Dun and Bradstreet Credit FileThe Dun and Bradstreet Credit File
S. Department of Justice ("DOJ"), adopted a $9 million decision on April 23, 2018, alleging that Dun & Bradstreet infringed the U.S. Foreign Corrupt Practices Act ("FCPA"). The US administration has reported that two Dun & Bradstreet affiliates in China have made illegal disbursements to China's civil servants.
Dun & Bradstreet, in its SEC resolutions, has declared its willingness to spend more than $9 million in debilitation and a civilian sentence. However, the DOJ has sent Dun & Bradstreet a rejection notice under the new FCPA Corporate Enforcement Policy. SEC's order against Dun & Bradstreet claims that two of the Company's Chinese subsidiary companies made illegal payment to Chinese governments between 2006 and 2012.
One of the key components of Dun & Bradstreet's overall credit management framework, and credit reports, is accessing credit information. Shanghai Huaxia Dun & Bradstreet business information Consulting Co, Limited ("HDBC") als auch Shanghai Roadway D&B Marketing Services Co, Ltd. "Roadway " was paying civil servants - among them staff of the Chinese State Administration of Industry and Commerce ("AIC"), other authorities and state institutions - to obtain protected information for Dun & Bradstreet's worldwide trade databank.
HDBC was established in 2006 as a Dun & Bradstreet and Huaxia International Credit Consulting Co. partnership. It'?s Limited ("Huaxia"). The due care of Dun & Bradstreet in relation to Huaxia revealed that the firm used intergovernmental links to obtain annual accounts information directly from the AIC Province Office and other authorities.
SEC found that Dun & Bradstreet's due process practices - a brief Huaxia executive education course on compliance with the Huaxia Code of Conduct and a petition for completion of an anti-corruption survey and certificate - to reach this banner fail. In the end, HDBC made payment to AIC officers, both through Huaxia and third party channels, to obtain inappropriately non-public AIC commercial information.
During 2009, Dun & Bradstreet purchased 90% of the stock of Roadway, a leader in China's directory service industry. In the course of the pre-merger due-diligence Dun & Bradstreet learnt that China's legislation imposes penal penalties on companies and persons who receive illegal personally identifiable information from certain governmental or business authorities in China.
D&B knew that Roadway had obtained much of its information from third party sources so it had to make sure that Roadway had received and would receive that information lawfully. Furthermore, Roadway Dun & Bradstreet stated before the takeover that it could not attest that no'discounts' had been granted in relation to the sale of information, since the pattern of selling fees could lead commercial agents to divide their fees with decision-makers in order to'speed up' the deal.
SEC claims that Dun & Bradstreet did not exercise reasonable care in relation to the lawfulness of the information obtained from Roadway or the potentially unlawful setbacks of agents. A roadway head of sale was introduced in a TV newscast on 15 March 2012, which stated that Roadway had set up a databank of information on more than 150 million people in China who had been selling roadway tickets for advertising use.
On the same date, the Shanghai roadway office was attacked by locals. D&B interrupted and then closed the operation of Roadway just after the crackdown. The Roadway and five staff were then sentenced for illegal acquisition of personal information from China's people. In March 2012 Dun & Bradstreet filed its first voluntary complaint with the SEC.
Monday the SEC ordered Dun & Bradstreet to make the payment of over $6 million, prejudice interest of over $1.1 million and a civilian fine of $2 million. The accusations were not admitted or rejected by Dun & Bradstreet. Pursuant to its order, the SEC took into account Dun & Bradstreet's self-disclosure, co-operation and remedies in achieving the Understanding.
On the same date, DOJ published a note in which it stated that it refused to prosecute in accordance with the FCPA Corporate Enforcement Policy. The DOJ identified the following as declension factors: Dun & Bradstreet's failure to comply, immediate self-report, thorough investigations, comprehensive collaboration, improved regulatory requirements, full resolution and payment to the SEC.
Specifically, Dun & Bradstreet worked together by identification of all poor players, provision of all facts about the wrongdoing, provision of actual and former staff for interview and translation of documentation into English. As part of the restructuring, Dun & Bradstreet dismissed 11 people and discipline others by cutting bonus payments and wages, cutting back assessments and formalising reprimands.
In particular, the refusal does not explicitly state that Dun & Bradstreet "prohibits any employee from using any piece of information that creates but does not properly maintain corporate documents or communications," such as certain IM and SSN apps - an explicit request for corrective action under the FCPA Corporate Enforcement Policy. It is therefore not clear whether and, if so, how Dun & Bradstreet has adhered to this guideline.
Dun & Bradstreet's decision is the third DOJ official DOJ under the Trump Board and the first under the DOJ's new corporate enforcement policy. A question that remained open for the new government was whether it would adhere to the DOJ's pilot programme within the scope of the DOJ's pilot programme for the Promotion of the Air Transport Industry (FCPA).
As the pilot program is extended, the FCPA Corporate Enforcement Policy is implemented and Linde North America, CDM Smith and Dun & Bradstreet have recently rejected it, it is likely that the DOJ under the new government will further recognise the corporate collaboration and self-promotion effort. On the basis of the material contained in the resolutions, the SEC's ruling was prompted by Dun & Bradstreet's failing to identify and target the preacquisition due diligence flag of Dun & Bradstreet, its failing to perform an appropriate post-acquisition review, and its failing to correct the unauthorized payment for several years.