More About Board Turmoil and D & O Risk
A prior D & O Diary post on board turmoil and D & O risk can be found here.
Significant FCPA Enforcement Developments: In the past few days, there have been two significant Foreign Corrupt Practices Act (FCPA) enforcement developments. First, on October 13, 2006, the SEC announced (here) the institution of a settled enforcement action against Statoil ASA, a Norway-based company whose shares are traded on the NYSE. The SEC found that Statoil had paid bribes to an Iranian official in return for his influence to help Statoil obtain contractual development rights to Iranian oil and gas fields. Without admitting or denying the allegations, Statoil agreed to pay disgorgement of $10.5 million In a related criminal proceeding, Statoil agreed to pay an additional $10.5 million penalty as part of a deferred prosecution agreement. ($3 million of the $10.5 million penalty was deemed satisfied by Statoil’s prior penalty payment to Norwegian officials).
On October 16, 2006, Schnitzer Steel Industries agreed to pay $15.2 million resolving an investigation that commenced with the company’s self-reporting of improper payments made between 1999 and 2004 in connection with the company’s operations in China and South Korea. The company’s press release is here. The company’s deferred prosecution agreement requires the company to hire an independent compliance consultant to audit and monitor the company’s operations.
I have frequently posted about the growing risk of FCPA enforcement actions (most recently here). The dollar size of these two recent settlements show the seriousness and magnitude of these actions. The Statoil case shows that both foreign and domestic public companies are subject to the FCAP if their stock trades on American exchanges. And the Schnitzer Steel case shows the growing role of self-reporting as a growing source of increased enforcement activity.
"The Funniest Joke in The World": Watch the Monty Python video here. Read the Wikipedia article here.