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- US DOJ indicts eight former Siemens executives as US SEC charges seven, in continuation of long-running FCPA enforcement action.
A Swiss subsidiary of Alstom SA, the French engineering giant, agreed last week to settle corruption-related charges with Swiss authorities and pay a total sanction of USD $42.7 million. According to an Office of the Attorney General (OAG) press release, Alstom Network Schweiz AF has been convicted of not having taken all necessary and reasonable organizational precautions to prevent bribery of foreign public officials in Latvia, Tunisia and Malaysia. Key to the OAG action was the finding that "the use of agents, particularly on the basis of success fees, in countries with a high level of corruption (cf. corruption index of Transparency International) bears a considerable risk of criminal prosecution for the companies." For in-house counsel and compliance professionals, the Alstom settlement offers a number of practice pointers:
- This action confirms Switzerland's standing as having one of the most active anti-corruption enforcement programs among OECD countries. According to Transparency International's Progress Report 2011: Enforcement of the OECD Anti-Bribery Convention, 7 of the 38 signatory countries have "active enforcement," with Switzerland among the 7 most active. Companies with operations implicating Swiss jurisdiction must remain mindful of the active Swiss anti-corruption program, and confirm that compliance controls are sufficient.
- The investigation involved 15 countries and the Swiss government submitted numerous requests for mutual legal assistance to foreign criminal prosecution authorities. This confirms the recent trend in which anti-corruption investigations involve extensive cooperation among law enforcement authorities from different countries.
- The OAG press release commented that "the group had implemented a Compliance policy that was suitable in principle, but that it had not enforced it with the necessary persistence." Thus, the OAG looked to the actual implementation of Alstom's compliance policy, in addition to the content of the policy itself, and found the implementation was lacking.
- The conduct in question involved consultants engaged by Alstom with consultancy agreements using success fees, portions of which were then passed to foreign government officials. The OAG press release states, "Only by extensive efforts in compliance and by rigorously enforcing and controlling the accordingly strict internal policy may this risk of criminal prosecution be reduced to an extent that is in accordance with the law." This highlights once again the risks associated with third parties and the need to impose appropriate compliance controls on relationships with third parties.
Alstom SA issued its own press release on the matter.
- On Tuesday, the Department of Justice announced that it will offer "detailed new guidance on the [US FCPA's] criminal and civil enforcement provisions" in 2012. In the same conference keynote address, Assistant Attorney General for the Criminal Division Lanny Breuer spoke about a number of additional aspects of the US approach to anti-corruption issues, including recent enforcement initiatives, efforts at multilateral collaboration and DOJ actions to seize the proceeds of foreign officials engaged in corruption. The full text of Breuer's remarks may be found here. The concept of DOJ-issued guidance is not a new one. Indeed, as part of FCPA amendments in 1988, the DOJ was required to consider whether guidance would be helpful. After a public notice and comment process, the DOJ in 1990 declined to issue guidance. See here for a 2010 blog posting on this issue. The idea gained renewed traction in the US following passage of the UK Bribery Act, which includes a provision requiring the UK Ministry of Justice to issue guidance on compliance procedures, and during recent debate about potential amendments to the FCPA. At the moment, there is no further word on what exactly the DOJ's "detailed new guidance" will address, nor is there word on whether the process of developing the guidance will be subject to public commentary. For in-house counsel, it would be most helpful to have the DOJ's specific views on the following subjects: (1) the scope of the affirmative defense for promotional expenses, such as meals, token gifts, business entertainment and travel; (2) when employees of state-owned, state-controlled or state-involved enterprises qualify as "foreign officials;" (3) the territorial contacts sufficient to trigger US jurisdiction over "persons other than issuers or domestic concerns;" and, (4) whether and when the statute's expressly-listed examples of "facilitating and expediting payments" qualify for the exception. There is certain to be extensive discussion about the guidance, and we will keep you posted on progress as it unfolds.
Japanese giant Bridgestone Corp. pleads guilty to FCPA and Sherman Act violations, paying $28 million fine.
- The SEC charged Diageo PLC, one of the worlds largest producers of premium alcoholic beverages, with widespread FCPA violations for more than six years of actions in India, Thailand, and South Korea.
- Armor Holdings Inc. settles FCPA enforcement action with DOJ and SEC for a total of $16 million, including non-prosecution agreement with DOJ.
- Daniel P. Stipano to discuss "High standards: Best practices for banking marijuana-related businesses" at the ACAMS AML & Anti-Financial Crime Conference
- Daniel P. Stipano to discuss "Wait wait ... do tell me! Where the panelists answer to you" at the ACAMS AML & Anti-Financial Crime Conference
- Matthew P. Previn and Walter E. Zalenski to discuss "Is valid when made ... valid?" at the Women in Housing & Finance Partner Series webinar
- Warren W. Traiger and Caroline K. Eisner to discuss "CRA modernization and the OCC final rule" at CBA Live
- Daniel R. Alonso to discuss "Transnational corruption: A chat with former U.S. federal prosecutors in New York" at Marval Live Talks
- Sherry-Maria Safchuk and Lauren Frank to discuss "New CFPB interpretation on UDAAP" at a California Mortgage Bankers Association Mortgage Quality and Compliance Committee webinar
- Thomas A. Sporkin to discuss "Managing internal investigations and advanced government defense" at the Securities Enforcement Forum
- H Joshua Kotin to discuss "Mortgage servicing in a recession: Early intervention, loss mitigation and more" at the NAFCU Virtual Regulatory Compliance Seminar
- Daniel R. Alonso to discuss "Independent monitoring in the United States" at the World Compliance Association Peru Chapter IV International Conference on Compliance and the Fight Against Corruption
- Jonice Gray Tucker to discuss "The future of fair lending" at the Mortgage Bankers Association Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Regulatory Compliance Conference
- Kathryn L. Ryan to discuss "Pandemic fallout – Navigating practical operational challenges" at the Mortgage Bankers Association Regulatory Compliance Conference
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute