DOJ Charges Smartmatic with FCPA Violations, Alleges Bribe Scheme in Philippines

Smartmatic Added to Bribery Indictment of the Company’s Executives

Smartmatic, the voting technology company, was added on Thursday to a Justice Department indictment that alleged that some of the company’s executives were involved in a scheme to bribe an election official in the Philippines.

The defendants are accused of funneling $1 million in bribes, from 2015 to 2018, to the man who led the Philippine elections commission for most of that time in order to obtain contracts.

In August 2024, prosecutors charged Roger Piñate, Smartmatic’s president and co-founder, and another executive, Jorge Vasquez, with violating the Foreign Corrupt Practices Act, which bans corporate bribery overseas. Mr. Piñate, Mr. Vasquez and Elie Moreno, a former Smartmatic executive, along with the former elections commission chairman, Juan Andres Bautista, were also charged with money-laundering violations.

The superseding indictment, filed in the U.S. District Court for the Southern District of Florida, adds criminal charges of money laundering and foreign bribery against Smartmatic itself.

Delaware Will Keep the Corporations Because It Must

The most important indicator to watch may simply be how dependent Delaware remains on revenue from the many corporations — and, in recent decades, non-corporate businesses such as limited partnerships and limited liability companies — that are domiciled there. In a classic 1985 Journal of Law, Economics, & Organization article titled “Law as a Product,” Roberta Romano of Yale Law School argued that Delaware’s dependence on corporate franchise taxes “precommits the state to not welching on its corporate customers by radically revising its corporate law policy to the detriment of their interests.” If that’s correct, Delaware remains quite precomitted: Business-entity tax revenue hit a record as a share of state revenue in 2023, at 29.5%, and while it’s down slightly since then is still projected to be higher this year than in any year between 1970 and 2020.

Nothing Is Securities Fraud?

Does this matter? It is not clear that those provisions would be legal under state law, at least in Delaware, though probably it’s fine for Texas corporations. But if it really is allowed now, will companies take advantage of it? Will big companies start going public with provisions in their charters saying “hey if we do fraud you can’t sue us”? I don’t know. But … yes? In theory you could imagine that big institutional shareholders might push back on that sort of provision: Big institutions that care about governance might be suspicious of companies that go public saying “hey if we defraud you you can’t sue.” But I’m not sure. For one thing, my impression is that big institutional investors will complain about bad governance but ultimately put up with it. For another thing, I’m not sure that securities class actions are net beneficial to institutional investors.

SEC Defense Process Redefined – Chairman Atkins Announces Changes to Wells Process and Other Enforcement Policies

A fair and transparent Wells process, as Chairman Atkins noted, helps the Commission fully understand both the positions of the Staff in making an enforcement recommendation and those of the individual or entity that would be charged. Chairman Atkins’ affirmation of the importance of the Wells process should benefit potential respondents or defendants who receive a Wells notice. The additional time to provide a written submission is a welcome reform. It affords additional time to consider whether a written submission is appropriate under the circumstances, as anything in a Wells submission can later be used by the SEC in its litigation as an admission. The additional time also should afford the parties sufficient time to consider the evidence Chairman Atkins has directed the Staff to provide when it issues the Wells notice. Experienced SEC counsel can help potential respondents or defendants navigate these issues and best present their position and interests to the Enforcement Staff.

How Jefferies Found Itself at the Center of First Brands’ Collapse

The sudden collapse of auto-parts giant First Brands Group has left Wall Street firms sorting through the wreckage. Few are facing more questions than Jefferies Financial Group, a supporting player in the finance world that now finds itself in the harsh spotlight of an accounting scandal.

The firm played important roles with First Brands through both its investment banking and asset-management divisions. First Brands sells billions of dollars worth of parts including oil filters and windshield wipers annually to customers such as Walmart.