2015 Baker & McKenzie LLP GOOD. SMART. BUSINESS. PROFIT. TM

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1 2015 Baker & McKenzie LLP GOOD. SMART. BUSINESS. PROFIT. TM

2 Anti-Corruption Enforcement and Compliance in the US, UK and China: Trends from 2014 and Forecast for 2015 January 30, Baker & McKenzie LLP

3 HOST QUESTIONS Chelsie Chmela Events Manager We encourage you to engage during the Q&A portion of today s webcast by using the Submit Question button located within your viewing experience. RECORDING Included in your registration: Event recording and deck: West LegalEdcenter provides on-demand event access for 180 days or until the end of your subscription, if sooner Baker & McKenzie LLP

4 SPEAKING TODAY John P. Cunningham Partner, Washington, DC Vivian Wu Special Counsel, Beijing Geoff Martin Associate, London, UK/Washington, DC 2015 Baker & McKenzie LLP 4

5 Anti-Corruption Enforcement and Compliance in the US, UK and China: Trends from 2014 and Forecast for 2015 January 30, 2015 John P. Cunningham: Washington, DC Vivian Wu: Beijing, China Geoff Martin: London, UK; Washington, DC Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm Baker & McKenzie LLP

6 Global Enforcement and Compliance Trends - Overview Burgeoning global enforcement of anti-corruption laws US, UK, China, Brazil, Russia, Canada Increased multi-country enforcement actions Proactive cross-border investigative cooperation (sharing) Keying in on individual prosecutions Heavy involvement by agents or intermediaries (75%) [Source = OECD Foreign Bribery Report, Dec. 2014] Majority of global matters in four sectors (67%): extractive, construction, transportation, and information Greater compliance awareness among companies and employees (e.g., whistleblower risk, monitoring) 2015 Baker & McKenzie LLP 6

7 2014 Transparency Int l CPI Index* From 1 (least corrupt) to 174 (most corrupt), the countries of particular interest in this specific presentation rank as follows: USA: Rank 17, Score 74 (Score of 100 = least corrupt; 1 = most) UK: Rank 14, Score 78 China: Rank 100, Score 36 Other Countries of Note in the TI 2014 CPI Index (i.e., top and bottom rankings) Denmark (Rank 1, Score 92) New Zealand (Rank 2, Score 91) Note: Singapore (Rank 7, Score 84) is only ASEAN country in top 10 North Korea (Rank 174, Score 8) Somalia (Rank 174, Score 8) *The TI Corruption Perceptions Index (CPI) measures how one country compares to others included in the Index based on the perceived level of public-sector corruption in each country 2015 Baker & McKenzie LLP 7

8 United States

9 Siemens AG $800 Alstom S.A. $772 KBR/Halliburton $579 BAE $400 Total S.A. $398 Alcoa $384 ENI S.p.A. $365 Technip S.A. $338 JGC Corporation $219 Daimler AG $185 Weatherford $152 Alcatel-Lucent $137 Avon $135 Hewlett-Packard $108 Deutsche / Magyar Telekom $95 Marubeni Corporation $88 Panalpina $82 Johnson & Johnson $70 Pfizer / Wyeth $60 ABB $58 Top 20 FCPA Settlements (US millions) Baker & McKenzie LLP

10 US - Enforcement and Compliance Trends in 2014 and Outlook for 2015: Overview US ranked 17 out of 174 on TI s 2014 Corruption Perceptions Index FCPA still by far most actively enforced anti-corruption law in the world Cost of settling FCPA enforcement actions continues to rise accompanied by big global headlines Emergence of more active cross-border cooperation between US authorities and other countries involving FCPA matters FCPA enforcement against non-us companies continues Self-reporting, cooperation, and remediation increasingly important factors in reducing anti-corruption settlement penalties Prosecution of individuals involved in FCPA misconduct on the rise Continued emphasis on benefits of an effective compliance program 2015 Baker & McKenzie LLP 10

11 US - Key Trends 2014 Increased role in global enforcement and cooperation Sharing information Joint prosecutions More countries: UK, Brazil, China, Russia, Canada Expanded charges Combining anti-corruption with export violations, money laundering, mail and wire fraud, other charges 2015 Baker & McKenzie LLP 11

12 US - Key Trends 2014 Greater corporate awareness Self-reporting and cooperation Front page media reports Whistleblowers Higher expectations for compliance programs Third party due diligence M&A, JVs due diligence Investigation protocols and rapid response 2015 Baker & McKenzie LLP 12

13 US Key Trends 2014 Aggressive expansion of FCPA jurisdiction to nondomestic concerns and non-issuers Exerting extra-territorial jurisdiction Enforcement based on abetting and conspiracy theories Higher expectations for compliance programs to be comprehensive and premised on company-specific risk profile Immense penalties and collateral consequences (legal fees, compliance program costs, shareholder derivative actions, debarment, negative publicity) 2015 Baker & McKenzie LLP 13

14 US - Key Trends 2014 The prosecution of individuals including corporate executives for white-collar crimes is at the very top of the Criminal Division s priority list under Assistant Attorney General Caldwell. --Marshall Miller, US Principal Deputy Assistant Attorney General for the Criminal Division, September 17, Baker & McKenzie LLP 14

15 US Key Trends 2014: Increased Focus on Asia Of the five 2014 settlements in the top 20: Alstom and Marubeni both relate to corrupt payments in Indonesia -- schemes to procure officials assistance in securing power projects for Alstom and its subsidiaries; and to secure a contract to provide power-related services in Indonesia (Marubeni) Avon involved allegations of corrupt conduct in China, including improper gifts, entertainment, and hospitality provided to public officials 2015 Baker & McKenzie LLP 15

16 US Key Trends 2014: Increased Focus on Asia (cont d) Other 2013 and 2014 FCPA resolutions with allegations of corrupt payments to officials in SEA / Asian countries include: Bio-Rad Products (Vietnam & Thailand) Smith & Wesson Holding Corporation (Indonesia) Bruker Corporation (China) Diebold Inc (China) 2015 Baker & McKenzie LLP 16

17 US Looking Ahead in 2015 Hiring practices abroad US government investigating major financial firms including Morgan Stanley and Citigroup, Inc. Travel issues Recent FCPA matters demonstrate continued interest and significantly increased fines in connection with travel-related improprieties Third parties 70-80% of FCPA cases involve third parties committing violations on or behalf of main corporate entity 2015 Baker & McKenzie LLP 17

18 US Looking Ahead in 2015 M&A DOJ opinion release: DOJ will not penalize a company subject to the FCPA for acquiring a foreign target with corruption issues, provided certain conditions were met Commercial bribery Diebold (2013) SEC folding commercial bribery into its FCPA enforcement realm 2015 Baker & McKenzie LLP 18

19 US Looking Ahead in 2015 Sep $30 million USD award to a foreign whistleblower in a fraud case (largest ever) November, 2014: SEC released annual Dodd Frank whistleblower report covering FY 14: 3,620 tips, 20% increase over two years 9 whistleblower awards (5 in all previous years combined) 2015 Baker & McKenzie LLP 19

20 US Looking Ahead in 2015 Increased prosecution against individuals DOJ: Corporate cooperation credit will depend on disclosure of evidence of individual culpability, more aggressive tactics will be used to investigate individuals Creation of 3 new and dedicated FBI units to focus on FCPA matters 2015 Baker & McKenzie LLP 20

21 United Kingdom

22 UK - Enforcement and Compliance Trends in 2014 and Outlook for 2015: Overview Tooling-up for corporate prosecutions Building a head of steam - more cases brought Significant firsts on the horizon? A pipeline of cases for 2015 The future of the Serious Fraud Office 2015 Baker & McKenzie LLP 22

23 UK Gearing Up for Corporate Prosecutions Introduction of Deferred Prosecution Agreements New Sentencing Guidelines Proposals for a broader ranging Corporate Offence of a Failure to Prevent Fraud/Economic Crimes UK Anti-Corruption Plan 2015 Baker & McKenzie LLP 23

24 UK - Building a Head of Steam in 2014 Enforcement of pre-bribery Act legislation Smith and Ouzman (December) Innospec (August) Alstom - Charged (July) Bruce Hall (July) Bribery Act enforcement Bio Fuel fraud & bribery convictions (December) 2015 Baker & McKenzie LLP 24

25 UK - Significant Firsts on the Horizon? First Deferred Prosecution Agreement First corporate conviction under Bribery Act s.7 First Bribery Act conviction for foreign bribery 2015 Baker & McKenzie LLP 25

26 UK - Pipeline of Cases for 2015 (selected) Rolls Royce GlaxoSmithKline Alstrom Barclays 2015 Baker & McKenzie LLP 26

27 UK - Future of the Serious Fraud Office Continued challenges Tchenguiz and Dahdaleh cases HM Crown Prosecution Service Inspectorate report (November 2014) Home Office considers disbanding SFO and rolling into the National Crime Agency 2015 Baker & McKenzie LLP 27

28 China

29 China - Enforcement and Compliance Trends in 2014 and Outlook for 2015: Overview Greater scrutiny from Chinese authorities Surge in prosecutions and higher penalties Strengthened administrative enforcement New legislation focusing on bribery 2015 Baker & McKenzie LLP 29

30 China - PRC Anti-Bribery Law PRC law prohibits and penalizes both the giving and receiving of bribes in exchange for improper benefits. Legislation Context Authority Criminal Law Criminal Law Judiciary Interpretation Regulates both official bribery and commercial bribery Public Security Bureau Procuratorate; People s courts; Anti-Unfair Competition Law (AUCL) Regulations Concerning the Prohibition of Commercial Bribery Acts Regulates commercial bribery State Administration for Industry and Commerce and its local counterparts CPC Rules Communist Party of China (CPC) polices and rules Commission for Discipline and Inspection of the Central Committee of CPC (CCDI) 2015 Baker & McKenzie LLP 30

31 China - General Enforcement Trends Increasing scrutiny of SOEs Industry sweeps Energy Telecommunications Media Automobile Banking Dawn raids frequently used by regulators Criminal prosecution Administrative enforcement 2015 Baker & McKenzie LLP 31

32 China - Highlights in Anti-Corruption Campaign Enforcement against Chinese government officials 68 71,748 Flies Tigers penalized for 30 transferred breaking to criminal disciplinary charges rules US$ 500 million Fox Hunt illegal assets recovered from abroad Prosecution against foreign invested enterprises GSK a record fine of US$489 million 2015 Baker & McKenzie LLP 32

33 China - Legislation Development New rule on enterprise information publication Draft 9th Amendment to Criminal Law New crime of offering bribes to close relatives of government officials Impose fines to corruption/bribery related crimes Replacement of amount-based standards for sentencing bribe-taking crimes with more general criteria Intensified international cooperation 2014 APEC Beijing Declaration on Fighting Corruption 2015 Baker & McKenzie LLP 33

34 China Looking Ahead in 2015 Continuation of the country s anti-corruption compaign Establish and Improve Punishment and Prevention of Corruption System Work Plan ( ) Strengthen prosecution of bribery crimes A new anti-corruption agency within the Supreme People s Procuratorate is to be established in 2015 Industry sweeps Industries concerning people s livelihood will continue to be enforcement targets 2015 Baker & McKenzie LLP 34

35 Baker & McKenzie - Additional Resources Follow ongoing developments in global anticorruption enforcement and compliance via: Baker & McKenzie s acclaimed Inside the FCPA Newsletter Baker & McKenzie LLP 35

36 Thank you! Any questions?

37 Contact Information for Presenters John P. Cunningham, Partner, Washington, DC Phone: Vivian Wu, Special Counsel, Beijing Vivian.Wu@bakermckenzie.com Phone: Geoff Martin, Associate, London, UK/Washington, DC geoff.martin@bakermckenzie.com Phone: Baker & McKenzie LLP 37

38 PLEASE JOIN US FOR Wednesday, February 4, 2015 Corruption and Corporate Risk: How to Integrate Anti-Corruption Practices into Existing Business Operations All upcoming Ethisphere events can be found at: Baker & McKenzie LLP

39 Business Ethics Leadership Alliance (BELA) This webcast and all future Ethisphere webcasts are available complimentary and on demand for BELA members. BELA members are also offered complimentary registration to Ethisphere s Global Ethics Summit and other Summits around the world. For more information on BELA contact: Laara van Loben Sels Senior Director, Engagement Services laara.vanlobensels@ethisphere.com Baker & McKenzie LLP

40 A UNIQUE EVENT WHERE THE C-SUITE AND LEADERS ACROSS INDUSTRIES AND GEOGRAPHIES ASSEMBLE TO ADVANCE CORPORATE INTEGRITY AND PERFORMANCE. Join CEOs, board chairs, communication executives, governance, risk management and compliance leaders and government and regulatory officials in New York on March 10-11, 2015 as the Ethisphere Institute and Thomson Reuters host the seventh annual Global Ethics Summit. March 10-11, 2015 New York City GlobalEthicsSummit2015.com 2015 Baker & McKenzie LLP

41 2015 Baker & McKenzie LLP THANK YOU