June 19, 2019

June 19, 2019

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June 18, 2019

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June 17, 2019

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DOJ Breaks its Silence in 2015 FCPA Enforcement

Last week, the DOJ announced its first corporate enforcement action under the Foreign Corrupt Practice Act (“FCPA”) for 2015. IAP World Services, Inc., a Florida-based defense and government contractor, agreed to pay $7.1 million in a non-prosecution agreement (NPA) for conspiring to bribe Kuwaiti officials in exchange for a contract to build a large-scale homeland surveillance system in Kuwait. The primary employee involved, James Rama, pleaded guilty to one count of conspiracy to violate the FCPA. (see here for criminal information and here for plea agreement). Fresh off the heels of the announcement that the DOJ has declined to prosecute Petro Tiger (only the second publicly-acknowledged declination of its kind), the IAP settlement is the first significant case from the DOJ in a year where FCPA enforcement has thus far been dominated by the SEC.

According to the NPA, Kuwait’s Ministry of the Interior started a homeland security project in 2004, which was divided into two phases. Rama and others allegedly created a shell company, Ramaco, which bid on and won the Phase I contract. Rama and IAP allegedly designated half of the approximately $4 million Ramaco received from the Phase I contract to bribe Kuwaiti officials through a consultant to assist IAP in gaining the lucrative Phase II contract.

In addition to the $7.1 million penalty, IAP has agreed to address deficiencies in its anti-corruption internal controls, compliance code, policies and procedures. Specifically, IAP has agreed to implement, among other things: (i) a comprehensive set of policies and procedures covering several types of potentially suspect payments; (ii) training programs; (iii) periodic risk-based reviews and other monitoring and testing; (iv) internal reporting mechanisms; and (v) accurate accounting, recordkeeping and internal reporting. The company also conducted an internal investigation, disciplined the officers and employees responsible, and going forward will subject proposals for relevant IAP contracts to a heightened review. Rama is to be sentenced in September.

To minimize FCPA risk, companies should adopt and enforce a robust anti-corruption compliance regime, including policies covering high risk payments, training programs, internal reporting mechanisms, and appropriate disciplinary measures. Companies need to be diligent in monitoring their and their agents’ interactions with foreign officials.

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Special thanks to Proskauer summer associate Kelly Curtis for her contributions to this post.

© 2019 Proskauer Rose LLP.

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About this Author

Sigal P. Mandelker, White Collar Defense Attorney, Proskauer Law Firm
Partner

Sigal Mandelker is a Partner in the New York office. She is a member of the firm’s White Collar Defense & Investigations, Appellate, International Practice, and Privacy Groups. Sigal represents individual and corporate clients in connection with government investigations and prosecutions, including white collar criminal defense, the FCPA, anti-money laundering matters, SEC and related enforcement matters, internal investigations, public corruption, and cyber security. She has a broad range of experience in domestic and international enforcement matters, appellate litigation,...

212-969-3360
Tracey L Silver, Litigation Attorney, Proskauer Law Firm
Associate

Tracey L. Silver is an associate in the Labor & Employment Department and a member of the firm’s Employment Litigation & Arbitration Group.

Prior to joining Proskauer, Tracey was a judicial extern for the Honorable Frances Rothschild, Presiding Justice of Division One of the Court of Appeal, Second Appellate District.

310-284-4535
Phillip J. Caraballo-Garrison, Litigation Attorney, Proskauer Law Firm
Associate

Phil Caraballo is a senior Associate in the Litigation Department, resident in the New York office, where he also represents the Litigation Department on the Associate Council. His practice focuses on white collar criminal defense and corporate investigations, appellate litigation, and complex civil litigation at both the state and federal levels.

As a member of the White Collar Defense & Investigations Group, Phil represents clients in prosecutions involving a broad array of federal and state crimes, including insider trading, racketeering...

212-969-3382