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COVID-19 took the world by surprise and continues to spread across the globe in more than 210 countries and counting.  The outbreak in the United States escalated rapidly, with over 585,000 confirmed cases as of April 14, 2020.  The federal government and a number of hard-hit states were caught off guard, and soon learned that their inventories of personal protective equipment (“PPE”) and other life-saving equipment such as test kits and ventilators were insufficient to keep pace with the pandemic.  The demand for equipment to fight COVID-19 skyrocketed and government and commercial entities have shifted into high gear to respond.  Whether motivated by humanitarian concern or commercial enterprise, many state and local governments, companies and individuals are now looking abroad to procure critical supplies on an expedited basis.  At the same time, many foreign industrial manufacturers are positioning themselves for the high demand of exports by adapting their facilities to produce PPE.  For example, Chinese electric car maker BYD announced on March 13, 2020 it is now the largest face mask factory in the world—less than one month after converting its facilities in response to the pandemic.  In the midst of these exigent circumstances, the global supply chain landscape is replete with Foreign Corrupt Practices Act landmines—and well-intentioned companies hoping to partner with foreign PPE manufacturers could become a casualty if they don’t watch their step.
Continue Reading FCPA Landmines Beneath the Surface of the COVID-19 Crisis

The C-Suite rarely wants to consider, much less worry about, the impacts of criminal conduct on their business. The reality is, however, companies can and do get pulled into criminal and quasi-criminal enforcement actions as both victims and (albeit unintentional) perpetrators. Two areas of criminal conduct that perhaps do not receive the amount of C-Suite attention they deserve are internal trade secret theft and human trafficking.
Continue Reading How to Prevent or Defend Against Business Crimes, including Trade Secrets and Human Trafficking

Deputy Attorney General Rod J. Rosenstein recently announced a revision to the U.S. Department of Justice (“DOJ”) policy on corporate enforcement of the Foreign Corrupt Practices Act (“FCPA”). The revision codifies a pilot program established during the Obama administration, which allows some companies that voluntarily disclose possible violations of the FCPA to avoid criminal prosecution. The new Corporate Enforcement Policy will be codified in the U.S. Attorney’s Manual. These announcements came during Mr. Rosenstein’s speech at the 34th International Conference on the FCPA, on November 29, 2017. Mr. Rosenstein’s overall theme was that global corruption negatively impacts business, society, and governments, and he asked corporate America to help fight corruption through compliance programs, as a matter of American safety and security.
Continue Reading Presumption of Declination with Voluntary Disclosure, Cooperation, and Remediation of FCPA Violations

Along with the anti-bribery provisions, the U.S. Foreign Corrupt Practices Act (“FCPA”) contains accounting provisions that apply to publicly traded companies. These provisions require that companies maintain and adhere to internal policies that manage risk and ensure that accurate financial records are maintained. There is no bribery requirement for there to be a violation of these provisions. There is also no foreign conduct requirement. All that is required is that a company have a policy in-place and circumvent that policy to obtain some business advantage (no matter how small). The Securities and Exchange Commission (“SEC”) often initiates investigations based on allegations of foreign bribery, but resorts to the accounting provisions when the alleged bribe cannot be proven (because an internal policy violation can almost always be found and the SEC does not want a company to get off scot-free).
Continue Reading FCPA Accounting Provisions Have Teeth: Halliburton to Pay $29.2 Million to Settle FCPA Charges

As its name implies, the U.S. Foreign Corrupt Practices Act (“FCPA”) was designed to prevent U.S. companies from engaging in foreign bribery. The Department of Justice (“DOJ”) and the Securities Exchange Commission (“SEC”), the U.S. Government agencies charged with enforcing the FCPA, have made great use of the FCPA in this regard. They have secured more than $5 billion in settlements over the past five years. This success has resulted in more expansive views of the FCPA’s reach and innovative arguments to find liability when the alleged misconduct occurred entirely within the U.S. The apparent preference for the FCPA in these situations over other potentially applicable laws is likely due to the ease with which an FCPA violation may be proven. An internal policy violation is all that is needed.
Continue Reading Whatever Happened to the FCPA’s Foreign Conduct Requirement – How the FCPA is Being Used to Police Domestic Conduct and Internal Policy Violations

Brazilian aircraft manufacturer Embraer SA (“Embraer”) will pay the United States government $205 million to settle allegations that the company violated the Foreign Corrupt Practices Act (“FCPA”) by paying millions in bribes and falsifying accounting records.  The United States government asserted that Embraer bribed government officials within the Dominican Republic, Saudi Arabia, and Mozambique with millions of dollars to win government aircraft contracts. The government also alleged Embraer paid millions in falsely recorded payments in India through a fraudulent agency agreement.
Continue Reading Embraer’s FCPA Deferred Prosecution Agreement and $205 Million Payment Demonstrate Need for Adequate Internal Controls

The private equity industry is facing increased scrutiny by the U.S. Government for potential violations of the Foreign Corrupt Practices Act (“FCPA”).  The Securities and Exchange Commission (“SEC”) has created a new private fund unit and publicly asserted that it is more closely examining the operations of private equity funds and their portfolio companies.  As with all SEC units, the private fund unit works in conjunction with the U.S. Department of Justice (“DOJ”) criminal and civil fraud divisions.  This increased attention will lead to more investigations, and has enhanced the need for robust FCPA compliance by private equity funds.
Continue Reading U.S. Targets Private Equity Funds for FCPA Scrutiny

This article originally appeared in the June 24, 2015 edition of Corporate Counsel and is reprinted with permission. © 2015 ALM Media Properties, LLC.

On December 17, 2014, President Barack Obama announced a set of diplomatic and economic changes aimed at normalizing relations between the United States and Cuba after nearly 55 years of barriers between the two countries. Obama stated that diplomatic relations would be re-established with Cuba, and on May 29 his administration removed Cuba from the U.S. list of state sponsors of terrorism. New regulations issued by the U.S. Department of Treasury and U.S. Department of Commerce on January 16, 2015, allow certain U.S. exports of telecommunications, construction materials and farming equipment, and allow U.S. banking transactions in Cuba.
Continue Reading The FCPA Challenges of Doing Business in Cuba

On June 16, 2015, IAP Worldwide Services Inc., a private defense and government contracting company, agreed to pay $7.1 million to settle criminal charges under the U.S. Foreign Corrupt Practices Act (“FCPA”) related to bribing Kuwaiti government officials to secure a Kuwaiti government contract. On the same day, James Michael Rama, IAP’s former Vice President of Special Projects and Programs, also pleaded guilty to FCPA charges. For U.S. Government contractors, the opportunities to provide services and expertise to foreign governments are lucrative, but this enforcement action also highlights the risks associated with obtaining such contracts.
Continue Reading Government Contracting Abroad: Beware Compliance Risks

In 2011, the Department of Justice (“DOJ”) stated that “[i]t’s not necessarily the wisest move for a company” to challenge the definition of “foreign official” under the Foreign Corrupt Practices Act (“FCPA”), and that “[q]uibbling over the percentage ownership or control of a company is not going to be particularly helpful as a defense.”[1] The DOJ’s prophecy rang true in the Eleventh Circuit’s recent decision in U.S. v. Esquenazi, 2014 U.S. App. LEXIS 9096 (11th Cir. 2014).
Continue Reading DOJ’s FCPA Enforcement Power Gets A Big Boost

The SEC awarded more than $14 million to a whistleblower earlier this month in exchange for information that helped the SEC bring an enforcement action against the perpetrators of an investment fraud in less than six months after receipt of the whistleblower’s tip. [1] The award is the largest made by the SEC since the Office of the Whistleblower was set up in 2011 under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. According to SEC Chair Mary Jo White, the hope is that “an award like this will encourage more individuals to come forward.”
Continue Reading SEC Awards $14 Million to Whistleblower