The Securities and Exchange Commission fined BHP Billiton $25 million for violating the Foreign Corrupt Practices Act in connection with the Summer Olympics, charged co-owners of a Manhattan brokerage with fraud and an investment firm and two execs with pension fund fraud.
Also, the Financial Industry Regulatory Authority censured and fined EDI Financial for private placement compliance failures.
BHP Billiton to Pay $25 Million on Improper Olympics Invites
The SEC has charged global resources company BHP Billiton with violating the Foreign Corrupt Practices Act (FCPA) when it sponsored the attendance of foreign government officials at the Summer Olympics.
According to the agency, the company’s internal controls over its global hospitality program connected to the 2008 Summer Olympic Games in Beijing were inadequate.
BHP Billiton invited 176 government officials and employees of state-owned enterprises to attend the games at the company’s expense, and ultimately paid for 60 such guests as well as some spouses and others who attended along with them. Sponsored guests were primarily from countries in Africa and Asia, and they enjoyed three- and four-day hospitality packages that included event tickets, luxury hotel accommodations, and sightseeing excursions valued at $12,000 to $16,000 per package.
While the company required business managers to complete a hospitality application form for any individuals they sought to invite to the Olympics, including government officials, it failed to make sure employees knew that no one outside the business unit submitting the application would review and approve each invitation.
In addition, the company did not provide employees with any specific training on how to complete forms or evaluate bribery risks of the invitations. Because of these and other failures, a number of the hospitality applications were inaccurate or incomplete, and BHP Billiton extended Olympic invitations to government officials connected to pending contract negotiations or regulatory dealings such as the company’s efforts to obtain access rights.
BHP Billiton has agreed to settle without admitting or denying the charges. In devising the settlement, the SEC has taken into account BHP Billiton’s remedial efforts and cooperation with the SEC’s investigation. In addition to paying the $25 million penalty, the company is required to report to the SEC on the operation of its FCPA and anti-corruption compliance program for a one-year period.
SEC Charges Brokerage Co-Owners With Fraud
The SEC has charged Robert DePalo and Joshua Gladtke, co-owners of Manhattan-based brokerage firm Arjent LLC and its U.K.-based affiliate Arjent Limited, with defrauding investors.