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Posts tagged "FCPA"

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Aon Corporation  to Pay Over $16 Million in Penalties to Resolve Violations of the Foreign Corrupt Practices Act

 

Aon Corporation, a publicly traded corporation headquartered in Chicago and one of the largest insurance brokerage firms in the world, has entered into an agreement with the Department of Justice to pay a $1.76 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA).  

 

According to the non-prosecution agreement, Aon's United Kingdom subsidiary, Aon Limited, administered certain training and education funds in connection with its reinsurance business with Instituto Nacional De Seguros (INS), Costa Rica's state-owned insurance company.   The supposed purpose of the funds was to provide education and training for INS officials.   However, between 1997 and 2005, Aon Limited used a significant portion of the funds to reimburse INS officials for non-training related activity, including travel with spouses to overseas tourist destinations, or for uses that could not be determined from Aon's books and records.   Many of the invoices and other records for trips taken by INS officials did not provide any business purpose for the expenditures, or showed that the expenses were clearly not related to a legitimate business purpose.  

 

As part of the agreement, Aon admitted that Aon Limited's accounting books and records related to the funds, which were consolidated into Aon's books and records, did not accurately and fairly reflect the purpose for which the expenses were incurred.   Aon also admitted that it failed to devise and maintain an adequate system of internal accounting controls with respect to foreign sales activities sufficient to ensure compliance with the FCPA.    

 

In addition to the monetary penalty, the agreement requires that Aon Corporation adhere to rigorous compliance, bookkeeping and internal controls standards and cooperate fully with the department.  

 

The department entered into a non-prosecution agreement with Aon as a result of Aon's extraordinary cooperation with the department and the U.S. Securities and Exchange Commission (SEC); its timely and complete disclosure of improper payments in Costa Rica and other countries that it discovered during its thorough investigation of its global operations; its early and extensive remedial efforts; the prior financial penalty of £5.25 million that Aon Limited paid to the United Kingdom's Financial Services Authority (FSA); and the FSA's close and continuous supervisory oversight over Aon Limited.   These factors also led to a substantially reduced monetary penalty.  

 

In a related matter, Aon Corporation reached a settlement with the SEC and agreed to pay approximately $14.5 million in disgorgement and prejudgment interest.  

FCPA to European Telecom Giants: "Can You Hear Me Now?"

Magyar Telekom Plc., a Hungarian telecommunications company, and Deutsche Telekom AG, a German telecommunications company and majority owner of Magyar Telekom, have agreed to pay a combined $63.9 million criminal penalty to resolve a Foreign Corrupt Practices Act (FCPA) investigation into activities by Magyar Telekom and its subsidiaries in Macedonia and Montenegro, announced Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.


The department filed a criminal information against Magyar Telekom and a two-year deferred prosecution agreement in U.S. District Court for the Eastern District of Virginia today. The three-count information charges Magyar Telekom with one count of violating the anti- bribery provision of the FCPA and two counts of violating the books and records provisions of the FCPA. At the time of the charged conduct, Magyar Telekom's American Depository Receipts (ADRs) traded on the New York Stock Exchange (NYSE). As part of the deferred prosecution agreement, Magyar Telekom agreed to pay a $59.6 million penalty for its illegal activity, implement an enhanced compliance program, and submit annual reports regarding its efforts in implementing the enhanced compliance measures and remediating past problems.

According to court documents, Magyar Telekom's scheme in Macedonia stemmed from potential legal changes being made to the telecommunications market in that country.    In early 2005, the Macedonian government tried to liberalize the Macedonian telecommunications market in a way that Magyar Telekom deemed detrimental to its Macedonian subsidiary, Makedonski Telekommunikacii AD Skopje (MakTel). Throughout the late winter and spring of 2005, Magyar Telekom executives, with the help of Greek intermediaries, lobbied Macedonian government officials to prevent the implementation of the new telecommunications laws and regulations.


Magyar Telekom eventually entered into an agreement with certain high-ranking Macedonian government officials to resolve its concerns about the legal changes. In the secret agreement, a so-called "protocol of cooperation," Macedonian government officials agreed to delay the entrance of a third mobile license into the Macedonian telecommunications market, as well as other regulatory benefits. Magyar Telekom executives signed two copies of the protocol of cooperation, each with high-ranking officials of the different ruling parties of Macedonia. The Magyar Telekom executives then kept the only executed copies outside of Magyar Telekom's company records.

According to court documents, in order to secure the benefits in the protocol of cooperation, the Magyar Telekom executives engaged in a course of conduct with consultants, intermediaries and other third parties, including through sham consultancy contracts with entities owned and controlled by a Greek intermediary, to pay €4.875 (approximately $6 million) under circumstances in which they knew, or were aware of a high probability that circumstances existed in which, all or part of such payment would be passed on to Macedonian officials. The sham contracts were recorded as legitimate on MakTel's books and records, which were consolidated into Magyar Telekom's financials. Deustche Telekom, which owned approximately 60 percent of Magyar Telekom, reported the results of Magyar Telekom's operations in its consolidated financial statements.

Additionally, the criminal information charges Magyar Telekom with falsifying its books and records in regard to its activity in Montenegro. According to the court filing, Magyar Telekom made improper payments in connection with its acquisition of a state-owned telecommunications company in Montenegro. These payments were documented on Magyar Telekom's books and records through the execution of four bogus contracts. For example, two of the contracts were backdated and concealed the true counterparties, and no legitimate services were provided under the contracts even though the contracts were for €4.47 million.

The US DOJ also entered into a two-year non-prosecution agreement with Magyar Telekom's parent company, Deutsche Telekom, for its failure to keep books and records that accurately detailed the activities of Magyar Telekom. Deutsche Telekom, which is headquartered in Germany, agreed to pay a $4.36 million penalty in connection with the inaccurate books and records and to enhance its compliance program. At the time of the conduct, Deutsche Telekom's ADRs traded on the NYSE.

Both agreements acknowledge Magyar Telekom and Deutsche Telekom's voluntary disclosure of the FCPA violations to the department and the leadership of Magyar Telekom's audit committee in pursuing a "thorough global internal investigation concerning bribery and related misconduct." In addition, the agreements highlight that the companies have already undertaken remedial measures and have committed to further remedial steps through the implementation of an enhanced compliance program.


In a related matter, the U.S. Securities and Exchange Commission (SEC) announced civil charges against Magyar Telekom and Deutsche Telekom as well as three former Magyar Telecom executives. Magyar Telekom and Deutsche Telekom consented to the entry of a permanent injunction against FCPA violations. Magyar Telecom agreed to pay $31.2 million in disgorgement and prejudgment interest.


Additional information about the Justice Department's FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

ARMOR HOLDINGS UNABLE TO SHIELD ITSELF FROM FCPA PENALTY: Company to Pay $15+ Million FCPA Penalty

Armor Holdings Inc. has entered into an agreement with the Department of Justice to pay a $10.29 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA).  The company manufactured security products, vehicle armor systems, protective equipment and other products primarily for use by military, law enforcement, security and corrections personnel.   On July 31, 2007, Armor was acquired by BAE Systems Inc. and is currently a subsidiary of BAE.  

 

According to the agreement, Armor accepts responsibility for its subsidiary's payment of more than $200,000 in commissions to a third-party sales agent, a portion of which it knew was to be passed on to a U.N. procurement official to induce the official to award two separate U.N. contracts to Armor's subsidiary.   The contracts were for the sale of approximately $6 million of body armor.   Armor also acknowledged that it falsely recorded the commission payments on its books and records.   In addition, Armor admitted that it kept off its books and records approximately $4.4 million in additional payments to agents and other third-party intermediaries used by its Products Group to assist it in obtaining business from foreign government customers.

Armor acknowledged that it failed to devise and maintain an appropriate system of internal accounting controls.

 

In a related matter, Armor reached a settlement today with the U.S. Securities and Exchange Commission (SEC) and agreed to pay more than $5.69 million in disgorgement of profits, including pre-judgment interest, and a civil money penalty.

 

The Justice Department's agreement recognizes Armor's complete voluntary disclosure of the conduct; its internal investigation and cooperation with the department and the SEC; the fact that the conduct took place prior to the acquisition of Armor by BAE; and Armor's extensive remedial efforts undertaken before and after its acquisition by BAE.  Due to Armor's implementation of BAE's due diligence protocols and review processes, its application of BAE's compliance policies and internal controls to all Armor businesses, its extensive remediation and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, Armor is not required to retain a corporate monitor.  

  

SOURCE: DOJ

Former U.S. CEO Pleads Guilty to Foreign Bribery Conspiracy

Jorge Granados, the former chief executive officer of Miami-based telecommunications company Latin Node Inc. (LatiNode), pled guilty to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) by conspiring to pay bribes to government officials in Honduras.  To date, four former senior executives of LatiNode have pleaded guilty to conspiring to pay bribes to the Honduran officials.

      

LatiNode provided wholesale telecommunications services using Internet protocol technology to countries throughout the world, including Honduras.   In December 2005, LatiNode learned that it was the sole winner of an "interconnection agreement" with Empresa Hondureña de Telecomunicaciones (Hondutel), the wholly state-owned telecommunications authority in Honduras.  The agreement permitted LatiNode to use Hondutel's telecommunications lines in order to establish a network between Honduras and the United States, and to provide long distance services between the two countries.   

 

Granados and other LatiNode executives agreed to a secret deal to pay bribes to Hondutel officials, including the general manager, a senior attorney for Hondutel and a minister of the Honduran government who became a representative on the Hondutel Board of Directors.  Between September 2006 and June 2007, LatiNode executives paid more than $500,000 in bribes to the Honduran officials, concealing many of the payments by laundering the money through LatiNode subsidiaries in Guatemala and to accounts in Honduras controlled by the Honduran government officials.  Granados admitted that he authorized bribe payments.      

 

At sentencing, scheduled for Aug. 22, 2011, Granados faces up to five years in prison and a fine of the greater of $250,000, or twice the value gained or lost.  

  

SOURCE: DOJ

FCPA: Tenaris S.A. $9 Million in Penalties for FCPA Violations

Tenaris S.A., a publicly traded corporation headquartered in Luxembourg, has agreed to pay a $3.5 million penalty for violations of the Foreign Corrupt Practices Act (FCPA), and has entered into a non-prosecution agreement with the Department of Justice.
 
Tenaris, a global manufacturer and supplier of steel pipe products and related services to the oil and gas industry throughout the world, admitted that its employees and agents offered and made improper payments to officials of OJSC O'ztashqineftgaz (OAO), an Uzbekistan state-controlled oil and gas production company, and failed to record such payments accurately in Tenaris's books and records.  In connection with four public bids to provide oilfield pipe and related services for energy extraction and transportation projects, Tenaris retained an agent to obtain competitors' bid information, which Tenaris then used to secretly submit revised bids to its advantage.  Tenaris agreed to pay the agent 3.5 percent of the value of four separate contracts, while being aware or substantially certain that the agent would pay all or a portion of the money to one or more OAO employees.
 
According to the agreement, Tenaris voluntarily disclosed this conduct to the department in a timely and complete manner, conducted an internal investigation, provided thorough, real-time cooperation to the department and the U.S. Securities and Exchange Commission (SEC), and undertook extensive remediation, including voluntary enhancements to its compliance program. The criminal penalty in this case constitutes a substantially reduced monetary penalty and reflects the department's commitment to providing meaningful credit to Tenaris for its extraordinary cooperation with the department.  As outlined in the agreement, Tenaris has agreed to fully cooperate with investigations by law enforcement authorities of the company's corrupt payments and to adhere to a set of enhanced corporate compliance and reporting obligations.
 
In a related matter, Tenaris reached a settlement with the SEC in which Tenaris entered into a deferred prosecution agreement and agreed to pay $5,428,338 in disgorgement and prejudgment interest.  Tenaris also agreed to comply with certain undertakings regarding its FCPA compliance program.


http://www.kk-llp.com/international-trade.asp

SOURCE: DOJ

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