$28M Tobacco Bribery Settlements Push Recent FCPA Fines to Almost $1B
On August 6, 2010, the Justice Department announced criminal and civil penalties against three subsidiaries of two tobacco companies totaling $28.35 million, as settlement for their bribery of Thailand and Kyrgyzstan government officials and employees in violation of the Foreign Corrupt Practices Act (FCPA).
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Swiss and Kyrgyzstan subsidiaries of Alliance One International Inc. (AOI), headquartered in North Carolina, reached settlement agreements totaling $9.45 million for criminal charges relating to the bribery of (1) Thai government officials to secure government contracts with their tobacco agency for AOI tobacco and (2) Kyrgyzstan officials for the purchase of Kyrgyzstan tobacco. To settle the civil charges, AOI will disgorge approximately $10 million in profits to the Securities and Exchange Commission.
In a similar bribery scheme, Universal Leaf Tabacos Ltda. (Universal Brazil), a subsidiary of Universal Corp. of Virginia, was paying bribes to Thai tobacco agency employees. Universal Leaf reached agreement on a $4.4 million criminal penalty, and will disgorge $4.5 million in profits to the SEC to settle the civil charges.
FCPA Fines Announced Since March Approaching $1 Billion
Since March 2010, the Justice Department and/or SEC have announced criminal and civil penalties in an amount approaching $1 billion against corporations and individuals for violations of the FCPA, as follows:
| Firm or Individual | Gain Sought | Target of Bribery | Criminal Fine |
|---|---|---|---|
| Daimler AG and its German, Russian, and Chinese subsidiaries 1 | Government purchase of Daimler vehicles | Foreign officials of 22 countries | $93.6M |
| Technip S.A., France2 | Liquefied Natural Gas facility contracts | Nigerian govt officials | $240M |
| ENI, S.p.A. and former subsidiary Snamprogetti Netherlands B.V.3 | Liquefied Natural Gas facility contracts | Nigerian govt officials | n/a |
| Snamprogetti Netherlands B.V.3 | Liquefied Natural Gas facility contracts | Nigerian govt officials | $240M |
| Alliance One International AG, Swiss subsidiary of Alliance One Int’l (AOI) Inc.4 | Tobacco leaf sales | Thai govt officials | $5.25M |
| Alliance One Tobacco Osh LLC, subsidiary of Alliance One Int’l Inc.4 | Tobacco leaf purchases | Kyrgystan govt officials | $4.20M |
| Alliance One Int’l (AOI) Inc.4 | Tobacco leaf sales, purchases | Thai and Kyrgystan govt officials | n/a |
| Universal Brazil, subsidiary of Universal Corp.4 | Tobacco sales | Thai govt employees | $4.4M |
| General Electric Company and subsidiaries: Marquette-Hellige and OEC-Medical Systems (Europa) AG5 | Contracts under UN Oil for Food Program | Iraq Health and Oil Ministries | n/a |
| Veraz Networks, Inc.6 | Telecom business advantages | Foreign officials of China and Vietnam | n/a |
| Innospec, Inc. of Delaware7 | Contracts under UN Oil for Food Program | Iraq Health and Oil Ministries | $14.1M |
| David P. Turner, senior official with Innospec, Inc.8 | Contracts under UN Oil for Food Program | Iraq Health and Oil Ministries | n/a |
| Ousama M. Naaman, agent of Innospec, Inc.8 | Contracts under UN Oil for Food Program | Iraq Health and Oil Ministries | $438,000 |
| Juan Diaz, Miami businessman9 | Telcom business advantages | Haiti govt officials | 57 months in prison, $74,000, $1M |
| Charles Jumet, Virginia, V.P. of Panama Corp10 | Panama Lighthouse and Buoy Contracts | Panama govt Officials | 87 months in prison, $15,000 |
New Law Allows Whistleblower Rewards for SEC Violations such as FCPA
Those that act as whistleblowers for certain securities violations, such as violations involving the FCPA, that result in monetary sanctions exceeding $1M (million), are now eligible for an award of between 10-30 percent of the SEC fine, according to a new law enacted on July 21, 2010. (See ITT’s Online Archives or 07/22/10 news, 10072230, for BP summary.)
1See ITT’s Online Archives or 04/06/10 news, 10040615, for earlier BP summary
2See ITT’s Online Archives or 06/29/10 news, 10062929, for earlier BP summary, that also mentions February 2009 criminal fine for Kellogg Brown & Root LLC of $402M
3See ITT’s Online Archives or 07/09/10 news, 10070803, for earlier BP summary
4See ITT’s Online Archives or 08/08/10 news, 10080802, for earlier BP summary
5See ITT’s Online Archives or 07/29/10 news, 10072906, for earlier BP summary
6See ITT’s Online Archives or 07/07/10 news, 10070722, for earlier BP summary
7See ITT’s Online Archives or 03/23/10 news, 10032399, for earlier BP summary
8SEC 08/05/10 release available at http://www.sec.gov/litigation/litreleases/2010/lr21615.htm
9See ITT’s Online Archives or 08/02/10 news, 10080110 for earlier BP summary
10See ITT’s Online Archives or 04/22/10 news, 10042246, for earlier BP summary