The three articles are: (1) “Complying With the Foreign Corrupt Practices Act: A Practical Primer”, authored by the University of Chicago Law School’s Corporate Lab, co-sponsored by Microsoft, and published by the ABA Global Anti-Corruption Task Force; (2) “The IP Practitioner’s ‘Cheat Sheet’ to the FCPA and Travel Act: Introducing the IP FCPA Decision Tree”, authored by Doug Sawyer and T. Markus Funk and published in the BNA Bloomberg Patent, Trademark & Copyright Journal; and (3) “Breaking Down the FCPA, Travel Act, and UK Bribery Act”, by T. Markus Funk, published in BNA Bloomberg White Collar Crime Report.
Checklist for Defending FCPA Cases | Thomas Fox – JDSupra
November 7, 2011 By Leave a Comment
Most readers of this blog will be familiar with the Lindsey Manufacturing and Esquenazi Rodriguez prosecutions earlier this year. Both sets of individual defendants in these cases were convicted of violating the Foreign Corrupt Practices Act (FCPA). These convictions were what the FCPA Blog called, “quick verdicts”. There was also the first of four groups of defendants tried in the Gun Sting case. In this case the jury deliberated for five days before the judge declared a mistrial. The second group of defendants is currently in trial.
While the Lindsey Manufacturing defendants have yet to be sentenced, Joel Esquenazi was sentenced to 15 years in prison and Carlos Rodriguez received a sentence of seven years. The John O’Shea case, which was set to go to trial this week here in Houston has been delayed until January, 2012 and the individual defendants in the Control Components case, US v. Carson, are scheduled to go to trial next spring. So there is an increase in the number of individuals going to trial and the length of their sentences, with apparently more to come.
via Checklist for Defending FCPA Cases | Thomas Fox – JDSupra.
Is Your Business Toxic-in the FCPA Compliance Context | Thomas Fox – JDSupra
September 29, 2011 By Leave a Comment
Is your business toxic? I do not mean that it had holds the type of sub-prime Collateral Debt Obligation assets which were so prominently mentioned in the press just a few years ago. I mean is your business so devoid of anything close to a best practices compliance program that you are not able to obtain loans, manage risk through insurance or other equally traditional business practices? Yesterday I wrote about the new types of insurance available for investigation of, and claims based upon, alleged violations of the Foreign Corrupt Practices Act (FCPA). This also included Directors and Officers liability coverage if such persons are made parties in a stock holder derivative action based upon violations of the FCPA. I also wrote about banks and other financial institutions which are now reviewing compliance programs to determine if they meet some type of minimum best practices. However, now the failure to have a minimum best practices compliance program in place may have a more drastic effect; it may deny you the ability to access your company’s value in the capital markets.
via Is Your Business Toxic-in the FCPA Compliance Context | Thomas Fox – JDSupra.
The FCPA Compliance Audit: a Market Approach to Moving the Bar Forward | Thomas Fox – JDSupra
August 2, 2011 By Leave a Comment
The issue of audit rights in compliance terms and conditions is one that leads to debates both pro and con. My This Week in FCPA colleague Howard Sklar and I have sparred on this issue. Usually the debates centers around the threshold question of if you have the rights must you audit the contractual counter-party which has agreed to allow itself to be audited. I argue that if you have audit rights that you must, at least selectively use them. However, if you do not ever use these audit rights, it may put you in a worse position than if you did not have the rights. The next argument is usually along the lines that the counter-party will never allow your company to audit them. The third argument is that auditing takes too much time and is too costly.
via The FCPA Compliance Audit: a Market Approach to Moving the Bar Forward | Thomas Fox – JDSupra.
Best Practices During an FCPA Enforcement Action: The Armor Holdings NPA | Thomas Fox – JDSupra
July 14, 2011 By Leave a Comment
We will give some detail to the books and records scheme used by the company to disguise its bribes and then detail some of the factors listed by the DOJ in its Press Release (the NPA is not available as of the posting of this blog). These factors listed by the DOJ clearly show that a sustained, committed effort to cooperate with the DOJ and SEC in the investigation, coupled with a robust remediation program going forward can significantly help a company overcome what may appear to be clear facts which would seem to warrant a criminal penalty, in addition to a civil action.
via Best Practices During an FCPA Enforcement Action: The Armor Holdings NPA | Thomas Fox – JDSupra.
FCPA Compliance: Documentation is a Key | Thomas Fox – JDSupra
April 14, 2011 By Leave a Comment
Paul McNulty, former United States Deputy Attorney General has provided perspective that there are three general areas of inquiry the Department of Justice (DOJ) would assess regarding an enforcement action. First: “What did you do to stay out of trouble?second: “What did you do when you found out?” and third: “What remedial action did you take?” He also discusses that as a key component, a company must document its overall compliance efforts. Former federal prosecutor Stephen Martin, currently the General Counsel of Corpedia, discusses the key component of documentation when he and I speak across the country on current compliance best practices in our World-Check sponsored Foreign Corrupt Practices Act (FCPA) events. To respond to any of these inquiries a company must document what it does for its compliance efforts. However, more than simply the ability to document the results of your company’s compliance efforts is the ability of a company to quickly and efficiently respond to a prosecutor’s request for information in a timely manner.
via FCPA Compliance: Documentation is a Key | Thomas Fox – JDSupra.
The Swiss Compliance House: a Model for FCPA Compliance? | Thomas Fox – JDSupra
January 18, 2011 By Leave a Comment
In an article in the January/February issue of the ACC Docket entitled “Five Fundamentals for Taking Management Compliance Seriously”, author Daniel Lucien Buhr discusses a model for a compliance system which he describes as the “Compliance House”. The Compliance House is a model which has been developed by Swiss businesses to use as the foundation of effective compliance management by ensuring that by “binding values and appropriate compliance management they can safeguard their integrity, and avoid or contain breaches of the law.” Buhr believes that it is the basic legal responsibility of any company board of directors to make certain breaches of law are either avoided or, if they occur, are detected early enough so that the company may remedy the situation.
Buhr begins with a very basic understanding of the term compliance, which he defines it as “ensuring law abidance.” However, the author goes on to expand this definition by noting that both private and public stakeholders of a company will expect that the company shall comply with applicable standards, therefore compliance may also be defined as “the state of integrity expected by stakeholders on the basis of civic responsibility of the companies.” This is a far different version than most US companies would state. Most US companies would try and obey the law but not include a complete culture of integrity.
via The Swiss Compliance House: a Model for FCPA Compliance? | Thomas Fox – JDSupra.
How Does the FCPA Apply to Your Business | Thomas Fox – JDSupra
January 16, 2011 By Leave a Comment
One question that I often hear about the application of the Foreign Corrupt Practices Act (FCPA) is something along the lines of the following: “I am not in the international energy business, I am in the restaurant, retail, banking, or (fill in the blank) business. And yes my company has international operations but we don’t transact business with foreign governments. Why do I need to worry about the FCPA?”
The answer to this oft-asked question is laid out in a new resource for the FCPA practitioner. It is a book entitled “Foreign Corrupt Practices Act – A Practical Resource for Managers and Executives” authored by Aaron Murphy. It is a welcome addition to the growing literature on the FCPA, which, as noted by Mr. Murphy’s title, is designed to be a practical resource. Aaron is a partner in the Los Angeles office of Latham & Watkins, who practices in the White Collar and Government Investigations Group and in his introduction states that this book is primarily for managers and “the most common problems areas where managers get themselves into FCPA trouble.”
via How Does the FCPA Apply to Your Business | Thomas Fox – JDSupra.
How Does the FCPA Apply to Your Business | Thomas Fox – JDSupra
January 13, 2011 By Leave a Comment
One question that I often hear about the application of the Foreign Corrupt Practices Act (FCPA) is something along the lines of the following: “I am not in the international energy business, I am in the restaurant, retail, banking, or (fill in the blank) business. And yes my company has international operations but we don’t transact business with foreign governments. Why do I need to worry about the FCPA?”
The answer to this oft-asked question is laid out in a new resource for the FCPA practitioner. It is a book entitled “Foreign Corrupt Practices Act – A Practical Resource for Managers and Executives” authored by Aaron Murphy. It is a welcome addition to the growing literature on the FCPA, which, as noted by Mr. Murphy’s title, is designed to be a practical resource. Aaron is a partner in the Los Angeles office of Latham & Watkins, who practices in the White Collar and Government Investigations Group and in his introduction states that this book is primarily for managers and “the most common problems areas where managers get themselves into FCPA trouble.”
via How Does the FCPA Apply to Your Business | Thomas Fox – JDSupra.
What To Do When You’re Smacked With An FCPA Violation
January 13, 2011 By Leave a Comment
According to John W. Brooks, senior international counsel at Luce Forward, a full-service law firm, if a company conducts business overseas, the chances of the FCPA catching up to an illicit payment is almost guaranteed.
In Brooks’ three part series, Getting caught with your FCPA pants down – What to do when the phone rings, he presents two scenarios that can help companies test and prepare a plan incase the DoJ decides to call.
Brooks writes that if a company’s ombudsman is notified that a violation has taken place and there’s no rigid corporate compliance program in place, the following should be taken into consideration:
Self-assessment: It is important to study the various sides of the issue. Start by asking what happened and who else knows? Has, or should, the alleged violation (AV) be raised with your board? What type of ‘reputational damage’ can be incurred? What are the odds of an unhappy employee or whistleblower turning the company in? Keeping those questions in mind and having a strategic plan in place can mitigate future FCPA risks.
External examination: In the second scenario, what if the government tracks you down and discovers your violation? ‘If you have a qualifying’ compliance program up and running, you may be able to hold down the penalties,’ says Brooks. ‘If you don’t, you may as well just go quietly.’
If that’s the case the lawyer advises that a company should measure how robust and effective its program is. ‘Did a senior officer of your company have secret knowledge of the violation? If the UK Bribery Act is involved, do you believe your program meets the UK standard of ‘Adequate Procedures?’
Flexibility: Sharing similar views is Thomas Fox, attorney and author of the FCPA Compliance and Ethics Blog, who claims that a superior business model must be adaptable so it can sustain its effectiveness over time. Additionally, a good compliance policy/program should be able to adapt despite the ever-changing regulatory landscape.
International compliance: ‘The key to this component is an annual assessment of your company’s FCPA compliance program to determine if there are any areas which may need to be modified,’ Fox explains. ‘A couple of clear examples of this are facilitation payments and UK subsidiaries or company employees subject to the UK Bribery Act.’ He further mentions that many companies tend to ban facilitation payments in the compliance policy and requires the same from those involved in business with them.
According to Fox, in the event a company is in fact subject to the UK Bribery Act, it needs to keep in mind the different treatment given to facilitation – treated more strictly in the UK – and private commercial transaction which are more clearly defined in the US statute. ‘Companies need to be aware of both developments and enhance their compliance program to meet these evolving standards,’ Fox says.
Whistleblowers: Brooks notes that whistleblowers come in two categories: the bounty hunter and the ‘shake-down artist,’ that the latter being motivated by self-interest. For this matter, the response to the two types of whistleblowers should be approached differently.
