Category Archives: US Government

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.

***

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

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.

Siemens Executives Charged in Bribery Scheme Reply

commercial intermediaries, enforcement, FCPA, Germany, Investigations, TRACE Compendium, US Government • Tags: , , , , , , , ,

The U.S. Department of Justice has charged eight former executives and agents of Siemens AG and its subsidiaries for allegedly engaging in a decade-long scheme to bribe senior Argentine government officials to secure, implement and enforce a $1 billion contract with the Argentine government to produce national identity cards. The indictment charges the defendants and their co-conspirators with conspiracy to violate the Foreign Corrupt Practices Act (FCPA), money laundering conspiracy and wire fraud. The Securities and Exchange Commission also filed a Civil Action on related charges alleging that over $100 million in bribes were paid in connection with Siemens’ efforts to secure the contract and obtain the profits from that contract. The indictments come three years after Siemens AG, as a company, resolved FCPA-related charges with the DOJ and SEC. The Compendium Siemens summary and government documents may be accessed here.

Judge Dismisses Lindsey Case Citing Prosecutorial Misconduct Reply

enforcement, FCPA, US Government • Tags: , , , ,

On December 1, 2011, U.S. District Judge Howard Matz dismissed the indictments against Lindsey Manufacturing, Keith Lindsey and Steve Lee, citing prosecutorial misconduct. The Lindsey and Lee defendants had been convicted of FCPA violations by a jury on May 10th. Judge Matz described his decision as follows:

“In this Court’s experience, almost all of the prosecutors in the Office of the United States Attorney for this district consistently display admirable professionalism, integrity and fairness. So it is with deep regret that this Court is compelled to find that the Government team allowed a key FBI agent to testify untruthfully before the grand jury, inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants, improperly reviewed e-mail communications between one Defendant and her lawyer, recklessly failed to comply with its discovery obligations, posed questions to certain witnesses in violation of the Court’s rulings, engaged in questionable behavior during closing argument and even made misrepresentations to the Court.

Consequently, the Court throws out the convictions of Defendants Lindsey Manufacturing Company, Keith E. Lindsey and Steve K. Lee and dismisses the First Superseding Indictment.”

The Compendium summary, including the full December 1st order, may be accessed here: https://www.traceinternational2.org/compendium/view.asp?id=301

Embraer Discloses FCPA Investigation Reply

Brazil, enforcement, Investigations, US Government • Tags: , , , ,

In a filing with the US Securities and Exchange Commission on November 3, 2011, Embraer S.A., the Brazilian aircraft manufacturer, disclosed that it was under investigation by the SEC and Department of Justice for possible FCPA violations in three countries. Embraer is listed on the NYSE.

The Compendium summary may be accessed here: https://www.traceinternational2.org/compendium/view.asp?id=378

Recent Enforcement Developments Reply

enforcement, FCPA, Investigations, UK Government, US Government • Tags: , , , , , , ,

Two More Executives Sentenced in Haiti Teleco Case.  On October 25, 2011, Joel Esquenazi and Carlos Rodriguez, the former president and executive vice president, respectively, of Florida-based Terra Telecommunications Corp., were sentenced in federal court in Miami.  Esquenazi received a 15-year prison sentence, the longest imposed to date in an FCPA case.  Rodriguez was sentenced to 84 months in prison.  Esquenazi and Rodriguez were convicted in August 2011 of multiple FCPA and money laundering conspiracy and substantive counts in connection with a multi-company scheme to bribe Haitian telecommunications officials.  https://www.traceinternational2.org/compendium/view.asp?id=38

UK Serious Fraud Office Charges Former Innospec Executive.  On October 25, 2011, the UK Serious Fraud Office charged David Turner, a former business unit director for Innospec Ltd., with conspiring to make corrupt payments to public officials in Indonesia and Iraq to secure supply contracts, as well as with conspiring to defraud a competitor company by bribing Iraqi officials to provide unfavorable test results on the competitor’s product.  Turner previously settled a civil suit with the US Securities and Exchange Commission in August 2010 in connection with the same matter.  Innospec Ltd. and its parent company, Innospec Inc., settled criminal and civil charges with US and UK regulators in March 2010.  https://www.traceinternational2.org/compendium/view.asp?id=174

Tognum AG Under Investigation in Germany.  According to a recent company news release and related press reports this week, Tognum AG, the German diesel engine-maker, is conducting an internal investigation into possible bribery involving the agents and sales partners of Tognum’s MTU Asia business.  The Ravensburg Public Prosecutor’s Office has reportedly initiated a probe into the matter.  The investigations are reportedly focusing on the company’s sales to government customers in South Korea.  https://www.traceinternational2.org/compendium/view.asp?id=370

Recent Enforcement Developments Reply

China, enforcement, FCPA, Investigations, UK Government, US Government • Tags: , , , , , , , , , , ,

Alcoa’s Agent Charged by UK Serious Fraud Office.  On October 24, 2011, Victor Dahdaleh, a Canadian and British national, was arrested and charged with corruption offenses relating to his role as an agent for US aluminum producer Alcoa Inc.  Dahdaleh allegedly made improper payments to employees of Bahrain’s majority state-owned smelting company between 2001 and 2005 in connection with Alcoa’s alumina supply contracts.  Alcoa is currently under investigation by the DOJ and SEC in the US.  https://www.traceinternational2.org/compendium/view.asp?id=373

Halliburton Conducting Internal Investigation in Angola.  In a securities filing on October 21, 2011, Houston-based Halliburton Company disclosed that it was conducting an internal investigation into possible foreign bribery violations involving the company’s agent in Angola.  The company voluntarily disclosed to the DOJ and SEC.  https://www.traceinternational2.org/compendium/view.asp?id=374

Keyuan Petrochemicals Discloses FCPA Review.  Keyuan Petrochemicals, Inc., the Chinese petrochemicals company, disclosed in a securities filing on October 20, 2011 that it had conducted an internal investigation into violations of PRC and US securities laws and had retained an FCPA expert to review relevant transactions and help the company to develop an FCPA compliance program.  Keyuan was delisted by NASDAQ on October 6th.  https://www.traceinternational2.org/compendium/view.asp?id=375

Recent Enforcement Developments Reply

Cuba, enforcement, FCPA, US Government • Tags: , , , , , , ,

Si Chan Wooh, Former Schnitzer Steel Executive.  On October 14, 2011, the DOJ dismissed its charges against Si Chan Wooh, the former Schnitzer Steel executive who had previously pleaded guilty to FCPA violations in 2007 and settled a civil suit with the SEC.  The decision apparently followed a protracted legal battle over whether Wooh should have been charged in the first place.  The FBI agent who investigated the case reportedly told prosecutors that Wooh was in fact a whistleblower.   The DOJ and SEC settled a FCPA enforcement matter with Schnitzer Steel in 2006.  The Compendium summary may be accessed here: https://www.traceinternational2.org/compendium/view.asp?id=1.

Cuban Probe Into Western Trading Firms.  According to recent press reports, Cuban police are investigating three prominent Western trading and investment firms in connection with a broad anti-corruption campaign by Cuban President Raul Castro.  Cuban police shut down the offices of Canada’s Tokmakjian Group and Tri-Star Caribbean, as well as the offices of the British investment fund, Coral Capital Group.   Multiple executives, employees and business partners of the companies were reportedly arrested.  Links to the Compendium summaries may be found below.