In January 2010, the SEC announced "a series of measures to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency’s investigations and enforcement actions." One of those measures included the use of Deferred Prosecution Agreements ("DPA"). On Tuesday May 17, the SEC announced that it has entered into its first such agreement, settling an FCPA matter with Tenaris S.A., a global manufacturer of steel pipes. In announcing the settlement, the Commission provided some guidance as to what cooperation was provided by Tenaris in order to earn such the first DPA.
The SEC alleges that Tenaris violated the FCPA by bribing government officials in Uzbekistan to secure contracts to supply pipelines for transporting oil and natural gas, making nearly $5 million in profits. Under the terms of the DPA, the SEC will not bring a civil action against Tenaris for these violations if the company complies with certain undertakings for a two-year period, including the payment of $5.4 million in disgorgement and prejudgment interest. Tenaris also entered into a Non-Prosecution Agreement with the Department of Justice, (announced on Tuesday, as well) and agreed to pay a $3.5 million criminal penalty.
The SEC’s January 2010 announcement this measure described DPAs as "[f]ormal written agreements in which the Commission agrees to forego an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and to comply with express prohibitions and undertakings during a period of deferred prosecution." The Tenaris settlement provides some insight into what steps a company must take in order to secure a DPA.
In 2009, Tenaris announced that it had learned from one of its customers in Central Asia that certain sales agency payments made by one of the Company’s subsidiaries may have improperly benefited employees of the customer and other persons, potentially in violation of the U.S. [FCPA]. The audit committee of the Company’s board of directors engaged external counsel in connection with a review of these payments and related matters. The Company voluntarily notified the SEC and the DOJ, shared the results of the audit committee’s review with the SEC and the DOJ, and cooperated in the investigations conducted by the SEC and the DOJ.
In addition to those actions, the steps taken by Tenaris in entering into the DPA included:
• reviewing its controls and compliance measures and significantly enhancing its anti-corruption policies and practices;
• producing all non-privileged documents, information, and other materials to the Commission when requested;
• using its best efforts to secure the full, truthful, and continuing cooperation of current and former directors, officers, employees and agents, including making these persons available for interviews and testimony when requested; and
• testifying at trial and other judicial proceedings, when requested to do so by the SEC.