Second quarter SEC filings revealed substantial financial reserves set aside by two companies, each under investigation for alleged FCPA violations for over half a decade. If they end up reflecting the size of the ultimate settlements reached, the reserves, totaling hundreds of millions of dollars, would represent some of the largest FCPA enforcement settlements ever reached by the Justice Department.
According to its July 29 Form 6-K/A filing with the SEC, Embraer S.A., a Brazilian aircraft manufacturer, has recognized a $200 million loss contingency in connection with its discussions to settle the DOJ’s investigation into allegations that Embraer sales executives bribed various Dominican individuals who, in exchange, influenced legislators in the Dominican Republic to approve a $92 million contract and financing agreement for aircraft. Embraer also disclosed that a final settlement is likely to include a deferred prosecution agreement and the imposition of an independent monitor to oversee the company’s compliance with the terms of an agreement. The related criminal case by the Brazilian government against eight Embraer S.A. sales executives is still ongoing. Additional FCPA Scorecard coverage of the Embraer investigation can be found here.
On August 2, Och-Ziff Capital Management Group LLC, a publicly-traded hedge fund, revealed in its Form 10-Q filing with the SEC that it has raised its FCPA investigation reserve to over $414 million from the $200 million accrued in the prior quarter. Och-Ziff disclosed that it was raising the reserve based on ongoing discussions to resolve the matter with the SEC and DOJ. According to the Wall Street Journal, the settlement discussions relate to allegations that the company knowingly paid bribes to Libyan government officials in order to obtain investments from Libya’s sovereign-wealth fund and in natural-resources deals in other African countries. The Journal also reported that the Justice Department is pushing for the company to plead guilty, which would be a rare occurrence for a major financial company accused of FCPA violations.