Save the date, scrutiny updates, coming attraction, job alert, and for the reading stack. It’s all here in the Friday roundup.
Save the Date
An event notice for East Coast readers.
On Friday, March 6th, the Fordham Law Review is hosting a free symposium opened to the public titled “Fighting Corruption in American and Abroad.”
To learn more about the event click here.
Preet Bharara (U.S. Attorney for the Southern District of New York) will be delivering a keynote address and symposium panels will explore the following topics.
(i) What is Corruption?—How Should We Define It, and Why Is It Bad?
(ii) Landmark Domestic Bribery Prosecutions
(iii) Corruption Regulation in Practice via the Foreign Corrupt Practices Act; and
(iv) The Political Economy of Global Corruption Regulation
I will be appearing on the third panel along with: Lanny Breuer (Partner, Covington & Burling LLP); Jay Holtmeier (Partner, Wilmer Cutler Pickering Hale and Dorr LLP); and Lucinda Low (Partner, Steptoe & Johnson LLP).
I have previously written about FCPA enforcement during Mr. Breuer’s tenure as Assistant Chief of the DOJ Criminal Division, but my panel presentation will concern a different topic – my forthcoming article: “The Uncomfortable Truths and Double Standards of Bribery Enforcement.” The article explores how the U.S. crusade against bribery suffers from several uncomfortable truths, including a double standard regarding corporate interaction with “foreign officials” under the Foreign Corrupt Practices Act and corporate interaction with U.S. officials under the U.S. laws.
General Cable Corp.
The company initially disclosed FCPA scrutiny in September 2014 and recently disclosed:
“As we previously reported, we have been reviewing, with the assistance of external counsel, certain commission payments involving sales to customers of our subsidiary in Angola. The review has focused upon payment practices with respect to employees of public utility companies, use of agents in connection with such payment practices, and the manner in which the payments were reflected in our books and records. We have determined at this time that certain employees in our Portugal and Angola subsidiaries directly and indirectly made or directed payments at various times from 2002 through 2013 to officials of Angola government-owned public utilities that raise concerns under the Foreign Corrupt Practices Act and possibly under the laws of other jurisdictions.
On February 20, 2015, based on the analysis completed at that time with the assistance of our external counsel and forensic accountants, we concluded that we were able to reasonably estimate the amount of profit derived from sales made to the Angolan government-owned public utilities in connection with the payments described above, which we believe are likely to ultimately be disgorged. As a result, we have recorded an estimated charge in the amount of $24 million as an accrual as of December 31, 2014. The accrued amount reflects only an estimate of the Angola-related profits reasonably likely to be disgorged, and does not include provision for any fines, civil or criminal penalties, or other relief, any or all of which could be substantial.”
As highlighted in this prior post, the company recently prevailed over the SEC regarding the company’s FCPA scrutiny. Set forth below is what Cobalt’s CEO (Joe Bryant) said during a recent investor conference call.
ANALYST: [J]ust one additional question for you. Back in January, you mentioned or had a press release that the SEC terminated its investigation; but the Department of Justice was still going forward with its parallel investigation into activities in Angola. Where does that stand now, Joe?
JOE BRYANT: Darn it […]. I was hoping to get through this conference without anybody bringing up any FCPA questions.
ANALYST: Sorry about that.
JOE BRYANT: No, I would — it’s pretty simple, really. Our focus in the past several years has obviously been with the SEC; and we brought the DOJ into the investigation early on to make sure that they could run a parallel investigation, if that was what they wanted. By the way, I will say that throughout this entire period, I can’t say enough about the working relationship we developed with the SEC and trying to make sure they understood what we did and they had everything we had in terms of the issue at question.
So we got the SEC out of the way. The DOJ is an independent agency, and it will run its process according to its measures. But I do think that we consider this issue largely behind us.”
The company disclosed FCPA scrutiny in August 2013 (albeit in short fashion – see here) and recently disclosed as follows.
“The U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) are conducting investigations into possible violations by the Company of the U.S. Foreign Corrupt Practices Act (FCPA). The Company is cooperating with these agencies regarding these matters. The Company’s Audit Committee, with the assistance of independent advisors, has been investigating and conducting a thorough review of possible violations of the FCPA, and has made recommendations for remedial measures, including employee disciplinary actions in foreign jurisdictions, which the Company has implemented and continues to implement. The Company is unable to predict the duration, scope or outcome of the SEC and DOJ investigations, but believes that an adverse outcome is reasonably possible. However, the Company is not able to estimate a reasonable range of possible loss. The SEC and/or DOJ could take action against us or we could agree to settle. In such event, we could be required to pay substantial fines and sanctions and/or implement additional remedial measures; in addition, it may be determined that we violated the FCPA.”
Kraft Foods long ago disclosed FCPA scrutiny resulting from its acquisition of Cadbury (see here). Kraft, currently known as Mondelēz International, Inc., recently disclosed as follows.
“[A]fter we acquired Cadbury in February 2010 we began reviewing and adjusting, as needed, Cadbury’s operations in light of applicable standards as well as our policies and practices. We initially focused on such high priority areas as food safety, the Foreign Corrupt Practices Act (“FCPA”) and antitrust. Based upon Cadbury’s pre-acquisition policies and compliance programs and our post-acquisition reviews, our preliminary findings indicated that Cadbury’s overall state of compliance was sound. Nonetheless, through our reviews, we determined that in certain jurisdictions, including India, there appeared to be facts and circumstances warranting further investigation. We are continuing our investigations in certain jurisdictions, including in India, and we continue to cooperate with governmental authorities.
As we previously disclosed, on February 1, 2011, we received a subpoena from the SEC in connection with an investigation under the FCPA, primarily related to a facility in India that we acquired in the Cadbury acquisition. The subpoena primarily requests information regarding dealings with Indian governmental agencies and officials to obtain approvals related to the operation of that facility. We are continuing to cooperate with the U.S. and Indian governments in their investigations of these matters, including through ongoing meetings with the U.S. government to discuss potential conclusion of the U.S. government investigation.”
This recent post highlighted judicial rejection of a deferred prosecution between the DOJ and Fokker Services.
Fokker recently announced:
“After careful review of the Court’s decision, Fokker Services decided to file a Notice of Appeal. Fokker Services has noticed recent press articles which contain highly speculative assumptions and amounts, not based on facts. Fokker cannot run ahead of the outcome of its appeal and will make further announcement only if and when applicable.”
While the case is outside the FCPA context, this appeal will certainly be one to follow as DPAs (as well as NPAs) are a prominent feature of FCPA enforcement.
Avon Calling! Avon Colombia S.A.S., a subsidiary of Avon Products, Inc., based in Medellin, Colombia, is looking for an attorney to join the Ethics & Compliance team. The Compliance Counsel has day-to-day operational responsibility for managing the compliance program in the Andean Cluster (Colombia, Ecuador, Peru, and Venezuela). The program seeks to minimize risk exposure of corporate and regulatory law through company guidance and controls. A primary activity of the Compliance Counsel is to provide operational advice and interpretation of company policies and procedures, including but not limited to the company’s anti-corruption policy. As part of the program, the Compliance Counsel supports corporate, regional and local governance, monitoring, auditing, training and communication initiatives. A primary goal for the Compliance Counsel is to enhance the culture of awareness and adherence to company policies. Prospective candidates should apply via the Avon website.
Third parties are not just a corruption risk in the global marketplace, but the domestic marketplace as well. See here for the New York Daily News article about so-called “expediters” who assist developers navigate bureaucracy “to speed their projects to approval — getting permits faster, addressing violations and filling out key paperwork. It’s an arrangement critics have long slammed as corrupt.”
“In the FCPA context and beyond, the Fokker Services decision is a reminder that increased judicial scrutiny of proposed settlement agreements with law enforcement agencies may be the “new normal.” Although the outcome of Fokker Services’ appeal remains to be seen, Judge Leon’s decision may entice prosecutors in future cases to seek harsher terms in DPAs out of concern for heightened judicial scrutiny of proposed DPAs, or instead shy away from DPAs entirely and attempt to achieve sufficient punishment and deterrence through Non-Prosecution Agreements (“NPAs”). In addition, Judge Leon’s concern that no individuals were charged in Fokker Services may further embolden prosecutors to demand individual accountability as part of proposed settlements or in the lead-up to such settlements.”
Some are still drinking the Kool-Aid regarding Morgan Stanley’s so-called declination. (See here – “A robust compliance program spared Morgan Stanley from prosecution under the FCPA”). Just goes to show that once a narrative is cast, nothing else seems to matter.
A recent Q&A in the Wall Street Journal’s Risk & Compliance Journal with Pascale Hélène Dubois (the World Bank’s chief suspension and debarment officer).
A good weekend to all.