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Dorsey and Whitney LLP
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    A Continued Focus On FCPA Enforcement

    The Department of Justice and the Securities and Exchange Commission continue to focus on FCPA prosecutions. Last week DOJ, along with the SEC and the Munich Public Prosecutors Office filed a record setting case, settled FCPA action against Siemens A.G. Now, another FCPA action has been brought, this one involving Fiat S.p.A. While not as spectacular as the Siemens case, it is the latest in a series of FCPA cases based on the U.N. Oil For Food Program.

    The Department brought actions against Fiat, an Italian manufacturer, and three of its subsidiaries, Iveco S.p.A. (“Iveco”), CNH Italia S.p.A. (“CNH Italia”) and CNH France, S.P. (CNH France). Iveco and CNH Italia were each charged with conspiracy to commit wire fraud and to violate the books and records provisions of the FCPA. CNH France was charged with conspiracy to commit wire fraud. Specifically, the charges claim that from 2000 to 20002 Iveco, CNH Italia and CNH France paid about $4.4 million to the Iraqi government in connection with the humanitarian aid side of the U.N. program. As in other cases, the fees were paid by inflating the contract prices by 10% before the agreements were submitted to the United Nations for approval. The contracts were for industrial pumps, gears and other equipment.

    Under the terms of the deferred prosecution agreement, Fiat agreed to pay a $7 million penalty. In entering into the agreement Fiat acknowledged responsibility for the actions of the subsidiaries and agreed to cooperate with the Department’s on-going Oil for Food Program.

    The Department agreed to the deferred prosecution agreement in view of the cooperation of Fiat and its adoption of enhanced compliance procedures. If Fiat abides by the terms of the agreement, the charges will be dismissed after three years. U.S. v. Iveco S.p.A. and U.S. v. CNH Italia S.p.A. Both cases were filed in the District of Columbia on December 22, 2008.

    The SEC filed a settled, related case. SEC v. Fiat S.p.A., Case No. 1:08-cv-02211 (D.D.C. Filed Dec. 22, 2008). The SEC complaint only names as defendants Fiat and CNH Global, N.V., a Dutch subsidiary which is a provider of agricultural and construction equipment. However, it involves Inveco, CNH France and NCH Italia. The SEC’s complaint alleges that the two defendants made about $4.3 million in kickback payments in connection with the sale of humanitarian goods to Iraq under the U.N. program. The action was settled with the entry by consent of a permanent injunction prohibiting future violations of the books and records provisions and an agreement to pay disgorgement of about $5.3 million plus prejudgment interest and a civil penalty of $3.6 million.

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