In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important international anti-corruption developments in the past month with links to primary resources. December has traditionally been a busy month for the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) as they attempt to wrap up Foreign Corrupt Practices Act (FCPA) cases. This year was no exception with multiple blockbuster corporate resolutions closing in on nearly $1 billion in penalties and disgorgement combined with a series of guilty pleas from former executives. Not to be outdone, enforcement agencies around the world also announced major cases and developments. Here is our December 2014 Top Ten list:

  1. Alstom SA Pleads Guilty and Agrees to a $772 Million Fine. In a press release on December 22, 2014, DOJ announced that Alstom pleaded guilty to a two-count criminal information, which charged the company with FCPA violations arising from the bribery of officials in Indonesia, Saudi Arabia, Egypt, and the Bahamas. The enforcement action involved a guilty plea by Alstom, which was a publicly traded company until 2004, to violating the accounting provisions of the FCPA and another guilty plea by Alstom's Swiss subsidiary to violating FCPA's anti-bribery provisions. The enforcement action included two separate three-year Deferred Prosecution Agreements (DPAs) for two U.S. subsidiaries of Alstom. In announcing the resolution, DOJ said Alstom paid more than $75 million in bribes from 2000 to 2011 to secure $4 billion in contracts, which resulted in profits of approximately $300 million. As a result, Alstom will pay a criminal fine of $772 million to resolve the charges. This penalty is the biggest criminal fine ever levied for FCPA offenses and the second biggest FCPA enforcement action overall, just behind the $800 million fine and disgorgement in the Siemens case almost exactly six years ago. The addition of Paris-based Alstom means three of the top ten biggest FCPA cases now involve French companies.
  2. Other Significant Corporate FCPA Resolutions in December:

    • Avon Resolves FCPA Violations with DOJ and SEC for $135 Million. On December 17, 2014, a Chinese subsidiary of Avon Products, Inc. pleaded guilty in federal court in Manhattan to one count of conspiring to violate the FCPA. The Chinese subsidiary made $8 million worth of payments in cash, gifts, travel, and entertainment to various Chinese officials. Avon's Chinese subsidiary will pay a $67.7 million criminal fine, and Avon itself entered into a three-year DPA and must retain an independent compliance monitor. Avon also settled with the SEC and agreed to pay an additional $67.4 million in disgorgement and prejudgment interest, bringing the total amount of U.S. criminal and regulatory penalties paid by Avon and its subsidiary to more than $135 million. The Justice Department's release did highlight Avon's cooperation with DOJ, which included conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, translating, and organizing voluminous evidence. Avon Products, Inc. issued this release in connection with the agreements. One aspect of the Avon matter not mentioned in the resolution documents was the substantial cost of the internal investigation, which by last year was reported to have exceeded $300 million.
    • Dallas Airmotive Inc. Enters $14 Million DPA with DOJ for FCPA Violations in Latin America. On December 10, 2014, DOJ announced that Dallas Airmotive agreed to pay a $14 million penalty related to FCPA violations. Dallas Airmotive, a privately held company, provides aircraft engine maintenance, repair, and overhaul services. The company, based in Grapevine, Texas, admitted to FCPA anti-bribery violations in connection with bribes paid to Latin American government officials in order to secure lucrative government contracts. A criminal information was filed in federal court as part of a three-year DPA. The charges allege that between 2008 and 2013 Dallas Airmotive bribed officials of the Brazilian Air Force, the Peruvian Air Force, the Office of the Governor of the Brazilian State of Roraima, and the Office of the Governor of the San Juan Province in Argentina. DOJ alleged that Dallas Airmotive used a variety of methods to pay the bribes, which included entering into agreements with front companies tied to foreign officials, making payments to third parties, and directly providing gifts to officials.
    • Bruker Pays $2.4 Million to Settle SEC FCPA Charges. On December 15, 2014, SEC charged Bruker Corporation with violating the FCPA's accounting provisions by providing improper payments and non-business related travel to Chinese government officials responsible for buying the company's products. Bruker, a publicly traded Massachusetts-based scientific instruments company, self-reported the misconduct and provided cooperation during SEC's investigation. According to SEC, Bruker made about $1.7 million in profits from bribe-tainted contracts with state-owned enterprises. Kara Brockmeyer, Chief of SEC's FCPA Unit, stated in the release: "Bruker's lax internal controls allowed employees in its China offices to enter into sham 'collaboration agreements' to direct money to foreign officials and send officials on sightseeing trips around the world. The company has since taken significant remedial steps to revise its compliance program and enhance internal controls over travel and contract approvals." Bruker paid $2.4 million to settle the charges, including disgorgement and prejudgment interest, as well as a $375,000 penalty. When determining the settlement, the SEC "considered the remedial acts promptly undertaken by Bruker and the significant cooperation it afforded to the Commission staff." The full administrative order can be found here. No DOJ action was announced.

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