Improper Gifts Alone, Without Cash Bribes, Serve as Basis for SEC’s Latest FCPA Enforcement Action -

Earlier this week, the SEC announced fines for two former defense contractor employees for FCPA violations relating to gifts given to Saudi officials. The individuals, Stephen Timms and Yasser Ramahi, each consented to the entry of settled administrative proceedings and agreed to pay $50,000 and $20,000 in fines, respectively. According to the SEC, in 2008 and 2009 the two men (employees of Boston-based FLIR Systems, Inc. at the time and each a US citizen) gave Saudi officials luxury watches and a 20-night multi-continent trip to win contracts for binoculars and security cameras. This enforcement action is noteworthy for being one of very few premised solely on improper gifts.

Typically, large cash bribes are the focus of charges, while improper gifts are cited in the charges as an add-on. In the Giffen/Mercator case, for example, the company pleaded guilty to having diverted tens of millions of dollars into Kazakh officials’ Swiss bank accounts. Although the original indictment against Mercator’s president, James Giffen, mentioned gifts of “fur coats, jewelry, speed boats, and snowmobiles” to senior Kazakh officials, those allegations read as an afterthought to the central allegations of complex financial transactions used to funnel oil revenues into Kazakh officials’ offshore bank accounts.