FCPA Compliance and Ethics Blog

January 31, 2011

And Then There Were None-JGC Settles

Filed under: FCPA — tfoxlaw @ 8:36 pm
Tags: , ,

The blog site International Construction reported, on January 31, 2011 that the Japanese company JGC announced has agreed to pay a $244 million penalty to the Department of Justice (DOJ) to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe the Nigerian government.

If this settlement is correct, the JGC resolution leads to an update to the monetary count paid to the US Treasury for the resolution of the Nigerian Bribery Scandal with the following Box Score:

SETTLEMENT BOX SCORE

Entity Fine, Penalty and Disgorgement of Profits
Halliburton + KBR $579 Million
Snamprogetti & ENI $365 Million
Technip $338 Million
JGC $244 Million
Total $1.526 Billion

So for those of you keeping score at home, there have been fines, penalties and profit disgorgement of over $1.526 billion. All of this for bribes paid on, by, or on behalf of, the four-company joint venture named TSJK, which totaled up to $180MM. This JV won four contracts, worth more than $6 billion, from the Nigeria government between 1995 and 2004 to build LNG facilities on Bonny Island.

This total settlement figure does not include any potential costs going forward such as reduction of credit ratings, the payment of legal fees and any forensic accounting fees during the pendency of the Deferred Prosecution Agreements (DPAs). The costs listed above do not include the total cost paid by JGC for its internal company investigation into this matter. However, based upon the reported fees to date paid by the other defendants, these investigation fees will surely be in the tens of millions of US$. Additionally the above Box Score does not take into account any fines or penalties paid by individuals, or the recent spate of fines paid by the defendants, to the Nigerian government. These last two sets of penalties will be explored in a subsequent blog.

As previously pointed out by the FCPA Professor, the amount of the settlement figure is quite a pretty penny for the US Treasury. He poses the question as to whether FCPA enforcement has become a “cash cow” for the US Treasury. As he has noted, this investigation started in a court in France, yet all the monies for fines and penalties are going to the US Treasury.

This question was also explored in a MainJustice posting by Chris Matthews, where he discussed the UK policy of making available some of the fines and penalties it collects as reparations to the country where the violative conduct occurred. Recently, the UK Serious Fraud Office (SFO) announced it would pay to the government of Tanzania almost €30 out of the BAE Systems resolution of its bribery and corruption matter.  Matthews reported Director Richard Alderman as saying “that compensating victims of corruption is a priority for the [SFO]”.

The  DOJ takes a different view on the subject of reparations.  Mark Mendelsohn, the former head of the US Justice Department’s Foreign Corrupt Practices Act team was quoted as saying, “There is a grave danger that you’re returning money to the very people that took bribes in the first place. The last thing one wants to do is fuel corruption in the name of fighting it.” Billy Jacobson, a former assistant chief on the US FCPA team and now Chief Compliance Officer at Weatherford International had a more nuanced view back in March, 2010 when he told MainJustice, “We’ve thought at DOJ from time to time about giving restitution, giving money to some of these governments,” he also went on to say “The problem is, almost by definition, you’re talking about corrupt governments. So we decided it really wasn’t the way to go. Maybe in some FCPA cases it is OK and in other’s it’s not, but as a matter of course DOJ doesn’t do it that way, and the SFO decided to do it that way.”

To quote Agatha Christie –  and then there were none…

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2011

 

1 Comment »

  1. The American Government and their Institutions have a curious habit of mislaying and being unable to retrieve billions of dollars of tax payers money that apparently goes up in smoke…
    Wouldn’t it be safer and more ethical that the fines are paid to whom the money was stolen in the first place: the taxpayers directly and not through any government agency in the US or elsewhere who are perhaps untrustworthy ?

    It also appears absurd that the companies who pay the fines continue to work in the countries where the corruption took place.They should be barred for a minimum of ten years or more, and therefore allow their perhaps less corrupt competitors in to have a go.

    Unfortunately, owing to the “Big, Bigger and TBTF” corporations of today, there often isn’t much choice.

    Very often the Directors of these multinationals are pushed to risk corrupt practices owing to the massive pressure from their shareholders for bigger and bigger dividends. A Mammouth needs to be fed continously massive ammounts of food. It has no choice but to get business at any risk. Otherwise it dies, and in todays world this cannot happen.

    Blackmail and unfair trading are massive issues that appear to be hardly noticed. When States such as France, barter arms deals against giving aid money to bankrupt countries such as Greece, then the States are stealing money from the taxpayers who cannot afford to pay and will never take a cruise on a brand new Frigate or Three. The so-called AID is quite simply Blood Money.

    Cheers

    Comment by vaizey — February 1, 2011 @ 1:52 am | Reply


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