Nov. 27, 2019

Six Long-Running FCPA Investigations That Concluded in 2019

This year saw the conclusion of several FCPA investigations that the DOJ and SEC have had in their pipelines for some time. This special issue of the Anti-Corruption Report features our coverage of some of these long-awaited 2019 resolutions, including Walmart, Barclays, Deutsche Bank, Telefônica, Fresenius and MTS. Our regular publication schedule will resume after the U.S. Thanksgiving holiday.

Walmart Finally Settles for $282M and a Monitor

After more than seven years and $900 million in investigation costs, Walmart struck a deal with the DOJ and SEC to resolve charges that it violated the FCPA’s accounting provisions in Mexico, China, India and Brazil. The world’s largest retailer will pay $282 million and retain a monitor. In this article series, we analyzed this monumental case and share insight from top practitioners, including former senior DOJ officials Mark Mendelsohn and Fry Wernick. The first article examines the facts of the case and the enforcement approach; the second article looks at how Walmart’s failures played into the settlement and extract compliance lessons from those failures; and the third article addresses additional features of the landmark resolution, including the lack of anti-bribery charges, the insufficient self-report, the partial cooperation credit Walmart received and what the case signals about upcoming enforcement. We also compared each provision of the Walmart agreement to the monitor agreement included in the recent Fresenius settlement.

Barclays Resolves Hiring Practices Problems With the SEC for $6.3M

By settling with the SEC for $6.3 million, Barclays PLC recently closed a chapter on its less-than-ideal hiring practices in the Asia Pacific region where friends and relatives of clients and government officials were given internships and jobs to win business. The SEC alleged that, even though Barclays had anti-corruption policies prohibiting employment offers from being made in exchange for business, about 117 friends and family of business connections were onboarded with the expectation that their presence at Barclays would boost its own business and open doors to getting even more. For the regulated community, this case, and the string of similar cases before it, that means that it might be time for corporate compliance and human resources functions to work together a bit better.

Deutsche Bank Nepotism Settlement Shows Policies Are Not Enough

Deutsche Bank has agreed to pay disgorgement and a civil penalty to the SEC to resolve allegations that it hired the relatives of government officials in China and Russia in order to land big deals. The German bank has had policies in place to prevent this type of nepotism but senior executives were able to creatively use joint ventures and lax lateral hiring rules to skirt those policies. In this article, we examine this failure of compliance execution and extract lessons for companies.

Telefônica’s Settlement Demonstrates the Dangers of Lavish Hospitality Programs

Telefônica Brasil (Telefônica), the Brazilian subsidiary of Spanish broadband and telecommunications provider Telefónica S.A., recently paid $4.125 million to resolve SEC allegations that it provided Brazilian government officials with tickets to both the 2014 World Cup and the 2013 Confederations Cup in violation of the accounting provisions of the FCPA. In this article, we discuss how the case against Telefônica, the third recent SEC matter involving hospitality programs for government officials at high-profile sports events, serves as a reminder that a quality compliance program must consider a plethora of issues.

German Medical Device Company Settles Allegations of Pervasive Global Bribery With SEC and DOJ

Fresenius Medical Care AG & Co. KGaA, a leading provider of products and services for people with chronic kidney failure based in Bad Homburg, Germany, recently settled allegations with both the SEC and DOJ that it engaged in bribery in myriad ways in myriad countries. We analyze how, despite its self-report, the company did not receive full cooperation credit and is required to retain a compliance monitor for two years. Fresenius will also pay more than $200 million in disgorgement and penalties.

What the $850 Million MTS Settlement Signals About FCPA Enforcement, Disclosure and Cooperation

In what some see as a lesson in what happens when a company experiencing a corruption problem opts not to self-disclose or to cooperate with the U.S. government, Moscow-based Mobile TeleSystems PJSC and Kolorit Dizayn Ink LLC, a subsidiary in Uzbekistan, agreed to pay a combined penalty of $850 million to settle cases with the DOJ and the SEC involving bribes in Uzbekistan. The federal government continues to pursue two individuals involved in the matter. The Anti-Corruption Report examines the implications of the widespread investigation and the record-setting penalty for the regulated community.