The new british invasion may jon mar-feature_030512-415-1

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The article describes the proscriptions of the UK Bribery Act of 2010 and compares its provisions to the United States Foreign Corrupt Practices Act, arguing that the UK Act potentially criminalizes a broader range of conduct including commercial bribery.

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The new british invasion may jon mar-feature_030512-415-1

  1. 1. The New British Invasion: 2010, the number had increased to 120.2 In 2007, nine individuals were prosecuted for FCPA violations. In 2010, that number had risen to 44.3 The Securities and Will the UK Exchange Commission (SEC) created a unit devoted exclusively to such prosecutions 4 and Mark Bribery Act of 2010 Mendelsohn, the former Deputy Chief of the Fraud Section at DOJ, told the Wall Street Journal in March Eclipse the FCPA? 2011 that he expected the number of FCPA prosecu- tions would continue to rise.5 Much attention has been given to the threat posed by such prosecutions to companies held accountable for the unlawful conduct of an employee even when the employee’s acts contravened company policy and evaded the company’s efforts at compliance. But the danger of prosecution under the FCPA is primarily limited to bribes directed at obtaining business from foreign governments. Consequently, compliance n July 1, 2010, the U.K. Bribery Act of 2010 efforts could be focused upon those people and enti- O became effective. This law subjects any U.S. corporation or individual doing business in the United Kingdom to harsh criminal penalties if ties engaged in soliciting business from a foreign gov- ernment. But with the enactment of the U.K. Bribery Act, a corrupt effort to obtain business from any found guilty of bribery. Unlike the Foreign Corrupt source is a potential threat to the company. Practices Act (FCPA), the U.K. Bribery Act of 2010 applies to commercial bribery. Potentially, therefore, a The FCPA and the U.S. company headquartered in Kansas City, that sells ethanol in Manchester, England, could be prosecuted U.K. Bribery Act: Origins for bribing an employee of an oil company in Saudi During the mid-1970s, the SEC uncovered evi- Arabia. The Bribery Act is that broad. dence that as many as 400 U.S. companies had paid The Bribery Act follows upon U.S. efforts to combat foreign officials, politicians, and political parties as corruption worldwide. Over the last five years the much as $300 million to secure business in a foreign Department of Justice (DOJ) has made enforcement venue.6 The most notorious example involved the air- of the Foreign Corrupt Practices Act a major priority. craft company Lockheed. Testimony before the Senate In 2003, there were nine investigations of foreign and revealed that Lockheed had paid $22 million to for- domestic corporations for violations of the FCPA.1 By eign officials to secure contracts in West Germany, B Y J O N M AY16 W W W. N A C D L . O R G THE CHAMPION
  2. 2. Japan, Italy, and the Netherlands. ring anywhere in the world, even if when the application of the FCPA mayThese revelations resulted in the enact- totally unconnected to the United be problematic. But that is not likely toment of the Foreign Corrupt Practices Kingdom.15 Thus, the Bribery Act is be the case with the Bribery Act.Act of 1977 “to bring these corrupt significantly broader than the FCPA. Commercial bribery is a central featurepractices to a halt and to restore public To see how this works in practice, of the U.K. law. Thus the Bribery Actconfidence in the integrity of the consider the case of Abc, a pharmaceu- poses a greater threat to U.S. companiesAmerican business system.”7 tical company headquartered in than the FCPA because it subjects U.S. The U.K. Bribery Act of 2010 had Connecticut that manufactures a drug corporations and individuals to poten-a similar origin. It was enacted in used to treat AIDS. Abc tial prosecution in the U.K. and it sub-response to a scandal involving BAE Pharmaceutical, a publically traded jects U.S. corporations and individualsSystems.8 British defense contractor corporation, also does business in to prosecution for a far wider range ofBAE Systems, the world’s second England. Abc seeks to sell its AIDS business activity.largest defense contractor, was accused drug to B, a nation in West Africa. Inof paying hundreds of millions of dol- order to obtain a contract with B Subjects and Targetslars to secure defense contracts from nation, X salesperson pays a bribe to YSaudi Arabia and Hungary. In 2010, it official. In its financial records, M Of the Lawspled guilty to one count of conspiracy employee of Abc Pharmaceutical As discussed earlier, bribery usedto defraud the United States (by mak- knowingly describes the payment as a to obtain business from a foreign gov-ing false statements concerning its lease for an office in B nation. ernment is a crime under both theFCPA compliance and violating the Under this scenario, Abc FCPA and the Bribery Act. The BriberyArms Export Control Act and the Pharmaceutical and its employee X Act goes further by making it a crimeInternational Traffic in Arms could be prosecuted under the FCPA for anyone to obtain anything of valueRegulations) and agreed to pay $400 (15 U.S.C. § 78dd-1(a)(1)(A)) for from a private company through T H E N E W B R I T I S H I N VA S I O Nmillion in fines.9 This plea was part of bribing a foreign official.16 There is no bribery.a coordinated effort with the United provision to prosecute foreign official The FCPA is not a model of clari-Kingdom’s Serious Fraud Office, which Y. Employee M could be prosecuted ty. The anti-bribery provisions areexacted its own punishment-a plea to a pursuant to 15 U.S.C. § 78m(b)(2) and divided between three sections: 15record keeping offense involving a (3)(B)(5) for concealing the true U.S.C. § 78dd-1 is applicable topayment to a Tanzanian consultant nature of the payment.17 “issuers”; 15 U.S.C. § 78dd-2 is appli-and a fine of $50 million.10 The Serious Under the Bribery Act, Abc cable to “domestic concerns”; and 15Fraud Office is the entity now charged Pharmaceutical and its employee X U.S.C. § 78dd-3 is applicable to “per-with the responsibility of enforcing the could be prosecuted for bribing a for- sons” other than “issuers.”U.K. Bribery Act. eign official (Bribery Act §§ 1, 6).18 In Issuers include companies addition, Abc Pharmaceutical could be (domestic or foreign) that have a classConduct Prohibited prosecuted for failing to prevent of securities traded on a U.S. market or employee X from bribing foreign offi- entities required to file reports with The FCPA attacks corruption in cial Y (Bribery Act § 7). Unlike the the SEC, or companies that havetwo ways. First, it directly outlaws FCPA, foreign official Y could also be American Depository Receipts tradedbribes to obtain business from foreign prosecuted for soliciting or taking the on a U.S. exchange.22governments, and second, it outlaws bribe (Bribery Act § 2).19 Domestic concerns are private cor-efforts to conceal those bribes in a If Abc Pharmaceutical bribed an porations, limited liability companies,company’s financial records. The employee of C Pharmaceutical in partnerships, sole proprietorships with aFCPA only targets the person or com- order to obtain the formula for C principal place of business in the Unitedpany paying the bribe. It does not Pharmaceutical’s new malaria drug, States or organized under U.S. law, andapply to those who solicited or this bribe could also be prosecuted “any individual who is a citizen, nation-received the bribe. Nor does it apply to under express provisions of the al, or resident of the U.S.”23commercial bribery. In the FCPA the Bribery Act (Bribery Act §§ 1, 2). Persons other than issuers oranti-bribery provisions are found in 15 While such conduct would not direct- domestic concerns include foreignU.S.C. §§ 78dd-1, 78dd-2, and 78dd-3, ly violate the anti-bribery provision of companies and foreign nationals thatand the financial reporting provisions the FCPA, 15 U.S.C. § 78dd-1, any “while in the territory of the U.S. …are found in 15 U.S.C. § 78m. erroneous description of the transac- make use of the mails or any means or The U.K. Bribery Act attacks cor- tion in Abc Pharmaceutical’s books instrumentality of interstate com-ruption in a different way. First, its would violate the accounting provi- merce” in furtherance of an improperproscriptions are not limited to acts sions in 15 U.S.C. § 78m. Moreover, as payment scheme.24corrupting foreign governments, Pollack and Billings noted, 20 the The U.K. Bribery Act is not so com-although there is a specific provision absence of a commercial bribery pro- plicated. It applies to persons who pay acovering such bribes (§ 6). 11 The vision has not hindered DOJ, which bribe, denominated “P,” and those whoBribery Act applies to commercial has relied upon state bribery violations receive the bribe, denominated “R.”bribery as well (§ 1).12 Second, the to bring charges under the Travel Act.21 Persons can either be individuals or arti-Bribery Act subjects persons receiving Nevertheless while it is possible to ficial entities. Some of its proscriptions,the bribe to prosecution (§ 2).13 Third, prosecute commercial bribery under however, only apply to artificial entities.the Bribery Act criminalizes a com- these provisions, such charges are com- Section 7 makes it a crime for a “relevantmercial organization’s failure to pre- paratively rare. The United States has commercial organi[z]ation,” denomi-vent bribery (§ 7). 14 Fourth, the employed the Travel Act primarily in nated “C,” to fail to have “adequate pro-Bribery Act applies to conduct occur- cases involving government corruption cedures” in place to prevent bribery byW W W. N A C D L . O R G MARCH 2012 17
  3. 3. an employee or someone associated with of Justice, commonly encountered Department of Justice Principles of the organization.25 external risks can be categorized into Prosecution of Business Organizations five broad groups — country, sec- lists the factors prosecutors should Defenses to Charges Under toral, transaction, business opportu- consider in reaching a decision regard- nity, and business partnership. ing a corporate target when prosecu- FCPA and Bribery Act Depending upon the nature of the tors conduct an investigation, deter- A. A Pound of Prevention business, one or more of these mine whether to bring charges, and As mentioned, the Bribery Act groups will need to be assessed in negotiate plea or other agreements: contains a defense not found in the order to develop adequate proce- FCPA. Unlike the FCPA, having “ade- dures. But such assessment is not 1. The nature and seriousness of the quate procedures” to prevent fraud limited to external threats. An assess- offense, including the risk of harm to constitutes a complete defense to any ment of an organization’s internal the public, and applicable policies bribery charges against a commercial operations may disclose other and priorities, if any, governing the organization.26 What constitutes ade- threats such as deficiencies in prosecution of corporations for par- quate procedures? The U.K. Ministry of employee training, a culture that ticular categories of crime (see Justice published a document entitled rewards excessive risk taking, or United States Attorneys’ Manual The Bribery Act of 2010 — Guidance inadequate financial controls.33 (USAM) 9-28.400); that delineates six principles which, if applied diligently, should insulate a 4. Due diligence. Although similar to 2. The pervasiveness of wrongdoing company from prosecution. 27 These risk assessment, the Ministry of within the corporation, including principles are: Justice considers due diligence the complicity in, or the condoning important enough for separate con- of, the wrongdoing by corporate 1. Proportionate procedures. These steps sideration. Using third-party inter- management (USAM 9-28.500);T H E N E W B R I T I S H I N VA S I O N are described as procedures that are mediaries to secure business from a sufficiently extensive to meet the foreign government may be identi- 3. The corporation’s history of similar challenge posed by a particular risk.28 fied as a threat during a risk assess- misconduct, including prior crimi- For instance, certain countries pose ment. But doing due diligence may nal, civil, and regulatory enforce- greater risks of public corruption lead to the identification of an inter- ment actions against it (USAM 9- than others. Thus, a company doing mediary unlikely to engage in bribery 28.600); business in the Netherlands may not and thus mitigate the threat.34 face the same level of risk as a com- 4. The corporation’s timely and volun- pany doing business in Nigeria. 5. Communication (including train- tary disclosure of wrongdoing and Some industries pose greater risks ing). This principle includes state- its willingness to cooperate in the than others. A manufacturer of dry- ments from the top that (1) set the investigation of its agents (USAM 9- wall may face fewer risks that a man- appropriate tone, and (2) educate 28.700); ufacturer of munitions.29 The proce- employees and agents on the dures implemented will be evaluated requirements of the law and proce- 5. The existence and effectiveness of on how likely those procedures were dures that encourage employees and the corporation’s pre-existing com- to mitigate the threat as well as deter outsiders to “speak up” when they pliance program (USAM 9-28.800); unethical conduct by the company’s have knowledge of unlawful conduct employees and agents.30 (i.e., whistleblowers).35 6. The corporation’s remedial actions, including any efforts to implement 2. Top-level commitment. The U.K. 6. Monitoring and review. Cultivating a an effective corporate compliance Bribery Act seeks to foster a culture culture of compliance and ethical program or to improve an existing of integrity. To that end, it is expect- behavior requires more than just one, to replace responsible manage- ed that those at the top of the com- promulgating policies and proce- ment, to discipline or terminate pany will (a) forcefully communicate dures. The organization must ensure wrongdoers, to pay restitution, and the company’s anti-bribery stance that those procedures are being fol- to cooperate with the relevant gov- and (b) have an adequate level of lowed. Periodically the organization ernment agencies (USAM 9-28.900); involvement in developing bribery must also re-evaluate its business to prevention procedures.31 The degree determine whether its existing pro- 7. Collateral consequences, including of involvement may depend upon cedures are adequate to address whether there is disproportionate the size of the organization. At a emerging threats.36 harm to shareholders, pension hold- small company, it may be necessary ers, employees, and others not for top management to be “personal- A company’s effort to prevent proven personally culpable, as well ly involved in initiating, developing, fraud through a rigorous compliance as impact on the public arising from and implementing bribery preven- program is a circumstance that the the prosecution (USAM 9-28.1000); tion procedures.” At a multinational Department of Justice will consider in corporation, the board may only determining whether to permit the 8. The adequacy of the prosecution of need to set bribery prevention poli- company to enter into a non-prosecu- individuals responsible for the cor- cies, leaving to management the task tion or deferred prosecution agree- poration’s malfeasance; and of implementing them.32 ment. However, the existence of a com- pliance program is not a defense to 9. The adequacy of remedies such as 3. Risk assessment. According to the bribery. civil or regulatory enforcement guidance published by the Ministry Section 9-28.300 of the actions (USAM 9-28.1100).18 W W W. N A C D L . O R G THE CHAMPION
  4. 4. The principles of prosecution is going to waste its time pursuing a (g) an individual ordinarily(USAM 9-28.200 B) contend that company that had to pay a foreign offi- resident in the United“Non-prosecution and deferred prose- cial a bribe in order to obtain tele- Kingdom;cution agreements, for example, occu- phone service or electricity.41 Wherepy an important middle ground more serious offenses are being pur- (h) a body incorporated underbetween declining prosecution and sued, however, it is likely that allega- the law of any part of theobtaining the conviction of a corpora- tions regarding grease payments will United Kingdom; ortion.” However, as NACDL Director of be included, particularly if the conductWhite Collar Policy Shana-Tara Regon is widespread. (i) a Scottish partnership.47has argued, the ugly truth is that whilethe existence of non-prosecution and C. Making Nice Thus, a U.S. citizen who is also adeferred prosecution agreements can Under the U.K. Bribery Act, a com- resident of the U.K. will be within thebe welcome alternatives to an indict- pany can take a foreign official out to a reach of British authorities.ment, combined with a virtually strict football game (as long as it isliability regime, they can also permit Manchester United, not the Sentences and Finesthe government to exact millions of Dolphins).42 Under the FPCA, a com-dollars in fines from companies who pany can pay to fly a foreign official to An individual found guilty ofare genuinely without fault but who the United States for a tour of the com- bribery under the FCPA can be sen-cannot afford to take the risk of an pany’s manufacturing facility. 43 But tenced to five years in prison.48adverse outcome if they take on the under neither statute can a company Corporations and other business entitiesgovernment.37 send a foreign official and his family on are subject to a fine of up to $2 million; Common sense and any sense of an all-expense paid visit to Disney officers, directors, stockholders, employ-fairness would suggest that a company World.44 But like everything else in the ees, and agents are subject to a fine of up T H E N E W B R I T I S H I N VA S I O Nthat did everything possible to prevent law, there are a thousand points to $100,000.49 Violation of the books andfraud should not be held accountable between these two extremes where an records provisions carries a maximumfor the criminal conduct of its employ- organization acts at its peril. Where the prison sentence of 20 years and fines ofees. But that is not a defense under the lines will be drawn will have to be set- $5 million for an individual and $25FCPA. Until Congress enacts a provi- tled by the courts. million for a company.50sion similar to § 7(2) of the Bribery However, companies and individu-Act, U.S. companies will have to Personal Jurisdiction als are subject to the Alternative Finesdepend upon prosecutorial discretion Act, 18 U.S.C. § 3571(d), which states:to avoid criminal prosecution. U.S. practitioners need to know “If any person derives pecuniary gain several things about U.K. jurisdiction. from the offense … the defendant mayB. A Pint of Bribery The Bribery Act applies to any company be fined not more than the greater of The FCPA and the U.K. Bribery that does business in the U.K. no matter twice the gross gain. …”Act also reflect different views of the where it was formed or incorporated.45 An individual found guilty of vio-seriousness of certain transactions In addition, the Bribery Act applies to a lating the Bribery Act is subject to asuch as “payments made to secure per- U.S. citizen if the “act or omission maximum sentence of 10 years inmits, licenses, or the expeditious per- which forms part of the offen[s]e takes prison (§ 11). There is no limit, howev-formance of similar duties of an essen- place in that part of the United er, on the fine that can be imposed ontially ministerial or clerical nature.” Kingdom.”46 Finally, the Bribery Act an individual or business entity.51Because the FCPA was intended to only applies to individuals if:punish those who obtained a competi- Finally, an Importanttive advantage through the use of The person was one of the fol-bribes, it contains an exception for pay- lowing at the time the acts or Exceptionments made to facilitate transactions omissions concerned were In United States v. Kozeny,52 therequired to carry out business other- done or made – District Court for the Southern Districtwise lawfully obtained (sometimes of New York stated in dicta:referred to as “grease payments”).38 As (a) a British citizen;the legislative history makes clear, the The legislative history of theFCPA was not intended to reach this (b) a British overseas territo- FCPA makes clear that “truekind of behavior.39 ries citizen; extortion situations would not The U.K. Bribery Act makes no be covered by this provision.”such exception for “facilitation pay- (c) a British National Thus, while the FCPA wouldments.” Such payments are viewed as (Overseas); apply to a situation in which ahaving a corrosive effect and excluding “payment [is] demanded onthem creates “artificial distinctions (d) a British Overseas citizen; the part of a government offi-that are difficult to enforce, undermine cial as a price for gaining entrycorporate anti-bribery procedures, (e) a person who under the into a market or to obtain aconfuse anti-bribery communication British Nationality Act 1981 contract,” it would not applywith employees and other associated was a British subject; to one in which payment ispersons, perpetuate an existing ‘cul- made to an official “to keep anture’ of bribery, and have the potential (f) a British protected person oil rig from being dynamited,”to be abused.” 40 Nevertheless, it is within the meaning of that an example of “true extortion.”unlikely that the Serious Fraud Office Act; The reason is that in the for-W W W. N A C D L . O R G MARCH 2012 19
  5. 5. mer situation, the bribe payer Notes financial or other advantage — (i) to F, or cannot argue that he lacked 1. Sherman and Sterling, LLP, Recent (ii) to another person at F’s request or the intent to bribe the official Trends and Patterns in FCPA Enforcement with F’s assent or acquiescence, and (b) F because he made the “con- (as of February 13, 2008) at 2, available at is neither permitted nor required by the scious decision” to pay the http://www.shearman.com/files/upload/ written law applicable to F to be influ- official. In other words, in the FCPA_Trends.pdf. enced in F’s capacity as a foreign public first example, the payer could 2. Michael F. Perlis & Wrenn E. Chais, official by the offer, promise or gift. have turned his back and Foreign Corrupt Practices Act: Prosecutions 12. U.K. Bribery Act — § 1 Offences of walked away — in the latter on the Rise, L.A. TIMES DAILY JOURNAL at 5, bribing another person example, he could not. available at http://www.stroock.com/ (1) A person (“P”) is guilty of an SiteFiles/Pub978.pdf. offen[s]e if either of the following cases The FCPA does not itself recog- 3. Sehyung Lee & David M. Laigaie, applies. nize such an exception, so it is uncer- FCPA Violators Beware: Harsh Sentences (2) Case 1 is where (a) P offers, prom- tain how a court would actually rule if May Become the Norm, T HE L EGAL ises or gives a financial or other advan- faced with such circumstances. INTELLIGENCER, June 5, 2010, available at tage to another person, and (b) P intends Similarly, no such distinction is found http://www.dilworthlaw.com/portalre- the advantage — (i) to induce a person to in the Bribery Act, although the source/lookup/wosid/cp-base-4- perform improperly a relevant function Ministry of Justice has stated that the 10120/media.name=/201061004Dilwort or activity, or (ii) to reward a person for common law defense of duress is likely h.pdf. the improper performance of such a to be available in instances in which 4. Robert Khuzami, Director, SEC function or activity. individuals are forced to make pay- Division of Enforcement, Remarks Before (3) Case 2 is where — (a) P offers, ments in order to prevent loss of life, the New York City Bar, My First 100 Days promises or gives a financial or other limb, or property.53 as Director of Enforcement (Aug. 5, 2009), advantage to another person, and (b) PT H E N E W B R I T I S H I N VA S I O N available at http://www.sec.gov/news/ knows or believes that the acceptance of Conclusion speech2009/spch080509rk.htm. the advantage would itself constitute the 5. http://online.wsj.com/article/ improper performance of a relevant func- Once upon a time, citizens only SB1000142405274870439650457620494 tion or activity. needed to be concerned about the laws 4173667866.html. 13. U.K. Bribery Act — § 2 Offen[s]es enacted by their own state legislatures 6. U.S. Department of Justice, relating to being bribed and municipalities. Lawmakers intend- Layperson’s Guide, at 2, available at (1) A person (“R”) is guilty of an ed most such enactments to prevent http://www.justice.gov/criminal/fraud/fc offen[s]e if any of the following cases conflict and resolve commercial dis- pa/docs/lay-persons-guide.pdf. applies. putes. Criminal sanctions were limited 7. Report of the Committee on (2) Case 3 is where R requests, agrees to the sorts of conduct punished by the Banking, Housing, and Urban Affairs, U.S. to receive or accepts a financial or other common law. The law was easy to Senate, Foreign Corrupt Practices and advantage intending that, in conse- understand; ignorance of the law was Domestic and Foreign Investment quence, a relevant function or activity no excuse. As the federal government Improved Disclosure Acts of 1977, p. 6, should be performed improperly began to regulate industries and finan- S. 305, Report 95-114. 95 Cong,. 1st sess; (whether by R or another person). cial markets, a far broader range of con- http://10.173.2.10/criminal/fraud/fcpa/hi (3) Case 4 is where — (a) R requests, duct became subject to civil and crimi- stor y/1977/senaterpt.html[7/7/2009 agrees to receive or accepts a financial or nal enforcement. The law became 7:50:02 AM. other advantage, and (b) the request, increasingly complex and decreasingly 8. When a Bribe Is Merely Facilitating agreement or acceptance itself consti- knowable. The relationship between Business, June 11, 2011, THE ECONOMIST; tutes the improper performance by R of a actus reus and mens rea became attenu- available at http://www.economist.com/ relevant function or activity. ated. Then the United States sought to blogs/blighty/2011/06/anti-bribery-laws. (4) Case 5 is where R requests, agrees subject foreign nationals and corpora- 9. Information, United States v. BAE to receive or accepts a financial or other tions to U.S. law. This established a Systems PLC, No. 10-cr-00035 (D.D.C. filed advantage as a reward for the improper precedent. The end result of this prece- February 4, 2010). performance (whether by R or another dent is that foreign laws now subject 10. BAE Systems Pays $450 Million to person) of a relevant function or activity. U.S. citizens to prosecution in foreign Settle Bribery Scandal Charges, WASH. POST, (5) Case 6 is where, in anticipation of lands for conduct that has the most ten- Feb. 6, 2010, available at http://www. or in consequence of R requesting, agree- uous relationship to the foreign venue. washingtonpost.com/wp-dyn/content/ ing to receive or accepting a financial or As a consequence, it is no longer article/2010/02/05/AR2010020503811. other advantage, a relevant function or enough for U.S. criminal defense html. activity is performed improperly — (a) by lawyers to be prepared to defend clients 11. U.K. Bribery Act — § 6 Bribery of R, or (b) by another person at R’s request against prosecutions in their own coun- foreign public officials or with R’s assent or acquiescence. try. Now such threats can come from (1) A person (“P”) who bribes a for- 14. U.K. Bribery Act — § 7 Failure of anywhere in the world. eign public official (“F”) is guilty of an commercial organi[z]ations to prevent Thanks to Daniel Nardello and offen[s]e if P’s intention is to influence F bribery Andrew Levi of Nardello & Company in F’s capacity as a foreign public official. (1) A relevant commercial and Michael E. Clark of Duane Morris (2) P must also intend to obtain or organi[z]ation (“C”) is guilty of an offence for their helpful suggestions in reviewing retain — (a) business, or (b) an advantage under this section if a person (“A”) associ- a draft of this article. in the conduct of business. (3) P bribes F ated with C bribes another person intend- © Jon May, 2011. All rights if, and only if — (a) directly or through a ing — (a) to obtain or retain business for reserved. third party, P offers, promises or gives any C, or (b) to obtain or retain an advantage20 W W W. N A C D L . O R G THE CHAMPION
  6. 6. in the conduct of business for C. uses the mail or any facility in interstate ciated with contract performance or (2) But it is a defen[s]e for C to prove or foreign commerce, with intent to — (1) inspections related to transit of goodsthat C had in place adequate procedures distribute the proceeds of any unlawful across country; (iv) providing phone serv-designed to prevent persons associated activity; or (2) commit any crime of vio- ice, power and water supply, loading andwith C from undertaking such conduct. lence to further any unlawful activity; or unloading cargo, or protecting perish- 15. U.K. Bribery Act — § 3 (6) A func- (3) otherwise promote, manage, estab- able products or commodities from dete-tion or activity is a relevant function or lish, carry on, or facilitate the promotion, rioration; or (v) actions of a similar nature.activity even if it — (a) has no connection management, establishment, or carrying 39. See note 21.with the United Kingdom, and (b) is per- on, of any unlawful activity, and there- 40. Guidance, note 27 at 18.formed in a country or territory outside after performs or attempts to perform or 41. Michael Volkov, Is the SFO Gettingthe United Kingdom. attempts to perform — (A) an act Ready to Flex Its Muscles?, White Collar 16. FCPA Section 78dd-1 Prohibited described in paragraph (1) or (3) shall be Defense and Compliance Blog, availableforeign trade practices by issuers (a) fined under this title, imprisoned not at http://michaelvolkov.blogspot.com/Prohibition. It shall be unlawful for any more than 5 years, or both; or (B) an act 2011/06/is-sfo-getting-ready-to-flex-issuer which has a class of securities reg- described in paragraph (2) shall be fined its.html.istered pursuant to section 78l of this title under this title, imprisoned for not more 42. Guidance, note 27 at 12-13.or which is required to file reports under than 20 years, or both, and if death results 43. 15 U.S.C. § 78dd-2(c)(2).section 78o(d) of this title, or for any offi- shall be imprisoned for any term of years 44. Guidance, note 27 at 14.cer, director, employee, or agent of such or for life. 45. U.K. Bribery Act § 7 (5) — (b) anyissuer or any stockholder thereof acting 22. Mike Koehler, FCPA Professor, other body corporate (wherever incorpo-on behalf of such issuer, to make use of FCPA 101, available at http://fcpaprofes- rated) which carries on a business, or partthe mails or any means or instrumentality sor.com/fcpa-101. of a business, in any part of the Unitedof interstate commerce corruptly in fur- 23. Id. Kingdom, and (d) any other partnership T H E N E W B R I T I S H I N VA S I O Ntherance of an offer, payment, promise to 24. Id. (wherever formed) which carries on apay, or authorization of the payment of 25. U.K. Bribery Act § 7 (1). business, or part of a business, in any partany money, or offer, gift, promise to give, 26. U.K. Bribery Act § 7 (2). of the United Kingdom.or authorization of the giving of anything 27. http://www.justice.gov.uk/guid- 46. U.K. Bribery Act § 12 (1).of value to — (1) any foreign official for ance/making-and-reviewing-the-law/ 47. U.K. Bribery Act § 12 (4).purposes of — (A)(i) influencing any act bribery.htm. 48. 15 U.S.C. § 78dd-2(g).or decision of such foreign official in his 28. Id., Guidance, at 21. 49. See note 34, supra.official capacity, (ii) inducing such foreign 29. Id. at 26. 50. 15 U.S.C. § 78ff.official to do or omit to do any act in vio- 30. Id. at 22. 51. U.K. Bribery Law Expandslation of the lawful duty of such official, 31. Id. at 23. Corporate Exposures, B USINESS INSURANCE,or (iii) securing any improper advantage; 32. Id. at 24. April 11, 2011, available at http://or (B) inducing such foreign official to use 33. Id. at 26. www.businessinsurance.com/ar ticle/his influence with a foreign government 34. Id. at 27. 20110410/ISSUE01/304109986.or instrumentality thereof to affect or 35. Id. at 29. 52. United States v. Kozeny, 582 F.influence any act or decision of such gov- 36. Id. at 31. Supp. 2d 535, 540 (S.D.N.Y. 2008).ernment or instrumentality, in order to 37. Written testimony of NACDL 53. Guidance, note 27, at 19. nassist such issuer in obtaining or retain- Director of White Collar Crime Policying business for or with, or directing busi- Shana-Tara Regon on behalf of NACDLness to, any person. Before the House Committee on the About the Author 17. 15 U.S.C. § 78m(b)(2) — Every Judiciary Subcommittee on Crime,issuer which has a class of securities reg- Terrorism, and Homeland Security (June Jon May is a partner in the firm of May &istered pursuant to section 78l of this title 14, 2011). Cohen P.A. His prac-and every issuer which is required to file 38. 15 U.S.C. § dd-1(b). Exception for tice concentratesreports pursuant to section 78o(d) of this routine governmental action. on white collartitle shall — (A) make and keep books, Subsections (a) and (g) of this section crime, organizedrecords, and accounts, which, in reason- shall not apply to any facilitating or expe- crime prosecutions,able detail, accurately and fairly reflect diting payment to a foreign official, polit- and money laun-the transactions and dispositions of the ical party, or party official the purpose of dering. He beganassets of the issuer … (3)(5) No person which is to expedite or to secure the per- his career as a pub-shall knowingly circumvent or knowingly formance of a routine governmental lic defender andfail to implement a system of internal action by a foreign official, political party, then was an Assistant U.S. Attorney. Heaccounting controls or knowingly falsify or party official. …(f )(3)(A) (3)(A) The practices law with his wife, Carol Cohen.any book, record, or account described in term “routine governmental action”paragraph (2). means only an action which is ordinarily Jon May 18. See notes 9 and 10, supra. and commonly performed by a foreign 1001 Brickell Bay Dr. 19. See note 11, supra. official in — (i) obtaining permits, licens- Suite 2206 20. Barry Pollack & Laura Billings, es, or other official documents to qualify Miami, FL 33131After 30 Years of the FCPA, Will Courts a person to do business in a foreign coun- 305-373-3740Finally Get Into the Act?, THE CHAMPION, try; (ii) processing governmental papers, Fax 786-228-0246 E- MAIL crimlawfed@gmail.comSeptember/October 2010 at 34. such as visas and work orders; (iii) provid- 21. 18 U.S.C. § 1952: (a) Whoever trav- ing police protection, mail pick-up andels in interstate or foreign commerce or delivery, or scheduling inspections asso-W W W. N A C D L . O R G MARCH 2012 21

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