Partner Scott Wilson Quoted in FCPA Report on SEC Settlements
October 7, 2015
Boies, Schiller & Flexner partner Scott Wilson was quoted extensively by The FCPA Report in two articles on October 7, regarding recent settlements resolving SEC investigations of Hitachi and Hyperdynamics, both under the Foreign Corrupt Practices Act (FCPA).
Hitachi’s $19 million settlement “is yet another example of how U.S. prosecutors will pursue FCPA cases even when the nexus to the United States is limited,” Mr. Wilson was quoted as saying. “Here is a Japanese company making investments through a European subsidiary and a South African subsidiary and there doesn’t seem to be any other touch in the U.S. besides the listing of depository shares on a U.S. exchange,” he said.
Mr. Wilson noted that the SEC’s reliance on South African media reports in its complaint, while highlighting “the open question of how the SEC would be able to prove the alleged foreign political connection in a U.S. court,” also “underscores the need for ongoing diligence and press monitoring in the course of a relationship with a third party so that a company can reevaluate as new facts, or even new allegations, come to light.” Hitachi’s alleged inability to produce a report on its initial due diligence process “may have raised concerns about controls and itself presented a red flag to the SEC,” he added.
Mr. Wilson said that, following the Hitachi settlement, companies should consider extending compliance training to outside vendors: “Training external consultants is probably beyond the curve of what most companies do but may be an emerging best practice.” “When a company does business primarily in a state-owned industry such as public utilities, FCPA training is particularly called for,” he said.
With regard to the SEC’s $75,000 settlement with Hyperdynamics, a Texas oil and gas firm, Mr. Wilson told The FCPA Report that the settlement “highlights that there are anti-corruption compliance risks even for a very small firm,” particularly with respect to engaging in-country consultants. “A small firm shouldn’t be expected to have the same vendor on-boarding process that a large multi-national corporation might,” he noted, “but at the same time a company proceeds at its own peril not to perform any kind of diligence, particularly when dealing with vendors that are going to be interacting with the government.”
For more, see Megan Zwiebel, “Lack of Training and Due Diligence Leads to $19 Million Penalty for Hitachi," and “Remediation, Cooperation and No Bribery Allegations Net Hyperdynamics a $75,000 Civil FCPA Settlement.” The FCPA Report, Vol. 4, No. 20 (Oct. 7, 2015).
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Related Lawyer: Scott R. Wilson
Related Practice: Global Investigations and White Collar Defense