The Anti-Corruption Report

The definitive source of actionable intelligence covering anti-corruption laws around the globe

Articles By Topic

By Topic: Due Diligence

  • From Vol. 7 No.20 (Oct. 3, 2018)

    Preparing for a Sanctions Crackdown on Apparel Companies with Operations in China

    A recent spate of OFAC designations, along with advisories jointly issued by the U.S. Departments of State, Treasury and Homeland Security about the risks of supply chain links to North Korea, may signal an impending crackdown on apparel companies with operations in China. In a guest article, Ryan Fayhee and Ashley Hodges, respectively a partner and associate at Hughes Hubbard, analyze the advisories and provide practical steps companies can take to mitigate supply chain risks. See “Five Ways a Company Can Leverage Its Anti-Bribery Compliance Program to Facilitate Sanctions Compliance” (Sep. 14, 2016).

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  • From Vol. 7 No.17 (Aug. 22, 2018)

    How Google Does Third-Party Due Diligence

    Third-party due diligence is a perpetual challenge for in-house anti-corruption compliance professionals. For large companies that work with numerous vendors across many business lines and geographic markets, the task can be enormous and there is no one right way to do it. Because of this, it is important for companies to benchmark their programs against those at other companies to see what they are doing right and come up with fresh ideas for improvement. The Anti-Corruption Report spoke with Therese Lee, senior counsel at Google, about how the ubiquitous search engine handles third-party due diligence and deals with red flags when they are raised. For further benchmarking see our three-part series on in-house perspectives on third-party due diligence: “Right-Sizing and Risk Ranking” (May 24, 2017); “Information Gathering” (Jun. 7, 2017); and “Red Flags and Follow-Up” (Jun. 21, 2017).

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  • From Vol. 7 No.14 (Jul. 11, 2018)

    Common Hang-Ups in Cross-Border Due Diligence and Investigations

    A successful cross-border due diligence or investigatory effort depends upon planning the process well and handling interactions with various stakeholders with sensitivity. During a recent panel at the 6th Annual European Compliance & Ethics Institute, Ann Sultan, counsel at Miller & Chevalier, and Patrick Garcia, Group Compliance officer at VEON, shared their approaches to transnational investigations and discussed what to do when things do not turn out quite as anticipated. See also “Compliance Experts From Altria, Noble Energy and HP Share Corruption Investigation Best Practices” (Sep. 10, 2014).

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  • From Vol. 7 No.13 (Jun. 27, 2018)

    Practical Approaches to M&A Compliance From Avis Budget Group

    In theory, compliance initiatives throughout a merger or acquisition should proceed with ease and be appreciated. In reality, various moving parts, players and personalities must be managed throughout the process by a compliance team, which no doubt will be called on to exercise its diplomatic skills while undertaking exceedingly vital work in a sometimes hostile environment. At the Society for Corporate Compliance and Ethics’ European Compliance & Ethics Institute in Frankfurt, Germany, representatives of Avis Budget Group discussed what it really takes to get things done before, during and after closing. The Anti-Corruption Report shares insight from the panel. See also “Structuring M&A Transactions to Minimize Corruption Risk” (Oct. 18, 2017) and Willkie’s series on “Complying With the FCPA: Mergers, Acquisitions and Investment Transactions (Part One of Five)” (Apr. 17, 2013); Part Two (May 1, 2013); Part Three (May 15, 2013); Part Four (May 29, 2013); and Part Five (Jun. 12, 2013).

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  • From Vol. 7 No.6 (Mar. 21, 2018)

    How Will the GDPR Affect Due Diligence?

    Among the many provisions of the GDPR with which companies are grappling is Article 10, which affects the processing of personal data relating to criminal activity. This kind of data collection is a core part of anti-corruption due diligence, as well as investigations. “The situation will basically put companies subject to both the GDPR and non-E.U. laws between a rock and a hard place,” Alja Poler De Zwart, counsel at Morrison Foerster in Brussels, told The Anti-Corruption Report. “Do you continue to comply with the FCPA and risk violating the GDPR, or do you scale your FCPA vetting back in fear of the GDPR fines and instead risk the wrath of the U.S. Department of Justice?” We discuss how companies can approach Article 10 and the patchwork of applicable member-state laws. See “New Criteria for Employee Monitoring Practices in Light of ECHR Decision” (Oct. 18, 2017).

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  • From Vol. 7 No.4 (Feb. 21, 2018)

    How Google Does Third-Party Due Diligence

    Third-party due diligence is a perpetual challenge for in-house anti-corruption compliance professionals. For large companies that work with numerous vendors across many business lines and geographic markets, the task can be enormous and there is no one right way to do it. Because of this, it is important for companies to benchmark their programs against those at other companies to see what they are doing right and come up with fresh ideas for improvement. The Anti-Corruption Report recently spoke with Therese Lee, senior counsel at Google, about how the ubiquitous search engine handles third-party due diligence and deals with red flags when they are raised. For further benchmarking see our three-part series on in-house perspectives on third-party due diligence: “Right-Sizing and Risk Ranking” (May 24, 2017); “Information Gathering” (Jun. 7, 2017); and “Red Flags and Follow-Up” (Jun. 21, 2017).

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  • From Vol. 6 No.21 (Nov. 1, 2017)

    Compliance and Self-Protection in an Uncertain Sanctions Environment

    The United States economic sanctions regime is experiencing a period of turbulence, with major changes occurring in sanctions programs (and the recent restructuring of the state department sanctions office) affecting trade involving several nations that have a significant presence in the world economy. In a guest article, Scott Balber, Jonathan Cross and Jared Stein of Herbert Smith Freehills explain how these developments underscore the importance of managing sanctions risk which may arise from future changes in U.S. law, both by establishing appropriate exit procedures should sanctions require the termination of existing arrangements, and by conducting appropriate political risk assessment and counterparty due diligence to identify and mitigate the potential for sanctions-related business disruption. See “Five Ways a Company Can Leverage Its Anti-Bribery Compliance Program to Facilitate Sanctions Compliance” (Sep. 14, 2016).

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  • From Vol. 6 No.19 (Oct. 4, 2017)

    Overcoming the Challenges of Conducting Third-Party Diligence in Brazil

    In the wake of the ongoing Petrobras scandal, conducting effective third-party due diligence in Brazil has become even more important, but local customs and peculiarities can make it difficult for those not familiar with the area. The Anti-Corruption Report recently discussed diligence strategies with Snežana Gebauer, executive managing director and head of the U.S. Investigations and Disputes practice at K2 Intelligence. Gebauer discussed how to conduct a risk analysis, the challenges of gathering public information in Brazil, the importance of human intelligence and more. See our three-part series on in-house perspectives on third-party due diligence: “Right-Sizing and Risk Ranking” (May 24, 2017); “Information Gathering” (Jun. 7, 2017); and “Red Flags and Follow-Up” (Jun. 21, 2017).

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  • From Vol. 6 No.19 (Oct. 4, 2017)

    How to Use Data Analytics to Mitigate Risk When Conducting Post-Acquisition Diligence and Integration Activities

    Identifying early that a target company has an insufficient or incomplete anti-bribery and anti-corruption compliance program is a crucial component in mitigating successor liability during an acquisition. In the fast-paced world of deal making it is not unusual for an acquirer to be unable to complete the ideal pre-acquisition ABAC due diligence procedures of the company it is acquiring. In a guest article, William P. Olsen, Scott Nemeroff and Alex Koltsov of Grant Thornton discuss how companies can use data analytics to simplify and improve several key post-acquisition activities: integrating business units and locations, training employees and third parties and conducting FCPA compliance reviews. See “Mitigating Corruption Risk When Acquiring Companies in High-Risk Jurisdictions” (May 24, 2017).

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  • From Vol. 6 No.16 (Aug. 16, 2017)

    Sample Anti-Corruption Third-Party Due Diligence Questionnaire

    During the initial phases of anti-corruption third-party due diligence, many companies choose to use a questionnaire to gather information about their potential partners. The Anti-Corruption Report has compiled a sample questionnaire that companies can use during their diligence and onboarding process. Companies can use this questionnaire as a starting point, adding questions that might be specific to their industry, region, business model or risk profile. For more details on customizing questions for third parties, see our three-part series on in-house perspectives on third-party due diligence: “Right-Sizing and Risk Ranking” (May 24, 2017); “Information Gathering” (Jun. 7, 2017); and “Red Flags and Follow-Up” (Jun. 21, 2017).

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  • From Vol. 6 No.15 (Aug. 2, 2017)

    Addressing Three Unique Challenges of Pre-Acquisition Anti-Corruption Due Diligence in the Technology Industry

    Technology companies often conduct pre-acquisition due diligence under less-than-ideal conditions, with short timelines, competitive negotiations and targets that have start-up cultures and minimal compliance programs. Proactively developing a solid anti-corruption due diligence plan can help overcome these challenges. In a guest article, Becky Rohr, vice president and associate general counsel at Hewlett Packard Enterprise, details three unique areas of corruption risk in the technology sector that require a focused due diligence strategy and explains HPE’s approach. See “Mitigating Corruption Risk When Acquiring Companies in High-Risk Jurisdictions” (May 24, 2017).

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  • From Vol. 6 No.12 (Jun. 21, 2017)

    In-House Perspectives on Third-Party Due Diligence: Red Flags and Follow-Up (Part Three of Three)

    Conducting third-party due diligence is only useful if the exercise leads to the effective identification and mitigation of corruption risk. The FCPA Report recently spoke with representatives from a wide variety of companies, including BDP International, Public Interest Registry and TE Connectivity, and identified seven red flags they look for when vetting third parties and what they do when they find them. We also discussed how and when to update diligence files to ensure that potential issues are caught in a timely manner. The first article in this three-part series discussed how companies can right-size their diligence programs and provided strategies for ensuring that those programs are appropriately risk-based. The second article addressed the information-gathering phase of the diligence process, revealing eight basic categories of information a company may want to look for and four methods of getting that information. See “Due Diligence in Africa: The Human Intelligence Factor” (Apr. 12, 2017).

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  • From Vol. 6 No.11 (Jun. 7, 2017)

    In-House Perspectives on Third-Party Due Diligence: Information Gathering (Part Two of Three)

    Smart compliance practitioners know that every third-party due diligence program must be carefully tailored to meet that company’s specific needs and risk profile. However, there are certain types of information that most companies will want to gather as part of their due diligence process and there are just a handful of techniques companies can use to gather that information. The FCPA Report recently spoke with representatives from a wide variety of companies, including BDP International, Public Interest Registry and TE Connectivity, about their third-party programs revealing eight basic categories of information a company may want to look for and four methods of getting that information. See “Due Diligence in Africa: The Human Intelligence Factor” (Apr. 12, 2017).

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  • From Vol. 6 No.11 (Jun. 7, 2017)

    Corruption and the Greater Good: NGOs and International Compliance Risk

    Each year, non-governmental and not-for-profit organizations (NGOs) expend billions of dollars in grants and services in countries struggling to combat political corruption and provide adequate public services. Yet, many such organizations systematically underestimate the risk bribery and illicit dealings pose to their overseas operations. In a guest article, Kim Nemirow, a partner at Ropes & Gray, and her associates Andrew O’Connor and David Rojas, identify several key areas of corruption risk for NGOs and outline seven steps that NGOs can take to address these risks allowing them to keep their resources focused on greater goals. See our three-part series on detecting and mitigating corruption risk when participating in public procurements : “Understanding the Procurement Process” (May 13, 2015); “Steps to Take Prior to Entering into a Procurement Process” (May 27, 2015); and “Seven Steps to Take During and After a Procurement Process” (Jun. 10, 2015).

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  • From Vol. 6 No.11 (Jun. 7, 2017)

    Time to Clean Up: What Life-Sciences Companies Need to Know About Brazil’s Operation Car Wash 

    Brazil’s Operation Car Wash originally focused on corruption at state-controlled oil company Petrobras. But recent developments indicate that other industries – including those in the medical device and pharmaceutical sectors – are now under scrutiny as well. In a guest article, Gary Giampetruzzi, a partner at Paul Hastings, and associates Jonathan Stevens and Thiago Ribeiro, provide an update on recent developments and advise medical device and other life-sciences manufacturers on how they can protect their interests in Brazil. See “Brazilian Enforcers Are MVPs in Odebrecht and Braskem Settlements” (Feb. 1, 2017).

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  • From Vol. 6 No.10 (May 24, 2017)

    In-House Perspectives on Third-Party Due Diligence: Right-Sizing and Risk Ranking (Part One of Three)

    The last several years of FCPA enforcement and government messaging have proven to even the most skeptical that an effective third-party due diligence program is a necessary part of any multinational business. Despite, or perhaps because of, a wealth of information on the topic, many companies still struggle with how to create and maintain such a program. To assist companies in benchmarking and enhancing their third-party diligence programs, The FCPA Report spoke with in-house compliance professionals hailing from a wide range of companies operating in a variety of industries, including experts from BDP International, NBCUniversal, Public Interest Registry and TE Connectivity. See “Training Insights From In-House Experts (Part One of Two)” (Jun. 1, 2016); and Part Two (Jun. 15, 2016).

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  • From Vol. 6 No.10 (May 24, 2017)

    Mitigating Corruption Risk When Acquiring Companies in High-Risk Jurisdictions

    Despite uncertainty as deal-makers await the fallout from global elections, private equity groups and corporations will continue to look for growth in new and emerging markets, Bill Olsen, Scott Nemeroff, Dan Reynolds and Alex Koltsov of Grant Thornton argue in a guest article. They provide detailed advice on conducting effective due diligence to mitigate the bribery and regulatory risks that companies face when entering new markets. See “Successor Liability in the Spotlight With Mondelēz’s $13M FCPA Settlement After Purchase of Cadbury India” (Feb. 1, 2017).

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  • From Vol. 6 No.7 (Apr. 12, 2017)

    Due Diligence in Africa: The Human Intelligence Factor

    The U.S. is a well-stocked cabinet of data like few other countries, challenged by none in its wealth of public-record information. In contrast, the public record in the majority of African countries is limited. In a guest article, William Shortt, a director at Stroz Friedberg, explains how, when it comes to pre-transaction, FCPA-focused due diligence on the African continent, companies must rely on human intelligence over public-record research and open-source intelligence to expose corruption risks. See “Regional Risk Spotlight: Ayoka Akinosi Discusses the Crackdown on Corruption in Nigeria” (Feb. 24, 2016).

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  • From Vol. 6 No.7 (Apr. 12, 2017)

    Patricia Etzold of PwC Discusses Effective M&A Due Diligence That Won’t Hamper Future Relationships

    Performing deep and thorough due diligence on a company targeted for merger or acquisition is critical to minimize anti-corruption risk. But poking into the target’s books and records, and getting information from its employees, can be a delicate business. The FCPA Report spoke with Patricia Etzold, an NY forensic services market leader in PwC’s forensics practice, for tips on how a due diligence team can work efficiently and effectively to collect information on a target without compromising future relationships between the two parties. See “Brian Ong of FTI Discusses Creating an M&A Anti-Corruption Due Diligence Game Plan and Getting the Most Out of Target Interviews” (May 18, 2016).

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  • From Vol. 6 No.6 (Mar. 29, 2017)

    Managing Subsidiary Risks: Setting Things Up for Success (Part One of Three)

    A common theme of many anti-corruption settlements is the involvement of foreign subsidiaries. A parent company may have little oversight of its far-flung subsidiaries, but can still be on the hook if bribes are paid or books and records are not kept properly. In this three-part series, The FCPA Report will look at the different ways companies can minimize and mitigate anti-corruption risks at their subsidiaries. In this first part, we discuss how companies can be held liable for the actions of their subsidiaries and how subsidiaries can be set up for success from the beginning – both when building one from scratch and when acquiring an already existing company. The subsequent articles will discuss how companies can use culture, communication and internal controls to keep subsidiary risks in check. See “How to Mitigate FCPA Risk Before and After an Acquisition” (Feb. 18, 2015).

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  • From Vol. 6 No.6 (Mar. 29, 2017)

    Optimizing Third-Party Due Diligence in the Wake of Unaoil

    Oil-and-gas intermediary Unaoil’s bribery scandal shows that even conducting extensive due diligence on third parties does not eliminate third-party risk, as evidenced by the several major corporations ensnared in the scheme despite their own substantial due diligence. A recent panel discussion hosted by Strafford examined the scandal and offered practical suggestions for making the most of third-party due diligence in its wake. The seminar was moderated by Jay Holtmeier, a partner at WilmerHale, and featured Palmina M. Fava, a partner at Paul Hastings, Pedro Medrano, senior counsel at Time Warner and Richard Sibery, a partner at EY. This article summarizes their insights. See “A New Era in FCPA Disclosure” (Feb. 1, 2017).

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  • From Vol. 6 No.2 (Feb. 1, 2017)

    Successor Liability in the Spotlight With Mondelēz’s $13M FCPA Settlement After Purchase of Cadbury India 

    Mondelēz International, Inc., has settled anti-corruption allegations with the SEC stemming from subsidiary Cadbury Limited’s expansion of a chocolate plant in India. U.S.-based Mondelēz, which acquired U.K.-based Cadbury in 2010, agreed to pay a civil penalty of $13 million to settle the allegations concerning payments made to a third-party agent retained by Cadbury India. The deal is notable for its illumination of acceptable levels of pre-acquisition due diligence and for the fact that only civil penalties were incurred, with no mention of disgorgement, practitioners told The FCPA Report. For more on anti-corruption in India, see “Experts Discuss the Corruption Climate in India and Give Six Practical Tips to Mitigate Risk” (Mar. 9, 2016); “Regional Risk Spotlight: Jay Holtmeier of WilmerHale Explains How to Navigate Bureaucratic Corruption Risks in India” (Sep. 23, 2015) and “Doing Business in India: Avoiding Corruption Risks and Monitoring Compliance Programs” (Jun. 11, 2014).

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  • From Vol. 6 No.2 (Feb. 1, 2017)

    After Two Extensions of Its DPA, Zimmer Biomet Settles Further FCPA Charges for $30M

    Biomet’s continued misconduct during the term of its 2012 deferred prosecution agreement, including its bribery of Mexican customs agents and persistent use of a third-party distributor known to have paid bribes in Brazil has led to a new resolution with the DOJ and SEC. The DOJ extended Biomet’s 2012 deferred prosecution agreement twice while the investigation was pending, and now the company (purchased in 2015 by Zimmer, which also bought the DPA obligations) will pay $30 million dollars to resolve the claim in a new settlement, and will take on another monitor for three years. See also “Dan Newcomb Discusses the Unusual Second Extension of Biomet’s DPA” (Apr. 20, 2016).

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  • From Vol. 6 No.2 (Feb. 1, 2017)

    Tailoring Compliance Efforts to Address Challenges in India

    With a reputation for widespread bribery and corruption, India can be a challenging locale in which to do business. Direct foreign investment into the country is worth at least $55 billion, and a number of major multinationals have faced FCPA enforcement actions arising out of their operations there, observed Foley & Lardner partner David Simon at a program at the Society of Corporate Compliance and Ethics 15th Annual Compliance and Ethics Institute. Program panelists, including Laurel Burke, associate general counsel at Regal Beloit Corporation, and Sherbir Panag, a partner at MZM Legal based in Mumbai, addressed steps companies can take to avoid corruption in India, along with the unique challenges companies face as they develop effective compliance programs there. See “How to Recognize and Address FCPA Challenges in India” (Jun. 12, 2013).

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  • From Vol. 5 No.24 (Dec. 7, 2016)

    A Dish of Cream? Some Caviare? Or Strassburg Pie? How to Properly Respond to Bribery Requests  

    “Before a Cat will condescend to treat you as a trusted friend, some little token of esteem is needed, like a dish of cream,” T.S. Eliot wrote in his Book of Practical Cats. Ensuring that an employee properly responds to a bribe request is no easy task because providing the soliciting individual with a “little token of esteem” may be the path of least resistance for employees. In a guest article, Hogan Lovells attorneys Peter Spivack and Rafael Ribeiro discuss how a company can strengthen all aspects of its compliance program to minimize the risk that bribes will be requested and ensure that their employees respond appropriately when they are. For further insights from Hogan Lovells, see “How Companies Can Use Enhanced Auditing Techniques to Address the Government’s Increasing Focus on Internal Controls” (May 13, 2015).

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  • From Vol. 5 No.22 (Nov. 9, 2016)

    Och-Ziff’s Settlement Offers Five Compliance Lessons for Hedge Fund Managers and Private Equity Investors 

    Och-Ziff’s recent settlements with both the SEC and DOJ for violations of the FCPA should be a wakeup call for hedge fund managers and private equity investors. “Although the enforcement authorities have historically focused their FCPA attention elsewhere, the DOJ and SEC are increasingly turning their attention to sophisticated financial firms,” Jason Jones, a partner at King & Spalding, explained. “Hedge funds, private equity firms, banks, and other firms often focus the majority of their compliance resources on anti-money laundering and sanctions programs, but anti-corruption must not be neglected,” he said. The details of the case, along with the terms of the company’s settlement, offer five key compliance lessons for firms in this industry. For details on the facts underlying the case and the terms of the settlement see our companion article “Dirty Dealings in Africa Result in SEC and DOJ Settlements for Och-Ziff and Two Executives” (Oct. 26, 2016).

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  • From Vol. 5 No.21 (Oct. 26, 2016)

    Mitigating the Corruption Risk Posed by Vendors in China 

    Some of the more difficult issues for businesses with operations in China arise from the activities of third parties and vendors in that country. The attenuated lines of supervision at many China operations, the lack of transparency in obtaining due diligence information on vendors, the changing and sophisticated nature of corrupt practice schemes, and increased pressure from regulators in the U.S. – and increasingly Chinese and other foreign jurisdictions – all put multinationals at risk. In a guest article, Ronald Cheng, a partner at O’Melveny & Myers based in both Los Angeles and Honk Kong, explains how companies can mitigate these risks while doing business in China. See “The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China” (Sep. 9, 2015).

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  • From Vol. 5 No.19 (Sep. 28, 2016)

    Managing Data Privacy Challenges in Performing Due Diligence and Internal Investigations in China (Part Two of Two)

    For companies doing business in China, understanding data privacy and cybersecurity requirements under Chinese law is critical. But once a company is familiar with the basic legal contours, more practical concerns move to the forefront. In this article, the second in a two-part series on China’s data privacy and cybersecurity laws, we share insights from practitioners working in China on how companies can manage the practical challenges of running their businesses while staying on the right side of the law. The first article in the series explained the basic structure of the data compliance regime in China, including the criminal law, civil law, industry regulations and the draft Cybersecurity Law. See also “The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China” (Sep. 9, 2015).

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  • From Vol. 5 No.19 (Sep. 28, 2016)

    Regional Risk Spotlight: Argentinian Attorney Pedro Serrano Espelta Explains the Country’s Complicated History and Its Effect on Corruption Risk Today

    Argentina’s complicated political history is marked by a pattern of alternating nationalization and privatization of industries. As a result, the government plays a role in almost all business transactions, leading to significant corruption risks for companies doing business there. Meanwhile, the country’s own laws rarely result in convictions and, in fact, do not meet the OECD’s recommendations for preventing corruption. The FCPA Report recently spoke with Pedro Serrano Espelta, a partner at Marval, O’Farrell & Mairal in Buenos Aires, about Argentina’s corruption risks and what companies can do to avoid them. Serrano Espelta will also be discussing the topic at the Global Regulatory & Enforcement Update Seminar at ACI’s 33rd International Conference on the FCPA to be held in Washington, D.C., in December. See “Regional Risk Spotlight: Livia Zamfiropol of DLA Piper Discusses Recent Trends in Romania’s Anti-Corruption Enforcement” (Aug. 31, 2016).

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  • From Vol. 5 No.19 (Sep. 28, 2016)

    A Charitable Donation to Avoid a Fine in China Nets Nu Skin an SEC Fine Instead

    Efforts to evade a Chinese sanction have resulted in an SEC penalty for a health and beauty company based in Provo, Utah. Nu Skin Enterprises, Inc., a manufacturer and direct marketer of cosmetics and nutritional products, has agreed to settle allegations that its subsidiary donated approximately $154,000 to a charity in order to influence a regulatory decision. The company will pay disgorgement in the amount of the fine it avoided paying – $431,088 – plus a $300,000 penalty, according to the SEC’s cease-and-desist order. See “Ten Strategies for Avoiding FCPA Violations When Making Charitable Donations” (Jul. 11, 2012).

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  • From Vol. 5 No.15 (Jul. 27, 2016)

    Credit Suisse, Goldman Sachs and Defense Counsel Discuss Corruption Issues Troubling Financial Institutions

    Over the past several years, anti-corruption regulators have consistently focused on financial institutions. From the Morgan Stanley declination in 2012, to the 2015 U.K. prosecution of Standard Bank, to the recent SEC sweep of sovereign wealth funds, financial institutions are facing enforcement risks in multiple jurisdictions. During a recent PLI seminar, Credit Suisse’s global head of anti-corruption and economic sanctions, a VP in Goldman Sachs’ Financial Crime Compliance group and top FCPA defense counsel from Gibson Dunn, Wilmer Hale and Sullivan and Cromwell discussed the FCPA issues faced by financial institutions, including a regulatory focus on hiring and internships, due diligence, the impact of the so-called “Panama Papers” and third-party risks. For more on this subject, see “Mayer Brown Attorneys Discuss Global Corruption Risk in the Financial Services Industry” (Aug. 19, 2015); and “Compliance Leaders from Citigroup and Morgan Stanley Examine FCPA Risks and Solutions for Financial Institutions” (May 14, 2014). 

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  • From Vol. 5 No.10 (May 18, 2016)

    Brian Ong of FTI Discusses Creating an M&A Anti-Corruption Due Diligence Game Plan and Getting the Most Out of Target Interviews

    Many companies enter into new markets and expand their businesses through mergers with, and acquisitions of, already existing entities. Due diligence on the target company has always been an integral part of the transaction so that the acquiring company can be sure it is getting what it pays for. This due diligence has traditionally been the purview of deal teams whose primary focus is on the financial elements of the deal, but recent cases have highlighted the need for companies to look into the compliance and ethics risks associated with deals as well. The FCPA Report recently spoke with certified public accountant Brian Ong, a senior managing director at FTI Consulting, about his experiences conducting M&A due diligence and what strategies companies can use to get the most out of the process. See “How to Mitigate FCPA Risk Before and After an Acquisition” (Feb. 18, 2015).

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  • From Vol. 5 No.9 (May 4, 2016)

    Effective FCPA Compliance Strategies in the Wake of the Panama Papers

    The Panama Papers leak of 11.5 million documents related to offshore banking and the use of shell companies in “tax havens” has ushered in a period of renewed focus on monitoring, tracking and justifying transactions with offshore companies, particularly those in low or no tax jurisdictions that lack transparency. In a guest article, Nicholas M. Berg and Kim B. Nemirow, partners at Ropes & Gray, and Jaime Orloff Feeney, an associate there, analyze the developments in the Panama Papers case, the potential liability theories stemming from the case, how the case has changed the FCPA enforcement environment, and how companies can ensure their controls are sufficiently tailored to the various risks presented by anonymous shell corporations. See “Structuring FCPA Books and Records Controls to Withstand SEC Scrutiny Without Impairing Sales” (Mar. 20, 2013).

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  • From Vol. 5 No.8 (Apr. 20, 2016)

    A Shady Consultant and Lackluster Accounting in China Wins Sands a $9 Million Penalty

    Las Vegas Sands Corp. (LVSC), a casino and resort giant, agreed on April 7, 2016 to pay a $9 million SEC penalty to settle FCPA charges stemming from its activities in China and Macao. According to the SEC, LVSC transferred funds totaling more than $62 million to a consultant in China without supporting documentation or appropriate authorization for the transfer of those funds. Furthering LVSC’s troubles, the majority of the transfers were made even though senior LVSC management knew significant funds that had previously been transferred to the consultant couldn’t be accounted for. In addition to the transfers to the consultant, LVSC’s Chinese operations were rife with internal controls failures and shady accounting. The case demonstrates that such controls are “of the utmost importance,” said Susan Divers, a senior advisor at LRN Advisory Services Group. See “How Companies Can Use Enhanced Auditing Techniques to Address the Government’s Increasing Focus on Internal Controls” (May 13, 2015).

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  • From Vol. 5 No.5 (Mar. 9, 2016)

    Five Stages of Corruption and Myriad Internal Controls Failures: Compliance Takeaways From the VimpelCom Settlement

    VimpelCom’s historic settlement with U.S. and Dutch authorities was notable for many reasons, among them the enormous penalties and disgorgement paid and the DOJ’s attendant civil forfeiture suit. But beyond the settlement itself, which was discussed in the first part of this two-part article series, the underlying bribery scheme is noteworthy – and informative – as well. Over and over the company’s weak internal controls enabled employees to make corrupt payments to a government official in Uzbekistan. Here, we take a close look at the five stages of corruption that were outlined by the DOJ in its criminal information. The underlying facts show the mechanics of how corrupt payments can be made and how strong internal controls could have prevented them. See “Examining New DOJ Compliance Counsel Hui Chen’s Four Elements of a Successful Compliance Program” (Jan. 13, 2016).

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  • From Vol. 4 No.20 (Oct. 7, 2015)

    Lack of Training and Due Diligence Leads to $19 Million Penalty for Hitachi

    Japanese conglomerate Hitachi has agreed to pay $19 million to resolve the SEC’s claims that it bribed foreign officials to obtain contracts related to two multi-billion dollar construction projects in South Africa.  The settlement highlights the risks companies face when working with local partners and the necessity of thorough, well-documented due diligence and in-country compliance training programs.  Experts also told The FCPA Report that the settlement raises questions as to what level of “corruption” is necessary to incur an FCPA violation and why, in light of other recent SEC actions, cases with similar fact patterns can have wildly divergent outcomes.  See “Top FCPA Officials Talk Compliance Tips and the Defense Bar Weighs In,” The FCPA Report, Vol. 3, No. 25 (Dec. 17, 2014).

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  • From Vol. 4 No.16 (Aug. 5, 2015)

    Four Compliance Lessons from Lesser-Known FCPA Cases

    In today’s active FCPA enforcement environment, the compliance bar is always rising.  Although most compliance specialists are familiar with the details of the headline-grabbing cases such as PetroTiger and FLIR, smaller, less-publicized cases can also provide valuable insight on how best to avoid FCPA liability.  In a recent webinar hosted by the Society of Corporate Compliance and Ethics, Bill Currier, a partner at White & Case, and Sulaksh Shah, a partner in PwC’s forensic service practice, discussed how companies can use the SEC and DOJ’s enforcement activity in recent, lower-profile corruption cases to tailor their compliance programs to the unique needs, risks and structures of their businesses or industries.  See also “Best Practices for Reviewing Anti-Corruption Compliance Programs: Government Expectations, Scheduling and Staffing (Part One of Three),” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013); “Challenges, Preparation and Risk Evaluation (Part Two of Three),” Vol. 2, No. 17 (Aug. 21, 2013); and “Implementation, Remediation and Documents (Part Three of Three),” Vol. 2, No. 18 (Sep. 11, 2013).

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  • From Vol. 4 No.13 (Jun. 24, 2015)

    Ten Steps A Company Can Take to Mitigate Corruption Risk When Entering a New Market (Part One of Two)

    New markets promise tremendous opportunities for growth and expansion, but also are filled with potential corruption landmines – new business partners, different cultural norms and local laws are only a few of the issues that can trip up a company.  The FCPA Report's ten-step guide to mitigating corruption risk when entering a new market will help companies create and implement an effective market-entry strategy.  This, the first article in a two-part series, discusses the first four steps: how a company can build a risk profile for the country, the various methods companies can use to enter new markets and how to mitigate the risk from local partners and other third parties.  The second article will address: logistical challenges, disclosures to local governments, integration plans, compliance programs and monitoring and reviewing the compliance program.  See “Gibson Dunn Attorneys Take the Pulse of Anti-Corruption Risks in Emerging Markets,” The FCPA Report, Vol. 3, No. 3 (Feb. 5, 2014).

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  • From Vol. 4 No.13 (Jun. 24, 2015)

    Addressing Corruption Risks and Compliance Strategies for Co-Investors (Part One of Two)

    Considerable uncertainty can arise when parties co-invest alongside one another in the same entity.  The sheer variety of co-investor relationships – from garden-variety joint venture partnerships to investments with state-owned entities to sophisticated private equity transactions – attests to the array of potential corruption and compliance risks created by co-investments and how to deal with them.  Adding to the confusion, the DOJ and the SEC expect co-investors to self-police for corruption, but co-investors are often left in the dark about the contours of appropriate compliance and anti-corruption efforts.  In a recent Practising Law Institute event, experts with diverse perspectives from Goldman Sachs, Cerberus Capital, Gibson Dunn, WilmerHale and Ropes & Gray discussed the complications that can occur throughout the lifecycle of co-investor relationships.  This article, the first of two, describes important due diligence steps for both the co-investor and the target to take before the transaction.  The second article will discuss essential compliance provisions when formalizing the new venture; the challenges of holding a minority stake in a joint venture; and best practices for conducting an investigation if there is a corruption issue.  See also “FCPA Compliance in Non-Controlled Joint Ventures,” The FCPA Report, Vol. 3, No. 10 (May 14, 2014).

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  • From Vol. 4 No.12 (Jun. 10, 2015)

    Detecting and Mitigating Corruption Risk When Participating in Public Procurements: Seven Steps to Take During and After a Procurement Process (Part Three of Three)

    Winning a contract through a public procurement process presents a tremendous opportunity for a company trying to enter or expand in an emerging market – the World Bank estimates that procurements account for approximately two-thirds of spending in such areas.  However, these rich sources of business do not come without risk.  Procurement processes require companies to interact with foreign officials and often involve third-party agents or local partners, providing ample opportunity for bribery.  The FCPA Report is publishing a three-part article series to help companies mitigate the corruption risks that arise before, during and after the public procurement process.  This third and final article in the series details seven steps a company should take to protect itself during and after a procurement process.  The first article examined how procurement works and when and how bribery occurs during the procurement process.  The second article provided six steps a company should take prior to engaging in a procurement process.  See also “The World Bank’s Wide Reach and Its Growing Anti-Corruption Program,” The FCPA Report, Vol. 3, No. 11 (May 28, 2014).

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  • From Vol. 4 No.12 (Jun. 10, 2015)

    In-House and Outside Counsel Share Advice on Risk Assessments, Gift Policies and Third-Party Due Diligence

    Effective risk assessments, strong third-party practices and gifts and hospitality procedures that hold up under fire are at the heart of best-in-class anti-corruption compliance programs.  In a recent Practising Law Institute event, moderated by Gibson Dunn partner Richard W. Grime, outside and in-house counsel discussed how they tackle developing, implementing and monitoring those essential features of compliance programs.  The panel included Kathryn Cameron Atkinson, a member at Miller & Chevalier, Patricia M. Byrne, VP and Associate General Counsel for International Compliance at BAE Systems, Inc., and William B. Jacobson, a partner at Orrick.  See The FCPA Report’s Conducting Effective Anti-Corruption Due Diligence on Third Parties Interview Series: Gwen Romack, Director of Global Anti-Corruption at Hewlett-Packard, Vol. 2, No. 20 (Oct. 9, 2013); Principals at Nardello & Co., Vol. 2, No. 19 (Sep. 26, 2013); and Alice Fisher, Partner at Latham & Watkins, Vol. 2, No. 18 (Sep. 11, 2013).

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  • From Vol. 4 No.9 (Apr. 29, 2015)

    Checklist of FCPA Issues to Consider Before and After Making a Charitable Donation

    Charitable donations can be effective guises for bribes, but can also be perfectly legitimate and benefit whole communities – in a sense, countering the corrosive impact of corruption.  Separating the altruistic payments from the problematic payments that improperly influence a foreign official can be challenging, especially when a foreign official has some connection to the charity.  The FCPA Report has compiled a non-exhaustive list of considerations to help companies formulate policies for smart charitable giving and to encourage good corporate citizenship while avoiding FCPA violations.  See also “Defining the Corruption Risks of Foreign Political Contributions,” The FCPA Report, Vol. 3, No. 18 (Sep. 10, 2014).

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  • From Vol. 4 No.6 (Mar. 18, 2015)

    Taking Third Party Diligence Beyond the FCPA and the U.K. Bribery Act

    An active third-party due diligence program protects a company from a host of dangers, including anti-corruption violations, sanctions issues and forming relationships with destructive business partners.  A recent program presented by the Society of Corporate Compliance and Ethics highlighted the continued importance of third-party due diligence for anti-corruption compliance and the impact of economic sanctions regimes on that due diligence.  The program featured Candice D. Tal, founder and Chief Executive Officer of security and risk management consulting firm Infortal Worldwide Inc.; and Cordery Compliance Limited’s principal adviser André Bywater and partner Jonathan P. Armstrong.  See also “Risk-Based Solutions to Complying with Anti-Money Laundering, Export Controls, Economic Sanctions and the FCPA,” The FCPA Report, Vol. 3, No. 2 (Jan. 22, 2014).

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  • From Vol. 4 No.5 (Mar. 4, 2015)

    Social Media: Navigating the Next Generation of FCPA Compliance (Part One of Two)

    As employees spend more time personally and professionally posting on social media sites, companies urgently need to understand how to restrict such use to mitigate corruption risk while at the same time maximizing the compliance benefits social media can offer.  In this, the first article in our series on the advantages and pitfalls of social media, we discuss how companies can use social media to aid with due diligence of third parties and target companies; the limits of using social media for those purposes; government expectations; and how to use social media during internal investigations.  The second article will discuss: best practices for including social media in compliance policies, such as in training, messaging and monitoring compliance programs; how social media use can help demonstrate good behavior to the government; and how to handle the risks that including social media as part of a compliance program pose.  See “In-House Experts Discuss Social Media Pitfalls and Compliance Opportunities,” The FCPA Report, Vol. 3, No. 15 (Jul. 23, 2014).

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  • From Vol. 4 No.4 (Feb. 18, 2015)

    How to Mitigate FCPA Risk Before and After an Acquisition

    Robust pre-acquisition due diligence can prevent the purchase of a costly FCPA violation along with the target company.  During a recent webinar hosted by Strafford Publications, experts Thaddeus R. McBride, a partner at Bass Berry & Sims and Brian Moffatt, Senior Compliance Counsel at EthosEnergy, discussed the importance of FCPA awareness in the mergers and acquisitions space.  This article outlines the risks associated with M&A as well as some of the best practices the panelists discussed for addressing those risks.  See also “Checklist of Actions to Take and Factors to Consider When Conducting Pre-Merger Anti-Corruption Due Diligence,” The FCPA Report, Vol. 2, No. 19 (Sep. 26, 2013).

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  • From Vol. 4 No.3 (Feb. 4, 2015)

    Checklist of Issues to Consider When Negotiating Anti-Corruption Representations and Warranties in Third-Party Contracts

    Third-party relationships continue to vex many companies operating internationally.  In fact, nearly every 2014 corporate FCPA resolution highlighted company liability for bribes made to foreign officials by third parties.  Anti-corruption reps and warranties in third-party contracts are one way to mitigate third-party corruption risk.  This checklist can help companies design a template to use when drafting provisions for specific third parties.  See also “A Guide to Anti-Corruption Representations in Third-Party Contracts: Nine Clauses to Include (Part One of Two),” The FCPA Report, Vol. 3, No. 13 (Jun. 25, 2014); “Clauses for High-Risk Situations and Enforcement Strategies (Part Two of Two),” Vol. 3, No. 14 (Jul. 9, 2014).

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  • From Vol. 4 No.1 (Jan. 7, 2015)

    Recordbreaking Alstom Criminal FCPA Settlement Results from Wide-Ranging Bribery Scheme and Lack of Cooperation

    The Department of Justice ended 2014 with its largest criminal FCPA enforcement action yet.  On December 22, 2014, Alstom S.A., a French engineering, power and transportation company, agreed to pay $772 million to resolve charges relating to widespread bribery involving tens of millions of dollars paid to foreign officials across the globe.  The bribery schemes included travel for foreign officials, bribes disguised as charitable payments and funds funneled to foreign officials via third parties.  The case brings up questions of jurisdiction, the consequences of failing to cooperate, as well as successor liability, given Alstom’s pending sale to General Electric.  The intersection of U.S. and French law may also have affected the terms of this settlement.  With insight from Edward Kang, a partner at Alston & Bird, The FCPA Report analyzes the salient facts and terms of the resolution, and draws compliance takeaways.  See also “Compliance Lessons from Total S.A.’s $398 Million FCPA Settlement: Foreign Cooperation, Compliance Monitors, Broad Jurisdiction and the Effect of Reluctant Cooperation with the DOJ and SEC,” The FCPA Report, Vol. 2, No. 12 (Jun. 12, 2013).

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  • From Vol. 3 No.25 (Dec. 17, 2014)

    Top FCPA Officials Talk Compliance Tips and the Defense Bar Weighs In

    Selling your company’s business side on compliance; the key indicators of a successful compliance program; and the government’s view of M&A risks were all on the agenda of the FCPA enforcement officials' annual fireside chat with the FCPA defense community.  SEC Chief Kara Brockmeyer (FCPA Unit, Enforcement Division), and DOJ Deputy Chief Patrick Stokes (Fraud Section of Criminal Division) were both on hand for the “year in review” discussion at American Conference Institute’s recent International Conference on the Foreign Corrupt Practices Act.  The FCPA Report discussed the regulators’ presentation with prominent defense practitioners, who provided a few caveats to the regulators’ pronouncements.  In our previous issue, we covered Stokes’ and Brockmeyer’s discussion of enforcement priorities and the defense bar’s reaction.  Our coverage of last year’s “year in review” panel can be found here and here.

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  • From Vol. 3 No.21 (Oct. 22, 2014)

    Qui Facit Per Alium, Facit Per Se: Best Practices for Third-Party Due Diligence

    Intermediaries are a critical part of most business operations, and, as recent DOJ and SEC FCPA enforcement actions – nearly all of which involved intermediaries – demonstrate, they pose significant corruption risk.  In a guest article, Dechert partners Mauricio A. España and Hector Gonzalez detail best practices for mitigating and managing third-party corruption risk before and after an intermediary is hired.  See also The FCPA Report’s two-part series on representations in third-party contracts, “Nine Clauses to Include (Part One of Two),” The FCPA Report, Vol. 3, No. 13 (Jun. 25, 2014); “Clauses for High-Risk Situations and Enforcement Strategies (Part Two of Two),” Vol. 3, No. 14 (Jul. 9, 2014).

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  • From Vol. 3 No.10 (May 14, 2014)

    FCPA Compliance in Non-Controlled Joint Ventures

    Transnational joint ventures – especially where the company owns a minority stake and does not control the venture – are fraught with corruption risk because the company is “on the hook” for the actions of the joint venture abroad.  At a recent panel, FCPA experts noted that companies are increasingly aware of this risk and are acting on it.  Mark Mendelsohn, a partner at Paul Weiss, moderated the discussion about joint venture corruption risks and compliance strategies at Practising Law Institute’s Foreign Corrupt Practices Act and International Anti-Corruption Developments 2014 program.  The panel featured James Bamford, a Founder and Managing Director at joint venture advisory firm Water Street Partners; Timothy Dickinson, a partner at Paul Hastings; and Kathryn Cameron Atkinson, a member of Miller & Chevalier.  See also “Strategies for Mitigating the FCPA Risk of Entering Into Joint Ventures,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).

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  • From Vol. 3 No.10 (May 14, 2014)

    Corruption Risks and Anti-Corruption Strategies in the E.U.

    Europe may not be an emerging market, but, as the European Commission’s first Anti-Corruption Report detailed, there are pervasive corruption risks in Europe that companies must navigate; risks made more pressing by increased anti-corruption enforcement in the E.U. as well as the evolving requirements of the laws there.  In a recent Strafford Publications webinar, K&L Gates partner Edward J. Fishman, along with associates Laura Atherton from the firm’s London office and Isabelle De Smedt from the firm’s Brussels office, examined the corruption risks in the region and offered strategies for mitigating those risks.  The panelists reviewed the E.C.’s February Anti-Corruption Report, the related climate of corruption and the existing corruption laws and shared best practices for an effective compliance program.  See also “Eye-Opening Report Helps Companies Tackle European Corruption Risks,” The FCPA Report, Vol. 3, No. 6 (Mar. 19, 2014).

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  • From Vol. 3 No.4 (Feb. 19, 2014)

    Six Things Every Business Lawyer Needs to Know About the FCPA

    Whether you’re in-house counsel or a transactional lawyer at a law firm, anti-corruption is something that should very much be on your radar – the government is aggressive, the fines can be astronomical and people do go to jail.  That was the message from William H. Devaney, partner at Venable and moderator of the American Bar Association’s recent webinar, “What Every Business Lawyer Should Know About the FCPA.”  The panel discussion provided business lawyers with information and advice about staying compliant in this anti-corruption enforcement climate.  The panelists were Lynn A. Neils, a partner at Covington & Burling; Carlos Ortiz, a partner at Edwards Wildman; Brian T. Sumner, in-house counsel at Alcoa; and Douglas Tween, a partner at Baker McKenzie.  See also “How to Conduct an Anti-Corruption Investigation: Ten Factors to Consider at the Outset (Part One of Two),” The FCPA Report, Vol. 2. No. 25 (Dec. 18, 2013); “Developing and Implementing the Investigation Plan (Part Two of Two),” Vol. 3, No. 1 (Jan. 8, 2014).

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  • From Vol. 2 No.23 (Nov. 20, 2013)

    Construction Industry Experts Discuss Crucial Steps in Internal Corruption Investigations, Due Diligence Best Practices and the Value of Cooperation

    Could the construction industry be the next target of anti-corruption enforcement action in the U.S. and abroad?  The industry is rife with risk – in the U.K., for example, 49% of corruption professionals say corruption is widespread, and law firm Reed Smith LLP predicts that at least two large U.K. Bribery Act investigations are in the works in the next two years for international construction firms.  How can construction companies, and others similarly situated, anticipate and mitigate what may be a gathering enforcement storm?  The Practising Law Institute recently sponsored a panel of attorneys with extensive experience in construction contracting who discussed the best ways to enhance compliance for the construction industry, offering lessons applicable to a range of industries.  The panelists analyzed the current global anti-corruption enforcement climate, detailed best practices with regard to due diligence when contracting with third parties in foreign countries, provided steps that a company should take when faced with an FCPA issue, including investigation mistakes companies make, and examined the value of cooperation and voluntary disclosure.  See also “Survey Reveals the Contours and Content of Bribery in the U.K. Construction Industry,” The FCPA Report, Vol. 2, No. 20 (Oct. 9, 2013).

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  • From Vol. 2 No.23 (Nov. 20, 2013)

    Six Steps to Reduce Third-Party Anti-Corruption Risk

    A central theme running through many recent FCPA enforcement actions is the involvement of third parties in illegal activities.  The role third parties play (whether agents, resellers, distributors, subcontractors or consultants) make them the ideal facilitators for the transfer of funds, and companies can be liable for the bribes those third parties make.  Some companies may think they have it covered with a “no FCPA violations” clause and audit rights in the contract.  In today’s climate, however, that is simply not enough, nor is a “notice” in a partner program or guide that requires that the partner be familiar with the FCPA or U.K. Bribery Act.  Companies need a comprehensive approach to third-party risk reduction that includes more than just due diligence, but also risk assessments, training, business justification and monitoring.  This guest article by Farzad Barkhordari, CEO of Click 4 Compliance, discusses the dangers of doing business with third parties and outlines steps companies should take when engaging third parties, including examples of how the steps can be implemented in common scenarios.

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  • From Vol. 2 No.23 (Nov. 20, 2013)

    Seven Issues to Address When Performing Pre-Acquisition Due Diligence

    Protecting a company from anti-corruption liability is a paramount concern during any cross-border merger or acquisition.  In a recent seminar hosted by the Practising Law Institute, FCPA expert Sharie Brown, partner at Troutman Sanders LLP and a former prosecutor and compliance officer, identified seven critical issues to address when performing pre-acquisition due diligence, and discussed due diligence best practices generally.  See also “Checklist of Actions to Take and Factors to Consider When Conducting Pre-Merger Anti-Corruption Due Diligence,” The FCPA Report, Vol. 2, No. 19 (Sep. 26, 2013).

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  • From Vol. 2 No.21 (Oct. 23, 2013)

    How the New Brazilian Anti-Corruption Law Impacts U.S. Corporations

    Brazil is the world’s seventh largest economy, with a GDP of over $2 trillion.  The country is considered an emerging global market, has a large domestic consumer market and is attractive to foreign direct investments.  Alongside this enormous growth, however, is the problem of corruption.  A large body of regulation governs the interaction between the public and private sectors in Brazil.  As a result, doing business in regulated sectors means that business will fall within a complex regulatory regime marked by uncertainty and burdensome bureaucratic requirements.  See “A Seven-Step Process for Mitigating Corruption Risk When Engaging Third-Party Consultants in Brazil,” The FCPA Report, Vol. 1, No. 7 (Sep. 5, 2012).  Brazil has now responded to global demands that it play a more active role in combating corruption on a domestic level – as well as the demands of the Brazilian public who have protested the lack of anti-corruption laws – with the enactment of a groundbreaking anti-corruption law that is aimed at changing the business culture in Brazil.  In a guest article, Adriana Dantas and Luiz Eduardo Alcântara, attorneys at Barbosa, Müssnich & Aragão in São Paulo, Brazil, present an overview of the Brazilian Anti-Corruption Law and explore the potential impact on U.S. companies doing business in Brazil.  See also “The Essentials of the New Brazilian Anti-Corruption Legislation,” The FCPA Report, Vol. 2, No. 17 (Aug. 21, 2013).

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  • From Vol. 2 No.20 (Oct. 9, 2013)

    Sample Questions to Ask Third Parties When Initiating Anti-Corruption Due Diligence

    This guest article, by Nardello & Co., provides an example of a questionnaire to be completed by third parties when a company is performing FCPA due diligence on such parties.  This questionnaire can be customized to specific circumstances, industries or geographies, and can serve as the basis for a risk assessment, further anti-corruption diligence or on-the-ground investigations.  The questionnaire includes corporate questions as well as individual questions.  For further insight on third-party due diligence, see “Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with the Principals of Nardello & Company,” The FCPA Report, Vol. 2, No. 19 (Sep. 26, 2013).

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  • From Vol. 2 No.20 (Oct. 9, 2013)

    Conducting Effective Due Diligence on Third Parties:  An Interview with Gwen Romack, Director of Global Anti-Corruption at Hewlett-Packard

    Many companies rely heavily on third parties when operating internationally.  Among other things, third parties serve as sales agents, handle customs issues, distribute product and educate the company on local practices.  Hiring third parties helps increase revenue, but also puts the company at significant risk of violating the FCPA.  If a third party bribes a foreign official, the company that hired the party can be held liable.  Effective initial due diligence is crucial in avoiding FCPA liability based on the acts or omissions of third parties, as is continuous monitoring of third parties.  Recognizing this, The FCPA Report is publishing a series of interviews with experts from different disciplines – from an outside law firm, an in-house compliance department and an investigative firm – on best practices when handling due diligence on third parties.  This article, the third in the series, includes our interview with Gwen Romack, Director, Global Anti-Corruption and U.S. Public Sector Compliance, at HP.  The first article in the series contained an interview with Alice Fisher, a partner at Latham & Watkins and former head of the Criminal Division at the DOJ.  The second article in the series contained an interview with Nardello & Co.’s FCPA team, a group of seasoned investigators with extensive experience in anti-corruption initiatives.

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  • From Vol. 2 No.19 (Sep. 26, 2013)

    Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with Principals at Nardello & Co.

    Most companies doing business multi-nationally must engage third parties to operate on the company’s behalf overseas, but in the current anti-corruption landscape, third parties can be a necessary evil.  Under the FCPA, a company can be held responsible for any improper payments made on its behalf by a third-party agent or partner, and many recent FCPA enforcement actions by the SEC and DOJ have involved the actions of third parties.  To best protect themselves from the risks associated with retaining third parties, companies must devote significant resources to the critical and complicated task of conducting due diligence.  How should a company efficiently allocate its due diligence resources?  How can a company effectively gather information in challenging jurisdictions?  What should a company do if it does not wish to inform a prospective agent that it is conducting due diligence?  The FCPA Report is publishing a series of interviews with experts from different disciplines on best practices for conducting anti-corruption due diligence on third parties.  This article, the second in the series, includes our interview with Nardello & Co.’s FCPA team: Daniel Nardello, Tara MacMillan, Nicholas Peck and Michael Ramos.  Nardello, MacMillan, Peck and Ramos are all seasoned investigators with extensive experience in anti-corruption initiatives.  Nardello and Ramos also both formerly served as prosecutors in the Southern and Eastern Districts of New York, respectively.  The first article in the series contained an interview with Alice Fisher, a partner at Latham & Watkins and former head of the Criminal Division at the DOJ.

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  • From Vol. 2 No.19 (Sep. 26, 2013)

    Checklist of Actions to Take and Factors to Consider When Conducting Pre-Merger Anti-Corruption Due Diligence 

    Anti-corruption issues can undermine a merger or acquisition that otherwise would be successful on the economic merits.  Consequently, FCPA due diligence has become a critical component of overall M&A due diligence, and such diligence is not complete before comprehensive FCPA due diligence has been conducted on the target company.  But what constitutes comprehensive FCPA due diligence in connection with a transaction?  What high-level areas should acquirers or merger partners investigate?  What specific questions should they ask, and what should cause them to drill down and ask hard follow-ups?  Perhaps most importantly, what issues should cause a company to walk away from an otherwise meritorious transaction?  This checklist, drafted by Michael Gilbert and Mauricio España, partners at Dechert LLP, addresses these questions, and in the process, helps define the scope and increase the precision of transactional FCPA due diligence.  For more from Gilbert and España on this subject, see “Critical Steps to Take and Questions to Ask When Conducting Pre-Merger Anti-Corruption Due Diligence,” The FCPA Report, Vol. 1, No. 5 (Aug. 8, 2012).

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Minimizing Anti-Corruption Deal Risk While Maximizing Returns on Venture Capital Investments

    More and more, venture capital firms are investing in start-ups seeking to expand internationally or with nascent cross-border operations in place.  Such investments offer opportunities for lucrative returns but also carry significant anti-corruption risk that VC firms are often ill-equipped to manage.  For many businesses, managing anti-corruption risk is a necessary cost center.  But VC firms are uniquely positioned to use that risk to drive a better deal and gain greater control over management and direction of the business.  In a guest article, G. Derek Andreson, Thomas M. Shoesmith, Marc H. Axelbaum, partners, and Ryan R. Sparacino, counsel, at Pillsbury Winthrop Shaw Pittman LLP, offer an assessment of the opportunities and risks that VC firms should consider, and conclude with four strategies for maximizing returns while limiting anti-corruption risks.  See also “Strategies for Mitigating the FCPA Risk of Entering Into Joint Ventures,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with Alice Fisher, Partner at Latham & Watkins

    Engaging third parties is necessary for most global businesses, but rife with corruption risk.  Under the FCPA, a company can be held responsible for any improper payments made on its behalf by a third-party agent or partner, and most of the recent FCPA enforcement actions by the SEC and DOJ have involved the actions of third parties – making the task of conducting due diligence on third parties one of the most critical and complicated issues in FCPA compliance.  How should a company efficiently allocate its due diligence resources?  What should a company do when its third-party partner is less than forthcoming?  Can a party engage a third party even if due diligence raises red flags?  The FCPA Report is publishing a series of interviews with experts from different disciplines on best practices for conducting anti-corruption due diligence on third parties.  This article, the first in the series, includes our interview with Alice Fisher, partner at Latham & Watkins.  Fisher specializes in white collar criminal investigations, internal investigations and advising clients on a range of criminal matters, including the FCPA.  She formerly served as Assistant Attorney General in charge of the Criminal Division of the DOJ.  See also “Designing Effective FCPA Compliance Programs and Monitoring Third Parties After the Guidance: An Interview with H. David Kotz, Michael Volkov and Paul Zikmund,” The FCPA Report, Vol. 2, No. 2 (Jan. 23, 2013).

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Anti-Corruption Professionals from GE, Abbott Laboratories and Navistar Share Proven Strategies on Third-Party Due Diligence, M&A, Training, Nepotism and Regional Risk

    Anti-corruption compliance can feel like a battlefield, with potential landmines at every turn.  But what do practicing in-house compliance professionals view as their biggest challenges?  What issues keep them up at night?  And, most importantly, what have they done to address those issues?  In a panel hosted by the American Conference Institute, three in-house compliance experts shared their practical experience.  They discussed specific challenges they have faced and outlined the strategies they used to effectively address those challenges.  The expert panelists included Matthew Hsu, Senior Counsel, Global Fraud and Anti-Corruption at Abbott Laboratories; Shannon Masson, Senior Counsel at Navistar, Inc.; and Kevin Matthews, Associate General Counsel at GE Oil and Gas.  See also “Insight from Top Companies and Practitioners on How They Are Addressing Current Anti-Corruption Issues, from Self-Reporting to Risk Assessments to Training,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013).

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  • From Vol. 2 No.17 (Aug. 21, 2013)

    Unforeseen Corruption Liability: How to Avoid a Post-Acquisition “Oh My!” Moment

    In the “Wizard of Oz,” when Dorothy, the Scarecrow and the Tin Man are already deep in the haunted forest, Dorothy asks her guides what dangers could be present.  “Oh my!” she exclaims when she is told of the perils around her.  It is too late to turn back.  Such is the plight of many public companies when they acquire or merge with entities doing business in countries with a high corruption risk.  Without proper anti-corruption guidance, many companies discover too late that they have placed themselves – and their shareholders – in great potential danger by effectively buying a target’s legal liability for past FCPA violations.  The legal liability extends well beyond the U.S., as many countries such as the U.K. and, recently, Brazil, have enacted their own anti-corruption laws.  In a guest article, John Carney and Christina Tsesmelis, partner and senior associate, respecitvely, at BakerHostetler LLP, discuss best practices for merger and acquisition due diligence in light of U.S. precedent and the newly-passed Brazilian law.

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  • From Vol. 2 No.15 (Jul. 24, 2013)

    Buyer Beware: Understanding and Mitigating Parent Company FCPA Liability in the Context of Private Equity Acquisitions

    The DOJ and SEC’s recent actions against financial services entities such as Direct Access Partners may be a harbinger of more scrutiny to come.  The increased focus on the financial services industry, along with the government’s aggressive expansion of its theories of parental liability for actions taken by subsidiaries and other business units (as revealed in the recent Ralph Lauren enforcement action), has special relevance both to standalone private equity firms and to investment banks and similar entities with private equity arms or subsidiaries.  Parent companies may be facing greater exposure than ever before for the misconduct of their subsidiaries, and thus face a greater risk of being the subject of the next enforcement action.  In a guest article, Seth C. Farber and Riche T. McKnight, partners at Winston & Strawn LLP, and Ryan D. Fahey, an associate at Winston & Strawn LLP, review relevant enforcement actions under the FCPA’s anti-bribery, books and records and internal control provisions, and outline critical steps that private equity firms and investment banks with private equity arms can take to reduce their overall FCPA exposure.  See also “FCPA Charges against Broker-Dealer Stemming From Routine SEC Examination Is ‘Wake-Up Call’ to the Financial Services Industry,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013); “SEC’s NPA with Ralph Lauren, the Agency’s First Ever, Modifies the M&A Due Diligence Requirements Traditionally Included in DOJ DPAs, and Outlines Specific Actions That Constitute Effective Self-Reporting,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).

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  • From Vol. 2 No.14 (Jul. 10, 2013)

    Russian Risks: Reconciling the Novo Nordisk Standard with the FCPA

    The central challenge faced by any corporation seeking to address the risks of corruption is to understand where its risks lie and what tools it can employ to mitigate those risks.  Typically, those areas presenting the greatest risk of corruption will call for correspondingly strong anti-corruption tools.  This challenge may be even greater for companies doing business in Russia, where they must not only confront the challenges of the Russian business environment but also may be forced to do so without many of the anti-corruption tools normally at their disposal.  In a guest article, Joseph Terry, partner at Williams & Connolly LLP, and Jessica Hayden, former associate at Williams & Connolly, discuss the Russian business environment and the challenges posed by the so-called “Novo Nordisk Standard” – set after the Russian Federal Antimonopoly Service found that Novo Nordisk’s anti-corruption diligence program violated Russian competition law – and present topics for companies to consider when designing a compliance program that protects against corruption risks in Russia.  See also “Alan Kartashkin and Dmitri Nikiforov of Debevoise & Plimpton LLP Discuss the Ins and Outs of Russian Bribery Law,” The FCPA Report, Vol. 1, No. 12 (Nov. 14, 2012).

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  • From Vol. 2 No.13 (Jun. 26, 2013)

    Kroll Managing Director Extracts Practical Lessons from 2013 Anti-Bribery and Corruption Benchmarking Survey

    Forty seven percent of companies don’t train their third parties.  That was one of the key findings of a recent benchmarking survey released by Kroll and Compliance Week.  The companies asked more than 300 executives from companies with a median annual revenue of $3.5 billion and a median of more than 9,600 employees about their risks, resources and compliance programs.  The FCPA Report talked to Lonnie Keene, a Managing Director at Kroll, about the practical implications of the survey results, and what specific actions companies should take in response to the results.  For a discussion of additional benchmarking data from Kroll, see “Kroll Benchmarking Report Surveys State of FCPA Compliance at U.S. Multinationals,” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    How to Recognize and Address FCPA Challenges in India

    With over 1.2 billion people, and a well-educated and low-cost work force, India is an appealing market for international businesses.  However, corruption is endemic in India and presents serious FCPA compliance challenges for companies that operate there.  A recent webcast highlighted many of those challenges, provided insights on how to identify and monitor the risks associated with doing business in India (and elsewhere) and drew lessons from FCPA enforcement actions that involved conduct in India.  The panelists were Jay Holtmeier, a partner at law firm WilmerHale; Elizabeth D. Keating, Global Compliance Counsel for Investigations at Johnson Controls; and Michael Stavridis, a partner at accounting firm Ernst & Young.  For insight on anti-corruption compliance in the other BRIC countries, see “A Seven-Step Process for Mitigating Corruption Risk When Engaging Third-Party Consultants in Brazil,” The FCPA Report, Vol. 1, No. 7 (Sep. 5, 2012); “Alan Kartashkin and Dmitri Nikiforov of Debevoise & Plimpton LLP Discuss the Ins and Outs of Russian Bribery Law,” The FCPA Report, Vol. 1, No. 12 (Nov. 14, 2012); “A Guide to Anti-Bribery Issue Spotting in China: Enforcement Trends, Third-Party Risks, Gift Giving, Travel Expenses, Foreign Officials and Due Diligence,” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013).

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    Anti-Corruption Due Diligence Checklist for Mergers and Acquisitions

    This checklist provides steps to guide companies through anti-corruption due diligence during a merger, acquisition or other transaction.  The authors of this checklist are Willkie Farr & Gallagher LLP partners Martin Weinstein, Robert Meyer and Jeffrey Clark, and this checklist was included in their treatise The Foreign Corrupt Practices Act: Compliance, Investigations and Enforcement.  In this and recent issues of The FCPA Report, we have serialized the chapter of the treatise dealing with anti-corruption issues in connection with mergers, acquisitions and other transactions.

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    Sample Anti-Corruption Representations and Warranties for Mergers and Acquisitions

    These sample anti-corruption representations and warranties are designed to aid in the drafting of merger or acquisition agreements or other transaction documents.  The drafters of these sample representations and warranties are Willkie Farr & Gallagher LLP partners Martin Weinstein, Robert Meyer and Jeffrey Clark, and these samples were included in their treatise The Foreign Corrupt Practices Act: Compliance, Investigations and Enforcement.  In this and recent issues of The FCPA Report, we have serialized the chapter of the treatise dealing with anti-corruption issues in connection with mergers, acquisitions and other transactions.

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  • From Vol. 2 No.11 (May 29, 2013)

    Digging Deep into M&A Anti-Corruption Due Diligence Best Practices: An Interview with William Michael, Partner at Mayer Brown LLP

    Anti-corruption due diligence before, during and after a merger or acquisition is an area of increasing focus for companies.  Members of the FCPA bar report that more and more of their work involves ensuring target companies are free from corruption, and handling the situation if corruption is discovered.  The FCPA Report recently spoke with William Michael, Co-Chair of the White Collar Defense & Compliance group at Mayer Brown LLP in Chicago, about his experience with these issues.  Previously, Michael served for more than 10 years as a federal prosecutor with the Department of Justice.  Among other things, Michael discussed important questions to ask during a risk assessment; strategies for negotiating for more access to the target company during due diligence; the effect of blocking statutes on due diligence; the risks and benefits of voluntarily disclosing a violation before or after a transaction; whether and how the Resource Guide clarified best practices; and advice on increasing the odds of achieving a declination from the SEC or DOJ if misconduct is discovered post-transaction.  See also “How to Perform Effective FCPA Due Diligence in Private Equity Transactions and Strategic Mergers and Acquisitions,” The FCPA Report, Vol. 2, No. 5 (Mar. 6, 2013).

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  • From Vol. 2 No.11 (May 29, 2013)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Four of Five)

    In light of the significant FCPA risk posed by cross-border transactions, The FCPA Report is serializing (in five parts) a chapter from a recently published treatise, The Foreign Corrupt Practices Act: Compliance, Investigations and Enforcement.  The authors of the treatise are Martin Weinstein, Robert Meyer and Jeffrey Clark, all partners at Willkie, Farr & Gallagher LLP, and highly-regarded FCPA practitioners.  This part of the series addresses corruption risk in non-U.S. investments, including steps to take during pre-investment due diligence, contractual safeguards that will mitigate risk and post-investment responsibilities.  The first part of the series provided an overview of the corruption liability inherent in M&A and investment transactions and provided insight on mitigation of corruption risk before transactions occur, focusing on successor liability, ratification, acts in furtherance of corruption and investment valuation.  The second installment in the series analyzed post-transaction risk, including the concept of willful blindness and the application of the FCPA’s accounting provisions to mergers and acquisitions.  The third installment in the series provided guidance on the due diligence process, including the initial risk assessment, determining the scope of the review, coordinating the work of the review team and investigating red flags.  It also provided advice on steps to take if a compliance issue is discovered and contractual safeguards to include in deal documents to minimize corruption risk.

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  • From Vol. 2 No.11 (May 29, 2013)

    Top Government and Private FCPA Practitioners Discuss Global Enforcement, Self-Reporting, Facilitation Payments, M&A Due Diligence, Jurisdiction and NPAs

    It’s been a busy year in FCPA compliance and enforcement – including leadership changes at the DOJ; the SEC’s first-ever NPA; an apparent decline in enforcement actions followed by a recent upswing; a growing, active global anti-corruption community; a new Canadian anti-corruption regime; and increased emphasis on merger and acquisition due diligence in the private sector, among other things.  At a recent panel hosted by the Practising Law Institute during its “Foreign Corrupt Practices Act and International Anti-Corruption Law Developments 2013” program, distinguished FCPA lawyers in both the private and public spheres distilled the most important trends in the field – and sometimes disagreed about what they mean for both outside and in-house counsel who deal with anti-corruption issues.  Mark Mendelsohn, partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP moderated the May 2, 2013 panel, with help from Richard Grime, a partner at O’Melveny & Myers LLP.  The panel was comprised of Roger Witten of WilmerHale and Danforth Newcomb of Shearman & Sterling LLP on the private side, and Jason Jones, Assistant Chief of the FCPA Unit, Fraud Section, Criminal Division at the DOJ, and Charles Cain, Deputy Chief, FCPA Unit, Division of Enforcement at the SEC, on the public side.

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  • From Vol. 2 No.10 (May 15, 2013)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Three of Five)

    In light of the significant FCPA risk posed by cross-border transactions, The FCPA Report is serializing (in five parts) a chapter from a recently published treatise, The Foreign Corrupt Practices Act: Compliance, Investigations and Enforcement.  The authors of the treatise are Martin Weinstein, Robert Meyer and Jeffrey Clark, all partners at Willkie, Farr & Gallagher LLP, and highly-regarded FCPA practitioners.  This installment of the series provides guidance on the due diligence process, including the initial risk assessment, determining the scope of the review, coordinating the work of the review team and investigating red flags.  It also provides advice on steps to take if a compliance issue is discovered and contractual safeguards to include in deal documents to minimize corruption risk.  The first part of the series provided an overview of the corruption liability inherent in M&A and investment transactions and provided insight on mitigation of corruption risk before transactions occur, focusing on successor liability, ratification, acts in furtherance of corruption and investment valuation.  The second installment in the series analyzed post-transaction risk, including the concept of willful blindness and the application of the FCPA’s accounting provisions to mergers and acquisitions.

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  • From Vol. 2 No.9 (May 1, 2013)

    Strategies for Mitigating the FCPA Risk of Entering Into Joint Ventures

    Companies are relying increasingly on joint ventures (JVs), that is, a business undertaking by two or more companies engaged in a single defined project, particularly when accessing a new market or building a new business line.  While JVs may make sound business sense – allowing the JV partners to leverage one another’s expertise, markets, resources, reputations, etc. – they also present significant legal risk under the FCPA.  Although the potential for FCPA liability based on the actions of a joint venture or one of its partners may depend on the level of control a company has over the joint venture or the extent to which it was aware of or involved in the misconduct, the risk of partnering with a company engaged in misconduct is always present.  In a guest article, Andrew J. Dunbar and Ike Adams, partner and associate, respectively, at Sidley Austin LLP, discuss the FCPA provisions giving rise to joint venture liability based on the actions of joint ventures and joint venture partners as well as the steps companies should take before entering into joint ventures in order to limit the risk of FCPA liability.

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  • From Vol. 2 No.7 (Apr. 3, 2013)

    A Guide to Anti-Bribery Issue Spotting in China: Enforcement Trends, Third-Party Risks, Gift Giving, Travel Expenses, Foreign Officials and Due Diligence

    Recent news reports, such as the downfall of Bo Xilai, as well as reports of watchdog groups such as Transparency International, emphasize the heightened corruption risk that companies doing business in China face.  Not only does the Chinese culture value gift giving and relationship building, but, because of the government structure, a large proportion of employees there are foreign officials.  This increases the range of business activity that may give rise to FCPA liability.  Plus, China’s top leaders have been paying more attention to official corruption and have taken steps to strengthen their own laws against bribery and step up enforcement.  A recent webinar focused on the topic of Chinese corruption risk.  The panelists, partners at Gibson Dunn & Crutcher LLP and Herbert Smith Freehills LLP, discussed: the current state of anti-corruption law and enforcement in China; China-specific anti-corruption issues; FCPA enforcement actions stemming from bribery in China; and ways to mitigate the FCPA risks of doing business there.  This article summarizes the key takeaways from the webinar, focusing in particular on the lessons for companies that do business in China and lawyers that represent such companies.

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    How to Perform Effective FCPA Due Diligence in Private Equity Transactions and Strategic Mergers and Acquisitions

    Corporations conducting mergers and acquisition, organizations that provide financing and even companies that are simply acquiring assets risk violating the FCPA and other anti-corruption laws if they fail to perform adequate due diligence.  A panel of experts at the New York City Bar, including both litigators and transactional attorneys, recently shared their insights on how to structure and conduct various types of deals in a manner that protects the acquirer from FCPA liability.  The panelists offered advice on, among other things, the different forms of M&A transactions; addressing the challenges of performing due diligence for anti-corruption purposes; determining how much due diligence is necessary; negotiating for the right to perform sufficient due diligence; performing post-acquisition due diligence; protecting the acquirer through language in the deal documents; and FCPA liability for private equity investors.

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    Six Steps for Converting a “Paper” FCPA Compliance Program into a Pervasive Culture of Anti-Bribery Compliance (Part Two of Two)

    Breathing life into even a comprehensive compliance manual is a challenge for most companies.  How can a company ensure that its program is proactive and dynamic, and that it is working at every level of the company?  How can the company ensure that third parties are being vetted at every stage of the process?  A recent webinar featuring H. David Kotz, Director at Berkeley Research Group and former Inspector General of the SEC, and Paul Zikmund, Director of Global Ethics and Compliance at Bunge Limited, tackled these and other hard questions head on, incorporating their long and relevant experience, as well as lessons from the recently-issued FCPA Guidance.  This article, the second in a two-part series, discusses the panelists’ advice regarding the best path forward after a risk score is assigned to a third party, including details about a “boots-on-the-ground” approach to due diligence; ways to monitor third parties on an ongoing basis; compliance advice for smaller companies; and how to incentivize employees to report complaints internally before going to the government.  The first article in the series discussed how the hypotheticals in the Guidance provide insight into the government’s enforcement strategy and what the “flavor of the month” FCPA cases are; six ways to ensure an FCPA compliance program is best-in-class; and integral steps to take when conducting risk assessments of third parties.  See “Six Steps for Converting a ‘Paper’ FCPA Compliance Program into a Pervasive Culture of Anti-Bribery Compliance (Part One of Two),” The FCPA Report, Vol. 2, No. 4 (Feb. 20, 2013).

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    Knowing Your Partners: Three Steps to Reduce FCPA Risk from Third Party Intermediaries

    The failure to pre-screen and monitor third party intermediaries (TPI) are the root causes of many recent FCPA investigations.  Thus, devising and implementing a consistent process for TPI due diligence and auditing, as well as understanding regulatory differences across the globe, are “must do” items for companies operating overseas.  Marc Miller, a partner in the New York forensic and risk consulting practice of KPMG LLP, recently shared his advice on identifying and mitigating risks involving TPIs in a webinar sponsored by compliance software developer Aravo Solutions, Inc. entitled “The Increasing Business Risk of FCPA Failures.”  Miller suggested that companies focus on three steps when it comes to third parties, each of which is described in detail in this article.  Miller also discussed his view on recent enforcement trends, informed by the Guidance.

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  • From Vol. 2 No.4 (Feb. 20, 2013)

    Six Steps for Converting a “Paper” FCPA Compliance Program into a Pervasive Culture of Anti-Bribery Compliance (Part One of Two)

    Recent enforcement actions have highlighted the bribery risk inherent in retaining third parties in foreign countries.  To adequately address such risks, companies need more than a compliance manual sitting on the shelf – they need a culture of compliance that pervades the organization.  Drafting a thorough and customized compliance manual is the first step in this process.  But how can companies bring a complete compliance program to life?  A recent webinar tackled this hard question head on, incorporating the long and relevant experience of the webinar participants, as well as lessons from the recently-issued FCPA Guidance.  This is the first article in a two-part series summarizing the key takeaways from the webinar.  This article discusses: how the hypotheticals in the Guidance provide insight into the government’s enforcement strategy and what the “flavor of the month” FCPA cases are; six ways to ensure an FCPA compliance program is best-in-class; and integral steps to take when conducting risk assessments of third parties.  The second article will address: steps to take after a risk score is assigned to a third party, including details about a “boots-on-the-ground” approach; ways to monitor third parties on an ongoing basis; compliance advice for smaller companies; and how to incentivize employees to report complaints internally before going to the government.  See also “Five Themes for General Counsel to Monitor with Respect to Dodd-Frank Whistleblowers and the FCPA,” The FCPA Report, Vol. 1, No. 9 (Oct. 3, 2012).

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  • From Vol. 2 No.4 (Feb. 20, 2013)

    How FCPA Transaction Monitoring Software Works

    To comply with the FCPA and other anti-corruption laws, companies operating multi-nationally must closely monitor the actions of their employees, agents and third-party partners for indications of potential bribery.  This is a costly proposition for any company, but especially for smaller companies that lack the human resources necessary to perform comprehensive anti-corruption reviews.  Enter technology.  Relatively recent software innovations allow companies to perform automated FCPA transaction monitoring, thereby enabling companies to track substantially the same number of transactions with fewer people and equal or greater effectiveness.  The FCPA Report recently had an extensive conversation regarding automated transaction monitoring with Patrick Taylor, CEO of Oversight Systems, a company that provides automated transaction monitoring solutions.  In our interview, Taylor explained the fundamentals of automated transaction monitoring; outlined what types of companies should consider transaction monitoring; and explained the benefits of implementing an automated system.

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  • From Vol. 2 No.3 (Feb. 6, 2013)

    Strategies for Implementing the U.K. Bribery Act’s Requirement of Adequate Procedures for Intermediaries

    Intermediaries are crucial to many businesses, sometimes even mandatory, and are replete with corruption risk – under both the FCPA and the U.K. Bribery Act, they can generate criminal liability for their principals if they bribe to win business.  In many jurisdictions, intermediaries are routinely used to enter markets; to identify opportunities; to access and build relationships with decision-makers responsible for awarding contracts, including public officials; to assist with navigating complex local laws, regulations and customs; and to win business.  How can a company mitigate the risks these ubiquitous third parties pose?  In a guest article, James Maton, a partner in Edwards Wildman Palmer UK LLP’s London office, provides strategies to that end by reference to the requirements of the U.K. Bribery Act, one of the most comprehensive anti-bribery statutes in the world, with broad application to global activities connected to the U.K.  It requires companies and partnerships to have adequate procedures intended to prevent bribery in both their private and public sector business activities.  Maton’s article considers the key principles that should underpin those procedures, and the steps an organisation can take to reduce the bribery risks posed by intermediaries.

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  • From Vol. 2 No.2 (Jan. 23, 2013)

    Designing Effective FCPA Compliance Programs and Monitoring Third Parties After the Guidance: An Interview with H. David Kotz, Michael Volkov and Paul Zikmund

    Relationships with third parties are a constant pressure point for companies trying to comply with the FCPA.  How should the recently-issued FCPA Resource Guide change a company’s strategy for dealing with third parties, during and after initial due diligence?  On February 6, 2013, LeClairRyan, Berkeley Research Group (BRG) and The FCPA Report will host a complimentary CLE-eligible webinar that will address this and other pressing regulatory questions.  The webinar, entitled “After the Guidance: Designing Effective Compliance Programs and Monitoring Third Parties,” will feature three FCPA experts: former SEC Inspector General and current BRG Director H. David Kotz; LeClairRyan Partner Michael Volkov; and Paul Zikmund, Director of Global Ethics and Compliance at Bunge Limited.  Rebecca Hughes Parker, Editor-In-Chief of The FCPA Report, will moderate the webinar.  Topics to be covered include the FCPA Resource Guide’s specific requirements for compliance programs; how to review and enhance compliance programs to get maximum credit; and best practices for monitoring third parties in a cost-effective manner following initial due diligence.  To register for the webinar, click here.  As a preview of the webinar, The FCPA Report interviewed the three participants on topics including: the elements of an effective third party risk assessment and the categories it should include; the utility of open source databases; common mistakes companies make when designing risk assessments; streamlining risk assessments and due diligence; the differences between due diligence for third parties and for M&A transactions; and effective ways to monitor third parties after they are “on board.”  An edited transcript of our interview is included in this issue of The FCPA Report.

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  • From Vol. 2 No.1 (Jan. 9, 2013)

    How Private Fund Managers Can Manage FCPA Risks When Investing in Emerging Markets

    Anti-corruption enforcement efforts have dramatically increased over the last few years.  Every day it seems there is a new headline about an investigation involving alleged violations of the FCPA.  Federal authorities have indicated that their FCPA enforcement efforts are increasingly focused on the financial services industry and, in particular, private fund managers that invest in emerging markets.  Given this heightened level of government scrutiny, it is important that private equity firms, hedge fund managers and other investors that conduct business in foreign markets understand the associated FCPA risks.  Such risks can arise in the context of raising funds overseas, working with joint venture partners and third party agents, and investing in companies that operate in countries known for corruption.  A potential misstep in these areas can result in a fund manager and its employees facing significant civil penalties and possible criminal prosecution or, at a minimum, having to respond to government subpoenas or requests for information in connection with an investigation by federal authorities, thus resulting in the unnecessary expenditure of time and money and the attraction of unwanted attention.  In a guest article, Justin V. Shur and Joel M. Melendez, partner and associate, respectively, at Molo Lamken LLP, consider some of the important and recurring FCPA risks that arise for investors in emerging markets, and offer practical guidance to help private fund managers and their employees avoid or minimize liability in this area.

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  • From Vol. 1 No.14 (Dec. 12, 2012)

    Sullivan & Cromwell Partners Discuss Managing FCPA Risk in Cross-Border Mergers and Acquisitions

    On December 10, 2012, the Practising Law Institute (PLI) hosted a webinar entitled “FCPA Due Diligence in Cross Border Transactions.”  The presenters were Francis J. Aquila and Krishna Veeraraghavan, both partners in Sullivan & Cromwell LLP’s mergers and acquisitions group.  The PLI program provided a helpful overview of the importance and mechanics of performing anti-corruption due diligence as part of a cross-border merger or acquisition.  Among other things, the presenters discussed: successor liability issues; strategies for reducing compliance risks; how to design an FCPA due diligence plan; key questions to ask when performing pre-acquisition due diligence; what to do if due diligence uncovers corruption; how to structure a deal to avoid FCPA liability; and appropriate post-acquisition conduct.

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  • From Vol. 1 No.14 (Dec. 12, 2012)

    Integral Elements of Proactive and Pre-Merger Anti-Corruption Forensic Audits

    The last five years of FCPA enforcement have increased the need for comprehensive and effective compliance programs and controls designed to detect, deter and remediate instances of bribery and corruption.  A hidden jewel for some organizations is the use of the forensic audit function to help achieve these objectives.  A properly staffed and well-trained forensic audit team can provide a positive return on investment if used appropriately to satisfy the new imperative of a well-functioning compliance program.  Conducted competently, forensic audits can go a long way toward preventing violations, detecting violations (including in the merger and acquisition process), aiding the investigative and remedial process, substantiating the existence, amounts and recipients of payments and ultimately helping a company earn credit when negotiating with the government or self-reporting discovered violations.  See “When and How Should Companies Self-Report FCPA Violations? (Part Two of Two),” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).  In a guest article, Paul E. Zikmund, Global Director, Ethics and Compliance, at Bunge Limited, discusses the core elements of proactive FCPA audits, as well as the key mechanics of pre-merger anti-corruption forensic audits.

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  • From Vol. 1 No.13 (Nov. 28, 2012)

    Comprehensive FCPA Guidance Provides a Roadmap for Companies to Reevaluate and Revise Their Compliance Policies

    On November 14, 2012, the DOJ and SEC jointly published “A Resource Guide to the U.S. Foreign Corrupt Practices Act” (Guidance), their long-awaited and highly anticipated guidance on the FCPA.  The Guidance did not pronounce any new defenses or radically reinterpret any of the FCPA’s provisions, but it does provide useful insights into the government’s enforcement considerations and should serve as a roadmap for companies to reevaluate and revise their FCPA compliance policies.  In a guest article, Paul E. Pelletier and Aaron M. Tidman, member and associate, respectively, at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., analyze the guidance and outline how practitioners may use the guidance to update their compliance policies and procedures.

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  • From Vol. 1 No.12 (Nov. 14, 2012)

    Managing FCPA and Other Risks After Onboarding a Third Party

    A November 7, 2012 webinar sponsored by compliance and investigative software provider Catelas Inc. (Catelas) addressed steps that companies can take to manage FCPA and other compliance risks after they have “onboarded” a third party, i.e., conducted due diligence and formalized a business relationship with that party.  The webinar was moderated by Eddie Cogan, CEO & founder of Catelas.  The other speakers were Alan Morley, president of compliance risk consulting firm Adsideo LLC, and Michael Volkov, a shareholder at LeClairRyan.  This article summarizes the key points from that presentation.

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  • From Vol. 1 No.12 (Nov. 14, 2012)

    Deloitte Survey Catalogues Bribery Risks in Emerging Markets and Outlines Compliance Recommendations

    On October 29, 2012, Deloitte Financial Advisory Services LLP released its fifth annual survey on business executives’ approaches on compliance and integrity-related risks in emerging markets.  This article summarizes Deloitte’s findings, including recommendations for effective compliance and integrity-related risk management for companies operating in emerging markets.

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  • From Vol. 1 No.11 (Nov. 7, 2012)

    The New Landscape of Corporate Social Responsibility Regulation and Its Overlap with FCPA Compliance

    New legislative demands on companies go beyond just prohibiting bribery to impose broader social responsibility, such as certifying that their products were not made with child labor, that their employees and supply chain partners did not engage in any trafficking-related activities, and others.  A broad anti-corruption program can incorporate social responsibility and supply chain issues as well as FCPA and anti-bribery elements, as many of the risk areas and bad actors – third parties especially – overlap.  This article – based on a panel at the ABA’s Fifth Annual FCPA Institute in Washington, D.C. on October 19, 2012, as well as independent research – discusses the current international landscape of Corporate Social Responsibility (CSR) laws around the world; the potential tension between CSR and bribery laws; how CSR and FCPA violations overlap; how companies can adapt their FCPA compliance programs to integrate CSR and broader corruption issues; and the likely ways in which the new CSR laws will be enforced.

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  • From Vol. 1 No.7 (Sep. 5, 2012)

    A Seven-Step Process for Mitigating Corruption Risk When Engaging Third-Party Consultants in Brazil

    Brazil is a country with tremendous business promise, but considerable corruption risk.  On the upside, Brazil is the world’s sixth largest economy; will host the upcoming 2014 World Cup and the 2016 Summer Olympics; has a largely internally focused economy (and thus does not rely on exports to the same extent as China, for example); was relatively unscathed by the 2008-2009 financial crisis; is making a concerted push to upgrade its infrastructure (ports, roads, utilities, sporting venues, etc.); has a wealth of natural resources (including oil) and a growing ability to commercialize them; and more.  The Brazilian government recently estimated that its economy will grow 4.5 percent in 2013.  On the downside, however, corruption has been a drag on Brazil’s economy for as long as anyone can remember, and adversely affects other aspects of life in Brazil (notably, the uneven and sporadic administration of justice).  Brazil’s regulatory regime is infamously – many would say, unnecessarily – complicated, in particular with respect to tax.  (Avon’s internal FCPA investigation reportedly has uncovered, among other things, millions of dollars of payments made by Avon to tax consultants in Brazil.)  Accordingly, doing business effectively in Brazil requires navigating a highly complex regulatory regime.  In turn, navigating that regime often requires on the ground expertise, color and connections.  In short, it requires hiring local, third-party consultants, or despachantes, as they are called in Brazil.  A big business opportunity, a complex regulatory regime and third-party agents that are ubiquitous and virtually inevitable – anti-corruption professionals will recognize the current landscape in Brazil as a classic recipe for FCPA violations.  The key business question is how to avoid such violations while taking advantage of the considerable business opportunities that Brazil offers.  This article seeks to answer that question.  In particular, this article discusses: relevant precedent regarding third-party consultants in Brazil, including completed enforcement actions and ongoing investigations; industries in Brazil in which corruption risk is salient; specific corruption risks in Brazil; the rationale for the use of third-party consultants in Brazil; three “red flags” to be aware of when evaluating third-party consultants in Brazil; seven steps to take when retaining third-party consultants in Brazil (steps that were originally distilled by Navigant Consulting for Tyco International Ltd.); and suggestions for monitoring third-party consultants once they are hired.

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  • From Vol. 1 No.5 (Aug. 8, 2012)

    Critical Steps to Take and Questions to Ask When Conducting Pre-Merger Anti-Corruption Due Diligence

    There is no doubt that the most aggressive enforcement of the FCPA by the DOJ and the SEC since the FCPA was enacted in 1977 has occurred in the last decade.  These prosecutions and enforcement actions have, in large part, been focused on individuals and entities who either directly or through agents and intermediaries have engaged in some form of bribery that violates the FCPA.  While it is true that an entity, in most instances, is liable for FCPA violations only if it, or its agents or intermediaries, engaged in corrupt bribes, one significant exception is successor liability for an acquired entity’s violation of the FCPA as a result of conduct that occurred prior to the acquisition.  Indeed, an acquiring entity can be exposed to successor liability in a stock transfer or merger since the assets and liabilities of the target company are usually assumed by the acquiring entity; or in an asset purchase, if the assets purchased include the entity that has the FCPA liability and those liabilities are also assumed by the acquiring entity.  The consequences of FCPA liability in the mergers and acquisitions context can be dire.  Accordingly, companies subject to the FCPA or considering acquiring companies that are subject to the FCPA should carefully consider the potential FCPA exposure created by mergers and acquisitions and take the necessary steps to avoid that exposure.  In a guest article, Michael J. Gilbert and Mauricio A. España, Partner and Associate, respectively, at Dechert LLP, provide a detailed checklist enumerating the key elements of a rigorous pre-merger anti-corruption due diligence program.

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  • From Vol. 1 No.5 (Aug. 8, 2012)

    Anticipating and Addressing FCPA Concerns When Expanding Internationally: An Interview with Dr. Shan Nair, Founder of Nair & Co.

    The FCPA Report recently spoke with Dr. Shan Nair, the founder of Nair & Co., a firm that specializes in helping companies navigate international expansion issues, including implementing anti-corruption and compliance measures.  Dr. Nair’s firm has helped approximately 1,000 companies expand into 50 countries.  In a wide-ranging conversation with The FCPA Report, Dr. Nair shared his insight on, among other things, anti-corruption considerations when buying a company and the benefits of buying the assets and not the stock; whether a company can be liable for a third party’s actions; the proper focus of anti-corruption audits; the anti-competitive nature of the FCPA and the U.K. Bribery Act; and the global anti-corruption landscape, in particular, implications for companies doing business in India and China.

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  • From Vol. 1 No.3 (Jul. 11, 2012)

    Ernst & Young’s 2012 Global Fraud Survey Highlights Significant Challenges in Dealing with Corruption and Bribery Risks

    Ernst & Young (E&Y) recently released the results of its 12th Global Fraud Survey.  Through an independent research firm, E&Y interviewed 1,758 company executives across 43 countries to gauge their perspectives on the current prevalence of bribery, fraud and other corruption, and their attitudes towards practices that might run afoul of anti-corruption rules.  The survey also provides insight on attitudes, risks and regulations in the emerging markets of Africa, Brazil, China, Eastern Europe and India.  This article summarizes the key takeaways from the survey.

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  • From Vol. 1 No.2 (Jun. 20, 2012)

    Anti-Corruption Audits, Risk Assessments, Transaction Testing and the Dangers of Petty Cash: An Interview with Leaders of Ernst & Young’s Fraud Investigation & Dispute Services Practice

    This article includes the second part of The FCPA Report’s in-depth interview with Brian Loughman and Richard Sibery, leaders of the Fraud Investigation and Dispute Services Practice at Ernst and Young LLP (E&Y).  Our interview focused on the critical decision points for global companies confronting anti-bribery issues when operating abroad.  We covered a lot of ground and, in the process, conveyed much of the key substance of the recent book by Loughman and Sibery, Bribery and Corruption: Navigating the Global Risks (Wiley 2012).  In light of its length and depth, we have published our interview as a two-part series.  This second part covers topics including: the dangers of petty cash; the nuts and bolts of transaction testing; FCPA-specific due diligence considerations for mergers and acquisitions; whether a company should combine an anti-corruption audit with a general audit; and best interviewing and communication techniques.  The first part of the interview dealt with the challenges of designing an effective FCPA training program, techniques of effective third party due diligence and risk assessments and other actionable topics.  See “Training, Certification, Due Diligence, Customs Clearance and Facilitation Payments: An Interview with Leaders of Ernst & Young’s Fraud Investigation & Dispute Services Practice,” The FCPA Report, Vol. 1, No. 1 (Jun. 6, 2012).

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  • From Vol. 1 No.2 (Jun. 20, 2012)

    Kroll Benchmarking Report Surveys State of FCPA Compliance at U.S. Multinationals

    Risk management firm Kroll Advisory Solutions (Kroll), a division of Altegrity, recently released its 2012 FCPA Benchmarking Report, including and analyzing the results of its annual survey of FCPA preparedness.  The survey report is “an in-depth study designed to take the pulse of corporate compliance officers at U.S.-based multinationals and to provide benchmarks for the current state of anti-bribery preparedness,” according to Kroll.  This article conveys the key points from the benchmarking report and offers critical insights for companies looking to measure their FCPA compliance programs against best practices.

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  • From Vol. 1 No.2 (Jun. 20, 2012)

    Data Systems and Solutions LLC Enters into Deferred Prosecution Agreement with the DOJ, Paying $8.82 Million in Fines for Bribing Foreign Officials in Lithuania

    Data Systems & Solutions LLC (DSS), a Virginia-based company that provides design, installation, maintenance and other services at nuclear and fossil fuel power plants, has agreed to a deferred prosecution agreement (DPA) with the DOJ.  This article explains the bribery scheme, DSS’s cooperation with the government and the penalty imposed.  Also, this article highlights two new mergers and acquisitions-related provisions included in this DPA that have not been present in recent DPAs.

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  • From Vol. 1 No.1 (Jun. 6, 2012)

    Training, Certification, Due Diligence, Customs Clearance and Facilitation Payments: An Interview with Leaders of Ernst & Young’s Fraud Investigation & Dispute Services Practice

    Brian Loughman is the Americas Leader of the Fraud Investigation & Dispute Services Practice at Ernst & Young LLP (E&Y), and Richard Sibery leads E&Y’s Fraud & Investigations Group within the Fraud Investigation & Dispute Services Practice.  In those roles, Loughman and Sibery have amassed deep, detailed and current experience with global anti-bribery investigations and remediation – the sort of practical know-how that only comes with extensive, on-the-ground experience.  The FCPA Report recently had the privilege of conducting a wide-ranging interview with Loughman and Sibery.  The general intent of the interview was to identify the most pressing anti-bribery issues facing global companies and specific strategies for addressing those issues.  In this sense, our interview sought to paraphrase some of the more important points made in the book recently written by Loughman and Sibery, Bribery and Corruption: Navigating the Global Risks (Wiley, 2012).  In particular, our interview covered: the challenges of designing an effective FCPA training program; the utility of certification programs; techniques of effective third party due diligence and risk assessments; issues surrounding customs payments, including the difficult issue of facilitation payments; the dangers of petty cash; the nuts and bolts of transaction testing; why M&A transactions pose unique due diligence challenges; whether an anti-corruption audit and a general audit plausibly may be combined; and best practices for interviewing and communications.  We are publishing the full transcript of our interview with Loughman and Sibery in two parts: the first part is included in this issue of The FCPA Report and the second part will be included in the next issue.

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