The Anti-Corruption Report

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

Recent Issue Headlines

Vol. 1, No. 9 (Oct. 3, 2012) Print IssuePrint This Issue

  • Five Themes for General Counsel to Monitor with Respect to Dodd-Frank Whistleblowers and the FCPA

    It’s late at night and General Counsel is giving the deck for the next morning’s Audit Committee presentation one final read through.  The subject of the presentation is a succinct yet thorough post-mortem report distilling the key findings from a wide-ranging internal investigation into irregularities relating to a major contract award in one of the company’s most challenging foreign markets.  There is sufficient evidence of questionable conduct to merit real concern under the FCPA and General Counsel, with Outside Counsel by her side, must make a recommendation to the Audit Committee as to whether the company should make a voluntary disclosure to U.S. authorities.  Flipping through the slides, General Counsel remarks to herself how familiar the facts have become, particularly the unattractive ones.  She is also well versed in the factors weighing on the pro and con side of disclosure.  But one wildcard prevents General Counsel from putting the presentation down and getting some much-needed rest: is there a whistleblower who has already informed the government?  If so, the company’s calculus is dramatically different.  But General Counsel just doesn’t know and that is one answer that Outside Counsel does not have for her.  Whistleblowers have long been a hot topic for corporate counsel.  They have become an even hotter topic since Congress passed Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), which amended the Securities Exchange Act of 1934 to add new Section 21F, “Securities Whistleblower Incentives and Protection.”  In a guest article, F. Joseph Warin, chair of Gibson, Dunn & Crutcher LLP’s Washington, D.C. Litigation Department and co-chair of the Firm’s White Collar Defense and Investigations Practice Group, along with John W.F. Chesley, a litigation associate at Gibson Dunn, provide a brief primer on the regulatory framework governing whistleblower awards under Dodd-Frank; explore early developments in Dodd-Frank whistleblower litigation, with a particular focus on two important cases predicated upon alleged violations of the FCPA; and list some of the key issues that they see as emerging or that they expect to emerge in the near future.

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  • Anonymous Polling, Focus Groups and “Organizational Justice” Help Companies Avoid FCPA Violations While Growing Revenue

    The notion that anti-bribery compliance and revenue generation are at odds has a superficial appeal and a long tradition.  But the notion does not hold up under theoretical scrutiny, and it has been discredited empirically.  As a theoretical matter, it makes good sense that a culture of ethics and excellence leads to high long-term returns, while a culture of bribery leads to misallocation of resources, among other problems.  And as an empirical matter, deep research by CEB (formerly the Corporate Executive Board), along with CEB’s extensive advisory experience, highlight a strong correlation between long-term revenue growth and a corporate culture of integrity.  “Integrity capital,” as CEB calls it, is not just the right thing to do or, less charitably, applied sanctimoniousness.  Rather, it is good business and effective strategy.  Working from an interview with Tracy Davis Bradley, a senior director at CEB; a recent article by Dan Currell, an executive director at CEB, and Bradley in the Harvard Business Review; as well as research provided to The FCPA Report by CEB, this article sheds light on some of the footpaths connecting ethics and revenue.  In particular, this article outlines specific steps that companies can take to avoid FCPA violations while simultaneously driving business growth; why the shaky economy may be driving bribery in developing countries; how integrity capital can help businesses’ bottom lines; how companies can make their hotlines more effective; how anonymous polling and focus groups, if done well, can yield surprisingly good results; and why companies should not only consistently and quickly punish offenders, but give recognition to employees who report wrongdoing.

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  • Why the Current Regime Is Effective at “Busting Bribery": An Interview with Professor Dan Danielsen, Co-Author of the Open Society Foundations’ Report on Corruption

    The FCPA Report recently had a wide-ranging conversation with Dan Danielsen, a Professor at Northeastern University School of Law and former general counsel of Europe Online Networks, S.A. and partner at Foley Hoag LLP.  Professor Danielsen, along with David Kennedy, Professor at Harvard Law School and Director of the Institute for Global Law and Policy, authored the report “Busting Bribery: Sustaining the Momentum of the Foreign Corrupt Practices Act” (Report).  The Report was commissioned by the Open Society Foundations as a response to the Chamber of Commerce’s report, which argued for amendments to the FCPA.  Danielsen and Kennedy had complete academic freedom as to the content and conclusions drawn in the Report.  In our interview, Professor Danielsen discussed, among other things: why the costs of bribery, given the evolving global scheme, outweigh the benefits; the effectiveness of the DOJ Opinion Procedure; why a good faith compliance defense is inconsistent with the scienter requirement in the statute; how agreements with the government, such as DPAs and NPAs, are creating a regulatory jurisprudence similar to no-action letters in the securities context; companies’ reluctance to go to court and obtain judicial scrutiny; the reasonableness of the current “knowing” standard in the statute; and the need for flexibility in the definition of “foreign official.”

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  • 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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  • Anti-Corruption Compliance in the Age of Global Enforcement

    A global wave of anti-corruption regulation has been steadily gaining momentum since it began in the 1990s.  International organizations, such as the Organisation for Economic Co-operation and Development, have set their sights on fighting bribery and have successfully pressured member states to pass tighter laws.  Cross-border enforcement cooperation is also on the rise.  This heightened scrutiny has highlighted the importance for corporations to have globally effective anti-corruption compliance programs.  Successful programs help reduce the risk of violations and may also engender a more favorable regulatory response when issues arise.  In a guest article, Richard Sibery, the Leader for Fraud and Investigations with Ernst & Young LLP’s Fraud Investigation & Dispute Services (FIDS) practice, and Virginia Adams, a Senior Manager in E&Y’s FIDS practice, discuss the three basic building blocks of a best-of-breed compliance program.  For additional insight from Sibery, see “Training, Certification, Due Diligence, Customs Clearance and Facilitation Payments: An Interview with Leaders of Ernst & Young’s Fraud Investigation & Dispute Services Practice,” The FCPA Report, Vol. 1, No. 1 (Jun. 6, 2012); and “Anti-Corruption Audits, Risk Assessments, Transaction Testing and the Dangers of Petty Cash: An Interview with Leaders of Ernst & Young’s Fraud Investigation & Dispute Services Practice,” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).

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  • Tyco Settles SEC and DOJ Charges Relating to FCPA Violations, Agrees to Pay Over $26 Million in Penalties, and Subsidiary Pleads Guilty to Criminal FCPA Charge

    In connection with a 2006 settlement with the SEC over alleged FCPA and other violations, Tyco International Ltd. (Tyco) pursued a comprehensive compliance review of all of its operating entities – 454 companies in 50 countries.  That review disclosed additional FCPA violations, or continuing benefits from prior violations, involving more than a dozen Tyco direct and indirect subsidiaries.  Tyco reported those findings to the SEC and DOJ, which began new investigations into Tyco’s operations.  On September 24, 2012, the DOJ and SEC announced that Tyco has now reached a comprehensive settlement of those new matters, consisting of three separate elements: A settled civil enforcement action by the SEC against Tyco, a non-prosecution agreement between the DOJ and Tyco and the entry of a guilty plea to a criminal violation of the FCPA by a Tyco subsidiary.  This article provides a summary of the various investigations and charges and the details of the three settlements.

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  • Rich Battaglia Joins Steptoe’s International Regulation & Compliance Group

    On September 12, 2012, Steptoe & Johnson announced that Richard Battaglia, former senior counsel for regulatory compliance at BP America Inc., has joined the firm as a senior counsel in the International Regulation & Compliance Group.

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  • Litigator Mimi Yang Joins Ropes & Gray in Shanghai

    Ropes & Gray recently announced that Mimi Yang will join the firm’s Shanghai office as counsel, and will be part of the firm’s securities and complex business litigation group.

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