2016 FCPA Enforcement Actions and Highlights

Overall, this was a more active year for FCPA enforcement actions when compared to 2015. This year, Department of Justice ("DOJ") took a total of 10 enforcement actions and Securities and Exchange Commission ("SEC") took a total of 25 enforcement actions. Like last year, SEC is more active than DOJ, in terms of numbers of the enforcement actions. Of the 10 enforcement actions taken by DOJ, only 1 of them was related to a real person. Of the 25 SEC enforcement actions 4 of them were related real persons.

In terms of sectoral concentration of FCPA enforcement actions, one can see that mostly the technology sector were targeted followed by the pharmaceutical sector. In terms of where the foreign bribery took place, China seems dominant. In fact, all of the 4 pharmaceutical companies were charged with foreign bribery in China.

This year, we were expecting to see the effects of Yates Memo, which underlined the significance of individual accountability for deterring corporate wrongdoing and provided a guideline on how to enforce such accountability. That said the total number of FCPA enforcement actions against individuals so far is 5, as opposed to 30 enforcement actions against corporations.

This year, one of the more interesting cases is with regard to provision of paid internships, provision of loans to universities and provision of loans for house buying to relatives of Chinese officials (the Qualcomm case). The case echoes the BNY Mellon case of last year, where provision of valuable internships to relatives of public officials was deemed bribery. Also this year for the first time, a hedge fund was found to have violated the FCPA.

DOJ Enforcement Actions

In February 2016, VimpelCom, a Dutch communications company agreed to pay a combined fine of more than $795 million to US and Dutch authorities to settle the charges that it made corrupt payments to Uzbek officials. The DOJ classified this case as "one of the largest global foreign bribery resolutions ever". VimpelCom's Uzbek subsidiary pleaded guilty, while Vimpelcom entered into a deferred prosecution agreement ("DPA") with the DOJ. According to admissions, companies paid at least $114 million in bribes to an Uzbek official, a close relative of a high-ranking Uzbek governmental official who had influence over the telecom industry. The companies attempted to hide illicit payments as payments to shell companies, payments for equity transactions, consulting agreements and reseller transactions. Vimpelcom is to pay $167 million to SEC with regard to the case.

In February 2016, two Chinese subsidiaries of PTC Inc. entered into a non-prosecution agreement ("NPA") with DOJ and agreed to pay $14.54 million in penalties. The companies admitted that they paid for recreational travel expenses of Chinese public officials and in return obtained $13 million in contract. Although the seeming purpose of these trips was training, the travel plan also included New York, Los Angeles, Las Vegas and Hawaii. Admittedly, the travel expenses were hidden in...

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