Category Archives: Corruption: Foreign

Global Magnitsky Sanctions Target Human Rights Abusers and Government Corruption Around the World

by David S. Cohen, Kimberly A. Parker, Jay Holtmeier, Ronald I. Meltzer, David M. Horn, Lillian Howard Potter, and Michael Romais

On December 20, 2017, President Trump issued a new Executive Order (EO) targeting corruption and human rights abuses around the world.

The EO implements last year’s Global Magnitsky Human Rights Accountability Act (the Global Magnitsky Act), which authorized the president to impose sanctions against human rights abusers and those who facilitate government corruption.[1] The US Department of the Treasury’s Office of Foreign Assets Control (OFAC), which will administer the EO, also added 15 individuals and 37 entities to its Specially Designated Nationals and Blocked Persons List (SDN List). Continue reading

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

Behind the Annual SEC Enforcement Report: 2017 and Beyond, Part II

by Urska Velikonja

The following is the second post in a series of three on recent SEC enforcement. The full report can be accessed here. A note of caution to the readers: the SEC does not share enforcement data. All three posts are based on a database of SEC enforcement actions I have put together along with several research assistants, covering the period between 2007 and 2017. The data was collected by hand, and reviewed at least once. Entries were compared with SEC releases and reports, but the chance of error remains.

I. Enforcement Against Entities

The first post observed that enforcement against individual defendants remained largely unchanged in the second half of the 2017 fiscal year. Enforcement against entities, on the other hand, has changed quite substantially. Fewer entities were targeted in actions brought in the second half of FY 2017: 34% of defendants (165 of 488) in standalone actions in the second half were entities, compared with 47% (201 of 427) in the first half of the year. Continue reading

A French Court Authorizes the First-Ever “French DPA”

by Frederick T. Davis

In December 2016 the French government finally passed the so-called “Loi Sapin II” in order to bolster its ability to penalize overseas bribery. Its unstated but clear goal was to achieve some degree of parity with US efforts in this area, which had led to a number of highly publicized cases where well-known French companies had paid fines totaling well over $2 billion to the US treasury to resolve criminal matters that could well have been resolved in France.  A key provision of the new law is a procedure that permits a negotiated outcome, similar in concept to a US Deferred Prosecution Agreement (“DPA”), that avoids a criminal conviction.  On November 14, 2017, the first such agreement was announced by the National Financial Prosecutor of France.  While many details of the deal will not be known until the release of the court’s opinion approving it, which may be available as early as the end of November, the fact of the outcome and its known parameters are very significant. 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

Acting Assistant Attorney General Kenneth Blanco Keynote Address on FCPA and Anti-Bribery Convention

by Kenneth A. Blanco

Acting Assistant Attorney General Kenneth A. Blanco Delivers Remarks at FCPA/OECD Anniversary Conference Organized by the DOJ, OECD, and SEC, and Hosted by PCCE November 9, 2017

Good morning and thank you for that kind introduction, Sandra.

It is a pleasure to be here today.  I want start to by thanking the U.S. Securities and Exchange Commission (SEC) and the Organization for Economic Cooperation and Development (OECD) for co-organizing this event with the Department of Justice.  I also want to thank the New York University School of Law for hosting us.

Today, I have the honor and the privilege of speaking with you as the Acting Assistant Attorney General for the Criminal Division of the United States Department of Justice.

As many of you know, the Criminal Division spearheads the Department’s efforts in financial investigations, transnational crime, health care fraud, securities fraud, intellectual property theft, computer hacking, money laundering, sanctions violations, illicit finance, asset recovery, and, of course, the Foreign Corrupt Practices Act (FCPA) and kleptocracy initiative, to name just a few areas in which we are leading.

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

Corporate Recidivism in the FCPA Context

by Bruce E. YannettAndrew M. Levine and Philip Rohlik and Maxwell K. Weiss

Introduction

Among the flurry of resolutions in the final days of the Obama administration, two “repeat offenders” settled FCPA cases: Zimmer Biomet Holdings, Inc. (“Zimmer Biomet”)[1] and Orthofix International N.V. (“Orthofix”).[2]  Zimmer Biomet and Orthofix are hardly the first such “repeat offenders.”  In July 2016, Johnson Controls Inc. (“JCI”) settled an enforcement action involving activities of a Chinese subsidiary with the Securities and Exchange Commission (“SEC”),[3] and the DOJ simultaneously “declined” to bring any charges.[4]  Each of these companies was a “repeat offender” in having previously settled FCPA-related allegations.

By analyzing and comparing these three recent resolutions, this Article highlights factors that may influence whether U.S. authorities bring follow-on FCPA enforcement actions and, if so, what penalties they seek to impose.  As discussed below, companies are well advised to make concrete compliance enhancements in an effort to avoid recidivist status and the significant penalties that can accompany a second resolution. Continue reading

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