During the second calendar quarter, there were three corporate FCPA enforcement actions. The settling companies — including Walmart — paid a total of about $583 million for the resolutions.
For comparison, during Q2 2018, there were five corporate FCPA enforcement actions, with the settling companies paying a total of $985 million in penalties.
During the second quarter this year, four individuals pleaded guilty to FCPA offenses and two others were convicted at trial. On individual was sentenced, receiving two-and-a-half years in prison.
There were four corporate declinations.
Here’s what happened:
DOJ / SEC Enforcement Resolutions
TechnipFMC plc (June 25), an oil and gas services company headquartered in London, agreed to pay criminal penalties of $296 million to resolve violations of the Foreign Corrupt Practice Act in Brazil and Iraq. The DOJ said TechnipFMC would pay about $214 million of the total penalties to enforcement authorities in Brazil and the remaining $81.9 million to the DOJ.
Walmart Inc. (June 20) agreed to pay the DOJ and SEC $282.7 million to settle allegations that it violated the FCPA by paying an intermediary in Brazil for help obtaining construction permits and having weak anti-corruption internal controls in Brazil, China, India, and Mexico. In the criminal action, Walmart paid penalties of $138 million. Its Brazil subsidiary agreed to plead guilty to violating the FCPA’s accounting standards and the parent company entered into a non-prosecution agreement. In the SEC’s civil action, Walmart paid $144.7 million in disgorgement and prejudgment interest.
Telefônica Brasil S.A. (May 9) paid a civil penalty of $4.125 million to the SEC for violating the FCPA by providing soccer tickets and hospitality to government officials who could help the company’s business. The SEC charged the São Paulo-based telecom with violating the FCPA’s internal accounting controls and recordkeeping provisions. The company spent $5.5 million to buy the tickets and booked the costs as “Publicity Institutional Events” and “Advertising & Publicity.”
Frank James Lyon aka Jim Lyon (May 13), 53, of Honolulu, Hawaii, was sentenced to 30 months in prison followed by three years of supervised release. Lyon pleaded guilty in January 2019 to a one-count information filed in the District of Hawaii charging him with conspiracy to violate the anti-bribery provisions of the FCPA and to commit federal program fraud for bribing officials in Micronesia.
Zwi Skornicki (June 25), a former consultant in Brazil to Technip S.A. and Keppel Offshore & Marine Ltd., pleaded guilty in the Eastern District of New York to a one-count criminal information charging him with conspiracy to violate the FCPA. He’s waiting for sentencing.
Luis Alberto Chacin Haddad (June 24), 54, of Miami, pleaded guilty in federal court to one count of conspiracy to violate the FCPA for bribing a former Venezuela government minister and an official at the state owned electric utility in exchange for $60 million in contracts. Under the plea, Chacin will forfeit at least $5.5 million in profits and real estate in the Miami area. He’s scheduled to be sentenced on September 4.
Jesus Ramon Veroes (June 24) 69, of Venezuela, Chacin’s co-defendant, also pleaded guilty in federal court to one count of conspiracy to violate the FCPA for bribing a former Venezuela government minister and an official at the state owned electric utility in exchange for $60 million in contracts. Under the plea, he’ll also forfeit at least $5.5 million in profits and real estate in the Miami area. He’s scheduled to be sentenced on September 4.
Jose Manuel Gonzalez Testino (May 29), 49, of Miami, pleaded guilty in federal court in Houston to one count of conspiracy to violate the Foreign Corrupt Practices Act, one count of violating the FCPA, and one count of failing to report foreign bank accounts. Gonzalez, a dual U.S.-Venezuelan citizen, bribed officials at two Houston-based subsidiaries of Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). He was arrested in July 2018 at Miami International Airport. Sentencing is set for August 28.
Roger Richard Boncy (June 20), 74, a dual U.S. and Haitian citizen who lives in Madrid, Spain, was found guilty by a federal jury in Boston after a two-week trial for a scheme to bribe Haitian officials to secure approval for an $84 million construction project. Boncy was convicted of one count of conspiracy to violate the FCPA and one count of conspiracy to violate the Travel Act. Sentencing is set for September 12.
Joseph Baptiste (June 20), 66, of Fulton, Maryland, Boncy’s co-defendant, was also convicted of one count of conspiracy to violate the FCPA and one count of conspiracy to violate the Travel Act, as well as one count of violating the Travel Act and one count of conspiracy to commit money laundering. Sentencing is set for September 12.
Misonix, Inc. (June 18) said it received a letter from the SEC saying that the agency concluded its investigation “into the business practices of the independent Chinese entity” and does not intend to recommend an enforcement action. Misonix did not mention the pending DOJ investigation.*
OSI Systems, Inc. (June 5) said in a statement that “the U.S. Department of Justice and Securities and Exchange Commission have informed the Company that they have closed their respective investigations into possible violations of the Foreign Corrupt Practices Act by the Company.”*
Gerdau S.A. (May 8) said in an SEC filing an investigation by the SEC into political contributions in Brazil by the company and its interactions with Brazilian authorities was closed. Gerdau said it was “informed by the SEC’s staff that it has closed its inquiry and therefore is not seeking any further information from the Company regarding these matters.”*
PAR Technology Corporation (May 7) said in an SEC filing that an internal investigation into conduct at the company’s China and Singapore offices to determine whether certain import/export and sales documentation activities violated the FCPA ended with notice in early April 2019 from the SEC that the agency” did not intend to recommend an enforcement action” and “shortly, thereafter, the DOJ advised that it did not intend to separately proceed.”*
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Our FCPA enforcement report for Q1 2019 is here.
Our prior full-year enforcement reports are here:
Richard L. Cassin is editor at large of the FCPA Blog.