“Marubeni Gets Hit Again for FCPA Violations – DOJ Says Company Did Not Voluntarily Disclose the Conduct, Refused to Cooperate”

Client Alert by Davis Polk, containing many lessons to be learned regarding FCPA compliance and enforcemnt.(By Paul T. Friedman, Stacey M. Sprenkel and Tiffany A. Rowe)

In a courtroom in New Haven, Connecticut, on March 19, 2014, Marubeni Corporation (Marubeni), a storied Japanese trading company headquartered in Tokyo, pleaded guilty to an eight-count criminal information charging Marubeni with one count of conspiring to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA.The FCPA violations arise from a bribery scheme involving Indonesian officials and a contract to build a major power plant in Indonesia. The criminal fine was $88 million, which was $25 million above the typical low end of the U.S. Sentencing Guideline range applied in many of these cases.

Marubeni has now become one of less than a handful of companies in history to be charged with FCPA violations on more than one occasion.3 Indeed, Marubeni entered into a Deferred Prosecution Agreement (DPA) with the Department of Justice (DOJ) in January 2012 to resolve an investigation into Marubeni’s involvement with the Bonny Island bribery scandal in Nigeria, which included a monetary penalty of $54.6 million.4 Moreover, and in some ways more importantly, Marubeni became one of the rare parent corporations to enter a guilty plea for violating the FCPA’s anti-bribery provisions, which carries with it the greater possibility of significant collateral consequences such as suspension and debarment

DOJ SENDS A MESSAGE

The DOJ’s press release sought to explain why Marubeni was forced both (1) to plead guilty and (2) to pay such an enhanced fine when other companies have not had to do so:

The plea agreement cites Marubeni’s decision not to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.

Underscoring this point, acting Assistant Attorney General Mythili Raman announced, “The company refused to play by the rules, then refused to cooperate with the government’s investigation. Now Marubeni faces the consequences for its crooked business practices in Indonesia.”

An examination of the facts underlying the charges, the jurisdictional basis for the charges, and the status of the broader investigation, highlights the important lessons to be learned from this case, and helps explain the message the DOJ is sending through Marubeni’s guilty plea and fine.

Read the full Client Alert:

http://bdti.mastertree.jp/f/64pl01ik

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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