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

 

July 8, 2010

And Then There Was One-the Updated Box Score of FCPA Settlements from the Nigerian Bribery Scandal

Yesterday, both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) announced the agreement by the Dutch company, Snamprogetti Netherlands BV, (Snamprogetti) to pay a $240 million criminal penalty to the DOJ to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe Nigerian government. In addition to the DOJ resolution, Snamprogetti and ENI also reached a settlement of a related civil complaint filed by the SEC, which charged Snamprogetti with violating the FCPA’s anti-bribery provisions, falsifying books and records, and circumventing internal controls and charged ENI with violating the FCPA’s books and records and internal controls provisions. As part of that settlement, Snamprogetti and ENI agreed jointly to pay $125 million in disgorgement of profits relating to those violations. Both the DOJ and the SEC resolutions were discussed in both in yesterday’s FCPA Blog and today’s posting by the FCPA Professor.

Snamprogetti and ENI both also agreed to enter into Deferred Prosecution Agreements (DPA) and the filing of Criminal Information against each. Under the terms of each DPA, the DOJ agreed to defer prosecution of Technip for two years. It is noteworthy that neither Snamprogetti nor ENI was required to agree to retain an independent compliance monitor. If both Snamprogetti and ENI abide by the terms of the DPAs, the DOJ will dismiss the criminal charges when the term of the agreements expires. The Snamprogetti and ENI resolution leads to an update to the monetary count for the resolution of the Nigerian Bribery Scandal of the following:

SETTLEMENT BOX SCORE

Entity Fine, Penalty and Disgorgement of Profits
Halliburton +KBR $579 Million
Snamprogetti & ENI $365 Million
Technip $338 Million
JGC None yet reported
Total $1.28 Billion

So for those of you keeping score at home, there have fines, penalties and profit disgorgement of over $1.28 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 joint venture won four contracts from the Nigeria government between 1995 and 2004 to build LNG facilities on Bonny Island. The contracts were worth more than $6 billion.

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 DPA. The costs listed above do not include the total cost paid by Snamprogetti and ENI for their internal company investigation into this matter. However based upon the reported fees to date paid by Snamprogetti and ENI, these investigation fees will surely be in the tens of millions of $.

As pointed out by the FCPA Professor in his blog today, the $1.28 BN figure amount 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. The FCPA Professor has explored this question more extensively in a prior blog posting. (See here) Additionally for those of you keeping score at home, could this case break the all time fine set by Siemens? All we know for certain at this time is and then there was one–JGC.

For a copy of the DOJ Press Release, click here.

For a copy of the SEC Press Release, click here.

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, 2010

June 28, 2010

Technip Settles-the Nigerian FCPA Bribery Box Score Update

Filed under: FCPA — tfoxlaw @ 12:42 pm
Tags: , , , , ,

Today the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) announced, in separate Press Releases, that they both has reached settlements with Technip S. A. (Technip) for multiple violations of the Foreign Corrupt Practices Act (FCPA) for its part in the Nigerian Bribery Scandal. The SEC also charged Technip with books and records and internal controls violations related to the bribery. Technip agreed to pay a fine to the SEC of $98MM and a separate penalty to the DOJ of $240MM.

Technip admitted that a consortium of which it was a member paid Nigerian officials up to $180MM in bribes for engineering, procurement and construction contracts awarded between 1995 and 2004 to build liquefied natural gas facilities on Bonny Island, Nigeria. The consortium was named TSJK and consisted of subsidiaries of the following entities: Technip; KBR (then owned by Halliburton); ENI, an Italian company; and JGC, a Japanese company.

Technip also agreed to a Deferred Prosecution Agreement (DPA) and the filing of a Criminal Information. Under the terms of the DPA, the DOJ agreed to defer prosecution of Technip for two years. Technip agreed, among other things, to retain an independent compliance monitor for a two-year period to review the design and implementation of Technip’s compliance program and to cooperate with the DOJ in ongoing investigations. If Technip abides by the terms of the deferred prosecution agreement, the DOJ will dismiss the criminal information when the term of the agreement expires. The Technip leads to a monetary count of the following:

SETTLEMENT (or RESERVED FOR SETTLEMENT) BOX SCORE

Entity Fine, Penalty and Disgorgement of Profits (in $ millions) Amount Reserved for Resolution (app. in $ millions)
Halliburton +KBR $579  
ENI   $350
Technip $338  
JGC   None yet reported
Total $917 $350

So for those of you keeping score at home, there has been and could be fines, penalties and profit disgorgement of over $1.2 billion. This figure does not include any costs for reduction of credit ratings, the payment of monitor fees, including monitor law firm fees and any forensic accounting fees during the pendency of the DPA. The costs listed above do not include the total cost paid by Technip for its internal company investigation into this matter. However based upon the reported fees to date paid by Halliburton, these investigation fees will surely be in the tens of millions of $$.

We are now anxiously awaiting the settlement of the FCPA cases against both ENI and JGC to determine if the Nigerian Bribery Scandal will yield the largest total fine for one long series of FCPA violations. All we can say is more will be revealed.

For a copy of the DOJ Press Release, click here.

For a copy of the SEC Press Release, click here.

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, 2010

March 26, 2010

Nigerian Bribery Box Score

Filed under: FCPA,FCPABlog — tfoxlaw @ 2:47 pm
Tags: , , , ,

Opening Day of the Baseball season is fast approaching and perhaps it is time to give a baseball statistician’s view to the Nigerian bribery case. Yesterday, Rob Evans in The Guardian reported that a UK court ruled that UK citizen Jeffery Tesler should be extradited to the US to stand trial. District Judge Caroline Tubbs, sitting at Westminster magistrates’ court in London, rejected Tesler’s arguments to fight off the extradition attempt. Judge Tubbs found that American prosecutors had alleged the crimes had a “substantial connection” with the US. She said that the Americans had already convicted one of the companies in the consortium for its part in the decade-long bribery scheme and one of the key executives who organized the corrupt payments. The Guardian, furthermore, reported that Judge Tubbs also rejected Tesler’s argument that it would be “unjust and oppressive” to send him to America as prosecutors had taken a long time to charge him. Tesler had argued that he would no longer be able to get a fair trial in the US. However, the judge rejected this argument, pointing out that he was responsible for part of this delay, as he had hired lawyers to block prosecutors obtaining evidence from Switzerland.

One individual, former KBR CEO Jack Stanley has pleaded guilty to violation of the Foreign Corrupt Practices Act (FCPA) in connection with the matter. He was sentenced to 7 years in prison and is subject to ongoing cooperation with authorities on this issue.

KBR admitted that a consortium of which it was a member paid Nigerian officials at least $132 million in bribes for engineering, procurement and construction contracts awarded between 1995 and 2004 to build liquefied natural gas facilities on Bonny Island, Nigeria. The consortium was named TSJK and consisted of subsidiaries of the following entities: KBR (then owned by Halliburton); Technip, French company; ENI, an Italian company; and JGC, a Japanese company.

SETTLEMENT (or RESERVED FOR SETTLEMENT) BOX SCORE

Entity Fine, Penalty and Disgorgement of Profits (in $ millions) Amount Reserved for Resolution (app. in $ millions)
Halliburton (KBR) $579  
ENI                              $340
Technip                              $330
JGC                     None reported
Total $579                            $670

 So for those of you keeping score at home, there has been and could be fines, penalties and profit disgorgement of over $1.2 billion. This figure does not include the amount paid out by these corporations for attorneys’ fees, forensic investigative costs and other professional fees which can be only speculated as priceless.

This amount will most probably be paid to the US government but not to the Nigerian government, the country which is alleged to be the focus of the bribery. The FCPABlog has posed the question that “Some in Nigeria will no doubt ask why the penalty money should end up in the U.S. Treasury and not their country?”. One reason could be that there is no current Nigerian investigation into the matter. In February, MainJustice reported that the Nigerian Senate subcommittee tasked with conducting the inquiry into the bribery scandal announced it was shutting itself down, saying that under the US-Nigeria Mutual Legal Assistance treaty, it could not obtain records from American investigators relevant to the investigation. While it does seem odd to this commentator that Nigeria would end its investigation of so public a scandal, we would only conclude that Nigeria must have its own reasons for doing so.

All of this and Opening Day is less than 10 days away. We can hardly wait.

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, 2010

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