FCPA UNDER THE TRUMP ADMINISTRATION

Transcription

1 FCPA UNDER THE TRUMP ADMINISTRATION TOM FOX, THE COMPLIANCE EVANGELIST MAPI Ethics and Compliance Council Meeting Fall 2017

2 PUBLICATIONS-PARTIAL LIST Thomas R. Fox / Advanced Compliance Solutions All Rights Reserved

3

4 THE BASICS 1. Resources and Policy 2. Evaluation of Corporate Compliance Programs

5 FCPA RESOURCES AND POLICY Nov. 2015: Hui Chen retained by DOJ as compliance expert Nov. 2015: DOJ announces plan to add 10 new FCPA prosecutors 3 new FBI squads fully operational Jan. 2016: DOJ FCPA unit at 24 attorneys April 2016: FCPA Pilot Program launched Dec. 2016: DOJ announces new fraud position in London Jan. 2017: DOJ FCPA unit at 30+ attorneys

6 FCPA RESOURCES AND POLICY Jan. 2017: Trump administration takes office Feb. 2017: DOJ issues Evaluation of Corporate Compliance Programs Mar. 2017: DOJ indefinitely extends Pilot Program Apr. 2017: SEC FCPA Unit Chief Kara Brockmeyer departs Apr. 2017: AG Sessions affirms commitment to strongly enforce the FCPA and other anti corruption laws June 2017: First two declinations under Trump administration June 2017: Hui Chen resigns

7 EVALUATION OF CORPORATE COMPLIANCE PROGRAMS Released February 8, 2017 Tied to 10 Hallmarks of an Effective Compliance Program Contains important topics and sample questions that the Fraud Section has frequently found relevant in evaluating a corporate compliance program. neither a checklist nor a formula New requirement for root cause analysis Key Concepts: 1. Operationalize compliance. 2. Continue data driven approach: actual results that are measured thoughtfully. 3. Document everything. 4. Think Think Think.

8 FCPA PILOT PROGRAM 1. Overview 2. Results 3. Pilot Program and Non-Pilot Program Declinations

9 OVERVIEW Up to 25% off bottom of sentencing guidelines if: Cooperation ++; and Remediation Up to 50% off if there is also a voluntary disclosure Opens door to: Declination Presumption against monitor (if program implemented)

10 RESULTS First year: April 2016 April voluntary disclosures 5 declinations Nortek, Inc. (June 3, 2016) Akamai Technologies, Inc. (June 6, 2016) Johnson Controls, Inc. (June 21, 2016) HMT LLC (September 29, 2016) NCH Corporation (September 29, 2016)

11 RESULTS-YEAR 2 Second year: April 2017 Present 2 Pilot Program declinations In re: Linde North America Inc. (June 16, 2017) In re: CDM Smith, Inc. (June 21, 2017) Non-Pilot Program 2017 declinations IBM Newmont Mining Corp. Net 1 UEPS Technologies, Inc. MTS Systems Vantage Drilling International

12 INTERNATIONAL 1. Cooperation 2. Odebrecht 3. Apportionment 4. Implications?

13 INTERNATIONAL COOPERATION In the last five years, DOJ reports: 28% increase in incoming requests for legal assistance 147% increase in incoming requests for US based evidence 75% increase in outgoing requests for evidence Growth in Office of International Affairs Cyber Unit MLA Unit Dedicated FBI resources

14 HOW CLOSE? Given the close relationship between the [DOJ] and the Brazilian prosecutors, we don t need to rely solely on formal processes such as mutual legal assistance treaties.... Acting Asst. AG Kenneth Blanco, July 19, 2017

15 ODEBRECHT At $2.6 billion, it is the largest global fine ever imposed in a corruption case Approximately 80 individuals charged Coordination between Brazilian, U.S., and Swiss authorities One of several FCPA cases arising out of Lava Jato task force

16 CROSS-BORDER APPORTIONMENT Company Date of Resolution Total Fine and Penalty US Apportionment US % Apportionment Siemens December 2008 $1.6 bn $800 50% VimpelCom February 2016 $795MM $377MM 48% Odebrecht December 2016 $2.6 bn $260 million but later reduced to $93MM 10% Rolls Royce January 2017 $800MM $170MM 21%

17 THE NUMBERS-FCPA ENFORCEMENT End of Siemens - $800MM in Alstom - $772MM in Halliburton - $579MM in BAE - $400MM in Total - $398MM in Alcoa - $384MM in ENI - $365MM in Technip - $338 in JGC Corp - $218.8MM in Daimler - $185MM in 2010 Source: FCPA Blog End of Siemens - $800MM in Alstom - $772MM in Halliburton - $579MM in Teva Pharmaceutical - $519MM in Odebrecht/Braskem - $419MM in Och-Ziff - $412MM in BAE - $400MM in Total - $398MM in VimpelCom - $397.6MM in Alcoa - $384MM in 2014 Source: FCPA Blog

18 THE NUMBERS-INTERNATIONAL ENFORCEMENT 1. Odebrecht/Braskem $4.5bn US, Switzerland and Brazil 2. Siemens $1.6bn in Germany and US 3. VimpelCom $795MM in US and The Netherlands 4. Alstom $772MM in US 5. Halliburton $604MM in US and Nigeria 6. Teva Pharmaceutical $519MM in US 7. GSK $498MM in China 8. Och-Ziff $412MM in US 9. BAE $400MM in US 10. Total $398MM in US

19 IMPLICATIONS? Increased cooperation means increased: Likelihood of information sharing / joint investigations Importance of compliance with local laws Complexity of self disclosures and resolutions Reliance on foreign regulators to solve jurisdictional hurdles

20 FCPA CASES AND ISSUES 1. Individual Enforcement Actions 2. Kokesh 3. Apportionment 4. Implications?

21 INDIVIDUAL ENFORCEMENT ACTIONS-DOJ U.S. v. Ashe, 15 cr (SDNY): jury convicted chairman of Chinese real estate development company of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy U.S. v. Thiam, 17 cr (SDNY): jury convicted former Minister of Mines and Geology of the Republic of Guinea of one count of transacting in criminally derived property and one count of money laundering U.S. v. Chi, 16 cr (CD Cal.): jury convicted Director of South Korea s Earthquake Research Center of one count of transacting in criminally derived property Thomas R. Fox / tomfoxlaw.com PC

22 INDIVIDUAL ENFORCEMENT ACTIONS-SEC SEC v. Straub, 1:11 cv (SDNY): three former executives at Hungarian based telecommunications company Magyar agreed to pay financial penalties ($250,000, $150,000 and $60,000) and to permanent injunctions against future violations of the securities laws they also accepted officer and director bars Magyar paid $95 million in December 2011 to settle parallel civil and criminal charges Thomas R. Fox / tomfoxlaw.com PC

23 COMPELLED TESTIMONY U.S. v. Allen et. al, cr (2d Cir. July 17, 2017 ): A potential minefield for U.S. Prosecutors Reversed convictions of two traders in Libor case 5th Amendment rights violated [C]ompelled testimony cannot be used to secure a conviction in an American court... even when the testimony was compelled by a foreign government in full accordance with its own law.

24 SIGNIFICANT DECISION-KOKESH Kokesh v. SEC, 137 S. Ct (2017) Disgorgements considered a penalty Subject to five year statute of limitations Implications for: Settlement negotiations Tolling agreements Voluntary disclosures Thomas R. Fox / tomfoxlaw.com PC

25 HALLIBURTON- INTERSECTION OF COMPLIANCE AND SUPPLY CHAIN 1. Third Party Agent or Local Content Provider? 2. Commercial agent or vendor in the Supply Chain? 3. High risk location require greater scrutiny? 4. Friend of government minister or former Hal employee as key indicia?

26 OTHER ISSUES 1. ISO AML 3. Cyber Security

27 ISO Anti Bribery Management Systems Adopted October 15, 2016 Drafted by committee of advisory groups from 37 countries Companies that have obtained certification include Microsoft, Walmart and Alstom Singapore and Peru have adopted it and the Market Supervision Commission of the Shenzhen Municipality has developed standards to help Chinese companies comply

28 ISO PROS AND CONS Possible Pros Potentially improves your compliance program Independent certification Marketable to business partners Possible Cons and Questions Not endorsed by or referenced in enforcement actions by DOJ/SEC/foreign regulators Certification is not a shield/guaranty of good behavior Consider the qualifications of the certifier What is the scope of a certification?

29 CYBERSECURITY PER DFS Controls relating to the governance framework for a robust cybersecurity program including requirements for a program that is adequately funded and staffed, overseen by qualified management, and reported on periodically to the most senior governing body of the organization; Risk-based minimum standards for technology systems including access controls, data protection including encryption, and penetration testing; Required minimum standards to help address any cyber breaches including an incident response plan, preservation of data to respond to such breaches, and notice to DFS of material events; and Accountability by requiring identification and documentation of material deficiencies, remediation plans and annual certifications of regulatory compliance. Thomas R. Fox / tomfoxlaw.com PC

30 AML AND SANCTIONS Anti Money Laundering FinCEN s Geographic Targeting Orders Civil Forfeitures Sanctions Evasion Venezuela/Russia/Belarus/Zimbabwe Thomas R. Fox / tomfoxlaw.com PC

31 INTERSECTION WITH AML Violations of the FCPA are a Specified Unlawful Activity ( SUA ) for money laundering violations (specifically, 18 U.S.C and 1957). The bribe recipient can be prosecuted for money laundering by engaging in any financial transaction with the proceeds of the bribe. A company that obtains/retains business as a result of paying a bribe can be prosecuted for money laundering assuming the new business is traceable to the SUA (e.g., payment of the bribe). Any property or proceeds traceable to the bribe as well as the ill gotten gain the company received can be subjected to civil and/or criminal forfeiture. Thomas R. Fox / tomfoxlaw.com PC

32 GOING FORWARD 1. Looking ahead in the FCPA 2. AML 3. Cyber Security

33 LOOKING AHEAD Hui Chen s replacement / benchmarks Pilot Program modifications and further declinations DOJ/SEC comments on ISO and industry developments U.S. v. Hoskins: conspiracy and accomplice liability Expanding Kleptocracy initiative and related AML/Sanctions enforcement Thomas R. Fox / tomfoxlaw.com PC

34 KEY TAKEAWAYS FROM 1 ST EIGHT MONTHS No substantial reallocation of FCPA resources (yet) New compliance references available Macro trends likely to continue International cooperation and enforcement Focus on individuals and compliance programs Pilot Program remains open Thomas R. Fox / tomfoxlaw.com PC

35 QUESTIONS?