The Beneficent Monopolist: Allen Grunes and Maurice Stucke on the Comcast/Time Warner merger.

 

 


Allen P. Grunes 


GeyerGorey LLP

Maurice E. Stucke 


University of Tennessee College of Law

March 26, 2014

Competition Policy International, April 2014, Forthcoming 


Abstract: 

In examining Comcast’s proposed acquisition of Time Warner Cable (TWC), we assess three of the arguments Comcast likely will make to the Department of Justice and FCC. Comcast will likely argue that its acquisition of TWC is unlikely to lessen competition because: (a) the broadband market is becoming more competitive: Google has introduced Google Fiber in a number of markets, and mobile broadband offered by wireless providers like AT&T and Sprint is competitive with fixed broadband; (b) Netflix and traditional media companies have sufficient clout to negotiate with Comcast and the government should not intervene on their behalf; and (c) the “wide array of FCC and antitrust rules and conditions from the NBCUniversal transaction in place . . . more than adequately address any potential vertical foreclosure concerns in the area of video programming.”

We argue that notwithstanding Comcast’s and TWC’s assertions, combining two monopolies does not yield better service, lower retail prices, more innovation, and greater choices for consumers. Nor should the DOJ and FCC simply extend the prior behavioral remedies to this merger. Behavioral remedies are a poor substitute for market competition. Comcast and TWC have not overcome the presumption of illegality for this merger and are unlikely to do so. As was the case with AT&T/T-Mobile, DOJ should just say no.

Long Island Doctor Arrested and Accused of Multi-million Medicare Fraud Scheme

A Long Island, N.Y., doctor was arrested today on charges that he submitted millions of dollars in false billings to Medicare.
The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office and Special Agent in Charge Thomas O’Donnell of the Department of Health and Human Services Office of Inspector General (HHS-OIG).
Dr. Syed Imran Ahmed, 49, was charged with one count of health care fraud by a criminal complaint unsealed this morning in federal court in Brooklyn, N.Y.   A seizure warrant seeking millions of dollars of Ahmed’s alleged ill-gotten gains, including the contents of seven bank accounts, was also unsealed.   In addition, a civil forfeiture complaint was also filed today against Ahmed’s residence located in Muttontown, N.Y., valued at approximately $4 million.   Further, search warrants were executed earlier today at six locations in New York, Michigan and Nevada.   Ahmed’s initial appearance is scheduled this afternoon before U.S. Magistrate Judge Marilyn Go.
“The Medicare system entrusts doctors to provide patients with the care and services they need,” said Acting Assistant Attorney General O’Neil.  “The charges unsealed today allege that Dr. Ahmed billed millions of dollars to Medicare for surgical procedures that he did not actually perform.  These charges are yet another example of the Department of Justice’s determination to hold accountable those who abuse the trust placed in them and steal from the system for personal gain.”
“As alleged, Ahmed created phantom medical procedures to steal very real taxpayer money. The defendant sought to enrich himself and fund his lifestyle through billing Medicare for services he never performed,” stated United States Attorney Lynch.  “We are committed to protecting these taxpayer-funded programs and prosecuting those who steal from them.”
“Fraudulently billing the government defrauds every American taxpayer,” said FBI Assistant Director in Charge Venizelos.   “We will investigate cases of graft and greed to protect important programs for those who need them.”
“For a single physician, the alleged conduct in this case is among the most serious I’ve seen in my law enforcement career,” said HHS-OIG SAC O’Donnell.  “Being a Medicare provider is a privilege, not a right.  When Dr. Ahmed allegedly billed Medicare for procedures he never performed, he violated the basic trust that taxpayers extend to healthcare providers.”
As alleged in the complaint, Ahmed engaged in a scheme to submit claims to Medicare for surgical procedures that were not in fact performed.   The complaint alleges multiple instances in which either patients told law enforcement officers that they never had the procedures that were billed, or hospital medical records did not contain any evidence that the procedures were actually performed.   From January 2011 through mid-December 2013, Medicare was billed at least $85 million for surgical procedures purportedly performed by Ahmed.
The investigation has been conducted by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.   The case is being prosecuted  by Trial Attorney Turner Buford of the Fraud Section and Assistant U.S. Attorneys William Campos and Erin Argo of the U.S. Attorney’s Office for the Eastern District of New York.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Former Army National Guard Soldier Pleads Guilty in Connection with Bribery and Fraud Scheme to Defraud the U.S. Army National Guard Bureau

A former soldier of the U.S. Army National Guard has pleaded guilty for his role in a bribery and fraud scheme that caused approximately $70,000 in losses to the U.S. Army National Guard Bureau, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.
Former Sergeant First Class Michael Rambaran, 51, of Pearland, Texas, pleaded guilty today to one count of conspiracy, one count of bribery and one count of aggravated identity theft.   Sentencing is scheduled for June 24, 2014 before U.S. District Judge Lee H. Rosenthal in Houston.
The case arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses.   To date, the investigation has led to charges against 25 individuals, 22 of whom have pleaded guilty.
According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP).   The G-RAP was a recruiting program that offered monetary incentives to Army National Guard soldiers who referred others to join the Army National Guard.   Through this program, a participating soldier could receive bonus payments for referring another individual to join the Army National Guard.   Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account.   To participate in the program, soldiers were required to create online recruiting assistant accounts.
Rambaran admitted that between approximately February 2008 and August 2011, while he was a recruiter for the National Guard, he obtained the names and Social Security numbers of potential soldiers and provided them to recruiting assistants so that they could use the information to obtain fraudulent recruiting referral bonuses by falsely claiming that they were responsible for referring those potential soldiers to join the Army National Guard, when in fact they were not.   In exchange for the information, Rambaran admitted that he personally received a total of approximately $29,000 in payments from the recruiting assistants.
Co-conspirators  Edia Antoine, Ernest A. Millien III and Melanie Moraida pleaded guilty to conspiracy and bribery in connection to this scheme.   Antoine and Millien are each scheduled to be sentenced on Aug. 24, 2014.   Moraida is scheduled to be sentenced on Aug. 26, 2014.   All of these sentencing hearings are set before U.S. District Judge Rosenthal in Houston.
Another alleged co-conspirator, Christopher Renfro, who was indicted on Aug. 7, 2013, remains charged with two counts of wire fraud and two counts of aggravated identity theft.   Trial is currently scheduled for June 16, 2014, before U.S. District Judge Rosenthal in Houston.   An indictment is only an accusation, and a defendant is presumed innocent unless and until proven guilty.
The cases are being investigated by special agents from the San Antonio Fraud Resident Agency of Army CID’s Major Procurement Fraud Unit.   This case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas.

Today Maurice Stucke will be presenting “In Search of Effective Ethics & Compliance Programs” before the Harvard European Law Association and its Program on Informal Enforcement of Competition Law

Preliminary Program

Harvard European Law Association

Informal Enforcement of Competition Law: Perspectives from the U.S. And Europe

March 24, Center for European Studies, Harvard University

Welcome: Pieter-Augustijn Van Malleghem (HELA) (9-9.10)

Opening SpeechAn Enforcer’s View: Prof. Jacques Steenbergen (Belgian CA), The Informal Competition Policy of the Belgian Competition Authority  (9.10-9.30)

 

  1. Informal Enforcement and Cartels (9.30-10.50AM)

Chair: Prof. Jacques Steenbergen

Anna-Louise Hinds (NUI Galway), Cartel Settlement in EU Competition Law – A Potential Compliance Impact?

Niels Baeten (Linklaters), Combined Lenience/Settlement Cases as the new normal in EU Cartel Enforcement: challenges & opportunities

Georges Georgiev (UCLA), The EU’s 2013 Proposal for a Directive on Antitrust Damages Actions: A Comparative Assessment

 

Coffee Break: 10.50 – 11.05AM

 

Keynote 1: Prof. Damien Geradin (11.05-11.25AM)

 

  1. Informal Enforcement and Unilateral Conduct (11.25-12.45PM)

Chair: Prof. Damien Geradin

Giovanna Massarotto (Criterion Economics), Antitrust Enforcement – The Crucial Role of Consent Decrees

Urska Petrovcic (EUI), Antitrust Settlements in Innovative Industries – The Case of Standard Essential Patents

Yane Svetiev (UBocconi/EUI), Settling or Learning: Commitment Decisions as a New Competition Enforcement Paradigm in the EU

 

Lunch: 12.45-1.45PM

 

Keynote 2: Prof. Einer Elhauge (1.45-2.05PM)

 

  1. Alternative Approaches to Informal Enforcement (2.05-3.25PM)

Chair: prof. E. Elhauge

Maurice Stucke (UTK), In Search of Effective Ethics & Compliance Programs

Matthew Jennejohn (BYU), Innovating Merger Review Outcomes

Mislav Mataija, (Uzagreb/EUI), Regulating the Regulators through Competition Law: Voluntary Private Regulation as an Alternative to Direct Enforcement?

 

Coffee Break: 3.25-3.40PM

 

  1. Informal Enforcement: A Legitimate Tool? (3.40-5PM)

Chair: Prof. D. Geradin

Damien Gerard, (UCLouvain/CGSH), Negotiated Remedies in the modernization era: the limits of effectiveness

Florian Wagner von Papp (UCL), Out-Lawing Antitrust

Georges Vallindas (ECJ), Is a Triple Cheeseburger easy to eat? EU’s Architecture facing non-litigation competition enforcement

Closing Remarks: Prof. Damien Geradin

Crossing the Rubicon: Why the Comcast/Time Warner merger should be blocked. Global Competition Review, 25 February 2014

http://globalcompetitionreview.com/news/article/35322/crossing-rubicon-why-comcasttime-warner-merger-blocked/

Comcast and Time Warner Cable say their proposed $45 billion merger would not raise prices – and would lead instead to real benefits – for cable customers across the country. But the deal raises serious concerns of a creeping monopolist and the ability of a powerful media buyer to harm rivals, write University of Tennessee professor and GeyerGorey of counsel Maurice E Stucke and GeyerGorey partner Allen P Grunes.

 

It seems fair to ask: Is this merger a done deal?

 

Quite a few financial analysts and some antitrust lawyers think so. They have publicly suggested that the Department of Justice and the Federal Communications Commission likely will approve Comcast’s acquisition of Time Warner Cable (TWC), subject to a few conditions, such as the extension of the Comcast/NBC Universal modified final judgment.

 

In a press call, both Comcast and TWC CEOs voiced confidence that the transaction would receive the necessary approvals, pointing to the absence of any break-up fee (or reverse break-up fee) as evidence of their confidence. Comcast has also argued that the combination would not reduce competition because the two cable providers do not compete in local markets. So is the only unanswered question what, if any, modifications will there be to Comcast’s obligations under the existing NBC Universal Final Judgment?

 

One thought experiment is to suppose that the predictions are correct. Suppose the merger, while not sailing through the regulatory process, is likely to remain relatively intact. If true, ask the following question: if Comcast can acquire TWC, what prevents Comcast from extending its footprint across America by acquiring all the remaining cable companies?

 

That was our initial query. And it seems difficult to discern a limiting principle, since the same justification for the Comcast/TWC transaction could easily be offered for a Comcast/TWC/Charter deal. Cable companies tend not to compete with one another for customers.

 

But upon closer examination, we wonder whether Comcast even would need to acquire other cable companies after acquiring TWC, which Comcast’s CEO described as the “premier pure play cable company in the US”. In acquiring TWC, according to one analysis, Comcast’s services would become available to 70 per cent of the US population (up from its current potential reach of 42 per cent of the US population). After TWC, Comcast’s remaining conquests are Nevada and even-less-populated regions, like North Dakota. With due respect to those states’ citizens, why bother? But suppose Comcast later seeks to acquire a local cable company. After letting this merger through, can the DoJ seriously argue that Comcast’s expansion into Iowa may somehow “substantially lessen competition or tend to create a monopoly?” Hardly. Thus this deal with TWC is critical. Comcast is crossing the regulatory Rubicon.

As noted, Comcast principally argues that it does not compete with TWC in the same geographic markets. Without any competitive overlap, according to Comcast, the acquisition does not really change anything. But this is wrong for several reasons.

 

First, a merger can violate section 7 of the Clayton Act without the parties competing in the same geographic market. Suppose each state had its own cable monopoly. Comcast, under its logic, could legally acquire every cable company in the US. Even if New York consumers were unaffected when Comcast acquires other Midwest cable monopolies, Comcast’s acquisition of local monopolies affects the overall competitive landscape. Moreover, if Comcast’s rivals compete throughout the US, and if Comcast can disadvantage its rivals by raising their costs, then consumers can be adversely affected far beyond Comcast’s local cable monopolies.

 

The intent under section 7, as in other parts of the Clayton Act, is as courts recognised to cope with monopolistic tendencies in their incipiency – well before they have attained such effects as would justify a Sherman Act proceeding. Congress sought to prevent situations where “several large enterprises [were] extending their power by successive small acquisitions”.  Here Comcast is extending its power through a significant acquisition – one that expands its reach to most of the US population.

 

As the DoJ found, Comcast and TWC already have market power for both video and broadband services in numerous local geographic markets. Comcast is the nation’s largest provider of video services (22 million residential customers at the end of 2012), internet services (19.4 million customers), and voice services (10 million customers). At the end of 2012, 41 per cent of the homes and businesses in the geographic areas Comcast served subscribed to Comcast’s video services; 36 per cent of the homes and businesses subscribed to Comcast’s internet services. As the largest video content distributor in many areas of the country, Comcast controls the pipes. But it also creates content through its national cable networks (including CNBC, MSNBC, and USA Network), regional sports networks, broadcast television (including NBC and Telemundo broadcast networks) and movie studio Universal Pictures, which produces, acquires, markets and distributes filmed entertainment worldwide.

 

In acquiring TWC, the second-largest cable provider of video, high-speed data and voice services in the US, Comcast extends its market power in five geographic areas: New York State (including New York City), the Carolinas, the Midwest (including Ohio, Kentucky and Wisconsin), Southern California (including Los Angeles), and Texas. This aggregation of important local markets, we submit, has antitrust significance.

 

Second, the Congressional command for section 7 is to “preserve competition among many small businesses by arresting a trend toward concentration in its incipiency before the trend developed to the point that a market was left in the grip of a few big companies”, as the Supreme Court said in Von’s Grocery. It was fashionable before the economic crisis for antitrust technocrats to scoff at Von’s, and at considering any trend toward concentration and the incipiency standard in merger review.

 

But after the havoc caused by financial institutions too big to fail (or to criminally prosecute), the incipiency standard has reappeared in the DoJ and FTC’s horizontal merger guidelines. One potential consequence of this merger is to accelerate the trend toward concentration among content providers and cable companies. Indeed, the chairman of DISH Network reportedly commented that this deal, if approved, “certainly doesn’t hurt the case for consolidation” of satellite TV providers, notwithstanding the fact that the US blocked a deal between Dish and DirecTV in 2002.

 

Third, one reason Congress sought to thwart a market dominated by a few firms is to prevent coordination or collusion. With fewer competitors, coordination, either express or tacit, becomes easier. We are already beyond that point. The DoJ and New York recently charged Comcast, TWC, Cox, and Bright House Networks of agreeing to restrain competition with Verizon.

 

Basically the cable companies sought to extend their “triple play” of voice, video, and broadband services into a “quad play” that included Verizon’s wireless services. Verizon, however, offered its competing “triple play” of voice, video, and broadband FiOS services. Under their agreement, in regions where Verizon’s FiOS competed with the defendant cable companies, Verizon would have sold two “quad play” products – its own and its competitors.  Verizon further agreed not to offer consumers a better price for its own quad play product. Not surprisingly the competitors’ agreement, the DoJ alleged, would have diminished Verizon’s incentives and ability to compete against Comcast, TWC, and the other cable providers. Why did Verizon hamstring itself? The cable companies agreed not to partner with a competing wireless company. And Verizon received a commission from selling its competitors’ products. This recent enforcement action shows how highly concentrated markets are susceptible to coordination.

 

Fourth, Comcast’s “no-competitive-overlap” argument considers only cable and internet subscribers. It ignores how the competition laws were also enacted to protect sellers from powerful buyers. One concern that arose in the recent joint hearings between the DoJ and Department of Agriculture is anti-competitive buyer power, namely monopsony. The complaint was that tepid antitrust enforcement over the past 30 years has left farmers and ranchers at the whim of powerful buyers. The emerging academic scholarship suggests that monopsony power can occur at lower market shares than monopoly power. Thus another concern is how the acquisition increases Comcast’s power to disadvantage sellers of television content (and raise the costs of Comcast’s rivals).

 

Fifth, in investigating Comcast’s deal with General Electric that ultimately enabled Comcast to control NBC Universal, the DoJ discussed various ways Comcast could disadvantage its traditional competitors (direct broadcast satellite and telephone companies) plus the emerging online video programming distributors (OVDs). Netflix and other OVDs rely on internet service providers like Comcast and TWC to deliver their television shows and movies to subscribers. Thus the growth of OVDs, as the DoJ found, “depends, in part, on how quickly [internet service providers] expand and upgrade their broadband facilities and the preservation of their incentives to innovate and invest”. In acquiring TWC, Comcast will have even more power to thwart Netflix or other emerging OVD rivals by impairing or delaying the delivery of their content. (Although Netflix recently sought to contractually resolve this issue with Comcast, other OVDs may lack the clout.)

 

Comcast might respond that whatever these concerns’ validity, its current Final Judgments with the DoJ ameliorate them. Comcast will likely extend net neutrality to TWC subscribers, promise to increase its broadband speed, and expand in rural and low-income areas. Comcast has also expressed a willingness to divest certain systems serving approximately three million managed cable subscribers, to be below 30 per cent of nationwide multichannel video subscribers. Why is that not good enough?

 

The FCC’s 30 per cent limit on nationwide multichannel video subscribers that any single cable provider can serve was vacated in 2009 by the US Court of Appeals for the DC Circuit; in its recent 10-K, TWC “is unable to predict when the FCC will take action to set new limits, if any”. So that is hardly a barrier. At what point does the DoJ become concerned and wonder whether its NBCU Final Judgment will protect suppliers and consumers? The judgment, for example, requires Comcast to maintain its internet access speed above a certain level. But the DoJ cannot know what a competitive market could bring.

 

That is a fatal flaw of behavioural remedies. Comcast continues to deliver expensive and (according to some critics) inferior broadband. In the US, it lags Google Fibre and other internet service providers. And there is less incentive for Comcast, after acquiring TWC, to innovate and compete.

 

AT&T, like Comcast, described its proposed acquisition of T-Mobile as somehow pro-consumer, pro-innovation, and pro-investment. AT&T apocryphally predicted that if its merger in a highly concentrated industry were blocked, consumers would suffer from lower output, worse quality, and higher prices. But AT&T and T-Mobile abandoned their merger after the DoJ’s challenge, and consumers now benefit from the competition by T-Mobile. Generally, antitrust views competition, not its reduction, as the remedy for allocating scarce resources. This deal is by no means done.

 

Copyright 2014 Global Competition Review

 

Marubeni Corporation Agrees to Plead Guilty to FCPA Charges and to Pay an $88 Million Fine

Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, entered a plea of guilty today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“Marubeni pleaded guilty to engaging in a seven-year scheme to pay – and conceal – bribes to a high-ranking member of Parliament and other foreign officials in Indonesia,” said Acting Assistant Attorney General Raman.  “The company refused to play by the rules, then refused to cooperate with the government’s investigation.  Now Marubeni faces the consequences for its crooked business practices in Indonesia .”

“For several years, the Marubeni Corporation worked in concert with a Connecticut company, among others, to bribe Indonesian officials in order to secure a contract to provide power-related services in Indonesia,” said Acting U.S. Attorney Michael J. Gustafson.  “Today’s guilty plea by Marubeni Corporation is an important reminder to the business community of the significant consequences of participating in schemes to bribe government officials, whether at home or abroad.”

“Companies that wish to do business in the United States or with U.S. companies must adhere to U.S. law, and that means bribery is unacceptable,” said Assistant Director in Charge Parlave.  “The FBI continues to work with our international law enforcement partners as demonstrated in this case to ensure that companies are held accountable for their criminal conduct.  I want to thank the agents, analysts and prosecutors who brought this case to today’s conclusion.”

Marubeni entered a plea of guilty to an eight-count criminal information filed today in the U.S. District Court for the District of Connecticut, charging Marubeni with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA.   Marubeni admitted its criminal conduct and has agreed to pay a criminal fine of $88 million, subject to the district court’s approval.  Sentencing has been scheduled for May 15, 2014.

As part of the plea agreement, Marubeni has agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation.   The plea agreement cites Marubeni’s decision not to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.

Frederic Pierucci, who was the vice president of global boiler sales at Marubeni’s consortium partner, pleaded guilty on July 29, 2013, to one count of conspiring to violate the FCPA and one count of violating the FCPA.   David Rothschild, a former vice president of regional sales at the consortium partner, pleaded guilty on Nov. 2, 2012, to one count of conspiracy to violate the FCPA.   Lawrence Hoskins, a former senior vice president for the Asia region for the consortium partner, and William Pomponi, a former vice president of regional sales at the consortium partner, were charged in a second superseding indictment on July 30, 2013.   The charges against Hoskins and Pomponi are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

According to court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for Marubeni and its consortium partner to provide power-related services for the citizens of Indonesia.   To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project.   The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.

As admitted in court documents, Marubeni and its co-conspirators retained the first consultant in the fall of 2002.   However, in the fall of 2003, before the Tarahan contract had been awarded, Marubeni and its co-conspirators determined that the first consultant was not bribing key officials at PLN effectively.   One e-mail between employees of the power company’s subsidiary in Indonesia described a meeting between Marubeni employees, employees of its consortium partner, and PLN officials during which the PLN officials expressed “concern” that if Marubeni and its consortium partner win the project, whether the agent would give the officials “rewards” that they would consider “satisfactory,” or “only give them pocket money and disappear.  Nothing has been shown by the agent that the agent is willing to spend money.”   Shortly thereafter, a Marubeni employee sent an e-mail to other employees at Marubeni and its consortium partner stating that “unfortunately our agent almost did not execute his function at all, so far.   In case we don’t take immediate action now now [sic], we don’t have any chance to get this project forever.”

As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN.  In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the first consultant “committed to convince [the member of Parliament] that ‘one’ [percent] is enough.”

Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.   Marubeni and its co-conspirators paid hundreds of thousands of dollars into the first consultant’s bank account in Maryland to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.

This case is being investigated by FBI agents from the Washington Field Office, with assistance from the Resident Agency of the FBI in Meriden, Conn.   Significant assistance was provided by the Criminal Division’s Office of International Affairs.   In addition, the department greatly appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland and the Serious Fraud Office in the United Kingdom.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.

Former Employee of Navy Contractor Pleads Guilty in International Navy Bribery Scandal

Alex Wisidagama, a citizen of Singapore formerly employed by Glenn Defense Marine Asia (GDMA), pleaded guilty today to one count of conspiracy to defraud the United States for his role in a scheme to overbill the U.S. Navy for ship husbanding services.   Wisidagama’s plea is the second in an expanding investigation into acts of alleged fraud and bribery committed by GDMA and several United States Navy officers and personnel.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement after the plea was accepted by U.S. Magistrate Judge Jan M. Adler of the Southern District of California.   The plea is subject to acceptance by U.S. District Judge Janis Sammartino.   Sentencing is set for June 13, 2014, before Judge Sammartino.
Wisidagama, who was arrested in San Diego, Calif., on Sept. 16, 2013, served as the general manager of global government contracts for GDMA, which was owned and operated by his cousin, Leonard Glenn Francis .   GDMA was a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States.   GDMA provided the U.S. Navy with hundreds of millions of dollars in husbanding services, which involve the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port.   These services included providing tugboats; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; and removing trash and collecting liquid waste.
In his plea agreement, Wisidagama admitted to conspiring to defraud the U.S. Navy in different ways.   Wisidagama and other GDMA employees generated bills charging the U.S. Navy for port tariffs that were far greater than the tariffs that GDMA actually paid.   In some cases, Wisidagama and others created fictitious port authorities for ports visited by U.S. Navy ships, and in other cases, Wisidagama and GDMA created fake invoices from legitimate port authorities purporting to bill the U.S. Navy at inflated tariff rates.   Wisidagama and GDMA also overbilled the U.S. Navy for fuel by creating fraudulent invoices which represented that GDMA acquired fuel at the same cost that it charged the U.S. Navy when in fact GDMA sold the fuel to the U.S. Navy for far more than it actually paid.   Wisidagama and GDMA also defrauded the U.S. Navy on the provision of incidental items by creating fake price quotes purportedly from other vendors to make it appear that the other vendors’ offering prices were greater than GDMA’s prices.
Wisidagama is the second defendant to plead guilty as part of this investigation.   On Dec. 17, 2013, former NCIS Supervisory Special Agent John Bertrand Beliveau Jr. pleaded guilty to conspiracy to commit bribery after admitting to providing Francis with sensitive law enforcement information in exchange for things of value such as cash, travel accommodations, lavish dinners, and prostitutes.   In addition to Beliveau and Wisidagama, Francis and U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez have been charged as part of a bribery and fraud scheme designed to defraud the U.S. Navy.   The charges against Misiewicz, Sanchez and Francis are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.   Significant assistance was provided by the Criminal Division’s Office of International Affairs, as well as the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Royal Thai Police and the Corrupt Practices Investigation Bureau in Singapore.
The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, and Trial Attorney Wade Weems, on detail to the Fraud Section from the Special Inspector General for Afghan Reconstruction.

Straw Owner of Clinic Sentenced in Medicare Fraud Scheme

A Florida man who had been the straw owner of a physical therapy rehabilitation facility has been sentenced to serve 30 months in prison for his role in a $28.3 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region made the announcement.
Roberto Fernandez Gonzalez, 63, formerly of southwest Florida, was sentenced by U.S. District Judge Susan C. Bucklew in the Middle District of Florida and was ordered to forfeit $446,738 and pay the same amount in restitution.   Fernandez pleaded guilty on June 24, 2013, to conspiracy to commit health care fraud.
According to court documents, Fernandez and his co-conspirators used various physical therapy clinics and other business entities throughout Florida – including Rehab Dynamics Inc. in Venice, Fla. – to submit approximately $28.3 million in fraudulent reimbursement claims to Medicare from 2005 through 2009.   Medicare paid approximately $14.4 million on those claims.
Fernandez’s co-conspirators obtained and controlled Rehab Dynamics.   They engaged in a sham sale of Rehab Dynamics to Fernandez, a Cuban immigrant with no background in the health care industry.   Fernandez did not have the money to buy Rehab Dynamics.   Instead, the co-conspirators paid Fernandez approximately $20,000 to serve as the straw owner of Rehab Dynamics from January 2008 through March 2008.   During that time, Rehab Dynamics submitted approximately $1.6 million in fraudulent claims to Medicare seeking reimbursement for rehabilitation therapy services that were not provided.   Medicare paid approximately $446,738 on those false claims.
This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida.   This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

American Family Care Inc. to Pay $1.2 Million to Settle Allegations of Inflated Medicare Claims

American Family Care Inc. has agreed to pay the government $1.2 million to resolve allegations under the False Claims Act that it knowingly submitted claims to Medicare for outpatient office visits that were billed at a higher rate than was appropriate, the Justice Department announced today.  American Family Care is a network of walk-in medical clinics headquartered in Birmingham, Ala., with offices in Alabama, Tennessee and Georgia.

“Mischarging the government for office visits wastes valuable government resources that could be used to care for other patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “At a time of increasing concern about the cost of medical care, it is especially important to ensure that health care providers are not overbilling the government by improperly inflating their claims.”

Following guidance adopted by the Centers for Medicare and Medicaid Services, health clinics such as American Family Care bill Medicare for their services by selecting a corresponding Evaluation and Management code.  The codes are divided into five different levels – from basic (level 1) to most complex (level 5).  Higher level codes result in higher reimbursement from Medicare than lower level codes.  The government alleged that American Family Care knowingly selected Evaluation and Management codes for a level of services that exceeded those actually provided in order to artificially increase the amount of reimbursement it received for those visits.

“The False Claims Act is a critical tool for weeding out fraud and protecting the taxpayers,” said U.S. Attorney for the Northern District of Alabama Joyce White Vance.  “My office will continue to return funds, like the $1.2 million in this case, to the taxpayers by proceeding against those who abuse our public health programs.

“Billing the government for services not provided as claimed cheats both taxpayers and patients,” said Derrick L. Jackson, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services region including Alabama.  “We will pursue aggressively providers like American Family Care alleged to have improperly maximized reimbursements.”

The civil settlement resolves a lawsuit filed by Anita C. Salters, a former employee of American Family Care, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the government for false claims and to obtain a portion of the government’s recovery.  Salters’ share has not yet been determined.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused on efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

This settlement with American Family Care was the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of Alabama; the Department of Justice’s Civil Division, Commercial Litigation Branch; the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation.

The lawsuit is captioned United States ex rel. Anita C. Salters v. American Family Care Inc. (N.D. Ala.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Law360: Court Split Likely To Lead To More FCPA Whistleblowing; contributing authors Joan E. Marshall and Phillip C. Zane

Court Split Likely To Lead To More FCPA Whistleblowing

Law360, New York (February 13, 2014,  1:42 PM ET) — Two burgeoning —  and seemingly disparate — legal trends affecting Foreign Corrupt  Practices Act enforcement have emerged recently. These forces may  presage a marked increase in whistleblower-driven FCPA investigations as well as the shareholder suits such corporate fraud investigations tend  to inspire.
First, federal regulators and prosecutors continue their high-profile  expansion of FCPA enforcement. Federal authorities began to prioritize  such actions in the early 2000s, and the heightened whistleblower  protections afforded FCPA informants under the Dodd-Frank Wall Street  Reform and Consumer Protection Act have contributed to the program’s  ongoing growth in more recent years. Second, a recent divide among  federal courts suggests an erosion of the protections these  whistleblowers can expect to receive under federal law, but  paradoxically, may result in more violations reported within the United  States.
These dual realities suggest that federal authorities will continue to  process FCPA tips at a growing rate, and that this growth may accelerate as more employees report FCPA violations directly to the government.
The FCPA holds liable any company that is based and/or publicly traded  in the United States whose employees or agents engage in acts of bribery with foreign government officials.[1] The act is remarkably broad in  its scope, effectively covering the conduct of all individuals working  for or on behalf of any company based or traded in the United States.  This allows prosecutors to hold companies accountable for, among other  things, acts committed by foreign employees of attenuated subsidiaries  and contractors of the company.
For example, the U.S. Securities and Exchange Commission successfully prosecuted Dow Chemical Company after a fifth-tier Dow subsidiary bribed Indian officials to expedite  the approval of pesticide products in that country.[2] The FCPA also  covers payments to agents of foreign governmental entities — including  employees of companies that are owned or controlled by the foreign  state. This point is particularly salient for companies doing business  in countries like China, where state-controlled companies dominate the  economy.
While Congress enacted the FCPA in 1977, federal enforcement of the act  increased sharply in 2004. In the act’s first 23 years — from 1977 to  2000 — the SEC brought a total of nine FCPA enforcement actions.[3] In  the next three years, that total doubled.[4] In 2010, the SEC created a  new subdivision dedicated exclusively to FCPA prosecution,[5] and  between that year and 2013, the commission averaged almost a dozen new  FCPA actions a year.[6]
These prosecutions have yielded enormous government recoveries. The prosecution of the German manufacturing conglomerate Siemens AG, for example, produced a 2008 settlement under which Siemens agreed to  pay some $800 million in disgorgement and fines to the SEC and the U.S. Department of Justice in addition to more than $850 million to German authorities for bribing government officials on five continents.[7]
This marked increase in FCPA enforcement dovetails with the recent  federal priority of aggressively promoting whistleblowing through the  enforcement of the Dodd-Frank Act. Under Section 922 of Dodd-Frank, the  federal government rewards whistleblowers who report high-stakes[8]  corporate malfeasance implicating America’s securities laws with between 10 to 30 percent[9] of the amount recovered.[10]
In addition to establishing financial incentives, the Dodd-Frank Act  affords whistleblowers certain protections, including the promise of job reinstatement, compensation for legal fees, and the payment of twice  the amount of back pay owed to any whistleblower who has suffered  retaliation from an employer for reporting violations that qualify for  Dodd-Frank protection.[11]
A number of recent federal rulings, however, have conflicted in their  interpretations of the reach of Dodd-Frank’s whistleblower protections  and cast doubt on the certainty of protection for certain types of  whistleblower reports. In mid-October 2013, for example, a Massachusetts district court affirmed that Dodd-Frank protected whistleblowers  regardless of whether they reported the qualifying crime to the SEC, to  any other federal agency, or to their employer.[12]
Less than a week later, however, a Manhattan federal judge rejected this reasoning in Liu v. Siemens AG, and denied whistleblower protections to a Siemens employee who had reported alleged FCPA violations  internally.[13] Four days thereafter, a different judge in the same  court rejected her colleague’s logic and extended whistleblower status  to a different employee who had reported an alleged qualifying  securities crime only to his employer, and not to the government.[14]
The only federal appellate court to address this question has ruled that Dodd-Frank’s whistleblower protections apply narrowly. In July 2013,  the U.S. Fifth Circuit Court of Appeals denied whistleblower status to  the former Iraq country director for GE Energy in Asadi v. GE  Energy.[15] In that decision, the Fifth Circuit scrutinized a perceived  inconsistency between the two definitions of “whistleblower” within  Dodd-Frank’s Section 922 — one defining the term for incentives  purposes, the other to establish protections — and held that the act  provides whistleblower protections only to those who report a violation  to the SEC itself.[16]
Accordingly, the court concluded that the plaintiff — who had reported  potential FCPA violations only to his supervisors — was not a  “whistleblower” entitled to Dodd-Frank retaliation protections.[17] This holding rejected a string of trial-level federal decisions[18] and  dismissed an SEC-promulgated rule specifically designed to harmonize  Section 922’s inconsistent definitions.[19]
Importantly, the Fifth Circuit also declined to reverse the underlying  district court’s ruling that reports of FCPA violations made outside the United States did not qualify for Dodd-Frank whistleblower  protection.[20] Three months thereafter, the Southern District of New  York’s Liu ruling, which drew great inspiration from Asadi, stated  expressly what the Fifth Circuit had implied — that Dodd-Frank protects  only whistleblowers who make their reports while within the United  States.[21]
Together, Liu and Asadi hold that Dodd-Frank protects only those who  report qualifying FCPA violations (1) to the SEC (2) while within the  United States. The Liu court also emphasized the fact that the plaintiff in that case was a “Taiwanese resident,” seemingly suggesting that the  court believes the act protects only whistleblowers residing in  America.[22]
This is a critical shift in the law for FCPA whistleblowers and, where  applicable, their legal representatives. (Whistleblowers who wish to  report violations to the commission anonymously must retain a lawyer in  order to do so.[23])
According to the “2013 Annual Report to Congress on the Dodd-Frank  Whistleblower Program,” which the SEC’s Office of the Whistleblower  released in November 2013, the commission received 30 percent more FCPA  tips during fiscal year 2013 than in 2012.[24] Moreover, the SEC  received more foreign-based whistleblower tips from China than from any  country other than the United Kingdom and Canada.[25] Finally,  California generated the most domestic-based whistleblower tips of any  state by far: 375 whistleblower reports originated in the Golden State,  with the next-highest state — New York — registering only 215.[26]
Considering that the recent federal rulings call into question the  application of Dodd-Frank’s whistleblower protections to FCPA violations reported from outside the United States, one can expect more of these  tips to come from whistleblowers located in America — and particularly  in states like California that enjoy extensive and longstanding ties  with Chinese business interests.[27] One can also expect to see an  increase in employee whistleblowers who report FCPA violations directly  to the SEC in order to ensure their protection under Dodd-Frank. Both  factors should accelerate the growth[28] of the SEC’s whistleblower  program under Dodd-Frank.[29]
Although lawyers should not expect this to automatically translate to an increase in whistleblower representations — again, informants who do  not wish to report violations anonymously are free to proceed without an attorney — the plaintiffs bar should find cause for optimism in one of  the likely collateral effects of increased FCPA enforcement: the  shareholder class suits that will inevitably follow.
—By Fabrice Vincent and Kevin Budner, Lieff Cabraser Heimann and Bernstein LLP, Joan E. Marshall and Phillip C. Zane, GeyerGorey LLP, Archie Grubb, Beasley Allen Crow Methvin Portis & Miles PC, and Ben Fuchs
Fabrice Vincent is a partner and Kevin Budner is an associate in Lieff Cabraser’s San Francisco office.
Joan Marshall is a partner in GeyerGorey’s Dallas office. Phillip Zane is of counsel in the firm’s Washington, D.C., office.
Archie Grubb is a partner with Beasley Allen in Montgomery, Ala.
Ben Fuchs is a third-year law student at Tulane University Law School  and a former print and new media journalist who can be reached at  [email protected].
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their firms, their clients, or Portfolio Media  Inc., or any of its or their respective affiliates. This article is for  general information purposes and is not intended to be and should not be taken as legal advice.

[1] 15 U.S.C. § 78dd-1 et seq. The Act creates an exception, however,  for payments made “to expedite or secure the performance of a routine  governmental action by a foreign official, party, or party official.” 15 U.S.C. § 78dd-1(b) (emphasis added).
[2] Press Release, “SEC Files Settled Enforcement Action Against the Dow Chemical Company for Foreign Corrupt Practices Act Violations,” U.S.  Securities and Exchange Commission (February 13, 2007) (available here:  http://www.sec.gov/litigation/litreleases/2007/lr20000.htm) (last  accessed February 10, 2014).
[3] “SEC Enforcement Actions: FCPA Cases,” U.S. Securities and Exchange  Commission (available here:  http://www.sec.gov/spotlight/fcpa/fcpa-cases.shtml) (last accessed  February 10, 2014).
[4] Id.
[5] Press Release, “SEC Names New Specialized Unit Chiefs and Head of  New Office of Market Intelligence,” U.S. Securities and Exchange  Commission (January 13, 2010) (available here:  http://www.sec.gov/news/press/2010/2010-5.htm) (last accessed February  10, 2014).
[6] “SEC Enforcement Actions: FCPA Cases,” supra, n.3.
[7] See Press Release, “SEC Charges Siemens AG for Engaging in Worldwide Bribery,” U.S. Securities and Exchange Commission (December 15, 2008)  (available here: http://www.sec.gov/news/press/2008/2008-294.htm) (last  accessed February 10, 2014).
[8] The program provides such payments to whistleblowers only when the  government’s total recovery exceeds $1 million. This requirement is  mitigated, however, by the fact that the “total recovery” reflects  recoveries secured through all actions related to the whistleblower’s  provided information. In contrast, the anti-retaliation provision of the Sarbanes-Oxley Act of 2002 only provides for back pay. Compare 15  U.S.C. § 78u-6(h)(1)(C) with 18 U.S.C. § 1514A(c)(2).
[9] The SEC assesses three factors in determining how much to reward  whistleblowers: (1) the significance of the whistleblower-provided  information; (2) the level of assistance the whistleblower has provided  during the investigation and prosecution; and (3) the level of  importance the Commission places on deterring the sort of conduct under  scrutiny in the particular case. 15 U.S.C. § 78u-6.
[10] 15 U.S.C. § 78u-6.
[11] Id.
[12] Ellington v. Giacoumakis, CIV.A. 13-11791-RGS, 2013 WL 5631046, at  *9–10 (D. Mass. Oct. 16, 2013) (holding that a financial planner’s  internal reporting of his employer’s violation of securities laws  covered under the Dodd-Frank whistleblower section constituted a  protected act of whistleblowing).
[13] Liu v. Siemens A.G., 13 CIV. 317 WHP, 2013 WL 5692504, at *4 (S.D.N.Y. Oct. 21, 2013).
[14] Rosenblum v. Thomson Reuters (Mkts.) LLC, 13 CIV. 2219 SAS, 2013 WL 5780775 (S.D.N.Y. Oct. 25,  2013). As with the Ellington whistleblower, the plaintiff in Rosenblum  alleged retaliation for accusing the employer of violating the  Sarbanes-Oxley Act of 2002 rather than the FCPA. Whistleblowers who  report violations of either of these laws, among other securities laws,  qualify for protection under the Dodd-Frank Act so long as the alleged  violator is a publicly held company and the alleged violation meets the  other requirements outlined in Section 922 of the Dodd-Frank Act.
[15] Asadi v. GE Energy (USA), L.L.C., 720 F.3d 620 (5th Cir. 2013).
[16] Id. at 629.
[17] Id.
[18] Id. at 625.
[19] Id. at 630 (justifying its decision to deny Chevron deference to the SEC rule on grounds that since Section 922 “clearly  expresses Congress’s intention to require individuals to report  information to the SEC to qualify as a whistleblower under Dodd-Frank . . . we must reject the SEC’s expansive interpretation of the term  ‘whistleblower’ for purposes of the whistleblower-protection provision”) (emphasis added).
[20] Id. at 621.
[21] Liu v. Siemens A.G., 13 CIV. 317 WHP, 2013 WL 5692504, at *10  (S.D.N.Y. Oct. 21, 2013) (concluding that “[t]here is simply no  indication that Congress intended the Anti–Retaliation Provision to  apply extraterritorially” and warning that “an intrusion into the  employment law of a foreign nation could disrupt the “delicate field of  international relations,” an interest protected by the presumption  against extraterritoriality”).
[22] Id. at *9–10.
[23] 15 U.S.C. § 78u-6.
[24] The Commission received 149 FCPA tips during fiscal year 2013, as  opposed to 115 during fiscal year 2012. “2013 Annual Report to Congress  on the Dodd-Frank Whistleblower Program,” U.S. Securities and Exchange  Commission, pg. 20 (November 2013) (available here:  http://www.sec.gov/about/offices/owb/annual-report-2013.pdf) (last  accessed February, 2014).
[25] Id. at 22. The SEC did not indicate how many of these China-based tips invoked the FCPA.
[26] Id. at 21.
[27] Although the SEC did not provide data on FCPA tips by source  country, one can reasonably expect that a portion of reports originating in nations like China and Russia, where conditions create an inherently high risk of FCPA violations, allege FCPA violations. See, e.g., David  Voreacos, “China’s Bribery Culture Poses Risks for Multinationals,”  Bloomberg (November 21, 2013) (available here:  http://www.businessweek.com/news/2013-11-21/china-s-culture-of-bribery-poses-risk-to-multinational-companies) (last accessed February 10, 2014).
[28] The SEC’s Dodd-Frank whistleblower program reportedly received  3,001 tips in fiscal year 2012—the program’s first full year in  existence—and 3,238 in fiscal year 2013. The tips arrived from all 50  states as well as from 55 countries. “2013 Dodd-Frank Whistleblower  Report,” supra, n.24, at 1.
[29] Id. at 1–2.

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