The FCPA Report

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

Recent Issue Headlines

Vol. 2, No. 21 (Oct. 23, 2013) Print IssuePrint This Issue

  • A Hot Bench Hears Oral Arguments in Historic Challenge to the Definition of “Foreign Official”

    The FCPA clearly prohibits bribes to employees of instrumentalities of foreign governments, but for many in the business world, it is by no means clear what an “instrumentality of a foreign government” is.  Is a state-owned or state-controlled hospital an instrumentality?  A telecommunications company with some government involvement?  A non-utility company in which the government has a minority but controlling interest?  By some estimates, two-thirds of recent FCPA enforcement actions have relied on the idea that an employee of a state-owned entity is a “foreign official.”  Lawyers, compliance professionals and businesspeople currently have a range of resources to turn to in understanding what constitutes an instrumentality, but none is conclusive or determinative – especially for international salespeople on the front lines of potential FCPA violations.  In a historic appeal, the Eleventh Circuit is poised to construe the meaning of “instrumentality” under the FCPA with a level of authority heretofore absent from anti-corruption jurisprudence.  The court heard oral arguments earlier this month and The FCPA Report spoke with the attorneys for defendants Joel Esquenazi and Carlos Rodriguez.  This article includes their insights on the positions of the parties and the importance of the case.  This article also discusses lower court decisions and other relevant authority on this crucial issue.

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  • Checklist of Actions to Take and Issues to Consider When Navigating Data Privacy and Anti-Corruption Issues

    Investigating a potential FCPA violation almost invariably entails cross-border discovery because U.S. companies need data housed overseas.  While trying to please U.S. regulators in obtaining information relevant to suspected bribes both in the context of internal investigations and due diligence of another company, however, companies often find themselves at the risk of violating the strong data privacy laws enacted in many countries across the globe.  To minimize conflicts, companies must educate themselves about data privacy, plan ahead and act strategically.  This checklist can serve as a guide to help companies comply with data privacy laws when conducting cross-border anti-corruption or other investigations, and when engaging in common compliance activities.  The checklist highlights data privacy issues that companies should consider and actions they should take prior to the development of an FCPA issue, during an investigation and during due diligence.  For more on the interaction between data privacy and anti-corruption laws, see The FCPA Report’s Data Privacy Series: "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),” The FCPA Report, Vol. 2, No. 1 (Jan. 9, 2013); Part Two Of Three, Vol. 2, No. 2 (Jan. 23, 2013); Part Three of Three, Vol. 2, No. 3 (Feb. 6, 2013).

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  • When and How Companies Should Include FCPA Risk Disclosures in SEC Filings: Compendium (Part Three of Three)

    In the wake of increased FCPA enforcement, more companies are including FCPA risks in the Risk Factors sections of their SEC filings.  FCPA experts disagree on whether the benefits of such disclosure outweigh the disadvantages.  Some recommend that companies include detailed, FCPA specific risk factors in their filings.  Others suggest that companies include more general international risk factors.  To help shed light on this controversial and critical issue, The FCPA Report is publishing a multi-part series addressing the strategy and mechanics of disclosure of FCPA risk in the Risk Factors section of SEC filings.  The first article in the series discussed the SEC rules governing such disclosure and the evolution of the disclosure of risk factors related to international operations, and examined both sides of the debate as to whether such disclosure is necessary and prudent.  The second installment in the series discussed the consequences of including FCPA-specific disclosures and provided insight into drafting risk-based disclosure.  With help from Intelligize’s database and search tools, The FCPA Report has also organized this long-form compendium of actual FCPA and international operations risk factor disclosures from recent SEC filings to complement the series, including links to the relevant SEC filings.  The disclosures are grouped based how much detail the company chose to include about the FCPA.

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  • Why the Direct Access Partners Case Matters for Financial Sector Anti-Corruption Compliance

    With the filing of criminal and civil charges against employees of New York-based broker dealer Direct Access Partners, the government has opened a new chapter of FCPA enforcement in the finance sector.  The labyrinthine scheme alleged by the government and the financial company’s rapid disintegration following the revelation of the charges serve as a stark reminder to the financial services industry of the importance of periodically assessing the effectiveness and appropriateness of anti-bribery compliance programs.  In a guest post, Sean Hecker, Andrew M. Levine and Steven S. Michaels of Debevoise & Plimpton LLP discuss the most recent developments in the case, summarize the government’s charges against the lower level defendants Clarke and Hurtado and identify some of the unique risks faced by financial services firms stemming from the complex transactions in which they deal and the multiplicity of government entities with mandates that can encompass anti-bribery compliance.  See also “FCPA Charges against Broker-Dealer Stemming From Routine SEC Examination Is ‘Wake-Up Call’ to the Financial Services Industry,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013). 

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  • 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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  • How the New Brazilian Anti-Corruption Law Impacts U.S. Corporations

    Brazil is the world’s seventh largest economy, with a GDP of over $2 trillion.  The country is considered an emerging global market, has a large domestic consumer market and is attractive to foreign direct investments.  Alongside this enormous growth, however, is the problem of corruption.  A large body of regulation governs the interaction between the public and private sectors in Brazil.  As a result, doing business in regulated sectors means that business will fall within a complex regulatory regime marked by uncertainty and burdensome bureaucratic requirements.  See “A Seven-Step Process for Mitigating Corruption Risk When Engaging Third-Party Consultants in Brazil,” The FCPA Report, Vol. 1, No. 7 (Sep. 5, 2012).  Brazil has now responded to global demands that it play a more active role in combating corruption on a domestic level – as well as the demands of the Brazilian public who have protested the lack of anti-corruption laws – with the enactment of a groundbreaking anti-corruption law that is aimed at changing the business culture in Brazil.  In a guest article, Adriana Dantas and Luiz Eduardo Alcântara, attorneys at Barbosa, Müssnich & Aragão in São Paulo, Brazil, present an overview of the Brazilian Anti-Corruption Law and explore the potential impact on U.S. companies doing business in Brazil.  See also “The Essentials of the New Brazilian Anti-Corruption Legislation,” The FCPA Report, Vol. 2, No. 17 (Aug. 21, 2013).

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  • Diebold Inc. Resolves Civil and Criminal FCPA Charges Related to Bribery in China, Indonesia and Russia for $48 Million

    Lavish vacations for foreign officials across the globe in return for business form the basis for many of the government’s allegations against Diebold, Inc., an Ohio-based maker of ATM machines and security systems.  Diebold settled with both the SEC and DOJ on October 22, 2013 and agreed to pay more than $48 million in fines, disgorgement and prejudgment interest for the alleged violations.  The government alleged that $3 million in illicit payments were made on behalf of Diebold in China, Russia and Indonesia from 2005-2010.  The DOJ charged the case as conspiracy to violate the anti-bribery provisions of the FCPA and a violation of the books and records provisions.  The company agreed to retain a compliance monitor for 18 months, often a costly and unwelcome proposition.  See “How to Find a Business-Minded Compliance Monitor and Minimize Reporting Requirements When Negotiating an FCPA Settlement (Part One of Three),” The FCPA Report, Vol. 2, No. 4 (Feb. 20, 2013); Part Two of Three, Vol. 2, No. 5 (Mar. 6, 2013); Part Three of Three, Vol. 2, No. 6 (Mar. 20, 2013)

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  • Former Executive Javade Chaudhri Rejoins Jones Day as Partner in Washington

    Jones Day recently announced that Javade Chaudhri has rejoined its Washington, D.C. office as a partner in the Global Disputes Practice, after a ten-year stint at Sempra Energy, where he was the chief compliance officer.  Chaudhri has conducted numerous international investigations relating to the FCPA and other regulatory matters.  See “A Guide to Disclosing Corruption Investigations in SEC Filings: Compendium of SEC Filings (Part Four of Four),” The FCPA Report, Vol. 2, No. 12 (Jun. 12, 2013). 

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  • Steptoe Expands FCPA/Anti-Corruption and Compliance Practices in London with Jeff Cottle

    On October 17, 2013, Steptoe & Johnson LLP announced that Jeffrey W. Cottle has joined as a partner in the firm’s International Regulation & Compliance and FCPA/Anti-Corruption Groups.  While Cottle will reside in Steptoe’s London office, he expects to be actively engaged for clients on both sides of the Atlantic, assisting them with a range of regulatory compliance matters.  See “Strategies for Implementing the U.K. Bribery Act’s Requirement of Adequate Procedures for Intermediaries,” The FCPA Report, Vol. 2, No. 3 (Feb. 6, 2013).

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  • Patricia Davis, Former DOJ Assistant Director, Joins GeyerGorey LLP

    On October 15, 2013, GeyerGorey LLP announced that Patricia Davis, a twenty-year veteran of the Department of Justice, has joined the firm as of counsel.  She previously served as Assistant Director of the Fraud Section in Civil Division of the DOJ where she was responsible for investigating and prosecuting hundreds of cases involving fraud on government healthcare, procurement and grant/loan programs.

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