Manufacturing Company Agrees to NPA, Will Pay More than $75 Million

On December 29, a Kentucky-based manufacturer and distributor of cable and wire, entered into a non-prosecution agreement with the DOJ regarding improper payments to government officials in Angola, Bangladesh, China, Indonesia, and Thailand. The company agreed to pay the DOJ a $20.5 million criminal penalty. The company simultaneously resolved an investigation by the SEC over the same conduct, and agreed to disgorge approximately $55.3 million, along with a $6.5 million penalty regarding accounting violations at its Brazilian subsidiary.

According to the DOJ, beginning in 2002, the company’s employees became aware that the company’s foreign subsidiaries were using third party agents and distributors to make corrupt payments to foreign officials in various countries to secure business. In 2011, employees from the company’s subsidiary expressed concerns to regional and parent-level executives that commission payments were being used for improper purposes but the company failed to investigate the payments or implement a system of internal controls to detect and prevent the abuse. In total, the subsidiaries paid approximately $13 million to third party agents and distributors from 2002 to 2013, a portion of which was used to make unlawful payments to foreign government officials. According to the DOJ, the payments and resulting contracts netted the company more than $51 million in profits on sales to state-owned enterprises around the world. The SEC separately found that due to weak internal controls, the company failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012.

Simultaneous with its resolution with the company, SEC also resolved charges against the company’s then-senior vice president and the individual responsible for sales in Angola. The former senior vice president agreed to pay the SEC a $20,000 penalty without admitting or denying that he knowingly circumvented internal accounting controls and caused FCPA violations when he approved over $340,000 in payments to an agent in Angola. The SEC separately noted that while the company’s former CEO and CFO had now returned millions of dollars in compensation they had received during the period of the violations, the SEC had found no personal misconduct by either former officer.

The company’s $20.5 million criminal penalty represented a 50 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range based on the DOJ’s conclusion that the company “voluntarily and timely disclosed the conduct at issue, fully cooperated in the investigation and fully remediated. The benefits the company received from the DOJ are similar to those companies can receive for participating in the Fraud Section’s FCPA Pilot Program for the self-reporting of FCPA violations. Prior coverage of the Fraud Section’s FCPA Pilot Program can be found here.

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Argentine Sports Marketing Firm Agrees to $112.8 Million Settlement in Connection with FIFA Corruption Investigation

An Argentine sports marketing firm, entered into a deferred prosecution agreement with the U.S. DOJ on December 13, admitting to wire fraud conspiracy in connection with paying tens of millions of dollars in bribes and kickbacks to high-ranking FIFA officials in order to secure support for broadcasting rights in Argentina, Uruguay, and Paraguay for the 2018, 2022, 2026, and 2030 World Cup. The four-year DPA calls for the firm to pay approximately $112.8 million in forfeiture and criminal penalties. In announcing the DPA, the DOJ noted its consideration of the firm’s remedial actions including termination of its entire senior management team, hiring a new General Manager, Chief Financial Officer, Legal Director, Chief Compliance Officer, and Compliance Manager, cooperation, and implementation of enhanced internal controls and a rigorous corporate compliance program.

The deferred prosecution agreement is part of the DOJ’s wider investigation into corruption in international soccer. Thus far, DOJ has charged 42 defendants and obtained 19 guilty pleas in connection with the FIFA corruption prosecutions. Prior Scorecard coverage of the FIFA investigations can be found here.

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First Israeli Enforcement Action Against a Company for Bribery of Foreign Government Officials

In a first under Israeli law, an IT solutions provider was fined approximately $1.2 million by the Tel Aviv Magistrate’s Court on December 15 for bribing a government official from the African county of Lesotho. The Israel-based company produces high-tech identification cards and products for population registration and border control. In 2012, the company entered into a $30 million agreement with the government of Lesotho to sell its products to the African country. The company was charged with paying a mediator $500,000 to advance that deal, with a significant amount of that sum intended as a bribe for the director general of Lesotho’s interior ministry. As part of the plea agreement, the company must also cooperate with an ongoing parallel investigation in Lesotho and implement an anti-corruption compliance program.

The prosecution and plea agreement represent the first time a company has been indicted or convicted of bribing a foreign official under Israeli law. In July 2008, Israel added Article 291A to its penal code, outlawing bribery of foreign public officials. The law was enacted in conjunction with Israel entering the UN Convention against Corruption in February 2009 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in March 2009. Prior to the case against the company, Israel had come under international criticism for lack of enforcement of Article 291A. The case adds Israel to the list of countries prosecuting companies for bribery of foreign officials and places Israeli companies on notice of future prosecutions.

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UK-Based Company and Seven Individuals Charged in the UK With Bribery Surrounding Angola Operations

On July 13, the UK Serious Fraud Office (SFO) charged a UK-based logistics and freight operations company, along with seven current and former executives, with making corrupt payments in violation of Section 1 of the Prevention of Corruption Act 1906. The company is a subsidiary of a privately-owned company headquartered in Hamburg, Germany. The conduct at issue is alleged to have occurred between January 2005 and December 2006, and involves an alleged conspiracy to bribe an agent of an Angolan state oil company to bolster the subsidiary company’s business in the Republic of Angola. Read more…

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Former Currency Manufacturer Manager Convicted and Sentenced In UK for Making Corrupt Payments

On May 11, following a five-week trial in a London court, a former manager of an Australia-based banknote manufacturer was convicted of four counts of making corrupt payments to a foreign official in violation of the Prevention of Corruption Act 1906. Peter Chapman, the former manager of the polymer banknote manufacturer’s Africa office, was acquitted on two other counts. Chapman was convicted of bribing an agent of Nigerian Security Printing and Mining PLC in order to secure contracts for the purchase of reams of polymer substrate from the banknote manufacturer. The total amount of bribes to the agent equaled approximately $205,000. On May 12, Chapman was sentenced to two and a half years (30 months on each convicted count, to be served concurrently).

The UK Serious Fraud Office (SFO) prosecuted the case following a joint investigation by the SFO and the Australian Federal Police, which initiated the investigation in May 2009.

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