Editors

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

FCPA enforcement report for Q1 2019

During the first calendar quarter there were three corporate FCPA enforcement actions, including one of the biggest resolutions of all time. In all, the three settling companies paid just over $1.1 billion for the resolutions.

(Looking back at Q1 enforcement over the past five years, in Q1 2018 there were three corporate FCPA enforcement actions. The three settling companies paid a total of $3.45 million for the resolutions. In Q1 2017, there were six corporate FCPA enforcement actions, with the settling companies paying a total of $256.5 million. In Q1 2016, there were eight corporate FCPA enforcement actions. The eight settling companies paid a total of $497.6 million for the resolutions. In both Q1 2015 and Q1 2014, there were two corporate FCPA enforcement actions.)

During the first quarter this year, one individual pleaded guilty to FCPA-related charges and one was sentenced.

Eight others were indicted for criminal FCPA offenses.

There was one corporate declination.

Here’s what happened:

DOJ / SEC Enforcement Resolutions

Cognizant Technology Solutions Corporation (February 15) paid $25 million to settle civil FCPA charges with the SEC related to violations of the antibribery, books and records, and internal accounting controls provisions of the FCPA without admitting or denying the allegations.The company agreed to pay disgorgement and prejudgment interest of around $19 million and a penalty of $6 million.

Mobile TeleSystems Public Joint Stock Company (MTS) (March 6), Russia’s biggest mobile phone company paid $850 million in penalties to the DOJ and SEC to resolve FCPA violations in Uzbeckistan. The company was penalized $100 million by the SEC for violating the anti-bribery, books and records, and internal accounting controls provisions of the FCPA. The DOJ imposed criminal penalties of $850 million on MTS and its wholly owned Uzbek subsidiary, Kolorit Dizayn Ink LLC. The DOJ credited MTS for the $100 million in penalties paid to the SEC, bringing total FCPA penalties to $850 million. Kolorit pleaded guilty in federal court. The subsidiary and MTS entered into a deferred prosecution agreement and agreed to retain a compliance monitor for three years.

Fresenius Medical Care AG & Co. KGaA (March 29), the world’s biggest provider of dialysis equipment and services, paid the DOJ and SEC $231.7 million in penalties and disgorgement to resolve violations of the Foreign Corrupt Practices Act across Africa, the Middle East, and Europe. Homburg, Germany-based Fresenius bribed doctors and public health officials in at least 17 countries. Under a non-prosecution agreement with the DOJ, Fresenius paid a criminal penalty of $84.7 million. In the SEC’s civil enforcement action, Fresenius disgorged $147 million (including prejudgment interest), bringing the total amount of the settlement to about $231 million. The company agreed to retain an independent compliance monitor for two years and self report to the DOJ for an additional year.

Sentenced

Chi Ping Patrick Ho (March 25), 69, Hong Kong’s former home secretary, was sentenced to three years in prison for bribing African officials on behalf of a Chinese energy company. He was also ordered to pay a $400,000 criminal fine. In December 2018, Ho was found guilty by a jury after a one-week trial in the Southern District of New York on seven counts — one count of conspiring to violate the Foreign Corrupt Practices Act, four counts of violating the FCPA, one count of conspiring to commit international money laundering, and one count of committing international money laundering.

Guilty Pleas

Frank James Lyon aka Jim Lyon (January 22), 53, of Honolulu, Hawaii, pleaded guilty 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. He’s  scheduled to be sentenced on May 13.

Indicted by DOJ

Andrew Pearse (indictment unsealed January 3), a New Zealnd national and former banker with Credit Suisse, was charged in federal court in Brooklyn for his role in Mozambique’s $2 billion “tuna bonds” scandal. He was charged with four counts of conspiracy — to violate the FCPA anti-bribery and internal controls provisions, and to commit wire fraud, securities fraud, and money laundering.

Surjan Singh (January 3), a UK national former banker with Credit Suisse, is a co-defendant with Pearse. He was also charged with four counts of conspiracy — to violate the FCPA anti-bribery and internal controls provisions, and to commit wire fraud, securities fraud, and money laundering.

Detelina Subeva (indictment unsealed January 3), a Bulgarian national and former banker with Credit Suisse, is a co-defendant with Pearse. He was also charged with four counts of conspiracy — to violate the FCPA anti-bribery and internal controls provisions, and to commit wire fraud, securities fraud, and money laundering.

Gordon Coburn (February 14), 55, the former president of Cognizant, was charged in a 12-count indictment with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, seven counts of falsifying books and records, and one count of circumventing and failing to implement internal accounting controls. (See Cognizant’s SEC resolution above.)

Steven E. Schwartz (February 14), 51, the former chief legal officer of Cognizant, was charged in a 12-count indictment with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, seven counts of falsifying books and records, and one count of circumventing and failing to implement internal accounting controls. (See Cognizant’s SEC resolution above.)

Rafael Enrique Pinto Franceschi (February 21), 40, of Miami, was charged in a five-count indictment returned in the Southern District of Texas with one count of conspiracy to violate the Foreign Corrupt Practices Act, one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of conspiracy to launder money. He’s accused of bribing three officials of Petroleos de Venezuela S.A. or PDVSA and taking kickbacks. He’s the president of a Miami-based company that did business with PDVSA.

Franz Herman Muller Huber (February 21), 68, of Weston, Florida, was charged in a five-count indictment returned in the Southern District of Texas with one count of conspiracy to violate the Foreign Corrupt Practices Act, one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of conspiracy to launder money. He’s accused of bribing three officials of Petroleos de Venezuela S.A. or PDVSA and taking kickbacks. He was a sales rep for the Miami company that did business with PDVSA.

Bekhzod Akhmedov (March 7), 44, a citizen of Uzbekistan and the former CEO of Uzdunrobita LLC, a wholly owned subsidiary of MTS, was charged in federal court in New York City with one count of conspiracy to violate the Foreign Corrupt Practices Act, two counts of violating the FCPA, and one count of conspiracy to commit money laundering. His co-defendant, Gulnara Karimova, 46, the daughter of the former president of Uzbekistan, was charged with one count of conspiracy to commit money laundering. The DOJ alleged that she took more than $865 million in bribes from MTS, VimpelCom, and Telia. (See MTS’ DOJ / SEC resolution above.)

Declinations

Cognizant Technology Solutions Corporation (February 13) received a declination from the DOJ under the FCPA Corporate Enforcement Policy. In a statement, Cognizant said the DOJ declined to prosecute because of the company’s “voluntary and prompt self-reporting, comprehensive investigation, compliance enhancements, and significant cooperation.” (See Cognizant’s SEC resolution above.)

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Our prior full-year enforcement reports are here:

2018 FCPA Enforcement Index

2017 FCPA Enforcement Index

2016 FCPA Enforcement Index

2015 FCPA Enforcement Index

2014 FCPA Enforcement Index

2013 FCPA Enforcement Index

2012 FCPA Enforcement Index

2011 FCPA Enforcement Index

2010 FCPA Enforcement Index

2009 FCPA Enforcement Index

2008 FCPA Enforcement Index

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Richard L. Cassin is editor at large of the FCPA Blog.

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