US, UK, EU: How does it all fit together?

Transcription

1 US, UK, EU: How does it all fit together? NYSBA/Czech Bar Association Prague 9 th March, Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris Firm and Affiliate Offices New York London Singapore Los Angeles Chicago Houston Hanoi Philadelphia San Diego San Francisco Baltimore Boston Washington, D.C. Las Vegas Atlanta Miami Pittsburgh Newark Boca Raton Wilmington Cherry Hill Lake Tahoe Ho Chi Minh City Duane Morris LLP A Delaware limited liability partnership _2

2 Today s Panel Jonathan Armstrong - Duane Morris LLP, London Beth Hansen - Goodrich Corporation, Charlotte NC Otto Waechter - Graf & Pitkowitz, Vienna Andrea Novosedlikova Deloitte, Bratislava Dale Martin - Siemens Corporation, Budapest

3 Beth Hansen -Goodrich Corporation, Charlotte NC

4 New UK Legislation - Background Passed House of Commons 8 th April 2010 Replaces legislation stretching back to 1889 Consultation closed 8 th November 2010 Final guidance issued March 2011 In force 1 st July

5 2011 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris Firm and Affiliate Offices New York London Singapore Los Angeles Chicago Houston Hanoi Philadelphia San Diego San Francisco Baltimore Boston Washington, D.C. Las Vegas Atlanta Miami Pittsburgh Newark Boca Raton Wilmington Cherry Hill Lake Tahoe Ho Chi Minh City Duane Morris LLP A Delaware limited liability partnership

6 Who is responsible for the UK Act? Ministry of Justice (MoJ) Serious Fraud Office (SFO)

7 UK Legislation - Highlights Applies to public & private officials Increases penalties - 10 years jail and/or unlimited fines for individuals, companies & partnerships Offences Offering, promising or giving an advantage Requesting, agreeing to receive or accepting an advantage Bribing a foreign public official Failure to prevent bribery Accepting or giving a bribe

8 Failure to Prevent Bribery s.7 Failure of commercial organisations to prevent bribery (1) A relevant commercial organisation ( C ) is guilty of an offence under this section if a person ( A ) associated with C bribes another person intending (a) to obtain or retain business for C, or (b) to obtain or retain an advantage in the conduct of business for C. (2) But it is a defence for C to prove that C had in place adequate procedures designed to prevent persons associated with C from undertaking such conduct..

9 What is persons associated? Purposely wide definition and will include: Suppliers Contractors Employees Agents Franchisees

10 Is there any guidance? MoJ guidance Consultation process closed November 2010 Final guidance issued March 2011 Changed substantially from draft guidance Joint prosecution guidance Issued March 2011 MoJ Circular 2011/05 Issued June 2011 Ken Clarke: combating bribery is about common sense, not bureaucracy

11 New UK Legislation Geographical Reach The offences of giving and receiving bribes and bribing foreign public officials apply to UK corporate entities, even if they are foreign owned British citizens Individuals ordinarily resident in the UK regardless of where the relevant act occurs Non-UK nationals & entities if an act or omission forming part of the offence takes place within the UK

12 Key Differences with FCPA Policies Foreign Public Official Hospitality De minimis levels Facilitation payments Clear, practical, accessible and enforceable

13 Hospitality and Promotional Expenditure Hospitality and promotional expenditure can employed improperly and illegally as a bribe SFO say used.. to groom employees.. into a position of obligation and thereby prepare the way for major bribery Key concerns: Professional education often a cover Lavish Different standards for different industries F1 Olympics MoJ want to trigger a review of hospitality standards Remember: accepting a bribe as well as giving one is an offence

14 Facilitation Payments Banned under UK legislation (and under old UK legislation) Permitted under some circumstances by FCPA OECD say facilitation payments corrosive SFO feel often a cover for more widespread corruption SFO interested in cross-sector initiatives SFO say prosecutorial decisions likely to be taken on: Amount Systemic or not? Strength of policies & procedures

15 Directors, Senior Officers etc. Section 14 specific offence Any senior officer will be guilty of the same offence as the company if he or she has consented to or connived in the commission of the offence Senior officer includes a director, manager, secretary or other similar officer of the body corporate

16 MoJ Guidance Six principles for Bribery Prevention 1. Proportionate procedures 2. Top level commitment 3. Risk assessment 4. Due diligence 5. Communication (including training) 6. Monitoring and review

17 Resources Briefing Bribery Act MoJ guidance Prosecutor s guidance - MoJ circular -

18 Questions Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris Firm and Affiliate Offices New York London Singapore Los Angeles Chicago Houston Hanoi Philadelphia San Diego San Francisco Baltimore Boston Washington, D.C. Las Vegas Atlanta Miami Pittsburgh Newark Boca Raton Wilmington Cherry Hill Lake Tahoe Ho Chi Minh City Duane Morris LLP A Delaware limited liability partnership.

19 NYSBA European Regional Meeting How Does the FCPA Apply in the Context of Third-Party Relationships Prague, March 9, 2012

20 FCPA Enforcements Third-Party Relationships Acting on the companies' behalf Agents Distributors Brokers Local business partners Sales, licensing and other representatives Consultants Advisors Lawyers Accountants 20 NYSBA European Regional Meeting 2012 Deloitte Slovakia

21 FCPA Enforcements FCPA and Third-Party Relationships FCPA expressly states that a company or individual may be held directly liable for bribes paid by a third party if the principal has knowledge of the third party's misconduct. 21 NYSBA European Regional Meeting 2012 Deloitte Slovakia

22 FCPA Enforcements Increasing Scrutiny on Third-Party Relationships Raising standards in the FCPA context Constructive, rather than actual knowledge of third-party conduct "willful blindness or "deliberate ignorance Violation of the FCPA by failing to conduct adequate Due diligence or Oversight of the activities of third parties. 22 NYSBA European Regional Meeting 2012 Deloitte Slovakia

23 Three Step Approach

24 Three Step Approach FCPA Compliance 24 NYSBA European Regional Meeting 2012 Deloitte Slovakia

25 Third-Party Due Diligence Program

26 Third-Party Due Diligence DOJ Risk Based Approach DOJ in Opinion Procedure Release 08-02:... a comprehensive, risk-based FCPA and anti-corruption due diligence work plan which will address, among other things, the use of agents and other third parties; commercial dealings with stateowned customers; any joint venture, teaming or consortium arrangements; customs and immigration matters; tax matters; and any government licenses and permits. Such work plan will organize the due diligence effort into high risk, medium risk, and lowest risk elements. 26 NYSBA European Regional Meeting 2012 Deloitte Slovakia

27 Third Party Due Diligence AML vs. FCPA compliance Indicators of AML risk include: Geography Nexus to government officials Business type Method of payment & dollar volume 27 NYSBA European Regional Meeting 2012 Deloitte Slovakia

28 Investigative Due Diligence Main Questions to Answer Has a place of business been confirmed and staffing determined to be proportionate to remuneration for services rendered? Is this foreign representative in fact qualified for the work they are to perform for your company? Who are the subject s social and business associates? What is known about their past social relationships and to what extent are they connected with government officials? Have they ever held office, been an official in a political party or been connected with government officials? Has the subject been involved in in other types of scandal such as securities fraud, export control violations, price-fixing, bid-rigging or other crimes or civil violations 28 NYSBA European Regional Meeting 2012 Deloitte Slovakia

29 Written Agreement

30 Written Agreement FCPA Compliance Terms and Conditions Anti-corruption provision Indemnification for any FCPA violation Cooperation with any ethics and compliance investigation Material breach of contract No sub-vendors (without approval) Audit rights (full review of all FCPA-related compliance procedures) Acknowledgment of the applicability of the FCPA to the business relationship On-going FCPA compliance training Annual certification FCPA re-qualification 30 NYSBA European Regional Meeting 2012 Deloitte Slovakia

31 After the Agreement

32 After the Agreement Monitor, Monitor and Monitor FCPA training on an ongoing basis Rigorous audits of the compliance program Detailed audits of the foreign business partner s books and records 32 NYSBA European Regional Meeting 2012 Deloitte Slovakia

33 Thanks for your attention

34 Contact 34 NYSBA European Regional Meeting 2012 Deloitte Slovakia

35 Otto Waechter -Graf & Pitkowitz, Vienna

36 Dale Martin -Siemens Corporation, Budapest

37 Panel Discussion Jonathan Armstrong - Duane Morris LLP, London Beth Hansen - Goodrich Corporation, Charlotte NC Otto Waechter - Graf & Pitkowitz, Vienna Andrea Novosedlikova Deloitte, Bratislava Dale Martin - Siemens Corporation, Budapest