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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Bill Steinman
Contributing Editor

‘They followed the leader into FCPA oblivion’

The only U.S.-headquartered company now on the FCPA top ten list is KBR (and its former parent, Halliburton). It landed second after paying $579 million in 2009 to settle an enforcement action for its role in the so-called TSKJ Nigeria consortium.

KBR and its three consortium partners admitted paying more than $180 million in bribes to Nigeria officials in return for contracts to build liquefied natural gas facilities on Bonny Island, Nigeria worth more than $6 billion.

KBR’s partners — Italy’s Snamprogetti, France’s Technip, and Japan’s JGC — all joined KBR on the top ten list.

To refresh memories, here are the ten biggest FCPA cases of all time:

1. Siemens (Germany): $800 million in 2008.

6. Technip S.A. (France): $338 million in 2010.

2. KBR / Halliburton (USA): $579 million in 2009.

7. JGC Corporation (Japan) $218.8 million in 2011.

3. BAE (UK): $400 million in 2010.

8. Daimler AG (Germany): $185 million in 2010.

4. Total S.A. (France) $398 million in 2013.

9. Alcatel-Lucent (France): $137 million in 2010.

5. Snamprogetti Netherlands B.V. / ENI S.p.A (Holland/Italy): $365 million in 2010.

10. Magyar Telekom / Deutsche Telekom (Hungary /Germany): $95 million in 2011.

 

What happened in the TSKJ consortium?

No one outside the group knows for sure. But it looks like the three foreign partners followed their U.S leader into FCPA oblivion.

KBR and its CEO Jack Stanley led the group. Stanley was the mastermind, the DOJ said. He came up with the complex offshore structure for TSKJ, and he decided how and where to organize bank accounts and agents — all designed to escape FCPA jurisdiction and liability.

It all backfired. The DOJ said later the convoluted structure showed intent to be corrupt. But when Jack Stanley first showed his ideas to the foreign partners, they were probably impressed and likely assumed the clever American knew how to slip free of the FCPA.

Jack Stanley copped a plea and went to federal prison. The evidence he gave helped the government prosecute the four TSKJ partners and two agents. Together they paid $1.7 billion in fines, penalties, and forfeitures. One of the agents, Jeffrey Tessler, also went to prison. The related TSKJ cases turned out to be the biggest enforcement action in the history of the FCPA.

What should we learn from TSKJ? That telling the feds you relied on someone who knew more about the FCPA than you did won’t ever be a defense that works.

TSKJ teaches that everyone needs to think and act for themselves. Companies, no matter where they’re headquartered or who their partners are, should be strong and independent when it comes to FCPA compliance. And their programs should sound alarms even when a smart and important partner, customer, agent or supplier says, ‘Don’t worry, follow me.’

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Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.

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