International Business Transactions Introduction to the International Anti-bribery Laws FCPA, OECD Convention and OECD Member States New Legislation Analysis, Comparison and Risk Management A European View Pierre Charpie Attorney at Law, 1976 LL.M., Banking, Securities and Corporate Law, 1995 LL.M., International Business and Trade Law, 1996 Fordham University Foreword by John D. Feerick Dean & Professor of Law Fordham University School of Law New York, NY
Foreword Preface Acknowledgments v vii xiii Introduction l Parti International Anti-bribery Laws 5 Chapter 1 Historical Evolution of Global Initiatives Against International Bribery 5 A. Concise History 5 B. Anti-bribery Initiatives 11 C. The Push of The United States 21 Chapter 2 General Structure of International Bribery Laws 29 A. Purpose 29 B. Approach 31 C. Fundamental Provisions 31 1. Prohibitions 32 2. Exemptions and Defenses 32 3. Penalties 33 4. Enforcement 33 5. Procedural Aspects 34 XV
Part II Comparative Study 35 Chapter 3 Aspects of the Comparative Study 35 Chapter 4 The U.S. Legislation: from the 1977 Foreign Corrupt Practices Act (FCPA) to the U.S. International Anti-Bribery and Fair Competition Act of 1998 39 A. Historical Development, Purpose and Aims 39 B. Prohibited Conduct 51 1. Prohibitions Against Paying Bribes 51 1.1 Pursued Companies or Individuals 53 1.2. Mental State Standard 55 1.3. Mails or Instrumentalities of Interstate Commerce 58 1.4. Prohibited Exchanges 59 1.5. Official Recipients or "Any Person" 60 1.5.1. Official Players 60 1.5.2. Foreign Official 62 1.5.3. International Organizations Providing Commercial Communications Services 64 1.5.4. "Any Person" - Third Party Payments 67 1.6. Business Purpose 72 1.7. Payment Purpose 73 2. Prohibitions Against False Accounting Practices 75 2.1. Books and Records Requirements 75 XVI
2.2. Books and Records requirements for Subsidiaries 80 2.3. Exemptions anddefenses 82 2.3.1. Exempt Transactions: "Facilitating Payments" 82 2.3.2. Affirmative Defenses 84 2.3.2.1. Lawful Payments 86 2.3.2.2. Payments for Reasonable and Bona Fide Promotional Expenses 88 C. Sanctions and Injunctions 89 1. Penalties 89 2. Injunctions 92 3. Additional Fines 92 4. Negative Business Consequences 93 D. Enforcement 94 1. Power of the U.S. Department of Justice and the Securities and Exchange Commission 94 2. The Department of Justice Opinion Procedure 96 3. The Secretary of Commerce Annual Report 99 E. Procedural Considerations 102 1. Jurisdiction: Applicable Parties and Scope of Application 102 2. Statute of Limitations 112 F. Foreign Barriers to FCPA Prosecution 113 1. Sovereign Immunity 114 2. The Act of State Doctrine 116 2.1. Commercial Exception 122 2.2. Corruption Exception 122 2.3. Imposing the Doctrine 125 XVU
3. Sovereign Compulsion 129 Chapter 5 FCPA Litigation 133 A. Early FCPA Cases 133 1. The "Pemex" Cases 134 2. United States v. Carver 140 3. United States v. Kenny International Corp 143 4. United States v. Silicon Contractors, Inc 145 5. United States v. Carpenter 147 6. Securities and Exchange Commission v. Katy Industries, Inc 148 7. Securities and Exchange Commission v. Page Airways, Inc 150 8. Securities and Exchange Commission v. Tesoro Petroleum Co... 151 9. Securities and Exchange Commission v. Sam P. Wallace Co 152 B. Other FCPA Cases 152 1. United States v. Lockheed Corp 153 2. Securities and Exchange Commission v. Montedison S.p.A 154 3. Securities and Exchange Commission v. Triton Energy Corp 156 Chapter 6 The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 159 A. Historical Development 159 B. Purpose of the OECD Convention 161 C. Prohibited Conduct 162 1. Prohibitions Against Paying Bribes 162 1.1. Prohibited Exchanges 165 1.2. Recipients 165 XVUl
1.3. Mental State Standard 167 1.4. Proscribed Purpose 167 1.5. Third Party Payments 168 2. Prohibitions Against False Accounting Practices 169 D. Exemptions anddefenses 171 E. Penalties 172 F. Enforcement 173 G. Procedural Considerations 174 1. Jurisdiction: Applicable Parties and Scope of Application 174 2. Statute of Limitations 176 Chapter 7 Comparative Analysis 177 A. Prohibited Conduct 178 1. Prohibitions Against Paying Bribes 178 2. Prohibitions Against False Accounting Practices 181 B. Exemptions and Defenses 183 C. Penalties 184 D. Enforcement 185 E. Procedural Considerations 186 1. Jurisdiction: Applicable Parties and Scope of Application 186 2. Statute of Limitations 187 F. Comparative Conclusion 187 XIX
Part III Bribery Risk Management 189 Chapter 8 Corporate Risk Management Procedures Based on FCPA Principles 189 Chapter 9 Bribery Risk Management Program 191 Chapter 10 Specific Elements of a Bribery Risk Management Program 195 A. Red Hags 195 1. Suspect Payments 196 1.1. Cash Payments 196 1.2. Request for Payments to a Third Party 197 1.3. Payments in Third Countries 197 1.4. Excessive Payments 197 2. Suspect Agents 198 2.1. Close Ties with Foreign Government Officials 199 2.2. Reputation for Bribery 199 3. Suspect Countries 199 4. Suspect Industries 200 B. Due Diligence 201 1. Third Party Due Diligence 201 2. Selection 202 3. Conducting an Investigation 204 4. Evaluation 204 XX
5. Due Diligence and the Relevant Law 204 6. Due Diligence and the Contract 205 6.1. Representation and Warranty Clauses 205 6.2. Payment Clause 206 6.3. Miscellaneous and Travel and Entertainment Clause 206 6.4. Right to Terminate 206 C. Corporate Compliance Program 207 1. Written Corporate Policy or Code of Conduct 207 2. Education and Training 208 3. Reporting Mechanisms 208 4. Internal Audit Program 208 Conclusion 211 Part IV Anti-Bribery Legislation 213 A. Foreign Corrupt Practices Act of 1977 213 B. International Agreements Concerning Acts Prohibited with Respect to Issuers and Domestic Concerns; Report to Congress 269 C. Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention) 273 D. Commentaries on the Convention on Combating Bribery of Officials in International Business Transactions Adopted by the Negotiating Conference on 21 November 1997 291 XXI
PartV Comparative Overview: OECD Convention /FCPA 307 A. Prohibitions Against Paying Bribes 308 B. Mental Standards 310 (a) Primary Party Mental Standard 310 (b) Third Party Mental Standard 311 C. Illegal Payments 312 (a) Payment Standard 312 (b) Payment Recipient 313 D. Prohibitions Against False Accounting Practices 314 E. Exemptions and Defenses 315 F. Penalties 316 G. Procedural Considerations 317 H. Statute of Limitations 318 I. Overview 319 Part VI Overview of OECD Member States and Non Member States' Implementation of the OECD Convention and Related Laws 321 ARGENTINA National Decree 164/99 323 xxu
National Decree 102/99 335 Law 25.188 347 AUSTRALIA Criminal Code Amendment (Bribery of Foreign Public Officials) No. 43, 1999 367 AUSTRIA Penal Code Adjustment Law 1998, BGB1. Nr. I 153 387 BELGIUM Act concerning the suppression of bribery; 10 February 1999 393 BRAZIL Decree 1171, of June 1994, on the Code of Ethics for Civil Servants 409 Official Gazette (DOU) of March 4, 1998 LAW N 9.613 of 03/03/98 422 BULGARIA Bill of Amendment to the Penal Code 445 Decree No. 9 448 CANADA Bill S-21 451 CHILE Boletin N 2290-10 465 xxui
CZECH REPUBLIC Original wording of section HI. of the Czech Criminal Code - before amendment from April 1999 487 Amendment of the Criminal Code of April 29, 1999 Implementing the OECD Convention 490 DENMARK Law Number 228 of April 4, 2000 495 FINLAND Finnish Penal Code (Excerpts) 501 FRANCE Law No. 2000-595 of June 30, 2000, Amending the Criminal Code and the Criminal Procedure Code on Combating Bribery 515 GERMANY Act on Combating Bribery of Foreign Public Officials In International Business Transactions dated 10 September 1998 525 Excerpts from the Criminal Code (StGB) of the Federal Republic of Germany 529 Excerpts from the Administrative Offences Act (OwiG) of the Federal Republic of Germany 559 GREECE Greek Legislation Relating to the Ratification and Implementation of the Convention of 17 December 1997 563 xxiv
HUNGARY Criminal Code 569 Act XXXVIII of 1996 on International Legal Assistance in Criminal Matters 588 ICELAND Icelandic General Penal Code Law No. 19/1940 601 Act on Criminal Responsibility of Legal Persons No. 144/1998 612 Code of Criminal Procedure No. 19/1991 613 IRELAND Prevention of Corruption (Amendment) Act 2001 617 Explanatory Memorandum 632 ITALY Senate Bill No. 3915 639 JAPAN Unfair Competition Prevention Law 649 Supplementary Provisions 665 Supplementary Provisions (Excerpts) (Law No. 116, of 1994) 670 XXV
KOREA The Bribery Prevention Law For Foreign Government Officials In International Business Transactions 675 LUXEMBOURG Compilation of Legislation A - N 17; 7 February 2001 679 MEXICO Federal Criminal Code 691 THE NETHERLANDS Act dated 13 December 2000 for the review of a number of sanctions for criminal offences committed by persons in public office as contained in the Code of Criminal Law, the adaptation of certain provisions in the Code of Criminal Law, in article 51a of the Extradition Act and in articles 67 and 67a of the Code of Criminal Procedure concerning ratification and implementation of certain treaties on combating fraud and corruption (review of corruption legislation) 695 NEW ZEALAND Crimes (Bribery of Foreign Public Officials) Amendment Act 2001 709 NORWAY Amendments to the Norwegian Penal Code 22, May 1902 chapter 12 723 XXVI
POLAND Law of September 9, 2000 Amending the Criminal Code, Code of Criminal Procedure; Law on the Prevention of Unfair Competition, Law on Public Orders, and Banking Law 725 PORTUGAL LawN 13/2001 745 Decree-Law N 28/84 of 20 January 748 SLOVAK REPUBLIC The Criminal Code (the Act No. 140/1961 of the Official Collection of Laws as amended) (Excerpts) 781 SLOVENIA Penal Code of the Republic of Slovenia (Excerpts) 799 SPAIN Criminal Code 1999 - Chapter V 815 SWEDEN Swedish Implementing Legislation In Reference To The OECD Convention On Combating Bribery Of Foreign Public Officials In International Business Transaction Of December 17, 1997 Lagtext EU-Bedrageriereu Och Korruption 821 SWITZERLAND Revision of the Penal Code Governing Corruption (Modification of December 22, 1999) 829 Penal Code 829 Military Penal Code 836 XXVll
UNITED KINGDOM Anti-Terrorism, Crime And Security Act 2001 - Chapter 24 PART 12 841 Explanatory Notes to Anti-Terrorism, Crime And Security Act 2001 -Chapter 24 PART 12 845 UNITED STATES International Anti-Bribery and Fair Competition Act of 1998 847 Part VII 873 Synopsis 873 Review by the OECD Working Group of Implementing Legislations 875 ARGENTINA 877 AUSTRALIA 878 AUSTRIA 879 BELGIUM 880 BULGARIA 881 CANADA 882 CZECH REPUBLIC 883 DENMARK 884 FINLAND 885 XXV1U
FRANCE 886 GERMANY 887 GREECE 888 HUNGARY 889 ICELAND 890 ITALY 891 JAPAN 892 KOREA 893 LUXEMBOURG 894 MEXICO 895 THE NETHERLANDS 896 NEW ZEALAND 897 NORWAY 898 POLAND 899 PORTUGAL 900 SLOVAK REPUBLIC 901 SPAIN 902 SWEDEN 903 SWITZERLAND 904 UNITED KINGDOM 905 XXIX
UNITED STATES 906 Abbreviations 907 Bibliography 909 Internet Sources 917 Index 921 xxx