On April 7, 2011, Comverse Technology Inc., a New York City-headquartered global provider of software and software systems for communication and billing services, agreed to settle Foreign Corrupt Practices Act violations with the DOJ and SEC for $2.8 million. As part of its plea deal, Comverse will pay a $1.2 million criminal penalty to the DOJ and $1.6 million in disgorgement and pre-judgment interest to the SEC. Comverse also received a non-prosecution agreement from the DOJ that expires in two years.
According to the SEC’s complaint, an Israeli subsidiary of Comverse made improper payments to obtain and retain business in Greece. The Comverse subsidiary made improper payments of approximately $536,000 to individuals connected to OTE, a telecommunications provider based in Athens, Greece, that is partially owned by the Greek Government. These improper payments resulted in the company obtaining contracts worth approximately $10 million in revenues and approximately $1.2 million in profits. In order to facilitate and conceal the payments, the Comverse subsidiary employed a third-party agent to establish an offshore entity that funneled the improper payments to customers. The subsidiary made payments to the agent and, after taking 15% off the top of these payments, the agent paid the remaining 85% in cash bribes to the customers. These payments were improperly recorded on Comverse’s books and records as “agent commissions.”
The DOJ noted that it recognized the company’s thorough self-investigation and voluntary disclosure. The DOJ also recognized that Comverse had undertaken extensive remedial efforts and overhauled its overall compliance culture, including through the implementation of mandatory training programs focused on anti-corruption and the use of third-party agents and intermediaries, as well as more rigorous accounting controls for the approval of third-party payments. The DOJ release noted that it was due to these mitigating factors that the DOJ agreed not to prosecute Comverse or its subsidiaries subject to a two-year non-prosecution agreement.