SOCGEN To Pay Over $1 Billion in Penalties over FCPA Violations and Manipulation of Libor Rate
■ ■ ■ June 14, 2018
On June 4, 2018 the U.S. Department of Justice ("DOJ") announced that Société Générale S.A. ("SocGen"), a global financial services institution based in Paris, France and its wholly owned subsidiary agreed to pay penalties of $860 million to resolve foreign bribery charges with U.S. and French authorities, including the Foreign Corrupt Practices Act (FCPA). SocGen also agreed to pay approximately $475 million in regulatory penalties and disgorgement to the Commodity Futures Trading Commission (CFTC) in connection with its practice of manipulating the London InterBank Offered Rate (LIBOR), which resulted in total penalties of over $1 billion.
SocGen admitted that, between 2004 and 2009, it paid bribes to secure 13 investments and one restructuring from Libyan state-owned financial institutions worth around $3.66 billion, all done through a Libyan "broker" that assisted with access to high-ranking Libyan officials. The company's profits from such investments were around $523 million, according to the DOJ.
SocGen's subsidiary plead guilty on June 5, before U.S. District Judge Dora L. Irizarry of the Eastern District of New York, while SocGen agreed to enter into a deferred prosecution agreement in connection with a criminal information charging the company with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of transmitting false commodities reports. The DOJ stated that the main factors underlying the resolution of the case were: (i) failure to voluntarily self-disclose the misconduct to the DOJ; (ii) the seriousness of the misconduct, including the high value of the bribes paid to foreign officials; (iii) the substantial, though not full, cooperation with the DOJ and; (iv) the significant remediation, together with the ongoing monitoring by L'Agence Française Anticorruption.
In addition to the FCPA violations, SocGen admitted to promulgating falsely deflated U.S. Dollar (USD) LIBOR submissions to mask the reality of the company's ability to borrow money at more favorable interest rate, during 2010 and 2011. This scheme was ordered by SocGen's senior executives, who were personally indicted with such violations in separate procedures. The company has a separate agreement with the authorities regarding the LIBOR manipulations.
The U.S. Attorney of the Eastern District of New York and the FBI Special Agent in Charge of the case made strong remarks regarding the U.S. continuous efforts to enforce anti-corruption laws and to assess penalties against corporations to protect markets. The U.S. prosecutors also made clear that the top executives of the companies were responsible for all wrongdoings.
With such record-setting penalties, the DOJ and SEC's aggressive investigation efforts, and increasing international enforcement collaboration, MDO Partners encourages companies to establish and strengthen Anti-Corruption Compliance Programs to mitigate the risks of FCPA violations. Our attorneys and advisors have extensive experience advising clients on the FCPA and effective Anti-Corruption Compliance Programs in over 30 countries.
About MDO Partners
MDO Partners is a boutique law firm that focuses on Corporate, International, and Real Estate Law, as well as Global Compliance and Business Ethics. The firm is comprised of a solid team of attorneys and advisors with more than 100 years of combined experience who are committed to the business goals and best interests of their clients. The firm delivers value-added services of the highest caliber, and serves as a trusted advisor to its clients with a practical and business-savvy approach. For more information on MDO Partners, please visit www.mdopartners.com
If you have questions or comments regarding this Alert, please contact the attorney listed below.
Richard Montes de Oca
Managing Partner
305.704.8452
rmontes@mdopartners.com
