The FCPA Report

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

Recent Issue Headlines

Vol. 2, No. 18 (Sep. 11, 2013) Print IssuePrint This Issue

  • Minimizing Anti-Corruption Deal Risk While Maximizing Returns on Venture Capital Investments

    More and more, venture capital firms are investing in start-ups seeking to expand internationally or with nascent cross-border operations in place.  Such investments offer opportunities for lucrative returns but also carry significant anti-corruption risk that VC firms are often ill-equipped to manage.  For many businesses, managing anti-corruption risk is a necessary cost center.  But VC firms are uniquely positioned to use that risk to drive a better deal and gain greater control over management and direction of the business.  In a guest article, G. Derek Andreson, Thomas M. Shoesmith, Marc H. Axelbaum, partners, and Ryan R. Sparacino, counsel, at Pillsbury Winthrop Shaw Pittman LLP, offer an assessment of the opportunities and risks that VC firms should consider, and conclude with four strategies for maximizing returns while limiting anti-corruption risks.  See also “Strategies for Mitigating the FCPA Risk of Entering Into Joint Ventures,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).

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  • Best Practices for Reviewing Anti-Corruption Compliance Programs: Implementation, Remediation and Documentation (Part Three of Three)

    In an effort to provide concrete, practical advice on the critical but ambiguous task of reviewing anti-corruption compliance programs, The FCPA Report is publishing a series of three articles on the topic.  This, the third and final article in the series, provides four strategies for conducting the actual review; discusses three steps a company should take post-review; outlines issues surrounding documentation of the review; and examines how FCPA settlement agreements, including monitorships and self-reporting requirements, affect reviews.  The first article in the series discussed the importance of regular anti-corruption compliance reviews; detailed the government’s expectations for reviews; outlined how to create an efficient and effective compliance review schedule; and specified how companies should staff their compliance reviews.  The second installment discussed the chief obstacles companies face when conducting a review; provided strategies for creating management buy-in; described four steps a company should take when preparing for a review; and outlined what risk areas the review should address.

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  • Fighting Corruption with Creative Data Mining: Five Forensic Accounting Techniques for Development Program Investigations

    The World Economic Forum estimates that the cost of corruption amounts to more than 5% of global GDP ($2.6 trillion), with more than $1 trillion paid in bribes each year.  Creative data mining is one of the most effective tools in identifying transactions connected to this illicit behavior.  It is commonplace in most every fraud and corruption investigation nowadays to pull raw data from ERP systems, identify relevant pools of data and design queries to find anomalies.  What happens, though, when an organization is faced with a situation where such raw data is unreliable, incomplete, or not available at all?  More often than not, the robust data sets that one would likely have access to in corporate investigations are not available in the case of development projects financed by institutions such as the United Nations and the World Bank.  Such projects are often plagued by inadequate accounting systems, archaic banking practices and a general lack of management and fiduciary controls.  In a guest article based on dozens of global corruption investigations, Jean-Michel Ferat, Managing Director at The Claro Group, describes the primary corruption risks inherent in development projects and – using slides taken directly from his investigative experience – details five workable methods for mitigating those risks.  See also “How Forensic Accountants Help Identify Corruption Risk and Delve into the Details of Books and Records,” The FCPA Report, Vol. 2, No. 12 (Jun. 12, 2013).

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  • Conducting Effective Anti-Corruption Due Diligence on Third Parties: An Interview with Alice Fisher, Partner at Latham & Watkins

    Engaging third parties is necessary for most global businesses, but rife with corruption risk.  Under the FCPA, a company can be held responsible for any improper payments made on its behalf by a third-party agent or partner, and most of the recent FCPA enforcement actions by the SEC and DOJ have involved the actions of third parties – making the task of conducting due diligence on third parties one of the most critical and complicated issues in FCPA compliance.  How should a company efficiently allocate its due diligence resources?  What should a company do when its third-party partner is less than forthcoming?  Can a party engage a third party even if due diligence raises red flags?  The FCPA Report is publishing a series of interviews with experts from different disciplines on best practices for conducting anti-corruption due diligence on third parties.  This article, the first in the series, includes our interview with Alice Fisher, partner at Latham & Watkins.  Fisher specializes in white collar criminal investigations, internal investigations and advising clients on a range of criminal matters, including the FCPA.  She formerly served as Assistant Attorney General in charge of the Criminal Division of the DOJ.  See also “Designing Effective FCPA Compliance Programs and Monitoring Third Parties After the Guidance: An Interview with H. David Kotz, Michael Volkov and Paul Zikmund,” The FCPA Report, Vol. 2, No. 2 (Jan. 23, 2013).

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  • Anti-Corruption Professionals from GE, Abbott Laboratories and Navistar Share Proven Strategies on Third-Party Due Diligence, M&A, Training, Nepotism and Regional Risk

    Anti-corruption compliance can feel like a battlefield, with potential landmines at every turn.  But what do practicing in-house compliance professionals view as their biggest challenges?  What issues keep them up at night?  And, most importantly, what have they done to address those issues?  In a panel hosted by the American Conference Institute, three in-house compliance experts shared their practical experience.  They discussed specific challenges they have faced and outlined the strategies they used to effectively address those challenges.  The expert panelists included Matthew Hsu, Senior Counsel, Global Fraud and Anti-Corruption at Abbott Laboratories; Shannon Masson, Senior Counsel at Navistar, Inc.; and Kevin Matthews, Associate General Counsel at GE Oil and Gas.  See also “Insight from Top Companies and Practitioners on How They Are Addressing Current Anti-Corruption Issues, from Self-Reporting to Risk Assessments to Training,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013).

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  • Who Is a Foreign Official?

    The FCPA’s broad definition, and the government’s broad interpretation, of the term “foreign official” have caused many companies operating internationally serious consternation.  The definition of “foreign official” for FCPA purposes – which arguably includes any employee of an institution that has some degree of state ownership or control, based on a list of considerations – does not match up with the more narrow way the term is used in common parlance.  This disconnect and the lack of perceived clarity on the issue under U.S. law and that of other countries causes companies to struggle with identifying potential risk areas and implementing effective compliance programs.  During a recent program, leading FCPA practitioners provided valuable insight into how the government defines the critical terms and how companies should structure their policies in response to the government’s interpretations.  The panelists included James G. Tillen, a Member of Miller & Chevalier Chartered; Matteson Ellis, a Special Counsel at that firm; and Mark Gough, Deputy Head for Compliance Investigations at Siemens.   See also “The Expanding Definition of ‘Foreign Official’ and its FCPA Implications,” The FCPA Report, Vol. 2, No. 11 (May 29, 2013).

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  • Avi Gesser Rejoins Davis Polk from the Department of Justice

    On September 9, 2013, Davis Polk & Wardwell LLP announced that Avi Gesser will rejoin the firm’s litigation department as a partner.  He will work with the firm’s White Collar Criminal Defense Group and will represent clients in a wide range of white collar criminal defense matters and investigations as well as complex commercial litigation.  From mid-2010 to December 2012, Gesser was Counsel to the Chief of the Justice Department, Criminal Division’s Fraud Section.  From early 2011 through August 2013, Gesser was the Deputy Director of the Justice Department, Criminal Division’s Deepwater Horizon Task Force.  For insight from Davis Polk, 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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  • Assistant U.S. Attorney Richard Hamilton Joins Ulmer & Berne

    Ulmer & Berne LLP recently announced that Richard T. Hamilton, Jr. will join the firm as chair of its White Collar practice group.  Hamilton comes to the firm after spending the bulk of his 20-plus-year legal career as a trial attorney with the DOJ’s Antitrust Division and, most recently, with the U.S. Attorney’s Office for the Northern District of Ohio.

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