Resource Management Firm Cuts FCPA Fines in Half
The Department of Justice (DOJ) closed its investigation into resource management and drilling company Layne Christensen earlier this week (In the Matter of Layne Christensen Company, Adm. Proc. File No. 3-16216 (October 27, 2014)). The DOJ brought enforcement actions against the company over bribes made to government officials in Mali, Guinea, Burkina Faso, Tanzania and Australia from 2005 to 2010. Layne Christensen allegedly paid out nearly $800,000 in bribes to avoid more than $3 million in taxes and penalities. The company’s actions violated the Exchange Act and Foreign Corrupt Practices Act (FCPA).
The DOJ worked with the Securities and Exchange Commission (SEC) to seek $5.1 million in penalties. However, the firm’s final settlement amounted to about $4 million. Although, the amount was only $1 million less than the DOJ’s final penalty assessment, the settlement amount is reportedly less than half of the DOJ’s original assessment.
According to Layne Christensen’s representation, Stinson Leonard Street, the firm negotiated its discounted settlement through “self-disclosure, exemplary cooperation and significant remediation.” The firm disclosed the illegal behavior to the SEC as soon as it was uncovered in internal audits and investigations.
Layne Christensen’s experience exemplifies how to successfully manage FCPA violations in today’s high-cost regulatory and litigation environment. As other companies uncover similar behavior, it would behoove them to cooperate with the appropriate authorities to save costs and reputations in the long run.