Your SlideShare is downloading. ×
0
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Acc knowledge seminar_fcpa_jan29_2014
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Acc knowledge seminar_fcpa_jan29_2014

140

Published on

Published in: Business, Economy & Finance
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
140
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
5
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Kyiv Anti-Corruption Seminar Steve Huggard and Antonio Suarez-Martinez Partners, EDWARDS WILDMAN Oleh Marchenko, Partner, and Andriy Guck, Senior Associate, MARCHENKO DANEVYCH © 2013 Edwards Wildman Palmer LLP & Edwards Wildman Palmer UK LLP
  • 2. Overview ♦ The US FCPA regime ♦ The UK Bribery Act ♦ Ukrainian ♦ Why anti-corruption laws important to Ukrainian companies? ♦ Compliance ♦ What should you do if you find a problem? 2
  • 3. The Key Provisions of the US FCPA ♦ The Foreign Corrupt Practices Act makes it illegal for any U.S. person or company or anyone acting on their behalf (whether U.S. person or not) or for any issuer (whether U.S. entity or not) to bribe a foreign official or foreign political party for the purpose of obtaining or retaining business ♦ The FCPA also applies to foreign companies and persons if an act in furtherance of the corrupt payment took place in the U.S. ♦ The FCPA prohibits not only direct payments, but also any payments made through any intermediary to a foreign government official 3
  • 4. What Constitutes a Bribe? ♦ Payment, offer of payment, promise to pay, or authorization to pay ♦ Money or anything of value ♦ Corruptly or with Improper Purpose ♦ To a foreign official or third parties while knowing that all or a portion will be used by the third party for the prohibited activities 4
  • 5. What Does “Anything of Value” Mean? ♦ The FCPA prohibits the giving (directly or indirectly) of anything of value, not just money ♦ It therefore applies to gifts, charitable donations, travel expenses, goods or services, loans, excessive entertainment, or other personal or financial favors for the foreign official or any member of his or her family ♦ The FCPA also includes favors such as political or charitable donations (the favor does not have to be explicitly requested) 5
  • 6. Limited Exception - Facilitating Payments ♦ Ordinarily and commonly performed by a foreign official ♦ Not intended to influence the exercise of discretion by the foreign official ♦ Nominal amount and is made for the sole purpose of facilitating, expediting or securing the performance of a non-discretionary routine act to which Company is entitled ♦ Be very careful before authorizing these – it is a very limited exception
  • 7. Limited Exception - Facilitating Payments (continued) ♦ ♦ ♦ ♦ These include: ♦ Obtaining permits, licenses, or other official documents; ♦ Processing papers such as visas and work orders; ♦ Providing police protection, mail pick-up and delivery, or scheduling inspections associated with contract performance or inspections related to transit of goods; ♦ Providing telephone service, power and water supply, loading and unloading cargo, or protecting perishable products from deterioration; or ♦ Actions of a similar nature May not be permitted under local law Not permitted under anti corruption laws enacted by many countries Not permitted under Ukrainian law
  • 8. What Does “Improper Purpose” or “Corruptly” Mean? ♦ An improper purpose includes: ♦ to obtain or retain business ♦ to direct business to another person or firm ♦ to obtain any other unfair advantage, such as: ♦ tax exemption or benefit ♦ reclassification or under valuation for customs purposes ♦ issuance of license or permit ♦ government concession, franchise, or contract ♦ waiver of penalties for non-compliance with law ♦ facilitating VAT refund even if a company (exporter) is entitled to VAT refund under the law (e.g. Alfred C. Toepfer International and ADM investigations) 8
  • 9. What Does “Knowledge of Improper Purpose” Mean? ♦ Knowledge can be demonstrated where a party is aware of: ♦ an improper payment ♦ circumstances for an improper payment exist ♦ an improper payment is substantially certain to occur 9
  • 10. Who Are Government Officials? ♦ An employee of a government agency ♦ A legislator ♦ A member of a political party ♦ A candidate for political office ♦ A member of a royal family who has government official responsibilities ♦ An official or employee of a state-controlled or state-owned business enterprise (including doctors in government hospitals) ♦ A consultant acting for or on behalf of a government or government agent ♦ A public international organisation 10
  • 11. Travel and Entertainment ♦ Certain expenses including but not limited to gifts, business entertainment, payment of travel expenses, lodging, meals, charitable contributions, educational or employment opportunities and/or assumption or forgiveness of debt may be treated as "bribes" under relevant laws and the FCPA, as a thing of value, if offered or given in order to obtain an improper business advantage 11
  • 12. Permissible Payments for Travel and Entertainment ♦ Payments, gifts, offers or promises of anything of value that are reasonable and bona fide expenditures, such as travel or lodging expenses incurred by or on behalf of a foreign official, and directly related to: ♦ the promotion, demonstration or explanation of products or services; or ♦ the execution or performance of a contract will not constitute a bribe. 12
  • 13. Permissible Payments for Travel and Entertainment? (continued) ♦ All expenses should be: ♦ moderate or reasonable ♦ company representative present ♦ contemporaneous with event (directly related to promotion of product or execution of contract) and appropriate balance between business purpose and the entertainment and leisure activities ♦ decision-Maker alone; no spouses, children etc. ♦ transparent ♦ expenses supported by appropriate receipts 13
  • 14. Bribes Paid with Employee Funds Are Still Bribes ♦ It is not okay to pay the bribe out of your own pocket (the Company will still get in trouble, and so will you). Don’t be the reason the Company gets in trouble… 14
  • 15. Accounting Provisions (US) You are required to: ♦ keep books and detailed records that accurately reflect the transaction and disposition of corporate assets ♦ devise and maintain an adequate system of internal accounting controls: ♦ ensure transactions are executed in accordance with management’s general or specific authorization ♦ ensure transactions are recorded to permit preparation of financial statements in conformity with generally accepted accounting principles, and to maintain accountability for assets ♦ Applies only to issuers 15
  • 16. What Anti-Corruption Due Diligence is Required for Mergers and Acquisitions? ♦ Aims of due diligence = proportionality ♦ ensure target business is sound and value not distorted by bribery ♦ identify early whether any bribery exposure ♦ ensure no successor liability ♦ provide basis for negotiating future penalties if wrongdoing uncovered ♦ provide basis for monitoring target to ensure quality of anti-bribery programme ♦ Conducting due diligence ♦ initiating the process ♦ appoint manager to lead anti-bribery component ♦ initial assessment of target and scoping of exercise ♦ develop timetable initial screening ♦ identify anti-bribery programme ♦ first discussion with target ♦ identify immediate risks and red flags ♦ 16
  • 17. What Anti-Corruption Due Diligence is Required for Mergers and Acquisitions? (continued) ♦ Detailed analysis ♦ review of target’s markets and competitors ♦ corporate intelligence and background checks ♦ examine target’s anti-bribery programme ♦ interview management and key personnel and assess tone from the top ♦ external interviews and site visits ♦ review data room ♦ detailed financial review ♦ Report and Decision ♦ Post-acquisition Due Diligence 17
  • 18. Public Tenders ♦ Good ♦ ♦ ♦ practice review procurement laws and comply carefully review tender documents, award criteria and ensure reasonable and level playing field check for any conflicts of interest ♦ Pitfalls ♦ how do you respond to requests for civic improvements? ♦ identify and clarify decision-maker – query if sole individual ♦ gifts and hospitality ♦ check for any conflicts of interests ♦ use of middlemen 18
  • 19. Training and Compliance Are Essential ♦ The governments of the US and UK are looking for companies that have a “culture of compliance.” ♦ US government says training should occur “from the board room to the supply room.” ♦ Employees need to be trained and counseled and encouraged to ask questions. 19
  • 20. Who Enforces These Laws in the US, UK and Ukraine? The UK ♦ Serious ♦ ♦ ♦ Fraud Office SFO attitude to self-reporting changed in October 2012 more pressure to self-report quickly advantages to full investigation and self-reporting ♦ Future ♦ ♦ Deferred Prosecution Agreements prosecutions inevitable; SFO under pressure to deliver 20
  • 21. Who Enforces These Laws in the UK, US and Ukraine? (continued) The US Department of Justice/Securities & Exchange Commission – they work both parallel and in tandem ♦ US Govt believes that you should self report at the first hint of trouble ♦ Most companies prefer to know something about the facts first ♦ Very interested in patterns, large cases, and cases where management ignored “red flags” ♦ Also very interested in books and record cases ♦ US 21
  • 22. Who Enforces These Laws in the UK, US and Ukraine? (continued) Ukraine ♦ Public Prosecution Office, including coordination of efforts of all enforcement agencies ♦ Organized Crimes Department of Interior Ministry ♦ Corruption and Organized Crimes Department of State Security Service ♦ Ministry of Justice – responsible for coordination of anticorruption strategies 22
  • 23. UK Bribery Law? ♦ Consolidated scheme of offences ♦ Covers private and public sector bribery ♦ Introduced five criminal offences on July 1, 2011 ♦ ♦ requesting, agreeing to receive or accepting a bribe ♦ bribing a foreign public official ♦ new offence of the failure of a commercial organisation to prevent bribery ♦ ♦ offering, promising or giving a bribe directors and managers: ignoring or consenting to a bribe Organisation must implement, maintain and enforce effective anti-bribery policies, systems and controls 23
  • 24. Who is Covered? ♦ Worldwide reach – will apply wherever the bribe is paid ♦ Liability for bribe paid anywhere in world ♦ Liability (failing to prevent bribery) for bribe paid anywhere in world by entity or individual performing services on its behalf ♦ Applies to: ♦ UK individuals (e.g. including all UK passport holders, including OTs etc) ♦ UK companies ♦ residents in the UK ♦ foreign companies carrying on business in the UK 24
  • 25. How is it Different from the FCPA? ♦ FCPA public ♦ FCPA does ♦ FCPA only ♦ UK sector only not prohibit facilitation payments criminalises active not passive bribery has statutory defence of “adequate procedures” 25
  • 26. Ingredients of General Offences of Paying or Receiving a Bribe require “improper performance” of (widely-defined) function or activity ♦ Offences ♦ What ♦ is improper performance? breach of an obligation of good faith, impartiality or trust ♦ Improper ♦ ♦ performance judged by UK standards local custom or practice to be disregarded unless permitted by written law 26
  • 27. How Should You Respond to Requests for Facilitation Payments? ♦ Facilitation payments are unlawful in the UK ♦ However, it is recognised that there is a defence of duress if payment is made to protect against loss to life, limb or liberty ♦ Be mindful of what payment is for and whether the amount requested is proportionate ♦ Ask for a receipt detailing the reason for payment 27
  • 28. UKBA: Failing to Prevent Bribery – Adequate Procedures (Section 7 Corporate Offence) ♦ Government ♦ ♦ ♦ ♦ ♦ ♦ Guidance on adequate procedures: top-level commitment to prevent bribery risk assessment proportionate policies and procedures to deter and detect bribery due diligence on those performing services on behalf of an organisation (e.g. agents/intermediaries) communication and training of policies and procedures regular monitoring and review of policies/procedures 28
  • 29. Accounting Provisions (UK) 386-387 Companies Act – failure to keep adequate accounting records ♦ Section ♦ Section 17 Theft Act 1968 – false accounting 29
  • 30. Deferred Prosecution Agreements ♦ DPAs introduced on 25 April 2013 by Crime and Courts Act 2013 but not expected to be in force until early 2014 ♦ DPAs apply to corporates, partnerships or unincorporated association; not individuals ♦ DPAs apply to economic crimes including accounting fraud and bribery ♦ DPP and SFO joint Code for Prosecutors to be published in late 2013: guidance on principles to be applied in deciding whether DPA appropriate ♦ High level of judicial involvement increases risk of non-approval of DPA 30
  • 31. Ukrainian anti-corruption law (UACL) UACL, dated April 7, 2011 # 3206-VI ♦ Covers public and private sector bribery ♦ Offences under UACL ♦ offering, promising or giving a bribe ♦ accepting a bribe or agreeing to a bribe (its offering or promise) ♦ bribing a foreign public official (including international organizations and foreign state-owned enterprises) 31
  • 32. Ukrainian anti-corruption law (UACL) Bribes ♦ Money or any other property, including services, any favours or benefits ♦ Given or accepted (including promises or offers and their acceptance) illegally, including any indirect dealings (e.g. through agents, vendors, resellers, legal representatives or any other related or unrelated intermediaries) 32
  • 33. Ukrainian anti-corruption law Who are public officials? ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ an officer in any governmental agency (national or local) a legislator (national or local) a judge an officer of governmental enforcement agencies a tax officer an officer in any state owned entity or enterprise any person offering public services, including auditors, experts, arbitrators an officer in any foreign governmental agency, international organization, or foreign state-owned enterprise 33
  • 34. Ukrainian anti-corruption law Private Sector Offences ♦ Private sector offences under UACL ♦ offering, promising or giving a bribe to an officer or an employer of any company or any legal entity in Ukraine ♦ accepting a bribe or agreeing to a bribe (its offering or promise) by an officer or an employee of any company or any legal entity in Ukraine 34
  • 35. Ukrainian anti-corruption law Exceptions ♦ UACL provide for very limited actions for gifts ♦ No exception for facilitation payments, e.g.: ♦ ♦ ♦ to obtain licenses and permits to obtain timely VAT refunds to enforce a court decision 35
  • 36. Ukrainian anti-corruption law Liability ♦ Any money or property obtained as a result of a bribery are subject to confiscation by the state based on decision of a court ♦ Any transaction entered into as a result of a bribery is void 36
  • 37. Ukrainian anti-corruption law Criminal Liability ♦ Bribing a public official, including officers of state-owned or municipally-owned enterprise, could result in jail of maximum 10 years and confiscation of personal property ♦ from September 1, 2014, a private legal entity would become criminally liable for bribes: ♦ maximum fine of UAH 1,275,000 37
  • 38. Ukrainian anti-corruption law Anti-Trust (Unfair Competition) ♦ Bribing public or private officials to obtain any commercial benefit in Ukraine, e.g. to win a public tender for lucrative contracts, could be treated as unfair competition violation ♦ Unfair competition violations are subject to a fine in Ukraine up to 5% of worldwide sales ♦ Unfair competition violations are enforced by the Anti-Monopoly Committee of Ukraine 38
  • 39. Why US FCPA and UKBA Important for Ukrainian Companies? Ukrainian company ♦ ♦ ♦ ♦ ♦ ♦ ♦ considers dealing with US or UK companies considers a joint venture with US or UK companies considers a future merger with US or UK companies considers listing its shares on US stock exchange considers business in the US or UK same applies to dealings, joint venture or prospective mergers with any non-US or non-UK companies, which are subject to US FCPA or UKBA rules, including US listed companies same applies to affiliate of UK or UK companies 39
  • 40. Risk Areas Risk areas: ♦ ♦ ♦ ♦ ♦ ♦ uncontrolled use of cash inadequate control procedures payments to charities and public bodies payments to intermediaries, including distributors, vendors, resellers, legal representatives, especially if not commercially justified or close to any illegally obtained benefit (e.g. award of a public tender, VAT refund, etc.) payments to intermediaries in the US or US bank accounts of foreign intermediaries public tenders 40
  • 41. FCPA Investigations Alfred C. Toepfer International (Germany) / ADM (US) ♦ December 20, 2013, US DOJ Press-Release ♦ ACTI, German subsidiary of ADM, pleaded guilty ACTI agreed to pay USD 17 M in criminal fines to resolve charges that it paid bribes through vendors to Ukrainian government officials to obtain VAT refunds ADM failed to implement sufficient policies and procedures to prevent the bribe payments, although ultimately ADM disclosed the conduct, cooperated with the US government, and instituted extensive remedial efforts. DOJ entered into NPA with ADM ADM agreed to pay USD 36.5 M to the US SEC ADM and ACTI also agreed to cooperate with DOJ, to periodically report the companies’ compliance efforts, and to continue implementing enhanced compliance programs and internal controls designed to prevent and detect FCPA violations ♦ ♦ ♦ ♦ 41
  • 42. FCPA Investigations Daimler AG and DaimlerChrysler Automotive Russia SAO (DCAR) ♦ April 1, 2010, the DOJ Press-Release ♦ Daimler AG (Germany), and 3 of its subsidiaries, including DCAR, have resolved charges related to FCPA investigation by the US DOJ into the company’s worldwide sales practices, and agreed to pay USD 93.6 M in criminal penalties DCAR admitted that it made improper payments to Russian federal and municipal government officials to secure contracts to sell vehicles by over-invoicing the customer and paying the excess amount back to the government officials, or to other designated third parties that provided no legitimate services to DCAR or Daimler AG. When requested, DCAR or Daimler AG employees caused the wire transfer of payments from Daimler AG’s bank accounts in Germany to, among other destinations, U.S. and Latvian bank accounts held by shell companies with the understanding that the money, in whole or in part, was for the benefit of Russian government officials. ♦ 42
  • 43. Compliance – How Do You Assess and Respond to Risk? ♦ Periodic assessment ♦ A risk assessment should consider risks that arise from: ♦ countries ♦ business sectors ♦ types of transaction involved in relationships business conducted ♦ Appropriately resourced, identifying internal and external information sources allowing risk to be assessed ♦ Overseen by top level management ♦ Anti-Corruption and Bribery Policy ♦ 43
  • 44. Compliance – Who Should Run It? ♦ Commitment from board of directors to preventing bribery and establishing correct culture ♦ Top-level management involved in development of bribery prevention procedures, risk assessment approval and communication of the organisation’s stance ♦ Independent Compliance team to manage and report to the Board? ♦ Awareness from all levels of management and workforce 44
  • 45. Compliance: Third Parties, Agents, and the Need for Due Diligence ♦ FCPA/UKBA prohibit corrupt payments through intermediaries, including distributors, joint venture and agents ♦ Prior to using any third party agent, companies should: ♦ establish that the third party is not a foreign official ♦ establish that the third party is qualified ♦ evaluate the proposed compensation ♦ evaluate the reputation of the third party ♦ investigate red flags ♦ ensure that any third party signs agreements that include antibribery provisions, and is aware of the FCPA and corporate policy 45
  • 46. Compliance – Level of Training ♦ Proportionate procedures ♦ Procedures embedded and understood in organisation ♦ Effective communication in high risk areas e.g. hospitality and charitable donations ♦ Tailored training to identified risks associated with specific positions and countries ♦ Policies and procedures should be monitored and reviewed ♦ Encouragement regarding raising concerns 46
  • 47. Whistleblowers? ♦ ♦ ♦ US perspective ♦ incentivised whistle-blowing ♦ Dodd-Frank law encourages whistleblowers. Very large rewards UK perspective ♦ no incentivised whistle-blowing … yet ♦ “adequate procedures” ♦ protection of whistleblowers – Public Interest Disclosure Act 1998 Ukraine perspective ♦ Criminal liability for failure to report bribery ♦ An individual failing to report could be treated as an accomplice 47
  • 48. Dodd-Frank Act Whistleblower Provisions: Section 922 ♦ ♦ ♦ ♦ Act amends the Securities Exchange Act and establishes a new whistleblower incentive program that provides monetary rewards between 10 and 30% to whistleblowers who report securities violations that lead to the recovery of sanctions exceeding $1 million in criminal and civil proceedings Amount received includes not only monies collected by the SEC, but also fines and penalties assessed by the DOJ, self-regulatory organizations and state Attorneys General Whistleblower provisions previously only covered insider trading violations and applied solely to civil penalties recovered and did not provide guaranteed minimum reward Dodd-Frank expands scope of conduct to include violations of Foreign Corrupt Practices Act (worldwide reach)
  • 49. Whistleblower Provisions: Section 922 Original Information ♦ Original ♦ ♦ ♦ ♦ ♦ Information: Derived from independent knowledge or analysis Not previously know to the Commission Not derived from material uncovered in existing investigations, attorney or client communications, but there is a significant issue here over what the SEC can use with respect to a company’s internal personnel and its communications with company personnel Cannot be obtained from publicly available sources, but question remains what about “analysis” of public information Does not have to be “first hand’ account of information
  • 50. Whistleblower Provisions: Section 922 Representation ♦ Whistleblower may be represented by counsel through whom they can provide information anonymously ♦ Identity of whistleblower must be disclosed prior to payment of any award ♦ Claims to the SEC must be filed under oath and subject to perjury charges (the SEC provides claim forms in the proposed rules)
  • 51. What Should You Do if You Find a Problem? INVESTIGATION – The three Cs: Confidence ♦ know the facts well enough to make an appropriate decision (2) Credibility ♦ vigorous investigation in good faith ♦ well documented (3) Cost ♦ balancing costs with need for confidence and credibility (1) 51
  • 52. Red Flags to Possible Violations Money passing through an agent or consultant to a foreign official or political leader to obtain certain actions ♦ Use of a consultant who is connected or affiliated with a foreign official or political leader ♦ Prior accusations involving the agent or consultant alleging improper business practices ♦ Requests that commissions or other payments be made in a third country or to another entity ♦ Requests that commission payments be made before public tender award decision ♦ Payments that appear to be higher than customary or standard rates ♦ Payments to persons outside the scope of a transaction ♦ Insistence by the foreign customer that a particular person be used as an intermediary ♦ 52
  • 53. Conducting an Effective Investigation ♦ Initial checklist ♦ terms of reference ♦ identify witnesses ♦ identify documents ♦ resources ♦ suspend potential wrongdoers ♦ costs ♦ insurer ♦ engage external/local lawyers or forensic accountants ♦ keep detailed record ♦ legal privilege ♦ Resources 53
  • 54. Conducting an Effective Investigation (continued) ♦ ♦ Documents ♦ record of collation and review exercise ♦ types of documents and locations ♦ key custodians ♦ collation exercise ♦ storage ♦ review ♦ report People Issues ♦ tipping off ♦ interviewer ♦ what to tell the interviewee ♦ preparation ♦ record of interviews ♦ suspension of employee ♦ disciplinary process/termination of employment 54
  • 55. Conducting an Effective Investigation (continued) ♦ Conclusions recording conclusions ♦ reporting to the Board ♦ Self-reporting ♦ Civil Litigation ♦ Follow-up ♦ compliance programme ♦ dismissal of employees ♦ PR (internal and external) ♦ 55
  • 56. Who Should Run the Investigation? of investigators – must be credible for management to have confidence in the results ♦ Senior Managers ♦ Non-Executive directors ♦ In-house Counsel/Compliance/Audit ♦ External lawyers ♦ External auditors ♦ Independence 56
  • 57. Data Protection Concerns ♦ Can be problematic ♦ Data protection and privacy laws in each country need to be considered and obeyed ♦ Data may not be able to be removed from country ♦ Some countries, e.g. France, Germany and China, have markedly different laws when it comes to interviewing employees, reviewing documents and data, and removing investigation related materials from the country. ♦ Data may need to be reviewed in-country 57
  • 58. Self-Reporting ♦ UK ♦ ♦ ♦ ♦ New SFO guidance More pressure to self-report quickly Advantages to full investigation and self-reporting Will prospect of DPA incentivise self-reporting? ♦ US ♦ ♦ ♦ ♦ Encouraged to self-report as soon as become aware Usually, at least some investigation takes place first Whistleblower considerations Penalty considerations 58
  • 59. Conclusion ♦ Concluding remarks ♦ Questions 59
  • 60. Attorney Contact Information EDWARDS WILDMAN Stephen G. Huggard Partner +1 617 239 0769 shuggard@edwardswildman.com 111 Huntington Avenue Boston, MA 02199 United States Antonio Suarez-Martinez Partner +44 (0) 20 7556 4526 asuarez-martinez@edwardswildman.com Dashwood, 69 Old Broad Street London EC2M 1QS United Kingdom 60
  • 61. Attorney Contact Information MARCHENKO DANEVYCH Oleh Marchenko Partner +380 44 220 0711 oleh.marchenko@marchenkodanevych.com Office 49, 4-B, Ivana Franka Str. Kyiv, Ukraine Andriy Guck Senior Associate +380 44 220 0711 andriy.guck@marchenkodanevych.com Office 49, 4-B, Ivana Franka Str. Kyiv, Ukraine 61

×