The International Law Firm of Fulbright & Jaworski - International Trade
Esther R. Quartarone, Mark L. Jensen, Kimberly Hope Caine and J. Scott Maberry
August 11, 2009
Helmerich & Payne Settles FCPA Allegations Relating to South American Payments
Helmerich & Payne Inc. ("H&P"), a publicly traded company based in Tulsa, Oklahoma, entered into agreements with the DOJ and SEC on July 30, 2009 to resolve allegations of FCPA violations for improper payments to customs officials in Argentina and Venezuela. According to publicly available materials, the payments first came to the surface during the implementation of H&P's anti-corruption program, when an employee mentioned them during a training session. An internal investigation ensued, and H&P then voluntarily disclosed the violations to the government.
H&P provides oil drilling equipment and personnel, primarily in the United States and South America. According to a DOJ press release, it acknowledged responsibility for approximately $185,000 in illicit payments to foreign officials by its Argentine and Venezuelan subsidiaries, employees and customs brokers. In return for these payments, local customs officials allowed H&P to import and export goods into those countries that were not in compliance with local regulations, and to reduce duties and taxes on the imported goods. The improper payments were characterized in H&P invoices as "additional assessments," "extra costs," "urgent processing" fees and "customs processing" fees.
H&P agreed with the DOJ to pay a $1 million penalty, implement "rigorous internal controls" and provide continued cooperation to the government for two years. H&P also reached a settlement with the SEC for accounting violations, agreeing to pay $375,000 in disgorgement and prejudgment interest.
The DOJ and the SEC both acknowledged HP's internal investigation and voluntary disclosure as mitigating factors, highlighting once again the benefits of having an internal compliance program that empowers personnel to voice compliance concerns and enables companies to get ahead of potential FCPA violations. Authored by Esther Quartarone.
D.C. Circuit Court of Appeals Allows Court Challenge to Timing of OFAC Agriculture/Medical License Issuance to go Forward
In a recent opinion, the D.C. Court of Appeals ruled on an action by Del Monte Fresh Produce Company to challenge alleged delays by the U.S. Department of Treasury, Office of Foreign Assets Control ("OFAC"), in issuing Agriculture/Medical export licenses for Iran. The D.C. Circuit overturned a District Court ruling that Del Monte's challenge was moot because the company had already received the OFAC license when the District Court heard the case. Calling the case a "classic example" of an issue may be repeated but may evade review, the D.C. Circuit noted that the 1-year limit on Agriculture/Medical licenses would require Del Monte to renew its license repeatedly. The Court remanded the case on the issue of Del Monte's request for a declaratory judgment against OFAC.
The case arose in August 2007 after Del Monte's applied for a one-year license from OFAC to export agricultural commodities to eligible entities in Iran. The license was issued pursuant to the Trade Sanctions and Reform Act of 2000 ("TSRA"), which authorizes exports of certain agricultural commodities, medical devices and medicine to Iran (and to Cuba and Sudan) under specific circumstances. Later that month, the license application was referred to the U.S. Department of State for review, and was returned to OFAC in mid-September without objection. Del Monte was not granted a license until November 29, 2007, a day after it had filed suit seeking a preliminary injunction for the grant of the license. After the license was granted, Del Monte continued the suit to seek a declaratory judgment from the court that OFAC's issuance of the license was unlawfully withheld and unreasonably delayed under the Administrative Procedure Act, which in turn resulted in the hearing before the D.C. Circuit on the issue of mootness.
The ultimate outcome of the case may help to clarify how the logistics of license issuance by OFAC is affected by TSRA. Section 906 of TSRA requires that Agriculture/Medical licenses be "no more restrictive" than license exceptions administered by the Department of Commerce, or general licenses administered by the Department of Treasury. If the Court determines that this language or other TSRA requirements effectively create a deadline for OFAC license issuance, the case could have positive ramifications for companies seeking licenses under OFAC's Agriculture/Medical program. In any event, the Circuit Court's decision to remand the case suggests that OFAC's authority with respect to the time it takes to issue a license may be at least somewhat limited – a finding that could benefit exporters, especially those seeking to export under the Agriculture/Medical program. Authored by Mark Jensen.
DHL's $9.44 Million Settlement Agreement with BIS and OFAC Signals Continued Commitment to Enforcing Sanctions Laws
On August 6, 2009, the U.S. Government announced that it reached a $9.44 million agreement with DHL to settle allegations that the company made hundreds of shipments to Iran, Sudan, and Syria, and failed to meet recordkeeping requirements in violation of U.S. export controls and sanctions laws. This case represents the largest joint settlement involving the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") and the U.S. Department of Commerce's Bureau of Industry and Security ("BIS"). The settlement was reached after a five-and-a-half-year investigation, conducted with the assistance of the U.S. Department of Homeland Security's Customs and Border Protection ("CBP"), which intercepted and reported many of the shipments. To read the entire Alert by Kim Levy and Scott Maberry, please click here.
September 10, 2009: Fulbright will present a webinar entitled "Navigating Cross Border Data Transfers in Accordance with European Data Protection Laws." For more information or to register, please click here.
October 1, 2009: Fulbright partner William Jacobson will speak at the American Conference Institute's "FCPA Boot Camp," which will be held in Miami. For more information or to register, please click here.
October 13, 2009: Fulbright attorneys J. Scott Maberry and Gozie Onyema will facilitate an in-depth roundtable workshop entitled "Best Practices for Compliance with the U.S. Foreign Corrupt Practices Act." For more information, please contact J. Scott Maberry.
October 30, 2009: Fulbright partner J. Scott Maberry will chair a program entitled "It's a Small World: The Internationalization of Government Anti-Bribery Investigations" at the American Bar Association Section of International Law Fall Meeting in Miami. For more information or to register, please click here.
Stay Tuned for the October launch of the new Fulbright Forum!
Esther R. Quartarone
Mark L. Jensen
Kimberly Hope Caine
J. Scott Maberry