The Anti-Corruption Report

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

Recent Issue Headlines

Vol. 2, No. 10 (May 15, 2013) Print IssuePrint This Issue

  • A Guide to Disclosing Corruption Investigations in SEC Filings (Part Two of Four)

    Public companies that discover evidence of potential anti-corruption violations are faced with a series of difficult decisions.  One of the most critical decisions is whether and when the company should disclose the potential violation and investigation in its public SEC filings.  Public companies are required to disclose material information, but determining when an FCPA investigation becomes material is more of an art than a science.  Further complicating matters, making such a disclosure to the SEC can carry serious consequences, including civil lawsuits, stock price instability, reputational damage, waning employee morale and productivity, loss of current government contracts and debarment from future contracts.  The FCPA Report is publishing a series of articles addressing the crucial issues public companies face when anti-corruption allegations surface.  In addition to analysis and insight from practitioners, this series will include a compendium of actual FCPA-related disclosures from recent SEC filings compiled with help from Intelligize’s database and search tools.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings relating to an FCPA issue.  This article, the second in the series, details the risks inherent in disclosure and non-disclosure; addresses ways to diminish those risks, including handling media coverage; and discusses best practices when disclosing foreign investigations to the SEC.  The first article in the series discussed factors that companies should consider when determining whether a public disclosure is appropriate; what experts a company should retain to help it make appropriate disclosure decisions; and the risks and benefits of disclosing at different stages of the anti-corruption investigation.  The third installment will provide insight on the most beneficial language to use in disclosures and analyze Wal-Mart’s disclosures during different periods of its recent investigation.  Finally, in the last installment in the series, The FCPA Report will publish the referenced compendium of SEC disclosures, categorized by their attributes.

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  • Insight from Top Companies and Practitioners on How They Are Addressing Current Anti-Corruption Issues, from Self-Reporting to Risk Assessments to Training

    The government has made it clear that complying with the FCPA does not, and should not, require companies to adopt a one-size-fits-all solution.  Each company must tailor its program to its unique business model.  Despite the individuality of each program, however, it is useful for a company and its advisors to understand how the company’s peers and competitors are ensuring FCPA compliance.  How much are companies spending on anti-corruption compliance?  What type of training program does each company find effective?  What percentage of companies invest in risk assessments?  A recent panel hosted by the Practising Law Institute provided answers to these questions and more.  Combining commentary from industry experts Mark Mendelsohn, partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP, Alexandra Wrage, president of TRACE International, Inc., Raja Chatterjee, Global Head of the Anti-Corruption Group at Morgan Stanley, and Susan Ringler, Deputy General Counsel for Xylem Inc., as well as interactive audience polling of conference participants (including in-house counsel, outside counsel and compliance personnel), the panel provided unique insight into trends and patterns in the FCPA world.  The panel analyzed the difficult issues that arise when developing training programs, allocating anti-corruption compliance resources, conducting risk assessments, executing internal investigations and making voluntary disclosures.  See “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).  See also The FCPA Report’s FCPA Training That Works series: Navigant’s Joseph Spinelli (Apr. 3, 2013); Weatherford’s Billy Jacobson (Apr. 17, 2013); Manatt Phelps & Phillips’ Jacqueline C. Wolff (May 1, 2013).

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  • Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Three of Five)

    In light of the significant FCPA risk posed by cross-border transactions, The FCPA Report is serializing (in five parts) a chapter from a recently published treatise, The Foreign Corrupt Practices Act: Compliance, Investigations and Enforcement.  The authors of the treatise are Martin Weinstein, Robert Meyer and Jeffrey Clark, all partners at Willkie, Farr & Gallagher LLP, and highly-regarded FCPA practitioners.  This installment of the series provides guidance on the due diligence process, including the initial risk assessment, determining the scope of the review, coordinating the work of the review team and investigating red flags.  It also provides advice on steps to take if a compliance issue is discovered and contractual safeguards to include in deal documents to minimize corruption risk.  The first part of the series provided an overview of the corruption liability inherent in M&A and investment transactions and provided insight on mitigation of corruption risk before transactions occur, focusing on successor liability, ratification, acts in furtherance of corruption and investment valuation.  The second installment in the series analyzed post-transaction risk, including the concept of willful blindness and the application of the FCPA’s accounting provisions to mergers and acquisitions.

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  • Collateral Consequences of Bribery: When Can Ethical Competitors Initiate Suit in the U.S. and U.K.?

    The potential fines and costs arising from corporate bribery can be sizeable.  But there is another risk for companies that have won government contracts because they bribed foreign officials: private lawsuits brought by clean competitors that have lost out on business as a result of bribery.  In an age of ever-increasing public information about bribery, from governments, non-governmental organizations, anti-corruption activists and others, competitors on the losing side of bidding processes have more evidence to pursue these claims.  In a guest article, Steve Huggard and James Maton, partners, and Katie Guarino, associate, at Edwards Wildman Palmer LLP, explain how suits against bribing competitors can be initiated and what is at stake.

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  • Doing Business with the World Bank: Understanding and Avoiding Debarment

    For companies that deal with the World Bank, the risk of debarment from future contracts with the Bank, and cross-debarment from doing business with other multi-lateral development banks, looms large.  That can be the penalty for misconduct in World Bank projects – sanctionable offenses include not only bribery of foreign officials, but bid rigging and other types of fraud.  Adding teeth to the enforcement regime, World Bank loan documents provide the Bank with audit rights, and the Bank has tight relationships with law enforcement agencies and regulators around the world.  The Bank is now publishing its sanctions decisions publicly.  Understanding and navigating the multi-layered World Bank sanctions system and its anti-corruption standards is paramount for companies that may be involved in projects financed through the Bank.  A recent webinar provided insight from World Bank insiders, detailing the operations of the World Bank sanctions program, from investigation to imposition and implementation of sanctions.

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  • FCPA Charges against Broker-Dealer Stemming From Routine SEC Examination Is “Wake-Up Call” to the Financial Services Industry

    A routine SEC examination of a New York-based broker-dealer has resulted in FCPA, Travel Act and money laundering charges against two employees in its Miami office.  It’s the first in which individuals were targeted for bribery during the sale of financial services.  Acting Assistant Attorney General Mythili Raman warned in a statement that the case “is a wake-up call to anyone in the financial services industry who thinks bribery is the way to get ahead.”  In an irregular move in a corruption case, prosecutors also charged the foreign official the employees allegedly bribed with violating the anti-money laundering statutes and the Travel Act.  This article distills the compliance takeaways and summarizes the complaints.

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  • Martin Stone and Thomas Feeney Join Nardello & Co.

    Investigative firm Nardello & Co. recently announced the addition of Thomas Feeney as Managing Director in its New York office and Martin Stone as Managing Director, EMEA, in its London office.

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