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New Chinese Anti-Bribery Guideline Calls For Blacklisting And Expulsion Of Foreign Companies That Pay Bribes In China

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Today’s post is from Dechert attorneys Andrew Boutros, Shriram Harid, David Kelley, Jay Schleppenbach, and Maria Sit.

China’s top anti-corruption watchdogs recently released a new anti-bribery Guideline designed to focus on multi-national corporations and individuals that pay bribes in China, as opposed to bribe recipients, the Chinese Communist Party’s traditional focus. With the threat of being barred from doing business in China, the Guideline raises significant concerns for entities doing business there.

In particular, business organizations should be aware that resolving bribery allegations that involve China elsewhere in the world (say, in the United States) could potentially result in a “carbon copy prosecution” in China with the full range of potentially devastating penalties. Similarly, multi-national corporations that face bribery charges (or even just an investigation) in China could later find themselves prosecuted in the United States or elsewhere in the world based on the same facts.

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Bad Advertising – Ad Group WPP Resolves $19.2 Million FCPA Enforcement Action

WPP

Last Friday, the SEC announced that London-based WPP (the world’s largest advertising agency and a company with depositary shares traded on the New York Stock Exchange) agreed to resolve a $19.2 million Foreign Corrupt Practices Act enforcement action.

The enforcement action focused on WPP subsidiary conduct in India, China, Brazil and Peru.

In summary fashion, the SEC’s order finds:

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Scrutiny Alerts

scrutiny alert

Honeywell

As highlighted in this prior post, in mid-2019 Honeywell disclosed that it was cooperating with the DOJ/SEC and Brazilian law enforcement investigations relating to its use of third parties in relation to Petrobras business as well as a matter involving a foreign subsidiary’s prior engagement of Unaoil in Algeria.

Honeywell recently disclosed: “We have begun discussions with the authorities with respect to a potential resolution of these matters. As the discussions are ongoing, there can be no assurance as to whether we will reach a resolution with such authorities or as to the potential timing, terms, or collateral consequences of any such resolution. As a result, we cannot predict the outcome of these matters, the potential impact on the Company, or a reasonable estimate of losses or range of losses at this time.”

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Deutsche Bank Joins The Repeat Offender Club By Resolving Second FCPA Enforcement In Just 16 Months

deutsche

In August 2019, Deutsche Bank paid $16.2 million “to settle changes that it violated the FCPA by hiring relatives of foreign government officials [in both the Asia Pacific Region and Russia] in order to improperly influence them in connection with investment banking business).” (See here and here for prior posts).

Late Friday, Deutsche Bank (a German investment bank and financial services company with shares traded on the NYSE between 2009 and 2016) joined the ever expanding list of FCPA repeat offenders as the DOJ and SEC announced (here and here) an approximate $122.6 million Foreign Corrupt Practices Act enforcement action focused on the company’s relationship with third parties in Abu Dhabi, Saudi Arabia, Italy, and China.

The approximate 16 month gap between Deutsche Bank’s FCPA enforcement actions is the shortest among the large group of FCPA repeat offenders.

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Herbalife Resolves $123 Million Enforcement Action – Becoming The Latest Company To Resolve A Matter In Connection With Obtaining A Direct Selling Permit In China

herbalife

In 2014, Avon resolved a Foreign Corrupt Practices Act enforcement based in large part on obtaining a direct selling permit in China. (See here for the prior post).

In 2016, Nu Skin Enterprises resolved an FCPA enforcement action based in large part on obtaining a direct selling permit in China. (See here for the prior post).

In the latest enforcement action involving another company in the same general industry involving the same general conduct, the DOJ and SEC recently announced (here and here) that Herbalife agreed to pay approximately $123 million to resolve a parallel DOJ and SEC enforcement action. The corporate action follows the DOJ and SEC’s November 2019 enforcement action against former Herbalife China executives Yanliang Li (a citizen of China and former Managing Director of a Chinese division of Herbalife) and Hongwei Yang (a citizen of China and former head the External Affairs Department of a Chinese division of Herbalife).

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