August more than made up for the relative peace and quiet of July. This month’s digest features two new FCPA settlements, an update on Wal-Mart’s spending to resolve FCPA and compliance-related weaknesses and new anti bribery reform in China.
SciClone Could Pay SEC $12.8M in FCPA Case
SciClone Pharmaceuticals disclosed in a quarterly report that it’s discussing a tentative $12.8M settlement with the SEC to resolve an investigation of potential FCPA violations. The tentative settlement relates to a formal investigation launched by the SEC and the DOJ in 2010 regarding a “range of matters,” including the possibility of FCPA compliance violations, which the company stated were “primarily related to certain historical sales and marketing activities with respect to our China operations.” In response to these matters, SciClone said that its board appointed a special committee of independent directors to oversee its response to the government inquiry.
In a Form 10-Q, SciClone said it has “reached agreement in principle regarding a proposed settlement of these matters with the staff of the SEC, subject to documentation and final approval by the Commissioners of the SEC.” Under the terms of the proposed resolution, SciClone, without admitting or denying liability, would consent to the entry of an administrative order requiring that the company cease and desist from any future violations of the FCPA. The company also would agree to pay disgorgement of $9.4M, prejudgment interest of $0.9M, and a civil money penalty of $2.5M. The company said it continues to cooperate fully with the investigations.
BNY Mellon to Pay $14.8M to Settle FCPA Violations
Bank of New York Mellon Corp will pay $14.8M to settle charges it gave internships to family members of officials affiliated with a Middle Eastern sovereign wealth fund, violating the FCPA. The SEC said the bank failed to evaluate the family members through its highly competitive internship programs and did not apply the rigorous criteria usually required. The family members nonetheless were hired for internships to corruptly influence government officials and to win or keep contracts to manage and service the sovereign wealth fund’s assets, the SEC said. “BNY Mellon deserved significant sanction for providing valuable student internships to family members of foreign officials to influence their actions,” Andrew Ceresney, the SEC’s director of enforcement, said in a statement.
BNY Mellon neither admitted nor denied the charges as part of the settlement. The bank in a statement said it has “already taken steps to enhance our existing internal controls and procedures with respect to our internship and hiring practices.” The sovereign wealth fund was not named in an SEC administrative order. The SEC said the Middle East fund had been a BNY Mellon client since 2000 and that during the relevant period the bank held $55B in assets for it.
Wal-Mart FCPA Spending Just Topped $650M
…Which is painful, considering the company hasn’t even been fined yet. Wal-Mart said in a management call that FCPA and compliance-related costs were about $30M during the 2nd quarter, with $23M for ongoing investigations and $7M for the company’s global compliance program. The company said it expects to spend between $130M and $150M on FCPA-related costs for the full year. First quarter FCPA and compliance-related costs this year were $33M.
In April 2012, the New York Times reported that Wal-Mart’s Mexico unit paid $24M in bribes to speed up licensing and permitting for new stores. The paper said top managers in the US covered up the bribery after learning about it. The DOJ and SEC are investigating possible FCPA violations in Mexico, as well as in China, India, and Brazil, among others. The based retailer said for fiscal 2015 (ended 1/31), FCPA-related costs were $173M. In its fiscal 2014 Global Compliance Program Report, Wal-Mart said it had spent $439M in legal fees and other costs associated with investigations of alleged FCPA violations, and to revamp its global compliance program.
Anti Bribery Compliance News from Around the Globe
Transparency International Report: 4 OECD Countries Improve Anti-Bribery Enforcement
Four of the countries party to an international anti foreign bribery agreement have improved their enforcement efforts, according to an annual review by Transparency International. The review found that Greece, South Korea, Norway and the Netherlands all improved their anti foreign bribery enforcement standings. Transparency International annually reviews the performance of countries that joined the anti bribery convention of the Organization for Economic Cooperation and Development (OECD), rating them as active enforcers, moderate enforcers, limited enforcers, or as having little or no enforcement.
Norway, according to the 2015 review, jumped to the moderate-enforcement level, while the 3 others moved from the cellar to the limited-enforcement level. Argentina was the only decliner in the latest review, moving down from the limited level to the bottom rung, showing little or no enforcement. The 2015 edition of the review shows 4 countries—Germany, Switzerland, the UK and US—are the leading enforcers of anti foreign bribery law, completing 215 cases and starting 59 new ones between 2011 and 2014. Transparency International said 22 countries have failed to investigate or prosecute a single case in the last four years, violating their OECD obligations. “The OECD must ensure real consequences for such poor performance. Violation of international law obligations to counter cross-border corruption cannot be tolerated,” said Jose Ugaz, chairman of Transparency International.
3 Key Features of the Second Draft of Anti Bribery Reform in China
China’s NPC Standing Committee has recently released the Second Draft amendments to the PRC Criminal Law for public comments. The Second Draft imposes tougher punishments on those offering bribes to close relatives of or any persons close to working personnel of the state. Global Compliance News shares some other major features:
KEY FEATURES OF THE SECOND DRAFT
Key Features Details Stricter punishments for bribes offered to close relatives of or any persons close to working personnel of the state Compared to the First Draft, the Second Draft proposes stricter punishment and increases the criminal detention or fixed-term imprisonment period from no more than 2 to no more than 3 years. For crimes where the consequences are serious or the national interest has been severely impaired, in addition to a concurrent fine, the Second Draft increases the proposed fixed-term imprisonment to between 3-10 years. Additional punishment on units responsible for offering bribes to close relatives of or any persons close to working personnel of the state The First Draft did not impose liability on the “crime unit” responsible for offering bribes to close relatives of or any persons close to working personnel of the state. The Second Draft provides that where units commit such crime, the units will be fined and the person in charge and other directly responsible persons will be sentenced to a fixed-term imprisonment of no more than 3 years and concurrently to a fine. Mitigation of punishment in relation to bribe-givers reinstated The current PRC Criminal Law provides an exemption or mitigation of punishment for bribe-givers who voluntarily confess. The First Draft retained the voluntary confession requirement for bribe-givers to seek exemption from punishment, but only where the underlying crimes are relatively minor and the offenders assist with exposing corrupt activities of others. The Second Draft has reinstated the provision in relation to mitigation of the punishment for bribe-givers.
New UK Agency to Target International Corruption
A new UK unit will investigate cases of international corruption affecting developing countries. The International Corruption Unit will merge existing investigation and intelligence units spread across several agencies, including the National Crime Agency, as well as Metropolitan and City of London police. It will be operated by the National Crime Agency, with funding from the Department for International Development, and it will be the central point for investigating international corruption in the UK, a UK government statement said.
According to a post on the National Crime Agency’s website describing the new unit, it will investigate bribery of foreign public officials by individuals or companies from the UK, and money laundering by corrupt foreign officials and their associates. It will also trace and recover proceeds of international graft, support foreign law-enforcement agencies on global anti-corruption probes and work with companies to support increased compliance with the UK Bribery Act. “The message to individuals and companies who see developing countries as fair game is that the UK has zero tolerance for overseas bribery and corruption,” said Jon Benton, a co-chief of the unit who previously led the Metropolitan Police’s Proceeds of Corruption Unit.