THE SEC SETTLES TWO FCPA CASES
FCPA enforcement continues to be a priority for the SEC and DOJ. This week the SEC filed two settled FCPA cases. One is a follow up to earlier cases the Commission has brought in conjunction with DOJ. SEC v. Technip, Case No. 4:10-cv-02289 (S.D. Tex. Filed June 28, 2010). A second is an action brought with the assistance of the Department of Homeland Security. SEC v. Veraz Networks, Inc., Case No. CV-10-2849 (N.D. Cal. Filed June 29, 2010).
Technip is related to the actions brought against KBR, Halliburton and the former CEO of Kellogg, Brown & Root, discussed here. Technip is a French corporation with its headquarters in Paris. In 1990, the company formed a joint venture with three other multinational engineering and construction companies. Its purpose was to secure contracts from Nigeria LNG, Ltd, a company formed by the Nigerian government to capture and sell natural gas associated with oil production in that country. Nigeria LNG was 49% owned by the government. Three multinationals owned the remaining interest.
The joint venture determined that bribes had to be paid to secure business. Arrangements were made with a UK Agent to pay high ranking Nigerian officials through sham contracts with a shell company. Similar arrangements were made with a Japanese Agent to pay lower level officials. From 1995 through 2004, about $180 million was paid to the two agents to secure contracts worth more than $6 billion. The payments were not properly recorded in the books and records of the company. The SEC’s complaint alleges violations of the bribery provisions of the FCPA as well as the books, records and internal control sections.
To resolve the matter, the company consented to the entry of a permanent injunction, prohibiting future violations of each of the Sections cited in the complaint. The company also agreed to disgorge $98 million in profits from the scheme and prejudgment interest. See also Litig. Rel. 21578 (June 28, 2010). The related criminal case is U.S. v. Technip S.A. , Case No H-10-439 (S.D. Tex. Filed June 28, 2010). There, the company entered into a deferred prosecution agreement. As part of that agreement the company agreed to pay a penalty of $240 million and to engage a corporate compliance monitor.
In Veraz Networks, the Commission alleged violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B) by the San Jose based telecommunications company. According to the complaint, the company made improper payments in China and Vietnam. In China, Veraz retained a consultant in late 2007 who provided about $4,500 worth of gifts to officials at a Telecommunications company to secure a business deal. A company official approved the funding for the gifts in an e-mail to the consultant which described them as the “gift scheme.” Subsequently, in January 2008 another improper payment was offered to officials at the same company to secure a contract valued at $233,000. Payment of what was labeled in e-mails as a “consulting fee” was set at 15% of the value of the contract.
In 2007 and 2008 the company also sold products to a telecommunications company controlled by the government of Vietnam. The sales were made through a Singapore based reseller. A Veraz employee offered or made illicit payments to the CEO of this company through the agent. In addition, the company approved and reimbursed its employees for questionable expenses related to the Telecommunications Company.
To resolve, the case Veraz consented to the entry of a permanent injunction prohibiting future violations of each of the Exchange Act Sections cited in the complaint. The company also agreed to pay a penalty of $300,000. See also Litig. Rel. 21581 (June 29, 2010).