By: Cheryl Palmeri
On May 29, 2013, Total, S.A. (Total), the French petroleum corporation, agreed to pay nearly $400 million to resolve charges that it violated the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act (FCPA). Collectively, the penalties imposed by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) against Total mark one of the largest settlement amounts yet under the FCPA.
The U.S. government asserted jurisdiction over Total based on its status as an issuer of American Depository Receipts traded on the New York Stock Exchange. According to the charging documents, between 1995 and 2004, Total paid approximately $60 million in bribes through intermediaries for the purpose of inducing an Iranian official to use his influence to assist Total to obtain and retain oil rights in the Sirri A and E and South Pars oil and gas fields. Total also allegedly mischaracterized the unlawful payments as “business development expenses” and improperly characterized the unlawful consulting agreements as legitimate on its books and records.
The $245.2 million penalty imposed by the DOJ was on the low end of the Sentencing Guidelines fine range. Among the factors the DOJ considered in reaching this amount were a related French criminal investigation into the same conduct (and, presumably, the DOJ’s assumption that the French government may also impose a significant monetary penalty against Total); evidentiary challenges, because the majority of the conduct occurred in the 1990s and early 2000s, i.e., outside the statute of limitations; and Total’s cooperation in the investigation and disclosure of the results of its internal investigation into the alleged misconduct.
In addition to the financial penalty, Total agreed to implement a compliance and ethics program designed to prevent and detect violations of the FCPA and other applicable anti-corruption laws, further review its existing internal controls, and retain a corporate compliance monitor for three years.
The Total settlement underscores a number of recent trends in FCPA enforcement. In particular, the settlement reiterates the U.S. government’s willingness to broadly assert jurisdiction to reach foreign companies with minimal U.S. contacts and to bring conspiracy charges against companies that use agents to pay illicit bribes. It also represents the first coordinated action by U.S. and French authorities to investigate and prosecute a major foreign bribery case.
Also notable is that the settlement involves alleged bribes paid in Iran. In the same week that the Total settlement was made public, the U.S. government imposed yet more sanctions on Iran and, specifically, companies around the world deemed to be front companies for the Iranian government. This may be a coincidence, but it is nonetheless interesting to contemplate the possibility of the FCPA being used as a tool of foreign policy, especially with respect to companies continuing to conduct business in Iran.