In the case of BNY Mellon, it was an illegal bribe in violation of the Foreign Corrupt Practices Act. The Securities and Exchange Commission charged BNY Mellon that it violated the Foreign Corrupt Practices Act by providing internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.
The unnamed Middle Eastern sovereign wealth fund was a client of BNY Mellon for custody and asset management. Unnamed officials at the sovereign wealth fund asked BNY Mellon to provide their family members with internships. One of those officials was a “key decision maker” who could award more business to BNY Mellon.
The SEC investigation found that BNY Mellon did not evaluate or hire the family members in accordance with its hiring standards and require a minimum grade point average and multiple interviews. The family members did not meet the criteria yet were hired with the knowledge and approval of senior BNY Mellon employees in order to corruptly influence foreign officials and win or retain contracts to manage and service the assets of the sovereign wealth fund.
The SEC found smoking gun emails that it made it clear that the internships were made to influence the government official.
A Boutique account manager wrote in a February 2010 e-mail concerning the internship request for Interns A and B that BNY Mellon was “not in a position to reject the request from a commercial point of view” even though it was a “personal request” from Official X. The employee stated: “by not allowing the internships to take place, we potentially jeopardize our mandate with [the Middle Eastern Sovereign
Wealth Fund].”In June 2010, an employee of BNY Mellon with primary responsibility for the Asset Management relationship with the Middle Eastern Sovereign Wealth Fund wrote of the internships for Interns A and B: “I want more money for this. I expect more for this. . . . We’re doing [Official X] a favor.”
In a separate e-mail to a different BNY Mellon colleague, the same employee stated “I am working on an expensive ‘favor’ for [Official X] – an internship for his son and cousin (don’t mention to him as this is not official).”
The same employee advised a colleague in human resources: “[W]e have to be careful about this. This is more of a personal request . . . [Official X] doesn’t want [the Middle Eastern Sovereign Wealth Fund] to know about it.” The same employee later directed his administrative assistant to refrain from sending e-mail correspondence concerning Official X’s internship request “because it was a personal favor.”
Hiring practices have been an area more subtle bribery. More typically we’ve seen this with government contracting where the government official will award the contract then go to work for the company.
Sources:
- SEC Charges BNY Mellon With FCPA Violations
- SEC Order
- BNY Mellon pays $15 million in FCPA settlement for internship hiring practices by Richard L. Cassin in the FCPA Blog
- BNY Mellon Settles First Sons and Daughters (and Nephews) FCPA Hiring Matter – Part I by Thomas Fox in the FCPA Compliance and Ethics Blog
