The US Securities and Exchange Commission (SEC) has settled charges against Maryland-based Legg Mason for violating the US Foreign Corrupt Practices Act (FCPA) in a scheme to bribe Libyan government officials.
Between 2004 and 2010, Permal Group, a former asset management subsidiary of Legg Mason, partnered with French global financial services company Societe Generale to solicit investment business from Libyan state-owned financial institutions.
The two firms engaged in a scheme to bribe government officials through a Libyan middleman in order to secure investments, according to the SEC.
As a result, Legg Mason, through Permal, was awarded business tied to $1bn (£776,970, €858,610) of investments, earning net revenues of around $31.6m.
According to the SEC, the middleman used the term “cooking” to describe his ability to get Libyan government officials to invest by any means necessary, including bribes.
Charles Cain, chief of the SEC Enforcement Division’s FCPA Unit, said: “Companies must take adequate steps to identify and mitigate the risks of bribery and corruption present in their global business.
“Those risks are particularly acute when, as here, agents and middlemen are used as part of a company’s efforts to obtain business with government clients.”
SEC and DOJ financial penalties
Legg Mason agreed to disgorge around $27.6m of ill-gotten gains and pay $6.9m in prejudgment interest to settle the SEC’s case.
The SEC document states that it is “not imposing a civil penalty based on the imposition of a $32,625,000 fine, as part of Legg Mason’s resolution with the United States Department of Justice (DOJ) on June 4, 2018”.
Legg Mason will also pay a disgorgement to the DOJ of $4m, taking the total penalty to just over $71m.
In a letter to stakeholders, dated 4 June, Legg Mason chief executive Joseph Sullivan said the firm had “reached a settlement with the US Department of Justice resolving a legacy matter, involving the activities of two mid-to-lower level employees that occurred more than a decade ago”.
After settling with the SEC, a spokesperson for Legg Mason said: “We are pleased that this matter with the SEC is now concluded, and look forward to continuing our mission of investing to improve lives.”
– This article first appeared on ESG Clarity‘s sister site International Adviser.