Rate This – Nielsen Company Accused Of FCPA Violations In Civil Suit, Plus Olympus Under Scrutiny
Approximately 100 companies are publicly known to be the subject of FCPA scrutiny. This figure is likely a conservative estimate given that little is often known of private company FCPA scrutiny until an enforcement action is announced. For instance, other than those involved, who knew that NORDAM Group or Data Systems & Solutions (two companies that recently resolved enforcement actions – see here and here) were the subject of FCPA scrutiny?
Add two more companies to the list: Nielsen Company and Olympus Corp.
Nielsen
It is not the traditional way companies become the subject of the FCPA scrutiny, but then again it is not unheard of for FCPA scrutiny to begin with a civil complaint.
Last week in a lengthy civil complaint (here) filed by New Delhi Television Limited (“NDTV”) in New York State Court, NDTV (which describes itself as India’s first and most respected private broadcaster of news, current affairs and lifestyle television and a pioneer in India’s news television) accused Nielsen and a host of related entities and individuals of “negligence, gross negligence, false representations, prima facie tort and negligence per se (based on violations of the Foreign Corrupt Practices Act and the Dutch Corporate Governance Code).”
The 37th cause of action against Nielsen is for negligence per se arising from violations of the FCPA and the complaint states in full as follows.
“The anti-bribery provisions of the Foreign Corrupt Practices Act … prohibit U.S. companies from giving anything of value, either directly or indirectly, to, inter alia, a foreign politician so as to induce such foreign politician to do or omit to do any act in violation of the lawful duty of such foreign politician; or to secure any improper advantage, or to continue the company’s business. Accordingly, since the formation of TAM [Television Audience Management, an Indian company which is a joint venture between a Nielson entity and others], Nielsen had a duty to comply with the provisions of the FCPA, so as to prevent the rampant corruption that has existed and currently exists within TAM. Nielsen has known or should have known, that politicians directly and indirectly own approximately one-third of the news channels in India; that approximately sixty-percent (60%) of Indian cable operations are owned, directly or indirectly, by politicians or their proxies; and that, at all relevant times, there were high levels of corruption in the Indian television ratings industry and in TAM’s operations. Nonetheless, since the inception of TAM, Nielsen has allowed TAM, using the Nielsen Process and/or Nielsen’s proprietary property and/or Nielsen’s name and logo, to publish corrupt data, which was known to be corrupt, which benefited politicians. Indeed, Nielsen knew or should have known and/or consciously disregarded the fact that the leakage of panel home identities yielded hundreds of millions of dollars for the benefit of several politicians. This has enabled TAM, Nielsen and Kantar [another entity in the joint venture] to maintain its monopoly power in India and/or steady revenues. The failure to stop publication of corrupt data continues to benefit politicians, TAM, Nielsen and Kantar. Since the formation of TAM, Nielsen has had intimate actual knowledge of such violations of the FCPA; knew of several red flags giving rise to an inference of actual knowledge of such violations of the FCPA; was willfully blind to such violations of the FCPA; and consciously avoided such violations of the FCPA. Indeed, Robert Messemer, Chief Global Security Officer for The Nielsen Company, and Paul Donato, Executive Vice President and Chief Research Officer for Nielsen, during the course of their several visits to India commencing January 2012, meetings there as described above, and in the course of investigations during and subsequent to such visits and meetings, had actual knowledge of, and/or consciously disregarded FCPA violations, including, but not limited to, representations made in person to them by the whistleblower whom they personally interviewed on February 28, 2012 …, that, at the very least, one of the parties engaged in obtaining and using highly sensitive identities of panel homes was a television network owned by a well known Indian politician. As a result of Nielsen’s willful disregard of such undeniable corrupt practices, such foreign politicians derived benefits by, inter alia, manipulation and skewing of TAM data in favor of broadcast channels and cable operations owned and/or operated by such local politicians or their proxies, from manipulation of rates based on knowledge of corrupt data and identity of panel homes, and various other means. Nielsen’s complete and utter failure and/or refusal to stop publication of manipulated TAM data has allowed such politicians to continue to benefit from the publication of such data. Thus, benefits were provided to those politicians, and TAM and/or Nielsen continued to enjoy the benefits of, inter alia, continued operations as a monopoly in the Indian market, and steady revenues. Such acts and omissions by Nielsen constitute violations of the FCPA by Nielsen, and, as a result, negligence per se.”
For additional coverage of the complaint, see here from Courthouse News Service, here from the Hollywood Reporter and here from International Business Times.
Olympus
Yesterday, Bloomberg reported (here) that Olympus Corp., the world’s largest maker of endoscopes, uncovered irregularities at a doctor-training program in Brazil that may have violated U.S. law and reported them to the Department of Justice.” According to the article, “at issue in Brazil may be the way the company handled doctors’ expenses for travel, meals or entertainment.” The article quotes company Chairman Yasuyuki Kimoto as saying “we might agree to some sort of violation of the Foreign Corrupt Practices Act in Brazil. We understand DOJ is trying to gather lots of information on us.”
How can Tokyo based Olympus become subject to the FCPA? For starters, the company has Level 1 ADRs traded on the so-called “Pink Sheets.” Also, as noted in the Bloomberg article, the company has a U.S. based subsidiary and if it was involved in the conduct at issue, the DOJ may take the position that the subsidiary was acting as an agent of the parent company. Also, as I suggest in the Bloomberg article, under the dd-3 prong of the FCPA added by the 1998 amendments, any company can be subject to the FCPA’s anti-bribery provisions to the extent “while in the territory of the U.S.” conduct occurs in furtherance of the scheme. As noted in this prior post, the DOJ has asserted expansive theories under dd-3. Notwithstanding the DOJ’s dd-3 setback in the Africa Sting case (also noted in the prior post) it is likely to continue to assert such expansive theories until challenged.
Olympus’s FCPA scrutiny would appear to be based on the untested (and in the minds of many – see here – dubious) enforcement theory that anyone employed by a state-run health care system is a “foreign official” under the FCPA. Several prior enforcement actions, including against medical device companies, (see here for instance) have been based on this theory.
For Your Listening Enjoyment
On June 5th, the American Bar Association Criminal Justice Section and the ABA Center for Continuing Legal Education in cooperation with Dorsey & Whitney & LLP and Pepper Hamilton LLP sponsored a program titled “The New Era of FCPA Enforcement and the Collapse of the Africa Sting Cases: Time to Reevaluate?”
I was pleased to participate along with John Buretta (Deputy Assistant Attorney General, Criminal Division, Department of Justice); Charles Cain (Deputy Chief, FCPA Unit, Securities and Exchange Commission); France Chain (Senior Legal Analyst, Anti-Corruption Division, OECD); Stanley Sporkin; and Eric Bruce (Partner, Kobre & Kim LLP). The program was moderated by Thomas Gorman (Partner, Dorsey & Whitney LLP) and Frank Razzano (Partner, Pepper Hamilton LLP).
An audio version of the 90 minute program can be downloaded here. Below is a breakdown of topics discussed along with the approximate minute mark(s) of the discussion.
4 – 11 minutes – Eric Bruce (defense counsel in the Africa Sting case) provides an inside view of the case.
11 – 13 minutes – discussion of 78dd-3 jurisdictional issues, including in the Africa Sting case
13 – 19 minutes – discussion of various issues including corporate FCPA resolutions, whether the DOJ is more of a regulator than prosecutor in FCPA cases, and the DOJ’s view of the Africa Sting cases including whether it learned anything from the cases
19 – 24 minutes – Stanley Sporkin weighs in as to the origins of the FCPA’s books and records and internal control provisions, says that the DOJ was hunting in the wrong place in the Africa Sting cases and says that FCPA enforcement needs to get back to the basics of “blocking and tackling”
25 – 30 minutes – discussion of the “foreign official” issue in which the DOJ says that “no one really conveys that they are confused” about what “foreign official” means
30 – 38 minutes – discussion of facilitation payments and whether the enforcement agencies have ignored this statutory exemption
38 – 41 minutes – I raise the question of whether the FCPA has morphed into an all-purpose corporate ethics or governance statute and discussion regarding what is the best way to expand the FCPA – through charging decisions or through Congressional action
42 – 50 minutes – discussion of compliance issues and how best to reward corporate compliance as well as the recent Garth Peterson / Morgan Stanley case in which I pose to the DOJ and the SEC the question of whether the outcome would have been any different if the FCPA had a formal compliance defense
50 – 55 minutes – discussion of miscellaneous issues including transparency in enforcement, cooperation issues and self-reporting
55 – 67 minutes – further discussion of compliance issues, including whether a compliance defense would be a “race to the bottom” or a “race to the top,” whether there is a Washington D.C. beltway view on FCPA compliance, and whether the increase in FCPA enforcement is doing anything to properly incentivize business conduct
67 – 71 minutes – discussion of whether there is any practical difference in the corporate liability standards in the U.K. Bribery Act and the FCPA
72 – 76 minutes – further discussion of the Africa Sting cases
77 – 79, 83 – 86 minutes – DOJ responds to a question regarding FCPA guidance, including timing and specifics
80 – 83 minutes – discussion as to whether it is acceptable not to self-report if the company otherwise implements a variety of internal remedial measures
87 – 89 – once again the issue of whether the DOJ has learned anything from the Africa Sting cases
*****
If you are aware of other FCPA video or audio programs and would like to provide a similar annotation as to issues, please consider this an open invitation to do a guest post as many could benefit.
Informative Reads
[You will see a new “Jobs” tab on the site today and I am pleased to announce this new feature of FCPA Professor. FCPA Professor readers include a world-wide audience of attorneys and business, accounting, finance, and compliance professionals with knowledge and experience of the FCPA and related topics. Both job seekers and organizations seeking to hire individuals with FCPA experience will benefit from a wide selection of job listings, so please spread the word and send this link to your HR department and professional contacts]
The quality of FCPA resources continues to impress. Three law firm periodic publications I make sure to put on my reading stack are those authored by Gibson Dunn & Crutcher, Shearman & Sterling, and Miller & Chevalier.
Gibson Dunn’s “2011 Year-End FCPA Update” (here) begins as follows. “2011 marked yet another dynamic year for the Foreign Corrupt Practices Act, including numerous significant enforcement actions, more trials than in any other year in the history of the statute, and a growing public debate about the policy ramifications of a U.S.-dominated international anti-corruption enforcement field. Those close to the statute can feel the unmatched pace at which the 34-year-old law is now developing. With more litigated decisions, more bills pending in Congress, and more interplay between the FCPA and other international laws prohibiting cross-border bribery, there is a growing sense of urgency amongst FCPA practitioners as to the direction the statute will take in the coming years. […] There can be no dispute about it–these are interesting times for the FCPA.” The Update concludes as follows. “Perhaps the most intriguing current development in the FCPA is that everything that made 2011 such a fascinating year promises only to increase in the years to come, as there will only be more litigation, more legislation, and more international coordination in the near future. Companies and their executives doing business in an increasingly global marketplace are well advised to stay abreast of these developments.” Sandwiched between is much useful information and analysis sure to be of interest to readers.
Gibson Dunn also released (here) its annual update on corporate deferred prosecution and non-prosecution agreements. According to the report, the DOJ and SEC entered into 29 NPAs/DPAs in 2011. Such vehicles were used in FCPA enforcement actions (DOJ or SEC) 11 times – approximately 40% of the total.
Shearman & Sterling’s “Recent Trends and Patterns in the Enforcement of the FCPA” (here) always impresses. The latest edition begins as follows. “Although the pace of new FCPA enforcement actions was somewhat off in 2011 – only sixteen corporate cases and eighteen new individual defendants – 2011 was nevertheless an eventful year for FCPA enforcement and indeed for enforcement of other countries’ similar laws. Among the highlights: defendants took the government to trial in a number of FCPA matters, with mixed results reflecting the difficulty and uncertainty of proving foreign bribery beyond a reasonable doubt; judges in multiple districts largely adopted the government’s expansive interpretation of what constitutes an “instrumentality” of a foreign government, including state-owned entities indirectly controlled by a foreign government; the DOJ and the SEC continued their focus on prosecution of individuals; the U.S. enforcement authorities brought fewer cases in 2011 against non-U.S. companies; despite claims that the government extracted exorbitant fines in FCPA matters, the average penalty continued to be less than $25 million; the DOJ and the SEC almost completely withdrew from their prior practice of routinely requiring an independent monitor in all cases and demonstrated a willingness to accept various forms of self-monitoring; with the advent of the U.K.’s Bribery Act, the British government offered considerable guidance on compliance and began exploring ways of encouraging voluntary disclosures and cooperation by emulating the U.S. system of deferred prosecution agreements.”
Shearman & Sterling publications are always strong on jurisdictional issues and its most recent “Trends and Patterns” states as follows regarding the Magyar Telekom enforcement action (see here for the prior post). “The year ended with an entirely new expansion of what constitutes territorial acts. In Magyar Telekom, the DOJ’s sole claim to anti-bribery jurisdiction (but not to books and records jurisdiction) was based on a foreign official’s “U.S.-based email address,” whereby email was “passed through, stored on, and transmitted from servers located in the U.S.” This is a particularly weak jurisdictional basis, given that this one count resulted in a Sentencing Guidelines calculation of eight times what the company would have had to pay under just the books and records provisions.”
Shearman & Sterling’s FCPA Digest (here), at 692 pages, is as complete of an FCPA source as you will find.
Last, but certainly not least, is Miller & Chevalier’s FCPA Winter Review 2012 (here). Complete with charts and graphs, it is a comprehensive resource on the latest developments in the following areas: enforcement actions against companies and individuals; FCPA-related private litigation; domestic legislative and U.S. enforcement agency developments; as well as international developments.
If you have not yet had the opportunity to read the above three publications, you should, it will be time well spent.
Beyond All Boundaries: The Extraterritorial Grasp Of Anti-Bribery Legislation
Today’s post is from Bruce Bean (here – Michigan State University College of Law)
*****
“The American Branch of the International Law Association held its Annual Law Weekend in New York City this past weekend. As a member of the ABILA Extraterritoriality Committee, I organized an expert panel to highlight how the UK Bribery Act 2010 takes an even more aggressive view of its jurisdictional scope than the Justice Department’s well documented, extraordinarily expansive view of the global reach of the FCPA. The panel included Visiting Professor Alexander Domrin, Oklahoma City University Law School, Philip Urofsky, former DoJ FCPA prosecutor and partner at Shearman & Sterling, Robert Buehler, partner at Hogan Lovells and former Assistant U.S. Attorney for the Southern District of NY, and Jeremy Carver, President of the UK Branch of the ILA as well as a partner for three decades at Clifford Chance.
The provocative title of the panel discussion, “Beyond All Boundaries: The Extraterritorial Grasp of Anti-Bribery Legislation,” attracted an animated crowd. I shared my opinion that a hyper-aggressive DoJ had expanded the reach of the FCPA far beyond the language of the law and the intent of Congress. I pointed out that this overreaching had been exceeded by the egregious extraterritorial grasp of Section 7 of the Bribery Act, which imposes strict criminal liability on a company for failing to prevent a bribe, even a facilitation payment by a non-UK person who is not employed by that company. And the guilty-until-proven-innocent company need not be a UK company, or have a place of business in the UK. The statutory nexus of the Bribery Act is merely that the company once conducted “a part of a business, in any part of the UK.”
Philip Urofsky, the long-time DoJ FCPA prosecutor, began his presentation by announcing that he “strongly disagreed” with everything I had said. In practice, he noted, the commerce clause nexus of the FCPA is met when a dollar wire transfer between two offshore jurisdictions clears through a New York money center bank, even though there was no “intent” by either of the parties involved to have any connection with the U.S.
Bob Buehler pointed out that the jurisdiction of the Southern District’s U.S. Attorney’s office is its statutory jurisdiction which includes Manhattan and its “contiguous waters.” I innocently asked if that extended to the Atlantic Ocean. The response was, perhaps not, but driving over the Verrazano Bridge between two boroughs not within the Southern District can bring jurisdiction to the “Sovereign District.”
Jeremy Carver, now President of Transparency International UK, testified regularly before Parliamentary and other Committees during the ten years of deferral and delay which finally produced the Bribery Act with its seriously aggressive overseas reach. More than once Carver accused the UK government of misleading Parliament about the adequacy of UK laws applicable to overseas bribery. A speech he gave at the Commonwealth Club in February 2007 was entitled “Is the UK Government Serious about Fighting International Corruption?” In later testimony he announced that the “government has done its utmost to undermine the efforts that so many others have been making to combat foreign bribery.”
As finally effective on July 1, 2011, the UK’s Bribery Act has enormous extraterritorial reach. Carver pointed out that it could have been worse. During the reign of Queen Elizabeth I, as Sir Francis Drake roamed the Seven Seas, the suggestion was made that the overwhelming dominance of British Navy meant that the Queen Elizabeth’s jurisdiction should extend over all the oceans. This suggestion was not accepted at the time, although I remain convinced that the UK Bribery Act 2010 is an attempt to do just that.
In whatever ways the Bribery Act evolves, few will forget last weekend’s ABILA panel discussion.”
Mr. Alderman Goes to Washington
[I am pleased to share that FCPA Professor is one of the nominated blogs for the Top 25 Business Law Blogs of 2011 contest sponsored by LexisNexis. LexisNexis invites comments on the nominated blogs so that the field can be narrowed to the Top 25. The link to submit comments is here. To submit a comment, you must register, but registration is free and does not result in any sales contacts. The comment box is at the very bottom of the page and the comment period ends on October 25th.
Since launching FCPA Professor in July 2009, and continuing with the upgrade of the site in July 2001, my mission has remained the same: to inject a much needed scholarly voice into FCPA and related issues; to explore the more analytical “why” questions increasingly present in this current era of aggressive enforcement; and to foster a forum for critical analysis and discussion of the FCPA and related topics among FCPA practitioners, business and compliance professionals, scholars and students, and other interested persons. I hope you value the content and resources found on FCPA Professor and I thank you for your consideration.]
Richard Alderman is the Director of United Kingdom Serious Fraud Office, an agency (here) similar to the U.S. Department of Justice and the primary U.K. enforcer of the Bribery Act (as well as the country’s prior bribery laws). Last week, Alderman gave three speeches in Washington and this post contains excerpts from those speeches. In his remarks Alderman touched upon the following topics: SFO resources, current workload and enforcement priorities; differences between how the UK and US investigate and prosecute bribery actions; WikiLeaks and the Arab Spring; the demand side of bribery; individual prosecutions under the Bribery Act; adequate procedures under the Bribery Act (“let me emphasize this is a complete defense, it is not a matter of mitigation”) and the SFO’s active engagement approach; and merger and acquisition issues (“society benefits if an ethical corporation takes over and sorts out a corporation that has corruption problems”).
Trace Forum 2011 (here)
“I shall talk a little later about the Bribery Act but let me tell you first a little more about what the SFO has been doing in order to justify the recognition of the UK as an active enforcer. We are a comparatively small office and we devote a considerable amount of that resource to dealing with anti-corruption. We have about 80 frontline staff dealing with anti-corruption with a resource for this of some $7.5 million. Our resource in the SFO is also a flexible one and we can move additional resource into anti-corruption from other areas depending upon workload. Currently, our anti-corruption workload is dominated by pre-Bribery Act cases. That is likely to remain for some time. We have about 50 corruption cases (whether involving the public sector or private sector) under formal investigation or prosecution and, of course, a number of additional ones that we are looking at to see whether we should open an investigation. Although these figures may look low in terms of the figures of some other authorities, it is important to understand quite what they mean. All of these cases are actually large complex anti-corruption investigations reaching across many countries and many individuals and companies. Under our system, we have to conduct every investigation to the standards required by our Criminal Justice System and with the possibility of a contested trial before Judge and Jury very much in mind. This means that each case is very resource intensive because we have to ensure that all evidence is obtained in the appropriate way and is admissible in court. The resource that goes into these cases is very great and is the source of great concern to me. “
*****
“Another feature of our cases that you do not have [in the U.S.] is the ability of those under investigation and indeed other parties such as non-governmental organisations to challenge anything that the SFO does. We saw that, for instance, in the BAE case where the decision to terminate the Saudi investigation was challenged by two non-governmental organisations. Any interested party (and that is construed very widely) can go to court and require the SFO to give an explanation to the satisfaction of the court about what we are doing. We need to show that our actions are lawful and proportionate. It is a very important discipline in my jurisdiction and we are at all times very conscious of this.”
*****
“There are some particularly important issues under [the Bribery Act] for an audience based in the US. Let me talk first about the extended reach of the Bribery Act to foreign corporations that carry on business in the UK. We have received lots of questions about this and about the meaning of those very simple words “carrying on business in the UK. I know that there is the potential for much litigation on this issue. Nevertheless, I tell corporations that it will be very unwise of them to try to rely upon a very technical interpretation of the Bribery Act in order to persuade themselves that it is safe to carry on using bribery. I have said that they might be in for a very unpleasant surprise in a number of years time when our Supreme Court gives its views on this test. I say to corporations that the only safe way of doing business is not to use bribery.”
*****
The Bribery Act has a new offence aimed at senior officers of corporations who consent to or connive in bribery. I know that there are many who are worried about this offence, particularly if they happen to be Directors or Non-Executive Directors based in the UK and where their companies are high risk. You may find, for example, that some London executive or non-executive directors may be worried about their exposure if US corporations are found to have been involved in corruption. We are actively looking for cases where we can apply this provision. Society expects senior members of a corporation to be responsible for ensuring that there is a true ethical culture. They have a key responsibility here. My view is that if they find that their efforts to do this meet with resistance or no success then they should consider resigning and telling us about their concerns. Expressing doubts about the company’s culture but remaining a highly paid officer would not be sensible because this would seem to be a model case of conniving in bribery for the purposes of the legislation.”
*****
“Some cases may involve corruption under the old law. You will not be surprised, for example, to hear that we looking through Wikileaks and the other information becoming available as a result of the Arab Spring in order to see what corporations have been doing over a period of years. We are going to be very interested in the sorts of deals that are going to come to light and I am sure that this will be a fruitful source of work for us. The message from me is that if corporations are worrying about this, then they ought to come and talk to us now rather than wait for the dawn raid.”
Anti-Corruption Summit 2011 (here)
“What we have been doing is to encourage corporations to work together and with us and other authorities in order to try to work on the underlying problem. I have been very impressed by what a number of corporations have been doing. They come to me to tell me what they are doing because they are slightly nervous that the SFO will pick this up and may even start making enquiries or investigate. This is not what we want to do. If there is a genuine attempt being made to solve the problem of corruption then I want to let the corporations get on with that so far as possible and indeed to provide any help that I can in the SFO. We have had a number of discussions of this nature. I do not underestimate the difficulties here and the constraints. It appears to me though to be absolutely the right thing to do. This is because in my view one of the likely issues in the coming years is not going to be what we do about the supply side of bribery, but what happens about the demand side of bribery. It is an issue that I am concerned about in the SFO and one where I want us to contribute.”
*****
“The Bribery Act creates a new offence at the corporate level of failing to prevent bribery. The defence to this is that there are adequate procedures to prevent that bribery. Let me emphasise that this is a complete defence. It is not a matter of mitigation. If an act of bribery occurs somewhere in your worldwide corporation and you had adequate procedures, then no criminal offence has been committed. This is something that has been reassuring to corporations. Of course what this means is that there has been great interest in the meaning of adequate procedures. The guidance from our Ministry of Justice sets out the UK Government’s approach to this in considerable and to my mind, helpful detail. Let me though give you a flavour of what you might expect if you came to us to talk about your adequate procedures. I should add here that many corporations do that. You may find this surprising but we do have a regular succession of corporations coming to the SFO to seek our views on their procedures and what they are doing. We stress that we can give no guarantee and certainly no certificate to the effect that their procedures are adequate but we are able to give them helpful advice. The feedback we get is that these are positive and pragmatic discussions. Some of the themes you will hear from us will be these. First, what is the approach of the most senior management in the corporation? They set the lead. Employees of corporations are very shrewd. They know what really matters to top management. They will know if something matters or does not matter. We will want to know therefore what top management is doing in order to ensure that the importance of good ethical business is known to every member of that company. We hear for example of contracts that corporations do not enter into because they could be secured only by corruption. This is a good practical example of the importance placed upon anti-corruption. There are others as well. We also want to know about risk assessment. This is something that corporations ought to be doing anyway but my own perception is that this has been intensified because of the Bribery Act. How do you assess the risks in your corporation? Is this simply a paper and routine exercise or is it genuine? It certainly ought to be genuine because this could bring down your corporation if you get it wrong and overlook some key risk. We will want therefore to talk through your risk assessment process. We shall of course be particularly interested if you find you have a considerable problem about something that was not flagged up in the risk assessment. This may or may not mean that the risk assessment process was flawed. We want to know what you are doing about this and indeed how you are developing the risk assessment process in future. We will offer any thoughts we have about any risks you should be thinking about but are not. What we will also want to be sure about is this. Please take it from me that simply handing us a large pile of documents with lots of boxes ticked on checklists will not be enough to satisfy us that you have adequate procedures. That is a paper exercise. It is part of what is needed but only part. We shall want to know what lies behind this and what the real issues are. Personally, I believe we are not alone in wanting to know this. When we are talking about corruption with all the reputational issues that are involved here, senior management should actually be asking exactly the same questions that the SFO will be asking in this respect. I have mentioned that corporations come and talk to us about all of these issues. Please feel free to contact us if you would find this helpful in order to talk through what you are doing. It is not a threatening process and please do not worry that if you came to us and expressed a few doubts about whether your procedures are adequate that you would find yourself on the wrong end of a prosecution before you left the SFO building. This simply does not happen. The object of these discussions is to be constructive and supportive. I hope you will find that if you approach us.”
*****
“I want finally in this overview of what is happening, to talk about mergers and acquisitions. I know how important this subject is. Some time ago we said publicly in the SFO that we were prepared to assist corporations that were in the process of carrying out a merger or acquisition and discovered problems during the course of due diligence. We made this willingness clear about two years ago although I have to say that there was little take up at that stage. That seems to be changing now. I have been struck in recent months by the fact that a number of corporations have been to see us about some sensitive potential acquisitions where they are identifying some real issues about corruption during the course of due diligence. Ultimately, the decision about an acquisition is a commercial one and will involve an analysis of risk and reputation as well as many other issues. The corporation and its advisors though want to try to manage the regulatory risk so far as possible by seeking views from the SFO. We have been ready to engage in this. What we do is to talk to the corporation and its advisors about what they are finding and what they propose to do about it if the acquisition takes place. It is quite clear to me as a result of the discussions that a negative response from the SFO is sufficiently important to put the acquisition in jeopardy. On the other hand, a positive view from us on the basis of what the corporation intends to do could enable the acquisition to go ahead. My view on this, simply stated, is that society benefits if an ethical corporation takes over and sorts out a corporation that has corruption problems. It is something I am keen for the SFO to promote, so far as we legitimately can.
Risk Advisory Dinner (here)
“What we are trying to do with private sector corporations is to work on some real initiatives in particular countries and even particular areas such as ports in order to try to find ways of curbing the demand for these payments. This is not just a question of simply saying “no”; it is also a question of seeing what is the underlying problem (for example, public officials are not paid by the state and so are forced to demand bribes) and what can be done about these underlying causes. It is also a question of how we deal with governments and other authorities about these issues.”
*****
“I have said publicly that a high priority for us will be to find a foreign corporation with a UK business presence that has got involved in corruption in another country and has undermined a good ethical UK corporation. Those corporations have been within the SFO’s reach since July 1st as a result of the new Bribery Act. An English jury will take the view that there is a very clear UK public interest in bringing such corporations to a criminal court. It is a high priority for us.”