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FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast
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FCPA Guidance: Understanding Key Issues and Ensuring Compliance LIVE Webcast

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The joint Department of Justice and Securities and Exchange Commission, “A Resource Guide to the U.S. Foreign Corrupt Practice Act”, highlights the agencies intention and approach to halt corrupt …

The joint Department of Justice and Securities and Exchange Commission, “A Resource Guide to the U.S. Foreign Corrupt Practice Act”, highlights the agencies intention and approach to halt corrupt practices and bribery of U.S companies to foreign officials.

Aside from addressing enforcement issues, (1) Definition of Foreign Official; (2) Issues on Gifts, travel and Entertainment; (3) Mergers and Acquisition and Successor Liability; and (4) Effective Compliance Program, were also discussed as they are deemed relevant to FCPA. But, above all, the guidance aims to help U.S companies comply with FCPA rules, mitigate potential pitfalls and prevent costly errors.

Join us in this two-hour Live webcast as our panel of distinguished leaders and practitioners provide an in-depth discussion of the significant issues included in the guidelines, along with training and other best practices in complying. The panel will also be available to answer questions and illuminate the latest regulations for participants.

To view the webcasts go to this link: http://youtu.be/AFATyTX1c48

To learn more about the webcast visit our website: http://theknowledgegroup.org/

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  • 1. Speaker Firms and Organization: Sponsored By: Presented By: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP James Slear Partner Thompson Coburn LLP Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Thank you for logging into today’s event. Please note we are in standby mode. All Microphones will be muted until the event starts. We will be back with speaker instructions @ 11:55am. Any Questions? Please email: Info@knowledgecongress.org Group Registration Policy Please note ALL participants must be registered or they will not be able to access the event. If you have more than one person from your company attending, you must fill out the group registration form. We reserve the right to disconnect any unauthorized users from this event and to deny violators admission to future events. To obtain a group registration please send a note to info@knowledgecongress.org or call 646.202.9344. 1 January 24, 2014
  • 2.  If you experience any technical difficulties during today’s WebEx session, please contact our Technical Support @ 866-779-3239.  You may ask a question at anytime throughout the presentation today via the chat window on the lower right hand side of your screen. Questions will be aggregated and addressed during the Q&A segment.  Please note, this call is being recorded for playback purposes.  If anyone was unable to log in to the online webcast and needs to download a copy of the PowerPoint presentation for today’s event, please send an email to: info@knowledgecongress.org. If you’re already logged in to the online webcast, we will post a link to download the files shortly.  If you are listening on a laptop, you may need to use headphones as some laptops speakers are not sufficiently amplified enough to hear the presentations. If you do not have headphones and cannot hear the webcast send an email to info@knowledgecongress.org and we will send you the dial in phone number. 2 January 24, 2014
  • 3.  About an hour or so after the event, you'll be sent a survey via email asking you for your feedback on your experience with this event today - it's designed to take less than two minutes to complete, and it helps us to understand how to wisely invest your time in future events. Your feedback is greatly appreciated. If you are applying for continuing education credit, completions of the surveys are mandatory as per your state boards and bars. 6 secret words (3 for each credit hour) will be given throughout the presentation. We will ask you to fill these words into the survey as proof of your attendance. Please stay tuned for the secret word.  Speakers, I will be giving out the secret words at randomly selected times. I may have to break into your presentation briefly to read the secret word. Pardon the interruption. 3 January 24, 2014
  • 4. Welcome to the Knowledge Group Unlimited Subscription Programs. We have Two Options Available for You: FREE UNLIMITED: This program is free of charge with no further costs or obligations. It includes:  Unlimited access to over 15,000 pages of course material from all Knowledge Group Webcasts.  Subscribers to this program can download any slides, white papers, or supplemental material covered during all live webcasts.  A special discount code which will give you 50% off the purchase of all Live webcasts and downloaded recordings. PAID UNLIMITED: Our most comprehensive and cost-effective plan, for a one-time fee:  Access to all LIVE Webcasts (Normally $199 to $349 for each event without a subscription). Including: Bring-a-Friend – Invite a client or associate outside your firm to attend for FREE. Sign up for as many webcasts as you wish.  Access to all of Recorded/Archived Events & Course Material includes 1,500+ hours of audio material (Normally $299 for each event without a subscription).  Free CLE/CPE/CE Processing (Normally $49 Per Course without a subscription).  Access to over 15,000 pages of course material from Knowledge Group Webcasts.  Ability to invite a guest of your choice to attend any live webcast Free of charge (Exclusive benefit only available for PAID UNLIMITED subscribers).  6 Month Subscription is $299 with No Additional Fees Other options are available.  Special Offer: Sign up today and add 2 of your colleagues to your plan for free Check the “Triple Play” box on the sign-up sheet contained in the link below. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964 4 January 24, 2014
  • 5. Knowledge Group UNLIMITED PAID Subscription Programs Pricing: Individual Subscription Fees: (3 Options) Semi-Annual: $299 one-time fee for a 6 month subscription with unlimited access to all webcasts, recordings, and materials. Annual: $499 one-time fee for a 12 month unlimited subscription with unlimited access to all webcasts, recordings, and materials. Month-to-Month: Pay $49 monthly. Cancel anytime (No Commitment). Group plans are available. See the registration form for details. Best ways to sign up: •Fill out the sign up form attached to the post conference survey email. •Sign up online by clicking the link contained in the post conference survey email. 3. Click the link below or the one we just posted in the chat window to the right. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964 Discounts: Enroll today and you will be eligible for the “Triple Play” program and 3% off if you pay by credit card. Also we will waive the $49 CLE/CPE processing fee for today’s conference. See the form attached to the post conference survey email for details. Questions: Send an email to: info@knowledgecongress.org with “Unlimited” in the subject. 5 January 24, 2014
  • 6. Sponsored By: Olshan, a law firm based in New York, represents major businesses and entrepreneurs for their most significant transactions, problems and opportunities. Olshan’s clients range from public companies, hedge, venture capital, private equity and other investment funds to entrepreneurs and private companies worldwide. Clients choose Olshan for innovative strategies and sophisticated, game-changing advice in corporate, securities law and shareholder activism, complex commercial, corporate and securities litigation, bankruptcy and creditors’ rights, real estate, intellectual property and advertising. Since its founding, Olshan has offered an alternative to the AmLaw 50 law firm business model with responsive, independent and clientfocused legal counsel provided by the firm’s senior lawyers. Thompson Coburn attorneys represent clients from nearly every industrial and corporate sector, including manufacturing, banking, transportation, energy, and communications. Companies choose to work with our firm because of our results-oriented approach, staffing that is appropriate for each assignment, and our understanding of their business. Thompson Coburn was recently named as one of the top 30 firms in the nation for client service in 2014 by BTI Consulting, which also named the firm among the nation's top firms at providing exceptional value. With 360 attorneys and 40 practice areas, we serve clients nationally and internationally. 6 January 24, 2014
  • 7. Sponsored By: Paul, Weiss is a firm of more than 800 lawyers with diverse backgrounds, personalities, ideas and interests who collaboratively provide innovative solutions to our clients' most critical and complex legal and business challenges. We represent some of the largest publicly and privately held corporations and financial institutions in the world as well as clients in need of pro bono assistance. 7 January 24, 2014
  • 8. Media Partner: bestattorneysonline.com, a premium service provided by bestattorneysonline.com LLC, started in 2009, ranks law firms through research and evaluation to identify the most respectable and dedicated law teams in the United States. Our goal is to provide our users with a new way to locate and contact an attorney or a law firm while providing firms a way to get their image out and into the open. We advertise and provide access to the best law firms around the country and in specific areas and also list a directory showing many opportunities for a client to get in touch with legal help. 8 January 24, 2014
  • 9. Brief Speaker Bios: Jeffrey A. Udell Jeffrey A. Udell is a partner in the Litigation Group at Olshan, with experience litigating a wide variety of matters in both federal and state courts. His practice focuses on white-collar criminal defense, regulatory enforcement and internal investigations, and he represents both corporations and individuals in some of their most sensitive, complex and high-stakes matters. He also represents hedge funds, investors and companies in complex commercial litigations. He has tried cases in a variety of forums, including federal district courts in New York and Ohio, New York State court, FINRA, New York’s Judicial Conduct Commission and the New York City Police Department Trials Commission. For three years (2008-2011), Jeff chaired the New York City Bar Association’s Professional Responsibility Committee. James Slear Jim Slear is a partner in Thompson Coburn's International Trade practice. He focuses his practice on international trade compliance and enforcement, including the FCPA, the economic and trade sanctions administered by the OFAC, ITAR, and the EAR. He advises domestic, foreign and multinational clients in a wide array of industries, including aerospace, biomedicine, defense, financial services, insurance, Internet services, manufacturing, semiconductor and telecommunications. Jim has more than 25 years of experience conducting investigations and has conducted internal investigations for numerous clients in international trade and other matters--such as antitrust and securities--both domestically and abroad, including Europe, the Middle East, Japan, the People's Republic of China and Malaysia. Prior to entering private practice, Jim was a Judge Advocate with the U.S. Air Force. 9 January 24, 2014
  • 10. Brief Speaker Bios: Walter Ricciardi Walter G. Ricciardi is a partner in the Securities Litigation and Enforcement Group at Paul, Weiss. Walter has extensive experience defending a broad variety of investigations conducted by the U.S. Securities and Exchange Commission and other regulatory authorities. Prior to joining Paul, Weiss Walter was the Deputy Director of the SEC's Division of Enforcement, where he supervised many of the Commission's most significant investigations related to financial fraud, Foreign Corrupt Practices Act, insider trading and broker-dealer and mutual fund compliance issues. Prior to joining the SEC, Walter spent 20 years with PricewaterhouseCoopers and its predecessor, Coopers & Lybrand, where he was in charge of defending the firm's litigation and regulatory matters. While at PwC, he was elected by his partners to serve on the firm's board, which is responsible for overseeing the management of the firm, and to serve on the Global Oversight Board of the PwC global organization. ► For more information about the speakers, you can visit: http://www.knowledgecongress.org/speakers_2013_Ensuring_Compliance.html 10 January 24, 2014
  • 11. The joint Department of Justice and Securities and Exchange Commission, “A Resource Guide to the U.S. Foreign Corrupt Practice Act”, highlights the agencies intention and approach to halt corrupt practices and bribery of U.S companies to foreign officials. Aside from addressing enforcement issues, (1) Definition of Foreign Official; (2) Issues on Gifts, travel and Entertainment; (3) Mergers and Acquisition and Successor Liability; and (4) Effective Compliance Program, were also discussed as they are deemed relevant to FCPA. But, above all, the guidance aims to help U.S companies comply with FCPA rules, mitigate potential pitfalls and prevent costly errors. Join us in this two-hour Live webcast as our panel of distinguished leaders and practitioners provide an in-depth discussion of the significant issues included in the guidelines, along with training and other best practices in complying. The panel will also be available to answer questions and illuminate the latest regulations for participants. 11 January 24, 2014
  • 12. Featured Speakers: SEGMENT 1: SEGMENT 2: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP James Slear Partner Thompson Coburn LLP SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP 12 January 24, 2014
  • 13. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP Introduction Jeffrey A. Udell is a partner in the Litigation Group at Olshan, with experience litigating a wide variety of matters in both federal and state courts. His practice focuses on white-collar criminal defense, regulatory enforcement and internal investigations, and he represents both corporations and individuals in some of their most sensitive, complex and high-stakes matters. He also represents hedge funds, investors and companies in complex commercial litigations. He has tried cases in a variety of forums, including federal district courts in New York and Ohio, New York State court, FINRA, New York’s Judicial Conduct Commission and the New York City Police Department Trials Commission. For three years (2008-2011), Jeff chaired the New York City Bar Association’s Professional Responsibility Committee. Prior to joining Olshan, Jeff served for six years as an Assistant U.S. Attorney in the Criminal Division of the U.S. Attorney's Office for the Southern District of New York. He was also a public defender for two years at the Office of the Appellate Defender. Jeff began his legal career by clerking for the Honorable Edward R. Korman, U.S. District Judge for the Eastern District of New York. • Email – judell@olshanlaw.com • T:212.451.2238 • F:212.451.2222 13 January 24, 2014
  • 14. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP FCPA: The Basics I. II. III. IV. V. History and Purpose of the FCPA Key FCPA Provisions Anti-Bribery Provisions Accounting and Internal Controls Provisions The DOJ & SEC FCPA Resource Guide 14 January 24, 2014
  • 15. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP I. History and Purpose of the FCPA • • • FCPA enacted in 1977 Drafted in response to:  Watergate scandal  SEC report of widespread payments to foreign and domestic officials to secure business Congress found that corruption:  Created market inefficiencies and instability  Lead to sub-standard products  Created unfair playing field for honest companies  Tarnished image of United States business Source: DOJ/SEC Guide at 3-4 15 January 24, 2014
  • 16. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP I. History and Purpose of the FCPA (cont’d) • • Fluctuation in DOJ FCPA enforcement:  1977 − 2004: minimal enforcement  2004 − 2006: 3 − 6 actions per year  2007 − 2009: 20 − 25 actions per year  2010: over 35 actions  2011 − 2012: 10 − 20 actions per year  January to June, 2013: 17 actions Several reasons for fluctuation 16 January 24, 2014
  • 17. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP II. Key FCPA Provisions • • Anti-bribery provisions prohibit payments or offers to pay money or anything of value to foreign officials, or third parties acting on their behalf, if payment made to assist in obtaining or retaining business (15 U.S.C. § 78dd-1) Accounting and internal controls provisions require public U.S. companies to maintain accurate books and records and internal controls (15 U.S.C. § 78m) 17 January 24, 2014
  • 18. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions What Persons and Entities Are Covered? Anti-bribery provisions apply to: • All U.S. companies, citizens or residents, whether or not they act within or outside of the U.S. • All foreign companies listed on U.S. stock exchanges • All foreign companies or individuals who execute any part of a bribery scheme from within the U.S. • Officers, directors, employees or agents of the above Source: DOJ/SEC Guide at 3-4 18 January 24, 2014
  • 19. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) Elements of an FCPA Bribery Offense Anti-bribery provisions prohibit: • • • • Offer, promise, or payment of a thing of value To a foreign official Made with corrupt intent To assist in obtaining or retaining business Source: 15 U.S.C. § 78dd-1 (a) 19 January 24, 2014
  • 20. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) What Is an Offer, Promise, or Payment? • • • • Broadly defined: offering or giving anything of value Payment need not be made; attempts count No de minimus exception Can include:  Money or gift cards  Gifts (e.g., a holiday bottle of whiskey)  Charitable contributions or donations  Travel or entertainment (e.g., flights, dinners, a show)  Anything else of value (e.g., tuition, loan, services) Source: DOJ/SEC Guide at 14-16. 20 January 24, 2014
  • 21. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) Who Is a Foreign Official? • • • • Any official regardless of rank or title Not always obvious, sometimes investigation is required Any officer or employee of:  Any “foreign government”  “[A]ny department, agency, or instrumentality” of a foreign government (e.g., the Ministry of Energy)  Any state-owned or controlled company  Any “foreign political party”  Any “public international organization” (e.g., the U.N.) Any candidate for foreign political office Source: DOC/SEC Guide at 19-21 21 January 24, 2014
  • 22. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) Use of Third Parties or Knowing Avoidance • • It is unlawful to make a payment to a third party while knowing all or a portion of that payment will go directly or indirectly to a foreign official  Knowledge = actual knowledge OR conscious avoidance Many types of payments to third parties can put a company at risk, including those to:     Subsidiary or other affiliate Agent, sponsor, distributor, consultant   Freight forwarder Customs broker Joint venture partner Relative of a foreign official Source: DOJ/SEC Guide at 21-23 22 January 24, 2014
  • 23. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) Corrupt Intent • • A violator must intend to induce the foreign official to misuse his/her official position Intent includes acting willfully and intending to do something unlawful  Awareness of the specific law violated by the conduct is not required  Even if you do not know you are violating the FCPA, you can still be liable Source: DOJ/SEC Guide at 14 23 January 24, 2014
  • 24. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) Business Purpose • Payment or offer or thing of value must be made to assist in:  Obtaining business  Retaining business  Directing business to any person or entity • Very broad and covers payments intended to:    Obtain a contract Reduce taxes Reduce customs duties    Gain non-public information Influence a lawsuit Create exceptions in regulations Source: DOJ/SEC Guide at 12-13 24 January 24, 2014
  • 25. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) Narrow Exception: Gifts and Facilitation Payments • FCPA does not prohibit reasonable gifts to foreign officials as tokens of esteem or gratitude where:  Made openly and transparently  Properly recorded in a company’s books  Appropriate under local law, customary where given and reasonable for the occasion (e.g., moon cakes) • Grease or facilitation payments not prohibited  FCPA exempts small payments to further “routine governmental action” that involve nondiscretionary acts Source: DOJ/SEC Guide at 15, 25 25 January 24, 2014
  • 26. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP III. Anti-Bribery Provisions (cont’d) Bona Fide Business Expenses Affirmative defense to FCPA enforcement where payment:  Reasonable and bona fide; and  Directly related to either: o Promotion, demonstration, or explanation of products or services, or o Execution or performance of a contract Examples of bona fide business expenses:   Travel to a factory Travel for training   Product Demonstrations Promotional Activities Source: DOJ/SEC Guide at 24 26 January 24, 2014
  • 27. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP IV. Accounting and Internal Controls Provisions Books and Records Provision • • • • Applies only to public companies Issuers must maintain books, records and accounts which in reasonable detail accurately reflect the transactions and dispositions of their assets “Books and records” is very broadly defined No materiality requirement Source: DOJ/SEC Guide at 38-41 27 January 24, 2014
  • 28. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP IV. Accounting and Internal Controls Provisions (cont’d) Internal Controls Provision • • Also applies only to public companies Issuers must have a system of internal accounting controls to provide reasonable assurance that  Transactions are authorized by management and  Financial statements are in conformity with GAAP Source: DOJ/SEC Guide at 38-41 28 January 24, 2014
  • 29. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP IV. Accounting and Internal Controls Provisions (cont’d) Oracle Settlement • • • In August 2012, SEC alleged in a complaint:  Oracle’s Indian subsidiary structured transactions with India’s government so that distributors placed $2.2 million of proceeds in unauthorized side funds, all unknown to parent  Funds were used to pay local vendors on false invoices SEC alleged Oracle violated FCPA’s books and records and internal controls provisions by:  Failing to properly record the side funds on its books  Failing to “audit and compare the distributor’s margin against the end user price” and failing to “seek transparency in or audit third party payments made by distributors” Oracle agreed to a $2 million penalty to settle matter Source: SEC Press Release , Aug. 16, 2012 29 January 24, 2014
  • 30. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP IV. Accounting and Internal Controls Provisions (cont’d) Oracle Settlement The Oracle settlement shows: • SEC may seek to apply the books and records and internal controls provisions under what is tantamount to a strict liability standard. There was no claim that:  Oracle ever paid any bribes to officials or otherwise  Parent had knowledge of the side funds  Parent saw any red flags • SEC appears to believe that companies must proactively audit all distributors Source: FCPA Blog, Nov. 25, 2013 30 January 24, 2014
  • 31. SEGMENT 1: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP V. DOJ & SEC FCPA Resource Guide • Guide provides:  Centralized compendium of current FCPA law and policy written in lay terms  Practical guidance for companies establishing compliance programs  Numerous examples and hypotheticals  Extensive appendix of FCPA related references • Guide does not provide:  No new policies  No new bright-line rules to make it easier for companies to comply with FCPA 31 January 24, 2014
  • 32. SEGMENT 2: James Slear Partner Thompson Coburn LLP Introduction Jim Slear is a partner in Thompson Coburn's International Trade practice. He focuses his practice on international trade compliance and enforcement, including the FCPA, the economic and trade sanctions administered by the OFAC, ITAR, and the EAR. He advises domestic, foreign and multinational clients in a wide array of industries, including aerospace, biomedicine, defense, financial services, insurance, Internet services, manufacturing, semiconductor and telecommunications. Jim has more than 25 years of experience conducting investigations and has conducted internal investigations for numerous clients in international trade and other matters--such as antitrust and securities--both domestically and abroad, including Europe, the Middle East, Japan, the People's Republic of China and Malaysia. Prior to entering private practice, Jim was a Judge Advocate with the U.S. Air Force. 32 January 24, 2014
  • 33. SEGMENT 2: James Slear Partner Thompson Coburn LLP Recurring Theme: Third Party Liability  “DOJ’s and SEC’s FCPA enforcement actions demonstrate that third parties, including agents, consultants, and distributors, are commonly used to conceal the payment of bribes to foreign officials in international business transactions.” 33 January 24, 2014
  • 34. SEGMENT 2: James Slear Partner Thompson Coburn LLP Prohibition on Indirect Payments  FCPA expressly prohibits corrupt payments made through third parties or intermediaries.  Specifically covers payments made to “any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly” to a foreign official. 34 January 24, 2014
  • 35. SEGMENT 2: James Slear Partner Thompson Coburn LLP Liability for Third Party Payments How much do you need to “know”? “Substantially certain” corrupt payment will be made Aware of “high probability” corrupt payment will be made Liable if there is . . . . “Reckless disregard” “Conscious avoidance” “Deliberate Ignorance” 35 January 24, 2014
  • 36. SEGMENT 2: James Slear Partner Thompson Coburn LLP SEC/DOJ First Guiding Point  As part of risk-based due diligence, companies should understand the third-party’s:     Qualifications Associations Business reputation Relationship, if any, with foreign officials  Scrutiny should increase as red flags surface 36 January 24, 2014
  • 37. SEGMENT 2: James Slear Partner Thompson Coburn LLP SEC/DOJ Second Guiding Point  Understanding business rationale for including the third party, including its role and necessity, and the timing of its introduction.  Ensure contract terms specifically describe services to be performed.  Compare payment terms to typical terms in industry and country and confirm compensation is commensurate with services provided.  Confirm actual performance of contracted services. 37 January 24, 2014
  • 38. SEGMENT 2: James Slear Partner Thompson Coburn LLP SEC/DOJ Third Guiding Point  Undertake some form of ongoing monitoring of third-party relationships.  Where appropriate may include:     updating due diligence periodically exercising audit rights providing periodic training requesting annual compliance certifications 38 January 24, 2014
  • 39. SEGMENT 2: James Slear Partner Thompson Coburn LLP SEC/DOJ Final Guiding Point  Inform third parties of the company’s compliance program and commitment to ethical and lawful business practices.  Where appropriate, seek assurances from third parties, through certifications and otherwise, of reciprocal commitments. 39 January 24, 2014
  • 40. SEGMENT 2: James Slear Partner Thompson Coburn LLP Takeaways from SEC/DOJ Guidance  All third parties present risk  Focus on risk-based due diligence, with increasing scrutiny as red flags are uncovered  An effective compliance program will include mechanisms to reduce risk at all stages of the third party relationship 40 January 24, 2014
  • 41. SEGMENT 2: James Slear Partner Thompson Coburn LLP Red Flags  High risk country  Excessive commissions  Unreasonably large discounts to distributors  Vaguely described services  Different line of business than that for which engaged  Related to or closely associated with foreign official  Express request or insistence of the foreign official  Shell company incorporated in offshore jurisdiction  Requests for payment to offshore bank accounts  Required prepayment in advance of work  Lack of adequate resources to do work 41 January 24, 2014
  • 42. SEGMENT 2: James Slear Partner Thompson Coburn LLP Third Parties  Local agents/sales representatives  Consultants/advisors  Subcontractors  Subsidiaries  JV Partners  Distributors  Freight forwarders  Attorneys  Other intermediaries 42 January 24, 2014
  • 43. SEGMENT 2: James Slear Partner Thompson Coburn LLP Agents  UTStarcom, Inc. (2009): o U.S. telecom company allegedly paid $1.5 million to agent in Mongolia for a “license fee.” o Fee was only $50,000 o Balance used to make improper payment to foreign official 43 January 24, 2014
  • 44. SEGMENT 2: James Slear Partner Thompson Coburn LLP Subsidiaries  SEC/DOJ Guidance on parent liability for subsidiary’s conduct under agency principles  “evaluate the parent’s control—including the parent’s knowledge and direction of the subsidiary’s actions, both generally and in the context of the specific transaction”  Schnitzer Steel Ind. Inc. (2006): Alleged bribes by subsidiaries and employees to obtain business states: “Schnitzer Steel accepts and acknowledges that it is responsible for the acts of . . . its wholly owned subsidiary” 44 January 24, 2014
  • 45. SEGMENT 2: James Slear Partner Thompson Coburn LLP Consultants/Advisors  Alcatel-Lucent SA (2010)  French issuer’s senior executives approved retention and payment of millions of dollars to consultants with no relevant experience or in other cases despite obvious indications that the consultants were performing little or no legitimate work. 45 January 24, 2014
  • 46. SEGMENT 2: James Slear Partner Thompson Coburn LLP Distributors  Pfizer H.C.P. (2012). Pfizer entered exclusive distribution contract with Kazakh company, believing at least some value from the contract would be given to a Kazakh government official to ensure registration of a Pfizer product in Kazakhstan.  Weatherford Services Limited (2013): Subsidiary provided volume discounts to Iraqi distributor believing those discounts would be used to create slush fund to make bribes to foreign officials of a government-owned national oil company. 46 January 24, 2014
  • 47. SEGMENT 2: James Slear Partner Thompson Coburn LLP Subcontractors  Data Systems & Solutions LLC (2012)  Paid bribes to officials at Ignalina Nuclear Power Plant through third-party subcontractors in exchange for large contracts  Disguised through fictitious scopes of work to subcontractors and paid at above-market rates 47 January 24, 2014
  • 48. SEGMENT 2: James Slear Partner Thompson Coburn LLP Joint Venture Partners  Weatherford Services Limited (2013)  Employees established JV in Africa with two local entities controlled by foreign officials.  JVPs did not contribute capital, expertise or labor.  Sole purpose of JVPs was to funnel payments to the foreign officials controlling them.  Foreign officials awarded JV lucrative contracts, gave WSL inside information about pricing, and took contracts away from competitors.  Other third party violations were involved. 48 January 24, 2014
  • 49. SEGMENT 2: James Slear Partner Thompson Coburn LLP Freight Forwarders/Logistics Companies  Panalpina World Transport (2010)  Swiss company bribed numerous foreign government officials on behalf of customers to circumvent local customs processes in various countries.  Customers also were held liable for FCPA violations 49 January 24, 2014
  • 50. SEGMENT 2: James Slear Partner Thompson Coburn LLP Ten Steps for Due Diligence  One: Consider country’s reputation for corruption  Reports (e.g., Transparency International), news, enforcements  Two: Determine value sought from third party    Why do we need a third party? Why was this third party selected? What value is the third party providing?  Three: Assess competence of third party  Qualifications (expertise, resources) to provide desired services 50 January 24, 2014
  • 51. SEGMENT 2: James Slear Partner Thompson Coburn LLP Ten Steps for Due Diligence  Four: Determine integrity of third party     Open source research and restricted party lists (U.S. and others) References, interviews, discreet inquiries Third party audits Cooperation (e.g., audit rights)  Five: Identify relationships with government officials     Interview or Questionnaire Identify directors / officers / key employees Require information about past/present relationships with government List of anticipate non-employee resources 51 January 24, 2014
  • 52. SEGMENT 2: James Slear Partner Thompson Coburn LLP Ten Steps for Due Diligence  Six: Determine reasonableness of compensation   Is pay commensurate with the effort expected? Special payment terms (advances, split payment, off shore accounts)  Seven: Verify due diligence responses  Verify information received from consultant with interviews of business references and background search or third party diligence 52 January 24, 2014
  • 53. SEGMENT 2: James Slear Partner Thompson Coburn LLP Ten Steps for Due Diligence  Eight: Integrate FCPA safeguards into the contract   Certifications Audit rights  Nine: Provide for continuing oversight of the activities of third party   Develop compliance plan Assign responsible employee  Ten: Ensure accurate books and records   Periodic review Training 53 January 24, 2014
  • 54. SEGMENT 3: James Slear Partner Thompson Coburn LLP Final Thoughts  No one-size fits all solution  Recognize and mitigate risk  Adequate due diligence may be costly (e.g., Burma)  Training is an essential complement to due diligence 54 January 24, 2014
  • 55. SEGMENT 2: James Slear Partner Thompson Coburn LLP Contact Information Jim Slear jslear@thompsoncoburn.com 202.585.6981 55 January 24, 2014
  • 56. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Introduction Walter G. Ricciardi is a partner in the Securities Litigation and Enforcement Group at Paul, Weiss. Walter has extensive experience defending a broad variety of investigations conducted by the U.S. Securities and Exchange Commission and other regulatory authorities. Prior to joining Paul, Weiss Walter was the Deputy Director of the SEC's Division of Enforcement, where he supervised many of the Commission's most significant investigations related to financial fraud, Foreign Corrupt Practices Act, insider trading and broker-dealer and mutual fund compliance issues. Prior to joining the SEC, Walter spent 20 years with PricewaterhouseCoopers and its predecessor, Coopers & Lybrand, where he was in charge of defending the firm's litigation and regulatory matters. While at PwC, he was elected by his partners to serve on the firm's board, which is responsible for overseeing the management of the firm, and to serve on the Global Oversight Board of the PwC global organization. 56 January 24, 2014
  • 57. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP FCPA Trends I. SEC and DOJ Have Sought Higher Penalties and Disgorgement II. Growth of Specialized Government Resources for FCPA Investigations III. Brave New World for Whistleblowers IV. Government Expectations regarding Cooperation 57 January 24, 2014
  • 58. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Disgorgement And Penalties Sought By The SEC And DOJ From Corporations To Settle Have Grown  Three recent settlements have joined the FCPA top ten all time largest list with total payments exceeding $100 million Alcoa Inc. January 9, 2014 $384 Million Weatherford International November 26, 2013 $152.8 million Total S.A. May 29, 2013 $382.2 million 58 January 24, 2014
  • 59. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Growth Of Specialized Government Resources For FCPA Investigations  “An Embarrassment of Resources”  Charles Duross Deputy Chief, DOJ Fraud Section Head of the FCPA Unit • 20 full time DOJ prosecutors  Kara Brockmeyer Chief SEC Enforcement FCPA Speciality Unit Units evolved from “working groups” on January 13, 2010 • Brockmeyer elevated to Chief September 27, 2011 • “Three dozen” SEC Enforcement professionals -- 75% in DC, 25% in the regional offices 59 January 24, 2014
  • 60. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Whistleblower Incentives And Protection  Section 21F of the Dodd-Frank Act (2010), “Securities Whistleblower Incentives and Protection”  Mandatory for SEC to award 10-30% of the monetary sanctions collected to whistleblowers who:   that leads to a successful Commission Enforcement action;   voluntary provide original information; resulting in sanctions exceeding $1 million Office of the Whistleblower    Sean X. McKessy, Chief since February 18, 2011 Jane A. Norberg, Deputy Chief since January 17, 2012 SEC Final Rules effective August 12, 2011 60 January 24, 2014
  • 61. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Whistleblower Incentives And Protection, (con’t)  Number of Complaints  FY 2011 - 334 FY 2012 - 3001 FY2013 - 3238  149 FCPA tips in FY 2013, up from 115 in FY 2012  Whistleblower submissions received from individuals in all 50 states and 68 foreign countries – 66 from UK; 62 from Canada; 52 from PRC  Six awards, including $14 million awarded on October 1, 2013  SEC Investor Protection Fund balance at FY 2013 -- $439 million  Confidentiality  Whistleblowers entitled to confidentiality  Breach of duty of confidentiality could be retaliation  Intangible harm could be actionable – Menendez v. Halliburton, Inc. 61 January 24, 2014
  • 62. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Government Expectations Regarding Cooperation  Ralph Lauren Corporation - Settlement April 22, 2013  SEC and DOJ Non-prosecution agreement  $700,000 disgorgement and interest  $882,000 penalty  “The NPA shows the benefit of implementing an effective compliance program. Ralph Lauren Corporation discovered the problem after it put in place an enhanced compliance program and began training its employees. That level of self-policing along with its self-reporting and cooperation led to this resolution.” 62 January 24, 2014
  • 63. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Government Expectations Regarding Cooperation, (con’t)  What is expected?  Controls and due diligence to avoid infractions  Credible response to “red flags”  Prompt remedial action  Self-Report? 63 January 24, 2014
  • 64. SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP Government Expectations Regarding Cooperation, (con’t)  Impact on Weapons in government arsenal  Any charges?  Financial penalty and disgorgement  Bribery or books and records charges  Admissions  Criminal plea, deferred prosecution agreement, non-prosecution agreement  Entity - parent or subsidiary  Monitor  Individuals 64 January 24, 2014
  • 65. Q&A: SEGMENT 1: SEGMENT 2: Jeffrey A. Udell Partner Olshan Frome Wolosky LLP James Slear Partner Thompson Coburn LLP SEGMENT 3: Walter Ricciardi Partner Paul, Weiss, Rifkind, Wharton & Garrison LLP ► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type your question in the box that appears and click send. ► Questions will be answered in the order they are received. 65 January 24, 2014
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