Preparing for the new age of global anti-corruption enforcement Presentation to WPACC. October 15, 2013

Transcription

1 Preparing for the new age of global anti-corruption enforcement Presentation to WPACC October 15, 2013

2 Welcome Welcome and introductions 8:30am 8:45 am Robert T. Biskup Director, Deloitte Forensic Deloitte Financial Advisory Services LLP Kurt Stitcher Director, Deloitte Forensic Deloitte Financial Advisory Services LLP Mark A. Rush Partner K&L Gates 2 Preparing for the New Age of Global Anti-Corruption Enforcement

3 Agenda Preparing for the new age of global anti-corruption enforcement 8:45am 9:45am Current global regulatory environment Global anti-corruption compliance programs expectations and leading practices Panel discussion Q&A 9:45am 10:00am 3 Preparing for the New Age of Global Anti-Corruption Enforcement Copyright 2012 Deloitte Development LLC. All rights reserved.

4 Current global regulatory environment

5 Perceived corruption risk Source: Transparency International 5 Preparing for the New Age of Global Anti- Corruption Enforcement

6 FCPA applies to you FCPA applies to: U.S. organizations (public and private), including their subsidiaries (U.S. or international), and all their employees, including citizens, resident aliens, and non-u.s. employees in any other country 6 Preparing for the New Age of Global Anti- Corruption Enforcement

7 Aggressive FCPA enforcement climate Enforcement Agencies U.S. Department of Justice (DOJ) U.S. Securities and Exchange Commission (SEC) public companies only Enforcement Trends Cases more frequent, penalties higher More criminal prosecutions More individual prosecutions International cooperation / enforcement abroad Industry-focused investigations Intrusive compliance requirements 7 Preparing for the New Age of Global Anti- Corruption Enforcement

8 Anti-bribery provisions: legal elements of a bribe An offer, promise, or authorization Made corruptly To give anything of value To a foreign official Directly or indirectly To obtain or retain business or any improper advantage 8 Preparing for the New Age of Global Anti- Corruption Enforcement

9 Global anti-corruption crackdown: an international trend Recent years have shown a large uptick in foreign anticorruption enforcement, including countries implementing or strengthening anti-bribery UK Bribery Act Canada new books and record provisions New Brazil anti-corruption law 9 Preparing for the New Age of Global Anti-Corruption Enforcement

10 Trends: number of FCPA actions Total Resolved FCPA Enforcement Actions (DOJ and SEC) 1977 through Preparing for the New Age of Global Anti-Corruption Enforcement

11 Trends: size of penalties for FCPA violations Average Combined Corporate Penalty/Disgorgement (DOJ and SEC) 1977 through 2011 $60,000,000 $54,571,187 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $9,273,333 $7,146,154 $- $50,000 $628,750 $496,250 $875, Preparing for the New Age of Global Anti-Corruption Enforcement

12 Trends: prosecutions of individuals Resolved FCPA Enforcement Actions Against Individuals (DOJ and SEC) 1977 through first quarter Q Preparing for the New Age of Global Anti-Corruption Enforcement

13 Potential organizational fines Largest FCPA Settlements (Combined Penalties/Disgorgement) $900 $800 $800 $700 $600 $579 Millions $500 $400 $338 $365 $400 $300 $200 $100 $95 $137 $149 $185 $219 $0 13 Preparing for the New Age of Global Anti-Corruption Enforcement

14 As applied: directly or indirectly May be liable for illegal payments made by a third party, if: Authorized the payment Paid the third party while knowing there is a high probability that the payment will pass through to an official Failed to investigate third party risks and ignored general and specific red flags Hired a third party who was likely to pay Important: May be liable even if it did not have actual knowledge of the payment. An offer, promise, or authorization Made corruptly To give anything of value To a foreign official Directly or indirectly To obtain or retain business or improper advantage 14 Preparing for the New Age of Global Anti-Corruption Enforcement

15 Global anti-corruption compliance programs expectations and leading practices

16 Results from Deloitte Forensic Study: Sources of Corruption Risk 16 Preparing for the New Age of Global Anti-Corruption Enforcement

17 US government expectations The Federal Sentencing Guidelines outlines seven key elements of an effective ethics and compliance program: 1. Prevention and Detection Procedures 2. High Level Oversight 3. Due Care 4. Training and Communication 5. Monitoring 6. Consistent Enforcement 7. Response & Prevention In addition, in November 2010 a new guideline was added: Compliance officer should have a direct reporting line to the Board of Directors Communicate to the Board following allegations of potential criminal conduct Annual update or review to the Board to cover what has been happening during the year, any changes, etc Department of Justice A Resource Guide to the U.S. Foreign Corrupt Practices Act 17 Preparing for the New Age of Global Anti-Corruption Enforcement

18 New FCPA Resource Guide Ten things for legal and compliance officers to consider 1. The most critical way to defend against FCPA exposure is a pre-existing compliance program that is risk-tailored and risk-based. 2. In the eyes of a regulator, the tone at the middle and tone at the bottom of a company will define the effectiveness of the tone at the top. 3. FCPA compliance is the responsibility of a senior executive who must work to ensure adequate staffing and resources. 4. Third party compliance is essential, must be risk-based, and must include purposeful and intelligently designed auditing and monitoring. 5. Controlled subsidiaries, affiliates and joint ventures must be taken into account in FCPA compliance. 18 Preparing for the New Age of Global Anti-Corruption Enforcement

19 New FCPA Resource Guide (continued) Ten things for legal and compliance officers to consider 6. Even non-controlled affiliates, joint ventures, distributors and dealers should be included in the risk assessment and compliance plan. 7. Financially immaterial transactions and payments may give rise to material liability, reputational harm and management distraction. 8. The ultimate test for an FCPA compliance program is Does it work? and companies must be prepared to prove that it does. 9. Privately held companies should be on notice that they also have FCPA risk exposure. 10.The U.S. government will continue to apply expansive jurisdictional concepts in order to enforce the provisions of the FCPA globally. 19 Preparing for the New Age of Global Anti-Corruption Enforcement

20 Local Corruption: Compliance Strategies Red flags to watch out for: Allegations of illegal or unethical conduct. Foreign official requesting bribes or offering impropriate confidential information. Suggestion that laws or policies need not be followed because an unethical conduct is customary in a country. Paying for entertainment that are extravagant (luxury bars or golf resorts) or impropriate (adult or illegal), or travel that is unrelated to business (leisure or family travel). Lack of accuracy or detail in expenses and accounting records; misreporting the purpose of an expense. Using unauthorized financial accounts for transactions, such as personal accounts or third party accounts. Payment patterns or financial arrangements that prevent expense tracking or accounting, such as cash, gift or debit cards, fake receipts, etc. 20 Preparing for the New Age of Global Anti-Corruption Enforcement

21 Panel Discussion

22 Key considerations for in-house counsel Building a compliance program across borders, and largely from scratch Weighing risk and allocating resources accordingly Approach to the use and process for diligence/engagement of third party intermediaries, trips by foreign officials for legitimate business purposes Investigating allegations of corruption: partnering with outside counsel and accountants to conduct a thorough and defensible, but affordable, investigation In-house perspective on voluntary disclosure 22 Preparing for the New Age of Global Anti-Corruption Enforcement

23 Q&A

24 Speaker information Robert T. Biskup Rob is a Director of Forensic Services at Deloitte Financial Advisory Services LLP with more than 28 years of experience in the corporate sector and private professional settings. Rob serves as the Central US Region leader of the firm s Corporate Investigation and Forensic Accounting practice, and also leads our Foreign Corrupt Practices Act (FCPA), Business Intelligence, and Anti-fraud Programs and Controls practice areas. Rob also serves as national Automotive Sector Leader at Deloitte FAS. He is a former global chief compliance officer at a Fortune 10 multinational company and is among our leaders in matters related to the design and implementation of effective Corporate Compliance Programs. 24 Preparing for the New Age of Global Anti-Corruption Enforcement

25 Speaker information (continued) Kurt Stitcher Kurt Stitcher is a Director in the Forensic practice of Deloitte Financial Advisory Services LLP ( Deloitte FAS ) in Chicago. Kurt focuses his practice on Corporate Investigations, Compliance, and Litigation Consulting. Before joining Deloitte FAS in February of 2013, Kurt had over two decades of experience as a litigator in four international law firms, with a focus on corporate internal investigations, government enforcement, and white collar criminal defense, as well as on product liability, mass tort, and toxic tort matters. Kurt was also an Assistant United States Attorney in Miami, Florida, for several years. As a trial lawyer, Kurt first- or second-chaired more than two dozen jury and non-jury trials. Prior to his legal career, Kurt was an Intelligence Analyst with the Central Intelligence Agency in Langley, Virginia 25 Preparing for the New Age of Global Anti-Corruption Enforcement

26 Speaker information (continued) Mark A. Rush Mark is a partner with the law firm of K&L Gates LLP. He concentrates his practice on litigation as a trial lawyer with an emphasis on corporate criminal defense and complex commercial litigation. Mark represented a Presidential Advisor in the Independent Counsel Investigation of President Clinton, was an investigator in the WorldCom bankruptcy and currently represents the Pennsylvania House and Senate Republican Caucuses. Formerly he served as an Assistant U.S. Attorney for the Western District of Pennsylvania and as a U.S. Army Judge Advocate General. Rush has been inducted into the Academy of Trial Lawyers of Allegheny County and is listed in The Best Lawyers in America and Corporate Counsel Magazine s Top Lawyers for Criminal Defense Law - White Collar. Rush has received the highest rating from Martindale- Hubbell and is listed in Pennsylvania Super Lawyers. 26 Preparing for the New Age of Global Anti-Corruption Enforcement

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