Category Archives: Bribery

DOJ Expands and Codifies Policy Incentivizing Corporations to Voluntarily Self-Disclose FCPA Violations

by Eric Volkman, Erin Brown Jones, and Bridget R. Reineking

On November 29, 2017, Deputy Attorney General Rod J. Rosenstein announced that the US Department of Justice (DOJ) has implemented a permanent, revised version of the Foreign Corrupt Practices Act (FCPA) Pilot Program.[1] The Pilot Program — which was launched as a one-year trial in April 2016 by then-Assistant Attorney General for the Criminal Division (and now Latham partner) Leslie Caldwell — was extended indefinitely in April 2017 to allow DOJ to evaluate the program’s efficacy.[2] Rosenstein announced that the enhanced policy — now called the FCPA Corporate Enforcement Policy (FCPA Policy) — will be incorporated into the United States Attorneys’ Manual (USAM). Like its predecessor, the FCPA Policy aims to encourage companies to make timely and voluntary disclosures of wrongdoing under the FCPA, while providing additional concrete incentives rewarding corporations for cooperation.

This policy announcement is likely the first of several DOJ policy changes and/or enhancements under the new administration. As detailed in Latham’s October 2017 Client Alert, Rosenstein recently announced that DOJ was reviewing a wide range of existing corporate enforcement policies, including the Pilot Program, DOJ’s policy on “Individual Accountability for Corporate Wrongdoing” (the Yates Memo), and other DOJ policies and memoranda — with the intention of ultimately incorporating the revised policies into the USAM. Continue reading

Reflections on the Past, Present, and Future of the SEC’s Enforcement of the Foreign Corrupt Practices Act

New York University School of Law, New York, NY

Nov. 9, 2017

Good afternoon, and thank you for inviting me to speak today. Before I begin, let me give the required disclaimer that the views I express here today are my own and do not necessarily represent the views of the Commission or its staff.[1]

I am honored to be here to mark with you the 40th anniversary of the enactment of the Foreign Corrupt Practices Act (FCPA) and the 20th year of the OECD anti-bribery convention. I want to thank New York University’s Program on Corporate Compliance and Enforcement for hosting this event. Programs like this one provide important forums for dialogue on critical enforcement issues, and I am pleased that this gathering has assembled so many familiar and distinguished practitioners in FCPA enforcement, our colleagues in domestic and international law enforcement, and academics who are interested in this space. Collaboration and coordination is integral to the Division of Enforcement’s efforts to combat bribery through the enforcement of the FCPA, and the OECD has played a pivotal role in fostering global efforts against bribery and corruption.

Continue reading

Russia Considers Enhanced Whistleblower Protections

by Jane Shvets, Anna V. Maximenko, and Elena Klutchareva

Effective anti-corruption compliance programs include protections for whistleblowers that raise corruption concerns.  Article 13.3 of Russia‘s 2008 Federal Law No. 273-FZ on Counteracting Corruption (the “Anti-Corruption Law”) addressed Russian lawmakers’ expectations regarding effective compliance programs.[1]  But the law was silent on whistleblower protections.  Recently proposed legislation in Russia may help address this gap.

Even before the Anti-Corruption Law came into effect, Russian law included several provisions that could be interpreted to provide some protection for whistleblowers.  For example, Russian employment law prohibits discrimination and sets out an exhaustive list of permissible grounds for dismissing an employee for cause; firing an employee for blowing the whistle on potential corruption is not among them.  As a result, firing an employee for whistleblowing could ran afoul of Russian employment law.  In addition, the Russian government can protect individuals whose security might be threatened as a result of their participation in criminal proceedings that involve alleged corruption.  The state might, for example, provide such witnesses with physical protection, relocate them, or even give them new identities. Continue reading

Keeping Score of FIFA’s Corruption, Compliance and Efforts for Reform – Part 2

by Brandon D. Fox

Part 2 – Changing the Game Plan

In late June, FIFA, the world’s governing soccer organization, released the “Garcia Report,” chronicling the extensive corruption and conflicts of interest that occurred in FIFA’s awarding of the men’s 2018 and 2022 World Cup venues. Part 1 summarized the report’s findings. Part 2 discusses how specific steps and safeguards can mitigate the risks of misconduct and ensure cooperation among FIFA officials – and at any organization.

Leadership

FIFA’s problems started at the top.  FIFA’s investigators found an astounding number of executive committee members committed misconduct and showed disdain for the investigation.  FIFA’s failures were systemic and reflected a culture of corruption.  An organization’s culture cannot be fixed simply by strengthening rules or creating a targeted compliance program.  Indeed, these are meaningless if the leaders themselves are corrupt.  Executives must have integrity and show a commitment to everyone’s compliance with the law.  FIFA needs to identify candidates for its executive committee that have shown integrity and a dedication to complying with rules and laws. Continue reading

Keeping Score of FIFA’s Corruption, Compliance and Efforts for Reform – Part 1

by Brandon D. Fox

Part 1 – Foul Play

The first installment of this two-part series summarizes the Garcia Report’s findings of misconduct. Author Brandon Fox also focuses on the difficulties investigators faced as a result of leaders failing to cooperate and contrasts the misconduct and lack of cooperation to the U.S. Soccer Federation’s behavior.

In late June, FIFA, the world’s governing soccer organization, released the Garcia Report chronicling the extensive corruption and conflicts of interest that occurred in FIFA’s awarding of the men’s 2018 and 2022 World Cup venues.  This article summarizes the Garcia Report’s findings of misconduct, focusing on the difficulties investigators faced as a result of leaders failing to cooperate, and discusses how specific steps and safeguards can mitigate the risks of misconduct and ensure cooperation among FIFA officials – and at any organization. Continue reading

Foreign Bribery: Incentives and Enforcement

by Jonathan Karpoff, Scott Lee, and Gerald Martin

Managers caught bribing foreign officials enhance their shareholders’ wealth unless they simultaneously engage in accounting fraud.  Most firms apprehended for foreign bribery generally did not engage in fraud and after adjusting for regulatory penalties, their average ex ante net present value of their bribery-induced projects is positive.  In a new paper, we develop a model that uses a comprehensive set of bribery enforcement to shed light on the how common foreign bribery is among US-listed firms with foreign sales. Continue reading

Legal Person Liability is a Key Component of the Emerging Rules for the Global Economy

by Kathryn Gordon and Brooks Hickman

The liability of legal persons for foreign bribery and related economic offenses is a key feature of the emerging legal infrastructure for the global economy.  Without it, governments face a losing battle in the fight against the bribery of foreign public officials and other complex economic crimes.

In recognition of the essential role that the liability of legal persons plays in combating foreign bribery, Articles 2 and 3 of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) require “[e]ach Party … to establish the liability of legal persons for foreign bribery” and to apply “effective, proportionate and dissuasive” penalties to legal persons for foreign bribery. Continue reading

What Does the OECD Know About Organizational Liability?

by Kevin E. Davis

The OECD Working Group on Bribery – the group responsible for monitoring implementation of the OECD’s Anti-Bribery Convention – has just closed a request for comments on the topic of liability of legal persons for foreign bribery. I submitted a comment, and I hope that others did as well, but I am afraid that instead of focusing on the issues I was asked to comment on I focused on my worries about the overall purpose of the exercise.

There is no question that the issues raised by the OECD are important. Imagine if the U.S. legal system did not have corporate criminal liability, how would it affect the scope and the intensity of corporate compliance? Would we still have compliance officers reporting directly to the board, supplier agreements replete with anti-corruption reps and warranties, and multi-million dollar internal investigations? Consider the potential effects of even a modest reform, such as treating the existence of an effective compliance program as a complete defense. Or, moving in the opposite direction, what if firms convicted of foreign bribery were automatically disbarred from all government contracts? Continue reading

Bribery Conspiracies, Foreign and Domestic: Ocasio v. United States and Its Implications for FCPA Complicity Theories

by Shu-en Wee and Daniel Richman*

To what extent can a nonresident foreign national be prosecuted for violations of the Foreign Corrupt Practices Act (FCPA)1 when he neither is an agent of a domestic concern nor has committed acts while physically present in U.S. territory?  Does the fact that the FCPA explicitly creates criminal liability in only these two situations mean that he cannot be charged for conspiring to violate the Act, or aiding and abetting a violation?  Such was the issue presented to Judge Janet Bond Arterton in United States v. Hoskins.2  Her rejection of the government’s conspiracy and accomplice theories in that case is presently up on appeal in the Second Circuit, but an intervening Supreme Court case may well lead the Circuit to see the case a bit differently. Continue reading

Kleptocrats in the Crosshairs

by Sharon Cohen Levin

Let’s say you’re a powerful foreign leader who has accepted millions of dollars in bribe payments, a “Kleptocrat.”  You’ve got a problem: where to stash the loot?  The stacks are too big to stockpile in your piggy bank or sock drawer.  You need to be more creative.   Here is one solution: set up an off-shore company, open a bank account in a jurisdiction with strict bank secrecy laws, load the account with the bribe payments you received, and then buy premium real estate in the United States.  Voila – clean money.

Not so fast. Continue reading

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