The Anti-Corruption Report

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

Articles By Topic

By Topic: Nepotism

  • From Vol. 5 No.24 (Dec. 7, 2016)

    How JPMorgan Chase Avoided a Monitor in Its Nepotism-Related FCPA Settlement With Three Agencies

    More than three years after the investigation of hiring practices at JPMorgan Chase by the SEC became public, the company has settled nepotism-related bribery charges with the SEC, the DOJ and the Federal Reserve. The basic facts have been known since 2013 when The New York Times broke the story, but the further details revealed in the SEC’s cease-and-desist order and the DOJ’s non-prosecution agreement show a pervasive pattern of quid pro quo hirings in the bank’s Asia Pacific subsidiary. We take a look at how the bank’s compliance program failed and how JPMorgan addressed those failures successfully enough to avoid the imposition of a monitor. See “Managing Corruption Risk When Hiring and Training Foreign Officials and Their Relatives Overseas: Practical Compliance Guidance (Part One)” (Jul. 27, 2016); (Part Two) (Aug. 10, 2016).

    Read Full Article …
  • From Vol. 5 No.16 (Aug. 10, 2016)

    Managing Corruption Risk When Hiring and Training Foreign Officials and Their Relatives Overseas: Practical Compliance Guidance (Part Two of Two)

    More than a decade after the overseas anti-corruption enforcement boom began, it is clear that the U.S. government is looking to prosecute corruption that takes non-traditional forms. Providing internships, education, gifts, hospitality and entertainment to, or at the request of, government officials can all lead to anti-corruption troubles. For companies operating in the extractive industry, subject to local content laws that require them to provide such opportunities to the local workforce, compliance is key. In a two-part guest article series, Andrew Costa, the general counsel and assistant secretary of the Atlantic Methanol Companies, along with Jeremy Levin, a partner at Baker Botts, and his associate Louie Layrisson, discuss how to overcome overseas hiring and training challenges. The first article distilled insights from U.S. settlements regarding the government’s expectations for hiring practices and training programs. This second article provides guidance on mitigating risks associated with training foreign officials and hiring their relatives. See “Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement (Part One of Two)” (Jan. 13, 2016); Part Two (Jan. 27, 2016).

    Read Full Article …
  • From Vol. 5 No.15 (Jul. 27, 2016)

    Managing Corruption Risk When Hiring and Training Foreign Officials and Their Relatives Overseas: Risks and Challenges (Part One of Two) 

    Companies in the extractive sector are often subject to local content laws requiring them to develop the local workforce by providing on-the-job training and educational funding for employees of government and state-owned entities. Such requirements, while generally well-intentioned, present an array of compliance challenges. In a two-part guest article series, Andrew Costa, the general counsel and assistant secretary of the Atlantic Methanol Companies, along with Jeremy Levin, a partner at Baker Botts, and his associate Louie Layrisson, discuss how to overcome overseas hiring and training challenges for extractive companies. In this first article, they distill insights from U.S. settlements regarding the government’s expectations for hiring practices and training programs. The second article will provide guidance on mitigating risks associated with training foreign officials and hiring their relatives. See “Kevin Abikoff of Hughes Hubbard Discusses the Benefits and Risks of African Local Content Laws” (Feb. 10, 2016).

    Read Full Article …
  • From Vol. 5 No.11 (Jun. 1, 2016)

    Checklist of Issues to Consider When Implementing a Hiring Practices Policy

    In the past year, the SEC’s settlements with BNY Mellon and Qualcomm have made it clear that, at least in the SEC’s opinion, a job or internship can be a “thing of value” under the FCPA. Hiring the relative of a foreign official in order to curry favor with that official can lead to an FCPA violation. The FCPA Report has put together a checklist a company can use when drafting and implementing policies governing hiring. A company can use this checklist to evaluate the strength of its program and identify areas for improvement. See also “Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement”: Part One (Jan. 13, 2016); Part Two (Jan. 27, 2016).

    Read Full Article …
  • From Vol. 5 No.5 (Mar. 9, 2016)

    Qualcomm’s $7.5 Million Settlement for Princeling Hirings Enabled by Three Key Compliance Failures

    Qualcomm Inc., a major designer of wireless telecommunications products, has agreed to pay a civil monetary penalty of $7.5 million to the SEC to settle FCPA charges. According to the SEC, Qualcomm hired the relatives of Chinese government officials and also provided extensive gifts, travel and entertainment to the foreign officials and their families to influence those officials’ purchasing decisions. The case shows that hiring family members of foreign officials “clearly needs to be on companies’ risk assessment radar,” asserted Jeffrey Kaplan, a partner at Kaplan & Walker. The case is also a reminder that companies still need to be mindful of more traditional corruption risks such as gifts, travel and entertainment and a weak compliance program. See “Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement (Part One of Two)” (Jan. 13, 2016); Part Two (Jan. 27, 2016).

    Read Full Article …
  • From Vol. 5 No.2 (Jan. 27, 2016)

    Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement (Part Two of Two)

    Adding to the list of creative ways to accomplish bribery, the SEC’s recent settlement with BNY demonstrated that, at least in the SEC’s opinion, a job can be a “thing of value” that can lead to an FCPA violation. The government made it clear that to avoid such violations, any robust anti-corruption program must integrate policies about hiring practices. Going forward, companies can use the settlement documents as a helpful roadmap for updating their compliance program to meet the SEC’s maturing expectations. The FCPA Report spoke to a number of experts in the field (including the chief compliance officer of a multinational company) who together identified three key aspects of a hiring policy and discussed how companies should be updating their training program. In the first article in this two-article series, we considered the expansion of FCPA liability and its broader implications for FCPA enforcement. See “BNY Mellon Settles Nepotism-Related Charges for $14.8 Million” (Aug. 19, 2015).

    Read Full Article …
  • From Vol. 5 No.1 (Jan. 13, 2016)

    Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement (Part One of Two)

    In August of 2015, the SEC settled its first FCPA case based solely on hiring relatives of foreign officials. Stemming from a series of investigations of hiring practices at banks, the settlement with BNY Mellon illuminated how the SEC views the FCPA and the types of practices that can violate it. In the wake of this first for the SEC, companies may need to reassess and retool their compliance programs. In this installment of our two-part article series, we discuss how the BNY settlement clarifies what can be an FCPA violation. The second part will explore what changes companies should be making to their hiring policies, compliance programs and training curricula. See “BNY Mellon Settles Nepotism-Related Charges for $14.8 Million” (Aug. 19, 2015).

    Read Full Article …
  • From Vol. 4 No.17 (Aug. 19, 2015)

    BNY Mellon Settles Nepotism-Related Charges for $14.8 Million

    Three participants in a highly competitive BNY Mellon internship program received their jobs differently from the rest, according to the SEC.  In the first FCPA settlement related to the hiring practices of financial institutions, the bank has agreed to pay $14.8 million dollars to resolve the SEC’s allegations that it hired relatives of foreign government officials affiliated with a Middle East sovereign wealth fund in exchange for contracts to manage and service the assets of the fund.  The case represents a collision of two separate investigations targeting financial institutions and their relationships with foreign government officials.  See also “Mayer Brown Attorneys Discuss Global Corruption Risk in the Financial Services Industry,” in this issue.

    Read Full Article …
  • From Vol. 4 No.13 (Jun. 24, 2015)

    FCPA Enforcement Officials and Defense Bar Advise on Anti-Corruption Compliance Policies

    What does the government really expect from a compliance program?  When will a company get cooperation credit?  These were among the questions tackled by FCPA experts in the private and public sectors during a recent program hosted by Practising Law Institute.  The panelists included Kara N. Brockmeyer, chief of the SEC’s FCPA Unit of the Division of Enforcement and Matthew S. Queler, an assistant chief in the Fraud Section of the DOJ’s Criminal Division.  Sharing the perspective of the defense bar were Kimberly A. Parker, a partner at WilmerHale; Jeffrey D. Clark, a partner at Willkie Farr & Gallagher and former Assistant U.S. Attorney in the District of New Jersey; and Mark F. Mendelsohn, a partner at Paul, Weiss, and former deputy chief of the Fraud Section of the DOJ’s Criminal Division.  A companion article, published in our last issue, contained the panelists’ discussion on hot topics such as international coordination of anti-corruption cases, a rising bar for cooperation credit and the availability of declinations.

    Read Full Article …
  • From Vol. 4 No.11 (May 27, 2015)

    Former Prosecutor Daniel Fetterman Speaks Out About Princelings Investigations

    The government continues to scrutinize hiring practices at banks, looking for evidence that banks are hiring the relatives of foreign officials in exchange for business advantages.  Banks are pushing back against these “princeling” investigations, reportedly lobbying the government and accusing the regulators of overreaching.   The FCPA Report spoke with Daniel Fetterman, a partner at Kasowitz, Benson, Torres & Friedman, about when the hiring of princelings crosses the line; best practices for hiring; and his views on the government’s investigation and its effect on other industries.  See “Friendly Relations? When Nepotism May Violate the FCPA,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012).

    Read Full Article …
  • From Vol. 4 No.7 (Apr. 1, 2015)

    From Princelings to SWFs: All-Star Panel Dissects Corruption Issues Affecting Wall Street

    For financial institutions and the private funds industry, corruption risks lurking in common activities are coming to the forefront.  At the New York City Bar, a distinguished panel of former prosecutors and industry experts offered insights into those evolving risks (including hiring practices and sovereign wealth funds), the enforcement landscape and how companies can strengthen their compliance programs in response.  The panel was moderated by John D. Buretta, a partner at Cravath, Swaine & Moore and former Assistant U.S. Attorney and Principal Deputy Assistant Attorney General at the DOJ.  The other speakers were Sarah Coyne, counsel at Debevoise & Plimpton and a former Assistant U.S. Attorney in the Eastern District of New York and Chief of the Business and Securities Fraud Section; Kelly B. Kramer, a partner at Mayer Brown; Claudius O. Sokenu, a partner at Shearman & Sterling and former SEC Senior Counsel; and Linda Chatman Thomsen, a partner at Davis Polk & Wardwell and former SEC Director of Enforcement.  See also “Friendly Relations? When Nepotism May Violate the FCPA,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012).

    Read Full Article …
  • From Vol. 4 No.3 (Feb. 4, 2015)

    In Rare DPA, SEC Resolves FCPA Claims with PBSJ over Middle-Eastern Bribes

    Florida-based engineering and construction firm PBSJ Corporation (now the Atkins North America Holding Corporation) has agreed to pay $3.4 million to resolve FCPA claims with the SEC relating to bribes in Qatar and Morocco.  The claims were resolved via a Deferred Prosecution Agreement – an unusual settlement tool for the SEC.  The SEC also settled claims with Walid Hatoum, PBSJ’s former international marketing director, through an administrative proceeding.  We summarize the case and draw compliance lessons.  See also “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).

    Read Full Article …
  • 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).

    Read Full Article …
  • From Vol. 3 No.24 (Dec. 3, 2014)

    Caldwell and Ceresney Push Companies on FCPA Compliance, Cooperation and Self-Reporting

    Reinforcing familiar messages, senior government officials at the SEC and DOJ said the FCPA continues to be a priority and self-reporting and cooperation count a lot towards the mitigation of penalties.  Speaking at American Conference Institute’s recent International Conference on the Foreign Corrupt Practices Act, Assistant Attorney General Leslie R. Caldwell and the Director of the SEC Division of Enforcement Andrew Ceresney described the government’s focus going forward in each of their keynote speeches, including focusing on prosecuting individuals; the strengthening of the Kleptocracy Initiative; and increasing international cooperation.  The FCPA Report synthesizes their speeches here and also in this issue presents private practitioners’ takeaways from the government's "Year in Review" presentation at the conference.  See also “In Final Speech as Criminal Division Head, Mythili Raman Emphasizes DOJ’s Focus on Anti-Corruption Efforts, Highlighting Individual Convictions and Foreign Cooperation,” The FCPA Report, Vol. 3, No. 7 (Apr. 2, 2014).

    Read Full Article …
  • From Vol. 2 No.25 (Dec. 18, 2013)

    What Private Fund Managers Must Know About FCPA Enforcement

    “Hedge funds are under the FCPA microscope now,” Lauren Resnick, a partner at Baker Hostetler LLP, warned at a recent panel discussing the corruption risks that private fund managers, including hedge fund managers, face.  She and her colleague Marc Kornfeld, along with James “Bucky” Canales, Chief Operating Officer of StoneWater Capital, detailed how the FCPA affects the private funds industry and what hedge fund managers and others should be doing to minimize the risk of an FCPA violation, or the violation of other global anti-bribery laws.  See also “Buyer Beware: Understanding and Mitigating Parent Company FCPA Liability in the Context of Private Equity Acquisitions,” The FCPA Report, Vol. 2, No. 15 (Jul. 24, 2013).

    Read Full Article …
  • From Vol. 1 No.10 (Oct. 17, 2012)

    Friendly Relations? When Nepotism May Violate the FCPA

    The FCPA prohibits covered entities from providing, with corrupt intent, anything of value to a foreign official to obtain or retain a business advantage.  The “anything of value” prong of the FCPA is quite broad, encompassing non-cash benefits.  But what about helping the relative of a foreign official get a job or internship?  Is that too prohibited by the FCPA?  In a guest article, Joel M. Cohen and Matthew W. Knox, partner and associate, respectively at Gibson, Dunn & Crutcher LLP, discuss the form a proper employee relationship between a domestic concern and the relative of a foreign official may take.  In particular, Cohen and Knox review recent FCPA cases that included allegations of nepotism and then consider DOJ opinion releases that outline the broad contours of a defensible employment relationship between a domestic concern and the relative of a foreign official.  From these cases and releases, the authors derive practical considerations that should bear on the decision to employ otherwise qualified relatives of foreign officials.

    Read Full Article …