After an uptick to 58 resolved enforcement actions in 2016, FCPA enforcement levels have returned to their recent norm during the first two years of the Trump administration, with 35 dispositions in 2017 and 31 dispositions in 2018. This decline in enforcement levels has been driven by a drop in the number of both resolved corporate enforcement actions (from 40 in 2016 to 21 in 2018) and the number of actions against individuals (from 18 in 2016 to 10 in 2018).
Among other notable developments this past year, several additional companies have entered into substantial ‘global’ settlements to resolve FCPA-related charges in multiple jurisdictions simultaneously, continuing an uptick in coordination and international cooperation to levels heretofore not seen between the US and a variety of other countries.
Keppel Offshore & Marine Ltd
On 22 December 2017, Singapore-based offshore rig company Keppel Offshore & Marine Ltd (KOM) and its wholly owned US subsidiary Keppel Offshore & Marine USA Inc (KOM USA) agreed to pay more than US$422 million in criminal penalties as part of a global settlement with the DOJ, Brazil’s Federal Public Prosecutor (MPF) and Singapore’s Attorney General’s Chambers (AGC). On the US side, the DOJ charged KOM and KOM USA with conspiracy to violate the FCPA’s anti-bribery provisions and imposed a total of US$105.5 million in criminal penalties, after offsets, under the companies’ respective DPA and guilty plea.
According to the pleadings, KOM and its subsidiaries made approximately US$55 million in bribe payments to Brazilian government and political party officials in connection with 13 projects tendered by Petrobras and the vessel company Sete Brasil. KOM allegedly sought to hide the bribes by paying ‘outsized commissions’ to an intermediary for purported ‘consulting’ services. The intermediary then passed the money to Petrobras officials and to a Brazilian political party.
Parallel settlements with the MPF and the AGC accounted for another US$211 million and US$105.5 million in criminal fines, respectively, which the US credited against the original US$422 million its agreements had imposed. Of note, the KOM resolution represents the first time the US has publicly coordinated an FCPA settlement with enforcement authorities in Singapore.
On 4 June 2018, the French financial services company Société Générale (SocGen) and its subsidiary SGA Société Générale Acceptance NV (SGA SocGen) agreed to pay US$585.5 million in criminal penalties to resolve anti-corruption charges the US DOJ and the French Parquet National Financier (PNF), including a charge for conspiring to violate the FCPA’s anti-bribery provisions. The resolution, which was shared between the agencies, was part of a broader US$1.3 billion settlement with the DOJ, PNF and US Commodity Futures Trading Commission that also covered charges that SocGen had helped to manipulate the London Interbank Offered Rate (Libor), a UK benchmark interest rate that has been at the centre of numerous criminal charges against large financial institutions.
The anti-corruption charges against SocGen and its subsidiary arose out of an alleged scheme by their employees to bribe a close relative of Libyan leader Muammar Gaddafi and several state bank employees with cash payments, travel, gifts and entertainment from about 2006 to 2009. SocGen employees reportedly channelled the bribes through a Libyan intermediary, to whom they provided commission payments that were recorded in the bank’s records as being for ‘introduction’ services or the like. In exchange, the Gaddafi relative and bank employees allegedly used their influence to cause the Libyan government to invest more than $3.66 billion with SocGen, which resulted in approximately $523 million in profit for the bank.
The SocGen settlement represents the first coordinated FCPA-related settlement between US and French authorities. As it has in other situations, the DOJ offset the penalties SocGen was to pay to French authorities, which totalled approximately US$292.7 million.
Petróleo Brasileiro SA
On 27 September 2018, the Brazilian national oil company Petróleo Brasileiro SA (Petrobras) agreed to pay a total of US$1.787 billion in fines and disgorgement of profits as part of a coordinated settlement with government authorities in the US and Brazil to resolve anti-corruption charges arising out of its role at the centre of the Operation Car Wash scandal in Brazil, including an estimated US$108 million to be paid to the DOJ and SEC (after accounting for various offsets reflecting payments to the Brazilian government and shareholder settlement fund). On the US side, Petrobras was charged with violating the FCPA’s accounting provisions by failing to make and keep accurate books and records and ‘knowingly and wilfully’ failing to implement internal financial and accounting controls - failures that enabled Petrobras executives to facilitate the bribery of Brazilian politicians and Brazilian political parties.
According to the settlement documents, Petrobras executives allegedly awarded inflated contracts to engineering and oilfield services companies in exchange for billions of dollars in bribes that they shared with Brazil’s political elite, including two former presidents, dozens of former senators and federal deputies, and other governors, mayors and cabinet officials. Under the resolutions, Petrobras, a US issuer, was held liable for failing to maintain adequate books and records and sufficient internal controls.
In settling with Petrobras, US authorities determined that an independent compliance monitor was unnecessary. However, the company is required to self-report to the DOJ ‘at no less than 12-month intervals’ for three years regarding its remediation efforts and the implementation of its compliance programme and internal controls.
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