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Two Brazilian nationals (the "individuals") and their companies, a global meat producer and its parent company, settled SEC and DOJ charges of violations under the Foreign Corrupt Practices Act ("FCPA").
As described in the Order, the SEC found that the individuals made illicit payments "totaling approximately $150 million for the benefit of then Brazil Finance Minister ("Minister") and various political parties and candidates in Brazil at the request and direction of the Minister." The Minister, in turn, helped the individuals access equity financing to facilitate an acquisition of a U.S. corporation ("the acquired corporation"). The SEC found that the individuals and their companies continued the bribery scheme after the acquisition - unbeknownst to the acquired corporation's management - and commingled their funds with those of the acquired corporation. As a result, the SEC determined that the acquired corporation violated the books, records and internal accounting provisions of the FCPA.
To settle the SEC's charges, the individuals agreed to (i) each pay a $550,000 civil penalty and (ii) cease and desist from future violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder. The meat producer agreed to pay a disgorgement of nearly $27 million. Additionally, the individuals and the companies agreed to cease and desist from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and to an undertaking requiring them to self-report on the status of certain remedial measures for a period of three years.
In a parallel action by the DOJ, the parent company agreed to pay a $256 million criminal monetary penalty for violating the anti-bribery provisions of the FCPA.
Commentary
While the financial penalties the companies agreed to pay the SEC and the DOJ are significant in their own right, this case is also an example of foreign governments' increased willingness to prosecute this kind of misconduct.According to the DOJ press release, the parent company previously entered into a resolution with Brazilian authorities for the same conduct and agreed to pay a fine equivalent to more than $1.4 billion and contribute more than $400 million to social projects in Brazil.
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