Foreign Corrupt Practices Act Panel

Transcription

1 Foreign Corrupt Practices Act Panel ABA White Collar Crime Institute 2017 Miami March 9, 2017 Robert W. Tarun Moderator Karen Hewitt Daniel Kahn Jennifer Newstead Ira Raphaelson Preview Introduction of Panelists and Description of Papers Overview: Dan Kahn, Chief, FCPA Unit Pilot Program DOJ Compliance Consultant: Role in Corporate Cases DOJ Evaluation of Corporate Compliance Programs Impact of OECD and International Partners: Coordination in Investigations and Penalties DOJ and FBI Resources Major FCPA Cases Hot Button Issues 2

2 Top Ten DOJ and SEC FCPA Settlements Company Amount Year Country DOJ/SEC $ Siemens $ Germany 450M / 350M Alstom $ France 772M / KBR / Halliburton $ U.S.A. 402M / 177M Teva Pharmaceutical $ Israel 283M / 236M Odebrecht / Braskem $ Brazil 354M / 65M Och-Ziff $ U.S.A. 213M / 199M BAE $ U.K. 400M / Total SA $ France 245M / 153M VimpelCom $ Holland 230M / 167.5M Alcoa $ U.S.A. 223M / 16M 3 4

3 Top 10 FCPA Enforcement Settlements: Seven of Top Ten Companies are Non-U.S. Firms All but Three of Their Headquarters Countries Have a 2016 Transparency International Score of 65 or Better: Exceptions Brazil 40 and Israel 64 Average Financial Penalties: $465 Million Greater Splitting of Penalties with Foreign Governments Four of Top 10 FCPA Settlements Occurred in 2016 Year-Over-Year Changes and Small Sample 150 Active FCPA Investigations 2016: SEC 32 versus DOJ 21 FCPA Enforcements 5 OVERVIEW AND ENFORCEMENT TRENDS Dan Kahn, Chief of Fraud Section Unit, Criminal Division: The 2016 Year in Review The Pilot Program DOJ Evaluation of Corporate Compliance Programs (2017) International Law Enforcement Partners: Participation and Individual Prosecutions Role in FCPA Investigations and/or Penalties Increased DOJ and FBI Resources The Year Ahead: Preliminary Prediction 6

4 Major FCPA Cases: HMT and NCH: DOJ Declination with Disgorgement (now five possible DOJ outcomes: criminal plea, DPA, NPA, declination and declination with disgorgement) Anheuser-Busch In Bev: Impeding employee communication with government authorities by threatening fine for violating non-disclosure terms Harris: Declination of company recognizing a robust compliance program through due diligence and cooperation with the DOJ Och Ziff: First FCPA case against Hedge Fund Operator. DPA. 8 Countries. $412 Million Fines. SEC sues CEO and CFO for books and records and internal controls violations. 7 Major Cases (cont d): Embraer SA: $205 Million ($107 Million to DOJ, $98 Million in disgorgement to SEC, and up to $20 Million credit for payments to Brazil): DPA. Calculation of Credit considered failure to selfdisclose and engage in full remediation, i.e., a senior executive with oversight responsibilities was not punished. Result ended in 20% below the bottom line of the fine range not 25% Odebrecht SA and Braskem SA: Guilty Pleas, ability to pay issue: $4.5 Billion and U.S. credits to Brazil and Switzerland (Brazil 80%, Switzerland 10%, and U.S. 10%) Vimpelcom Ltd.: $795 Million ($230 Million to DOJ; $230 Million to Dutch authorities; and $375 Million disgorgement split between U.S. and Dutch). Management withheld information from outside counsel. 8

5 Hot Button Issues: Auditors, Compliance Officers and General Counsel as Targets Challenges investigating in certain countries, e.g., China DOJ Compliance Expert: Role and Participation in Corporate Negotiations and Resolutions Foreign Law Enforcement Coordination: Interviews Impact of Collateral Matters Whistleblower Actions Derivative Actions Internal Discipline Remediation 9 Hot Button Issues (cont d): Interference with Employment and Severance Agreements: Anti-Retaliation SEC Lessons Learned from the First Hundred Days of FCPA Investigations of Corporations Selection of Counsel Which Side of the Wall Early Contact with the Government NuSkin: Second FCPA case to involve charging of only charitable contributions (SEC) 10

6 Hot Button Issues (cont d): Mondelēz International: Pre-Acquisition Due Diligence Monitors Multi-Government Investigations: Interviews and Risks Remedial Action and Corporate Compliance Credit HMT Embraer Lan Declination Failure to Discipline No discipline Large Scale Senior Executive 5% Acquired By Discipline Less Credit Latam 11 Hot Button Issues (cont d): A Lesser Scienter Standard for Corporations Princeling Investigations: J.P. Morgan, Qualcomm and Bank of New York resolutions and Citibank Disclosure Reflections by a General Counsel on FCPA Investigations: Three Key Lessons Sentencing Calculations in FCPA Corporate Cases Whistleblowers FCPA Rewards Yates Impact on Investigations of Individuals 12

7 Hot Button Issues (cont d) Pilot Program Self-reporting: credit up to 50% off low end of Guidelines, no monitor imposition and possibility of declination Number of companies qualifying that have been publicly filed or disclosed Race to the Court House Reasonable amount of time to review and investigate Any Photo Finishes Hearing Footsteps 13 Thank You. Jennifer, Karen, Dan, Ira and Bob 14