In any country, paying for travel for government officials, customers at state-owned enterprises, or customers at purely private enterprises can present corruption risks. . . .
Entries in Alliance One International (9)
There's always a danger that an unhealthy corporate practice, even an illegal one, will gain internal acceptance and legitimacy simply because it happens all the time.
The SEC's Office of the Whistleblower (yes, it's real) published its first list of enforcement actions that might be eligible for whistleblower rewards. It includes FCPA-related cases.
An FBI agent told a gathering of international law enforcement officials last week that several U.S. public companies are being investigated for bribery in Indonesia.
Attorney Thomas Fox looks back on 2010's most memorable enforcement actions.
Bobby Jay Elkin Jr., a former country manager in Kyrgyzstan for tobacco company Dimon Inc, now called Alliance One International, was sentenced to just three years' probation a $5,000 fine. He had pleaded guilty in August to a one-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act.
If the DOJ and SEC are prosecuting corporations instead of individuals for FCPA violations -- an idea raised in another post -- the numbers should show it. So let's take a look.
In an unusual tandem settlement, two unrelated U.S. tobacco companies and their foreign subsidiaries today resolved civil and criminal FCPA charges with the SEC and DOJ.
In the criminal cases, two foreign subsidiaries of North Carolina-based Alliance One International Inc. agreed to pay a total of $9.45 million in fines. And a Brazilian subsidiary of Virginia-based Universal Corporation agreed to pay a $4.4 million criminal fine.
Alliance One's Swiss and Kyrgyzstan subsidiaries pleaded guilty in U.S. District Court for the Western District of Virginia to separate three-count criminal informations charging them with conspiring to violate the FCPA and violations of the anti-bribery provisions and books and records provisions of the FCPA.
Universal's Brazilian subsidiary pleaded guilty to a two-count information in the Eastern District of Virginia. It was charged with conspiring to violate the anti-bribery provisions and books and records provisions of the FCPA, and with violating the FCPA's anti-bribery provisions.
The parent companies -- Universal and Alliance One -- entered into non-prosecution agreements with the DOJ and agreed to retain independent monitors for three years. They're cooperating in the ongoing investigations.
In the SEC civil cases, Universal and Alliance One were ordered to pay disgorgement of $4.58 million and $10 million respectively. The SEC charged both companies with violating the FCPA's anti-bribery provisions in Thailand. It also said Alliance One payed bribes in Kyrgyzstan, China, Greece, and Indonesia. And it said Universal made improper payments in Malawi and Mozambique. The SEC's complaints alleged both Universal and Alliance One violated the books and records and internal control provisions of the FCPA.
Alliance One was formed in 2005 with the merger of Dimon Incorporated and Standard Commercial Corporation, both wholesale leaf tobacco merchants. The FCPA violations were committed by employees and agents of foreign subsidiaries of both Dimon and Standard before the merger.
Earlier this week, Bobby Jay Elkin Jr., a former Dimon executive, pleaded guilty to a one-count criminal information charging him with conspiracy to violate the FCPA. Elkin, 50, of Washington, D.C., was Dimon's country manager in Kyrgyzstan. He faces up to five years in prison and a $250,000 fine. His sentencing date hasn't been set.
In April, the SEC brought a civil enforcement action against Elkin and three other former employees of Dimon. It charged them with violating the anti-bribery provisions of the FCPA and aiding and abetting violations. The defendants agreed to settle the charges, with two of them paying $40,000 in penalties. The SEC didn't impose financial penalties on Elkin.
Final sentencing for Alliance One subsidiaries is scheduled for October 21, 2010.
Alliance One International trades on the NYSE under the symbol AOI.
Universal Corporation trades on the NYSE under the symbol UVV.
View the DOJ's August 6, 2010 release here.
View the SEC's Litigation Release No. 21618 and Accounting and Auditing Enforcement Release No. 3170 (both dated August 6, 2010) in Securities and Exchange Commission v. Universal Corporation, Inc., Civil Action No. 01:10-cv-01318 (RWR) (D.D.C.) (filed August 6, 2010) and Securities and Exchange Commission v. Alliance One International Inc., Civil Action No. 01:10-cv-01319 (RMU) (D.D.C.) (filed August 6, 2010) here.
Download the SEC's civil complaint against Universal Corporation here.
Download the SEC's civil complaint against Alliance One International here.
The SEC said today that it brought a civil enforcement action against four former employees of Dimon, Inc., now Alliance One International, Inc. It charged them with violating the anti-bribery provisions of the Foreign Corrupt Practices Act and aiding and abetting violations. The defendants agreed to settle the charges.
From 1996 through 2004, Dimon's subsidiary in Kyrgyzstan paid more than $3 million in bribes to various government officials to purchase Kyrgyz tobacco. Defendant Bobby J. Elkin, Jr., 49, a former country manager for Kyrgyzstan, arranged the bribes through a bank account held under his name called the Special Account.
Another defendant, Baxter J. Myers, 65, a former regional financial director, authorized transfers from a Dimon subsidiary's bank account to the Special Account, and defendant Thomas G. Reynolds, 54, a former corporate controller, recorded the payments made from the Special Account in Dimon's books.
Dimon also paid bribes in a scenario familiar to many western companies operating in high-risk countries. Its office, according to the SEC's civil complaint, was subjected to continuous audits by Kyrgyz tax officials. Some Dimon personnel devoted most of their work hours to answering questions from the tax inspectors. As soon as one audit finished, another would begin. The inspectors were never satisfied. Because Dimon once "failed to submit two reports to the tax office," they imposed a fine of about $171,741 and threatened to seize its bank accounts and tobacco inventory. The tax inspectors later offered to reduce the penalties in exchange for Dimon's cash payment.
Separately, from 2000 to 2003, Dimon paid bribes of about $542,590 to officials of the government-controlled Thailand Tobacco Monopoly in exchange for about $9.4 million in sales contracts. Defendant Tommy L. Williams, 55, a former sales executive, directed tobacco sales from Brazil and Malawi to the Thailand Tobacco Monopoly through Dimon's agent in Thailand. He authorized the payment of bribes to government officials of the Thailand Tobacco Monopoly. These bribes were characterized as commissions paid to Dimon's agent in Thailand.
Defendants Myers and Reynolds agreed to pay civil penalties of $40,000 each. All four defendants also consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B).
Alliance One International, Inc. was formed in May 2005 -- after the offenses described in the SEC's complaint -- with the merger of Dimon and Standard Commercial Corporation. The company trades on the NYSE under the symbol AOI.
View the SEC's April 29, 2010 Litigation Release No. 21509 in Securities and Exchange Commission v. Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams, Civil Action No. 1:10-cv-00661 (RMU) (D.D.C.) (filed April 28, 2010) here.
Download a copy of the SEC civil complaint here.