.

The TRACE Compendium is a compilation of summaries of international anti-bribery enforcement actions.  It is open to the public and free of charge.  Compendium  summaries are searchable by company name, year of enforcement action, location of company, enforcing authority, industry type, and other categories.  You can search the Compendium by clicking here.

Government moves to dismiss largest FCPA Sting prosecution Reply

Africa, Defense industry, enforcement, FCPA, Investigations, TRACE, TRACE Compendium, Uncategorized, US Government • Tags: , , , , , , , , , , , , ,

Recent Enforcement Developments

Government moves to dismiss largest FCPA Sting prosecution.  On 21 February 2012, the government filed a motion in the US District Court for the District of Columbia to dismiss with prejudice all remaining claims in the case, which began in January 2010 with the sensational arrest of twenty-two individuals.  The defendants were accused of participating in a scheme to bribe the defense minister of the African nation of Gabon, but in fact the arrangement, and the underlying contracts for the sale of police and military equipment, were fictitious. Three defendants reached plea agreements with the prosecution.  In order to ensure manageable trials for the remaining nineteen defendants, the judge in the case separated them into smaller groups.  The first trial, of four defendants, ended in mistrial in July 2011.  Charges were dismissed as against one defendant in April 2011, and two defendants in the second trial, which ended in January 2012, were acquitted.  A mistrial was declared with respect to three other defendants when the jury could not reach a verdict.  Now, less than one month before the third trial was scheduled to begin, the government has dropped the entire case, citing “the impact of certain evidentiary and other legal rulings in the first two trials” as well as cost, as its motives for seeking to close the case.  Recent reports in the press had brought to light some apparent professional missteps in the conduct of the Sting operation.  The Compendium summary may be accessed here.

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The TRACE Compendium is a compilation of summaries of international anti-bribery enforcement actions.  It is open to the public and free of charge.  Compendium  summaries are searchable by company name, year of enforcement action, location of company, enforcing authority, industry type, and other categories.  You can search the Compendium by clicking here.

TRACE Compendium Updates Reply

commercial intermediaries, Cuba, enforcement, FCPA, Greece, Haiti, Indonesia, Iraq, Mexico, Public utilities, Telecommunications, TRACE Compendium, UK Serious Frauds Office, United Nations • Tags: , , , , , , , , , , , , , , ,

Recent Enforcement Developments

Fourth Innospec employee charged with corruption.  The UK Serious Frauds Office filed charges on filed on 10 February 2012 in Southwark Crown Court against Miltiades Papachristos, formerly the Asia-Pacific Regional Sales Director for Innospec Ltd.  Papachristos, a dual UK and Greek citizen, is charged with bribing public officials in Indonesia in order to secure or reward the grant of contracts between Innospec and the government of Indonesia.  Innospec Ltd. was charged by the SFO in February 2010 with conspiracy to corrupt Indonesian officials, and the company later pleaded guilty to charges in the U.S. regarding bribery schemes in Iraq, and violation of the U.S. embargo on Cuba. Three other individuals have been charged in the Indonesia case:  Paul Jennings, David Turner, and Dennis Kerrison.  The Compendium summary of this case can be accessed here.

Government moves to dismiss all charges against O’Shea.  On 9 February 2012, the Department of Justice filed a motion to dismiss all remaining charges against John Joseph O’Shea, who had been acquitted in January of substantive FCPA violations.  The remaining charges included conspiracy, obstruction of justice and money laundering; all of the charges had arisen from O’Shea’s alleged participation in the bribery of Mexican government officials in order to secure contracts with the Comisión Federal de Electricidad, a state-run power company, while O’Shea served as general manager of the Texas business unit of the US subsidiary of a Swiss company. The Compendium summary of this case can be accessed here.

Guilty plea from Haiti Teleco official.  On 8 February 2012, Patrick Joseph entered a plea agreement with the Department of Justice, for his role in the Haiti Teleco bribery case.  Joseph was the Director General of the state-owned Haitian telecommunications company.  The indictment accuses him of accepting bribes from two companies in exchange for granting various advantages to those companies.  The Compendium summary of this case can be accessed here.

The TRACE Compendium is a compilation of summaries of international anti-bribery enforcement actions.  It is open to the public and free of charge.  Compendium  summaries are searchable by company name, year of enforcement action, location of company, enforcing authority, industry type, and other categories.  You can search the Compendium by clicking here.

Medical device maker Smith & Nephew agrees to pay USD 22.2 million to settle bribery case. Reply

FCPA, Greece, Investigations, TRACE Compendium, US Government • Tags: , , , , , ,

In a complaint filed by the SEC on 6 February 2012, details of a decade-long bribery scheme are given:  Beginning in 1997, a Greek distributor paid the full list price for Smith & Nephew products rather than the usual discounted rate, to the  U.S. and German subsidiaries of the company.  Smith & Nephew would then transfer the 25% to 40% differential to UK shell companies controlled by the Greek distributor.  In this way, the distributor avoided Greek taxes on the money, and used portions of the USD 9.4 paid to the shell companies to bribe doctors in Greece’s public health system to purchase Smith & Nephew products.  A settlement was reached with the Securities and Exchange Commission obliging Smith & Nephew to pay USD 5.4 million in disgorgement.  Also on 6 February 2012, a criminal information was filed and a deferred prosecution agreement was reached with the Department of Justice based on the same allegations, which the company neither admits nor denies.  The DPA requires the payment of a USD 16.8 million penalty, and implementation of rigorous internal controls, continued cooperation with the DOJ, and the retention of a compliance monitor for a period of 18 months.  The full Compendium summary may be accessed here:  https://www.traceinternational2.org/compendium/view.asp?id=239

Recent Enforcement Developments Reply

enforcement, FCPA, TRACE Compendium • Tags: , , ,

Deferred Prosecution Agreement for Marubeni Corporation, with Payment of $54.6 Million to Conclude TSKJ Nigeria Case

On January 17, 2012, a criminal information was filed against the Japanese trading company, Marubeni Corporation, in the U.S. District Court for the Southern District of Texas, charging the company with conspiracy to violate the FCPA and with aiding and abetting violations of the FCPA.  Marubeni reached a two-year deferred prosecution agreement with the DOJ, and Marubeni will pay US $54.6 million to the DOJ;  if Marubeni abides by the terms of the agreement, the criminal information will be dismissed upon the expiry of the two year period.  The four-company joint venture TSKJ employed Marubeni between 1995 and 2004 to obtain contracts to build natural gas facilities in Nigeria.  The joint venture partners were Technip S.A., Snamprogetti  Netherlands B.V., Kellogg Brown & Root Inc. (KBR), and JGC Corporation. The Compendium summary about this matter may be accessed here:

https://www.traceinternational2.org/compendium/view.asp?id=381

Former ABB Manager John O’Shea Acquitted of Bribery Charges

On January 16th, 2012, the U.S. District Court for the Southern District of Texas acquitted former ABB manager John O’Shea of charges that, through a third party intermediary, he bribed Mexican officials and hid the payments. O’Shea had been accused of paying executives of Mexico’s state-owned electricity company in order to obtain lucrative contracts for ABB.  The Compendium summary about this matter may be accessed here:

https://www.traceinternational2.org/compendium/view.asp?id=164

Court Orders Payment of Investor Gains in Mabey & Johnson Case

Concluding an action brought in the High Court by the Serious Frauds Office, Mabey Engineering (Holdings) Ltd, has been ordered to pay over GBP130,000 as payment for share dividend earnings attributable to contracts obtained by the company unlawfully. The contracts were for construction projects in Iraq.  In announcing the settlement, the SFO emphasized its intention to use the civil recovery process to pursue institutional investors who have profited from illegal conduct. The Compendium summary regarding this matter may be accessed here:

https://www.traceinternational2.org/compendium/view.asp?id=98

Former Innospec Ltd Director, David Turner, Pleads Guilty to Corruption

On January 17th, 2012, former Innospec Limited Global Sales and Marketing Director, Dr David Turner, pleaded guilty to three counts of conspiracy to corrupt at the Southwark Crown Court in London. Two counts charged Turner with conspiracy to make illegal payments to government officials in Indonesia and Iraq between 2002 and 2008, in order to obtain contracts to supply the company’s products, or to reward officials for having awarded the chemical supply contracts.  Dr Turner also pleaded guilty to one charge of conspiracy to corrupt Iraqi officials by payment money to ensure that tests on a competitor’s chemical product would produce unfavorable results. The SFO investigation was assisted by the US Department of Justice, the US Securities & Exchange Commission, the City of London Police and the Cheshire Constabulary. The Compendium summary about this matter may be accessed here:

https://www.traceinternational2.org/compendium/view.asp?id=174

John O’Shea Challenge Denied Reply

FCPA, TRACE, TRACE Compendium • Tags: , , , , , ,

In the ABB-related case against John Joseph O’Shea pending in the Southern District of Texas, Judge Lynn Hughes denied O’Shea’s motion to dismiss the indictment based on O’Shea’s challenge that employees of the Mexican utility Comision Federal de Electricidad (“CFE”) are not “foreign officials” under the FCPA. Judge Hughes adopted the DOJ’s view that foreign, state-owned enterprises are instrumentalities under the FCPA, making their officers and employees “foreign officials” under FCPA definitions.  This is the fifth failure at the trial court level to challenge the DOJ’s definition of a foreign official. The ABB-related case summaries may be accessed in the TRACE Compendium here.

Magyar Telekom & Deutsche Telekom Settlement Reply

BRIBEline, Hungary, Telecommunications, TRACE Compendium • Tags: , , , , , , , , , , ,

Magyar Telekom, Plc., a Hungarian telecommunications company and its  German majority owner, Deutsche Telekom AG, recently agreed to pay a combined $95 million to settle civil and criminal charges to resolve Foreign Corrupt Practices Act (FCPA) investigations into activities by Magyar Telekom and subsidiaries in Macedonia and Montenegro.  The combined criminal penalty to the U.S. Department of Justice (DOJ) was $63.9 million, while Magyar Telekom agreed to settle the Securities and Exchange Commission’s (SEC) charges by paying more than $31.2 million in disgorgement and pre-judgment interest settlement.  The DOJ filed a criminal information against Magyar Telekom and a two-year deferred prosecution agreement in U.S. District Court for the Eastern District of Virginia. The SEC also sued three former Magyar executives. The government investigations date back nearly five years and involved funneling bribes to government officials to delay the entry of a competitor into the mobile-phone market. The Compendium summary and government documents may be accessed here.

Giordanella Receives Acquittal in FCPA Sting Case Reply

Africa, FCPA, TRACE Compendium, Uncategorized • Tags: , , , , , ,

U.S. District Judge Richard J. Leon entered judgment acquitting Stephen G. Giordanella of conspiracy to violate the Foreign Corrupt Practices Act (FCPA). The Judge found that the Government’s evidence was insufficient to sustain a conviction after a twelve week jury trial in U.S. District Court for the District of Columbia. Giordanella was one of the twenty two defendants indicted in December 2009 in the largest prosecution of individuals ever under the FCPA as part of a two-and-a-half year undercover “sting” operation. Further details of the FCPA sting operation and related cases can be found here.

Aon Corporation Settles with SEC and DOJ Reply

enforcement, FCPA, Gift Hospitality & Travel, Investigations, TRACE Compendium, US Government • Tags: , , , , ,

Aon Corporation, a publicly-traded insurance brokerage firm headquartered in Chicago, has entered into a non-prosecution agreement with the Department of Justice and agreed to pay a $1.76 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA).  Aon also reached a settlement with the SEC and agreed to pay approximately $14.5 million in disgorgement and prejudgment interest.   Aon’s United Kingdom subsidiary, Aon Limited, administered certain training and education funds in connection with its reinsurance businesses. The SEC complaint alleges that Aon made over $3.6 million in improper payments to various parties between 1983 and 2007 as a means of obtaining or retaining insurance business in several countries. Funds were used to reimburse officials for non-training related activity, including travel with spouses to overseas tourist destinations, or for uses that could not be determined from Aon’s books and records and which did not include any recorded business purpose.  The Compendium summary and government documents may be accessed here.

TRACE Resource Center Reply

BRIBEline, TRACE, TRACE Compendium, TRACE Partner Firms • Tags:

TRACE Resource Center – A Database of Local Laws and Analysis Designed to Enhance Compliance Programs

Facing a request to approve a gift to a local official in Cameroon? Trying to determine whether taking an employee of a national agency to lunch is permitted in India? Unsure of who to ask and concerned about exceeding your budget for outside counsel? The TRACE Resource Center is a cost-effective solution that provides answers to these and other questions. With over 115 countries covered by a single, pre-vetted partner law firm in each country, companies can access local law information on gifts and hospitality and local law restrictions on the use of the third party intermediaries quickly and easily. The country-specific summaries are updated regularly and include information on applicable revolving door laws, restrictions on the amount and type of compensation third parties can receive and dispute resolution issues that could arise in the local jurisdiction. Instead of simply directing you to copies of the local anticorruption law, these summaries provide analysis and give practical guidance on common issues that arise in international business transactions. The Resource Center also includes links to each country’s anti-bribery law and helpful memoranda provided by our partner law firms on topics of interest, such as who is considered a government official in China.

More than just a local law database, the TRACE Resource Center contains a library of model anti-bribery policies, procedures and contract language; the results of TRACE’s many benchmarking projects; and practical guidebooks on various aspects of anti-bribery compliance. Request a demonstration of the TRACE Resource Center at:  https://secure.traceinternational.org/contact_us.html.