Less than two months in to the new year, individuals are already predicting a massive year for prosecutions and settlements in Foreign Corrupt Practices Act cases, according to the South China Morning Post. The Foreign Corrupt Practices Act was passed in 1977 to halt bribery of foreign officials by United States companies. It also requires public companies to maintain accurate books and records as well as an effective system of internal accounting controls.
The year started off with a large, $384 million dollar settlement by Alcoa. One of its majority-owned units pleaded guilty to bribing members of Bahrain’s royal family and officials. A consultant hired by the unit bribed government officials in order to retain a contract with state-owned Aluminum Bahrain.
This announcement was followed up in late January by a decision from an Administrative Law Judge at the SEC who censured the Chinese affiliates of Big Four accounting firms KPMG, Deloitte Touche Tohmatsu, PricewaterhouseCoopers and Ernst & Young. They cited Chinese law in refusing to provide audit work papers to regulators conducting accounting fraud investigations of their clients. The decision prohibits the units from conducting audits on U.S. listed companies for six months. It is suspended pending the outcome of their appeal.
The Department of Justice has begun a criminal investigation into conduct by six major financial firms in Libya, according to Compliance Week. The Libyan Investment Authority invested up to $1 billion in Goldman Sachs, JPMorgan Chase, Credit Suisse, Societe Generale and Och-Ziff Capital Management. Goldman has been under investigation by the SEC since at least 2011.
Finally, Avon has just increased its settlement reserve for a FCPA investigation conducted by the SEC and DOJ to $89 million. It estimated settlement negotiations may impose liability of up to $132 million for bribery to Chinese officials. According to Bloomberg, the company has spent more than $300 million in its internal investigation and compliance reviews over the past five years. Chinese and U.S. authorities are investigating other major corporations for bribery as well.
New investigations by the SEC into bribery overseas could also be strengthened by the SEC Whistleblower program. The SEC has reported an increase in tips from international whistleblowers. Foreign tips are eligible for an award the same as tips submitted domestically.
Eric L. Young and the attorneys of McEldrew Young represent whistleblowers submitting tips to the SEC. If you would like to report a violation of the Foreign Corrupt Practices Act, please call Eric at 1-800-590-4116 or fill out the contact form to schedule a free, confidential consultation with one of our FCPA whistleblower attorneys.