On 17 December 2012, the SEC charged Allianz SE with violating the Foreign Corrupt Practices Act (“FCPA”) by making improper payments to Indonesian government officials between 2001 and 2008. According to the SEC, Allianz SE, a German based insurance and asset management company, made over $5m in profits from 295 insurance contracts obtained or retained through improper payments made by Allianz’s Indonesian subsidiary. The company has agreed to pay more than $12.3m to settle the SEC’s charges. More information can be found here.
Whilst another case also settled by a large company in the last quarter of 2012 was not against financial services companies, it is worth mentioning as it demonstrates a trend in FCPA enforcement and is the context in which to view the Allianz case. This was in relation to Tyco International Ltd. (“Tyco”) and its indirect, wholly owned subsidiary Tyco Valves & Controls Middle East Inc. (“TVC”). On 24 September, it pled guilty to a criminal charge for conspiracy to violate the FCPA in a federal court in the Eastern District of Virginia. Tyco is a Swiss-based manufacturer and seller of products related to security, fire protection and energy; TVC markets and sells valves and industrial equipment oil, gas, petrochemical, commercial construction, and other industries throughout the Middle East. Tyco agreed to pay a $13.56m to resolve charges of falsifying books and records in connection with improper payments by its subsidiaries to government officials in foreign countries. Additionally, Tyco agreed to resolve allegations by the SEC and pay approximately $13m in disgorgement and fees. TVC admitted to paying bribes to officials at Saudi Aramco, a state-owned oil and gas company in Saudi Arabia, and will pay a fine of $2.1m. Interestingly, these significant penalties came notwithstanding a timely and voluntary disclosure by Tyco and the company’s implementation of an extensive remediation program. More information can be found here.
In addition to these settlements, the DoJ and SEC jointly published a guide for companies explaining the agencies’ approach to FCPA enforcement. The comprehensive guide details the meanings of key terms in the statute, the applicability of the statute to certain situations, and the guidelines the agencies use when deciding whether to bring an action for FCPA violations. The guide is publicly available here.
These cases continue to demonstrate the seriousness with which the SEC and DoJ are taking allegations of foreign bribery. Each of the three companies is paying far more in fines than they gained in profits, suggesting that the SEC and DoJ are attempting now also to use the statute as a deterrent. Moreover, two of the companies that faced FCPA charges are foreign-based, suggesting that the SEC and DoJ are not constrained from taking action against non-U.S. companies. We expect to see the SEC and DoJ continue to actively pursue FCPA violations against companies regardless of where they are principally based.