United States: Ongoing FCPA Litigation


On January 17, 2013, Meng-Lin Liu filed a whistleblower retaliation complaint against Seimens, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Meng-Lin Liu was formerly a compliance officer for Siemens. He alleged that it was Siemens's company policy to circumvent protocols and internal controls required by the FCPA. His complaint alleged that he uncovered serious "red flags" hinting to high risks of corruption in the sale of medical equipment in China and North Korea. He states that Siemens submitted intentionally inflated bids for the medical equipment to public hospitals. He also alleged that he was fired shortly following these disclosures, after the company ignored the high probability of bribery occurring through these transactions. Meng-Lin Liu continued to complain to executives following the firing and subsequently filed a whistleblower complaint with the SEC in 2011.

On February 19, 2013, a federal district court judge in New York City threw out the SEC's civil FCPA enforcement action against former Siemens executive Herbert Steffen, citing a lack of "minimum contacts" required for personal jurisdiction. Honorable Judge Shira Scheindlin cited a lack of geographic ties to the U.S. and poor proficiency in English as reasons for declining personal jurisdiction. The SEC filed charges in 2011 against Steffen, a German citizen, as well as six other Siemens executives. The SEC stated that the executives allegedly paid over $100 million in bribes to government officials in Argentina in order to procure a $1 billion contract for national identity cards. Also, in December 2012, eight former Siemens employees and agents were charged in a U.S. criminal indictment.

On April 16, 2013, a former officer and board member of Siemens AG, Uriel Sharef, settled civil FCPA charges with the SEC. He agreed to a $275,000 civil penalty and was enjoined from further violating the provisions of the FCPA.

Magyar Telekom

On February 8, 2013, a federal district court in New York City denied a motion to dismiss a civil FCPA enforcement action against executives of Magyar Telekom Plc. In December 2011, the SEC brought an action for FCPA violations against Elek Straub, Andras Balogh, and Tamas Morvai. All three defendants are Hungarian citizens and currently reside in Hungary. The suit states that the executives violated the books and records and internal controls provisions of the FCPA. In addition, it states that they knowingly circumvented internal controls, falsified books and records and made false statements to the company's auditor. The SEC is seeking disgorgement and civil penalties.

The motion to dismiss argued that the U.S. lacked personal jurisdiction over the individual defendants, that the SEC's claims are barred by the FCPA's five-year statute of limitations, and that the SEC failed to state a cause of action. Honorable Judge Richard J. Sullivan denied the motion in its entirety. Judge Sullivan ruled that the defendants had enough "minimum contacts" with the U.S. to confer jurisdiction. He based his decision on the activity the executives took on behalf of Magyar, a one-time "issuer" under the FCPA. Judge Sullivan stated that the 5-year statute of limitations had not accrued because the statute specifically requires that the "offender must be physically present in the United States for the statute of limitations to run." The Judge also rejected the argument for motion to dismiss on the basis that the SEC had not established that "foreign officials" actually received the bribes. He concluded that there was no provision within the FCPA that required such proof.

In December 2011, Magyar and its majority owner Deustche Telekom AG agreed to pay a combined $63.9 million criminal penalty to the DOJ to resolve FCPA charges. In addition, Magyar agreed to pay $31.2 million in disgorgement and prejudgment interest to settle civil charges with the SEC.


On January 24, 2013, former Hondutel (Honduran Telecom) Managing Director Mercelo Chimirri was acquitted by the Honduras Supreme Court on charges of bribery, fraud, and abuse of authority. Chimirri was linked to the LatiNode case, where the defendant company pleaded guilty to conspiracy to violate the FCPA. Four executives of LatiNode also pleaded guilty and two received prison sentences. Among the LatiNode admissions were illegal payments totaling $1.9 million to Honduran officials. LatiNode paid a $2 million fine to settle the FCPA charges. In Chimirri's prosecution in Honduras, papers offered by the United States implicating Chimirri were rejected on a technical premise that they violated "legal requirements for international assistance."

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