The Anti-Corruption Report

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

Articles By Topic

By Topic: Third Parties

  • From Vol. 7 No.23 (Nov. 14, 2018)

    How to Surmount Obstacles and Enforce Third-Party Audit Rights

    Third parties are one of the largest sources of corruption risk, but companies still struggle with creating effective third-party audit programs. A lack of resources, pushback from company business units and reticent third parties are all common hurdles that compliance departments face. During a recent webinar, The Anti-Corruption Report’s Editor-in-Chief, Nicole Di Schino, discussed how to overcome these challenges with Palmina Fava, a partner at Paul Hastings, Edward Fishman, a partner at Nossaman, and Marc Shanker, managing counsel at Oracle. See our three-part series on enforcing audit rights, the next third-party management frontier: “What to Do Before an Audit” (Nov. 9, 2016); “Conducting an Onsite Audit” (Dec. 7, 2016); “Forestalling Problems, Documenting the Audit and Responding Appropriately” (Mar. 1, 2017).

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  • From Vol. 7 No.13 (Jun. 27, 2018)

    Eight Steps to Take When Installing an Anti-Corruption Compliance Program at a Smaller Company

    Although much has been written regarding the “ideal” compliance program, many smaller companies may lack the resources to achieve those best practices. In a guest article, Kirkland & Ellis partners Kim Nemirow and Abdus Samad Pardesi and associate Christina Dahlman offer concrete guidance for small and medium-sized companies seeking to prioritize and maximize their compliance resources to meet regulator expectations. An effective compliance program, they argue, need not be the most expensive one. A smart, narrow program can, in many cases, be far more effective than a cumbersome one. See “Beyond Millennials: Under Armour’s Amy Much Discusses Crafting a Compliance Program for the Modern Workplace” (May 2, 2018)

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  • From Vol. 7 No.11 (May 30, 2018)

    Understanding the Intersection of Law and Artificial Intelligence

    How can lawyers effectively use artificial intelligence and mitigate the myriad risks it poses? During a recent Strafford panel, Robert W. Kantner, a partner at Jones Day; Michael W. Kelly and Huu Nguyen, both partners at Squire Patton Boggs; and Dennis Garcia, an assistant general counsel at Microsoft, provided insight on how to make the most of AI. See “Ernst & Young Experts Reveal How Forensic Data Analytics Can Transform Anti-Corruption Compliance” (Apr. 30, 2014).

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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.5 (Mar. 7, 2018)

    GDPR Readiness: Legal and Technological Implications for Third-Party Monitoring in the E.U. and Beyond

    The looming May 25, 2018, effective date of the European Union’s General Data Protection Regulation (GDPR) carries implications beyond just the E.U. for both so-called “controllers,” the entities that make decisions relating to personal data, and “processors,” the third parties that act on the instructions of a controller when managing the use of that personal data. During a recent Bristows webinar, “The Future of Third Party Compliance in Europe,” Robert Bond, a partner at Bristows, and Allan Matheson, CEO of Blue Umbrella, a compliance research firm, spoke about how GDPR and other laws are impacting third-party monitoring and how technology can be used to make that monitoring more effective. See our series on third-party contracts, “A Guide to Anti-Corruption Representations in Third-Party Contracts: Nine Clauses to Include (Part One of Two)” (Jun. 25, 2014); “Clauses for High-Risk Situations and Enforcement Strategies (Part Two)” (Jul. 9, 2014).

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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.23 (Nov. 29, 2017)

    Auditing Third Parties: A Ten-Step Checklist

    A successful third-party risk-management program requires regularly conducting third-party audits. While some companies have active third-party audit programs, others are still developing this component of their compliance program. This checklist guides a party through the audit process, from drafting policies and procedures to documenting and remediating after an audit is completed. For a more in-depth look at enforcing audit rights, the next third-party management frontier, see our three-party series: “What to Do Before an Audit” (Nov. 9, 2016); “Conducting an Onsite Audit” (Dec. 7, 2016); “Forestalling Problems, Documenting the Audit and Responding Appropriately” (Mar. 1, 2017).

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  • 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.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)

    Remediating Corruption Issues Uncovered During Third-Party Audits

    Auditing a third party will almost certainly lead to the discovery of anti-corruption red flags. Before embarking on an audit, a company must both understand what red flags it is looking for and have a plan for how to address problems when they are uncovered. Companies and their lawyers can learn from the experiences of others caught in the glare of the anti-corruption spotlight as to what to do – or not do – when a red flag has surfaced. Drawing on advice from anti-corruption audit veterans and lessons from FCPA settlements, this article provides a starting point for creating such a plan. See our three-part series on enforcing audit rights, the next third-party management frontier: “What to Do Before an Audit” (Nov. 9, 2016); “Conducting an Onsite Audit” (Dec. 7, 2016); “Forestalling Problems, Documenting the Audit and Responding Appropriately” (Mar. 1, 2017).

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  • From Vol. 6 No.19 (Oct. 4, 2017)

    Crafting an Effective Cross-Border Distribution Agreement

    A primary area of corruption risk lies in relationships with third parties in general and distributors in particular. Well-crafted distributor agreements can help mitigate that risk while ensuring that the deal remains workable for both the principal and the distributor. During a recent webinar hosted by Strafford, WilmerHale partner Jay Holtmeier, Arnall Golden Gregory partner Michael Burke and Fluet Huber + Hoang senior associate Adam Munitz provided eight critical elements companies should consider when drafting cross-border distribution contracts. See our two-part guide to anti-corruption representations in third-party contracts: “Nine Clauses to Include” (Jun. 25, 2014); and “Clauses for High-Risk Situations and Enforcement Strategies” (Jul. 9, 2014).

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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.14 (Jul. 19, 2017)

    One Saudi Company’s Role in Fostering Saudi Arabia’s Anti-Corruption Efforts

    Saudi Arabia’s Council of Ministers has endorsed a sweeping set of programs and reforms to be implemented by 2030 known as Vision 2030. The program includes a plan to improve transparency and combat corruption in all sectors. In a televised interview, Saudi Arabia’s then-Deputy Crown Prince Mohammad bin Salman Al Saud announced that Saudi Arabia will be placed at “the forefront of countries which are combatting corruption and to have the lowest rates of corruption in the world.” In a guest article, Waleed Alghosoon and Danielle Cannata of Saudi Basic Industries Corporation (SABIC) explain how their company is supporting the Saudi Vision 2030 through its internal anti-corruption programs and through capacity building in its Saudi supply chain. See “Regional Risk Spotlight: Riyadh-Based Attorney Robert Thoms Talks Formal and Informal Anti-Corruption Control in Saudi Arabia” (Oct. 26, 2016).

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  • From Vol. 6 No.12 (Jun. 21, 2017)

    Channeling the Channel-Partner Risk: Addressing Anti-Corruption Risk with Channel Partners in the Technology Sector

    In the software and hardware businesses, the use of channel partners – entities that pair with manufacturers to market and sell products, services and technology – often presents unique compliance challenges. To assist with navigating these risks, Nicola T. Hanna and Michael M. Farhang, partners at Gibson Dunn, along with associates Pedro G. Soto and Caitlin S. Peters, explore some of the recent enforcement actions in the software and hardware sector, identify the principal themes in those actions and propose best compliance practices. See “Excessive Power for Junior Employees and Lavish Trips for Foreign Officials Lead to $28 Million PTC Settlement” (Feb. 24, 2016).

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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)

    Anti-Corruption Provisions in Third-Party Contracts in China

    Like in most countries, anti-corruption enforcement actions in China are often triggered by third-party misconduct. As more and more multinational companies start to enforce the anti-corruption provisions in their Chinese third-party contracts, practical issues emerge. For example, a third party may not cooperate with an audit because it claims the audit provision is vague. In a guest article, Kate Yin and Samuel Yu, from the Chinese firm Fangda Partners, advise on how a company can anticipate these issues and effectively protect itself using anti-corruption provisions in third-party contracts. See The FCPA Report’s series on third-party contracts, “A Guide to Anti-Corruption Representations in Third-Party Contracts: Nine Clauses to Include (Part One of Two)” (Jun. 25, 2014); “Clauses for High-Risk Situations and Enforcement Strategies (Part Two)” (Jul. 9, 2014).

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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)

    Regional Risk Spotlight:  Rafael Jimenez-Gusi Discusses Corruption Perceptions and Compliance Expectations in Spain

    By passing amendments to its anti-corruption laws in 2015, Spain placed itself at the vanguard of countries that are encouraging companies to implement strong compliance programs. The FCPA Report recently spoke with Rafael-Jimenez Gusi, a partner at Baker McKenzie based in Barcelona, about the new law, Spain’s current enforcement environment and what companies can do to take advantage of the country’s innovative compliance defense. See “Regional Risk Spotlight: Aisha Abdallah Discusses Corruption and Compliance Practices in Kenya” (Apr. 26, 2017).

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  • From Vol. 6 No.9 (May 10, 2017)

    No Good Deed Goes Unpunished: Possible Unintended Consequences of Enforcing Supply-Chain Transparency (Part Two of Two)

    Companies have been trying to mitigate risks associated with their supply chain through third-party contracts and audit rights, as well as disclaimer language on products and websites. But sometimes too many of these “buyer’s rights” may be construed against the companies claiming them and may result in a company’s liability for violations within its supply chain when no such duty exists independently. It is a modern-era-corporate-responsibility paradox – the more ethical the company wants to be, the more likely it may be subject to consequences of “trying to do the right thing.” The first part of this guest article series by Fernanda Beraldi, international ethics and compliance director and corporate counsel at Cummins, Inc., and Edwin Broecker, a partner at Quarles & Brady, detailed the different legal regimes that affect supply-chain transparency. In this second article, they address some of those unintended consequences. See The FCPA Report’s series on third-party contracts, “A Guide to Anti-Corruption Representations in Third-Party Contracts: Nine Clauses to Include (Part One of Two)” (Jun. 25, 2014); “Clauses for High-Risk Situations and Enforcement Strategies (Part Two)” (Jul. 9, 2014).

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  • From Vol. 6 No.8 (Apr. 26, 2017)

    No Good Deed Goes Unpunished: Possible Unintended Consequences of Enforcing Supply-Chain Transparency (Part One of Two)

    In light of recent laws such as the U.K. Modern Slavery Act and the California Transparency in Supply Chains Act, a responsible supply chain that embodies a company’s corporate social responsibility policies has become a key part of the strategy of many companies. But that strategy is being carried out by responsible sourcing teams and corporate-responsibility professionals while anti-money laundering and anti-corruption programs remain in the custody of legal and compliance personnel. In a guest article series, Fernanda Beraldi, international ethics and compliance director and corporate counsel at Cummins, Inc., and Edwin Broecker, a partner at Quarles & Brady, argue that the coming challenge for companies will be how to integrate these historically divergent functions as they balance disclosure demands, the operational need to continuously improve imperfect and challenging conditions in their supply chains and increasing legal risk for full disclosure and performance. In this first article, they discuss in detail the different legal regimes that affect supply-chain transparency. In the second article, they will discuss how, in light of recent litigation, that transparency can have unintended consequences for companies. See “The New Landscape of Corporate Social Responsibility Regulation and Its Overlap With FCPA Compliance” (Nov. 7, 2012).

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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)

    Kroll/Ethisphere Report Highlights Concerns About Reputational Risk and Post-Onboarding Monitoring of Third Parties

    A whopping 92% of compliance professionals expect their organizations’ bribery and corruption risks to either increase or remain the same in 2017, according to a survey conducted by Kroll and the Ethisphere Institute, and around half said their compliance budget is lacking. Respondents cited third-party relationships and global regulatory enforcement as enhancing the risk, and expressed concerns about the impact of a bribery or corruption violation on reputation. We analyze the survey results with input from Kroll experts. See also “2016 Brought Heavy Enforcement, a Flurry of Settlements and Disruption to the FCPA Space” (Mar. 1, 2017).

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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.5 (Mar. 15, 2017)

    Repeat FCPA Offender Orthofix Settles Brazilian Bribery Charges With the SEC 

    Medical device company Orthofix has settled FCPA charges again, this time based on its Brazilian subsidiary’s use of commercial representatives and distributors to bribe doctors at state-owned hospitals. Pursuant to an SEC order, Orthofix has agreed to pay $6.25 million and retain an independent consultant. Unlike its previous 2012 FCPA settlement, which involved bribery at its Mexican subsidiary, there is no accompanying DOJ enforcement action. We dissect Orthofix’s FCPA resolution and provide enforcement and compliance lessons, including a comparison to Biomet, another repeat offender in the same industry, whose second FCPA resolution came in 2017. See “After Two Extensions of Its DPA, Zimmer Biomet Settles Further FCPA Charges for $30M” (Feb. 1, 2017).

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  • From Vol. 6 No.4 (Mar. 1, 2017)

    SFO Arrives in the Anti-Corruption Premier League With Rolls-Royce Settlement

    The U.K.’s Serious Fraud Office has struggled for legitimacy in recent years, with a limited number of enforcement actions under its belt and a shrinking budget. But its recent settlement with Rolls-Royce has established it as a force to be reckoned with in global anti-corruption enforcement. “The settlement catapults the SFO into the Premier League of global anti-bribery law enforcement,” said London-based Barry Vitou, head of Pinsent Masons’ corporate crime team. But is it sending mixed messages about the value of cooperation and self-reporting? For more on the settlement, see “Rolls-Royce Settlement Offers Lessons on How to Pay Commissions Without Corruption” (Feb. 15, 2017).

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  • From Vol. 6 No.4 (Mar. 1, 2017)

    A Guide to Enforcing Audit Rights, the Next Third-Party Frontier: Forestalling Problems, Documenting the Audit and Responding Appropriately (Part Three of Three)

    Although third-party audit rights are only effective if the company designs and implements a solid plan for exercising them on a periodic basis, many companies still struggle with enforcing those rights and how, once an audit cycle is concluded, to respond to information the audit uncovered. The FCPA Report’s Guide to Enforcing Audit Rights provides practical guidance for every step of the audit-right enforcement process, from drafting a policy to remediation. This, the third article in our three-part series, discusses how companies can address common auditing challenges, how they should document the audit process and how they might respond to an audit’s results. The first article in the series discussed, in detail, drafting the company’s policy and outlined six steps a company should take prior to conducting an onsite audit of a third party. The second laid out a plan for conducting the actual onsite audit. See also “When and How Should Companies Include Audit Rights in Third-Party Contracts? (Part One of Three)” (Jul. 23, 2014); Part Two (Aug. 6, 2014); and Part Three (Aug. 20, 2014).

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  • From Vol. 6 No.3 (Feb. 15, 2017)

    Rolls-Royce Settlement Offers Lessons on How to Pay Commissions Without Corruption

    Rolls-Royce’s recent massive settlement with U.S., U.K. and Brazilian authorities is a stark reminder of the anti-corruption risks associated with intermediaries, agents and fixers when negotiating contracts with state-owned entities. Commissions paid by Rolls-Royce to its agents – including notorious oil-and-gas “solutions” provider Unaoil – often were eventually passed on to foreign officials to close deals, netting Rolls-Royce a global settlement for hundreds of millions of dollars. In this first article discussing the case, we look at the bribes Rolls-Royce paid, how its compliance program failed to prevent them and what companies can do to make sure that commissions paid to agents are not used improperly. In a second article, we will look at the implications for cooperative U.S. and U.K. enforcement and what the SFO is looking for in terms of cooperation and remediation. See “Bribery Act Experts Discuss the Impact of Brexit, DPAs and Other U.K. Developments” (Jul. 13, 2016).

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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. 6 No.1 (Jan. 18, 2017)

    General Cable Pays $75 Million to Settle Wide-Ranging Bribery Scheme Based on Agents and Distributors

    General Cable Corporation (GCC) has resolved FCPA charges with the SEC and DOJ based on a bribery scheme that spanned more than 10 years and half a dozen subsidiaries on two continents, and resulted in $51 million in profits. GCC, which self-reported, cooperated and remediated, will pay combined fines of more than $75 million pursuant to a DOJ non-prosecution agreement and an SEC order. The figure includes a significant discount off the Sentencing Guidelines, with no SEC fine separate from the disgorgement. A former senior vice president will pay $20,000 pursuant to a separate agreement with the SEC. The FCPA Report spoke with Ayoka Akinosi, an international specialist at Hughes Hubbard & Reed, and Kathleen Hamann, a partner at Pierce Atwood, to delve into the details of the case and the lessons the case holds for other companies, including identifying key performance indicators that may have mitigated the extent of the bribery scheme. See “Developing Key Performance Indicators and Tracking Metrics Using ISO 37001 (Part One of Two)” (Nov. 9, 2016); Part Two (Nov. 23, 2016).

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  • From Vol. 6 No.1 (Jan. 18, 2017)

    Attorney-Consultant Privilege? Structuring and Implementing the Kovel Arrangement (Part Two of Two)

    So-called “Kovel arrangements” provide unique opportunities for companies and their legal counsel to extend the attorney-client privilege to consultants, such as those performing anti-corruption investigations or audits. After deciding to use the arrangement, the next (and most important) step is ensuring that the entire Kovel engagement is performed correctly so that the privilege will be recognized by regulators and courts, and documents detailing the company’s operational deficiencies are not unnecessarily made available. This article, the second in a two-part series, provides practical guidance regarding the provisions that need to be included in an engagement letter with a consultant, details daily steps a company must take to ensure it remains Kovel-compliant and examines circumstances under which it is and is not appropriate for companies to employ Kovel arrangements. The first article in this series detailed the legal requirements of the Kovel doctrine, as well as considerations for companies when deciding whether to invoke or waive the privilege. See also “When Are Reports of Internal Investigations Protected by Attorney-Client Privilege?” (Apr. 30, 2014).

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  • From Vol. 5 No.25 (Dec. 21, 2016)

    Attorney-Consultant Privilege? Key Considerations for Using the Kovel Doctrine (Part One of Two)

    Most companies are comfortable that their interactions with outside counsel during investigations, audits and compliance assessments are covered by privilege. However, whether that protection also applies to the range of non-attorney consultants who also help attorneys with those efforts, such as forensic accountants and investigators, is less clear. The Second Circuit’s Kovel decision in 1961 extended the attorney-client privilege to third parties assisting attorneys in representing clients under certain circumstances. This two-part series discusses how companies can most successfully make use of so-called “Kovel arrangements.” This first article describes the requirements of the Kovel privilege as established by case law. The second article will detail the requisite features of a fully compliant Kovel arrangement and when they are appropriate. See also “Preserving the Attorney-Client Privilege in Cross-Border Internal Investigations” (Jun. 26, 2013).

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  • From Vol. 5 No.25 (Dec. 21, 2016)

    Opportunity in Expansion: A Logistical Look at FCPA Compliance in Third-Party Relationships

    Expanding into a new market can be a moment of great risk for any company. These risks are heightened in the shipping and logistics industry where spreading geographic reach and reliance on consultants and independent contractors is necessary for success. In a guest article, Catherine Muldoon, the chief legal officer of BDP International, Inc., a leading privately held global logistics and transportation services company, and legal intern Caitlin Smith discuss the challenges BDP faced when opening new offices in Casablanca, Morocco, and how the company leveraged its culture of compliance to achieve both its business and ethical goals. 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. 5 No.24 (Dec. 7, 2016)

    A Guide to Enforcing Audit Rights, the Next Third-Party Management Frontier: Conducting an Onsite Audit (Part Two of Three)

    To protect themselves from anti-corruption violations caused by third-party partners, more and more companies are including audit rights in their third-party contracts. Those rights, however, are useless – and even potentially dangerous – if a company does not regularly enforce them. The FCPA Report’s three-part guide to enforcing audit rights is designed to assist companies in building and implementing effective third-party audit policies and procedures. The first article in the series discussed drafting the company’s policy and outlined six additional steps a company should take prior to conducting any onsite audits of third parties. This article lays out a plan for conducting the actual onsite audits, including 10 specific areas the audit should address. The third article in the series will tackle some of the challenges companies will face while auditing and outline measures companies should take after an audit is complete. See “EY’s Rick Sibery Outlines a Seven-Step Process for Monitoring Third Parties” (Oct. 20, 2016).

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  • From Vol. 5 No.24 (Dec. 7, 2016)

    Regional Risk Spotlight: Bruce Horowitz of Paz Horowitz Advises on Ecuador-Specific Corruption Challenges 

    Don’t assume Ecuador’s laws are the same as Mexico’s or Colombia’s, warned Bruce Horowitz, a partner at Paz Horowitz, in an interview with The FCPA Report. Despite its small size, Ecuador has vast natural resources and is attractive to international companies. It also has, however, significant corruption, ranking 107 out of 168 countries in Transparency International’s Corruption Perceptions Index 2015. Horowitz highlighted what companies need to know about Ecuador’s new Constitution, other relevant anti-corruption laws, the enforcement landscape (especially in light of the country’s role in the FIFA and Panama Papers scandals) and risks specific to Ecuador. See also “Room for Improvement: Miller & Chevalier Survey Reveals Troubling Perceptions of Corruption and Compliance in Latin America” (Sep. 14, 2016). 

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  • From Vol. 5 No.24 (Dec. 7, 2016)

    Embraer Global Settlement Presages a New Paradigm in International Enforcement and Next-Level Compliance

    Embraer, the world’s largest manufacturer of mid-size jets, recently settled FCPA allegations. The settlement is a striking example of how the SEC and DOJ are working with foreign governments all over the world to investigate and prosecute corruption in a coordinated manner. The case also illustrates how companies need a next level of compliance beyond basic policies and procedures to prevent individuals from finding ways around internal controls. In this, our second article analyzing Embraer’s historic settlement, we discuss the enforcement implications as well as the compliance takeaways of the case. For details on the facts underlying the case and the terms of the settlement see our companion article “Embraer Uses Sleight-of-Hand Payments to Third-Party Agents to Sell Planes Around the World, Landing It More Than $200M in U.S. Fines” (Nov. 9, 2016).

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  • From Vol. 5 No.22 (Nov. 9, 2016)

    A Guide to Enforcing Audit Rights, the Next Third-Party Management Frontier: What to Do Before an Audit (Part One of Three)

    While companies, recognizing the significance of third-party risk, have become increasingly sophisticated about vetting their business partners before an engagement, many still struggle with monitoring those relationships. Ongoing third-party management, including conducting regular third-party audits, is the next frontier in anti-corruption compliance. The FCPA Report’s three-part guide to enforcing audit rights is designed to meet companies where they are, helping them to tackle third-party audits while being mindful of the potential landmines inherent in the process. In this, the first article in the series, we discuss drafting third-party audit procedures and policies and outline seven steps a company should take prior to conducting an onsite audit of a third party. Upcoming installments of the series will discuss how to perform an onsite audit of a third party, address some of the challenges companies will face while auditing and outline measures companies should take after an audit is complete. See “EY’s Rick Sibery Outlines a Seven-Step Process for Monitoring Third Parties” (Oct. 20, 2016.) 

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  • From Vol. 5 No.22 (Nov. 9, 2016)

    Embraer Uses Sleight-of-Hand Payments to Third-Party Agents to Sell Planes Around the World, Landing It More Than $200M in U.S. Fines

    Embraer, one of Brazil’s leading exporters and the world’s largest manufacturer of mid-size jets, has settled bribery allegations with both the SEC and DOJ related to its use of third-party agents in transactions spanning the globe. According to Karlis Novickis, a regional compliance officer at Whirlpool LatAm based in São Paolo, the fines in this case show that compliance “is one of the best investments” a company can make. In this article, we synthesize the SEC and DOJ’s divergent papers to provide a coherent narrative of how Embraer employees skirted the company’s internal controls. In a companion article in a future issue, we will look at the compliance and enforcement implications of the settlement. See “Regional Risk Spotlight: Giovanni Falcetta of TozziniFreire Talks Anti-Corruption in Brazil Beyond the Petrobras Scandal” (Mar. 23, 2016). 

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  • From Vol. 5 No.21 (Oct. 26, 2016)

    EY’s Rick Sibery Outlines a Seven-Step Process for Monitoring Third Parties

    Despite consistent warnings about the corruption risks associated with engaging third parties in foreign locations, the vast majority of FCPA settlements continue to involve such relationships. Moving beyond traditional due diligence to a more robust, ongoing approach to third-party management is one of the best ways to show regulators that the company is serious about compliance. Effectively monitoring third parties requires more than just performing data analytics, EY partner Rick Sibery said during a recent interview with The FCPA Report. He suggested that a company adopt a holistic approach to monitoring, considering not only its full third-party compliance process but also leveraging other areas of its anti-corruption compliance program. During our conversation, Sibery outlined a seven-step process for optimizing a company’s third-party monitoring program. See “Using Data Analytics to Meet the Government’s Anti-Corruption Compliance Expectations” (May 4, 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.20 (Oct. 12, 2016)

    Subsidiary Corruption, a Troublesome Joint Venture and a Fired Whistleblower: AB InBev’s Route to a $6 Million SEC Settlement

    Anheuser-Busch InBev (AB InBev) recently settled with the SEC to resolve FCPA books and records violations relating to the actions of its Indian joint venture and internal controls violations relating to its Indian subsidiary. The brewing company’s settlement highlights, once again, that companies operating in high-risk markets cannot be complacent about the activities of their foreign cohorts, whether that be subsidiaries, joint venture partners or third parties operating on behalf of the company. The settlement also highlights the dangers of interfering with whistleblowers. AB InBev was charged with impeding a whistleblower through the provisions of an employee separation agreement. See “Regional Risk Spotlight: Jay Holtmeier of WilmerHale Explains How to Navigate Bureaucratic Corruption Risks in India” (Sep. 23, 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.13 (Jun. 29, 2016)

    Regional Risk Spotlight: Luis Ortiz of OCA Law Firm Discusses New Legislation and Anti-Corruption Challenges in Mexico

    The manufacturer and exporter of a wide range of products, including electronics and cars, Mexico is an economic powerhouse and an attractive target for foreign investment – albeit one with a long history of corruption that permeates all aspects of its society. In the past several years, however, the public has called for legal reform to address this corruption, and Mexico’s Congress responded with the passage of new anti-corruption legislation. The FCPA Report recently spoke with Luis Ortiz, a partner at OCA Law Firm, about the corruption risks associated with doing business in Mexico, the popular groundswell for reform and the resulting legislation. Since our discussion, the legislation passed by Congress has been vetoed by Mexican President Enrique Pena Nieto, leaving the future of the country’s laws in flux and making it all the more important for companies to be aware of the corruption risks they may face in this market. See also “Regional Risk Spotlight: Reed Smith’s Calvin Chan Discusses Singapore’s Vigorous Anti-Corruption Enforcement” (May 18, 2016).

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  • From Vol. 5 No.13 (Jun. 29, 2016)

    The DOJ Deploys Carrots and Sticks in Analogic FCPA Settlement

    The SEC and DOJ’s recent FCPA settlements with health care and security technology company Analogic reveal how the government is treating self-reporting and cooperation after the announcement of the Pilot Program and the Yates Memo. The combination of Analogic’s voluntary disclosure of its bribery scheme involving Russian slush funds, and its failure to fully cooperate in the investigation, netted benefits (the lack of a parent-level DOJ plea) yet also less-than-optimal results (a lower discount than the Pilot Program provides for). We analyze the more than $11 million settlement with Analogic and its Danish subsidiary BK Medical and BK Medical’s former CFO. See also “From Discounts to Slush Funds: Red Flags to Heed and Eight Steps to Take to Avoid SAP’s $3.9 Million Mistakes” (Feb. 10, 2016).

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  • From Vol. 5 No.12 (Jun. 15, 2016)

    Addressing Five Major Compliance Issues Posed by Brazil’s 2016 Olympic Games

    Brazil’s president has been stripped of authority and faces impeachment proceedings. High-ranking politicians and major companies stand accused of far-reaching corruption as a result of Operation “Car Wash.” The country is experiencing an economic crisis that enlarges as fast as the political panorama shifts. It is in the midst of this turmoil that Brazil will host the Games of the XXXI Olympiad, the first ever hosted in South America. In a guest article, Giovanni Falcetta, Thaísa Toledo Longo, Shin Jae Kim and Renata Muzzi of Brazilian law firm TozziniFreire outline the five largest corruption risks facing companies that seek economic opportunities connected to the Games and detail the laws and regulations governing Olympic-related anti-corruption compliance. For more insight from TozziniFreire, see “Regional Risk Spotlight: Giovanni Falcetta of TozziniFreire Talks Anti-Corruption in Brazil Beyond the Petrobras Scandal” (Mar. 23, 2016). 

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  • From Vol. 5 No.4 (Feb. 24, 2016)

    Excessive Power for Junior Employees and Lavish Trips for Foreign Officials Lead to $28 Million PTC Settlement

    PTC Inc., a Massachusetts-based software company, will pay more than $28 million to settle parallel civil and criminal FCPA charges. Like FLIR and SciClone, PTC’s corruption troubles stemmed from the provision of improper travel, gifts and entertainment to government officials. By inflating the fees paid to third parties for their services, junior employees of PTC’s China-based subsidiaries created pools of money that were then used to fund sightseeing adventures. Officials visited Honolulu, San Diego, New York and Las Vegas and enjoyed guided tours, golfing and other leisure activities. The SEC also announced its first DPA with an individual in an FCPA case, agreeing to defer prosecution against Yu Kai Yuan, a former employee of a PTC subsidiary, because of the significant cooperation he provided during the SEC investigation of the company. The voluntary disclosure calculus and how to handle relationships with lobbyists were among the key compliance concerns implicated in the PTC matter. See “CEO of LAN Airlines Settles FCPA Charges With SEC Over Union Dispute” (Feb. 10, 2016).

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  • From Vol. 5 No.3 (Feb. 10, 2016)

    From Discounts to Slush Funds: Red Flags to Heed and Eight Steps to Take to Avoid SAP’s $3.9 Million Mistakes

    As companies increase the complexity of their compliance programs, employees trying to make corrupt payments are forced to become more and more creative to circumvent those programs. German software and technology company SAP SE recently learned that the hard way when it agreed to pay nearly $3.9 million to settle charges that it violated both the books and records and the internal controls provisions of the FCPA. According to the SEC, a former SAP executive created a slush fund by providing an 82% discount to one of SAP’s local partners. That money was then used to pay $145,000 in bribes to one senior Panamanian official and offer bribes to two others. Adrian D. Mebane, vice president and deputy general counsel of The Hershey Company told The FCPA Report that the settlement reinforces a company’s obligation to maintain robust internal controls. That obligation goes beyond financial controls and includes establishing a compliant tone at the top, performing risk assessments, maintaining procedures to guarantee directives are followed for high-risk transactions, and ongoing monitoring, he said. See also “Miller & Chevalier’s Ellis Offers Insights From Former SAP Employee’s FCPA Guilty Plea and SEC Settlement” (Sep. 9, 2015).

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  • From Vol. 5 No.3 (Feb. 10, 2016)

    Kevin Abikoff of Hughes Hubbard Discusses the Benefits and Risks of African Local Content Laws

    Foreign investment in a country has historically been a double-edged sword. While investment may allow elites to prosper, often the benefits do not flow to the general population. In response to this pattern, many countries have adopted “local content laws” that require a certain level of reinvestment by foreign companies into the countries where they operate. While these programs can have clear benefits in terms of technology transfer and local ownership, they can also be a source of corruption risk, as Japanese conglomerate Hitachi learned in 2015 when it was fined $19 million for corruption related to its local partner. The FCPA Report discussed how to navigate these programs when doing business in African countries, where they are prevalent, with Hughes Hubbard partner Kevin Abikoff. He explained why local content laws are beneficial but also how they can lead to corruption, and what companies can do to avoid problems when working with local partners. See “Lack of Training and Due Diligence Leads to $19 Million Penalty for Hitachi” (Oct. 7, 2015).

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  • From Vol. 5 No.2 (Jan. 27, 2016)

    Survey Highlights Surprising Lack of Corporate Anti-Corruption Efforts

    The World Bank estimates that $1 trillion is lost to corruption of foreign public officials each year. Yet, a recent survey conducted in the second half of 2015 by the economic crime and justice studies department at Utica College, along with risk and business consulting firm Protiviti Inc., found that company anti-corruption efforts are lacking. During a recent panel discussion, Scott Moritz, a Protiviti managing director, observed that most companies are not well positioned to deter, detect or investigate fraud and corruption. We summarize the most concerning portions of the survey report to help compliance professionals evaluate their programs and advocate for sufficient resources. See also “Ernst & Young’s Fraud Survey Warns of Anti-Corruption Complacency” (Jun. 25, 2014); and “Kroll Managing Director Extracts Practical Lessons From 2013 Anti-Bribery and Corruption Benchmarking Survey” (Jun. 26, 2013).

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  • From Vol. 4 No.24 (Nov. 18, 2015)

    Customs Corruption Risks:  Should a Company Ever Pay a Facilitation Payment to a Customs Official? (Part Three of Three)

    Moving goods from one country to another – a staple of many businesses – exposes companies to various points of bribery risk as employees try to navigate different customs regimes and expedite shipments.  One particular area of risk is the temptation to give a customs official a small “grease payment” to quickly clear goods through customs.  Under certain circumstances such payments may be permissible – but not always.  This article, the final installment of The FCPA Report’s series on anti-corruption risks related to customs, takes an in-depth look at facilitation payments in the customs process, which have become “a trap for the unwary,” according to Boies, Schiller & Flexner partner Scott Wilson.  The article examines when, if ever, companies should allow facilitation payments and, if so, how companies should structure their facilitation payment policies.  The first article gave an overview of the types of corruption risks companies face when engaging in international trade, and suggested four ways to mitigate them.  The second looked at the role third parties, such as customs brokers and freight forwarders, play in customs corruption risk and discussed how companies can minimize those risks through due diligence, communicating expectations, contract language and monitoring.  See also “Designing a Facilitation Payments Policy to Minimize Liability and Retain Flexibility (Part One of Two),” The FCPA Report, Vol. 1, No. 4 (Jul. 25, 2012); Part Two, Vol. 1, No. 5 (Aug. 8, 2012).

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  • From Vol. 4 No.23 (Nov. 4, 2015)

    Customs Corruption Risks: Four Ways to Limit the Risks of Working with Customs Brokers, Freight Forwarders and Other Third Parties (Part Two of Three)

    Importing and exporting goods across borders exposes companies to corruption risks on a number of fronts.  Third-party risks are particularly prevalent because international trade often requires that a company work with agents such as customs brokers and freight forwarders.  This second article in The FCPA Report’s series on customs risks examines the risks posed by third parties in the customs process and identifies four key strategies for mitigating those risks.  The first article in the series examined how the customs system works and the risks associated with that system, including books and records violations for inaccurate customs forms and the temptation for employees to make illegal payments to customs officials to ensure that their paperwork is approved as quickly as possible.  The third article will discuss facilitation payments in the customs context, including whether companies should allow such payments and, if so, how they can structure their compliance policies to minimize risks.  See also “Anti-Corruption and Trade Regulations: Identifying Common Elements and Streamlining Compliance Programs (Part One of Two),” The FCPA Report, Vol. 3, No. 14 (Jul. 9, 2014); and Part Two, Vol. 3, No. 15 (Jul. 23, 2014).

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  • From Vol. 4 No.21 (Oct. 21, 2015)

    Fighting the Dynamic War on Corruption in China

    Corruption poses a constant risk to companies operating in China, but the nature of that risk is always shifting.  Creative ways to create slush funds that can be used for bribery proliferate in China – travel agents, marketing companies and distributors have all been involved in funneling corrupt funds to foreign officials on behalf of businesses.  In that environment, a company must have a dynamic and comprehensive compliance program.  The FCPA Report, Paul Hastings and EY recently hosted a roundtable discussion about how companies can address and uncover new corruption issues in China while continuously monitoring old issues.  The panel was moderated by The FCPA Report’s Editor-in-Chief, Nicole Di Schino.  The panelists, all recognized experts in Chinese anti-corruption, included: Nat Edmonds, a Paul Hastings partner and former FCPA prosecutor; Ananda Martin, a partner in Paul Hastings’ Shanghai office; and John Auerbach, a partner and former Greater China managing partner in EY’s fraud investigation and dispute services group.  This article summarizes the highlights of the panel discussion.  For more insight from these experts, see “The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China,” The FCPA Report, Vol. 4, No. 18 (Sep. 9, 2015); and “Responding to China’s Aggressive Anti-Corruption Enforcement,” The FCPA Report, Vol. 4, No. 19 (Sep. 23, 2015).

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  • From Vol. 4 No.19 (Sep. 23, 2015)

    Regional Risk Spotlight:  Jay Holtmeier of WilmerHale Explains How to Navigate Bureaucratic Corruption Risks in India

    As the world’s second-most populous country, India presents myriad opportunities for foreign companies to sell and manufacture their products.  As an English-speaking nation with a highly educated populace, it has also become a hub for outsourcing services such as customer relations and technical support.  On the other hand, as a legacy of its colonial past, India is highly bureaucratic and companies doing business there face an intricate web of government regulations and licensing requirements, creating corruption risk.  In this installment of The FCPA Report’s Regional Risk Spotlight series, we talk to Jay Holtmeier, a partner at WilmerHale, about how companies can best navigate corruption risks in India and build strong compliance programs while doing business there.  See also “Regional Risk Spotlight:  Thomas Firestone of Baker & McKenzie Explains How to Navigate Corruption Risks in Russia,” The FCPA Report, Vol. 4, No. 16 (Aug. 5, 2015).

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  • From Vol. 4 No.18 (Sep. 9, 2015)

    Thinking Outside the Box: Examining the Growing Trend of Compliance Outsourcing (Part Two of Two)

    Chief compliance officers are regularly being pressured to do more with less.  Many are operating in businesses that are rapidly becoming more complex, both in terms of their global reach and in their use of sophisticated information technology, PwC partner Jerry Stone told The FCPA Report.  At the same time, a CCO faces increasing expectations from global regulators, the board of directors and the C-Suite, all while trying to keep compliance costs low.  To address this myriad of concerns, many companies are outsourcing some or all of their compliance functions to third-party vendors.  In this two-part article series, The FCPA Report examines the outsourcing trend and discusses the benefits and risks of outsourcing various compliance functions.  The first article discussed why a company might outsource some or all of its compliance functions and explored the associated benefits and risks.  This second article looks at how companies are outsourcing various compliance functions and details three steps a company should take before selecting a vendor.  See also “Five Tools Every Chief Compliance Officer Needs for Effective FCPA Compliance: Title, Authority, Access, Budget and Culture (Part One of Two),” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013); Part Two of Two, Vol. 2, No. 8 (Apr. 17, 2013).

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  • From Vol. 4 No.18 (Sep. 9, 2015)

    The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China

    The sheer volume of dollars that flow through the Chinese economy, combined with the evolving nature of corruption risk, make it essential that companies operating there remain ever vigilant and frequently re-evaluate the risk profile of their Chinese operations.  On September 30, Paul Hastings, EY and The FCPA Report will host a symposium in Washington, D.C. addressing how companies can mitigate risk when operating in China.  The FCPA Report’s Editor-in-Chief, Nicole Di Schino, will moderate the event.  The panelists, all recognized experts in Chinese anti-corruption, include: Nat Edmonds, a Paul Hastings partner and former FCPA prosecutor; Ananda Martin, a partner in Paul Hastings’ Shanghai office; and John Auerbach, a partner and former Greater China managing partner in EY’s fraud investigation and dispute services group.  In advance of the September 30 symposium, The FCPA Report spoke with Edmonds, Martin and Auerbach regarding one of the biggest risk areas facing companies operating in China – third parties.  For more information on the symposium please contact Nicole Di Schino at ndischino@fcpareport.com.

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  • From Vol. 4 No.17 (Aug. 19, 2015)

    Thinking Outside the Box: Examining the Growing Trend of Compliance Outsourcing (Part One of Two)

    As anti-corruption enforcement efforts mature, governments are raising the compliance bar.  Implementing and maintaining a best-in-class compliance program that meets these ever-rising standards requires significant human resources and can overwhelm a compliance department, even at a large company.  To help ease the burden on in-house compliance personnel, many companies are outsourcing compliance activities – such as proactive monitoring, training and hotline operations – to third-party vendors.  Some have even gone so far as to hire an outside vendor to serve as their chief compliance officer.  In this two-part article series, we examine the outsourcing trend and discuss the benefits and risks of outsourcing various compliance functions.  This first article discusses the reasons a company might outsource some or all of its compliance functions and explores the associated risks and benefits.  The second article will look at how companies are outsourcing various compliance functions.  See “The Nuts and Bolts of Anti-Corruption Hotlines: An Interview with Benjamin Haley of Covington & Burling,” The FCPA Report, Vol. 3, No. 19 (Sep. 24, 2014).

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  • From Vol. 4 No.17 (Aug. 19, 2015)

    Guarding Against Bribery When Conducting Clinical Trials Overseas

    Increasingly, pharmaceutical and medical device companies are conducting clinical trials overseas in an effort to cut down on costs.  Many of these trials (needed to support applications to the FDA for the approval of new drugs or devices or the approval of new indications or uses for current drugs or devices) are now taking place in Russia, India, China and Brazil, where the risk of corruption is high.  This shift requires implementation of, and strict adherence to, anti-corruption compliance policies and procedures.  In a guest article, Jacqueline C. Wolff, a partner at Manatt, Phelps & Phillips, discusses the bribery risks associated with such trials and provides an anti-corruption checklist that companies can use to guard against anti-corruption violations.  See also “Ceresney, Focusing on Pharma, Discusses SEC Enforcement Priorities and Compliance Expectations,” The FCPA Report, Vol. 4, No. 6 (Mar. 18, 2015).

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  • From Vol. 4 No.16 (Aug. 5, 2015)

    Dissecting Mead Johnson’s $12 Million Chinese Baby Formula Bribe Settlement

    In the fifth FCPA enforcement action this year brought only by the SEC, Mead Johnson has agreed to pay $12.03 million to settle charges that its Chinese subsidiary created a slush fund with distributor discounts and used that money to bribe health care practitioners to recommend its baby formula and collect marketing information about new mothers.  The case is the latest in a line of Chinese health care FCPA enforcement actions, which may be taking on new life after the Chinese GSK case, Marc Alain Bohn, counsel at Miller & Chevalier, told The FCPA Report.  We discuss the case and the compliance lessons, including the ramifications of Mead Johnson’s failure to self-report, and why the DOJ has reportedly declined to bring a parallel action.  See also “What Does the PetroTiger Case Mean for FCPA Compliance?  Sigelman’s Attorneys and Other Experts Weigh In,” The FCPA Report, Vol. 4, No. 13 (Jun. 24, 2015).

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  • From Vol. 4 No.16 (Aug. 5, 2015)

    Mitigating Corruption Risk in the Middle East (Part Two of Two)

    Business is booming in the Middle East, with many foreign investors seeking to take advantage of these rapidly expanding markets.  Doing so, while avoiding entanglement with anti-corruption regulators, requires careful risk assessment and planning.  The first article in this two-part series discussed the high incidence of corruption throughout the region, highlighting which countries and industries are the riskiest, and the legal and cultural diversity that can complicate a company’s assessment of corruption risk.  This, the second article of our two-part series, looks at three specific attributes of doing business in the Middle East that pose their own unique risks:  (1) the dominance over many economic sectors by state-owned entities and royal families; (2) the prevalence of third parties in business transactions in the region; and (3) the culture of gift-giving in Middle Eastern countries.  We draw from the knowledge of a panel of experts, organized by Strafford Publications and including Tom Best, a partner at Steptoe & Johnson in Washington, D.C.; Marc Alain Bohn, counsel at Miller & Chevalier in D.C.; John Vincent Lonsberg, a partner with Baker Botts based in Dubai, U.A.E.; and Daniel P. Chung, of counsel with Gibson Dunn in D.C.

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  • From Vol. 4 No.15 (Jul. 22, 2015)

    No Discount and a Three-Year Monitor: Dissecting LBI’s $17.1 Million FCPA Settlement

    Securing government contracts through deliberately disguised bribes recently landed Louis Berger International (LBI) in hot water with the DOJ.  The New Jersey-based construction management company agreed to pay $17.1 million to settle charges that it violated the FCPA.  Unlike other companies that have been rewarded for cooperation or self-disclosure with a below-sentencing guidelines fine, the LBI fine was within the statutorily suggested range.  The company was also required, under the terms of the DPA, to engage a corporate monitor for a period of three years, a costly undertaking that the government has been requiring less frequently.  This article explains the bribery scheme and what companies can learn from the settlement.  See “Top FCPA Enforcers Tout Voluntary Disclosure and Warn About International Cooperation; The Defense Bar Responds,” The FCPA Report, Vol. 3, No. 24 (Dec.3, 2014).

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  • From Vol. 4 No.15 (Jul. 22, 2015)

    EY’s Asia-Pacific Fraud Survey Finds Correlation Between Talent Retention and Ethical Business Conduct

    EY's 2015 Asia-Pacific fraud survey examined the prevalence of third-party and cybersecurity risks and found that although an ethical business culture can help retain talent, significant weaknesses persist in the anti-corruption measures of organizations in the region, especially when it comes to whistleblowers.  This article summarizes the key takeaways from the report.  See also “Ernst & Young’s 2013 Asia-Pacific Fraud Survey Highlights Disconnect Between Company Policies and Employee Perceptions,” The FCPA Report, Vol. 2, No. 20 (Oct. 9, 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)

    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.

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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.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.8 (Apr. 15, 2015)

    Consero Benchmarking Survey Offers CCO’s Insights on Budgets, Training, Strategy and Third-Party Management

    “Chief compliance officers seem pleased with the variety and sophistication of new resources available to support their efforts, but they are troubled by the speed at which the global economy is changing, and the increasing complexity of the compliance environment,” Paul Mandell, Founder and CEO of Consero Group, LLC told The FCPA Report, drawing on the findings from his firm’s 2015 Corporate Compliance & Ethics Data Survey.  In the Survey, developed in connection with Consero’s Fall 2014 Corporate Compliance and Ethics Forums in the U.S. and U.K., senior compliance executives offered information on their budgets, the effectiveness of their training, their confidence in their third-party management and other topics.  See also “Five Tools Every Chief Compliance Officer Needs for Effective FCPA Compliance: Title, Authority, Access, Budget and Culture (Part One of Two),” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013); Part Two of Two, Vol. 2, No. 8 (Apr. 17, 2013). 

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  • From Vol. 4 No.6 (Mar. 18, 2015)

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

    Social media can help and hurt compliance efforts – providing the opportunity to spread the compliance message and aid in due diligence efforts, but also potentially exposing the company to harm caused by inappropriate posts.  In this, the second article in our series on the advantages and pitfalls of social media, we 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.  The first article discussed 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.  See also “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.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.5 (Mar. 4, 2015)

    Checklist of Issues to Consider When Negotiating, Drafting and Enforcing Audit Clauses in Third-Party Contracts

    Securing audit rights in contracts with third parties is one specific way to mitigate the corruption risk that doing business with third parties poses.  Audit rights allow a company to monitor third parties’ activities – activities which could result in FCPA charges for the company.  These rights can be challenging to obtain and enforce, and may not be appropriate for all third parties.  This checklist assists companies with structuring negotiations, drafting audit clauses and enforcing agreements.  See “When and How Should Companies Include Audit Rights in Third-Party Contracts? (Part One of Three),” The FCPA Report, Vol. 3, No. 15 (Jul. 23, 2014); Part Two and Part Three

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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.25 (Dec. 17, 2014)

    Key Compliance Takeaways from the OECD Foreign Bribery Report

    For the first time, the Organisation for Economic Co-operation and Development has studied the entirety of the bribery cases (427 of them) brought by its 41 signatories over the past 15 years.  Calling the results of its Foreign Bribery Report a “new weapon in the global push to fight corruption,” the OECD says its Report seeks to “enable governments, companies and civil society to better understand and combat this insidious crime.”  Among other things, the Report found more bribery than many expected in wealthy countries and a drop in cases over the past two years.  FCPA experts Steven Michaels, counsel at Debevoise & Plimpton and Juan Morillo, a partner at Quinn Emanuel, talked to The FCPA Report about how compliance officers can use these findings.  See our previous coverage of the Report, “OECD Launches ‘New Weapon’ in Global Push to Fight Corruption,” The FCPA Report, Vol. 3, No. 24 (Dec. 3, 2014).

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  • From Vol. 3 No.25 (Dec. 17, 2014)

    Dallas Airmotive Resolves Criminal FCPA Charges for $14 Million Through a DPA

    Dallas Airmotive, a company that provides aircraft engine, maintenance, repair and overhaul services, has agreed to pay $14 million to settle charges that it bribed Latin American government officials to secure lucrative service contracts.  The bribery scheme included the use of third parties, funneling payments through front companies and providing improper travel benefits to government officials.  The DOJ has declined to prosecute, giving the company significant credit for its cooperation and remediation efforts.  It did not self-report.  See also “Layne Christensen Resolves FCPA Civil Charges After DOJ Declination; Details Its Extensive Cooperation,” The FCPA Report, Vol. 3, No 22 (Nov. 5, 2014). 

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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.18 (Sep. 10, 2014)

    Mitigating Bribery Risks Using Financial Controls, Risk Assessments and Leveraging Internal Resources

    A recent program presented by The Knowledge Group brought together experts from investigative and consulting firm Kroll, law firm Alston & Bird and defense company Leidos to discuss best practices in mitigating FCPA risk.  The panelists analyzed the current enforcement climate and shared how they have structured and implemented systems at their companies for financial controls, risk assessments and the vetting of third parties, including how they leverage existing resources to enhance their compliance programs.  They also highlighted compliance lessons from recent Kroll global fraud surveys.  See also “Kroll Managing Director Extracts Practical Lessons from 2013 Anti-Bribery and Corruption Benchmarking Survey,” The FCPA Report, Vol. 2, No. 13 (Jun. 26, 2013).

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  • From Vol. 3 No.17 (Aug. 20, 2014)

    When and How Should Companies Include Audit Rights in Third-Party Contracts? (Part Three of Three)

    Significant corruption risks continue to stem from the actions of third parties that companies hire.  As detailed in our series about anti-corruption reps and warranties in third-party contracts (Part One and Part Two), appropriate reps and warranties help to mitigate those risks.  Clauses pertaining to audit rights are some of the most difficult to get right, and can be some of the most important.  Our three-part series provides guidance on when and how companies should include audit rights in their third-party contracts.  This third and final article in the series discusses when conditions are ripe for a third-party audit; best practices to use when performing the audit; and what to do about issues uncovered by the audit.  The first article discussed how companies should determine which third-party relationships require audit rights and outlined the benefits and drawbacks of including audit rights provisions in contracts.  The second article provided strategies for securing audit rights during negotiations; discussed situations where companies should or should not proceed without audit rights; and provided advice regarding drafting audit rights provisions. 

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  • From Vol. 3 No.16 (Aug. 6, 2014)

    When and How Should Companies Include Audit Rights in Third-Party Contracts? (Part Two of Three)

    Lawyers, accountants, customs brokers, sales agents and distributors are just a few of many third parties an organization typically retains that can cause serious FCPA problems.  Regularly auditing appropriate third parties is a key tool for decreasing third-party corruption risk.  To assist companies in drafting and using audit rights clauses in third-party contracts, The FCPA Report is publishing a three-part series. This, the second article in the series, provides strategies for securing audit rights during negotiations; discusses situations where companies should or should not proceed without audit rights; and provides advice regarding drafting audit rights provisions.  The first article discussed how companies should determine which third-party relationships require audit rights and outlined the benefits and drawbacks of including audit rights provisions in contracts.  The final article will explore when a company should conduct a third-party audit; provide advice on performing a third-party audit; and discuss what a company should do about issues raised during an audit.

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  • From Vol. 3 No.16 (Aug. 6, 2014)

    Smith & Wesson Resolves FCPA Charges with the SEC, Avoids DOJ Charges

    Four years after it began its inquiry, the SEC has settled FCPA charges with Smith & Wesson for $2 million through an administrative action.  The DOJ declined to prosecute.  How good of a deal was this for the iconic gun maker?  We distill a few points from the fourth FCPA corporate enforcement action of the year.

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  • From Vol. 3 No.15 (Jul. 23, 2014)

    When and How Should Companies Include Audit Rights in Third-Party Contracts? (Part One of Three)

    In November 2013, Kara Brockmeyer, Chief of the SEC's FCPA Unit, reported that 60%-70% of the SEC's FCPA cases in the past two years have involved third-party intermediaries.  As detailed in our series about anti-corruption reps and warranties in third-party contracts (Part One and Part Two), including the appropriate reps and warranties in contracts can be a key tool to mitigate the risks caused by employing third parties.  Clauses pertaining to audit rights are some of the most difficult to get right, and can be some of the most important.  To assist companies in optimizing this compliance tool, The FCPA Report is publishing a three-part series on when and how companies should include audit rights in their third-party contracts.  This, the first article in the series, discusses how companies should determine which third-party relationships require audit rights and outlines the benefits and drawbacks of including audit rights provisions in contracts.

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  • From Vol. 3 No.15 (Jul. 23, 2014)

    Five Corruption Risks in the Financial Services Industry

    Given the increased attention from the government, how can principals and employees of private equity firms, hedge fund managers, broker-dealers and other financial services firms – as well as their principals and employees – protect themselves from FCPA violations?  What are the most vulnerable parts of their businesses?  At a recent PracticeEdge session hosted by the Regulatory Compliance Association, “FCPA Regulation and Enforcement for Asset Managers,” Ronald Wood, a partner at Proskauer Rose; Kara Brockmeyer, Chief of the SEC’s FCPA Unit; Andrew Levine, a partner at Debevoise & Plimpton; and Paula Anderson, a partner at Shearman & Sterling, identified five major risk areas for the financial services industry and explained how companies can mitigate those risks.  See also “Compliance Leaders from Citgroup and Morgan Stanley Examine FCPA Risks and Solutions for Financial Institutions,” The FCPA Report, Vol. 3, No. 10 (May 14, 2014).

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  • From Vol. 3 No.14 (Jul. 9, 2014)

    A Guide to Anti-Corruption Representations in Third-Party Contracts: Clauses for High-Risk Situations and Enforcement Strategies (Part Two of Two)

    Doing business with third parties – whose actions may subject companies to FCPA liability – remains one of the most challenging aspects of anti-corruption compliance.  An effective way to mitigate the corruption risk posed by third parties is to include FCPA reps and warranties in third-party contracts.  This, the second article in our series examining the optimal ways to incorporate those clauses, suggests specific reps and warranties for special situations and discusses techniques for enforcing the rights associated with the reps and warranties.  The first article described nine basic reps and warranties to include in third-party contracts.  See also “Mitigating FCPA Risks Associated with Incentive Awards to Third Parties,” The FCPA Report, Vol. 3, No. 12 (Jun. 11, 2014).

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  • From Vol. 3 No.13 (Jun. 25, 2014)

    A Guide to Anti-Corruption Representations in Third-Party Contracts: Nine Clauses to Include (Part One of Two)

    Liability for third-party activities remains one of the most challenging FCPA risks.  “A company needs to have mechanisms in place to ensure that its third parties are complying with the law and not creating liability for the company,” Matteson Ellis, special counsel at Miller & Chevalier, said.  One of the most effective ways to mitigate this risk is by including FCPA reps and warranties in third-party contracts.  This, the first article in our series examining the optimal ways to incorporate those clauses, discusses: the types of relationships that require reps and warranties; the risks and benefits of including such clauses in third-party contracts; and nine examples of the types of reps and warranties companies may wish to include in their contracts.  The second article will discuss advanced reps and warranties for special situations and will suggest techniques for enforcing the rights associated with the reps and warranties.  See also our four-part series on Audit Committee Responsibilities Before, During and After an Anti-Corruption Investigation: “Five Steps to Take Before the Investigation Begins (Part One of Four),” (Feb 19, 2014); “Determining When and How to Proceed (Part Two of Four),” (Mar. 5, 2014); “Retaining Counsel, Gathering Information and Documenting the Investigation (Part Three of Four), (Mar. 19, 2014); and “Remediating and Disclosing the Investigation to the Government and the Public (Part Four of Four), (Apr. 4, 2014).

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  • From Vol. 3 No.12 (Jun. 11, 2014)

    Mitigating FCPA Risks Associated with Incentive Awards to Third Parties

    The use of incentive awards to recognize outstanding sales staff, dealers or downstream business partners who market or sell a company’s goods and services is a well-established business practice.  Such incentive awards can take the form of cash, gifts or vouchers for retail shopping, travel and dining.  For top sales staff or dealers, the incentive may be an off-site retreat that includes both training, promotion of products and services, and hospitality.  In a guest article, Adam Safwat, counsel at Weil, Gotshal & Manges, explains that when transparently administered between commercial parties, such incentive awards can be legitimate promotional activities without any intent on the part of the sponsor to corruptly influence the recipient’s conduct.  When the incentive awards are given to sales staff of state enterprises, however, there is a risk they may transgress the FCPA.  See also Gifts, Travel, Entertainment and Anti-Corruption Compliance: Sources of Authority, Best Practices and Benchmarking,” The FCPA Report, Vol. 2, No. 22 (Nov. 6, 2013).

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  • From Vol. 3 No.12 (Jun. 11, 2014)

    Doing Business in India: Avoiding Corruption Risks and Monitoring Compliance Programs

    India presents companies not only with tremendous business opportunities but also an entrenched culture of corruption at virtually every government “touchpoint.”  Strafford Publications recently hosted a panel discussion highlighting some of the unique challenges facing companies trying to navigate India’s notorious bureaucracy.  The discussion examined FCPA cases with Indian connections as well as the anti-corruption enforcement climate in India and offered guidance on third-party due diligence and on monitoring the effectiveness of an anti-corruption compliance program.  The panel featured Jay Holtmeier, a partner at Wilmer Hale; Elizabeth D. Keating, Global Compliance Counsel – Investigations of Johnson Controls, Inc.; and Michael Stavridis, a partner at Ernst & Young.  See also “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. 3 No.12 (Jun. 11, 2014)

    FCPA Compliance Strategies for Hedge Funds and Private Equity Firms

    Given today's investment environment, with an unabated government focus on the private fund industry and significant opportunities developing in emerging markets, private equity fund managers are hard-pressed to ignore corruption risks in their businesses.  Molo Lamken, together with The FCPA Report and The Hedge Fund Law Report, recently hosted a panel that addressed hot topics in FCPA enforcement and compliance for this industry.  The panelists, including outside and in-house counsel, discussed, among other things: the current FCPA enforcement climate for private equity and financial services firms; strategies for mitigating the risk associated with third parties and service providers in high-risk countries; handling facilitation payments; self-reporting violations; and the importance of continuously monitoring compliance programs.  See “Corruption Considerations for Private Fund Managers: An Interview with Molo Lamken Partner Justin Shur,” The FCPA Report, Vol. 3, No. 11 (May 28, 2014).

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  • From Vol. 3 No.11 (May 28, 2014)

    Corruption Considerations for Private Fund Managers: An Interview with Molo Lamken Partner Justin Shur

    Private fund managers are looking with increasing receptivity at emerging markets, and, in some cases, frontier markets where corruption risk is significant.  This has not gone unnoticed by the FCPA units in the SEC and DOJ, which have been focusing on bribery in the financial services industry.  See “Why the Direct Access Partners Case Matters for Financial Sector Anti-Corruption Compliance,” The FCPA Report, Vol. 2, No. 21 (Oct. 23, 2013).  The FCPA Report recently interviewed Justin V. Shur, a former federal prosecutor and now a partner at Molo Lamken LLP, about the enforcement climate, the risks the industry faces and strategies for compliance.  The interview covered, among other things: the relationship between investment control and FCPA risk; contract provisions to limit the FCPA risk raised by third parties; issues presented by deal finders and sovereign wealth funds; hiring risks and best practices; facilitation payments; and successor liability.  Shur will expand on these ideas at a complimentary event (invitation here) at 5 p.m. on June 3 at the CORE: Club in Manhattan.  The event is sponsored by Molo Lamken, The FCPA Report and our affiliated publication, The Hedge Fund Law Report.  In addition to Shur, the event will feature his partner Andrew DeVooght, panelists from Indus Capital, Seward & Kissel, Global Environment Fund and the SEC.  Please RSVP to rsvp@fcpareport.com.  A cocktail reception will follow.

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  • From Vol. 3 No.10 (May 14, 2014)

    Compliance Leaders from Citigroup and Morgan Stanley Examine FCPA Risks and Solutions for Financial Institutions

    Banks and other financial institutions are subject to constant regulatory scrutiny.  Given their global reach and government touchpoints, they face constant challenges in assuring compliance with the FCPA.  At a recent program sponsored by the New York City Bar Association, Chinwe Esimai, Senior Vice President of Global Anti-Bribery & Corruption at Citigroup Inc. and Morgan Heyer, Executive Director and Global Head of Anti-Corruption Group Compliance at Morgan Stanley, considered the most pressing FCPA risks in their industries (including the recent government inquiries into banks’ hiring practices) and how their companies are handling those risks.  The panel was moderated by Kimberly A. Parker, a partner at Wilmer Hale and Claudius O. Sokenu, a partner at Shearman & Sterling.  See “How Can Financial Services Firms and Employees Avoid FCPA Liability?,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 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.8 (Apr. 16, 2014)

    FCPA Experts in the Public and Private Sector Share Seven Lessons from Recent Cases (Part One of Two)

    At a recent panel discussion sponsored by the Knowledge Group, former FCPA prosecutors, a current SEC lawyer and an economist shared their insights on what recent FCPA enforcement actions mean for companies, along with advice for initiating and conducting FCPA investigations.  This article, the first of a two-part series, contains seven lessons the panelists have extracted from recent FCPA settlements and trends; initial decisions that a company faces when it discovers a potential violation; and the role of whistleblowers in revealing potential violations.  The second part of the series will cover the panelists’ insights on initiating internal investigations; voluntary disclosures; multi-jurisdictional concerns; negotiations with regulators; remediation efforts and calculation of fines.  See also “Top DOJ and SEC Officials Discuss FCPA Enforcement Priorities and Mechanics,” The FCPA Report, Vol. 3, No. 7 (Apr. 2, 2014).

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  • From Vol. 3 No.8 (Apr. 16, 2014)

    Three Regions, Four Settlement Tools and $108 Million: HP Entities Resolve Criminal and Civil FCPA Charges 

    Hewlett-Packard and three of its subsidiaries in Russia, Mexico and Poland have resolved FCPA charges, paying $108 million in penalties.  The schemes involved bribes to obtain contracts with various government sectors and encompass different risk areas, such as third-party payments and gifts.  The entities resolved the actions through a guilty plea (for HP Russia), a deferred prosecution agreement (for HP Poland), a non-prosecution agreement (for HP Mexico) and a cease and desist order (for HP, the California-based parent company).  The criminal fines represent discounts from the low end of the Sentencing Guidelines range, unlike the recent Marubeni case, and no compliance monitor was imposed.  For insights from HP on its current compliance program, see “Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with Gwen Romack, Director of Global Anti-Corruption at Hewlett-Packard Company,” Vol. 2, No. 20 (Oct. 9, 2013). 

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  • From Vol. 3 No.5 (Mar. 5, 2014)

    Understanding and Tackling China’s Corruption Challenges

    “The FCPA applies with special force in China due to China’s state-dominated economy and pervasive business culture where petty corruption is common and tolerated,” Professor Daniel Chow said at a recent seminar at Fordham Law School sponsored by the Chinese Business Lawyers Association.  Chow and two other panelists, Paul Hastings partner Nat Edmonds, and Dorsey & Whitney partner Thomas Gorman, along with the Honorable Denny Chin of the U.S. Court of Appeals for the Second Circuit (who gave closing remarks), discussed the unique risks companies face in China, the cultural sensitivities that make compliance difficult, the status of China’s enforcement of its own corruption laws and practical recommendations for doing business ethically in a region where many businesses can reap big rewards.  Professor Sean Griffith of Fordham Law School gave opening remarks and Associate Professor Carl Minzner moderated.  See also “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. 3 No.5 (Mar. 5, 2014)

    Troubled SNC-Lavalin Appoints New CCO

    SNC-Lavalin, the Canadian construction and engineering giant, has been mired in corruption allegations and charges for years.  Many of its executives face corruption charges and many of its affiliates are included on the World Bank debarment list.  Among its continuing efforts to turn the page on these scandals, the company recently appointed a new CCO, David Wilkins.  The FCPA Report examines that appointment, SNC-Lavalin’s corruption troubles and some of the steps it has taken to fix them.  See also “Doing Business with the World Bank: Understanding and Avoiding Debarment,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013).

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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.3 (Feb. 5, 2014)

    Creating Efficiency in Legal and Compliance Departments: An Interview with Varun Mehta, Vice President at Clutch Group

    More than two-thirds of compliance officers say they don’t have enough resources to develop and implement sufficient compliance programs.  The complaints are, in part, prompted by the growing volume of data that companies produce and handle as well as the increasingly complex regulatory landscape.  When it comes to anti-corruption compliance, in-house departments must create and maintain programs effective at preventing, detecting and remediating FCPA violations all while minimizing costs to the company.  The stakes are high – a company that fails to maintain an adequate program can find itself at a disadvantage if a violation does occur, while an effective program can earn the company credit with the government.  The FCPA Report recently spoke with Varun Mehta, Vice President of Legal and Compliance Solutions at Clutch Group, about ways companies can identify and address inefficiencies in their legal and compliance departments, including handling data before and during an investigation, choosing automated software programs, structuring reporting lines, conducting risk assessments and performing due diligence on third parties.  See also “Conducting Effective Anti-Corruption Risk Assessments: An Interview with Kevin Bennett, Managing Director, Forensic and Valuation Services, Grant Thornton LLP,” The FCPA Report, Vol. 2, No. 24 (Dec. 4, 2014).

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  • From Vol. 3 No.2 (Jan. 22, 2014)

    A Guide to Detecting and Preventing Travel Agency Corruption (Part Two of Three)

    China’s investigation into bribery at GSK in 2013 marked a potential new era in Chinese anti-corruption enforcement.  Notably, the Chinese government alleged that GSK used its relationships with local travel agencies to facilitate bribery – both to provide government officials with improper benefits and to host “conferences” that were used to generate pools of cash that could later be used for bribes.  GSK is not alone.  According to anti-corruption experts, in China and many other countries, travel agency fraud is part of a growing “industry” designed to help employees and subsidiaries evade company and legal regulations.  As regulators become more familiar with these types of schemes, it is likely that travel agency relationships will come under stricter government scrutiny.  To assist companies in strengthening their compliance programs with regard to the use of travel agents, The FCPA Report is publishing a three-part series on identifying and preventing corruption involving travel agents.  This, the second article in the series, outlines industries that are at particular risk for travel agent-related corruption schemes, explains why travel agency fraud is so difficult to detect and provides three steps for strengthening company control over travel agents.  The first article detailed how travel agency fraud is accomplished and examined the motivations underlying such fraud.  The third article will provide five concrete suggestions for preventing and detecting such fraud.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013).

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  • From Vol. 3 No.2 (Jan. 22, 2014)

    $384 Million Alcoa Civil and Criminal FCPA Settlement Highlights the Risks of Third-Party Relationships

    Alcoa World Alumina LLC, a majority-owned and controlled sales company of Alcoa, Inc., a global provider of primary aluminum and fabricated aluminum, has resolved criminal and civil charges that it violated the FCPA.  The $384 million settlement, resolved via a plea agreement and SEC cease and desist order, is one of the largest in FCPA enforcement history.  It involves a decades-long scheme in which a third party – a company Alcoa hired to facilitate sales of alumina to a Bahraini aluminum smelter – used middlemen and shell companies to funnel $110 million to Bahraini foreign officials to secure business for Alcoa.  See “Sample Questions to Ask Third Parties When Initiating Anti-Corruption Due Diligence,” The FCPA Report, Vol. 2, No. 20 (Oct. 9, 2013).

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  • 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).

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  • From Vol. 2 No.24 (Dec. 4, 2013)

    Charles Duross and Kara Brockmeyer Discuss Five FCPA Enforcement Trends That Matter to Regulators: Individual Prosecutions, Administrative Proceedings, Global Coordination, Corporate Monitors and Third Parties (Part One of Two)

    At ACI’s International Conference on the Foreign Corrupt Practices Act in Washington D.C., Charles Duross, Deputy Chief of the Fraud Section of the Criminal Division of the DOJ, and Kara Brockmeyer, Chief of the FCPA Unit of the Division of Enforcement of the SEC, provided candid and detailed insight into elements of FCPA enforcement that matter to leading regulators.  They discussed the government’s charging philosophies, investigative techniques and enforcement priorities, and dispensed advice about how companies can avoid or decrease FCPA penalties.  This article summarizes the most noteworthy insights shared by Duross and Brockmeyer, and discusses the practical implications of the regulators’ points.  See also “Five Lessons from 2013 FCPA Enforcement: Transaction Monitoring, International Cooperation, Documenting Hiring Decisions, Risk Assessments and Individual Prosecutions,” The FCPA Report, Vol. 2, No. 22 (Nov. 6, 2013).

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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.20 (Oct. 9, 2013)

    How Can Companies Capture the Telecom, Energy and Resources Opportunities in Africa While Mitigating Corruption Risks?

    “Africa is bigger than we think.”  Thomas Laryea, a partner at Dentons US LLP, and his fellow panelists at a recent panel sponsored by Dentons and AlixPartners described just how big it is – in terms of size, opportunity and risk.  Panelists discussed Africa-specific issues that companies doing or contemplating doing business there should know, and also presented a summary of results of a survey done by Dentons and AlixPartners, the full results of which The FCPA Report has exclusively.  The survey measured companies’ perception of the strategic importance of doing business in Africa, their understanding of African business opportunities and the corruption risks and compliance issues executives face in the region.  The survey can be interpreted to reveal the gap between the stereotypical perceptions of a monolithic continent with endemic corruption and the more nuanced reality of a diverse Africa with tremendous opportunity, if risks are carefully managed.

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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)

    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)

    Best Practices for Reviewing Anti-Corruption Compliance Programs: Challenges, Preparation and Risk Evaluation (Part Two of Three)

    As the recent joint DOJ/SEC FCPA Resource Guide makes clear, for a company to earn meaningful credit with the government in an anti-corruption investigation, its compliance program must not only be robust, but also periodically reviewed and improved.  However, neither the Guide nor any other government resource provides specific direction on the appropriate frequency or depth of reviews.  In lieu of specific authority, companies typically turn to best practices and industry norms when deciding how frequently to review and update their compliance programs.  Best practices, though, can be hard to discern and difficult to apply.  Recognizing the challenge and importance of actionable information on this topic, The FCPA Report is publishing a series of three articles on best practices for reviewing anti-corruption compliance programs.  This article, the second in the series, discusses the chief obstacles companies face when conducting a review; provides strategies for creating management buy-in; describes four steps a company should take when preparing for a review; and outlines what risk areas the review should address.  The first article in the series discussed the importance of regular anti-corruption compliance reviews; detailed the government’s expectations for reviews; outlined how to create an efficient and effective compliance review schedule; and specified how companies should staff their compliance reviews.  See “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).  The third and final article in the series will provide strategies for conducting the actual review; discuss what a company should do post-review; outline issues surrounding documentation of the review; and examine how FCPA settlement agreements affect reviews. 

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  • From Vol. 2 No.15 (Jul. 24, 2013)

    Lessons Learned by Motorola Solutions, ExxonMobil and VMWare on the Role of Risk in Designing and Implementing an FCPA Compliance Program

    Risk assessment procedures are the foundation of an effective and efficient anti-corruption compliance program.  At the recent Momentum Anti-Corruption Global Congress, three experienced in-house compliance counsel – currently at Motorola Solutions, ExxonMobil and VMWare – shared their insight and experience creating and implementing risk-based anti-corruption compliance programs.  Specifically, the panelists, speaking in their individual capacities, described the corruption risks raised by their suppliers, customers and partners; offered differing takes on the role of certification and risk coding; shared best practices born of experience for interacting with employees and third parties; relayed their experiences with third-party sponsorship; and emphasized the central place of mitigation in any risk-based compliance program.  Jay Musoff, a partner at Loeb & Loeb LLP, moderated the panel.

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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.9 (May 1, 2013)

    FCPA Training That Works: An Interview with Jacqueline C. Wolff, Co-Chair of the Corporate Investigations & White Collar Defense Practice at Manatt, Phelps & Phillips, LLP

    This is the third article in our ongoing series on FCPA and anti-corruption training.  Each of the articles in the series is based on a long-form interview with a thought leader from a different discipline.  Collectively, the articles in this series provide a deep and multidisciplinary view of one of the most important processes available to companies to mitigate FCPA risk.  Our goal in this series is to provide actionable insight – recommendations, best practices and specific techniques that companies can use to improve the effectiveness of their training programs.  To advance that goal, this installment includes our interview with Jacqueline C. Wolff, a Partner at Manatt, Phelps & Phillips, LLP, Co-Chair of Manatt’s Corporate Investigations & White Collar Defense practice and former Chief of the Environmental Crimes Unit and Assistant United States Attorney for the District of New Jersey.  Our interview with Wolff delved deeply into a wide range of relevant topics, including: special considerations applicable to training different categories of employees; when to train third parties; the role of outside counsel in training; the interaction between attorney-client privilege issues and candor during training; the risks of online training; appropriate training frequency; the role of hypotheticals; minimizing cost without sacrificing effectiveness; and training lessons from the November 2012 Guidance.  The prior installment in this series included our interview with Billy Jacobson, Senior Vice President, Co-General Counsel and Chief Compliance Officer of Weatherford International, the global oil and natural gas services company.  See “FCPA Training That Works: An Interview with Billy Jacobson, Chief Compliance Officer of Weatherford International,” The FCPA Report, Vol. 2, No. 8 (Apr. 17, 2013).  And the first installment in the series included our interview with Joseph Spinelli, the head of Navigant’s FCPA practice and former Inspector General of New York State.  See “FCPA Training That Works: An Interview with Joseph Spinelli, Global Leader of Navigant’s Anti-Bribery & Corruption-FCPA Segment,” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013).

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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.7 (Apr. 3, 2013)

    FCPA Training That Works: An Interview with Joseph Spinelli, Global Leader of Navigant’s Anti-Bribery & Corruption-FCPA Segment

    Designing and implementing a workable and customized FCPA training program is a foundational challenge in anti-corruption compliance for all companies doing business internationally.  As the FCPA Resource Guide says, “Compliance policies cannot work unless effectively communicated throughout a company.”  As a practical matter, training is the primary channel through which companies communicate their culture of FCPA compliance and specific compliance strategies.  Done right, training is one of the most effective bulwarks against FCPA violations.  But how can companies do training right?  To answer this question, The FCPA Report is undertaking a series of interviews with experts that approach the same topic (FCPA training) from different disciplines.  This article – the first installment in that series – includes our interview with Joseph Spinelli, a Managing Director in Navigant’s Global Investigations and Compliance practice and the global leader of Navigant’s Anti-Bribery & Corruption-FCPA segment.  Spinelli has more than 30 years of forensic experience, founded the forensic practice at a Big Four accounting firm and has served in various monitorships.  See “How to Find a Business-Minded Compliance Monitor and Minimize Reporting Requirements When Negotiating an FCPA Settlement (Part Three of Three),” The FCPA Report, Vol. 2, No. 6 (Mar. 20, 2013).  Spinelli shared his views not only on how to make a training program effective in preventing bribery, but also on how to ensure the company receives maximum credit when the government is evaluating its training program.  He addressed, among other things: training third parties; which employees should be trained; specialized training for different industries; the relative merits of different technologies for training employees; training challenges, including facilitation payments; and effective training methods.

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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 Can Anti-Money Laundering Laws Affect an FCPA Compliance Program? An Interview with Former FinCEN Director James H. Freis, Jr. (Part Two of Two)

    Though motivated by different statutes, anti-money laundering compliance programs and FCPA compliance programs deal with related risks.  Anti-money laundering laws are also integrally related to FCPA charges, and prosecutors use them frequently in FCPA enforcement actions across industries and geographies.  The FCPA Report recently spoke with the nation’s former top anti-money laundering regulator, James H. Freis, Jr., about a range of issues, including the role anti-money laundering laws play in FCPA cases, how financial regulators are working together across the globe to combat corruption and the corruption challenges facing the gaming industry in particular.  In this, the second part of our interview, Freis discussed, among other things: the connection between anti-bribery laws and broader financial reforms around the globe; how financial institutions can integrate their AML and FCPA compliance programs; the similarities and differences between Politically Exposed Persons and foreign officials; and the importance of high-profile FCPA enforcement.  In the first article in this series, Freis discussed, among other things: what companies should focus on when conducting corruption and anti-money laundering risk assessments and audits; how the DOJ and SEC work with FinCEN on corruption cases; and details regarding the formation, operation and future of the Egmont Group, a 130-member organization of international financial intelligence units.  See “Former FinCEN Director James H. Freis, Jr. Discusses the Intersection between Anti-Money Laundering and Anti-Corruption Law (Part One of Two),” The FCPA Report, Vol. 2, No. 3 (Feb. 6, 2013).

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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)

    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.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.9 (Oct. 3, 2012)

    LeClairRyan Webinar Highlights Ten Anti-Corruption Risks for Pharmaceutical and Medical Device Companies and Outlines the Elements of an Effective FCPA Compliance Program

    On September 19, 2012, Michael Volkov, a partner at LeClairRyan, hosted a webinar entitled “Anti-Corruption Risks for Pharmaceutical and Medical Device Companies.”  Volkov provided an overview of current trends in enforcement of the FCPA in the pharmaceutical and medical device industries and identified risk factors in FCPA compliance.  He also identified best practices associated with avoiding each risk factor and outlined the basic elements of a successful FCPA compliance program.

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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)

    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)

    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.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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