Analogic Corp prepares to settle FCPA investigations with the SEC and the DOJ
We reported in October 2015 that medical imaging firm Analogic Corp had disclosed its proposal to pay $1.6 million to settle a Foreign Corrupt Practices Act ("FCPA") investigation conducted by the Securities and Exchange Commission ("SEC"). In its most recent quarterly report, Analogic Corp reported that the SEC had rejected the proposal, and the SEC and the Department of Justice ("DOJ") made separate settlement proposals that would potentially amount to $15 million total in fines. Analogic Corp might face additional penalties imposed by the Danish government, but it is currently unclear how severe these penalties would be.
The conduct under investigation involved Analogic Corp's Danish subsidiary, BK Medical. According to Analogic Corp, it discovered that some distributors had made extra payments to BK Medical, and BK Medical had transferred these extra funds to third parties, without clear reasons for doing so. As remedial actions to the investigation, Analogic Corp terminated the employment of certain BK Medical employees and its relationships with the distributors that were involved in the transactions. The company also voluntarily reported the transactions to the SEC, the DOJ, and the Danish Government.
DOJ filed lawsuits against Volkswagen, Audi and Porsche for alleged emission test cheating
The DOJ announced on 4 January 2016 that it had initiated a civil lawsuit against Volkswagen AG ("Volkswagen") and several related entities, on behalf of the US Environmental Protection Agency ("EPA"), for alleged violations of the Clean Air Act. In the complaint, the DOJ alleged that nearly 600,000 vehicles produced and distributed by the defendants had installed illegal defeat devices that could sense when the vehicle is being tested for compliance with EPA emissions standards and turn on emissions controls during that testing process. During normal operations, these vehicles emit pollutants exceeding EPA's standards. The DOJ action is pending in federal district court in Detroit, Michigan.
In September, Volkswagen announced that it has set aside €6.5 billion (approximately $6.7 billion) to cover the anticipated cost of resolving the emissions cheating scandal. As we have previously reported, Volkswagen is facing investigations or enforcement actions in many other jurisdictions, including several European countries and South Korea.
General Electric agreed to pay $2.25 million to settle federal complaint
General Electric agreed to pay $2.25 million to settle a federal complaint alleging the company used a computer program to bypass environmental rules and lied about it on compliance reports, the DOJ announced. The complaint stems from actions the company took at its old silicone manufacturing plant in Waterford, which currently is owned and operated by Momentive Performance Materials. General Electric operated the plant until 2007.
DOJ arrested two Venezuelans in connection with PdVSA bribery investigation
Two Venezuelan businessmen were arrested in the US amid investigations into Petróleos de Venezuela ("PdVSA") for alleged bribery, kickbacks and money laundering. According to the DOJ, both men have been charged with conspiracy to violate the FCPA and the wire fraud statute, as well as money laundering violations. According to court documents, one of the defendants has paid bribes to get his affiliated companies to win PdVSA contracts, in the amount of over one billion dollars.
Latest FIFA developments
The DOJ expanded its probe of corruption associated with the Fédération Internationale de Football Association ("FIFA"). In early December 2015, the DOJ unsealed a 92-count superseding indictment, which adds racketeering, wire fraud and money laundering charges against an additional 16 defendants, including the current presidents of two of FIFA's continental confederations. The Swiss Federal Office of Justice confirmed that it has arrested these two officials and one of them has been extradited. In total, forty-one individuals and entities have been charged to date; of those, twelve have been convicted.
The Swiss authority also announced on 30 December 2015 that it has handed over an initial package of evidence regarding the investigation to the US authorities, containing information about bank accounts allegedly used for bribes. It has also initiated process in anticipation of handing over more relevant evidence to the US authorities.
FIFA's ethics committee announced that Joseph Blatter and Michel Platini, President and Vice-President of FIFA, will be banned for eight years from all football-related activities, in relation to a CHF 2 million payment made by Joseph Blatter to Michael Platini. FIFA said that available evidence was insufficient to establish any bribery scheme in relation to the payment, but the transaction still breaches FIFA's gift policy.
US and Chinese Financial Intelligence Units signed Memorandum of Understanding to facilitate information sharing
On 11 December 2015, it was announced that the US Financial Crimes Enforcement Network ("FinCEN") and the China Anti-Money Laundering Monitoring and Analysis Center ("CAMLMAC") had entered into a Memorandum of Understanding ("MOU") that will result in additional levels of co-operation between the two Financial Intelligence Units ("FIUs"). The release from FinCEN stated that the MOU will "provide a mechanism for sharing information on money laundering and the financing of terrorism in order to prevent illicit actors from abusing either country’s financial systems.” FinCEN's announcement also notes that the information exchanged will be used only in an authorized and confidential manner. According to an announcement made by CAMLMAC, the MOU covers, among other things, the collection and analysis of financial information related to money laundering, terrorist financing, and related crimes on a reciprocal basis, as well as mutual assistance.
For more background on the MOU, see our e-bulletin dated 18 December 2015.
FinCEN fined a card club and a precious metals dealer for AML violations
On 17 December 2015, FinCEN announced its first enforcement action against a card club, Oaks Card Club. Oaks Card Club admitted that it had violated the Bank Secrecy Act ("BSA"), and agreed to pay a fine of $650,000. FinCEN stated in its order that Oaks Card Club failed to implement and maintain an effective anti-money laundering program and failed to report suspicious activity.
On 30 December 2015, FinCEN announced that B.A.K. Precious Metals, Inc. ("B.A.K."), a precious metals dealer, and its sole owner and compliance officer, had agreed to pay a $200,000 civil penalty for violation of the BSA. The order states that B.A.K. did not have any anti-money laundering compliance program in place until five years after the business had been established, and even the later established anti-money laundering compliance program was insufficient in that it did not have due diligence requirements on new, high-volume customers. B.A.K. has agreed to implement several remedial actions in addition to the fines.
OFAC implemented sanctions rules for cyber-attack suspects
OFAC announced on 31 December 2015 that it has issued regulations to implement Executive Order 13694, which was issued on 1 April 2015 to target persons engaging in significant malicious cyber-enabled activities. The regulations provide further basis for OFAC to designate persons involved in cyber-attack. However, the regulations did not specifically define "significant malicious cyber-enabled activities," leaving the administration with discretion in its designation decision. So far, no individual or entity has been designated under Executive Order 13694.
US enacts cybersecurity legislation to encourage information sharing
On 18 December 2015, the Omnibus Appropriations Act was signed into law by the US President Obama. The massive spending legislation contains the Cybersecurity Act of 2015, a piece of legislation that sets out a framework for information sharing to promote cybersecurity.
Among other things, the legislation provides liability protection to companies that voluntarily share "cyber threat indicators" or "defensive measures" with other private entities or a federal agency. For its part, the federal agency must maintain the security of the shared information and can only use that information for a purpose related to cybersecurity or investigations and prosecutions. The legislation also takes into consideration privacy concerns, and encourages pre-sharing redaction or removal of personal identifiable information. For information shared, legal privileges and trade secrets will be preserved, and no disclosure will be made under the Freedom of Information Act ("FOIA"). More detailed guidelines will be issued by the administration to implement the legislation.