The Anti-Corruption Report

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

Articles By Topic

By Topic: Mergers & Acquisitions

  • From Vol. 6 No.20 (Oct. 18, 2017)

    Alere Settles Accounting Fraud and FCPA Charges for $13 Million

    Alere, a public company that manufactures and sells diagnostic tests, has resolved SEC charges that it misstated its revenue and bribed government officials in Colombia (through a sham consulting agreement arranged by a newly bought subsidiary) and India (with a commission paid by a third-party distributor). In the combined settlement, Alere agreed to pay $3.3 million in disgorgement, interest of about $495,000 and a penalty of $9.2 million. A DOJ investigation is ongoing. With these investigations, among other things, dragging down the deal, Abbott Laboratories agreed to buy Alere in April 2017 for $500 million less than a previously announced price. See “How to Use Data Analytics to Mitigate Risk When Conducting Post-Acquisition Diligence and Integration Activities” (Oct. 4, 2017).

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  • From Vol. 6 No.20 (Oct. 18, 2017)

    Structuring M&A Transactions to Minimize Corruption Risk

    The specter of anti-corruption enforcement around the world means that experienced anti-corruption lawyers must work alongside dealmakers in crafting agreements and conducting due diligence, both before and after closing M&A deals. Companies need to put tailored-to-the-deal due diligence plans in place for pre- and post-closing so that they can both make good bargains for themselves and address anti-corruption compliance effectively in the entity that results from the deal. A recent Strafford webinar emphasized structuring transactions to protect purchasers, especially deep-pocketed ones. Panelists offered insight on past deals, including a few that went very awry, and how to benefit from those lessons to lessen liability. See “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. 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.17 (Sep. 6, 2017)

    A Bribe By Any Other Name: 101 Ways People Refer To Corruption

    What do mangoes, cheese bread and bonbons have in common? Aside from being delicious treats, they all can be used as euphemisms for a bribe. Less creatively, fraudsters may also discuss providing a “boost,” a “courtesy payment” or a “motivation amount.” Being able to spot these synonyms for corruption is a critical part of anti-corruption compliance, whether it be while reviewing expense reports, conducting pre-acquisition due diligence or investigating potential corruption. This checklist, including 101 ways to refer to a bribe, is a useful starting point for anyone tasked with reviewing documents for evidence of potential corruption. See “Ten Tips for Performing Effective Anti-Corruption Investigations in India” (May 24, 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.14 (Jul. 19, 2017)

    First FCPA Actions Under Sessions’ DOJ Are Declinations With Disgorgement 

    The Trump administration has entered the FCPA enforcement fray by issuing two declination-with-disgorgement letters under the ongoing Pilot Program. The first was for gas supplier Linde in connection with a profit-sharing arrangement between Linde’s newly acquired subsidiary and Georgian officials. The second was for CDM Smith, an engineering and construction company, and resolved issues relating to the bribery of highway officials in India in exchange for contracts. Linde agreed to disgorge $7.82 million and forfeit $3.14 million, and CDM Smith agreed to disgorge $4.04 million. “The Sessions DOJ, through these resolutions, has demonstrated its commitment to the Pilot Program through rewards to companies that timely self-disclose, cooperate, remediate and disgorge profits,” Edward Kang, a partner at Alston & Bird, told The Anti-Corruption Report. See “A Close Look at the DOJ’s New Declination-Plus-Disgorgement Settlement Approach” (Oct. 12, 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.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. 5 No.19 (Sep. 28, 2016)

    SEC Settles FCPA Case With the Former CEO of Harris Corp.’s Chinese Subsidiary but Declines to Go After Harris

    Harris Corp., a Florida-based international communications and information technology company, found an unwelcome surprise after it purchased CareFx Corp. During a post-acquisition audit in 2012, Harris discovered that the Chinese division of its new subsidiary was engaged in an ongoing bribery scheme. Harris reported the wrongdoing to the SEC and DOJ, cooperated and remediated and subsequently avoided civil and criminal FCPA charges, while the former CEO of the Chinese subsidiary settled charges with the SEC for $46,000. The SEC asserted that the former CEO condoned the bribery scheme and failed to disclose it to Harris. “[F]or the first time in a case involving only FCPA misconduct, the authorities have given a large public multinational company a full declination after charging a former employee with FCPA violations that, on their face, would have resulted in the past in a multi-million dollar enforcement action against the company,” Robert Kent, a partner at Baker & McKenzie and lead counsel for Harris in the CareFx China investigation, told The FCPA Report. See also “PetroTiger’s Counsel Reveals the Defense Strategy That Led to a DOJ Declination” (Jul. 22, 2015).

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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.5 (Mar. 9, 2016)

    Canadian Health Science Company and Employee Settle Civil FCPA Charges in Failed Quest for Drug Distribution in Russia

    Hiring the purported friend of a company employee to facilitate the distribution of a liver treatment drug in Russia is behind the SEC’s FCPA settlements with Nordion (Canada) Inc. and employee Mikhail Gourevitch. Gourevitch allegedly orchestrated a scheme for his “friend” to pay bribes to Russian officials to get the approval, hid the extra costs from the company and received a kickback. The SEC said weak internal controls at Nordion (the predecessor-in-interest to Nordion (Canada), which purchased Nordion during this investigation) allowed the scheme to go undetected, including payments to offshore bank accounts. Nordion ultimately was unable to distribute the drug and made no profits. See “Ten Steps A Company Can Take to Mitigate Corruption Risk When Entering a New Market (Part One of Two)” (Jun. 24, 2015); Part Two (Jul. 8, 2015).

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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.12 (Jun. 10, 2015)

    WilmerHale Partners Discuss How Private Fund Managers Can Address Growing Corruption Risks

    The financial services industry is under increased scrutiny from anti-corruption enforcement authorities both in the U.S. and abroad.  Fund managers face two primary types of corruption risks.  First, employees or third parties engaged by a manager may make improper payments to secure business.  Second, a fund may acquire a stake in a company that is engaging in corrupt practices.  During a recent program hosted by Lawline, Kimberly A. Parker and Erin G.H. Sloane, both partners at WilmerHale, discussed these and other corruption risks faced by fund managers and provided actionable advice on how to address them.  See “Private Equity FCPA Enforcement: High Risk or Hype?,” Vol. 4, No. 4 (Feb. 18, 2015).

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  • From Vol. 4 No.11 (May 27, 2015)

    Prosecutors and Defense Lawyers Discuss FCPA Risk Areas, Government Expectations and the Length of Investigations

    At ACI’s 9th Advanced Forum on FCPA and Anti-Corruption for the Life Sciences Industry, FCPA experts opined on enforcement for the second half of 2015 and the speed of government investigations, and warned that third parties and mergers and acquisitions still pose major risks.  The panel was moderated by Bret Campbell, a partner at Cadwalader, Wickersham & Taft, and included Daniel Kahn, assistant chief of the DOJ’s FCPA Unit and Timothy Peterson, a partner at Murphy & McGonigle and previously senior counsel in the SEC’s Division of Enforcement.  See also “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.9 (Apr. 29, 2015)

    Brazil’s Evolving Anti-Corruption Environment

    It has been over a year since the landmark Brazilian Anti-Corruption Act (BAA) has taken effect, and as the widespread investigation into Petrobras reveals, there is both official and grassroots disgust with the corruption that has historically plagued Brazil.  How have these current developments (which also include investigations into bribery involving the recent World Cup, the upcoming Olympics, and the aerospace conglomerate Embraer) affected the Brazilian corruption landscape and the risks of doing business there?  During a recent program presented by The Network, Matteson Ellis, a member of Miller & Chevalier, discussed those risks in the current anti-corruption environment in Brazil, detailed the new BAA regulations and offered strategies for assuring compliance with the FCPA and the BAA when doing business in Brazil.  See also “Corruption Risk and the Changing Legal Climate in Latin America,” The FCPA Report, Vol. 3, No. 4 (Feb. 19, 2014).

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  • From Vol. 4 No.7 (Apr. 1, 2015)

    Learning from the Extension of Biomet’s DPA

    Days before its March 2012 deferred prosecution agreement was about to expire, medical device manufacturer Biomet announced that the DOJ was extending the term of its agreement for another year amidst allegations of further bribery in Mexico and Brazil.  Biomet, whose $13.35 billion merger with Zimmer Holdings is imminent, reportedly discovered the new bribery allegations (some of which involve offshoots of the original culpable distributors) through an anonymous whistleblower report.  FCPA experts share their insights on Biomet’s troubles and the DOJ’s tactics.  See also “Weak FCPA Compliance Program and Lack of Cooperation Cited in Marubeni’s $88 Million Guilty Plea,” The FCPA Report, Vol. 3, No. 7 (Apr. 2, 2014).

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  • From Vol. 4 No.5 (Mar. 4, 2015)

    $16 Million Goodyear SEC Settlement Highlights M&A Risks and Subsidiary Liability

    Goodyear Tire & Rubber Company has agreed to pay $16 million to settle civil FCPA charges, resolving allegations that it failed to detect more than $3.2 million in improper payments made by its Kenyan and Angolan subsidiaries.  The SEC says that due diligence failures relating to the acquisition of the Kenyan subsidiary and weak internal controls allowed the bribery to occur unchecked.  Goodyear received credit for self-disclosure, cooperation and remediation.  “Goodyear did very well,” Robert Appleton, a partner at Day Pitney, told The FCPA Report.  The company “got the best result I think it could have hoped for,” he said.  See also “Seven Issues to Address When Performing Pre-Acquisition Due Diligence,” The FCPA Report, Vol. 2, No. 23 (Nov. 20, 2013).

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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.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.23 (Nov. 19, 2014)

    FCPA Liability Does Not Reach Successor When Target’s Misconduct Was Beyond FCPA’s Jurisdiction, DOJ Affirms, Outlining M&A Best Practices

    The SEC/DOJ FCPA Guidance says that an acquisition does not create liability where none existed before.  In its second Opinion Procedure Release of 2014, the DOJ reaffirms the limits of FCPA liability, announcing that it would not take enforcement action against a U.S. acquiring company based on its foreign target’s pre-acquisition conduct, which was not subject to the FCPA’s jurisdiction before the acquisition.  The company explained its pre-acquisition diligence and its post-acquisition plan to bring the target in compliance.  The release comes at a time when the DOJ and SEC are facing judicial scrutiny of their interpretation of the jurisdiction of the FCPA.  See “Hoskins Provides an Opportunity for Judicial Determination of the FCPA’s Jurisdiction,” The FCPA Report, Vol. 3, No. 20 (Oct. 8, 2014); “How Broad Is the FCPA’s Reach Over the Acts of Foreign Nationals?,” The FCPA Report, Vol. 2, No. 6 (Mar. 20, 2013).

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  • From Vol. 3 No.15 (Jul. 23, 2014)

    The FCPA Report Joins Mergermarket Group

    Mergermarket Group announced on July 21, 2014 that it acquired The Law Report Group, the New York-based publisher of The Hedge Fund Law Report and The FCPA Report.  The acquisition bolsters Mergermarket Group’s legal and regulatory expertise.  For FCPAR subscribers, this transaction will result in content, distribution and product enhancements.

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  • From Vol. 3 No.7 (Apr. 2, 2014)

    DOJ Green Lights the Sale of Stake in Private Business by Owner-Turned-Foreign Official to Affiliated Buyer

    Does the purchase of a closely-held business from a seller who becomes a foreign official violate the FCPA?  The DOJ’s first Opinion Procedure Release of the year examines whether a company’s payment to the foreign official, the former chief executive and minority owner of a foreign subsidiary of the company, to complete a previously contemplated buyout (but at a higher price than originally agreed) violates the FCPA.  This article scrutinizes the facts in the request and the DOJ’s decision and reasoning.  See “DOJ Clarifies Bounds of Humanitarian Aid Benefitting Foreign Officials in FCPA Opinion Release,” The FCPA Report, Vol. 3, No. 1 (Jan. 8, 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. 3 No.2 (Jan. 22, 2014)

    A Guilty Plea and Two Flight Risks in PetroTiger Colombian Bribery Case

    Three individual cases in the corruption risk-ridden oil and gas industry have added to January’s FCPA enforcement flurry.  The DOJ has unsealed FCPA charges against former PetroTiger executives related to alleged payments to an employee of Ecopetrol S.A., the Colombian state-owned petroleum company, to obtain a lucrative contract.  The former General Counsel has pled guilty and the two former CEOs were arrested (one at Newark airport and one in the Philippines) and are free on bail.  The article distills six compliance and enforcement takeaways from this case.  See also  “For Individual FCPA Defendants, Providing Assistance Can Lead Directly to Downward Departures in Sentencing,” The FCPA Report, Vol. 2, No. 8 (Apr. 17, 2013).

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  • From Vol. 2 No.25 (Dec. 18, 2013)

    FCPA Corporate Settlements of 2013: Details, Trends and Compliance Takeaways

    FCPA enforcement got off to a slow start in 2013, with no official corporate FCPA settlements announced until the beginning of the second quarter.  Experts dove into the vacuum, speculating about whether the lack of settlements signaled a downturn in the government’s commitment to enforcement.  As the year progressed, however, enforcement picked up.  While the statistics were slightly down from 2012, as of press time, the DOJ and SEC had reached nine settlement agreements with corporations, including multiple DPAs and the SEC’s first-ever NPA.  The government assessed over $650 million in fines, disgorgement and penalties from the settling companies, with company settlements ranging from $1 million to a staggering $398 million.  This article discusses four compelling enforcement trends and summarizes the settlements and their compliance takeaways.  See also “Seven Key Trends That Are Changing the FCPA Enforcement and Compliance Landscape,” The FCPA Report, Vol. 2, No. 14 (Jul. 10. 2013).

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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.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)

    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.16 (Aug. 7, 2013)

    Dechert Produces Movie to Assist in FCPA and Corporate Governance Training

    The board of directors of a beleaguered company faces a vote on whether to acquire a new company with promise, and risk, in an emerging market.  It’s a serious, high-stakes situation faced by many boards.  It is the subject of many papers and seminars.  And it’s even the subject of training sessions in various media – but, Dechert LLP says, there has never been a training video like this.

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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.12 (Jun. 12, 2013)

    A Guide to Disclosing Corruption Investigations in SEC Filings: Compendium of SEC Filings (Part Four of Four)

    This is the fourth and final article in The FCPA Report’s series on when and how public companies should disclose FCPA and other corruption issues in SEC filings.  In this article, we have organized (with help from Intelligize’s database and search tools) a compendium of actual FCPA-related disclosures from recent SEC filings.  The filings are grouped based on the type of event that triggered the initial disclosure, as follows: U.S. government subpoena; U.S. government inquiry; foreign government investigation; internal compliance discovery; whistleblower allegation; and post-acquisition due diligence.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings relating to an FCPA issue.  To maximize the value of this compendium as a practice tool, this compendium also contains links to each of the filings discussed and quoted.  The first article in the series discussed factors that companies should consider when determining whether a public disclosure is appropriate; what experts a company should retain to help it make appropriate disclosure decisions; and the risks and benefits of disclosing at different stages of an anti-corruption investigation.  The second installment in the series detailed the risks inherent in disclosure and non-disclosure; addressed ways to diminish those risks, including handling media coverage; and discussed best practices when disclosing foreign investigations to the SEC.  The third article in the series provided insight on the most effective language to use in disclosures, and analyzed Wal-Mart’s disclosures at critical decision points in its recent investigation.

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Five 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 discusses: the FCPA risks faced by minority interest holders, and additional compliance measures that may be needed when an individual investor or one or more employees or representatives of a private equity firm serve on the board of directors of an investment or portfolio company.  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.  The fourth part of the series addressed corruption risk in non-U.S. investments, including steps to take during pre-investment due diligence, contractual safeguards to mitigate risk and post-investment responsibilities.

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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)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Two 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 entitled 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 members of the FCPA bar.  This issue contains the second installment in the series, which analyzes post-transaction risk, including the concept of willful blindness and the application of the FCPA’s accounting provisions to mergers and acquisitions.  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.  See “Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part One of Five),” The FCPA Report, Vol. 2, No. 8 (Apr. 17, 2013).

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  • From Vol. 2 No.8 (Apr. 17, 2013)

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

    FCPA compliance is a paramount consideration in any cross-border merger, acquisition or investment transaction.  The U.S. government has emphasized the importance of conducting due diligence and implementing compliance measures in connection with overseas corporate transactions through its enforcement actions, DOJ Opinion Procedure Releases and the recent Guidance.  In addition, the compliance practices of individual investors and private equity firms that invest funds overseas have come under scrutiny.  Pre-transaction due diligence, anti-corruption representations and warranties in agreements with counterparties and prompt implementation after closing of any necessary changes to the acquisition or investment target’s anti-corruption compliance program are key to mitigating FCPA risk.  In light of the central role of FCPA compliance in cross-border transactions, The FCPA Report is serializing (in five parts) a chapter from a recently published treatise entitled 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 members of the FCPA bar.  This first installment in the series provides an overview of the corruption liability inherent in M&A and investment transactions, drawing on the authors’ professional experience and recent enforcement actions.  This installment also addresses mitigation of corruption risk before transactions occur, focusing on successor liability, ratification, acts in furtherance of corruption and investment valuation.

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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.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. 1 No.14 (Dec. 12, 2012)

    Top Practitioners Analyze the DOJ & SEC FCPA Guidance (Part Two of Two)

    On November 14, 2012, the SEC and DOJ jointly issued long-awaited guidance on the FCPA (Guide or Guidance), spurred in part by the Organisation for Economic Cooperation and Development’s recommendation, and business pressures for more clarity about the FCPA and the government’s enforcement of it.  This article continues our extensive coverage of the Guidance and the practical implications of it, offering concrete suggestions to anti-bribery professionals on avoiding, handling and settling enforcement actions, conducting internal investigations and executing mergers and acquisitions.  This article – the second in a two-part series – uses input from leading FCPA experts to extract practical lessons from the Guide, including what it says about compliance programs and internal controls; whether the Guide sheds any light on what constitutes a facilitation payment and who constitutes a foreign official, and whether those distinctions are important; the Guide’s insight on third-party due diligence, successor liability and statute of limitations issues; and whether the Guide affects the self-reporting calculus.  The first article in this series addressed the backstory of the Guide and why it was issued; how companies and their counsel can use the Guide and the hypotheticals included in it; advice that can be distilled from the Guide on gifts, travel and entertainment; deficiencies in the Guide and which areas of the law remain unclear; and the highlights and lowlights of the Guide’s declination section.  See “Top Practitioners Analyze the DOJ & SEC FCPA Guidance (Part One of Two),” The FCPA Report, Vol. 1, No. 13 (Nov. 28, 2012).

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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.13 (Nov. 28, 2012)

    DOJ and SEC Officials Provide Candid Insight into the Recently Issued FCPA Guidance

    On November 14, 2012, the DOJ and the SEC provided unprecedented guidance on the FCPA, releasing a Resource Guide to the Foreign Corrupt Practices Act (Guide or Guidance).  See “DOJ and SEC Jointly Issue Long-Awaited Guidance on the FCPA,” The FCPA Report, Vol. 1, No. 12 (Nov. 14, 2012) and the articles analyzing the Guide in this issue of The FCPA Report.  Two days later, at the American Conference Institute’s 28th Annual Conference on the Foreign Corrupt Practices Act, top officials from the DOJ and the SEC addressed the FCPA community.  In what moderator Homer Moyer, member at Miller & Chevalier Chartered, described as an “impressive exercise in transparency,” Charles Duross, the Deputy Chief of the Fraud Section of the Criminal Division of the DOJ, Kara Brockmeyer, Chief of the FCPA Unit of the Division of Enforcement of the SEC and Jeffrey Knox, Principal Deputy Chief of the Fraud Section of the Criminal Division of the DOJ, answered the legal and business community’s most pressing questions about the Guidance.  Topics addressed included: reasons for providing the Guidance; whether companies should rely on the Guidance; a company’s potential liability for the acts of a foreign subsidiary; successor liability under the FCPA; gifts and entertainment; definition of the term “foreign official”; corporate compliance programs; and corporate criminal liability.  This article relays the officials’ most noteworthy points on each of the foregoing topics.

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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.2 (Jun. 20, 2012)

    Watts Water Technologies Sues Sidley Austin LLP for Malpractice Arising out of Alleged Failure to Reveal Chinese Target Company’s Written “Kickback” Policy

    In 2002, Watts Water Technologies, Inc. (Watts) retained global law firm Sidley Austin, LLP (Sidley) to advise it in connection with its operations in the People’s Republic of China (PRC).  From 2004 to 2005, Sidley conducted due diligence on a company Watts proposed to acquire in the PRC.  Sidley did not raise any red flags about FCPA compliance.  After the acquisition, Watts learned that the acquired company’s sales policies violated the FCPA.  Watts self-reported the problem to the DOJ and the SEC.  See “When and How Should Companies Self-Report FCPA Violations? (Part Two of Two),” above, in this issue of The FCPA Report.  It eventually consented to the entry of a cease-and-desist order by the SEC, whereby it disgorged $3.57 million in profit and paid a $200,000 fine.  Watts has now sued Sidley for malpractice, claiming that Sidley neglected to tell Watts of the target’s written “kickback” policy that Sidley had received during due diligence.  This article details the factual allegations and legal claims in Watts’ Complaint.

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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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