Interesting Issues To Ponder
Several notable Foreign Corrupt Practices Act enforcement actions have involved conduct in Haiti including U.S. v. Kay and U.S. v. Esquenazi.
The Esquenazi enforcement action concerned the telecommunications sector in Haiti.
Reading the news with “FCPA goggles” on is – for me – an occupational hazard of sorts.
So it was with a recent Wall Street Journal article titled “Amid Haiti’s Mayhem, Phones Keep Working.”
The Charitable Donation That Did Not Occur
If you have a pair of “FCPA goggles” (in other words – knowledge of the FCPA and how it is enforced) you no doubt know that some Foreign Corrupt Practices Act enforcement actions have involved, in whole or in part, charitable donations.
See here and here for the Schering Plough and Eli Lilly enforcement actions involving the Chudow Castle Foundation in Poland, here for the Nu Skin enforcement action, here for the KT Corp. enforcement action, here for the Fresenius enforcement action, and here for the MTS enforcement action.
When an FCPA enforcement action is based on conduct that is otherwise legal and acceptable in most instances, a risk averse compliance response may be to avoid the conduct altogether for fearing of FCPA scrutiny.
The Charitable Donation That Did Not Occur
This post was originally published in March 2018 and is one of the best guest posts ever published on this site.
After the introductory comments in italics, the remainder of this post is from Corporate Counsel at a well-known U.S. based publicly traded company.
Do Foreign Corrupt Practices Act enforcement actions based on foreign charitable donations (such as Schering-Plough, Nu Skin Enterprises and several others that include such allegations) represent a net positive or net negative?
The FCPA Guidance contains the unobjectionable statement that companies “cannot use the pretense of charitable contributions as a way to funnel bribes to government officials.” However, seldom are the circumstances as black and white as the government portrays and query whether business organizations, because of this guidance and because of actual FCPA enforcement actions involving charitable donations, have become excessively risk averse and have stopped contributing to humanitarian causes or otherwise pulled back from supporting communities or institutions in need. According to the below guest post, the answer is yes and query whether the world is a better place because of this.
Issues To Consider From The KT Corp. Enforcement Action
This recent post highlighted the $6.3 million Foreign Corrupt Practices Act enforcement action against KT Corp. – a South Korea based telecommunications company with American Depositary Shares registered with the SEC and traded on the New York Stock Exchange.
This post highlights additional issues to consider.
Proper?
In the FCPA’s modern era, much of the largeness of enforcement activity is from enforcement actions against foreign companies from peer OECD Convention countries.
The first corporate FCPA enforcement action of 2022 is another example.
South Korea’s KT Corp. Resolves $6.3 Million FCPA Enforcement Action
KT Corporation is a Seoul, South Korea based telecommunications company with American Depositary Shares registered with the SEC and traded on the New York Stock Exchange.
Yesterday, the SEC announced that the company agreed to pay $6.3 million “to resolve charges that it violated the Foreign Corrupt Practices Act by providing improper payments for the benefit of government officials in Korea and Vietnam.”
In summary fashion, this administrative order finds: