Sectors, Technology - Written by Barry & Richard on Tuesday, September 27, 2011 23:30 - 0 Comments
Technology businesses under the bribery microscope – time for our technology masterclass
In contrast technology companies have come through enforcement relatively unscathed.
First, telecommunications company Alcatel Lucent entered into a deferred prosecution agreement and a settlement with the SEC in December 2010. With combined fines and disgorgement totalling US$137 million – Alcatel was catapulted into the top 10 of FCPA penalties.
In March 2011, none other than the Big Blue - IBM - resolved civil charges brought by the SEC for violating the books and records provisions of the Foreign Corrupt Practices Act. IBM admitted making improper cash payments to government officials in Asia and providing gifts and paying travel and entertainment expenses in violation of the FCPA.
In the mean time another titan of the industry, Hewlett Packard, is being investigated for suspected FCPA and other bribery law violations. Hewlett Packard’s 2010 annual report discloses:
“The German Public Prosecutor’s Office (‘‘German PPO’’) has been conducting an investigation into allegations that current and former employees of HP engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE GmbH in Germany, a former subsidiary of HP, and the Chief Public Prosecutor’s Office of the Russian Federation. The A35 million transaction, which was referred to as the Russia GPO deal, spanned the years 2001 to 2006 and was for the delivery and installation of an IT network.
The U.S. Department of Justice and the SEC have also been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act (‘‘FCPA’’). Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation and equitable remedies, including disgorgement and other injunctive relief. In addition, criminal penalties could range from the greater of $2 million per violation or twice the gross pecuniary gain or loss from the violation.
In addition to information about the Russia GPO deal, the U.S. enforcement authorities have requested (i) information related to certain other transactions, including transactions in Russia, Serbia and in the Commonwealth of Independent States (CIS) subregion dating back to 2000, and (ii) information related to two former HP executives seconded to Russia and to whether HP personnel in Russia, Germany, Austria, Serbia, the Netherlands or CIS were involved in kickbacks or other improper payments to channel partners, or state owned or private entities.
HP is cooperating with these investigating agencies.”
At the end of August the Wall Street Journal broke the story that Oracle was also being investigated by the US DOJ and SEC for FCPA violations in Africa and specifically whether improper payments have been made in order to win software sales.
West coast FCPA investigation office opens
The focus on technology companies coincides with the opening in 2010 of a regional unit of the SEC dedicated to the enforcement of the FCPA.
When it opened Tracy L. Davis, the assistant regional director, reportedly said “[t]he fact that we have a significant presence of companies in Silicon Valley who do business internationally, specifically in Asia, makes us well-suited for addressing these kinds of issues. That’s one of the reasons why San Francisco is a particularly good location for an FCPA unit.”
Another reason would be the proximity to silicon valley home to many of the world’s largest technology companies.
We anticipate that similar or related investigations into technology sector businesses will inevitably hit the UK’s shores.
With this in mind, and following on from the success of our oil and gas and pharmaceutical and medical device masterclass we shall be running a technology business anti-bribery masterclass later this year.
This will be followed by an exclusive event early next year targeted at purely at businesses in the technology sector.
If you would like to attend these register your interest by contacting Barry please email: firstname.lastname@example.org
Dates of our autumn season of masterclasses, including our technology masterclass, will be announced later this week.