Justice Department Settles Gaddafi-Libya FCPA Cases with Société Générale and Legg Mason (Part I of III)

In a one-two punch of FCPA enforcement actions, the Justice Department announced two related FCPA settlements involving Société Générale and Legg Mason for Gaddafi-era bribery payments to Libyan officials.

In the first settlement announced, Société Générale agreed to pay a total of $860 million in criminal penalties, $585 million for FCPA violations and $275 million in a separate investigation for manipulation of London InterBank Offered Rates (LIBOR), the leading benchmark interest rate.  A Société Générale subsidiary plead guilty to FCPA charges.  Société Générale and the Justice Department agreed to a three year Deferred Prosecution Agreement (DPA) that does not include a compliance monitor.

In a related enforcement action, Société Générale reached a settlement with the Parquet National Financier (PNF) and will pay approximately $292 million (equal to 50 percent of the total criminal penalty otherwise payable to the United States).  The Justice Department noted that this is the first coordinated resolution of an anti-corruption case with French authorities.

In the separate LIBOR matter, Société Générale submitted false deflated submissions as part of the LIBOR coordination process and agreed to pay a $275 million civil penalty to the CFTC.  In August 2017, two former Société Générale officers were indicted in the United States for criminal charges arising from the LIBOR scheme.  They have not yet been apprehended.

The next day, Legg Mason, a private equity fund agreed to pay $64 million in criminal penalties and disgorgement as part of a non-prosecution agreement (NPA) for participation in the same Société Générale bribery scheme in Libya.

Société Générale admitted to paying over $90 million in corrupt payments to the Gaddafi government in Libya.  The Gaddafi regime was in power until 2011 and suffered from significant corruption.

Under the Justice Department’s Corporate Enforcement Policy, Société Générale did not receive credit for voluntary disclosure of the companies’ misconduct; the conduct was deemed serious because of the high value of the bribes paid to Libyan officials; Société Générale provided substantial (but not full) cooperation with the Justice Department because it was slow to investigate and cooperate at the early stages of the investigation; and Société Générale implemented significant remediation and is subject to ongoing monitoring by L’Agence Française Anticorruption.  As a result, Société Générale received a 20 percent reduction from the bottom of the applicable sentencing guideline range.

In reaching the NPA with Legg Mason, the Justice Department cited the following factors under its Corporate Enforcement Policy:  Legg Mason did not voluntarily disclose the conduct but fully cooperated in the investigation and instituted remediation.  Additionally, the Justice Department noted that the misconduct in the bribery scheme involved only mid-to-lower level employees of Permal, a subsidiary.  The misconduct was not pervasive in Legg Mason or the subsidiary.  Further, Société Générale, not Legg Mason or Permal, was the primary actor in originating and leading the bribery scheme.  The profits earned by Legg Mason and Permal were less than one-tenth of the profits earned by Société Générale, and neither Legg Mason nor Permal has a history of similar misconduct.  Under these circumstances, the Justice Department awarded Legg Mason a 25 percent reduction in the fine from the lower end of the US sentencing guidelines.

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