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Like Siemens, SNC-Lavalin Creates Employee Amnesty Program

SNC-Lavalin (a leading engineering and construction company based in Canada) is mired in a bribery and corruption scandal concerning projects in Bangladesh and certain countries in Africa.  Earlier this week, the company announced (here)  “a company-wide Amnesty Program to encourage current employees to report potential corruption and anti-competition matters in which they may have direct or indirect knowledge.”  For more on SNC-Lavalin’s scrutiny, including its alleged use of secret internal accounting codes, see this recent article from CBC News.

SNC-Lavalin’s release further states as follows.

“The Amnesty Program is intended to assist SNC-Lavalin in its efforts to fully gather and assess the facts associated with corporate ethics matters in order to resolve them.”

“To be eligible for amnesty, an employee must file a request with SNC-Lavalin’s Chief Compliance Officer within the 90-day period between June 3 and August 31, 2013. The Company guarantees that it will not make claims for damages or unilaterally terminate employees who voluntarily, truthfully and fully report violations of its Code of Ethics and Business Conduct during this period. The offer does not extend to executives in the Company’s Office of the President or Management Committee groups, or anyone who directly profited from an ethical violation.”

“To SNC-Lavalin’s knowledge, this is the first time that a Canadian company has initiated an amnesty program. Such programs are strongly encouraged by the international ethics community in situations like the one SNC-Lavalin is facing.”

In the release, the company’s Chief Compliance Officer stated as follows.

“Amnesty programs are known to be highly effective means of getting to the bottom of ethics and compliance issues in large organizations.  While the vast majority of SNC-Lavalin’s employees will have nothing to report, this offer of amnesty will allow us to uncover and quickly deal with any remaining issues. Our goal is to turn the page on a challenging chapter in the Company’s history, so we can focus all of our attention on creating value for our stakeholders.”

SNC-Lavalin’s employee amnesty program is similar to the one Siemens created in 2007 during its bribery and corruption scrutiny.

The DOJ’s sentencing memorandum in the December 2008 FCPA enforcement action (the largest in FCPA history in terms of fine and penalty amount – $800 million) cited Siemens creation of the “innovative and effective amnesty and leniency program” as evidence of the company’s “exceptional” and “wide-ranging cooperation efforts.”

Under the heading “Amnesty and Leniency Programs,” the DOJ stated as follows.

“In consultation with the Department, Siemens designed and implemented a company wide amnesty program to facilitate the internal investigation. This amnesty program was implemented on October 31, 2007 and continued until approximately February 29, 2008. The program provided that all but the most senior employees who voluntarily disclosed to Debevoise [the firm that conducted the internal investigation on behalf of Siemens’s audit committee] truthful and complete information about possible violations of relevant anti-corruption laws would be protected from unilateral employment termination and company claims for damages. The policy that implemented the amnesty program made clear that it was in no way binding on any prosecutors or regulators, including the Department and the SEC, but that Siemens would bring an employee’s cooperation to the attention of such authorities if he or she were the subject of a government investigation.”

“For employees too senior to qualify for the amnesty program, as well as those employees who did not come forward during the amnesty program period, Siemens established a similar leniency program on April 4, 2008. The leniency program provided for individualized leniency determinations for cooperating employees. The creation of these two programs was a unique and effective way to further the investigation and it yielded impressive results. Over 100 employees provided information in connection with the programs, including numerous employees who previously provided incomplete or less than truthful information and employees who had not come forward previously.”

“Shortly after the amnesty program began, the Department and the SEC identified various individuals and projects for more extensive debriefings by Siemens, referred to by the parties as ‘deep dives.’ The amnesty and leniency programs were vital to obtaining the types of detailed information needed for the deep dives. These deep dive sessions greatly enhanced the Department’s ability to evaluate the overall case, properly target its limited resources, and develop the evidence necessary to bring the charges here.”

Friday Roundup

Credit when credit is due, no fear despite fear based marketing, a further Section 1504 development, and individual prosecutions in Canada, it’s all here in the Friday roundup.

Credit When Credit is Due

In this previous February 2012 post, I called out the DOJ for its deficient and misleading FCPA website in that the website did not inform the public of the DOJ’s setbacks in the Africa Sting cases, the O’Shea case, the Wooh case and the Lindsey Manufacturing cases.  I ended the post by saying that the DOJ’s FCPA website ought to be improved and ought to keep citizens informed of all FCPA developments – not just those that cast the DOJ in a favorable light.

I am happy to dole out credit when credit is due and can now report that Wooh’s entry (here), O’Shea’s entry (here), the Lindsey related entry (here) and the numerous Africa Sting related entries have all been updated to reflect the final disposition of those cases.

Few Companies Concerned About the U.K. Bribery Act

Despite marketing campaigns that were often based on fear and overblown rhetoric, one year into the U.K. Bribery Act few companies have changed their compliance programs as a result and even fewer are concerned about an enforcement action being brought against their organization, according to this recent poll by Deloitte Financial Advisory Services.  Specifically 24% of respondents answered “yes” to the following question – “in July 2012, one year after the UK Bribery Act enforcement began, will your company have changed its anti-corruption program to comply” and 9% answered “yes” to the following question – “one year after UK Bribery Act enforcement began, is your company concerned about a UK action being brought against your organization.”

That is pretty much what I predicted in this January 3, 2011 post that states as follows – “I don’t see how companies already subject to the FCPA and already thinking about compliance in a pro-active manner, have much to worry about when it comes to the U.K. Bribery Act …”.

Even so, the silly marketing continues as evidenced by this post “Don’t Be Lulled by a Dearth of UK Bribery Act Convictions” which begins as follows.  “Be warned that the UK Bribery Act is considered to be the world’s most restrictive and far-reaching anti-corruption law to date. This measure differs in many key aspects from the US Foreign Corrupt Practices Act.”

A Further Section 1504 Development

This recent post provided an update on Section 1504 of Dodd-Frank, the so-called Resource Extraction Issuer Disclosure Provisions, an ill-conceived “miscellaneous provision” tucked into Dodd-Frank at the last minute that will substantially increase compliance costs and headaches for numerous companies that already have extensive FCPA compliance policies and procedures by further requiring disclosure of perfectly legal and legitimate payments to foreign governments.

In a further update, last week several House members wrote to SEC Chairman Mary Schapiro “regarding the status of the long-delayed final rule making.”  In the letter, the House members state that the Commission “has had more than enough time to consider and respond to all of the substantive comments from industry, civil society, investors and others” and that the “issue is too serious to allow further delay.”

Canada Prosecutions

Recent media articles (see here from the Globe and Mail and here from the Canadian Press) report that “two former executives of SNC-Lavalin Group Inc. have been charged with corrupting foreign officials” under Canada’s FCPA-like law, the Corruption of Foreign Public Officials Act.  Ramesh Shah (a former Vice President) and Mohammad Ismail (a former Director of  International Projects) allegedly “offered payment to secure contracts for supervision and construction of the Padma Bridge and an elevated expressway in Dhaka, Bangladesh.”


A good weekend to all.

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