2015 FCPA Update. Max B. Chester 11/20/2015

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1 Attorney Advertising Prior results do not guarantee a similar outcome Models used are not clients but may be representative of clients 777 E. Wisconsin Ave, Milwaukee,WI FCPA Update Max B. Chester 1

2 FCPA Risks Are Real and Significant Themes from the Regulators Emphasized Disclosure and Cooperation PetroTiger, Ltd. (Rare Declination) Voluntary disclosure Cooperation Remediation 3 guilty pleas by executives A. Ceresny (SEC Division of Enforcement) Translation of documents Provisions of interview memos Making employees available for Staff interviews Real time updates L. Caldwell (AUSA DOJ Criminal Division) Distinguished Alstom ($772M penalty) from PetroTiger 2

3 Recent Enforcement Actions BHP Biliton (SEC) Internal Controls Hospitality packages to government officials at 2008 Olympic Games No quid pro quo payments; $960k spent $25M penalty Biomet (DPA DOJ) Improper payments to doctors in Brazil and Mexico $17.3M criminal fine; $5.4 SEC FLIR Systems (SEC) Luxury watches ($7k) and world tour ($40k); $7.5M Profit $7.5M disgorgement; $930k pre-judgment interest; $1M penalty Goodyear Tire & Rubber Co. (SEC) Illicit payments by subsidiaries in Africa $3M in payments; $14M in profits $16M fine (disgorgement, interest, penalty) Recent Enforcement Actions BHP Biliton (SEC) Internal Controls Hospitality packages to government officials at 2008 Olympic Games No quid pro quo payments; $960k spent $25M penalty Biomet (DPA DOJ) Improper payments to doctors in Brazil and Mexico $17.3M criminal fine; $5.4M payment to SEC BNY Mellon BNY provided services to Middle Eastern Sovereign Wealth Fund and provided internship opportunities to family members of Fund officials $14.8M settlement with the SEC ($8.3M disgorgement; $1.5M pre-judgment interest; $5M penalty) Bristo-Myers Squibb (SEC) Improper payments to doctors in China $14.2M payment to SEC ($11.4M disgorgement; $500k pre-judgment interest; $2.75M fine) FLIR Systems (SEC) Luxury watches ($7k) and world tour ($40k); $7.5M Profit $7.5M disgorgement; $930k pre-judgment interest; $1M penalty Goodyear Tire & Rubber Co. (SEC) Illicit payments by subsidiaries in Africa $3M in payments; $14M in profits $16M fine (disgorgement, interest, penalty) 3

4 Recent Enforcement Actions Hitachi (SEC) (SEC) and Internal Controls Hitachi sold a 25% interest in a South African sub to Chancellor, a company that was a front for a South African political party, ANC. In its consolidated books, Hitachi improperly recorded payments to Chancellor as success fees $19M payment to the SEC Hyperdynamics (SEC) Recorded $130k in payments for services in Guinea but did not know who received or what services were provided $75k penalty to the SEC but $12.7M in professional fees IAP Worldwide Services (DOJ NPA) $1.8M illicit payments in Kuwait $7.1M penalty DOJ cited cooperation and remediation to agree to NPA Louis Berger International Inc. (DOJ DPA) Concealment of illicit payments totaling $3.9M to officials in India, Indonesia, Kuwait, Vietnam. Marketing fee, field operation terms were used $17.1M penalty Mead Johnson (SEC) Improper payments to doctors in China $7.77M disgorgement; $1.26M pre-judgment interest; $3M penalty to SEC PBSJ Corp. (SEC DPA rare) Offers of illicit payments on contracts in Morocco by employee of a subsidiary Ignorance of red flags by parent (receipt of confidential information; disguised agency fees as costs) $2M in profit on the first contract $3.4 disgorgement and interest; $375k penalty Individual Prosecutions Joseph Sigelman PetroTiger co-ceo; agreed to conspiring with co-ceo and GC to make an illegal payment to an employee of Colombian national oil company. Plea in the middle of a trial to a lesser offence after government witness admitted to making false statements on the stand Probation Garcia, Vicente U.S. citizen, former head of SAP s Latin American sales; pled guilty Harder, Dmitrij Russian national, German citizen, permanent resident alien of the U.S.; alleged bribes to EBRD officials. 4

5 Robust Compliance Program or Window Dressing? The Yates Memo: The Highlights 1. Companies must turn over information on individuals to get cooperation credit 2. Both criminal and civil investigations will focus first on individuals 3. Criminal and civil divisions will work together on investigations 4. Written approval from senior DOJ attorneys before protection offered to individuals 5. Individual actions must be resolved before corporate actions 6. Individual actions pursued, even if individuals are unable to pay 5

6 Foley GRS: A Real Solution Risk Assessment Training & Continuing Advice Third-Party Due Diligence & Payments Fi Oversight, Autonomy & Resources Continuous Improvement: Periodic Testing & Review Incentives & Disciplinary Measures Commitment from Senior Management Code of Conduct & Compliance Policies & Procedures Foley GRS: A Real Solution Fi 6

7 Questions? Max B. Chester