A large retailer agreed to pay more than $282 Million to settle charges brought by the Department of Justice and the SEC that it failed to implement anti-corruption procedures required by the Foreign Corrupt Practices Act. The prosecutors assert that the company knew about FCPA violations including unlawful payments routed through intermediaries as far back as 2000 but failed to take any meaningful action until 2011. Alleged failures included neglecting to follow up on obvious red flags raised by the internal audit function, revising internal recommendations, delegating compliance to in-country business units, and failing to implement sufficient training. An SEC enforcement official maintains that the company “valued international growth and cost-cutting over compliance.”
The Foreign Corrupt Practices Act requires registrants to implement rigorous compliance and internal controls to prevent unlawful payments to foreign government officials. Violations can result in substantial civil and criminal penalties.
IT outsourcing firm agreed to pay over $25 Million in disgorgement, interest and
penalties for violating the Foreign Corrupt Practices Act by paying bribes to Indian
government officials to build facilities there. The SEC and the Department of Justice have
also charged the firm’s President and Chief Legal Officer with approving and
facilitating the transactions. According
to the SEC, Indian officials demanded bribes to grant construction permits, and
the firm approved and arranged such payments through a third-party
contractor. The SEC alleges that the
firm hid the bribes by falsifying construction change orders. The SEC charged the company on the legal theory
of respondeat superior whereby the company is responsible for the actions of its
Firms doing business outside the United States must create compliance infrastructure to prevent employees at any level from paying bribes. Violations of the FCPA carry severe civil and criminal penalties.
The firm also agreed to pay a $32 Million criminal fine and execute a non-prosecution agreement with the Department of Justice. The SEC alleges that employees at the asset manager knew that payments made by a foreign subsidiary to a solicitor were used to bribe foreign officials with power to direct investments by sovereign wealth funds. The SEC accuses the firm for violating the internal control provisions of the Foreign Corrupt Practices Act and for having insufficient internal accounting controls. The SEC ordered a large asset manager to pay over $34 Million in disgorgement and interest to settle charges that it bribed foreign officials to obtain investment mandates.
OUR TAKE: Compli-pros must implement enhanced procedures when their firms seek to attract foreign government clients. Procedures should include vetting of solicitors and due diligence into payments.