Investigating and Prosecuting Transnational Corruption and ... · Investigating and Prosecuting Transnational Corruption and Bribery November 16, 2016 Kevin Feldis ... •Must provide

Investigating and Prosecuting Transnational Corruption and Bribery

November 16, 2016

Kevin Feldis U.S. Department of Justice Resident Legal Advisor U.S. Embassy, Jakarta

FCPA Overview

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Foreign Bribery Was Made Illegal

in the United States in 1977

Foreign Corrupt

Practices Act

(“FCPA”)

FCPA Overview

Anti-bribery provisions:

• Prohibit payment, offer of payment, or authorization of payment of

bribes, directly or indirectly, to foreign officials, foreign parties,

foreign party officials, and foreign candidates for public office

Accounting provisions:

• Books and Records: make and keep books, records, and accounts,

which, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the issuer; and

• Internal Controls: devise and maintain a system of internal

accounting controls

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FCPA Overview

Criminal and Civil Enforcement

Justice Department - Criminal and civil enforcement authority

• Criminal enforcement authority over issuers, domestic

concerns, and foreign persons and entities (acting within the

territory of the U.S.)

• Civil (anti-bribery) enforcement authority over persons and

non-issuers subject to the FCPA

Securities and Exchange Commission - Civil enforcement authority

• Civil enforcement authority over issuers (and their officers,

employees, etc.) only

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FCPA Overview

“Put simply corruption undermines the promise of democracy.

It imperils development, stability, and faith in our markets.

And it weakens the rule of law.”

− U.S. Attorney General Eric Holder, May 2010

• No matter where or how it happens or what it is

called, bribery has the same corrosive effect:

− Weakened economic development

− Lost confidence in the marketplace

− Imperils political stability

− Unfair and distorted competition

− Undermines U.S. interests abroad

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FCPA Overview

The Foreign Corrupt Practices Act (FCPA)

• Prohibits U.S. and certain foreign persons and companies from:

• Paying or promising to pay anything of value;

• To foreign officials, foreign political parties (or officers

thereof) or candidates for foreign office;

• For the purposes of:

• Influencing any act or decision of the official in his/her

official capacity;

• Inducing the official to take any action or refrain from

taking any action in violation of his/her lawful duty;

• Obtaining any improper advantage; or

• Inducing the official to use his/her influence to affect or

influence any act of a government;

• In order to assist the company in obtaining or retaining

business or directing business to any person.

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FCPA Overview

Anything of Value…

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FCPA Overview

Directly and Indirectly…

• Third party agents or consultants

• Intermediaries

• Hiring a company “owned” by a relative of the officials

• You do not need to know what actually happens to the

money to violate the FCPA

• It makes no difference if the third party agent does not pass a single

penny on to the official

• The FCPA does not require that a corrupt act succeed in its purpose

• “Willful blindness”

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FCPA Overview

To Obtain or Retain Business…

• Payments made for specific contracts

• To secure a successful bid

• To extend an existing contract

• Payments that may indirectly relate to obtaining business

• Payments that “provide an unfair advantage over competitors” –

U.S. v. Kay, 359 F.3d 738, 749 (5th Cir. 2004)

• Examples: Tax benefits, customs clearance

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FCPA Overview

Exceptions and Defenses…

• Exception for Routine Government Action (facilitation payments):

• Small payments to secure, facilitate or expedite routine government action;

• Applies only to government action to which a company is already entitled

without the exercise of discretion by a foreign official;

• Does not apply to small payments to avoid otherwise applicable requirements.

• Affirmative Defenses:

• Reasonable and bona fide expenditures that are directly related to:

• Promotion, demonstration or explanation of products;

• Execution or performance of a contract;

• Testing equipment; training; visiting the plant where product is

manufactured for a demonstration

• Payments, gifts and offers that are legal under the written laws and regulations

of the official’s country 10

The Foreign Corrupt Practices Act

Accounting Provisions

• Public companies must “make and keep books,

records and accounts” which “accurately and fairly

reflect the transactions and dispositions of the assets of

the issuer”

• Public companies must “devise and maintain a system

of internal accounting controls” that provide reasonable

assurances that the transactions are properly

authorized

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FCPA Overview

FCPA Enforcement

• Origins of FCPA Investigations:

• Corporate voluntary self disclosures

• Mergers and acquisitions

• Undercover investigations

• Whistleblowers

• Foreign law enforcement partners

• Tips from U.S. embassies / Anonymous tips

• Pro-active investigations on other matters

• Data analysis (bank records / SARs)

• Media reports

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FCPA Enforcement: Investigative Tools

• Subpoenas

• Search warrants

• MLATs

• Interviews

• Confidential informants

• Cooperating defendants

• Wire taps

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FCPA Enforcement: Cooperation

• Increasing Methods of International Cooperation

• Formal evidence requests by treaty

• Multilateral Organizations (OECD, UNCAC, Eurojust)

• Informal Intelligence Sharing

• Parallel Investigations and Prosecutions

• Division of wrongful conduct / defendants

• Referrals of Investigations

• US referral of entire investigation

• US referral of foreign public officials

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FCPA Voluntary Disclosure Program

• DOJ Pilot Program for Voluntary Disclosures:

• Company must voluntarily self-disclose

• Must provide full cooperation

• Must remediate the harm done

If Voluntary Disclosure requirements are all satisfied:

• Up to 50% penalty fine/reduction

• No post conviction monitoring will be required

• Potential for non-prosecution agreement

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