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Eleventh Circuit Court of Appeals expands reach of FCPA

FCPA Resource Guide Cover, Nov 2012On May 16, 2014 in its U.S. v. Esquenazi decision, the 11th Circuit Court of Appeals upheld the Department of Justice’s broad definition of a key part of the Foreign Corrupt Practices Act (“FCPA”). At issue was ‘instrumentality’ within the FCPA’s definition of ‘foreign official’ (defined by the statute as ‘any officer or employee of a foreign government or any department, agency, or instrumentality thereof’ ). The 11th Circuit is the first appellate court to rule on this issue and its holding has immediate and broad impact on all U.S. businesses subject to the FCPA. Read more

Managing Foreign Corrupt Practices Act (FCPA) Risks

FCPA Resource Guide Cover, Nov 2012Thu, Apr 24. Any business operating in the global marketplace must make the FCPA and anti-corruption an integral part of its business plan. Vigorous enforcement of the Foreign Corrupt Practices Act (FCPA) has become a top priority for both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Recently, both have increased resources dedicated to FCPA enforcement. At the same time, civil and criminal penalties for FCPA violations continue to grow and DOJ has shown an increasing willingness to criminally prosecute individuals for FCPA violations. In addition, many other nations have enacted and/or have begun to seriously enforce anti-corruption legislation of their own. . Read more

Foreign Corrupt Practices Act Enforcement Trends And Priorities

Kara Brockmeyer, SEC - FCPAComments of U.S. officials and others at a November conference on the FCPA  provide a critical snapshot of the current state of play in still increasingly stringent U.S. enforcement of the FCPA and growing international cooperation to pursue anti corruption law enforcement well beyond U.S. borders. Addressing the question of the most significant recurring issues that the SEC is seeing in cases that they investigate, Ms. Brockmeyer highlighted companies’ use of third-party intermediaries. In the past two years, up to 70 percent of the cases in the SEC’s FCPA Unit have involved joint ventures, vendors, suppliers or other third parties.

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Deputy Attorney General James Cole: Remarks at FCPA Conference, Nov 19, 2013

James ColeIn France and Germany, as late as the 1990s, bribes were not only legal, but they were also tax deductible. Yet, in the past 10 years, both of those nations have changed their laws and joined us in the fight against transnational corruption. Most of you are familiar with the Siemens resolution in 2008, which was the product of our cooperation with German authorities. And in just the past 6 months, we announced the first coordinated action by French and U.S. law enforcement in a major foreign bribery case, the Total investigation.  ### Read more

Mitigating FCPA exposure in international distribution relationships

Michael_E_Burke.jpgMitigating the risk of sanctions under the U.S. Foreign Corrupt Practices Act (FCPA) is a core concern in every international commercial transaction, including cross-border distribution relationships in the FDA-regulated industry sectors. The FCPA contains both anti-bribery and accounting provisions. The anti-bribery provisions prohibit U.S. persons and businesses, U.S. and foreign public companies listed on stock exchanges in the United States or which are required to file periodic reports with the Securities and Exchange Commission, and certain foreign persons and businesses acting while in the territory of the United States from making corrupt payments to foreign officials to obtain or retain business. The accounting provisions require issuers to make and keep accurate books and records and to devise and maintain an adequate system of internal accounting controls. The U.S. Department of Justice and the Securities and Exchange Commission share enforcement authority under the Act. This article will review briefly best practices to mitigate FCPA risk in international distribution relationships. Read more

GSK in China: A Game Changer in FCPA Compliance

GSK in China: A Game Changer in Compliance, by Thomas FoxHOUSTON, AUG. 22, 2013 — /PRNewswire/ — A new e-book published by attorney, author and Foreign Corrupt Practices Act (FCPA) expert Tom Fox is pulling back the curtain on this summer’s bribery accusations leveled by the Chinese government against pharmaceutical giant GlaxoSmithKline.

In “GSK in China: A Game Changer in Compliance,” Mr. Fox explores the many unusual elements of the case, in which company employees are accused of bribing Chinese doctors and other officials to encourage the use of Glaxo drugs.

“As bad as it seems, there are many lessons that compliance officers can draw from and use as teachable moments within their own companies,” Mr. Fox says. Read more

Eight Red Flags: The 12 days of FCPA • Useful takeaways from the new FCPA Resource Guide (8)

breuer-meeting

The U.S. .Securities and Exchange Commission (“SEC”) and U.S. Department of Justice (“DOJ”) issued a long-delayed Foreign Corrupt Practices Act (“FCPA”) Resource Guide in November 2012. While the Guide was preceded by years of pressure to clarify the enforcement of the FCPA, it generally does little to break new ground as a matter of policy and is not legal precedent. The Guide functions best as a single-reference source of preexisting agency enforcement actions and opinion letters. In this regard, it is a useful resource for the long-held interpretations of the FCPA by the agencies tasked with enforcement and offers a single source for the ounce of prevention that may be worth a pound of cure. It is important that companies review the Guide to assess whether current compliance programs or measures will pass the watchful eye of the SEC or DOJ and for insight into how the agencies are likely to view future compliance issues and potential misconduct. With that in mind, one legal services firmed pulled together 12 important takeaways that can be drawn from the Guide. Read one per day or all at once.

The Eighth Day: Eight Red Flags About (Third) Parties 

Takeaway number eight is the Guide’s eight red flags to spot when dealing with third parties. Liability under the FCPA exists where payments are made while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to a foreign official. Needless to say, this can include payments made by third-party agents or business partners. What’s more, recent case law suggests that liability exists where there is “conscious avoidance” of whether a bribe will be paid or which particular foreign official it will go to. The eight red flags referenced in the Guide are the following:

  • excessive commissions to third-party agents or consultants;
  • unreasonably large discounts to third-party distributors;
  • third party “consulting agreements” that include only vaguely described services;
  • the third-party consultant is in a different line of business than that for which it has been engaged;
  • the third party is related to or closely associated with the foreign official;
  • the third party became part of the transaction at the express request or insistence of the foreign official;
  • the third party is merely a shell company incorporated in an offshore jurisdiction; and
  • the third party requests payment to offshore bank accounts.

Read more …

12 Days of FCPA: Useful Takeaways from the New Foreign Corrupt Practices Act Resource Guide

DOJ and SEC Resource Guide to the U.S. Foreign Corrupt Practices Act for more in-depth details on specific provisions.

12 Days of Christmas • to provide cultural background on why there are “12 Days of FCPA”

The 12 days of FCPA: Useful Takeaways from the New FCPA Resources Guide (1 – 3)

breuer-meetingThe U.S. .Securities and Exchange Commission (“SEC”) and U.S. Department of Justice (“DOJ”) issued a long-delayed Foreign Corrupt Practices Act (“FCPA”) Resource Guide in November 2012. While the Guide was preceded by years of pressure to clarify the enforcement of the FCPA, it generally does little to break new ground as a matter of policy and is not legal precedent. The Guide functions best as a single-reference source of preexisting agency enforcement actions and opinion letters. In this regard, it is a useful resource for the long-held interpretations of the FCPA by the agencies tasked with enforcement and offers a single source for the ounce of prevention that may be worth a pound of cure. It is important that companies review the Guide to assess whether current compliance programs or measures will pass the watchful eye of the SEC or DOJ and for insight into how the agencies are likely to view future compliance issues and potential misconduct. With that in mind, one legal services firmed pulled together 12 important takeaways that can be drawn from the Guide. Read one per day or all at once.

The First Day: ‘Tis the Season for Enforcement

Takeaway number one is simple: the focus on FCPA enforcement is unlikely to change in the near future. The 120-page Guide divides into ten chapters, ranging from a discussion of the anti-bribery provisions themselves to a description of the types of resolutions available to the SEC and DOJ. The amount of time and energy that the agencies have put into the Guide make it clear that FCPA enforcement is here to stay.

The Second Day: Two Clear Defenses

Takeaway number two is that the Guide will not satisfy the many observers and commentators who have pushed for additional affirmative FCPA defenses. The Guide repeats only the two statutory provisions: “(1) that the payment was lawful under the written laws of the foreign country (the ‘local law’ defense), and (2) that the money was spent as part of demonstrating a product or performing a contractual obligation (the ‘reasonable and bona fide business expenditure’ defense).” The local law defense is notoriously difficult to invoke and requires more than the mere absence of criminalization – the law must actually authorize the payments. As for the reasonable and bona fide business expenditure defense, the Guide offers only the few examples already recognized in the past:

  • travel and expenses to visit company facilities or operations;
  • travel and expenses for training; and
  • product demonstration or promotional activities, with accompanying travel and expenses for meetings.

The Third Day: Expansive Theories of Jurisdiction

Takeaway number three is that the long arm of the law isn’t going to get shorter anytime soon. One of the first hot spots touched on by the Guide is the enforcement reach of the FCPA. As expected, the SEC and DOJ continue to take a broad view of FCPA jurisdiction. One communication to, from, or through the United States or one wire transfer through a U.S. bank is sufficient to establish jurisdiction. What’s more, despite recent skepticism by commentators and one court, the Guide advances the theory that co-conspirators fall under the FCPA “even if they themselves” were not present and never took action in the United States.

Read more …

12 Days of FCPA: Useful Takeaways from the New Foreign Corrupt Practices Act Resource Guide

DOJ and SEC Resource Guide to the U.S. Foreign Corrupt Practices Act for more in-depth details on specific provisions.

12 Days of Christmas • to provide cultural background on why there are “12 Days of FCPA”

Assistant Attorney Lanny Breuer Speaks on the U.S. Foreign Corrupt Practices Act


Washington, D.C. ~ Tuesday, November 8, 2011

Lanny Breuer, Assistant Attorney General, DOJThank you, Homer, for that kind introduction. This is the third year in a row that I have had the privilege of addressing this conference. It is an honor each time, and I am delighted to be here with you again today.

In at least one respect, this past year has been no different from the two years that preceded it: The Justice Department has been vigorously enforcing the Foreign Corrupt Practices Act and achieving strong results. As we speak, in federal court in Washington, D.C., we are in the middle of our fourth FCPA trial of the year – more than in any prior year in the history of the Act. And just two weeks ago, we secured the longest prison sentence – 15 years – ever imposed in an FCPA case .

In other respects, however, the world has witnessed historic changes in the last year that highlight the importance of our mission to fight corruption at home and abroad, including by enforcing the FCPA. Having addressed you on two prior occasions, I know that you are all well aware of the Justice Department’s enforcement record. And during this conference, you will be hearing many expert analyses of our recent enforcement trends. So, what I want to do with you today, rather than tell you about our cases, is to place our FCPA work in context and share with you my perspective on recent efforts to amend the Act.

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Walmart’s Debacle – What PE Firms Can Learn

The recent allegations against Wal-Mart that the company engaged in bribery to assist in its expansion efforts illuminates the great challenges facing multinational companies transacting overseas.

Tyson Foods, Diageo, IBM and Pfizer have been alleged to violate the Foreign Corrupt Practices Act (FCPA).

And while these larger corporations have been subject to scrutiny, the Department of Justice is sure to be taking a closer look at smaller companies too as it ramps up its effort to clean its international house.

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