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SEC Finds That Former Panasonic Executive Authorized Conduct Causing Company’s FCPA Violations, Another Former Executive Found To Engage In Improper Revenue Recognition Practices

Margis

As highlighted in prior posts (here, here and here) in April 2018 the DOJ and SEC announced a $280 million Foreign Corrupt Practices Act enforcement action against Japan-based Panasonic Corp.  and a U.S. subsidiary Panasonic Avionics Corp. (PAC).

In the words of the government “between 2007 and 2013, PAC employees, including senior executives, engaged in a scheme to retain consultants for improper purposes other than for providing actual consulting services.”

Earlier this week, the SEC returned to the same core conduct to bring administrative actions (here and here) against Paul Margis (pictured – a former President and CEO of PAC) and Takeshi Uonaga (PAC’s former CFO). The Margis action finds that he authorized various conduct giving rise to the company’s FCPA liability, whereas the Uonaga matter is materially different in that it is a revenue recognition matter.

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FCPA Flash: A Conversation With Former DOJ FCPA Prosecutor Bruce Searby Regarding Internship And Hiring Enforcement Actions

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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 Bruce Searby (Searby LLP). Prior to forming this firm, Searby was an enforcement attorney in the DOJ’s FCPA Unit. During the podcast, Searby expands upon points made in his recent article titled “FCPA Liability for Hiring Practices Gain New Credence” including how this enforcement theory is “expansive,” how “no FCPA hiring case has been tested in court,” how in certain of the enforcement actions there are hints that the “government may struggle to establish all the elements required for an anti-bribery violation of the FCPA,” and how “building cases against individuals may be particularly challenging.”

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Friday Roundup

Roundup

Impasse, quotable, scrutiny alerts, um excuse me but, and for the reading stack. It’s all here in the Friday roundup.

Impasse

Walmart’s FCPA scrutiny began in late 2011. Yet, nearly seven years later there still has not been an enforcement action.

Bloomberg reports: “Walmart Inc. set aside nearly $300 million last fall for a possible resolution with the U.S. government over international bribery allegations, a sign that an end to the years-long investigation was imminent. But eight months later, the sides are deadlocked, three people familiar with the matter said. It’s not about the money: One source of tension is prosecutors’ insistence that Walmart, the world’s largest retailer, admit to certain misconduct as part of any deal, one of the people said.”

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To

to

A basic cannon of statutory construction is that all words in a statute are to be given effect so that no words are void, superfluous, or redundant. Stated differently, every word in a statute matters.

The FCPA’s anti-bribery provisions contain many words. However, in the four FCPA enforcement actions principally focused on internship and hiring practices as a form of bribery (BNY Mellon see here and here; Qualcomm see here and here; JPMorgan see herehere, and here; and Credit Suisse see here and here), the enforcement agencies (in yet another example of converting the FCPA into an all-purpose corporate ethics statute) seem to ignore a very basic, yet important, word in the FCPA’s anti-bribery provisions.

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Do Your Hiring And Employment Practices Live Up To The DOJ’s New Expectations?

HR

An aspect of Foreign Corrupt Practices Act compliance that likely drives many compliance professionals crazy is that the FCPA’s internal controls provisions lack specifics and are thus, for the most part, standardless.

The provisions state that issuers shall “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that” certain limited financial objectives are met.

This standardless aspect of the internal controls provisions was highlighted in the notable World-Wide Coin decision (believed to be the only substantive judicial decision to construe the internal controls provisions). In the decision, the judge stated:
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