During the third calendar quarter there were seven corporate FCPA enforcement actions and three individual resolutions.
Och Ziff’s $412 million settlement landed fourth on our list of the biggest FCPA cases.
The Nu Skin action arose from a charitable contribution in China. It was only the second case in FCPA history based solely on a a charitable donation.
One individual was arrested during the summer quarter and two were sentenced.
There were three corporate declinations and two declinations with disgorgement — a new enforcement action category under the DOJ’s Pilot Program.
It was an active three months. For comparison, in Q3 2015, there there were five corporate FCPA enforcement actions and one individual resolution. And in Q3 2014, there was one corporate enforcement action and two individual actions.
Here’s the full report for the third quarter of 2016:
DOJ / SEC Enforcement Resolutions
LATAM Airlines Group S.A. (July 25), a commercial airline company based in Chile, agreed to pay more than $22 million to the DOJ and SEC to resolve FCPA offenses for bribing union officials in Argentina. The company paid a $12.75 million criminal penalty to the DOJ. The DOJ charged LATAM in federal court in Miami with one count of violating the FCPA books and records provisions and one count of violating the internal controls provisions of the FCPA. LATAM paid the SEC $9.44 million — $6.74 million in disgorgement and $2.7 million in prejudgment interest.
Key Energy Services, Inc. (August 12) agreed to disgorge $5 million to the SEC to settle Foreign Corrupt Practices Act offenses for bribes from its Mexican subsidiary to an employee at state-owned Pemex.
AstraZeneca PLC (August 31) paid the SEC $5.5 million to resolve charges that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act when wholly-owned subsidiaries in China and Russia made illegal payments to boost drug sales. AstraZeneca paid $4.325 million in disgorgement, $822,000 in prejudgment interest, and a $375,000 civil penalty.
Jun Ping Zhang (September 13), 50, the former chief of Harris Corporation’s Carefx subsidiary in China, agreed to pay the SEC a civil penalty of $46,000 for helping bribe China officials with up to a million dollars in gifts, and covering up the scheme in Harris’s books and records.
Nu Skin Enterprises, Inc. (September 20) paid almost $766,000 to settle charges that it violated the internal controls and books-and-records provisions of the FCPA. The FCPA violations arose from a $150,000 payment Nu Skin’s China subsidiary made to a charity so that a high-ranking Chinese Communist party official would intervene in an on-going provincial agency investigation.
Anheuser-Busch InBev (September 28) paid $6 million to settle charges that it violated the FCPA and impeded a whistleblower who reported the misconduct. The company used third-party sales promoters to make improper payments to government officials in India. And it entered into a separation agreement that deterred an employee of its India unit from continuing to voluntarily communicate with the SEC about potential FCPA violations.
Och-Ziff Capital Management Group (September 29) paid the DOJ and SEC $412 million for criminal and civil FCPA violations. A three-year deferred prosecution agreement charged Och-Ziff with two counts of conspiracy to violate the anti-bribery provisions of the FCPA, one count of falsifying its books and records, and one count of failing to implement adequate internal controls. Subsidiary OZ Africa Management GP LLC pleaded guilty in federal court to a one-count criminal information that charged it with a conspiracy to violate the anti-bribery provisions of the FCPA.
Daniel Och (September 29), the CEO of Och-Ziff, paid nearly $2.2 million to settle SEC charges that he caused FCPA violations.
Joel Frank (September 29), the Och-Ziff CFO, agreed to settle SEC charges that he caused violations in Och-Ziff transactions in Libya and the Democratic Republic of the Congo. A “penalty will be assessed against him at a future date,” the SEC said.
GlaxoSmithKline plc (September 30) paid the SEC a $20 million penalty to resolve FCPA offenses in China. GSK’s China-based subsidiaries spent millions of dollars on pay-to-prescribe schemes for several years to pump up sales. The FCPA offenses involved gifts, improper travel and entertainment, shopping excursions, family and home visits, and cash. GSK recorded the illegal payments and gifts as legitimate expenses.
Samuel Mebiame (August 16), 43, a Gabon national and the son of Gabon’s former prime minister, was arrested in Brooklyn and charged with conspiracy to bribe officials in at least three African countries to help win mining rights for a joint venture involving Och-Ziff.
James McClung (July 7), 60, of Dubai, a former senior vice president of Louis Berger International, was sentenced to a year and a day in prison for bribing officials for more than a decade to win contracts in India, Indonesia, Vietnam, and Kuwait.
Richard Hirsch, (July 7), 62, of Makaati, Philippines, a former senior vice president of Louis Berger International, was sentenced to two years probation and fined $10,000 for bribing officials for more than a decade to win contracts in India, Indonesia, Vietnam, and Kuwait.
Cisco Systems Inc. (September 8) said that following an investigation into operations in Russia and some CIS countries, the DOJ and SEC won’t bring FCPA enforcement actions. Cisco disclosed in March 2014 that at the request of the agencies, it was investigating allegations of FCPA violations involving the company and some of its resellers.
Harris Corporation (September 13). In connection with the Jun Ping Zhang enforcement action (see above), the SEC said it “determined not to bring charges against Harris, taking into consideration the company’s efforts at self-policing that led to the discovery of Ping’s misconduct shortly after the acquisition, prompt self-reporting, thorough remediation, and exemplary cooperation with the SEC’s investigation.”
GlaxoSmithKline plc (September 30) said in a statement emailed to the FCPA Blog that the Justice Department “concluded its investigation into these matters and will be taking no further action.” The matters referred to in the statement are the FCPA offenses resolved with the SEC on September 30 (see above).
Declinations with Disgorgement
HMT LLC (September 29) received a DOJ Pilot Program declination for FCPA offenses in Venezuela and China that required disgorgement of $2.7 million.
NCH Corporation (September 29) received a DOJ Pilot Program declination for FCPA offenses in China that required disgorgement of $335,000.
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Our FCPA enforcement report Q2 2016 is here.
Our FCPA enforcement report for Q1 2016 is here.
Our prior full-year enforcement reports are here:
Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.