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$300 Million Penalty to Resolve Charges of Foreign Bribery by Predecessor Companies

Monday, July 01, 2019
Sandler, Travis & Rosenberg Trade Report

A U.S. company and its wholly-owned U.S. subsidiary have agreed to pay a combined total criminal fine of nearly $300 million to resolve foreign bribery charges with authorities in the U.S. and Brazil, according to a Department of Justice press release. The DOJ states that this penalty amount reflects credit given for the company’s cooperation and remedial measures.

For more information about the Foreign Corrupt Practices Act and ensuring your company is in compliance, please contact Kristine Pirnia at (202) 730-4964.

The DOJ states that beginning in at least 2003 and continuing until at least 2013 one of the company’s predecessors conspired with others to violate the FCPA by making more than $69 million in corrupt payments and “commission payments” to a consultant, companies associated with the consultant, and others. Portions of these payments were passed along as bribes to Brazilian government officials at the state-owned oil company to secure improper business advantages and obtain and retain business.

In addition, beginning by at least 2008 and continuing until at least 2013, a separate predecessor company conspired to violate the FCPA by paying bribes to at least seven government officials in Iraq through a Monaco-based intermediary company to secure improper business advantages and influence those officials to obtain and retain business.

Under a deferred prosecution agreement with the DOJ, the U.S. company will pay a total criminal fine of more than $296 million. The DOJ will credit the amount the company pays to Brazilian authorities under separate settlement agreements, which is approximately $214 million. The company has also committed to implement rigorous internal controls and cooperate fully with the DOJ’s ongoing investigation.

The DOJ notes that the criminal fine reflects a 25 percent reduction off the applicable U.S. sentencing guidelines amount in response to the company’s substantial cooperation with the department’s investigation and its extensive remedial measures. For example, the company fired or took disciplinary action against former and current employees involved in the violations, made changes to its business operations in Brazil to no longer participate in the type of work where the misconduct at issue arose, required certain employees and third parties to undergo additional compliance training, and made specific enhancements to its internal controls and compliance program.

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