2019 FCPA Enforcement Index

Last year 14 companies paid a record $2.9 billion to resolve FCPA cases. That includes amounts assessed in resolutions with the DOJ or SEC or both.

There were four enforcement actions last year in the mega category — Ericsson at $1 billion, MTS at $850 million, Walmart at $282.7 million, and Fresenius at $231.7 million. Both Ericsson and MTS landed on our list of the ten biggest FCPA enforcement actions of all time.

Other big-name corporate defendants with FCPA enforcement actions last year included Deutsche Bank, Microsoft Corporation, Juniper Networks, and Barclays PLC.

Nine companies reported declinations in 2019 — Royal Dutch Shell, Eni, and Ciena Corporation among them.

Three individuals settled civil FCPA charges brought by the SEC.

During 2019, nine individuals pleaded guilty to FCPA-related criminal charges, six different individual defendants were sentenced, and four others were convicted at trial. Fourteen individuals were newly indicted for FCPA crimes during the year (three of them pleaded guilty in 2019 to non-FCPA counts).

At $2.9 billion in total corporate settlements, 2019 broke the prior FCPA enforcement record set in 2018 by about $8 million.

The average FCPA corporate settlement amount last year was $207 million.

As a side note: The average FCPA resolution starting from Siemens’ enforcement action in late 2008 until today is $100 million in penalties, forfeiture, disgorgement, and special assessments. In the ten years prior to Siemens, the average FCPA settlement had cost defendants $8 million.

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DOJ / SEC Enforcement Resolutions

Tim Leissner (December 16), 50, the former head of Goldman Sachs in Southeast Asia, was charged by the SEC with civil FCPA violations. He agreed to disgorge $43.7 million and be permanently barred from the securities industry. The disgorgement will be offset by amounts Leissner paid under a forfeiture order that was part of a plea deal he made last year with the DOJ. He pleaded guilty in November 2018 to conspiracy to launder money and violate the FCPA.

Telefonaktiebolaget LM Ericsson (December 6) agreed to pay the DOJ and SEC $1.06 billion to resolve FCPA violations in Djibouti, China, Vietnam, Indonesia, and Kuwait. The Swedish telecom paid the DOJ a criminal penalty of over $520 million and nearly $540 million to the SEC in disgorgement and interest. An Ericsson subsidiary from Egypt pleaded guilty to criminal charges in federal court in New York. In a civil complaint the SEC charged Ericsson with violating the anti-bribery, books and records, and internal controls provisions of the FCPA.

Samsung Heavy Industries Company Limited (November 22) agreed to pay $75 million in total penalties to resolve criminal FCPA offenses in Brazil. A three-year deferred prosecution agreement required SHI to pay 50 percent ($37.75 million) of the total penalty in the United States and 50 percent “either to Brazilian authorities or, if not paid to them by November 25, 2020, to the DOJ.” The DOJ charged the company with conspiracy to violate the FCPA anti-bribery provisions.

Westport Fuel Systems, Inc. (September 27) of Vancouver, Canada paid about $4.1 million to resolve civil FCPA charges brought by the SEC. The clean fuel technology company disgorged $2.35 million and paid prejudgment interest of $196,000, plus a civil penalty of $1.5 million. It bribed  a government official in China. The company settled without admitting or denying the SEC’s findings.

Nancy Gougarty (September 27), 64, of Leesville, South Carolina, the former CEO of Westport Fuels, agreed to pay the SEC a civil penalty of $120,000 to resolve FCPA offenses. The SEC said Gougarty caused Westport’s FCPA violations by circumventing its internal accounting controls and falsely certificating the sufficiency of those controls. She resolved the charges without admitting or denying the SEC’s findings.

Barclays PLC (September 27) paid the SEC $6.3 million to settle FCPA offenses for hiring relatives of public officials in Asia. The British bank disgorged $3.8 million and paid a $1.5 million penalty to the SEC, plus pre-judgment interest of $984,000. In an internal administrative order, the SEC charged Barclays with violating the FCPA’s books and records and internal accounting controls provisions.

Quad/Graphics Inc. (September 26) agreed to pay the SEC nearly $10 million to settle violations of the Foreign Corrupt Practices Act for long-running bribery schemes and cover-ups in Peru and China. The Sussex, Wisconsin print and digital marketing company disgorged $6.9 million and paid prejudgment interest of about $960,000, plus a civil penalty of $2 million.

Sridhar Thiruvengadam (September 13), 55, the former chief operating officer of New Jersey-based Cognizant Technology Solutions Corporation, settled SEC charges that he violated the FCPA’s internal accounting controls and recordkeeping provisions by helping bribe an Indian government official and concealing the bribe. Thiruvengadam, an Indian national, paid a penalty of $50,000 and agreed to cooperate with the SEC.

Juniper Networks (August 29) paid the SEC $11.7 million to settle FCPA offenses related to its sales practices in Russia and China. The company disgorged $4 million and paid a $6.5 million penalty to the SEC, plus prejudgment interest of $1.3 million.

Deutsche Bank August 22) paid the SEC $16 million to settle FCPA offenses for hiring relatives of public officials in China and Russia. The German bank disgorged $10.7 million and paid a $3 million penalty to the SEC, plus prejudgment interest of $2.4 million.

Microsoft Corporation (July 22) and an overseas subsidiary paid the DOJ and SEC $25.3 million to settle FCPA offenses related to operations in Hungary, Saudi Arabia, Thailand, and Turkey. A subsidiary in Hungary called Microsoft Magyarorszag Kft. paid a criminal penalty of $8.75 million and entered into a three-year non-prosecution agreement with the DOJ. Microsoft Corporation also disgorged $13.78 million to the SEC, plus prejudgment interest of $2.78 million.

TechnipFMC plc (June 25) 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. On September 23 TechnipFMC also paid  the SEC $5 million to settle FCPA offenses related to bribing Iraqi officials to win business with state-owned oil companies. The London-headquartered oil and gas company disgorged $4.3 million to the SEC, plus prejudgment interest of $735,000.

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.

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.

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 Uzbekistan. 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. 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.

Cognizant Technology Solutions Corporation (February 15) paid $25 million to settle civil FCPA charges brought by the SEC related to violations of the anti-bribery, books and records, and internal accounting controls provisions, 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.

Convicted

Mark Lambert (November 22), 56, of Mount Airy, Maryland, formerly the president of Transport Logistics Inc., was found guilty by a federal jury in Maryland of four counts of violating the Foreign Corrupt Practices Act, two counts of wire fraud, and one count of conspiracy to violate the FCPA and commit wire fraud. Lambert and co-conspirators bribed a Russian official in exchange for contracts to transport nuclear materials to customers in the United States. Lambert’s sentencing is set for March 9, 2020.

Lawrence Hoskins (November 8), 69, a former senior vice president at Paris-based Alstom SA, was found guilty of violating the Foreign Corrupt Practices Act and related charges. The jury in Connecticut convicted the UK citizen on six counts of violating the FCPA, three counts of money laundering, and two counts of conspiracy. Sentencing is set for March 6, 2020.

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 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. He’s awaiting sentencing.

Sentenced

Jesus Ramon Veroes (November 29) 69, of Venezuela, was sentenced to  51 months in prison. He 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 also forfeited at least $5.5 million in profits and real estate in the Miami area.

Darwin Enrique Padron-Acosta (November 19), a Venezuela citizen and U.S. permanent resident, was sentenced to 18 months in prison after pleading guilty to conspiracy to violate the FCPA and commit money laundering. Padron was indicted in September 2016 for bribing officials at Venezuela’s state energy firm, Petroleos de Venezuela S.A. He pleaded guilty in October 2016 and agreed to cooperate with the DOJ. As part of his plea, he forfeited $9 million. He was sentenced in federal court in Houston by Judge Gray Miller. His case had been under seal.

Jeffrey Chow (November 15), 61, an American citizen who worked as a lawyer for Keppel Offshore & Marine in Singapore for 25 years, was sentenced to time served and probation. He pleaded guilty in August 2017 to conspiracy to violate the FCPA. As part of his plea in federal court in Brooklyn, New York, he agreed to help the DOJ prosecute his ex-employer for FCPA violations in Brazil.

Luis Alberto Chacin Haddad (September 25), 54, was sentenced to 51 months in federal prison for bribing officials at Venezuela’s national electricity company in exchange for $60 million in contracts for his Florida-based companies. Chacin pleaded guilty in federal court in Miami on June 24 to one count of conspiracy to violate the Foreign Corrupt Practices Act. As part of his plea deal, he agreed to forfeit at least $5.5 million in profits he made from the corrupt contracts, as well as real estate he owned in the Miami area.

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.

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

Cyrus Ahsani (announced October 30), 51, a UK citizen and the former CEO of Unaoil, pleaded guilty on March 25, 2019, to one count of conspiracy to violate the FCPA. He and others conspired to pay millions of dollars in bribes to government officials in Algeria, Angola, Azerbaijan, the Democratic Republic of Congo, Iran, Iraq, Kazakhstan, Libya, and Syria. Sentencing is set for April 20, 2020 in federal court in Houston.

Saman Ahsani (announced October 30), 46, a UK citizen and the former chief operating officer of Unaoil, pleaded guilty with his co-defendant and brother, Cyrus, on March 25, 2019, to one count of conspiracy to violate the FCPA. His sentencing is also set for April 20, 2020 in federal court in Houston.

Steven Hunter (announced October 30), 50, the former business development director of Unaoil and a UK citizen, pleaded guilty to one count of conspiracy to violate the FCPA for facilitating bribes in Libya. His sentencing is scheduled for March 13, 2020.

Surjan Singh (September 6), a UK national former banker with Credit Suisse, pleaded guilty to count of conspiracy to commit money laundering. An indictment against him was unsealed on January 3 that charged him 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.

Robin Longoria (August 29), 58, of Mansfield, Texas, pleaded guilty in federal court in Ohio to one count of conspiracy to violate the Foreign Corrupt Practices Act and to commit wire and visa fraud. She bribed Ugandan officials while helping manage an international adoption program for an Ohio-based agency. She also defrauded U.S. adoptive parents and the U.S. Department of State. Sentencing has been set for March 2, 2020.

Andrew Pearse (July 19), 49, pleaded  guilty to wire fraud in federal court in Brooklyn, New York. And indictment against the the New Zealand national and former Credit Suisse banker was unsealed on January 3 with charges 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.

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. His sentencing hearing is currently set for January 15, 2020.

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. He was arrested in July 2018 at Miami International Airport. Current case status is unclear.

Detelina Subeva (May 20), 37, a former vice president in Credit Suisse’s global financing unit, pleaded guilty to one count of conspiracy to launder funds. An indictment against her was unsealed on January 3 in connection with kickbacks to Mozambique’s ex-finance minister. The Bulgarian national was originally 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.

Indicted / Charged

Jose Carlos Grubisich (unsealed November 20), 62, a Brazil citizen and former CEO of Braskem S.A., was arrested and charged in federal court with one count of conspiracy to violate the anti-bribery provisions of the FCPA, one count of conspiracy to violate the FCPA’s books and records provisions and falsely certifying financial reports, and one count of conspiracy to commit international money laundering. The indictment was handed down in February 2019 but sealed until Grubisich’s arrest.

Jerry Li (November 14), 51, a Chinese citizen, the former head and managing director of Herbalife’s China subsidiary, was charged in New York City with one count of conspiracy to violate the FCPA’s internal controls provisions, one count of perjury, and one count of destruction of records in federal investigations. His Chinese name is Yanliang Li. The SEC also charged Li on November 14 with violating the FCPA and  aiding and abetting Herbalife’s violations of the securities laws.

Mary Yang (November 14), 51, a Chinese national, formerly ran the external affairs department of Herbalife’s China subsidiary. She was charged with one count of conspiracy to violate the FCPA’s internal controls provisions. Her Chinese name is Hongwei Yang.

Daisy T. Rafoi-Bleuler (announced September 4), a Swiss citizen, was indicted in April 2019 (under seal) for conspiracy to bribe officials at the Venezuelan state energy company PDVSA. She was also charged with money laundering offenses.

Armengol Alfonso Cevallos Diaz (reported July 1), an Ecuador citizen living in Florida, was charged in an 11-count indictment that was filed May 9 (without an announcement from the DOJ) in federal court in Miami. He was charged with conspiracy to violate the FCPA, conspiracy to commit money laundering, and nine counts of money laundering. He allegedly helped pay and launder more than $4 million in bribes to officials at Empresa Pública de Hidrocarburos del Ecuador or PetroEcuador.

Jose Melquiades Cisneros Alarcon (reported July 1), Diaz’s co-defendant, also an Ecuador citizen living in Florida, was charged in the same 11-count indictment filed May 9.

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.)

Rafael Enrique Pinto Franceschi (February 21), 40, of Miami, was charged in federal court in Houston 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.

Gordon Coburn (February 14), 55, the former president of Cognizant, was charged in a 12-count criminal 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.) The SEC charged Coburn in a federal civil court action with aiding and abetting Cognizant’s violations of the securities laws.

Steven E. Schwartz (February 14), 51, the former chief legal officer of Cognizant, was charged in a 12-count criminal 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.) The SEC charged Schwartz in federal civil court action with aiding and abetting Cognizant’s violations of the securities laws.

Andrew Pearse (indictment unsealed January 3), 49, a New Zealand 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. He pleaded guilty on July 19 to wire fraud. (See Guilty Pleas above).

Surjan Singh (unsealed January 3), a UK national and former banker with Credit Suisse and co-defendant with Pearse, 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. He pleaded guilty on September 6 to count of conspiracy to commit money laundering (See Guilty Pleas above).

Detelina Subeva (unsealed January 3), 37, a Bulgarian national and former Credit Suisse banker, was indicted with Pearse and Singh. She 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. She pleaded guilty on May 20 to one count of conspiracy to launder funds (See Guilty Pleas above).

Declinations

Royal Dutch Shell plc (October 4) said in a statement, “The U.S. Department of Justice (DoJ) has notified us that it has closed its inquiry into Shell in relation to OPL 245. We understand that this is based on the facts available to the DoJ, including ongoing legal proceedings in Europe. We maintain that the 2011 settlement of long-standing legal disputes related to OPL 245 was a fully legal transaction and, based on our review of the Prosecutor of Milan’s file and all of the information and facts available to us, we do not believe that there is a basis to convict Shell or any of its former employees in Milan.”*

Eni SpA (October 1) said in a statement that “it received confirmation from the U.S. Department of Justice that the DOJ has closed its investigation of Eni with respect to the OPL 245 and Algeria matters without taking any action.” *

Quad/Graphics, Inc. (September 19) received a declination from the DOJ pursuant to the FCPA Corporate Enforcement Policy. The DOJ’s declination letter said, “We have reached this conclusion despite the bribery committed by employees of the Company’s subsidiaries in Peru and China.” See the SEC enforcement action for Quad/Graphics above.

Ciena Corporation (September 11) said in a securities filing that on September 9, 2019, the SEC advised that it has concluded its FCPA investigation and “that its staff does not intend to recommend any enforcement action by the SEC against Ciena.” The investigation, first disclosed in 2017, involved one of Ciena’s third-party vendors and “allegations about certain questionable payments to one or more individuals employed by a customer in a country in the ASEAN region.” On December 10, 2018, the DOJ advised that it declined to prosecute the matter and that its investigation was closed.*

Misonix, Inc. (August 16) said it received a declination on August 14, 2019 dated August 13 stating that “the DOJ has closed its inquiry into Misonix without any action against Misonix with respect to the matters described below.” Misonix received a letter from the SEC on June 18, 2019 stating that the SEC had concluded its FCPA investigation and that it did not intend to recommend an enforcement action against the company.*

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 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.”*

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.)

* Company disclosures courtesy of FCPA Tracker.