NYSBA Prague Regional Meeting 2012 Friday, 9th of March FCPA, UK Bribery Act interpreted from a EU non-us/uk perspective Otto Waechter, Philip Rosenauer
NYSBA Prague Regional Meeting 2012 Friday, 9th of March Table of contents I. Introduction II. Numbers III. Corruption IV. Multinational/ European Treaties V. Understanding European VI. Examples VII. Outlook Otto Waechter, Philip Rosenauer
I. Introduction FCPA, UK Bribery Act - why bother as Mainland European residing on the Continent? Corruption a concern Treaties (judicial assistance, implementation, etc.) Local Law / Money Laundering Sanctions / Extradition / Debarment Ne bis in idem Data Transfer / Bank Secrecy Taxes Costs (e.g. Compliance, Interviews) Attorneys admitted in NY or other States (Conduct, privilege), etc, etc, etc.. 3
I. Introduction http://www.benno-kuppler.de/benno_kuppler_texte_zu_politik_&_gesellschaft.htm - cartoon on bribery
I. Introduction/Numbers http://cpi.transparency.org/cpi2011/interactive - Transparency International, Corruption Perception Index 2011
I. Introduction/Numbers http://bpi.transparency.org/interactive - Transparency International, Bribe Payers Index 2011
II. Corruption bribery theft embezzlement smuggling Corruption illegal funding fraud money laundering grease pay. http://stock-channel.net money rain
II. Corruption TELCO AG (seat in Vienna; ADR listed in NY, important business in Glasgow) Secretary of Transportation enacted a regulation in favor of TELCO; Immediately after his resignation his assistant received a salary for 2 years of 250.000,- from TELCO via a lobbyist. Independently, Secretary was invited by TELCO to the Super Bowl, the Salzburger Festspiele and a private Cocktail Party by the CEO of TELCO.
IV. Multinational Treaties OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions Members: e.g. Czech Republic, Hungary, Austria, UK and US (mutual assistance, extradition!) United Nation Convention against Corruption (UK ratified) Working Group reports
IV. Multinational Treaties FATF - Financial Action Task Force - established by a G-7 summit - develops and promotes policies to combat money laundering and terrorist financing MONEYVAL (Council of Europe) - evaluates measures of anti-money laundering - tasks same as GRECO - cooperates with IMF, World Bank, FATF
IV. European Treaties Council of Europe: not an institution of the EU aim: democratic and legal area throughout the whole continent, ensuring respect for its fundamental values: human rights, democracy and rule o. law Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (amended 2003) Member States: 48 Mutual Assistance and tracking down and seize proceeds 11
IV. European Treaties Civil and Criminal Law Convention on Corruption Member States (47): Austria, Bulgaria, Estonia, Finland, Greece, Latvia, Malta, Poland, Rumania, Sweden, Slovakia, Slovenia, Czech Republic, Hungary, Cyprus not: UK, Russia Mutual assistance, corporation and compliance common international definition for rules in connection with civil and criminal corruption claims, damages, protection of employees, preservation of assets, etc. 12
IV. European Treaties GRECO monitors the observance of the guiding principles of the treaty monitors the implementation of international legal instruments conduct evaluations of member states prepares reports national authorities are obliged to pursue criminal offences
IV. European Union Art 325 AEUV 1. The Union and the Member States shall counter fraud and any other illegal activities affecting the financial interests of the Union through measures to be taken which shall act as a deterrent and be such as to afford effective protection in the Member States, and in all the Union s institutions, bodies, offices and agencies. 2. Member States shall take the same measures to counter fraud affecting the financial interests of the Union as they take to counter fraud affecting their own financial interests. 3. Member States shall coordinate their action aimed at protecting the financial interests of the Union against fraud. To this end they shall organize, together with the Commission, close and regular cooperation between the competent authorities.
IV. European Union OLAF Council Regulation on-the-spot checks & investigations carried out by Commission to protect financial interests Commission decision establishing the European Anti- Fraud Office (OLAF) Target: EU expenditure, revenue, staff procedural rights: internal & external investigations, coordination of cases, criminal assistance recommendations: question in dispute is the legal consequence binding for local authorities?
IV. European Union OLAF s mandate to investigate: all EU expenditures (structural funds, agricultural policy & rural development, direct expenditure and external aid), a substantial part of EU revenue (customs duties, agricultural duties and sugar levies), EU staff (officials, temporary agents, local agents and contract agents) affecting the EU s financial interests.
IV. European Union OLAF in 2010: ( 67,9 mio; 351,2 mio. open) European Anti-Fraud Office, Annual Report 2011
V. Europe - Understanding
V. Europe - Understanding Council of Europe (Europarat) Corruption (Civil and Criminal Law Convention on Corruption) Examples: Means: purpose: culpability: offender: recipient: how: bribe, concealed party donations distorting the proper performance of any duty or behavior required deliberately acting (willfulness not required) e.g. employee, executives, GmbH, AG, ltd., plc. official or a third person e.g. public official (meaning under national law), wife, kid (relatives) e.g. instigation (Anstiftung); agent
V. Europe - Understanding Council of Europe (Europarat) Corruption (Civil and Criminal Law Convention on Corruption Implementation & Enforcement (e.g. Austria) criminal code: civil law: prosecutor, criminal complaint by parties involved (bribery in private sector) civil complaint by parties involved
Sanctions: V. Europe - Understanding Council of Europe (Europarat) Corruption (Civil and Criminal Law Convention on Corruption Civil Law: Criminal Law: [Administrative: compensation for damages either by the state or the Offender effective, proportionate and dissuasive sanctions and measures, including fines; and when committed by natural persons, fines, imprisonment and extradition Debarment (P. Procurement Directive)]
VI. Examples activity: means: purpose: offender: recipient: $$ (Mio) to secure government contract ($ 1 bio.) even goods of minor value pen neglecting/violating procurement procedures officer, director, employee, agent, stockholder; national, resident, corp. or partnership in the USA; corp. or partnership organized under foreign law foreign public official, foreign political party e.g. officer or employee of a foreign government, or agency thereof, person acting on behalf of such instrumentality
VI. Examples Case TELCO (fictitious case) activity: paying means: 250.000,-- purpose: to an Austrian Secretary of Infrastructure to sign an Act (his duty) how: via lobbyist who: issuer of ADRs (TELCO) culpability: knowing influencing signing of an Act recipient: Assistant of the Congressman Defense: outside payment is lawful in Austria?! (Secretary of Employment Act for Public Services)
VI. Examples Case TELCO (fictitious case) activity: Cocktail party/ Festspiele/ research paper means: food & beverages / opera / $$ purpose: show off, image; getting him to review draft of an Act prepared by TELCO and to be signed how: via CEO / lobbyist who: executive of subsidiary (TELCO) culpability: intention recipient: Secretary of Infrastructure Defense: payment is lawful in Austria (?) adequate procedures (e.g. risk assessment, DDpolicies, top-level commitments) (?)
VI. Differences FCPA only active bribery FCPA limited to foreign officials (Cross border element) No criminal liability for corruption in private sector Settlements: US/UK Deferred Prosecution Agreement Enforcement Sanctions Defenses 25
VI. Enforcement FCPA Securities Exchange Commission (SEC) Department of Justice (DOJ) UK Director of the Serious Fraud Office (SFO) EU (Austria) public prosecutor (department on corruption), or private corruption : if aggrieved party demands prosecution mutual assistance and extradition (treaties e.g. OECD)
VI. Sanctions FCPA UK civil penalties up to $ 10.000,- and further penalties up to $ 2,- Mio (individuals: $ 100.000,-) or imprisonment of 5 years max. fines up to statutory maximum (unlimited) imprisonment of 1to 10 years EUROPE Country specific Austria imprisonment 1-10 years
VI. Defense FCPA lawful under foreign public official s national law, reasonable and bona fide expenditure, or e.g. payment for flight and accommodation to join product presentation securing or expediting routine governmental action e.g. visa, facilitation payments UK adequate procedures (Sec 7) Foreign public official: activity permitted or required under national law (Sec 6) 28
VI. Defense EUROPE/ AUSTRIA Receiving a benefit not applicable to federal ministers, mayors, governors, members of supervisory boards of outsourced companies (no employment regulation) Benefits : no, in case feasible and appropriate service in return customary gifts of minor value, or received ex post, or no connection with official act
VI. Criticism Criticism from GRECO national congressmen are only liable to prosecution if they are actively/passively bribed for behavior in connection with voting in Congress provisions on the transparency of financing political parties are without any sanctions regulation of disclosure to avoid corruption enacting of Lobbying and Interest Groups Transparency Act demanded (Ministerial Draft Bill) Bribing within the private sector prosecution only by private party mandatory closing of proceedings if public official makes good (active repentance Tätige Reue )
VII. Outlook need of standardization of provisions on Corruption within EU (corruption) improve cooperation between authorities and between authorities and private sector (information transfer) implementation of and compliance with Treaties implementation of Compliance-Mechanism in business entities intensify Due Diligence Audits for takeovers
FCPA, UK Bribery Act interpreted from a EU non-us/uk perspective Thank you for your attention! Dr. Otto Waechter