T’Was the Week After Christmas: General Cable and Mexico Aviation FCPA Prosecutions
You know this has been a big year in FCPA enforcement when DOJ and the SEC announce two FCPA settlements during the usually sleepy week between Christmas and New Years. And what a year it has been – more to follow in my post-New Years series of postings.
The SEC and DOJ announced a $75 million settlement for FCPA violations with General Cable Corporation, a manufacturer and distributor of cable and wire. General Cable earned approximately $51 million in illegal profits by paying bribes totaling approximately $19 million in Angola, Bangladesh, China, Indonesia and Thailand.
DOJ entered into a non-prosecution agreement (NPA) with General Cable in exchange for payment of a criminal fine of approximately $20.5 million. General Cable self-disclosed the violations, remediated its compliance program and fully cooperated with the investigation. Specifically, General Cable terminated 13 employees and terminated its relationships with 47 third party agents and distributors who participated in the misconduct.
In a related action, the SEC entered into a cease and desist order with General Cable under which General Cable agreed to pay $55 million in disgorgement and prejudgment interest.
General Cable used commission payments, alleged rebates and other mechanisms to make bribery payments to foreign officials. After an internal audit report discovered some questionable payments and expenses, it took General Cable a number of months after that to launch an internal investigation of excessive commission payments made to its agents and distributors.
The bulk of the bribery activity occurred in Angola involving commission payments to distributors and agents. General Cable also made large payments to freight forwarders in other countries that were used to bribe foreign officials.
Mexican Aviation Prosecution
The Justice Department announced the unsealing of criminal indictments against six individuals, each of whom plead guilty for their participation in a scheme to bribe Mexican officials to secure aircraft maintenance and repair contracts with government-owned entities, and two for conspiracy to launder proceeds of the schemes.
Four individuals were charged and plead guilty to bribery and were associated with Hunt Pan Am Aviation. Three of the four individuals served as the General Manager, Director of Maintenance, and the President, respectively. The fourth was an agent for the company.
Two Mexican government officials were indicted and plead guilty to related money laundering charges.
The bribery scheme also involved bribery and kickbacks of private entities for maintenance and repair contracts.
The case was built with the assistance of a cooperating witness who recorded various conversations with the defendants relating to the bribery and kickback scheme.