DOJ And SEC Extend FCPA Monitorship For Telecom Company
 

On December 14, a multinational telecommunications company headquartered in Stockholm, Sweden (the “Company”), announced it had reached agreement with the U.S. Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) to extend the Company’s independent compliance monitorship by one year, to June 2024.  The agreement to extend the monitor, which had been required under a 2019 resolution with the DOJ, was the result of the DOJ determining that the Company had failed to adequately disclose compliance matters that it had investigated in Iraq.

In December 2019, the Company agreed to pay total penalties of more than $1 billion to both the DOJ and SEC to resolve an investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of an alleged scheme by the Company to bribe officials and improperly record those payments through its subsidiaries in several countries.  The combined resolution included a criminal penalty of over $520 million to DOJ and approximately $540 million to be paid to the SEC.

In announcing the 2019 resolution, the DOJ and SEC alleged that the Company’s subsidiaries orchestrated a bribery scheme, from 2011 to 2017, by funneling payments through third parties to government officials in China, Djibouti, and Saudi Arabia, resulting in the acquisition of business valued at approximately $427 million.  The Company’s subsidiaries allegedly used luxury travel and high-priced entertainment offerings to obtain business relationships with state-owned telecommunication entities.  The Company allegedly followed similar practices in Vietnam, Indonesia, and Kuwait that involved establishing slush funds and fabricating transactions and invoices.

A Company subsidiary in Egypt pleaded guilty in 2019 for its role in the scheme, and the Company entered into a Deferred Prosecution Agreement (DPA) with DOJ.  In announcing the DPA, the DOJ noted that the Company had accepted responsibility.  Under the terms of the agreement, the Company was required to report its remediation and compliance efforts to the DOJ’s Fraud Section and to retain a monitor for a three-year period.

In October 2021, the Company announced that it had received correspondence from the DOJ stating that the Company had breached its obligations under the DPA “by failing to provide certain documents and factual information.”  The Company had stated that it intended to continue cooperating with the DOJ on this issue, and that DOJ has sole discretion under the DPA to determine whether a breach occurred.  On March 2, 2022, the Company provided additional details, including that the DOJ had determined the Company had not sufficiently investigated or disclosed to the DOJ, as required by the DPA, facts related to the Company’s conduct in Iraq between 2011 and 2019.

Finally, on December 14 and 15, 2022, the Company announced an extension of the compliance monitorship program, noting that it welcomes the extension, and that even though the work with the monitor has advanced meaningfully, an extension would allow more time for the Company to implement and thoroughly test its new compliance framework and ensure it is fully embedded across all its markets.  The Company’s experience operating under a prolonged DPA and independent monitorship is not uncommon for large companies that have mandatory reporting requirements, either through regulatory requirements or resolutions with government agencies, and reflects the difficulty compliance officers face in fully investigating and mitigating all alleged violations of corporate policy and law around the world to the satisfaction of U.S. regulators.