It was the busiest January ever for FCPA corporate resolutions. During a ten-day stretch, six companies settled FCPA-related offenses by paying a combined total of $256.5 million to the DOJ and SEC.
January is usually a slow month for FCPA enforcement. In January 2016, there were no FCPA resolutions. In 2015, there were two. In January 2014, there was one. And in 2013, there were none.
We believe only one other month had six FCPA enforcement actions. That was September 2016, with resolutions by Nu Skin, Anheuser-Busch InBev, Och-Ziff Capital Management Group, HMT LLC, NCH Corporation, and GlaxoSmithKline plc.
Also in January 2017, two individuals pleaded guitly to criminal FCPA offenses, three were indicted, and two were charged in SEC civil complaints. There was also one corporate declination.
Here’s what happened:
DOJ / SEC Enforcement Resolutions
Mondelēz International, Inc. (January 9) paid the SEC $13 million to resolve FCPA offenses related to payments by its Cadbury unit in India. The SEC said both Cadbury India and Mondelēz violated the internal controls and books-and-records provisions of the FCPA. Mondelēz, formerly known as Kraft Foods, Inc., acquired Cadbury Limited and its subsidiaries in February 2010.
Zimmer Biomet Holdings Inc. (January 12) agreed to pay more than $30 million to resolve DOJ and SEC investigations into the company’s “repeat” violations of the Foreign Corrupt Practices Act. The medical device maker paid a criminal fine of $17.46 million and civil penlaties and disgorgment of $13 million. Biomet previously resolved FCPA offenses in 2012 when it paid the DOJ and SEC nearly $23 million. Zimmer bought Biomet in 2015.
Sociedad Química y Minera de Chile SA (January 13) paid $30.5 million to resolve criminal and civil Foreign Corrupt Practices Act offenses for bribes to Chilean politicians. SQM paid a criminal penalty to the DOJ of nearly $15.5 million and a civil penalty to the SEC of $15 million. The SEC said “virtually all of the improper payments to [Politically Exposed Persons] were directed and authorized by a senior SQM executive.”
Rolls-Royce plc (January 17) agreed to pay the United States a criminal penalty of $170 million for a global conspiracy to violate the Foreign Corrupt Practices Act. The DOJ action was part of an $800 million resolution of investigations by U.S., UK, and Brazilian authorities. The DOJ filed a criminal information and deferred prosecution in federal court in Columbus, Ohio on December 20. The documents were under seal until January 17.
Orthofix International (January 18) paid the SEC more than $6 million in disgorgement and penalties to settle FCPA charges related to illegal payments to doctors at government hospitals in Brazil. Orthofix was involved in another FCPA enforcement action in 2012 for illegal payments to doctors at government hospitals in Mexico. It paid $7.4 million to the DOJ and SEC to resolve the earlier FCPA offenses.
Las Vegas Sands Corp. (January 19) paid a criminal fine of nearly $7 million for Foreign Corrupt Practices Act offenses in China and Macau. The casino and resort operator admitted paying $5.8 million to a China consultant “without any discernable legitimate business purpose.” A Sands finance department employee and an outside auditor warned the company that some of the money paid to the consultant couldn’t be accounted for, but the payments continued.
Juan Jose Hernandez Comerma (January 10), 51, of Weston, Florida pleaded guilty in federal court in Houston to one count of conspiracy to violate the FCPA and one count of violating the FCPA, for payments to officials at Venezuela’s state oil company, Petroleos de Venezuela S.A. (PDVSA). He’s a former general manager and part owner of a Florida-based company. Sentencing is set for July 14.
Charles Quintard Beech III (January 10), 46, of Katy, Texas, pleaded guilty in federal court in Houston to one count of conspiracy to violate the FCPA for payments to officials at PDVSA. He owns several Texas-based companies. Sentencing is set for July 14.
Indicted by DOJ
Ban Ki Sang (January 10), 69, of Seoul, South Korea — the brother of former United Nations Secretary-General Ban Ki-moon — was charged in federal court in Manhattan with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, one count of conspiracy to commit money laundering, and one count of money laundering. He allegedly plotted to bribe a man posing as an agent for a Middle East sovereign wealth fund in exchange for financing of a building sale in Vietnam. He’s at large and presumed to be in Korea.
Joo Hyun Bahn (January 10), 38, is Ban Ki Sang’s son. He also goes by Dennis Bahn and lives in Tenafly, New Jersey. He was charged in federal court in Manhattan with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, one count of conspiracy to commit money laundering, one count of money laundering, and one count of aggravated identity theft. He was arrested in Tenafly and released on bail.
San Woo (January 10), also known as John Woo, 35, of Edgewater, New Jersey, was charged with conspiracy to violate the FCPA. He was arrested at New York’s JFK Airport and released on bail. He allegedly helped secure $500,000 for a bribe from Ban Ki Sang and Dennis Bahn to the man posing as an agent for a Middle East sovereign wealth fund.
Charged by SEC
Michael L. Cohen (January 26), 45, a partner in Och-Ziff Capital Management Group and member of the firm’s management committee, was charged in an SEC civil complaint filed in federal court in New York with violating the FCPA and aiding and abetting Och-Ziff’s violations. He was also charged with violating the Investment Advisers Act.. He lives in London and holds dual UK/U.S. citizenship. The SEC alleged he caused Och-Ziff to pay tens of millions of dollars in bribes to high-level government officials in Libya, Chad, Niger, Guinea, and the DR Congo.
Vanja Baros (January 26), 44, a former analyst in the private investments group at Och-Ziff’s European office and a member of the firm’s African Special Investment Team, was charged in an SEC civil complaint filed in federal court in New York with violating the FCPA and aiding and abetting Och-Ziff’s violations. He’s an Australian citizen living in the UK. He reported to and worked closely with Michael Cohen.
Orthofix International (Janauary 18) said when announcing its $6 million FCPA resolution with the SEC for payments to doctors at government hospitals in Brazil (see above) that the DOJ had “decided to take no further action with respect to this matter.”
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Our prior full-year enforcement reports are here:
Richard L. Cassin is the publisher and editor of the FCPA Blog.
I predict, though, that the coming months will be very quiet and that the cases that get resolved will be for substantial lower amounts.
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