This post provides updates on long-standing FCPA scrutiny of the following companies: Fresenius, Herbalife, and TechnipFMC as well as an update from across the pond in the United Kingdom concerning GlaxoSmithKline and individuals associated with Rolls Royce.
Fresenius
German healthcare firm Fresenius Medical Care AG (a company with shares traded on the NYSE) has been under FCPA scrutiny since 2012 (no that is not a typo). The company recently disclosed:
“Beginning in 2012, the Company received certain communications alleging conduct in countries outside the United States that might violate the Foreign Corrupt Practices Act or other anti-bribery laws. The Company’s Supervisory Board, through its Audit and Corporate Governance Committee, conducted investigations with the assistance of independent counsel. In a continuing dialogue, the Company voluntarily advised the Securities and Exchange Commission and the United States Department of Justice (collectively and interchangeably the “government”) about these investigations. The government also conducted its own investigations, in which the Company cooperated. In the course of this dialogue, the Company identified and reported to the government, and took remedial actions including employee disciplinary actions with respect to, conduct that resulted in the government seeking monetary penalties and other remedies against the Company and disgorgement of related profits revolving principally around conduct in the Company’s products business in a limited number of countries outside the United States. The Company recorded charges of €200 M in 2017 and €77 M in 2018 encompassing estimates for the government’s claims for profit disgorgement, penalties, certain legal expenses, and other related costs or asset impairments believed likely to be necessary for full and final resolution, by litigation or settlement, of the claims and issues arising from the investigation. The increase recorded in 2018 took into consideration preliminary understandings with the government on the financial terms of a potential settlement. Following this increase, which takes into account incurred and anticipated legal expenses, impairments and other costs, the provision totals €224 M as of December 31, 2018. The Company has reached an agreement in principle with the government agencies encompassing the terms understood to be necessary for settlement. The Company believes that the previously-recorded charge appropriately accounts for the consequences of the resolution as related to its financial statements. The agreement in principle remains subject to memorialization in fully integrated documents and final approval by authorized officials of the government and the Company. The Company continues to implement enhancements to its anti-corruption compliance program, including internal controls related to compliance with international anti-bribery laws. The Company continues to be fully committed to compliance with the Foreign Corrupt Practices Act and other applicable anti-bribery laws.”
Herbalife
As highlighted in this prior post, the company has been under Foreign Corrupt Practices Act scrutiny since January 2017 and recently disclosed:
“As previously disclosed, the SEC and the Department of Justice (“DOJ”) have been conducting an investigation into the Company’s compliance with the Foreign Corrupt Practices Act (“FCPA”) in China, which is mainly focused on the Company’s China external affairs expenditures relating to its China business activities and the adequacy of and compliance with the Company’s internal controls relating to such expenditures. This investigation is proceeding, with the government continuing to request documents and other information relating to these matters. The Company is conducting its own review and has taken remedial and improvement measures based upon this review, including but not limited to replacement of a number of employees and enhancements of Company policies and procedures in China. The Company is continuing to cooperate and engage in discussions with the SEC and DOJ. Although a likely outcome could include a resolution or government action, the Company cannot predict the eventual scope, duration, or outcome of the government investigation at this time, including potential monetary payments, injunctions, or other relief, the results of which may be materially adverse to the Company, its financial condition, its results of operations, and its operations. At the present time, the Company is unable to reasonably estimate the amount of loss relating to this matter.”
TechnipFMC
In 2010, French oil and gas company Technip resolved an approximate $340 million FCPA enforcement action concerning conduct at Bonny Island, Nigeria. (See here and here for prior posts). As highlighted in this prior post, in March 2016 the company (now known as TechnipFMC) disclosed that it was again under FCPA scrutiny.
Recently TechnipFMC disclosed:
“As previously disclosed, we are cooperating with the U.S., Brazilian, and French authorities in their investigations of potential violations of anticorruption laws relating to historical projects in Brazil, Equatorial Guinea, and Ghana, and Unaoil contracts. We have been informed that these authorities have been coordinating their investigations, which could result in a global resolution. These matters have progressed to a point where a probable estimate of the aggregate settlement amount with all authorities is $280 million for which we have taken a provision in the fourth quarter and year ended December 31, 2018. These matters involve negotiations with law enforcement authorities in three separate jurisdictions, and there is no certainty that a global settlement will be reached or that settlement will not exceed the provision.”
An early welcome to the FCPA repeat offender club.
Across the Pond
In the United Kingdom, the Serious Fraud Office recently announced “the closure of the Rolls-Royce and GlaxoSmithKline cases.” As stated in the release:
“The investigation into Rolls-Royce PLC resulted in a Deferred Prosecution Agreement with the company and one of its subsidiaries in respect of bribery and corruption to win business in Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia. Following further investigation, a detailed review of the available evidence and an assessment of the public interest, there will be no prosecution of individuals associated with the company.
The GlaxoSmithKline PLC investigation focused on commercial practices by the company, its subsidiaries and associated persons. Again, following a detailed review of the available evidence and an assessment of the public interest there will be no prosecution in this case.
Both cases were wide ranging and complex investigations. Lisa Osofsky, Director of the Serious Fraud Office said:
“After an extensive and careful examination I have concluded that there is either insufficient evidence to provide a realistic prospect of conviction or it is not in the public interest to bring a prosecution in these cases. In the Rolls-Royce case, the SFO investigation led to the company taking responsibility for corrupt conduct spanning three decades, seven jurisdictions and three businesses, for which it paid a fine of £497.25m. I am thankful for the work of colleagues and the assistance of domestic and international partners.”