Top Ten FCPA Recoveries of 2019
Posted January 10, 2020
This year, the federal government recovered billions of dollars under the Foreign Corrupt Practices Act (FCPA), which prohibits the payment of bribes to foreign officials for the purposes of furthering business interests. The anti-corruption actions by the Department of Justice and the Securities and Exchange Commission concerned almost every continent and covered a variety of misconduct. Below, we’ve gathered the top ten FCPA recoveries for 2019.
- Ericsson. In December 2019, Ericsson agreed to pay $1.06 billion to settle civil and criminal charges that Ericsson and its subsidiaries engaged in a scheme from 2000 to 2016 to pay bribes in Djibouti and China, and maintained slush funds and entered into sham contracts in Vietnam, Indonesia, and Kuwait. As part of the scheme, Ericsson falsified its books and records to cover up the use of third-party agents to make bribe payments to government officials and manage its off-books slush funds.
- Mobile Telesystems PJSC. In March 2019, Russian telecom giant Mobile TeleSystems PJSC (MTS) agreed to pay approximately $850 million to settle allegations the company violated the FCPA by bribing an Uzbek official, a relative of Uzbekistan’s president at the time. The bribes at issue totaled at least $420 million and were allegedly funneled through front companies controlled by the President’s relative, who also held a government post. The bribes were disguised as acquisition costs, charitable donations, and various other misleading line items. This is the third major FCPA settlement relating to the Uzbek telecom business that the United States government has announced, including 2016’s blockbuster VimpelCom
- TechnipFMC. In June 2019, the international gas and oil provider agreed to pay over $296 million to settle bribery charges by U.S. and Brazilian authorities. The company allegedly paid bribes from 2003 to 2013 to government officials in Brazil and Iraq in order to secure improper business advantages.
- Walmart. In June 2019, Walmart paid nearly $283 million to settle civil and criminal charges that, from 2000 through 2011, its subsidiaries in Brazil, China, India, and Mexico hired third-party intermediaries to make improper payments to foreign government officials to obtain store permits and licenses. Prosecutors also charged that Walmart learned of certain practices in which its subsidiaries engaged, but did not investigate or mitigate the known risks until 2011 or later.
- Fresenius. German-based medical device production and services company Fresenius Medical Care AG & Co. KGaA (“FMC”), agreed in March 2019 to a $231 million settlement with both DOJ and the SEC to resolve allegations that it paid bribes between 2007 and 2016 to publicly employed health and/or government officials to obtain or maintain business in Angola and Saudi Arabia. Fresenius was further found to have violated the books and records provisions of the FCPA in at least another half dozen countries.
- Samsung Heavy Industries. The South Korean company agreed in November 2019 to pay $75 million in a global settlement of allegations that it engaged in an unlawful scheme to bribe government officials in Brazil. Half of this will resolve its FCPA liability. Samsung was alleged to have paid millions to a Brazil-based intermediary, knowing and intending that those funds would be used to bribe officials at the Brazilian state-owned Petrobras in order to obtain a shipbuilding contract for Samsung.
- Tim Leissner. In December 2019, the SEC charged former Goldman Sachs executive Tim Leissner for engaging in a corrupt scheme to obtain millions of dollars by paying unlawful bribes to government officials to secure lucrative contracts for Goldman Sachs. As a managing director of Goldman Sachs, Leissner used a third-party intermediary to bribe high-ranking government officials in Malaysia and the Emirate of Abu Dhabi so as to obtain for Goldman Sachs lucrative business from 1Malaysia Development Berhard (1MDB), a Malaysian government owned investment fund, including underwriting $6.5 billion in bond offerings. Leissner agreed to personally disgorge more than $43 million he received in illicit payments for his role in facilitating the bribe scheme; a related criminal case against Leissner is ongoing. In addition, Goldman Sachs is reportedly in talks to admit guilt and pay nearly $2 billion to end DOJ’s investigation of its role in the broader 1MDB corruption scandal, in which the storied investment house allegedly turned a blind eye while $4.5 billion was looted from Goldman’s client, 1MDB.
- Cognizant. In February 2019, Cognizant Technology Solutions Corporation agreed to pay $25 million to settle FCPA charges with the SEC, at the same time DOJ indicted two of Cognizant’s former executives with paying bribes to Indian government officials. Between 2014 and 2016, Cognizant authorized payments of approximately $3.6 million in bribes to various Indian government officials to obtain government construction-related permits and operating licenses in connection with the construction and operation of commercial office buildings. Cognizant made profits of approximately $16.4 million as a result of the bribes.
- Microsoft. In July 2019, the tech giant agreed to pay more than $16 million to settle charges that it violated the FCPA through improper actions in Hungary, Saudi Arabia, Thailand, and Turkey. Its alleged misconduct included improperly using discounts on software licenses to its resellers, distributors, and other third parties to fund improper payments intended for foreign government officials to secure software license sales, improperly funding gifts and travel for government officials through slush funds, and providing excessive discounts to unauthorized third-party resellers in off-books deals.
- Deutsche Bank. In August 2019, Deutsche Bank agreed to pay over $16 million to settle civil charges that, from at least 2006 to 2015, it provided valuable employment to the relatives of foreign government officials in China and Russia to obtain or retain business in those countries, and concealed its corrupt hiring practices.