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Friday Roundup


Listening in, guilty plea, marketing the opaque, and machine learning. It’s all here in the Friday roundup.

Listening In

During a recent investor conference call, Cardinal Health executives were discussing how the company continues to evaluate which countries they should be in because “there’s a lot of hidden cost when you’re in a country.”

Company CEO Michael Kaufmann stated:

“The regulatory cost, statutory audit cost, FCPA risk that you’re in a country and you’re only selling $5 million and maybe making $1 million, but what happens if you have some type of FCPA issue or — and all these other hidden costs that kind of get buried. And so we’re aggressively working our way through which countries do we really need to be in. And so that alone, we’ve taken out some there.”

Guilty Plea

As highlighted in this prior post, in May 2019 the DOJ brought criminal charges against Armengol Alfonso Cevallas Diaz (an Ecuadorian citizen) concerning the same alleged PetroEcuador bribery scheme alleged in a prior enforcement action. Recently, the DOJ announced that Cevallas pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering.

As stated in the DOJ release:

“Cevallos admitted at the plea hearing that, from 2012 through 2015, he conspired with others to pay bribes of $4.4 million to PetroEcuador officials by using the mails and means and instrumentalities of interstate commerce, including U.S.-based companies and U.S.-based bank accounts, in order to obtain and retain business.  Cevallos also admitted that he conspired with others to conceal and promote the bribe scheme by laundering funds through Miami-based shell companies and bank accounts and by purchasing properties in the Miami area for the benefit of certain PetroEcuador officials.  Specifically, as alleged in the indictment, Cevallos admitted that he solicited and intermediated bribe payments from an oil services company for the benefit of PetroEcuador officials, and that he helped launder those bribes and others he had paid to PetroEcuador officials on behalf of Ecuadorian contractors and his own companies.”

Marketing the Opaque

Law firms, I suppose, can market whatever they want to market. Nevertheless, it is sort of odd to market things that are completely opaque. For instance, this recent Covington alert about 2019 FCPA developments states:

“Notwithstanding this vigorous [FCPA] enforcement, companies can weather even a prolonged FCPA investigation. Our team secured five FCPA declinations within the past three months alone for publicly traded multinational clients in the technology, financial services, and life sciences industries. We achieved these results even in investigations that were active for many years and in circumstances where our clients had not made voluntary disclosures. These favorable outcomes turned on our clients’ cooperation, remediation, and empowerment of our team to engage in measured but tenacious advocacy regarding the facts and applicable law.”

Machine Learning

An interesting article here titled “AB InBev Taps Machine Learning to Root Out Corruption.” The article begins:

“For many multinational companies, preventing bribery and corruption involves sending lawyers to far-flung places, holding meetings and web-based surveys, and interviewing uncooperative or uninformed employees. It’s a human process, prone to bias and error. That is why it’s ripe for a more data-driven approach, experts say. The company that appears to be ahead in solving this technological riddle isn’t in the tech sector. In fact, its main product — beer — predates the invention of the wheel. Anheuser-Busch InBev SA, the world’s largest brewer, has spent three years developing machine-learning technology that can identify risky business partners and potentially illegal payments. The analytics platform, BrewRight, draws on data from operations in more than 50 countries, allowing the company to proactively monitor legal risks and prevent violations, instead of focusing on investigating problems after they arise. The platform is designed to get smarter and more effective over time. It has cut hundreds of thousands of dollars in costs associated with investigating suspect payments. It has also placed the company — the brewer of Budweiser, Stella Artois and other beers — at the forefront of corporate anticorruption compliance.”

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