In this article, we highlight settlements with criminal and supervisory authorities around the globe. We discuss the USD 283 million Walmart settlement for allegedly insufficient anti-corruption controls that allowed third-party intermediaries to make improper payments to government officials in China, Mexico, Brazil and India. We also discuss the TechnipFMC settlement, which TechnipFMC claims as the first simultaneous resolution of corruption investigations by US and Brazilian authorities.
Walmart agrees to settle FCPA charges for USD 283 million
On 20 June 2019, US retailer Walmart agreed to pay USD 283 million to settle allegations by the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) that several Walmart subsidiaries violated the Foreign Corrupt Practices Act (FCPA). The settlements cover conduct in China, Mexico, Brazil and India.
Walmart signed a three-year non-prosecution agreement (NPA) with the DOJ, along with a USD 138 million penalty. According to the NPA, Walmart subsidiaries in Brazil, China, India and Mexico operated without sufficient anti-corruption controls from July 2000 to April 2011. According to the DOJ, these failures allowed Walmart’s foreign subsidiaries to hire certain third-party intermediaries without establishing sufficient controls to prevent those intermediaries from making improper payments to government officials to help obtain store permits and licences.
No voluntary disclosure credit
Walmart did not receive any voluntary disclosure credit as part of the settlement. According to the DPA, the company did not timely and voluntarily disclose conduct in Mexico, and only notified US authorities of wrongdoing in Brazil, China and India after the US government had already opened its investigation in Mexico.
Full cooperation credit for conduct in Brazil, China and India
The company did receive full credit for its cooperation with the DOJ’s investigation into the company’s conduct in Brazil, China, and India. The full cooperation credit was received for: (i) conducting a thorough internal investigation; (ii) proactively identifying issues and facts that would likely be of interest to the DOJ, and providing updates to the DOJ; (iii) making regular factual presentations to the DOJ and sharing information that would not otherwise have been available to the DOJ; (iv) voluntarily making foreign-based employees available for interviews in the US; (v) producing documents, including translations, to the DOJ from foreign countries in ways that did not implicate foreign data-privacy laws; (vi) obtaining cooperation of former employees and third parties, including their consent to being interviewed; (vii) providing the services of a legal counsel to employees and former employees to facilitate their cooperation; (viii) collecting, analysing, and organising voluminous evidence and information for the DOJ; and (ix) identifying, investigating, and disclosing conduct to the DOJ that was outside the scope of the company’s initial disclosures.
Partial cooperation credit for conduct in Mexico
Partial cooperation credit was granted for the company’s conduct in Mexico. In the DOJ’s view, Walmart did not timely provide documents and information to the DOJ in response to certain requests and did not adequately cooperate with the DOJ’s request to interview one witness before the company interviewed that witness.
The NPA shows that Walmart has engaged in significant remedial measures, including enhancing its anti-corruption compliance programme and its internal accounting controls related to anti-corruption. According to the NPA, Walmart ensured that its anti-corruption compliance programme satisfies the minimum elements set out in the corporate compliance programme laid down in attachment B to the NPA. However, despite the company’s significant remedial measures, the DOJ determined that an independent compliance monitor must be appointed for two years, to ensure that Walmart’s compliance programme is operating effectively and is adequately tested to ensure that it meets the minimum elements set out in the corporate compliance programme.
For the portion of the penalty that related to conduct in Brazil, China, and India, the DOJ gave a 25% discount on the lowest, applicable amount in the U.S. Sentencing Guidelines range, and based it on the individual circumstances of the case. For the portion of the penalty addressing conduct in Mexico, the DOJ gave a 20% discount on the lowest end of the U.S. Sentencing Guidelines range.
Guilty plea by WMT Brasilia and SEC settlement
As part of the agreement with the DOJ, Walmart’s Brazilian subsidiary, WMT Brasilia, agreed to a penalty of over USD 700,000 and to forfeiture of over USD 3.6 million – which will be deducted from the amount owed by Walmart under the non-prosecution agreement – after pleading guilty to violating the FCPA’s books and records provision in a federal court. Walmart also settled related FCPA books and records and accounting control charges with the SEC and agreed to disgorge USD 144 million. Under the different settlements, Walmart agreed to a combined payment of USD 282.7 million.
TechnipFMC reaches first simultaneous resolution that includes US and Brazilian authorities
On 25 June 2019, publicly traded, US oil and gas company TechnipFMC and its wholly-owned US subsidiary, Technip USA, Inc., announced that they had negotiated the first ever coordinated resolution with enforcement agencies in the US and Brazil. The resolution concerns foreign bribery charges relating to the years 2002 to 2012. The company said that it will pay a total of USD 301.3 million to the US and Brazilian authorities.
Settlement in Brazil
TechnipFMC’s Brazilian subsidiaries settled with Brazil’s Office of the Comptroller General (CGU), Federal Prosecution Service (MPF) and Office of the Attorney General (AGU). According to the Brazilian prosecutors, senior employees of two TechnipFMC subsidiaries bribed officials in the then governing Workers Party and at state-controlled oil company Petrobras. Petrobras will receive USD 136.8 million as compensation. USD 214 million will be paid to the Brazilian authorities.
Settlement with DOJ and SEC
The US settlement relates to allegations of bribery in Nigeria and Iraq. TechnipFMC agreed to a three-year deferred prosecution agreement (DPA) with the DOJ and will pay a fine of USD 296 million. The US will deduct from its penalty the USD 214 million that the company pays to the three Brazilian authorities. According to the DPA, TechnicFMC paid bribes to at least seven government officials in Iraq, including at the Ministry of Oil, through a Monaco-based company, to win lucrative projects in Iraq from 2008 to 2013. TechnipFMC received a 24% reduction in its DOJ fine for its substantial cooperation and for taking extensive remedial measures. The reduction was one point below the 25% standard reduction because TechnipFMC had violated the FCPA before: it entered into a USD 240 million FCPA settlement with the US in 2010. TechnipFMC did not receive voluntary disclosure credit.
No compliance monitor
TechnipFMC escaped having to appoint a compliance monitor, due to the company’s remediation efforts and the state of its compliance programme. The DOJ did impose a compliance monitor as part of the separate 2010 settlement. TechnipFMC, however, has agreed to hand over internal anti-corruption reports to Brazilian and US authorities for two and three years, respectively.
The resolution is not without loose ends. Parts of TechnipFMC’s case remain unresolved. According to sources, the MPF said its settlement will not be final until it receives the green light from an internal oversight body. Furthermore, according to TechnipFMC, it has, in principle, also reached an agreement with the SEC. But this agreement is still subject to SEC approval. Another loose end is an investigation by the French Parquet National Financier (PNF) related to projects in Equatorial Guinea and Ghana. This investigation has not led to a resolution so far. The company is maintaining a USD 70 million provision related to this investigation.
Step forward in coordination
Although not all investigations have been completely settled, the resolution can be considered a step forward in coordinated resolutions of multi-jurisdictional investigations with a Brazilian angle. In several multi-jurisdictional cases (like Rolls Royce), companies have entered into global settlements, but have spent years negotiating the end of similar investigations in Brazil. A coordinated approach is beneficial in the fight against corruption, but of course also to the companies involved, as it creates more certainty.
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