Law Amendment and the FCPA Best Practices for Responding to a Chinese Government Commercial Bribery Investigation

Transcription

1 Presenting a live 90 minute webinar with interactive Q&A New Chinese Anti Corruption Law Amendment and the FCPA Best Practices for Responding to a Chinese Government Commercial Bribery Investigation THURSDAY, AUGUST 25, pm Eastern 12pm Central 11am Mountain 10am Pacific Td Today s faculty features: Amy L. Sommers, Partner, K&L Gates, Shanghai John Auerbach, Greater China Practice Leader, Fraud Investigation & Dispute Services, Ernst & Young (China) Advisory Limited, Shanghai, China The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

2 October 2006 (company) Late 2007 (Exec. V.P. and CEO) Schnitzer Steel company, Executive Vice President and CEO $200,000 in cash bribes and other gifts (gift certificates and in at least once instance a $2400 watch) to win business in China. Made similar payments in S. Korea. More than $1.8 in bribes and for parties/gifts in both China and S. Korea. Company $7.7 million to SEC independent compliance consultant/ monitor $7.5 million to DOJ E. V.P. $25,000 civil penalty $14, in bonus $1, interest ~$40,000 in disgorgement, interest and penalties CEO $169, disgorgement of excessive bonus July 2009 (settled) Avery Dennison Kickbacks, sightseeing trips ($4,227 USD for 5 people in 2002) in addition to gifts with an alleged value of $30,000 including 4 pairs of shoes at $125/ each note the low value of this item, but the overall value of all gifts likely an unfavorable factor for the company. $273,213 in disgorgement $45,257 prejudgment interest Books & records + violating internal controls * Company did an internal investigation and self-reported. December 2009 UTStarcom Inc. Travel & gifts. Travel had little or no business component. Details regarding types of gifts in China were not specified, however the facts disclosed in respect of Thailand included mention of a $600 bottle of wine. $7 million for hundreds of overseas trips. $4 million in executive training trips + cash allowances during the same. Also references to lavish gifts in this section, but without further detail. $1.5 million penalty to the DOJ $1.5 million penalty to the SEC. Additional compliance obligations. Non-prosecution agreement because of internal investigation and self-reporting. Anti-bribery, books & records and internal controls charges Additional expenditures and gifts in Thailand and Mongolia

3 June 2010 Veraz Networks Gifts and improper payments totaling $40,000. At least one supervisor referenced the company s gift scheme, which accounted for $4500 of the $40,000 total. There were additional allegations of bribing a Vietnamese official to win business during the same period. $300,000 penalty Injunction from future violations Internal controls violations for the bribery and books and records violations August 2010 Alliance One International, Inc. (the predecessor to the companies that that took the actions at issue). Gifts, travel & entertainment expenses. Specific gifts included watches, cameras and laptop computers among other items. $10 million disgorgement to the SEC The SEC charged substantive violations of the FCPA and books & records charges Four individuals were charged as well based on their roles in the respective companies There was also bribery in Asia and other regions of the world. $9.45 million criminal fine to the DOJ The DOJ brought bribery and conspiracy charges. The individuals paid fines/settlements ranging from $5,000-$40,000. April - December 2010 Daimler AG Systematic gift-giving in various countries including China. In China there were payments disguised as commission, travel for delegations and gifts. $93.6 for Daimler & subsidiaries (criminal fines and penalties) Conspiracy to violate the FCPA and books & records violations. December 2010 RAE Systems Gifts included: a laptop for an executive s child, jade, fur coats, suits, expensive liquor, and kitchen appliances. $1.7 million penalty to the DOJ DOJ charged internal controls and books & records violations. $1,147,800 disgorgement to the SEC $109,212 prejudgment interest to the SEC On-going compliance SEC alleged violations of the anti-bribery and internal controls provisions.

4 March 2011 IBM Allegations of bribes paid to Chinese and South Korean officials. The allegations relating to the Chinese officials included that they were given gift such as cameras and laptop computers, in addition to travel. May 2011 Rockwell Automation, Inc. Approximately $450,000 worth of leisure travel and non-work sightseeing trips (in addition to bribes) $5.3 million in disgorgement $2.7 million in prejudgment interest $2 million civil penalty SEC $1,771,000 disgorgement $590,091 prejudgment interest $400,000 civil penalty (reflecting cooperation and self-reporting) On-going (since October 2008) Avon Corporation Travel, entertainment & promotional expenses. Conducted an internal investigation and self-reported. Additional cases of note: December 2010 Allison Transmission This matter stems from gift-giving in China. The plaintiff was the Managing Director for operations in China, Korea and Japan. He refused to engage in or sanction violations of the FCPA and was fired. The plaintiff has alleged that the FCPA violations he witnessed or heard about included gifts of jewelry and individuals who deliberately lost at high stakes poker games. *** This is a private whistleblower suit because Allison is not a publicly traded company. The suit names the company and two other executives. February/ October 2010 Declination in Q CB Richard Ellis Unknown, but conduct appears to have related to small gifts. Exact nature of those is unknown. Internal investigation and self-reporting to DOJ and SEC. Ended with declinations by both agencies very positive outcome for CBRE.

5 For more information on our Foreign Corrupt Practices Act/Anti-Corruption practice, please visit or contact one of the lawyers listed below: Washington, D.C. Matt Morley Ed Fishman ed.fi Shanghai Amy Sommers London Robert Hadley Dubai, Pittsburgh Brian Saulnier Dubai Pittsburgh Anchorage Austin Beijing Berlin Boston Brussels Charlotte Chicago Dallas Dubai Fort Worth Frankfurt Harrisburg Hong Kong London Los Angeles Miami Moscow Newark New York Orange County Palo Alto Paris Pittsburgh Portland Raleigh Research Triangle Park San Diego San Francisco Seattle Shanghai Singapore Spokane/Coeur d Alene Taipei Tokyo Warsaw Washington, D.C. K&L Gates includes lawyers practicing out of 37 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information about K&L Gates or its locations and registrations, visit This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer K&L Gates LLP. All Rights Reserved _5812