Date Company/Individuals Allegations Settlement October 2006 (company) Late 2007 (Exec. V.P. and CEO) Schnitzer Steel company, Executive Vice President and CEO $200,000 in cash bribes and other gifts (gift certificates and in at least one instance a $2400 watch) to win business in China. Made similar payments in S. Korea. More than $1.8 in bribes and for parties/ gifts in both China and S. Korea. Company $7.7 million to SEC independent compliance consultant/monitor $7.5 million to DOJ E. V.P. $25,000 civil penalty $14,819.38 in bonus $1,312.52 interest ~$40,000 in disgorgement, interest and penalties CEO $169,863.79 disgorgement of excessive bonus December 2007 Lucent Technologies Trips w/out business component (sightseeing) in excess of $10 million. In one instance the company even agreed to pay for a Chinese executive s MBA instead of a trip; the cost of which was approx. $21,000. The company agreed to do so. $1 million criminal fine (SEC) $1.5 million civil penalty (SEC) December 2008 Siemens Aktiengesellschaft More than $9 million worth of study trips by Chinese doctors to win business. Part of a much larger bribery and non-official trips practice. $1.6 billion total (to various agencies world-wide) $350 million disgorgement to the SEC $450 million criminal fine to the DOJ $569 million to the German Office of the Prosecutor General July 2009 (settled) Avery Dennison Kickbacks, sightseeing trips ($4,227 USD for 5 people in 2002) in addition to gifts with an alleged value of $30,000 including 4 pairs of shoes at $125/ each note the low value of this item, but the overall value of all gifts likely an unfavorable factor for the company. $273,213 in disgorgement $45,257 prejudgment interest Books & records + violating internal controls Company did an internal investigation and self-reported. Updated 9/26/2012
Date Company/Individuals Allegations Settlement July 2009 (company) February 2009 to April 2012 (executives) Control Components and numerous senior executives of the company and its subsidiaries Making corrupt payments totaling approximately $6.85 million in thirtysix countries between 1998 and 2007. Benefits given include extensive paidfor vacations by Chinese state-owned enterprise employees to Disneyland, Las Vegas and Hawaii, first class airfare, 5-star hotel accommodations and chartered boats. Also paid for college tuition of children of at least two Chinese state-owned employees. $18.2 million criminal fine 3-year independent compliance monitor with periodic reports to DOJ 3-year organizational probation Continued cooperation with DOJ in further investigation Numerous senior executives also pleaded guilty and await sentencing December 2009 UTStarcom Inc. Travel & gifts. Travel had little or no business component. Details regarding types of gifts in China were not specified; however, the facts disclosed in respect of Thailand included mention of a $600 bottle of wine. $7 million for hundreds of overseas trips. $4 million in executive training trips + cash allowances during the same. Also references to lavish gifts in this section, but without further detail. $1.5 million penalty to the DOJ. $1.5 million penalty to the SEC. Additional compliance obligations. Non-prosecution agreement because of internal investigation and self-reporting. Anti-bribery, books & records and internal controls charges. Additional expenditures and gifts in Thailand and Mongolia. June 2010 Veraz Networks Gifts and improper payments totaling $40,000. At least one supervisor referenced the company s gift scheme, which accounted for $4500 of the $40,000 total. There were additional allegations of bribing a Vietnamese official to win business during the same period. $300,000 penalty Injunction from future violations. Internal controls violations for the bribery and books and records violations. August 2010 Alliance One International, Inc. (the predecessor to the companies that took the actions at issue). Gifts, travel & entertainment expenses. Specific gifts included watches, cameras and laptop computers among other items. $10 million disgorgement to the SEC. The SEC charged substantive violations of the FCPA and books & records charges. Four individuals were charged as well based on their roles in the respective companies. There was also bribery in Asia and other regions of the world. $9.45 million criminal fine to the DOJ. The DOJ brought bribery and conspiracy charges. The individuals paid fines/settlements ranging from $5,000-$40,000.
Date Company/Individuals Allegations Settlement April - December 2010 Daimler AG Systematic gift-giving in various countries including China. In China there were payments disguised as commission, travel for delegations and gifts. $93.6 for Daimler & subsidiaries (criminal fines and penalties). Conspiracy to violate the FCPA and books & records violations. December 2010 RAE Systems Gifts included: a laptop for an executive s child, jade, fur coats, suits, expensive liquor, and kitchen appliances. $1.7 million penalty to the DOJ. DOJ charged internal controls and books & records violations. $1,147,800 disgorgement to the SEC. $109,212 prejudgment interest to the SEC. Ongoing compliance. SEC alleged violations of the anti-bribery and internal controls provisions. March 2011 IBM Allegations of bribes paid to Chinese and South Korean officials. The allegations relating to the Chinese officials included that they were given gifts such as cameras and laptop computers, in addition to travel. May 2011 Rockwell Automation, Inc. Approximately $450,000 worth of leisure travel and non-work sightseeing trips (in addition to bribes). $5.3 million in disgorgement. $2.7 million in prejudgment interest. $2 million civil penalty. SEC $1,771,000 disgorgement. $590,091 prejudgment interest. $400,000 civil penalty (reflecting cooperation and self-reporting). October 2011 Watts Water Technologies, Inc. and Leesen Chang Payments of up to 3% of the contract value to design companies, which resulted in approximately $2.7 million in profits for the Chinese subsidiary. It is unknown how the payments were presented to individuals at the Chinese-based design institutes, but the cease and desist order suggests that some were presented as gifts and entertainment. The payments were accounted for as a portion of the sales agents commissions, and the company recorded them inaccurately as such in its books and records. Watts $2,755,815 disgorgement $820,791 prejudgment interest $200,000 civil money penalty Cease and desist order Mr. Chang $25,000 civil money penalty Cease and desist order The Commission explicitly stated the civil penalty was capped at this level as a result of the company s cooperation. This cooperation included: a world-wide anti-corruption audit, engaging an outside provider to conduct on-going global training, and hiring a Director of Legal Compliance. For comparison, business from this subsidiary accounts for only 1% of Watts gross revenues
March 2012 Biomet Paying bribes to Argentinean, Brazilian and Chinese physicians of public hospitals from 2000 to 2008. Benefits given include paying for 20 Chinese physicians to travel to Barcelona and Valencia, a substantial portion of which was entertainment and sightseeing; another case involved paying for the department head of a Shanghai hospital to travel to Switzerland to visit his daughter. August 2012 Pfizer From 2003 until 2007, Pfizer China paid for international travel and hospitality for doctors of Chinese healthcare institutions in order to boost prescription of Pfizer products. Incentive programs would pay for doctors trips to international conferences if they made certain prescription targets. Cash and other gifts were also given. $5.4 million disgorgement $17.28 million criminal penalty (reflecting extensive efforts of internal investigation, cooperation and remediation) 18-month compliance monitor $26,339,944 disgorgement and prejudgment interests $15 million criminal penalty Reporting to compliance monitor and periodic compliance reports to SEC for two years September 2012 Tyco Chinese subsidiaries paying approximately US$137,000 to third parties who used the funds to purchase gifts for government officials. Employees also submitted expense claims for entertaining health care professionals and false travel itineraries and documentation for trips by government physicians. US$50 million civil penalties (paid as part of entry of civil judgment in 2006) US$10,564,992 disgorgement and US$2,566,517 prejudgment interest US$26 million (of which US$13.68 million was connected with violations in Saudi Arabia) to resolve criminal charges by SEC and DOJ (amount reflects timely and full voluntary disclosure, cooperation and diligent remediation efforts) At least 90 employees and supervisors were terminated as a result of the investigation Ongoing cases: Since 2008 Avon Products Inc. March 2012 shareholder s class action claim alleges, among other things, repeatedly treat[ing] Chinese licensing officials to dinner and karaoke. Since 2012 Qualcomm Providing benefits, including special hiring considerations and gifts, to employees of state-owned enterprises Since 2012 SL Industries Providing gifts and entertainment to government officials Investigation ongoing and discussing with SEC and DOJ on resolution Investigation ongoing and cooperating with SEC and DOJ Investigation ongoing and cooperating with SEC and DOJ
Additional cases of note: December 2010 Allison Transmission This matter stems from gift-giving in China. The plaintiff was the Managing Director for operations in China, Korea and Japan. He refused to engage in or sanction violations of the FCPA and was fired. The plaintiff has alleged that the FCPA violations he witnessed or heard about included gifts of jewelry and individuals who deliberately lost at high stakes poker games. This is a private whistleblower suit because Allison is not a publicly traded company. The suit names the company and two other executives. February/ October 2010 Declination in Q1 2011 CB Richard Ellis Unknown, but conduct appears to have related to small gifts. Exact nature of those is unknown. Internal investigation and self-reporting to DOJ and SEC. Ended with declinations by both agencies very positive outcome for CBRE. April to August 2012 Garth R. Peterson Morgan Stanley Peterson, former head of Morgan Stanley s Shanghai office, arranged to sell, at a discount, stakes in real estate investment to the chairman of a Chinese state-owned enterprise Garth R. Peterson Pleaded guilty and sentenced to 9 months imprisonment $254,589 disgorgement and relinquishment of improperly gained investment interests (estimated value of $3.4 million) Morgan Stanley The DOJ declined to prosecute (reflecting Morgan Stanley s adequate internal controls and extensive compliance efforts)
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