The Anti-Corruption Report

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

Recent Issue Headlines

Vol. 1, No. 10 (Oct. 17, 2012) Print IssuePrint This Issue

  • Friendly Relations? When Nepotism May Violate the FCPA

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

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  • When and How Should Outside Counsel Withdraw from an FCPA Representation or Report Violations to Authorities?

    When an attorney discovers, or strongly suspects, that bribery is taking place, or will take place, at a company she represents, but the company refuses to act, what should the attorney do?  The recent Wal-Mart revelation that the company allegedly thwarted the 2005 recommendation of outside counsel to conduct a thorough anti-corruption investigation is just one example of a potentially difficult situation for counsel.  When should an attorney withdraw from an investigation to protect herself from being complicit in the bribery?  When should she report the client to the government?  The attorney client privilege provides significant protection for attorneys when they learn of a violation, but that protection is not iron clad, especially as authorities say that they will not hesitate to prosecute lawyers who are involved in a client’s corruption.  Additionally, attorneys must weigh their reputations with other clients and with the government.  This article provides context and practical guidance for counsel facing the thorny question of withdrawal.  In particular, this article discusses: the legal and regulatory landscape, including ABA Model Rules and SEC rules that discuss withdrawal, reporting and the scope of the attorney client privilege; recent cases where attorneys withdrew from representation or were implicated in a client’s bad acts; considerations regarding how to document the representation to ease or prevent withdrawal later; factors that influence a decision to withdraw and whether to withdraw “noisily” or not; and when and why an attorney may want to report a violation to authorities.

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  • Davis Polk Lawyers and Morgan Stanley Compliance Director Discuss DOJ’s Decision Not to Prosecute Morgan Stanley for FCPA Violations

    In April 2012, Morgan Stanley Managing Director Garth Peterson pleaded guilty to one count of conspiring to circumvent Morgan Stanley’s internal controls in violation of the FCPA.  The plea was the result of his efforts to enrich himself and the Chinese official who facilitated a Shanghai real estate deal with his Morgan Stanley unit.  Notably, the DOJ indicated that it was declining to bring charges against Morgan Stanley as a result of Peterson’s misconduct.  In a recent webcast, Morgan Stanley’s anti-corruption chief, Raja Chatterjee, and its outside counsel from Davis Polk & Wardwell LLP, discussed the “unprecedented and important” decision not to prosecute Morgan Stanley for Peterson’s FCPA violations.  They believe that, by declining to prosecute Morgan Stanley, the DOJ has made a statement that “compliance matters” and that an effective compliance program can be a mitigating factor in an FCPA investigation.  This article summarizes the webcast with a view to identifying the lessons that can be learned from the Morgan Stanley matter.  See also “Civil and Criminal Enforcement Actions Against Former Morgan Stanley Employee Highlight the Relevance of the FCPA for Private Fund Managers,” The Hedge Fund Law Report, Vol. 5, No. 19 (May 10, 2012).

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  • Britain’s Serious Fraud Office Updates Guidance on the Bribery Act, Reinforcing Its Role as a Crime Fighting Agency

    While much of the U.S. anti-corruption community was focused on the expected arrival of FCPA guidance from the DOJ and the SEC, on October 9, 2012, the Serious Fraud Office (SFO), the U.K.’s agency with primary responsibility for enforcing the Bribery Act, beat them to the punch, releasing new guidelines relating to certain aspects of the Act in a tone that emphasizes the importance the SFO is placing on targeting bribery.  This article details the substance of the guidance and its implications for operating companies.

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  • DOJ Issues Opinion Release Containing Guidelines on Whether a Royal Is a “Foreign Official” Under the FCPA

    On September 18, 2012, the DOJ issued its first Opinion Procedure Release of 2012 (Release), providing guidelines on whether a royal family member may be deemed a “foreign official” under the FCPA.  The definition of “foreign official” has been the subject of considerable debate and litigation in recent years.  Among the controversial issues is the DOJ’s view that “foreign officials” include employees of state-owned entities, a view that the district courts have generally accepted but that is currently being challenged before the U.S. Court of Appeals for the Eleventh Circuit.  See “Defendants in Haiti Teleco Case Urge the Eleventh Circuit to Limit ‘Instrumentalities’ to Entities that Perform Government Functions,” The FCPA Report, Vol. 1, No. 1 (Jun. 6, 2012); and “U.S. Government Counters Foreign Official Challenge in the Eleventh Circuit,” The FCPA Report, Vol. 1, No. 7 (Sep. 5, 2012).  This article describes the factual background and legal analysis in the Release.

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  • Transparency International UK 2012 Defence Industry Anti-Corruption Index Highlights Industry-Wide Deficiencies in Anti-Corruption Practices and Disclosure

    The Defence and Security Programme of Transparency International UK (TI-UK) has released its “Defence Companies Anti-Corruption Index 2012.”  TI-UK surveyed 129 companies from 31 countries, drawing information primarily “from what companies disclose publicly on their websites about their anti-corruption systems.”  Concluding that two-thirds of the defense companies surveyed “do not provide adequate levels of transparency,” TI-UK seeks to goad those companies into sharing more information about their anti-corruption efforts and to encourage stakeholders to push them in the right direction.  This article reviews TI-UK’s findings and recommendations.

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  • Walmart International Hires Daniel Trujillo as Head of International Compliance

    Walmart International has hired Daniel Trujillo as its head of international legal compliance, according to an internal company memo obtained by The FCPA Report.

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  • Lynn Neils Joins Covington's White Collar Practice

    Covington & Burling, LLP has announced that former federal prosecutor Lynn Neils is joining its litigation group as a partner, strengthening the firm’s white collar practice.

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