BHP Billiton To Pay SEC $25M For FCPA Bribery Violations for inviting and paying for foreign government officials to attend the Beijing Olympics - Foreign companies with US stock listings beware of the reach of the FCPA
20th May 2015
BHP Billiton, an Australian-based global resources company, whose ADR shares are also listed on the NYSE, agreed to pay $25 million to settle a charge by the U.S. Securities and Exchange Commission (SEC) that it violated the Foreign Corrupt Practices Act (FCPA) relating to its sponsorship of various foreign government officials at the 2008 Beijing Summer Olympic Games.
The SEC stated in its press release and Settlement Order that BHP Billiton invited 176 government officials and employees of state-owned enterprises, primarily from Africa and Asia, to attend the Games at its expense, ultimately paying for 60 guests and in some cases with spouses and others. These guests enjoyed three or four-day hospitality packages, valued at $12,000 to $16,000 per package that included event tickets, luxury hotel accommodation and sight-seeing excursions.
Andrew Ceresney, director of the enforcement division of the SEC, which brought the charge, explained that Billiton had footed the bill for the government officials while they were “in a position to help the company with its business or regulatory endeavors.” “BHP Billiton recognized that inviting government officials to the Olympics created a heightened risk of violating anti-corruption laws,” he said, “yet the company failed to implement sufficient internal controls to address that heightened risk.”
According to the SEC, the company required business managers to compete a hospitality application form for anyone they wanted to invite to the Olympics, including government officials. The company did not make it clear that no one outside the business unit submitting the application would review and approve each invitation. Nor did the company provide training for the employees about how to complete the forms or evaluate the bribery risks the invitations might give rise to. As a result of these and other failures, some of the forms were inaccurate or incomplete and Billiton ended up inviting government officials connected to pending contract negotiations or regulatory dealings (such as its efforts to obtain access rights).
As part of the settlement, the company has agreed to report to the SEC on the operation of its FCPA and anti-corruption compliance program for a one-year period.