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$14 Million Penalty to Settle FCPA Charges

Wednesday, July 20, 2016
Sandler, Travis & Rosenberg Trade Report

A U.S.-based company has agreed to pay more than $14 million to settle charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act. This amount includes disgorgement of $11.8 million, a $1.18 million civil penalty and prejudgment interest of $1.38 million. The company has also agreed to report to the Securities and Exchange Commission for one year on the status of its FCPA and anti-corruption related remediation and implementation of compliance measures. The Department of Justice closed a related criminal investigation based on a number of factors, including the company’s voluntary self-disclosure, thorough investigation, full cooperation, full remediation and steps taken to enhance its compliance program and internal accounting controls.

According to an SEC press release, over a six-year period a wholly-owned Chinese subsidiary of the company used sham vendors to make improper payments of approximately $4.9 million to employees of Chinese government-owned shipyards, and ship-owners and others, to obtain and retain business. The company acquired the subsidiary as part of an acquisition of a separate company that had been subject to a prior FCPA enforcement action for conduct in China. After the parent company limited the use of agents, employees of the subsidiary used vendors instead to circumvent and manipulate the parent company’s internal and financial controls. The parent company self-reported the misconduct to the SEC shortly after becoming aware of it.

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