General Electric Company, Inc.
Securities and Exchange Commission Settlement July 27, 2010
General Electric Company, Inc. (GE), along with two other subsidiaries subsequently acquired by GE, settled a civil action with the SEC in connection with the United Nations Oil-for-Food Program (OFFP). This settlement is the latest of such settlements bringing the total number arising out of the OFFP to 15.
Veraz Networks, Inc.
Securities and Exchange Commission Settlement June 29, 2010
Veraz Networks, Inc, a California telecommunications company, settled a civil action with the SEC for violating the FCPA’s books-and-records and internal controls provisions. The charges arose in connection with sales in China and Vietnam. Veraz’s third-party consultant in China allegedly provided about $4,500 in gifts to officials of the state-run telecommunications company and would have provided another $35,000 in connection with a specific deal, but was discovered by Veraz before the transaction was complete. The deal was subsequently terminated. In Vietnam, a Veraz employee allegedly used a distributor to make improper payments to the CEO of a government-run telecommunications company. Veraz also allegedly reimbursed its employees for questionable gifts and entertainment expenses given to the staff of the state-run company and the CEO’s wife. Veraz agreed to pay a $300,000 civil penalty and consented to an injunction from future violations of the FCPA’s accounting provisions, without admitting or denying the allegations.
Bobby J. Elkin, Jr., Baxter J. Meyers, Thomas G. Reynolds, and Tommy L. Williams
Securities and Exchange Commission Settlement April 28, 2010
The SEC charged four former employees of Dimon, Inc., now Alliance One International, Inc., with violating the antibribery provisions of the FCPA and aiding and abetting. According to court documents, the case involved bribes of more than $3 million paid through a subsidiary in Kyrgyzstan in connection with purchases of tobacco. About $170,000 in bribes were also paid to Kyrgyz tax officials, who subjected the subsidiary to unending audits, and who reduced tax fines only upon payment of bribes. Separately, from 2000-2003, Dimon paid bribes of about $542,590 to the Thailand Tobacco Monopoly in exchange for about $9.4 million in sales contracts. Two of the defendants were fined civil penalties of $40,000 each; all four consented to permanent injunctions against further violations of the FCPA.
NATCO Group, Inc.
Securities and Exchange Commission Settlement January 11, 2010
On January 11, 2010, the SEC filed a settled civil action charging NATCO Group, Inc., with violations of the books-and-records and internal controls provisions of the FCPA. According to the complaint, TEST Automation & Controls, Inc. (“TEST”), a wholly-owned subsidiary of oil field services provider NATCO Group, Inc., created and accepted false documents while paying extorted fees to obtain immigration visas in the Republic of Kazakhstan. NATCO’s system of internal accounting controls failed to ensure that TEST recorded the true purpose of the payments, and NATCO’s consolidated books and records did not accurately reflect these payments. NATCO voluntarily disclosed this matter.
As part of the settled civil action, NATCO agreed to pay a relatively modest $65,000 civil penalty. The case is notable because while the SEC acknowledged in its complaint that the payments were extorted because the payments were obtained upon threats of fines, jail, and/ or deportation, the SEC nonetheless brought books-andrecords and internal controls charges (extortion is not a defense to these charges, while it could be a defense to an anti-bribery charge which requires a corrupt intent).