Alleged foreign corrupt practices are regularly settled out of court, and we often consider settlements as setting precedents. We provide a brief overview of the most important settlements every month. This month we briefly discuss recent settlements reached in the Netherlands with SBM Offshore and in the US with Bio-Rad Laboratories. We also briefly discuss a possible upcoming settlement with Commerzbank, another European bank that may have breached US economic sanctions law.
SBM Offshore N.V.
SBM Offshore N.V. (SBM) entered into a USD 240 million out-of-court settlement with the Dutch Public Prosecution Service relating to alleged improper payments to sales agents in Equatorial Guinea, Angola and Brazil from 2007 through 2011. The U.S. Department of Justice (DoJ) is not prosecuting the company and has closed its inquiry into the matter.
Under the settlement terms, SBM will pay USD 240 million to the Dutch Public Prosecution Service. The settlement discussions started after SBM Offshore voluntarily informed the Dutch Public Prosecution Service of its self-initiated internal investigation. SBM Offshore, on its own initiative, has also taken significant measures to improve the company’s compliance systems and policies.
A life science company, Bio-Rad Laboratories, agreed to settle a case involving alleged improper payments by subsidiaries to foreign officials in Russia, Vietnam and Thailand to win new business. Bio-Rad paid a USD 14.35 million criminal penalty to the DoJ to resolve these alleged violations of the US Foreign Corrupt Practices Act (FCPA), consisting of falsification of its books and records and failure to implement adequate internal controls in connection with sales made in Russia. In a parallel SEC enforcement action, Bio-Rad agreed to pay USD 40.7 million in disgorgement and interest.
The DoJ entered into a non-prosecution agreement with the company due, in large part, to Bio-Rad’s self-disclosure of the misconduct and cooperation with the investigation. Bio-Rad has taken remedial actions, including:
- enhancing its anti-corruption policies worldwide
- improving its internal controls and compliance functions
- developing and implementing additional due diligence and contracting procedures
- extensive anti-corruption training throughout the organisation
The company must report its FCPA compliance efforts to the SEC for a period of two years.
Commerzbank AG, a German financial services company, announced on 6 November 2014 in its third quarter interim report of 2014 that it may have to pay substantial fines stemming from investigations into whether it breached US embargo regulations with respect to Iran, Sudan, Myanmar, Cuba and North Korea. This is yet another European bank that is undergoing investigation by US regulators in connection with possible economic sanction violations.
The outcome of the investigation is uncertain, but US authorities may impose civil and criminal sanctions on Commerzbank, including substantial fines. The bank itself has commented that it cannot rule out having to pay a considerable sum of money to settle the case.