In the Matter of Telefônica Brasil S.A. (2019)

• Case Name
• In the Matter of Telefônica Brasil S.A. (2019)

• Date Filed
• 05/09/2019

• Enforcement Agency
• SEC

• Foreign Official
• Unnamed Brazilian government and foreign government officials.

• Date of Conduct
• 2012 to 2014

• Nature of Business
• Telefônica Brasil is a Brazilian telecommunications company, headquartered in São Paulo. It is a subsidiary of Telefônica S.A., a Spanish broadband and telecommunications provider operating worldwide. The company’s American Depositary Receipts are registered with the SEC and traded on the NYSE.

• Influence to be Obtained
• According to the SEC order, Telefônica Brasil gifted tickets for the 2013 Confederations Cup and 2014 World Cup to Brazilian government and foreign government officials. The internal memorandum seeking approval of the purchases described the tickets as being “for relationship-building activities with strategic audiences.” The company’s Institutional Relations Department (IR Department), which interacts with the Brazilian government and foreign governments, was allegedly the primary department providing the tickets to government officials.
  
  According to the SEC, the IR Managers and employees considered an official’s previous or potential future assistance in considering who to offer a ticket to, including: (1) the importance of effective action already taken by the individual; (2) whether the individual “has opened [] doors” or offers “ongoing support;” (3) the extent to which Telefônica Brasil was seeking aid in pushing certain legislative activity; and (4) the significance of the individual to the company’s business.
  
  Telefônica Brasil allegedly gifted a value of $621,576 for tickets and related hospitality for the 2014 World Cup and $117,230 for tickets and related hospitality for the 2013 Confederations Cup. Telefônica Brasil allegedly lacked the internal controls sufficient to prevent these practices and failed to properly record the purchase of tickets and related hospitality.

• Enforcement
• On May 9, 2019, the SEC issued a cease-and-desist order for Telefônica Brasil’s violations of the books and records and internal controls provisions of the FCPA.
  
  As part of the SEC’s order, Telefônica Brasil agreed to adopt new anti-corruption and compliance policies in order to enhance its internal accounting controls.
  
  For violation of the books and records and internal controls provisions of the FCPA, Telefônica Brasil was ordered to pay a civil money penalty of $4.125 million.

• Amount of the Value
• $738,806.

• Amount of Business Related to Payment
• Not stated.

• Intermediary
• None.

• Citizenship of Parent Entity
• Brazil

• Total Sanction
• $ 4,125,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 4,125,000

Telefônica Brasil S.A.

• Citation
• In the Matter of Telefônica Brasil S.A., Admin. Proc. File No. 3-19162 (May 9, 2019).

• Date Filed
• 05/09/2019

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None.

• Disposition
• Cease-and-Desist Order, Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• Brazil

• Individual Sanction
• $4,125,000.