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The Challenges Of Detection And Prevention

challenge

The recent Sutherland Springs church massacre. The recent New York City bike path attack. Before that, the bridge attack in London. Before that, the shooting at the Fort Lauderdale airport. Before that, the shooting at an Orlando nightclub.

These recent instances, and several other similar acts of violence, have little in common with alleged Foreign Corrupt Practices Act offenses.

Except there is often a common thread in terms of the challenges of detection and prevention.

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The U.S. Government Bears Some Responsibility For Certain Root Causes Of Foreign Bribery And Corruption

Double Standard4

This post is not about the U.S. government’s two-pronged approach to fighting bribery and corruption: Foreign Corrupt Practices Act enforcement and the DOJ’s so-called Kleptocracy Asset Recovery Initiative.

Rather, this post highlights this dandy op-ed by Jay Newman recently published in the Wall Street Journal to explore a picture issue previously explored on these pages and that is whether the U.S. government bears some responsibility for certain root causes of foreign bribery and corruption.

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As We Say, Not As We Do

hypocrisy

The internal controls provisions of the Foreign Corrupt Practices Act require issuers to “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that” the specific financial objectives of the statute are met.

Besides these vague objectives such as “transactions are executed in accordance with management’s general or specific authorization” or “access to assets is permitted only in accordance with management’s general or specific authorization” the FCPA does not specify what issuers are supposed to do. Nor does any implementing rule or regulation.

Rather, enforcement of the internal controls provisions often amounts to the government – with the perfect of hindsight – adopting a theory of enforcement that represents little more than ipse dixit (an unsupported statement that rests solely on the authority of the individual who makes it). In other words, the failure to do x, y or z is an internal controls violations merely because the government says it is.

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Friday Roundup

Roundup

Odebrecht / Braskem settlement amount is significantly trimmed, a form of bribery?, quotable, deficient internal controls, and scrutiny alerts and updates. It’s all here in the Friday roundup.

Odebrecht / Braskem Settlement Amount Significantly Trimmed

There was much false and misleading reporting about the FCPA settlement amount in the December 2016 FCPA enforcement action against Odebrecht / Braskem.

As highlighted in this post, after accounting for various credits and deductions (including for payments to Brazil and Swiss law enforcement agencies and a claimed inability to pay) the net FCPA settlement amount (subject to potential future adjustments) was approximately $420 million. The $420 settlement amount consisted of approximately $260 million in connection with the Odebrecht criminal information and plea agreement; $94.8 million in connection with the Braskem criminal information and plea agreement; and $65 million in connection with the SEC’s related enforcement action against Braskem.

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JPMorgan – A Trifecta Of Off-The-Rails FCPA Enforcement

Offtherails

Bloomberg Law’s White Collar Crime Report recently published my article “JPMorgan – A Trifecta of Off-The-Rails FCPA Enforcement.” The article can be downloaded here and below is the abstract.

The Foreign Corrupt Practices Act has specific elements that must be met in order for there to be a violation. However, with increasing frequency it appears that the Department of Justice and Securities and Exchange Commission have transformed FCPA enforcement into a free-for-all corporate ethics statute in which any conduct the enforcement agencies find objectionable is fair game to extract a multi-million dollar settlement from a risk-averse corporation.

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