October 23, 2016
Last week the International Organization for Standardization (ISO) released ISO 37001 anti-bribery management systems – requirements with guidance for use. (See here for ISO’s release and here for a summary document. To obtain the actual document you have to pay for it which I regret that I did).
One’s view of ISO 37001 likely depends on one’s background, experience and motivation.
If you are familiar with the numerous sources of best practices in the anti-bribery space, then ISO 37001 is a complete yawner, indeed a disappointment as several best practices are not even captured in the purported best practices document.
If you are not familiar with the numerous sources of best practices in the anti-bribery space, and/or you are seeking to market your compliance practice, then ISO 37001 is probably a big deal.
October 21, 2016
The above headline may be a bit confusing, but it is instructive as to the basic point that the Foreign Corrupt Practices Act has always been a law much broader than its name suggests because of its books and records and internal controls provisions.
These provisions, applicable to issuers, are among the most generic substantive legal provisions one can find and the fact is most FCPA enforcement actions (using that term in the most technical sense) do not even involve foreign bribery.
Case in point is yesterday’s SEC enforcement action finding that FMC Technologies violated the FCPA’s books and records and internal controls provisions when it overstated profits in one of its business segments.
The name of this company might ring a bell because earlier this year FMC Technologies disclosed FCPA scrutiny of the more traditional type.
October 20, 2016
Lennox International is involved in the heating, air conditioning, and refrigeration markets.
The question needs to be asked: what made the company so hot as to recently disclose to the DOJ and SEC an investigation into a $475 payment in Russia to release a shipment of goods being held by customs officials?
The disclosure is arguably one of the most absurd FCPA disclosures ever.
There is of course no legal obligation to voluntarily disclose, something even the DOJ acknowledges in its April 2016 FCPA Pilot Program. But then again, returning to an issue first highlighted in this 2009, voluntary disclosure is the fuel that feeds FCPA enforcement and is extremely lucrative for FCPA Inc. Indeed, who can forget the words of the former DOJ Fraud Section Chief in this Wall Street Journal article “if you get two of these [FCPA investigations] a year as a partner, you’re pretty much set.”
Lennox’s decision to disclose was presumably a business decision made by the board of directors or audit committee based on the advise of FCPA counsel. If FCPA counsel did indeed advise company leaders to disclose, that advise needs to be seriously questioned.
October 19, 2016
The SEC has brought two Foreign Corrupt Practices Act enforcement actions based on internship and other hiring practices involving family members of alleged “foreign officials.”
As highlighted here and here, in August 2015 BNY Mellon agreed, without admitting or denying the SEC’s findings in an administrative order, to pay $14.8 million to resolve findings that the company provided “valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.”
As highlighted here and here, in March 2016 Qualcomm agreed, without admitting or denying the SEC’s findings in an administrative order, to pay $7.5 million to resolve findings that the company “provided or offered full-time employment and paid internships to family members and other referrals” of alleged “foreign officials” at state-owned or state-controlled enterprises.
The narrative in both enforcement actions was that providing an internship or job to a family member of an alleged “foreign official” represented an attempt to improperly influence the “foreign official” who then exercised discretion – presumably because of the internship or job provided to a family member – to benefit the company.
It is this narrative that has resulted in several other companies, including Goldman Sachs, being under FCPA scrutiny. Yet last week this narrative was rejected by a London judge in a closely watched civil action between the Libyan Investment Authority (LIA) and Goldman Sachs.
October 18, 2016
Recently Robert Kent (Baker McKenzie) penned this article in Law360 titled “The First 6 Months of FCPA Pilot Program: 10 Lessons.”
This post contains various rebuttal points regarding the article.
First, the article implicitly asserts that the “surge” in FCPA enforcement thus far in 2016 is casually related to announcement of the April 2016 FCPA Pilot Program by the DOJ.
Yes, 2016 has been a record-breaking year for FCPA enforcement as highlighted in this post.
However, the enforcement activity is not casually related to the Pilot Program.