US Regulators Investigate Citigroup, Other MNCs for Corruption
It’s clear that US regulators aren't letting up on enforcing the Foreign Corrupt Practices Act any time soon.
Case in point: this weekend's report that the Securities and Exchange Commission is investigating Citigroup Inc. for possible violations of the FCPA, as well as accounting fraud, relating to bad loans made by its Citi's Mexican subsidiary, Banamex. Reuters reported the investigation on 2 March, citing a source familiar with the situation.
Citibank had said on 28 February that it is forced to restate fourth-quarter and 2013 earnings as a result of about US$400 million in bad loans at Banamex. Citibank's earnings will drop by approximately US$235 million as a result. The banking company said that the fraud was uncovered by its own investigation, triggered when the Mexican government halted contracts made with the borrower.
Reuters reported that the SEC investigation is in early stages, and it has not yet been decided whether the Department of Justice will get involved.
This development is the latest example of what is now several banner years of investigation, fines and settlements from the SEC and the DOJ. In fact, last year saw two of the top ten largest settlements in FCPA history, according to a recent update from lawyers Richard Craig Smith, Paul Edward Sumilas and Kate Hunter, writing in a Norton Rose Fulbright LLP "US Foreign Corrupt Practices Act" update.
Total FCPA-related fines and penalties came in at US$730 million last year, up from US$260 million in 2012, the lawyers wrote.
There are many settlements in the regulatory pipeline.
Currently, companies as varied as Anheuser-Busch InBev, Avon Products, Inc., and JPMorgan Chase & Co. are dealing with investigations and negotiations with regulators, and many other companies are conducting their own internal investigations to uncover wrongdoing and proactively head off regulatory issues.
"Issues of foreign corruption and bribery are likely to be under a very public lens in 2014," lawyers at Baker & Hostetler LLP wrote in their "2013 Year-End Foreign Corrupt Practices Act Update."
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