Difference between revisions of "Foreign bribery and FCPA violations"

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='''Top Enforcement Actions for FCPA/Foreign Bribery Violations'''=
='''Top Enforcement Actions for FCPA/Foreign Bribery Violations'''=
The table below identifies some of the top SEC and DOJ enforcement actions against companies for FCPA violations:
The table below identifies some of the top SEC and DOJ enforcement actions against companies for FCPA violations:
The table below identifies some of the largest SEC enforcement actions against companies for accounting fraud:
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|According to the DOJ's announcement of the settlement: "...beginning in 2000 and continuing until 2016, [Ericsson] conspired with others to violate the FCPA by engaging in a longstanding scheme to pay bribes, to falsify books and records and to fail to implement reasonable internal accounting controls. Ericsson used third party agents and consultants to make bribe payments to government officials and/or to manage off-the-books slush funds. These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to them were improperly accounted for in Ericsson’s books and records."
|According to the DOJ's announcement of the settlement: "...beginning in 2000 and continuing until 2016, [Ericsson] conspired with others to violate the FCPA by engaging in a longstanding scheme to pay bribes, to falsify books and records and to fail to implement reasonable internal accounting controls. Ericsson used third party agents and consultants to make bribe payments to government officials and/or to manage off-the-books slush funds. These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to them were improperly accounted for in Ericsson’s books and records."
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|Time Warner
|Telia Company AB
|[https://www.sec.gov/news/press/2005-38.htm $300 Million]
|[https://www.justice.gov/opa/pr/telia-company-ab-and-its-uzbek-subsidiary-enter-global-foreign-bribery-resolution-more-965 $965 Million]
|Time Warner engaged in securities fraud related to its accounting for online advertising revenue. It used “round-trip transactions” to inflate its online advertising revenue to hide the business slow down.
|Swedish telecommunications company Telia Company AB and its Uzbek subsidiary Coscom LLC, paid $331 million in bribes to a high ranking Uzbek government official so that Telia could enter the Uzbek telecommunications market and Coscom could gain valuable telecom assets in Uzbekistan. The bribes were concealed through multiple payments, including to a shell company owned by the government official.
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|Qwest Communications
|Braskem S.A.
|[https://www.sec.gov/litigation/litreleases/lr18936.htm $250 Million]
|[https://www.justice.gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve $957 Million]
|Qwest intentionally recognized over $3.8 billion in revenue and excluded $231 million in expenses that did not meet generally accepted accounting principles (GAAP) in an attempt to meet their predicted revenue and earnings projections.
|Brazilian-based petrochemical manufacturer Braskem violated the FCPA by concealing bribes paid to government officials in Brazil through intermediaries over an 8 year period. Braskem paid approximately $250 million into Odebrecht’s (see above) secret bribe payment system and then authorized payments to various politicians, political parties, and officials in Brazil to receive preferential treatment, contracts, and favorable legislation related to the state-controlled oil company Petrobas.
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|Computer Associates
|Siemens AG
|[https://www.sec.gov/news/press/2004-134.htm $225 Million]
|[https://www.justice.gov/archive/opa/pr/2008/December/08-crm-1105.html $800 Million]
|Computer Associates prematurely recognized over $3.3 billion in revenue by manipulating its quarter end cutoff dates to meet Wall Street’s quarterly earnings estimates. SEC’s Northeast Regional Office Director Schonfeld compared it to a team “that plays on after the final whistle has blown … until it had all the points it needed to make every quarter look like a win.
|German company Siemens made illicit payments to foreign government officials in numerous countries in exchange for favorable business treatment during bidding processes. It also “engaged in systematic efforts to falsify its corporate books and records and knowingly failed to implement and circumvent existing internal controls.” Bribery by Siemens AG included: in Iraq, four Siemens subsidiaries paid Iraqi government officials $1.7 billion to win 42 contracts as part of the UN Oil-For-Food Program; in Bangladesh, over $5 million in payments were made to officials during a mobile telephone project; in Argentina, over $31 million in payments were made to officials during a national ID card project; in Venezuela, over $18 million in payments were made during two mass transit projects.
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|Panasonic Corp
|VimpelCom and Unitel, LLC
|[https://www.sec.gov/news/press-release/2018-73 $143 Million]
|[https://www.justice.gov/opa/pr/vimpelcom-limited-and-unitel-llc-enter-global-foreign-bribery-resolution-more-795-million $795 Million]
|Panasonic overstated pre-tax and net income by prematurely recognizing more than $82 million in revenue by backdating an agreement with an airline. Additionally, Panasonic “lacked sufficient internal accounting controls and failed o make and keep accurate books and records in connection with purported consultant retained by PAC.
|The world’s sixth largest telecommunications company VimpelCom and its Uzbek subsidiary Unitel LLC violated the FCPA when they engaged in a conspiracy to make over $114 million in bribery payments to a government official in Uzbekistan over a six year period in exchange for their entrance and continued operations in the Uzbek telecommunications market. The payments were laundered through bank accounts around the world and falsely recorded in company records as equity transactions, consulting and repudiation agreements, and reseller transactions. The bribes were made to the same government official that received illegal payments from Telia company (see above).
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|Weatherford
|Alstom
|[https://business.cch.com/srd/2016-194-092716.pdf $140 Million]
|[https://www.justice.gov/opa/pr/alstom-pleads-guilty-and-agrees-pay-772-million-criminal-penalty-resolve-foreign-bribery $772 Million]
|Weatherford inflated earnings by using deceptive income tax accounting which included an international tax avoidance structure that reduced its effective tax rate (ETR) and tax expense. False financial statements inflated earnings by over $900 million.
|French power and transportation company Alstom S.A. violated the FCPA both by “falsifying its books and records and failing to implement adequate internal controls” and “conspiracy to violate the anti-bribery provisions.” Alstom paid bribes to government officials in many countries around the world, including Egypt, Indonesia, Saudi Arabia, Taiwan, and the Bahamas in exchange for contracts in several power, grid, and transportation projects.
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|Healthsouth
|KBR-Halliburton
|[https://www.sec.gov/litigation/litreleases/lr19280.htm $100 Million]
|[https://www.justice.gov/opa/pr/kellogg-brown-root-llc-pleads-guilty-foreign-bribery-charges-and-agrees-pay-402-million $579 Million]
|Shortly after Healthsouth went public in 1986, it began to “artificially inflate its earnings to meet Wall Street analysts’ expectations and maintain the market price.” Since 1999, it overstated its earnings by over $1.4 billion.
|Kellogg Brown & Root LLC (KBR) violated the FCPA by bribing senior government officials in Nigeria over a 10 year period to obtain engineering, procurement, and construction (EPC) contracts. Former parent company Halliburton did not prevent or detect the bribery and falsified records to hide the bribery payments. KBR was part of a four company joint-venture partnership in which all four companies participated in illegal payments to government officials in exchange for Nigerian EPC contracts valued at over $6 billion.
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|Lehman Brothers
|Teva Pharma
|[https://www.sec.gov/litigation/litreleases/judgm18116.pdf $80 Million]
|[https://www.justice.gov/opa/pr/teva-pharmaceutical-industries-ltd-agrees-pay-more-283-million-resolve-foreign-corrupt $519 Million]
|Lehman intentionally manipulated their accounting reports through numerous Repo105 transactions that hid their actual debt. When they declared bankruptcy they were $615 billion in debt.
|Teva Pharmaceutical Industries Ltd. (Teva) violated the FCPA by bribing government officials in Russia, Ukraine, and Mexico. In Russia, bribes were paid to influence the increase in sales of Teva’s multiple sclerosis drug Copaxone by the Russian Ministry of Health. In the Ukraine, bribes were paid to influence the government’s approval of Teva drug registrations. In Mexico, bribes were paid to doctors employed by the Mexican government to prescribe Copaxone to patients.
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