BHP BILLITON PAYS $25 MILLION FOR FAILING TO HAVE ADEQUATE INTERNAL PROCEDURES IN ILLEGAL QUID PRO QUO AGREEMENT WITH FOREIGN GOVERNMENT OFFICIALS.
In 2015, BHP Billiton, the Australian based mining and metal company trading on the New York Stock Exchange, paid $25 million to the Security Exchanges Commission (“SEC”) for violating the Foreign Corrupt Practices Act.
BHP Billiton invited 176 government officials and employees of State-owned enterprises to attend the 2008 Beijing Olympics free of charge. These officials and employees, most of which from African and Asian countries with resources BHP Billiton could exploit, enjoyed four day hospitality packages which included tickets, stays in luxury hotels, and sightseeing excursions and were allowed to bring guests. The total cost of the packages? Between $12,000 and $16,000 each.
The Foreign Corrupt Practices Act prohibits companies that trade on an American stock exchange from bribing foreign officials, including employees of State-owned entities, to obtain business. The Foreign Corrupt Practices Act also requires companies to follow strict accounting principles and have internal controls to prevent violation of the law. The Foreign Corrupt Practices Act rewards whistleblowers up to 30% of the recoveries for submitting complaints to the SEC of Foreign Corrupt Practices Act violations.
In an attempt to appear compliant, BHP Billiton required managers to compete hospitality applications before sending invitations to any foreign official, but failed to have anyone other than the managers actually review the applications or train the managers in compliance. Due to these failures, government officials in current or future negotiations with BHP Billiton for business were sent invitations. According to the Antonia Chion, then the Associate Director of the SEC’s Division of Enforcement:
A ‘check the box’ compliance approach of forms over substance is not enough to comply with the FCPA . . . the company failed to provide adequate training to its employees and did not implement procedures to ensure meaningful preparation, review, and approval of the invitations.
In August, 2016, the Australian Financial Review reported that an Australian whistleblower had been rewarded $3.75 million by the SEC in relation to the BHP Billiton Foreign Corrupt Practices Act violation. This is the first time the SEC has rewarded a whistleblower for reporting violations of the Foreign Corrupt Practices Act. Due to the SEC’s confidentiality enforcement, the identity of the whistleblower is currently unknown.
If you have evidence of an American company bribing foreign officials or engaging in illegal accounting principles, then give us a call today for a free consultation and case review with an experienced whistleblower attorney.
Sources:
http://www.reuters.com/article/us-bhp-billiton-sec-idUSKCN1130WD
