FCPA Update — the government’s $48m ATM withdrawal: is it time to start sweating again?

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FCPA Update — October 2013: Vol. 5, No. 3 - .PDF file.

On 22 October, Diebold, an Ohio manufacturer of ATMs and bank security systems that is listed on the NYSE, entered into a deferred prosecution agreement with the US Department of Justice and a settlement with the US Securities and Exchange Commission (SEC), agreeing to a $25.2m (£16m) fine and an 18-month monitorship as part of its deferred prosecution agreement and $22.9m in disgorgement and prejudgment interest as part of its SEC settlement.

The Information and the Complaint alleged that Diebold conferred approximately $1.75m in improper travel, entertainment and gifts upon ‘foreign officials’ between 2005 and 2010 in China and Indonesia and an additional approximately $1.2m in bribes to private persons in Russia and the Ukraine during the same period, in violation of the Foreign Corrupt Practices Act’s (FCPA’s) books and records and internal controls provisions.

Although there are significant aggravating factors that might explain imposing $48m in penalties and disgorgement on a company that voluntarily disclosed what are, unfortunately, common improprieties in China, combined with wholly unrelated commercial bribery in Russia, the size of the financial resolution — apart from the substantial burdens of the monitorship — raises questions about future enforcement of the FCPA, as well as the incentives for companies to self-report…

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