Original Story: morningstar.com
Mergers and acquisitions have accelerated sharply since the financial crisis faded, but the government's pace for reviewing proposed deals is slowing.
The Justice Department and the Federal Trade Commission are taking more time to investigate their most intensely scrutinized mergers, according to data compiled by antitrust lawyer Paul Denis of Dechert LLP. A Kansas City antitrust lawyer is following this story closely.
In such deal reviews concluded this year, more than 10 months elapsed, on average, between the transaction's announcement and a yes-or-no decision by the government. That's an increase from an average of seven months in recent years.
As time passes, merging firms can become increasingly worried about completing a deal. They have to ensure financing remains in place, and that can cost money. They can begin to lose employees nervous about the future, as well as customers. A Richmond mergers and acquisitions lawyer is knowledgeable in all areas of M&A and general acquisitions law, including but not limited to leveraged buyouts and company reorganizations.
"When you go from seven months of that to 10 months, it's different," Mr. Denis said. "No one wants their deals to hang out there very long. You're taking market risk. All kinds of things can happen."
Companies in a number of recent mergers have been waiting upward of a year -- or longer -- for a final verdict, and some deals have fallen apart because of government concerns.
Comcast Corp.'s bid for Time Warner Cable Inc. was pending for 14 months before it was dropped in April in the face of opposition from the Justice Department and the Federal Communications Commission.
Days later, Applied Materials Inc. walked away from its deal to acquire Tokyo Electron Ltd. 19 months after it was announced, citing Justice Department objections. The FTC spent more than a year examining Sysco Corp.'s planned acquisition of rival food distributor US Foods Inc. before bringing a lawsuit in February challenging the deal.
Other reviews still pending after more than a year include the merger of medical-device makers Zimmer Holdings Inc. and Biomet Inc., and AT&T Inc.'s deal to acquire DirecTV.
Government officials say companies play a significant role in determining the duration of antitrust reviews. A Boston M&A lawyer represents clients in business divestitures, leveraged buyouts, and company reorganizations.
"There are ways the parties can help themselves in the process," said Deborah Feinstein, head of the FTC's Bureau of Competition. It matters how long companies take to provide data and documents, to offer divestitures when appropriate, and to find buyers for assets that need to be sold off to get approval.
Ms. Feinstein also said companies can choose to come to the agency early after a deal is announced to walk through the transaction and highlight areas of business overlap between the merger partners. "Sometimes that can significantly speed things up," she said.
Bill Baer, the Justice Department's antitrust chief, said the average review is taking longer this year due to a couple of particularly lengthy ones. "In those cases, the parties weren't pushing for a decision, either because they wanted more time to convince us or because they wanted to align the process with a sister agency," he said.
Mr. Denis's statistics focus on merger deals that resulted in a government lawsuit, a settlement, abandonment by the firms, or a closing statement from antitrust officials explaining why the transaction should be allowed.
Not all significant recent merger reviews have taken so long. The FTC cleared the merger of medical-supply companies Medtronic Inc. and Covidien PLC, with conditions, about five months after the deal was announced in June 2014.
External factors explain the length of some antitrust probes. Telecom mergers, such as the Comcast and AT&T deals, require an added layer of FCC review. And deals with a strong international component can take longer as firms coordinate with antitrust agencies overseas.
But antitrust lawyers say the U.S. agencies have gotten more demanding in asking firms for long periods to conduct exams.
By law, merging parties can put the agencies on a 30-day decision clock once they have complied with requests for detailed data about a merger, a process that can take months. In reality, firms almost always agree to give more time, with officials sometimes asking for 90 days or more, antitrust lawyers say.
The antitrust agencies are operating from a position of strength. Companies need the government's cooperation, particularly on narrowing the scope of agency information requests, because producing large volumes of documents is costly.
More important, firms prefer not to get sued, so they are usually willing to give the government more time if it might make a difference between a suit and a settlement. "If parties are unwilling to litigate, the agencies will sense it, and it can give the agencies greater leverage to lengthen investigations," said lawyer Joshua Soven of Gibson, Dunn & Crutcher LLP, who has worked at Justice and the FTC.
The Justice Department's Mr. Baer said it is mutually beneficial to have an endgame to talk through potential antitrust concerns. "If there's a way to get to a meeting of the minds before we have to litigate, most companies want to do that," he said.
Even when the risk of a lawsuit fades, the process of completing divestitures and other settlement conditions can push back a closing date. Some lawyers say the time it takes the government to sign on the dotted line has increased, particularly at the FTC.
"The agencies want to make sure they get it right. The last thing they want to do is a lengthy investigation and then not fully replicate the competition being lost," said Matt Reilly, a former FTC lawyer now at Simpson Thacher & Bartlett LLP. "It's going to take a long time. And it is going to be a little bit of a roller coaster."
Showing posts with label Justice Department. Show all posts
Showing posts with label Justice Department. Show all posts
Wednesday, June 10, 2015
Tuesday, December 23, 2014
HOW ALSTOM EXECUTIVES MADE BRIBERY THEIR BUSINESS FOR OVER A DECADE
Original Story: bloomberg.com
Alstom SA (ALO) executives won several billions of dollars worth of business in Saudi Arabia a decade ago by making at least $49 million in illegal payments in part through middlemen the company called “Mr. Paris” and “Quiet Man.”
The bribes were among those the French power company made in five countries over more than 10 years, prosecutors in Washington said. Alstom pleaded guilty to those charges today and agreed to pay $772 million to end the investigation, representing the largest criminal penalty paid to the Justice Department under the Foreign Corrupt Practices Act. A Washington DC Foreign Corrupt Practices Act lawyer is reviewing the details of this case.
The prosecutors’ statements, laid out in dozens of pages of charging documents, contained new details about Alstom’s attempts to buy influence in Egypt, Saudi Arabia, Taiwan and the Bahamas, including one executive’s effort to quiet an employee who questioned the payments. The documents also covered bribery in Indonesia, which had already served as a basis of criminal charges against former Alstom executives and business partner in federal court in Connecticut.
The U.S. corruption case is one of several against Alstom, which General Electric Co. (GE) is buying in its biggest acquisition ever. The Fairfield, Connecticut-based manufacturer agreed in June to buy most of the assets for 12.4 billion euros ($15.2 billion), and the purchase should close next year. An Atlanta RICO lawyer represents clients involved in racketeering cases.
Earlier Monday, Alstom’s London-based power unit and two of its employees were charged by the U.K.’s Serious Fraud Office for alleged bribe payments in Lithuania. Lawyers for the men declined to comment at the hearing. Alstom is also facing a corruption investigation in Brazil.
‘Corruption Scheme’
The documents released by the Justice Department outlined how Alstom paid more than $75 million in bribes between 2000 and 2011 to win $4 billion in projects from state-owned companies, relying on consultants who prosecutors said funneled payments to officials in five countries.
“Alstom’s corruption scheme was sustained over more than a decade and across several continents. It was astounding in its breadth, its brazenness and its worldwide consequences,” U.S. Deputy Attorney General James Cole told reporters in Washington.
“There were a number of problems in the past and we deeply regret that,” Patrick Kron, Alstom’s chief executive officer, said in a statement. The Levallois-Perret-based company has changed its compliance practices, he added. An Atlanta RICO lawyer is following this story closely.
In Saudi Arabia, where Alstom was seeking $3 billion in contracts, company executives spread bribe money among a half a dozen consultants around the turn of the millennium, prosecutors wrote. These people were identified, in company documents, by code names that also included “Mr. Geneva” and “Old Friend.”
‘Action Plan’
Alstom collected details on officials of the country’s state-owned electric company to improve its chances of securing business, prosecutors wrote. They cited a January 2000 “action plan” for an upcoming bid that identified Alstom’s perceptions of decision-makers at the Saudi Electricity Co. (SECO), as well as the “most important concerns” for dealing with each.
“Honest reputation,” the action plan read, referring to one official who it said had a majority voice in awarding contracts. “Son has been known to deal.”
To ensure the official’s support, Alstom turned to one of his close relatives -- who internal company documents referred to as Mr. Paris -- who was paid $4 million to bribe the executive, prosecutors said. An Atlanta Racketeering Litigation Attorney represents both plaintiffs and defendants in cases involving racketeering.
Alstom made $2.2 million in donations to a U.S.-based Islamic education foundation associated with the Saudi official, prosecutors said. They didn’t identify the official.
$800 Million
Several countries have opened probes into Alstom since 2004, when auditors for the Swiss Federal Banking Commission unearthed documents they said showed possible corrupt payments. Since then, the company has paid more than $53 million over claims its employees bribed officials.
The U.S. fine, which eclipsed the $450 million paid by Siemens AG in 2008, would bring Alstom’s tab to above $800 million. Kron said on Dec. 19 that the company will pay the fines connected to its energy businesses as its shareholders voted in favor of their sale to GE.
The U.S. investigation, led by Daniel Kahn of the fraud section and Assistant U.S. Attorney David Novick in Connecticut, included at least 49 hours of recordings made by government cooperators about allegations of bribery in Indonesia, according to federal court records in Connecticut.
Investigators initially had to build their case using informants and charges against former Alstom executives when the company refused to cooperate, prosecutors said.
Indonesia Allegations
The Connecticut prosecution centered on a $118 million contract to provide boiler services at a power plant in Tarahan, on the southern coast of Sumatra. Alstom executives, together with Marubeni Corp. (8002), a Japanese commodity-trading company, used middlemen to funnel hundreds of thousands of dollars to a member of Indonesia’s parliament and officials at Perusahaan Listrik Negara PT, a state-controlled electricity company known as PLN, according to court papers filed by the Justice Department in related cases.
Marubeni pleaded guilty to bribery violations in March and paid an $88 million fine.
On Monday in the Connecticut federal court, Alstom pleaded guilty to two charges related to their activities in the five countries -- one for violating bribery laws by falsifying records and the other for failing to have adequate controls. Alstom’s Swiss subsidiary pleaded guilty to conspiracy. Two U.S. subsidiaries entered into deferred prosecution agreements.
Internal Conflicts
The documents released Monday also pointed to internal conflicts over payments, as Alstom executives allegedly attempted to hide transactions related to the company’s bids for power contracts in Egypt.
In December 2003, an Alstom finance employee said by e-mail that she was rejecting an invoice from one of the company’s consultants in Egypt because there weren’t enough details to justify the payment, according to the documents released Monday.
The finance employee received a phone call from a U.S.- based project manager, who told the official that if she “wanted to have several people put in jail,” she should continue to send e-mail messages questioning payments, according to the prosecutors’ documents. The project manager ordered the finance official to delete all e-mails about the consultant, prosecutors wrote.
Alstom SA (ALO) executives won several billions of dollars worth of business in Saudi Arabia a decade ago by making at least $49 million in illegal payments in part through middlemen the company called “Mr. Paris” and “Quiet Man.”
The bribes were among those the French power company made in five countries over more than 10 years, prosecutors in Washington said. Alstom pleaded guilty to those charges today and agreed to pay $772 million to end the investigation, representing the largest criminal penalty paid to the Justice Department under the Foreign Corrupt Practices Act. A Washington DC Foreign Corrupt Practices Act lawyer is reviewing the details of this case.
The prosecutors’ statements, laid out in dozens of pages of charging documents, contained new details about Alstom’s attempts to buy influence in Egypt, Saudi Arabia, Taiwan and the Bahamas, including one executive’s effort to quiet an employee who questioned the payments. The documents also covered bribery in Indonesia, which had already served as a basis of criminal charges against former Alstom executives and business partner in federal court in Connecticut.
The U.S. corruption case is one of several against Alstom, which General Electric Co. (GE) is buying in its biggest acquisition ever. The Fairfield, Connecticut-based manufacturer agreed in June to buy most of the assets for 12.4 billion euros ($15.2 billion), and the purchase should close next year. An Atlanta RICO lawyer represents clients involved in racketeering cases.
Earlier Monday, Alstom’s London-based power unit and two of its employees were charged by the U.K.’s Serious Fraud Office for alleged bribe payments in Lithuania. Lawyers for the men declined to comment at the hearing. Alstom is also facing a corruption investigation in Brazil.
‘Corruption Scheme’
The documents released by the Justice Department outlined how Alstom paid more than $75 million in bribes between 2000 and 2011 to win $4 billion in projects from state-owned companies, relying on consultants who prosecutors said funneled payments to officials in five countries.
“Alstom’s corruption scheme was sustained over more than a decade and across several continents. It was astounding in its breadth, its brazenness and its worldwide consequences,” U.S. Deputy Attorney General James Cole told reporters in Washington.
“There were a number of problems in the past and we deeply regret that,” Patrick Kron, Alstom’s chief executive officer, said in a statement. The Levallois-Perret-based company has changed its compliance practices, he added. An Atlanta RICO lawyer is following this story closely.
In Saudi Arabia, where Alstom was seeking $3 billion in contracts, company executives spread bribe money among a half a dozen consultants around the turn of the millennium, prosecutors wrote. These people were identified, in company documents, by code names that also included “Mr. Geneva” and “Old Friend.”
‘Action Plan’
Alstom collected details on officials of the country’s state-owned electric company to improve its chances of securing business, prosecutors wrote. They cited a January 2000 “action plan” for an upcoming bid that identified Alstom’s perceptions of decision-makers at the Saudi Electricity Co. (SECO), as well as the “most important concerns” for dealing with each.
“Honest reputation,” the action plan read, referring to one official who it said had a majority voice in awarding contracts. “Son has been known to deal.”
To ensure the official’s support, Alstom turned to one of his close relatives -- who internal company documents referred to as Mr. Paris -- who was paid $4 million to bribe the executive, prosecutors said. An Atlanta Racketeering Litigation Attorney represents both plaintiffs and defendants in cases involving racketeering.
Alstom made $2.2 million in donations to a U.S.-based Islamic education foundation associated with the Saudi official, prosecutors said. They didn’t identify the official.
$800 Million
Several countries have opened probes into Alstom since 2004, when auditors for the Swiss Federal Banking Commission unearthed documents they said showed possible corrupt payments. Since then, the company has paid more than $53 million over claims its employees bribed officials.
The U.S. fine, which eclipsed the $450 million paid by Siemens AG in 2008, would bring Alstom’s tab to above $800 million. Kron said on Dec. 19 that the company will pay the fines connected to its energy businesses as its shareholders voted in favor of their sale to GE.
The U.S. investigation, led by Daniel Kahn of the fraud section and Assistant U.S. Attorney David Novick in Connecticut, included at least 49 hours of recordings made by government cooperators about allegations of bribery in Indonesia, according to federal court records in Connecticut.
Investigators initially had to build their case using informants and charges against former Alstom executives when the company refused to cooperate, prosecutors said.
Indonesia Allegations
The Connecticut prosecution centered on a $118 million contract to provide boiler services at a power plant in Tarahan, on the southern coast of Sumatra. Alstom executives, together with Marubeni Corp. (8002), a Japanese commodity-trading company, used middlemen to funnel hundreds of thousands of dollars to a member of Indonesia’s parliament and officials at Perusahaan Listrik Negara PT, a state-controlled electricity company known as PLN, according to court papers filed by the Justice Department in related cases.
Marubeni pleaded guilty to bribery violations in March and paid an $88 million fine.
On Monday in the Connecticut federal court, Alstom pleaded guilty to two charges related to their activities in the five countries -- one for violating bribery laws by falsifying records and the other for failing to have adequate controls. Alstom’s Swiss subsidiary pleaded guilty to conspiracy. Two U.S. subsidiaries entered into deferred prosecution agreements.
Internal Conflicts
The documents released Monday also pointed to internal conflicts over payments, as Alstom executives allegedly attempted to hide transactions related to the company’s bids for power contracts in Egypt.
In December 2003, an Alstom finance employee said by e-mail that she was rejecting an invoice from one of the company’s consultants in Egypt because there weren’t enough details to justify the payment, according to the documents released Monday.
The finance employee received a phone call from a U.S.- based project manager, who told the official that if she “wanted to have several people put in jail,” she should continue to send e-mail messages questioning payments, according to the prosecutors’ documents. The project manager ordered the finance official to delete all e-mails about the consultant, prosecutors wrote.
Saturday, January 16, 2010
Feds Step Up Antitrust Investigation Into Monsanto
Business Week
The Justice Department has intensified its antitrust investigation into Monsanto Co., demanding internal documents that outline marketing tactics of the world's biggest seed company.
The demand, disclosed Thursday by Monsanto, formalizes a months long investigation into possible antitrust violations at the company, which has gained unprecedented power in the multibillion market for biotech seeds. It has already provided millions of pages of documents to the department and is cooperating with the agency's civil probe, spokesman Lee Quarles said Thursday.
The government asked this week for information on Monsanto's biotech soybean business, Quarles said. Monsanto's patented genes are inserted into roughly 95 percent of all soybeans and 80 percent of all corn grown in the U.S.
The government is examining whether farmers and seed companies will have access to Monsanto's popular Roundup Ready soybeans after the seeds' patent expires in 2014. The company is trying to shift customers to the next generation of patented soybeans, but said in a statement it will grant full access to the current variety even after the patent expires.
Justice Department spokeswoman Gina Talamona would not comment on the matter, but confirmed for the first time the department is "investigating the possibility of anticompetitive practices in the seed industry."
Last month, an Associated Press investigation uncovered contracts showing that Monsanto's business practices squeeze competitors, control smaller seed companies and protect its dominance over the genetically altered crops market.
One contract clause, for example, bans independent companies from breeding plants that contain both Monsanto's genes and the genes of any of its competitors, unless Monsanto gives prior written permission. That could let Monsanto effectively lock out competitors from inserting their patented traits into the vast share of U.S. crops that already contain Monsanto's genes.
Scott Partridge, Monsanto's deputy general counsel, said the company has done nothing wrong.
"Monsanto continues to cooperate with the U.S. Department of Justice inquiries, just as we have over the last several months," Partridge said in a statement Thursday. "We respect the thorough regulatory process. We believe our business practices are fair, pro-competitive and in compliance with the law."
Monsanto shares fell $1.22, or 1.5 percent, to $82.73 in afternoon trading Thursday.
Morgan Stanley analyst Vincent Andrews said antitrust troubles would likely fade with time and not have a significant impact on Monsanto's business. Because the department asked about access to Roundup Ready products after the patent expired, it is likely not interested in other issues around Monsanto's practices, Andrews said in a report Thursday.
"We expect this to be the sole focus of the Department of Justice's inquiry into Monsanto, and that a formal lawsuit will not be filed," Andrews said in the report.
Monsanto, which is based near St. Louis, introduced its first commercial strain of genetically engineered soybeans in 1996. The Roundup Ready plants were resistant to the herbicide, allowing farmers to spray Roundup whenever they wanted rather than wait until the soybeans had grown enough to withstand the chemical.
The company gained broad market reach over the last decade by letting competitors and independent seed companies sign licensing agreements allowing them to insert Monsanto's patented genes into their own strains of corn, soybeans and other crops.
Monsanto has the right to control how its genes are used because they are patented. Competitors worry that Monsanto could prolong its dominance for years if customers aren't allowed to use Roundup Ready seeds after the patent expires in 2014.
Monsanto said in a Dec. 15 letter to the American Soybean Association that seed companies and farmers will have access to the Roundup ready trait after its patent expires.
The company's business practices also are at the center of civil antitrust suits filed against Monsanto by its competitors, including a 2004 suit filed by Syngenta AG, that was settled with an agreement, and ongoing litigation filed this summer by DuPont in response to a Monsanto lawsuit.
The demand, disclosed Thursday by Monsanto, formalizes a months long investigation into possible antitrust violations at the company, which has gained unprecedented power in the multibillion market for biotech seeds. It has already provided millions of pages of documents to the department and is cooperating with the agency's civil probe, spokesman Lee Quarles said Thursday.
The government asked this week for information on Monsanto's biotech soybean business, Quarles said. Monsanto's patented genes are inserted into roughly 95 percent of all soybeans and 80 percent of all corn grown in the U.S.
The government is examining whether farmers and seed companies will have access to Monsanto's popular Roundup Ready soybeans after the seeds' patent expires in 2014. The company is trying to shift customers to the next generation of patented soybeans, but said in a statement it will grant full access to the current variety even after the patent expires.
Justice Department spokeswoman Gina Talamona would not comment on the matter, but confirmed for the first time the department is "investigating the possibility of anticompetitive practices in the seed industry."
Last month, an Associated Press investigation uncovered contracts showing that Monsanto's business practices squeeze competitors, control smaller seed companies and protect its dominance over the genetically altered crops market.
One contract clause, for example, bans independent companies from breeding plants that contain both Monsanto's genes and the genes of any of its competitors, unless Monsanto gives prior written permission. That could let Monsanto effectively lock out competitors from inserting their patented traits into the vast share of U.S. crops that already contain Monsanto's genes.
Scott Partridge, Monsanto's deputy general counsel, said the company has done nothing wrong.
"Monsanto continues to cooperate with the U.S. Department of Justice inquiries, just as we have over the last several months," Partridge said in a statement Thursday. "We respect the thorough regulatory process. We believe our business practices are fair, pro-competitive and in compliance with the law."
Monsanto shares fell $1.22, or 1.5 percent, to $82.73 in afternoon trading Thursday.
Morgan Stanley analyst Vincent Andrews said antitrust troubles would likely fade with time and not have a significant impact on Monsanto's business. Because the department asked about access to Roundup Ready products after the patent expired, it is likely not interested in other issues around Monsanto's practices, Andrews said in a report Thursday.
"We expect this to be the sole focus of the Department of Justice's inquiry into Monsanto, and that a formal lawsuit will not be filed," Andrews said in the report.
Monsanto, which is based near St. Louis, introduced its first commercial strain of genetically engineered soybeans in 1996. The Roundup Ready plants were resistant to the herbicide, allowing farmers to spray Roundup whenever they wanted rather than wait until the soybeans had grown enough to withstand the chemical.
The company gained broad market reach over the last decade by letting competitors and independent seed companies sign licensing agreements allowing them to insert Monsanto's patented genes into their own strains of corn, soybeans and other crops.
Monsanto has the right to control how its genes are used because they are patented. Competitors worry that Monsanto could prolong its dominance for years if customers aren't allowed to use Roundup Ready seeds after the patent expires in 2014.
Monsanto said in a Dec. 15 letter to the American Soybean Association that seed companies and farmers will have access to the Roundup ready trait after its patent expires.
The company's business practices also are at the center of civil antitrust suits filed against Monsanto by its competitors, including a 2004 suit filed by Syngenta AG, that was settled with an agreement, and ongoing litigation filed this summer by DuPont in response to a Monsanto lawsuit.
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