The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

Articles By Topic

By Topic: Due Diligence

  • From Vol. 5 No.19 (Sep. 28, 2016)

    Managing Data Privacy Challenges in Performing Due Diligence and Internal Investigations in China (Part Two of Two)

    For companies doing business in China, understanding data privacy and cybersecurity requirements under Chinese law is critical. But once a company is familiar with the basic legal contours, more practical concerns move to the forefront. In this article, the second in a two-part series on China’s data privacy and cybersecurity laws, we share insights from practitioners working in China on how companies can manage the practical challenges of running their businesses while staying on the right side of the law. The first article in the series explained the basic structure of the data compliance regime in China, including the criminal law, civil law, industry regulations and the draft Cybersecurity Law. See also “The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China” (Sep. 9, 2015).

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  • From Vol. 5 No.15 (Jul. 27, 2016)

    Credit Suisse, Goldman Sachs and Defense Counsel Discuss Corruption Issues Troubling Financial Institutions

    Over the past several years, anti-corruption regulators have consistently focused on financial institutions. From the Morgan Stanley declination in 2012, to the 2015 U.K. prosecution of Standard Bank, to the recent SEC sweep of sovereign wealth funds, financial institutions are facing enforcement risks in multiple jurisdictions. During a recent PLI seminar, Credit Suisse’s global head of anti-corruption and economic sanctions, a VP in Goldman Sachs’ Financial Crime Compliance group and top FCPA defense counsel from Gibson Dunn, Wilmer Hale and Sullivan and Cromwell discussed the FCPA issues faced by financial institutions, including a regulatory focus on hiring and internships, due diligence, the impact of the so-called “Panama Papers” and third-party risks. For more on this subject, see “Mayer Brown Attorneys Discuss Global Corruption Risk in the Financial Services Industry” (Aug. 19, 2015); and “Compliance Leaders from Citigroup and Morgan Stanley Examine FCPA Risks and Solutions for Financial Institutions” (May 14, 2014). 

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  • From Vol. 5 No.10 (May 18, 2016)

    Brian Ong of FTI Discusses Creating an M&A Anti-Corruption Due Diligence Game Plan and Getting the Most Out of Target Interviews

    Many companies enter into new markets and expand their businesses through mergers with, and acquisitions of, already existing entities. Due diligence on the target company has always been an integral part of the transaction so that the acquiring company can be sure it is getting what it pays for. This due diligence has traditionally been the purview of deal teams whose primary focus is on the financial elements of the deal, but recent cases have highlighted the need for companies to look into the compliance and ethics risks associated with deals as well. The FCPA Report recently spoke with certified public accountant Brian Ong, a senior managing director at FTI Consulting, about his experiences conducting M&A due diligence and what strategies companies can use to get the most out of the process. See “How to Mitigate FCPA Risk Before and After an Acquisition” (Feb. 18, 2015).

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  • From Vol. 4 No.16 (Aug. 5, 2015)

    Four Compliance Lessons from Lesser-Known FCPA Cases

    In today’s active FCPA enforcement environment, the compliance bar is always rising.  Although most compliance specialists are familiar with the details of the headline-grabbing cases such as PetroTiger and FLIR, smaller, less-publicized cases can also provide valuable insight on how best to avoid FCPA liability.  In a recent webinar hosted by the Society of Corporate Compliance and Ethics, Bill Currier, a partner at White & Case, and Sulaksh Shah, a partner in PwC’s forensic service practice, discussed how companies can use the SEC and DOJ’s enforcement activity in recent, lower-profile corruption cases to tailor their compliance programs to the unique needs, risks and structures of their businesses or industries.  See also “Best Practices for Reviewing Anti-Corruption Compliance Programs: Government Expectations, Scheduling and Staffing (Part One of Three),” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013); “Challenges, Preparation and Risk Evaluation (Part Two of Three),” Vol. 2, No. 17 (Aug. 21, 2013); and “Implementation, Remediation and Documents (Part Three of Three),” Vol. 2, No. 18 (Sep. 11, 2013).

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  • From Vol. 4 No.12 (Jun. 10, 2015)

    In-House and Outside Counsel Share Advice on Risk Assessments, Gift Policies and Third-Party Due Diligence

    Effective risk assessments, strong third-party practices and gifts and hospitality procedures that hold up under fire are at the heart of best-in-class anti-corruption compliance programs.  In a recent Practising Law Institute event, moderated by Gibson Dunn partner Richard W. Grime, outside and in-house counsel discussed how they tackle developing, implementing and monitoring those essential features of compliance programs.  The panel included Kathryn Cameron Atkinson, a member at Miller & Chevalier, Patricia M. Byrne, VP and Associate General Counsel for International Compliance at BAE Systems, Inc., and William B. Jacobson, a partner at Orrick.  See The FCPA Report’s Conducting Effective Anti-Corruption Due Diligence on Third Parties Interview Series: Gwen Romack, Director of Global Anti-Corruption at Hewlett-Packard, Vol. 2, No. 20 (Oct. 9, 2013); Principals at Nardello & Co., Vol. 2, No. 19 (Sep. 26, 2013); and Alice Fisher, Partner at Latham & Watkins, Vol. 2, No. 18 (Sep. 11, 2013).

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  • From Vol. 4 No.6 (Mar. 18, 2015)

    Taking Third Party Diligence Beyond the FCPA and the U.K. Bribery Act

    An active third-party due diligence program protects a company from a host of dangers, including anti-corruption violations, sanctions issues and forming relationships with destructive business partners.  A recent program presented by the Society of Corporate Compliance and Ethics highlighted the continued importance of third-party due diligence for anti-corruption compliance and the impact of economic sanctions regimes on that due diligence.  The program featured Candice D. Tal, founder and Chief Executive Officer of security and risk management consulting firm Infortal Worldwide Inc.; and Cordery Compliance Limited’s principal adviser André Bywater and partner Jonathan P. Armstrong.  See also “Risk-Based Solutions to Complying with Anti-Money Laundering, Export Controls, Economic Sanctions and the FCPA,” The FCPA Report, Vol. 3, No. 2 (Jan. 22, 2014).

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  • From Vol. 4 No.4 (Feb. 18, 2015)

    How to Mitigate FCPA Risk Before and After an Acquisition

    Robust pre-acquisition due diligence can prevent the purchase of a costly FCPA violation along with the target company.  During a recent webinar hosted by Strafford Publications, experts Thaddeus R. McBride, a partner at Bass Berry & Sims and Brian Moffatt, Senior Compliance Counsel at EthosEnergy, discussed the importance of FCPA awareness in the mergers and acquisitions space.  This article outlines the risks associated with M&A as well as some of the best practices the panelists discussed for addressing those risks.  See also “Checklist of Actions to Take and Factors to Consider When Conducting Pre-Merger Anti-Corruption Due Diligence,” The FCPA Report, Vol. 2, No. 19 (Sep. 26, 2013).

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  • From Vol. 3 No.4 (Feb. 19, 2014)

    Six Things Every Business Lawyer Needs to Know About the FCPA

    Whether you’re in-house counsel or a transactional lawyer at a law firm, anti-corruption is something that should very much be on your radar – the government is aggressive, the fines can be astronomical and people do go to jail.  That was the message from William H. Devaney, partner at Venable and moderator of the American Bar Association’s recent webinar, “What Every Business Lawyer Should Know About the FCPA.”  The panel discussion provided business lawyers with information and advice about staying compliant in this anti-corruption enforcement climate.  The panelists were Lynn A. Neils, a partner at Covington & Burling; Carlos Ortiz, a partner at Edwards Wildman; Brian T. Sumner, in-house counsel at Alcoa; and Douglas Tween, a partner at Baker McKenzie.  See also “How to Conduct an Anti-Corruption Investigation: Ten Factors to Consider at the Outset (Part One of Two),” The FCPA Report, Vol. 2. No. 25 (Dec. 18, 2013); “Developing and Implementing the Investigation Plan (Part Two of Two),” Vol. 3, No. 1 (Jan. 8, 2014).

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  • From Vol. 2 No.23 (Nov. 20, 2013)

    Construction Industry Experts Discuss Crucial Steps in Internal Corruption Investigations, Due Diligence Best Practices and the Value of Cooperation

    Could the construction industry be the next target of anti-corruption enforcement action in the U.S. and abroad?  The industry is rife with risk – in the U.K., for example, 49% of corruption professionals say corruption is widespread, and law firm Reed Smith LLP predicts that at least two large U.K. Bribery Act investigations are in the works in the next two years for international construction firms.  How can construction companies, and others similarly situated, anticipate and mitigate what may be a gathering enforcement storm?  The Practising Law Institute recently sponsored a panel of attorneys with extensive experience in construction contracting who discussed the best ways to enhance compliance for the construction industry, offering lessons applicable to a range of industries.  The panelists analyzed the current global anti-corruption enforcement climate, detailed best practices with regard to due diligence when contracting with third parties in foreign countries, provided steps that a company should take when faced with an FCPA issue, including investigation mistakes companies make, and examined the value of cooperation and voluntary disclosure.  See also “Survey Reveals the Contours and Content of Bribery in the U.K. Construction Industry,” The FCPA Report, Vol. 2, No. 20 (Oct. 9, 2013).

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  • From Vol. 2 No.23 (Nov. 20, 2013)

    Six Steps to Reduce Third-Party Anti-Corruption Risk

    A central theme running through many recent FCPA enforcement actions is the involvement of third parties in illegal activities.  The role third parties play (whether agents, resellers, distributors, subcontractors or consultants) make them the ideal facilitators for the transfer of funds, and companies can be liable for the bribes those third parties make.  Some companies may think they have it covered with a “no FCPA violations” clause and audit rights in the contract.  In today’s climate, however, that is simply not enough, nor is a “notice” in a partner program or guide that requires that the partner be familiar with the FCPA or U.K. Bribery Act.  Companies need a comprehensive approach to third-party risk reduction that includes more than just due diligence, but also risk assessments, training, business justification and monitoring.  This guest article by Farzad Barkhordari, CEO of Click 4 Compliance, discusses the dangers of doing business with third parties and outlines steps companies should take when engaging third parties, including examples of how the steps can be implemented in common scenarios.

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  • From Vol. 2 No.23 (Nov. 20, 2013)

    Seven Issues to Address When Performing Pre-Acquisition Due Diligence

    Protecting a company from anti-corruption liability is a paramount concern during any cross-border merger or acquisition.  In a recent seminar hosted by the Practising Law Institute, FCPA expert Sharie Brown, partner at Troutman Sanders LLP and a former prosecutor and compliance officer, identified seven critical issues to address when performing pre-acquisition due diligence, and discussed due diligence best practices generally.  See also “Checklist of Actions to Take and Factors to Consider When Conducting Pre-Merger Anti-Corruption Due Diligence,” The FCPA Report, Vol. 2, No. 19 (Sep. 26, 2013).

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  • From Vol. 2 No.20 (Oct. 9, 2013)

    Sample Questions to Ask Third Parties When Initiating Anti-Corruption Due Diligence

    This guest article, by Nardello & Co., provides an example of a questionnaire to be completed by third parties when a company is performing FCPA due diligence on such parties.  This questionnaire can be customized to specific circumstances, industries or geographies, and can serve as the basis for a risk assessment, further anti-corruption diligence or on-the-ground investigations.  The questionnaire includes corporate questions as well as individual questions.  For further insight on third-party due diligence, see “Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with the Principals of Nardello & Company,” The FCPA Report, Vol. 2, No. 19 (Sep. 26, 2013).

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  • From Vol. 2 No.20 (Oct. 9, 2013)

    Conducting Effective Due Diligence on Third Parties:  An Interview with Gwen Romack, Director of Global Anti-Corruption at Hewlett-Packard

    Many companies rely heavily on third parties when operating internationally.  Among other things, third parties serve as sales agents, handle customs issues, distribute product and educate the company on local practices.  Hiring third parties helps increase revenue, but also puts the company at significant risk of violating the FCPA.  If a third party bribes a foreign official, the company that hired the party can be held liable.  Effective initial due diligence is crucial in avoiding FCPA liability based on the acts or omissions of third parties, as is continuous monitoring of third parties.  Recognizing this, The FCPA Report is publishing a series of interviews with experts from different disciplines – from an outside law firm, an in-house compliance department and an investigative firm – on best practices when handling due diligence on third parties.  This article, the third in the series, includes our interview with Gwen Romack, Director, Global Anti-Corruption and U.S. Public Sector Compliance, at HP.  The first article in the series contained an interview with Alice Fisher, a partner at Latham & Watkins and former head of the Criminal Division at the DOJ.  The second article in the series contained an interview with Nardello & Co.’s FCPA team, a group of seasoned investigators with extensive experience in anti-corruption initiatives.

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  • From Vol. 2 No.19 (Sep. 26, 2013)

    Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with Principals at Nardello & Co.

    Most companies doing business multi-nationally must engage third parties to operate on the company’s behalf overseas, but in the current anti-corruption landscape, third parties can be a necessary evil.  Under the FCPA, a company can be held responsible for any improper payments made on its behalf by a third-party agent or partner, and many recent FCPA enforcement actions by the SEC and DOJ have involved the actions of third parties.  To best protect themselves from the risks associated with retaining third parties, companies must devote significant resources to the critical and complicated task of conducting due diligence.  How should a company efficiently allocate its due diligence resources?  How can a company effectively gather information in challenging jurisdictions?  What should a company do if it does not wish to inform a prospective agent that it is conducting due diligence?  The FCPA Report is publishing a series of interviews with experts from different disciplines on best practices for conducting anti-corruption due diligence on third parties.  This article, the second in the series, includes our interview with Nardello & Co.’s FCPA team: Daniel Nardello, Tara MacMillan, Nicholas Peck and Michael Ramos.  Nardello, MacMillan, Peck and Ramos are all seasoned investigators with extensive experience in anti-corruption initiatives.  Nardello and Ramos also both formerly served as prosecutors in the Southern and Eastern Districts of New York, respectively.  The first article in the series contained an interview with Alice Fisher, a partner at Latham & Watkins and former head of the Criminal Division at the DOJ.

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with Alice Fisher, Partner at Latham & Watkins

    Engaging third parties is necessary for most global businesses, but rife with corruption risk.  Under the FCPA, a company can be held responsible for any improper payments made on its behalf by a third-party agent or partner, and most of the recent FCPA enforcement actions by the SEC and DOJ have involved the actions of third parties – making the task of conducting due diligence on third parties one of the most critical and complicated issues in FCPA compliance.  How should a company efficiently allocate its due diligence resources?  What should a company do when its third-party partner is less than forthcoming?  Can a party engage a third party even if due diligence raises red flags?  The FCPA Report is publishing a series of interviews with experts from different disciplines on best practices for conducting anti-corruption due diligence on third parties.  This article, the first in the series, includes our interview with Alice Fisher, partner at Latham & Watkins.  Fisher specializes in white collar criminal investigations, internal investigations and advising clients on a range of criminal matters, including the FCPA.  She formerly served as Assistant Attorney General in charge of the Criminal Division of the DOJ.  See also “Designing Effective FCPA Compliance Programs and Monitoring Third Parties After the Guidance: An Interview with H. David Kotz, Michael Volkov and Paul Zikmund,” The FCPA Report, Vol. 2, No. 2 (Jan. 23, 2013).

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Anti-Corruption Professionals from GE, Abbott Laboratories and Navistar Share Proven Strategies on Third-Party Due Diligence, M&A, Training, Nepotism and Regional Risk

    Anti-corruption compliance can feel like a battlefield, with potential landmines at every turn.  But what do practicing in-house compliance professionals view as their biggest challenges?  What issues keep them up at night?  And, most importantly, what have they done to address those issues?  In a panel hosted by the American Conference Institute, three in-house compliance experts shared their practical experience.  They discussed specific challenges they have faced and outlined the strategies they used to effectively address those challenges.  The expert panelists included Matthew Hsu, Senior Counsel, Global Fraud and Anti-Corruption at Abbott Laboratories; Shannon Masson, Senior Counsel at Navistar, Inc.; and Kevin Matthews, Associate General Counsel at GE Oil and Gas.  See also “Insight from Top Companies and Practitioners on How They Are Addressing Current Anti-Corruption Issues, from Self-Reporting to Risk Assessments to Training,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013).

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    Anti-Corruption Due Diligence Checklist for Mergers and Acquisitions

    This checklist provides steps to guide companies through anti-corruption due diligence during a merger, acquisition or other transaction.  The authors of this checklist are Willkie Farr & Gallagher LLP partners Martin Weinstein, Robert Meyer and Jeffrey Clark, and this checklist was included in their treatise The Foreign Corrupt Practices Act: Compliance, Investigations and Enforcement.  In this and recent issues of The FCPA Report, we have serialized the chapter of the treatise dealing with anti-corruption issues in connection with mergers, acquisitions and other transactions.

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  • From Vol. 2 No.11 (May 29, 2013)

    Top Government and Private FCPA Practitioners Discuss Global Enforcement, Self-Reporting, Facilitation Payments, M&A Due Diligence, Jurisdiction and NPAs

    It’s been a busy year in FCPA compliance and enforcement – including leadership changes at the DOJ; the SEC’s first-ever NPA; an apparent decline in enforcement actions followed by a recent upswing; a growing, active global anti-corruption community; a new Canadian anti-corruption regime; and increased emphasis on merger and acquisition due diligence in the private sector, among other things.  At a recent panel hosted by the Practising Law Institute during its “Foreign Corrupt Practices Act and International Anti-Corruption Law Developments 2013” program, distinguished FCPA lawyers in both the private and public spheres distilled the most important trends in the field – and sometimes disagreed about what they mean for both outside and in-house counsel who deal with anti-corruption issues.  Mark Mendelsohn, partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP moderated the May 2, 2013 panel, with help from Richard Grime, a partner at O’Melveny & Myers LLP.  The panel was comprised of Roger Witten of WilmerHale and Danforth Newcomb of Shearman & Sterling LLP on the private side, and Jason Jones, Assistant Chief of the FCPA Unit, Fraud Section, Criminal Division at the DOJ, and Charles Cain, Deputy Chief, FCPA Unit, Division of Enforcement at the SEC, on the public side.

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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.7 (Apr. 3, 2013)

    A Guide to Anti-Bribery Issue Spotting in China: Enforcement Trends, Third-Party Risks, Gift Giving, Travel Expenses, Foreign Officials and Due Diligence

    Recent news reports, such as the downfall of Bo Xilai, as well as reports of watchdog groups such as Transparency International, emphasize the heightened corruption risk that companies doing business in China face.  Not only does the Chinese culture value gift giving and relationship building, but, because of the government structure, a large proportion of employees there are foreign officials.  This increases the range of business activity that may give rise to FCPA liability.  Plus, China’s top leaders have been paying more attention to official corruption and have taken steps to strengthen their own laws against bribery and step up enforcement.  A recent webinar focused on the topic of Chinese corruption risk.  The panelists, partners at Gibson Dunn & Crutcher LLP and Herbert Smith Freehills LLP, discussed: the current state of anti-corruption law and enforcement in China; China-specific anti-corruption issues; FCPA enforcement actions stemming from bribery in China; and ways to mitigate the FCPA risks of doing business there.  This article summarizes the key takeaways from the webinar, focusing in particular on the lessons for companies that do business in China and lawyers that represent such companies.

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    Six Steps for Converting a “Paper” FCPA Compliance Program into a Pervasive Culture of Anti-Bribery Compliance (Part Two of Two)

    Breathing life into even a comprehensive compliance manual is a challenge for most companies.  How can a company ensure that its program is proactive and dynamic, and that it is working at every level of the company?  How can the company ensure that third parties are being vetted at every stage of the process?  A recent webinar featuring H. David Kotz, Director at Berkeley Research Group and former Inspector General of the SEC, and Paul Zikmund, Director of Global Ethics and Compliance at Bunge Limited, tackled these and other hard questions head on, incorporating their long and relevant experience, as well as lessons from the recently-issued FCPA Guidance.  This article, the second in a two-part series, discusses the panelists’ advice regarding the best path forward after a risk score is assigned to a third party, including details about a “boots-on-the-ground” approach to due diligence; ways to monitor third parties on an ongoing basis; compliance advice for smaller companies; and how to incentivize employees to report complaints internally before going to the government.  The first article in the series discussed how the hypotheticals in the Guidance provide insight into the government’s enforcement strategy and what the “flavor of the month” FCPA cases are; six ways to ensure an FCPA compliance program is best-in-class; and integral steps to take when conducting risk assessments of third parties.  See “Six Steps for Converting a ‘Paper’ FCPA Compliance Program into a Pervasive Culture of Anti-Bribery Compliance (Part One of Two),” The FCPA Report, Vol. 2, No. 4 (Feb. 20, 2013).

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    Knowing Your Partners: Three Steps to Reduce FCPA Risk from Third Party Intermediaries

    The failure to pre-screen and monitor third party intermediaries (TPI) are the root causes of many recent FCPA investigations.  Thus, devising and implementing a consistent process for TPI due diligence and auditing, as well as understanding regulatory differences across the globe, are “must do” items for companies operating overseas.  Marc Miller, a partner in the New York forensic and risk consulting practice of KPMG LLP, recently shared his advice on identifying and mitigating risks involving TPIs in a webinar sponsored by compliance software developer Aravo Solutions, Inc. entitled “The Increasing Business Risk of FCPA Failures.”  Miller suggested that companies focus on three steps when it comes to third parties, each of which is described in detail in this article.  Miller also discussed his view on recent enforcement trends, informed by the Guidance.

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  • From Vol. 2 No.4 (Feb. 20, 2013)

    Six Steps for Converting a “Paper” FCPA Compliance Program into a Pervasive Culture of Anti-Bribery Compliance (Part One of Two)

    Recent enforcement actions have highlighted the bribery risk inherent in retaining third parties in foreign countries.  To adequately address such risks, companies need more than a compliance manual sitting on the shelf – they need a culture of compliance that pervades the organization.  Drafting a thorough and customized compliance manual is the first step in this process.  But how can companies bring a complete compliance program to life?  A recent webinar tackled this hard question head on, incorporating the long and relevant experience of the webinar participants, as well as lessons from the recently-issued FCPA Guidance.  This is the first article in a two-part series summarizing the key takeaways from the webinar.  This article discusses: how the hypotheticals in the Guidance provide insight into the government’s enforcement strategy and what the “flavor of the month” FCPA cases are; six ways to ensure an FCPA compliance program is best-in-class; and integral steps to take when conducting risk assessments of third parties.  The second article will address: steps to take after a risk score is assigned to a third party, including details about a “boots-on-the-ground” approach; ways to monitor third parties on an ongoing basis; compliance advice for smaller companies; and how to incentivize employees to report complaints internally before going to the government.  See also “Five Themes for General Counsel to Monitor with Respect to Dodd-Frank Whistleblowers and the FCPA,” The FCPA Report, Vol. 1, No. 9 (Oct. 3, 2012).

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  • From Vol. 2 No.2 (Jan. 23, 2013)

    Designing Effective FCPA Compliance Programs and Monitoring Third Parties After the Guidance: An Interview with H. David Kotz, Michael Volkov and Paul Zikmund

    Relationships with third parties are a constant pressure point for companies trying to comply with the FCPA.  How should the recently-issued FCPA Resource Guide change a company’s strategy for dealing with third parties, during and after initial due diligence?  On February 6, 2013, LeClairRyan, Berkeley Research Group (BRG) and The FCPA Report will host a complimentary CLE-eligible webinar that will address this and other pressing regulatory questions.  The webinar, entitled “After the Guidance: Designing Effective Compliance Programs and Monitoring Third Parties,” will feature three FCPA experts: former SEC Inspector General and current BRG Director H. David Kotz; LeClairRyan Partner Michael Volkov; and Paul Zikmund, Director of Global Ethics and Compliance at Bunge Limited.  Rebecca Hughes Parker, Editor-In-Chief of The FCPA Report, will moderate the webinar.  Topics to be covered include the FCPA Resource Guide’s specific requirements for compliance programs; how to review and enhance compliance programs to get maximum credit; and best practices for monitoring third parties in a cost-effective manner following initial due diligence.  To register for the webinar, click here.  As a preview of the webinar, The FCPA Report interviewed the three participants on topics including: the elements of an effective third party risk assessment and the categories it should include; the utility of open source databases; common mistakes companies make when designing risk assessments; streamlining risk assessments and due diligence; the differences between due diligence for third parties and for M&A transactions; and effective ways to monitor third parties after they are “on board.”  An edited transcript of our interview is included in this issue of The FCPA Report.

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  • From Vol. 1 No.12 (Nov. 14, 2012)

    Managing FCPA and Other Risks After Onboarding a Third Party

    A November 7, 2012 webinar sponsored by compliance and investigative software provider Catelas Inc. (Catelas) addressed steps that companies can take to manage FCPA and other compliance risks after they have “onboarded” a third party, i.e., conducted due diligence and formalized a business relationship with that party.  The webinar was moderated by Eddie Cogan, CEO & founder of Catelas.  The other speakers were Alan Morley, president of compliance risk consulting firm Adsideo LLC, and Michael Volkov, a shareholder at LeClairRyan.  This article summarizes the key points from that presentation.

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  • From Vol. 1 No.11 (Nov. 7, 2012)

    The New Landscape of Corporate Social Responsibility Regulation and Its Overlap with FCPA Compliance

    New legislative demands on companies go beyond just prohibiting bribery to impose broader social responsibility, such as certifying that their products were not made with child labor, that their employees and supply chain partners did not engage in any trafficking-related activities, and others.  A broad anti-corruption program can incorporate social responsibility and supply chain issues as well as FCPA and anti-bribery elements, as many of the risk areas and bad actors – third parties especially – overlap.  This article – based on a panel at the ABA’s Fifth Annual FCPA Institute in Washington, D.C. on October 19, 2012, as well as independent research – discusses the current international landscape of Corporate Social Responsibility (CSR) laws around the world; the potential tension between CSR and bribery laws; how CSR and FCPA violations overlap; how companies can adapt their FCPA compliance programs to integrate CSR and broader corruption issues; and the likely ways in which the new CSR laws will be enforced.

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  • From Vol. 1 No.7 (Sep. 5, 2012)

    A Seven-Step Process for Mitigating Corruption Risk When Engaging Third-Party Consultants in Brazil

    Brazil is a country with tremendous business promise, but considerable corruption risk.  On the upside, Brazil is the world’s sixth largest economy; will host the upcoming 2014 World Cup and the 2016 Summer Olympics; has a largely internally focused economy (and thus does not rely on exports to the same extent as China, for example); was relatively unscathed by the 2008-2009 financial crisis; is making a concerted push to upgrade its infrastructure (ports, roads, utilities, sporting venues, etc.); has a wealth of natural resources (including oil) and a growing ability to commercialize them; and more.  The Brazilian government recently estimated that its economy will grow 4.5 percent in 2013.  On the downside, however, corruption has been a drag on Brazil’s economy for as long as anyone can remember, and adversely affects other aspects of life in Brazil (notably, the uneven and sporadic administration of justice).  Brazil’s regulatory regime is infamously – many would say, unnecessarily – complicated, in particular with respect to tax.  (Avon’s internal FCPA investigation reportedly has uncovered, among other things, millions of dollars of payments made by Avon to tax consultants in Brazil.)  Accordingly, doing business effectively in Brazil requires navigating a highly complex regulatory regime.  In turn, navigating that regime often requires on the ground expertise, color and connections.  In short, it requires hiring local, third-party consultants, or despachantes, as they are called in Brazil.  A big business opportunity, a complex regulatory regime and third-party agents that are ubiquitous and virtually inevitable – anti-corruption professionals will recognize the current landscape in Brazil as a classic recipe for FCPA violations.  The key business question is how to avoid such violations while taking advantage of the considerable business opportunities that Brazil offers.  This article seeks to answer that question.  In particular, this article discusses: relevant precedent regarding third-party consultants in Brazil, including completed enforcement actions and ongoing investigations; industries in Brazil in which corruption risk is salient; specific corruption risks in Brazil; the rationale for the use of third-party consultants in Brazil; three “red flags” to be aware of when evaluating third-party consultants in Brazil; seven steps to take when retaining third-party consultants in Brazil (steps that were originally distilled by Navigant Consulting for Tyco International Ltd.); and suggestions for monitoring third-party consultants once they are hired.

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  • From Vol. 1 No.5 (Aug. 8, 2012)

    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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  • From Vol. 1 No.5 (Aug. 8, 2012)

    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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  • From Vol. 1 No.2 (Jun. 20, 2012)

    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

    This article includes the second part of The FCPA Report’s in-depth interview with Brian Loughman and Richard Sibery, leaders of the Fraud Investigation and Dispute Services Practice at Ernst and Young LLP (E&Y).  Our interview focused on the critical decision points for global companies confronting anti-bribery issues when operating abroad.  We covered a lot of ground and, in the process, conveyed much of the key substance of the recent book by Loughman and Sibery, Bribery and Corruption: Navigating the Global Risks (Wiley 2012).  In light of its length and depth, we have published our interview as a two-part series.  This second part covers topics including: the dangers of petty cash; the nuts and bolts of transaction testing; FCPA-specific due diligence considerations for mergers and acquisitions; whether a company should combine an anti-corruption audit with a general audit; and best interviewing and communication techniques.  The first part of the interview dealt with the challenges of designing an effective FCPA training program, techniques of effective third party due diligence and risk assessments and other actionable topics.  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).

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  • From Vol. 1 No.2 (Jun. 20, 2012)

    Data Systems and Solutions LLC Enters into Deferred Prosecution Agreement with the DOJ, Paying $8.82 Million in Fines for Bribing Foreign Officials in Lithuania

    Data Systems & Solutions LLC (DSS), a Virginia-based company that provides design, installation, maintenance and other services at nuclear and fossil fuel power plants, has agreed to a deferred prosecution agreement (DPA) with the DOJ.  This article explains the bribery scheme, DSS’s cooperation with the government and the penalty imposed.  Also, this article highlights two new mergers and acquisitions-related provisions included in this DPA that have not been present in recent DPAs.

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  • From Vol. 1 No.1 (Jun. 6, 2012)

    Training, Certification, Due Diligence, Customs Clearance and Facilitation Payments: An Interview with Leaders of Ernst & Young’s Fraud Investigation & Dispute Services Practice

    Brian Loughman is the Americas Leader of the Fraud Investigation & Dispute Services Practice at Ernst & Young LLP (E&Y), and Richard Sibery leads E&Y’s Fraud & Investigations Group within the Fraud Investigation & Dispute Services Practice.  In those roles, Loughman and Sibery have amassed deep, detailed and current experience with global anti-bribery investigations and remediation – the sort of practical know-how that only comes with extensive, on-the-ground experience.  The FCPA Report recently had the privilege of conducting a wide-ranging interview with Loughman and Sibery.  The general intent of the interview was to identify the most pressing anti-bribery issues facing global companies and specific strategies for addressing those issues.  In this sense, our interview sought to paraphrase some of the more important points made in the book recently written by Loughman and Sibery, Bribery and Corruption: Navigating the Global Risks (Wiley, 2012).  In particular, our interview covered: the challenges of designing an effective FCPA training program; the utility of certification programs; techniques of effective third party due diligence and risk assessments; issues surrounding customs payments, including the difficult issue of facilitation payments; the dangers of petty cash; the nuts and bolts of transaction testing; why M&A transactions pose unique due diligence challenges; whether an anti-corruption audit and a general audit plausibly may be combined; and best practices for interviewing and communications.  We are publishing the full transcript of our interview with Loughman and Sibery in two parts: the first part is included in this issue of The FCPA Report and the second part will be included in the next issue.

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