On July 11, a Wisconsin-based global technology company agreed, pursuant to an administrative cease and desist order and without admitting or denying the SEC’s findings, to pay $14.3 million to settle the SEC’s allegations that it violated the books and records and internal controls provisions of the FCPA. The charges related to actions taken by managers and employees of the company’s wholly-owned Chinese subsidiary, between 2007 and 2013, to make payments to sham vendors to effect bribes and improper payments to employees of Chinese government owned shipyards, ship-owners, and others, as well as to obtain and retain business and personally enrich the subsidiary’s employees. The company’s settlement includes a disgorgement of $11,800,000, prejudgment interest of $1,382,561, as well as a civil penalty of $1,180,000. The company also agreed to a one-year period of self-reporting to the SEC on the status of its FCPA and anti-corruption related remediation and compliance enhancements. Read more…
On July 15, Petrobras announced that SBM Offshore NV had entered into a settlement agreement with Brazilian authorities to resolve allegations stemming from the Petrobras bribery probe. Under the terms of the agreement, the Dutch drilling company, which had been accused of paying bribes to Brazilian state-owned oil company Petrobras, will be immune to new legal actions stemming from the probe. In exchange, SBM Offshore agreed to pay approximately $342 million in fines, comprising $13.2 million to the Brazilian government and $328.2 million to Petrobras, of which $179 million “represents the nominal value to be deducted from future payments owed by Petrobras to SBM based on prevailing contracts.”
According to Petrobras, the leniency agreement is the outcome of negotiations that began in March 2015. Petrobras further stated that it will resume its normal business relationship with SBM Offshore.
The agreement is the latest settlement for SBM Offshore in connection with the Petrobras bribery probe. In 2014, SBM Offshore settled with Dutch authorities. In February 2016, SBM Offshore announced that the U.S. DOJ had re-opened its investigation into the company.
On June 21, the SEC and DOJ announced a nearly $15 million settlement with a Massachusetts-based imaging company and its wholly-owned Danish subsidiary to resolve parallel civil and criminal actions involving FCPA violations. The SEC alleged that, from at least 2001 through early 2011, the subsidiary paid about $20 million to third parties in hundreds of sham transactions with distributors in Russia and shell companies in Belize, the British Virgin Islands, Cyprus, and Seychelles. The sham transactions involved fictitious inflated invoices to the distributors with the over-payments going to third parties identified by the distributors. The subsidiary did not have a relationship with the third parties and did not know if the payments had any business purpose for the distributors.
The settlement is consistent with the settlement offer that the imaging company disclosed last December, and it reflects the company’s agreement to pay $7.67 million in disgorgement and $3.8 million in prejudgment interest to resolve the SEC’s books and records and internal controls charges, and the subsidiary’s agreement to pay $3.4 million in criminal fines in a non-prosecution agreement with the DOJ. The subsidiary’s former CFO also settled with the SEC, agreeing to pay a $20,000 penalty to settle allegations that he knowingly circumvented internal controls and falsified the subsidiary’s books and records.
DOJ Determines that Indiana-Based Medical Device Manufacturer Breached FCPA Deferred Prosecution Agreement
On June 6, the DOJ filed a status report with the U.S. District Court for the District of Columbia stating that an Indiana-based medical device manufacturer had violated its 2012 deferred prosecution agreement (DPA) related to FCPA charges. Specifically, the DOJ stated that it notified the medical device manufacturer on April 15, 2016 that “the government had determined that [it] had breached the DPA based on the conduct in Mexico and Brazil and based on [its] failure to implement and maintain a compliance program as required by the DPA.”
The medical device manufacturer had settled FCPA charges with the DOJ and SEC in 2012 related to the company’s conduct in Argentina, Brazil, and China. As previously reported in the FCPA Scorecard, the company’s DPA had been extended twice since 2012: once in March 2015 because the company had discovered additional potential FCPA violations in Brazil and Mexico, and again in March 2016. According to the DOJ, the company and the DOJ are in discussions to resolve the matter without a trial.
SEC Reaches Non-Prosecution Agreements for Bribes of Chinese Officials; DOJ Declines to Pursue FCPA Enforcement Actions
On June 7, the SEC announced it had entered into non-prosecution agreements with two unrelated companies in connection with bribes paid to Chinese officials by foreign subsidiaries. First, a Massachusetts-based internet services provider agreed to pay $652,000 in disgorgement and $19,433 in interest. According to its agreement, the company’s foreign subsidiary had paid bribes to induce Chinese government-owned entities to purchase more services than they needed. Second, a Rhode Island-based residential and commercial building products manufacturer agreed to pay $291,000 in disgorgement and $30,000 in interest. According to that agreement, the company’s subsidiary made improper payments and gifts to Chinese officials in exchange for preferential treatment, relaxed regulatory oversight, and reduced customs duties, taxes, and fees. The agreements each stipulate that the companies are not charged with violations of the FCPA and will not pay any additional monetary penalties. Read more…