Another FCPA Record: The Largest Combined FCPA Settlement Paid By U.S. Companies
The Department of Justice and the SEC continued to focus on FCPA enforcement, setting records in the process. With the ink hardly dry on the Siemens record-setting deal, DOJ and the SEC combined to set another record: the largest combined FCPA settlement paid by U.S. companies. This time the settlement involved former Halliburton subsidiary Kellogg Brown & Root (initially discussed here). U.S. v. Kellogg Brown & Root LLC, 4:09-cr-00071 (S.D. Tex, Filed Feb. 6, 2009); SEC v. Halliburton Company, Case No. 4:09-CV-399 (S.D. Tex. Filed Feb. 11, 2009). At the same time the SEC also filed a second, settled FCPA case. SEC v. ITT Corp., Civil Action No. 1:09-cv-00272 (D.D.C. Filed Feb. 11, 2009).
In the KBR criminal case, the company pled guilty to conspiring with its joint venture partners and others to violate the FCPA. The company admitted to paying bribes to Nigerian government officials in connection with the award of four contracts between 1995 and 2004 valued at over $6 billion.
KBR also admitted that prior to the award of the contracts, its former CEO Albert Stanley and others met with three successive former holders of a top-level office of the Nigerian government to ask for the designation of a representative with whom the joint venture could negotiate bribes for government officials. Following the designation and negotiations, about $132 million in bribes were paid to one agent, a consulting company incorporated in Gibraltar, and another $50 million to a second agent based in Japan. The fees were paid to bribe Nigerian government officials.
In connection with its plea, KBR agreed to pay a fine of $402 million and to retain a monitor for three years. Mr. Stanley previously pled guilty to FCPA charges as discussed here.
The SEC also filed a settled civil injunctive action against Halliburton and KBR, alleging violations of the anti-bribery and books and records provisions of the FCPA. The complaint is based on the same scheme as the criminal case. To settle the action, the defendants agreed to pay disgorgement of $177 million.
In SEC v. ITT, the SEC filed a second settled civil injunctive action based on alleged violations of the FCPA books and records provisions. There, the SEC claimed that the Chinese subsidiary of ITT made about $200,000 in illegal payments to Chinese state-owned entities in connection with the sale of water pumps for a large infrastructure project in China. As a result the company obtained about $4 million in sales yielding $1 million in profits.
To settle the action, ITT consented to the entry of a permanent injunction prohibiting future violations of the FCPA books and records provisions. The company also agreed to pay disgorgement of over $1 million, along with prejudgment interest and a civil penalty of $250,000. The SEC took into consideration the fact that ITT self-reported, cooperated with its investigation and instituted remedial measures.