Watts Water sues Sidley Austin over FCPA error

Lawsuit alleges firm’s mistakes resulted in big bribery sanctions for the company

The Department of Justice’s (DOJ) crackdown on foreign bribery has caught a lot of companies in its crossfires, most recently Wal-Mart. Many businesses have complained that the Foreign Corrupt Practices Act (FCPA) is confusingly worded, and have asked for more guidance on the law. In the meantime, they have to rely on lawyers to navigate the muddy waters. One recently sanctioned company, however, is not happy with its lawyers’ performance, and has decided to sue.

Watts Water Technologies got slammed with FCPA sanctions last year over a 2005 acquisition of Chinese company Changsha Valve Works that turned out to have a kickback policy. Changsa had a written policy of helping itself secure government contracts by paying kickbacks to Chinese officials.

Watts Water’s law firm on the deal, Sidley Austin, allegedly found this policy while it was vetting the transaction, but did not alert Watts Water, according to the lawsuit filed on June 6. The company lost $3.7 million in October 2011 to resolve accusations that sales staff influenced the awarding of contracts by paying bribes to Chinese officials. Watts Water claims these sanctions were a direct result of Sidley Austin’s mistakes.

Read more at Thomson Reuters.


For more InsideCounsel coverage of the FCPA and its surrounding lawsuits, see below:

Companies want clarity on anti-bribery law

Regulatory: 7 points to consider in regard to FCPA due diligence

Wal-Mart scrambles to address FCPA violation accusation

Groundbreaking FCPA case ends with dismissals

Regulatory: Challenging the government’s broad interpretation of “foreign official” under the FCPA

SEC targets execs, auditors in Biomet FCPA case

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