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The “Foreign Officials” Of 2017

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A “foreign official.”

Without one, there can be no FCPA anti-bribery violation (civil or criminal).  Who were the alleged “foreign officials” of 2017?

This post highlights the alleged “foreign officials” from 2017 corporate DOJ and SEC FCPA enforcement actions.

There were 13 core corporate enforcement actions in 2017. Of the 13 enforcement actions 7 (54%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs) with an additional 2 actions (15%) involving, in whole or in part, individuals associated with foreign health care systems.

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“Foreign Official” Notable

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This previous post highlighted various issues to consider in the recent SBM Offshore enforcement action.

Buried deep in the approximate 170 pages of resolution documents was another important issue to consider deserving of its own post.

This important issue was likely not a significant factor in the overall resolution of the matter (after all, as highlighted in the previous post, the conduct at issue “lasted over 16 years, was carried out by employees at the highest level of the organization, including two high-level executives who were at times directors of a wholly-owned U.S. domestic concern, involved large bribe payments, and included deliberate efforts to conceal the scheme”).

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Friday Roundup

Roundup

Offensive use of the FCPA, a weekend homework assignment, already answered, scrutiny alert, and for the reading stack. It’s all here in the Friday roundup.

Offense Use of the FCPA

FCPA Ripples highlights, among other things, how the FCPA is increasingly being used offensively including in connection with battles for corporate control.

The latest example concerns Elliott Management Corporation’s efforts to unseat board members at Arconic Inc. The recent departure of Arconic’s CEO Klaus Kleinfeld for apparently threatening Elliott Management (an existing Arconic shareholder) was all over the news (see here for example) and this recent Elliott Management letter to Arconic shareholders assails the “poor judgment” of Arconic’s board including the following.

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Why The Meaning Of “Foreign Official” Matters

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This is not the first time I’ve written about this general topic nor is it likely to be the last.

In the minds of some, Foreign Corrupt Practices Act compliance is easy – you just don’t bribe.

However, as recent enforcement activity has demonstrated, FCPA enforcement actions often include allegations about internships (BNY Mellon and Qualcomm), sports tickets (BHP Billiton), travel and entertainment (GlaxoSmithKline and several other enforcement actions), charitable donations (Nu Skin) and other inconsequential things of value such as flowers, cigarettes, and golf in the morning and beer drinking in the evening (Eli Lilly, SciClone Pharmaceuticals and several other enforcement actions).

In other words, the underlying activity is legal and socially acceptable in most situations. In fact, it is often called effective sales and marketing, wining and dining the customer, or maintaining good will. Yet when such activity is focused, directly or indirectly, on a “foreign official” the U.S. government is inclined to call it bribery.

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Issues To Consider From The Och-Ziff Enforcement Action

Issues

Previous posts here and here went in-depth into the recent Foreign Corrupt Practices Act enforcement action against Och-Ziff, Daniel Och and Joel Frank.

This post continues the analysis by highlighting additional issues to consider. As highlighted below, embedded in the approximately 175 pages of resolution documents were several notable issues.

Time Line

According to Och-Ziff’s prior disclosures “beginning in 2011, and from time to time thereafter, we have received subpoenas from the SEC and requests for information from the U.S. Department of Justice (the “DOJ”) in connection with an investigation involving the FCPA and related laws.”

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