The Anti-Corruption Report

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

Articles By Topic

By Topic: Joint Ventures

  • From Vol. 7 No.19 (Sep. 19, 2018)

    Compliance Challenges When Working With JV Partners in China

    Multinational companies face unique compliance challenges when partnering with local companies to form joint ventures in China, particularly when the partner is also a state-owned entity. Recent FCPA enforcement actions reflect the continued attention U.S. regulators pay to business activities in China, including those involving JVs. In a guest article, Mimi Yang, David Zhang and Karen Oddo of Ropes & Gray explain how to effectively navigate these complex anti-corruption risks. They argue that multinational corporations need to take a proactive approach, from pre-deal due diligence of a potential JV partner through post-investment integration and implementation of a strong compliance program, to ongoing training and monitoring. See “Anti-Corruption Provisions in Third-Party Contracts in China” (Jun. 7, 2017).

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  • From Vol. 7 No.8 (Apr. 18, 2018)

    ACR Program Examines FCPA Enforcement and Local Anti-Corruption Efforts in China and Singapore

    Asia has long been the most active region for FCPA enforcement actions and investigations. China, which over the past nine years has had more than three dozen actions involving conduct in the pharmaceuticals, technology, manufacturing and other industries, has recently launched its own anti-corruption regime with a new super agency to enforce it. Additionally, the Keppel Offshore & Marine settlement (involving a decade of bribery committed by the world’s largest oil-rig builder) in late 2017 brought Singapore into the anti-corruption spotlight. During a recent program presented by The Anti-Corruption Report, local experts examined FCPA enforcement as well as local anti-corruption efforts in China and Singapore, challenges in conducting internal investigations in China, and the role of whistleblowers in the region. See “Practitioners Take the Pulse of Anti-Corruption Compliance and Enforcement in China” (Mar. 15, 2017).

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  • From Vol. 6 No.5 (Mar. 15, 2017)

    Practitioners Take the Pulse of Anti-Corruption Compliance and Enforcement in China

    China’s aggressive but sometimes opaque anti-corruption efforts have been making headlines for the past several years and companies are facing a “fluid enforcement environment,” according to Nathan G. Bush, a partner at DLA Piper. The domestic anti-corruption efforts of President Xi Jinping’s regime and uncertainty over how the Trump administration will enforce the FCPA and interact with Beijing make anti-corruption compliance particularly challenging. A recent Strafford seminar featuring Michael S. Diamant and Michael Li-Ming Wong, partners at Gibson Dunn, and Cindy Hong, a partner at K&L Gates, offered a thorough overview of the current state of the anti-corruption and political climate in China. This article summarizes the key insights from the program. See our two-part series on China’s State Secrets Law: “A Primer for Anti-Corruption Practitioners (Part One)”(Jun. 29, 2016); and “Six Things to Consider When Engaging in Internal Investigations in China (Part Two)” (Jul. 13, 2016).

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  • From Vol. 5 No.23 (Nov. 23, 2016)

    Industry Risk Spotlight: Orrick Partner William Jacobson Examines Extractive Industry Corruption

    The FCPA Report’s Regional Risk Spotlight has made it clear that where a company operates can have a big impact on the level of corruption risk it faces. But risk does not just vary from region to region; it can also vary widely from industry to industry. Most multinational companies will find themselves interacting with business partners and third parties in a multitude of industries, and familiarity with the risks specific to each sector will help a company better assess its overall level of risk. In this first installment of The FCPA Report’s Industry Risk Spotlight series, we spoke with Billy Jacobson, a partner at Orrick and the former chief compliance officer of Weatherford International Ltd., to shine a light on the extractive industry, which has historically faced steep hurdles for anti-corruption compliance. See also “Corruption Risks and Compliance Programs in the Oil & Gas Industry: An Interview With Samuel Cooper of Paul Hastings” (Mar. 19, 2014).

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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. 4 No.20 (Oct. 7, 2015)

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

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

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  • From Vol. 4 No.20 (Oct. 7, 2015)

    “No Money, No Prescription” Attitude in China Leads Bristol-Myers Squibb to $14 Million SEC Penalty

    The SEC has made no secret that it is focused on bribes made by pharmaceutical companies to Chinese health care practitioners, whom it considers foreign officials under the FCPA.  Previous settlements with pharma companies operating in China - such as Eli Lilly, Biomet, Pfizer and Mead Johnson – have focused on the provision of gifts, travel, entertainment or simply cash to Chinese health care practitioners in exchange for prescribing products or getting on government formularies. On October 5, 2015, the SEC announced that it resolved similar charges with pharma giant Bristol-Myers Squibb (BMS) for over $14 million.  The SEC says former BMS employees called their bribes an “open secret” and the only way to meet their sales targets.  We analyze the settlement, a U-turn from the initial investigation into BMS’ activities in Germany, and some of the mistakes BMS made.  See “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.14 (Jul. 8, 2015)

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

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

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  • From Vol. 4 No.13 (Jun. 24, 2015)

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

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

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  • From Vol. 4 No.13 (Jun. 24, 2015)

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

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

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  • From Vol. 3 No.10 (May 14, 2014)

    FCPA Compliance in Non-Controlled Joint Ventures

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

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  • From Vol. 3 No.8 (Apr. 16, 2014)

    Ukrainian Gas Magnate Dmitry Firtash Claims His FCPA Indictment Is Politically Motivated

    The FCPA indictment of Dmitry Firtash, a Ukrainian oil and gas magnate with close ties to the recently deposed Ukrainian President Victor Yanukovych, was unsealed this month following his arrest in Austria.  Firtash was released on $174 million bail with instructions to stay in the country.  He is a prominent figure in the Ukraine, and he claims the charges (conspiracy to violate the FCPA) are politically motivated, his company pointing out that his extradition comes at a time when he is needed in that volatile region. The DOJ, trumpeting its increased prosecutions of individuals for FCPA violations, charged Firtash and five other foreign nationals with participation in an international racketeering conspiracy.  The scheme allegedly included at least $18.5 million in bribes to Indian state and central government officials to allow the mining of titanium materials.  See “A Synthesis of Top Firms’ FCPA 2013 Year-in-Review Insights,” The FCPA Report, Vol. 3, No. 4 (Feb. 19, 2014) (discussing individual indictments).

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  • From Vol. 2 No.25 (Dec. 18, 2013)

    Bilfinger Settlement Highlights the Long Tail and Loose Jurisdictional Requirements of Criminal FCPA Charges

    Bilfinger SE has entered into a Deferred Prosecution Agreement with the DOJ to resolve charges that it and Houston-based Willbros Group paid more than $6 million in bribes to Nigerian officials to retain gas contracts related to the Eastern Gas Gathering System Project (EGGS).  Bilfinger agreed to pay a $32 million fine.  Willbros settled with the DOJ in 2008, paying $22 million to resolve charges related to EGGS (as well as charges relating to a bribery scheme in Ecuador).  One Willbros consultant was sentenced in May and several others pleaded guilty.  One former Willbros executive is currently a fugitive.  This article summarizes the case, extracting the compliance takeaways (including the attenuated U.S. nexus, the long tail of the investigation and the hybrid monitorship), and including a chart comparing the compliance requirements in the DPA to past corporate FCPA settlement agreements.  See “A Comparison and Examination of DOJ Compliance Program Requirements in FCPA Settlement Agreements,” The FCPA Report, Vol. 2, No. 19 (Sep. 26, 2013).

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  • From Vol. 2 No.24 (Dec. 4, 2013)

    Oil and Gas Company Weatherford Settles Civil and Criminal FCPA Charges for $153 Million

    Weatherford International, a Geneva-based oilfield services company with significant operations in Texas, has agreed to settlements with both the SEC and DOJ to resolve government investigations into a number of matters, including charges that it violated the FCPA, sanctions and export controls.  The total fine was $253 million.  The $153 million fine for the FCPA portion makes this the eighth largest FCPA fine to date, and this is the first time the SEC has used books and records charges to allege the violation of export control and sanctions laws.  Weatherford announced a tentative deal last month.  For insight on FCPA training from Weatherford’s chief compliance officer, hired after the government probe began, 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).

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  • From Vol. 2 No.9 (May 1, 2013)

    Strategies for Mitigating the FCPA Risk of Entering Into Joint Ventures

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

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  • From Vol. 2 No.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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