Anti Corruption

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This presentation on the new global law enforement effort against corruption, white collar crime, and anti-trust/anticartel behavior was first presented in London in November 2008. The presenters followed up with a presentation in November of 2009 in St. Louis. Copyright HBS and AG, 2008 and 2009.

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  • Depends on nature of goods Destination of proposed export Ultimate end use UK has well developed export control system Nature of goods: UK Strategic Export Control Lists not only military BUT ALSO dual use items (civil or military purposes) - covers some encryption technology products and software. Depends on complexity. Carve out for personal use; availability in mass-market outlets and also “read only” material - can seek guidance If covered by Lists: need licence. Open General EL does not cover Sudan but does cover China. Approx 35 licences which cover wide range of circumstances. if not, need to apply for individual licence: either standard individual licence or open individual export licence. Record keeping
  • Depends on nature of goods Destination of proposed export Ultimate end use UK has well developed export control system Nature of goods: UK Strategic Export Control Lists not only military BUT ALSO dual use items (civil or military purposes) - covers some encryption technology products and software. Depends on complexity. Carve out for personal use; availability in mass-market outlets and also “read only” material - can seek guidance If covered by Lists: need licence. Open General EL does not cover Sudan but does cover China. Approx 35 licences which cover wide range of circumstances. if not, need to apply for individual licence: either standard individual licence or open individual export licence. Record keeping
  • Depends on nature of goods Destination of proposed export Ultimate end use UK has well developed export control system Nature of goods: UK Strategic Export Control Lists not only military BUT ALSO dual use items (civil or military purposes) - covers some encryption technology products and software. Depends on complexity. Carve out for personal use; availability in mass-market outlets and also “read only” material - can seek guidance If covered by Lists: need licence. Open General EL does not cover Sudan but does cover China. Approx 35 licences which cover wide range of circumstances. if not, need to apply for individual licence: either standard individual licence or open individual export licence. Record keeping
  • Depends on nature of goods Destination of proposed export Ultimate end use UK has well developed export control system Nature of goods: UK Strategic Export Control Lists not only military BUT ALSO dual use items (civil or military purposes) - covers some encryption technology products and software. Depends on complexity. Carve out for personal use; availability in mass-market outlets and also “read only” material - can seek guidance If covered by Lists: need licence. Open General EL does not cover Sudan but does cover China. Approx 35 licences which cover wide range of circumstances. if not, need to apply for individual licence: either standard individual licence or open individual export licence. Record keeping
  • The activities must relate to the supply or production of a product or service in the UK . The cartel offence only applies to horizontal agreements (agreements between undertakings operating on the same level of the supply or production chain ). In addition, arrangements fixing prices, limiting supplies or limiting production must be reciprocal in that at least two undertakings must each be bound to fix prices, limit supplies or limit production. Dishonesty It seems likely that evidence of the covert nature of some cartel activities will be of significance in proving dishonesty. Norris – see Maya article In its initial draft guidance on "no-action" letters to individuals; the OFT gave some examples of behaviour which might fall within the cartel offence: (1) managers or directors who became aware of the existence of a cartel and then took steps to end it and to report its existence to the OFT cannot be seen to have acted dishonestly. (2) An employee who becomes aware of the existence of the cartel and, although not involved in its operation, does nothing to end it has not committed the cartel offence. (3) However, individuals who are knowingly engaged in the cartel activity may have technically committed the offence, but where their involvement is peripheral or they have shown themselves willing to come forward at an early stage, the exercise of prosecutorial discretion would mean that they would be unlikely to be prosecuted Standard of proof Burden of proof in a criminal case (must be proved beyond all reasonable doubt) is greater than in a civil case where the “balance of probabilities” test is used Various procedural safeguards imposed by the Police and Criminal Evidence Act 1984 which must be observed, for example the giving of cautions and the conduct of interviews Information obtained under an EA02 investigation may be used for a CA98 investigation but not necessarily vice versa
  • Creation of cartel offence brings powers of criminal investigation, and the need to apply criminal procedure to substantive competition law. Hence, if OFT suspects that a case may involve cartel activities and there may therefore be a possibility of a criminal prosecution, it will use its EA02 powers of investigation S193 : OFT may also give notice in writing requiring a person under investigation or any other person who it believes had relevant information to answer questions or otherwise provide information in relation to any matter under investigation. S194 : OFT has powers to enter premises under warrant and to seize documents which are very similar to the powers under section 29 of CA98 S 199 : Chairman of the OFT can authorise such action. The surveillance powers that may be employed include planting surveillance equipment at business premises, residential premises (including hotels) or vehicles. The OFT can grant authorised officers access to directed surveillance (essentially monitoring the movement of people and vehicles) and covert human intelligence sources (essentially the use of informants) under sections 28 and 29 RIPA. In addition, it can grant authorised officers access to communication data (primarily postal and telephone records) under section 22 RIPA The first step in the process is for an Officer of the OFT to request, in writing, an authorisation for intrusive surveillance from the Chairman of the OFT. Under section 32(2) of RIPA, the Chairman will not authorise intrusive surveillance unless he believes: (a) that the authorisation is necessary for the purpose of preventing or detecting a serious offence under section 188 of the Enterprise Act (that is to say, a cartel offence); and (b) that the authorised surveillance is proportionate to what is sought to be achieved by carrying it out. The Chairman will also take into account, in deciding whether an authorisation is necessary and proportionate, whether the information which it is thought necessary to obtain by means of the intrusive surveillance could reasonably be obtained by other less intrusive means. Except in urgent cases, an authorisation granted by the Chairman for intrusive surveillance will not take effect until it has been approved by the Surveillance Commissioner. However, when the authorisation is urgent it can take effect from the time it is granted by the Chairman provided notice is given to the Surveillance Commissioner.
  • Creation of cartel offence brings powers of criminal investigation, and the need to apply criminal procedure to substantive competition law. Hence, if OFT suspects that a case may involve cartel activities and there may therefore be a possibility of a criminal prosecution, it will use its EA02 powers of investigation S193 : OFT may also give notice in writing requiring a person under investigation or any other person who it believes had relevant information to answer questions or otherwise provide information in relation to any matter under investigation. S194 : OFT has powers to enter premises under warrant and to seize documents which are very similar to the powers under section 29 of CA98 S 199 : Chairman of the OFT can authorise such action. The surveillance powers that may be employed include planting surveillance equipment at business premises, residential premises (including hotels) or vehicles. The OFT can grant authorised officers access to directed surveillance (essentially monitoring the movement of people and vehicles) and covert human intelligence sources (essentially the use of informants) under sections 28 and 29 RIPA. In addition, it can grant authorised officers access to communication data (primarily postal and telephone records) under section 22 RIPA The first step in the process is for an Officer of the OFT to request, in writing, an authorisation for intrusive surveillance from the Chairman of the OFT. Under section 32(2) of RIPA, the Chairman will not authorise intrusive surveillance unless he believes: (a) that the authorisation is necessary for the purpose of preventing or detecting a serious offence under section 188 of the Enterprise Act (that is to say, a cartel offence); and (b) that the authorised surveillance is proportionate to what is sought to be achieved by carrying it out. The Chairman will also take into account, in deciding whether an authorisation is necessary and proportionate, whether the information which it is thought necessary to obtain by means of the intrusive surveillance could reasonably be obtained by other less intrusive means. Except in urgent cases, an authorisation granted by the Chairman for intrusive surveillance will not take effect until it has been approved by the Surveillance Commissioner. However, when the authorisation is urgent it can take effect from the time it is granted by the Chairman provided notice is given to the Surveillance Commissioner.
  • In May 2007, the OFT had announced that it is carrying out on-site searches as part of a criminal investigation into suspected cartel activity in the market for marine hoses used to transfer oil (the cartel was being investigated by the European Commission under Article 81 and also by the US Department of Justice (DOJ)) (see OFT press release 70/07). Separate but connected investigations First time a cartel case investigated by Commission under civil powers (Art. 81 EC Treaty) and by OFT under its criminal powers (S.188 EA) The DOJ arrested a number of individuals, including three British citizens. On 12 December 2007, the DOJ announced that the three UK nationals had agreed to plead guilty to participating in a conspiracy to rig bids, fix prices and allocate market shares of marine hoses sold in the US in violation of the Sherman Act. As part of the plea arrangement it was agreed that the men would be escorted in custody back to the UK in order to "allow them to co-operate" with the OFT Enterprise Act investigation. The three men were arrested by the Metropolitan Police on their arrival at Heathrow on 18 December 2007. They were interviewed by OFT officials before being charged with criminal cartel offences under the Enterprise Act. (OFT press release 177/07). In June 2008, the three men plead guilty at Southwark Crown Court to dishonestly participating in a cartel to allocate markets and customers, restrict supplies, fix prices and rig bids for the supply of marine hose and ancillary equipment in the UK, contrary to the cartel offence. The charges related to the period between 20 June 2003 (when the cartel offence came into force) and 2 May 2007 (when the cartel ended following the arrests in the US). The men were sentenced to imprisonment (two of them for three years and one for two and half years) and were also disqualified as directors for seven years and five years respectively). The OFT announced these first Enterprise Act charges as being a "highly significant development in both the UK's own competition regime and in international cooperation against cartels". On announcing the sentencing, the OFT stated that "this first criminal prosecution sends a clear message to individuals and companies about the seriousness with which UK law fives cartel behaviour" (OFT press release 72/08). However, as the defendants in these cases pleaded guilty there was no trial. Therefore, these first cases provide no assistance in resolving any of the issues in the construction of the cartel offence discussed in the remainder of this Practice note.
  • The offence may be committed even if the agreement is not implemented or the individuals involved do not have authority to act on behalf of their companies. There is no need for the undertakings in relation to which the agreement has been made to implement the agreement. The only exception to this is where the agreement is made outside the UK. In that case the offence will only apply if some steps were taken to actually implement the agreement in the UK. However, this requirement may be satisfied by as little as a phone call or e-mail to a UK subsidiary telling it to act in a certain way, regardless of whether the UK company actually changed its behaviour.
  • Anti Corruption

    1. 1. The World’s Policeman Has a Posse GLOBAL REGULATION OF INTERNATIONAL TRANSACTIONS MITIGATING YOUR RISK AND REDUCING YOUR EXPOSURE Maxwell Carr-Howard Husch Blackwell Sanders LLP Phil Gallas Husch Blackwell Sanders LLP Bruce Kilpatrick Addleshaw Goddard LLP Elizabeth Robertson Addleshaw Goddard LLP Christina Weis Husch Blackwell Sanders LLP Moderated by Michael Ray and Linda Tiller Husch Blackwell Sanders LLP © Husch Blackwell Sanders LLP and Addleshaw Goddard LLP
    2. 2. The World’s Policeman Has a Posse GLOBAL REGULATION OF INTERNATIONAL TRANSACTIONS MITIGATING YOUR RISK AND REDUCING YOUR EXPOSURE Just the Facts, Ma’am: a new approach to understanding the international enforcement regime 1:40 to 3:00 Anti-Corruption Laws and Export Controls 3:00 to 3:15 Break 3:15 to 4:15 Anti-Dumping and Anti-Trust Laws 4:15 to 4:30 Questions Join us for a reception following the presentation at 4:30 pm.
    3. 3. Dinner Before Prison: Why you need to know whom you are dining with and the impact of Global Anti-Corruption Laws <ul><li>The View from the United States, presented by Maxwell Carr-Howard </li></ul><ul><li>The View from Europe, presented by Elizabeth Robertson </li></ul>
    4. 4. The Attorney General and 94 US Attorneys (prosecution decision makers) FBI, DEA, ATF TSA, ICE, Customs, Commerce, BIS Import, Export, and Foreign Nationals Congressional Investigations Munitions OFAC Embargoed Countries and Prohibited Persons Anti-Corruption FCPA Antitrust Enforcement (criminal matters referred to DOJ) CFIUS National Security and Foreign Investments
    5. 5. UK and EU Antitrust Enforcement (including criminal matters) Export Controls Organization Enforcement of Export Controls Anti-Corruption Antitrust (criminal matters) Financial Services Regulator (Enforcement) European Commission (Antitrust enforcement and anti-dumping legislation) The next president?
    6. 6. The Foreign Corrupt Practices Act <ul><li>Governs : </li></ul><ul><li>Any Publicly Traded Company Registered in the United States or its agents </li></ul><ul><li>Any “domestic concern” organized under the laws of the United States or its agents </li></ul><ul><li>Any “foreign national or business” acting or causing actions within the United States </li></ul><ul><li>Prohibits : </li></ul><ul><li>Payment of “anything of value” (directly or through a third party) </li></ul><ul><li>To a “foreign official,” foreign political party, or candidate for office, including officials of state-owned businesses </li></ul><ul><li>With a “corrupt intent” to influence a government decision, obtain business, or obtain an improper advantage </li></ul><ul><li>Books and Records : </li></ul><ul><li>Publicly Traded Companies must maintain books that reflect all transactions </li></ul><ul><li>Publicly Traded Companies must have internal accounting controls to ensure all payments to foreign officials are recorded </li></ul><ul><li>It is a crime to circumvent such controls </li></ul><ul><li>Penalty: 5 years in Prison, up to $2mm fine </li></ul>The SEC investigates compliance with the FCPA, provides civil enforcement through its national and 11 regional offices The Department of Justice prosecutes criminal violations of the FCPA through its Fraud Section and 94 US Attorney’s Offices
    7. 7. FCPA Prosecutions Are Growing Dramatically This Year Alone: <ul><li>A Hollywood Producer and his wife were convicted of bribing Thai government officials to secure a contract for the Bangkok Film Festival </li></ul><ul><li>Latin Node, a private Florida company , pled guilty to making payments of more than $1mm to a “consultant” knowing that some or all of the money would be paid to officials of a state-owned Honduran telecommunications company and made similar payments in Yemen </li></ul><ul><li>US, Korean, and Italian Executives of a California valve company were indicted for bribing officials of foreign state-owned companies from China, Malaysia, and United Arab Emirates </li></ul>
    8. 8. The Issues <ul><li>Jean works for French Defense Ministry </li></ul><ul><li>Bob works for a company traded on NYSE </li></ul><ul><li>“Great Dinner” </li></ul><ul><li>Euro Disney Passes </li></ul><ul><li>Bob wants the Ministry to buy Fertinc products </li></ul>
    9. 9. FCPA Application <ul><li>FCPA governs “domestic concerns” (people in the US, public and private companies, foreign subsidiaries) and foreigners who cause transactions within the US </li></ul><ul><li>EVERYONE at the Ministry is a “Foreign Official” under the FCPA </li></ul><ul><li>Dinner and the “free passes” are “things of value” under the FCPA </li></ul><ul><li>Question: were the gifts offered for the purpose of “corruptly” influencing a decision by Jean? </li></ul><ul><li>Penalty: 5 years in Prison, $100,000 fine to Bob, $2 million fine to Fertinc for each violation </li></ul>
    10. 10. On EU and UK anti-bribery laws <ul><li>Historical Context and Overview </li></ul><ul><li>No single piece of anti-bribery or corruption legislation in Europe. Until a few years ago German corporations were allowed to off set “bribes” against tax. In Italy and many other civil law countries it is not possible to prosecute the corporate for criminal offences and it is dealt with by way of an administrative law process. French and British corporations have been accused routinely of paying bribes for defence procurement contracts and oil and gas and construction contracts broadly along colonial spheres of influence. Both countries have been heavily criticised for failing to prosecute overseas corruption. </li></ul>
    11. 11. On EU and UK anti-bribery laws (continued) <ul><li>But see 5 key drivers for change: </li></ul><ul><ul><li>Organisation for Economic and Cultural Development (“OECD”) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions </li></ul></ul><ul><ul><li>Terrorist attacks of September 11 2001 and the Proceeds of Crime Act 2002 (“POCA”) </li></ul></ul><ul><ul><li>The United Nations Convention Against Corruption (“UNAC”) 1997 (ratified by UK in 1997) </li></ul></ul><ul><ul><li>BAE and Siemens prosecutions </li></ul></ul><ul><ul><li>Extra territorial reach of the United States and the Foreign Corrupt Practices Act (FCPA”) </li></ul></ul>
    12. 12. The United Kingdom - The Existing Statutory Framework <ul><li>T he three existing statutes that cover corruption from an English law perspective are : </li></ul><ul><li>1. the Public Bodies Corrupt practices Act 1889 (&quot;PBCPA&quot;); 2. the Prevention of Corruption Act 1906 (&quot;PCA 1906&quot;); and 3. the Prevention of Corruption Act 1916 (&quot; POA 1916 &quot;) </li></ul><ul><li>For the sake of completeness that the Anti- terrorism Crime and Security Act (&quot;ATCSA&quot;) 2001 extends the common law offence of bribery plus most offences under the 1889 and 1906 Acts to acts carried out in a territory outside the UK and to corrupt acts relating to foreign officials. </li></ul><ul><li>At common law where a person performing a public duty takes a bribe to act corruptly in discharging that duty, both parties involved commit an offence. The offence of bribery is punishable by a fine or imprisonment, whether the bribe is accepted or not. </li></ul>
    13. 13. Defences <ul><li>In terms of defences, an agent may claim that he is not an agent at all i.e. there is no fiduciary relationship between himself and the principal.  Or, he may claim that the principal provided informed consent to the payment/consideration made . In the case of PCA 1916 and PBCPA the defendant must prove that the gift etc was not paid/given or received corruptly. </li></ul>
    14. 14. Facilitation Payments <ul><li>The FCPA criminalises bribery offences.  However, this specifically excludes from offences payments made to &quot;facilitator or expedite&quot; the performance of &quot;routine governmental action&quot; such a visa applications, utility connection etc. </li></ul><ul><li>In contrast, UK law makes no such exception for facilitation payments - &quot;a bribe is a bribe&quot; </li></ul><ul><li>Guidance issued jointly by the Department of Trade and Industry (now the Department of Enterprise and Regulatory Reform) and the Foreign and Commonwealth Office in 2004, stated that it would be difficult to envisage that the making of a small facilitation payment would lead to prosecution in the UK. However, more recent guidance, issued in February 2006 contains no such assertion. Not permitted by new Bribery Bill </li></ul>
    15. 15. Bribery Bill – Overview of New Legislation 4 New Offences <ul><li>The passive offence of receiving the bribe </li></ul><ul><li>The active offence of giving the bribe </li></ul><ul><li>A separate offence of bribing a foreign public official; and </li></ul><ul><li>A specific corporate offence of failing to prevent bribery: </li></ul><ul><ul><li>The Company would be liable if any person, including an employee, agent or subsidiary while performing services on behalf of the company, bribed another person in connection with the Company’s business and a person connected with or employed by the Company, whose functions at the time of the bribe included, anti-corruption compliance, was negligent in failing to prevent bribery </li></ul></ul>
    16. 16. Bribery Bill – Overview of New Legislation 4 New Offences (continued) <ul><ul><li>The Company will not be guilty if it can prove that it had in place “adequate procedures designed to prevent persons performing services for or on behalf of Company from committing bribery offences” </li></ul></ul><ul><ul><li>NB: This defence is not available where the person who was negligent in preventing the bribery was a director or officer in the Company </li></ul></ul><ul><ul><li>The effect of the bill is to force companies to implement or maintain adequate procedures to prevent bribery </li></ul></ul><ul><ul><li>At present there is no guidance as to what this might look like </li></ul></ul><ul><ul><li>The new offences will also apply to acts conducted overseas if it would amount to an offence in the UK and be applicable to foreign nationals working and residing in the UK </li></ul></ul>
    17. 17. Corporate Hospitality <ul><li>P holds hospitality event </li></ul><ul><li>P intends that recipients of hospitality should be impressed by opportunities his company has to offer and offer P a chance to do business </li></ul><ul><li>P recognises though that some may be so impressed by the hospitality they may offer such business irrespective of the merits of P’s company </li></ul><ul><li>Law Commission says this should NOT constitute an offence by P </li></ul><ul><li>But a recent study concluded that half of respondents were unable, among other things, to distinguish between corruption and corporate hospitality </li></ul><ul><li>Consider anti – corruption procedures/enforceable code of conduct that prohibits any offers, giving or acceptance of bribes,gifts,hospitality or expenses by employees or other parties involved that could influence the outcome of a transaction </li></ul>
    18. 18. Who is your Customer? Be Careful Where and With Whom You Do Business to avoid violating export controls <ul><li>The view from the United States, presented by Christina Weis </li></ul><ul><li>The view from Europe, presented by Bruce Kilpatrick </li></ul>
    19. 19. International Traffic in Arms Regulations (ITAR) <ul><li>U.S. Department of State, Directorate of Defense Trade Controls (DDTC) regulates defense trade under the Arms Export Control Act, implemented by the ITAR </li></ul><ul><li>ITAR contains the U.S. Munitions List (USML) </li></ul><ul><li>Registration with the DDTC </li></ul><ul><li>Key Terms </li></ul><ul><ul><li>“ Defense Articles” </li></ul></ul><ul><ul><li>“ Defense Service” </li></ul></ul><ul><li>Types of Agreements </li></ul><ul><li>Penalties </li></ul>
    20. 20. Office of Foreign Assets Control <ul><li>OFAC – Division of the U.S. Department of the Treasury </li></ul><ul><li>Administers and enforces numerous economic and trade sanctions against certain groups of individuals and countries </li></ul><ul><li>Types of Sanctions: Comprehensive, Regime-based, Limited, Specially Designated Nationals (SDN) </li></ul><ul><li>Penalties and Consequences </li></ul>
    21. 21. The Issues <ul><li>Philippe Piratte, Chief Executive of Sudinic </li></ul><ul><li>Sudinic operates in Sudan </li></ul><ul><li>The product – nitrogen mustard – is a key input in the manufacture of explosives </li></ul><ul><li>The Sudanese government seized the product and sold it to the Syrian Intelligence Services </li></ul>
    22. 22. ITAR/OFAC Application <ul><li>OFAC </li></ul><ul><ul><li>Philippe Piratte is on OFAC’s SDN list </li></ul></ul><ul><ul><li>Sudan: There is a comprehensive sanction which prohibits exports and reexports to Sudan of goods, technology (including technical data and software) or services from the U.S. or by a U.S. person, wherever located. Certain areas of Sudan are carved out of the prohibition but are very complicated to apply. </li></ul></ul><ul><ul><li>Syria: There is a comprehensive sanction which covers all financial transactions, exports and imports. </li></ul></ul><ul><li>ITAR – Nitrogen Mustard is classified in Category XIV of the USML as a Toxicological Agent (Nerve Agent, Vesicant Agent) </li></ul>
    23. 23. EU/UK export control issues (1) <ul><li>Export Control Organisation (BIS) </li></ul><ul><ul><li>Responsible for issuing export licences for “controlled” goods </li></ul></ul><ul><ul><li>Includes “dual use” goods </li></ul></ul><ul><li>ECO works closely with FCO, MoD, DFID and HMRC </li></ul><ul><li>Legislation </li></ul><ul><ul><li>EU Dual-Use Regulation (EC 428/2009) </li></ul></ul><ul><ul><li>EU Regulation on Torture (EC 1236/2005) </li></ul></ul><ul><ul><li>Export Control Act 2002 </li></ul></ul><ul><ul><li>Export Control Order 2008 </li></ul></ul><ul><li>UK strategic export control lists </li></ul>
    24. 24. EU/UK export control issues (2) <ul><li>Licensing regime (SPIRE) </li></ul><ul><ul><li>Open General Export Licence (OGEL) </li></ul></ul><ul><ul><li>Standard Individual Export License (SIEL) </li></ul></ul><ul><ul><li>Open Individual Export License (OIEL) </li></ul></ul><ul><ul><li>Global Project License (GPL) </li></ul></ul><ul><ul><li>Trade Control License </li></ul></ul><ul><li>Enforcement </li></ul><ul><ul><li>Criminal offence to export controlled goods without a license </li></ul></ul><ul><ul><li>HMRC investigates and prosecutes companies and individuals </li></ul></ul><ul><ul><li>Reporting suspicious activities </li></ul></ul><ul><ul><li>Recent prosecutions (see handout) </li></ul></ul>
    25. 25. EU/UK export control issues (3) <ul><li>Nitrogen mustard </li></ul><ul><ul><li>Classified as a chemical warfare vesicant agent </li></ul></ul><ul><ul><li>Included in Schedule 2 of UK military list </li></ul></ul><ul><li>Sudan </li></ul><ul><ul><li>Arms embargo in force (Export Control Order 2008) </li></ul></ul><ul><ul><li>UK interprets arms embargo as covering everything on UK military list </li></ul></ul><ul><li>Criminal offence </li></ul><ul><li>Case study: recent prosecution of individuals for conspiracy to export military equipment to Iran </li></ul>
    26. 26. Be Careful Where You Take that Laptop: Export Restrictions and the Business Executive <ul><li>Its not just who your customer is, or where your customer lives, it’s what you are selling. </li></ul><ul><li>Take a look at what Fertinc does next! </li></ul>
    27. 27. Export Administration Regulations (EAR) <ul><li>U.S. Department of Commerce, Bureau of Industry and Security (BIS) is responsible for implementing and enforcing the EAR </li></ul><ul><li>EAR contains the Commerce Control List (CCL) </li></ul><ul><li>Scope of the EAR </li></ul><ul><li>What is “Subject to the EAR”? </li></ul><ul><li>Key Terms: Export, Reexport, Release </li></ul><ul><li>Controlled encryption items are listed in the CCL - Category 5 </li></ul><ul><ul><ul><li>Software, technology and hardware incorporating encryption technology </li></ul></ul></ul><ul><li>Penalties and Consequences </li></ul>
    28. 28. The Issues <ul><li>Fertinc Sales Representatives travel to China with disk containing technical data related to encrypted chip </li></ul><ul><li>The Sales Representative gives the disk to PRC AG Ministry </li></ul><ul><li>The Fertinc Representative returns to the United States Border with his laptop containing evidence of the disk creation </li></ul>
    29. 29. EAR – Encryption Application <ul><li>Determine what type of authorization necessary to export: </li></ul><ul><ul><li>No review required </li></ul></ul><ul><ul><li>Notification required </li></ul></ul><ul><ul><li>Review required </li></ul></ul><ul><ul><li>License required </li></ul></ul><ul><li>The sales representative needed a license or a license exception to export the controlled encryption item </li></ul>
    30. 30. EU/UK Export Controls <ul><li>Controlled encryption items are listed in the EU Dual-Use List, which concerns “Information Security” </li></ul><ul><ul><li>Category 5A2 – Systems, Equipment and Components (includes cryptographic software) </li></ul></ul><ul><ul><li>Category 5D2 – Software </li></ul></ul><ul><li>License required if the goods are to be exported outside the EU </li></ul><ul><li>Exceptions </li></ul><ul><ul><li>Personal use </li></ul></ul><ul><ul><li>Equipment where the cryptographic capability is not user-accessible </li></ul></ul><ul><ul><li>Software which is generally available in retail outlets (i.e. mass market products) </li></ul></ul><ul><li>Guidance is available from ECO on exporting cryptographic items </li></ul>
    31. 31. No Warrants At the Border <ul><li>The US Supreme Court has long held that when crossing the national border the Warrants Clause doesn’t apply and there is no need for “probable cause” to conduct a search. </li></ul><ul><li>CBP Policy Permits Search and Seizure without Probable Cause or Reasonable Suspicion: </li></ul><ul><li>“ Any Electronic Device” </li></ul><ul><li>Device can be detained or data copied </li></ul><ul><li>CBP Officers can override passwords and encryption with the assistance of other federal agencies </li></ul><ul><li>Information will be destroyed only if CBP concludes on its own that there is no probable cause to continue to hold it </li></ul>
    32. 32. What Do You Mean This Is An Export? It Never Left My Office! <ul><li>Your product doesn’t have to leave the United States to be deemed an export. Now what is Fertinc up to? </li></ul>
    33. 33. Export & “Deemed Export” <ul><li>Pursuant to the ITAR, “Export” is defined to include the oral or visual disclosure or transfer of any defense article or technical data to a foreign person in the US </li></ul><ul><li>Under the EAR, a “deemed export” is an export of technology or source code (except encryption source code) that is “deemed” to take place when it is released to a foreign national within the United States. (EAR §734.2(b)(2)(ii)) </li></ul><ul><li>&quot;Technology&quot; is specific information necessary for the &quot;development,&quot; &quot;production,&quot; or &quot;use&quot; of a product. (EAR Part 772) </li></ul><ul><li>Technology is “released” for export when it is available to foreign nationals by way of: </li></ul><ul><ul><li>A visual inspection </li></ul></ul><ul><ul><li>Oral explanation </li></ul></ul><ul><ul><li>Practice or application under the instruction of persons having knowledge of the technology </li></ul></ul><ul><li>An export license is required under this rule when the following conditions are met: (1) intent to transfer controlled technologies to foreign nationals in the U.S.; and (2) transfer of the same technology to the foreign national’s home country would require an export license. </li></ul>
    34. 34. The Issues <ul><li>Chinese official examines Fertinc’s fertilizer products and high explosives in operation at various sites in the US </li></ul><ul><li>Export controls within any organization should include tracking of visitors </li></ul>
    35. 35. Export / Deemed Export Application <ul><li>The foreign national is in the US </li></ul><ul><li>The foreign national’s oral or visual exposure to the ITAR-controlled technology (nitrogen mustard production) is an export under ITAR </li></ul><ul><li>Under the EAR, his examination of the high explosives line in operation is a “deemed export” </li></ul>
    36. 36. Break
    37. 37. Those Pesky Expense Reports Now They Can Send You to Prison (more on anti-corruption laws) <ul><li>The View from the United States, presented by Maxwell Carr-Howard </li></ul><ul><li>The View from Europe, Presented by Elizabeth Robertson </li></ul>
    38. 38. FCPA Internal Controls <ul><li>Applies only to publicly traded companies </li></ul><ul><li>Requires adequate internal controls to ensure companies are tracking all financial transactions </li></ul><ul><li>Intended to require companies to list bribes as bribes so that management can stop violations of the FCPA and the government can uncover violations of the FCPA </li></ul><ul><li>Criminalizes failure to implement a system of internal controls and conduct intended to falsify a corporation's books or to circumvent an internal control </li></ul>
    39. 39. Siemens Guilty Plea <ul><li>Largest FCPA settlement: $1.6 Billion </li></ul><ul><li>First significant DOJ case involving the internal controls provision; regularly enforced by the SEC through civil fines </li></ul><ul><li>Resulted from a disclosure by Siemens to the US and German Authorities </li></ul><ul><li>Pattern of more than 30 years of using bribes to further their business </li></ul>
    40. 40. The Issues <ul><li>Recommendation by Xjan Ho to the Ministry </li></ul><ul><li>The tab at the Churchill in London </li></ul><ul><li>“Marketing Expense” </li></ul><ul><li>Directive to the Accountant </li></ul>
    41. 41. Application of Internal Controls <ul><li>Bob commits a clear violation of the Anti-Bribery provision when picks up the tab “in return” for the recommendation </li></ul><ul><li>Accountant is enforcing an internal control </li></ul><ul><li>Creative use of “marketing” will be viewed as an effort to circumvent the internal control or to cause a false entry to be made in the books of Fertinc </li></ul><ul><li>FCPA requires an entry which would allow both the government and the company to recognize the expense as a bribe </li></ul>
    42. 42. Anti Corruption Record Keeping Requirements <ul><li>No obligation under UK law requiring adequate internal controls to ensure companies are tracking all financial transactions outside of the Companies Act and Insolvency Acts (neither statute designed to prevent corruption) </li></ul><ul><li>Reason for UK and European corporates to keep such records: </li></ul><ul><ul><li>Anti Money Laundering statutes (POCA) and EU Directives. </li></ul></ul><ul><ul><li>Provisions of FCPA </li></ul></ul><ul><ul><li>Serious Fraud Office: </li></ul></ul><ul><ul><ul><li>“ Approach of the serious fraud office to dealing with overseas corruption” </li></ul></ul></ul><ul><ul><ul><li>21 July 2009 Official Guidance </li></ul></ul></ul><ul><ul><ul><li>(see Mabey & Johnson prosecution) </li></ul></ul></ul>
    43. 43. Anti Corruption Record Keeping Requirements (continued) <ul><ul><li>Move to Civil Recovery under s240 POCA </li></ul></ul><ul><ul><li>(see Balfour Beatty case) </li></ul></ul><ul><ul><li>Companies in the financial services sector and/or regulated by the Financial Services and Markets Act 2000 (“FSMA”) </li></ul></ul><ul><li>Principle 3 - Management and Control – a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems </li></ul><ul><li>(see Aon case) </li></ul><ul><li>Principle II - Relations with Regulator – a firm must deal with its regulator in an open and co-operative way and must disclose to the Financial Services Authority(“FSA”) anything relating to the firm of which the FSA would reasonably expect notice </li></ul><ul><li>Domestic and international sharing of information by prosecutors </li></ul><ul><li>New Bribery Bill (Queens Speech – 18 November 2009, anticipated to be law in the UK from next Spring – no retrospective effect) </li></ul>
    44. 44. Application of Internal Controls <ul><li>Jurisdiction – ATCSA extends the common law offence of bribery and most offences under the 1889 and 1906 Acts. </li></ul><ul><li>Jean Bonamis is a “public official” and a “government official” so both PBCPA and PCA are engaged </li></ul><ul><li>Presumption that if it is proved that any money, gift or other consideration has been paid, or given to or received by a person, among others a government official, the money, gift or consideration shall be deemed to have been paid or given corruptly unless the contrary is proved (reverse burden of proof) </li></ul><ul><li>Bob and Jean Bonamis will need to show that the gift of the Disney passes and dinner was not an influencing factor in the decision by Jean Bonamis to introduce Bob to Philleppe Piratte </li></ul>
    45. 45. Application of Internal Controls (continued) <ul><li>Other factors to consider: </li></ul><ul><ul><li>Principle and Agent </li></ul></ul><ul><ul><li>Breach of duty </li></ul></ul><ul><ul><li>No de minimums value in the UK </li></ul></ul><ul><ul><li>Corporate liability </li></ul></ul><ul><li>The situation if the new Bribery Bill is in force: </li></ul><ul><ul><li>Passive and active offences; </li></ul></ul><ul><ul><li>Bribing a foreign public official; and </li></ul></ul><ul><ul><li>Specific corporate offence of failing to prevent bribery. </li></ul></ul><ul><li>SFO Guidance July 21 2009 </li></ul>
    46. 46. When a Benjamin is Not A Bargain: Antidumping Law in the US and the EU <ul><li>The view from the United States, presented by Phil Gallas </li></ul><ul><li>The View from Europe, presented by Bruce Kilpatrick </li></ul>
    47. 47. From a U.S. Perspective, What Is Dumping? <ul><li>International Price Discrimination/Predatory Pricing </li></ul><ul><li>Dumping occurs when a foreign producer sells a product in the United States at “less than normal value”—at a U.S. price cheaper than in its own home market or at a price lower than its cost of production </li></ul><ul><ul><li>If no home market, compare U.S. price to exporter’s third country price </li></ul></ul><ul><ul><li>If no home or third country markets, or if below cost sales, compare U.S. price to constructed value (cost of production + profit + packing) </li></ul></ul><ul><ul><li>In case of non-market economy like Belarus, compare U.S. price to Belarusian producer’s “factors of production”—a constructed normal value using producer’s quantities of raw materials, hours of labor, etc. but valued using comparable surrogate market economy country’s production costs </li></ul></ul><ul><li>The amount by which the price (or cost) in the foreign market exceeds the price in the U.S. market is called the antidumping (AD) margin </li></ul>
    48. 48. From a U.S. Perspective, What Is Dumping? (continued) <ul><li>Relief comes in the form of additional duties (based on the weighted-average AD margin) on the dumped imports to offset the unfair price advantage </li></ul><ul><li>AD duties seek to remedy, not punish, unfair pricing of imported merchandise (i.e., to level the playing field) </li></ul><ul><li>Statutory authority: Title VII of the Tariff Act of 1930, as amended by the Uruguay Round Agreements Act (1994), that implements the “Antidumping Agreement” (Article VI of the General Agreement on Tariffs and Trade) </li></ul><ul><ul><li>World Trade Organization members (i.e., U.S. and E.U.) generally play by same rules, with member countries crafting own modifications </li></ul></ul>
    49. 49. Two Federal Agencies Conduct AD Investigation in 287 Days <ul><li>Department of Commerce (DOC) is charged with determining whether imported products are dumped and with quantifying the degree of dumping </li></ul><ul><li>International Trade Commission (ITC), a six-member independent, quasi-judicial Federal agency, determines whether dumped imports are causing or threatening to cause material (economic) injury to a domestic industry in the United States </li></ul><ul><ul><li>Material injury is defined as “harm which is not inconsequential, immaterial, or unimportant” </li></ul></ul><ul><ul><li>ITC considers: (1) volume of imports; (2) effect on U.S. prices; and impact on domestic producers </li></ul></ul><ul><li>If both ITC and DOC make affirmative determinations in their investigations, the DOC issues an AD Order setting forth the investigated companies’ AD margin rates as well as “all others” rate since countrywide determination—Petitioners win </li></ul><ul><li>Foreign producers and their U.S. importers (Respondents), however, can defeat action if </li></ul><ul><li>— DOC finds that foreign producers are not dumping or </li></ul><ul><li>— ITC finds that the U.S. industry is not materially injured or threatened with material injury by the dumped imports </li></ul>
    50. 50. Why Bring an Antidumping (AD) Case? <ul><li>With all of the other U.S. trade remedy options to choose from </li></ul><ul><li>(Countervailing Duties; Global Safeguards (Section 201); China Safeguards (Section 421); Unfair Trade Practices of Foreign Countries (Section 301); Unfair Practices in Import Trade (Section 337)) </li></ul><ul><li>— why bring a dumping action!? </li></ul><ul><li>AD actions are the trade weapon of choice: </li></ul><ul><ul><li>Most effective and targeted relief for combating foreign producers’ predatory import prices that adversely affect the domestic industry’s profitability and competitiveness </li></ul></ul><ul><li>One of most powerful, long-lasting trade remedies available to U.S. producers </li></ul><ul><ul><li>AD order has a shelf-life of at least five years before it is eligible for a five-year “sunset” review (some orders have lasted more than 20 years!) </li></ul></ul><ul><li>Defense of lengthy AD investigation becomes administrative and financial burden on foreign producers </li></ul><ul><li>Early returns: i f affirmative DOC preliminary determination (160 days after petition filed), U.S. Customs starts collecting bonds or cash deposits on imports as security against potential duty liability </li></ul><ul><li>Importers pay the AD duties (foreign producers cannot reimburse their importers) that can range from single digits to more than 400%, shutting out foreign competitors and making their products undesirable </li></ul><ul><li>Mere filing of case disruptive since U.S. importers suddenly unsure of ultimate cost of foreign purchase—established sources of supply suddenly traps to unwary importers </li></ul>
    51. 51. Some US Antidumping Examples: <ul><li>Industrial products (cement, steel, pipes/tubes, softwood lumber) </li></ul><ul><li>Agricultural commodities and foods (pasta, honey, garlic, raspberries, salmon, kiwi fruit, shrimp) </li></ul><ul><li>Chemicals and pharmaceuticals (sulfanilic acid, aspirin, creatine) </li></ul><ul><li>Advanced technology products (semiconductors, currency scanners) </li></ul><ul><li>Commercial goods (artists canvas, sweaters, cookware, paint brushes, paper clips, furniture, antifriction bearings) </li></ul><ul><li>And many more to come… </li></ul>
    52. 52. Jonny & Bob Seem to Recall (What Keen Memories!) that a Similar AD Action Against Urea Imports from Belarus Was Successful in the U.S.— <ul><li>July 1986: U.S. producers of solid urea filed AD petition with the U.S. Department of Commerce and U.S. International Trade Commission, alleging that dumped imports of solid urea from the USSR, East Germany and Romania were materially injuring the U.S. industry </li></ul><ul><li>Both agencies made affirmative finding and published AD order July 1987 (order for USSR later divided between 15 independent states, including Belarus, June 1992) </li></ul><ul><li>Since no domestic interested party participated in the second five-year “sunset” review of the order, Commerce revoked (December 2004) the order on Belarus and Romania along with several remaining independent states of the former Soviet Union, excluding Russia and Ukraine </li></ul><ul><li>In April 2002, U.S. domestic producers also filed an AD action against a downstream product, urea ammonium nitrate solution from Belarus, Russia and Ukraine. Even though Commerce found evidence of dumping, the ITC in its final determination found no significant adverse price effects from the subject imports, and hence, no injury or threat of injury (April 2003), leading to termination of the investigation </li></ul>
    53. 53. Jonny & Bob … (Continued) <ul><li>Meanwhile, across the “pond,” the E.U. not only had imposed AD orders on imports of upstream products—solid urea from Belarus, Ukraine (January 2002) and Russia as well as ammonium nitrate from Ukraine (January 2001)) (suspension agreement with Russia 1998)—but also had imposed orders since 2000 on downstream product, urea ammonium nitrate solutions from Belarus, Ukraine, Russia. </li></ul><ul><li>Fertinc and Nitroco Ltd., as the two primary U.S. producers of urea, should have legal standing to file new AD actions in the U.S. against Belarusian urea, especially since five years have passed since the order was revoked. </li></ul><ul><li>These producers need to have trade counsel analyze— </li></ul><ul><ul><ul><li>U.S. pricing trends </li></ul></ul></ul><ul><ul><ul><li>Belarusian factors of production/costs for comparable merchandise </li></ul></ul></ul><ul><ul><ul><li>health of the U.S. domestic industry </li></ul></ul></ul><ul><li> to assess chances for success before bringing new U.S. AD action </li></ul>
    54. 54. The Issues <ul><li>Glut of cheap imports of urea from Belarus </li></ul><ul><li>Bob (Fertinc) and Jonny (Nitroco) agree to set up a trade association and lodge an anti-dumping complaint with the European Commission </li></ul>
    55. 55. EU anti-dumping regime (1) <ul><li>EU anti-dumping regulation (EC 384/96) </li></ul><ul><li>Definition of dumping: </li></ul><ul><ul><li>Where a company sells its products at a cheaper price on the export market than on its own domestic market </li></ul></ul><ul><ul><li>Duties raise price of dumped imports to a level where the injurious dumping is removed </li></ul></ul><ul><ul><li>Dumping does not take place merely because the imported products undercut prices of EU producers </li></ul></ul><ul><li>Rules administered by External Relations Directorate (DGI) of European Commission </li></ul>
    56. 56. EU anti-dumping regime (2) <ul><li>Conditions </li></ul><ul><ul><li>Finding of “dumping” </li></ul></ul><ul><ul><li>Material injury to EU industry </li></ul></ul><ul><ul><li>Community interests are served by the imposition of duties </li></ul></ul><ul><li>Dumping </li></ul><ul><ul><li>Dumping margin = normal value – export price </li></ul></ul><ul><ul><li>Determines level of duties </li></ul></ul><ul><li>Normal value </li></ul><ul><ul><li>price payable for the like product in the ordinary course of trade by independent customers in the exporting country </li></ul></ul><ul><ul><li>May be necessary to use a “constructed value” (cost of production plus a margin) </li></ul></ul><ul><ul><li>For non-market economies (including Belarus), an appropriate “analogue” country is used </li></ul></ul>
    57. 57. EU anti-dumping regime (3) <ul><li>Export price </li></ul><ul><ul><li>Usually price paid for the product sold to export to the EU </li></ul></ul><ul><ul><li>May be constructed if there is no actual export price </li></ul></ul><ul><ul><li>Commission may use a “sampling technique” </li></ul></ul><ul><ul><li>May need to be adjusted to compare like with like </li></ul></ul><ul><li>Material injury to EU industry </li></ul><ul><ul><li>Volume of dumped imports / effect on EU prices </li></ul></ul><ul><ul><li>Must be causal link between dumping and injury </li></ul></ul><ul><li>Community interest: easily satisfied </li></ul>
    58. 58. EU anti-dumping regime (4) <ul><li>Anti-dumping duties </li></ul><ul><ul><li>Power to impose interim duties (6 months) </li></ul></ul><ul><ul><li>Definitive duties imposed by European Council on a simple majority </li></ul></ul><ul><ul><li>“ Lesser duty” rule: measures must be imposed at the lowest of the dumping or injury margins </li></ul></ul><ul><li>Sunset review: 5 years </li></ul><ul><li>Procedure </li></ul><ul><ul><li>Complaints usually brought by trade associations </li></ul></ul><ul><ul><li>Must be supported by a major proportion of EU producers (>25% of EU production) </li></ul></ul><ul><ul><li>Investigation: questionnaires and verification visits </li></ul></ul><ul><ul><li>Commission proposes duties; Council votes </li></ul></ul>
    59. 59. The Fix is in: the Long Arms of Anti-Trust and Anti-Cartel Regulators <ul><li>The US View, presented by Maxwell Carr-Howard </li></ul><ul><li>The European View, Presented by Bruce Kilpatrick </li></ul>
    60. 60. US Anti-Trust Enforcement The Department of Justice Antitrust Division in Washington and its 8 regional offices, enforce the civil and criminal antitrust laws of the United States <ul><li>US Antitrust Laws Have A Broad Reach : </li></ul><ul><li>Section 1 of the Sherman Act prohibits agreements or conspiracies imposing “ unreasonable restraints on trade ” </li></ul><ul><li>Section 2 of the Sherman Act prohibits monopolization in the interstate or foreign commerce of the United States </li></ul><ul><li>Other laws prohibit discriminatory pricing when it will result in substantial competitive injury </li></ul><ul><li>Civil litigants can enforce the antitrust laws on their own and potentially recover treble damages and attorneys’ fees </li></ul><ul><li>DOJ has both the grand jury and Civil Investigative Demands ( CID ) as tools to investigate antitrust violations </li></ul><ul><li>State Attorneys General investigate and enforce state antitrust laws </li></ul><ul><li>Actions Considered Per Se Illegal : </li></ul><ul><li>Agreements between competitors to fix prices or engage in bid rigging </li></ul><ul><li>Agreements between competitors to carve up territory, customers, or limit output </li></ul>The FTC investigates discriminatory pricing that may substantially undermine competition and mergers that may lessen competition Penalties: Violations of the Sherman Act can result in ten years in prison and up to a $1 mm fine for individuals Corporations can be fined up to $100 mm per violation
    61. 61. Anti-Trust Enforcement is on the Rise <ul><li>The new Assistant Attorney General in charge of the Justice Department’s Antitrust Division Christine Varney has announced that “the Antitrust Division will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers.” </li></ul>
    62. 62. The Issues <ul><li>Phone calls between US and UK regarding key customers </li></ul><ul><li>Carving up the Market, Assigning Customers </li></ul>
    63. 63. Application of US Anti-Trust Laws <ul><li>“Per-Se” violation of Section 1 of the Sherman Anti-Trust Act </li></ul><ul><li>Allocating customers is an “unreasonable restraint on trade” </li></ul><ul><li>Using the phone potentially implicates the wire fraud statute </li></ul><ul><li>Federal wiretaps are being used more than ever before in white collar cases </li></ul>
    64. 64. The UK “cartel offence” (1) <ul><li>S188 Enterprise Act 2002 </li></ul><ul><ul><li>Individual dishonestly agrees with one or more other persons to make, implement, or cause to be made or implemented, arrangements whereby at least two companies will engage in one or more &quot;prohibited cartel activity&quot; </li></ul></ul><ul><li>&quot;Prohibited cartel activity&quot; </li></ul><ul><ul><li>Horizontal (not vertical) conduct: direct or indirect price-fixing; limitation of production or supply; sharing customers or markets; and bid-rigging </li></ul></ul><ul><li>Individuals must have acted &quot;dishonestly” (R v Ghosh (1982)) </li></ul><ul><ul><li>Whether what was done was dishonest by the ordinary standards of reasonable and honest people (objective test); and </li></ul></ul><ul><ul><li>If so, whether the defendant realized that his actions were dishonest according to those standards (subjective test). </li></ul></ul><ul><li>Criminal standard of proof (beyond reasonable doubt) </li></ul>
    65. 65. The UK “cartel offence” (2) <ul><li>A person who is guilty of the cartel offence is liable to: </li></ul><ul><ul><li>conviction on indictment: maximum of 5 years in prison and/or a fine </li></ul></ul><ul><ul><li>summary conviction: maximum of 6 months in prison and/or a fine </li></ul></ul><ul><li>In practice, if OFT suspects that a case may involve criminal cartel offence, it will use EA02 powers of investigation: </li></ul><ul><ul><li>S192 EA02: OFT may investigate if there are “reasonable grounds for suspecting” that a cartel offence has been committed </li></ul></ul><ul><ul><li>S193 EA02: powers to request information </li></ul></ul><ul><ul><li>S194 EA02: powers to enter premises under warrant and to seize documents </li></ul></ul><ul><ul><li>S199 EA02: right to employ intrusive surveillance powers contained in the Regulation of Investigatory Powers Act 2000 (RIPA) </li></ul></ul>
    66. 66. Applying for Immunity Yes Rarely Leniency up to 50% Type C Yes Yes Yes Rarely Immunity (100%) Leniency (up to 50%) Type B Yes Yes 100% Type A CDO exemption No Action Letters Fines
    67. 67. Marine Hoses – a new approach <ul><li>European Commission civil investigation into alleged cartel for marine hose </li></ul><ul><li>3 May 2007: </li></ul><ul><ul><li>Coordinated dawn raids involving OFT, European Commission and DOJ, including first raid of private home in UK </li></ul></ul><ul><ul><li>8 executives arrested attending industry conference in Houston </li></ul></ul><ul><li>19 December 2007: </li></ul><ul><ul><li>3 UK citizens pleaded guilty to violations of US antitrust law and charged with criminal cartel offences </li></ul></ul><ul><ul><li>Allowed to return to the UK as part of a plea bargain agreement </li></ul></ul><ul><ul><li>Agreed to plead guilty to price-fixing charges and serve time in UK prison for a period no less than the time agreed in their Plea Agreements </li></ul></ul><ul><li>11 June 2008: </li></ul><ul><ul><li>three individuals sentenced to between 2.5 to 3 years and disqualified as directors </li></ul></ul>
    68. 68. British Airways/Virgin <ul><li>13 June 2006: </li></ul><ul><ul><li>OFT investigation into alleged price-fixing by BA and Virgin of fuel surcharges on long-haul passenger flights out of UK </li></ul></ul><ul><ul><li>Virgin applied successfully for Type A immunity </li></ul></ul><ul><ul><li>OFT and DOJ carry out simultaneous investigations </li></ul></ul><ul><li>August 2007: </li></ul><ul><ul><li>BA admits colluding with Virgin and OFT imposes fine of £121.5m </li></ul></ul><ul><ul><li>DOJ fines BA $300m for “conspiracy to restrain trade” in both fuel surcharge and cargo operation cartels following plea agreement </li></ul></ul><ul><li>August 2008: four BA executives charged with cartel offences </li></ul><ul><li>Awaiting trial </li></ul>
    69. 69. Application of UK Anti-Trust Laws <ul><li>Has an offence been committed in the UK? </li></ul><ul><ul><li>Certainly a “hard core” infringement </li></ul></ul><ul><ul><li>No need to implement the agreement for cartel offence to apply </li></ul></ul><ul><ul><li>However, if the agreement is made outside the UK, the offence will only apply if some steps were taken to implement the agreement in the UK </li></ul></ul><ul><ul><li>May be satisfied by as little as a phone call or e-mail to a UK subsidiary telling it to act in a certain way, regardless of whether it actually changed its behaviour </li></ul></ul><ul><li>Risk of investigation: “reasonable suspicion” </li></ul><ul><li>Use of intrusive surveillance powers (RIPA)? </li></ul><ul><li>Power to disclose information to US authorities: s243 EA02 </li></ul>
    70. 70. Questions about the Global Posse? Maxwell Carr-Howard US Enforcement of Anti-Corruption and Anti-Trust Laws Phil Gallas US Anti-Dumping Laws and Trade Remedies Bruce Kilpatrick European Anti-Trust and Anti-Dumping Laws Elizabeth Robertson European Anti-Corruption Laws Christina Weis US Export Controls Moderated by Michael Ray and Linda Tiller

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