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Don’t try to tell Mark Mendelsohn that bribery is just another cost of doing business overseas, because he won’t buy it. Mendelsohn is the point man at the U.S. Department of Justice (DOJ) for enforcing the Foreign Corrupt Practices Act (FCPA), which makes it a criminal offense for any company operating in the United States to bribe government officials in other countries. During his two years as deputy chief of the DOJ Criminal Division’s fraud section, he has opened a rising number of investigations and overseen a spike in voluntary disclosures. Peter Clark, the previous FCPA enforcer, opened 19 new cases in 2004, his last year at DOJ, according to a recent study by Shearman & Sterling of New York. The number dropped to seven in 2005, Mendelsohn’s first year at the fraud section, but this year he’s close to matching his old boss, having opened 13 new investigations as of Oct. 2. Mendelsohn’s team is currently working on more than 40 probes, with targets including Halliburton Co., Lucent Technologies Inc. and DaimlerChrysler A.G. An expensive matter Companies are learning that an FCPA case can turn into an expensive matter. In March 2005, Titan Corp., a defense contractor based in Reston, Va., was hit with a $28.5 million penalty, the biggest fine yet for an FCPA violation. (The Titan case was started under Clark but was concluded under Mendelsohn.) This fall, Mendelsohn reached two more big settlements. On Oct. 13, his office announced a deferred prosecution agreement with Statoil ASA in which the Norwegian oil company admitted that it had bribed Iranian officials to secure oil and gas rights. (The DOJ claimed jurisdiction over Statoil because it is traded on the New York Stock Exchange.) Under the terms of the prosecution agreement, which will last for three years, Statoil agreed to pay a $10.5 million penalty and to appoint a compliance monitor. Three days later, Mendelsohn settled a case against against SSI International Far East Ltd., a subsidiary of Schnitzer Steel Industries Inc., based in Portland, Ore. In its deferred-prosecution agreement, SSI admitted that it funneled $1.8 million to Chinese customers in an attempt to encourage them to buy scrap metal from Schnitzer. The company agreed to pay a $7.5 million criminal fine and to appoint a compliance monitor. One reason for the upswing in FCPA activity is that Mendelsohn has urged businesses to step forward whenever they think they may have run afoul of the law. Of the 20 new investigations opened since Mendelsohn took over his post, 17 were the result of voluntary disclosures by companies.

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