Apr. 17, 2019

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, has settled allegations with both the SEC and DOJ that it engaged in bribery in myriad ways in myriad countries. 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. We analyze the case. See “What the $850 Million MTS Settlement Signals About FCPA Enforcement, Disclosure and Cooperation” (Apr. 3, 2019).

Managing Corruption Risk in Portfolio Companies: Assessment, Diligence and Walking Away

Private equity investors are taking heed of the significant corruption risks posed by their investments, but getting their arms around those risks and the targets’ compliance programs can be challenging. In this second installment of our article series on managing corruption risk in portfolio companies, we discuss key components of pre-deal assessment and diligence, when to walk away from a deal and when it may make sense to invest in companies that have had FCPA problems. The first article addressed the compliance and enforcement climate and the risks a private equity firm faces related to its portfolio companies. A subsequent article will examine how to walk the line between control and passivity while monitoring the portfolio, and strategies for handling anti-corruption issues that arise after the deal has closed. See our three-part series on managing M&A anti-corruption risk: “Pre-Deal Prep” (Oct. 3, 2018); “Pre-Closing Risk Assessments and Due Diligence” (Oct. 17, 2018); and “Deal Terms and Integration” (Oct. 31, 2018).

Firing on All Cylinders: U.S. Enforcement Efforts Against Venezuelan State-Owned Oil Company PDVSA

Recent developments demonstrate that the U.S. Department of Justice is laser-focused on investigating allegations of widespread corruption and money laundering with connections to Venezuela. In late 2015, DOJ brought a case against U.S.-based companies and related individuals for bribing procurement officials at the Venezuelan national oil company, Petróleos de Venezuela SA (PDVSA), in exchange for lucrative contracts. In a guest article, Ropes & Gray partner Nicholas Berg examines U.S. enforcement efforts and explains how they could be the beginning of an even more active phase of the government’s investigation into reports of widespread corruption and criminality centering around Venezuela and PDVSA. See “Recent Developments in Latin American Anti-Corruption Enforcement” (Jan. 9, 2019).

U.S. Indicts Eight Foreign Nationals in Connection With a $2-Billion Scheme in Mozambique

Eight people, including three former government officials in Mozambique, three London-based investment bankers formerly with Credit Suisse and two executives of a shipbuilding company headquartered in Abu Dhabi, U.A.E., have been indicted in the U.S. District Court for the Eastern District of New York for their alleged involvement in a $2-billion fraud and kickback scheme involving the development of the maritime industry in Mozambique. The Anti-Corruption Report considers the size of the scam, the absence of most of the defendants, and the wisdom of pursuing individuals rather than corporations in places far away. See also “Hoskins and Ho Decisions Clarify the Jurisdictional Reach of the FCPA” (Sep. 19, 2018).

How the FCPA’s Interstate Commerce Requirement Should Apply to Free Email Services

To establish FCPA jurisdiction, U.S. authorities have relied on a broad interpretation of the term “interstate commerce” to bring enforcement actions based on extraterritorial conduct without any tangible connection to, or action in, the United States. Indeed, enforcement actions have been repeatedly brought against companies that use free email services, such as Hotmail and Gmail, that have servers located in the U.S. Jurisdiction has been claimed based primarily on emails being routed through or stored on those servers without any other meaningful contact with the United States. In a guest article, Maxwell Carr-Howard, a partner at Denton’s, and his associate Matthew Lafferman, argue that these kinds of cases are an overreach and offer an alternative interpretation of the FCPA interstate commerce requirement. See “The History and Reach of dd-3 Jurisdiction and Lessons for Companies Investigating Potential Violations” (Apr. 18, 2018).

A Checklist for Managing a Dawn Raid in India

In a recent guest article, attorneys at Foley & Lardner and Panag & Babu explained how India’s antitrust enforcement agency is raiding companies suspected of antitrust violations at an increasing rate. In a follow-up article, David Simon, Samudra Sarangi and Michelle Freeman provide a checklist of actions to take to minimize the significant reputational backlash and serious business disruptions that dawn raids can otherwise cause. See “How to Prepare for the Possibility of a Dawn Raid in India” (Feb. 20, 2019).

Paul Hastings Welcomes Two Partners in Washington, D.C.

Tom Best and Matthew Herrington join the firm’s enforcement practice. For insight from Paul Hastings, see “Updates to the Corporate Enforcement Policy Attempt to Address Company Concerns” (Apr. 3, 2019).

Former DAAG Joins Crowell & Moring

Former U.S. Deputy Associate Attorney General A. Marisa Chun joins as a partner and will be based in San Francisco. For more from Crowell & Moring, see “Former SEC and DOJ Attorneys Discuss Thorny FCPA Questions on Jurisdiction and Liability” (Aug. 2, 2017).