BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C. Recent Developments in Foreign Corrupt Practices Act Enforcement Pharma Audioconference December 11, 2012 Joseph B. Tompkins, Jr. Partner, Washington D.C.
2011 Predicted FCPA Trends for 2012 Continued Aggressive Enforcement by U.S. DOJ and SEC Increased Use of Deferred Prosecution Agreements and Non-Prosecution Agreements by DOJ Continued Prosecution of Individuals, Not Just Companies Increased International Cooperation by Law Enforcement Agencies 2
I. Continued Aggressive Enforcement FCPA- Related Cases new criminal or civil cases (settled or contested) instituted by year (pending investigations based upon public disclosures of investigations) (as of December 2012) 3
I. Continued Aggressive Enforcement Corporate FCPA-Related Fines (Civil il & Criminal) i (as of December 2012) 4
I. The Top Ten No. Company Year Amount (millions) 1 Siemens (Germany) 2008 $800 2 KBR/Halliburton (U.S.) 2009 $579 3 BAE,,p plc (UK) 2010 $400 4 ENI SpA/Snamprogetti Netherlands B.V. 2010 $365 (Italy/Holland) 5 Technip S.A. (France) 2010 $338 6 JGC Corporation (Japan) 2011 $218 7 Daimler AG (Germany) 2010 $185 8 Alcatel-Lucent (France) 2010 $137 9 Panalpina (Switzerland) 2010 $81 10 Johnson & Johnson (U.S.) 2011 $70 5
II. Deferred Prosecution and Non- Prosecution Agreements 2012 February 2012: Smith & Nephew, Inc. (Tennessee) DPA; $16.8 million criminal/fine; monitor SEC settlement; $5.4 disgorgement; no admission of wrongdoing March 2012: Bozjet Int l Sales and Support, Inc. (Oklahoma) DPA; $11.8 million criminal fine; no monitor March 2012: Biomet, Inc. (Indiana) DPA; ;$ $17.3 million criminal fine; monitor SEC settlement; $5.4 million disgorgement 6
II. Deferred Prosecution and Non- Prosecution Agreements 2012 June 2012: Data Systems LLC (Virginia) DPA; $8.82 million criminal fine: no monitor July 2012: Orthofix International, N.U. (Curacao and Texas) DPA; $2.2 million criminal/fine; lack of internal controls; no monitor July 2012: Honda Group, Inc. (Oklahoma) NPA; $2 million criminal fine; no monitor August 2012: Pfizer H.C.P. Corporation (New York) 7 DPA; $26 million criminal fine; no monitor SEC Settlement; $45 million in disgorgement, including $19 million in disgorgement related to Wyeth subsidiaries
II. Deferred Prosecution and Non- Prosecution Agreements 2012 September 2012: Tyco International Ltd. (Switzerland) NPA; $13.7 million criminal fine; no monitor SEC settlement; $13 million in disgorgement, plus interest September 2012: Tyco Valves & Controls Middle East, Inc. (Delaware) Plea Agreement; $2.1 million criminal fine 8
III. FCPA Prosecutions of Individuals U.S. v. Lindsay Manufacturing (C.D. Cal.) (Dec. 2011) Convictions of several defendants vacated and charges dismissed because of prosecutorial misconduct Misconduct included: Allowing a key FBI agent to testify untruthfully Inserting material falsehoods into affidavits submitted to the Court Improperly reviewing an e-mail communication between a defendant and her lawyer Engaging in questionable behavior during closing argument and making misrepresentations to the Court DOJ decided not to appeal to Ninth Circuit Court of Appeals 9
III. FCPA Prosecutions of Individuals Africa Sting/ Shot Show Case (D.D.C. 2011) Large, multi-year FBI undercover operation involving 5,287 phone calls, 240 meetings between the suspects and government undercover agents, and 14 search warrants in the U.S. and the U.K. Result: Case split into four different trials A mistrial was declared in first case; motions for acquittals granted against several defendants in second case, and then not guilty verdicts and mistrial against other defendants After scathing comments by the Judge, DOJ announced that it would not pursue prosecution of any other defendants 10
III. FCPA Prosecutions of Individuals U.S. v. O Shea (S.D. Tex 2011) Indictment and prosecution of John Joseph O Shea, a business united manager at ABB, Inc., charged with conspiring to pay bribes to officials of a Mexican state- owned utility company Result: January 2012: After government presented its case, the Judge granted the defendant s motion for acquittal The Judge stated: The government s principal witness knows nothing. His answers were abstract t and vague, generally relating to gossip. Case dismissed 11
III. FCPA Prosecutions of Individuals U.S. v. Garth Peterson (E.D.N.Y. 2012) Guilty plea by Peterson, who was a U.S. citizen working for Morgan Stanley in Shanghai Peterson eeso admitted to oconspiring to oevade Morgan oga Stanley s internal accounting controls designed to avoid FCPA violations Sentenced to 9 months in prison; 3 years supervised release Morgan Stanley not charged because DOJ and SEC found that it had comprehensive compliance policies in place, including frequent training of its employees on FCPA and anti-corruption compliance, and because Morgan Stanley made a voluntary disclosure 12
III. FCPA Prosecutions of Individuals U.S. v. Carson, et al. (C.D. Cal.) (2012) Seven defendants were all employees of Control Components, Inc. (CCI) CCI pled guilty to three counts of FCPA and related ed violations in 2009; admitted to making corrupt payments in more than 30 countries between 2003 2007 CCI paid $18.2 million criminal fine; monitor retained for three years All seven defendants have now pled guilty; but to only one count of FCPA violation; most defendants received minimal sentences in October 2012 13
Current FCPA Issues of Interest What effect, if any, will the new DOJ and SEC Guide to the FCPA have on actual FCPA enforcement? How many FCPA prosecutions will take place as a result of the whistleblower provisions of the Dodd- Frank Act? What effect will the Shot Show debacle, in which the DOJ ended up dropping charges against 22 individual FCPA defendants, and other failed prosecutions have on future FCPA prosecutions of individuals? id 14
FCPA Risk Assessment www. transparency.org/ 15
FCPA Risk Assessment 16
FCPA Risk Assessment 17
JOSEPH B. TOMPKINS, JR. Partner Washington, D.C. 202.736.8213 202.736.8711 Fax jtompkins@sidley.com PRACTICES Complex Commercial Litigation International Trade White Collar AREAS OF FOCUS Business Torts Compliance Counseling - White Collar Contract Litigation Customs Economic Sanctions Export Controls FCPA/Anti-bribery Financial Institutions Counseling Financial Institutions Litigation Grand Jury Investigations Internal Investigations International Financial Institutions in the U.S. Private Securities Litigation Real Estate Litigation Trials ADMISSIONS & CERTIFICATIONS U.S. Supreme Court, 1977 U.S. Court of Appeals, 3rd Circuit, 1983 U.S. Court of Appeals, 4th Circuit, 1993 U.S. Court of Appeals, 5th Circuit, 1977 U.S. Court of Appeals, 6th Circuit, 1985 U.S. Court of Appeals, 7th Circuit, 1991 U.S. Court of Appeals, 9th Circuit, 1985 U.S. Court of Appeals, 11th Circuit, 1982 U.S. Court of Appeals, D.C. Circuit, 1976 U.S. Court of Appeals, Federal Circuit, it 1985 U.S. District Court, District of Columbia U.S. District Court, E.D. of Virginia District of Columbia, 1976 Virginia, 1975 EDUCATION Harvard Law School (J.D., 1975) Harvard University - John F. Kennedy School of Government (M.P.P., 1975) Washington and Lee University (B.A., 1971, summa cum laude) JOSEPH B. TOMPKINS, JR. s experience includes service with the Criminal Division of the United States Department of Justice from 1979-1982, where he served as Deputy Chief of the Fraud Section from 1980-1982. Mr. Tompkins serves as a Global Coordinator of the Firm s Complex Commercial Litigation practice, and he is one of the leaders of the firm s Foreign Corrupt Practices Act (FCPA) practice. His practice includes a variety of civil and white collar criminal litigation matters. In recent years, Mr. Tompkins has represented corporate and individual clients in connection with complex internal investigations, commercial litigation in federal and state courts, Department of Justice and Securities and Exchange Commission investigations, Inspector General investigations and federal grand jury investigations concerning alleged fraud, corruption and export control violations. Mr. Tompkins has also represented corporate and individual clients in international law enforcement matters, including FCPA investigations, economic sanctions, export control investigations and related matters. He has also drafted and negotiated international agreements between the United States and foreign entities. Mr. Tompkins is currently leading the Firm s representation of Bank of America in the Multi-District Litigation proceeding involving Parmalat, the Italian dairy company that engaged in a massive international fraud. He has also represented a number of other major financial institutions that have been the victims of fraud and corrupt activity, including the World Bank and other domestic and international banks. Mr. Tompkins regularly represents clients such as the U.S. Chamber of Commerce, the government of the United Kingdom and the government of the Cayman Islands in a broad range of regulatory and litigation matters. He was selected to be listed in the International Who s Who of Commercial Litigators 2010, and he is also listed in Who s Who in the World and Who s Who in America. 18
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