Root Causes Archives - FCPA Professor

Issues To Consider From The Herbalife Enforcement Action

By Mike Koehler on September 1, 2020 in Disgorgement, Gray Cloud, Herbalife, Internal Controls, Root Causes

This prior post went in-depth into the recent $123 million Foreign Corrupt Practices Act enforcement action against Herbalife and this post highlights additional issues to consider.

Timeline

As highlighted in this post, Herbalife disclosed its FCPA scrutiny in early 2017. Thus, from start to finish, its scrutiny lasted more than 3.5 years. I’ve said it many times, and will continue saying it until the cows come home, if the DOJ/SEC wants their FCPA enforcement programs to be viewed as credible and effective they must resolve instances of FCPA scrutiny much quicker.

This is particularly true in the Herbalife matter given that the conduct focused on a single country as well as the following language from the enforcement agencies.

Further To The Government Bearing Some Responsibility

By Mike Koehler on February 6, 2019 in Root Causes

As highlighted in prior posts here and here, many Foreign Corrupt Practices Act enforcement actions do not occur in a vacuum. In certain instances, the road to FCPA violations is laid years, in some cases decades, earlier by government policy encouraging certain companies to do business in certain countries to accomplish certain political objectives. In such situations, it is worth pausing to consider whether the government bears some responsibility for certain FCPA violations.

I was reminded of this dynamic when reading this recent White House release announcing an Africa Strategy to “advance trade and commercial ties to increase prosperity in the United States and Africa.”

Sole Source Procurement

By Mike Koehler on August 22, 2018 in Root Causes, Sole Source Procurement

Microsoft Word - 116 ICSI Mysore eMagazine September 2013

Sole source procurement generally refers to a contract executed without a competitive bidding process. Most governments, including the U.S., use sole source procurement in connection with certain goods and services.

There is nothing inherently wrong with sole source procurement from a Foreign Corrupt Practices Act perspective. However, the bribery risk is that a government contracting official with discretion over the procurement process may request money or something of value to convert what would otherwise be a competitive bidding process into a sole source procurement. The end result may be that the company providing or offering money or something of value to the foreign official will get the contract – which is an FCPA issue.

As highlighted below certain FCPA enforcement actions have involved – in some way – sole source procurement.
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… Because FCPA Enforcement Actions Often Involve “Normal” Activity

By Mike Koehler on August 14, 2018 in Compliance, Root Causes, Uncategorized

This recent FCPA Blog post asks: “why do ‘normal’ employees violate the FCPA?”

Sure, there will always be Foreign Corrupt Practices Act violators like Richard Bistrong (an FCPA Blog contributor and a “training partner” of the FCPA Blog’s owner) who – in the words of the Africa Sting jury foreman – “freely admitted on the stand more illegal acts than the entire group of defendants was accused of, yet was able to plead to only one count of conspiracy to violate the FCPA.” Bistrong himself has stated: “When I am asked, ‘what could have stopped you? My response is quite simple: nothing.”

There is little compliance programs can do as to these sorts of actors. Nevertheless, let me raise my hand and offer a partial answer to the question posed by the FCPA Blog: “normal” employees may violate the FCPA because FCPA enforcement actions often involve “normal” activity.

Issues To Consider From The Beam Enforcement Action

By Mike Koehler on July 10, 2018 in Beam Inc., Beverage Industry, Gray Cloud, India, Root Causes

This post highlighted the SEC’s recent $8.2 million FCPA enforcement action against Beam Inc. (now known as Beam Suntory Inc.) concerning conduct in India. This post continues the analysis by highlighting additional issues to consider.

Time Line

As highlighted in this prior post, Beam was under FCPA scrutiny since late 2012. Thus from start to finish, its FCPA scrutiny lasted approximately 6 years.

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Issues To Consider From The Herbalife Enforcement Action

Further To The Government Bearing Some Responsibility

Sole Source Procurement

… Because FCPA Enforcement Actions Often Involve “Normal” Activity

Issues To Consider From The Beam Enforcement Action

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