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$15 Million in Penalties for Bribery of Government Officials in China and Peru

Tuesday, October 08, 2019
Sandler, Travis & Rosenberg Trade Report

China

The Securities and Exchange Commission reports that a Canadian company and its former chief executive officer have agreed to pay more than $4.1 million to resolve charges that they violated the Foreign Corrupt Practices Act by paying bribes to a foreign government official in China. This amount includes $2.55 million in disgorgement and prejudgment interest, a $1.5 million civil penalty against the company, and a $120,000 civil penalty against the former CEO. The SEC states that it considered remedial acts undertaken by the company concerning its anti-corruption and financial reporting compliance programs as well as its cooperation with SEC staff.

According to an SEC order, the company engaged in a scheme to bribe a Chinese government official to obtain business and a cash dividend payment by transferring shares of stock in its Chinese joint venture to a Chinese private equity fund in which the government official held a financial interest. The company concealed the identity of the equity fund in its public filings, as well as in its books and records, by falsely identifying a different entity as the counterparty to the transaction. The former CEO caused these violations by circumventing the company’s internal accounting controls and signing a false certification concerning the sufficiency of those controls.

China and Peru

The SEC also reports that a U.S. company has agreed to pay nearly $10 million to resolve charges that it violated the FCPA by engaging in multiple bribery schemes in Peru and China. This amount includes $6.94 million in disgorgement, $959,160 in prejudgment interest, and a $2 million civil penalty. The company has also agreed to self-report on its compliance program for one year.

The SEC states that the company’s Peruvian subsidiary repeatedly paid or promised bribes to Peruvian government officials to win sales contracts and avoid penalties and improperly attempted to influence the judicial outcome of a dispute with the Peruvian tax authority. The subsidiary also created false records to conceal transactions with a state-controlled Cuban telecommunications company that were subject to U.S. sanctions and export controls laws. Finally, the company’s China-based subsidiary used sham sales agents to make and promise improper payments to employees of private and governmental customers to secure business.

For more information about the FCPA and ensuring your company is in compliance, please contact Kristine Pirnia.

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