Following a flurry of corporate settlements in the final days of the Obama Administration, enforcement of the US Foreign Corrupt Practices Act (FCPA) has been relatively quiet. In the first six months of the Trump Administration, neither the US Department of Justice (DOJ) nor the US Securities and Exchange Commission (SEC) announced new charges against any company or entered into any deferred-prosecution or non-prosecution agreements with respect to FCPA violations. We suspected that the lull in enforcement actions would be short lived, however, as Trump Administration officials were quite open in expressing their commitment to vigorous enforcement of the FCPA. Our suspicions were confirmed in late July, when the SEC announced that it had resolved FCPA charges against Halliburton Company.

New DOJ officials also have extended the FCPA Pilot Program that was unveiled last year. In June, the DOJ announced two new "declinations" under the Program, which rewards companies for voluntary disclosure, cooperation, and remediation. Both declinations were contingent, however, on the companies disgorging profits from the conduct under question.

Meanwhile, criminal FCPA cases against individuals are proceeding apace. Judges recently have imposed prison sentences on defendants who have pleaded guilty to FCPA charges, and a Chinese developer accused of bribing United Nations officials was convicted by a Manhattan federal jury.

On the civil enforcement side, in June the US Supreme Court issued a significant decision in Kokesh v. SEC, holding that a five-year limitations period applies to disgorgement claims brought by the SEC. This ruling is likely to lead the SEC to expedite investigations and expand the use of tolling agreements, among other things.

Outside the United States, other countries are enforcing their own anti-corruption laws, as well as cooperating with US-led investigations. For example, the United Kingdom's Serious Fraud Office (SFO) has announced new charges and expanded investigations under the UK Bribery Act. In addition, Brazil, with its massive "Operation Car Wash" investigation into corruption involving the state-controlled oil company, continues to be a hotbed of enforcement activity. Mexico, for its part, recently implemented new anti-corruption legislation.



SEC Settles FCPA Charges with Halliburton, Former Executive for $29.2 Million

On July 27, 2017, the SEC charged Texas-based Halliburton Company (Halliburton) with violating the books and records and internal accounting controls provisions of the FCPA in connection with winning lucrative oilfield services contracts from Angola's state oil company, Sonangol. According to the SEC, Halliburton made millions of dollars in payments to a local Angolan company owned by a former Halliburton employee who was a friend and neighbor of the Sonangol official responsible for awarding the contracts to Halliburton. Halliburton's contracts with the local Angolan company allegedly were intended to meet local content requirements rather than for the stated scope of work, and Halliburton's selection of and payments to the company allegedly circumvented internal accounting controls.

Without admitting or denying the charges, Halliburton agreed to an order requiring a settlement payment of approximately $29.2 million, including $14 million in disgorgement, $1.2 million in interest, and $14 million in penalties. Halliburton also agreed to the retention of an independent compliance consultant to oversee its anti-corruption policies and procedures in Africa. Without admitting or denying the SEC's claims, Halliburton's former vice president Jeannot Lorenz also agreed to pay a $75,000 penalty to settle charges that he caused the company's violations, circumvented internal accounting controls, and falsified books and records.1

Declinations Continue Under FCPA Pilot Program

On April 5, 2016, the DOJ launched a one-year pilot program in an effort to provide more transparency and consistency to the process of evaluating voluntary self-disclosure, cooperation, and remediation of FCPA violations. Following speculation about whether the DOJ would extend the pilot program under the new administration, Kenneth Blanco, acting assistant attorney general for the DOJ's Criminal Division, confirmed in March 2017 that the pilot program would "continue in full force" while the DOJ evaluates its utility and efficacy.2

The DOJ has issued two declinations under the pilot program so far this year:

  • CDM Smith Inc. (June 21, 2017) – The DOJ issued a declination letter to CDM, a privately held engineering and construction firm. The DOJ alleged that CDM and its wholly owned Indian subsidiary paid approximately $1.18 million in bribes to officials in India's state-owned highway management agency in exchange for highway construction supervision and design and a water project contract resulting in approximately $4 million in net profits. The declination was based on (1) CDM's timely, voluntary self-disclosure of the bribery scheme; (2) CDM's thorough and comprehensive investigation; (3) CDM's full cooperation; (4) CDM's agreement to disgorge to the DOJ all profits from the scheme; (5) CDM's enhancement of its compliance program and controls; and (6) CDM's remediation, including terminating employees involved in the scheme.3
  • Linde North America Inc. (June 16, 2017) – The DOJ issued a declination letter to Linde, an industrial gas supplier. The letter alleged that Linde, through a company it had acquired, paid bribes in the form of shared profits to officials at a Georgian state-owned technology company in exchange for being selected to purchase certain income-producing assets and equipment from the state-owned company. The scheme allegedly resulted in profits to Linde of approximately $1,430,000. The DOJ nevertheless declined to take enforcement action based on (1) Linde's timely, voluntary self-disclosure of the matter; (2) Linde's thorough and comprehensive investigation; (3) Linde's full cooperation; (4) Linde's agreement to disgorge all profits from the scheme; (5) Linde's enhancement of its compliance program and controls; and (6) Linde's remediation, including terminating employees involved in the scheme.4

Additional Declinations Announced This Year

In the first two quarters of 2017, the DOJ and SEC also declined to prosecute or pursue charges in a substantial number of cases not officially linked to the FCPA Pilot Program:

  • IBM Corp. (July 25, 2017) – IBM disclosed in a periodic report filed with the SEC for the second quarter of 2017 that in June 2017 it received letters from the DOJ and SEC closing FCPA investigations without any enforcement action. IBM had notified the SEC in early 2012 that the Polish Central Anti-Corruption Bureau was investigating allegations of illegal activity by a former IBM Poland employee in connection with sales to the Polish government. IBM later learned in 2013 that the DOJ was also investigating allegations related to the Poland matter, as well as allegations relating to transactions in Argentina, Bangladesh, and Ukraine.5
  • Newmont Mining (July 25, 2017) – Newmont, a gold mining company, disclosed that in June 2017 the DOJ issued a declination letter advising the company that it did not intend to recommend an enforcement action in connection with an FCPA investigation involving activities outside the United States. Earlier this year, the company disclosed that in February 2017 it received a declination letter from the SEC.6
  • Platform Specialty Products (May 9, 2017) – Platform Specialty, a chemicals production company, announced the conclusion of an investigation into Arysta, a company Platform Specialty had acquired. Platform Specialty disclosed in SEC filings that the DOJ and SEC had closed their investigations into certain payments Arysta had made to third-party agents related to Arysta's government tender business in West Africa.7
  • Harris Corporation (May 3, 2017) – Harris, a global communications company, disclosed in a quarterly filing that the DOJ declined to take action against the company related to an FCPA investigation arising from Harris' acquisition of CareFx Corp. in 2011. The SEC previously issued a declination to Harris in September 2016, though it brought charges against the former head of CareFx's Chinese subsidiary for giving gifts to Chinese government officials in exchange for $9.6 million in contracts.8
  • Innodata Inc. (March 8, 2017) – In its annual report, Innodata, a global digital services company, disclosed that both the SEC and DOJ had closed investigations into potentially improper payments made by a foreign subsidiary in connection with the inspection of the subsidiary's compliance with local employment-related tax requirements.9
  • Merck & Co., Inc. (February 28, 2017) – In its annual report, Merck disclosed that the SEC recently had closed an FCPA investigation involving, broadly, "activities in a number of countries." The DOJ previously had closed a parallel inquiry.10
  • Crawford & Co. (February 27, 2017) – Crawford, a claims management company, disclosed in its annual report that after having voluntarily self-reported a potential FCPA violation to the SEC and DOJ in 2015, it learned in the first quarter of 2017 that the SEC had concluded its investigation and did not intend to recommend an enforcement action against Crawford.11
  • Cobalt Int'l Energy, Inc. (February 9, 2017) – Having previously received a declination from the SEC in January 2015, Cobalt announced in a press release that the DOJ had closed an FCPA investigation into an alleged connection between senior Angolan government officials and an Angolan company with which Cobalt had partnered.12

Odebrecht S.A. Sentenced to Pay $2.6 Billion Fine by Federal Judge Following Reduction Based on Analysis of Ability to Pay

On April 17, 2017, Judge Raymond Dearie of the United States District Court for the Eastern District of New York sentenced Brazil-based construction company Odebrecht S.A. (Odebrecht) to pay a criminal fine totaling $2.6 billion for conspiring to violate the anti-bribery provisions of the FCPA, with $93 million of that amount going to the United States, $2.39 billion going to Brazil, and $116 million going to Switzerland.13

In December 2016, both Odebrecht and its US-based petrochemical unit, Braskem S.A., pled guilty to conspiracy to violate the anti-bribery provisions of the FCPA.14 According to the DOJ, Odebrecht paid approximately $788 million in bribes to government officials in 12 countries through a network of shell companies, off-book transactions, and off-shore bank accounts to win business during a period of more than 15 years.15 To resolve the charges, Braskem entered into a plea agreement in which the company agreed to a total criminal penalty of $632 million,16 while Odebrecht agreed to a $4.5 billion global settlement with US, Brazilian, and Swiss authorities. Odebrecht represented, however, that it was only able to pay approximately $2.6 billion in criminal fines. As part of the settlement agreement, the DOJ and Brazilian authorities were required to analyze Odebrecht's ability to pay and report to the court. Following this analysis, the DOJ requested that Judge Dearie reduce Odebrecht's criminal penalty.17

Odebrecht and Braskem both settled with the Ministerio Publico Federal in Brazil and the Office of the Attorney General in Switzerland. Braskem, whose American Depositary Receipts (ADRs) are publicly traded on the New York Stock Exchange, settled with the SEC as well.18

Six Companies Reach Settlements in January 2017 Before New Administration Took Office

Rolls-Royce Enters Settlement with US, UK, and Brazilian Authorities to Resolve Global Bribery Probe

In January 2017, UK-based engineering company Rolls-Royce plc (Rolls-Royce) agreed to pay the DOJ $169.9 million in criminal penalties as part of the company's $800 million global settlement with US, UK, and Brazilian authorities.19 The global settlement resolved allegations of criminal conduct connected with a three-decade long, worldwide scheme to bribe government officials in exchange for government contracts in multiple jurisdictions that involved three Rolls-Royce business sectors. Rolls-Royce also agreed to pay more than $600 million to the UK's Serious Fraud Office (SFO), making this the UK's most significant criminal enforcement action against a company; Rolls-Royce further agreed to pay more than $25 million to Brazil's Ministério Público Federal (MPF).20

Under the terms of its DPA with DOJ, which was filed under seal on December 20, 2016, but not made public until January 17, 2017, Rolls-Royce agreed to pay the criminal penalties and continue to cooperate fully with the department's ongoing investigation, including DOJ's investigation of individuals.21 As part of its DPA, Rolls-Royce admitted that, between 2000 and 2013, it conspired to violate the FCPA by paying more than $35 million in bribes through third parties to foreign officials in various countries in exchange for those officials' assistance in providing confidential information and awarding contracts to Rolls-Royce and affiliated entities.22 In connection with its resolution with SFO, Rolls-Royce also admitted to paying other bribes or failing to prevent bribery in multiple jurisdictions from 1989 to 2013. Rolls-Royce's improper conduct transpired in Azerbaijan, Angola, Brazil, China, Kazakhstan, India, Indonesia, Iraq, Malaysia, Nigeria, Russia, and Thailand.23

Las Vegas Sands Pays $7 Million in Criminal Penalties to the DOJ

On January 19, 2017, the DOJ announced that Las Vegas Sands Corporation (LVSC) agreed to an NPA requiring the payment of nearly $7 million in criminal penalties to resolve FCPA charges.24 LVSC admitted that, between 2006 and 2009, its Macao- and China-based subsidiaries paid approximately $60 million to a Chinese consultant, more than $5 million of which was allegedly without any discernible legitimate business purpose.25 Senior executives were repeatedly warned about the consultant's dubious business practices and the high-risk nature of the transactions by an employee and LVSC's outside auditor, yet continued to engage the consultant without conducting enhanced due diligence or taking other risk-appropriate precautions.26

According to the NPA, LVSC received a 25-percent reduction off the bottom of the applicable US Sentencing Guidelines fine range in light of its thorough internal investigation, full cooperation, and extensive remedial measures.27 This DOJ settlement follows LSVC's payment of approximately $9 million in April 2016 to resolve related charges in an SEC administrative proceeding.28

Orthofix Self-Reports, Resolves FCPA Violations with the SEC

On January 18, 2017, Texas-headquartered medical device company Orthofix International N.V. (Orthofix) agreed to pay more than $6 million in disgorgement, prejudgment interest, and civil penalties to resolve FCPA books and records and internal control charges through an SEC administrative proceeding.29 The SEC alleged that, from at least 2011 to 2013, Orthofix's Brazilian subsidiary made improper payments to doctors employed by government hospitals through third-party commercial representatives and distributors by paying false invoices and providing high discounts to induce the doctors to use Orthofix's products.30 As a part of its settlement, Orthofix also agreed to comply with certain undertakings, including retaining an independent FCPA consultant for a period of one year.31

Orthofix self-reported the misconduct at its Brazilian subsidiary as a part of its obligations under its prior $5.2 million SEC settlement in 2012 relating to FCPA violations at its Mexican subsidiary,32 and for which it also paid the DOJ $2.2 million to settle related charges.33

Chilean Chemicals and Mining Company Settles with DOJ and SEC for Total of $30 Million

On January 13, 2017, chemicals and mining company Sociedad Química y Minera de Chile, S.A. (SQM) agreed to pay a $15.5 million criminal fine and to be subject to independent corporate compliance monitoring for two years as part of a three-year DPA that it entered into with DOJ.34 From 2008 to 2015, SQM made donations to dozens of foundations controlled by or closely tied to Chilean politicians, including an official with influence over the government's mining plans in Chile, a key segment of SQM's business.

The company admitted that it knowingly failed to implement internal controls to ensure that payments from a fund under the control of one of its officers were made for services that SQM received.35 SQM also admitted to falsifying its books and records to conceal payments to vendors associated with Chilean politicians. These payments were fraudulently logged as payments for consulting and professional services. In total, SQM paid vendors close to $15 million "despite having no evidence any goods or services were actually received."36 In a related matter, SQM also reached a settlement with the SEC on January 13, 2017, pursuant to which it consented to a cease-and-desist order requiring it to pay a $15 million civil penalty for alleged violations of the FCPA's books and records and internal controls provisions.37

Zimmer Biomet Breaches 2012 Deferred Prosecution Agreement, Agrees to Pay $30 Million

On January 12, 2017, medical device company Zimmer Biomet Holdings Inc. (Zimmer Biomet) agreed to pay more than $30 million to resolve DOJ and SEC investigations into the company's repeated violations of the FCPA. Zimmer Biomet paid a criminal fine of $17.4 million and civil penalties and disgorgement of $13 million for violating the FCPA's internal control provisions with respect to the company's operations in Mexico and Brazil between 2010 and 2013.38 According to the DOJ, even after the 2012 DPA, the company knowingly and willfully continued to use a third-party distributor in Brazil known to have previously paid bribes to government officials on Zimmer Biomet's behalf. Zimmer Biomet "also failed to implement an adequate system of internal accounting controls at the company's subsidiary in Mexico, despite employees and executives having been made aware of red flags suggesting that bribes were being paid."39 The DOJ and the SEC determined that this misconduct breached a 2012 DPA with DOJ "resolving an earlier investigation into FCPA violations committed by Biomet, Inc., which became part of Zimmer Biomet in 2015."40 Zimmer Biomet previously resolved these FCPA offenses by, among other things, paying DOJ and the SEC a total of close to $23 million in monetary sanctions.

Mondelēz Pays $13 Million to Resolve FCPA Charges Relating to Indian Subsidiary

On January 6, 2017, US-based food and beverage manufacturer Mondelēz International Inc. (Mondelēz), along with its subsidiary Cadbury Limited (Cadbury), entered into an administrative cease-and-desist order with the SEC, agreeing to pay $13 million in sanctions to resolve internal controls and books and records charges relating to the conduct of Cadbury's Indian subsidiary, Cadbury India Limited (Cadbury India).41

The SEC alleged that in 2010, Cadbury India failed to conduct appropriate due diligence on, and monitor the activities of, an agent who was retained to obtain licenses and approvals for a chocolate factory in Baddi, India. The agent allegedly submitted invoices and was paid in cash for, among other things, preparing licenses that Cadbury India employees had prepared. Thus, according to the SEC, Cadbury India's books and records did not accurately reflect the nature of services rendered by the agent, and that Cadbury failed to implement adequate FCPA controls at Cadbury India. Mondelēz and Cadbury neither admitted nor denied the SEC's findings.42

While the SEC noted that Mondelēz failed to identify the relationship between the agent and Cadbury India in connection with its acquisition of Cadbury in 2010, the SEC also noted that Mondelēz conducted an internal investigation and terminated the relationship with the agent, cooperated with the SEC's investigation, and undertook extensive remedial actions with respect to Cadbury and Cadbury India.43

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1. Press Release, SEC, Halliburton Paying $29.2 Million to Settle FCPA Violations (July 27, 2017).

2. Acting Assistant Attorney General Kenneth A. Blanco, Remarks at the American Bar Association National Institute on White Collar Crime (Mar. 10, 2017); see also Acting Principal Deputy Assistant Attorney General Trevor N. McFadden, Remarks at Anti-Corruption, Expert Controls & Sanctions 10th Compliance Summit (Apr. 18, 2017).

3. Letter from FCPA Unit, Fraud Section, DOJ to counsel for CDM Smith Inc. (June 21, 2017).

4. Letter from DOJ to counsel for Linde North America Inc. (June 16, 2017).

5. IBM Corp., Quarterly Report (Form 10-Q), at 44 (July 25, 2017).

6. Newmont Mining Corp., Quarterly Report (Form 10-Q), at 47 (July 25, 2017); Newmont Mining Corp., Quarterly Report (Form 10-Q), at 42 (Apr. 24, 2017).

7. Platform Specialty Products Corp., Quarterly Report (Form 10-Q), at 31 (May 9, 2017); Platform Specialty Products Corp., Annual Report (Form 10-K), at 26 (Mar. 13, 2017).

8. Harris Corp., Quarterly Report (Form 10-Q), at 22 (May 3, 2017); see also Press Release, SEC, SEC Charges Former Information Technology Executive with FCPA Violations; Former Employer Not Charged Due to Cooperation with SEC (Sept. 12, 2016).

9. Innodata Inc., Annual Report (Form 10-K), at 29 (Mar. 8, 2017).

10. Merck & Co., Annual Report (Form 10-K), at 103 (Feb. 28, 2017).

11. Crawford & Co., Annual Report (Form 10-K), at 97 (Feb. 27, 2017).

12. Press Release, Cobalt Int'l Energy, Cobalt Announces Closing of DOJ Investigation (Feb. 9, 2017).

13. See Judgment, United States v. Odebrecht S.A., No. 16-cr-00643 (E.D.N.Y. Apr. 17, 2017), Dkt. Entry 17.

14. Press Release, DOJ, Odebrecht and Braskem Plead Guilty and Agree to Pay at Least $3.5 Billion in Global Penalties to Resolve Largest Foreign Bribery Case in History (Dec. 21, 2016) {hereinafter "Odebrecht & Braskem Press Release"}.

15. See Information, United States v. Odebrecht S.A., No. 16-cr-00643 (E.D.N.Y. Dec. 21, 2016), Dkt. Entry 1; Information, United States v. Braskem S.A., No. 16-cr-00644 (E.D.N.Y. Dec. 21, 2016), Dkt. Entry 1.

16. See Plea Agreement at 16-17, United States v. Odebrecht S.A., No. 16-cr-00643 (E.D.N.Y. Dec. 21, 2016), Dkt. Entry 2.

17. Id.; see also Sentencing Memorandum, United States v. Odebrecht S.A., No. 16-cr-00643 (E.D.N.Y. Apr. 11, 2017), Dkt. Entry 15.

18. Odebrecht & Braskem Press Release, supra note 14.

19. See Press Release, DOJ, Rolls-Royce plc Agrees to Pay $170 Million Criminal Penalty to Resolve Foreign Corrupt Practices Act Case (Jan. 17, 2017) {hereinafter "DOJ Rolls-Royce Press Release"}.

20. See News Release, SFO, SFO completes £497.25m Deferred Prosecution Agreement with Rolls-Royce PLC (Jan. 17, 2017) {hereinafter "SFO Rolls-Royce News Release"}.

21. See Deferred Prosecution Agreement at 1–6, United States v. Rolls-Royce plc, No. 2:16-cr-00247 (S.D. Ohio, Dec. 20, 2016), Dkt. Entry 4.

22. See DOJ Rolls-Royce Press Release, supra note 19.

23. See SFO Rolls-Royce News Release, supra note 20.

24. Press Release, DOJ, Las Vegas Sands Corporation Agrees to Pay Nearly $7 Million Penalty to Resolve FCPA Charges Related to China and Macao (Jan. 19, 2017).

25. Letter from Andrew Weissmann, Chief, Fraud Sec., Crim. Div., DOJ to Counsel to Las Vegas Sands Corp. (Jan. 17, 2017).

26. Id.

27. Id.

28. Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, In the Matter of Las Vegas Sands Corp., File No. 3-17204 (Apr. 7, 2016). For further discussion of the SEC settlement, see Arnold & Porter Kaye Scholer Newsletter, Global Anti-Corruption Insights: Summer 2016.

29. Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order, In the Matter of Orthofix International N.V., File No. 3-7800 (Jan. 18, 2017).

30. Id. at 4-5.

31. Id. at 8-9.

32. Id. at 3, 6; see also Press Release, SEC, SEC Charges Orthofix International with FCPA Violations (July 10, 2012).

33. See Deferred Prosecution Agreement, United States v. Orthofix International, N.V., No. 4:12-CR-00150 (E.D. Tex. July 10, 2012).

34. See Deferred Prosecution Agreement, at 4, 8, United States v. Sociedad Química y Minera de Chile, S.A., No. 1:17-cr-00013 (D.D.C., Jan. 13, 2017), Dkt. Entry 2.

35. See Press Release, DOJ, Chilean Chemicals and Mining Company Agrees to Pay More Than $15 Million to Resolve Foreign Corrupt Practices Act Charges (Jan. 13, 2017).

36. Id.

37. See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order, at 8, In the Matter of Sociedad Química y Minera de Chile, S.A. File No. 3-17774 (Jan. 13, 2017).

38. See Press Release, DOJ, Zimmer Biomet Holdings Inc. Agrees to Pay $17.4 Million to Resolve Foreign Corrupt Practices Act Charges (Jan. 12, 2017) {hereinafter "DOJ Zimmer Biomet Press Release"}; Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, at 11, In the Matter of Biomet, Inc., File No. 3-17771 (Jan. 12, 2017).

39. DOJ Zimmer Biomet Press Release, supra note 38. 40.


41. Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Cease-and-Desist Orders and a Civil Penalty, In the Matter of Cadbury Limited and Mondelēz International, Inc., File No. 3-17759 (Jan. 6, 2017).

42. Id.

43. Id. at 4.

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