Technology Company Settles SEC and DOJ Charges for FCPA Violations

Ilan T. Graff Commentary by Ilan T. Graff

In parallel civil and criminal actions, a technology company settled SEC and DOJ charges for violations of the Foreign Corrupt Practices Act ("FCPA"). The resolution was part of a coordinated global settlement that included criminal authorities in Switzerland and South Africa.

According to the Civil Order, the SEC found that the company bribed a high-ranking official at South Africa's state-owned energy company to secure a government contract worth approximately $160 million. The SEC found that the company used third-party service providers with close connections to the government to transfer funds to the official.

As a result, the SEC determined that the company violated Exchange Act Section 13(b)(2)(A)-(B) ("Periodical and other reports") and Section 30A ("Prohibited foreign trade practices by issuers"). To settle the charges, the company agreed to (i) cease and desist, (ii) a civil monetary penalty of $75 million and (iii) disgorgement of $58 million with $14,554,267 of prejudgment interest.

In a parallel federal criminal action in the Eastern District of Virginia, the DOJ charged the company with (i) conspiracy to violate the FCPA's anti-bribery provisions, (ii) conspiracy to violate the FCPA's books and records provisions and (iii) substantive violations of the FCPA. Several of the company's subsidiaries pleaded guilty in related charges. The company entered into a three-year deferred prosecution agreement and agreed to pay more than $315 million to settle the charges. The DOJ will give credit, up to half of that amount, for penalties paid to South African, German and Swiss authorities as well as other regulators.

Commentary

This resolution comes less than a week after the leadership of the DOJ's Criminal Division affirmed the DOJ's commitment to robust FCPA enforcement, and previewed "several more resolutions announced in the coming months." Given the DOJ's recent emphasis on individual prosecutions (a theme underscored in the Criminal Division's acting principal deputy's FCPA remarks), expect to see charges against individuals as part of similar enforcement actions in the near term.

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