The FCPA Report

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

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By Topic: China

  • From Vol. 6 No.7 (Apr. 12, 2017)

    The Effect of China’s Two-Invoice System on Anti-Corruption Compliance for Drug Companies 

    Drug sales in China are rife with corruption risk – both in terms of violations of the FCPA and local Chinese anti-corruption laws. By restricting the number of tax-valid invoices in the drug procurement industry chain, China’s new “Two-Invoice System” aims to reduce that risk by increasing the transparency of pharmaceutical product distribution. But, compliance lawyers told our sister publication Policy and Regulatory Report (PaRR), the rule may actually introduce anti-corruption risks for drug companies changing distribution strategies to comply. See “Travel Agencies, Fapiao and Hospitality: $12.8 Million SciClone Settlement Highlights Diversity of Risk in China” (Feb. 10, 2016).

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  • From Vol. 6 No.5 (Mar. 15, 2017)

    Practitioners Take the Pulse of Anti-Corruption Compliance and Enforcement in China

    China’s aggressive but sometimes opaque anti-corruption efforts have been making headlines for the past several years and companies are facing a “fluid enforcement environment,” according to Nathan G. Bush, a partner at DLA Piper. The domestic anti-corruption efforts of President Xi Jinping’s regime and uncertainty over how the Trump administration will enforce the FCPA and interact with Beijing make anti-corruption compliance particularly challenging. A recent Strafford seminar featuring Michael S. Diamant and Michael Li-Ming Wong, partners at Gibson Dunn, and Cindy Hong, a partner at K&L Gates, offered a thorough overview of the current state of the anti-corruption and political climate in China. This article summarizes the key insights from the program. See our two-part series on China’s State Secrets Law: “A Primer for Anti-Corruption Practitioners (Part One)”(Jun. 29, 2016); and “Six Things to Consider When Engaging in Internal Investigations in China (Part Two)” (Jul. 13, 2016).

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  • From Vol. 6 No.4 (Mar. 1, 2017)

    Nine Months After SEC Settlement, Las Vegas Sands Pays $7M Penalty to Bring DOJ Investigation to a Close

    Just one day before the recent change in administration, the DOJ announced its settlement with Las Vegas Sands Corp. to resolve FCPA charges stemming from payments made to a politically connected consultant doing business in China and Macao between 2006 and 2009. The deal is notable for the relatively small penalty involved given the behavior at issue and the cash flow of the company, as well as for the unusual lag between the resolution of the DOJ matter and an earlier one with the SEC over substantially the same facts. See “A Shady Consultant and Lackluster Accounting in China Wins Sands a $9 Million Penalty” (Apr. 20, 2016).

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  • From Vol. 6 No.3 (Feb. 15, 2017)

    The Sword of Damocles in the Information Age: How to Face the New Challenges Under the Chinese Cybersecurity Law 

    A monumental legal change will be taking place in China later this year that will have far-reaching implications not only for companies performing internal investigations in China, but for all companies doing business there. In this guest article about China’s Cybersecurity Law, attorneys Kate Yin, Yanjun Zhuang, and Nan Zheng from the Chinese firm Fangda Partners bring clarity to the most critical aspects of these onerous but vague regulations. See our two-part series on data privacy and cybersecurity in China: “Crossing the River by Feeling the Stones” (Sep. 14, 2016) and “Performing Due Diligence and Internal Investigations in China” (Sep. 28, 2016).

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  • From Vol. 5 No.25 (Dec. 21, 2016)

    What to Expect From China’s Revised Commercial Bribery Law

    Draft revisions to China’s Anti-Unfair Competition Law, a wide-ranging statute governing e-commerce, trade secrets, false advertising and commercial bribery, were made public in February 2016. The revisions to the law, which was originally passed in 1993, include a new definition of commercial bribery, clarify when corporations can be held accountable for corrupt payments made by employees and expand the investigatory powers of the State Administration of Industry and Commerce and local AICs. The proposed new language, however, lacks clarity and possibly conflicts with existing law, Chinese attorneys told The FCPA Report’s sister publication Policy and Regulatory Report (PaRR). See The FCPA Report’s two-part series on data security in China: “Crossing the River by Feeling the Stones (Part One of Two)” (Sept. 14, 2016); and “Performing Due Diligence and Internal Investigations (Part Two)” (Sep. 28, 2016).

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  • From Vol. 5 No.24 (Dec. 7, 2016)

    How JPMorgan Chase Avoided a Monitor in Its Nepotism-Related FCPA Settlement With Three Agencies

    More than three years after the investigation of hiring practices at JPMorgan Chase by the SEC became public, the company has settled nepotism-related bribery charges with the SEC, the DOJ and the Federal Reserve. The basic facts have been known since 2013 when The New York Times broke the story, but the further details revealed in the SEC’s cease-and-desist order and the DOJ’s non-prosecution agreement show a pervasive pattern of quid pro quo hirings in the bank’s Asia Pacific subsidiary. We take a look at how the bank’s compliance program failed and how JPMorgan addressed those failures successfully enough to avoid the imposition of a monitor. See “Managing Corruption Risk When Hiring and Training Foreign Officials and Their Relatives Overseas: Practical Compliance Guidance (Part One)” (Jul. 27, 2016); (Part Two) (Aug. 10, 2016).

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  • From Vol. 5 No.21 (Oct. 26, 2016)

    Mitigating the Corruption Risk Posed by Vendors in China 

    Some of the more difficult issues for businesses with operations in China arise from the activities of third parties and vendors in that country. The attenuated lines of supervision at many China operations, the lack of transparency in obtaining due diligence information on vendors, the changing and sophisticated nature of corrupt practice schemes, and increased pressure from regulators in the U.S. – and increasingly Chinese and other foreign jurisdictions – all put multinationals at risk. In a guest article, Ronald Cheng, a partner at O’Melveny & Myers based in both Los Angeles and Honk Kong, explains how companies can mitigate these risks while doing business in China. See “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.20 (Oct. 12, 2016)

    GSK SEC Settlement Highlights Multi-Jurisdictional Enforcement Risk

    Two years after the Chinese government fined GlaxoSmithKline $490 million for bribing health care practitioners there, the SEC has resolved FCPA charges with the company for $20 million for the same conduct. The settlement “does not refer to profit or gain figures, or tie the fine to such figures,” Gary DiBianco, a partner at Skadden, told The FCPA Report, which may mean the SEC took into account the Chinese government’s penalty. The DOJ declined to prosecute. The settlement is the latest in a series of FCPA actions against pharmaceutical companies. As a result of those investigations, compliance obligations negotiated as a part of settlements and proactive compliance improvements, anti-corruption programs in the pharmaceutical sector have evolved to be among the most sophisticated among all multinational corporations, DiBianco said. See also “Seven Lessons From China’s Bribery Investigation of GlaxoSmithKline” (Aug. 7, 2013). 

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  • 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.19 (Sep. 28, 2016)

    A Charitable Donation to Avoid a Fine in China Nets Nu Skin an SEC Fine Instead

    Efforts to evade a Chinese sanction have resulted in an SEC penalty for a health and beauty company based in Provo, Utah. Nu Skin Enterprises, Inc., a manufacturer and direct marketer of cosmetics and nutritional products, has agreed to settle allegations that its subsidiary donated approximately $154,000 to a charity in order to influence a regulatory decision. The company will pay disgorgement in the amount of the fine it avoided paying – $431,088 – plus a $300,000 penalty, according to the SEC’s cease-and-desist order. See “Ten Strategies for Avoiding FCPA Violations When Making Charitable Donations” (Jul. 11, 2012).

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  • From Vol. 5 No.18 (Sep. 14, 2016)

    Data Privacy and Cybersecurity in China: Crossing the River by Feeling the Stones (Part One of Two)

    The Chinese National People’s Congress is currently considering a new law on cybersecurity that could have a far-reaching impact on data management in China. While the legislation is not yet in effect, it highlights the need for companies to familiarize themselves with China’s varied data privacy and cybersecurity laws as they currently are, and how they may be in the near future. This, the first part of a two-part series, provides insight from practitioners in China explaining the various sources of law governing data management in China and what types of information are covered by the law. In the second part, we will explore practical implications of these laws with regard to employee relations, particularly during internal investigations and due diligence. See our two-part series on China’s State Secrets Law: “A Primer for Anti-Corruption Practitioners (Part One)” (Jun. 29, 2016); and “Six Things to Consider When Engaging in Internal Investigations in China (Part Two)” (Jul. 13, 2016).

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  • From Vol. 5 No.18 (Sep. 14, 2016)

    Familiar Schemes Land AstraZeneca $4 Million of Disgorgement and Small Penalty

    Global pharmaceutical company AstraZeneca quietly settled FCPA-related books-and-records allegations with the SEC recently. According to the Commission’s bare-bones cease-and-desist order, the company failed to devise and maintain internal controls relating to interactions with health care practitioners in China and Russia. While details were sparse, familiar schemes such as fapiao fraud and sham speaker contracts played a role in China. To settle the charges, the company agreed to pay disgorgement of more than $4 million as well as a $375,000 penalty. See “Travel Agency Abuse, Falsified Expense Reports and Other Hospitality Blunders Lead to $25 Million Novartis Settlement” (Apr. 6, 2016).

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  • From Vol. 5 No.15 (Jul. 27, 2016)

    Could Johnson Controls Have Prevented the Flagrant Circumvention of Its Revamped Compliance Program?

    Johnson Controls (JCI) has agreed to pay $14 million to resolve SEC charges that employees of its subsidiary China Marine undermined the company’s revamped internal controls systems to make payments to sham vendors. Nicholas Berg, a partner at Ropes & Gray, said that “the Chinese subsidiary’s employees appear to have engaged in a carefully orchestrated effort to evade those controls in a way that was extremely difficult to detect.” Notably, China Marine was being supervised by a monitor in connection with a prior FCPA settlement both at the time it was acquired by JCI and when the illicit actions occurred. The DOJ announced its decision not to prosecute by publicly releasing a letter it sent to JCI, the third such letter since the implementation of the Pilot Program. The settlement highlights compliance issues, including the proper design of risk-based controls and internal reporting incentives. It also raises enforcement questions such as how long a company can wait to self-report under the Pilot Program and whether the DOJ had a case against JCI. See “Using the FCPA Pilot Program’s Remediation Requirements to Build a Best-in-Class Compliance Program” (May 18, 2016).

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  • From Vol. 5 No.14 (Jul. 13, 2016)

    Six Things About State Secrets to Consider When Engaging in Internal Investigations in China (Part Two of Two)

    China’s state secrets law is the source of much angst for lawyers. While the concept of protecting state secrets is straightforward – and common to most countries – the breadth and ambiguity of China’s law, and the inconsistent way it is enforced, create unique compliance challenges for companies operating in the PRC, particularly those faced with an internal investigation of a possible anti-corruption violation. In the first part of this two-part series on China’s state secrets law, we discussed the relevant legal framework and how state secrets are defined. In this second article, we discuss six concerns a company needs to address when formulating a sensible investigation strategy based on insights from lawyers on the ground in China. See “Fighting the Dynamic War on Corruption in China” (Oct. 21, 2015).

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  • From Vol. 5 No.13 (Jun. 29, 2016)

    A Primer on China’s State Secrets Law for Anti-Corruption Practitioners (Part One of Two)

    The high incidence of FCPA settlements involving allegations of corruption in China hints at a much wider number of companies facing possible anti-corruption issues that need investigation in the PRC. But China’s laws on reviewing and transmitting certain types of data present unique complications for companies performing internal investigations. In particular, China’s state secrets law is one of the greatest sources of complexity for foreign companies and their counselors. Vaguely worded and inconsistently enforced, the law forbids the transport of certain documents outside of the PRC. The FCPA Report recently spoke with a number of attorneys working in Asia to demystify this area of law and get tips on how to practically conduct an internal investigation while minimizing risk. In this, the first part in a two-part series, we explain the framework of the state secrets law and what types of information and data it may cover. In the second part we will discuss practical implications of the law for companies engaged in cross-border investigations. See “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.12 (Jun. 15, 2016)

    How Nortek and Akamai Escaped SEC and DOJ Prosecution for Chinese Bribery

    Nortek, a home security and ventilation manufacturer, and Akamai Technologies, a cloud services provider, have entered into non-prosecution agreements with the SEC in unrelated cases, after each company self-reported corruption at subsidiaries in China. Nortek will pay about $320,000 and Akamai will pay about $670,000 to resolve the matters. The DOJ also issued letters indicating that it will decline to prosecute both companies. Together with the NPAs, these declinations are widely seen as a signal from the government that self-reporting, cooperation and remediation can net a company more than just a penalty discount. We explore the settlements and what lies behind 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.8 (Apr. 20, 2016)

    A Shady Consultant and Lackluster Accounting in China Wins Sands a $9 Million Penalty

    Las Vegas Sands Corp. (LVSC), a casino and resort giant, agreed on April 7, 2016 to pay a $9 million SEC penalty to settle FCPA charges stemming from its activities in China and Macao. According to the SEC, LVSC transferred funds totaling more than $62 million to a consultant in China without supporting documentation or appropriate authorization for the transfer of those funds. Furthering LVSC’s troubles, the majority of the transfers were made even though senior LVSC management knew significant funds that had previously been transferred to the consultant couldn’t be accounted for. In addition to the transfers to the consultant, LVSC’s Chinese operations were rife with internal controls failures and shady accounting. The case demonstrates that such controls are “of the utmost importance,” said Susan Divers, a senior advisor at LRN Advisory Services Group. See “How Companies Can Use Enhanced Auditing Techniques to Address the Government’s Increasing Focus on Internal Controls” (May 13, 2015).

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  • From Vol. 5 No.7 (Apr. 6, 2016)

    Travel Agency Abuse, Falsified Expense Reports and Other Hospitality Blunders Lead to $25 Million Novartis Settlement

    In the fourth similar settlement in the last six months, pharmaceutical giant Novartis has agreed to pay $25 million to settle SEC charges that it violated the books and records and internal controls provisions of the FCPA by bribing foreign officials. “The Novartis case is essentially the GSK case, with fewer zeroes and headlines,” Amy Sommers, a partner in K&L Gates’ Shanghai office, told The FCPA Report. Indeed, the scheme underlying Novartis’ troubles is familiar – employees and agents of the company’s Chinese subsidiaries provided travel, gifts and entertainment to health care providers to encourage sales of Novartis’ products. “The Novartis case appears to have arisen by virtue of inquiries made by the SEC in the wake of reporting about the GSK case in 2013,” Sommers explained. See also our coverage of the SciClone, PTC and Bristol Myers Squibb settlements.

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  • From Vol. 5 No.5 (Mar. 9, 2016)

    Qualcomm’s $7.5 Million Settlement for Princeling Hirings Enabled by Three Key Compliance Failures

    Qualcomm Inc., a major designer of wireless telecommunications products, has agreed to pay a civil monetary penalty of $7.5 million to the SEC to settle FCPA charges. According to the SEC, Qualcomm hired the relatives of Chinese government officials and also provided extensive gifts, travel and entertainment to the foreign officials and their families to influence those officials’ purchasing decisions. The case shows that hiring family members of foreign officials “clearly needs to be on companies’ risk assessment radar,” asserted Jeffrey Kaplan, a partner at Kaplan & Walker. The case is also a reminder that companies still need to be mindful of more traditional corruption risks such as gifts, travel and entertainment and a weak compliance program. See “Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement (Part One of Two)” (Jan. 13, 2016); Part Two (Jan. 27, 2016).

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  • From Vol. 5 No.4 (Feb. 24, 2016)

    Excessive Power for Junior Employees and Lavish Trips for Foreign Officials Lead to $28 Million PTC Settlement

    PTC Inc., a Massachusetts-based software company, will pay more than $28 million to settle parallel civil and criminal FCPA charges. Like FLIR and SciClone, PTC’s corruption troubles stemmed from the provision of improper travel, gifts and entertainment to government officials. By inflating the fees paid to third parties for their services, junior employees of PTC’s China-based subsidiaries created pools of money that were then used to fund sightseeing adventures. Officials visited Honolulu, San Diego, New York and Las Vegas and enjoyed guided tours, golfing and other leisure activities. The SEC also announced its first DPA with an individual in an FCPA case, agreeing to defer prosecution against Yu Kai Yuan, a former employee of a PTC subsidiary, because of the significant cooperation he provided during the SEC investigation of the company. The voluntary disclosure calculus and how to handle relationships with lobbyists were among the key compliance concerns implicated in the PTC matter. See “CEO of LAN Airlines Settles FCPA Charges With SEC Over Union Dispute” (Feb. 10, 2016).

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  • From Vol. 5 No.3 (Feb. 10, 2016)

    Travel Agencies, Fapiao and Hospitality: $12.8 Million SciClone Settlement Highlights Diversity of Risk in China

    The allegations in the recent SciClone Pharmaceuticals’ FCPA settlement read like a “how to” manual for bribing foreign officials in China. SciClone employees paid for foreign officials to attend a beer festival, gave officials language classes as gifts, used travel agencies to disguise entertainment as legitimate conferences, submitted fake fapiao to falsify expense reports and more. To resolve these widespread bribery schemes at SciClone’s Chinese subsidiaries, the company, a U.S.-based, China-focused, specialty pharmaceutical company, agreed to pay $12.8 million and self-report to the SEC for a period of three years. We analyze the key compliance takeaways from the settlement. 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. 4 No.21 (Oct. 21, 2015)

    Fighting the Dynamic War on Corruption in China

    Corruption poses a constant risk to companies operating in China, but the nature of that risk is always shifting.  Creative ways to create slush funds that can be used for bribery proliferate in China – travel agents, marketing companies and distributors have all been involved in funneling corrupt funds to foreign officials on behalf of businesses.  In that environment, a company must have a dynamic and comprehensive compliance program.  The FCPA Report, Paul Hastings and EY recently hosted a roundtable discussion about how companies can address and uncover new corruption issues in China while continuously monitoring old issues.  The panel was moderated by The FCPA Report’s Editor-in-Chief, Nicole Di Schino.  The panelists, all recognized experts in Chinese anti-corruption, included: Nat Edmonds, a Paul Hastings partner and former FCPA prosecutor; Ananda Martin, a partner in Paul Hastings’ Shanghai office; and John Auerbach, a partner and former Greater China managing partner in EY’s fraud investigation and dispute services group.  This article summarizes the highlights of the panel discussion.  For more insight from these experts, see “The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China,” The FCPA Report, Vol. 4, No. 18 (Sep. 9, 2015); and “Responding to China’s Aggressive Anti-Corruption Enforcement,” The FCPA Report, Vol. 4, No. 19 (Sep. 23, 2015).

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  • From Vol. 4 No.19 (Sep. 23, 2015)

    Responding to China’s Aggressive Anti-Corruption Enforcement

    The DOJ and SEC’s sustained focus on corruption in China, combined with China’s own anti-corruption push, has left many multi-national companies scrambling to strengthen their compliance programs.  On September 30, Paul Hastings, EY and The FCPA Report will host a symposium in Washington, D.C., addressing how companies can mitigate risk when operating in China.  The FCPA Report’s Editor-in-Chief, Nicole Di Schino, will moderate the event.  The panelists, all recognized experts in Chinese anti-corruption, include: Nat Edmonds, a Paul Hastings partner and former FCPA prosecutor; Ananda Martin, a partner in Paul Hastings’ Shanghai office; and John Auerbach, a partner and former Greater China managing partner in EY’s fraud investigation and dispute services group.  For more information on the symposium please contact Nicole Di Schino at ndischino@fcpareport.com.  To RSVP, please click here.

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  • From Vol. 4 No.18 (Sep. 9, 2015)

    The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China

    The sheer volume of dollars that flow through the Chinese economy, combined with the evolving nature of corruption risk, make it essential that companies operating there remain ever vigilant and frequently re-evaluate the risk profile of their Chinese operations.  On September 30, Paul Hastings, EY and The FCPA Report will host a symposium in Washington, D.C. addressing how companies can mitigate risk when operating in China.  The FCPA Report’s Editor-in-Chief, Nicole Di Schino, will moderate the event.  The panelists, all recognized experts in Chinese anti-corruption, include: Nat Edmonds, a Paul Hastings partner and former FCPA prosecutor; Ananda Martin, a partner in Paul Hastings’ Shanghai office; and John Auerbach, a partner and former Greater China managing partner in EY’s fraud investigation and dispute services group.  In advance of the September 30 symposium, The FCPA Report spoke with Edmonds, Martin and Auerbach regarding one of the biggest risk areas facing companies operating in China – third parties.  For more information on the symposium please contact Nicole Di Schino at ndischino@fcpareport.com.

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  • From Vol. 4 No.16 (Aug. 5, 2015)

    Dissecting Mead Johnson’s $12 Million Chinese Baby Formula Bribe Settlement

    In the fifth FCPA enforcement action this year brought only by the SEC, Mead Johnson has agreed to pay $12.03 million to settle charges that its Chinese subsidiary created a slush fund with distributor discounts and used that money to bribe health care practitioners to recommend its baby formula and collect marketing information about new mothers.  The case is the latest in a line of Chinese health care FCPA enforcement actions, which may be taking on new life after the Chinese GSK case, Marc Alain Bohn, counsel at Miller & Chevalier, told The FCPA Report.  We discuss the case and the compliance lessons, including the ramifications of Mead Johnson’s failure to self-report, and why the DOJ has reportedly declined to bring a parallel action.  See also “What Does the PetroTiger Case Mean for FCPA Compliance?  Sigelman’s Attorneys and Other Experts Weigh In,” The FCPA Report, Vol. 4, No. 13 (Jun. 24, 2015).

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  • From Vol. 4 No.14 (Jul. 8, 2015)

    Regional Risk Spotlight: William McGovern of Kobre & Kim Advises on How to Handle Corruption Risk When Doing Business in China

    China has long been plagued with high corruption risk.  However, the recent uptick in China’s own anti-corruption enforcement – evidenced recently by the fine the Chinese government levied on GSK – is changing the corruption landscape there, as is the steady focus on China by U.S. regulators.  In this installment of The FCPA Report’s Regional Risk Spotlight series, we talk to William McGovern, a partner in Kobre & Kim’s Hong Kong office, about the most pressing corruption issues in China and how companies doing business there can handle them.  See also “Understanding and Tackling China’s Corruption Challenges,” The FCPA Report, Vol. 3, No. 5 (Mar. 5, 2014).

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  • From Vol. 4 No.10 (May 13, 2015)

    Deciphering the Chinese Anti-Corruption Landscape

    Corruption risk has loomed large for companies operating in China for a long time.  However, recent events may be changing the landscape there – both the aggressive FCPA enforcement by U.S. regulators and the well-publicized battle against corruption by the Chinese government may be having an impact.  A recent program sponsored by Clear Law Institute surveyed the current FCPA enforcement climate as it relates to China, discussed China’s internal anti-corruption efforts, and offered strategies for anti-corruption compliance in China.  The program featured Michael Diamant, a partner at Gibson Dunn.  See also “A Guide to Anti-Bribery Issue Spotting in China: Enforcement Trends, Third-Party Risks, Gift Giving, Travel Expenses, Foreign Officials and Due Diligence,” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013); and “Gibson Dunn Attorneys Take the Pulse of Anti-Corruption Risks in Emerging Markets,” The FCPA Report, Vol. 3, No. 3 (Feb. 5, 2014).

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  • From Vol. 4 No.1 (Jan. 7, 2015)

    Anti-Corruption Compliance Lessons from the Avon Settlements

    After a six-year investigation that cost the company upwards of $344 million, Avon has resolved FCPA charges with the DOJ and SEC, agreeing to pay $135 million in penalties.  In a guest article, Michelle J. Shapiro and Kiran Patel, partner and associate, respectively, at Dentons, analyze the settlements and draw three anti-corruption compliance lessons from the saga.  See also “Avon Class Action Dismissal Illustrates Challenges of FCPA-Related Shareholder Derivative Suits,” The FCPA Report, Vol. 3, No. 21 (Oct. 22, 2014).

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  • From Vol. 3 No.19 (Sep. 24, 2014)

    Analyzing GSK’s Record-Breaking Chinese Bribery Fine

    China has fined GlaxoSmithKline a record 3 billion yuan ($489 million) for paying bribes to hospitals and doctors to prescribe its products, closing a fifteen-month investigation into the company’s activities there.  FCPA experts shared insights with The FCPA Report about the impact of the historic decision on GSK and other multi-national companies operating in China.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013).

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  • From Vol. 3 No.14 (Jul. 9, 2014)

    Davis Polk FCPA Experts Assess Global Anti-Corruption Trends (Part Two of Two)

    The first half of 2014 brought significant anti-corruption enforcement developments in the U.S. and abroad.  In a recent webinar, attorneys from Davis Polk & Wardwell examined the trends that are shaping the global enforcement landscape and how companies can use them to improve their compliance programs.  In this, part two of the article series covering the webinar, Davis Polk attorneys discuss international cooperation in anti-bribery investigations and changes in the FCPA enforcement climate, including the increasing use of administrative proceedings by the SEC.  In part one, they compared and contrasted three recent FCPA resolutions and discussed the enforcement climate in Asia and other parts of the world.  See also “Davis Polk Lawyers and Morgan Stanley Compliance Director Discuss DOJ’s Decision Not to Prosecute Morgan Stanley for FCPA Violations,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012).

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  • From Vol. 3 No.13 (Jun. 25, 2014)

    Davis Polk FCPA Experts Assess Global Anti-Corruption Trends (Part One of Two)

    Midway through 2014, what is the state of global anti-corruption enforcement and what does it mean for multi-national companies?  In a recent webinar, attorneys from Davis Polk & Wardwell examined the trends that are shaping the enforcement and compliance landscape.  In part one of this article series, Davis Polk attorneys compare and contrast three recent FCPA resolutions and discuss the enforcement climate in Asia and other parts of the world and the accompanying compliance implications.  In part two, they discuss international cooperation in anti-bribery investigations and changes in the FCPA enforcement climate, including the increasing use of administrative proceedings by the SEC.  See “Davis Polk Lawyers and Morgan Stanley Compliance Director Discuss DOJ’s Decision Not to Prosecute Morgan Stanley for FCPA Violations,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012).

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  • From Vol. 3 No.5 (Mar. 5, 2014)

    Understanding and Tackling China’s Corruption Challenges

    “The FCPA applies with special force in China due to China’s state-dominated economy and pervasive business culture where petty corruption is common and tolerated,” Professor Daniel Chow said at a recent seminar at Fordham Law School sponsored by the Chinese Business Lawyers Association.  Chow and two other panelists, Paul Hastings partner Nat Edmonds, and Dorsey & Whitney partner Thomas Gorman, along with the Honorable Denny Chin of the U.S. Court of Appeals for the Second Circuit (who gave closing remarks), discussed the unique risks companies face in China, the cultural sensitivities that make compliance difficult, the status of China’s enforcement of its own corruption laws and practical recommendations for doing business ethically in a region where many businesses can reap big rewards.  Professor Sean Griffith of Fordham Law School gave opening remarks and Associate Professor Carl Minzner moderated.  See also “Gibson Dunn Attorneys Take the Pulse of Anti-Corruption Risks in Emerging Markets,” The FCPA Report, Vol. 3, No. 3 (Feb. 5, 2014).

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  • From Vol. 3 No.3 (Feb. 5, 2014)

    A Guide to Detecting and Preventing Travel Agency Corruption (Part Three of Three)

    Travel agency fraud, the practice of using travel agencies to generate cash for illicit purposes and to evade company hospitality restrictions, is running rampant in China and many other countries, anti-corruption experts say.  The recent Chinese investigation of GlaxoSmithKline for using relationships with local travel agencies to provide government officials (mainly medical professionals) with improper benefits is one example.  Travel agency fraud is now on the radar of government regulators in the U.S. and abroad and thus, must be on the radar of any company operating internationally.  To assist companies in strengthening their anti-corruption compliance programs with regard to the use of travel agents, The FCPA Report is publishing a three-part series on identifying and preventing corruption involving travel agents.  This, the third article in the series, provides five concrete suggestions for preventing and detecting such fraud.  The first article detailed how travel agency fraud is accomplished and examined the motivations underlying such fraud.  The second article outlined industries that are at particular risk for travel agency-related corruption schemes, explained why travel agency fraud is so difficult to detect and provided tips for strengthening company control over travel agents.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013). 

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  • From Vol. 3 No.3 (Feb. 5, 2014)

    Gibson Dunn Attorneys Take the Pulse of Anti-Corruption Risks in Emerging Markets

    The anti-corruption enforcement landscape is changing and emerging markets, with their endemic cultures of corruption and vast economic opportunity for many multi-national companies, are at the forefront of that change.  Many are implementing and enforcing their own laws, but the deep-seated risks of corruption still exist.  A recent panel of emerging market experts from Gibson Dunn & Crutcher LLP highlighted the current anti-corruption initiatives and trends in key foreign markets.  The presentation, “FCPA Trends in the Emerging Markets of China, the Middle East and Africa, Russia and India,” featured Gibson Dunn partners F. Joseph Warin, Benno Schwarz, Kelly S. Austin and Peter Gray.  See also “Lessons from the Latest Anti-Corruption Developments in the U.K., Brazil and China,” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013).

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  • From Vol. 3 No.3 (Feb. 5, 2014)

    A Comparison of Anti-Bribery Laws in the U.S., U.K., China, Germany and India

    In this era of increasing international cooperation, anti-corruption compliance programs cannot consider only the FCPA.  Various anti-bribery regimes must be addressed in a multi-national company’s program to adequately protect the company from the growing threat of global enforcement and “carbon copy” prosecutions.  This chart, developed by T. Markus Funk and Sambo “Bo” Dul, partner and associate, respectively, at Perkins Coie LLP, helps with the task of creating a comprehensive anti-bribery program by comparing the main provisions of five anti-bribery laws that companies should be wary of – laws in the U.S., the U.K., China, Germany and India.  See “Assessing the Year in FCPA Enforcement and Looking Ahead,” The FCPA Report, Vol. 3, No. 2 (Jan. 22, 2014) (T. Markus Funk and Bo Dul).

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  • From Vol. 3 No.2 (Jan. 22, 2014)

    A Guide to Detecting and Preventing Travel Agency Corruption (Part Two of Three)

    China’s investigation into bribery at GSK in 2013 marked a potential new era in Chinese anti-corruption enforcement.  Notably, the Chinese government alleged that GSK used its relationships with local travel agencies to facilitate bribery – both to provide government officials with improper benefits and to host “conferences” that were used to generate pools of cash that could later be used for bribes.  GSK is not alone.  According to anti-corruption experts, in China and many other countries, travel agency fraud is part of a growing “industry” designed to help employees and subsidiaries evade company and legal regulations.  As regulators become more familiar with these types of schemes, it is likely that travel agency relationships will come under stricter government scrutiny.  To assist companies in strengthening their compliance programs with regard to the use of travel agents, The FCPA Report is publishing a three-part series on identifying and preventing corruption involving travel agents.  This, the second article in the series, outlines industries that are at particular risk for travel agent-related corruption schemes, explains why travel agency fraud is so difficult to detect and provides three steps for strengthening company control over travel agents.  The first article detailed how travel agency fraud is accomplished and examined the motivations underlying such fraud.  The third article will provide five concrete suggestions for preventing and detecting such fraud.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013).

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  • From Vol. 3 No.1 (Jan. 8, 2014)

    A Guide to Detecting and Preventing Travel Agency Corruption (Part One of Three)

    Travel agency fraud is an increasing source of FCPA violations.  The recent GlaxoSmithKline investigation is a prime example of the risks travel agents can pose, especially in China but in other regions as well, and travel agent relationships will likely come under government scrutiny in the aftermath of the GSK matter.  Preventing corruption schemes using travel agents as the conduit for bribes can be difficult, however, as travel agency fraud can be easily hidden.  To assist companies in strengthening their compliance programs with regard to the use of travel agents, The FCPA Report is publishing a comprehensive three-part series on identifying and preventing corruption involving travel agents.  This, the first article in the series, details how travel agency fraud is accomplished and examines the motivations underlying such fraud.  The second article will outline industries that are at particular risk for travel agent-related corruption schemes, explain why travel agency fraud is so difficult to detect and provide tips for strengthening company control over travel agents.  The final article in the series will offer five concrete suggestions for preventing and detecting such fraud.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013).

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  • From Vol. 2 No.22 (Nov. 6, 2013)

    Five Lessons from 2013 FCPA Enforcement: Transaction Monitoring, International Cooperation, Documenting Hiring Decisions, Risk Assessments and Individual Prosecutions

    It has been a busy year for FCPA enforcement – the government has prosecuted individuals for violating the FCPA, used aggressive criminal investigation techniques to build cases and continued to increase its cooperation with foreign governments.  In a recent webinar hosted by The Network, Tom Fox shared his insight into recent FCPA trends and provided tips for FCPA compliance arising from those trends.  See also “Seven Key Trends That Are Changing the FCPA Enforcement and Compliance Landscape,” The FCPA Report, Vol. 2, No. 14 (Jul. 10. 2013).

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  • From Vol. 2 No.21 (Oct. 23, 2013)

    K&L Gates Panel Reviews Anti-Corruption Enforcement in the U.S., the U.K., China, Australia, Latin America, Africa, Southeast Asia and Russia

    With the spate of new anti-corruption laws around the globe, and the evolution of laws already on the books, “it is critical for a company to have on-the-ground information and local support” in structuring an effective anti-bribery and anti-corruption (ABAC) program and responding to regulatory action in all of the regions in which it operates.  So said Dick Thornburgh, former Attorney General of the United States and former Governor of Pennsylvania, introducing a recent webinar presented by K&L Gates LLP, where Thornburgh is now of counsel.  The K&L Gates speakers who followed Thornburgh shared their direct local experiences and examined the state of the ABAC laws in their regions of speciality.

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  • From Vol. 2 No.20 (Oct. 9, 2013)

    Ernst & Young’s 2013 Asia-Pacific Fraud Survey Highlights Disconnect Between Company Policies and Employee Perceptions

    The Asia-Pacific region is an enticing one for companies around the world, with its enormous markets, resources and opportunities.  But there is also significant corruption risk in the region, and that risk may be increasing.  In an extensive recent survey of fraud and corruption in eight APAC countries, Ernst & Young found that “fraudulent practices are on the rise” in APAC nations, and businesses operating there face heightened corruption risk due to weak controls and a weakening economic environment, which is leading businesses to take shortcuts.  EY interviewed employees of large corporations to gauge their perspectives on the extent of corruption in their respective countries and on the effectiveness of various anti-corruption controls.  For a global perspective from EY, see “Ernst & Young’s 2012 Global Fraud Survey Highlights Significant Challenges in Dealing with Corruption and Bribery Risks,” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012).

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  • From Vol. 2 No.17 (Aug. 21, 2013)

    SEC Investigation of JPMorgan Hiring Practices Demonstrates FCPA Nepotism Risks

    Should banks with global presences be concerned that their hiring practices may cause FCPA headaches?  The recent revelation that JPMorgan Chase & Co., the nation’s largest bank, is being investigated by the SEC for possible FCPA violations stemming from its hiring of the children of two high-placed Chinese officials, may cause other banks to scrutinize who they are hiring and how they are documenting their hiring decisions, especially if the new hires are related to foreign officials.  This article discusses the JPMorgan investigation and how companies can mitigate FCPA risks in their hiring practices.  See also “Friendly Relations? When Nepotism May Violate the FCPA,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012).

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  • From Vol. 2 No.16 (Aug. 7, 2013)

    Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline 

    The Chinese government’s recent actions against employees of pharmaceutical giant GlaxoSmithKline plc in connection with possible commercial and government bribery have thrust the business practices of pharmaceutical and other health-related companies in China into the spotlight.  Speculation is growing that China may be increasing enforcement of its anti-bribery laws against a range of industries.  Chinese anti-bribery enforcement varies in important ways from U.S. enforcement.  Therefore, it is important for companies operating in China to understand what steps they can take to mitigate corruption risk, uncover and react to bribery by their employees and others, and be prepared for unannounced visits from Chinese regulators.  In a recent webinar, Shanghai-based K&L Gates partner Amy Sommers offered seven compliance and business lessons that companies can learn from GSK’s predicament.  See also “China Clarifies and Expands its Anti-Bribery Laws,” The FCPA Report, Vol. 2, No. 3 (Feb. 6, 2013).

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  • From Vol. 2 No.8 (Apr. 17, 2013)

    Representing Foreign Companies in Criminal FCPA Actions: Strategies for Handling the Legal, Practical and Cultural Challenges

    Many FCPA investigations and prosecutions involve foreign companies or foreign subsidiaries of U.S. companies.  When the DOJ investigates or commences a criminal enforcement action against a foreign company, local laws, customs and practices can create challenges for unwary U.S. counsel in areas such as discovery and attorney-client privilege.  A recent event shed light on the topics that frequently come up when dealing with a foreign company client: attorney-client privilege, cross-border discovery, data privacy, obstruction of justice and extradition.  The event participants, all partners at Kaye Scholer LLP, also shared advice on working with in-house counsel in Japan and China and addressed other practical issues specific to the European Union, China and Japan.

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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.7 (Apr. 3, 2013)

    Lessons from the Latest Anti-Corruption Developments in the U.K., Brazil and China

    A single-minded focus on the FCPA with a passing nod to other countries’ regulatory regimes is not enough to make a company’s compliance program first-in-class today; multinational companies must fully address an array of global anti-bribery laws in an environment of growing global enforcement and increased prosecutorial vigor.  Regulatory regimes in other countries may not be consistent with existing company compliance programs.  In a recent webinar, partners from Hogan Lovells shared their insight and experience on navigating the latest global developments in anti-bribery and corruption regulation and enforcement.  This article conveys the highlights from the discussion, focusing primarily on the anti-corruption regimes in China, the U.K. and Brazil.

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    Major Chinese Petrochemical Company, Formed by Reverse Merger, Resolves Insider Trading and FCPA Charges with the SEC

    It’s an insider trading case with an FCPA twist: the SEC has announced that China-based Keyuan Petrochemicals, and its former CFO, Aichun Li, have resolved charges of violations of anti-fraud and reporting provisions of federal securities laws for failing to disclose related party transactions (a form of insider trading) as well for giving gifts to Chinese officials from a secret account.  The settlement must be approved by a judge.  See “Judge’s Refusal to Approve Civil FCPA Settlement Raises Concerns for Future FCPA Settlements with the SEC,” The FCPA Report, Vol. 2, No. 1 (Jan. 9, 2013); “District Court Judge Modifies Demands in Push for Stricter Judicial Review of Civil FCPA Settlements,” The FCPA Report, Vol. 2, No. 3 (Feb. 6, 2013).

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  • From Vol. 2 No.3 (Feb. 6, 2013)

    China Clarifies and Expands Its Anti-Bribery Laws

    According to a report recently issued by the Global Compliance and Disputes Practice Group of international law firm Paul Hastings LLP, recent guidance issued by regulatory authorities in the People’s Republic of China signals that those authorities may be placing greater emphasis on pursuing the payers of bribes, as opposed to their traditional focus on the recipients of bribes.

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  • From Vol. 2 No.1 (Jan. 9, 2013)

    Pharma Giant Eli Lilly Agrees to $29.4 Million Consent Judgment to Settle SEC Charges of FCPA Violations Arising Out of Its Operations in Russia, China, Brazil and Poland

    Eli Lilly and Company (Lilly), a major pharmaceutical company, has consented to the entry of a final judgment against it to settle SEC charges that Lilly subsidiaries violated the FCPA in connection with their operations in China, Brazil, Poland and Russia.  The consent judgment, which includes an injunction against future FCPA violations, calls for an independent review of Lilly’s internal controls and requires Lilly to pay disgorgement, interest and civil penalties of almost $29.4 million.  In its Complaint, the SEC provides insight into its expectations for internal controls.  The Lilly settlement resolves another case in what has been considered an “industry sweep” of pharmaceutical companies by the SEC.  See also “LeClairRyan Webinar Highlights Ten Anti-Corruption Risks for Pharmaceutical and Medical Device Companies and Outlines the Elements of an Effective FCPA Compliance Program,” The FCPA Report, Vol. 1, No. 9 (Oct. 3, 2012).

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