The Anti-Corruption Report

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

Recent Issue Headlines

Vol. 1, No. 5 (Aug. 8, 2012) Print IssuePrint This Issue

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

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

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  • Designing a Facilitation Payments Policy to Minimize Liability and Retain Flexibility (Part Two of Two)

    Facilitation payments – payments to foreign officials that facilitate or expedite routine tasks – remain “legal bribes” under the FCPA.  Facilitation payments can be advantageous in many circumstances, and sometimes even essential to the safety of a company’s workers or the viability of its ongoing operations.  But such payments are prohibited under other foreign bribery laws, and they are nearly universally prohibited as payments to domestic officials under local laws.  Companies have struggled to strike the right balance between business flexibility and legal compliance.  Many companies have banned facilitation payments outright, but doing so can unduly limit a company’s ability to act quickly and decisively, which can be crippling in competitive markets.  On the other hand, too lax an approach to facilitation payments invites enforcement actions and reputational harm.  To assist our subscribers in designing policies, procedures and practices that balance compliance considerations with the need to retain business agility, we are publishing this second article in a two-part series.  This article addresses: advisable “safety valves” or exceptions to a general ban on facilitation payments; drafting and implementing a facilitation payments policy to accommodate those exceptions and avoid liability; concerns relating to the all-important issue of properly recording facilitation payments; and seven specific steps that companies should take in designing training programs relating to facilitation payments.  The first article in this series discussed: the definition of a facilitation payment, including examples; the differing treatment of such payments under the FCPA and other laws, notably the U.K. Bribery Act; the tension that has resulted from the conflict of laws; cases in which the argument has been made that the payments in question were facilitation payments, including the Wal-Mart investigation; and the trend among companies toward banning facilitation payments outright.  See “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).

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  • FCPA Investigation Protection: D&O Insurance and Beyond

    Few subjects receive as much attention in legal, compliance and accounting circles these days as the FCPA, the United Kingdom Bribery Act and other foreign and international anti-corruption laws.  However, while legal issues, compliance questions and legislative initiatives are the subject of constant scrutiny from companies, legal counsel, blogs, commentators and lobbyists, one potential means of ameliorating FCPA risk receives relatively little consideration: insurance.  So, what can a company do in the insurance context to protect itself against the costs of an FCPA investigation and/or proceeding?  In a guest article, M. Machua Millett, a Senior Vice President at international insurance brokerage firm Marsh USA, Inc., addresses this important question.

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  • Shearman & Sterling Report Identifies Trends in FCPA Enforcement

    International law firm Shearman & Sterling LLP (Shearman) recently released its “FCPA Digest: Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act,” a statistical and substantive analysis of the enforcement of the FCPA in the first half of 2012.  This article summarizes Shearman’s report and discusses statistics on enforcement activity (including the common characteristics of recent settlements) and developments related to statutory issues, compliance guidelines, private litigation, anti-bribery enforcement abroad and FCPA reform.

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  • Halliburton Settles Shareholder Derivative Suits Alleging Breaches of Fiduciary Duty Stemming from Inadequate Internal Controls and Violations of the FCPA

    In May 2009, the Policemen and Firemen Retirement System of the City of Detroit and the Central Laborers’ Pension Fund commenced separate shareholder derivative actions in the name of Halliburton Company (Halliburton).  The plaintiffs accused Halliburton and its former subsidiary, Kellogg, Brown & Root, Inc. (later Kellogg, Brown and Root, LLC) of operating as a “criminal enterprise” and running a “reign of terror” in connection with various violations of the FCPA and other laws.  Those violations included, notably, the payment of $182 million of bribes to win Nigerian oil contracts.  The parties have agreed to settle the suits and all related claims.  This article provides the background facts and a summary of the material terms of the settlement, with emphasis on those that relate to FCPA and anti-corruption compliance issues.  It also discusses Halliburton’s recently-filed Form 10-Q, which discloses internal FCPA investigations of payments made to third party agents in Angola and Iraq.

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  • 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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  • Pfizer Subsidiaries Agree to Pay $60.2 Million to Settle Civil and Criminal FCPA Charges

    The DOJ announced on August 7, 2012 that Pfizer H.C.P., a subsidiary of Pfizer Inc., has agreed to pay $15 million to resolve FCPA violations arising out of conduct in various countries in Europe and Asia.  The Pfizer subsidiary has also agreed to pay $26.3 million in disgorgement of profits and pre-judgment interest to settle SEC charges; Wyeth LLC, a company Pfizer bought three years ago, agreed to pay $18.9 million in disgorgement and pre-judgment interest.  Pfizer reported in a November 2011 SEC filing that it had reached an agreement in principle with the government, but the details were not announced until nine months later.

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