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In the Matter of BHP Billiton Ltd. and BHP Billiton Plc

 
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BHP Billiton Ltd. and BHP Billiton Plc
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SEC Civil
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May 20, 2015
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In the Matter of BHP Billiton Ltd. and BHP Billiton Plc
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In the Matter of BHP Billiton Ltd. and BHP Billiton Plc, Admin. Pro. File No. 3-16546 (2015)
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The SEC’s enforcement action is the largest civil penalty in history. Notably no disgorgement or prejudgment interest was sought by the SEC.
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Minerals-Mining
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Burundi, China, Guinea, Philippines
:
2005; 2006; 2007; 2008
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Various unnamed foreign officials and representatives of state-owned enterprises; Burundi Minister of Mines; Department of Environment and Resources of the Philippines; Governor of Katanga Province of the Democratic Republic of the Congo; Guinean Minister of Mines.
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BHP Billiton Limited, headquartered in Melbourne, Australia, and BHP Billiton PLC, headquartered in London, England, (collectively “BHP”) operate under a Dual Listed Company structure as a single economic entity run by a single board of directors. BHP is a global resources company that is among the world’s leading producers of major commodities, including iron ore, coal, oil and gas, copper, aluminum, manganese, uranium, nickel, and silver. BHP Billiton Limited and BHP Billiton Plc maintain American Depository Shares on the New York Stock exchange.

On December 8, 2005 the Beijing Organizing Committee for the Games of the XXIX Olympiad announced BHP as an official sponsor of the 2008 Beijing Olympic Games. The SEC explains that in exchange for providing the raw materials for the Olympic medals and financial support, BHP received priority access to event tickets and luxury accommodations during the Games. The SEC’s order noted that to take full advantage of their priority status, BHP established the Olympic Sponsorship Steering Committee (“OSSC”) to which employees would submit Olympic Leverage Plans prepared for each country identifying key individuals whose sponsorship to attend the Games may serve the business interests of BHP. According to the SEC, the overall objective of BHP was “to reinforce and develop relationships with key stakeholders” across Asia and Africa.

In total, the SEC states that BHP invited 650 individuals to attend the Olympic Games in Beijing, 176 of which were government officials. According to the SEC, sixty officials, along with their spouses, attended the games under BHP sponsorships and were treated to event tickets, luxury hotels stays, and sightseeing trips while in Beijing—each hospitality package being valued at approximately $12,000-$16,000.

The SEC asserts that BHP violated the books-and-records and internal controls provisions of the FCPA by failing to properly review and administer the application process designed to oversee how invitations were issued by BHP employees. According to the SEC, BHP did not require the applications to undergo any form of legal or compliance review. Instead, the SEC claims that of the hundreds of applications submitted by BHP employees, only ten were reviewed by the OSSC and BHP’s Ethics Panel which only served in an advisory capacity and noted that “accountability rest[ed] with business leaders.”

The SEC cited other flaws in BHP’s oversight including (i) numerous incomplete and inaccurate applications; (ii) a lack of general training on how to appropriately fill out the application forms and how business leaders should evaluate the applications; (iii) the failure of certain applications to update the company on any developments which could impact the appropriateness of a particular invitation; and (iv) the failure to set in place a mechanism that would allow BHP to detect whether an invitee was involved in other business dealings which could raise a conflict of interest.

The SEC’s order also offered a series of examples of officials from Burundi, the Philippines, the Democratic Republic of the Congo, and Guinea who received invitations despite their close relationship to BHP business interests.

On May 20, 2015 the SEC announced that it settled its enforcement action against BHP through an administrative proceeding whereby BHP agreed to pay a civil penalty of $25 million.
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Books and records (Issuer), Internal controls (Issuer)
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Cease and Desist
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$25,000,000 in civil monetary penalty.
:
25,000,000
:
0
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Issuer
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Foreign
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United Kingdom
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Contract Procurement/Retention, Other Business Advantage
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Not stated.
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Entertainment, Gifts, Travel
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Not stated.
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No
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No