In the minds of some, companies that have resolved Foreign Corrupt Practices Act enforcement actions are bad or unethical companies.
It is a tempting position to take. After all, the FCPA is about bribery and corruption.
However, it is a wrong position to take in many (but certainly not all) instances.
Fear based marketing, not a victim, dismissed, and for the reading stack.
It’s all here in the Friday roundup.
Fear Based Marketing
Another example of lawyers trying to market the COVID-19 situation by asserting that “the novel and exigent circumstances brought on by the pandemic significantly increase companies’ risk exposure under the Foreign Corrupt Practices Act and global anti-bribery laws.”
The piece even uses the personal protective equipment hypothetical that not even top DOJ officials seemed to be concerned about. (See here).
Earlier this week, Daniel Kahn (Sentior Deputy Chief, DOJ Criminal Division – Fraud Section) and Charles Cain (SEC FCPA Unit Chief) participated in this webinar.
During the webinar, Kahn and Cain addressed a variety questions related to their respective enforcement agencies relative to the COVID-19 crisis.
Set forth below are the issues addressed and their responses.
One common Foreign Corrupt Practices Act hypothetical that has been repeated often over the last couple of months sort of goes like this. The current COVID-19 crisis presents increased FCPA risks because, among other things, businesses are scrambling to secure personal protective equipment (PPE) for their workers and some of this PPE may be located in foreign countries and/or manufactured by foreign governments or state-owned or state controlled enterprises. (See here, here, here, and here for examples).
I’ve never really understood this hypothetical. Among other things, in the FCPA’s 40+ year history I am not aware of any enforcement action in which the alleged improper conduct occurred in connection with the purchase of a good or service rather than in connection with selling or facilitating the sale of a good or service.
Moreover, as highlighted in this prior post, the FCPA has, among other elements, a corrupt intent element.
As highlighted below, during a webinar yesterday Daniel Kahn (Senior Deputy Chief, U.S. Department of Justice Criminal Division – Fraud Section) addressed a version of this hypothetical.
Listening in, SEC work continues, and for the reading stack. It’s all here in the Friday roundup.
Listening In
As highlighted in this recent post, Herbalife recently disclosed that it is poised to pay $123 million to resolve its long-standing FCPA scrutiny. In a recent investor conference call, John Agwunobi (CEO of the company) stated about the company’s disclosure: “we do believe that it [the disclosure] has freed us of any material, nonpublic information that would have affected our ability to repurchase shares.”
Goes to show that FCPA scrutiny and enforcement are often entwined with other legal issues.
