I. Introduction

The long-awaited Fresenius Medical Care AG & Co. KGaA (FMC) Foreign Corrupt Practices Act (FCPA) enforcement action was recently announced. It involved massive multi-year and multi bribery schemes by the company in multiple countries. According to the Department of Justice (DOJ) Press Release, the company admitted to earning more than $140 million in profits from the corrupt schemes. In spite of this massive amount of corruption the company was able to garner a Non-Prosecution Agreement (NPA). 

The company agreed to pay a total criminal penalty of $84,715,273.  FMC settled a related FCPA matter with the US Securities and Exchange Commission (SEC) and paid $147 million in disgorgement and prejudgment interest to the SEC, which the DOJ credited in its resolution, bringing the total amount paid by FMC to over $231 million. This series will begin a multipart exploration of the enforcement action. FMC also agreed to a three-year monitorship, which can be reduced, in the sole discretion of the DOJ, to two-years. Today, I introduce the matter with the background. 

This FCPA enforcement action should be reviewed by every compliance professional to understand the bribery schemes and where FCPA enforcement is heading. According to Tracy L. Price, Deputy Chief of the SEC Enforcement Division’s FCPA Unit, who was quoted in the SEC Press Release, “By engaging in widespread bribery schemes across multiple countries, the company prioritized profits over compliance in its dealings with foreign government officials.” US Attorney of the District of Massachusetts, Andrew E. Lelling, said in the DOJ Press Release, “Bribery, in all forms, is corrosive and illegal. As today’s announcement makes clear, this Office will continue its long tradition of aggressively investigating companies and individuals who use bribes and kickbacks to gain an unfair and illicit business advantage, or who deliberately turn a blind eye to that conduct.” 

Federal Bureau of Investigation Assistant Director Robert Johnson, noted in the same Press Release, “This case shows the continued commitment of the FBI and our partners to investigate bribery and corruption worldwide. The FBI’s dedicated International Corruption Squads across the United States will continue to combat foreign corruption that reaches our shores and send a strong message that, no matter how long it takes, we will not wane in our efforts to uphold the law.”

The SEC settled its portion of this matter with a Cease and Desist Order (Order). The SEC Press Release noted that FMC “engaged in illegal activity in Saudi Arabia, Morocco, Angola, Turkey, Spain, China, Serbia, Bosnia, Mexico, and eight countries in the West African region against a backdrop where the company failed to have sufficient internal accounting controls.” The company made illegal payments through a “variety of schemes, including using sham consulting contracts, falsifying documents, and funneling bribes through a system of third-party intermediaries.”  Moreover, the company had  “known red flags of corruption since the early 2000s.” Finally, in “many instances, senior management actively engaged in corruption schemes and directed employees to destroy records of the misconduct. All told FMC paid nearly $30 million in bribes to government officials and others to procure business.”

As noted, the bribery schemes were many but varied. They included such basic bribery techniques as direct payments to foreign officials and claiming they were made under a consulting agreement; without the foreign official providing any service or even having a sham contract in place. There were fraudulent gifts and payments to publicly employed doctors for travel with no business or educational justification gifts. In one scheme over $1.7 million in paid by customers brokers on behalf of FMC. But there were some new and novel schemes that every compliance practitioner needs to learn and become familiar with. 

For instance, according to the DOJ Press Release, in Angola the company government officials shared “in a joint venture in Fresenius’s local subsidiary, specifically, 15 percent to the Angolan military health officer and 15 percent to a publicly employed doctor. A similar scheme was employed in Turkey where Fresenius entered into joint ventures with publicly employed doctors in exchange for those doctors directing business from their public employer to Fresenius clinics in Turkey.” In one instance, “in or around 2006, Fresenius entered into a joint venture with a publicly employed Turkish doctor, who received 35 percent of the joint venture shares (worth approximately $74,000 at the time) at the time it was formed.  In 2010, Fresenius purchased the doctor’s shares and never required the doctor to pay for his shares in the joint venture resulting in $356,000 profit to the doctor.” 

Another scheme used in Angola was the creation of fraudulent storage contracts with a company owned by the sons of the Angolan military health officer, to “provide warehousing space” in a warehouse where no FMC products were. Going in a different direction (bribery scheme wise) in Saudi Arabia, the company “engaged in a check-cashing scheme where employees were directed to cash checks that had been made payable in their names and return the cash to the general manager of Fresenius’s distributor and agent where he [the agent] then arranged to have the cash delivered to Saudi government doctors and others.” There were also payments to charities which were owned or controlled by government officials. Finally, in several countries in West Africa, bribes were paid through a combination of direct payments, payments through third parties and payments through a third-party distributorship. 

In spite of all these schemes and the length of time it went on, FMC not only obtained an NPA but it also received a 40% discount under the FCPA Corporate Enforcement Policy (Policy), from the bottom range of the Sentencing Guidelines. I will review the conduct in which the company engaged during the investigation which allowed it to obtain this discount even though it did not meet the requirements of the Policy for a full declination. All of this information is instructive for the compliance professional. 

II. The Bribery Schemes

Next, I want to consider the bribery schemes in some detail. Every compliance practitioner should study this matter carefully as there were several bribery schemes which were new, different of ones not generally seen previously. The creativity of the Fresenius executives and employees involved speaks to the constant evolution of corrupt employees, always looking for ways to make corrupt payments which will not be detected by a company. But for the compliance professional it means that you must use the full arsenal of tools, controls and techniques available to every corporation to fight this scourge. 

The bribery schemes were many but varied. They included such basic bribery techniques as direct payments to foreign officials and claiming they were made under a consulting agreement; without the foreign official providing any service or even having a sham contract in place. There were fraudulent gifts and payments to publicly employed doctors for travel with no business or educational justification gifts. In one scheme over $1.7 million was paid by customers brokers on behalf of FMC. But there were some new and novel schemes that every compliance practitioner needs to learn and become familiar with. 

A. Use of JVs

1. Angola

Here the company created a Joint Venture (JV) and according to the NPA, the original plan was to “attribute 35% of the share capital of FMC Angola to certain “local partners” as minority shareholders – specifically “15% to [Angolan Military Health Officer who was listed by his military rank], 15% to [Angolan Doctor 1] and 5% to NefroAngola - a local company which owners are all the Angolan nephrologists.” To hide the involvement of the Military Health Officer, his title was changed to “Dr.” Finally, when the JV was presented to FMC management for approval, it was not disclosed that the minority shareholders included an Angolan military health officer and Angolan government-employed doctors.

2. Turkey

A similar corruption scheme was pursued in Turkey. There, the local business unit entered into a JV with “Turkish Doctor 1, who received 35% of the joint venture shares (worth approximately $74,000 at the time) at the time it was formed”. This Turkish Doctor 1 would contribute to a capital increase in the JV, yet he kept his interest. Indeed, “When the other FMC executive questioned why “they have to be so cooperative to keep [Turkish Doctor 1] when he’s not paying anything,” FMC Turkey Executive 1 responded that Turkish Doctor 1 has strong relations with state hospitals and that they are “not in the position to start a fight with this professor by diluting his shares.” Doctor 1 received $360,000 for his interest in the JV for which he contributed nothing. 

A second JV was also set up on Turkey, where another doctor received similar treatment but only to the extent of receiving 20% interest in the JV. Once again Doctor 2 contributed no capital at formation and during the pendency he held his interest. Yet he was paid $110,000 for his interest in this second JV. 

B. Check-Cashing Scheme

In Saudi Arabia, apparently most of the business unit was in on the bribery scheme. We have seen this previously with GlaxoSmithKline PLC (GSK) in China and also Eli Lilly and Company in China. In those situations, the employees were instructed to submit fraudulent expense reimbursement requests to create a pot of money with which to pay bribes. The scheme used by FMC was somewhat different in Saudi Arabia. 

Here the company made commission payments to employees. According to the Order, the Saudi business unit generated approximately $1.77 million to fund bribes through a check writing scheme, where checks were written to employees who cashed the checks and handed the cash to the General Manager. There was so much cash laying around that the Order noted “employees sometimes stored bags of cash in a safe without proper documentation.” To hide what they were doing, the transactions were falsely recorded as project marketing expenses and collection commissions in SRS’ books and records, which FMC consolidated. 

C. False Warehousing

Remember the Angolan Military Health Officer noted above? Since he was never paid through the corrupt JV, another scheme was concocted on the Angolan business unit. It was the creation of fraudulent storage payments with a company owned by the sons of the Military Health Officer, to “provide warehousing space” in a warehouse where no FMC products were. According to the NPA, the company “entered into an oral contract with the Shareholder Company, which was owned by the sons of the Angolan Military Health Officer, to provide warehousing space. In or around December 2011, FMC Angola paid approximately $560,000 to the Shareholder Company for purported “Temporary Storage Services,”. However, no company products were ever stored at the warehouse.

When the company’s internal audit function unearthed this scheme, the local business unit simply put a contract in place, executing a written contract with the Shareholder Company to provide temporary storage services for approximately $77,000 per month from January 2012 to

January 2013. Once again, no company products were ever stored at the warehouse.

D. The Usual Suspects

FMC utilized a large number of traditional bribery schemes to make corrupt payments in all the countries listed in the NPA and Order. While the list of countries is impressive; including not only Angola, Turkey and Saudi Arabia but also Spain, Morocco, China, Bosnia, Mexico, Benin, Burkina Faso, Cameroon, the Ivory Coast, Niger, Gabon, Chad and Senegal. The bribery schemes used in many of these countries were schemes we had previously seen. They included (1) sham consulting contracts for paying bribes to government officials where no services were performed, (2) fake collection commission agreements, (3) fraudulent payments to a charity controlled by a foreign government official ($90,000 to a government charity run by a Saudi doctor), (4) gifts in the form of laptop computers for nurses in Saudi Arabia, (5) payments to publicly employed doctors for travel with no business or educational justification (a six-night stay at the Atlantis Palm Hotel in Dubai to the tune of $7,579.20 for Saudi doctor and his wife), (6) excessive payments to customs officials where the payments were inaccurately recorded ($1.7 million total in Saudi Arabia), (7) payments through third parties and payments through a third-party distributorship, all as a way to funnel bribes to government officials. (West Africa).

In addition to vast corruption conspiracy, it was long standing, going on for over 10 years. Join me tomorrow as I consider how FMC obtained a NPA and a 40% reduction off its criminal fine under the FCPA Corporate Enforcement Policy for this massive corruption. 

III. The NPA, Fines and Monitor

It was clear from that deep dive there was massive corruption. Yet in spite of the colossal amount of corruption involved, the company was able to garner a NPA. How did it do so? Moreover, the company was able to garner not only an NPA but also receive a discount of 40% off the minimum range suggested under the US Sentencing Guidelines. While the NPA did not detail the full calculations which led to the range of the fine under the Sentencing Guidelines, it did state, “The monetary penalty is based upon profits of approximately $141,192,121 as a result of the offense conduct, and reflects a discount of 40% off of the bottom of the U.S. Sentencing Guidelines fine range.” 

Under the FCPA Corporate Enforcement Policy (Policy), a company which does not qualify for the presumption of a Declination can receive a discount of up to 50% off the minimum range of the Sentencing Guidelines. FMC did not self-disclose (“voluntarily and timely disclose”) this matter to either the DOJ or the SEC so a Declination was never in the cards. Further, FMC did not receive the full 50% available to them as it the Company did not receive full cooperation credit because it “did not timely respond to requests by the Department and, at times, did not provide fulsome responses to requests for information” so it did not meet the requirement for extraordinary cooperation with the DOJ (and SEC) during the pendency of the investigation. Finally, to the extent the Yates Memo is still in the mix, the NPA noted the company provided to the DOJ “all relevant facts known to it, including information about the individuals involved in the conduct described in the attached Statement of Facts and conduct disclosed to the” DOJ prior to the resolution of the matter. 

However, according to the NPA Fresenius did meet other mandates under the Policy, including:

• conducting a thorough internal investigation; 
• making regular factual presentations to the DOJ; 
• providing facts learned during witness interviews; 
• • voluntarily making foreign-based employees available for interviews in the US;
• producing documents to the DOJ from foreign countries in ways that did not implicate foreign data privacy laws; 
• collecting, analyzing, and organizing voluminous evidence and information from multiple jurisdictions for the DOJ, including translating key documents; and 
• disclosing conduct to the Department that was outside the scope of its initial voluntary self-disclosure.

The SEC Order had other information about the company’s conduct which did not appear in the NPA. FMC self-reported “certain misconduct and voluntarily provided facts developed during its internal investigation.” The company cooperation with the SEC, which was somewhat enigmatically “varied at times.” It was specifically noted that the company “produced documents, including key document binders and translations as needed, and made current or former employees available to the Commission staff, including those who needed to travel to the United States.”

It did appear that the company met its obligation for extensive remediation after the illegal acts were uncovered. The NPA noted the company engaged in the following remediation steps:

A. At least ten employees who were involved in or failed to detect the left the company, either through termination, resignation upon after being asked to leave, or they voluntarily departure once the Company’s internal investigation began;

B. The company enhanced its compliance program, controls, and anti-corruption training; 

C. The company terminated its business relationships with the third party agents and distributors who participated in the illegal acts;

D. Fresenius adopted heightened controls on the selection and use of third parties, to include third party due diligence; and 

E. The company voluntarily withdrew from participation in pending public contracts potentially related to its illegal acts;

F. The Company enhanced, and has committed to continuing to enhance, its compliance program and internal controls, including by taking steps to ensure that its compliance program satisfies the minimum elements set forth in Attachment B to the NPA.

In addition to the foregoing, the Order noted that the company beefed up its compliance function through “enhancements to its internal accounting controls. FMC strengthened its global compliance organization; enhanced its policies and procedures regarding the due diligence process and the use of third parties; created positions to address potential risks; and increased training of employees on anti-bribery issues.”

Yet even with all of these steps the company still allowed the illegal conduct to continue during the pendency of the internal investigation, into 2016. Apparently, this last point troubled the DOJ who required a monitor be put in place. The NPA stated, “misconduct continued to occur at the Company until 2016, thus the parties have agreed that to ensure and test the effectiveness of the Company’s enhanced compliance program and to prevent a reoccurrence of the conduct outlined in the Statement of Facts, an independent compliance monitor shall be appointed for a term of two years”. Clearly the company did not meet the mandates of the Benczkowski Memo which changed the DOJ default position to one where no monitor would be assigned unless “a corporation’s compliance program and controls are demonstrated to be effective and appropriately resourced at the time of resolution, a monitor will not be necessary.” 

In mining the FMC FCPA enforcement action, there are many nuggets for the compliance practitioner to study. The actions which allowed FMC to obtain an NPA included both assistance in the investigation and remedial actions to stop the conduct and prevent it from happening in the future. You should study these for your own compliance program. 

IV. Lessons Learned on the Bribery Schemes

While I have discussed the bribery schemes in some detail, this section will explore the lessons learned for the compliance professional from the information presented in the settlement documents detailing the numerous and varying bribery schemes used by the company to make corrupt payments.

There were multiple bribery schemes employed by FMC. These included the setting up of joint ventures as a mechanism to pay corrupt doctors, employees of state-owned health care enterprises and government officials who were also medical officials. There was one such JV in Angola and two in Turkey set up for illicit purposes. In both bribery schemes, 35% of the JV interest was doled out to the corrupt officials. Typically, there was no capital contribution required from the employees of state-owned enterprises and government officials and there may or may not have been distributions to them during the term where held interests in the JV. Finally, the employees of state-owned enterprises and government officials were all cashed out at some point for values far above their individual values in the JVs. 

One of the more novel yet troubling bribery schemes was found in Saudi Arabia. It was novel because it is a bribery scheme rarely seen and troubling because a large portion of the country-wide business unit was apparently in on the scheme. The company made commission payments to employees via hard copy checks. These checks were then cashed by the employees and the funds received were handed over to the Saudi business unit General Manager. To hide what they were doing, the transactions were falsely recorded as project marketing expenses and collection commissions in SRS’ books and records. 

While fake or even no contracts for services which are never provided is an old and standard form of mechanism to pay bribes, FMC used with it with an interesting twist. The company paid both employees of state-owned enterprises, government officials and their family members for storing facilities in which no goods were stored. When the company’s internal audit function brought the inconvenient fact there was no contract present for these storage services, the local business unit simple created one out of thin air. 

FMC utilized a large number of traditional bribery schemes to make corrupt payments in all the countries in which they engaged in illegal acts. The bribery schemes used in many of these countries were schemes we had previously seen but they are worth mentioning for all compliance professionals to review. They included (1) sham consulting contracts for paying bribes to government officials where no services were performed, (2) fake collection commission agreements, (3) fraudulent payments to a charity controlled by a foreign government official ($90,000 to a government charity run by a Saudi doctor), (4) gifts in the form of laptop computers for nurses in Saudi Arabia, (5) payments to publicly employed doctors for travel with no business or educational justification (a six-night stay at the Atlantis Palm Hotel in Dubai to the tune of $7,579.20 for Saudi doctor and his wife), (6) excessive payments ($1.7 million total) to customs officials where the payments were inaccurately recorded, (7) payments through third parties and payments through a third-party distributorship, all as a way to funnel bribes to government officials. 

The lessons for the compliance professional are numerous based upon this FCPA enforcement action. JVs continue to be problematic for companies, most especially where the local JV partners are employees of state-owned enterprises and government officials. There should be a written business justification as to why certain employees of state-owned enterprises, government officials or their family members are to be granted interest in a JV. Due diligence must be performed on all your JV partners, separate and apart from local business unit assurances there are no conflicts, red flags or illegal activities. Any monies paid out to your JV partners must pass all internal requirements for such payments and if the interest is purchased outright, there must be a valid business appraisal, performed at arms-length by an impartial third-party. Of course, the JV must also be managed on an ongoing basis from the compliance perspective. 

As I indicated the Saudi-wide business unit check cashing scam is more troubling because it speaks to an entire business unit compliance failure. Obviously, the tone from the Saudi business unit was not one of compliance or even lawfulness. This speaks to multiple failures at FMC in business leadership, training and oversight. Commission payments in high-risk areas must be monitored to see if there is an increase which would warrant additional scrutiny. Getting out of the corporate office to put on training has the additional benefit of putting a compliance face with a name on an email so that hopefully such a massive bribery scheme can be identified much sooner. 

The biggest key to the usual suspects of bribery schemes employed by FMC in a wide variety of other countries is the failure of internal controls. Whether hiding corruption by mischaracterizing it in books and records or simply creating pots of money out of air, a more robust financial internal controls system will help the compliance professional identify potential compliance failures more quickly. 

V. Lessons Learned on Investigations and Remediations

Having considered the lessons to be learned from the bribery schemes, I next explore the lessons learned for the compliance professional on investigative steps to take as well as remedial steps based upon the FMC FCPA enforcement action.  

A. During the Investigation

1. Investigative Steps

The FMC enforcement action provided enough information about the steps the company finally began to engage in after the FCPA investigation began in earnest. The steps listed in the NPA provide a roadmap that every compliance professional should study if they find their company in an investigation. However, the lessons learned are not limited to those companies which find themselves mired in a FCPA investigation. This information can also be used educate Boards of Directors and Senior Executives about what to expect during an investigation in terms of both scope and potential cost. These steps can also be used to set up an investigation protocol now which will allow you to move more nimbly and agilely for any information which comes in through an internal reporting mechanism or more vigilant internal controls you have put in place based upon the bribery schemes. 

As previously noted, FMC met the following mandates under the FCPA Corporate Enforcement Policy, including:

• conducting a thorough internal investigation; 
• making regular factual presentations to the DOJ; 
• providing facts learned during witness interviews; 
• voluntarily making foreign-based employees available for interviews in the US;
• producing documents to the DOJ from foreign countries in ways that did not implicate foreign data privacy laws; 
• collecting, analyzing, and organizing voluminous evidence and information from multiple jurisdictions for the DOJ, including translating key documents; and 
• disclosing conduct to the DOJ that was outside the scope of its initial voluntary self-disclosure

The Order also related that FMC “produced documents, including key document binders and translations as needed, and made current or former employees available to the Commission staff, including those who needed to travel to the United States.”

Clearly the robustness of your investigation is critical. How as a Chief Compliance Officer are you going to insure such steps are taken? The first step is to have a triage protocol in place to quickly and accurately assess the quality of the information which comes in to you. From there you need to get the information to an appropriate level within your organization. Recall here one of the key lessons from the Cognizant Technology Solutions Corporation FCPA enforcement action, where the Board of Directors self-disclosed the FCPA violations within two weeks of being informed. Obviously, someone at the company had to get that information to the Board quickly and with sufficient specificity to enable the Board to act so quickly. 

Beyond your initial intake of information, triage and internal reporting are the steps to preserve documents. Recall one of the areas where FMC was criticized in allowing certain business units to hide and then destroy documents detailing the bribery and corruption. Obviously, such actions were taken at senior levels in the business unit in question. As a CCO you should take steps to protect the data. 

2. Remedial Steps
 

The Policy also requires extensive remediation during the pendency of any investigation. Both the NPA and the Order laid out the remedial steps taken by FMC after the illegal acts were uncovered. The NPA noted the company engaged in the following:

(a) At least ten employees who were involved in or failed to detect the left the company, either through termination, resignation upon after being asked to leave, or they voluntarily departure once the Company’s internal investigation began;

(b) The company enhanced its compliance program, controls, and anti-corruption training; 

(c) The company terminated its business relationships with the third-party agents and distributors who participated in the illegal acts;

(d) Fresenius adopted heightened controls on the selection and use of third parties, to include third party due diligence; and 

(e) The company voluntarily withdrew from participation in pending public contracts potentially related to its illegal acts; and

(f) The Company enhanced, and has committed to continuing to enhance, its compliance program and internal controls, including by taking steps to ensure that its compliance program satisfies the minimum elements set forth in Attachment B to the NPA.

In addition to the foregoing, the Order noted that the company beefed up its compliance function through “enhancements to its internal accounting controls. FMC strengthened its global compliance organization; enhanced its policies and procedures regarding the due diligence process and the use of third parties; created positions to address potential risks; and increased training of employees on anti-bribery issues.”

In mining the FMC FCPA enforcement action, there are many nuggets for the compliance practitioner to study. The actions which allowed FMC to obtain an NPA included both assistance in the investigation and remedial actions to stop the conduct and prevent it from happening in the future. You should study these for your own compliance program as they present significant lessons for every compliance practitioner. 

Part VI – FCPA Enforcement Going Forward

We are at the end of this exploration of the long-awaited Fresenius FCPA enforcement action. I have explored the background, the underlying facts, the bribery schemes used and lessons for the compliance professional from those bribery schemes, the steps the company took which facilitated its steep discount of the eventual penalty paid. We have now had three significant FCPA enforcement actions in 2019; FMC, Cognizant Technology Solutions Corporation (Cognizant) and Mobile TeleSystems PJSC (MTS). All three demonstrated the 2017 FCPA Corporate Enforcement Policy (Policy) at work. 

In a speech to the 33rd Annual ABA National Institute on White Collar Crime Conference last month,  Assistant Attorney General Brian Benczkowski spoke about the Policy. Initially this Policy has led to greater transparency from the DOJ. Benczkowski  said that the DOJ strives “to be open books about which factors we find aggravating, which we find mitigating, and how each is penalized, credited, and ultimately weighed.” Yet it is more than having transparency. It is also about clarity in conveying “the right incentives for responsible corporate behavior” and not simply slapping on fines and penalties “imposed for penalties’ sake.” Finally, it is about fairness as the DOJ “will avoid penalties that disproportionately punish innocent employees, shareholders, customers, and other stakeholders.”

But more than simply all this, is the clarity brought by the Policy and how the DOJ has implemented it. Benczkowski noted that the Policy details “standards for what constitutes voluntary self-disclosure, full cooperation, and timely remediation”. Further, the Policy “fosters transparency about when credit is due, and how we will award that credit.  With that information, companies and their officers will be better equipped to engage in rational decision-making about the steps they should take to qualify for a declination.” He ended this section of his remarks by stating, “At the end of the day, companies that voluntarily self-disclose, take steps to prevent misconduct through robust compliance programs, and take appropriate remedial steps when misconduct is detected should know that they will get a fair shake from the Department.”

A. Fresenius

With no self-disclosure, FMC was not eligible for a Declination. Yet the company did receive a 40% reduction from the minimum of the US Sentencing Guidelines as its criminal penalty. They achieved this reduction through an extensive remediation program and robust cooperation with the DOJ in the investigation, which I have previously highlighted. It not only included the robust nature of the investigation but its assistance to the DOJ. FMC went above and beyond in obtaining and providing documents, securing witness testimony and presenting witnesses to the DOJ and disclosing conduct that was outside the scope of its initial voluntary self-disclosure. In the area of remedial action, the company took swift steps to terminate or separate from employment those directly involved in the bribery schemes, enhancing its internal controls, policies and procedures, upgrading its third-party program and increasing oversight and monitoring.

B. Cognizant Technology

While the FMC FCPA enforcement action did not feature a self-disclosure by the company, the Cognizant FCPA enforcement action did. This self-disclosure was a critical element in the company receiving a full Declination in the face of C-Suite directing the bribery scheme. About that Declination, Benczkowski said, “Notwithstanding the fact that the misconduct reached the highest levels of the company, we declined prosecution. And we have made it clear why: The company voluntarily self-disclosed the conduct within two weeks of when the company’s board learned of it. As a result, the Department was able to identify the culpable individuals – and indeed, we have announced charges against the former president and the former chief legal officer of the company for their alleged involvement in the scheme.”

C. MTS

In the MTS FCPA enforcement action, there were none of the factors present that led to FMC or Cognizant receiving reductions. In applying the Policy factors, MTS did not voluntarily disclose the matter to the DOJ; MTS’s cooperation and remediation was lacking because it was slow to provide information and evidence in response to DOJ requests and MTS failed to discipline senior executives involved in the conduct. The DOJ also noted a mitigating factor included the fact that the Uzbek government expropriated MTS’s telecommunications assets in Uzbekistan, resulting in no realized pecuniary gain to the companies’ telecommunications assets in Uzbekistan. As a result, the DOJ and MTS agreed that MTS would pay a total fine equal to 25% above the bottom of the US Sentencing Guidelines range.

Beyond MTS’ monetary penalty, the company’s wholly owned Uzbek subsidiary pled guilty to conspiracy to violate the FCPA’s anti-bribery and books and records provisions. The DOJ also announced charges against two individuals, the former Uzbek government official Gulnara Karimova and Bekhzod Akhmedov, the former Chief Executive Officer based in Uzbekistan.

There are those who still criticize the DOJ for even developing the Policy or applying it. Such criticism fails to even consider the application of the Policy in practice and therefore does not speak to the compliance aspect of the Policy or even to the compliance professional. For it is in the application of the Policy where the rubber meets the road. One can only conclude from the application of the Policy since its inception in November 2017, through the additions and modifications made to date, it is working. Companies are receiving real benefits just as the DOJ intended.  

Going forward, through this application of the Policy, the DOJ has laid out what companies need to do from the compliance perspective if they find themselves in a FCPA enforcement action.