United States: Settlements In Brief: Notable Settlements In July And August

Enforcement actions by criminal and supervisory authorities are settled regularly. In light of these developments, companies are advised to take appropriate measures. This month we highlight some notable settlements that were reached in the US in July and August. The U.S. Department of Justice settled with Louis Berger International Inc., for allegedly having paid bribes to secure government contracts. Banamex USA also settled for not having an effective compliance programme in place. The Securities and Exchange Commission and Mead Johnson Nutrition Co. settled over alleged payments to healthcare professionals at state-owned hospitals. Medical device manufacturer NuVasive paid USD 13.5 million because it allegedly caused health care providers to submit false claims to health care programmes. BNY Mellon settled for USD 14.8 million as it had allegedly hired family members of certain government officials for its highly sought-after internships. The last settlement of USD 92,395 was agreed with a former SAP executive who had allegedly orchestrated a scheme to bribe Panamanian government officials.

Louis Berger International Inc.

The U.S. Department of Justice (DOJ) announced on 17 July 2015 that Louis Berger International Inc. (LBI), a construction management company based in New Jersey, entered into a deferred prosecution agreement (DPA) and agreed to:

  • pay an amount of USD 17.1 million
  • implement rigorous internal controls
  • continue to cooperate fully with the DOJ
  • retain a compliance monitor for at least three years

According to the DOJ, from 1998 through 2010, LBI and its employees – including two former executives – orchestrated USD 3.9 million in bribe payments in India, Indonesia, Vietnam and Kuwait to secure government contracts. LBI and two of its former executives admitted to these violations of the Foreign Corrupt Practices Act (FCPA), the DOJ stated. The former executives will be prosecuted separately.

According to the DOJ, factors in entering into a DPA with LBI included:

  • LBI's self-reporting of the misconduct
  • LBI's cooperation, including voluntarily making both US and foreign employees available for interviews, and collecting, analysing and organising evidence and information for federal investigators
  • LBI's extensive remediation, including terminating the officers and employees responsible for the corrupt payments
  • LBI's demonstrated commitment to improving its compliance programme and internal controls

Banamex USA

On 22 July 2015, Banamex USA, an indirect wholly-owned subsidiary of Citigroup and an affiliate of Banco Nacional de Mexico, entered into a joint consent agreement with the Federal Deposit Insurance Corporation (FDIC) and the California Department of Business Oversight (CDBO). The FDIC and CDBO imposed a fine of USD 140 million on Banamex USA for alleged violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws and regulations.

According to the FDIC, the bank had failed to implement an effective BSA and AML Compliance Program over an extended period of time.

Citigroup said in a statement: "Ensuring a strong and sustainable BSA/AML Compliance Program is an ongoing mission. Citi is committed to devoting the resources and expertise needed to continuously execute a robust and comprehensive program that helps protect the integrity of the financial system."

Mead Johnson Nutrition Co.

Mead Johnson Nutrition Co., a Delaware corporation headquartered in Illinois, agreed on 28 July 2015 to pay USD 12.03 million to settle SEC charges that it had violated the books and records and internal controls provisions of the FCPA.

From 2008 through 2013, several employees of Mead Johnson's majority-owned subsidiary in China, Mead Johnson Nutrition (China) Co., Ltd., allegedly made improper payments, for a total of approximately USD 2 million, to health care professionals at state-owned hospitals to recommend Mead Johnson's nutrition products to, and provide information about, expecting and new mothers. According to the SEC, these payments were made to assist Mead Johnson China in developing its business.

Mead Johnson violated the books and records provisions of the FCPA by failing to properly record the improper payments, the SEC said. According to the SEC, Mead Johnson also did not have an adequate system of internal accounting controls. The company resolved the charges without admitting or denying liability.

NuVasive

On 30 July 2015, medical device manufacturer NuVasive Inc. settled with the DOJ for USD 13.5 million to resolve allegations that the company had promoted the CoRoent System for surgical uses that were not approved or cleared by the U.S. Food and Drug Administration, which caused health care providers to submit false claims to health care programmes.

The settlement also resolves allegations that NuVasive payed kickbacks to induce physicians to use the company's CoRoent System, in violation of the federal Anti-Kickback Statute. The kickbacks consisted of promotional speaker fees, honoraria and expenses relating to physicians' attendance at events sponsored by the Society of Lateral Access Surgery, which was allegedly created, funded and operated solely by NuVasive, despite its outward appearance of independence.

The settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act by a former NuVasive sales representative, who will receive approximately USD 2.2 million.

This settlement illustrates the focus of enforcement authorities on combating health care fraud.

BNY Mellon

On 18 August 2015, the SEC reached a settlement with BNY Mellon for alleged violation of the FCPA by providing valuable student internships to family members of government officials affiliated with a Middle Eastern sovereign wealth fund. BNY Mellon has agreed to pay USD 14.8 million.

During the investigation, the SEC found that BNY Mellon had set aside stringent hiring standards – which require a minimum grade point average and multiple interviews – when evaluating or hiring the family members for its highly sought-after internships programme. The family members were hired via senior BNY Mellon managers without further review by HR, legal or compliance staff, even when they failed to meet the hiring criteria. The SEC's order finds that BNY Mellon lacked sufficient internal controls to prevent and detect the improper hiring practices.

Without admitting or denying the findings, the company agreed to pay USD 8.3 million in disgorgement, USD 1.5 million in prejudgment interest, and a USD 5 million penalty. In setting these amounts, the SEC took the company's remedial action and cooperation with the investigation into account. The SEC commented that it will continue to scrutinise industries that have not been vigilant about compliance with the FCPA.

Former executive SAP SE

The SEC reached a settlement on 18 August 2015 with the former vice-president of global and strategic accounts of worldwide software manufacturer SAP SE. The former VP has agreed to pay USD 92,395 to settle charges that he bribed Panamanian government officials through an intermediary to procure software licence sales.

The SEC found that the former VP had orchestrated a scheme to pay USD 145,000 in bribes to one government official and had promised to pay two others in order to obtain four contracts to sell SAP software to the Panamanian government. He essentially caused SAP, which executes most of its sales through a network of worldwide corporate partners, to sell software to a partner in Panama at discounts of up to 82%. This enabled him to create a slush fund from the earnings on the sales and tap that money to pay the bribes. The former VP also received kickbacks from those earnings into his own bank account.

These acts violated the anti-bribery and internal control provisions of the Securities Exchange Act of 1934. The former VP agreed to pay disgorgement of USD 85,965, which is the total amount of kickbacks he received, plus prejudgment interest of USD 6,430, totalling USD 92,395. In a parallel action, the DOJ announced a criminal suit against him.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.