The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

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By Topic: Telecom, Media, Tech

  • From Vol. 5 No.5 (Mar. 9, 2016)

    Five Stages of Corruption and Myriad Internal Controls Failures: Compliance Takeaways From the VimpelCom Settlement

    VimpelCom’s historic settlement with U.S. and Dutch authorities was notable for many reasons, among them the enormous penalties and disgorgement paid and the DOJ’s attendant civil forfeiture suit. But beyond the settlement itself, which was discussed in the first part of this two-part article series, the underlying bribery scheme is noteworthy – and informative – as well. Over and over the company’s weak internal controls enabled employees to make corrupt payments to a government official in Uzbekistan. Here, we take a close look at the five stages of corruption that were outlined by the DOJ in its criminal information. The underlying facts show the mechanics of how corrupt payments can be made and how strong internal controls could have prevented them. See “Examining New DOJ Compliance Counsel Hui Chen’s Four Elements of a Successful Compliance Program” (Jan. 13, 2016).

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  • From Vol. 5 No.5 (Mar. 9, 2016)

    Qualcomm’s $7.5 Million Settlement for Princeling Hirings Enabled by Three Key Compliance Failures

    Qualcomm Inc., a major designer of wireless telecommunications products, has agreed to pay a civil monetary penalty of $7.5 million to the SEC to settle FCPA charges. According to the SEC, Qualcomm hired the relatives of Chinese government officials and also provided extensive gifts, travel and entertainment to the foreign officials and their families to influence those officials’ purchasing decisions. The case shows that hiring family members of foreign officials “clearly needs to be on companies’ risk assessment radar,” asserted Jeffrey Kaplan, a partner at Kaplan & Walker. The case is also a reminder that companies still need to be mindful of more traditional corruption risks such as gifts, travel and entertainment and a weak compliance program. See “Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement (Part One of Two)” (Jan. 13, 2016); Part Two (Jan. 27, 2016).

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  • From Vol. 5 No.4 (Feb. 24, 2016)

    VimpelCom Settlement Highlights U.S. Government’s New Holistic Approach to Anti-Corruption Enforcement

    VimpelCom, a Russian-owned, Amsterdam-based telecommunications company, and its wholly owned Uzbek subsidiary Unitel, have come to a global agreement to settle allegations that VimpelCom bribed its way into the Uzbek cable market. Unitel pled guilty to bribery charges, while VimpelCom entered into a criminal DPA and reached a civil settlement with the SEC. Altogether, VimpelCom agreed to pay more than $795 million to the SEC, DOJ and Dutch authorities, and agreed to take on a compliance monitor for three years. The investigation involved more than 17 jurisdictions and was accompanied by a civil forfeiture case seeking the funds paid to the corrupt foreign official in Uzbekistan that are squirreled away in Swiss bank accounts. Here we dissect the settlement and VimpelCom’s significant discounts for cooperation, despite its failure to self-report. In our next issue we will explore how VimpelCom’s blasé attitudes about corruption at its highest levels led to this historic settlement. See “From Discounts to Slush Funds: Red Flags to Heed and Eight Steps to Take to Avoid SAP’s $3.9 Million Mistakes” (Feb. 10, 2016).

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  • From Vol. 5 No.4 (Feb. 24, 2016)

    Excessive Power for Junior Employees and Lavish Trips for Foreign Officials Lead to $28 Million PTC Settlement

    PTC Inc., a Massachusetts-based software company, will pay more than $28 million to settle parallel civil and criminal FCPA charges. Like FLIR and SciClone, PTC’s corruption troubles stemmed from the provision of improper travel, gifts and entertainment to government officials. By inflating the fees paid to third parties for their services, junior employees of PTC’s China-based subsidiaries created pools of money that were then used to fund sightseeing adventures. Officials visited Honolulu, San Diego, New York and Las Vegas and enjoyed guided tours, golfing and other leisure activities. The SEC also announced its first DPA with an individual in an FCPA case, agreeing to defer prosecution against Yu Kai Yuan, a former employee of a PTC subsidiary, because of the significant cooperation he provided during the SEC investigation of the company. The voluntary disclosure calculus and how to handle relationships with lobbyists were among the key compliance concerns implicated in the PTC matter. See “CEO of LAN Airlines Settles FCPA Charges With SEC Over Union Dispute” (Feb. 10, 2016).

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  • From Vol. 5 No.3 (Feb. 10, 2016)

    From Discounts to Slush Funds: Red Flags to Heed and Eight Steps to Take to Avoid SAP’s $3.9 Million Mistakes

    As companies increase the complexity of their compliance programs, employees trying to make corrupt payments are forced to become more and more creative to circumvent those programs. German software and technology company SAP SE recently learned that the hard way when it agreed to pay nearly $3.9 million to settle charges that it violated both the books and records and the internal controls provisions of the FCPA. According to the SEC, a former SAP executive created a slush fund by providing an 82% discount to one of SAP’s local partners. That money was then used to pay $145,000 in bribes to one senior Panamanian official and offer bribes to two others. Adrian D. Mebane, vice president and deputy general counsel of The Hershey Company told The FCPA Report that the settlement reinforces a company’s obligation to maintain robust internal controls. That obligation goes beyond financial controls and includes establishing a compliant tone at the top, performing risk assessments, maintaining procedures to guarantee directives are followed for high-risk transactions, and ongoing monitoring, he said. See also “Miller & Chevalier’s Ellis Offers Insights From Former SAP Employee’s FCPA Guilty Plea and SEC Settlement” (Sep. 9, 2015).

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