REMEA Sales Meeting 2011 – Turkey FCPA - Anti-Bribery Training Laurence MOOTZ DOUAY
Dec 25, 2015
REMEA Sales Meeting 2011 – Turkey
FCPA - Anti-Bribery Training
Laurence MOOTZ DOUAY
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The best way to start the day…
A breakfast with Legal !
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• Tell the truth - do your statements reflect reality?
• Act with integrity – was your behavior upright, honest and sincere?
• Keep commitments – did you do what was promised?
• Treat people with dignity and respect – did you preserve other people’s
pride and sense of worth?
• Promote positive relationships – did you work in a way that makes
people want to work with you?
• Protect the environment – did you demonstrate concern for others and
the natural environment?
• Excel – did you set high performance standards for yourself and others?
Steelcase Core Values
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Steelcase Global Business Standards
Global business standards are described in the context of ourresponsibilities to six groups:
1. Each other;
2. Our employees;
3. Our shareholders;
4. Our customers;
5. Our business partners; and
6. Our worldwide communities.
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Why this training?
• Global business standards and core values are one side of this
• Training on FCPA is required by compliance program
• All Steelcase employees potentially face FCPA issues (sales force, procurement, dealer development, management)
• FCPA applies to Steelcase Inc, as it is an American company listed on NYSE
• Other similar rules exist in a number of EMEA geographies where Steelcase operates
• Business practice in a country does not mean it complies with local laws, the Steelcase GBS, and FCPA.
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An Introduction to the U.S. Foreign Corrupt Practices Act (FCPA)
• Passed in the United States in 1977.
• Over 400 U.S. Companies had made “questionable payments” of over $300 million, in the course of pursuing business.
• Brings about greater confidence in the international business of U.S. companies.
• Amended in 1988 and 1998, and remains vigorously enforced today.
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The FCPA Contains Two Primary Provisions:
• The Anti-Bribery Provision
Criminalizes the bribery of foreign officials anywhere in the world where the purpose of the bribe is to influence an official decision in order to obtain business.
• The Accurate Books and Records Provision
Requires companies whose stock is traded on U.S. stock exchanges to meet certain transparency standards regarding their accounting practices, books and records, and internal controls.
The obligation is to maintain accurate books and records, whether or not there is any issue of improper payments.
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FCPA Definitions
• The FCPA anti-bribery provisions make it unlawful to bribe any foreign government official to obtain or retain business
• Bribe may be anything of value : • Cash or cash equivalent• Charitable donations• Travel expenses• Entertainment connected with a particular deal or contract• Gifs in excess of nominal, culturally recognized holiday or customary
event where gifts are appropriate under local laws and customs
• Bribe must be made for the purpose or keeping business, or obtaining a new one
• Broadly understood
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FCPA Definitions
• Foreign government officials are : • Political figures• Governmental officials• Officers, employees and agent of commercial enterprises that are
owned by foreign government (50%) who have discretion over the business (such as decision makers at national airline companies)
• Very broadly understood !
• US companies is very broadly defined to include :• US companies • Their employees• Their subsidiaries• Their agents which include dealers or sub-contractors
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FCPA Definitions
• Some Expenses Are Permitted Under the FCPA: • Obtaining permits, licenses or other official documents to qualify a person
to do business in a foreign country;• Processing governmental papers;• Providing police protection, mail pickup and delivery, or scheduling
inspections associated with contract performance or inspections related to transit of goods;
• Providing phone service, power and water supply, loading and unloading cargo, or protecting perishable products; or
• Actions of a similar nature so long as the official’s decision does not involve whether, or on what terms, to award new business to or to continue business with a particular party.
• Payments should be less than $ 1000 !
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FCPA’s Accurate Books and Records Provision
• The Record-Keeping and Accounting provisions require:
• Books, records and accounts kept in reasonable detail to accurately and fairly reflect transactions and dispositions of assets; and
• Internal accounting controls (such as management authorization of transactions e.g. MAR)
• These provisions apply to:• Any company, or officer, director, employee, agent or stockholder of a
company, whose stocks are traded on US exchange• This provision applies to all affiliates whose financial results appear in the
consolidated financial statements of a “parent company” whose stock is publicly traded, i.e., all Steelcase EMEA companies (France, Morocco, Germany, Spain…)
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Sanctions COMPANY INDIVIDUAL
CRIMINAL Anti bribery (AB): Up to $2,000,000Twice the amount obtained thanks to the bribeBooks and records (BR)Up to $25,000,000
AB : Up to $250,000Up to 5 years imprisonmentBR :Up to $5,000,000Up to 20 years imprisonment
CIVIL AB : Up to $10,000BR : From $50,000 to $100,000 or the gross amount of pecuniary gain, whichever is greater
AB: Up to $10,000BR : Up to $100,000
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Other Consequences of FCPA Violations
• Other consequences, that can be more damaging than the individual and corporate criminal penalties include:
• Damage to business reputation, effect on customer relationship• Monetary sanctions and penalties• No more access to government contracting• Loss of faith in company by stakeholders, such as investors, shareholders, employees and customers• May bring multiple investigations (customs, tax, anti-trust
authorities)
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FCPA Settlements are getting higher !
Siemens $800 KBR/Halliburton $579 BAE $400 ENI $365 Technip $338 Daimler $185 Alcatel-Lucent $137 Panalpina $82 ABB $58 Pride International $56
Siemens $800 KBR/Halliburton $579 Baker Hughes $44 Willbros $32 Chevron $30 Titan $29 Vetco $26 York International $22 Statoil $21 Schnitzer Steel $15
2007 2008 2009 201020062005
Top 10 /2009 Top 10 /2010
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The German industrial giant Siemens has agreed to pay more than $1.3 bn in Germany and the US to settle long-standing corruption charges.
It will pay $800m in the US and 395m euros in Germany.
It was charged in the US with bribery and falsifying its books, while German prosecutors said it had a "lack of control over its business activities".
The US Justice Department described the case as its furthest-reaching foreign corrupt practices trial. (ex: 1bn Euros bribe in 2004 in order to obtain telecommuniation for Athens Olympic Games)
Siemens negotiated to still be able to bid for government contracts.
Total cost to Siemens : €2.5bn (€850m in lawyers and accountants fees)
Siemens in corruption settlement
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BAE to pay $450m to end bribery case
BAE pleaded guilty for producing failed statements and accounting practices related to deals with Saudi Arabia and Tanzania
BAE Systems was on Friday night preparing to plead guilty to criminal charges and pay one of the biggest ever fines over alleged corporate bribery after striking a deal to end transatlantic corruption probes that have entangled it for years. The deal will cost the group almost $450m – most of it in the US – but should prevent it from being barred from government defence contracts in the US and elsewhere that underpin its business. The deal – in Britain’s biggest and most politically contentious corporate corruption case – immediately sparked debate over whether BAE had got off lightly after eight years of investigation in London and Washington. Under the settlement, the first co-ordinated transatlantic deal in a corporate bribery case, BAE has agreed to pay a $400m fine in the US and plead guilty to one charge of conspiring to make false statements to the government in connection with regulatory filings and undertakings.
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What makes your case worse or better?
1. Nature and seriousness of the offense;
2. Existence of wrongdoings in many parts of the business;
3. History of similar misconduct;
4. Timely and voluntary disclosure of wrongdoing and willingness to
cooperate in the investigation;
5. Existence and effectiveness of pre-existing compliance program;
6. Remedial actions, including efforts to implement corporate compliance
program;
7. Collateral consequences, including existence of disproportionate harm to
shareholders;
8. Adequacy of prosecution of individuals responsible;
9. Adequacy of civil or regulatory remedies.
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What about Steelcase’s Partners ?
• The FCPA prohibits payments to third parties such • as architects, designers, dealers, agents, consultants, lobbyists, or
sales representatives, • while “knowing” that all or part of the payment will be given to a
foreign official.
• The “knowing” criteria is easily fulfilled as liability can be based on e.g.• conscious disregard, • willful blindness or • deliberate ignorance of facts • which should cause you to question the situation.
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Our Responsibilities to Our Business Partners
• Due Diligence: Know your partners• Assemble information about the ownership and business background of
architects, designers, dealers, third-party agents, representatives, or
distributors. Confirm with reliable independent sources. • Solicit questionnaire to obtain necessary information, (e.g. questions about
capabilities; office location; affiliations with government officials or their
family members: references).
• Check into our partner’s background:• Country desk officers at local chambers of commerce• Published press reports
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Our Responsibilities to Our Business Partners
• Contractual Safeguards should include language to ensure that a Third
Party:• Is not a foreign official or affiliated or related to a foreign official • Understands and will comply with FCPA and local laws• Has not previously engaged in questionable conduct and will not in the
future
• Should also include procedural measures:• Mandatory provisions such as:
annual compliance certifications; payment restrictions (check/wire only – no cash, no third-party
payees or countries); termination rights
• Suggested provisions such as: notification of change of ownership; no assignments of rights or transferability
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How to determine if you may have an FCPA issue?
• As the FCPA exemption for local law does not work very well : Just don’t
take the risk, if it is feels wrong, don’t do it !• Usually less a legal question than, is this behavior consistent with
Steelcase values and GBS?• You must make your own assessment ! - No monopoly in Grand Rapids
on those judgments • Walk through the hierarchy - Steelcase values – GBS – legal requirements -
if you conclude that it is against the core values or the GBS, then you
don’t need to ask legal, just don’ t do it.
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What do local laws generally say ?
• What is bribery ? : bribing business counterparts or staff with money or
property or other means to influence the sale of goods• Similar criteria as for the FCPA• Key factor is how the payment is accurately recorded in accounting
books, including invoices from the person receiving the payment. • The relationship with such person should be clearly reflected in writing,
Thus the need for written agreements with design firms and other
partners.• The party receiving the payment should have the proper business license
for the service they are providing.• Finally, the amount of the payment should be reasonable given the service
provided.• As for the FCPA, the fact that the acts do not happen in the country,
will not allow individuals to avoid sanctions
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What is the OECD convention?
• OECD Convention to prohibit corruption or bribery of a Foreign Public
Official• Principles similar than FCPA
• Even if the country is not in the list, it is likely that there are anti-bribery
laws in place !
• 38 countries are party to the Convention Argentina Australia Austria Belgium Brazil Bulgaria Canada Chile Czech Republic Denmark Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovakia Republic Estonia Finland France Germany Greece Hungary Iceland Ireland Israel Italy Slovenia South Africa Spain Sweden Switzerland Turkey United Kingdom United States
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Local Anti-Bribery/ FRANCE
• French laws prohibits :
• private corruption (no public officials involved), • private international trading in influence (trafic d‘influence)• corruption of public officials (active or passive)• international trading in influence (trafic d‘influence) (active or
passive)
• An important focus of the French state generally (newspaper)
• Introduction of « whistle blower » clause in the Labour Code.
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Local Anti-Bribery/ FRANCE
• Recent French cases:
India helicopter deal - corruption and irregularities surfaced in a 2007 deal involving
purchase by India of 197 helicopters from Eurocopter worth $600 million ;
India cancelled the order further to allegations of corruption during the bidding process
Alstom (French transport and infrastructure group) - In 2008 French authorities
investigated Alstom, in relation with payments of $6.8m to help win a $45m contract
to expand Sao Paulo's underground network (three of its directors have been
arrested in a UK corruption probe in 2010)
Corruption : Alstom dans le collimateur de la justiceFRANCE INFO - 6 MAI 2008
L'ombre de la corruption plane de nouveau sur le géant français des transports et de l'énergie - © REUTERS / Jack Dabaghian
Le groupe industriel français fait l’objet depuis l’automne dernier d’une enquête pour corruption. Des dizaines de millions d’euros de pots-de-vin auraient été versés à l’étranger…
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Several sanctions may be accumulated!
• prohibition to continue some activities included in the corporate purpose
• closure of the branch of the company which has been used to commit the
bribery
• exclusion from public procurement bid
Local Anti-Bribery/ FRANCE
Sanctions Companies Individuals
Fines and imprisonnement
fine up to 150 000 euros and additional penalties
up to 10 years of imprisonnement and fine up to 150 000 euros
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Local Anti-Bribery legislation/UK Bribery Act (2010)
• A very extensive law :
• Capture bribery in the public and the private sector (unlike the FCPA)
• Companies are responsible for the acts of third parties such as
employees or joint ventures.
• Do not criminalize bona fide business expenditures which seeks to improve
the image of an organization, better presents its products or services or
establish relationship with customers.
• Sanctions for individuals up to 10 years in prison and unlimited fines
• Sanctions for Companies: Unlimited fines
• The Act is expected to come into force in July 2011
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Local Anti-Bribery legislation/ Romania
• Current Romania's anti-corruption strategy is conceived in response to EU
recommendation
• National Anti-Corruption Directorate (independent judicial structure) - set up
in 2002 has duties to investigate suspected corruption cases in the public and the
private sector and crimes related to corruption
• Corruption cases are also dealt with by courts
• 2011 : Anti-corruption operation resulting in more than 200 persons arrested !
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What is the situation in other geographies?
Corruption 'costs Africa billions‘
Bribery and gratifications are a way of life in Africa.Corruption in Africa is costing the continent nearly $150bn a year, according to a new report. The African regional body, the African Union (AU) has drawn up a convention to stamp out malpractices which the study says are hitting the poorest the hardest.
Corruption is illegal everywhere in Africa, but everywhere it is woven deep into thefabric of every day life. From the bottle of whisky slipped under the counter to speed a traveller's way through customs, to the presidents and ex-presidents living way beyond their declared means, it results in an assumption that no business will ever get done without a present changing hands. The report before this week's meeting of the African Union in the Ethiopian capital, Addis Ababa, makes no attempt to excuse these "gratifications" as part of the culture. It says that corruption is costing Africa more than $148bn dollars a year, increasing the cost of goods by as much as 20%, deterring investment and holding back development. Most of the cost, it says, falls on the poor. Common stance The AU's proposed solution is a convention which would provide countries signing up to it with a blueprint for tackling the problem. (…)
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How can Steelcase prevent FCPA and Bribery issues ?
• Compliance programs (including trainings)
• You are key !
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The Essential Ingredients of Corporate Compliance
13. Re-assessment – regular review and necessary revisions
12. Discipline for violations of policy
11. Reporting violations confidentially with no retaliation
10. Guidance – provision of advice to ensure compliance
9. Accounting – effective internal controls for accurate books and records
8. Business partners due diligence
7. Specific risk areas – promulgation and implementation programs to address key issues
7. Respond quickly to allegations and modify program
6. Monitoring and review6. Oversight by senior corporate officers with sufficient resources, authority, and access to Board
6. Provide incentives; discipline misconduct
5. Effective implementation5. Support from senior management – strong, explicit and visible
5. Monitor and audit; maintain reporting mechanism
4. Clear, practical and accessible policies and procedures4. Responsibility – individuals at all levels should be
responsible for monitoring
4. Communicate standards and procedures of compliance program, and conduct effective training
3. Due diligence
3. Training – periodic, documented
3. Deny leadership positions to people who have engaged in misconduct
2. Top level commitment2. Policy that clearly and visibly states bribery is prohibited
2. Leaders understand / oversee the compliance program to verify effectiveness and adequacy of support; specific individuals vested with implementation authority / responsibility
NOTE: A general provision requires periodic assessment of risk of criminal conduct and appropriate steps to design, implement, or modify each element to reduce risk
USSG’s 7 Elements of an Effective Compliance Program
13 Good Practices by the OECD on Internal Controls, Ethics, and Compliance
UK’s 6 Principles for “Adequate Procedures”
1. Standards and procedures to prevent and detect criminal conduct
1. Risk assessment as basis for effective internal controls and compliance program
1. Risk assessment
Prepared by:
Paul J. McNulty
Chair, Global Compliance
Baker & McKenzie
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1. Call Jim Hackett and ask if he wants to see your report before you send it to the Audit Committee?
2. Wake up Jim Mitchell and tell him you need to meet right away?
3. Call a local lawyer and seek a legal opinion?
4. Don’t worry about it and go back to sleep?
5. Wait until morning and talk to your supervisor?
What do you do if you wake up late one night and realize that you may have an FCPA issue?
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When in doubt, ask for guidance. If you have a question, wishto discuss an individual situation, or want to report a suspected violation you should contact one of the following resources:
Your supervisor, his or her supervisor
Legal Team - Laurence Mootz Douay
Global Integrity Line
+1-800-437-6167 (French, Spanish) +1-704-943-1134 (Answered in English, with translators available)
Who To Contact to Report a Concern?
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May a company make commission payments?
Are companies liable for improper payments by distributors or others?
How should a company handle sub-contractor payments?
Are payments to resolve tax or customs disputes covered by the FCPA?
If necessary, how should a company make overseas payments?
Frequently asked questions?
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QUESTIONS ?
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Thank you!
• Steelcase Inc Board of Directors asks about our compliance
with the FCPA and local bribery laws on a quarterly basis –
keeping these issues in mind is important!