Cooperating and Showing Hardship Yields “Discounted” $2 Million Penalty for FCPA Violations

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On July 17, the U.S. Department of Justice (“DOJ”) announced that Nordam Group, Inc., a privately held Oklahoma-based aircraft repair company, admitted that a subsidiary and an affiliate, with the approval of Nordam employees, violated the Foreign Corrupt Practices Act (“FCPA”) by bribing employees of state-owned or -controlled airlines in China. The bribes totaled almost $1.5 million over nine years, securing nearly $2.5 million in profits. Nordam assented to a non-prosecution agreement, and will pay what the DOJ described as a discounted $2 million penalty—a relatively modest sum as FCPA penalties go.

The misconduct was not a novel fact pattern, and the terms of the non-prosecution agreement generally follow the norm, but one feature of the Nordam case is notable. Perhaps signaling the DOJ’s willingness, in certain circumstances, to set a penalty that will punish but not destroy, the DOJ noted that it set the penalty at $2 million because Nordam had demonstrated that a larger penalty would “substantially jeopardize” the company’s viability.

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Published In: Administrative Agency Updates, Business Organization Updates, General Business Updates, Criminal Law Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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