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Acquisition May Create Headaches for Merck in Foreign Corruption Probe | BNET

August 13, 2010 By Leave a Comment

Merck (MRK) disclosed in its quarterly 10-Q filing that it is the subject of an investigation by the Department of Justice and the SEC for possible violations of the Foreign Corrupt Practices Act (which prohibits paying bribes to do business in foreign countries). The investigation comes with a bit of unspoken history — and some potential risk created by Merck’s recent acquisition of Schering-Plough.

Merck says “this inquiry is part of a broader review of pharmaceutical industry practice.” That’s true: at least 10 other companies are suspected of doing the same thing, and an 11th — SciClone (SCLN.O) popped up Tuesday.

However, the fuller context is that the letters are more serious than a “review.” A DOJ assistant attorney general warned an assemblage of pharma industry lawyers last year that DOJ “will be intensely focused on rooting out foreign bribery in your industry.” A similar criminal investigation has already led to the imprisonment of one executive at Johnson & Johnson (JNJ) in the U.K., and J&J admitted in its most recent 10-Q that it had violated anti-corruption laws and that investigations are under way in several nations, including the United States.

via Acquisition May Create Headaches for Merck in Foreign Corruption Probe | BNET.

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Apple vulnerable in iTunes antitrust probe – Computerworld

May 28, 2010 By Leave a Comment

Federal antitrust regulators may be able to build a case against Apple over its iTunes business because the company has a dominant share of the U.S. music download market, an antitrust lawyer said today.

The Department of Justice is reportedly in the early stages of an investigation of Apple’s business practices, in part because of a complaint that the company pressured music labels to pull support of Amazon’s “MP3 Daily Deal,” a promotion in which the online retailer received exclusive access to new tracks.

Apple has an estimated 70% share of the U.S. retail digital music download market, significantly larger than Amazon and Wal-Mart, which each account for 12% of all sales.

And the size of Apple’s share matters to the government, said Hillard Sterling, an antitrust attorney at Chicago-based law firm Freeborn & Peters LLP.

“This has much stronger promise than the mobile device case because Apple’s market share in digital music is much more attractive to government regulators,” said Sterling, referring to reports earlier this month that officials at the DOJ and the Federal Trade Commission (FTC) are also looking into Apple’s ban of third-party development tools for creating iPhone software.

“The DOJ seems to be sniffing around for a stronger foundation for an antitrust case,” Sterling said. “And 70% is sufficient market share to raise the specter of a monopoly. It’s a strong indicator to the government.”

via Apple vulnerable in iTunes antitrust probe – Computerworld.

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Senators Pressure DOJ to Take Action Against Oil Spill Companies | National Law Journal

May 25, 2010 By Leave a Comment

Democratic members of a Senate committee examining the Deepwater Horizon oil spill said today that they want the U.S. Department of Justice to throw the book at the companies responsible. Republicans were a little more cautious.

At a hearing this morning, senators urged Associate Attorney General Thomas Perrelli to pursue civil liability against BP, Transocean, and any other companies that could be found at fault. They also repeatedly pushed for criminal investigations of the companies.

“We need to ensure that those harmed by this accident are fully compensated,” said Sen. Jeff Bingaman, D-N.M., chairman of the Senate Committee on Energy and Natural Resources.

Senators expressed frustration with current law, which threatens to cap liability for the Gulf of Mexico spill, beyond clean-up costs, at $75 million. BP has said it will pay all “legitimate claims” associated with the spill, but that has not lessened lawmakers' skepticism.

“Exxon said many of these same things” — after the 1989 Exxon Valdez oil spill — “and then they litigated all the way to the Supreme Court,” said Sen. Robert Menendez, D-N.J. He asked Perrelli about pursuing a written consent agreement with BP.

Perrelli tried to reassure senators, telling them that the $75 million cap might not apply in the case of the Deepwater Horizon, especially if the government has evidence of gross negligence or willful misconduct. He declined to say whether it has such evidence now. “There are many facts to be developed,” he said.

Sen. Byron Dorgan, D-N.D., wondered whether BP's public commitment to pay “legitimate claims” might be used against the company in court. “Is their representation legally binding on them?” Dorgan asked.

“They've certainly made that commitment very publicly,” Perrelli said. “We intend — in a court of law or elsewhere — we certainly intend to have them uphold that commitment.”

At Dorgan's request, Perrelli said the department would consider ways to make BP's assurances legally binding. He also said it would consider ways to stop a planned $1 billion dividend payout to shareholders of drilling-rig owner Transocean, which also faces liability claims.

via Law.com – Senators Pressure DOJ to Take Action Against Oil Spill Companies.

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Foreign Corrupt Practices Act Update | Sheppard Mullin Richter & Hampton LLP – JDSupra

April 29, 2010 By 1 Comment
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The Department of Justice (“DOJ” or “Department”) and the Securities and Exchange Commission (“SEC”) have dramatically stepped up their enforcement of the Foreign Corrupt Practices Act (“FCPA”). Perhaps the most noteworthy development this year was the first ever FCPA sting in which Federal Bureau of Investigations (“FBI”) agents posed as agents representing foreign government officials and solicited bribes from executives in the defense and law enforcement products industry. However, less sensational enforcement efforts—including investigations arising out of industry-wide probes and self-reporting—continue to be a focus for the DOJ and reports of more investigations surface seemingly every week. Most recently it has come to light that Australian natural resources firm, BHP Billiton, is under investigation by the SEC for possible violations of the FCPA, as well as by officials from the United Kingdom for possible corruption stemming from their operations in Cambodia and elsewhere.

via Foreign Corrupt Practices Act Update | Sheppard Mullin Richter & Hampton LLP – JDSupra.

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Look Out! They’re Gonna Get YOU | Law.com

March 18, 2010 By

The heightened focus by the Department of Justice on possible violations of the Foreign Corrupt Practices Act (FCPA) has received much attention from corporate counsel over the last few years — particularly those in-house counsel whose business unit clients conduct business abroad.

The statute was enacted in 1977, but prosecutions were few and far between for nearly three decades. In the last three years, however, the U.S. has prosecuted more FCPA cases than in all previous years combined.

While the substantial uptick in FCPA prosecutions has been well publicized, a new DOJ tactic has arisen: The targeting of individuals (e.g., CEOs, officers, directors, etc.) — in addition to companies — for suspected FCPA violations. Moreover, DOJ is now employing aggressive investigative tools such as the use of undercover agents in targeting individual employees.

On Nov. 17, 2009, the assistant attorney general for DOJ's criminal division, Lanny Breuer, remarked: “[This past year,] we tried more individuals for FCPA violations than in any prior year. And we indicted more individuals than ever before. That is no accident. In fact, prosecution of individuals is a cornerstone of our enforcement strategy.”

DOJ backed up its rhetoric when, on Jan. 19, 2010, 22 executives and employees of companies in the military and law enforcement products industry were indicted for participating in a scheme to bribe a minister of defense in connection with what they believed to be an opportunity to outfit the country's presidential guard. This represented the largest single investigation and prosecution of individuals in the history of DOJ's enforcement of the FCPA.

via Look Out! They’re Gonna Get YOU.

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Mitigating corporate fraud risks in the life sciences and healthcare sectors

February 22, 2010 By Leave a Comment

Over the past 18 months, there has been a noticeable increase in enforcement activity aimed at tackling the growing issue of corporate fraud. The most striking example has been a stricter enforcement of the Foreign Corrupt Practices Act (FCPA) by the US Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI). Furthermore, the Department of Justice (DOJ) announced on several occasions that it will focus its FCPA enforcement on the pharmaceutical and medical device industry. Already, the DOJ has realigned its resources to enable prosecutors of FCPA violations and healthcare fraud to work together and combine their expertise.

Experts suggest there has been a visible increase in the scrutiny of pharmaceutical and biotech companies by both federal and state enforcement agencies since the start of the economic turmoil. Evidenced by the recent rise in civil settlements and criminal fines, governing bodies have been aggressively enforcing the rules and regulations that govern the sector.

“Further evidence of the federal government’s enforcement focus on the industry is illustrated by the increases in budget and personnel resources allocated to combat fraud,” says Michael Koon, a partner at Shook Hardy & Bacon LLP. “For example, the DOJ created a new interagency task force, the Health Care Fraud Prevention and Enforcement Team, or Heat, in 2009.” Heat was specifically formed to increase coordination and optimise criminal and civil enforcement. The DOJ has already credited Heat among other strike forces for their recent healthcare fraud recoveries.

via Mitigating corporate fraud risks in the life sciences and healthcare sectors.

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Nine British companies in US bribery inquiry – Times Online

February 14, 2010 By 1 Comment

Nine British companies are being investigated by American authorities for allegedly paying bribes to win business in overseas markets, according to new research.

The study by Freshfields Bruckhaus Deringer, the UK law firm, will further stoke fears about the growing reach of international regulators.

This month, in one of the biggest corruption cases to date, BAE Systems, the defence contractor, agreed to pay £285 million in fines and to plead guilty to minor accounting violations after it was accused of paying bribes to win defence contracts. The deal brought to an end a six-year investigation led by the US Department of Justice (DOJ) and Britain’s Serious Fraud Office (SFO). BAE has always denied bribery.

Other British companies are also being pursued for allegedly bribing foreign officials.

The DOJ and other leading US regulators are investigating at least 111 companies for suspected bribery in overseas markets, Freshfields said. Of those, 33 are from outside the US, including 9 from Britain.

Multinational companies are being targeted under a US law known as the Foreign Corrupt Practices Act (FCPA), which gives American regulators jurisdiction to pursue foreign companies as long as they conduct some business in the US.

The DOJ and other US regulators handed out a total of $620 million in fines for FCPA violations last year, Freshfields said. That was a seven-fold increase from 2007, when fines stood at $87 million.

via Nine British companies in US bribery inquiry – Times Online.

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