Friday FCPA Roundup for Week Ending June 13

Friday FCPA Roundup for Week Ending June 13

 This article was reprinted with permission from FCPA Professor

Elevate your FCPA knowledge and practical skills, FCPA ripples, origins of PetroTiger’s FCPA scrutiny, news flash, and for the reading stack.  It’s all here in the Friday Roundup.

Elevate Your FCPA Knowledge and Practical Skills

Join lawyers and other in-house counsel and compliance professionals from around the country – indeed the world –  already registered for the inaugural FCPA Institute July 16-17th in Milwaukee, Wisconsin.  The FCPA Institute is a unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills.  FCPA Institute participants will have their knowledge assessed and upon successful completion of a written assessment tool can earn a certificate of completion. In this way, successful completion of the FCPA Institute represents a value-added credential for professional development.

To register see here.

FCPA Ripples

An obvious reason to comply with the Foreign Corrupt Practices Act is that non-compliance can expose a company to a criminal or civil FCPA enforcement action by the Department of Justice and/or the Securities and Exchange Commission.   However, settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement in this new era.

I will be discussing this issue and others during a free webinar on June 17th titled “The Ripple Effect:  Understanding Financial and Business Consequences of FCPA Scrutiny and Enforcement.”  The webinar is hosted by Hiperos and you can register here.

Origins of PetroTiger’s FCPA Scrutiny

An interesting article here from Wall Street Journal Risk & Compliance Journal regarding the origins of the FCPA enforcement action against various PetroTiger executives.   The article highlights the $85 million private equity investment of Alberta Investment Management Corp.’s (“Aimco”) in PetroTiger in the hopes of greater returns in an emerging market.

Although the article suggests that the alleged improper conduct was discovered by Aimco, the article states:

“In hindsight, despite extensive due diligence prior to the investment, [an Aimco representative] says he should have taken a harder look at company expenses immediately after the purchase. Had he reviewed every invoice in the months following the investment, [an Aimco representatives] says Aimco would likely have discovered the issue sooner. ‘PetroTiger didn’t have the controls of a bigger company and we should have been more sensitive to the higher risk’ [an Aimco representative] said.”

Perhaps not a clear parallel to U.S. v. Bourke, but it is hard not to think of Bourke while reading the article.  As highlighted here, in Bourkethe Second Circuit held that Bourke enabled himself to participate in a bribery scheme without acquiring actual knowledge of the specific conduct at issue and that such conscious avoidance, even if supported primarily by circumstantial evidence, is sufficient to warrant an FCPA-related charges.

As noted in the prior post, the message to international investors should be clear: if a potential investment results in sleepless nights and fear of asking specific direct questions because of the answers you might receive, there is probably better uses for your money.

News Flash

The media is often quick to pounce on instances of FCPA scrutiny involving companies.  Many of the articles seem to advance the “good companies don’t bribe period” fallacy (see here for the prior post).

I am glad that the media now recognizes that it is not that simple.  This recent article in the Press Gazette concerning recent comments by the BBC’s legal chief caught my eye.

In the article, the individual states as follows:

“In the newsgathering sense, what this means [complying with bribery and corruption laws] is that it can be very difficult to operate in many parts of the world.

“If you’re a reporter, for example, in a place like Kenya, you turn up at the border, you have got all your visas, you try to get to Somalia, and a border official says to you ‘Well, I am terribly sorry, you can’t bring your camera – you have one of two options, you can either go back to Nairobi and that’ll take three days, to get another pass which you urgently need, or perhaps I might be able to help you if you give me 25 dollars’.

“What is the reporter supposed to do?

“Around the world people in newsgathering are being put in a position where they are being asked to make quite difficult decisions.”

My interest in the above article was mostly a result of this prior post concerning News Corp.’s scrutiny and the suggestion by some that because the commodity of news organizations is information, and because that commodity is processed into news, that somehow the First Amendment or some perceived public interest insulates news organizations from bribery and corruption scrutiny.

Making improper payments to secure a commodity (whether it is oil or information) should be treated the same.   As to any perceived public interest, sure there is a public interest in the news, but then again there is also a public interest in having oil and gas or a public interest (as relevant to the pharmaceutical industry) of providing medicine and other medical devices to those who need them.

Reading Stack

This Reuters article regarding the escalating criminal fines against banks notes:

“In the past two years the U.S. Justice Department has said it’s broken records on penalties for corporate misconduct at least seven times, including three times this year alone.”

“The numbers are going up because they can,” one former prosecutor said.”

 Some lawyers representing major banks said they viewed the escalating penalties as essentially exploiting defendants who usually don’t fight back in court. ”Lots of sophisticated observers view these as extortion at this point,” said one bank lawyer.”

For a discussion of similar issues in FCPA enforcement actions, see here for the prior post.

*****

A good weekend to all.

 Read more articles on the FCPA by Mike Koehler at FCPA Professor.

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