The FCPA Report

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

Recent Issue Headlines

Vol. 2, No. 1 (Jan. 9, 2013) Print IssuePrint This Issue

  • Conflicting Compliance Obligations: How to Navigate Data Privacy Laws While Performing Internal Investigations and Promoting FCPA Compliance in the E.U. (Part One of Three)

    Vigorous anti-corruption compliance – as undertaken by many companies in the wake of the recent uptick in FCPA prosecutions – may endear a company to the DOJ and SEC, but could also put it at risk of violating data privacy laws across the globe.  In Europe, where privacy is considered a fundamental right, this is a particularly thorny problem.  It is difficult for companies operating in both the U.S. and E.U., if not impossible, to comply with both U.S. law and E.U. data privacy legislation.  To minimize conflicts, companies must educate themselves about data privacy, plan ahead and act strategically.  This article series helps companies do just that, delving into the details of E.U. privacy regulations and the challenges they pose during all the stages of an anti-corruption internal investigation, as well as during due diligence on third parties and for mergers and acquisitions and when creating and maintaining an anti-corruption hotline.  Through discussions with numerous data privacy and FCPA experts as well as secondary research, this article series provides a valuable framework for understanding data privacy laws in the E.U. and applying them to anti-corruption compliance.  This first part of the article series discusses data privacy laws generally and specifically as they relate to FCPA compliance and provides information about the specifics of the E.U. data privacy regime, including: data processing principles; restrictions on data transfer; data transfer mechanisms, including the meaning of “safe harbor status,” binding corporate rules and European model clause agreements; as well as how potential new regulation can affect data collection.  The second part of this article series will discuss how France specifically applies the relevant E.U. Directive; best practices for due diligence in France; and specific steps a company should take before a need to investigate arises in the E.U. and other jurisdictions with similar data privacy regimes.  The third part will tackle internal investigation considerations; best practices for reviewing documents and conducting interviews; strategies for transferring data outside the E.U.; data privacy concerns when performing due diligence in the E.U.; and effective techniques for running an anti-corruption hotline in the E.U.  See also “Strategies for Preserving Data Before and During an FCPA Investigation,” The FCPA Report, Vol. 1, No. 12 (Nov. 14, 2012).

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  • How Private Fund Managers Can Manage FCPA Risks When Investing in Emerging Markets

    Anti-corruption enforcement efforts have dramatically increased over the last few years.  Every day it seems there is a new headline about an investigation involving alleged violations of the FCPA.  Federal authorities have indicated that their FCPA enforcement efforts are increasingly focused on the financial services industry and, in particular, private fund managers that invest in emerging markets.  Given this heightened level of government scrutiny, it is important that private equity firms, hedge fund managers and other investors that conduct business in foreign markets understand the associated FCPA risks.  Such risks can arise in the context of raising funds overseas, working with joint venture partners and third party agents, and investing in companies that operate in countries known for corruption.  A potential misstep in these areas can result in a fund manager and its employees facing significant civil penalties and possible criminal prosecution or, at a minimum, having to respond to government subpoenas or requests for information in connection with an investigation by federal authorities, thus resulting in the unnecessary expenditure of time and money and the attraction of unwanted attention.  In a guest article, Justin V. Shur and Joel M. Melendez, partner and associate, respectively, at Molo Lamken LLP, consider some of the important and recurring FCPA risks that arise for investors in emerging markets, and offer practical guidance to help private fund managers and their employees avoid or minimize liability in this area.

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  • Judge’s Refusal to Approve Civil FCPA Settlement Raises Concerns for Future FCPA Settlements with the SEC

    A federal judge’s frustration with the SEC’s enforcement policies could have important consequences for companies subject to the civil provisions of the FCPA.  U.S. District Judge Richard J. Leon of the U.S District Court for the District of Washington, D.C. announced in open court in late December that he will not “rubber stamp” a settlement agreement resolving civil FCPA charges brought by the SEC against IBM in 2011, and accused the SEC of “rolling over.”  Judge Leon insisted that IBM agree to more rigorous reporting than the settlement requires.  Judge Leon’s active involvement in the settlement and his imposition of additional reporting demands on IBM could affect how other companies negotiate FCPA (and other) settlements with the SEC.  Sources told The FCPA Report that Judge Leon’s demands could lead to, among other things, more widespread judicial scrutiny of settlements, and ultimately more enforcement actions settled administratively.

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  • 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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  • 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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  • Consero Survey Offers Benchmarking Data on Chief Compliance Officer Compensation, Budgets and Access to Top Management

    Consero Group LLC (Consero) recently conducted a survey of chief compliance officers (CCOs) of major corporations.  The survey provides data on compliance departments with respect to department size, access to top management, budgets and compensation.  Consero conducted the survey at its October 2012 Corporate Compliance and Ethics Forum, held in Palm Beach Gardens.  Forty-eight of the Forum’s attendees – all CCOs of Fortune 1,000 companies – responded to the questions.  See also “Top General Counsel Compensation Increasing Amidst Growing Pressure on In-House Law Departments,” The FCPA Report, Vol. 1, No. 14 (Dec. 12, 2012).

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  • Ex-Federal Prosecutor Joins White Collar Group at Stradling Yocca Carlson & Rauth

    On December 20, 2012, California law firm Stradling Yocca Carlson & Rauth, P.C. announced that Jason de Bretteville, a former federal prosecutor previously with Sullivan and Cromwell, has joined the firm as a shareholder.

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