SEC Cuts A Deal With Company Accused Of Bribery

05/17/2011 12:23 pm ET | Updated Jul 17, 2011

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05/17/2011 12:07 PM EDT

SEC Cuts A Deal With Company Accused Of Bribery

Taking a page from their colleagues at the Department of Justice, Securities and Exchange Commission officials Tuesday entered into a deferred prosecution agreement with steel pipe manufacturer Tenaris, the agency’s first-ever use of the legal tool to facilitate and reward cooperation in investigations.

Such agreements have provoked much debate -– DOJ has made dozens of them over the years with major companies like AIG, AOL, Boeing, Bristol-Meyers Squibb, KPMB and Merrill Lynch. They provide prosecutors with a tool to deal with misconduct by companies other than declining to prosecute or indicting, while still making sure that malefactors are fined, chastised and restructured.

Yet they’ve also been criticized by some who claim they allow 'corporate criminals' to opt out of the criminal justice system and avoid conviction. Amid the subprime mortgage crisis, legal experts questioned whether Wall Street firms were willing to take more risks, knowing that they could avoid prosecution by making such agreements with the government. Such deals aroused controversy in 2008 after it was revealed that a medical supply company avoided criminal prosecution by agreeing to pay up to $52 million to former attorney general John Ashcroft's consulting firm as an outside monitor.

The SEC's agreement involves allegations that Tenaris violated the Foreign Corrupt Practices Act (FCPA) by bribing Uzbekistan government officials during a bidding process to supply pipelines for transporting oil and natural gas. The SEC alleges that Tenaris made almost $5 million in profits when it was subsequently awarded several contracts by the Uzbekistan government. Under the terms of the DPA, Tenaris must pay $5.4 million in disgorgement and prejudgment interest.

Per the SEC:

Tenaris is the first company to enter into a DPA with the SEC, an approach announced last year to encourage individuals and companies to provide information about misconduct and assist with an SEC investigation. When Tenaris conducted a thorough, worldwide internal review of its operations and controls, it discovered FCPA violations by personnel in Uzbekistan and informed the SEC. In response to its findings, Tenaris reviewed its controls and compliance measures and significantly enhanced its anti-corruption policies and practices. Tenaris has agreed to cooperate further with the SEC, Justice Department, and any other law enforcement agency in connection with this case. Tenaris also agreed to pay a $3.5 million criminal penalty in a Non-Prosecution Agreement announced today by the Justice Department.

05/17/2011 11:59 AM EDT

The Wake-Up Call: Nuke Crisis Sparks Review Of U.S. Plants

• Japan's nuclear crisis sparks reviews of U.S. power plants, reports the Charlotte Observer.

• Today’s must-read. The Washington Post reports:

The federal government’s largest housing construction program for the poor has squandered hundreds of millions of dollars on stalled or abandoned projects and routinely failed to crack down on derelict developers or the local housing agencies that funded them.

Nationwide, nearly 700 projects awarded $400 million have been idling for years, a Washington Post investigation found. Some have languished for a decade or longer even as much of the country struggles with record-high foreclosures and a dramatic loss of affordable housing.

• A set of confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, reports HuffPost’s Shahien Nasiripour.

• Interior Secretary Ken Salazar and BOEMRE chief Michael Bromwich are testifying on oil and gas development this morning. Watch live here.

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