United States: FCPA Scrutiny Of Nigerian Customs Payments Intensifies - Companies Conducting Business In High-Risk Countries Redouble Compliance Reviews

Originally published 16 July 2007

In the wake of the guilty plea entered by Vetco Grey in February 2007, the US Department of Justice (DOJ) has aggressively intensified its investigation into payment practices of those working through the customs process in Nigeria. While some of these investigations have resulted in public statements by companies under review, the activity has yet to cease.

Companies conducting business in high-risk countries through freight forwarding agents must confirm that all appropriate Foreign Corrupt Practices Act (FCPA) and anti-corruption compliance measures are being taken, particularly with respect to payments to obtain temporary importation permits and other customs and immigration related permits and licenses.

On February 6, 2007, three wholly-owned subsidiaries of the UK company Vetco International Ltd. pled guilty in the United States to violations of the anti-bribery provisions of the FCPA. Two of the three subsidiaries were non-US entities. A fourth Vetco subsidiary, Aibel Group Ltd., entered into a deferred prosecution agreement with the DOJ, requiring cooperation, an enhanced compliance program, and retention of compliance counsel.

The DOJ press release states that Vetco’s "corrupt payments were paid through a major international freight forwarding and customs clearance company … over approximately a two-year period to Nigerian government officials." The papers did not identify the name of the freight forwarding concern.

Subsequent to the Vetco Grey settlement, numerous companies conducting business in Nigeria initiated internal reviews of their use of freight forwarding companies to confirm that they were in compliance with the FCPA. This has resulted in a number of public disclosures of FCPA investigations, and a significant flurry of activity continues.

From April through June 2007, four companies conducting operations in Nigeria and using the services of freight forwarding or customs clearing agents have made public announcements that FCPA investigations have commenced. Each of these four has also announced that disclosures were made to the DOJ and SEC.

The DOJ is likely to investigate any company that contracted with the "major international freight forwarding and customs clearance company" used by Vetco and these other companies. Moreover, as a result of the ripple effect of Vetco Grey’s settlement and the numerous public announcements of FCPA investigations, many companies conducting operations in Nigeria and other high-risk countries are reviewing their FCPA and anti-corruption compliance practices and making appropriate improvements.

Copyright © 2007, Mayer Brown LLP and/or Mayer Brown International LLP. This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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