On 20 May 2015 the U.S. Securities and Exchange Commission (SEC) issued a ‘cease-and-desist’ order in administrative proceedings instituted by the SEC under the Securities Exchange Act of 1934 against BHP Billiton Ltd. and BHP Billiton Plc (together: BHPB). BHP Billiton Ltd., established in Australia, and BHP Billiton Plc, established in the United Kingdom, are at the head of a multinational enterprise that produces commodities like aluminum, copper, oil and gas, nickel and uranium. BHP Billiton Ltd. and BHP Billiton Plc have a so-called dual listed company structure: they have one corporate board and management team that lead both companies as one economic entity, and American depository shares of both companies are traded on the New York Stock Exchange.
BHPB was an official sponsor of the Olympic Games that were held in 2008 in Beijing. In return, BHPB could use the Olympic trademark and had access to Olympic tickets, hospitality suits as well as accommodations. In this context, BHPB installed a hospitality program under which it invited inter alia government officials and officers of state-owned enterprises from around the world to attend the Olympic games. BHPB was aware of the risks involved in the hospitality programme in connection with its own Guide to Business Conduct and anti-corruption laws like the U.S. Foreign Corrupt Practices Act. To counter these risks, BHPB relied on both its existing internal controls as well as the controls built into the ‘Olympic Leverage Plans’ it drew up for each country from which its invitees came.
The SEC found that BHPB’s ‘controls did not adequately address the anti-bribery risks associated with offering expensive travel and entertainment packages to government officials’, to the effect that BHPB had ‘invited a number of government officials who were directly involved with, or in a position to influence, pending negotiations, efforts by BHPB to obtain access rights, or other pending matters’. The SEC based its conclusions inter alia on the arguments that BHPB’s business managers could select invitees without ‘legal or compliance review’ outside their own business division, some applications by BHPB’s business managers to have invitees admitted to the hospitality program were ‘not accurate or complete’, BHPB ‘did not provide its employees and executives with any specific training’ in relation to the hospitality programme, and BHPB ‘did not institute a process for updating hospitality applications or reassessing the appropriateness of invitations to government officials if conditions changed’. The SEC ordered BHPB inter alia to ‘cease and desist from committing or causing any violations and any future violations’ and ‘pay a civil money penalty totaling $25,000,000’. The ‘cease-and-desist’ order can be found at www.sec.gov, enforcement, administrative proceedings, 2015 release no. 34-74998 - May 20 2015 - BHP Billiton Ltd. and BHP Billiton Plc.