The Foreign Corrupt Practices Act (FCPA) aims to stop corruption and bribery by making it illegal for individuals and organizations to make payments or provide anything of value to influence foreign government officials for the purpose of obtaining or retaining business. Violations of this act can involve very complex schemes and involve very large sums of money. The following is a brief synopsis of recent FCPA cases that have reached resolutions:
On March 23, 2016, Reuters published that Drug-maker Novartis AG agreed to pay more than $25 million to settle charges that it bribed Chinese health professionals in order to obtain more business in China. According to Reuters, U.S. officials claim that Novartis tried to account for the bribes by calling them ordinary business expenses. Though the settlement includes no admittance of guilt on the part of Novartis, the company did note that many of the allegations involve events that occurred before the implementation of their internal compliance program. Novartis also is said to be taking measures to improve its compliance procedures in China.
On March 23, 2016, the Department of Justice announced that Abraham Jose Shiera Bastidas of Florida, pled guilty in federal court to one count of conspiring to violate the FCPA, one count of fraud, and one count of violating the FCPA in relation to a scheme that would allow his U.S. – based energy companies to receive energy contracts from Venezuela’s state-controlled energy company. Bastidas was not the only party charged, just the latest to settle.
On March 2, 2016, it was reported that Qualcomm agreed to pay a $7.5 million settlement to end a four-year long investigation into an alleged bribery scheme involving Chinese government officials. The allegations assert that Qualcomm gave Chinese officials special gifts, paid personal travel expenses, and provided entertainment to obtain contracts from government owned businesses. Qualcomm accounted for these costs as legitimate business expenses.
On March 1, 2016, the Department of Justice announced that Olympus Latin America (OLA), a subsidiary of one of the United States’ largest medical device distributors, will pay $22.8 million for violating the FCPA. OLA admitted to bribing health officials in Latin America in order to obtain business opportunities and sell its products. The $22.8 million figure was reached as part of a plea agreement that also requires OLA to retain a compliance counselor for the next three years and implement certain compliance measures.
Violations of the FCPA can cost companies millions of dollars, and as seen in the Qualcomm case, it is not always clear whether or not certain business activities constitute violations of the FCPA. A robust compliance program guided by qualified counsel is a great way to ensure that no violations or costly settlements will occur.