Archive for the ‘DoJ’ Category


Dec

18

Name That Country!


Posted by Clif Burns at 6:31 pm on December 18, 2013
Category: BISDoJSanctionsSyria

Dell HQ http://www.dell.com/downloads/global/corporate/imagebank/hq/hq_rr1.jpg [Fair Use]The Securities and Exchange Commission just released on Monday, according to this article, correspondence that it had with Dell regarding an on-going  investigation by Dell, the DOJ, and the Bureau of Industry and Security (“BIS”) regarding sales of Dell computers to Syria.  These sales were made by a Dell distributor based in the U.A.E. In that correspondence, Dell indicated that it was conducting an internal investigation with outside counsel into sales by one of its Dubai-based distributors, was regularly communicating with the U.S. Attorney regarding that investigation, and had responded to a BIS subpoena requesting information about the sales in question. The company said that the investigation was not yet complete so that the company could not yet respond to the SEC’s questions as to whether Dell had any liability under U.S. export and sanctions law arising from the distributor’s sales to Syria.

The company, however, did try to suggest that it might not be liable because of a clause it cited in its distribution agreement:

Distributor acknowledges that Products licensed or sold hereunder or in respect of which services (including Dell Branded Services) are provided, which may include software, technical data and technology, are subject to the export control laws and regulations of the USA, the European Union, the Territory in which Distributor operates and the territory from which they were supplied, and that Distributor will abide by such laws and regulations. Distributor confirms that it will not export, re-export or trans-ship the Products, directly or indirectly, … to … any countries that are subject to the USA’s or those other relevant territories’ export restrictions or any national thereof … .

To paraphrase someone else, I guess you go to war with the language you have — that is to say, this language is hardly ideal. It relies on the distributor to know what countries are subject to U.S. export restrictions. Do you really think that a distributor in the U.A.E. is aware of the details of U.S. sanctions programs or even which countries are on the current U.S. bad country list? Probably not.

I certainly do not mean to imply that Dell has criminal or civil liability because of this drafting issue. Rather, my point only is that companies should be explicit in these clauses about which countries are subject to sanctions and to affirmatively advise distributors in writing when those countries change. Don’t count on your distributor to know who the U.S. has sanctioned anymore than you would count on him to know the name of last year’s winner of American Idol.

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Jun

17

FCPA Totally Useful As a Secondary Sanctions Program


Posted by George Murphy at 6:14 pm on June 17, 2013
Category: Criminal PenaltiesDoJEconomic SanctionsFCPAIran SanctionsOECDSEC

Total Gas Station in France http://www.total.com/MEDIAS/MEDIAS_INFOS/1564/FR/station-service-morinvilliers-France-media.jpg [Fair Use]

The U.S. Department of Justice recently announced that Total, S.A., the French oil and gas company, agreed to pay $245.2 million to resolve charges that it paid bribes to an Iranian government official by way of purported consulting agreements from 1995 to 2004 in order to secure, among other things, oil and gas rights in Iran. The Justice Department described the case against Total as “the first coordinated action by French and U.S. law enforcement in a major bribery case.” The U.S. Securities and Exchange Commission also reached a settlement with Total pursuant to which Total agreed to pay $153 million to resolve related FCPA allegations.

There is a lot to be said about Total’s settlement. At almost $400 million combined, Total’s payments are in the pantheon of largest payments ever for FCPA matters, along with Siemens, KBR and BAE. Another interesting component to the Total case, however, is its potential effectiveness for economic sanctions enforcement vis-à-vis Iran.

In the past few weeks, Congress and the White House have been busy expanding U.S. economic sanctions against foreign persons for their dealings with Iran. We reported recently on the current House bill that would expand sanctions against foreign banks engaging in certain transactions with Iranian banks. The President last week issued an executive order expanding secondary sanctions against, for example, foreign banks’ rial-based transactions as well as certain dealings by anyone with most persons on the SDN List pursuant to sanctions against Iran.

These secondary sanctions, however, provide U.S. enforcement authorities with a great deal of discretion on if and when to designate foreign persons to the SDN List. Pushing the bounds of secondary sanctions beyond those against foreign persons with substantial ties to the Iranian government, of course, runs the risk of offending other countries who continue to permit their companies to do business with Iran.

Given these limitations, the FCPA would appear to be an effective tool the United States can use in applying pressure against foreign persons doing business with Iran. Although the FCPA carries its own extraterritorial criticisms, corruption is a global issue that many countries have committed itself to address whether by national law or membership to groups like the OECD.

While the United States differs with other countries on precisely what sanctions policies to adopt against Iran, Sudan, Syria or North Korea for current conflict or human rights concerns in those countries, there would seem to be a common allegiance to combat corruption there. It just so happens all four countries are among the most corrupt countries in the world as annually ranked by Transparency International. The Total case at least sends the message to foreign companies that business as usual in Iran can result in significant FCPA penalties and possible cooperation from authorities in the companies’ home countries in bringing them about.

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Apr

24

It Takes Two to Argentine Tango


Posted by George Murphy at 5:10 pm on April 24, 2013
Category: DoJFCPASEC

By WestportWiki (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ARalph_Lauren_Store%2C_NYC.jpg

The U.S. Justice Department announced yesterday that Ralph Lauren Corporation agreed to pay $882,000 to resolve alleged FCPA violations. According to a Justice Department press release, the allegations involved Ralph Lauren trying to secure “improper customs clearance of merchandise” from Argentine government officials, including “clearance of items without the necessary paperwork … [and] of prohibited items” or “avoid[ing] inspection entirely.” The Justice Department alleged that Ralph Lauren employees made bribes through a customs clearance agency using “fake invoices” to justify the payments.

In addition, the U.S. Securities and Exchange Commission announced that, in parallel proceedings, Ralph Lauren agreed to pay $734,846 in disgorgement and prejudgment interest for other related alleged FCPA violations that took place between 2005 and 2009. The SEC also announced that its non-prosecution agreement with Ralph Lauren was the SEC’s first involving “FCPA misconduct.”

While the SEC first is noteworthy, a special spotlight should be shown on Argentina.

Since early last year, the Argentine government has enforced a trade policy World Trade Organization member countries have described to the WTO as a “de facto import restricting scheme” because Argentine law requires non-automatic, government pre-approval on all imports. WTO members have alleged that companies have experienced long delays in getting approval and that some companies report receiving calls from Argentine government officials telling them that they must undertake “trade balancing commitments prior to receiving authorization to import goods.” This “trade balancing” is part of Argentina’s informal adoption of a policy that requires companies seeking to import products to export “dollar for dollar” goods from Argentina or “establish production facilities in Argentina.”

As described to the WTO, the current situation in Argentina sounds ripe for situations like the one involving Ralph Lauren and other U.S. exporters to happen again. Notwithstanding the FCPA’s exception for facilitating payments, situations where foreign government officials require some form of quid pro quo for goods coming into a country need to be examined carefully to determine whether further interactions with the official may implicate applicable anti-corruption laws.  Obviously, if the quid pro quo goes to the government and not the government official, there is not an FCPA issue.  But where the requested quid pro quo is supposed to go to the government official personally, then no matter how tempting is this offer to relieve the U.S. exporter of Argentinian import burdens, the best response may be to leave the dance floor.

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