Netherlands: Settlements In Brief: JPMorgan's Hiring Scheme And Oilwell Varco Sanction Breaches

Enforcement actions by criminal and supervisory authorities are settled regularly. In light of these developments, companies are advised to take appropriate measures. This month we highlight recent settlements with two US companies. In the first case, US banking and financial services firm JPMorgan settled with the SEC, Department of Justice and Federal Reserve System in connection with alleged violations of anti-corruption rules. JP Morgan had allegedly hired relatives and friends of important foreign officials to win business and banking deals. This settlement highlights the broad scope of the Foreign Corrupt Practices Act, which enables US authorities to fight bribery abroad. The settlement also shows that US authorities interpret bribery broadly to include this type of hiring practice. The second settlement concerns violations of trade sanctions by US drilling company National Oilwell Varco. This company and two subsidiaries violated Iran, Cuba and Sudan trade sanctions from 2002 to 2009, resulting in a recent USD 25 million settlement. Particularly interesting in this settlement are the aggravating and mitigating factors, as highlighted by the U.S. Office of Foreign Assets Control.

JPMorgan settles FCPA matter for USD 264 million

JPMorgan Chase and its Hong Kong subsidiary JPMorgan APAC settled on 17 November 2016 with three US authorities for a total amount of USD 264 million. JPMorgan agreed to pay more than USD 130 million in disgorgement to the SEC and another USD 61.9 million civil penalty to the Federal Reserve System's Board of Governors. Both US authorities also issued a cease and desist order. JPMorgan APAC agreed to pay a USD 72 million criminal penalty to the DOJ as part of a non-prosecution agreement. The settlement is a result of alleged FCPA violations by JPMorgan from 2006 to 2016 which, according to the SEC, involved the creation of a hiring scheme to win business in China by employing relatives and friends of clients and Chinese government officials.

The special programme, which bypassed JPMorgan's normal hiring process, was referred to as the Sons and Daughters Program and aimed to increase business opportunities in, for example, Chinese initial public offerings. According to the SEC, unqualified persons were offered an internship or employment at JPMorgan, because of their links to important officials who were able to create business for the company. According to the Chief of the SEC Enforcement Division's FCPA Unit,  "referral hires vs revenue" spreadsheets were created to monitor the alleged programme. Some of the individuals also knew they were hired to attract business to JPMorgan, according to the US Attorney.

According to the SEC, JPMorgan was able to gain more than USD 100 million by giving well-paid jobs and internships to approximately 100 candidates. In addition to the special hiring programme, JPMorgan APAC employees tried to conceal the practices, according to the DOJ.

JPMorgan APAC, as part of the non-prosecution agreement, agreed to continue its cooperation with the DOJ, to enhance its compliance programme and to report to the DOJ on its implementation. Furthermore, for those individuals abroad who engaged in the alleged corrupt practices, the DOJ has made clear it will work together with the FBI to further investigate them.

Both the SEC and the DOJ highlight several mitigating factors, which were considered when determining the settlement:

  • cooperation with the investigation
  • significant action against individual employees who either were involved in the misconduct or failed to stop it
  • financial sanctions by the company against former or current employees

This settlement indicates that the FCPA is not only limited to situations where the advantage offered directly benefits the foreign official, but extends to advantages that benefit relatives and friends of the foreign officials; see also In context April 2016. It is important for companies to ensure that their anti-corruption policies cover this aspect of the FCPA and to approach the hiring of relatives of governmental officials with caution.

National Oilwell Varco settles trade sanctions violations

The Office of Foreign Assets Control (OFAC) fined US driller National Oilwell Varco and its subsidiaries Dreco and Almar on 14 November 2016. Oilwell Varco agreed to pay USD 25 million for violating trade sanctions. The alleged violations took place between 2002 and 2009 and involved the Cuban Assets Control Regulations, the Iranian Transactions and Sanctions Regulations, and the Sudanese Sanctions Regulations.

The entire list of US authorities that have settled include the DOJ, the Department of Commerce, the Bureau of Industry and Security, the U.S. Department of Treasury, the OFAC, and the U.S. Immigration and Customs Enforcement. In addition, National Oilwell Varco concluded a Non-Prosecution Agreement with the U.S. Attorney's Office for the Southern District of Texas. In its enforcement information, the OFAC set out in detail in which alleged violations of trade sanctions National Oilwell Varco engaged, including the USD 13.6 million sale and exportation of goods to Iran between September 2006 and January 2008 and the USD 21,000 export of goods from the US to Sudan in 2005 and 2006.

According to OFAC, the alleged violations were egregious as National Oilwell Varco had every reason to know about the prohibited actions, but did not act accordingly. Furthermore, National Oilwell Varco did not voluntarily self-disclose the alleged misconduct.

A very interesting part of the information OFAC provided is the extensive reflection on both the aggravating and the mitigating factors underlying the settlement. Aggravating factors included the disregard for the violated sanctions and its effects, the fact that National Oilwell Varco is a highly developed company working in regions with high sanctions risk, and the inadequacy of its compliance programme. Mitigating factors were:

  • no violations were found in the five years before the alleged violations in this case
  • the company cooperated with the investigation, including interrupting the limitation period for more than 2600 days
  • the company remediated and further enhanced the compliance programme

This case highlights the need for a well-functioning compliance programme when doing business with sanctioned countries. This prevents violations and is clearly mentioned as a mitigating factor in enforcement by authorities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions