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Regarding Charitable Foundations …

August 30, 2016


This previous post highlighted Hillary Clinton’s corruption perception problem.

With additional revelations about the Clinton Foundation recently in the news (see here for AP report, here for a Los Angeles Times report), this post highlights Foreign Corrupt Practices Act enforcement actions that have involved, in whole or in part, donations to foundations founded by or favored by foreign officials.

To be sure, Hillary Clinton is not the only U.S. official or candidate for office who has been under the microscope regarding a charitable foundation (this recent article “The Uncomfortable Truths and Double Standards of Bribery Enforcement” details other examples).

However, the irony is that as Secretary of State Clinton championed the U.S. crusade against foreign bribery under the FCPA stating that the Obama administration “has taken a strong stand when it comes to American companies bribing foreign officials” and that any perceived weakening of the FCPA “would not give us the leverage and the credibility that we are seeking” on the world stage.

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Disgorgement Circuit Split Deepens As 10th Circuit Holds That Disgorgement Is Not Subject To A Five-Year Limitations Period

August 29, 2016

circuit split

The SEC first sought disgorgement in a Foreign Corrupt Practices Act enforcement action in 2004. Since then, approximately 100 SEC corporate FCPA enforcement actions have included disgorgement including, most controversially, enforcement actions that do not charge or find violations of the FCPA’s anti-bribery provisions.

Disgorgement is in the news again.

First, it was the IRS concluding that disgorgement paid in an FCPA enforcement action is not deductible. (See here).

Then, it was the Eleventh Circuit concluding in SEC v. Graham that disgorgement is akin to forfeiture and thus subject to a five-year limitations period. (See here).

Last week in SEC v. Kokesh, the Tenth Circuit disagreed with the Eleventh Circuit and held, similar to other circuits, that disgorgement is neither a penalty or forfeiture and thus not subject to a five-year limitations period.

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Friday Roundup

August 26, 2016


Checking in on Wal-Mart, DOJ “declinations,” another installment of as we say not as we do, scrutiny alerts, and cashing in. It’s all here in the Friday roundup.


In its recent 2Q FY2017 earnings call presentation Wal-Mart disclosed $28 million in Foreign Corrupt Practices Act and compliance related expenses ($23 million for ongoing investigations and inquiries and $5 million for global compliance program and organizational enhancements). The Q2 expenses of $28 million are higher than the Q1 expenses of $25 million.

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Orthofix International Poised To Join The FCPA “Repeat Offender” Club

August 25, 2016


The recent article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement” highlights that part of the DOJ’s rhetoric surrounding such alternative resolution vehicles is that such agreements “have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe” and that “the result has been, unequivocally, far greater accountability for corporate wrongdoing — and a sea change in corporate compliance efforts.”

However, as highlighted in the article the DOJ’s policy justification for NPAs and DPAs rings hollow as there is no data to suggest that resolving alleged instances of corporate criminal liability through NPAs or DPAs achieves any meaningful deterrence.

As further highlighted in the article through reference to specific companies, despite the DOJ’s statement that companies resolving enforcement actions through NPAs or DPAs have “undergone dramatic changes,” several companies that resolved FCPA enforcement actions through alternative resolution vehicles have subsequently resolved additional FCPA enforcement actions or become the subject of additional FCPA scrutiny.

Recent posts here and here have chronicled how Biomet (a company that resolved a prior FCPA enforcement via a DPA) is soon to join the inauspicious “FCPA Repeat Offender” club and this post highlights how Orthofix International (another company that resolved a prior FCPA enforcement action via a DPA) is also poised to join the club.

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The DOJ’s Latest Position Regarding The Siemens Monitor Report Is Laughable

August 24, 2016


Rather than just prosecuting alleged Foreign Corrupt Practices Act violations, the Department of Justice (presumably) wants business organizations to adopt compliance best practices.

In resolving the record-setting Siemens FCPA enforcement, the DOJ complimented Siemens on its remedial measures, stating in this sentencing memorandum that the company “set a high standard for multi-national companies to follow.”

Yet, in a recent filing in a case seeking release of the Siemens monitor report, the DOJ advances a laughable position.

That position – as articulated by the DOJ in seeking to block release of the monitor report – is that “disclosure of confidential information about Siemens’ compliance programs would provide a free roadmap as to what works in international commerce without violating the FCPA and other anti-corruption laws, what activities to avoid, how build an effective compliance program and system of internal controls, etc.”

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