A&O Shearman FCPA Digest | SEC v. Comverse Technology, Inc. (E.D.N.Y. 2011)

Source Documents

Nature of Business
Purchase orders between a telecommunications company partially owned by the Greek government and Comverse Limited, an Israeli operating subsidiary of Comverse Technology, Inc. (“Comverse”), a provider of software systems and applications incorporated in New York.

Influence to be Obtained
In early 2003, Comverse Limited allegedly engaged an agent to facilitate sales in Greece through Fintron. According to the SEC, Comverse Limited employees negotiated orders with customers, directed the agent’s activities, and used Fintron to process and funnel improper payments made to procure that business. Comverse Limited allegedly paid the agent a fee, 85% of which was used as a bribe amount to customers (including OTE), and then falsely recorded these bribes as commissions to Fintron and the agent. According to the SEC, the arrangement continued through 2006 and included $536,000 in improper payments to employees of OTE to obtain or retain business.

Enforcement
On April 6, 2011, the SEC filed a complaint against Comverse, alleging that it had violated the books and records and internal controls provisions of the FCPA. Six days later, following a settlement with the SEC, judgment was entered against Comverse and it was ordered to pay $1,608,501 in disgorgement and prejudgment interest. Comverse consented to the judgment, but neither admitted nor denied the SEC’s allegations.

Intermediary
Employees of Hellenic Telecommunications Organisation S.A. (“OTE”), which is partially owned by the Greek government, and certain of its subsidiaries.