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Friday Roundup

Burma with conditions, the SEC lawyer heading up the Wal-Mart inquiry, connections between foreign environmental crimes and corruption, FCPA Inc. marketing, adding to the Haiti Teleco Roundup, and a new entrant to the FCPA space.  It’s all here in the Friday roundup.

Burma With Conditions

Yesterday Miller Chevalier released this [1] informative alert concerning business opportunities in Burma.  As noted in the alert, the U.S. Government recently “enacted measures that dramatically ease the Burmese Sanctions Regulations (“BSR”) that has been in place for over 15 years. On July 11, 2012, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) authorized new investments and the exportation of U.S. financial services into Burma for the first time since 1997 and 2003 respectively through the issuance of two new general licenses.”

As noted in the alert, on the same day that OFAC released the two new general licenses, the State Department published draft reporting requirements [here [2]] relating to investment in Burma.”  Pursuant to the draft reporting requirements, “any U.S. person whose aggregate investment in Burma exceeds $500,000” must provide information regarding, among other things, its policies and procedures as they relate to its operations and supply chain in Burma concerning, among other things, “policies and procedures on anti-corruption in Burma.”  The State Department document specifically references the OECD Guidelines, Section VII. Combating Bribery, Bribe Solicitation and Extortion [here [3]], and the OECD Good Practice Guidance on Internal Controls, Ethics, and Compliance.” [here [4]].

It’s a bit ironic isn’t it.  A company seeking to do business in Burma can obtain the necessary U.S. government licenses by disclosing its pre-existing FCPA compliance policies and procedures consistent with best practices guidance, but if any employee in its organization acts inconsistent with those policies and procedures without management or senior executive knowledge, the U.S. government may criminally prosecute the organization subject only to the non-reviewable, opaque, internal discretion of DOJ enforcement attorneys.  See here [5] for “Revisiting a Foreign Corrupt Practices Act Compliance Defense.”

SEC Attorney Sees “The Spotlight As An Opportunity”

This [6] recent Texas Lawbook article profiles Michael King (Assistant Director of Enforcement with the SEC’s Forth Worth office) reportedly heading up the SEC’s Wal-Mart inquiry.  King is quoted in the article as saying he views “the spotlight as an opportunity.”  Other lawyers quoted in the article stated as follows.  “I think King is under tremendous pressure to make Wal-Mart the poster child for what happens when corporations violate [the] Foreign Corrupt Practices Act and then don’t self report.”

Am I the only one alarmed when a government enforcement attorney uses the word “spotlight” and “opportunity” in the same sentence?

An interesting tidbit discussed in the article is that King also headed up the SEC’s enforcement actions against Panalpina and Pride International (see here [7] and here [8] for prior posts).  These enforcement actions, as well as others in the so-called CustomsGate actions, reached the outer bounds of the FCPA (and likely involved conduct Congress did not seek to capture in passing the FCPA) and it is likely the same result will occur in any Wal-Mart action as I discussed in this [9] previous post.

FCPA Inc. Marketing

“Firms face increasing exposure to anti-bribery and corruption laws and regulations. Laws such as the Foreign Corrupt Practices Act (FCPA) have been in place in the U.S. for 35 years.  Despite this length of time, each year shows increasing non-compliance and growing fines, penalties and judgments by the U.S. Department of Justice.  […] The financial impact is more significant than the fine alone. Investigation and litigation costs can easily equal the cost of the fine itself. The firm must then also bear the weight of interaction with a corporate monitor to validate its compliance program for the next 10 to 20 years [really, show me an FCPA monitor or FCPA NPA or DPA that has a 10 to 20 year term] and report to the Federal government. Not to mention the reputation and brand impact that bribery and corruption has upon the firm. If the FCPA is not enough, the United Kingdom approved the U.K. Bribery Act (UKBA) legislation in 2010, which went into force in July 2011.  This anti-corruption law brings broader scope and implications to anti-corruption compliance.  […] This is the era of the corporate bounty hunter.  Government is increasingly turning to insiders (e.g., employees), incenting them to report wrongdoing and non-compliance.  […] In an era of increased scrutiny and judgments for anti-corruption, this is a significant concern that keeps executives, the board, legal and compliance professionals up at night.”

So writes AccuitySolutions in a recent white paper titled “Addressing Anti-Bribery and Corruption Compliance.”

The solution, why of course ComplianceMAX and the Anti-Bribery and Corruption Solution “a flexible compliance management platform. The Solution eases the compliance burden by delivering operational effectiveness, human and financial efficiency and agility to compliance processes. The solution enables a firm to manage anti-bribery and corruption programs including monitoring and enforcing policy through workflow management; screening and tracking of high-risk entities and relationships; reporting and communicating compliance issues; and ensuring a state of readiness for inspections and audits.”

Next.

“The US FCPA and UK Bribery Act are far-reaching acts; they reach deep into the organization, leaving almost no part of the business untouched. The acts are taken very seriously both by governments, as well as by the general public. There is little empathy to bribes in the general public. This makes non-compliance, more than many other acts, a reputational risk in itself.”

So writes BWise in a recent white paper titled “US FCPA and UK Bribery Act.”

The solution, why of course The BWise GRC [Governance, Risk and Compliance] Platform “with a best-in-class method to address corruption and bribery, and achieve company-wide compliance and transparency.” (See here [10]).

Next.

Another entrant into the FCPA insurance market (see here [11] and here [12] for previous posts).

Navigators recently announced (here [13]) that “its Navigators Pro division has introduced “Side A Global InNAVation,” a directors and officers (D&O) liability policy to address emerging global risks. This new policy offers dedicated excess coverage for individual directors and officers for specific non-indemnifiable claims, including where the company they serve is insolvent. The policy provides coverage for civil fines and penalties, where insurable by law, when they are assessed pursuant to Section 308 of the Sarbanes Oxley Act of 2002, the Foreign Corrupt Practices Act, the U.K. Bribery Act or similar laws.”

Finally, an informative white paper (here [14]) by FTI Consulting Technology titled “E-Discovery Strategies for International Anti-Bribery Investigations.”  The paper discusses the “complexity of issues that may arise during an international anti-bribery investigation” such as data privacy laws, blocking statutes, secrecy laws and ill-defined privilege rules” that are a “common feature of an FCPA investigation.”  And by the way “FTI Technology helps clients manage the risk and complexity of e-discovery” and collaborates with clients to develop and implement defensible e-discovery strategies with keen focus on the productivity of document review.”

It truly is an FCPA world.

The Lacey Act Meets the FCPA

The Lacey Act prohibits trafficking in wildlife and plant products in violation of foreign law.

Arnold & Porter attorneys Marcus Asner [15], Samuel Witten [16], and Jacklyn DeMar [17]write in “The Foreign Corrupt Practices Act and Overseas Environmental Crimes: How Did We Get Here and What Happens Next?” (Bloomberg Law – see here [18]) as follows.

“Environmental regulation by any country creates a series of touch points between the private sector and government authorities, any one of which may provide an opportunity and a temptation for an unscrupulous employee or agent of a company to seek to corruptly influence a government official. Opportunities for corruption occur, for example, from the moment officials decide how to regulate local natural resources through laws and regulations; how and when they decide who may harvest resources and in what amounts; how permit requests are reviewed; and how local laws are actually enforced in practice. Each point of contact creates an opportunity for offering or making bribes or otherwise seeking improper influence.”

The authors further state as follows.  “Though there is no explicit statutory link between the Lacey Act and the FCPA, the possibilities are endless: Potential bribe takers in forestry and fishery schemes could run the gamut from the police, to forestry and fishery officials, to guards, to regulators, to customs and export officials, and even to officials at state-owned companies. All of these are government officials within the meaning of the Foreign Corrupt Practices Act. While there has been no public case charging both Lacey Act and FCPA violations thus far, we believe such investigations may well be just around the corner, and, in any event, responsible companies should do what it takes to protect themselves from the risks.”

Haiti Teleco Roundup

This [19] recent post summarizing the expansive Haiti Teleco related enforcement actions has been updated to reflect Patrick Jospeh’s recent 366 day sentence.  Joseph, an alleged “foreign official” at Haiti Teleco previously pleaded guilty to money laundering conspiracy in connection with the bribery scheme.  As noted in this [20] recent Wall Street Journal Corruption Currents post by Chris Matthews, Joseph was also ordered to forfeit nearly $1 million.

FCPA Monitor

Rajat Soni recently launched FCPA Monitor (here [21]).  FCPA Monitor examines news and cases about the Foreign Corrupt Practices Act and the UK Bribery Act of 2010.  Soni is an attorney with several years of experience conducting global internal investigations related to the FCPA.  He has worked on large FCPA investigations including those arising from the UN Oil-for-Food Program and Siemens AG.

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A good weekend to all.