This Week in Compliance

This Week in Compliance: SEC and DOJ end FCPA investigation into Exterran

Here’s what’s been going on in the compliance world this week:

Business 

  • SEC and DOJ end FCPA investigation into Exterran: Exterran Corporation reported that the SEC and DOJ investigation into FCPA violations in connection with equipment contracts for desalination plants in the Middle East has ended, and that no enforcement action will be brought against the company. The two-year investigation was launched back in 2016 when the company self-disclosed the potential violations to the SEC. Exterran had responded to an SEC subpoena, and the DOJ also requested FCPA-related documents during the investigation.
  • Fresenius Medical Care reserves USD 245 million for potential FCPA resolution: Fresenius Medical Care, the world’s biggest provider of dialysis products and services, has set aside USD 245 million for a potential FCPA resolution with the DOJ and SEC, as reported by the company itself in a securities filing earlier this week. The FCPA investigations into the Germany-based company were initiated in 2012 when Fresenius self-disclosed the potential violations to the authorities. The company said that the amount is an estimate from a range of possible outcomes; including claims for profit disgorgement, fines or penalties, and other costs. The company reported that it is still negotiating with the DOJ and SEC and that no agreements have been reached yet. Details about the possible FCPA violations or where they might have occurred were not disclosed.
  • Authorities close FCPA investigation into Teradata: The FCPA investigation led by the SEC into gifts and travel expenses at a Teradata subsidiary in Turkey has been closed and the company won’t face an enforcement action. Teradata was informed that the SEC investigations ended in January and the company received a declination letter from the DOJ in late February. The company had alerted the SEC and DOJ in February 2017 of dubious expenditures it uncovered at its subsidiary and of the company’s internal investigation into the matter. According to the disclosure, Teradata had taken remedial actions and terminated the individuals involved in the misconduct.

Government

  • Probe broadening into Austria’s purchase of Airbus Eurofighter jets: Prosecutors in Vienna are further investigating the USD two billion Eurofighter jet purchase by Austria as well as Norbert Darabos, former defense minister – also the first known former cabinet member to formally be targeted by prosecutors – for alleged breach of trust. The probe was launched in early 2017 into Airbus and the company’s Chief Executive Tom Enders, when the defense ministry claimed that Austria was misled about the price of the deal, the equipment and deliverability. The 2003 purchase of the jets was linked to bribery allegations from the outset and reasons to cancel the deal were explicitly sought in a parliamentary inquiry in 2006. Yet in 2007, Darabos managed to settle with Airbus to reduce the order. Last year, a second parliamentary inquiry examined the settlement and found no indication of bribery or influence peddling, yet highlighted Darabos’ failure to adequately liaise with other ministries and agencies and to be transparent enough to allow a court to audit the settlement.
  • Suspects freed in corruption case connected to PM Netanyahu: Four out of seven suspects detained in a high-profile corruption case involving Israel’s telecom giant Bezeq and the close confidants of Netanyahu were released by the courts earlier this week. The suspects were arrested for the alleged promotion of the USD hundreds of millions worth regulation to Israel’s Bezeq telecom company in return for favorable coverage of Netanyahu by Bezeq’s popular news site. The suspects were arrested over allegations that Bezeq-owned news outlet Walla provided favorable coverage to Netanyahu in exchange for benefits. The director of Bezeq, his son and wife, two Bezeq executives, Netanyahu’s former media adviser, and the former director of the Communications Ministry were all detained in the case. Tel Aviv Magistrate Court Judge Ronit Poznanski-Katz, who is overseeing the case, and securities investigator Eran Shaham-Shavit were reportedly exchanging text messages on WhatsApp discussing extending the detention of several suspects in the investigation. Poznanski-Katz was removed from the case, subsequent to the uproar the allegations triggered and critics decrying the exchange as an obstruction of justice.

Noteworthy

  • Bribery scheme involving 350 driver’s licenses revealed in New Zealand: Hundreds of drivers licenses have been cancelled in New Zealand – ranked among the least corrupt countries in the world – after a probe revealed a large bribery scheme involving driving tests. The scheme was reported by Radio New Zealand after filling an Official Information Act request. Allegedly, three officials at the New Zealand Transport Agency (NZTA) received bribes from 350 drivers in return for accepting fake overseas licenses and dubious driving-course certificates. According to one whistleblower, officials took between USD 500 and 600 to pass drivers without giving any on-road exam.
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