The FCPA Report

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

Articles By Topic

By Topic: Mergers & Acquisitions

  • From Vol. 6 No.7 (Apr. 12, 2017)

    Patricia Etzold of PwC Discusses Effective M&A Due Diligence That Won’t Hamper Future Relationships

    Performing deep and thorough due diligence on a company targeted for merger or acquisition is critical to minimize anti-corruption risk. But poking into the target’s books and records, and getting information from its employees, can be a delicate business. The FCPA Report spoke with Patricia Etzold, an NY forensic services market leader in PwC’s forensics practice, for tips on how a due diligence team can work efficiently and effectively to collect information on a target without compromising future relationships between the two parties. See “Brian Ong of FTI Discusses Creating an M&A Anti-Corruption Due Diligence Game Plan and Getting the Most Out of Target Interviews” (May 18, 2016).

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  • From Vol. 6 No.2 (Feb. 1, 2017)

    Successor Liability in the Spotlight With Mondelēz’s $13M FCPA Settlement After Purchase of Cadbury India 

    Mondelēz International, Inc., has settled anti-corruption allegations with the SEC stemming from subsidiary Cadbury Limited’s expansion of a chocolate plant in India. U.S.-based Mondelēz, which acquired U.K.-based Cadbury in 2010, agreed to pay a civil penalty of $13 million to settle the allegations concerning payments made to a third-party agent retained by Cadbury India. The deal is notable for its illumination of acceptable levels of pre-acquisition due diligence and for the fact that only civil penalties were incurred, with no mention of disgorgement, practitioners told The FCPA Report. For more on anti-corruption in India, see “Experts Discuss the Corruption Climate in India and Give Six Practical Tips to Mitigate Risk” (Mar. 9, 2016); “Regional Risk Spotlight: Jay Holtmeier of WilmerHale Explains How to Navigate Bureaucratic Corruption Risks in India” (Sep. 23, 2015) and “Doing Business in India: Avoiding Corruption Risks and Monitoring Compliance Programs” (Jun. 11, 2014).

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  • From Vol. 5 No.19 (Sep. 28, 2016)

    SEC Settles FCPA Case With the Former CEO of Harris Corp.’s Chinese Subsidiary but Declines to Go After Harris

    Harris Corp., a Florida-based international communications and information technology company, found an unwelcome surprise after it purchased CareFx Corp. During a post-acquisition audit in 2012, Harris discovered that the Chinese division of its new subsidiary was engaged in an ongoing bribery scheme. Harris reported the wrongdoing to the SEC and DOJ, cooperated and remediated and subsequently avoided civil and criminal FCPA charges, while the former CEO of the Chinese subsidiary settled charges with the SEC for $46,000. The SEC asserted that the former CEO condoned the bribery scheme and failed to disclose it to Harris. “[F]or the first time in a case involving only FCPA misconduct, the authorities have given a large public multinational company a full declination after charging a former employee with FCPA violations that, on their face, would have resulted in the past in a multi-million dollar enforcement action against the company,” Robert Kent, a partner at Baker & McKenzie and lead counsel for Harris in the CareFx China investigation, told The FCPA Report. See also “PetroTiger’s Counsel Reveals the Defense Strategy That Led to a DOJ Declination” (Jul. 22, 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. 5 No.5 (Mar. 9, 2016)

    Canadian Health Science Company and Employee Settle Civil FCPA Charges in Failed Quest for Drug Distribution in Russia

    Hiring the purported friend of a company employee to facilitate the distribution of a liver treatment drug in Russia is behind the SEC’s FCPA settlements with Nordion (Canada) Inc. and employee Mikhail Gourevitch. Gourevitch allegedly orchestrated a scheme for his “friend” to pay bribes to Russian officials to get the approval, hid the extra costs from the company and received a kickback. The SEC said weak internal controls at Nordion (the predecessor-in-interest to Nordion (Canada), which purchased Nordion during this investigation) allowed the scheme to go undetected, including payments to offshore bank accounts. Nordion ultimately was unable to distribute the drug and made no profits. See “Ten Steps A Company Can Take to Mitigate Corruption Risk When Entering a New Market (Part One of Two)” (Jun. 24, 2015); Part Two (Jul. 8, 2015).

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  • From Vol. 4 No.11 (May 27, 2015)

    Prosecutors and Defense Lawyers Discuss FCPA Risk Areas, Government Expectations and the Length of Investigations

    At ACI’s 9th Advanced Forum on FCPA and Anti-Corruption for the Life Sciences Industry, FCPA experts opined on enforcement for the second half of 2015 and the speed of government investigations, and warned that third parties and mergers and acquisitions still pose major risks.  The panel was moderated by Bret Campbell, a partner at Cadwalader, Wickersham & Taft, and included Daniel Kahn, assistant chief of the DOJ’s FCPA Unit and Timothy Peterson, a partner at Murphy & McGonigle and previously senior counsel in the SEC’s Division of Enforcement.  See also “Top FCPA Officials Talk Compliance Tips and the Defense Bar Weighs In,” The FCPA Report, Vol. 3, No. 25 (Dec. 17, 2014).

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  • From Vol. 4 No.5 (Mar. 4, 2015)

    $16 Million Goodyear SEC Settlement Highlights M&A Risks and Subsidiary Liability

    Goodyear Tire & Rubber Company has agreed to pay $16 million to settle civil FCPA charges, resolving allegations that it failed to detect more than $3.2 million in improper payments made by its Kenyan and Angolan subsidiaries.  The SEC says that due diligence failures relating to the acquisition of the Kenyan subsidiary and weak internal controls allowed the bribery to occur unchecked.  Goodyear received credit for self-disclosure, cooperation and remediation.  “Goodyear did very well,” Robert Appleton, a partner at Day Pitney, told The FCPA Report.  The company “got the best result I think it could have hoped for,” he said.  See also “Seven Issues to Address When Performing Pre-Acquisition Due Diligence,” The FCPA Report, Vol. 2, No. 23 (Nov. 20, 2013).

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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.25 (Dec. 17, 2014)

    Top FCPA Officials Talk Compliance Tips and the Defense Bar Weighs In

    Selling your company’s business side on compliance; the key indicators of a successful compliance program; and the government’s view of M&A risks were all on the agenda of the FCPA enforcement officials' annual fireside chat with the FCPA defense community.  SEC Chief Kara Brockmeyer (FCPA Unit, Enforcement Division), and DOJ Deputy Chief Patrick Stokes (Fraud Section of Criminal Division) were both on hand for the “year in review” discussion at American Conference Institute’s recent International Conference on the Foreign Corrupt Practices Act.  The FCPA Report discussed the regulators’ presentation with prominent defense practitioners, who provided a few caveats to the regulators’ pronouncements.  In our previous issue, we covered Stokes’ and Brockmeyer’s discussion of enforcement priorities and the defense bar’s reaction.  Our coverage of last year’s “year in review” panel can be found here and here.

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  • From Vol. 3 No.23 (Nov. 19, 2014)

    FCPA Liability Does Not Reach Successor When Target’s Misconduct Was Beyond FCPA’s Jurisdiction, DOJ Affirms, Outlining M&A Best Practices

    The SEC/DOJ FCPA Guidance says that an acquisition does not create liability where none existed before.  In its second Opinion Procedure Release of 2014, the DOJ reaffirms the limits of FCPA liability, announcing that it would not take enforcement action against a U.S. acquiring company based on its foreign target’s pre-acquisition conduct, which was not subject to the FCPA’s jurisdiction before the acquisition.  The company explained its pre-acquisition diligence and its post-acquisition plan to bring the target in compliance.  The release comes at a time when the DOJ and SEC are facing judicial scrutiny of their interpretation of the jurisdiction of the FCPA.  See “Hoskins Provides an Opportunity for Judicial Determination of the FCPA’s Jurisdiction,” The FCPA Report, Vol. 3, No. 20 (Oct. 8, 2014); “How Broad Is the FCPA’s Reach Over the Acts of Foreign Nationals?,” The FCPA Report, Vol. 2, No. 6 (Mar. 20, 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)

    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.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.17 (Aug. 21, 2013)

    Unforeseen Corruption Liability: How to Avoid a Post-Acquisition “Oh My!” Moment

    In the “Wizard of Oz,” when Dorothy, the Scarecrow and the Tin Man are already deep in the haunted forest, Dorothy asks her guides what dangers could be present.  “Oh my!” she exclaims when she is told of the perils around her.  It is too late to turn back.  Such is the plight of many public companies when they acquire or merge with entities doing business in countries with a high corruption risk.  Without proper anti-corruption guidance, many companies discover too late that they have placed themselves – and their shareholders – in great potential danger by effectively buying a target’s legal liability for past FCPA violations.  The legal liability extends well beyond the U.S., as many countries such as the U.K. and, recently, Brazil, have enacted their own anti-corruption laws.  In a guest article, John Carney and Christina Tsesmelis, partner and senior associate, respecitvely, at BakerHostetler LLP, discuss best practices for merger and acquisition due diligence in light of U.S. precedent and the newly-passed Brazilian law.

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Five 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 part of the series discusses: the FCPA risks faced by minority interest holders, and additional compliance measures that may be needed when an individual investor or one or more employees or representatives of a private equity firm serve on the board of directors of an investment or portfolio company.  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.  The third installment in the series provided 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 provided advice on steps to take if a compliance issue is discovered and contractual safeguards to include in deal documents to minimize corruption risk.  The fourth part of the series addressed corruption risk in non-U.S. investments, including steps to take during pre-investment due diligence, contractual safeguards to mitigate risk and post-investment responsibilities.

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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.12 (Jun. 12, 2013)

    Sample Anti-Corruption Representations and Warranties for Mergers and Acquisitions

    These sample anti-corruption representations and warranties are designed to aid in the drafting of merger or acquisition agreements or other transaction documents.  The drafters of these sample representations and warranties are Willkie Farr & Gallagher LLP partners Martin Weinstein, Robert Meyer and Jeffrey Clark, and these samples were 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)

    Digging Deep into M&A Anti-Corruption Due Diligence Best Practices: An Interview with William Michael, Partner at Mayer Brown LLP

    Anti-corruption due diligence before, during and after a merger or acquisition is an area of increasing focus for companies.  Members of the FCPA bar report that more and more of their work involves ensuring target companies are free from corruption, and handling the situation if corruption is discovered.  The FCPA Report recently spoke with William Michael, Co-Chair of the White Collar Defense & Compliance group at Mayer Brown LLP in Chicago, about his experience with these issues.  Previously, Michael served for more than 10 years as a federal prosecutor with the Department of Justice.  Among other things, Michael discussed important questions to ask during a risk assessment; strategies for negotiating for more access to the target company during due diligence; the effect of blocking statutes on due diligence; the risks and benefits of voluntarily disclosing a violation before or after a transaction; whether and how the Resource Guide clarified best practices; and advice on increasing the odds of achieving a declination from the SEC or DOJ if misconduct is discovered post-transaction.  See also “How to Perform Effective FCPA Due Diligence in Private Equity Transactions and Strategic Mergers and Acquisitions,” The FCPA Report, Vol. 2, No. 5 (Mar. 6, 2013).

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  • From Vol. 2 No.11 (May 29, 2013)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Four 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 part of the series addresses corruption risk in non-U.S. investments, including steps to take during pre-investment due diligence, contractual safeguards that will mitigate risk and post-investment responsibilities.  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.  The third installment in the series provided 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 provided advice on steps to take if a compliance issue is discovered and contractual safeguards to include in deal documents to minimize corruption risk.

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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.10 (May 15, 2013)

    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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  • From Vol. 2 No.9 (May 1, 2013)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Two 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 entitled 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 members of the FCPA bar.  This issue contains the second installment in the series, which analyzes post-transaction risk, including the concept of willful blindness and the application of the FCPA’s accounting provisions to mergers and acquisitions.  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.  See “Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part One of Five),” The FCPA Report, Vol. 2, No. 8 (Apr. 17, 2013).

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  • From Vol. 2 No.8 (Apr. 17, 2013)

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

    FCPA compliance is a paramount consideration in any cross-border merger, acquisition or investment transaction.  The U.S. government has emphasized the importance of conducting due diligence and implementing compliance measures in connection with overseas corporate transactions through its enforcement actions, DOJ Opinion Procedure Releases and the recent Guidance.  In addition, the compliance practices of individual investors and private equity firms that invest funds overseas have come under scrutiny.  Pre-transaction due diligence, anti-corruption representations and warranties in agreements with counterparties and prompt implementation after closing of any necessary changes to the acquisition or investment target’s anti-corruption compliance program are key to mitigating FCPA risk.  In light of the central role of FCPA compliance in cross-border transactions, The FCPA Report is serializing (in five parts) a chapter from a recently published treatise entitled 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 members of the FCPA bar.  This first installment in the series provides an overview of the corruption liability inherent in M&A and investment transactions, drawing on the authors’ professional experience and recent enforcement actions.  This installment also addresses mitigation of corruption risk before transactions occur, focusing on successor liability, ratification, acts in furtherance of corruption and investment valuation.

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    How to Perform Effective FCPA Due Diligence in Private Equity Transactions and Strategic Mergers and Acquisitions

    Corporations conducting mergers and acquisition, organizations that provide financing and even companies that are simply acquiring assets risk violating the FCPA and other anti-corruption laws if they fail to perform adequate due diligence.  A panel of experts at the New York City Bar, including both litigators and transactional attorneys, recently shared their insights on how to structure and conduct various types of deals in a manner that protects the acquirer from FCPA liability.  The panelists offered advice on, among other things, the different forms of M&A transactions; addressing the challenges of performing due diligence for anti-corruption purposes; determining how much due diligence is necessary; negotiating for the right to perform sufficient due diligence; performing post-acquisition due diligence; protecting the acquirer through language in the deal documents; and FCPA liability for private equity investors.

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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.14 (Dec. 12, 2012)

    Sullivan & Cromwell Partners Discuss Managing FCPA Risk in Cross-Border Mergers and Acquisitions

    On December 10, 2012, the Practising Law Institute (PLI) hosted a webinar entitled “FCPA Due Diligence in Cross Border Transactions.”  The presenters were Francis J. Aquila and Krishna Veeraraghavan, both partners in Sullivan & Cromwell LLP’s mergers and acquisitions group.  The PLI program provided a helpful overview of the importance and mechanics of performing anti-corruption due diligence as part of a cross-border merger or acquisition.  Among other things, the presenters discussed: successor liability issues; strategies for reducing compliance risks; how to design an FCPA due diligence plan; key questions to ask when performing pre-acquisition due diligence; what to do if due diligence uncovers corruption; how to structure a deal to avoid FCPA liability; and appropriate post-acquisition conduct.

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  • From Vol. 1 No.14 (Dec. 12, 2012)

    Integral Elements of Proactive and Pre-Merger Anti-Corruption Forensic Audits

    The last five years of FCPA enforcement have increased the need for comprehensive and effective compliance programs and controls designed to detect, deter and remediate instances of bribery and corruption.  A hidden jewel for some organizations is the use of the forensic audit function to help achieve these objectives.  A properly staffed and well-trained forensic audit team can provide a positive return on investment if used appropriately to satisfy the new imperative of a well-functioning compliance program.  Conducted competently, forensic audits can go a long way toward preventing violations, detecting violations (including in the merger and acquisition process), aiding the investigative and remedial process, substantiating the existence, amounts and recipients of payments and ultimately helping a company earn credit when negotiating with the government or self-reporting discovered violations.  See “When and How Should Companies Self-Report FCPA Violations? (Part Two of Two),” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).  In a guest article, Paul E. Zikmund, Global Director, Ethics and Compliance, at Bunge Limited, discusses the core elements of proactive FCPA audits, as well as the key mechanics of pre-merger anti-corruption forensic audits.

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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)

    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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