This week the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) announced that France-based oil and gas company Total S.A. resolved Foreign Corrupt Practices Act (FCPA) charges by agreeing to pay a near record-setting $398.2 million. In addition to the magnitude of Total’s payout, the case is notable for other reasons, too – the vintage of the misconduct and investigations; the appointment of an independent compliance monitor; the continued expansion of international enforcement cooperation in FCPA matters; and the number of classic FCPA risk factors involving third parties present in the charged conduct. The case thus provides a useful reminder to companies and executives of the omnipresence of the FCPA and other countries’ foreign anti-bribery laws, as well as an opportunity to review and enhance anti-bribery compliance efforts.
BACKGROUND OF THE MATTER -
According to the SEC and DOJ, Total, a French company with American Depository Shares that trade on the NYSE, paid over $60 million to an Iranian official through the use of intermediaries between 1995 and 2004, in order to secure two lucrative oil development contracts in Iran in 1995 and 1997. Specifically, after Total and the Iranian official met to discuss a contract in 1995, an offshore subsidiary of Total entered into a consulting contract with an intermediary chosen by the official. The intermediary was to perform vaguely defined “economic and marketing research and support services.” Although it is not clear from the charging documents whether the intermediary actually provided any services (other than channeling money to the Iranian official), over two-and-a-half years Total paid approximately $16 million to a Swiss bank account for the benefit of the intermediary and, ultimately, for the Iranian official. In 1997, the process largely repeated itself with a second intermediary and consulting contract, under which Total paid approximately $44 million to a Swiss bank account. In its books and records, Total ambiguously, and misleadingly, described the payments as legitimate “business development expenses.”
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