In May 2021, the Ministry of Economy, Trade and Industry (METI) revised the Guidelines for the Prevention of Bribery of Foreign Public Officials (Guidelines). Although the Guidelines do not impose legal obligations on companies, METI expects each company to create and implement an appropriate compliance system with reference to the Guidelines. The revised Guidelines include detailed guidance on due diligence prior to executing an acquisition or retaining a third-party agent — largely consistent with US government expectations under the US Foreign Corrupt Practices Act (FCPA) — and urge Japanese companies and global companies with business operations in Japan to prohibit small facilitation payments. Companies that have business operations in Japan should understand and incorporate the most recent changes to the Guidelines into their local company compliance system to the extent appropriate.
The enforcement actions included: (i) a net $17.7 million FCPA enforcement action concerning conduct in Brazil; (ii) a net $142 million U.K. enforcement action concerning conduct in Brazil, Nigeria, Saudi Arabia, Malaysia, and India; and (iii) a net approximately $17 million Brazil enforcement action concerning conduct in Brazil.
That is a lot of money going into government coffers, but the question needs to be asked: what actually was accomplished through these enforcement actions?
If a country is to have a deferred prosecution agreement regime, the approach of the United Kingdom is far more preferable than the approach of the United States.
In the U.K. (unlike the U.S.), the judiciary is actively involved in the DPA process and the public is offered insight into the reasoning of the judge in approving the DPA (which often includes facts and information not mentioned in the resolution documents authored by the prosecutors).
Simply put, it is refreshing to hear from someone other than the prosecutors and this posts summarizes the judgment and reasoning of Lord Justice Andrew Edis in the recent U.K. portion of the enforcement action against Amec Foster Wheeler / John Wood Group. (see here for the prior post).
This post is authored by Foley & Lardner attorneys David Simon, Rohan Virginkar, James Peterson, Kristen Maryn and Stephanie Cash.
Experienced practitioners and dealmakers understand there may be Foreign Corrupt Practices Act risks in an acquisition and have adopted procedures designed to identify and address these issues as part of the M&A diligence process. Most acquirers ask the right questions, conduct risk-based probes of the target’s compliance program and operations, take steps to allocate the risk of compliance issues in the transaction documents and, in some circumstances, structure the transaction as an asset purchase rather than as a stock purchase or merger.
Where FCPA issues are discovered in the due diligence process, there is an increasingly well-established playbook for addressing and mitigating the exposure created by these issues, including mitigating the resulting risks by taking advantage of the Department of Justice’s (DOJ’s) Corporate Enforcement Program (CEP), requiring voluntary self-disclosure by the target, and thus avoiding a carry-over enforcement action against the acquirer.
This recent post highlighted the SEC’s $8.8 million Foreign Corrupt Practices Act enforcement action against Cardinal Health.
This post continues the analysis by highlighting additional issues to consider.
According to the SEC order, “In December 2016, Cardinal voluntarily disclosed the results of its investigation to the Commission staff and subsequently cooperated with its investigation.”