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$800 Million in Penalties for Bribery of Officials in Multiple Countries

Friday, January 20, 2017
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that a European manufacturer and distributor of power systems for the aerospace, defense, marine, and energy sectors has agreed to pay the U.S. nearly $170 million as part of an $800 million global resolution of investigations into a scheme to bribe foreign government officials. 

As part of a deferred prosecution agreement with the DOJ the company agreed to pay a $195.5 million criminal penalty and cooperate fully with the department’s ongoing investigation. The company admitted that between 2000 and 2013 it conspired to violate the Foreign Corrupt Practices Act by paying more than $35 million in bribes through third parties to foreign officials in various countries in exchange for their assistance in providing confidential information and awarding contracts to the company and affiliated entities.

The DOJ notes that the company did not disclose the criminal conduct until after the media began reporting allegations of corruption and the SFO initiated an inquiry. In addition, the conduct was extensive and spanned 12 countries. On the other hand, the DOJ states, the company did cooperate with the department’s investigation and has taken significant remedial measures, including terminating business relationships with multiple employees and third-party intermediaries who were implicated in the corrupt scheme, enhancing compliance procedures to review and approve intermediaries, and implementing new and enhanced internal controls to address and mitigate corruption and compliance risks.  As a result, the criminal penalty to be paid to the DOJ reflects a 25 percent reduction from the bottom of the U.S. Sentencing Guidelines fine range.  

The company also agreed to pay $604.8 million as part of a DPA with the United Kingdom’s Serious Fraud Office concerning charges that it paid bribes or failed to prevent bribery payments in connection with business operations in additional countries from around 1989 to around 2013. Further, the company entered into a leniency agreement with Brazil’s Ministério Público Federal that levies a $25.6 million penalty for the company’s role in a conspiracy to bribe officials in Brazil between 2005 and 2008. This amount will be credited against the fine to be paid to the DOJ, which will thus be reduced to $169.9 million.

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