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Friday Roundup

Roundup

Scrutiny alerts and updates, reminder, OECD Article 5, ripple, and for the reading stack.

It’s all here in the Friday roundup.

Scrutiny Alerts and Updates

Deutsche Bank

The company has been under scrutiny since 2013 and recently disclosed in its annual report:

“Investigations Into Referral Hiring Practices and Certain Business Relationships.

Certain regulators and law enforcement authorities in various jurisdictions, including the US Securities and Exchange Commission and the DOJ, are investigating, among other things, Deutsche Bank’s compliance with the US Foreign Corrupt Practices Act and other laws with respect to the Bank’s hiring practices related to candidates referred by clients, potential clients and government officials, and the Bank’s engagement of finders and consultants. Deutsche Bank is responding to and continuing to cooperate with these investigations. Certain regulators in other jurisdictions have also been briefed on these investigations. The Group has recorded a provision with respect to certain of these regulatory investigations. The Group has not disclosed the amount of this provision because it has concluded that such disclosure can be expected to prejudice seriously the outcome of these regulatory investigations. Based on the facts currently known, it is not practicable at this time for the Bank to predict the timing of a resolution.”

Park Ohio Holdings

As highlighted in this previous post, in 2013 Park Ohio Holdings, a diversified manufacturing services and products holding company, disclosed:

“In August 2013, the Company received a subpoena from the staff of the SEC in connection with the staff’s investigation of a third party. At that time, the Company also learned that the Department of Justice (DOJ) is conducting a criminal investigation of the third party. In connection with responding to the staff’s subpoena, the Company disclosed to the staff of the SEC that, in November 2007, the third party participated in a payment on behalf of the Company to a foreign tax official that implicates the Foreign Corrupt Practices Act (FCPA). The Board of Directors of the Company has formed a special committee to review the Company’s transactions with the third party and to make any recommendations to the Board of Directors with respect thereto. The Company intends to cooperate fully with the SEC and the DOJ in connection with their investigations of the third party and with the SEC in light of the Company’s disclosure. The Company is unable to predict the outcome or impact of the special committee’s investigation or the length, scope or results of the SEC’s review or the impact, if any, on its results of operations.”

Recently, the company disclosed:

“With respect to our disclosure, we have not heard anything from the SEC since 2014 and we do not expect to hear anything further from it, but we will cooperate with the SEC to the extent that it requests any additional information. Accordingly, we do not plan on providing any future disclosure regarding this matter unless circumstances change.”

Nokia

The Finnish telecom company recently disclosed:

“With the acquisition of Alcatel Lucent, any historical issues with Alcatel Lucent’s operations may be attributed to or the responsibility of Nokia. In the past, Alcatel Lucent has experienced both actual and alleged violations of anti-corruption laws. As a result of FCPA violations in the past, Alcatel Lucent had to pay substantial amounts in fines, penalties and disgorgement of profits to government enforcement agencies in the United States and elsewhere. We may be subject to claims, fines, investigations or assessments for conduct that we failed to or were unable to discover or identify in the course of performing our due diligence investigations of Alcatel Lucent, including unknown or unasserted liabilities and issues relating to fraud, trade compliance, non-compliance with applicable laws and regulations, improper accounting policies or other improper activities. Any damages, fines, penalties or other sanctions or consequences attributable to us could have a material adverse effect on our brand, reputation or financial position.

[…]

During the course of the ongoing integration process, we have been made aware of certain practices relating to compliance issues at the former Alcatel Lucent business that have raised concerns. We have initiated an internal investigation and voluntarily reported the matter to the relevant regulatory authorities, with whom we are cooperating with a view to resolving the matter. The resolution of this matter could result in potential criminal or civil penalties, including the possibility of monetary fines, which could have a material adverse effect on our business, brand, reputation or financial position.”

Airbus

Spiegel goes in-depth here on Airbus and its relationship with Egyptair.

Reminder

One of the best things written about the FCPA was penned in 1982 by a lawyer in private practice who observed:

“We must be able to advise our clients as to whether their conduct violates the law, not whether this year’s crop of administrators is likely to enforce a particular alleged violation.  That would produce, in effect, a government of men and women rather than a government of law.”

In was reminded of this dynamic when reading this recent FCPA practitioner article saying that clarifications are needed after the DOJ’s new FCPA policy (see here for the prior post).

So if you are scoring at home, here is the chronology.

In April 2016, the current crop of administrators released an FCPA Pilot Program (see here). Then, in November 2017, the current crop of administrators released an FCPA Corporate Enforcement Policy (CEP) (see here). Then, in March 2019, the current crop of administrators updated the CEP (see here).

Now, some are calling for additional clarifications.

OECD Article 5

Several prior posts, including this post in connection with SNC Lavalin’s scrutiny, have highlighted Article 5 of the OECD Convention which states:

“Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”

In this opinion piece, Donald Johnston, the former Secretary General of the OECD, states:

“I was Secretary General of the OECD at the time, and I actively participated in the signing of the convention in December 1997. I can tell you that in this meaning, the phrase [national economic interest] was intended to prevent exporters in OECD countries from avoiding prosecution under the convention by arguing that exports were in the national economic interest — and that bribery was therefore required to protect their export markets. That is what the word “national” was put in there to mean. I do not recall jobs ever being discussed as relating to the national economic interest as defined in the convention, nor were DPAs ever considered in the convention.”

It would be nice if the OECD Convention had something similar to legislative history. I’ve tried seeking information about this issue, but have consistently struck out.

Ripple

As sure as the sun rises in the east and dogs bark, in the aftermath of its FCPA enforcement (see here and here), MTS was hit with a securities fraud class action lawsuit (see here).

Reading Stack

An interesting profile here of Rafael Gomes (Chief Governance and Compliance Officer at Petrobras).

The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here with articles about the recent MTS and Cognizant Technology Solutions enforcement actions and the DOJ’s recent revision to its FCPA corporate enforcement policy.

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