Category: Deferred Prosecution Agreements

Azeri Tax Officials and More On Nigeria TIPs

Next up in the analysis of CustomsGate enforcement actions is Tidewater.

See here for the prior post on the Noble Corporation enforcement action and here for the prior post on the GlobalSantaFe enforcement action.

The Tidewater enforcement action involved both a DOJ and SEC component. Total settlement amount was approximately $15.7 million ($7.35 million criminal fine via a DOJ deferred prosecution agreement; $8.3 million in disgorgement and a civil penalty via a SEC complaint).

DOJ

The DOJ enforcement action included a criminal information (here) filed against Tidewater Marine International Inc. (“TMII), a wholly-owned subsidiary of Tidewater Inc. (“TDW”) and the primary international operating entity for TDW.

TDW (see here) operates offshore service and supply vessels designed to support all phases of offshore energy exploration, development and production throughout the world. TDW is headquartered in New Orleans and has publicly traded shares on the New York Stock Exchange.

The criminal charges against TMII were resolved via a deferred prosecution agreement (here) between the DOJ and TMII and TDW “on behalf of its wholly-owned subsidiary TMII.”

Criminal Information

According to the criminal information, TMII “had managerial and administrative operations in the United States, and it exercised contractual rights and control over Tidewater’s vessel operations in Nigeria and Azerbaijan, among other areas.”

The criminal information concerns: (1) “bribes paid to Azeri tax inspectors”, and (2) “payment of bribes to Nigerian customs officials through the freight fowarding agent [Panalpina].”

Azerbaijan

According to the information, “in 2001, 2003, and 2005, the Azeri Tax Authority [a government entity responsible for administering and collecting tax assessments and duties for the Republic of Azerbaijan] initiated tax audits of TMII’s business operations in Azerbaijan.”

The information states that TMII employed the “Consulting Firm” [a U.S. consulting company incorporated in Texas and headquartered in Baku, Azerbaijan to provide a broad range of services including accounting services and tax advice and assistance] including the “Azerbaijan Agent” [the Managing Director of the Consulting Firm] to assit with the audits.

The information charges that “in 2001, 2003, and 2005, TMII, through its employees and agents, paid bribes to Azeri tax inspectors to improperly secure favorable tax assessments.”

According to the information, TMII “caused approximately $160,000 to be paid to the Dubai Entity [an entity associated with the Consulting Firm], while knowing that some or all of the money would be paid, with the assistance of the Azerbaijan Agent to Azeri tax inspectors.”

The information states that “the benefit received and the potential tax liability avoided by TMII as a result of the payment of the bribes was approximately $820,000.”

Nigeria

According to the information, between January 2002 through March 2007, Tidex Nigeria Limited (“Tidex”) [a Nigerian company 60% majority owned by Tidewater Marine” that “provided agency and operational support, at the direction of TMII, for all vessels that Tidewater operated in Nigeria during the relevant period”], through its employees, affiliates, and agents, authorized the payment of approximately $1.6 million to [Panalpina] as reimbursements for bribes paid by [Panalpina], made on Tidex’s behalf, to Nigeria Customs Service (“NCS”) employees to induce the officials to disregard certain regulatory requirements in Nigeria relating to the temporary importation of Tidewater vessles into Nigerian waters.” The information charges that by August 2004, “TMII managers and employees were aware of and condoned the payments.”

The regulatory requirements set forth in the information concern Nigeria’s rules and regulations relating to temporarily importing vessels and the “temporary importation permit” (“TIP”). For more on the TIP process see here.

According to the information, between August 2004 and 2007, TMII employees and other Tidewater employees authorized the payment of approximately $1,089,000 to [Panalpina], on Tidex’s behalf, knowing that some or all of the monies had been paid by [Panalpina] to NCS officials to induce them to disregard Nigerian regulations, to not impose fines and penalties, and to allow Tidewater vessels to operate in Nigerian waters without a valid TIP.”

The information states that the “total benefit in avoided costs, duties, and penalties received by TMII in exchange for these payments was approximately $5,800,000.”

Based on the above information, the information charges TMII with conspiracy to violate the FCPA’s anti-bribery provisions and to knowingly falsify books and records (in connection with both the Azeri and Nigeria payments) and knowing falsification of books, records, and accounts in connection with “129 payments totaling approximately $1,089,00, as [Panalpina] costs when, in fact, the payments were, in whole or in part, paid to NCS officials.”

According to the information, the following individuals “authorized the payment of bribes” or “know, or were aware of a high probability” that bribes were being paid:

Director of Tax [a U.S. citizen located in New Orleans], the Dubai Area Controller[a U.S. citizen], the Regional Finance Director [a British citizen, but described as a “employee and agent of a domestic concern], the Azerbaijan General Manager A [a U.S. citizen] and the Azerbaijan General Manager B [a U.S. citizen] (as to Azeri payments); and

the Vice President of Operations [an Australian citizen who supervised, at various times, both Azerbaijan and Nigerian operations and described as an employee an agent of a domestic concern] and the Nigeria Area Manager [a British citizen] (as to Nigeria payments).

In addition, the information charges that certain money in furtherance of the bribe payments were wired from accounts located in the U.S.

Deferred Prosecution Agreement

Pursuant to the DPA, TMII admitted, accepted and acknowledged that it was responsible for the acts of its officers, employees, subsidiaries, and agents as set forth above.

The term of the DPA is three years and seven months and it states that the DOJ entered into the agreement “based on the individual facts and circumstances” of the case and TMII. Among the factors stated are the following.

“TMII and TDW promptly commenced an internal investigation into its dealings with [Panalpina] after becoming aware of information indicating potential issues with [Panalpina];”

“promptly after commencing its internal investigation, TMII and TDW voluntarily disclosed the conduct described in the Information to the Deparment;”

“TMII and TDW voluntarily expanded their internal investigation to numerous operations and areas of the world outside Nigeria where no misconduct had been reported or suspected, and reported all relevant findings to the Department;”

“TMII and TDW hired a General Counsel with substantial international compliance experience, appointed him the Chief Compliance Offcer, and established a Corporate Compliance Committee;”

“TMII and TDW issued an enhanced, stand-alone FCPA compliance policy, substantially revised its Code of Conduct, as well as additional relevant policies and procedures, including a vetting and approval process for third part service providers and business parners upon implementation of that policy, and instituted a worldwide training program for employees;”

“TMII and TDW expanded their internal investigation to cover additional countries and business activities;”

“TMII and TDW cooperated with the Department’s investigation, including sharing all relevant investigation findings and making available numerous current and former employees;”

“TMII and TDW exhibited leadership in the oil and gas industry by leading an oil and gas industry initiative, both in the United States and abroad, to address the [Nigeria TIPs conduct];”

“TMII and TDW implemented an enhanced compliance program and have agreed to undertake further remedial measures as contemplated by this Agreement …;”

“TDW, on behalf of TMII, agreed to provide a written report to the Deparment on its progress and experience in maintaining and, as appropriate, enhancing its compliance policies and procedures …;” and

“TMII and TDW agreed to continue to cooperate with the Deparment in any ongoing investigation of the conduct of TMI and its directors, employees, agents, consultants, contractors, subcontractors, subsidiaries, affiliates,
and others relating to violations of the FCPA.”

As stated in the DPA, the fine range for the above describe conduct under the U.S. Sentencing Guidelines was $10.5 million – $21 million. Pursuant to the DPA, TMII and TDW agreed that TMII shall pay a monetary penalty of $7.35 million – 30% below the minimum guideline amount.

As is standard in FCPA DPAs, TMII and TDW agreed not to make any public statement “contradicting the acceptance of responsibility by TMII as set forth” in the DPA and TMII and TDW further agreed to only issue a press release in connection with the DPA if the DOJ does not object to the release.

SEC

The SEC’s complaint (here) concerns the same core set of facts as set forth in the DOJ’s DPA.

In summary fashion, the SEC alleges as to Azerbaijan conduct that “between August 2001 and November 2005, Tidewater Inc. […] directly or through its subsidiaries, affiliates, employees and agents, violated [the FCPA’s anti-bribery and books and records and internal control provisions] by paying $160,000 in bribes to foreign government officials in Azerbaijan through a third party disguised as legitimate services to influence acts and decisions by these officials to resolve local Azeri tax audits in a Company subsidiary’s favor.”

According to the SEC, “these improper payments were authorized by senior employees at Tidewater and its subsidiaries while knowing, or ignoring red flags which indicated a high probability, such payments would be passed to government officials, inaccurately recorded in the Company’s or its affiliates’ books and records, and Tidewater failed to maintain sufficient internal controls to prevent such payments.”

The SEC complaint alleges that the payments included: (i) “on or about August 14, 2001, Tidewater authorized and paid $50,000 to a third party that it knew, or was reckless in not knowing, would be passed to government officials in Azerbaijan; (ii) “in July 2003, Tidewater authorized and paid $40,000 to a third party in two installments that it knew, or was reckless in not knowing, would be passed to government officials in Azerbaijan; and (iii) “on or about November 11, 2005, a Tidewater subsidiary authorized and paid $70,000 to a third party that it knew, or was reckless in not knowing, would be passed to government officials in Azerbaijan.”

The SEC’s complaint provides additional detail regarding the Azeri tax audits than the DOJ’s criminal information. The SEC’s allegations seem to suggest that the payments to the Azeri tax officials were the result of extortionate demands communicated to Tidewater entities through the Azerbaijan Agent. For instance, in connection with the 2001 tax audit, the complaint states that “Executive A [Tidewater’s CFO during the relevant period] believed that the 2001 Audit was sort of a ‘shakedown’ that the Azerbaijan Agent created in order to collect a fee.” As to this audit, the complaint further alleges that “Executive A and [another company employee] learned that the Azeri tax auditors threatened to use an accounting method that would result in a higher tax assessment because the tax auditors did not feel ‘respected.'” In connection with the 2002 tax audit, the complaint alleges that the Azerbaijan Agent informed Tidewater personnel “that the Azeri tax auditors had verbally identified a potential figure of up to $600,000 to resolve the 2003 audit” but that this “amount bore no relation to any actual tax assessment or penalty.”

As to Nigeria conduct, the SEC complaint alleges, in summary fashion, that “from in or about January 2002 through March 2007, Tidewater, through its subsidiaries and agents, also authorized the reimbursement of approximately $1.6 million to its customs broker in Nigeria used, in whole or in part, to make improper payments to Nigerian Customs Services (“NCS”) employees to induce them to disregard certain regulatory requirements in Nigeria relating to the temporary importation of the Company’s vessels into Nigerian waters.”

According to the SEC, both the Azeri and Nigerian payments:

“[W]ere improperly recorded as legitimate expenses in the Company’s books and records and all of them, with the exception of the 2003 Azerbaijan payments, were consolidated into Tidewater’s financial statements. Tidewater’s internal controls, including at least two internal audits, failed to detect numerous red flags which should have alerted its management that the Azerbaijan agent and Nigerian customs broker were likely using funds provided by Tidewater, in whole or in part, to make improper payments to government officials.”

Based on the above conduct, the SEC charged Tidewater with violating the FCPA’s anti-bribery and books and records and internal control provisions.

As to the company’s internal controls, the SEC specifically alleged as follows.

“Tidewater’s controls over the engagement and activities of agents operating in high-risk jurisdictions outside of the marketing and sales area were inadequate. For example, the Company’s compliance program, including training provided to its employees, did not adequately address the applicability of the FCPA to customs, tax, and similar regulatory issues in its foreign subsidiary operations until March 2007. Moreover, employees in Azerbaijan easily circumvented the Company’s internal controls by setting up small cash reserves for contingencies, dividing the improper payments into increments below their discretional financial authority and processing a payment through a Company affiliate. Some of the payments for invoices that the Nigerian Agent submitted to Tidex were authorized, processed and funded without the work order or supporting documentation necessary to verify that the service was requested and rendered. Tidewater also conducted internal audits in 2001 and 2003 of its Nigerian operations that failed to detect the improper payments even though weaknesses with invoices from, and payments to, agents and consultants were identified.”

Without admitting or denying the SEC’s allegations, Tidewater agreed to an injunction and the payment of $8,104,362 in disgorgement and a $217,000 penalty.

Lucinda Low (here) (Steptoe & Johnson) represented Tidewater.

Major Shipment – Customs Cases Bring In $236.5 Million

The pipeline that contains pending FCPA enforcement actions burst yesterday as the DOJ and SEC announced enforcement actions against 13 separate entities.

In enforcement actions that have long been anticipated, Panalpina entities, as well as several others, settled DOJ and SEC enforcement actions principally focused on customs and related payments in Nigeria, but also including alleged improper conduct in Angola, Brazil, Russia, Kazakhstan, Venezuela, India, Mexico, Saudi Arabia, the Republic of Congo, Libya, Azerbaijan, Turkmenistan, Gabon and Equatorial Guinea.

The combined DOJ/SEC settlement amounts total $236.5 million.

Your FCPA scorecard thus shows that since June 28th, the U.S. government has brought FCPA enforcement actions totaling approximately $1.1 billion. With numbers like these, aggressive FCPA enforcement based on, often times, dubious legal theories (more on that later) seems like the most profitable government program ever conceived.

Set forth below is a basic overview of the settlements. A more thorough review of the hundreds of pages of relevant documents will be forthcoming.

The DOJ resolution documents can be found here, the SEC resolution documents here.

Panalpina Entities

DOJ

Entities: Panalpina World Transport (Holding) Ltd. and Panalpina Inc.

Resolution Vehicles: Criminal information charging Panalpina World Transport(Holding) with conspiracy to violate and violating the FCPA’s anti-bribery provisions. Charges resolved through a deferred prosecution agreement. Criminal information charging Panalpina Inc. with conspiracy to violate the FCPA’s books and records provisions and aiding and abetting certain customers in violating the FCPA’s books and records provisions. Charges resolved through a plea agreement.

Countries: Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia, and Turkmenistan

Penalty: Combined $70.56 million

SEC

Entity: Panalpina, Inc.

Resolution Vehicle: Settled civil complaint charging FCPA anti-bribery violations, aiding and abetting FCPA anti-bribery violations, and FCPA books and records and internal controls violations.

Countries: Nigeria, Angola, Brazil, Russia, and Kazakhstan

Disgorgement: $11,329,369

Pride Entities

DOJ

Entities: Pride International Inc. and Pride Forasol S.A.S.

Resolution Vehicle: Criminal information charging Pride International with conspiracy to violate the FCPA’s anti-bribery provisions and books and records provisions; violating the FCPA’s anti-bribery provisions; and violating the FCPA’s books and records provisions. Charges resolved through a deferred prosecution agreement. Criminal information charging Pride Forasol with conspiracy to violate the FCPA’s anti-bribery provisions; violating the FCPA’s anti-bribery provisions; and aidng and abetting violations of the FCPA’s books and records provisions. Charges resolved through a plea agreement.

Countries: Venezuela, India and Mexico

Penalty: $32.625 million (combined)

SEC

Entity: Pride International Inc.

Resolution Vehicle: Settled civil complaint charging FCPA anti-bribery violations, FCPA books and records and internal controls violations.

Countries: Venezuela, India, Mexico, Kazakhstan, Nigeria, Saudi Arabia, Republic of Congo, and Libya

Disgorgement and interest: $23,529,718

Tidewater Entities

DOJ

Entities: Tidewater Marine International Inc., Tidewater Inc.

Resolution Vehicle: Criminal information charging Tidewater Marine with conspiracy to violate the FCPA’s anti-bribery and books and records provisions and violating the FCPA’s books and records provisions. Charges resolved through a deferred prosecution agreement with Tidewater that requires, among other things, Tidewater Marine to pay a $7.35 million criminal penalty.

Countries: Azerbaijan and Nigeria

Penalty: $7.35 million

SEC

Entity: Tidewater Inc.

Resolution Vehicle: Settled civil complaint charging FCPA anti-bribery violations, FCPA books and records and internal controls violations

Countries: Nigeria, Azerbaijan

Disgorgement: $8,104,362

Civil Penalty: $217,000

Transocean Entities

DOJ

Entities: Transocean Inc. and Transocean Ltd.

Resolution Vehicle: Criminal information charging Transocean Inc. with conspiracy to violate the FCPA’s anti-bribery and books and records provision; violating the FCPA’s anti-bribery provisions; and aiding and abetting the FCPA’s books and records provisions. Charges resolved through a deferred prosecution agreement with Transocean Ltd. that requires, among other things, Transocean Inc. to pay a $13.44 million criminal penalty.

Countries: Nigeria

Penalty: $13.44 million

SEC

Entity: Transocean Inc.

Resolution Vehicle: Settled civil complaint charging FCPA anti-bribery violations, FCPA books and records and internal controls violations

Countries: Nigeria

Disgorgement and interest: $7,265,080

GlobalSantaFe Corp.

SEC

Entity: GlobalSantaFe Corp.

Resolution Vehicle: Settled civil complaint charging FCPA anti-bribery provisions, FCPA books and records and internal controls violations

Countries: Nigeria, Gabon, Angola, Equatorial Guinea

Disgorgement: $3,758,165

Civil Penalty: $2.1 million

Noble Corporation

DOJ

Entity: Noble Corporation

Resolution Vehicle: Non-proseuction agreement in which Noble Corporation: (i) acknowledged that certain of its employees knew that payments would be passed on as bribes to Nigerian customs officials; and (ii) admitted that the company falsely recorded the bribe payments as legitimate business expenses.

Countries: Nigeria

Penalty: $2.59 million

SEC

Entity: Noble Corporation

Resolution Vehicle: Settled civil complaint charging FCPA anti-bribery violations, FCPA books and records and internal controls violations

Countries: Nigeria

Disgorgement and interest: $5,576,998

Royal Dutch Shell Entities

DOJ

Entities: Royal Dutch Shell plc and Shell Nigeria Exploration and Production Company Ltd. (“SNEPCO”)

Resolution Vehicle: Criminal information charging SNEPCO with conspiracy to violate the FCPA’s anti-bribery and books and records provisions and with aiding and abetting the FCPA’s books and records provisions resolved through a deferred prosecution agreement with Royal Dutch Shell Plc requiring, among other things, SNEPCO to pay a $30 million criminal penalty

Countries: Nigeria

Penalty: $30 million

SEC

Entity: Royal Dutch Shell plc and Shell International Exploration and Production Inc (“SIEP”).

Resolution Vehicle: Administrative cease and desist order finding FCPA books and records and internal control violations by Royal Dutch Shell and FCPA anti-bribery violations by SIEP

Countries: Nigeria

Disgorgement: $18,149,459

*****

According to the SEC release (here), Cheryl Scarboro, Chief of the SEC’s FCPA Unit stated: “This investigation was the culmination of proactive work by the SEC and DOJ after detecting widespread corruption in the oil services industry. The FCPA Unit will continue to focus on industry-wide sweeps, and no industry is immune from investigation.”

The SEC release further states: [t]his is the first sweep of a particular industrial sector in order to crack down on public companies and third parties who are paying bribes abroad.”

The OECD Report – Initial Observations

Yesterday, the OECD released its much anticipated “Phase 3” report (here) on the U.S. implementation and enforcement of the “Convention of Combating Bribery of Foreign Public Officials in International Business Transactions.” In other words, the OECD Report (“Report”) comments on U.S. enforcement of the FCPA, a statute which (at least in theory) is supposed to model the OECD Convention.

As noted in this OECD release:

“The Working Group commended the United States for its engagement with the private sector, substantial enforcement, and commitment from the highest levels of the U.S. Government. In addition to the recommendation on facilitation payments, it also made recommendations that include the following on ways to improve U.S. enforcement:

– Consolidating publicly available information on the application of the FCPA, including the affirmative defence for reasonable and bona fide expenses;

– To increase transparency, making public, where appropriate, more information on the use of Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs) in specific cases; and

– Ensure that the overall limitation period applicable to the foreign bribery offence is sufficient to allow adequate investigation and prosecution.

The Working Group also highlighted good practices developed within the U.S. legal and policy framework that helped it achieve such a high level of enforcement, including the creation of specialised enforcement units dedicated to foreign bribery, and the use of plea agreements, DPAs and NPAs and the appointment of corporate monitors. These efforts have also encouraged the establishment of robust compliance programmes and measures among companies subject to U.S. anti-bribery law. The Working Group also welcomed the United States’ efforts to encourage close co-operation between the United States and foreign authorities.”

The Report is perhaps the single largest collection of FCPA related information and statistics ever in one document. This post will be the first of several posts in the coming days on the information and views contained in the Report.

This post highlights the “Executive Summary,” “Introduction” and “Recent Trends in Investigation and Prosecuting FCPA Violations” sections of Report. In addition, this post discusses specific sections of the Report dealing with the FCPA’s “obtain or retain business” and “foreign official” elements as well as the use of NPAs or DPAs to resolve FCPA matters.

Before turning to the Report’s Executive Summary, let me provide one of my own. [For ease of reading, my observations in this post are in italics].

There is no question that the U.S. is a world leader in enforcing its domestic foreign bribery statute (the FCPA) and the Report rightfully commends the U.S. for this. However, quantity does not always mean quality and U.S. enforcement of the FCPA is not without criticism and questions, including in the Report. One would hardly realize this if all one did was read this joint statement of the Departments of Justice, Commerce and State, and the Securities and Exchange Commission issued yesterday in connection with the Report’s release.

Perhaps the message for other OECD member nations reading the Report is this – enforce your domestic bribery law in questionable ways, seemingly inconsistent with the intent of the legislature in passing the law, and figure out a way to resolve the enforcement actions without judicial scrutiny. If so, perhaps your nation will one day be praised in an OECD Report for its “high level” of enforcement activity.

The “Executive Summary” of the Report states, among things:

That, since Phase 2 (see here and here) “U.S. enforcement has increased steadily and resulted in increasingly significant prison sentences, monetary penalties and disgorgement. Increased enforcement was enabled by the good practices developed within the U.S. legal and policy framework, including the dedication of resources to specialised units in the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC).”

[…]

“The U.S. has investigated and prosecuted cases involving various business sectors and various modes of bribing foreign public officials. In addition, it has been conducting proactive investigations, using information from a variety of sources and innovative methods like plea agreements (PAs), Deferred Prosecution Agreements (DPAs), Non-Prosecution Agreements (NPAs), and the appointment of corporate monitors. Vigorous enforcement and record penalties, alongside increased private sector engagement, has encouraged the establishment of robust compliance programmes and measures, particularly in large companies, which are verified by the accounting and auditing profession and monitored by senior management. Less is known of the effect increased FCPA enforcement has had on small- to medium-sized enterprises (SMEs), which is an issue shared by all Parties to the Convention.”

“Ways in which implementation of the Convention could be made more effective have also been identified. For instance, the Working Group recommends that the U.S., in its periodic review of its policies and approach on facilitation payments, consider the views of the private sector and civil society… The evaluation also recommended the consolidation and summarisation of publicly available information on the application of the FCPA, including information regarding the affirmative defence for reasonable and bona fide expenses. This could be especially useful for SMEs. Similarly, given that the U.S. authorities are increasingly enforcing the FCPA by using DPAs and NPAs, the Working Group believes that transparency and public awareness of these measures could be enhanced if the U.S. made public, where appropriate, more detailed reasons on issues such as why a particular type of agreement is used, the choice of an agreement‘s terms and duration, and how a company has met the agreement‘s terms. The Working Group also recommends that the U.S. ensure that the overall limitation period applicable to the foreign bribery offence is sufficient to allow adequate investigation and prosecution.”

The Introduction to the Report, under the heading “Cases involving the bribery of foreign public officials,” states:

“The United States has investigated and prosecuted the most foreign bribery cases among the Parties to the Anti-Bribery Convention. From 1998 to 16 September 2010, 50 individuals and 28 companies have been criminally convicted of foreign bribery, while 69 individuals and companies have been held civilly liable for foreign bribery. In addition, 26 companies have been sanctioned (without being convicted) for foreign bribery under non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs). Sanctions have also been imposed for accounting misconduct and money laundering related to foreign bribery.”

“These cases have resulted in increasingly significant penalties. From 1998 to 2003, the maximum monetary sanctions levelled against a company in an FCPA case were USD 2.5 million. Since then, 23 companies have received monetary sanctions in excess of USD 10 million. In one case, monetary sanctions totalling USD 800 million were ordered against a single company. In 2010, an 87-month sentence was imposed against an individual in an FCPA case. Since 2004, over USD 1 billion in foreign bribery proceeds have been recovered through disgorgement actions. The SEC also obtains civil penalties in addition to DOJ criminal fines. In the first 9 months of 2010 alone, the SEC obtained over USD 404 million in disgorgement, interest and civil penalties from thirteen companies and eight individuals. Representatives of the private sector told the evaluators that these increasingly heavy sanctions combined with the increased number of prosecutions against companies and individuals have significantly raised the FCPA‘s profile. They are also felt to be the main reason why many companies have taken steps to improve their anti-bribery measures, internal controls, books and records, and compliance systems.”

[Note – the above referenced 87-month sentence of Charles Jumet is misleading. Elsewhere in the Report it states: “In a recent case, a defendant was sentenced to 87 months in prison for FCPA violations.” Fact check – Jumet pleaded guilty to two counts – conspiracy to violate the FCPA and making false statements to federal agents. The false statements portion of his sentence was 20 months. Thus, Jumet’s “FCPA” sentence was 60 months – not 87 months]

“These cases come to the authorities‘ attention through a myriad of means. A significant number (but not the majority) of investigations result from voluntary self-reporting by companies. Other sources include corporate securities filings; suspicious activity reports from financial institutions; the media, including keyword searches of the Internet; whistleblowers, employees, customers, competitors, and agents; qui tam and civil complaints; referral from other U.S. government agencies, including overseas embassies; international financial institutions such as the World Bank; reports through a “hotline” email address and website; and information from foreign states, including requests for mutual legal assistance (MLA). A recent case resulted from an undercover sting operation. Investigations also originate from research and traditional law enforcement operations to determine where corruption may exist. The U.S. utilizes statistics that it compiles and information obtained in prior and current FCPA cases to identify trends and patterns of behaviour that warrant investigation. The U.S. also conducts industry sweeps, which are targeted investigations focusing on a particular industry or market. The U.S. believes that the use of such proactive tools keeps its regulators ahead of trends and allows them to combat corruption in a timely fashion. The U.S. did not provide statistics on the sources of investigations, due to the need to protect investigative sources and methods, but confirms that no one source accounted for a majority.”

“These FCPA enforcement figures are expected to increase in the near future. Presently, the United States has more than 150 criminal and 80 civil ongoing FCPA investigations. [a footnote states “many are parallel criminal and civil investigations of the same alleged conduct”] The U.S. authorities recently announced new initiatives including investigations of specific industries (“targeted sweeps” or “industry-wide sweeps”) and an increased emphasis of prosecuting natural persons in addition to companies. These efforts will likely lead to more prosecutions and convictions.”

Under the heading “Recent trends in investigating and prosecuting FCPA violations,” the Report states, among other things, as follows:

“Allegations of FCPA violations come from a variety of sources. This part of the report canvasses a few of the most important sources. According to the DOJ, voluntary disclosures are the source of a significant proportion of investigations, although not the majority.”

[…]

“… companies consider it in their interest to be co-operative, and seem willing to settle more often than not when they have voluntarily disclosed. While some companies self-report violations of the FCPA, some companies do not. Representatives of companies in the extractive industry explained that it is very common for a company to uncover one discrete violation of the FCPA and voluntarily disclose it, following which the DOJ or SEC asks the company to look further to see if the conduct is pervasive and occurring in other places. In some cases, the conduct is pervasive and is fully investigated by the DOJ and SEC. In other cases, the conduct is limited in scope and no additional violations are uncovered. Some companies may find this very cumbersome and expensive, and try to settle the case without a full investigation. However, the DOJ and SEC advise that they require companies to complete their investigations before finalising settlement discussions.”

[…]

“Proactive investigative steps by the DOJ and SEC, such as industry-wide sweeps, can also produce information that leads to enforcement actions. In November 2009, an industry-wide investigation into the pharmaceutical industry was announced by Assistant Attorney General, Lanny Breuer. An investigation into the medical device industry has also been discussed publicly. The Oil-for-Food cases involved a sweep of companies that paid kickbacks to the Iraqi Government during the United Nations Oil-for-Food Programme. The sweep was very effective and more than fifteen companies have been charged to date.”

“Such investigations may be commenced by sending “sweep letters” requesting co-operation from industry members on a voluntary basis. If a company chooses to not respond to such a letter, the DOJ and SEC consider whether a subpoena should be issued to compel the production of relevant documents and the testimony of individuals. Recently, the SEC announced that it will be conducting more industry-wide sweeps. Investigations of this kind enable the DOJ and SEC to develop specialised expertise identifying illegal conduct and conducting prosecutions involving various industries. In addition, due to the cross-connections between various members of the same industry, an investigation into one company can produce leads about other companies, including those in the supply-chain.”

“More traditional sources of allegations also continue to be useful, such as anonymous whistleblower reports. Such reports are often received from current and former employees, competitors, and others, and are analysed by the FBI to ensure their veracity. The DOJ provides a “hotline” to report anonymously directly to the FCPA Unit. The SEC also has a hotline and a detailed process for analysing tips, complaints and reports of FCPA violations.”

[…]

“[Mutual Legal Assistance] requests from foreign jurisdictions also provide a basis for allegations, although to a lesser extent than other sources.”

“United States embassy staff are also important sources of information about FCPA violations. The DOJ cited examples of full-blown investigations that were launched due to information provided by an embassy and referrals from State Department and Commercial Services branches. In one of these investigations, the embassy stayed involved throughout.”

As to Dodd-Frank’s whistleblower provisions, the Report states:

“The U.S. authorities believe that in light of this new legislation, reporting violations of the FCPA is likely to increase.”

FCPA Elements

Among other elements, the Report discusses the “obtain or retain business” and “foreign official” elements of the FCPA.

“Obtain or Retain Business”

The Report states:

“One important aspect of the foreign bribery offence in the FCPA is different from the description of the offence in Article 1 of the Convention. Under the FCPA, the bribery of a foreign public official must be committed in order to assist the briber “in obtaining or retaining business for or with, or directing business to, any person‘ (known as the “business nexus test‘). In Article 1 of the Convention, the corresponding formulation is: “in order to obtain or retain business or other improper advantage in the conduct of international business.”

“Thus, unlike Article 1 of the Convention, the FCPA language does not specifically convey that the case is covered where the purpose of the bribe is to obtain or retain other improper advantage in the conduct of international business, such as obtaining an operating license or permit to operate a business, or a reduction in tax or import duty. In other words, the FCPA language might be read to only address bribes for the purpose of obtaining or retaining business per se. Reference is made to “improper advantage” elsewhere in the FCPA, but in a different context – i.e., the offences in the FCPA inter alia cover the case where the purpose of a bribe to a foreign public official is to secure “any improper advantage…in order to assist such [person/issuer/domestic concern] in obtaining or retaining business for or with, or directing business to, any person‘.”

“However, it has been the position of the United States Government throughout that the FCPA formulation is very broadly interpreted and covers in practice the kinds of advantages required to be covered by the Convention. The evaluation team notes that this position has been largely confirmed by jurisprudence, in the 2007 decision of the United States Court of Appeals in United States v. Kay.”

“In U.S. v. Kay, the Court of Appeals held that a payment to customs officials to reduce import duties on rice falls within the parameters of the “business nexus” test because when Congress enacted the FCPA it was concerned about: (1.) Bribery that leads to discrete business contract arrangements; and (2.) Payments that even indirectly assist in obtaining business or maintaining existing business operations in a foreign country. The Court of Appeals also stated that:

…bribes paid to foreign officials in consideration for unlawful evasion of customs duties and sales taxes could fall within the purview of the FCPA‘s proscription. We hasten to add, however, that this conduct does not automatically constitute a violation of the FCPA: It must be shown that the bribery was intended to produce an effect – here through tax savings – that would “assist in obtaining or retaining business”.”

“The decision of the Court of Appeals in U.S. v. Kay is therefore helpful, in that it clarifies that payments to, for instance, reduce import duty “could” satisfy the “business nexus test”. The United States has also successfully enforced the FCPA in cases involving similar advantages, such as payments to customs officials to import goods and materials (Helmerich & Payne; and Natures Sunshine), and payments to tax officials to reduce tax obligations, and to judicial officials for favourable treatment in pending litigation (Willbros Group). On the other hand, the clarification by the Court of Appeals leaves open the possibility that there might be cases where a bribe to a foreign public official to facilitate international business does not violate the FCPA, although it does meet the test of “other improper advantage in the conduct of international business” in Article 1 of the Convention.”

For more on U.S. v. Kay (see here and here).

The Report’s discussion of the “obtain or retain business” is noteworthy.

I must also take issue with the sentence in the Report that suggests when the DOJ enters into a NPA (such as in Helmerich & Payne) or DPA that this is evidence of the U.S. “successfully enforcing the FCPA.” This is one of the many reasons why the “facade of FCPA enforcement” matters – because it fosters the absurd notion that privately negotiated settlements, subject to little or no judicial scrutiny, entered into in the context of the enforcement agencies possessing substantial “carrots” and “sticks” should serve as de facto case law or otherwise represent “successful” enforcement of the FCPA.

“Foreign Official”

As to the definition of “foreign official,” the Report states:

“Due to an absence of explicit language in the definition of “foreign official” in the FCPA, two questions arise concerning the scope of the definition: (1.) Whether, in compliance with the Convention, it covers a person holding a judicial office of a foreign country‘; and (2.) Whether it covers a person exercising a public function for a foreign country, including for a…public enterprise‘ (i.e. a state-owned or controlled enterprise).”

Readers know that this second question is a frequent topic on these pages and deservingly so. It is no small matter. As I highlight in this recent article in the Indiana Law Review (here), this dubious interpretation of the “foreign official” element was at the core of 66% of 2009 FCPA enforcement actions against business entities as well as numerous individuals. And that was just in 2009. Several pre-2009 enforcement actions as well were based on the theory that employees of state-owned or state-controlled enterprises are “foreign officials” under the FCPA.

So again, on the one hand the Report praises the U.S.’s high level of FCPA enforcement, yet on the other hand, the Report openly questions the definition of “foreign official” that was used in a significant percentage of recent FCPA enforcement actions.

The Report then contains a discussion of the Nexus Technologies case and advances the DOJ’s curious assertion that resolution of this matter (see here) validates its interpretation that employees of so-called state-owned or state-controlled enterprises are “foreign officials” under the FCPA.

The Report states:

“Since Phase 2, there have been positive legal developments regarding the second question on the bribery of employees of state-owned or controlled enterprises, in U.S. v. Nam Quoc Nguyen, et al. (E.D. Pa., September 4, 2008), in which the District Court recently held in favour of the United States Government in a case involving allegations that the defendants bribed employees of a foreign state-owned company. The defendants argued that the definition of “foreign official” in the FCPA does not include employees of state-owned enterprises, because in order for an organisation to be considered an “agency or instrumentality” of a foreign government, it must serve a “purely public purpose”. The United States Government, citing the legislative history of the FCPA, responded by arguing that “public purpose” is only one of the many factors in determining that an organisation is an “agency or instrumentality” of a foreign government, and that Congress expressly intended to include employees of state-owned enterprises in the definition of “foreign official”.”

As I highlighted in this prior post, in its briefing in the Nexus case the DOJ specifically urged the judge, on a number of occassions, not to consider the defendant’s substantive “foreign official” argument because they were premature. The following are snippets from the DOJ’s brief: (i) “the Court need not address any of these faulty arguments at this time:” (ii) “although styled as a motion to dismiss, Defendants’ submission is instead a premature request for a ruling on the sufficiency of the Government’s evidence before any of that evidence has been presented. These arguments, which are premature at best, will be moot after presentation of the Government’s case.” (iii) “because Defendants’ arguments turn entirely on issues of fact, they are premature.”

Continuing on this issue, the Report states:

“Although the Court ruled in favour of the United States, it did not issue a written opinion, and the defendants did not file an appeal. In addition, District Court opinions are not binding on higher courts or courts of other U.S. jurisdictions. The DOJ informed the evaluators that this means the Government interpretation could be disputed again. However, the DOJ believes the argument would fail again given the FCPA‘s legislative history, and because numerous cases have been brought by the DOJ and SEC in which the definition of “foreign official” has been broadly interpreted.” This last sentence has a footnote which states: “For instance Willbros Group involved the bribery of foreign judicial officials, Siemens AG involved payments to various persons from state-owned companies, and Diagnostic Products, involved payments to doctors of state-owned hospitals. The United States explains that in each of these cases, pursuant to Federal Rule of Criminal Procedure 11, a court had to determine whether all the elements of the offence have been proven including that the receiving individual was a foreign public official.”

On this issue, the Report concludes with this “commentary”

“The evaluators welcome positive legal developments concerning the application of the definition of ‘foreign official’ in the FCPA to members of the judiciary and employees of state-owned or controlled enterprises.”

In the “Recommendations” section, the Report notes that the “Working Group will follow up the issues below, as the case-law continues to develop, to examine: […] whether amendments are required to the FCPA to supplement or clarify the existing language defining the elements of the offense of foreign bribery with regard to […] (ii) the scope of the definition of a ‘foreign public official,’ in particular with respect to […] the directors, officers, and employees of state-controlled enterprises or instrumentalties.”

NPAs / DPAs

The Report states:

“Due to their increasing importance in law enforcement actions by the DOJ, the evaluators sought information about the deterrent effect of DPAs and NPAs. The evaluators were also conscious that the SEC intends to also begin using DPAs and NPAs to encourage companies and individuals to co-operate with SEC investigators.”

“It seems quite clear that the use of these agreements is one of the reasons for the impressive FCPA enforcement record in the U.S. However, their actual deterrent effect has not been quantified; although the DOJ hears anecdotally from companies that their use has made FCPA compliance high priority.”

The Report states:

“DPAs are technically subject to judicial review and approval, but most judges do not appear to scrutinise DPAs. Unlike a DPA, an NPA does not involve the court.”

“Although DPAs and NPAs have existed since 1993, their use has grown dramatically in recent years. Since 2004, the annual average number of DPAs and NPAs entered into by the DOJ has grown from less than 5 to over 20 and a high of 38 in 2007. In FCPA cases, DPAs and NPAs were not used until 2004. Since then, they have been used in 30 out of 39 concluded criminal enforcement actions against companies.”

“Explanations for this phenomenon vary. The dramatic increase occurred shortly after the prosecution and collapse of the accounting firm Arthur Andersen which led to thousands of jobs lost. Avoiding such collateral consequences of prosecution is generally cited as why DPAs and NPAs are used. In FCPA cases, factors such as the protection of employees and shareholders also play a role, according to U.S authorities. The U.S. authorities also believe that companies often prefer to resolve matters through DPAs and NPAs in lieu of going to court and undergoing a potentially lengthy process and resulting press scrutiny. As well, the DPAs and NPAs in FCPA cases generally cite factors such as the defendants‘ co-operation and self-reporting of the crime as the reasons for the agreement. These agreements are thus used as an incentive for voluntary disclosure and co-operation. The U.S. authorities also use DPAs and NPAs to resolve cases quickly. Finally, FCPA cases usually involve obtaining evidence from foreign countries, which can be time-consuming and unsuccessful. DPAs and NPAs can be used to secure a company‘s co-operation and obtain overseas evidence where the MLA process is cumbersome or unavailable.”

“In January 2010, the SEC announced that it would begin using co-operation agreements, DPAs and NPAs in FCPA cases. A co-operation agreement is similar to a plea agreement in criminal proceedings. An individual or company must provide substantial assistance to an SEC investigation and co-operate fully and truthfully. In return, the SEC Enforcement Division agrees to make certain recommendations to the Commission, such as the individual or company should receive credit for co-operating. DPAs and NPAs require the company or individual to co-operate fully and truthfully, and to agree to comply with prohibitions and/or undertakings. DPAs also require the company or individual to admit to or not contest certain alleged facts. NPAs are available only in “limited and appropriate circumstances”. All three types of agreements require the company or individual to agree to toll the statute of limitations. The SEC has not yet used one of these agreements, given that the policy to use them was adopted only recently.”

In the “commentary section” the Report states:

“The evaluators note that PAs, DPAs, NPAs and the appointment of corporate monitors are an innovative method for resolving cases, and has evolved into an important feature of the U.S. criminal justice system, which has helped to enable a high level of enforcement activity. These measures have been used extensively in FCPA cases, especially in recent years. Guidance exists on the use of these agreements. Some private sector representatives would like more guidance but the U.S authorities disagree.”

“A useful compromise may be for the DOJ and the SEC, where appropriate, to make public in each case in which a DPA or NPA is used, more detailed reasons on the choice of a particular type of agreement, and the choice of the agreement’s terms and duration; and the basis for imposing monitors. The DOJ already does so for PAs through sentencing memoranda. Greater transparency on these issues would add accountability and enhance public confidence in the DOJ’s and SEC’s enforcement of the FCPA. Making public this information would also raise awareness of how these agreements enhance foreign bribery enforcement efforts.”

As to “recommendations” the Report states:

“Regarding the use of NPAs and DPAs, the Working Group recommends that the United States:

a. Make public any information about the impact of NPAs and DPAs on deterring the bribery of foreign public officials [..]; and

b. Where appropriate, make public in each case in which a DPA or NPA is used, more detailed reasons on the choice of a particular type of agreement; the choice of the agreement‘s terms and duration; and the basis for imposing monitors […]”.

As noted in the OECD release:

“The United States will make an oral follow-up report on its actions to implement certain key recommendations of the Working Group after one year. The United States will further submit a written report to the Working Group within two years, which will be the basis of a publicly available evaluation by the Working Group of the United States’ implementation of the recommendations.”

Stay tuned for more.

More On ABB

Deferred prosecution agreements (DPAs) tend to be interesting reads. Often times, a DPA raises more questions than it answers.

The recent ABB Ltd. DPA (here) is no exception.

The DOJ and SEC recently announced a wide ranging enforcement action against ABB Ltd. and its subsidiaries ABB Inc., and ABB Ltd. – Jordan (see here for the prior post).

This post discusses the ABB Ltd. DPA as well as the ABB Inc. plea agreement.

The short summary is as follows: the DOJ resolution concerns Iraq Oil-for-Food conduct as well as conduct in Mexico. However, the DPA is clear that there was “other misconduct” as well and that “corrupt payments” were made by ABB sudsidiaries “in various countries around the world.” ABB Ltd. agrees to pay a total monetary penalty of $30.4 million – the “bottom of the applicable combined Sentencing Guidelines fine range for ABB Inc. [Mexico conduct] and ABB Ltd – Jordan [Iraqi Oil for Food conduct].” As is common in DPA’s, ABB Ltd. agrees to forever say silent about any issues contradicting the facts of the settlement in exchange for the DOJ agreeing to defer prosecution of the criminal charges. In exchange, the DOJ “agrees to cooperate with ABB Ltd.” and tell any “governmental and other debarment authority” about how “extraordinary” ABB Ltd’s “cooperation and remediation” was in the enforcement action.

No wonder DPAs are controversial.

ABB Ltd. Deferred Prosecution Agreement

The DPA has a term of three years. [A DPA is a less harsh resolution to an FCPA enforcement action because, while the criminal charges are technically filed, the charges are deferred or not prosecuted during the term of the DPA.] If ABB abides by its obligations under the DPA, the criminal charges (see below) will be dismissed when the DPA’s term expires.

Those obligations include a corporate compliance program meeting certain common elements as set forth in Attachment C of the DPA as well as “Enhanced Corporate Compliance and Reporting Obligations and Condition of Corporate Probation” as set forth in Attachment D of the DPA (described more fully below).

The DPA term, however, may be terminated early “in the event the Fraud Section finds, in its sole discretion, that there exists a change in circumstances sufficient to eliminate the need for the enhanced compliance obligations” set forth in the agreement.

Pursuant to the DPA, ABB “accepted and acknowledged that it is responsible for the acts of its employees, subsidiaries, and agents” as set forth in the ABB Inc. and ABB Ltd. Jordan criminal informations (see here and here).

According to the DPA, the DOJ agreed to enter into the agreement with ABB based on the following factors: “(a) following discovery of the bribery, ABB Ltd. and ABB Inc. voluntarily and timely disclosed to the Fraud Section and the [SEC] the misconduct” set forth in the informations; “(b) ABB Ltd. conducted a thorough internal investigation of that and other misconduct; (c) ABB Ltd. regularly reported all of its findings to the Fraud Section and SEC; (d) ABB Ltd. cooperated in the Fraud Section’s investigation of this matter, as well as the related SEC investigation; (e) ABB Ltd. undertook substantial remedial measures, including those recommended by the independent compliance consultant engaged after ABB Vetco Gray Inc. and ABB Vetco Gray UK Ltd. settlement in 2004 with the Fraud Section and SEC and the implementation of an enhanced compliance program, and agreed to undertake further remedial measures as contemplated by this Agreement; and (f) ABB Ltd. agreed to continue to cooperate with the Fraud Section subject to applicable law and regulation in any ongoing investigation of the conduct of ABB Ltd. and its employees, agents, consultants, contractors, subcontractors, and subsidiaries relating to violations of the FCPA.” (emphasis added).

The DPA further notes that “ABB Ltd’s cooperation during this investigation has been extraordinary.”

According to the ABB Inc. plea agreement (here), “the extraordinary cooperation” of ABB Ltd. and ABB Inc. “had lead, in part, to the guilty plea by ABB Inc. agent Fernando Maya Basurto […] and the indictment of former ABB Inc. General Manager John Joseph O’Shea …” (see here for more).

According to the DPA, the fine range under the advisory U.S. Sentencing Guidelines for ABB Inc’s conduct was $28.5 million – $57 million; for ABB Ltd. – Jordan’s conduct $1.92 million – $3.2 million. The combined fine range was thus $30.42 million – $60.2 million.

ABB Ltd. agreed to pay a total monetary penalty of $30.42 million “or the bottom of the applicable combined Sentencing Guidelines fine range for ABB Inc. and ABB Ltd – Jordan.”

The DPA states that “the Fraud Section and ABB Ltd. further agree that a fine at the bottom of the applicable combined Sentencing Guidelines fine range is appropriate given the nature and extent of ABB Ltd’s extraordinary cooperation in this matter, including sharing information with the Fraud Section regarding evidence obtained as a result of ABB Ltd’s extensive investigation of corrupt payments made by ABB subsidiaries in various countries around the world.” (emphasis added).

Paragraph 22 of the DPA contains this clause:

“With respect to ABB Ltd’s present reliability and responsibility as a government contractor, the Fraud Section agrees to cooperate with ABB Ltd., in a form and manner to be agreed, in bringing facts relating to the nature of the conduct underlying this Agreement and to ABB Ltd’s and ABB Inc’s extraordinary cooperation and remediation to the attention of governmental and other debarment authorities, including the [Multilateral Development Banks] or other entities, as requested.” The ABB Inc. plea agreement contains the same provision.

The DPA, as most commonly do, forever muzzles ABB or “its attorneys, directors, employees, agents, or any other person authorized to speak for ABB” for making any public statement contradicting the acceptance of responsibility by ABB.” Similarly, the ABB Inc. plea agreement contains this clause: “the defendant agrees that if it or its parent corporation issues a press release in connection with this Agreement, the defendant shall first consult the Fraud Section to determine whether the text of the release is acceptable, and shall only issue a release that has been deemed acceptable to the Fraud Section.” In the U.K. Serious Fraud Office enforcement action against Innospec, Lord Justice Thomas specifically criticized this feature of settlement (see here) and Richard Alderman recently stated in my Q&A with him (see here) that that the “SFO will not be doing this again.”

Attachment D of the DPA is titled “Enhanced Corporate Compliance and Reporting Obligations and Condition of Corporate Probation”

It begins by stating:

“AB will continue to implement and adhere to the 101 compliance program elements recommended by the Independent Compliance Consultant in the Report of the Independent Consultant to ABB Ltd, Securities and Exchange Commission v. ABB Ltd, Civ. Action No. 04-1141 (D.D.C. July 23, 2007) (revised in December 2007), except where not possible because of local law.”

It then contains an extensive list of things ABB will continue to implement relating, but not limited to: risk assessments and audits; acquisitions; business model modification such as “eliminat[ing] the use of ABB Representatives whenever possible;” relationships with third parties; gift, travel, and entertainment; complaints, reports, and compliance issues; training; and certification.

*****

A future post will highlight how the above FCPA enforcement actions against ABB Ltd. and certain of its subsidiaries was not the first time ABB Ltd. and those within its corporate hierachy have settled FCPA enforcement actions.

A Conversation With Richard Alderman – Director of the U.K. Serious Fraud Office

While in London recently to chair the World Bribery & Corruption Compliance Forum (see here, here and here for previous posts), I was pleased to accept the invitation of the U.K. Serious Fraud Office to visit its offices and meet top-level SFO personnel to discuss Bribery Act and other anti-corruption issues and topics. As part of the invitation, Richard Alderman (here), the Director of the SFO, invited me to submit questions to him on any topic of my choosing.

I submitted approximately thirty detailed questions covering a broad range of topics, including the role and policies of the SFO, the Bribery Act, the BAE and Innospec cases, Bribery Inc., and other questions of general interest. Except for certain questions regarding the BAE case, which is still pending in the U.K. courts, Mr. Alderman provided answers to every question, including on topics I have been critical of the SFO in the past.

In his answers, Mr. Alderman, among other things:

(i) compares and contrasts the SFO’s role with the DOJ’s role in enforcing the Foreign Corrupt Practices Act, including the more active and independent role U.K. courts have in reviewing SFO charging decisions;

(ii) talks about voluntary disclosure, and the role of non-prosecution and deferred prosecution agreements;

(iii) discusses reputational harm, debarment, and reparations; and

(iv) talks specifically about the Bribery Act which is to be implemented in April 2011.

I thank Mr. Alderman and other SFO personnel for taking a keen interest in my work and commend the “active engagement” approach the SFO has taken in going about its work.

My complete “conversation” with Mr. Alderman can be downloaded here.