Archive for the ‘Uncategorized’ Category

FCPA Institute – Miami

Tuesday, October 7th, 2014

FCPA InstituteBegin 2015 by elevating your FCPA knowledge and practical skills in Miami, Florida at the FCPA Institute on January 12th-13th.

At a typical FCPA conference, participants are a face in the crowd and information is conveyed in a disjointed fashion by dozens of speakers appearing on multiple panels with little opportunity for actual engagement by participants.

The FCPA Institute is different as information is presented in an integrated and cohesive manner by an expert instructor with FCPA practice and teaching experience. Moreover, the FCPA Institute promotes active learning by participants through issue-spotting video exercises, skills exercises, small-group discussions and the sharing of real-world practices and experiences.

To best facilitate the unique learning experience that the FCPA Institute represents, attendance at each FCPA Institute is capped at 30 participants.

In short, the FCPA Institute elevates the FCPA learning experience for a diverse group of professionals and is offered as a refreshing and cost-effective alternative to a typical FCPA conference. The goal of the FCPA Institute is simple: to develop and enhance fundamental skills relevant to the FCPA, FCPA enforcement, and FCPA compliance best practices in a stimulating and professional environment with a focus on learning.

The FCPA Institute presents the FCPA not merely as a legal issue, but also as a business, finance, accounting, and auditing issue. The FCPA Institute is thus ideal for a diverse group of professionals such as in-house and outside counsel; compliance professionals; finance, accounting, and auditing professionals; and others seeking sophisticated knowledge and enhanced skills relevant to the FCPA. Click here to see what these diverse professionals are saying about the FCPA Institute.

FCPA Institute participants not only gain knowledge, practical skills and peer insight, but will also have their knowledge assessed and can earn a certificate of completion upon passing a written assessment tool. In this way, successful completion of the FCPA Institute represents a value-added credential for professional development.

Click here to register for the FCPA Institute – Miami.

Continuing Legal Education (“CLE”) credit for the FCPA Institute – Miami has been applied for and is pending in Florida and Georgia. Attorneys may be eligible to receive CLE credit through reciprocity or attorney self-submission in other states as well.

Free FCPA Essentials Webinar With Continuing Education Credit – October 22nd

Wednesday, October 1st, 2014

In conjunction with Emtrain (an innovative compliance training company with whom I offer a best-in-class online Global Anti-Bribery Course for business organizations), I will be offering a free “FCPA Essentials” webinar on Wednesday October 22nd (2 p.m. ET, 11 a.m. PT).

The webinar will help attendees

  • Understand the basics of the FCPA
  • Understand the common root causes of FCPA scrutiny & enforcement
  • Learn how to minimize FCPA scrutiny through risk assessments
  • Create uniquely tailored compliance training policies & procedures

This webinar has been certified for 1 hour of continuing education for HRCI, MCLE and CE. Attendees will also receive direct access to Emtrain’s anti-bribery videos to use in their own live training or corporate communications.





What Others Are Saying About The FCPA Institute

Monday, September 15th, 2014

FCPA InstituteA diverse group of professionals from around the world recently elevated their Foreign Corrupt Practices Act knowledge and skills by attending the inaugural FCPA Institute.

The FCPA Institute is a unique two-day learning experience that is materially different than other FCPA conferences.

At a typical FCPA conference, participants are a face in the crowd and information is conveyed in a disjointed fashion by dozens of speakers appearing on multiple panels with little opportunity for actual engagement by participants.

However, at the FCPA Institute information is presented in an integrated and cohesive manner by an expert instructor with FCPA practice and teaching experience.  Moreover, the FCPA Institute promotes active engagement by participants through issue-spotting video exercises, skills exercises, small-group discussions and the sharing of real-world practices and experiences. To best facilitate the unique learning experience that the FCPA Institute represents, attendance at each FCPA Institute is capped at 30 participants.

FCPA Institute participants have their knowledge assessed and can earn a certificate of completion upon passing a written assessment tool.  In this way, successful completion of the FCPA Institute represents a value-added credential for professional development for a diverse group of professionals such as in-house and outside counsel; finance, accounting and auditing professionals; and other compliance professionals seeking sophisticated knowledge and enhanced skills relevant to the FCPA.

You can elevate your FCPA knowledge and practical skills by attending the next FCPA Institute in Miami, Florida on January 12-13, 2015.  Space is limited and you can register here.

Set forth below is what participants at the inaugural FCPA Institute had to say about their experience.

  • “Unlike other FCPA conferences where one leaves with a spinning head and unanswered questions, I left the FCPA Institute with a firm understanding of the nuts and bolts of the FCPA, the ability to spot issues, and knowledge of where resources can be found that offer guidance in resolving an issue.  The limited class size of the FCPA Institute ensured that all questions were answered and the interactive discussion among other compliance professionals was fantastic.”  (Rob Foster, In-House Counsel, Oil and Gas Company)
  • “The FCPA Institute was a professionally enriching experience and substantially increased my understanding of the FCPA and its enforcement. Professor Koehler’s extensive insight and practical experience lends a unique view to analyzing enforcement actions and learning compliance best practices. I highly recommend the FCPA Institute to practitioners from all career stages.” (Sherbir Panag, MZM Legal, Mumbia, India)
  • “The FCPA Institute was a valuable course; well worth the investment.  The 2 day session course was well structured; led by a renowned expert, and I was very pleased with the small class size which allowed for dynamic discussions by the course participants of successes and challenges in complying with the requirements of the FCPA in today’s complex business environment.” (Global Compliance Executive, CPA, CIA for Manufacturing Company)
  • “The FCPA Institute provided an in-depth look into the various forces that have shaped, and that are shaping, FCPA enforcement.  The diverse group of participants provided unique insight into how, at a practical level, various professionals evaluate risk and deal with FCPA issues on a day-to-day basis.  The small group setting, the interactive nature of the event, and the skills assessment test all set the FCPA Institute apart from other FCPA conferences or panel-based events.” (John Turlais, Foley & Lardner)

Four-Time Ironman

Monday, September 8th, 2014

IronmanMy annual second Monday of September off-topic post.

Yesterday, I competed in Ironman Wisconsin for the fourth-straight year and became a four-time Ironman.  I completed the event (a 2.4 mile swim, a 112 mile bike and a 26.2 mile run) in 12 hours and 5 minutes.  A podium finish it was not, but it was my second best time in the event.

Why Ironman?

To those who have done it, you know, but it is hard to explain.

For me the answer is as follows.

There are currently people who are physically unable, or practically unable given their circumstances in life – to do an Ironman. But I am capable at the present moment.

Moreover, there will come a day in which I will be unable to do an Ironman, but that day has not yet arrived and god-willing will not arrive for some time.  But I am capable at the present moment.

Ironman is obviously a physical test, but a mental and emotional journey just the same.  It takes determination to get to the finish line as well as courage to put yourself at the starting line.  For me, Ironman is a place to channel my competitive juices and accomplish a cathartic cleanse each year.  Each year, during the physical, mental and emotional journey that is Ironman, I learn something new about myself, my life, and those around me that I might not have learned but for putting myself through the journey.

Thanks for listening and tomorrow we will return to the regularly-scheduled program.

FCPA Related Auditor – Client Disputes

Thursday, August 14th, 2014

Knowledge of the Foreign Corrupt Practices Act is a fundamental skill set for a variety of lawyers as well as accountants.

But what about auditors?  How does the FCPA impact the day-to-day job functions of auditors including relationships with clients?

This post highlights two recent examples of FCPA related auditor – client disputes.

Kallo Inc.

The FCPA, with increasing frequency, is popping up in all sorts of corporate disclosures.  Yet, Kallo Inc.’s recent FCPA related disclosure is downright strange.  Last week the healthcare delivery services company with corporate headquarters in Canada and shares traded on U.S. exchanges disclosed in an SEC filing as follows.

“On June 3, 2014, we terminated Schwartz Levitsky Feldman LLP [...] as our independent registered accounting firm.  The decision to dismiss Schwartz Levitsky Feldman LLP as our independent registered public accounting firm was approved by our board of directors on June 3, 2014.  Except as noted in the paragraph immediately below, the reports of Schwartz Levitsky Feldman LLP’s financial statements for the years ended December 31, 2012 and 2011 and for the period January 1, 2013 through March 31, 2014 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle.

The reports of Schwartz Levitsky Feldman LLP on our financial statements as of and for the years ended December 31, 2012 and 2011 and for the period January 1, 2013 through March 31, 2014 contained an explanatory paragraph which noted that there was substantial doubt as to our ability to continue as a going concern as we had suffered negative working capital, had experienced negative cash flows from continuing operating activities and also due to uncertainty with respect to our ability to meet short-term cash requirements.

During the years ended December 31, 2012 and 2011 and for the period January 1, 2013 through March 31, 2014 and through June 3, 2014,  we have not had any disagreements with Schwartz Levitsky Feldman LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to Schwartz Levitsky Feldman LLP’s satisfaction, would have caused it to make reference to the subject matter of the disagreements in its reports on our consolidated financial statements for such years or in connection with its reports in any subsequent interim period through the date of dismissal with the exception of the following:

Schwartz Levitsky Feldman LLP failed to timely audit our financial statements for the period ended December 31, 2013.  The auditor requested an opinion to the affect that there were no violations of the Foreign Corrupt Practices Act.  We complied and had our securities attorney issue an opinion that there were no violations of the Foreign Corrupt Practices Act.  Then, after receiving the requested opinion, the auditor decided that it would require a second opinion from an “independent” attorney.  Again, we complied having retained a law firm in New York City, which specialized in the Foreign Corrupt Practices Act.   Again, the opinion reflected there was no violation of the Foreign Corrupt Practices Act.  After that, the auditor wanted the opinion from the New York City firm to contain additional language, which the independent lawyer felt that Schwartz Levitsky Feldman LLP was trying to influence the attorney’s independent opinion.  By this time, we were frantic.  The auditor could not give us a definitive date or specific conditions which would result in the issuance of its audit opinion of the December 31, 2013 financial statements.

Under the circumstances we had no choice but to obtain the services of a new auditor.  After retaining MaloneBailey LLP, MaloneBailey LLP was able to render an unqualified audit opinion.  We have authorized Schwartz Levitsky Feldman LLP to respond fully to the inquiries of MaloneBailey LLP concerning the disagreement.  Schwartz Levitsky Feldman LLP alleged that it did not receive an unqualified opinion by independent legal counsel to confirm that that there were no violations of the Foreign Corrupt Practices Act.  However, Schwartz Levitsky Feldman LLP fail[ed] to disclose that in fact it received two opinions from two law firms that there were no violations.  Further, Schwartz Levitsky Feldman LLP did not conduct any independent investigation or retain their own counsel with respect to the matter.

Thereafter, Malone Bailey issued an unqualified audit opinion after having access to the same information that Schwartz Levitsky Feldman had access to and audited our financial statements for the year ended December 31, 2013 and reviewed our Form 10-Q for the period ended March 31, 2014.”

Most recently in this strange auditor – client dispute, Kallo included in an SEC filing earlier this week this response from Schwartz Levitsky Feldman LLP which states:

“We are the former independent auditors for Kallo Inc. (the “Company”). We have read the Company’s disclosure … dated August 8, 2014. Insofar as it pertains to our firm, we have to advise as follows:

During the conduct of our audit of the Company’s financial statements for the year ended December 31, 2013, we expressed concerns to the Company related to certain acts and transactions that may have violated the U.S. Foreign Corrupt Practices Act (“FCPA”).

As a necessary component of alleviating our concerns and completing the Company’s audit and issuing an opinion on the Company’s financial statements for the year ended December 31, 2013 and for the subsequent period through March 31, 2014, we requested that the Company provide us with an unqualified opinion by independent legal counsel, which confirmed that the acts and transactions in question did not violate the FCPA.

In response to our request, the Company provided a two page legal opinion that concluded that the acts and transactions in question did not violate the FCPA. This initial response was insufficient to alleviate our concerns, in part because the issuing attorney was not sufficiently independent.

Thereafter, the Company provided us with a letter from a New York-based law firm. Although this letter was issued by an apparently independent attorney, the letter did not contain an unqualified legal opinion that the acts and transactions in question did not violate the FCPA. Upon receipt of this letter, we once again requested an unqualified opinion by independent legal counsel that confirmed that the acts and transactions in question did not violate the FCPA.

After following up numerous times as to the status of this opinion, the Company indicated that the New York-based firm was conducting an investigation of the facts and circumstances that would allow it to issue the requested opinion. To date of our termination, the Company had not provided us with this unqualified opinion by an independent legal counsel stating that the acts and transactions in question did not violate the FCPA, despite their numerous assurances that they would do so.

We had not received such an opinion and as a result, we were unable to alleviate our concerns of a potential violation of the FCPA and the potential liability in respect thereof.

In view of our inability to satisfy ourselves, as to this issue we were not, on the date of our termination, in a position to release our audit report on the Company’s financial statements for the year ended December 31, 2013.”

To say the least, it will be interesting to follow Kallo’s alleged or perceived FCPA issues.

DAP Partners

As highlighted in this previous post, in May 2013 various executives of broker-dealer Direct Access Partners (“DAP”) were criminally and civilly charged in connection with an alleged bribery scheme involving an official of an alleged Venezuelan state-owned banking entity that acted as the financial agent of the state to finance economic development projects.  Thereafter, as highlighted here and here, additional individuals associated with DAP were also charged, certain defendants pleaded guilty, and the firm went defunct.

In connection with its demise, DAP filed a civil lawsuit in New Jersey state court alleging that its auditor (Rothstein Kass & Co – an entity recently acquired by KPMG) was negligent due to its failure to spot the alleged conduct at issue.  In summarizing DAP’s complaint, this recent Law360 article states:

“DAP accused Rothstein Kass of deviating from general accounting standards and principles during its dealings with the company, leading to multiple missed chances to uncover the scheme. Among the specific allegations DAP asserts is that Rothstein failed to dedicate adequate resources to its audits, delegated critical responsibilities to inexperienced staff members and failed to conduct mandatory analytical procedures in order to meet deadlines, thus exposing the brokerage to the fraud.”
As highlighted in the same Law360 article, Rothstein Kass recently filed a motion to dismiss and the article states as follows.
“To state claims … DAP is required to do more than simply allege that RK audited DAP and DAP suffered damages as a result of a bribery and kickback scheme perpetrated by its own senior executives,” Rothstein Kass’s brief said. “DAP, however, has not done so. Instead, DAP offers only incomplete, conclusory and factually unsupported allegations that fail to state any actionable claims against RK, for several reasons.” Defending its work, Rothstein Kass — which acted as DAP’s auditor for 2009, 2010 and 2011 — said evidence now suggests that it was provided with false and fraudulent documents to hide the alleged scheme. However, the claims themselves have other flaws, the Roseland, New Jersey-based firm contends. Because DAP’s senior executives, managers and principal employees carried out the scheme, the fraud can be attributed to DAP and its claims fall victim to the doctrine of in pari delicto, according to Rothstein Kass. That doctrine bars courts from resolving disputes between two wrongdoers and should prevent DAP from recovering for its own officers’ misconduct, the firm said …”.
*****

As highlighted by the two examples above, the FCPA intersects a variety of professional disciplines and auditors, as well as other obvious professionals, need a pair of FCPA goggles in going about their daily tasks.

Moreover, in terms of FCPA ripples (see here for my recent article of the same name), FCPA related auditor-client disputes are yet another example of the many ripples that result from FCPA scrutiny or enforcement.