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FCPA Compliance and Enforcement TrendsAnnual Guide: January 2018


Smith Pachter McWhorter PLC

8000 Towers Crescent Drive, Suite 900 | Tysons Corner, Virginia 22182

Tel: 703.847.6300 | Fax: 703.847.6312

[email protected] | www.smithpachter.com

©2018 Smith Pachter McWhorter PLC. This publication is not intended to provide legal advice but to provide information on legal matters. Transmission is not intended to create and receipt does not establish an attorney-client relationship. Readers should seek specific legal advice before taking any action with respect to matters mentioned in this publication.

Julia S. KopcienskiAssociate

Ms. Kopcienski practices in the areas of government contracts,

commercial construction, and white collar matters. She has experience

with litigation and alternative dispute resolution procedures, focusing

on construction insurance and warranty issues, prime-subcontractor

disputes, claim entitlement and liability, fraud investigations, and

electronic discovery. Additionally, she has counseled clients on data

rights, bid protests, performance disputes, privilege, and federal agency

procurement practices.

Ms. Kopcienski is a graduate of the George Washington University Law

School, where she completed a government contracts course of study that

covered federal procurement topics including formation, performance,

cost and pricing, and intellectual property. During law school, she was

a member of the Moot Court Board, and competed in the 2016 GW

Government Contracts Moot Court Competition. As a finalist in that

Competition, she argued before a panel of experienced federal judges

and was awarded Best Overall Competitor. She was also a member of the

Federal Circuit Bar Journal, for which she served as Programs Editor.

George Washington University School of Law (J.D. 2017)

George Washington University Graduate School of Education &

Human Development (M.A., Education Policy Studies, 2017)

Loyola University Chicago (B.S., Psychology, magna cum laude, and

B.A., Philosophy, magna cum laude, 2013)

SMITH PACHTER McWHORTER PLC

8000 Towers Crescent Drive, Suite 900

Tysons Corner, Virginia 22182

Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]


Table of Contents

I. Introduction ......................................................................................................................................................1

II. The Statutory Framework ...............................................................................................................................1

III. 10 Frequently Asked Questions Regarding FCPA Anti-corruption Compliance Programs

1. What subject areas must anti-corruption compliance policies and procedures address? ..............2

2. How much and what kind of training must a company provide to satisfy DOJ/SEC standards? ....3

3. What should a U.S. company do to prevent misconduct by a non-U.S. subsidiary? ........................4

4. What measures should be taken to prevent third party misconduct? ...............................................4

5. Can travel, entertainment, gifts, or product discounts be provided to non-U.S. government officials? ...............................................................................................................5

6. Should a company’s anti-corruption compliance policy prohibit facilitation payments? ...............6

7. What is a company expected to do with respect to investigating potential corrupt payments? ....6

8. What do DOJ/SEC expect a company to do to assess its FCPA compliance risk? ..............................7

9. Does an SEC-registered company have to take additional anti-corruption compliance measures beyond those taken by non-registered companies? .....................................8

10. Should a company’s compliance program take into account non-U.S. anti-corruption laws? .......9

IV. Enforcement and Policy Developments and Trends

a. DOJ Pilot Program and FCPA Corporate Enforcement Policy (Replacing the Pilot Program) .......10

b. Enforcement Activity in 2017 ................................................................................................................14

c. International Cooperation and Updates on Enforcement for Key Countries ..................................18

d. DOJ Evaluation of Corporate Compliance Programs .........................................................................23

V. 2017 Enforcement Actions: Case Summaries .............................................................................................25

VI. FCPA Statutory Provisions and Penalties ....................................................................................................37

Smith Pachter McWhorter White Collar Practitioners .........................................................................................40

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I. Introduction

“Our company has an anti-bribery policy and some associated procedures, but what else should we have? What do DOJ

and SEC expect? Can we both satisfy enforcement standards with respect to our program and still run a viable business

with operations and sales abroad? And, given recent corruption scandals in countries outside of the U.S., such as Brazil

and China, should we be worried about non-U.S. enforcement as well?”

In this annual Guide to the FCPA, we discuss answers to frequently asked questions regarding FCPA compliance, review

recent developments and trends in enforcement, and provide a roundup of the cases from the most recent year. In

addition, while the U.S. remains the world’s leader in terms of anti-corruption enforcement, and U.S. standards remain

the most relevant for any company subject to U.S. jurisdiction, there is a trend towards multinational enforcement. That

trend is well worth understanding to assist your company and its third party business partners in promoting compliance

within, and to mitigate the risk of problems and subsequent enforcement actions by authorities whether in the U.S. or

outside of it.

This Guide is intended to be helpful for companies at various stages in their anti-corruption compliance programs, from

those who are still working to design and implement those programs, to those that already have robust measures in

place but are looking to ensure their programs are up to date and continually evolving to reflect changing risks and best

practices. Throughout, and consistent with our approach in our FCPA compliance, investigations, and defense practice,

we emphasize a practical approach. The key to a successful program is to both understand the corruption risks that

your company faces based on its business profile and the expectations of enforcement authorities and more generally

the best practices the compliance, legal, and business communities have developed. Then, of course, the program has to

be practical in terms of mitigating risk while appropriately allocating resources and setting priorities that are tailored to

your company.

II. The Statutory Framework

The FCPA has two sets of provisions:

» The anti-bribery provision, which makes it unlawful to make a corruption payment to a foreign official for the

purpose of obtaining or retaining business; and

» The books and records and internal controls provisions, which require companies with securities listed on

stock exchanges in the United States to make and keep books and records that accurately and fairly reflect the

transactions of the corporation and to devise and maintain an adequate system of internal accounting controls.

The above-listed provisions can be enforced against both corporate entities and individuals, and all can be enforced both

criminally and civilly. A more detailed explication of these statutory provisions and the penalties for non-compliance is

provided at the end of this Guide.


FCPA COMPLIANCE AND ENFORCEMENT TRENDS ANNUAL GUIDE: JANUARY 2018 | 2

III. 10 Frequently Asked Questions Regarding FCPA Anti-corruption Compliance Programs

1. What subject areas must anti-corruption compliance policies and procedures address?

As a general matter, a company’s policies and procedures should address classic areas of FCPA risk as well as any risks

that are particular to the company’s business profile.

Classic risk areas include:

» Third party due diligence, compliance requirements, and monitoring

» Gifts, meals, and entertainment

» Customer travel

» Employee expense reimbursements

» Use of cash (e.g., petty cash, or other cash needed for overseas payments)

» Political contributions and charitable donations and sponsorships

» Facilitation payments

» Solicitation of payments, and extortion

» Mergers and acquisitions: anti-corruption due diligence and post-M&A compliance program integration

Risks that may be specific to a company’s business profile can include, among others:

» Non-U.S. government sales and bidding

» Interaction with non-U.S. government regulators, e.g., customs, visa agencies, labor authorities, tax authorities,

licensing authorities, particularly if through third party partners

» Non-U.S. sponsors required to conduct business in certain countries

» Local requirements to partner with local companies or to use local companies as suppliers or service providers

» Doing business in countries with a high degree of state involvement in the economy/state-owned or controlled

enterprises

A company’s policies and procedures also need to address certain compliance program processes:

» Training and certification

» Compliance guidance resources

» Non-retaliation and internal reporting mechanisms, including a hotline where reports can be made anonymously

» Ethics and compliance internal investigations

» Employee discipline for violations

» Corruption risk assessments

» Monitoring and updating of the anti-corruption compliance program, including by making use of data and metrics

regarding the functioning of the program and through control testing

It is also helpful to review the recent Guidance issued by the Department of Justice regarding how they evaluate

corporate compliance programs, which guidance is summarized at the end of this Guide, and which is available in full at

https://www.justice.gov/criminal-fraud/page/file/937501/download.

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2. How much and what kind of training must a company provide to satisfy DOJ/SEC standards?

The U.S. Department of Justice (DOJ) and Securities Exchange Commission (SEC) expect that training be risk-based.

This means that anti-corruption compliance training should be provided to all personnel who could confront corruption

in performing their job duties, based on their function within the organization and/or location of work, and all

personnel with managerial or supervisory responsibility over others in that position, to be trained as to the company’s

anti-corruption policies, procedures and program. It is furthermore expected that employees in positions of leadership or

trust will receive more in-depth and/or more frequent training. Such positions include senior executives and managers,

personnel who occupy watchdog or gatekeeper functions (legal, compliance, finance, procurement, human resources),

and personnel whose positions require them to handle transactions or situations that could put the company at risk (e.g.,

employees who manage non-U.S. government bids or interaction with non-U.S. government regulators, or who supervise

third parties who perform such functions for the company).

There are no specific rules regarding the training methodology – including, for example, whether it is web-based or

in-person – or frequency that is required. The right answer for a company as to any given portion of its workforce will

vary based on the degree of risk, practicality, and resource commitment. Moreover, when a problem has occurred, it is

unfortunately all too easy for enforcement authorities to criticize in retrospect the company’s training program. Nor are

the enforcement agencies typically sympathetic to arguments that it would have cost more than the company wanted

to spend to do things differently. The best way to develop an effective, and defensible, training program is to be able to

demonstrate that, whatever the particularities of the company’s training program, that program is reasonably designed

and effectively implemented given the three factors just mentioned: risk, practicality, and resources required. This

includes using a format that is effective and clear, taking into account language issues, providing additional resources

to employees who have questions, incorporating lessons learned from the company’s experiences, and monitoring the

effectiveness of the training program.

Training of third party service providers, suppliers, subcontractors, business partners, and representatives or agents,

raises its own set of questions and is more complex to administer. Here, though, again, the three factors come into play:

risk, practicality, and resource required. For all third parties, the practicality factor has to take into account the fact

that a company does not control a third party in the way that it controls employees. This means, for example, that a

company cannot reasonably be expected to train all third parties on the company’s anti-corruption compliance program

in the way that, generally speaking, a company will be expected to provide at least some level of training to all or most

employees (exceptions to employee training may exist, e.g., a blue-collar workforce with no possibility of triggering or

observing FCPA issues based on their job function). Third parties, however, with significant responsibility for interacting

with government authorities on the company’s behalf, and who operate in high-risk environments, must receive strong

training at the inception of the business relationships, and periodic refreshers if the relationship continues over time.

The only exception to such third party training requirements may be where the third party is itself a demonstrably

sophisticated and compliant organization with its own rigorous anti-corruption policies, procedures, and training.

Regarding third parties who pose less risk, training and the kind of training will depend on the circumstances.

Finally, the DOJ and SEC expect that training will be documented and verified, including through a certification process.



3. What should a U.S. company do to prevent misconduct by a non-U.S. subsidiary?

From a compliance program perspective, U.S. companies must treat wholly-owned and majority-owned or controlled

subsidiaries as entirely their own. U.S. enforcement authorities will view the U.S. parent company as responsible,

full stop, for conduct by such subsidiaries. Occasionally there might be technical arguments about U.S. jurisdiction

that could lead to a viable defense in litigation against an enforcement action involving a non-U.S. subsidiary. But a

compliance program cannot be structured around the hypothetical, and typically remote, possibility of such a defense in

the event of a problem in the future. Thus, the company’s anti-corruption compliance program should be implemented

at such subsidiaries, subject to any tailoring or modification reasonably needed to address local risks and local laws.

With respect to minority-owned subsidiaries, U.S. companies will be expected to take all measures that are reasonable

and practical under the circumstances to ensure a robust anti-corruption compliance program is in place. What that

looks like will depend on the degree and nature of the U.S. company’s influence over the operations. But it should also

be remembered that if a U.S. company staffs the minority-owned subsidiary with its own personnel, for example as

secondees, then misconduct by such personnel should be presumed to be directly attributable to the U.S. company and

to trigger corporate liability. Thus, particular care must be taken to ensure that such personnel are well-trained in the

U.S. company’s anti-corruption policies and practices, and that such personnel flag any potential misconduct that they

observe at the minority-owned subsidiary.

4. What measures should be taken to prevent third party misconduct?

Third party intermediaries, service providers, suppliers, subcontractors, distributors, and partners (e.g., JV partners)

pose one of the most important risk areas for a company to focus on in its anti-corruption compliance program. Quite

simply, third parties have historically been used to cover up corruption schemes, because that is generally the easiest way

to avoid detection within the company itself. In addition, no matter how close the relationship, third parties and their

expenditures, communications, and actions are inherently subject to fewer controls and less oversight than company

employees.

All of this means that a company that works with third parties to conduct business abroad must take a hard look at

which third parties pose a risk of getting the company into trouble based on the scope of the engagement, the location of

the work, the size and sophistication of the third party from a compliance point of view, and the nature and significance

of the government interaction that could occur on behalf of the company. For example, is the government a client? A

regulator? Are the transactions at issue high value? Etc.

Then the company must develop appropriate due diligence/vetting procedures, compliance requirements, training,

and monitoring for those third parties that pose risk. For such measures to be practical and capable of effective

implementation and maintenance, a company needs to have a workable process for categorizing third parties by risk

(typically, companies develop a process for categorizing them as low, medium, and high risk), clear, standardized

processes for conducting due diligence, imposing contractual requirements related to ethics and compliance that both

require and incentivize compliance (and provide remedies for non-compliance), and monitoring or auditing company

payments to third parties and the activities conducted by those third parties. These processes need to be integrated into

relevant procurement, vendor management, and/or other partnering processes. A company must also have a mechanism

for going beyond its standard approach to respond to warning signs that might be particular to a given third party or set

of circumstances.

All of this can require significant planning, care, and, even more importantly, expenditure of company resources.

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Fortunately, there are many valuable lessons to be drawn from the enforcement cases and, in addition, for experienced

practitioners, from our work over many years on any number of FCPA cases involving all types of third parties and

associated compliance risks or problems. Tailoring a company’s anti-corruption compliance program to adequately

address third party risks in a way that is practical and sensitive to resource constraints, can be done effectively by

bringing these lessons learned and experience to bear.

5. Can travel, entertainment, gifts, or product discounts be provided to non-U.S. government officials?

These items can be provided to non-U.S. government officials under some circumstances.

First, the FCPA provides an affirmative defense for providing such items where they constitute reasonable (in terms of

the value and type of item) expenses to support the promotion, demonstration or explanation of a company’s products

or services, or in support of the performance of a contract. As an “affirmative defense,” this means that the burden will

be on the company to show that the expenditure meets these requirements. There are quite a few published examples

of permissible scenarios provided via the DOJ’s published Opinion Releases, as well as in the DOJ/SEC Guide to the

Foreign Corrupt Practices Act. Examples that we have dealt with in practicing in this area are many and varied, and

have included, among other situations, product discounts, gifts of product samples, business dinners with individual

officials or larger dinner events for groups of officials, travel to company facilities for training accompanied by modest

entertainment as a professional courtesy, and business-class air travel where appropriate based on the length of travel,

level of the official, and consistent with company policies for its own employees, among many others.

The core issues are: whether one or more of the recognized statutory purposes is truly in play; whether the type and

value of the item or benefit to be provided is reasonable in light of the purpose or, in other words, whether a reasonable

prosecutor or other enforcement authority could conclude that the value of a trip or other hospitality is high enough

to begin to corruptly influence the recipient; whether there is appropriate review and approval within the company,

including, typically, by legal or compliance or, at least, by management personnel with sufficient authority and training

as to compliance issues; is there documented evidence that the expenditure is appropriate; and is there transparency with

the foreign official’s employer or otherwise associated government agency.

Second, because FCPA liability is only triggered where the provision of the thing of value is corrupt, there may be

circumstances where this element is not met. As a legal matter, that means that the government could not meet its

burden of proof to show that there was an intent to influence the official to obtain or retain business. That said, this is a

legal distinction that should make little difference for a company’s anti-corruption compliance program: the same factors

that would support the affirmative defense typically would support an argument that the government cannot show a

corrupt purpose in the first place.



6. Should a company’s anti-corruption compliance policy prohibit facilitation payments?

It has become increasingly common for companies to prohibit facilitation payments, i.e., low value payments made to

officials to perform or to expedite non-discretionary, routine government acts to which a company is entitled, but for

which the official seeks in essence a tip to perform. Facilitation payments are permitted under the FCPA. The trend

to prohibit them despite that fact appears to stem from one or more of the following reasons: first, in today’s global

economy and with heightened awareness of compliance issues more generally in the corporate world, companies are

increasingly sensitive to the fact that such payments typically are not permitted under other nation’s anti-corruption

laws; second, some companies take the view, which is the view taken by the Organisation for Economic Co-operation

and Development (OECD), that permitting such payments could lead to a sense of complacency amongst company

employees about bribery, and/or encourage more demands for these and other types of payments from officials; and

third, some companies have concluded that navigating permissible vs. impermissible payments is too difficult to be

worth the burden in training, legal review, and oversight of relevant transactions.

Ultimately, because these payments are legal under U.S. law, from a U.S. perspective it is a business decision rather than

a legal decision whether or not to prohibit them. And the reality is that in some parts of the world, it can be extremely

difficult to obtain routine government acts to which a company is entitled without paying such tips. Failure to do so can

lead to delays or outright denials of the act to which the company is entitled. But, because the exception is narrow, clear

controls and review by compliance or legal are recommended. If, on the other hand, a company chooses to prohibit such

payments altogether, it is important to provide the support, including with respect to helping employees plan ahead for

these obstacles and develop effective strategies for resisting such demands without unduly compromising the needs of

the business. We have found that this can be done, but it does require thought and some dedication of internal training,

legal guidance, and business planning resources to have a ban on facilitation payments that truly works in practice.

7. What is a company expected to do with respect to investigating potential corrupt payments?

When a company has reason to think that an employee or a business partner may have made corrupt payments to a

foreign official, the DOJ and SEC expect that the company will look into the issue with sufficient rigor and depth to be

able to assess:

○ did payments occur or, even if they did not occur, were they offered or authorized;

○ what was the benefit obtained or sought by the company;

○ which company employees were involved, and how high up did the knowledge go;

○ were there supervisors who either knew, were willfully blind, or failed to adequately train or supervise

subordinates who were involved;

○ why did the compliance failure occur, e.g., was it a “bad apple” employee or were there also failures in

company policies, procedures, training, internal reporting mechanisms, culture (is there a culture of the end

justifying the means), or other process issues;

○ did personnel who serve as compliance watchdogs and gatekeepers (legal, compliance, finance, procurement,

human resources) fail in their responsibilities;

○ is there evidence that the incident was isolated or one-off or, by contrast, evidence that it reflected a pattern

or larger set of corruption issues;

○ if a business partner was involved, what was their culpability and must the relationship be terminated or can

the partner be trusted in the future; and

○ are there disclosure obligations under local or U.S. law based on the nature of the conduct?

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With regard to the last bullet, there is no general legal obligation to disclose an FCPA violation to U.S. authorities; but

there could be an obligation to disclose locally, or even to U.S. authorities, depending on the circumstances, e.g., if the

payments were made to foreign officials in connection with performing a U.S. government contract, there might be

mandatory disclosure obligation under the Federal Acquisition Regulations (FAR).

If a company chooses to disclose to the government, or for other reasons becomes subject to a government investigation,

then the approach to the internal investigation must also take into account the issue of cooperation. In this regard, it is

worth noting two relatively recent DOJ policies. First, a 2015 policy memorandum issued by former Deputy Attorney

General, Sally Q. Yates, stresses that, if a company wants to be eligible for cooperation credit from DOJ, the company

must provide to DOJ all relevant facts about the individuals involved in the corporate misconduct. Second, a set of

provisions added to the United States Attorneys Manual in 2017 that makes permanent certain precepts first tested in

the DOJ’s “pilot program” relating to credit for disclosure and cooperation. The provisions discuss DOJ’s expectations

in terms of cooperation, remediation, and de-confliction between an internal investigation and any government

investigation. Experienced practitioners have long structured their investigations in a way that should satisfy these DOJ

expectations, but nevertheless these written policies provide an important touchstone and can also help in educating key

stakeholders within a company as to how and why an internal investigation should be structured in a certain way.

Finally, a note on expectations as to investigation methods: there is no pre-set script for what constitutes an adequate

investigation. But enforcement agencies expect to see rigorous scoping, independence and objectivity by the investigation

team, strong evidence of preservation efforts, thorough email and non-email collection (including from servers, laptops,

personal devices, and other media) and review, analysis of financial records, and interviews of employees, former

employees and/or third parties if relevant, and analysis of root causes and appropriately structured remediation to

address those causes. How far to go will depend on what is reasonable in the circumstances of each case, –and can be

defended as such if the need arises.

8. What do DOJ/SEC expect a company to do to assess its FCPA compliance risk?

The DOJ and SEC expect that a company will take specific steps to assess its FCPA compliance risk with respect to both

ongoing and prospective business. The degree of formality and the complexity of this risk assessment will vary according

to the size, nature, and complexity of the company as well as factors such as the extent of the company’s non-U.S.

business and operations, the countries with the highest corruption risk in which the company has business, the degree of

interaction with foreign government agencies and officials required to conduct the company’s business, and the extent to

which the company relies on third parties to assist in those interactions.

Some large companies engage in very formal and structured FCPA risk assessment processes, for example, by conducting

risk assessment workshops with leadership from the business and from key corporate functions that seek to address

risk both on a company-wide basis and more specifically with respect to the operations in particular countries or for

particular lines of business; synthesizing the results of these workshops; and developing risk mitigation plans based on

the results. This type of risk assessment process is also accompanied by taking into account information generated by

compliance-related investigations, consultations to legal/compliance raised by the business, the results of internal audit

activity, and other information sources.



Other companies, based on their size, complexity of the operations or extent of non-U.S. business, or stage of

development of their risk assessment processes, may undertake a risk assessment process that is somewhat less complex.

Even in those cases, however, it is important that the company undertake to identify who within the company is in

a position to assist in identifying corruption risk in the company’s business, and to develop a process for collecting

information from such sources, organizing it, using it to inform the company’s anti-corruption compliance program, and

then updating this information on a periodic basis. Moreover, DOJ in particular has become increasingly data-focused,

expecting that companies will collect and analyze data about its risks, as well as make use of internal audit findings as

well as the results of internal investigations, and periodically update its program accordingly. However, such practices

are wise not only because enforcement agencies expect it, but also because such a process is necessary to be able to

deploy precious compliance resources wisely: all of this costs time and money, and the primary purpose of a business

is to be successful for the company’s customers and clients, shareholders or owners, and employees. An effective risk

assessment process will help the company focus those resources on where they are most needed.

9. Does an SEC-registered company have to take additional anti-corruption compliance measures beyond those taken by non-registered companies?

The short answer to this question is: Yes, but…

Yes: because the FCPA places additional obligations on public companies, i.e., they are legally required to maintain

accurate books and records, and an adequate system of internal accounting controls. Those obligations extend to all

parts of a public company that it owns, including wholly owned and majority-owned subsidiaries and other corporate

affiliates. Public companies are moreover strictly liable for failures to comply: no bad intent is required for civil liability,

although it is for criminal liability under these provisions.

But: all companies should be aware that the DOJ has imported the books and records and internal controls legal

standard into the Department’s requirements, as a policy matter, for an effective anti-corruption compliance program.

This is manifested in the requirements that DOJ imposes on all companies – both public and private – when it settles

an FCPA matter with them. Those requirements now require as a standard measure that the company maintain

an anti-corruption compliance program that satisfies the elements laid out in guidance issued by the enforcement

agencies (principally, by DOJ). One of those elements is that the company maintain internal controls and financial

and accounting procedures sufficient to provide reasonable assurances that: books and records accurately reflect the

substance of any economic transaction, and are not used to mask “slush funds” or other inappropriate expenditures;

execution and recordation of transactions is per management authorization; access to assets is authorized; and recorded

assets are compared with existing assets at regular intervals. Finally, the greater the risk profile of the company or of

certain business activities in which it engages, the more rigorous must be the controls.

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10. Should a company’s compliance program take into account non-U.S. anti-corruption laws?

Certainly, any company with non-U.S. business or operations must take into account applicable anti-corruption laws of

the local country, and of other countries if their laws apply to the company and have extraterritorial applicability (such

as the U.K. Bribery Act). In addition, multi-jurisdictional cooperation among different national authorities has become

more frequent in recent years. Finally, there is arguably a trend of more countries taking steps to implement stricter anti-

corruption laws and to enforce those laws. For example, new laws have been passed in Argentina, Brazil, Colombia,

and Mexico in recent years. While not all of these laws are yet being enforced vigorously, at least in some jurisdictions,

such as Brazil, there has been movement in that direction and there may be increased enforcement in various non-U.S.

jurisdictions in the future. The U.S. remains the leading enforcer in this area, and is likely to remain so for many years to

come. Thus, it is no surprise that companies subject to U.S. jurisdiction tend to focus their anti-corruption compliance

programs first and foremost on the FCPA. But it is ever more the case that other countries’ anti-corruption laws cannot

be ignored or presumed to be toothless.

The core precepts of U.S. and non-U.S. anti-corruption laws tend to be the same or very similar. And where there are

differences, U.S. laws tend to be as complete, or more expansive. As one example, the U.K. Bribery Act criminalizes both

government and private sector bribery (aka “commercial bribery”), whereas the FCPA criminalizes only government

bribery; however, other U.S. laws exist to prosecute commercial bribery, including when such bribery is committed

outside of the U.S. As another example, while there are a number of countries in the world whose criminal law systems

do not provide for corporate criminal liability absent high-level management involvement in the conduct, under U.S.

law, any employee or third party acting as the company’s agent (within the meaning of vicarious liability principles) may

trigger corporate liability. There are however some limited exceptions whereby U.S. anti-corruption law is less expansive

than certain other nations’ laws. For example, the U.S. permits facilitation payments, whereas other nations’ anti-

corruption laws generally do not. As another example, the U.K. Bribery Act goes even farther than the FCPA in terms

of liability for the acts of third parties, through the U.K.’s “corporate failure to prevent bribery” provision. It is for this

reason that, while it is generally reasonable to focus a company’s anti-corruption compliance program on U.S. law, the

laws of other countries must also be taken into account where applicable to the company’s operations.



IV. Enforcement and Policy Developments and Trends

a. DOJ Pilot Program and FCPA Corporate Enforcement Policy (Replacing the Pilot Program)

On April 5, 2016, the DOJ Criminal Division initiated a one-year FCPA “Pilot Program” to encourage voluntary

disclosures and cooperation by corporations with FCPA matters1 and delineated the type of credit that corporations

could receive for disclosure and cooperation. It also sought to increase the DOJ’s transparency in identifying the

potential credit for self-disclosure, cooperation, and remediation. The Pilot Program was later extended in March 2017.2

On November 29, 2017, citing the increase in voluntary disclosures after the enactment of the Pilot Program, Deputy

Attorney General Rod Rosenstein announced a revised FCPA Corporate Enforcement Policy based on the principles

delineated in the Pilot Program.3 The new policy codifies certain aspects of the Pilot Program “as is” and revises others.

Attorney General Rosenstein published the guidance directly to the U.S. Attorney’s Manual (USAM)4 rather than

through a memorandum, to facilitate easy comprehension and application by busy prosecutors. Although published in

the USAM, the new policy creates no private rights and is not enforceable in court. Rather, like DOJ policy memoranda

and other internal operating policies, it was put in place to provide guidance and promote consistent application.

With regard to substance, the new policy goes further than any other DOJ guidance in incentivizing companies to self-

disclose. The policy includes a presumption of declination when, absent any aggravating circumstances, a company

voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates in accordance with

the definitions and standards set forth in the policy. Aggravating circumstances may include involvement by executive

management of the company in the misconduct; a significant profit to the company from the misconduct; pervasiveness

of the misconduct within the company; and criminal recidivism.

In the instances where a company voluntarily discloses wrongdoing and satisfies all other requirements, but aggravating

circumstances compel DOJ to prosecute, the new policy directs the prosecuting attorney to nonetheless recommend a

50% reduction off the low end of the U.S. Sentencing Guidelines (USSG) fine range. In addition, the DOJ will generally

not request a monitor if the company has implemented an effective compliance program. The policy also provides that,

where a company fails to disclose but later fully cooperates and remediates appropriately, the DOJ will recommend a

25% reduction.

Although the DOJ will recommend a reduction in the criminal fine pursuant to the abovementioned criteria, companies

nonetheless will be required to pay disgorgement, forfeiture, and/or restitution from the misconduct at issue. This will be

the case even where the DOJ declines to bring charges. Further, companies must ensure they meet the policy’s definitions

of “voluntary self-disclosure,” “full cooperation,” and “timely and appropriate remediation.”

The DOJ will assess whether the disclosure occurred prior to an imminent threat of disclosure or government

investigation; within a reasonably prompt time after becoming aware of the offense (with the burden on the company

to demonstrate timeliness); and included a disclosure of all relevant facts known to the company, including facts about

individuals involved in the violation.

1 See Andrew Weissmann, Chief, Fraud Section, DOJ Criminal Division, The Fraud Section’s Foreign Corruption Practices Act Enforcement Plan and Guidance (April 5, 2016).

2 See Kenneth A. Blanco, Acting Assistance Attorney General, Speech at the American Bar Association National Institute on White Collar Crime, available at https://www.justice.gov/opa/speech/acting-assistant-attorney-general-kenneth-blanco-speaks-american-bar-association-national.

3 See Deputy Attorney General Rod Rosenstein Delivers Remarks at the 34th International Conference on the Foreign Corrupt Practices Act, (November 29, 2017) available at https://www.justice.gov/opa/speech/deputy-attorney-general-rosenstein-delivers-remarks-34th-international-conference-foreign.

4 See USAM 9-47.1 – FCPA Corporate Enforcement Policy.

11

Credit for full cooperation requires:

○ Companies timely disclose “all facts” relevant to the wrongdoing. This means providing the DOJ all facts

gathered during the company’s independent investigation including, but not limited to, specific source

information; timely updates on the company’s internal investigation; any criminal activity engaged in by

officers, employees or agents of the company; and potential criminal conduct by all third-party companies.

○ Cooperation to be proactive rather than reactive. Companies must disclose facts without first being

specifically requested to do so and must proactively identify opportunities to the DOJ where it could obtain

relevant evidence.

○ Relevant documents be timely preserved and collected, which includes documents overseas (including the

locations of such documents); facilitation of third-party productions; and translation of relevant documents

where necessary.

○ Companies de-conflict their own investigation from the DOJ’s.

○ Companies make available for interviews officers, employees, agents, and, in some cases, facilitate the

production of third-party witnesses.

In addition, companies must timely and sufficiently remediate the misconduct. To receive full credit, a company must

demonstrate that it has:

○ Analyzed the root cause of the underlying conduct and remediated to address the root cause.

○ Implemented an effective ethics and compliance program, which varies based on the size and resources of an

organization. Among other factors, the DOJ will consider the authority and independence of the compliance

function and compliance expertise available to the board; the “quality and experience” of personnel involved

in compliance; the “compensation and promotion” of the personnel involved in compliance; and the auditing

of the compliance program.

○ Disciplined employees appropriately, including those responsible for the misconduct (either directly or

through a failure to provide oversight) and those supervising the area under which the misconduct occurred.

○ Retained business records and prohibited the improper destruction or deletion of records either manually or

through the use of software that does not properly retain them.

The DOJ will also review any additional steps that the company took that demonstrate the company’s recognition of the

seriousness of the company’s misconduct.

While not all aspects of the policy are new or novel, a few features are worth discussing further. First, the policy now

includes a “presumption” of a declination where companies self-report, cooperate, and remediate. This addition was

surely meant to provide more certainty to organizations contemplating voluntary disclosure.

Second, with regard to remediation, the policy requires companies to analyze the root cause of the underlying conduct.

This requirement makes explicit an expectation that was only implicit in the previous policy requirement that companies

implement or augment, as appropriate, an ethics and compliance program. Companies are expected to identify the

problem and remediate the cause of the specific misconduct at issue.

Third, the policy specifies that an adequate compliance program requires that compliance personnel have sufficient

authority and independence. The word “authority” did not appear in the Pilot Program language. This, as well as the

other requirements for compliance personnel, highlight DOJ’s expectation that compliance personnel have access to the

board and be empowered to enact policies and execute meaningful change within an organization.



While this new guidance and its incorporation into the USAM is a positive change, companies must nonetheless analyze

the unique facts and circumstances surrounding an FCPA violation when determining whether or not to self-report,

including the pros and cons of reporting. For example, disclosure will always result in disgorgement, forfeiture, and/or

restitution even where the DOJ declines to bring charges. This loss of revenue must be weighed against the advantages

that voluntary disclosure may bring. Finally, before self-disclosing, organizations should be confident that they can

meet the requirements of “voluntary self-disclosure,” “full cooperation,” and “timely and appropriate remediation”

as defined in the policy. Failure to do so could nullify any advantage the company might have otherwise gained

through voluntary self-disclosure. As in any government investigation and, certainly, in order to be able to qualify for

maximum credit under the new policy, it is critical that companies and their counsel carefully track and document their

cooperation throughout the course of the investigation.

While the new policy is not likely to fundamentally change the analysis companies undertake when determining whether

to voluntarily disclose, the reduction in fines and avoidance of a monitor are significant incentives for those companies

already contemplating voluntary disclosure and looking for a push in that direction. As the Pilot Program did before, the

policy provides companies reassurance that voluntary disclosure will bring a reduction in fines and allow them to avoid

a monitor.

i. Declinations

The most favorable result possible in a government FCPA investigation is to obtain a declination from the enforcement

agency. In 2017, the DOJ granted two declinations under the Pilot Program:5 Linde North America Inc.; and CDM

Smith, Inc. In both cases, the DOJ considered the following factors when reaching its decision to close the case:

(1) prompt voluntary self-disclosure; (2) the company’s thorough investigation; (3) the company’s full cooperation,

including the provision of all relevant facts about the individuals involved in or responsible for the misconduct, and the

company’s agreement to continue to cooperate in any ongoing investigations of individuals involved (where applicable);

(4) the agreement to disgorge the profits it received from the improper conduct; (5) the steps the company took to

enhance its compliance program and internal accounting controls; and (6) the company’s full remediation, including, but

not limited to, the termination and discipline of employees at all levels (including managers and executives involved in

the misconduct).

In both cases, the DOJ required the companies to disgorge profits from the underlying scheme. Linde was required to

not only disgorge profits it received from improper conduct but also to forfeit to the United States the corrupt proceeds

it withheld from companies owned or controlled by the foreign officials to which it made corrupt payments. This

approach of requiring companies to disgorge profits to DOJ is relatively new. Historically, declination did not involve

exaction of any financial penalty or remedy. In that way, declinations under the Pilot Program and now the Corporate

Enforcement Policy are more akin to non-prosecution agreements. However, declinations are still a more favorable

resolution insofar as they do not entail various obligations that non-prosecution agreements typically involve, such as

prospective reporting requirements.

5 The DOJ granted five declinations under the Pilot Program in 2016. A list of all declinations entered into in 2016 and 2017 under the Pilot Program and the letter agree-ments for the same are available at https://www.justice.gov/criminal-fraud/pilot-program/declinations.

13

ii. Criminal Fine Discounts

As discussed in the previous section, under the Pilot Program and now the Corporate Enforcement Policy, to qualify for

full mitigation credit, a company must:

○ voluntarily self-disclose;

○ fully cooperate with a DOJ investigation;

○ remediate, as appropriate, internal controls and compliance programs; and

○ disgorge ill-gotten gains.

Full compliance with these requirements can result in up to a 50% reduction off the bottom end of the applicable USSG

fine range. Companies that do not voluntarily self-disclose are eligible to receive no more than a 25% reduction off the

bottom of the fine range suggested by the USSG.

For example, in its 2017 settlement with SBM, the DOJ did not offer disclosure credit because the company reported the

conduct nearly a year after it learned of the issue. However, SBM qualified for the full remaining 25% discount off the

bottom of the USSG fine range because it cooperated with the DOJ’s investigation, including an accelerated investigation

into bribery conduct. In addition, SBM undertook significant remedial measures, including terminating and demoting

employees who were involved in the criminal conduct, terminating longstanding agency agreements, and implementing

a new and enhanced system of internal controls to address and mitigate corruption compliance risks. The DOJ also

considered SBM’s inability to pay a fine.

In Keppel Offshore, despite not voluntarily disclosing, DOJ granted the company a 25% discount off the USSG fine

range. The DOJ cited the company’s substantial cooperation with the DOJ’s investigation and extensive remedial

measures. Specifically, Keppel terminated and otherwise disciplined employees involved in the criminal conduct, and

implemented an enhanced system of compliance and internal controls to address and mitigate corruption risks. Similarly,

in Las Vegas Sands, the DOJ found the company qualified for a 25% reduction. The DOJ granted the reduction based

on a number of factors, including the nature and seriousness of the internal controls violations, and the fact that

Las Vegas Sands fully cooperated in the investigation and fully remediated. Las Vegas Sands’ cooperation included

conducting a thorough internal investigation and voluntarily collecting, analyzing and organizing voluminous evidence

and information for the government in response to requests, including translating key documents. In addition, the

company no longer employs or is affiliated with any of the individuals implicated in the conduct. Las Vegas Sands

also engaged in extensive remedial measures, including revamping and expanding its compliance and audit functions

and programs and making significant personnel changes, such as the retention of new leaders of its legal, compliance,

internal audit and financial gatekeeper functions. Other similar examples include Telia and SQM. Neither voluntarily

disclosed, but both received the remaining maximum 25% cooperation credit allowed under the Pilot Program and

Corporate Enforcement Policy.



b. Enforcement Activity in 2017

i. Corporate Resolutions

Corporate resolutions in 2017 were down from the record-breaking 2016 numbers, but remained high, and the

settlement amounts were significant. The SEC and DOJ each brought 10 corporate enforcement actions in 2017, down

from the unprecedented 14 and 24 the respective agencies brought in 2016. The 2017 SEC corporate resolution totals

surpassed the numbers between 2013 and 2015, while the DOJ’s 2017 totals surpassed the totals between 2013 and

2015 and matched those of 2014.

SECDOJ

20172016201520142013

98

10

7

2

8

14

24

FCPA Enforcement ActionsCorporate Resolutions

10 10

SECDOJ

FCPA Enforcement Actions – Corporate Resolutions

Corporate FCPA Defendants

20172016201520142013

Non-U.S. Corporation

U.S. Corporation

9

13

9

18

98

3

20

11

8

Corporate FCPA Defendants

There were more enforcement actions against non-U.S. corporations and individuals in 2017 than against U.S.

corporations and U.S. citizens. This marks the second consecutive year in which this occurred.

15

ii. Enforcement Against Individuals and the Yates Memo

The number of individual DOJ prosecutions in 2017 was more than double that brought against individuals in 2016,

and matches the highest number of DOJ prosecutions in the previous five years. The number of SEC individual actions is

down from the 2016 high of eight, to three in 2017.

The proportion of non-U.S. citizen defendants was also significant. Of the 17 cases, 70% were non-U.S. nationals, which

is up from 65% in 2016.

20172016201520142013

14

5

14

3

12

4

9

2

6

8

SECDOJ

FCPA Enforcement ActionsIndividual Actions

FCPA Enforcement Actions – Individual Actions

Individual FCPA Defendants

20172016201520142013

Non-U.S. Citizen/National

U.S. Citizen/National

98

910

554

3

18

12

Individual FCPA Defendants



For several years the DOJ has stated that prosecuting individuals in FCPA matters is a high priority. In 2015, the Yates

Memo formalized this pre-existing policy. At least for 2017, the long-standing policy goal appeared to have had some

teeth, although it should be noted that the figures were no higher than they were four to five years ago.

Looking at the numbers alone, however, can be misleading given the practical length of an FCPA investigation and the

steps that need to be taken before charging individuals. Thus, whether the agency in fact ramps up its prosecutions of

individuals significantly over time as a result of the Yates Memo remains to be seen. Regardless of the numbers, the

government’s explicit focus on individuals is critical to informing the way internal investigations are conducted and

cooperation with a government investigation is handled.

iii. Enforcement Actions of Note

Telia

The DOJ announced on September 21, 2017, that Swedish-based telecom company Telia Company AB, a former ADR

issuer, had entered into a resolution with U.S., Dutch, and Swedish authorities to resolve charges arising out of a scheme

by the company’s Uzbek subsidiary, Coscom, LLC, to pay bribes in Uzbekistan.

Telia settled with the DOJ, SEC, Dutch, and Swedish authorities. Telia agreed to pay the Public Prosecution Service of

the Netherlands (Openbaar Ministrie, or OM) a criminal penalty of $274 million, and, the DOJ another $274 million

– amounting to a total criminal penalty of $548 million; to implement rigorous internal controls, and to cooperate in

the DOJ’s ongoing investigation; and to disgorge profits and prejudgment interest to the SEC in the amount of $457

million – amounting to fines and disgorgements totaling over $1 billion. However, Telia will not pay the total amount:

rather the DOJ agreed to credit the criminal penalty Telia paid to the OM, and the SEC agreed to credit $40 million in

forfeiture paid to the DOJ and up to half of the total disgorgement ($208.5 million) paid to the Swedish Prosecution

Authority (SPA) and OM. After accounting for the offsets, Telia is expected to pay a total combined amount of $965

million to the SEC, DOJ, OM and SPA.

This case is noteworthy for several reasons. First, Telia was the first multi-jurisdictional FCPA enforcement action

resolved under the Trump administration. Second, the combined penalty of almost one billion dollars was among the

largest ever imposed. Third, it was the second major resolution involving conduct by a telecom company in Uzbekistan

(the first was VimpelCom in February 2016 with a multi-jurisdictional settlement with U.S. and Dutch authorities of

$795 million). Fourth, this case represented the largest of four cases from 2017 that involved cooperation between

multiple national enforcement authorities, a growing trend. And finally, the DOJ brought the enforcement action against

a non-U.S. corporation. While the DOJ has brought cases against non-U.S. entities and persons in the past, this case

makes clear that bringing cases against non-U.S. entities remains an important DOJ policy goal to promote a level

playing field in anti-corruption enforcement.

17

Keppel

This matter involved a Singapore shipyard operator and shipping vessel company, Keppel Offshore and Marine Ltd.,

and its wholly-owned U.S. subsidiary. The underlying conduct involved a scheme to pay bribes to Brazilian officials.

Keppel ultimately pleaded guilty to conspiring to violate the anti-bribery provision of the FCPA and agreed to pay a

combined penalty of $422 million to authorities in Brazil, the U.S., and Singapore. As in the Telia resolution and other

recent multi-jurisdictional actions, U.S. authorities will credit the amount paid to authorities in Brazil and Singapore.

Last year, U.S., Brazilian, and Swiss authorities reached a global settlement with the Brazilian construction company

Odebrecht and its petrochemical subsidiary Braskem relating to conduct discovered through Operation Carwash, the

years-long probe into corruption at the Brazilian state-owned oil company Petrobras. Keppel is noteworthy because it

is an example6 of coordinated enforcement by several different nations. This is another example of U.S. and Brazilian

cooperation on a Petrobras related investigation. Singapore authorities also joined in the Keppel enforcement action.

iv. Significant Court Decisions

Kokesh

On June 5, 2017, the U.S. Supreme Court found in Kokesh v. SEC that the five-year statute of limitation applicable to

fines, penalties, and forfeitures is also applicable to disgorgement claims. Specifically, the Supreme Court found that SEC

enforcement actions are “penalties” within the meaning of 28 U.S.C. § 2462.

Given the frequency with which the SEC seeks disgorgement, the Supreme Court’s decision in Kokesh will impact

corporations and individuals subject to financial penalties in SEC enforcement actions. In 2016, for example, out of the

24 SEC FCPA corporate settlements, 20 of them imposed disgorgement. The SEC will now be constrained with regard to

the period of time in which disgorgement can be sought.

While this decision is clearly important, the practical reality is that only on rare occasions will companies facing an

SEC enforcement action have a viable statute-of-limitations argument. First, it requires that the conduct be old enough

that the statute of limitations would apply. This development will have a more significant impact on cases that occurred

several years before the initiation of the SEC enforcement action. Second, if the statute of limitations has not already run

at the time that an SEC investigation commences, and the company chooses to cooperate with the SEC’s investigation,

the SEC will likely ask for an agreement to toll the statute of limitations during the investigation. The pressure to agree

to such a measure will be significant for a cooperating company.

6 Other multi-jurisdictional enforcement actions in 2017 include resolutions with Rolls Royce, SBM Offshore, and Telia.



c. International Cooperation and Updates on Enforcement for Key Countries

i. International Coordination

The trend toward increased international cooperation in anti-corruption enforcement continued in 2017 with U.S.

authorities and their counterparts around the world working together to fight corruption. Acting Principal Deputy

Assistant Attorney General Trevor McFadden recognized this trend in remarks he made in May 2017, stating:

The landscape of international cooperation continues to evolve. In so many of the cases

we handle, and in nearly all of the white collar cases, cooperation with our foreign

partners has become a hallmark of our work…internal cooperation is a two-way street,

meaning that just as we receive significant assistance from our foreign partners in our

investigations and prosecutions, so too do we provide significant assistance to them.7

For example, in 2017, U.S., U.K., and Brazilian authorities worked together to coordinate a resolution to the Rolls-

Royce bribery scheme;8 and U.S., Brazilian, Dutch, and Swiss authorities collaborated on DOJ’s investigation into SBM

Offshore.9

As the number of global settlements10 rises, U.S. authorities are increasingly offsetting penalties based on the amounts

paid to other nations. In 2017, the DOJ offset payments to its international partners in its agreements with Telia, Rolls-

Royce, and Keppel. Acting Assistant Attorney General Kenneth A. Blanco has explained that the DOJ has taken this

approach to prevent duplicative fines and penalties and because it “ensure[s] fairness to the companies and provide[s]

the right incentives for companies to cooperate fully with the relevant jurisdictions implicated in the case.”

1. Operation Carwash and the Ripple Effect

Brazil’s Federal Police began investigating allegations of corruption within Brazil’s state-owned oil company Petrobras

in 2014.11 The investigation, dubbed “Operation Carwash,” has had a ripple effect far beyond Brazil, resulting in

several high-profile cross-border investigations and significant global settlements. The largest global settlement occurred

in December of 2016, in which the Brazilian construction conglomerate Odebrecht and its petrochemical subsidiary

Braskem resolved corruption-related charges with authorities in the U.S., Brazil, and Switzerland. The Odebrecht

settlement resulted in an unprecedented $3.5 billion global fine, which was only later reduced because of an ability-to-

pay analysis.12

The January, 2017 Rolls-Royce global settlement came on the heels of the Odebrecht settlement. The British power-

systems manufacturer Rolls-Royce PLC agreed to pay a combined $800 million in penalties to resolve charges with

authorities in Brazil, the U.K., and the U.S. over allegations that the company paid $11 million to government officials

7 Trevor McFadden, Acting Principal Deputy Assistant Attorney General, Dep’t of Justice, Address at American Conference Institute’s 19th Annual Conference on Foreign Corrupt Practices Act (Apr. 20, 2017) available at https://www.justice.gov/opa/speech/acting-principal-deputy-assistant-attorney-general-trevor-n-mcfadden-justice-depart-ment-s.

8 In 2016, the DOJ conducted an investigation into allegations that Rolls-Royce PLC had paid millions to government officials around the world to secure government contracts, including, several million to officials of the Brazilian state-owned petroleum company Petrobras. The investigation ultimately resulted in a deferred prosecution agreement against the company and charges against several individuals.

9 The DOJ alleged that SBM Offshore, N.V. and its subsidiary SBM Offshore USA, Inc. paid more than $180 million in commission payments to intermediaries around the world to win local projects in the oil and gas industry.

10 A global settlement is when an entity settles with multiple parties. In the FCPA context, this may include enforcement actions brought by different agencies in the U.S. and abroad.

11 See, e.g., Ministério Público Federal, Caso Lava Jato: Entenda o Caso, http://lavajato.mpf.mp.br/entenda-o-caso (Br.) (last visited Jan. 9, 2018); Esther Fuentes, Understanding the Petrobras Scandal, Council on Hemispheric Affairs, Apr. 7, 2016, http://www.coha.org/wp-content/uploads/2016/04/Understanding-the-Petro-bras-scandal.pdf.

12 See Press Release, Dep’t of Justice, Odebrecht and Braskem Plead Guilty and Agree to Pay at Least $3.5 Billion in Global Penalties to Resolve Largest Foreign Bribery Case in History (Dec. 21, 2016) available at https://www.justice.gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve.

19

around the world to secure government contracts, including, approximately $9.3 million to officials of the Brazilian

state-owned petroleum company Petrobras.13

The resolution between Singapore-based Keppel Offshore and Marine Ltd (KOM) and authorities in the U.S., Brazil,

and Singapore also involves allegations of illegal payments to officials in Brazil to secure public contracts. According to

the DOJ, KOM paid millions of dollars in bribes to officials at Petrobras and to the then-governing political party in

Brazil. The bribes were concealed as commission payments to third parties under consulting agreements. In total, from

2001 through 2014, KOM admitted to paying approximately $55 million in bribes. In exchange, KOM won numerous

Petrobras contracts.14

The impact of Operation Carwash in Brazil cannot be overstated. As of November 2017, Brazil’s Federal Public

Prosecutor’s Office had 201 active requests for cooperation from 41 countries with many others expected. At least

10 companies have entered into leniency agreements and over 150 individuals have signed cooperation agreements

in Brazil.15 Various political parties have been implicated and, notably, former President Lula da Silva was criminally

convicted of corruption and money laundering.16

2. Telecom in Uzbekistan

In the past two years, two European-based telecommunications companies entered into global resolutions to resolve

charges arising from allegations of bribery in Uzbekistan: Amsterdam-based VimpelCom and Swedish-based Telia

Company. Combined, these two companies paid over $1.76 billion in global fines and disgorgement to resolve

corruption-related charges with U.S., Dutch, and Swedish authorities.17 In 2016, the DOJ filed civil forfeiture actions

to recover nearly $1 billion in bribe money that these companies and a third telecom company allegedly paid to the

daughter of the former Uzbek President, Gulnara Karimova.18

ii. International Developments

Another important trend in international enforcement is legal reforms and, in some cases, increased enforcement activity,

by various countries to strengthen anti-corruption legal frameworks. Below we highlight some of the more significant

developments in Latin America and discuss the changes to the anti-corruption enforcement landscape in China.

Brazil

Brazil’s corporate liability law, the Clean Company Act, took effect in 2014. The Clean Company Act provides for strict

civil and administrative liability for acts of bribery or attempted bribery of Brazilian or foreign public officials.19 Brazil’s

anti-corruption regime has continued to mature and authorities have taken significant enforcement actions since 2014,

when the Clean Company Act came into effect.

13 See Press Release, Dep’t of Justice, Rolls-Royce plc Agrees to Pay $170 Million Criminal Penalty to Resolve Foreign Corrupt Practices Act Case (Jan. 17, 2017) available at https://www.justice.gov/opa/pr/rolls-royce-plc-agrees-pay-170-million-criminal-penalty-resolve-foreign-corrupt-practices-act.

14 See Press Release, Dep’t of Justice, Keppel Offshore & Marine Ltd. and U.S. Based Subsidiary Agree to Pay $422 Million in Global Penalties to Resolve Foreign Bribery Case (Dec. 22, 2017) available at https://www.justice.gov/opa/pr/keppel-offshore-marine-ltd-and-us-based-subsidiary-agree-pay-422-million-global-penalties.

15 See A Lava Jato em Números no Paraná, Ministério Público Federal, http://www.mpf.mp.br/para-o-cidadao/caso-lava-jato/atuacao-na-1a-instancia/parana/resultado (Braz.) (last visited Jan. 9, 2018).

16 See generally Mauricio Savarese and Sarah DiLorenzo, Brazil’s Once-adored Ex-president Convicted of Corruption, Ass. Press, July 12, 2017, https://www.apnews.com/35d89305e7f7447eaa79b9dfc565a2cb (last visited Jan. 9, 2018). The conviction is currently being appealed.

17 See Press Release, Dep’t of Justice, Telia Company AB and Its Uzbek Subsidiary Enter Into a Global Foreign Bribery Resolution of More Than $965 Million for Corrupt Payments in Uzbekistan (Sept. 21, 2017) available at https://www.justice.gov/opa/pr/telia-company-ab-and-its-uzbek-subsidiary-enter-global-foreign-bribery-resolu-tion-more-965.

18 See Press Release, Dep’t of Justice, VimpelCom Limited and Unitel LLC Enter into Global Foreign Bribery Resolution of More Than $795 Million; United States Seeks $850 Million Forfeiture in Corrupt Proceeds of Bribery Scheme (Feb. 18, 2016) available at https://www.justice.gov/opa/pr/vimpelcom-limited-and-unitel-llc-enter-glob-al-foreign-bribery-resolution-more-795-million.

19 Law no. 12.846/2013 (Lei nº 12.846, de Agosto de 2013) (Braz.).



Although the anti-corruption legal framework in Brazil does not provide for corporate criminal liability, individuals

can be prosecuted for corruption-related offenses under Brazil’s criminal code. Brazilian authorities continue to bring

criminal actions against individuals, including charges against former President Lula da Silva for corruption that resulted

in conviction and charges against current President Michel Temer.20

In addition to the high-profile Operation Carwash, Brazilian authorities have made headlines based on a number of

other investigations. Brazil’s Federal Public Prosecutor’s Office filed charges against the former Minister of Finance

Guido Mantega and 13 others in November 2017 in connection with Operation Zealots21, an ongoing investigation

into corruption at Brazil’s Administrative Council of Tax Appeals. The Federal Public Prosecutor’s Office announced in

May 2017 the first criminal action arising out of Operation Greenfield22, a probe into alleged corrupt dealings by state-

controlled pension companies. Brazilian authorities charged a number of people in connection with Operation Weak

Meat, an investigation into alleged bribery of food inspectors with the Ministry of Agriculture by employees of Brazil’s

meat-processing companies.23

Mexico

As of July 2017 the main elements of Mexico’s new National Anti-Corruption System (SNA) became effective. The

adoption of the SNA has been a multi-year process, which began with a constitutional amendment in May 2015

followed by the passing of an anti-corruption law in 2016 that became effective in July 2017. Civil society in Mexico

was active and engaged throughout that period and remains active in the push for full enactment of the SNA.

The SNA is a comprehensive framework that applies to all levels of government, bolsters individual criminal liability for

bribery, creates criminal and civil liability for corporations, and establishes specific requirements and liability for public

officials (e.g., reporting of assets and conflict of interest declarations).

The legislation provides for an independent, federal anti-corruption prosecutor that sits within the attorney general’s

office. The prosecutor would not only investigate and prosecute but also sit on the steering committee of the SNA, and,

as such, is a critical piece within the anti-corruption system and enforcement regime. At the time of publication the

position had yet to be filled.

Despite the many advances in the establishment of a new anti-corruption regime in Mexico, significant steps

necessary for full implementation remain and, indeed, the Mexican President and his party have been the subject

of significant criticism for not having appointed the officials necessary to lead the new anti-corruption enforcement

agencies established by the 2017 law. It remains to be seen whether the new law in Mexico will be more than a

mere “paper tiger.”

20 See, e.g., Mauricio Savarese and Sarah DiLorenzo, Brazil’s Once-adored Ex-president Convicted of Corruption, Ass. Press, July 12, 2017; Ricardo Brito, Brazil Supreme Court Sends New Temer Graft Charges to Congress, Reuters, Sept. 20, 2017, https://www.reuters.com/article/us-brazil-corruption-temer/brazil-supreme-court-sends-new-temer-graft-charges-to-congress-idUSKCN1BV2XV.

21 See Press Release, Ministério Público Federal, Operação Zelotes: MPF/DF denuncia Guido Mantega e outras 13 pessoas (Nov. 8, 2017) available at http://www.mpf.mp.br/df/sala-de-imprensa/noticias-df/operacao-zelotes-mpf-df-denuncia-guido-mantega-e-outras-13-pessoas (Braz.) (last visited Jan. 9, 2018).

22 See Press Release, Ministério Público Federal, Operação Greenfield, MPF/DF envia primeira denúncia à Justiça (May 18, 2017) available at http://www.mpf.mp.br/df/sala-de-imprensa/noticias-df/operacao-greenfield-mpf-df-envia-primeira-denuncia-a-justica (Braz.) (last visited Jan. 9, 2018).

23 See Press Release, Ministério Público Federal, Operação Carne Fraca: MPF no Paraná denuncia 60 pessoas (Apr. 20, 2017) available at http://www.mpf.mp.br/pr/sa-la-de-imprensa/noticias-pr/mpf-pr-denuncia-60-pessoas-no-ambito-da-operacao-carne-fraca (Braz.) (last visited Jan. 9, 2018).

21

Argentina

On November 8, 2017, Argentina’s Congress passed the Law of Corporate Criminal Liability, that establishes corporate

criminal liability for, among other things, bribery and influence peddling, and establishes requirements for corporate

compliance programs. Penalties under the new law can range from two to five times the benefit obtained or potentially

obtained, disgorgement of profits, and debarment from government procurement. Entities, however, may be exempt

from penalties provided the entity: i) self-reports a violation as a consequence of internal detection and investigation, ii)

had proper internal controls in place before the conduct occurred, and iii) forfeits any undue benefit.24

The law provides that companies under investigation may enter into cooperation agreements with authorities in

exchange for reduced penalties provided the company offers verifiable information useful to the investigation, pays 50%

of the minimum fine, disgorges ill-gotten gains, and voluntarily returns assets that presumably would be forfeited in the

case of conviction.

Implementation of a compliance program that satisfies requirements established in the new law may serve to mitigate

penalties imposed. The law requires that a compliance program: 1) be appropriate, based on risk, size, and economic

capacity of the company; and 2) have a code of ethics, internal procedures and trainings. The law notes that authorities

will issue additional guidelines regarding compliance programs. Although not universally required, entities involved in

certain contracts with the federal government must have compliance programs in place.

Argentina’s new anti-corruption law is expected to take effect in March 2018.

Colombia

Colombia enacted Law 1778 of 2016, known in English as the Transnational Corruption Act (“TCA”) in February of

2016, which provides for corporate administrative liability and individual criminal liability for acts of foreign bribery.

The law also amends the country’s domestic bribery laws to align them with the new foreign bribery law. Penalties may

include fines up to 200,000 times the minimum monthly wages in Colombia, and debarment from government subsidies

or incentives for up to five years. Restitution, cooperation, and implementation of an effective compliance program are

factors that may serve to mitigate imposed sanctions.25

Peru

The Peruvian Congress approved an anti-bribery law in 2016, which became effective on January 1, 2018. The law

provides for corporate criminal liability for foreign and domestic bribery. Penalties may include fines up to six times

the benefit obtained or expected, suspension of corporate activity for up to two years, cancellation of licenses, and

dissolution of the legal entity. Cooperation, restitution, and adoption of a compliance program (after the criminal act

but prior to sentencing) may serve to mitigate imposed sanctions.26

The law provides that companies will be exempt from liability under this law if an adequate compliance program

was in place prior to the illegal conduct. The adequacy of the program varies based on the nature, risks, needs, and

characteristics of the entity.

24 See Argentina Congress Passes Law to Fight Corporate Corruption, Reuters, Nov. 8, 2017, https://www.reuters.com/article/us-argentina-corruption/argentina-con-gress-passes-law-to-fight-corporate-corruption-idUSKBN1D83AX (last visited Jan. 9, 2017).

25 Law 1778 of 2016 (Ley 1778 de 2016, por la cual se dictan normas sobre la responsabilidad de las personas jurídicas por actos de corrupción transnacional y se dictan otras disposiciones en materia de lucha contra la corrupción) [Law 1778 of 2016, by which rules are issued on the liability of legal entities for acts of transnational cor-ruption and other provisions in the fight against corruption] (Colom.).

26 Law 30424 of 2016 (Ley que regula la responsabilidad administrativa de las personas jurídicas por el delito de cohecho activo transnacional, Apr. 1, 2016) [Law Regulat-ing Administrative Liability of Legal Entities for the Commission of Active Transnational Bribery] (Peru).



China

In 2012, at the Communist Party’s quinquennial National Congress sessions, the Chinese national government

announced “Striking down Flies and Tigers,” a significant anti-corruption campaign directed at all levels of government,

from low-level bureaucrats to high-level officials. At the October 2017 National Congress of the Communist Party,

China’s highest political official – the General Secretary of the Communist Party and President of China, Xi Jinping –

spoke about the campaign and championed its importance.27

The “Flies and Tigers” campaign is directed at the demand side of corruption – i.e., at investigating and sanctioning or

criminally prosecuting corrupt government officials. Since its inception, it is reputed that tens of thousands, or perhaps

even hundreds of thousands, of government officials have been targeted by the campaign, often losing their government

posts as a result and in many cases also facing criminal prosecution. It is difficult to assess exactly how many

government officials have been caught up in the campaign due to issues with obtaining reliable data as well as data that

is “counting” cases in the same manner. For example, in early 2016 the Chinese Communist Party announced that it had

punished some 300,000 government officials for corruption;28 in 2017 a report by the chief of the national government’s

primary prosecution agency reportedly stated that during the prior year the courts had issued rulings in 45,000

corruption cases;29 while a database compiled by independent researchers at the Asia Society, a U.S.-based nonprofit,

reports far lower numbers – 1,899 officials investigated and sanctioned in some manner as of December 31, 2016.30

Given the environment in China, there is debate about the extent to which the campaign serves more as a means of

removing political opponents to the President of China and his allies and gaining public support than a pure anti-

corruption campaign uninfluenced by Communist Party politics. Transparency International has continued to assess

China as a country ranking poorly on TI’s Corruption Perception Index.31

Regardless, however, there is little doubt that the Flies and Tigers campaign has been an important development. It

has been highly publicized within China and reputable sources report that there is a general public perception that

government officials do face risks if they engage in graft; it has resulted in sanctions against many low-level and also

high-level officials; and its status as a national priority has been recently reiterated by China’s President.

With respect to enforcement risk against multinational companies doing business in China, there is also little doubt

that this risk has increased significantly in recent years. The Chinese government has aggressively pursued a number of

companies under Chinese anti-corruption laws. These laws include: the Criminal Law of China – a criminal statute that

proscribes and defines the punishments for both government-related and commercial bribery, up to and including death

(the death penalty is now only available as an elective sentence for domestic officials accepting a bribe); and the Anti-

Unfair Competition Law – the statute that regulates anti-competitive business practices, including commercial bribery.

The most notable recent bribery case was the GlaxoSmithKlein (“GSK”) case in 2014. GSK was fined $490 million

by the Chinese government for bribing Chinese doctors and health officials. While the Chinese authorities have not

prosecuted any multinational corporations for corruption since GSK, they have reportedly initiated investigations of

various prominent multinational companies, including Michelin, Bridgestone, Nestlé, Microsoft, Qualcomm, and

27 President Xi Jinping, Report to the 19th National Congress of the Communist Party of China (Oct. 18, 2017).

28 See https://www.cbsnews.com/news/china-300000-punished-for-corruption-in-last-year/.

29 Chinese courts conclude 45,000 graft cases in 2016, implicating 63,000 people, Xinhua News Agency, Mar. 12, 2017, see http://www.chinadaily.com.cn/chi-na/2017-03/12/content_28525386.htm.

30 See http://www.chinafile.com/infographics/visualizing-chinas-anti-corruption-campaign.

31 China’s CPI ranking for China has ranged from 37 at the low end to 40 at the high end from 2012 to 2016. See https://www.transparency.org/news/feature/corruption_perceptions_index_2016#table. Countries with rankings of 40 or below are countries with high levels of corruption as measured by the CPI.

23

Daimler, among others.32 Chinese authorities have also investigated and prosecuted employees of multinationals, as

reflected in the recent fines and jail sentences for several individuals working for Nestlé in China.33

Lack of transparency in, and the possibility of politicization of, the Chinese government’s investigation and enforcement

practices necessarily mean that it can be difficult for companies to assess the risk of enforcement, but it is clear that the

risk is real. It is also clear that the outcome of such an action by Chinese authorities may be far less predictable, and

potentially very harsh, against multinationals and individuals associated with them. In sum, the Chinese enforcement

environment, combined with the consistent trend of U.S. authorities bringing enforcement cases against U.S. companies

and others subject to the FCPA for corrupt activities in China, require companies doing business in China to exercise

strong vigilance to avoid running afoul of either U.S. or Chinese laws.

d. DOJ Evaluation of Corporate Compliance Programs

In February 2017, the Fraud Section of the DOJ published new guidance on compliance programs, “Evaluation of

Corporate Compliance Programs.” The guidance provides the public with the questions the Fraud Section considers

when assessing corporate compliance programs. The DOJ designated the new guidance as part of DOJ’s “Compliance

Initiative.” The guidance, through targeted questions, provides insight into the Fraud Section’s analyses behind eleven

primary compliance evaluation areas.34 Even though the introduction warns that the topics and questions are neither a

checklist nor a formula, particularly as all the topics and questions may not be relevant in all situations, the guidance

can serve as a useful tool for developing and implementing compliance programs as well as assessing risk after a

violation.

Overall, the guidance highlights the importance of ensuring adequate oversight and assessing risk within corporate

compliance programs as well as securing sufficient support and autonomy for the program from company management.

The guidance stresses to a greater degree the importance of companies collecting and analyzing data on their programs

in order to assess their effectiveness. By posing specific questions, the recent guidance also provides a useful roadmap to

the kinds of specific subjects that a company and its counsel should be prepared to address with DOJ if the company’s

program is under any type of review (e.g., in connection with settling an enforcement matter or reporting out to the

Department as a condition of such a settlement). Companies should review the guidance in detail and to be prepared to

answer the DOJ’s questions with sufficient and satisfactory responses should the need arise.

The topics discussed in the 2017 guidance are:

1. Analysis and Remediation of Underlying Misconduct

This element focuses on the company’s root cause analysis of the misconduct; prior indications of misconduct; prior

opportunities to detect the misconduct; and the specific remediation the company has put in place to reduce the risk of

future occurrence.

32 See, e.g., Daniel C.K. Chow, How China’s Crackdown on Corruption Has Led to Less Transparency in the Enforcement of China’s Anti-Bribery Laws, at 698 n. 64, U.C. Davis Law Review (citing media reports), at https://lawreview.law.ucdavis.edu/issues/49/2/Symposium/49-2_Chow.pdf.

33 Nicholas Leong, China has a message for Western companies: corruption does not pay, South China Morning Post, Aug. 22, 2017.

34 The topics also appear in other U.S. government and international organization publications including the United States Attorneys Manual; the United States Sentencing Guidelines; A Resources Guide to the U.S. Foreign Corrupt Practices Act (FCPA Guide); the Good Practice Guidance on Internal Controls, Ethics, and Compliance adopt-ed by the Organization for Economic Cooperation and Development (OECD); and the OECD Anti-Corruption Ethics and Compliance Handbook for Business.



2. Senior and Middle Management

This element highlights the importance of analyzing whether misconduct occurred at the top levels of leadership;

the concrete actions leadership has taken; whether there is a shared commitment to compliance from the different

components of the company; and oversight by the board.

3. Autonomy and Resources

This element focuses on the role of the compliance function in training of personnel; the stature of the compliance

function within the company; the experience and qualifications of compliance and other gatekeepers; the autonomy of

the compliance program; access by compliance leadership to the board; funding and resources allocated to compliance;

and the extent to which the company has outsourced compliance functions and its rationale for doing so.

4. Policies and Procedures

This topic is broken down into two primary subparts: (a) Design and Accessibility and (b) Operational Integration. The

questions in subpart (a) focus on the design, implementation, application, guidance, and accessibility of the company’s

compliance program policies and procedures. The questions in subpart (b) are aimed at identifying those responsible

for integrating the policies and procedures; the controls that failed or were absent that could have prevented the

misconduct; the payment systems that funded the misconduct; the approval and certification processes relevant to the

misconduct, and the company’s vendor management system, if vendors were involved in the misconduct.

5. Risk Assessment

These questions address the company’s risk management process; the information the company has gathered and

analyzed to help detect the type of misconduct in question; and how the company’s risk assessment process has

accounted for manifested risks.

6. Training and Communications

This topic addresses the training the company has instituted and specifically asks questions regarding risk-based training;

the form, content and effectiveness of such training; corporate communications around compliance; and the availability

of compliance guidance to employees.

7. Confidential Reporting and Investigation

This section concerns the effectiveness of the company’s reporting mechanisms; the company’s efforts to ensure that

investigations have been properly scoped by qualified personnel; and the company’s response to investigations.

8. Incentives and Disciplinary Measures

This topic concerns whether and to what extent the actors responsible for the misconduct were disciplined; the

company’s history for terminating or disciplining employees for similar conduct; the individuals responsible for making

the disciplinary decisions; whether disciplinary actions and incentives have been consistently applied; and the company’s

methods for incentivizing ethical behavior.

25

9. Continuous Improvement, Periodic Testing and Review

This topic includes questions relating to the internal audit function and the type of testing performed; the company’s

methods for reviewing and auditing its compliance program; and the extent to which the company regularly updates its

compliance policies, procedures, and practices.

10. Third Party Management

These questions analyze the company’s third-party management processes in relation to the nature and level of the

risk associated with the third party; the controls the company has in place to govern third parties; the management of

relationships with third parties; and the identification of red flags in the due diligence process and subsequent follow-up.

11. Mergers and Acquisitions

This section focuses on the effectiveness of the due diligence process in identifying risk; the integration of the compliance

function into merger and acquisition activity; and the process for connecting due diligence to implementation, including

for tracking and remediating misconduct identified during the due diligence process.

V. 2017 Enforcement Actions: Case Summaries35

Alere, Inc.

Enforcement Agency(ies): SEC

Summary of Conduct: Subsidiaries of Alere, Inc. (Alere) in India and Colombia allegedly36 used distributors and

consultants to make improper payments to foreign officials. Alere did not accurately record the payments in the

company’s books and records. In addition to improper payments, other Alere subsidiaries engaged in improper revenue

recognition practices to inflate revenues. The SEC charged Alere with FCPA violations and accounting fraud.

Improper Payment: $275K to officials in Colombia; SEC did not quantify the total amount of improper commission

payments made in India.

Benefit Sought or Obtained: Increased sales of medical devices, resulting in $3.3M of profits in India and Colombia.

Disclosure, Cooperation and Remediation: The SEC did not comment on Alere’s cooperation.

Charges or Allegations: Violations of the internal controls and books and records provisions.

Disposition: Cease and Desist Order.

Financial Sanctions or Remedies: Disgorgement $3.3M; prejudgment interest $495K; civil penalty $9.2M.

Reporting Obligations or Other Significant Non-Financial Obligations: None.

* * * * *

35 All information regarding matters described in this Guide was obtained from publically available sources.

36 In SEC settlements, the respondent typically agrees neither to admit nor deny the SEC’s findings in connection with the SEC proceedings.



Fernando Ardila-Rueda, Charles Quintard Beech III, and Juan Jose Hernandez-Comerma

Enforcement Agency(ies): DOJ

Summary of Conduct: Three U.S. businessmen pleaded guilty in an ongoing conspiracy case involving a bribery scheme

to secure contracts with Venezuela’s state-owned oil company Petróleos de Venezuela S.A. (PDVSA). Fernando Ardila-

Rueda (Ardila), Charles Quintard Beech III (Beech), and Juan Jose Hernandez-Comerma (Hernandez) engaged in the

bribery scheme along with several other individuals who previously pleaded guilty in connection with the same case.

Ardila, Beech, and Hernandez, owners and managers of multiple U.S.-based energy companies, admitted to bribing

officials to gain advantages in obtaining energy contracts with PDVSA. Ardila provided entertainment and offered bribes

to PDVSA officials, varying the amount of bribes offered according to the value of the contracts the officials secured for

Ardila’s business partners. Hernandez conspired with other defendants to pay bribes to PDVSA purchasing analysts,

while Beech bribed PDVSA officials to place his companies on PDVSA bidding panels and obtain contracts and related

payments for his and other companies.

Improper Payment: $304,753.

Benefit Sought or Obtained: Contracts with PDVSA, placement on PDVSA bidding panels, and payment priority.

Charges or Allegations: Conspiracy to violate and substantive violations of the anti-bribery provisions (Ardila and

Hernandez); conspiracy to violate the anti-bribery provisions (Beech).

Disposition: Plea agreements still under seal at the time of this publication.

Sentence and Financial Sanctions or Remedies: Sentencing for Ardila, Beech, and Hernandez is scheduled for February 8,

2018.

* * * * *

Joseph Baptiste


Summary of Conduct: Joseph Baptiste was indicted for allegedly soliciting bribes from undercover FBI agents in

connection with an $84 million project to develop a port in Haiti. Baptiste allegedly solicited bribes from the undercover

agents through in-person meetings and telephone calls, telling them that the money would be funneled through a

non-profit entity he controlled and would be used to bribe Haitian officials in order to secure work on the project.

He received approximately $50,000 from the agents, which he used for personal purposes, and allegedly intended to

seek additional money from the agents to use for bribing officials. He also allegedly bribed the aide of a senior Haitian

official by offering him a future job on the port project.

Improper Payment: Baptiste was not alleged to have made any improper payments, as he used the initial $50,000

received from undercover agents for personal purposes. Baptiste also allegedly promised a job to an aide to a senior

Haitian public official.

Benefit Sought or Obtained: $50,000.

Charges or Allegations: Conspiracy to violate and substantive violation of the anti-bribery provisions of the FCPA and

Travel Act; conspiracy to commit money laundering.

27

Disposition: None at the time of this publication.

Sentence and Financial Sanctions or Remedies: Open case.

* * * * *

Vanja Baros and Michael Cohen


Summary of Conduct: Michael Cohen was an executive at Och-Ziff, a U.S.-based hedge fund that controlled a variety

of investment vehicles through various subsidiaries. Vanya Baros, an Australian citizen residing in the UK, was an

employee of a wholly-owned subsidiary of Och-Ziff. Cohen and Baros allegedly engaged in multiple bribery schemes

in which Och-Ziff payed multimillion dollar bribes to government officials in Libya, Chad, Niger, Guinea, and other

African countries in exchange for financial benefit to both individuals and to the company. Charges against Cohen and

Baros stem from an FCPA enforcement action against Och-Ziff and its high-level executives in 2016.

Improper Payment: Tens of millions of dollars to African government officials.

Benefit Sought or Obtained: Special access to investment opportunities, mining rights, and other business; direct

financial benefit to Cohen and Baros.

Charges or Allegations: Violations of the anti-bribery, books and records, and internal controls provisions.



* * * * *

Cadbury Limited and Mondelez International


Summary of Conduct: In 2010, Cadbury Limited (Cadbury), a candy and beverage distributor headquartered in

England, was acquired by Mondelez International (Mondelez), a global manufacturer of food, beverages, and snack

products headquartered in the United States. Cadbury’s Indian subsidiary Cadbury India Limited (Cadbury India), called

Mondelez India Foods Private Limited after the acquisition, was the site of the wrongdoing the SEC administrative

proceedings targeted. Cadbury India allegedly hired an agent to interact with Indian government officials to obtain

licenses and approvals for a factory expansion in India. In hiring the agent, the company failed to conduct appropriate

due diligence into the agent’s background or to properly monitor the agent’s activities, thus creating risk that funds

transferred to the agent would be used improperly.

Improper Payment: $90,666 in payments to the intermediary.

Benefit Sought or Obtained: SEC did not allege any specific benefit Cadbury obtained from the improper payments.

Disclosure, Cooperation, and Remediation: Mondelez conducted an internal investigation and cooperated in the SEC

investigation.

Charges or Allegations: Violations of the books and records and internal controls provisions.




Financial Sanctions or Remedies: Civil penalty $13M.


* * * * *

CDM Smith, Inc.


Summary of Conduct: CDM Smith Inc. (CDM), a Boston-based company providing engineering and construction

services, and a wholly owned subsidiary in India (CDM India) allegedly paid bribes to government officials over a

period of four years starting in 2011. The bribes were paid in exchange for highway construction supervision and design

contracts, as well as a water project contract. CDM and its subsidiary allegedly paid the bribes through the use of

fraudulent subcontractors who provided no services and were instead merely a front for forwarding the payments to the

officials. According to the DOJ, “all senior management at CDM India” either participated in the misconduct or at the

least knew of its existence and approved the wrongdoing.

Improper Payment: $1.18M.

Benefit Sought or Obtained: Award of highway construction supervision and design contracts and award of a water

project contract, resulting in $4M in profits.

Disclosure, Cooperation, and Remediation: CDM made a timely voluntary self-disclosure, conducted an internal

investigation, cooperated with DOJ’s investigation, enhanced its compliance program, and terminated all involved

employees.

Charges or Allegations: Violations of anti-bribery provision.

Disposition: Letter of Declination under the FCPA Pilot Program with disgorgement.

Financial Sanctions or Remedies: Disgorgement $4.03M.


* * * * *

Petros Contoguris, James Finley, Andreas Kohler, and Aloysius Johannes Jozef Zuurhout


Summary of Conduct: Four individuals were charged for conspiring to pay bribes to a high-ranking Kazakh government

official to retain business for Rolls-Royce. James Finley and Aloysius Johannes Jozef Zuurhout (Zuurhout) were current

and former employees of Rolls-Royce and its subsidiaries, and Andreas Kohler and Petros Contoguris were employees

of an international engineering consulting firm which served as an intermediary for Rolls-Royce in Kazakhstan. These

charges were filed in connection with a 2016 DOJ investigation into Rolls-Royce bribery allegations which resulted in a

Deferred Prosecution Agreement against the company and charges against a fifth individual, Keith Barnett.


Benefit Sought or Obtained: Contracts worth approximately $145M.

29

Charges or Allegations: Conspiracy to violate and substantive violation of the anti-bribery provision (Contoguris);

Conspiracy to violate and substantive violation of the anti-bribery provision (Finley); Conspiracy to violate the anti-

bribery provisions (Kohler and Zuurhout).

Disposition: Kohler, Finley and Aloysius entered plea agreements still under seal at the time of this publication.


* * * * *

Cheikh Gadio and Patrick Ho


Summary of Conduct: Cheikh Gadio is the former foreign minister of Senegal. Chi Ping Patrick Ho (Ho) is the head of a

Hong Kong-based NGO. Ho and Gadio allegedly bribed officials in Chad and Uganda to win business for a Chinese oil

and gas company. In addition to the improper payments, Ho also allegedly offered Ugandan officials gifts and promises

of future benefits, including a share of oil profits. Ho compensated Gadio for his help facilitating the bribes.

Improper Payment: $2M offered to President of Chad, $500K offered to the minister of foreign affairs of Uganda.

Benefit Sought or Obtained: Exclusive oil rights in Chad without international competition, assistance obtaining

business advantages in Uganda.

Charges or Allegations: Conspiracy to violate and substantive violations of the FCPA, conspiracy to commit

international money laundering, and commission of international money laundering (Gadio and Ho).



* * * * *

Halliburton Company and Jeannot Lorenz


Summary of Conduct: In 2008, Angolan government officials for the state-owned oil company Sonangol told

Halliburton Company (Halliburton) that its subcontracting work was in danger of being terminated because it had

insufficient local business relationships to satisfy local content regulations. Thus, Halliburton allegedly directed

Jennot Lorenz, a former Halliburton executive, to increase Halliburton’s local content in Angola. Lorenz retained an

Angolan company owned by a former Halliburton employee who was also friends with the Sonangol official that had

directed Halliburton to enhance its local content and that would ultimately approve the award of further contracts to

Halliburton. Halliburton outsourced more than $15 million worth of business to the local Angolan company. Sonangol

then approved seven contracts to Halliburton, resulting in about $14 million in profit.

Improper Payment: $15M.

Benefit Sought or Obtained: Award of contracts from Sonangol resulting in $14 million in profit.

Disclosure, Cooperation, and Remediation: Halliburton and Lorenz cooperated with the investigation and engaged in

voluntary remedial measures.



Charges or Allegations: Violations of the books and records and internal controls provisions.


Financial Sanctions or Remedies: Civil penalty $75K (Lorenz); disgorgement $14M (Halliburton); prejudgment interest

$1.2M (Halliburton); civil fine $14M (Halliburton).

Reporting Obligations or Other Significant Non-Financial Obligations: Independent compliance monitor for eighteen

months.

* * * * *

JERDS Luxembourg Holdings S.AR.L. and Zimmer Biomet Holdings, Inc.

Enforcement Agency(ies): DOJ and SEC

Summary of Conduct: Biomet, Inc. (Bioment), a predecessor of Zimmer Biomet Holdings, Inc. (Zimmer Biomet) initially

settled FCPA allegations in 2012 for conduct in Argentina, Brazil, and China and hired an independent compliance

monitor. The company (now acquired by Zimmer Biomet) disclosed new allegations in Brazil and Mexico, after the

company entered into the 2012 settlement. In Brazil, Biomet allegedly used a distributor to make improper payments

to public healthcare providers in order to promote Biomet’s products. The company continued to use the distributor

despite representing that it had terminated that relationship. The company’s books and records incorrectly recorded

the transactions with a pass-through distributor rather than the actual distributor. In Mexico, Biomet’s subsidiary (now

acquired by JERDS Luxembourg Holding S.AR.L. (JERDS), an indirect subsidiary of Zimmer Biomet) allegedly made

improper payments to customs officials through a customs broker in order to transport unlicensed medical devices

across the Mexican border. The company allegedly made the payments knowing that a portion of the funds would be

paid to customs officials.

Improper Payment: DOJ and SEC did not quantify the amount of improper payments made to the Brazilian distributor.

Biomet’s Mexican subsidiary allegedly paid $980,774 to the customs broker.

Benefit Sought or Obtained: DOJ and SEC did not allege any specific benefit Zimmer Biomet or JERDS obtained from

the improper payments.

Disclosure, Cooperation and Remediation: Zimmer Biomet disclosed the misconduct and cooperated with the

investigation, but failed to implement an effective compliance program, in violation of the 2012 resolutions.

Charges or Allegations: Violations of the internal controls, anti-bribery, and books and records provisions.

Disposition: SEC Cease and Desist Order (Zimmer Biomet); DOJ Deferred Prosecution Agreement (Zimmer Biomet);

DOJ Guilty Plea (JERDS).

Financial Sanctions or Remedies: DOJ penalty $17.46M (Zimmer Biomet, with $4.8M attributed to JERDS conduct);

SEC disgorgement $5.82M (Zimmer Biomet); SEC prejudgment interest $702,705 (Zimmer Biomet); SEC civil penalty

$6.5M (Zimmer Biomet).

Reporting Obligations or Other Significant Non-Financial Obligations: Three year independent compliance monitor.

Zimmer Biomet agreed to retain a second monitor for the additional monitorship period, bringing the company’s total

monitorship term to almost eight years.

* * * * *

31

Keppel Offshore & Marine Ltd. and Keppel Offshore & Marine USA, Inc.


Summary of Conduct: Keppel Offshore & Marine Ltd. (Keppel) and Keppel Offshore & Marine USA, Inc. (Keppel

USA) allegedly bribed officials at Petrobras, Brazil’s state-owned oil company, to win contracts. The company concealed

the payments as commissions to intermediary consultants which were then passed along to Petrobras officials. The

DOJ coordinated the investigation with officials in Brazil and Singapore. A former senior member of Keppel’s Legal

Department was also charged with FCPA violations.


Benefit Sought or Obtained: Contracts with Petrobras and another Brazilian entity, resulting in $350M of ill-gotten

gains.

Disclosure, Cooperation and Remediation: Keppel cooperated with the DOJ investigation, conducted an internal

investigation, terminated or disciplined the employees involved, and enhanced its compliance program.

Charges or Allegations: Violations of the anti-bribery provision.

Disposition: Deferred Prosecution Agreement (Keppel); Plea Agreement (Keppel USA).

Financial Sanctions or Remedies: Criminal penalty $105M (with credit for criminal penalties of $211M in Brazil and

$105M in Singapore).

Reporting Obligations or Other Significant Non-Financial Obligations: Three year reporting requirement to the DOJ on

the company’s remediation and compliance program.

* * * * *

Las Vegas Sands Corp.


Summary of Conduct: Las Vegas Sands Corporation (Las Vegas Sands) made payments to a consultant with political

connections in China and Macao, purportedly to promote the company’s brand. Several payments were made “without

any discernable legitimate business purpose.” The company allegedly failed to accurately authorize and record millions

of dollars in payments made to the consultant. The company continued to make payments to the consultant even after

being warned that the business practices were questionable and that some payments could not be accounted for. Las

Vegas Sands resolved FCPA allegations with the SEC in 2016 for substantially similar conduct.


Benefit Sought or Obtained: DOJ did not allege any specific benefit Las Vegas Sands obtained from the improperly

recorded payments.

Disclosure, Cooperation and Remediation: Las Vegas Sands retained outside counsel to conduct an internal

investigation, cooperated with the DOJ investigation, hired a new General Counsel and other management personnel,

established a Compliance Committee on its Board of Directors, updated its code of business conduct and anti-corruption

policy, and terminated affiliation the individuals involved.




Disposition: Non-Prosecution Agreement.

Financial Sanctions or Remedies: Criminal penalty $6.96M, reflecting a 25% discount off the bottom of the U.S.

Sentencing Guidelines fine range.

Reporting Obligations or Other Significant Non-Financial Obligations: As part of the 2016 settlement with the SEC,

Las Vegas Sands hired a compliance consultant and agreed to submit reports to the DOJ. The company must continue

reporting to the DOJ for the duration of the three year Non-Prosecution Agreement.

* * * * *

Linde North America, Inc. and Linde Gas North America, LLC


Summary of Conduct: Linde North America, Inc. (Linde), Linde Gas North America, LLC (Linde Gas), and Spectra

Gasses, Inc., a Linde subsidiary, allegedly made improper payments to officials at the state-owned National High

Technology Center (NHTC) in the Republic of Georgia. In exchange for assistance acquiring assets and equipment used

to produce boron gas, Spectra executives agreed to share profits from its boron gas sales with NHTC officials. Spectra

executives and the NHTC officials created new corporate entities with cross-ownership to share profits. NHTC officials

owned 51% of the new companies and received 75% of the approximately $7.8M in profits. Once Linde discovered

the misconduct, the company withheld earmarked money in a separate account for the companies controlled by NHTC

officials, pending resolution of Linde’s investigation.


Benefit Sought or Obtained: Assistance purchasing assets and equipment, resulting in approximately $7.8M in profits.

Charges or Allegations: Violations of the anti-bribery provision.

Disclosure, Cooperation, and Remediation: Linde made a timely voluntary disclosure, conducted an internal

investigation, cooperated with the DOJ investigation, terminated or disciplined the employees involved, and improved

its compliance program.

Disposition: Letter of Declination under the FCPA Pilot Program with disgorgement.

Financial Sanctions or Remedies: Disgorgement $7.8M; forfeiture $3.4M outstanding amounts owed to the companies

controlled by NHTC officials.


* * * * *

33

Orthofix International N.V.


Summary of Conduct: Orthofix International, N.V.’s (Orthofix’s) Brazilian subsidiary, Orthofix do Brasil LTDA,

allegedly made improper payments to healthcare professionals at government-owned hospitals in Brazil. The subsidiary

entered into at least four improper payment schemes between 2011 and 2013 in order to increase sales of Orthofix

products. The company worked with third-party commercial representatives and distributors to facilitate the payments.

Orthofix concealed the improper payments with sham invoices for services which were not actually rendered. Orthofix

had previously resolved other FCPA allegations related to improper subsidiary payments in Mexico in 2012.

Improper Payment: SEC did not quantify the amount of improper payments made through the various payment

schemes.

Benefit Sought or Obtained: Increased sales of pharmaceutical products, resulting in $2,928,000 of profits.

Disclosure, Cooperation and Remediation: Orthofix self-reported the misconduct, cooperated with the investigation,

fired the employees involved, terminated the third-party relationships with commercial representatives and distributors,

and expanded its compliance program. Orthofix made its disclosure pursuant to its reporting obligations under its 2012

FCPA settlement.



Financial Sanctions or Remedies: Disgorgement $2.928M; prejudgment interest $263,375; civil penalty $2.928M.

Reporting Obligations or Other Significant Non-Financial Obligations: One year independent compliance monitor.

* * * * *

Amadeus Richers


Summary of Conduct: Amadeus Richers is a former general manager of a Miami-based telecommunications company.

From 2001 until 2004, Richers and his co-conspirators paid bribes to officials at Telecommunications D’Haiti, Haiti’s

state-owned telecommunications company. Richers and his co-conspirators made some payments directly to Haitian

officials and funneled other payments through third party intermediaries. Richers was extradited from Panama to face

DOJ charges. Richers is the ninth defendant to be sentenced in the Telecommunications D’Haiti case.


Benefit Sought or Obtained: Contract with Telecommunications D’Haiti.

Charges or Allegations: Conspiracy to violate the FCPA and wire fraud.

Disposition: Plea Agreement.

Sentence and Financial Sanctions or Remedies: Approximately 8 months time served; three years supervised release;

$100 criminal penalty.

* * * * *



SBM Offshore, N.V., SBM Offshore USA, Inc., Anthony Mace, and Robert Zubiate


Summary of Conduct: SBM Offshore, N.V. (SBM), a Dutch company, and its subsidiary SBM Offshore USA, Inc.

(SBM USA) allegedly paid more than $180 million in commission payments to intermediaries around the world. SBM

allegedly knew that some of those funds would be used to bribe officials in Angola, Brazil, Equatorial Guinea, Iraq, and

Kazakhstan in order to win local projects in the oil and gas industry. SBM previously resolved other bribery allegations

with enforcement agencies in the Netherlands in 2014 and Brazil in 2016.

Anthony Mace was SBM’s CEO and a former board member of SBM USA. Robert Zubiate was a sales and marketing

director for SBM USA. Mace and Zubiate admitted to bribing officials at Petrobras, Brazil’s state-owned oil company,

and state-owned energy firms in Africa.

Improper Payment: SBM made at least $180M in commission payments to intermediaries worldwide.

Benefit Sought or Obtained: Contracts worth approximately $2.8B.

Charges or Allegations: Conspiracy to violate the anti-bribery provision (SBM and SBM USA); Conspiracy to violate the

FCPA (Mace); Conspiracy to violate the FCPA (Zubiate).

Disclosure, Cooperation, and Remediation: Although SBM brought this matter to the DOJ’s attention, the company did

not make a complete disclosure for approximately one year. SBM cooperated with the DOJ investigation, terminated

or demoted the employees involved, terminated the improper agency agreements, and implemented a new system of

internal compliance controls.

Disposition: Deferred Prosecution Agreement (SBM); Plea Agreement (SBM USA); Plea Agreement (Mace), Plea

Agreement (Zubiate).

Financial Sanctions or Remedies: Criminal penalties of $238M, reflecting a 25% discount off the bottom of the U.S.

Sentencing Guidelines fine range (SBM). The criminal penalties include a criminal fine of $500K (SBM) and criminal

forfeiture of $13.2M of ill-gotten gains (SBM on behalf of SBM USA). Sentencing for Mace and Zubiate is pending at

the time of this publication.

Reporting Obligations or Other Significant Non-Financial Obligations: Three year annual self-reporting requirement to

DOJ (SBM).

* * * * *

35

Sociedad Química y Minera de Chile SA


Summary of Conduct: Sociedad Química y Minera de Chile SA (SQM) allegedly paid vendors connected to Chilean

politicians and officials for goods and services that were never actually received. SQM also made donations to

foundations controlled by Chilean politicians. One senior executive directed and authorized “virtually all of the

improper payments.” SQM failed to implement proper controls to stop the improper payments after the company

identified these risks in an internal audit.


Benefit Sought or Obtained: DOJ and SEC did not allege any specific benefit SQM obtained from the improper

payments.

Disclosure, Cooperation and Remediation: SQM terminated the senior executive involved, cooperated with the

investigation, and enhanced its compliance program.


Disposition: SEC Cease and Desist Order; DOJ Deferred Prosecution Agreement.

Financial Sanctions or Remedies: DOJ criminal penalty $15.5M; SEC civil penalty $15M.

Reporting Obligations or Other Significant Non-Financial Obligations: Two year independent compliance monitor; one

year self-reporting requirement to DOJ and SEC after monitorship ends.

* * * * *

Colin Steven


Summary of Conduct: Colin Steven is a former sales executive at Embraer S.A. (Embraer), a Brazilian aircraft

manufacturer. These charges were filed in connection with a 2016 DOJ and SEC investigation into Embraer which

resulted in a DOJ Deferred Prosecution Agreement and SEC Consent Agreement for the company. Steven pleaded guilty

in a scheme to bribe government officials in Saudi Arabia’s national oil company in exchange for securing sales of new

Embraer aircraft rather than used models. Stevens allegedly disguised the payments as commissions to a South African

company owned by his personal friends. The South African company transferred the bulk of the payments to the Saudi

Arabian official, but paid a portion of the proceeds directly to Steven. Steven admitted to engaging in the scheme,

retaining a kickback, and lying to law enforcement about the kickback.


Benefit Sought or Obtained: Guaranteed sales contract of new Embraer aircraft, valued at approximately $93M.

Charges or Allegations: Conspiracy to violate the FCPA; Conspiracy to commit wire fraud; Conspiracy to commit

money laundering; Money laundering; and Making a false statement.



* * * * *



Telia Company AB and Coscom, LLC


Summary of Conduct: Telia Company AB (Telia), a Swedish company, and its Uzbek subsidiary, Coscom LLC (Coscom),

allegedly offered and paid bribes to a shell company controlled by an Uzbek government official. The payments were

masked as lobbying and consulting services that were never provided. The improper payments occurred over several

years, as Telia sought entry into and Coscom expanded market share in the Uzbek telecommunications market. Telia

agreed to pay $965M in a global settlement with the DOJ, SEC, and Dutch and Swedish law enforcement, but is eligible

to offset the total settlement with forfeitures and proceedings by Dutch and Swedish enforcement agencies.

Improper Payment: $331M in payments passed to Uzbek government official.

Benefit Sought or Obtained: Entry into and increased business in the Uzbek telecommunications market.

Disclosure, Cooperation and Remediation: Telia agreed to cooperate with the DOJ’s ongoing investigation, terminated

the employees involved, and implemented internal controls.

Charges or Allegations: Violations of the anti-bribery and internal controls provisions.

Disposition: SEC Cease and Desist Order; DOJ Deferred Prosecution Agreement (Telia); DOJ Plea Agreement (Coscom).

Financial Sanctions or Remedies: Criminal penalties $508M (eligible for offset up to $274M for criminal penalties paid

to Dutch Public Prosecution Service); disgorgement $457M (with $40M disgorgement offset by forfeiture and eligible

for offset up to $208.5M for forfeiture to Swedish or Dutch Prosecutors).


* * * * *

37

VI. FCPA Statutory Provisions and Penalties

The FCPA’s anti-bribery provisions make it unlawful:37

» To offer, pay, promise to pay, or authorize a corrupt payment or other thing of value;

» Directly or indirectly;

» To a foreign official, candidate for foreign political office, official of an international public organization, or a

foreign political party;

» For the purpose of influencing any official act or decision, including any act or omission in violation of a lawful

official duty, or securing an improper advantage;

» To assist in obtaining, retaining, or directing business to any person.

Criminal penalties for violation of the anti-bribery provision are:

» For individuals38

○ Up to five years imprisonment

○ Fine of up to $250,000

» For corporate entities39

○ Fine of up to $2,000,000, or up to double the amount of the bribe or the gain from the bribe

○ Non-monetary sanctions such as a monitorship or self-reporting obligations can also be imposed

Criminal penalties for violation of the books and records and internal controls provisions are:40

» For individuals

○ Up to twenty years imprisonment

○ Fine of up to $5 million

» For corporate entities

○ Fine of up to $25 million

Civil penalties and remedies for violation of the books and records and internal controls provisions are:41

» Individuals

○ $9,054 to $181,171 depending on the seriousness of the violation

○ Disgorgement of ill-gotten gains

○ Bar on serving as a director or officer of a public company

37 See 15 U.S.C. § 78dd-1 (public companies and persons associated with them), § 78dd-2 (domestic companies and persons associated with them), and § 78dd-3 (non-U.S., private held companies and foreign nationals).

38 See 15 U.S.C. §§ 78dd-2(g)(2)(A), 78dd-3(e)(2)(A), 78ff(c)(2)(A); see also 18 U.S.C. § 3571(b)(3), (e) (fine provision that supersedes FCPA-specific fine provisions).

39 See 15 U.S.C. §§ 78dd-2(g)(1)(A), 78dd-3(e)(1)(A), 78ff(c)(1)(A); see also 18 U.S.C. § 3571(d).

40 15 U.S.C. § 78ff(a).

41 See Section 21(B)(b) of the Exchange Act, 15 U.S.C. 78u(d)(3); see also 17 CFR 201.1004 (providing adjustments for inflation).



» For corporate entities

○ $90,535 to $905,353 depending on the seriousness of the violation

○ Disgorgement of ill-gotten gains

○ Non-monetary sanctions such as a monitorship or self-reporting obligations can also be imposed

Additional Consequences

In addition to the criminal and civil penalties, violations of the FCPA may spur other consequences, including suspension

or debarment from federal government contracting.

» Suspension and Debarment for FCPA Violations

The Federal Acquisition Regulation (FAR)—the central body of rules governing federal contracts—provides for the

possibility of suspension or debarment of government contractors upon:42

(1) A criminal conviction or civil judgment for fraud or similar misconduct;

(2) A serious violation of the terms of a public contract, subcontract, agreement, or transaction, such as a willful

failure to perform in accordance with applicable provisions, or a history of failure to perform, or of unsatisfactory

performance; or

(3) Any other cause of so serious or compelling a nature that it affects the present responsibility of the individual or

entity in question.

Notably, for purposes of the general suspension and debarment provisions, SDOs take the position that the offense need

not have been in connection with a U.S. government contract.

» Suspension and Debarment for Failure to Disclose Credible Evidence of an FCPA Violation in Connection with a

Government Contract

The mandatory disclosure provisions of the FAR further provide that a contractor may be debarred or suspended for:43

“Knowing failure by a principal, until 3 years after final payment on any Government contract awarded to the

contractor, to timely disclose to the Government, in connection with the award, performance, or closeout of the contract

or subcontract … credible evidence of—(A) Violation of Federal criminal law involving fraud, conflict of interest,

bribery, or gratuity violations found in Title 18 of the United States Code …”

Each federal agency has a suspension and debarment official (SDO) authorized to impose suspensions and/or

debarments, which exclude entities from participating in government contracting at both the prime and subcontractor

levels.44 A debarment or suspension from procurement activities imposed by any federal agency automatically extends to

procurement activities for all executive agencies.45

The General Services Administration actively maintains a list of all debarred and suspended contractors, and

government contractors generally must certify they are not suspended or debarred as a requirement of any

contract award.

42 See 48 C.F.R. §§ 9.406–2, 9.407–2.

43 See 48 C.F.R. § 9.406–2.

44 See 48 C.F.R. 9.403.

45 See 48 C.F.R. §§ 9.406-1(c), 9.407-1(d).

39

Because suspension and debarment is designed to ensure the integrity of government contracts, the question is not

whether the contractor is culpable for past conduct but whether the contractor can be trusted to act responsibly at

present and in the future.46 Consistent with the purpose behind suspension and debarment, federal regulations direct the

SDO to consider “the seriousness of the contractor’s acts or omissions and any remedial measures or mitigating factors”

in making any debarment decision.47

It is typically wise to proactively inform the relevant SDO of any government investigation of the company for a

potential FCPA violation, any FCPA disclosures made by the company, as well as the company’s own investigative and

remediation efforts.

46 See, e.g., Robinson v. Cheney, 876 F.2d 152 (D.C. Cir. 1989).

47 See 48 C.F.R. § 9.406-1(a).

I. Smith Pachter McWhorter White Collar Practitioners

Smith Pachter McWhorter White Collar Practitioners

Iris E. BennettMember

Ms. Bennett has deep experience counseling clients on the investigation,

defense, and resolution of white collar matters, as well as the corporate

compliance programs designed to avoid such liabilities. She has

represented numerous Fortune 100 corporate and individual clients in

matters relating to potential violations of criminal or civil fraud statutes,

including the Foreign Corrupt Practices Act (FCPA), the False Claims

Act, the Anti-Kickback Act, and antitrust laws. She has also represented

companies in matters implicating the federal mandatory and voluntary

disclosure rules and brought those matters to successful resolution.

She has conducted internal investigations in cases across the globe and

represented companies before the Criminal and Civil Divisions of the

Department of Justice as well as the Securities and Exchange Commission,

in all phases of U.S. government investigations and settlement.

Ms. Bennett’s fluency in Spanish has enabled her to conduct many

investigations in that language. In addition to her extensive investigation

and defense experience, Ms. Bennett has years of FCPA compliance

counseling experience. She regularly advises corporate clients on their

anti-corruption compliance programs and on specific policies, procedures

and compliance questions. She has also designed and led large-scale

corporate compliance reviews and audits.

Ms. Bennett clerked for the Honorable Robert W. Sweet of the United

States District Court for the Southern District of New York, and for the

Honorable David S. Tatel of the United States Court of Appeals for the

District of Columbia. Ms. Bennett entered private practice after serving

as a federal criminal defense lawyer in the District of Columbia Federal

Public Defenders’ office.

Ms. Bennett is also Chair of the Public International and Criminal

Law Subcommittee for the District of Columbia Bar, International Law

Community, 2017–2018.

New York University School of Law (J.D., 1999; magna cum laude);

Order of the Coif; New York University Law Review

Harvard College (A.B., 1989; summa cum laude); Phi Beta Kappa




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]




Telephone: (703) 839–8121

Fax: (703) 847–6312

[email protected]

Joseph P. CovingtonMember

Mr. Covington has over 35 years of white collar litigation and counseling

experience in the domestic and international marketplaces, with expert

knowledge of the Foreign Corrupt Practices Act (FCPA), the Anti-

Kickback Act, the False Claims Act, and other criminal and civil fraud

statutes and regulations. Mr. Covington’s FCPA experience began in

1977 as a trial attorney in the Fraud Section at the Department of

Justice investigating foreign bribery cases, and later served as head

of DOJ’s FCPA prosecution unit, after which Mr. Covington entered

private practice. Mr. Covington has successfully represented hundreds

of corporate clients in FCPA internal investigations, government

investigations, and compliance matters, in countries ranging from Albania

to Zimbabwe. He has counseled clients on post-violation remediation,

guided them in establishing and maintaining compliance programs, and

advised on third-party due diligence and contracting issues. Mr. Covington

recently was appointed by the International Bank for Reconstruction and

Development and International Development Association (World Bank) as

the Independent Compliance Monitor for SNC-Lavalin Group Inc., with

a mandate to review and evaluate the company’s global anti-corruption

compliance program.

Mr. Covington also has two decades of experience with the False

Claims Act (FCA) and its qui tam provisions. He has investigated and

litigated numerous FCA cases, identifying and implementing strategies to

resolve these cases. He has represented corporate and individual clients

involving a range of other federal statutes and regulations, including

those governing conflicts of interest, procurement integrity, and anti-

competitive behavior. Mr. Covington is also well-versed in the mandatory

and voluntary disclosure obligations of government contractors and has

represented numerous clients in those matters.

Mr. Covington has represented companies before government agencies

including the Department of Justice Civil and Criminal Divisions, the

Securities and Exchange Commission, the Special Investigator General

for Afghan Reconstruction, and other investigatory bodies as well as

suspension and debarment officials.

Mr. Covington is AV Peer Review Rated, Martindale-Hubbell’s highest

peer recognition for ethical standards and legal ability. In 2012, Mr.

Covington was named a DC Super Lawyer in White Collar Defense.

Before his legal career, he served in the United States Army in combat in

Vietnam and received a Purple Heart.

University of Virginia School of Law (J.D., 1973)

University of Virginia (B.A. History, 1968)

Washington DC Super Lawyers, Criminal Defense: White Collar (2012)




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]

Sean J. HartiganMember

Mr. Hartigan practices exclusively in the areas of federal and international

law, specializing in white collar defense and compliance counseling. In

the international compliance context he concentrates on the Foreign

Corrupt Practices Act (FCPA) and in the domestic context on the False

Claims Act, Procurement Integrity Act, Federal Acquisition Regulation

(FAR), and other federal statutes and regulations governing the conduct of

government contractors and their employees.

Mr. Hartigan has represented corporate clients in the course of

numerous internal and government investigations, including before the

Department of Justice, Securities and Exchange Commission, and Office

of the Inspector General. With bilingual skills, he has conducted many

investigations in Spanish. Mr. Hartigan has also led teams in planning

and conducting FCPA compliance audits and program reviews, and

provides compliance counseling in this area. Mr. Hartigan has substantial

in-house experience with a major government contractor in the areas of

contract negotiation, investigation of potential voluntary and mandatory

disclosures, and analysis of FAR clauses for flow-down to business

partners.

Mr. Hartigan clerked for the Honorable Jacques L. Wiener, Jr. of the

United States Court of Appeals for the Fifth Circuit.

University of Michigan Law School (J.D., 2003, cum laude);

Book Review Editor, Michigan Law Review

University of Michigan – Gerald R. Ford School of Public Policy

(M.P.P., 2003)

Dartmouth College (B.A., 1994)




Telephone: (703) 847–6284

Fax: (703) 847–6312

[email protected]

Stephen D. KnightMember

Mr. Knight has practiced government contract law in excess of 35

years, counseling and litigating on behalf of clients in all aspects of that

specialized practice. He has significant experience in claims and disputes,

with special emphasis on costing and pricing issues involving cost

allocability and allowability, Cost Accounting Standards, defective pricing

under the Truth in Negotiations Act, and government audits.

Mr. Knight has substantial experience in compliance issues pertaining

to government contractors and frequently assists clients in evaluating

the requirement and manner of making disclosures to the government.

He has conducted compliance reviews for clients, assisting in reviewing

and evaluating internal controls, conducting training and evaluating

specific compliance issues such as business systems and socio-economic

requirements in government contracts. Mr. Knight represents prime

contractors as well as subcontractors, and is experienced in ascertaining

the necessary government contract requirements for inclusion in

subcontracts.

Mr. Knight also has significant experience in representing clients during

Inspector General audits and investigations, as well as procurement

fraud investigations. This experience includes grand jury and civil fraud

investigations pursuant to the criminal and civil False Claims Acts,

involving accounting, quality, conflicts of interest, and socio-economic

requirements.

For over twenty years, Mr. Knight has served as an adjunct professor with

the Masters in Procurement Law Program at The George Washington

University School of Law, teaching Costing & Pricing. He holds the Sy

Herman Professorial Lectureship at that law school.

Mr. Knight is bilingual in English and French.

University of Virginia School of Law (J. D., 1978)

University of Virginia (B.A. with Honors, 1975)




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]

Kathryn T. MuldoonMember

Ms. Griffin represents contractors across a range of industries on federal,

state, and private projects. She specializes in representing contractors in

resolving contract claims and disputes with the federal government and

prime-subcontractor disputes on federal and federally-funded projects.

She has a depth of experience in claim analysis and presentation,

including work with technical experts, scheduling experts, and cost and

pricing experts.

She has extensive experience representing defense contractors with

respect to government cost accounting issues, covering among other

issues government proposed disallowances of executive compensation

and broad-based employee compensation (including the costs associated

with health and welfare benefits). She also has experience assisting

government contractors with a full spectrum of other contracting issues

including those involving audits and investigations and procurement

fraud allegations. Her experience includes assisting contractors in

developing and evaluating their ethics and compliance programs, as

well as representing contractors who have been suspended or proposed

for debarment. She is also experienced in the conduct of internal

investigations and employee interviews pertaining to compliance issues

and in support of independent monitor engagements.

Ms. Griffin has worked with national, international, and local

construction and engineering firms on major contracting issues including

defective specifications, differing site conditions, constructive changes,

contractor performance evaluations, and liquidated damages.

Ms. Griffin currently serves as the President of the Board of Contract

Appeals Bar Association (BCABA); and served as the BCABA Vice

President in 2016. From 2014–2015, she taught a Cost & Pricing course

as an adjunct professor at George Washington University School of Law.

She has published on several aspects of government contracting, with

a recent focus on decisions and rules regarding contractor performance

evaluations.

Pepperdine University School of Law (J.D., 2006)

University of Virginia – McIntire School of Commerce (B.S. Commerce –

Accounting Concentration, 2002)

Armani VadieeMember

Mr. Vadiee’s practice focus is government contracts, commercial contracts,

compliance, white collar and construction matters. Mr. Vadiee provides

counsel to domestic and international clients on a wide range of issues

including contract negotiation, contract terms and conditions, bid

protests, contract changes and claim preparation, contract termination

settlements, regulatory audit and compliance litigation and oversight

on independent monitor engagements. Mr. Vadiee provides regulatory

compliance counseling on a wide range of areas including export controls,

subcontractor evaluations and mandatory reporting requirements.

Mr. Vadiee has experience litigating contract disputes in federal and

state courts and administrative bodies including before the Civilian

Board of Contract Appeals, the Armed Services Board of Contract

Appeals, the United States Government Accountability Office, the United

States Court of Federal Claims and the United States Court of Appeals

for the Federal Circuit.

Prior to law school, Mr. Vadiee was a contracting officer for a U.S.

Department of Energy research laboratory and during law school clerked

at the U.S. Government Accountability Office.

Mr. Vadiee is multi-lingual in English, Farsi (Bilingual Proficiency),

and Spanish (Limited Working Proficiency). He is an active member of the

American Bar Association Section of Public Contract Law and the Federal

Bar Association’s Government Contracts Section. Mr. Vadiee instructs

courses in Cost and Price Realism in Government Contracts, Government

Contracts Ethics and Compliance, and Cybersecurity and the impact on

law firms.

University of Maryland School of Law (J.D., 2010)

University of New Mexico, Anderson Graduate School of Management

(M.B.A., 2004)

University of New Mexico, Anderson School of Management

(B.B.A., 2002)




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]

Erica J. GeibelCounsel

Ms. Geibel represents clients in the government contracts, white collar,

and construction practice areas. She has significant experience in the area

of compliance counseling and regularly reviews ethics and compliance

programs, assists in training, and evaluates and tests internal controls.

Ms. Geibel is a Certified Compliance & Ethics Professional having

received her CCEP in 2017.

Her practice includes extensive work on independent monitor

engagements, contractor responsibility and integrity issues, internal

investigations, Anti-Kickback Act issues, Foreign Corrupt Practices

Act compliance counseling, and civil False Claims Act issues, as well

as all aspects of government contracts including small business issues,

contract claims and disputes, bid protests, contract negotiations, contract

review and contract drafting, and cost and pricing issues involving cost

allocability and allowability.

In her construction practice, Ms. Geibel has represented major national

and international contractors, as well as local contractors on a wide

variety of construction issues. Her construction experience includes, but is

not limited to, work on general negligence, differing site conditions, design

changes, contract interpretation issues, and analysis of contractor claims.

Ms. Geibel is Co-Chair of the Fairfax Bar Association Government

Contracts Section, member of the D.C. Bar Government Contracts and

Litigation Community Steering Committee on which she serves as the

Community Outreach Coordinator, and is an active member of the

ABA Section of Public Contract Law, serving as Vice Chair of the

Construction Division.

Ms. Geibel instructs courses on a variety of government contracts topics

including government contracting ethics and compliance. In 2017, Ms.

Geibel was named a Virginia Super Lawyers “Rising Star” in Government

Contracts.

George Mason University School of Law (J.D., cum laude, 2009)

George Mason University (B.A., Government & International Politics,

Departmental Honors, cum laude, 2005)

Virginia Super Lawyers “Rising Star,” Government Contracts (2017)




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]

Sean K. GriffinAssociate

Sean K. Griffin’s practice areas include government contracts,

construction, and white collar law. Mr. Griffin is experienced in the

mediation and litigation of government contracts disputes before the

Boards of Contract Appeals, the Court of Federal Claims, the U.S. Court

of Federal Claims, and the U.S. Court of Appeals for the Federal Circuit.

Mr. Griffin is also experienced in internal investigations and other matters

concerning the False Claims Act, Anti-Kickback Act, and Foreign Corrupt

Practices Act.

Prior to joining Smith Pachter McWhorter in 2015, he served as a Law

Clerk, and then as an Honors Attorney, for the United States Civilian

Board of Contract Appeals, focusing on government contract claims under

the Contract Disputes Act.

Mr. Griffin is a graduate of the American University, Washington College

of Law, where he served on the American Bar Association’s Administrative

Law Review and as Dean’s Fellow for the Business Law Program, and

competed for the Alternative Dispute Resolution Honor Society.

American University, Washington College of Law (J.D., 2014)

University of California, Santa Cruz (B.A., Political Science, 2008)

Paulo GusmãoAssociate

Mr. Gusmao’s practice areas include Government Contracts and White

Collar law. Mr. Gusmao serves on an Independent Compliance Monitor

team appointed by the World Bank to review and evaluate the global

anti-corruption program of SNC-Lavalin Group, Inc. Prior to joining

Smith Pachter McWhorter in 2017, Mr. Gusmao worked in the corporate

legal affairs department of the Inter-American Development Bank where

he advised on various corporate and institutional matters, including

human resources administration, mobilization of institutional resources,

implementation of personnel and administrative policies, corporate

governance, and tax. Mr. Gusmao also represented the Inter-American

Development Bank in labor disputes before its administrative tribunal.

While in law school, Mr. Gusmao was an intern at the Department of

Labor’s International Labor Affairs Bureau, a summer associate in the

project finance practice group of a corporate law firm in Rio de Janeiro,

Brazil, and a Student Attorney for the Community and Economic

Development Law Clinic.

Mr. Gusmao is multi-lingual in English, Portuguese and Spanish.

American University, Washington College of Law (J.D., 2014, cum laude);

Senior Editor, Journal of Gender, Social Policy and the Law; Dean’s

Fellow, Legal Analysis Program

American University, School of International Service (M.A., 2016)

University of Redlands, Johnston Center for Integrative Studies

(B.A., 2007)




Telephone: (703) 847–6288

Fax: (703) 847–6312

[email protected]




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]

Kristin A. TisdelleAssociate

Ms. Tisdelle’s practice focus is corporate compliance, commercial

contracts, government contracts, and white collar matters. She provides

counsel to domestic and international clients on a variety of issues

including contract negotiations and awards, contract claims and disputes,

interactions between prime contractors and subcontractors, and contract

administration. Ms. Tisdelle’s white collar experience includes internal

corporate compliance matters, investigations under the False Claims

Act and Foreign Corrupt Practices Act, debarment proceedings before

federal Suspension and Debarment Officers, and regulatory reporting

requirements. She also serves on an Independent Compliance Monitor

team appointed by the International Bank for Reconstruction and

Development and International Development Association (World Bank) to

review and evaluate the global anti-corruption program of SNC-Lavalin

Group, Inc.

During law school, Ms. Tisdelle interned in the Bureau of Competition

at the Federal Trade Commission, investigating mergers and acquisitions

among pharmaceutical companies for regulatory compliance and

consumer protection issues. Prior to law school, she worked in-house for

the General Counsel of a national transportation brokerage firm handling

state and local procurement contracts, corporate compliance matters, and

regulatory issues.

Washington and Lee University School of Law (J.D., 2016)

University of Mary Washington, (B.S., Economics, Philosophy, magna cum

laude, 2011)

Joseph P. EvansAssociate

Mr. Evans practices in the areas of government contracts, construction,

and white collar matters. Mr. Evans has experience with contract

interpretation disputes, bid protests, False Claims Act matters, collective

bargaining, and IP licensing. He has worked Fifth Amendment takings

cases, and Foreign Corrupt Practice Act issues.

Mr. Evans served as law clerk in the chambers of the Honorable Circuit

Judge Pauline Newman at the U.S. Court of Appeals for the Federal

Circuit. During his tenure, he worked on numerous cases in the fields of

government contracting and constitutional takings, gaining invaluable

insight on the appellate-level litigation of claims against the Federal

Government. Before his clerkship, and immediately following his

graduation from law school, Mr. Evans held a fellowship at the University

of Alberta, Faculty of Law’s Health Law Institute in Edmonton, Alberta.

There he conducted research on government regulation of basic and

applied scientific research, medical treatment, therapeutic devices, and

vaccines.

Mr. Evans obtained his law degree from the University of North Carolina

School of Law and his bachelors from North Carolina State University,

and completed portions of both his undergraduate and law school

coursework at Peking University in Beijing, China. As a fluent and

literate Chinese speaker, he spent his 1L summer at the Beijing branch of

Zhonglun Law Firm – one of China’s first and most prestigious law firms

– and worked as a freelance document translator and interpreter in Beijing

for the year between undergraduate and law school.

University of North Carolina School of Law (J.D., 2013)

Peking University School of Law (Summer Session on Chinese Law, 2011)

North Carolina State University (B.A., 2009); International Studies Focus

on East Asia, cum laude, Dean’s List, Phi Eta Sigma

Peking University (Foreign Exchange, 2008); ranked first among 2008

foreign students




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]

©2018 Smith Pachter McWhorter PLC. This publication is not intended to provide legal advice but to provide information on legal matters. Transmission is not intended to create and receipt does not establish an attorney-client relationship. Readers should seek specific legal advice before taking any action with respect to matters mentioned in this publication.

Julia S. KopcienskiAssociate

Ms. Kopcienski practices in the areas of government contracts,

commercial construction, and white collar matters. She has experience

with litigation and alternative dispute resolution procedures, focusing

on construction insurance and warranty issues, prime-subcontractor

disputes, claim entitlement and liability, fraud investigations, and

electronic discovery. Additionally, she has counseled clients on data

rights, bid protests, performance disputes, privilege, and federal agency

procurement practices.

Ms. Kopcienski is a graduate of the George Washington University Law

School, where she completed a government contracts course of study that

covered federal procurement topics including formation, performance,

cost and pricing, and intellectual property. During law school, she was

a member of the Moot Court Board, and competed in the 2016 GW

Government Contracts Moot Court Competition. As a finalist in that

Competition, she argued before a panel of experienced federal judges

and was awarded Best Overall Competitor. She was also a member of the

Federal Circuit Bar Journal, for which she served as Programs Editor.

George Washington University School of Law (J.D. 2017)

George Washington University Graduate School of Education &

Human Development (M.A., Education Policy Studies, 2017)

Loyola University Chicago (B.S., Psychology, magna cum laude, and

B.A., Philosophy, magna cum laude, 2013)




Telephone: (703) 847–6300

Fax: (703) 847–6312

[email protected]



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8000 Towers Crescent Drive, Suite 900 | Tysons Corner, Virginia 22182

Tel: 703.847.6300 | Fax: 703.847.6312

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