An often-overlooked provision in the financial reform legislation now before Congress would allow employee whistleblowers to receive a reward of up to 30% of the fines collected by the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”) from corporations who violate the Foreign Corrupt Practices Act (“FCPA”). We have reported in this blog on several occasions the increase in FCPA enforcement by the government in recent years. The passage of a bill containing this proposed whistleblower provision could lead to even more government enforcement, as well as multi-million dollar awards to whistleblowers.
Proposed Whistleblower Provision Could Dramatically Increase FCPA Risk | Sheppard Mullin Richter & Hampton LLP – JDSupra
May 13, 2010 By Leave a Comment
Digi CFO Subramanian Krishnan resigns; investigation launched | StarTribune.com
May 12, 2010 By Leave a Comment
The chief financial officer of Minnetonka-based Digi International Inc. has resigned amid a corporate investigation into possible violations of its gifts, travel and entertainment policy overseas.
Subramanian Krishnan, Digi International’s senior vice president, chief financial officer and treasurer, resigned Friday, the company disclosed Tuesday in a filing with the Securities and Exchange Commission. In its quarterly report, filed Monday, the company disclosed that its audit committee is investigating allegations “regarding possible violations of our gifts, travel and entertainment policy in the Asia-Pacific region by a few employees.”
It said it’s examining internal control issues, “including any possible violations of law, such as the Foreign Corrupt Practices Act” and that it has informed the U.S. Department of Justice and the Securities and Exchange Commission (SEC) about the ongoing probe.
Brenda Mueller, Digi International’s corporate controller, will act as chief financial officer while the company looks for a new one.
via Digi CFO Subramanian Krishnan resigns; investigation launched | StarTribune.com.
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- Digi International Announces Officer Departure (eon.businesswire.com)
- The Sting of Stepped Up Foreign Corrupt Practices Act (FCPA) Enforcement (bulletproofblog.com)
- Foreign Corrupt Practices Act Cases Rise, Fines Mounting (time.com)
Toyota exec warned on defect: We need to come clean | Reuters
April 8, 2010 By
A senior Toyota Motor Corp (7203.T) executive in the United States warned in a January email that the automaker needed to “come clean” on a safety defect that caused accelerator pedals to become stuck open.
The January 16 email from Irv Miller, then Toyota’s top U.S. spokesman, was sent five days before the automaker launched a recall for about 2.3 million vehicle to fix the sticky accelerator pedals.
“We are not protecting our customers by keeping this quiet,” Miller said in his email. “The time to hide on this one is over. We need to come clean.”
A copy of the document was obtained by Reuters on Thursday. Its release comes as Toyota considers whether to appeal a proposed $16.4 million safety fine by U.S. safety regulators.
The email exchange between Miller and a Japanese colleague arguing against responding to media reports of mechanical failures highlights the gap in the level of urgency at the U.S. arm and headquarters — a problem that Toyota later acknowledged contributed to delays in its responses.
The email from Miller, who was about to retire a month later, was one of thousands of pages of internal correspondence collected by U.S. government officials investigating Toyota.
The U.S. Department of Transportation proposed the fine against Toyota — the largest allowed by law — and said that the automaker had knowingly delayed the recall for defective accelerator pedals.
Toyota has two weeks to decide whether to appeal that penalty for the first official finding that the world’s largest automaker violated U.S. safety regulations.
Toyota spokesman Mike Michels said on Thursday that the automaker had not determined its response yet.
The automaker said it would not comment on Miller’s email.
“We have publicly acknowledged on several occasions that the company did a poor job of communicating during the period preceding our recent recalls,” Toyota said in a statement.
via Toyota exec warned on defect: We need to come clean | Reuters.
Data Privacy and Protection – U.S. Mission to The European Union
March 29, 2010 By
U.S., EU Carry Out Passenger Name Record (PNR) Review – Representatives from the U.S. Department of Homeland Security (DHS) and the European Union (EU) held a joint review of the 2007 U.S.-EU Passenger Name Record (PNR) agreement on February 8-9, 2010, in Washington, D.C., says a joint statement issued on February 10. The U.S.-EU PNR agreement sets forth commitments for the processing and transfer of PNR for flights between EU Member States and the United States. During the course of the comprehensive, two-day review, an EU expert delegation led by the European Commission observed first hand how PNR contributes to DHS’s layered approach to border management and aviation security and how DHS handles PNR data. The EU expert delegation will issue a report reflecting its analysis resulting from the two days of site visits and discussions.
via Data Privacy and Protection – U.S. Mission to The European Union.
US top cop says Justice Department using new tools | Reuters
February 26, 2010 By Leave a Comment
The head of the U.S. Department of Justices criminal division told a gathering of criminal defense lawyers on Thursday that the division was using tools “not often seen in white collar cases” to combat financial fraud.
In a speech at a white collar crime conference, Lanny Breuer cited the use of wiretaps in the Galleon hedge fund insider trading case and the use of undercover agents in a recent prosecution of 22 people under the Foreign Corrupt Practices Act FCPA.
“Taken together, these two cases reflect a new chapter in white collar criminal enforcement, one that Im confident has not gone unnoticed by you, or by your clients,” he said.
“Out are the days of resting easy in the belief that only self-reporting or tipsters will bring criminality to light. In are the days of proactive and innovative white collar enforcement.”
Breuer called the FCPA case the largest single prosecution of individuals in the history of the Justice Departments enforcement of the statute, which makes it illegal to pay bribes to secure business abroad.”
Put simply,” he said, “the prospect of significant prison sentences for individuals should make it clear to every corporate executive, every board member, and every sales agent that we will seek to hold you personally accountable for FCPA violations.”
Breuer said the Justice Department would continue to pursue criminal charges against corporations “when the criminal conduct is egregious, pervasive and systemic, or when the corporation fails to implement compliance reforms, changes to its corporate culture, and undertake other measures designed to prevent a recurrence of the criminal conduct.”
via US top cop says Justice Department using new tools | Reuters.
Alcatel-Lucent signs deal with U.S. on bribery case | Reuters
February 19, 2010 By Leave a Comment
Telecoms equipment gear maker Alcatel-Lucent set aside 93 million euros ($125.5 million) last quarter to settle a U.S. bribery investigation that began six years ago.
The Franco-American group said that it had reached agreements with the U.S. Department of Justice and the Securities and Exchange Committee under which it would pay fines, be put on a three-year probationary period, and be subject to a French anti-corruption monitor.
In exchange, the Department of Justice would defer prosecution of the company over charges that it violated the Foreign Corrupt Practices Act's anti-bribery provisions.
The accord must be approved by U.S. courts in order to take effect, according to a February 11 regulatory filing from Alcatel-Lucent.
“If finalized, the agreements would relate to alleged violations of the FCPA involving several countries, including Costa Rica, Taiwan, and Kenya,” said the company in the filing.
The investigation centered on an Alcatel executive Christian Sapsizian who pleaded guilty in 2007 to arranging for bribes to be paid to Costa Rican officials to obtain mobile contracts.
via Alcatel-Lucent signs deal with U.S. on bribery case | Reuters.
Heartland moves to encrypted payment system
January 20, 2010 By Leave a Comment
Responding to its widely reported and massive data breach that took place a year ago, Heartland Payment Systems will be moving to an end-to-end encryption system for payment transactions, according to Chairman and CEO Robert Carr.
“End-to-end encryption is a good way to mitigate the risk of having the kind of compromise that we and hundreds of other companies have had,” Carr said in an interview.
“We're using encryption on the front end to keep card numbers out of our merchants’ systems, and to also have all the card numbers coming through our network be encrypted throughout, except at the point of decryption,” he said.
The company, which handles more than 4 million transactions annually for more than 250,000 merchants, will be using Thales nShield Connect hardware security module along with Voltage Security’s SecureData encryption software as the basis of this capability.
In January 2009, Heartland Payment Systems reported that it found that intruders had penetrated its systems and planted software to harvest card numbers, using SQL injection attacks to plant programs inside the network that would sniff the card numbers.
In August, the U.S. Department of Justice indicted Florida resident Albert Gonzalez for this breach, along with those of several other companies that were attacked. Gonzalez pleaded guilty last month.
DOJ: Kindle in Classroom Hurts Blind Students – PC World
January 13, 2010 By Leave a Comment
Three U.S. universities will stop promoting the use of Amazon.com’s Kindle DX e-book reader in classrooms after complaints that the device doesn’t give blind students equal access to information.
Settlements with Case Western Reserve University in Cleveland, Pace University in New York City and Reed College in Portland, Oregon, were announced Wednesday by the U.S. Department of Justice. The National Federation of the Blind and the American Council of the Blind had complained that use of the Kindle devices discriminates against students with vision problems.
The complaints about the Kindle were based on the Americans with Disabilities Act, which prohibits discrimination on the basis of disability.
The three universities were among six schools participating in an Amazon.com pilot program testing the use of the Kindle DX in classrooms. On Monday, a fourth participating school, Arizona State University, also reached a settlement with the DOJ and the two organizations representing the blind.
via DOJ: Kindle in Classroom Hurts Blind Students – PC World.
Team, Inc. Reports 2nd Quarter Earnings and Affirms Full Year Guidance — ALVIN, Texas, Jan. 5 /PRNewswire-FirstCall/ –
January 5, 2010 By Leave a Comment
As previously reported, the Audit Committee is conducting an independent investigation regarding possible violations of the Foreign Corrupt Practices Act (“FCPA”) in cooperation with the U.S. Department of Justice and the Securities and Exchange Commission. While the investigation is ongoing, management continues to believe that any possible violations of the FCPA are limited in size and scope. The investigation is now expected to be completed during the first calendar quarter of 2010. The total professional costs associated with the investigation are now projected to be about $3.0 million.
SEC Charges California Telecom Company With Bribery And Other FCPA Violations
December 31, 2009 By Leave a Comment
The Securities and Exchange Commission today charged Alameda, Calif.-based telecommunications company UTStarcom, Inc. with violations of the Foreign Corrupt Practices Act (FCPA) for authorizing millions of dollars in unlawful payments to foreign government officials in Asia.
UTStarcom agreed to settle the SEC’s charges and pay a $1.5 million penalty among other remedies. In a related criminal case, the U.S. Department of Justice announced today that UTStarcom agreed to pay an additional $1.5 million fine.
“UTStarcom spent millions of dollars on illegal bribes to win and keep customers in Asia,” said Marc J. Fagel, Director of the SEC’s San Francisco Regional Office. “It is important for corporate America to recognize that resorting to these methods of boosting profits contributes to a culture of corruption that cannot be condoned under U.S. law.”
via SEC Charges California Telecom Company With Bribery And Other FCPA Violations.
