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$950,000 Penalty for Failure to Maintain Anti-Corruption Controls

Friday, March 30, 2018
Sandler, Travis & Rosenberg Trade Report

A Canada-based company has agreed to pay a $950,000 penalty to settle charges that it violated the Foreign Corrupt Practices Act in connection with its repeated failure to implement adequate accounting controls of two African subsidiaries. The company has also agreed to a cease and desist order and will report on its remedial steps for one year.

According to the Securities and Exchange Commission, the company acquired the African subsidiaries in 2010 with the understanding that they lacked anti-corruption compliance programs and internal accounting controls. It then took almost three years to implement adequate controls, despite multiple internal audits flagging widespread deficiencies. 

However, the SEC states, even after implementing the controls the company failed to maintain them. For example, a lucrative logistics contract was awarded to a company preferred by Mauritanian government officials despite concerns that it was a high-cost provider with poor technical capabilities. The company also contracted with a politically-connected consultant to facilitate contacts with high-level Mauritanian government officials without conducting required, heightened due diligence and paid vendors and consultants without ensuring the payments were consistent with policies prohibiting improper payments.

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