Archive for the ‘Compliance’ Category

What Others Are Saying About The New Global Anti-Bribery And Corruption Training Course

Thursday, February 13th, 2014

Last week I announced, in partnership with Emtrain (an innovative compliance training company), the release of a new, best-in-class Global Anti-Bribery and Corruption Training course.

The interactive course engages learners at all levels and will elevate the FCPA learning experience for the business and compliance communities.

Don’t just take my word.

The following experienced FCPA compliance practitioners have taken the full course and here is what they say.

Tom Fox (author of the FCPA Compliance and Ethic blog) reviewed the course in this post and says:

“I had the opportunity to view the course and I can agree that it is certainly an excellent training course, which you should consider for use in your company’s ongoing compliance training and communication. As you would expect from the FCPA Professor, each slide is well documented and provides the basis for the training. However, the thing that I thought made the training stand out was the variety of techniques used throughout the course. [...]  But the course is more than simply a recitation of what is required under the FCPA.  The thing that makes it stand out for me is the different types of training it employs to hold the listener’s attention.  [...]  What I think makes the course unique and frankly enjoyable to watch, is that it has several interactive features. [...]  So when the FCPA Professor says he has created a best in class FCPA training program, I heartily agree.”

Pat Sanjenis (Associate General Counsel Chief Privacy Officer & Investigative Counsel – Rockwell Automation) says:

“As chief investigative counsel for Rockwell Automation, I have investigated numerous alleged bribery schemes around the world and am intimately familiar with the FCPA and other country’s anti bribery laws. I have been involved in corporate wide anti-bribery training initiatives as part of our global ethics training and as stand-alone courses. I have previewed Emtrain’s course entitled Global Anti-Bribery and Corruption and I particularly liked the scenarios with the actors. This is an excellent course for both novices and the more experienced.”

Aaron Murphy (FCPA Lawyer and Author – Foreign Corrupt Practices Act: A Practical Resource for Managers and Executives) says:

“This is a great training tool packed with subtle, real-world scenarios that employees around the world will recognize from their own experiences. This kind of practical training engages and educates employees in a way that boring PowerPoint slides never can.”

For additional information concerning the release of this course, see here.

Friday Roundup

Friday, February 7th, 2014

Siemens delists, former Siemens execs fail to show up, quotable, to FCPA Inc. and for the reading stack.  It’s all here in the Friday roundup.

Siemens to Delist ADRs

The record-setting 2008 FCPA enforcement action against Siemens A.G. was primarily based on the fact that the company had its shares listed on a U.S. exchange and was thus subject to the FCPA’s books and records and internal controls provisions.  (Note:  Siemens AG itself was not charged with FCPA anti-bribery violations).

I doubt – six years after the fact – that there is a cause and effect relationship here, but it is interesting nevertheless to note that last week Siemens announced that ”it is planning to delist its American Depositary Receipts (ADR) from the New York Stock Exchange (NYSE).”  The company further announced that ”Siemens intends to terminate its reporting obligations (deregistration) to the American Securities and Exchange Commission (SEC).”  As stated in the release:

“The goal of the delisting and deregistration is to address the change in the behavior of its investors. As a consequence processes of financial reporting are simplified and efficiency is improved. The trading of Siemens shares is nowadays conducted predominantly in Germany and via electronic trading platforms (‘over-the-counter’). Trading volume of Siemens shares in the USA is low, amounting to significantly less than 5% of its global trading volume in the year 2013.”

A delisting of course does not remove Siemens from the reach of the FCPA.  There still is the 78dd-3 prong of the FCPA, but the jurisdictional reach of it is the most restrictive found in the FCPA.

For a moment, let’s just pretend that Siemens delisting was related, in some way, to the FCPA.  If so, is this a good thing or a negative impact of the DOJ and SEC’s expansive jurisdictional theories of FCPA liability against foreign actors?

For instance, as noted in this 2010 post, approximately one month after Daimler resolved its FCPA enforcement action it decided – after 17 years on being on the NYSE to delist from the exchange.  (See here for more).

Former Siemens Execs

One way for the SEC to win its FCPA cases is when the defendants do not show up.

As highlighted here, in December 2011 the SEC filed a civil lawsuit against former Siemens executives Uriel Sharef, Herbert Steffen, Andres Truppel, Ulrich Bock, Stephan Signer, Carlos Sergi, and Bernd Regendantz.  The complaint was based on conduct concerning the Argentine prong of the 2008 Siemens enforcement action.

On the same day the enforcement action was announced, Regendatz agreed to resolve the enforcement action.  As noted in the SEC release, Regendatz “paid a €30,000 administrative fine ordered by the Munich prosecutor (equivalent to $40,000 in U.S. dollars).”

As highlighted in this prior post, when put to its burden by Steffen, Judge Shira Scheindlin dismissed the SEC’s complaint in February 2013 for lack of personal jurisdiction (an initial threshold issue not unique to the FCPA).

As noted in this prior post, in April 2013 Uriel Sharef agreed to resolve the enforcement action by paying a $275,000 civil penalty.  (See here).

The SEC voluntarily dismissed its claims against Carlos Sergi in October 2013.

Earlier this week, on February 3rd, Truppel consented to a final judgment in which he agreed to pay a $80,000 civil penalty.

Also earlier this week, on February 4th,  Judge Scheindlin entered a default judgment as to Bock and Signer.  As part of the order, Bock was ordered to pay $937,957 (a $524,000 civil penalty, $316,452 in disgorgement, plus prejudgment interest of $97,505) and Signer was ordered to pay a $524,000 civil penalty.  The Bock and Signer settlement amounts rank first and third in terms of individual SEC FCPA settlements amounts with Ousama Naaman (approximately $877,000) ranking second.

The burning question of course is whether the SEC would have prevailed against Truppel, Bock and Signer if put to its burden of proof.  Like in Steffen, there would no doubt have been an initial threshold issue of personal jurisdiction before turning to FCPA specific jurisdictional issues.

The relevant jurisdictional allegations against Truppel were as follows.

“Truppel participated in meetings in Miami, Florida, and New York, NY, in which bribes to Argentine officials were negotiated and promised. He caused Siemens to pay, and promise to pay, millions of dollars in bribes in an effort to retain the DNI Contract. Some ofthe bribes were paid via bank accounts in the United States.”

The relevant jurisdiction allegations against Bock were as follows.

“Bock participated in a meeting in Miami, Florida, at which bribes to Argentine officials were negotiated and promised. Bock also provided false testimony in two arbitration proceedings, one of which was filed in Washington, D.C., in an effort to conceal Siemens’ corrupt payments and recover its expected profits from the DNI Contract.”

The relevant jurisdictional allegations against Signer were as follows.

“Signer authorized the payment of bribes to government officials in Argentina. Some of the bribes were paid to bank accounts in the United States.”

Quotable

As noted here OECD Secretary General Angel Gurria warned that the bribery of foreign public officials by businesses was contributing to an “erosion of public trust.”  True, but “enforcing” bribery and corruption laws through resolution vehicles not subjected to judicial scrutiny and otherwise inconsistent with rule of law principles (see here for my recent article) also contribute to an “erosion of public trust.”

Gurria also reportedly stated:  “corporations need to stop bribing public officials, and that is going to help recover public trust and legitimacy, that is going to help markets work.”

In all due respect, this is just such a naive way to view the problem of bribery and corruption.

I like what Alexandra Wrage (President of Trace International) said here:

“Whether they’re stating it expressly or acting on it quietly, governments are using corporations as their primary tool to reduce international bribery. They alarm companies with vast fines and terrify individuals with substantial prison sentences with the hope of ending the payment of bribes because they cannot, in most cases, do much of anything about those demanding them. This is not inappropriate. Companies are regulated, subject to laws and answerable to shareholders. The worst offenders demanding bribes, on the other hand, do so with impunity, hiding behind sovereign immunity and, often, their own, complicit local law enforcement. Abacha. Suharto. Marcos. Duvalier. It’s a longstanding tradition, still thriving in many countries today. U.S. and some European law enforcement agencies have been extraordinarily successful, with fines in the United States now counted in the billions of dollars and other jurisdictions promising to catch up soon. While these efforts have done more than anything else to reduce bribery, they have yet to convince us that companies are both the sole source and solution of all international corruption — and that’s insupportable. [...] The simple reality is that there are just some things that companies can’t do about corruption.”

See here and here for further reasons why Gurria’s statement is off-base.

To FCPA Inc.

Weil Gotshal announced that Adam Safwat, most recently the Deputy Chief in the DOJ’s Fraud Section where he worked on – among other things – FCPA enforcement actions – has joined the firm.  According to the release, “with several years of senior level experience in the DOJ, as well as experience as a former federal prosecutor, [Safwat] brings a deep understanding of criminal and regulatory enforcement to the Firm, including with regard to corporate securities fraud and Foreign Corrupt Practices Act investigations.”

Reading Stack

A handy-dandy “Master List of Third Party Corruption Red Flags” courtesy of the FCPAmericas Blog.

For your viewing enjoyment, the recent program at Fordham Law School “China and the Foreign Corrupt Practices Act:  Challenges for the 21st Century.”

For your viewing enjoyment, Senator Elizabeth Warren talking about an issue discussed in last week’s Friday roundup regarding JPMorgan.

I’ve written before about “offensive use” of the FCPA, but I am still trying to figure out the purpose of this press release.

*****

A good weekend to all.

New, Best-In-Class Training Course Released

Monday, February 3rd, 2014

I am pleased to announce that I have partnered with Emtrain, an innovative compliance training company, and today we are releasing a new, best-in-class Global Anti-Bribery training course.

The approximate 60 minute online course features:

  • Executive and non-executive versions
  • The ability to configure the course with company-specific policies, videos, graphics, text, and employee hotline or reporting information
  • 20+ video clips to illustrate real-world business scenarios that present risk
  • An Enforcement Risk Spectrum that helps learners “issue spot” bribery and corruption risk
  • The ability to use video scenes outside the e-Learning experience in live training, discussion groups, or company emails and reminders
  • A compliance Learning Management System enabling an administrator to launch and track training efforts and generate audit-ready training reports showing time spent on each video, screen, policy, etc.
  • Upcoming availability in Spanish, Mandarin Chinese, Russian, Arabic, Portuguese, French, and other languages upon request

Old-school training that “tells” learners about the FCPA and other anti-bribery laws by presenting legal information and stock images on dozens of slides is not memorable or effective.

This Global Anti-Bribery course takes a different approach by showing high quality video scenes of real situations that learners will identify with and remember long after the training. The course engages learners on all levels from officers and directors, to business managers and employees, to business partners.

Business organizations will find unique value in this course.  It is comprehensive and interactive, and most importantly, provides a diverse range of learners with fundamental skills to identify risk in their specific job functions in order to pro-actively address it.

For additional information concerning the release of this course, see here.

It’s More Like Bronze Dust

Thursday, January 30th, 2014

Recently at the FCPA Blog, Richard Cassin authored a post titled “Gold Dust for Compliance Officers” which began as follows.

“What’s the first thing  compliance officers need to do? We’d say it’s  convincing management and board members they need  an effective compliance program. That’s not easy.  It takes advocacy, and advocacy takes credibility.”

Spot-on.

However, I disagree that the sources “compliance officers can find support” in – the DOJ’s Principles of Prosecution of Business Organizations - are the gold dust they are portrayed to be.

Whether the analogy is gold dust – or real carrots vs. baby carrots as I used in my article “Revisiting a Foreign Corrupt Practices Act Compliance Defense” – the issue remains the same:  are the current incentives business organizations have to adopt best-in-class compliance policies and procedures sufficient, or can policy makers further incentivize corporate compliance with a real carrot – or gold dust if you prefer – through a compliance defense?

In my article, I argue, among other things, that an FCPA compliance defense will better incentivize more robust corporate compliance, reduce improper conduct, and thus best advance the FCPA’s objective of reducing bribery.

A previous FCPA Blog titled “We’re With You On This One, Prof Koehler” stated as follows regarding my article.

“Scholarship at its best can change things. It can cause judges to take a fresh look and lawmakers to  fix problems. We hope  Mike Koehler’s new scholarship will do just that.  [...] We agree with Prof Koehler on the need for the good faith defense. It would give companies the best incentive to work hard at compliance. And if there’s a downside to more compliance, we don’t see it.”

To demonstrate why a compliance defense is the best positive incentive to achieve greater FCPA compliance consider the following demonstration involving two persons:  (i) the general counsel or compliance officer of a company (“compliance officer”); and (2) the board of directors / CEO / or other person who controls the purse strings of the company (“executive”).

Scenario A

Compliance Officer:  Boss, I need more money and resources to devote to FCPA compliance.

Executive:  Why?

Compliance Officer:  Well, boss, if anything ever happens within our business organization, an effective FCPA compliance program can lessen the impact of our legal liability.

Executive:  What do you mean?

Compliance Officer:  Well, the money we spend on FCPA compliance will not eliminate our legal exposure, but the DOJ and SEC have said that the existence of an effective compliance program may perhaps lower our criminal or civil fine or penalty amount and perhaps even persuade an enforcement attorney to go lightly on us in case our compliance program is ever circumvented by an employee.

Scenario B

Compliance Officer:  Boss, I need more money and resources to devote to FCPA compliance.

Executive:  Why?

Compliance Officer:  Well, boss, an effective FCPA compliance program can reduce our legal exposure as a matter of law.

Executive:  What do you mean?

Compliance Officer:  Well, the money we spend on investing in FCPA best practices will be relevant as a matter of law.  In other words, if we make good faith efforts to comply with the FCPA when doing business in the international marketplace, we will not face any legal exposure when a non-executive employee or agent acts contrary to our compliance policies and/or circumvents our policies.

Under which scenario is the compliance officer most likely to receive the budget and resources needed for a best-in-class FCPA compliance program?

Every time I have run this scenario in class, the answer has been unanimous.  Scenario 2 will best allow the compliance officer to receive the budget and support needed to most effectively do his/her job.

I am under no illusion that an FCPA compliance defense will magically result in 100% best-in-class FCPA compliance in all business organizations.

However, I am confident in saying that if 50% of business organizations currently have best-in-class policies and procedures (and survey data seems to suggest that this figure is about right), an FCPA compliance defense will result in 50% + of business organizations adopting best-in-class policies and procedures.

And – as the FCPA Blog previously righly noted – “if there’s a downside to more compliance, we don’t see it.”

It is for this reason, why the DOJ and SEC should be in favor of an FCPA compliance defense.  However, as noted in this previous post, this will take courage.  An FCPA compliance defense may indeed result in less “hard” FCPA enforcement as certain business organizations will be able to avail itself of the compliance defense.

The cheerleaders of more FCPA enforcement (and there are many, including various civil society organizations) who frequently publish enforcement statistics may not be happy.  However, more FCPA enforcement is not necessarily an inherent good and ought not be the singular goal of the FCPA or other similar laws.  The goal ought to be constructing an enforcement regime that best promotes compliance, reduces improper conduct, and best advances the FCPA’s objective of reducing bribery.

The FCPA has witnessed courageous moments before and a courageous moment is once again presented.

Friday Roundup

Friday, December 6th, 2013

Looking for talent … got talent, the DOJ is sued, the Corruption Perceptions Index, a pulse on FCPA Inc., and for the reading stack.  It’s all here in the Friday roundup.

Looking for Talent … Got Talent

If your firm or organization is looking for either a summer associate or full-time lawyer with a solid Foreign Corrupt Practices Act foundation, please e-mail me at fcpaprofessor@gmail.com.  This past semester, twenty Southern Illinois University law students completed a semester long class on the FCPA, FCPA enforcement and FCPA compliance.

Learning objectives for the class included:  (i) developing a comprehensive understanding of the FCPA’s anti-bribery provisions and books and records and internal controls provisions; (ii) analyzing legal, ethical and policy issues associated with FCPA enforcement; (iii) understanding the FCPA’s long tentacles and how actual FCPA enforcement actions brought by the DOJ and/or SEC are often just one consequence of FCPA scrutiny; and (iv) gaining practical FCPA compliance skills including the ability to conduct an FCPA risk assessment and develop FCPA compliance policies.

I am confident in saying that few, if any, law students in America have as solid a foundation in the FCPA and FCPA compliance as these students.  I encourage you to give them an opportunity.

The DOJ Is Sued

University of Virginia Law Professor Brandon Garrett and Reference Librarian Jon Ashley maintain the excellent Federal Organizational Prosecution Agreements website which contains hundreds of federal organizational prosecution agreements such as non-prosecution and deferred prosecution agreements … at least those in the public domain.

Recently Ashley filed this lawsuit against the DOJ under the Freedom of Information Act seeking release of a certain non-prosecution agreement.  The complaint asserts:

“Plaintiff is statutorily entitled to the disclosure of [the] non-prosecution agreement and [the DOJ] has improperly withheld the requested records in violation of the law and in opposition to the strong public interest in understanding the judicial system and why admitted wrongdoers are not criminally prosecuted.”

While lacking knowledge as to the specifics of the complaint, I applaud the lawsuit for seeking to shine a light on DOJ enforcement practices.

As noted in this prior post, the 2012 FCPA Guidance highlighted secret FCPA enforcement.  While I did not file a formal Freedom of Information Act request, I sought on several occasions to seek information from the DOJ regarding its secret FCPA enforcement practices.  In each instance, my requests were ignored.

Corruption Perceptions Index

Transparency International (“TI”) recently released its annual Corruption Perceptions Index (“CPI”) (see here).

The CPI ranks countries/territories based on how corrupt their public sector is perceived to be and is a composite index drawing on corruption-related data collected by a variety of institutions and reflecting the views of observers from around the world including those living and working in the countries/territories evaluated.

The top four (very clean) countries in the CPI were Denmark, New Zealand, Finland and Sweden. The bottom four (highly corrupt) countries were Somalia, North Korea, Afghanistan, and Sudan.

The United States placed 19th on the list of 177 countries.

The DOJ has spoken in religious terms regarding its FCPA enforcement actions as former Assistant Attorney General Lanny Breuer stated “we in the United States are in a unique position to spread the gospel of anti-corruption, because there is no country that enforces its anti-bribery laws more vigorously than we do.”

Yet, it remains a bit ironic that as the U.S. aggressively expands its Foreign Corrupt Practices Act enforcement practice and theories, the U.S. remains far from the top of the CPI.  The latest CPI should again cause us to pause as to our claimed exceptionalism and moral superiority on this topic.  For instance, see this prior post “We Really Ought to Pause and Reflect.”

See the “Double Standard” subject matter tag for more.

Pulse of FCPA Inc.

What is one reason Wal-Mart is spending in excess of $1 million per working day on its FCPA issues?  Because, in many instances corporate FCPA scrutiny has turned into a full employment act for FCPA Inc.

Reuters recently reported here that Wal-Mart “is paying for lawyers to represent more than 30 of its executives involved in a foreign corruption investigation, according to people familiar with the matter,  an unusually high number that shows the depth of the federal probe.”  The article states:

“In recent months, the U.S. government has brought in a number of senior Wal-Mart executives for questioning, including officials from corporate headquarters in Bentonville, Arkansas, the sources said. The move, along with widespread publicity about the probe, appears to have prompted executives to seek their own legal representation. The sources declined to name the executives who have submitted to interviews.”

As noted in this recent Friday roundup, there are few relevant data points associated with the pulse of FCPA Inc.  Much information is anecdotal, including the following from Legal Search Consultants Major, Lindsey & Africa in its Asia Legal Market, Semi-Annual Report.

“FCPA practices continue to grow with firms continuing to relocate specialists from their US offices to Asia. This is reflective of an effort to meet the unrelenting demand in investigations work. There seem to be few certainties in Asia, but one is that FCPA business will not be diminishing anytime soon.”

Reading Stack

An informative post recently on the FCPAmericas site titled “Conducting Effective FCPA Training in Latin America.”  The eight pointers discussed are true regardless of which region FCPA compliance is focused.

A little dickey bird whispers to thebriberyact.com here regarding U.K. DPAs and Bribery Act prosecutions.

For the resources stack, the OECD, the U.N. Office on Drugs and Crime, and the World Bank recently released here the “Anti-Corruption Ethics and Compliance Handbook for Business.”  It states:

“The handbook is not intended to create new standards or represent any form of legally binding requirement for businesses. It has been developed to serve as a useful, practical tool for companies seeking compliance advice in one, easy-to-reference publication.  The handbook is divided into three sections. The first section provides an overview of the international anti-corruption framework, within which companies conducting international business must operate. The second section provides a brief introduction to how companies can assess their risk in order to begin developing an effective anti-corruption ethics and compliance programme. The third and most significant section brings together the major business guidance instruments. A comparison of these instruments reveals that they all largely include the same basic anti-corruption ethics and compliance elements. These elements are further illustrated using real-life, anonymised case studies provided by companies. Finally, the handbook includes as an annex a quick-reference table providing a cross-comparison of all the major business guidance instruments referenced in this handbook.”

*****

A good weekend to all.