The FCPA Report

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

Articles By Topic

By Topic: Whistleblowers

  • From Vol. 6 No.2 (Feb. 1, 2017)

    A New Era in FCPA Disclosure

    In the past few years, U.S. enforcement authorities have heightened their rhetoric surrounding voluntary and complete self-disclosure. New policies and rules issued by the government strongly encourage and incentivize disclosure in unprecedented ways. At the same time, an alarming increase in data leaks and the ever-present danger of whistleblowers threaten to reveal or force the disclosure of company information and secrets at every turn. In a guest article, Lara A. Covington, a partner in the Washington, D.C., office of Holland & Knight, and Lisa A. Prager, a partner in the firm’s New York office, explain that the net effect of these internal and external pressures is that U.S. companies have never faced more inducements to disclose potential FCPA violations nor higher risks of inadvertently disclosing them. See The FCPA Report’s three-part series on the DOJ’s Pilot Program: “Going Deep on the Fraud Section’s FCPA Pilot Program” (Apr. 20, 2016); “How Will the Fraud Section’s Pilot Program Change Voluntary Self-Reporting?” (May 4, 2016); and “Earning Cooperation Credit Under the Fraud Section’s FCPA Pilot Program” (May 18, 2016).

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  • From Vol. 5 No.20 (Oct. 12, 2016)

    Subsidiary Corruption, a Troublesome Joint Venture and a Fired Whistleblower: AB InBev’s Route to a $6 Million SEC Settlement

    Anheuser-Busch InBev (AB InBev) recently settled with the SEC to resolve FCPA books and records violations relating to the actions of its Indian joint venture and internal controls violations relating to its Indian subsidiary. The brewing company’s settlement highlights, once again, that companies operating in high-risk markets cannot be complacent about the activities of their foreign cohorts, whether that be subsidiaries, joint venture partners or third parties operating on behalf of the company. The settlement also highlights the dangers of interfering with whistleblowers. AB InBev was charged with impeding a whistleblower through the provisions of an employee separation agreement. See “Regional Risk Spotlight: Jay Holtmeier of WilmerHale Explains How to Navigate Bureaucratic Corruption Risks in India” (Sep. 23, 2015).

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  • From Vol. 5 No.20 (Oct. 12, 2016)

    The SEC as the Whistleblower Program’s Advocate: Severance Agreements and FCPA Investigations

    The recent close of the SEC’s fiscal year added notable guidance to a significant period of FCPA enforcement, including several cases that reveal a new feature of the SEC’s efforts to protect whistleblowers. These actions imposed penalties on companies for severance agreements that restricted the ability of employees to seek financial rewards for reporting potential violations of the securities laws to the SEC. They provide further evidence not only of the SEC’s dim view of companies’ efforts to undermine its growing Whistleblower Program, but also of the agency’s desire and ability to use Rule 21F-17 to combat them. In a guest article, Cravath partner David M. Stuart and his associate Kyle S. Gazis explain why these cases are particularly important precedents for companies with worldwide operations. They also analyze the SEC’s latest efforts to defend the Whistleblower Program and the resulting effects on companies seeking to address the risks of FCPA violations. See “Addressing Employees’ Perception That Internally Reporting Compliance Violations Is Futile” (Aug. 10, 2016).

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  • From Vol. 5 No.16 (Aug. 10, 2016)

    Addressing Employees’ Perception That Internally Reporting Compliance Violations Is Futile 

    FCPA investigations triggered by whistleblower reports are increasingly likely as the SEC whistleblower program matures. According to the 2015 Annual Report on the Whistleblower Program, 80 percent of employee or former employee whistleblowers raised their concerns internally to their supervisors or compliance personnel (or otherwise understood that the company knew of the violations) before reporting their tips to the Commission. In a guest article, Cravath’s David Stuart and Harry Black discuss why employees often feel compelled to report violations outside of the company after they have reported internally and suggest how companies can incentivize prompt internal reporting and decrease external disclosures without running afoul of SEC rules prohibiting a company or individual from impeding reports to the SEC. See “Implications of the SEC’s First-Ever Whistleblower Protection Enforcement Action” (Apr. 15, 2015). 

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  • From Vol. 5 No.5 (Mar. 9, 2016)

    Failure to Heed a CCO Whistleblower’s Warnings Leads to Olympus’ $646 Million Anti-Kickback, FCA and FCPA Settlement

    The DOJ’s recent settlement with medical-device distributor Olympus demonstrates that corruption is not confined to emerging or high-risk markets. Rather, when a company fails to implement effective compliance measures, corruption can occur anywhere, even in the United States. From 2006 to 2011, Olympus Latin America (OLA) attempted to increase medical equipment sales in Central and South America by paying health care practitioners at government-run facilities more than $3 million. Simultaneously, in North America, Olympus employees were paying kickbacks to doctors and hospitals. The charges against Olympus resulted from a False Claims Act lawsuit filed by its former chief compliance officer who allegedly first-reported the claims internally – Olympus executives apparently failed to heed his warnings. See “Whistleblower Advocate and Experts at Gibson Dunn Discuss the Current State of the Dodd-Frank Whistleblower Program” (Jan. 13, 2016).

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  • From Vol. 5 No.1 (Jan. 13, 2016)

    Whistleblower Advocate and Experts at Gibson Dunn Discuss the Current State of the Dodd-Frank Whistleblower Program

    According to top officials at both the DOJ and SEC, whistleblowers are an ever-increasing point of origination for FCPA cases. Whistleblowers and their attorneys are becoming more sophisticated about how – and when – they present information to the government, and the possibility of large awards based on the Dodd-Frank whistleblower program is attracting new tips from across the globe. A recent program sponsored by Securities Docket and Gibson, Dunn & Crutcher examined the state of the Dodd-Frank whistleblower program and provided practical insights on the reporting and award-claim process. The discussion was led by Gibson Dunn partner F. Joseph Warin and featured John W.F. Chesley, also a Gibson Dunn partner, and Erika A. Kelton, a partner at Phillips & Cohen who represents whistleblowers. For more from Chesley and Warin, see “Five Themes for General Counsel to Monitor With Respect to Dodd-Frank Whistleblowers and the FCPA” (Oct. 3, 2012).

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  • From Vol. 4 No.26 (Dec. 16, 2015)

    2015 Office of the Whistleblower Report Highlights a Banner Year for Whistleblowers

    The whistleblower program continues to bear fruit for SEC investigations, according to the recently released 2015 Annual Report to Congress on the Dodd-Frank Whistleblower Program.  Fiscal year 2015 had the most whistleblower tips since the program began in 2011, as well as the highest individual and aggregate award payments to date.  For coverage of previous annual reports from the Office of the Whistleblower, see “Preparing for the Increasing Role of Whistleblowers in FCPA Enforcement,” The FCPA Report, Vol. 4, No. 2 (Jan. 21, 2015) and “Key Takeaways from the 2013 Office of the Whistleblower Report,” The FCPA Report, Vol. 2, No. 25 (Dec. 18, 2013).

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  • From Vol. 4 No.25 (Dec. 2, 2015)

    Top FCPA Enforcers Discuss Evolving and Diverging Enforcement Approaches and the Defense Bar Responds

    International cooperation and whistleblowers are changing the government’s investigations and resolutions according to top FCPA enforcers.  Due to these changes – and the ever-increasing sophistication of both the SEC and DOJ – the agencies’ goals, strategies and tactics continue to evolve and diverge based on their statutory remits.  At this year’s ACI FCPA conference, Kara Brockmeyer, Chief of the FCPA Unit of the Division of Enforcement of the SEC, and Patrick Stokes, Deputy Chief of the Fraud Section of the Criminal Division of the DOJ, distilled the government’s enforcement priorities in their “Year in Review” discussion, and The FCPA Report spoke to several anti-corruption defense experts for their reactions.  Stokes and Brockmeyer also discussed what they expect from compliance programs as well as the incentives they offer companies to self-report, cooperate and remediate, which will be discussed at length, with input from the FCPA bar, in our next issue.  For coverage of last year’s panel see “Top FCPA Enforcers Tout Voluntary Disclosure and Warn About International Cooperation; The Defense Bar Responds,” The FCPA Report, Vol. 3, No. 24 (Dec. 3, 2014) and “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.15 (Jul. 22, 2015)

    EY’s Asia-Pacific Fraud Survey Finds Correlation Between Talent Retention and Ethical Business Conduct

    EY's 2015 Asia-Pacific fraud survey examined the prevalence of third-party and cybersecurity risks and found that although an ethical business culture can help retain talent, significant weaknesses persist in the anti-corruption measures of organizations in the region, especially when it comes to whistleblowers.  This article summarizes the key takeaways from the report.  See also “Ernst & Young’s 2013 Asia-Pacific Fraud Survey Highlights Disconnect Between Company Policies and Employee Perceptions,” The FCPA Report, Vol. 2, No. 20 (Oct. 9, 2013).

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  • From Vol. 4 No.8 (Apr. 15, 2015)

    Implications of the SEC’s First-Ever Whistleblower Protection Enforcement Action

    The SEC has announced its first enforcement action under a rule prohibiting companies from impeding an individual’s efforts to report a potential securities law violation to the SEC.  The Commission’s settlement with KBR over language in its form confidentiality agreement signals that the SEC intends to take a sweeping view of the whistleblower protection rule.  In a guest article, David M. Stuart and Omar K. Madhany, partner and associate, respectively, at Cravath, Swaine & Moore LLP, analyze the decision and suggest steps that companies can take to ensure compliance with the rule.  See also “Preparing for the Increasing Role of Whistleblowers in FCPA Enforcement,” The FCPA Report, Vol. 4, No. 2 (Jan. 21, 2015). 

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  • From Vol. 4 No.2 (Jan. 21, 2015)

    Preparing for the Increasing Role of Whistleblowers in FCPA Enforcement

    The growth in the Dodd-Frank Whistleblower Program, as revealed in the 2014 Whistleblower Report, has a diverse group of stakeholders – companies, whistleblowers, counsel, the SEC and Congress – clamoring for answers about the scope and application of the Dodd-Frank whistleblower provisions.  In a guest article, David M. Stuart and Omar K. Madhany, partner and associate, respectively, at Cravath, Swaine & Moore LLP, analyze the provisions and how they have been enforced and interpreted.  They also discuss how companies can encourage internal reporting and the importance of ensuring that employee agreements are in compliance with the whistleblower provisions.  See also “Seven Lessons from FCPA Enforcement Trends from FCPA Experts in the Public and Private Sector (Part One of Two),” The FCPA Report, Vol. 3, No. 8 (Apr. 16, 2014).


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  • From Vol. 4 No.1 (Jan. 7, 2015)

    Top Practitioners Survey Dodd-Frank Whistleblower Landscape

    Large awards to whistleblowers under rhe Dodd-Frank whistleblower program, such as the recent $57 million award to former Countrywide Financial executive Edward O’Donnell,  raise the visibility of the Dodd-Frank program, heightening the need for companies to understand the provisions.  A recent program sponsored by Securities Docket and the law firm Gibson Dunn & Crutcher discussed salient aspects of the Dodd-Frank program, including how the whistleblower provisions have functioned since their adoption and key elements of the reporting and award processes.  The panelists, Gibson Dunn partners F. Joseph Warin and John W.F. Chesley and Phillips & Cohen partner Erika A. Kelton, also offered insights drawn from recent whistleblower awards and highlighted critical unresolved issues under that regime.  For more insight from Warin and Chesley on whistleblowers, see “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. 3 No.16 (Aug. 6, 2014)

    International Anti-Corruption Enforcement Roundup

    In this issue, we cover the sentencing of four Innospec executives in the U.K. for bribes in Indonesia and Iraq, and the Wells Notice issued to Cobalt International Energy by the SEC regarding an FCPA investigation into activity in Angola.  Plus, more anti-corruption enforcement activity against Alstom: bribery charges will reportedly be leveled against ex-employees by the U.K.’s SFO and in Brazil, Sao Paulo prosecutors allege Alstom bribed an ex-government official through a Swiss account.  Also, developments in two FCPA-related individual cases in the U.S. – French citizen Frederic Cilins gets 24 months in prison for obstructing an FCPA investigation and the former BizJet president pleads guilty to bribing officials in Mexico and Panama.  The South Korean government sets up a task force to stamp out corruption.  And, adding to GSK’s corruption troubles: a whistleblower alleges the company paid bribes in Syria.

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  • From Vol. 3 No.15 (Jul. 23, 2014)

    Sanctions for Retaliating Against Whistleblower Highlight the Importance of Incentivizing Internal Reporting

    What, if anything, can companies do with respect to a whistleblower’s employment without violating the anti-retaliation provisions in the Exchange Act?  In a recent order, the first of its kind, the SEC sanctioned a private fund manager for taking adverse employment actions against a whistleblower who reported principal transaction compliance shortcomings to the SEC.  In light of this decision, what legal or operational options are available to a company that fails to incentivize internal reporting of FCPA and other compliance violations?  See also “Seven Steps Companies Can Take to Incentivize Internal Reporting of FCPA Violations,” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012). 

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  • From Vol. 3 No.8 (Apr. 16, 2014)

    Seven Lessons from FCPA Enforcement Trends from FCPA Experts in the Public and Private Sector (Part One of Two)

    At a recent panel discussion sponsored by the Knowledge Group, former FCPA prosecutors, a current SEC lawyer and an economist shared their insights on what recent FCPA enforcement actions mean for companies, along with advice for initiating and conducting FCPA investigations. This article, the first of a two-part series, contains seven lessons the panelists have extracted from recent FCPA settlements and trends; initial decisions that a company faces when it discovers a potential violation; and the role of whistleblowers in revealing potential violations. The second part of the series will cover the panelists’ insights on initiating internal investigations; voluntary disclosures; multi-jurisdictional concerns; negotiations with regulators; remediation efforts and calculation of fines. See also “Top DOJ and SEC Officials Discuss FCPA Enforcement Priorities and Mechanics,” The FCPA Report, Vol. 3, No. 7 (Apr. 2, 2014).

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  • From Vol. 2 No.25 (Dec. 18, 2013)

    Key Takeaways from the 2013 Office of the Whistleblower Report

    It’s been two years since the Dodd-Frank Whistleblower Program – which gives whistleblowers the opportunity to obtain a financial reward – was implemented.  There have been limited rewards under the program (though one reward was certainly noteworthy in its size, $14 million), but whistleblower tips have increased, as many have expected, forcing companies to take note.  The 2013 Annual Report to Congress on the Dodd-Frank Whistleblower Program, recently issued by the SEC, provides information on the tips received and the awards.  Some experts say the Report is too vague and more information is needed for companies to fully understand how to best handle the new law.  This article summarizes the key takeaways from the Report and includes insight from a recent webinar hosted by Securities Docket featuring F. Joseph Warin, partner at Gibson Dunn LLP, and Jay Perlman, Director at Navigant Consulting, Inc.  See “Top FCPA Practitioners Share Strategies for Detecting, Preventing and Responding to Whistleblower Allegations,” The FCPA Report, Vol. 2, No. 13 (Jun. 26, 2013). 

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  • From Vol. 2 No.24 (Dec. 4, 2013)

    Charles Duross and Kara Brockmeyer Discuss Five FCPA Enforcement Trends That Matter to Regulators: Individual Prosecutions, Administrative Proceedings, Global Coordination, Corporate Monitors and Third Parties (Part One of Two)

    At ACI’s International Conference on the Foreign Corrupt Practices Act in Washington D.C., Charles Duross, Deputy Chief of the Fraud Section of the Criminal Division of the DOJ, and Kara Brockmeyer, Chief of the FCPA Unit of the Division of Enforcement of the SEC, provided candid and detailed insight into elements of FCPA enforcement that matter to leading regulators.  They discussed the government’s charging philosophies, investigative techniques and enforcement priorities, and dispensed advice about how companies can avoid or decrease FCPA penalties.  This article summarizes the most noteworthy insights shared by Duross and Brockmeyer, and discusses the practical implications of the regulators’ points.  See also “Five Lessons from 2013 FCPA Enforcement: Transaction Monitoring, International Cooperation, Documenting Hiring Decisions, Risk Assessments and Individual Prosecutions,” The FCPA Report, Vol. 2, No. 22 (Nov. 6, 2013).

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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.22 (Nov. 6, 2013)

    New York Judge Rules that Foreign FCPA Whistleblowers Are Not Protected Under Dodd-Frank’s Anti-Retaliation Provision

    Does Dodd-Frank’s Anti-Retaliation Provision protect a foreign employee who reports FCPA violations based on conduct that occurred extraterritorially?  A court in the Southern District of New York recently became the second district court in the country to say that it does not.  Judge William H. Pauley III granted Siemens A.G.’s motion to dismiss Meng-Lin Liu’s case against it on October 21, 2013, holding that whistleblower protection does not apply to activity outside the United States, but declining to opine on whether Dodd-Frank’s definition of “whistleblower” extends to those who report to the SEC after the alleged retaliation has occurred.  Liu, a Taiwanese resident who worked for Siemens’ Chinese subsidiary, alleges that he was retaliated against after he internally reported a potential FCPA violation regarding an alleged kickback scheme in China and Korea.  He reported it to the SEC after he was terminated.  Siemens has a checkered FCPA history, having paid a record-breaking fine in 2008.  See “Lessons Learned on Crafting Compliance Programs from the Largest FCPA Case in History,” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012).  For more on Dodd-Frank’s whistleblower provisions, see “Seven Steps Companies Can Take to Incentivize Internal Reporting of FCPA Violations,” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012). 

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  • From Vol. 2 No.13 (Jun. 26, 2013)

    Top FCPA Practitioners Share Strategies for Detecting, Preventing and Responding to Whistleblower Allegations

    Organizations operating internationally are exposed to seemingly endless sources of complainants – employees, former employees, third-party sales agents, suppliers, distributors and even competitors could potentially become whistleblowers.  How, in such an environment, does a company decrease the likelihood that it will be the subject of a whistleblower complaint?  Corporate whistleblowers remain one of the top concerns of companies subject to the FCPA.  That concern is fueled by the recent implementation of the Dodd-Frank Act’s reward program, which awarded its second money prize on June 12, 2013 to whistleblowers who provided information about a “sham” hedge fund and its chief executive.  Experts predict that more awards are soon to follow.  During two recent panels – one held at the American Bar Association’s Fifth Annual National Institute on Internal Corporate Investigations and Forum for In-house Counsel, and the other at the Practising Law Institute’s Foreign Corrupt Practices Act and International Anti-Corruption Law Developments 2013 program – FCPA practitioners discussed strategies for identifying, preventing and addressing whistleblower allegations.  See also “Specific Strategies from Pfizer, Barrick Gold and Other Leading Companies for Handling Actual and Potential FCPA Whistleblowers,” The FCPA Report, Vol. 1, No. 11 (Nov. 7, 2012).

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  • From Vol. 2 No.7 (Apr. 3, 2013)

    How to Maintain an Anti-Corruption Reporting Hotline That Complies with Data Privacy Laws

    The November 2012 FCPA Resource Guide emphasized that a confidential reporting hotline is one of the hallmarks of an effective FCPA compliance program.  However, operating such a hotline requires a company to collect personal data about employees.  Accordingly, maintaining a reporting hotline may conflict with applicable data privacy laws, particularly in non-U.S. jurisdictions.  How can companies both abide by data privacy laws and maintain a reporting hotline, consistent with best compliance practices?  This article addresses this question and, in doing so, offers guidance on setting up a hotline; processing and investigating complaints; and post-investigation procedures.

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    Facilitation Payments, Foreign Officials, Bona Fide Expenditures and More: Actionable Insight from the Authors of “Defending Clients in FCPA Investigations”

    Mark P. Goodman and Bruce E. Yannett, partners at Debevoise & Plimpton LLP, and Daniel J. Fetterman, a partner at Kasowitz, Benson, Torres & Friedman LLP, are the FCPA experts behind “Defending Clients in Foreign Corrupt Practices Investigations,” a chapter in the 2012 treatise “Defending Corporations and Individuals in Government Investigations.”  Their chapter addresses the hot button issues companies are facing today as the SEC and DOJ continue to increase the pressure on global companies to implement and enforce best of breed FCPA compliance programs.  Goodman and Fetterman recently shared their insight on some of these pressing issues with The FCPA Report.  In our interview, they discussed how far the FCPA’s jurisdiction reaches in light of recent case law and the FCPA Guidance, including the jurisdictional implications for aiders, abettors and conspirators; details regarding rewards under the new Dodd-Frank whistleblower provisions; who is a foreign official and whether it matters; how companies should handle facilitation payments; advice on reasonable business expenses after the Guidance; the concept of virtual strict liability in accounting violations of the FCPA; how judicial review will impact settlements; the collateral effects of an FCPA settlement; and when to self-report an FCPA violation.

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  • From Vol. 2 No.1 (Jan. 9, 2013)

    Germany-Based Insurer Allianz Pays $12.3 Million to Resolve SEC’s Books and Records and Internal Controls FCPA Charges

    Allianz, a German insurance and asset management company that previously had bonds registered with the SEC, recently resolved charges that an Indonesian joint venture in which Allianz’s Indonesian subsidiary invested made improper payments to employees of state-owned entities between 2001 and 2008.  Allianz agreed to pay $12.3 million.  The case demonstrates the government’s interpretation of the jurisdictional reach of the FCPA, the importance of whistleblowers and the increasing prevalence of FCPA cases that do not implicate the FCPA’s anti-bribery provisions.  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. 1 No.11 (Nov. 7, 2012)

    Specific Strategies from Pfizer, Barrick Gold and Other Leading Companies for Handling Actual and Potential FCPA Whistleblowers

    The SEC’s new whistleblower bounty program, promulgated under the Dodd-Frank Act, has altered litigation strategy and forced in-house counsel and compliance officers to revisit portions of their compliance policies to encourage would-be whistleblowers to report internally in lieu of, or before, going to the government.  On October 19, 2012, at the ABA’s Fifth Annual FCPA Institute in Washington, D.C., a group of in-house and outside counsel discussed how the whistleblower program has affected FCPA compliance policies, the challenges of handling and disciplining whistleblowers as well as recent caselaw interpreting the provisions.  For more on discipline considerations for anti-bribery professionals, see “When, Why and How Should Companies Discipline Employees for FCPA Violations?,” The FCPA Report, Vol. 1, No. 8 (Sep. 19, 2012).

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  • From Vol. 1 No.9 (Oct. 3, 2012)

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

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

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  • From Vol. 1 No.9 (Oct. 3, 2012)

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

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

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  • From Vol. 1 No.6 (Aug. 22, 2012)

    New Delhi Television Action against Nielsen Highlights the Ability of Private Lawsuits to Serve as De Facto FCPA Whistleblower Complaints

    New Delhi Television Limited (NDTV) has filed a mammoth, 194 page complaint in New York State Supreme Court against principal defendants Nielsen Holdings N.V. and The Nielsen Company (together, Nielsen), Kantar Media Research PVT LTD. (Kantar), and their Indian joint venture, TAM Media Research Private Limited (TAM).  This suit appears to be the culmination of long-running efforts by plaintiff NDTV to challenge the reliability of television viewership data produced by defendant TAM.  NDTV claims that, to NDTV’s detriment, TAM’s ratings have been skewed by corruption and bribery for many years.  Although primarily a negligence and breach of contract suit, NDTV asserts one claim for “negligence per se” against Nielsen arising out of Nielsen’s alleged violation of the FCPA.  NDTV claims that many of the television stations that allegedly benefited from the corrupted ratings are owned by Indian politicians.  It claims total damages of more than $800 million.  This article summarizes the background of the dispute and NDTV’s FCPA theory of recovery, and highlights the manner in which private lawsuits may serve as de facto FCPA whistleblower complaints.

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  • From Vol. 1 No.3 (Jul. 11, 2012)

    Seven Steps Companies Can Take to Incentivize Internal Reporting of FCPA Violations

    When real or potentially unlawful conduct is occurring at a public company or regulated entity, learning of it in real time and addressing it quickly is critical to that entity’s ability to respond and manage reputational and financial fallout.  The Securities and Exchange Commission’s Whistleblower Rules (promulgated under Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), which award whistleblowers a percentage of the penalty paid by the company to the SEC as a result of the information from the whistleblower, contain certain key provisions.  In a guest article, Thomas Sporkin, a Partner at BuckleySandler LLP, outlines seven ways in which these provisions can be leveraged by entities to incentivize whistleblowers to report information internally, thereby providing the company with additional time to properly understand, contain, remediate and, in certain instances, self-report potential violations of the federal securities laws, including the FCPA.  See “When and How Should Companies Self-Report FCPA Violations? (Part Two of Two),” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).

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  • From Vol. 1 No.3 (Jul. 11, 2012)

    Orthofix International Agrees to Pay $7.5 Million to the SEC and DOJ to Settle Charges that It Bribed Mexican Officials with “Chocolates”

    In a July 10, 2012 complaint, the SEC charged a Texas-based medical device company, Orthofix International N.V., with engaging in a seven-year bribery scheme involving its Mexican subsidiary Promeca S.A. de C.V. (Promeca).  The SEC alleges that Promeca employees referred to the bribe payments, which totaled over $300,000, as “chocolates.”

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