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FCPA Flash – A Conversation With David Pere Regarding Developments In France

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The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from written posts on FCPA Professor.

This FCPA Flash episode is a conversation with David Pere (an attorney in the Paris office of Bryan Cave). During the podcast, Pere discusses: (i) developments in France relevant to the anti-bribery and compliance space including, most notably, the new so-called Sapin II law and the new French anti-corruption agency (AFA); (ii) what general counsel and other compliance professionals need to know about the new law and enforcement agency; and (iii) French resentment to aggressive U.S. prosecution of French companies based on sparse jurisdictional allegations.

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Next Up – Telia As DOJ And SEC Announce Contemplated $483 Million Net FCPA Enforcement Action

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This recent post asked: what will September bring and noted that with history as a guide likely notable FCPA enforcement actions.

This 2015 post highlighted the burgeoning Uzbekistan telecommunication investigations involving Dutch telecom company VimpleCom, Swedish telecom company TeliaSonera, and Russia-based Mobile TeleSystems.

As highlighted here, in February 2016 VimpelCom resolved a net $397.5 million FCPA enforcement action and as highlighted below yesterday the DOJ and SEC announced a contemplated $483 million net FCPA enforcement against against Telia (after accounting for various credits and deductions for contemplated Swedish and Dutch enforcement actions) – the 5th largest net FCPA settlement of all-time.

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U.S. Government Reportedly Investigating Chinese Government For Bribery In Nigeria

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Regarding the above headline, technically, as noted in this Bloomberg report, the DOJ and SEC are investigating China Petroleum & Chemical Corporation (Sinopec – a Chinese state-owned entity) with shares traded on a U.S. exchange for bribery in Nigeria.

However, given that the DOJ and SEC consider certain state-owned entities like Sinopec to be “instrumentalities” of a foreign government, the above headline is accurate.

This previous post highlighted how there has never been an FCPA enforcement against a Chinese-based issuer, but this is likely just a matter of time as the previous post noted that Sinovac Biotech [a Beijing based company with shares traded on NASDAQ] is currently under FCPA scrutiny.

Add Sinopec to the list.

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Might Sinovac Become The First Chinese Issuer To Resolve An FCPA Enforcement Action?

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A long, long time ago (September 2009 to be exact) FCPA Professor highlighted how Chinese companies were increasingly seeking to raise capital in the U.S. and by registering securities in the U.S. becoming subject to a variety of U.S. laws including the Foreign Corrupt Practices Act.

There has never been an FCPA enforcement against a Chinese-based issuer, but that could change.

This post highlights the FCPA scrutiny of Beijing-based Sinovac Biotech, a company with shares traded on NASDAQ, including its recent disclosure that it is unable to file its annual report because of a bribery internal investigation.

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FCPA Enforcement Actions Against Foreign Companies From OECD Convention Peer Countries

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2016 was a record-breaking year for Foreign Corrupt Practices Act enforcement, both in terms of the number of core corporate actions resolved as well as overall settlement amounts.

As highlighted in this post, much of the largeness of 2016 FCPA enforcement resulted from corporate enforcement actions against foreign companies. (For purposes of this post, a foreign company means the “residence” of the corporate parent company and not for instance, Analogic’s foreign subsidiary or JPMorgan’s foreign subsidiary being offered up to resolve the DOJ prong of the corporate enforcement action). 

Specifically, of the 27 corporate enforcement actions from 2016, 11 (41%) were against foreign companies (based in many instances on mere listing of securities on U.S. markets and in a few instances on sparse allegations of a U.S. nexus in furtherance of an alleged bribery scheme). Even more dramatic, of the net $2.27 billion settlement amounts from 2016 corporate enforcement actions, approximately $1.44 billion (63%) resulted from enforcement actions against foreign companies.

Given that all of the foreign companies that resolved 2016 FCPA enforcement actions were from peer OECD Convention countries, the question should be asked whether these FCPA enforcement actions represented a proper use of the FCPA – at least from a policy standpoint.

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