Matteson Ellis Discusses Enforcement Actions Following Panamanian Bribery Scheme in The FCPA Report

"Miller & Chevalier's Ellis Offers Insights from Former SAP Employee's FCPA Guilty Plea and SEC Settlement"
The FCPA Report

In this question and answer session, Matteson Ellis discusses former SAP vice president Vicente Eduardo Garcia's guilty plea following a scheme to bribe Panamanian officials and the resulting Securities & Exchange Commission (SEC) and Department of Justice (DOJ) enforcement actions. Ellis explains how the case fits into a broader pattern of FCPA cases arising in Central America in general, and Panama in particular, as well as what the SEC and DOJ may be signaling regarding companies' compliance programs. "On a basic level, it is important to highlight that this is another FCPA action against an individual," Ellis said. "What is interesting here is that it is a joint effort by both the SEC and DOJ to announce FCPA actions against the same individual at the same time. That is something relatively uncommon."

According to Ellis, corruption is prevalent in Central America due to the nature of business relationships in the region, and he notes that close-knit relationships between business and government sectors are very common. "In the Garcia matter, the interactions and relationships between the companies, consultants and Panamanian government officials are emblematic of the typical tight-knit circles that one sees in the region," he said. In order to avoid issues, Ellis said companies should take time to conduct thorough due diligence on local partners. "It's one thing to be on the ground for a while and develop relationships with trusted and proven partners that can be relied upon. When you are going into an area for the first time, it's highly important to take extra care to ensure that your first business arrangements are fully reviewed and vetted," he said.

The Garcia matter underscores the high risk of third-party relationships in Latin America as well as risks that arise for companies when new governments assume power in high corruption risk jurisdictions. "SAP was attempting to win business when a new government had taken power in Panama. During such periods of change, there is often a quick rush to formalize relationships with new government officials. Corrupt officials are also looking to take advantage of the spoils of victory. Companies should be particularly alert for corruption risks during periods of regime change," Ellis said.

Related Files
Related Links