The FCPA Report

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

Recent Issue Headlines

Vol. 1, No. 7 (Sep. 5, 2012) Print IssuePrint This Issue

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

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

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  • Six Compliance Lessons from the 2012 Latin America Corruption Survey

    A recent survey of companies spanning 14 countries throughout the Americas, organized by U.S. law firms Miller & Chevalier Chartered and Matteson Ellis Law PLLC along with 12 Latin American law firms, provides insight into corruption issues in the region.  Four hundred and thirty nine respondents from local, regional and multinational companies completed the 2012 Latin America Corruption Survey.  The results offer perspectives on the extent of corruption in Latin American countries, the effects of corruption on companies operating in those countries, the effectiveness of regional anti-corruption laws, and tools that companies are using to address corruption risks.  For a summary of the survey, see “Miller & Chevalier and Matteson Ellis Law’s 2012 Latin American Corruption Survey Results Shows Increasing Awareness of the FCPA,” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012).  In a guest article, James Tillen and Matteson Ellis provide additional analysis that will be useful to compliance personnel when they are evaluating the effectiveness of their compliance programs in Latin America.  In particular, Tillen and Ellis highlight four themes of the results and six corresponding takeaways from the survey findings for compliance officers.  Tillen is Coordinator of Miller & Chevalier’s FCPA and Anti-Corruption Practice Group, and Ellis is Principal of Matteson Ellis Law and writes the FCPAméricas Blog.

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  • Fines, Victims, the Three Buckets of FCPA Costs and FCPA Reform: An Interview with Mike Koehler, the FCPA Professor (Part Two of Two)

    The FCPA Report recently interviewed Mike Koehler, Assistant Professor at Southern Illinois University School of Law, author of the popular blog the FCPA Professor and outspoken critic of the current FCPA enforcement regime.  This article includes the second part of our interview with Professor Koehler.  In this part, Professor Koehler addresses recent Supreme Court precedent affecting corporate fines; the potential for fines to be paid to victims instead of the U.S. Treasury; the cost-benefit analysis of FCPA compliance and the three buckets of FCPA costs; his distinction between license/permit cases and government procurement cases and its importance for compliance policies and procedures; and the prospect of FCPA reform, a topic on which Professor Koehler disagrees with Judge Sporkin.  For the first part of our interview with Professor Koehler, see “Compliance Implications of the Current Enforcement Climate: An Interview with Mike Koehler, the FCPA Professor (Part One of Two),” The FCPA Report, Vol. 1, No. 6 (Aug. 22, 2012).

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  • Grant Thornton Webinar Highlights FCPA and U.K. Bribery Act Enforcement Trends (Part One of Two)

    On August 21, 2012, Grant Thornton hosted a webinar entitled “Evolving Anti-Corruption Legislation: Is your business up-to-date?”  The program provided a helpful overview of trends in FCPA enforcement and enforcement of the U.K.’s Bribery Act of 2010 (Bribery Act), including the potentially broad reach of the Bribery Act, and guidance on best practices for anti-corruption compliance.  The FCPA Report is covering the webinar in a two-part article series.  This article, the first part, focuses on enforcement trends, and the second part will focus on compliance.  The participants in the panel were Sterl Greenhalgh and Bill Olsen of international accounting and auditing firm Grant Thornton UK and Grant Thornton US LLP, respectively, and Vivian Robinson of law firm McGuire Woods UK.  Greenhalgh is Grant Thornton UK’s head of anti-bribery and corruption.  Olsen, Grant Thornton’s U.S. leader of Anti-Corruption services and Global Investigations, authored “The Anti-Corruption Handbook.”  Robinson was previously General Counsel to the U.K.’s Serious Fraud Office, which has primary responsibility for enforcing the Bribery Act.  Robinson led the development of the SFO’s enforcement policy under the Bribery Act.

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  • Pension Fund Sues Wal-Mart to Gain Access to Documents Pertaining to Mexican FCPA Allegations

    In preparation for a possible shareholder’s derivative suit, and claiming that Wal-Mart Stores, Inc. (Wal-Mart), has “made a mockery” of the Delaware law that affords shareholders the right to inspect corporate books and records, the Indiana Electrical Workers Pension Trust Fund IBEW (Trust) has sued Wal-Mart in the Delaware Court of Chancery.  The Trust seeks access to Wal-Mart’s books and records, and the records of Wal-Mart’s Mexican subsidiary, Wal-Mart de Mexico, S.A. de C.V., that relate to their handling of allegations of corruption, bribery and violations of the FCPA in their Mexican operations.  This article provides the background of the dispute and a summary of the Trust’s allegations.

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  • U.S. Government Counters Foreign Official Challenge in the Eleventh Circuit

    In the first case to bring the issue of the definition of an “instrumentality of a foreign government” in front of an appellate court, the DOJ has replied to Joel Esquenazi and Carlos Rodriguez’s (Defendants’) opening brief.  The Defendants have argued that Teleco, a firm that provides telephone service to Haiti and that was owned by the Haitian national bank at the time of the alleged bribery, was not an instrumentality of the Haitian government because Teleco did not perform a government function.  Defendants were convicted of bribing employees of Teleco to retain business for their Florida-based communications company.  In its brief filed August 21, 2012, the DOJ says that the Defendants’ argument “contravenes bedrock principles of statutory construction and is unsupported by legislative history.”

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  • Alvarez & Marsal Expands Global Forensic and Dispute Services Practice in the Southeast Region

    On September 4, 2012, independent global professional services firm Alvarez & Marsal announced that Joe Galanti and Bill Jennings have joined the firm’s Global Forensic and Dispute Services practice as managing directors based in Atlanta.

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