On May 29, 2013, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) announced agreements with Total S.A. (Total) to settle alleged Foreign Corrupt Practices Act (FCPA or the Act) violations for a combined sum of more than $398 million. The DOJ filed a three-count information and deferred prosecution agreement (DPA) in the Eastern District of Virginia, whereby Total agreed to a $245.2 million penalty and to implement an improved compliance program. The SEC issued a Cease and Desist Order (CDO) which requires, among other things, that Total pay $153 million in disgorgement.
Total, a French company headquartered in Nanterre, France, is an oil and gas exploration and development firm with operations around the world. It is a publicly held company with SEC-registered American Depository Shares traded on the New York Stock Exchange. As a public company, Total is an "issuer" as defined by 15 U.S.C. § 78dd-1 for purposes of the FCPA, and accordingly, is subject to the anti-bribery, books and records, and internal control provisions of the Act.
The three-count criminal information charges Total with (1) Conspiracy to Violate the Anti-Bribery Provisions of the FCPA (18 U.S.C. § 371), (2) Violation of the Books and Records Provisions of the FCPA(15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(5), and 78ff(a)), and (3) Violation of the Internal Controls Provision of the Act. As described in both the DOJ's press release and the criminal information, between 1995 and 2004, Total paid $60 million in bribes through intermediaries to an Iranian Official who facilitated lucrative exploratory and development contracts between Total and National Iranian Oil Company (NICO). These contracts are alleged to have allowed Total to obtain access to the Sirri A and E Oil fields around or on Sirri Island, which is situated over the South Pars gas field, the largest national gas field in the world. These alleged bribes were improperly described on Total's books as "business development expenses."
As part of the DPA entered into with the DOJ, Total agreed to pay $254.2 million in fines, to continue implementing a compliance and ethics program, and to hire a French national as a Corporate Compliance Monitor. The term of the DPA is three years and seven days and was granted based on three main factors: parallel investigations by French law enforcement, the evidentiary challenges presented, and the company's disclosure of its internal investigation and cooperation with the government. The use of a DPA reaffirms guidance provided by the DOJ and SEC late last year that highlighted the weight given to self disclosure and cooperation in their joint release of A Resource Guide to the U.S. Foreign Corrupt Practices Act.
The SEC's CDO listed Total's violations as (1) violation of the anti-bribery provisions of the FCPA under Exchange Act § 30A; (2) books and records violations under § 13(b)(2)(A); and (3) internal controls violations under § 13(b)(2)(B). Under the CDO, the company will be required, among other things, to retain a compliance consultant and to pay $153 million in disgorgement.
This case represents a cooperative effort by both French and U.S. law enforcement to hold a company liable for its corrupt foreign activities and, as noted by the SEC's press release, "[c]harges also were recommended today by the prosecutor of Paris (François Molins, Procureur de la République) of the Tribunal de Grande Instance de Paris for violations of French Law." Investigations by French authorities are now likely against Total, its Chairman, CEO, and at least two unnamed individuals.
This case illustrates a key development in FCPA practice, namely the evolution of carbon-copy prosecutions, whereby the same criminal conduct is simultaneously investigated and prosecuted by multiple international countries (here, by both the United States and France). As a result of this development, clients are urged to assess their compliance and reporting programs to ensure that they are in line not only with U.S. practices, but also with those of countries where the company actively conducts business, is incorporated, or is otherwise based.