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Friday Roundup

Predictable, scrutiny alert, in the words of Attorney General Lynch, bankrupt, DOJ guidance, and for the reading stack. It’s all here in the Friday roundup.

Predictable

It’s as predictable as the sun rising in the east.

A former FCPA enforcement official criticizes certain aspects of FCPA enforcement. As noted in this Law360 article [1], former DOJ Assistant Attorney General of the Criminal Division Lanny Breuer (who took a great interest in FCPA enforcement while in that position – see here for the article [2] “Lanny Breuer and FCPA Enforcement”) recently observed as follows regarding the DOJ’s FCPA Pilot Program.

“Breuer … said that the pilot program was an example of prosecutors’ trying to provide more carrots and sticks meant to encourage companies to self-report violations. “I would say that on paper … these are very desirable benefits to the programs,” he said. “But they’re still discretionary.” And that uncertainty means that the calculus for companies thinking about self-reporting any violations has not significantly changed, Breuer said. The Justice Department does not have to decline to prosecute and does not have to lower the fines, especially in an environment where the government, particularly the SEC, has developed an aggressive interpretation of the FCPA, he said. Breuer added that the Justice Department has taken an aggressive stance on what constitutes proper cooperation to reduce penalties, something else that has to be taken into consideration.”

Scrutiny Alert

VimpelCom was not the only company involved in the Uzbek telecommunications bribery scheme. As highlighted in this prior post [3], Swedish telecom company (a company with ADRs registered with the SEC) and Russia-based Mobile TeleSystems PJSC (a company with shares traded on the New York Stock Exchange) have also been scrutiny.

TeliaSonera recently disclosed [4]:

“On September 14, Telia Company received a proposal from the US and the Dutch authorities for financial sanctions amounting to a total of approximately USD 1.45 billion or approximately SEK 12.5 billion. Telia Company has decided to continue its negotiations with the authorities. It is not at present possible to assess when the investigations will be finally resolved.

[…]

Resolution of the various investigations is complex and will require further discussion and negotiation with the various government agencies involved in the investigations. Without certainty as to the timing and amount that may be paid at the time of a final resolution, Telia Company has recorded a USD 1.45 billion (SEK 12.5 billion) provision at the balance sheet date.”

In the Words of Attorney General Lynch

In this recent speech [5], Attorney General Loretta Lynch stated:

“In pursuing this mission [of detecting corruption and bringing wrongdoers to justice], the Justice Department has had the benefit of several powerful tools.  The public integrity units in our Criminal Division, our U.S. Attorney’s Offices, and our Federal Bureau of Investigation have prosecuted and convicted corrupt officials at all levels of the American government.  And since 2009, under the Foreign Corrupt Practices Act, the department has brought more than 65 individual criminal cases and more than 65 cases against corporations in connection with foreign bribery charges – many of them in coordination with our foreign law enforcement partners.  These investigations have resulted in the collection of more than $4.4 billion in penalties, and they have had the welcome effect of increasing corporate self-scrutiny, incentivizing companies to better train, monitor, and discipline their own agents and subsidiaries around the world.  In the same period, our colleagues at the Securities and Exchange Commission have brought suit against more than 100 companies and 40 individuals, resulting in approximately $2.6 billion in monetary relief.  The message we are seeking to send through these enforcement actions is simple: We expect businesses and organizations – and anyone acting on behalf of these entities – to play by the rules, whether they act overseas or in the United States.”

It is of course a debatable point whether the DOJ’s approach to FCPA enforcement has best incentivized (compared to alternative approaches) companies to better train, monitor and discipline their own agents and subsidiaries around the world.

Bankruptcy Filing

This August post [6] regarding the FCPA enforcement action against Key Energy Services noted that the $5 million settlement amount was, in part, a reflection of the fact that the company was on the verge of bankruptcy.

As noted in this company release [7], earlier this week “Key Energy Services, Inc. and certain of its domestic subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code on October 24, 2016 in the United States Bankruptcy Court for the District of Delaware …”.

DOJ Guidance

Similar to the DOJ’s April 2016 FCPA Pilot Program, the DOJ National Security Division recently released this document [8] titled “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Controls and Sanctions Investigations Involving Business Organizations.”

“This Guidance memorializes the policy of NSD to encourage business organizations to voluntarily self-disclose criminal violations of the statutes implementing the U.S. government’s primary export control and sanctions regimes – the Arms Export Control Act … and the International Emergency Economic Powers Act …”.

For a useful summary, see here [9] from Paul Hastings.

For the Reading Stack

A summary of recent comments [10] by SEC FCPA Unit Chief Kara Brockmeyer at a recent conference courtesy of BakerHostetler.

From the New York Times [11]:

Feasts of crocodile tail. Pricey liquor by the bucketful. A nanny employed just to take care of pets. Bundles of jade bracelets worth millions. A free trip to the World Cup in Brazil. Titillating scenes from “Lifestyles of the Rich and Famous”? Not quite. They are highlights from a new Chinese television series [12] about official corruption and loose living that is best described as “Lifestyles of the Venal and Disgraced.”

*****

A good weekend to all.