The United States Department of Justice (“DoJ”) has continued its active pursuit of violations of the Foreign Corrupt Practices Act (“FCPA”). In the first four months of 2013, the DoJ announced four actions against individuals and corporations for violations of or assisting in the violation of the FCPA.
Details of the first two cases, on April 5 and April 16, are outside the scope of this publication as they do not involve the investment industry, nor the United States Securities and Exchange Commission (“SEC”). Nevertheless, they provide a useful indicator for possible future SEC action, with both cases involving the unsealing of charges against individuals.
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The SEC was, however, involved in the following two cases, including its first published use of a non-prosecution agreement in an FCPA case.
On April 16, 2013, the DoJ announced a non-prosecution agreement with Parker Drilling Company, a Houston, Texas-based, publicly traded company, to resolve charges that it authorized a $1.25 million payment to an intermediary it knew would be used to improperly influence Nigerian government officials. The intermediary, Panalpina World Transport (Nigeria) Limited, sought to avoid Nigeria’s customs law with regard to Parker Drilling’s drilling rigs, as well as a $3.8 million fine which Nigeria levied against Parker Drilling. As part of the non-prosecution agreement Parker Drilling agreed to pay $11.76 million. Parker Drilling also settled related charges brought by the SEC, agreeing to pay $4.09 million in disgorgement and prejudgment interest. The DoJ noted that it took account of Parker Drilling’s cooperation, including its “extensive, multi-year investigation into the charged conduct.”
Additional information is available at (http://www.justice.gov/opa/pr/2013/April/13-crm-431.html).
On April 22, 2013, the DoJ announced a non-prosecution agreement with Ralph Lauren Corporation, a New York based apparel company, to resolve charges of FCPA violations for bribing Argentinean government officials. The agreement recounts that Ralph Lauren’s Argentinean subsidiary bribed customs officials over a five-year period in order to clear customs, avoid paperwork, and sometimes to avoid inspection entirely. Ralph Lauren agreed to pay an $882,000 penalty, cooperate with the DoJ, and to implement enhanced compliance procedures to prevent and detect FCPA violations. In a companion proceeding, the SEC announced a separate non-prosecution agreement with Ralph Lauren requiring the company to pay $734,846 in disgorgement and prejudgment interest. It is noteworthy that the DoJ made a special acknowledgment of Ralph Lauren’s “extensive, thorough, and timely cooperation.”
Additional information is available at (http://www.justice.gov/opa/pr/2013/April/13-crm-456.html).
The four cases show the DoJ’s continued use of non-prosecution agreements. They also evidence an increase in government focus on individuals for FCPA violations. Additionally, the DoJ continues to positively credit the cooperation of its targets. While the benefits of cooperation for a corporation may be a lower fine and the option of a non-prosecution agreement instead of criminal charges, for individuals the benefit may be significantly greater, including a reduced sentence, that can possibly eliminate prison time.