A&O Shearman FCPA Digest | SEC v. Tyco International Ltd. (D.D.C. 2012)

Source Documents

Countries
Bosnia & Herzegovina, China, Congo, Dem. Rep., Croatia, Egypt, India, Indonesia, Iran, Laos, Libya, Madagascar, Malaysia, Mauritania, Niger, Poland, Saudi Arabia, Serbia, Slovakia, Slovenia, Syria, Thailand, Turkey, United Arab Emirates

Foreign Official
Employees of government customers in China, Croatia, India, Libya, Saudi Arabia, Serbia, Syria, Turkey, Malaysia, and the UAE; One security officer at a government-owned mining company in Mauritania; Government officials (including those at state-owned “design institutes”) and public healthcare officials and publicly employed doctors in China; Representatives of a company majority-owned by the Egyptian government; Doctors and officials of hospitals owned or controlled by the Saudi Arabian government; Healthcare professionals in Poland.

Nature of Business
Tyco International Ltd., a Swiss company, manufactures and sells products related to security, fire protection, and energy. Its securities are registered pursuant to Section 12(b) of the Exchange Act and trade on the New York Stock Exchange.

Influence to be Obtained
According to the SEC’s complaint, Tyco’s subsidiaries perpetuated schemes that typically involved payments of fake “commissions” or the use of third-party agents to funnel money to government officials improperly to obtain lucrative contracts. To conceal the true nature of the payments, they were recorded in Tyco’s books and records as “commissions,” “business introduction services,” “promotional expenses,” or “sales development expenses.”

In Germany, Tyco agents allegedly paid third-parties to secure contracts or avoid penalties or fines in several countries. Tyco’s subsidiary in China allegedly paid the “site project team” of a state-owned corporation to sign a contract with the Chinese Ministry of Public Security. Tyco’s subsidiary in France allegedly made payments to a security officer at a government-owned mining company in Mauritania and paid sham “commissions” to intermediaries in four different countries.

In several other countries, Tyco’s subsidiaries made payments to various government officials and “consultants,” falsely recording the payments as “commissions.”

Enforcement
On September 24, 2012, the SEC filed a complaint charging Tyco with anti-bribery, books-and-records, and internal controls violations of the FCPA. On September 25, 2012, Tyco consented to a final judgment, under which it acknowledged as true and accurate the Statement of Facts entered into in connection with its non-prosecution agreement with the DOJ in a related criminal matter. Tyco was required to pay disgorgement and prejudgment interest of approximately $13.13 million and was permanently restrained and enjoined from further violations of the FCPA. After some delay, U.S. District Judge Richard Leon approved the final order on June 17, 2013.

In the related criminal action, in which Tyco entered into a non-prosecution agreement with the DOJ, Tyco agreed to pay a monetary penalty of $13.68 million.