It’s election day in Michigan. That is, election day for many municipal primary elections. The big news around Detroit is the slate of mayoral hopefuls. According media reports, half of the eight candidates are convicted felons. Two of them were charged with assault to commit murder!
Thankfully, the political environment in most U.S. communities isn’t nearly this bad. (Apologies to folks living in Chicago, Miami and several northern New Jersey towns.) Sadly, however, corruption and greed is often rampant outside the United States. When U.S. companies bribe, or offer bribes to foreign government officials, the SEC and Justice Department can get involved. Under the Foreign Corrupt Practices Act (FCPA), U.S. citizens or companies that pay or offer these bribes can be prosecuted.
Why should what happens outside the U.S interest you and I? Because whistleblowers who report these FCPA violations can receive huge cash awards for coming forward. That means ordinary people can become hero and actually make a difference in the war on greed.
Political corruption gets all the headlines. Corporate malfeasance often goes unnoticed by the media unless the company is huge such as Bank of America or Enron.
While Detroit’s checkered election dominates the headlines today, another story failed to make mainstream media. In fact, unless one reads specialized trade publications, the story is unknown to the public.
Archrock Partners LLP and Exterran Corp FCPA Disclosure
Archrock Partners disclosed to shareholders today that it is under investigation by the Justice Department and SEC for “previously disclosed errors and possible irregularities at one of our former international operations.”
The disclosure also says, “We have been assisting Exterran Corp. in responding to a subpoena for documents related to the restatement of prior period consolidated and combined financial statements and related disclosures and compliance with the U.S. Foreign Corrupt Practices Act (FCPA), which are also being provided to [the DOJ] at its request.”
Exterran Corp. is an Archrock affiliate.
Archrock is a natural gas compression services business. To be sold or distributed, natural gas must be compressed. Compression is a mechanical process whereby the pressure of natural gas is increased to a desired higher pressure for transportation from one point to another. Compression is usually needed at the wellhead, throughout the distribution system, when storing the gas and keep gas flowing through pipelines.
According to the company’s website, Archrock employs approximately 1900 people.
Exterran Corp or Archrock Partners – Who is Under Investigation?
When companies disclose bad news, they usually do so on a busy news day and do so with as few words as possible. We know that Archrock is the U.S. gas compression services spinoff from Exterran Corp. We also know that Exterran is Archrock’s “big brother.” With over 5000 employees and a global footprint, Exterran is the larger of the two companies. It appears from Archrock’s disclosure, however, both are being investigated.
Oil and Gas Companies and the Foreign Corrupt Practices Act
Energy companies and the bribery of foreign officials seem to go hand in hand. Many drilling companies, mining companies and oil field services business have been caught paying bribes to foreign government officials. When that happens, these companies violate the Foreign Corrupt Practices Act.
Catching those violations is difficult and because of a recent law change is now much more difficult.
In February of this year, President Trump signed a measure passed by Congress to roll back an SEC rule that required oil, gas and mining companies to disclose how much they pay foreign governments.
The goal of the rule had been to prevent foreign politicians and bureaucrats from skimming from the payments that drillers and miners make to their country. The American Petroleum Institute claimed that the rule put American companies at a competitive disadvantage because foreign companies aren’t subject to the same rules.
Those claims are false. European, Russian and Canadian companies have similar rules. And the US rule reached some of the big Chines and Brazilian companies with shares listed on US exchanges to comply.
Paying or offering bribes is still illegal but without mandatory disclosures, catching companies has now become more difficult.
Whistleblower Awards and the FCPA
Despite the rhetoric from industry lobbyists and a few GOP lawmakers, stopping foreign bribes helps American companies.
How? Stopping foreign bribery allows honest and law abiding companies to play on a level playing field. Without safeguards, some companies feel they have an incentive to cheat instead of an incentive to play by the rules.
The Foreign Corrupt Practices Act insures that companies that break the law and pay bribes are not rewarded for their bad behavior.
One of the most powerful weapons in the anti-fraud arena is the whistleblower award provisions of the SEC whistleblower program. Workers or accountants with inside information about foreign bribery can earn an award of between 10% and 30% of whatever monies are collected from the wrongdoer. To date, the SEC has paid over $100 million in awards.
According to the SEC, “Through their knowledge of the circumstances and individuals involved, whistleblowers can help the Commission identify possible fraud and other violations much earlier than might otherwise have been possible. That allows the Commission to minimize the harm to investors, better preserve the integrity of the United States’ capital markets, and more swiftly hold accountable those responsible for unlawful conduct.”
Archrock and Exterran are two of the latest energy related businesses that find themselves under investigation for foreign bribery. We suspect there are many , many more oil and gas companies that simply have not been caught.
Domestic Bribery and Whistleblower Awards
Let’s not forget about our Detroit politicians! Corrupt politicians that take bribes or illegally pass out favors face prison time. We can’t put companies in prison but companies that hurt taxpayers by conspiring with dirty politicians can be prosecuted under the federal False Claims Act.
Earlier this year, Dr. Salomon Melgen was convicted in a scheme that the Palm Beach Post called “one of the nation’s biggest Medicare fraud cases.” Melgen was allegedly the highest paid Medicare physician in the country. It turns out that Dr. Melgen was tied to U.S. Senator Robert Menendez.
The feds indicted Senator Menendez. They say that the Senator interfered in the investigation against his friend Melgen.
Corruption hurts taxpayers. We hear of cases everyday where contracts are awarded to big campaign donors. Contracts that are awarded at grossly inflated prices.
Once again, whistleblower awards are available for those with inside information about fraud. Under the False Claims Act, the fraud must be tied to a loss of government funds or a fraud upon a government program.
MahanyLaw – False Claims Act & SEC Whistleblower Lawyers
The experienced team of whistleblower lawyers has helped its clients collect over $100,000,000.00 in awards. Our mission is to get you the highest possible award allowed and put a stop to greed and fraud.
If you have inside knowledge of illegal or questionable payments to foreign officials, call us. Often, we see companies try to shield themselves from liability by using “consultants” and other third parties to deliver the bribe. That doesn’t matter.
For more information, please visit our FCPA foreign bribery page or our False Claims Act whistleblower page. Ready to talk to a lawyer? Contact attorney Brian Mahany directly at or by phone at (414) 704-6731.