Search

Editors

Richard L. Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Elizabeth K. Spahn Editor Emeritus

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

Wednesday
Aug152007

A Few Words About US . . .


Keeping Tabs on the FCPA

SINGAPORE--LAWFUEL - The Law Newswire – August 14, 2007 – Lawyers, business people, academics and others have a new way to follow developments in the Foreign Corrupt Practices Act. The FCPA Blog, launched earlier this month, describes itself as “News and Views About The United States Foreign Corrupt Practices Act.”

One of the most talked about United States laws, the Foreign Corrupt Practices Act prohibits bribing foreign officials to obtain or retain work. Violators can pay fines and penalties reaching tens of millions of dollars, and serve up to five years in prison.

Interest in the FCPA is likely to intensify. The U.S. Department of Justice recently said it will step up enforcement. More cases of bribery are being reported worldwide, especially in the oil and gas and communications industries.

The FCPA Blog is the product of attorneys from Cassin Law LLC, an American law firm with an international practice. Through the firm’s compliance work, it handles FCPA matters for U.S. and foreign companies that are subject to the law.

“We want to help companies and individuals comply with the FCPA ,” said Richard L. Cassin, one of the lawyers responsible for the blog. “It’s always important to have current information. And we talk about the evergreen issues– those FCPA areas that general counsels and compliance officers deal with every day.”

View the News Release Here.

Tuesday
Aug142007

Hospitality, FCPA Style

The FCPA's promotional expenses affirmative defense is used as a basis to pay for overseas trips by foreign officials. It allows payment or reimbursement of expenses that are directly related to “the promotion, demonstration, or explanation of products or services." 15 U.S.C. §§ 78dd-1(c)(2)(A) and 78dd-2(c)(2)(A).

The Department of Justice’s Opinion Procedure Release 07-01 (July 24, 2007) mentioned earlier is the latest word on the subject. To fit snugly within the affirmative defense, the requestor included representations that are themselves accreted from prior Releases.

The requestor represented, among other things, that:

· it does not currently conduct operations in the foreign country or with the foreign government, although it is interested in pursuing such opportunities in the future;

· it has obtained written assurance, a copy of which has been provided to the Department of Justice, from an established law firm with offices in both the U.S. and the foreign country that the requestor's sponsorship of the visit and its payment of the expenses described in the request is not contrary to the law of the foreign country;

· it did not select the delegates who will participate in the visit; rather, the foreign government selected the delegates;

· to the requestor's knowledge, the delegates have no direct authority over decisions relating to potential contracts or licenses necessary for operating in the foreign country;

· it will host only officials working for the relevant foreign ministries and one private government consultant;

· it intends to pay all costs directly to the providers; no funds will be paid directly to the foreign government or the delegates;

· it will not pay any expenses for spouses, family, or other guests of the officials;

· any souvenirs that the requestor may provide to the delegates would reflect the requestor's name and/or logo and would be of nominal value;

· apart from meals and receptions connected to meetings, speakers, or events the requestor is planning for the officials, it will not fund, organize, or host any entertainment or leisure activities for the officials, nor will it provide the officials with any stipend or spending money; and

· all costs and expenses incurred by the requestor in connection with the visit will be properly and accurately recorded in the requestor's books and records.

Requestors typically present ultra-safe scenarios, as in the case here.

Which will leave would-be hosts of foreign officials wondering if they can really follow the de facto guidelines without offending their guests.

View Opinion Procedure Release 07-01 here.

Monday
Aug132007

The Facilitating Payments Exception is a Narrow Gate

There are strict requirements for Facilitating Payments -- the one exception written into the FCPA. Among other things, the payment must be for “routine governmental action . . . which is ordinarily and commonly performed by a foreign official." See 15 U.S.C. §§78dd-1 (b) and (f) (3) [Section 30A of the Securities & Exchange Act of 1934].

The clear implication is that the exception will not apply if there was no legitimate routine governmental action pending and for which the payment or any part of it was made. A governmental action obtained or sought to be obtained by subornation of the official’s duty probably is not an action “ordinarily and commonly performed by a foreign official” and therefore is outside the scope of the exception.

For example, paying a customs clerk to schedule an inspection of goods already in the customs queue may be permissible. But paying a customs clerk to jump the queue, or paying for positive inspection results, may be outside the exception.

The question is whether the payment relates purely to “routine governmental action . . . which is ordinarily and commonly performed by a foreign official."

Any time an official is asked to do something more – something beyond the scope of his or her normal discretion, the Facilitating Payments exception is unlikely to apply.

Sunday
Aug122007

Does ABB Have an Effective Compliance Program?

Zurich, Switzerland-based engineering giant ABB Ltd's Q2 earnings release contained the following item:

On July 13, 2007, ABB disclosed to the U.S. Department of Justice and the U.S. Securities and Exchange Commission suspect payments made by employees of company subsidiaries in Asia, South America and Europe, in particular Italy. These suspect payments were discovered as a result of ABB's internal audit and compliance program. The payments may be in violation of the Foreign Companies (sic) Practices Act or other applicable laws. If ABB is found to have violated any of these laws, the company could be liable for penalties and other costs and the violations could otherwise negatively impact its business. ABB is cooperating on these issues with the relevant authorities and is continuing its internal investigations and compliance reviews.

In July 2004, ABB and two subsidiaries disgorged $5.9 million and paid a $10.5 million penalty for FCPA violations involving Nigeria, Angola and Kazakhstan.

That same month, ABB said:

ABB has undertaken an extensive compliance review of its upstream business . . . in full cooperation with the DoJ and the SEC. As part of the agreement with the U.S. authorities, both ABB and the upstream business will adopt enhanced compliance procedures intended to detect and prevent future violation of laws related to improper payments. (emphasis added)

Whether ABB has had an "effective compliance program" since 2004 is likely to be an issue now that new potential violations have been found.

ABB's American Depositary Shares trade on the New York Stock Exchange under the symbol: ABB.


View ABB's July 26, 2007 Earnings Release here.

View the SEC's July 6, 2004 Litigation Release here.

View ABB's July 7, 2004 News Release here.

Thursday
Aug092007

Question: Why Do Bribes to Reduce Foreign Taxes Violate the FCPA?

The answer, from the United States Court of Appeals for the Fifth Circuit, is this:

[T]he concern of Congress with the immorality, inefficiency, and unethical character of bribery presumably does not vanish simply because the tainted payments are intended to secure a favorable decision less significant than winning a contract bid. Obviously, a commercial concern that bribes a foreign government official to award a construction, supply, or services contract violates the statute. Yet, there is little difference between this example and that of a corporation’s lawfully obtaining a contract from an honest official or agency by submitting the lowest bid, and —— either before or after doing so —— bribing a different government official to reduce taxes and thereby ensure that the under-bid venture is nevertheless profitable. Avoiding or lowering taxes reduces operating costs and thus increases profit margins, thereby freeing up funds that the business is otherwise legally obligated to expend. And this, in turn, enables it to take any number of actions to the disadvantage of competitors. Bribing foreign officials to lower taxes and customs duties certainly can provide an unfair advantage over competitors and thereby be of assistance to the payor in obtaining or retaining business.

From U.S. v. David Kay and Douglas Murphy (February 4, 2004) at page 21.


View the Fifth Circuit's Opinion here.

Wednesday
Aug082007

U.S. Anticorruption Laws Reach Everywhere

SINGAPORE--LAWFUEL - The Law Newswire – August 2, 2007 – Companies located anywhere in the world whose shares are traded on a U.S. stock exchange are subject to the United States Foreign Corrupt Practices Act. The FCPA, as it is known, makes it illegal to bribe foreign public officials in order to obtain or retain business or gain any unfair advantage.

“Most business people are shocked by the reach of the FCPA,” said Richard L. Cassin, an American lawyer with the Singapore-based international law firm, Cassin Law LLC. “The FCPA even criminalizes behavior between two non-U.S. persons who are acting entirely outside the borders of the United States. That’s unusual and alarming by any standard.”

For example, explains Cassin, the FCPA applies directly to more than 440 non-U.S. companies whose shares are registered on either the New York Stock Exchange or the NASDAQ. Another 600 or so have shares registered on the OTC and may be subject to the FCPA.

An FCPA offense can inflict permanent reputational damage and lead to fines of tens of millions of dollars. Shareholders, directors, officers, employees and agents who violate the FCPA face up to five years in prison.

View the News Release Here.

Tuesday
Aug072007

Nigerian Problems Trigger Another FCPA Investigation

The Houston Chronicle reports that Nabors Industries is conducting an internal investigation in response to a federal investigation into possible violations of the Foreign Corrupt Practices Act. The article says,

The Justice Department is investigating alleged Foreign Corrupt Practices Act violations by oil-service companies that used Panalpina [a Swiss based freight forwarder] and other brokers in Nigeria and other parts of the world, the company said.

In addition to Nabors, similar investigations into Nigerian operations have been announced by Transocean, GlobalSantaFe Corp., Noble Corp., Tidewater and Global Industries, among others.


View the Houston Chronicle Article here.

Tuesday
Aug072007

Fallout Continues From Schnitzer Steel Industries' FCPA Violations

The Securities and Exchange Commission announced in late June 2007 that it charged a former executive of Portland, Oregon-based Schnitzer Steel Industries, Inc. with violating the anti-bribery provisions of the FCPA. Si Chan Wooh of Tacoma, Washington, the former Executive Vice President and head of a Schnitzer subsidiary, agreed to pay approximately $40,000 in disgorgement, interest and penalties.

The complaint alleged that from at least 1999 through 2004, Wooh paid over $200,000 in cash bribes and other gifts to managers of government-owned steel mills in China to induce them to purchase scrap metal from Schnitzer. Schnitzer realized over $6.2 million in profits from sales to customers procured through these illicit payments. During the same period, Wooh made or authorized similar payments totaling over $1.7 million to managers of privately owned steel mills in both China and South Korea.

Without admitting or denying the charges, Wooh agreed to disgorge $14,819.38 in bonuses plus prejudgment interest of $1,312.52, to pay a $25,000 civil penalty, and to an order enjoining him from violations of the FCPA in the future.

In October 2006, Schnitzer settled related charges by the Commission by paying $7.7 million in disgorgement. Schnitzer also paid $7.5 million in penalties to settle related criminal charges brought by the U.S. Department of Justice.

View the SEC's Press Release here.

View the SEC's Complaint here.

View the October 2006 Schnitzer Cease and Desist here.

Tuesday
Aug072007

Former Willbros Executive Charged with FCPA Violations

The U.S. Department of Justice announced on July 23, 2007 the indictment in Houston of a former executive of a subsidiary of Houston-based Willbros Group Inc. He is charged with conspiring to make corrupt payments to Nigerian officials in violation of the Foreign Corrupt Practices Act.

Jason Edward Steph, 37, a U.S. citizen residing in Kazakhstan, is charged with conspiring to make over $6 million in bribe payments to Nigerian officials in order to obtain and retain gas pipeline construction business from a joint venture majority-owned and controlled by the Nigerian state oil company. He was also charged with money laundering based upon the international transfer of some of the bribe money.

[Added August 9, 2007] Reuters reports that Nigeria's anti-corruption police are trying to determine who allegedly received $6 million in bribes from Steph.

View the Justice Department Press Release here.

View the Reuters Report here.

Tuesday
Aug072007

Guidelines for Promotional Expenses Under FCPA Affirmative Defense

In its first Opinion Procedure Release of 2007, the Department of Justice said it would take no action against a requestor proposing to cover some expenses for a U.S. trip by six officials of an Asian government. The DOJ based its opinion on the requestor's representations, consistent with the FCPA's promotional expenses affirmative defense, that the expenses contemplated are reasonable under the circumstances and directly relate to "the promotion, demonstration, or explanation of [the requestor's] products or services." 15 U.S.C. §§ 78dd-1(c)(2)(A) and 78dd-2(c)(2)(A). The requestor's representations set out in the Release reflect the now familiar guidelines for the promotional expenses affirmative defense as developed in prior Opinion Procedure Releases.


View Opinion Procedure Release No.: 07-01 here.

Tuesday
Aug072007

Delta & Pine Land Company Settles FCPA Charges

 FCPA Violations Disclosed During Monsanto's Pre-Acquisition Due Diligence

July 26, 2007 -- The Securities and Exchange Commission has settled Foreign Corrupt Practices Act enforcement actions against Delta & Pine Land Company, a Mississippi-based cottonseed producer, and its 100% owned subsidiary, Turk Deltapine, Inc. From 2001 to 2006, Turk Deltapine made payments of approximately $43,000 to officials of the Turkish Ministry of Agricultural and Rural Affairs in order to obtain various governmental reports and certifications that were necessary for Turk Deltapine to obtain, retain and operate its business in Turkey.

The improper payments were first discovered by U.S. officers of Delta & Pine in 2004. Instead of stopping the payments, Delta & Pine made arrangements to fund them through a third party supplier in Turkey. The payments violated both the antibribery provisions and the accounting standards. Delta & Pine and Turk Deltapine jointly agreed to pay a $300,000 civil penalty and engage an independent compliance consultant.

Monsanto Company acquired Delta & Pine on June 1, 2007. The payments came to light in connection with Monsanto's pre-acquisition due diligence and were then reported to the SEC. The Department of Justice has not yet indicated whether it will seek criminal enforcement action against Delta & Pine, Turk Deltapine, or any of their respective directors, officers, employees and agents.

View the SEC's Complaint here.

View the Cease and Desist Order here.

57TU6V6D3C4C

 

Page 1 ... 507 508 509 510 511