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In Pursuit of a Level Playing Field: FCPA andthe Global Anti-Corruption Movement

Ronald E. Wood, Moderator, ProskauerRose

Andrew Levine, Debevoise & Plimpton

Paula Anderson, Shearman & Sterling

March 26, 2014

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Learning Objectives

• (1) Scenarios that have led to enforcement action

• (2) Factors that help identify and mitigate risk

• (3) Cases that help define scope of FCPA reach

• (4) Foreign anti-corruption efforts

• (5) Factors favoring cooperation

• (6) Possible consequences of not cooperating

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What is the FCPA?

FCPA Background

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- Enacted in 1977

- Objectives- Combat bribery overseas- Ensure accurate books and records and

financial reporting at home

- Prohibits bribery of foreign officials

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Why the FCPA should matter to you

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Strong likelihood that some aspect of yourbusiness may be exposed to FCPA risk

• Due diligence is critical- Use of foreign agents/third

parties

- Total S.A.

- Eli Lilly

- Fund raising

- Liaisons to sources ofcapital/finders

- Government officials

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Strong likelihood that some aspect of yourbusiness may be exposed to FCPA risk

• Licensing/obtaining permits

- Local authorities

- State/province levelofficials

• Investing in/managing anoperating business

• Gifts, travel, andentertainment- Diebold

- Weatherford Int’l

- Eli Lilly

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Gift-Giving• Even small gifts can constitute an

FCPA violation if there is corruptintent

• “Corrupt intent” = “an intent or desireto wrongfully influence the recipient”

• Nominal gifts related to productpromotion or demonstration couldqualify as a “business promotion”expense

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FCPA is an enforcement priority for SEC andDOJ

• Past 10 years: moreaggressive enforcement ofanti-bribery provisionsworldwide

• Direct Access Partners

• Kozeny/Bourke

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Other lessons in compliance

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A Helpful Tool: FCPA Resource Guide

• Can be downloaded forfree from SEC or DOJwebsite

• Contains Hallmarks ofEffective CompliancePrograms (p. 57)

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Morgan Stanley’s ComplianceProgram

• Updated internal policies regularly toreflect regulatory developments

• Frequently trained employees

• Monitored and regularly auditedtransactions, employees, businessunits

• Due diligence on all new businesspartners

• Strict controls on payments made tobusiness partners

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Example of Cooperation: Parker Drilling

• Accused of bribery in Nigeria,but cooperated with DOJ andSEC, conducted an “extensiveinternal investigation,” andenhanced its complianceprogram

• DOJ took two points off Parker’soverall culpability score due tothe company’s cooperation

• Also got a 20% reduction off thebottom of penalty range due inpart to cooperation andremediation

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Need to Self-Report: Bilfinger

• Accused of bribingNigerian officials indeveloping a utilities jointventure

• Did not self-report; its jointventure partner voluntarilydisclosed the violations

• Penalty of $32.3 millionwas within (rather thanbelow) sentencingguidelines

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FCPA Dos and Don’ts

DO:

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• Maintain an active and comprehensive

compliance program.

• Upon finding any FCPA violations, consider

self-reporting to the DOJ and SEC.

• Continue to cooperate with the DOJ and SEC

throughout any investigation.

• Conduct remediation as soon as possible in the

wake of an FCPA violation.

DON’T:

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• Rely on unsubstantiated assurances that third

party transactions are legitimate.

• Assume that it’s safe to bribe a particular

person because he or she may not be a foreign

official.

• Assume that small tokens, such as cigarettes

or bottles of wine, are not improper gifts.

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In Pursuit of a Level Playing Field: FCPA andthe Global Anti-Corruption Movement

Ronald E. Wood, Moderator, ProskauerRose

Andrew Levine, Debevoise & Plimpton

Paula Anderson, Shearman & Sterling

March 26, 2014

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