HNBA Corporate Counsel Conference March 30 – April 2, …

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HNBA Corporate Counsel Conference March 30 – April 2, 2017 ~ Miami, FL Accreditation Packet

Corruption in the Global Gateway: Developments and Enforcement Trends Relating to the Foreign Corrupt Practices Act and Other Anti-Bribery Laws. Date: March 31, 2017 Time: 11 am Moderator Eduardo A. Santiago-Acevedo Vice-President and Corporate Counsel, Regulatory Law Prudential Financial Newark, NJ Panelists Eric I. Bustillo Regional Director of the Miami Regional Office U.S. Securities and Exchange Commission Miami, FL Jerrob Duffy Assistant U.S. Attorney DOJ, Southern District of Florida Miami, FL Andrea Gonzalez Chief Compliance Officer, Latin America Prudential Real Estate Investors Mexico City, Mexico Alberto Orozco Forensic Services Director PricewaterhouseCoopers Houston, TX Mayling Blanco Partner - White Collar, Government Investigations, FCPA & Anti-Corruption Blank Rome LLP New York, NY

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HNBA Corporate Counsel Conference Accreditation Packet

Corruption in the Global Gateway

TAB 1

Panelists Biographies or CVs

Eduardo A. Santiago-Acevedo Vice-President and Regulatory Counsel Prudential Financial Eduardo is a corporate counsel with Prudential’s Enterprise Regulatory Law Group. He provides oversight and advice concerning significant regulatory matters for all lines of business and corporate center functions on state, federal and international issues. Eduardo handles the Enterprise’s regulatory matters and investigations involving the Department of Justice, the Securities and Exchange Commission (“SEC”), the Department of Labor, and other federal and state government agencies and FINRA. He is also responsible for regulatory matters involving anti-corruption and anti-bribery, including the Foreign Corrupt Practices Act, whistleblowers, third-part due diligence, and sanctions issues.

Prior to joining Prudential, Eduardo served as a Senior Counsel with the SEC’s Division of Enforcement in New York, where he was a member of the Asset Management Unit. Before he joined the Commission in 2001, Eduardo practiced commercial litigation for six years at a leading Puerto Rico law firm, where he represented local, national, and multi-national corporate clients during all stages of litigation, administrative proceedings, and arbitration matters. Eduardo holds an LLM in International Business and Trade Law from Fordham University School of Law and earned his law degree from the University of Puerto Rico School of Law. He obtained a Bachelor of Science degree from Purdue University’s Krannert School of Management.

Eduardo is the Chair of the Prudential Law, Compliance, Business Ethics and External Affairs (“LCBE”) Department’s Tenants Facing Eviction Pro Bono Clinic, Co-Chair of the LCBE Diversity Council, and serves on the board of directors of Inwood Community Services, Inc., a non-profit organization that provides counseling, education, and youth services. He is a member of the Hispanic National Bar Association, the Hispanic Lawyers Society of New York, and the Association of Corporate Counsel.

ERIC I. BUSTILLO, ESQUIRE

Eric I. Bustillo currently serves as the Regional Director of the Miami Regional Office (“MIRO”) of the U.S. Securities and Exchange Commission (“SEC”). As Regional Director, he is responsible for leading the functions of the MIRO, including the supervision of the office’s Enforcement and Examination programs, which jurisdiction covers the States of Florida, Mississippi, and Louisiana, as well as the U.S. Virgin Islands and Puerto Rico. The MIRO employs numerous professionals, including attorneys, accountants, and examiners, as well as support personnel who are assigned to these programs.

Between March 1995 and January 2010, Mr. Bustillo was employed by the United States

Attorney’s Office for the Southern District of Florida (“USAO-SDFL”) as an Assistant United States Attorney (“AUSA”) where for the last five years of his tenure with the office he served as Chief of the USAO-SDFL’s Economic & Environmental Crimes Section, in charge of supervising a group of AUSAs and other professionals. Mr. Bustillo supervised and prosecuted criminal matters involving, among other things, securities/corporate fraud, health care fraud, environmental crimes, commodities fraud, mail fraud, wire fraud, bank fraud, tax fraud, and/or money laundering violations.

Between February 1990 and March 1995, Mr. Bustillo was employed by the SEC’s Miami Office where he last served as Chief of one of the office’s Enforcement Branches, in charge of supervising a group of enforcement attorneys and an accountant. He supervised and prosecuted complex matters involving, among other things, financial fraud, insider trading, stock manipulation, fraudulent sale of unregistered securities, broker-dealer/investment adviser fraudulent practices, and corporate accounting controls violations. Prior to joining the SEC, Mr. Bustillo worked, briefly, at a private law firm doing commercial litigation and some corporate/real estate transactional work.

Mr. Bustillo currently serves as an Adjunct Faculty member of the Litigation Skills Program

at the University of Miami School of Law where he teaches Trial Advocacy Skills. He also is a frequent speaker at securities and white collar crime seminars around the country.

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Jerrob Duffy Assistant U.S. Attorney DOJ, Southern District of Florida Miami, FL [email protected]

Jerrob Duffy is an Assistant United States Attorney at the U.S. Attorney’s Office in Miami, in the Economic Crimes Section. From 2006 through 2011, he was a prosecutor in the DOJ Fraud Section, where he was a Senior Trial Attorney in the FCPA Unit. Jerrob has prosecuted numerous corporate fraud and FCPA matters, including United States v. Magyar Telekom and Deutsche Telekom, In re: Tenaris (resulting in the first DPA issued by the SEC), and various matters involving financial services, technology and oil and gas companies.

mailto:[email protected]

Andrea Gonzalez Chief Compliance Officer – PGIM Real Estate, Mexico Number of Years of Experience: 16 Number of Years with Prudential: 9.5

Ms. Andrea Gonzalez is Chief Compliance Officer at PGIM Real Estate Mexico. She is responsible for identifying, assessing, managing, and communicating all compliance risks of PGIM Real Estate Mexico. Ms. Gonzalez's duties include the design and application of procedures that allow the Company to conduct its business activities in compliance with all relevant laws and regulations from Mexico, Brazil, and Chile, including, among others, Investment Advisers Act, SOX, anti-bribery/ anti-corruption, privacy, conflicts of interests matters, and anti-money laundering guidelines, as well as in compliance with PGIM Real Estate's corporate policies. Ms. Gonzalez is also a co-leader in the ongoing efforts of social responsibility, including having PGIM Real Estate Mexico be recognized as a social responsible company (RSE), certification granted by the Mexican philanthropic organization CEMEFI.

Prior to joining PGIM Real Estate, Ms. Gonzalez worked at PepsiCo International Mexico, S. de R.L. de C.V. as a legal manager in the Contract and Business Support team, where she assisted and advised the Company's business people in drafting, reviewing and executing all kind of agreements, but specializing mostly on anti-trust and real estate matters. Additionally, Ms. Gonzalez was responsible of implementing, administrating and training employees on internal policies which include, among others, Code of Conduct, FCPA, confidentiality programs and the launching of the business conduct and ethics hot line for all Latin America Region. Prior to that, Ms. Gonzalez practiced law at Jauregui, Navarrete y Nader, S.C., where she specialized in corporate and compliance matters of financial institutions such as banks, insurance, surety and leasing companies, including compliance filings with Mexican authorities, M&A, and spin-offs.

Ms. Gonzalez graduated from Law School at the Universidad Iberoamericana (2003) and is currently pursuing as master’s degree in Social Responsibility at Universidad Anahuac Mexico. She also holds a diploma in Introduction to English and European Law from The London School of Economics and Political Science, and has attended several seminars on anti-trust, FCPA, anti-bribery/anti-corruption, and anti-money laundering matters.

She is a Mexican citizen, speaks Spanish and English fluently, has a middle level in French and is novice in Portuguese.

SERVICES

White Collar Defense& Investigations FCPA & Anti-CorruptionLitigationAppellate LitigationTax ControversyFBAR and FATCACompliance ADMISSIONS

New JerseyNew YorkU.S. Tax Court EDUCATION

Seton Hall UniversitySchool of Law, JDCornell University, BA

Mayling C. Blanco

Partner

New York, NY v. +1.212.885.5502 f. +1.917.332.3044Princeton, NJ v. +1.609.750.2647 f. [email protected]

Mayling Blanco represents corporations and individuals in white collar defense,government investigations, and commercial litigation matters, notablyconcentrating her practice on the Foreign Corrupt Practices Act (“FCPA”) andcorporate fraud, as well as matters implicating criminal tax exposure.

Ms. Blanco has conducted numerous domestic and international,multi-jurisdictional investigations for clients with ventures in Latin America, Asia,and Europe, and has represented her clients before the U.S. Department ofJustice’s Criminal, Civil, and Tax Divisions. She regularly advises clients withrespect to the development of anti-bribery plans and policies, audit findings,investigating potential violations, and anti-bribery inquiries arising from everydaybusiness dealings. She also represents clients facing government investigation orseeking to conduct internal investigations.

Ms. Blanco also advises corporations and financial institutions, including theirboards of directors and committees, in connection with corporate governanceand compliance matters, particularly as they relate to internal investigations andmitigating civil regulatory and criminal exposure. She has significant experienceassisting companies in efficiently responding to subpoenas, thereby minimizingany dirsuption to their business operations.

In litigation, Ms. Blanco has significant experience before various Federal DistrictCourts, U.S. Tax Court, the Superior Court of New Jersey, the New JerseyAppellate Division, and the New Jersey Supreme Court, defending clients in whitecollar, tax, commercial, employment, and constitutional matters.

Prior to joining Blank Rome, Ms. Blanco served under the Honorable Mathias E.Rodriguez of the New Jersey Superior Court. During law school, she was amember of the Legislative Bureau Journal, a student fellow for the Immigrationand Human Rights Clinic, and held an executive position with studentorganization.

REPRESENTATIVE MATTERS

Represented companies before the DOJ and State Attorneys General’sOffices. Representation included conducting internal investigations,implementing remedial measures, and negotiating resolutions.Representing a South American sports broadcasting and marketingcompany in FIFA investigation.Representing a European based credit card processing company in gaminginvestigation.Representing the owner of South American company in bank fraud,money laundering and criminal tax investigation.Representing the owner of pharmacy in criminal tax investigation.

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Representing an individual in Tax Court matter involving expropriation ofassets by government in Iran.Represented a company in the aerospace industry in an FCPA matter thatresulted in a non-prosecution agreement, no compliance monitor and asubstantial reduction in the amount of the potential fine. Therepresentation includes ongoing assistance in compliance with the termsof the non-prosecution agreement.Represented several companies in responding to federal and state grandjury subpoenas.Designed and implemented comprehensive FCPA compliance programs toprevent and detect potential anti-corruption risks for numerouscompanies, including (1) developing compliance policies and trainingprograms, and (2) drafting and reviewing contracts with agents,distributors, and other third parties to ensure they include provisions thatrequire adherence to applicable anti-corruption standards and provideclients with ability to monitor compliance.Represented a public entity and key elected official in a matter involvingFree Speech and social media. Secured a dismissal for key defendants atthe inception of the case.Representing a company in the aerospace industry in an FCPA withongoing assistance in compliance with the terms of the non-prosecutionagreement and before the DOJ.Represented a national nonprofit agency under investigation for undueinfluence and conflicts of interest.Representing clients entering the Offshore Voluntary Disclosure Program(“OVDP”) with the IRS.

COMMUNITY SERVICE & AFFILIATIONS

Ms. Blanco is a member of the Seton Hall Alumni Council, the Firm’s DiversityCommittee, and is active with the Hispanic National Bar Association and the NewJersey Hispanic Bar Association.

RECOGNITIONS

2010–2013, 2015–2016, “Rising Star,” listed in New York Super Lawyers

A description of the standard or methodology on which the accolades are basedcan be found here.No aspect of this advertisement has been approved by the Supreme Court of NewJersey.

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http://www.blankrome.com/index.cfm?contentID=54#methodologies

Alberto Orozco Director

Email: [email protected] Office: (713) 356-8421 Fax: (813) 741-4121 PricewaterhouseCoopers LLP Advisory

Education and Certifications • The University of Texas at Austin -

Master of Business Administration • Universidad Iberoamericana- UIA,

Mexico- Accounting • Certified Public Accountant (CPA) -

Texas

Professional and Business Affiliations • Member, American Institute of

Certified Public Accountants (AICPA) • Member, Texas Society of Certified

Public Accountants (TSCPA)

Presentations • “Practical Strategies to Conduct an

Effective Internal Investigation and Remediation,” Mexico Summit on Anti-Corruption, Mexico City, March 2016

• “Latin America’s Investment Opportunities: How to Tap into Lucrative Government Contracts in Mexico and Colombia and Prevent Bribery Pitfalls” ACI’s 10th FCPA Bootcamp, Houston TX, January 2016

• “What to do when Corruption is Discovered: How to conduct an Effective Internal Investigation into Bribery Allegations,” Mexico Summit on Anti-Corruption, Mexico City, March 2014

• “Latin America Compliance Focus,” 2nd UH Ethics and Compliance Symposium, Houston TX, June 2013

• "Minimizing Joint Venture Risks: How to Assess Partners and What to do if you suspect Corruption," 2nd Latin America Summit on Anti-Corruption, Sao Paulo Brazil, February 2012

Publications • “Mexico Energy Reform- How to

Mitigate Corruption Risk in Mexico” – September 2015

Range of Experience Alberto Orozco is a Director in the Houston Forensic Services Practice of PwC. Mr. Orozco has over fifteen years of experience providing financial consulting, assurance and business advisory services to clients in various industries. Mr. Orozco leads our Latin American Forensic Services practice for the Houston office.

Mr. Orozco has provided a variety of financial advisory services to clients, including the investigation of allegations regarding fraudulent financial reporting, asset misappropriation, inappropriate procurement practices, allegations of illegal activities related to the Foreign Corrupt Practices Act (FCPA), and analysis of the accounting treatment of particular transactions in various industries. Mr. Orozco has assisted in different litigation and arbitration assignments including projects involving breach of contract, determining monetary damages relating to product liability, forensic accounting analysis of mortgage securities and mutual fund transactions, application of accepted accounting principles, and adequacy of financial reporting disclosures.

Mr. Orozco’s work experience includes assistance in International Arbitrations as well as conducting financial fraud investigations, FCPA investigations, FCPA due diligence reviews, and FCPA compliance reviews in Mexico, Ecuador, Costa Rica, Paraguay, Bolivia, Spain, Peru, Dominican Republic, Colombia, Venezuela, Argentina, Brazil, Turkey, Russia, South Africa, Ivory Coast and Mozambique.

Mr Orozco’s deep experience and understanding of Latin America's culture, customs, practices and risks have been invaluable when advising his clients on potential opportunities and challenges. Alberto is regularly called upon to advise corporations seeking guidance and assistance due to his passion for forensics work and continuous pursuit of building better bridges between Latin America and those seeking to do business in the region.

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TAB 2

Course Materials (Articles and Publications)

Jurisdiction Anti-bribery in Latin America

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1. What is the legal framework regulating bribery?

ARGENTINA Sections 256 to 259 of the Argentine Criminal Code provide the legal framework regulating bribery. Laundering the proceeds of bribery is also punished by the Argentine Criminal Code (sections 303 and following). A criminal conviction on bribery can also trigger consequenc-es in relation to public procurement (such as contracts being void).

BOLIVIA The anti-bribery regulation is detailed in Law No. 004 of 31 March 2010 (Law 004).

BRAZIL Bribery is considered as one of the forms of corruption. An individual who offers any advantage or benefit, directly or indirectly, to a pub-lic agent in order to obtain a favourable decision commits the crime of active corruption, whereas the individual who receives the illegal advantage commits the crime of passive corruption.

Crimes of “active bribery” and “traffic of influence” in an international business transaction are given by articles 337-B and 33-C of the Brazilian Penal Code.

COLOMBIA Bribery is dealt with by Articles 405, 406 and 407 of the Colombian Criminal Code, and Law 1474 of 2011. Law 80 of 1993. The main charter for public procurement also deals partially with the issue.

COSTA RICA There are two main legal frameworks dealing with bribery:

� The Anti-Corruption Act (Law 8422). This primarily applies to public officials. However, individuals who interact with public officials can also be punished for certain crimes under this law. Individuals may be subject to criminal penalties. Companies may be subject to fines and administrative penalties for the corrupt actions of their employees and representatives.

� The Criminal Code (Law 4573). This covers public officials as well as individuals who interact with public officials, without regard to the origin or cause of the interaction.

DOMINICAN REPUBLIC The legal framework regulating bribery is mainly provided by the Constitution of the Dominican Republic, enacted on 26 January 2010, which expressly condemns any form of bribery in state entities. This prohibition is further developed in:

� Law 41-08 of Public Function, enacted on 25 January 2008.

� Law 448-06 on Bribery on Commerce and Investment, enacted on 6 December 2006.

� The Criminal Code of the Dominican Republic.

This framework is also complemented by conventions executed and ratified by the Dominican Republic, such as

� The Inter-American Convention against Corruption, ratified by the Dominican Republic on 8 June 1999.

� The UN Convention against Corruption, ratified on 26 October 2006.

GUATEMALA The legal framework that punishes and regulates bribery is provided by the Criminal Code of Guatemala (Decree 17-73 of Congress). The relevant crime provisions that sanction corruption acts apply to active bribery, trans-national active bribery, passive bribery, illegal acceptance of gifts, misappropriation of funds, embezzlement, extortion, abuse of office, and fraud (Articles 439, 442bis, 443 through 452, Criminal Code).

HONDURAS The legal framework that punishes and regulates bribery is composed of the following Laws:

� Constitution of the Republic of Honduras.

� Criminal Code.

� Labour Law.

� Law against Money Laundering.

� Law regarding Organisation and Attribution of the Court.

� Law of Transparency and Access to Public Information.

� Law of Public Officers Recruitment.

� Ethical Behaviour Code for Public Officers.

� Inter-American Convention against Corruption.

� United Nations Convention against Corruption.

� Treaty for Framework of Democratic Security in Central America.

� Guatemalan Convention for a region free of corruption.

Anti-bribery in Latin America

Gerardo Gallego Díaz de LeónIbarra del Paso y Gallego

In recent years, international economic transactions have increased both in frequency and amounts in and between the world’s various economic blocks. The main factors that have enhanced commercial activity between countries include:

� Greater access to international finance.

� Greater flow of goods and services between countries attempting to satisfy the growing market demand.

� The globalisation phenomena.

Due to increasing global activity, more stringent regulation and alignment is required in every country that is involved in the economic status quo. The growth and development of

commercial transactions between nations requires that the legal framework of the countries involved must consistently suit the incessant operations taking place around the world. Efforts towards avoiding law-infringement in piracy, data protection, international trade, transparency in government procurement and public bidding and foreign investment (among others) as well as with anti-corruption, aim to establish the rule of law and certainty for cross-border investors.

Bribery is one of the most common challenges for foreign investors when they arrive at unknown territories to do business. Bribery is a major threat to commercial activity and economic factors, therefore, stronger anti-bribery measures are required wherever foreign investment is welcomed.

Many countries have now embodied regulations and policies in their legal frameworks in order to ban, limit and sanction undue practices (for example, in the US, the Foreign Corrupt Practices Act; in the UK, the Bribery Act; and in Mexico, the Federal Anti-corruption Law for Government Procurement).

This article gives a general overview of anti-bribery efforts in certain Latin American countries in order to show that despite adverse propaganda in some international fora, Latin American nations have joined the trend to fight corruption and improve their free market conditions. The article gives details of case studies from emerging economies that are seeking anti-corruption measures from and against actors from developed economies.

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MEXICO Until very recently Mexico lacked a specific legal framework to prevent and punish acts of corruption. The Federal Anti-corruption Law for Government Procurement (Ley Federal Anticorrupción en Contrataciones Públicas) was officially published in the Official Gazette of the Mexican Federation on 11 June 2012. Its main purpose is to:

� Establish liabilities and sanctions for those involved in bribery during public procurement proceedings.

� Regulate the procedures to determine such liabilities as well as to apply consequent sanctions.

� Determine competent authorities for these purposes.

Bribery acts are also controlled by criminal and administrative regulations such as:

� Federal Criminal Code (Código Penal Federal).

� Federal Law for Public Servants’ Liabilities (Ley Federal de Responsabilidades Administrativas de los Servidores Públicos).

� Law for Acquisitions, Leases and Services of the Public Sector (Ley de Adquisiciones, Arrendamientos y Servicios del Sector Público).

� Law for Public Works and Services (Ley de Obras Públicas y Servicios Relacionados con las Mismas).

NICARAGUA The legal framework regulating and punishing the crime of bribery is the Criminal Code of the Republic of Nicaragua (Law No. 641), specifically the Articles:

� 429: Crimes against freedom of expression.

� 445-447: Crime of bribery.

� 449: International bribery.

� 475: False testimony.

� 476: Falseness in the expert´s report, interpretation or translation.

� 478: Bribery of witnesses, experts, interpreters or translators.

� 482: Facilitation of avoidance.

PARAGUAY The Paraguayan Criminal Code sanctions bribery payments under Articles 300, 301, 302, 303 and 304.

Paraguay has additionally ratified the United Nation Convention Against Corruption and the Inter-American Convention Against Corrup-tion. These treaties, according to the Constitution, are hierarchically superior to the laws adopted by the Congress.

EL SALVADOR The legal framework that punishes and regulates bribery is composed of the following Laws:

� Constitution of the Republic of El Salvador.

� Governmental Ethic Law.

� Criminal Code.

� Law of Access to Public Information.

� Ethical Standards for Public Service.

� Politics for rational use of resources of the state or municipality.

� Government procurement and public bidding Act.

� Inter-American Convention against Corruption.

� United Nations Convention against Corruption.

� Treaty for Framework of Democratic Security in Central America.

� Guatemalan Convention for a region free of corruption.

� Mechanism for Transparency of Public Administration and Publicity of the Administrative Acts.

URUGUAY The legal framework that punishes and regulates bribery is composed of the following Laws:

� Criminal Code, passed by Act No. 9.155 dated 4 December 1933. Several crimes regarding corruption were amended and incorporated by Act 17.060.

� Act 17.060, commonly referred to as the “Anti-Corruption Law”, which refers to the undue use of public power (corruption), and its regulatory decree number 30/003.

� United Nations Convention against Corruption was signed and then ratified by Uruguay in Act No. 18.056 dated 14 November 2006.

� Inter-American Convention against Corruption, signed in Caracas on 29 March 1996, and then ratified by Uruguay in Act No. 17.08 dated 25 November 1998.

2. Is your country a signatory of the OECD anti-bribery convention?

ARGENTINA Yes. The OECD Convention was ratified on 8 February 2001.

BOLIVIA No.

BRAZIL Yes, Brazil signed the OECD Anti-Bribery Convention in 1997 and ratified the Convention on 15 June 2000 by Legislative Decree No. 125/2000.

Brazil is also signatory to two other international conventions against corruption:

� The Inter-American Convention against Corruption, enacted by Decree No. 4410 of 7 October 2002.

� United Nations Convention against Corruption, enacted by Decree No. 5.687 of 31 January 2006.

COLOMBIA Colombia is a signatory of the OECD Anti-Bribery Convention and on 29 November 2011 became the 40th member of the Working Group on Bribery of the OECD. The legislature is in the process of ratification of an accession to the OECD Convention.

COSTA RICA No, Costa Rica is not a signatory of the OECD Anti-Bribery Convention, but the country is part of the OAS and UN Conventions against corruption.

DOMINICAN REPUBLIC Although the Dominican Republic has signed and ratified several conventions on matters of corruption and bribery, it is not yet part of the OECD Anti-Bribery Convention.


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GUATEMALA No.

HONDURAS No.

MEXICO Yes, since 1999. Mexico also ratified Inter-American Convention against Corruption (IACAC) from the Organization of American States in 1997, and the United Nations Convention against Corruption (UNCAN).

NICARAGUA No.

PARAGUAY No.

EL SALVADOR No.

URUGUAY No.

3. Does the legal framework punish only public officials or also the private entity or its representatives/employees committing the bribery?

ARGENTINA Both public officials and representatives/employees of private entities are subject to criminal punishment. Private entities are subject to confiscation of the proceeds of bribery (section 23, Criminal Code), and are criminally liable for laundering the proceeds of bribery only (section 304, Criminal Code).

BOLIVIA Article 5 of Law 004 provides that the Law applies to:

� Current and formal public officials.

� Armed forces.

� Police forces.

� Entities where the government has patrimonial participation.

� Individuals or private legal entities who commit bribery that causes economic damage to the Bolivian state, or from which they have unlawfully benefited.

BRAZIL The possibility of criminal liability for legal entities is unclear in Brazil and the legal framework does not provide for criminal liability for a private entity for bribery. Only public officials and individuals who commit bribery (representatives or employees) can be liable. However, there are some legislative bills still in progress at the Brazilian Congress that aim to legislate against the corruption of private entities within the public administration.

COLOMBIA Both officials and private individuals and entities are subject to criminal charges under Articles 405 and 406 (public officials) and 407 (private individuals) of the Colombian Criminal Code.

Loss of contractual capacity for current contracts and future contracts is also imposed on individuals and private entities in cases of brib-ery for access to contracts, under Laws 80 and 1474. Public officials and individuals would also be subject to incapacity for the exercise of public functions.

COSTA RICA The Anti-Corruption Act primarily covers public officials. However, individuals who interact with public officials can also be punished for certain crimes under the law. While only physical persons can be punished with criminal penalties in Costa Rica, companies may be sub-ject to administrative penalties for damages caused by the actions of their employees. These administrative sanctions can include fines and the closure of the business for up to five years.

Additionally, the Criminal Code establishes that in the case of a crime committed by a public official, the other participants that are not pub-lic officials (such as business officers) may be considered to be public officials if they knew that they were dealing with a public official.

DOMINICAN REPUBLIC The legal framework on the subject of bribery is designed to punish both public officials and private persons committing bribery. In cases related to commerce and investment, punishment is also imposed on a private entity found guilty of bribery. Under Law 448-06, a private entity can be subjected to temporary or permanent closure or intervention, in addition to fines, as well as the imposition of prison sentences and fines for company representatives, and for the public official recipient of the bribe.

GUATEMALA Both public officials and private entities can be held liable.

HONDURAS The Criminal Code punishes public officials and the private individuals who commit bribery.

MEXICO Before the implementation of the Federal Anti-corruption Law for Government Procurement, corruption practices were mainly punished when committed by government and public officials. However, under the new Law, every individual or company, whether Mexican or for-eign, who participates in public procurement proceedings is subject to its provisions and penalties.

These kind of liabilities and penalties are pursued not only when directly committed by individuals or corporations, but also when performed by their representatives, agents, employees, consultants, contractors, associates, partners, shareholders or any other character in their name.

NICARAGUA The legal framework punishes both public officials and private individuals. Private entities are not subject to penalties or punishments.

PARAGUAY The Paraguayan Criminal Code sanctions public officials and individuals who offer bribe payments to public officials.

EL SALVADOR The Criminal Code punishes public officials and private individuals who commit bribery.

URUGUAY Law 17.060 does not expressly provide any punishment for private entities or their representatives/employees.

The Uruguayan Criminal Code stipulates two crimes regarding corruption offences, which concern private individuals as the perpetrators of the crime. As a general rule, private entities are not criminally accountable.

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4. Does the application of the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act in your country violate any public policy provision or statute?

ARGENTINA No.

BOLIVIA No.

BRAZIL The FCPA and UK Bribery Act are not enforceable in Brazil, as they have not been enacted by the Brazilian Legal System. However, their provisions could be used as a supplementary source of reference for bribery cases, whenever the Brazilian Federal Constitution is not violated.

COLOMBIA Colombia recognises and co-operates with foreign officials in the application of foreign laws in cases of criminal activities contemplated under foreign statutes, with the only exceptions being where this violates Colombian public order or the application of incarceration in ex-cess to the maximum penalties in Colombia for the same criminal activity. Colombia has a concept of a criminal conduct called “Soborno Trasnacional” (Transnational Bribery) under which, the offer or transfer to a foreign public officer of money, articles with monetary value, or any other profit in exchange of an activity favouring an economic transaction, is punishable in Colombia with both incarceration and fines (Article 433, Colombian Criminal Code).

COSTA RICA The FCPA is generally compatible with national bribery and corruption laws. However, unlike the FCPA, Costa Rican law does not allow for any criminal fines against individuals convicted of corruption. However, Costa Rica provides for the civil liability of individuals for damage or injury they cause to others as a result of their corrupt actions. This civil liability may result in monetary damages. There is also the possibility of administrative fines and sanctions.

DOMINICAN REPUBLIC The application of the FCPA and the UK Bribery Act do not, in principle, violate any Dominican public policy or statute, as far as their ap-plication does not present an obstacle for the enforcement of the corresponding Dominican regulations against the accused person or entity.

GUATEMALA No, as long the act is applied exclusively to nationals of countries that have enacted the Acts and are judged by a foreign jurisdiction.

HONDURAS As Honduras is not signatory of these Acts, and they are not part of our legislation, such provisions or statutes cannot be enforced within Honduran Territory.

MEXICO The FCPA and UK Bribery Act both have extraterritorial application. However, both provisions apply mainly to individuals or companies that:

� Are nationals, citizens or residents of the US or UK.

� Perform business transactions or have a presence in the US or UK.

� Appear listed on public stock markets in the US or UK.

Therefore, the application of both Acts within Mexico to any other company or individual would not be easy to execute.

In addition, the Mexican Law for the Protection of Commerce and Investment from Foreign Regulations that Contravene International Rights (Antidote Law) forbids the extraterritorial effects of foreign laws that may affect commerce or investment, or the sharing of any kind of information, by any means, that is required by foreign courts or authorities.

NICARAGUA The FCPA and the UK Bribery Act do not violate any public policy provision or statute because they are not legally valid in the current Nicaraguan legislation.

PARAGUAY In cases where the criminal offence was committed in Paraguay, or when the crime was committed by Paraguayan public officers, the Paraguayan Criminal Code applies. This is a public policy provision.

However, in cases where the author of the crime was sanctioned by a foreign authority in their respective jurisdictions the author of the crime will avoid further sanctions, according to the non bis in idem principle.

It is likely that the application of the FCPA or the UK Bribery Act to sanction bribe payments committed in Paraguay would not violate these provisions, as long as the non bis in idem principle is followed.

EL SALVADOR Since El Salvador is not signatory of these Acts, and they are not part of our legislation, such provisions or statutes could not be enforced within El Salvador.

URUGUAY The application of these Acts may violate public policy provisions, depending on the circumstances.

5. How is bribery defined under the applicable statute or legal precedent?

ARGENTINA Section 256 of the Criminal Code defines bribery as the act by which any public official, either personally or by means of an intermediary, receives money or any other gift, or directly or indirectly accepts a promise from an official to carry out, delay, or not to do something in rela-tion to his duties.

The law also punishes the act of, personally or through an intermediary, requesting or receiving money or any other gift, or directly or indi-rectly accepting a promise in order to make an unlawful use of influence with a public official, (including magistrates of the Judiciary or the National Attorney General’s Office) with the purpose of having the official act, delay or refrain from acting in relation to his duties, or issue, decree, delay or omit any resolution, sentence or judgment concerning any matter under his jurisdiction (section 256 bis, Criminal Code).

It is an offence for any person to personally or through an intermediary give or offer any gift for the purpose of obtaining any of these acts. It is also an offence for any judge or magistrate of the Ministerio Público to personally or through an intermediary accept money or any other gift, or directly or indirectly accept promise of such in order to issue, decree, delay or omit any resolution, sentence or judgment concerning any matter under his jurisdiction (sections 257 and 258, Criminal Code).

It is an offence for any person to offer or give a public official from a foreign state or from an international public organisation, personally or through an intermediary, money or any object of pecuniary value or other benefits such as gifts, favours, promises or benefits, for his own benefit or for the benefit of a third party, for the purpose of having such official act or refrain from acting anything related to his office or to use the influence derived from the office he holds in an economic, financial or commercial transaction (section 258 bis, Criminal Code).

The Criminal Code also establishes that it is an offence for any public official to accept any gift by reason of that office while in public office (section 259, Criminal Code).

BOLIVIA Article 2 of Law 004 provides that bribery encompasses every requirement, acceptance, offering, or direct or indirect granting, of any valuable object or any other benefit, such as gifts, favours, promises or any advantage for the perpetrator, or for third parties, in exchange for an action or inaction that affects the interests of the State, caused by any public officer, or any individual or legal entity, whether national or foreign.


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BRAZIL The Brazilian Penal Code defines corruption broadly and bribery is one of the various forms of corruption. Any individual who offers any advantage or payment, directly or indirectly, to a public agent in order to obtain a favourable decision commits the crime of active corrup-tion, whereas an individual who receives the illegal advantage commits the crime of passive corruption.

COLOMBIA The description of bribery is very general in the Colombian legal framework. Articles 405 to 407 of the Colombian Criminal Code define bribery as the transfer of money or profit, or the promise of future remuneration, to a public official, in exchange for an activity that does not correspond to his official duty.

COSTA RICA Under the Anti-Corruption Act, any advantage granted to public officials is an impermissible act. Government employees are not allowed to receive rewards or benefits for their work beyond those established in the public regime, regardless of value. They are not allowed to receive any gifts, prizes, rewards or any other advantage for their actions or inactions in the course of their employment. This means that they may not receive any fee, stipend or salary from any other person or company, national or foreign, due to their work or position. Any donation to a public official is forbidden.

DOMINICAN REPUBLIC Bribery is defined as the act of giving and/or requesting/accepting gifts, entertainments, gratifications, favours, any object of monetary value and/or any other kind of undue benefit (including using promises, threats or violence), directly or indirectly, in exchange for actions or omissions pertaining to the exercise of a public servant’s functions, regardless of the legality of the action or omission, as long as a cause and effect relation can be established between the public servant’s action or omission and the benefit received (Law 41-08 of Public Function, Law 448-06 on Bribery on Commerce and Investment, the Criminal Code of the Dominican Republic, Inter-American Convention against Corruption).

Acts or omissions by a public servant in the exercise of their functions in order to illicitly obtain benefits for himself or for others, as well as not returning or depositing when required funds, receipts, seals, properties, equipment and so on placed in their care due to their post is also considered bribery.

GUATEMALA All Guatemalan anti-corruption provisions are included in the Guatemalan Criminal Code (Decree 17-73 of Congress).

The provisions do not offer precise definitions of a gift and do not give a minimum threshold for what acts would be deemed not illegal or legal. Bribery is a general concept but it may comprise the different criminal felonies included in the section of the code mentioned be-fore. Broadly speaking, the crimes refer to officials accepting (and private parties offering), directly or indirectly, any object of any value or benefit, as payment of a favour, present, promise or advantage, so as to achieve the performance of certain acts that would benefit whomever is paying for the favour. Payments to foreign officials or international institutions are also punishable. A public official’s pursuit of any contractual grant in his favour is also punishable.

HONDURAS Bribery is defined as (Criminal Code):

� Any act where public officers, request or receive, on their own behalf or in representation of a third party, goods, gifts, presents or accepts any promise of retribution, with the purpose of committing a crime.

� Any act where public officers, request or receive, on their own behalf or in representation of a third party, goods, gifts, presents or any other improper advantage, or accepts any promise of retribution, with any purpose that does not include a crime.

� Where a public worker or employee requests, receives or accepts, directly or through a third party, gifts, presents, offers, promises or any other improper benefit to execute an action that is against his duties and does not consist in a crime.

� Any act where public officers, request or receive, on their own behalf or in representation of a third party, goods, gifts, presents or accepts any promise of retribution, with the purpose of speeding or delaying their functions.

� Any act where public officers, request or receive, on their own behalf or for a third party, goods, gifts, presents or accepts any promise of retribution, by someone who has requested an official act of the public officer.

� The act of offering or giving a public officer goods, gifts, presents or any other improper advantage, or any promise of retribution, with the purpose of requesting any type of action or omission from the public officer.

� Any act where a public officer, in a superior position, affects or requests from another public officer, to act officially in a way that could directly or indirectly bring him or any third party economic benefits.

MEXICO The following actions are penalised under Mexican Federal Anti-corruption Law for Government Procurement:

� Promising, offering, or delivering money or any other gift (with a few exceptions) to a government officer (directly or indirectly), so that he realises or abstains from performing his faculties in order to obtain or maintain a certain benefit.

� Acts or omissions in order to:

� participate in public procurement proceedings when legally impeded from doing so;

� avoid requirements or rules for public procurement proceedings; and

� obtaining a wrongful advantage for public procurement proceedings.

� Intervening on behalf of another individual or company that is legally impeded from participating in public procurement proceedings in order for them to obtain benefits.

� Forcing a public officer to deliver, execute or destroy a document or good in order to obtain a benefit or advantage.

� Promoting or using influence, economic or political power over any public officer to obtain any benefit or advantage.

� Submitting false or altered documentation or information in order to obtain any benefit or advantage.

NICARAGUA The crime of bribery is defined as any act of offering, promising, or granting to an authority, national public official or employee, any article of monetary value or any other benefits in exchange for the authority, official or public employee, to perform or omit any act in the exercise of their functions.

The offence includes any element considered as a benefit, whether this is corporeal or incorporeal, such as gifts, money, favours, prom-ises or advantages of any kind.

Its scope goes beyond the national level. It has an international scope in accordance with article 449 of the Criminal Code, where inter-national bribery is punished.

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PARAGUAY Bribery includes any undue benefit, including gifts of any sort. The relevant articles defining and sanctioning bribe payments are:

� Article 300:

� a public officer that requests, allows an offer or accepts a benefit in exchange for official function-related conduct that has taken place or that will take place in the future, is punishable with imprisonment of up to 3 to 4 years or a fine;

� a judge or arbitrator that requests, allows an offer or accepts a benefit in exchange for a consideration coming from a ruling or any judicial activity that has taken place or that will take place in the future, is punishable with imprisonment of up to 5 years or a fine;

� in all these cases, the attempt is also punishable.

� Article 301:

� a public officer that requests, allows an offer or accepts a benefit in exchange for an act of service already performed or that will be performed in the future, and that is injurious to his duties, is punishable with imprisonment of up to 5 years;

� a judge or arbitrator that requests, allows an offer or accepts a benefit in exchange for a ruling or any other judicial activity already performed or that will be performed in the future, and that is injurious to his judicial duties, is punishable with imprisonment of up to 10 years;

� in these cases, the attempt is also punishable.

� Article 302:

� an individual who offers, promises or guarantees a benefit to a public officer in exchange for an act of service already performed or that will be performed in the future, and which depends on its discretionary powers, is punishable with imprisonment of up to 2 years or a fine;

� an individual who offers, promises or guarantees a benefit to a judge or arbitrator in exchange for a ruling or other judicial activity already performed or that will be performed in the future, is punishable with imprisonment of up to 3 years or a fine.

� Article 303:

� an individual who offers, promises or guarantees a benefit to a public officer in exchange for a service already performed or that will be performed in the future, and that is injurious to its duties, is punishable with imprisonment of up to 3 years;

� an individual who offers, promises or guarantees to a judge or arbitrator a benefit in exchange for a ruling or any other judicial activity, already performed or that will be performed in the future, and that is injurious to its judicial duties, is punishable with imprisonment of 1 to 5 years;

� in these cases, the attempt is also punishable.

EL SALVADOR Bribery is defined as follows:

� The Ethics in Government Act includes a prohibition that indirectly defines bribery as any action involving giving goods, services or benefits (with an economic value) to public officers, with the purpose of speeding up, slowing down or stopping the tasks or procedures related to their functions.

� Any act where a public officer, requests or receives, by himself or through another, goods, any improper advantage, or accepts any promise of retribution, with the purpose of speeding or delaying their functions (Criminal Code).

� A person or entity, that bribes a public officer, giving or offering goods, any improper advantage or promising any kind of retribution with the purpose of speeding or delaying the public officer´s functions (Criminal Code).

URUGUAY The act of bribery (cohecho simple) is defined under the Uruguayan Criminal Code as the activity of a public official who receives an undue retribution, or accepts its promise to execute an act he is to perform due to his position, or to delay or omit such act or to perform an act other than the one which is due.

6. Does the legal framework for government procurement and public bidding address or cross-reference these concepts?

ARGENTINA Yes. According to Executive Decree 1023/2001, Section 10, contracts procured through bribery must be terminated and proposals or offers must be rejected at any stage of the bid.

BOLIVIA Due to its wide scope, Law 004 applies to government procurement and public bidding. Article 5 provides that Law 004 applies to every public officer or entity, at every level, including the officers in charge of government procurement and public bidding.

BRAZIL Public bids and public administration agreements are covered under Law No. 8,666/93. However, this Law does not include any discus-sion of bribery. The only relevant provisions are stated in the Penal Code.

COLOMBIA Criminal Laws are a direct source of regulation for government procurement. However, government procurement laws contain further pro-visions regarding sanctions for improper behaviour. In addition to loss of contractual capacity and incapacity for the execution of current and future public contracts under Law 80 and Law 1474, Law 1474 establishes caps for the support of public campaigns, violations of which result in impossibility of execution and performance of public contracts in which the elected public official is responsible for the contract procedure.

COSTA RICA The Anti-Corruption Act addresses bribery in the government procurement process. In such cases, the company can be fined up to 10% of the amount of the government bid involved if it is a higher amount than the standard bribery fine. Additionally, the company may be prohibited from participating in the government procurement process in the future.

DOMINICAN REPUBLIC The bribery concepts are cross-referenced by provisions pertaining to government procurement. Article 11 of Law 340-06 on Purchases and Contracts for Goods, Services, Works and Concessions, enacted 18 August 2006, states that corrupt or fraudulent practices com-prised in the Dominican Criminal Code or in the Inter-American Convention against Corruption will be deemed causes for rejection of a proposal presented or the termination of the contract if it has already been executed.

GUATEMALA No, the legal framework for government procurement and public bidding does not cross-reference bribery concepts.

HONDURAS Yes, the Government Procurement and Public Bidding Act includes prohibitions where no entity can participate in Public Biddings if they have been previously condemned for bribery.

MEXICO Yes, the Mexican Federal Anti-corruption Law for Government Procurement derives from cross-referencing both anti-bribery concepts with government procurement and public biddings provisions.

NICARAGUA No, the legal framework for government procurement and public bidding does not cross-reference bribery concepts.

PARAGUAY There are no references to those concepts in the laws addressing public biddings. However, the Paraguayan Criminal Code has general application over any act described in its provisions (Law No 2.051/03 Articles 10, 57 paragraph c), 83).


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EL SALVADOR Yes, the Government Procurement and Public Bidding Act includes prohibitions where no entitiy can participate in public bidding if they have been previously convicted of bribery.

URUGUAY Law 17.060 contains provisions regarding government procurement and public bidding.

7. What institutions are in charge of anti-bribery enforcement?

ARGENTINA In federal cases, the enforcement of the anti-bribery legal framework in the criminal system is by public prosecutors (which are part of the structure of the Federal Public Prosecutor’s Office, within the Ministerio Público, an independent and autonomous constitutional body pursuant to Article 120 of the Constitution) and criminal judges and tribunals.

Within the Ministerio Público there are no specialised agencies except for the National Prosecutor’s Office of Administrative Investiga-tions (Fiscalía Nacional de Investigaciones Administrativas) (FNIA), designed to play a role in prosecuting corruption offences. However, this agency can autonomously carry out only preliminary investigations before the judicial stages of the case. Once the case is filed with a judge, it has only an auxiliary role to the competent prosecutor attached to the judge’s court.

The Anti-corruption Agency (Oficina Anticorrupción) (OA) working within the structure of the executive has powers to receive complaints from private individuals and public officials, investigate corruption within the national administration and report bribery advancing administrative, civil, and criminal proceedings. It also acts as the plaintiff in proceedings that affect State assets, which provides it with standing to propose investigative measures and evidence, and appeal against decisions that are adverse to its claims.

In non-federal cases, most states have no specialised units, although some of them have established some sort of anti-corruption unit.

BOLIVIA Article 6 of Law 004 creates the Anti-Bribery National Council (Consejo Nacional de Lucha Contra la Corrupción, Enriquecimiento Ilícito y Legitimación de Ganancias Ilícitas), which is composed of government representatives. Additionally, Article 11 creates specialised anti-bribery courts and Article 18 creates the Financial Investigations Unit to specialise in illicit earnings. These entities are in charge of the supervision and sanctioning of bribery acts. However, the District Attorney is responsible for indicting the perpetrators.

BRAZIL The Brazilian Court of Audit (TCU) plays an important role in federal anti-bribery enforcement. The TCU supervises the accounts of administrators and authorities responsible for public money, goods and assets of the public bodies of the federal state and other entities, the TCU also controls the collection of revenues and evaluates the legality of the acts of admission public officials, and so on.

The General Comptroller of the Union (CGU) also acts on corruption prevention, proposing to the Congress measures to improve the legal framework and expulsing public servers, for example.

The Federal Police and Prosecutors have been jointly operating in the decomposition of old organised schemes to divert public resources throughout the country.

COLOMBIA In criminal cases, the General Prosecutor (Fiscal General) (broadly equivalent to the General Attorney) is in charge directly, or through one of his deputies. In non-criminal cases, bodies with authority over disciplinary actions against public officers (Procurador General de la Nación) or for Treasury surveillance (Contralor General de la Nación) may also be involved. In addition to incarceration, fines and inca-pacities, the public entities affected may ask for the reparation of any damage, in which case the Ministry of Internal Affairs (Ministerio del Interior) may file actions for recovery.

COSTA RICA There are three main institutions that may be involved in enforcing anti-bribery law:

� The Comptroller General’s Office.

� The Attorney General’s Office.

� Any part of the public administration on whose behalf the offending public official acts.

DOMINICAN REPUBLIC The institution in charge of enforcing anti-bribery laws is the Attorney General’s Office (Procuraduría General de la República), by means of a dependency created to deal specifically with corruption practices, the National Directorate of Prosecution of Administrative Corrup-tion (Dirección Nacional Persecución de la Corrupción Administrativa).

GUATEMALA The District Attorney conducts the investigation and if there are sufficient merits, the District Attorney files a criminal complaint before the courts.

HONDURAS The main institutions that may be involved in enforcing anti-bribery law are:

� The Governmental Accounts Tribunal.

� The Attorney General Office.

� The Courts General Inspectorate.

� The Criminal Courts.

� Anti-bribery legal assistance office.

MEXICO The main institutions involved in enforcing anti-bribery law are:

� Ministry of Public Administration (Secretaría de la Función Pública). The Organic Law of the Federal Public Administration (Ley Orgánica de la Administración Pública Federal) was published in the Federal Official Gazette on 2 January 2013. This law contained several reforms including the dissolution of the Ministry of Public Administration, which was (and still is to date) the ministry in charge of prosecuting corruption in the government. The dissolution will eventually be implemented in order to incorporate a new autonomous body (unidentified as yet), which will assume those functions. This substitution process is expected to take place in several stages. The Ministry of Public Administration will remain operating until the new regulations are published and become enforceable.

� Mexican Congress, including both, Chamber of Senators and Chamber of Deputies.

� Supreme Court of Justice and Federal Judiciary Council.

� Federal Tax and Administrative Court.

� Settlement and Arbitration boards (Federal Conciliation and Arbitration Court and Agrarian Courts), Federal Electoral Institute.

� Supreme Federal Audit Office.

� National Human Rights Commission.

� National Institute of Statistic and Geography.

� Mexico’s Central Bank.

NICARAGUA The institution in charge of enforcing anti-bribery laws is the Public Ministry represented by the General Prosecutor, who enforces the law through the district prosecutors all over the country.

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PARAGUAY The Public Prosecutor’s Office is in charge of prosecuting bribery.

EL SALVADOR The institutions in charge of enforcing anti-bribery laws are the Governmental Ethics Tribunal, the Attorney General’s Office and Criminal Courts.

URUGUAY Breaches of the duties and prohibitions contained under the regulatory decree of law 17.060 constitute disciplinary faults. Therefore, the respective agency should prosecute the offence through administrative disciplinary proceedings.

The enforcing institution is the criminal judicial courts if the conduct is a criminal offence under the Criminal Code.

Law 17.060 expressly determines that disciplinary proceedings are without prejudice to the civil and/or criminal liability provided by the Constitution and the law. Similarly, the submission of a public officer to criminal justice does not detract from the administrative disciplinary proceeding.

8. What are the maximum penalties (incarceration and monetary) for bribery?

ARGENTINA The maximum penalties for bribery are 6 years’ imprisonment, and 12 years’ imprisonment in the cases of bribery and trading in influence involving judges and magistrates of the Ministerio Público, as well as the penalty of special disqualification for life regarding the exercise of any public office.

Both individuals and legal persons are subject to disgorgement of the bribe and the proceeds of bribery.

BOLIVIA The maximum penalty for public officials is incarceration for 5 to 10 years, barring from public office, a fine of 200 to 500 days wages and the confiscation of any property that was illegally attained (Article 27). In the case of private individuals or entities (including the legal entity’s representative), the maximum penalty is incarceration for 3 to 8 years, a fine of 100 to 300 days and the confiscation of any property which was illegally attained (Article 28).

BRAZIL The maximum penalty for active corruption is 12 years’ incarceration, which may be increased by one-third, if the foreign public official actually delays or omits, or puts into practice the official act in breach of his duty.

The monetary penalty can vary according to the authority’s assessment.

COLOMBIA There are different punishable conducts with different penalties. For cases of maximum liability, incarceration is from 6 to 12 years for public officers, and from 4 to 9 years for private individuals. Fines are from approximately US$15,000 to US$30,000.

COSTA RICA Companies and legal entities are not directly liable for criminal prosecution. However, a company involved in bribery is subject to a sanc-tion that could reach a maximum fine of approximately US$500,000. The company could also be subject to closure of business for up to 5 years, freezing of business’ activities for up to 5 years, cancellation of concessions or operation permits, or loss of tax benefits and exonerations.

Business officials may be held personally liable for criminal penalties, but are not subject to monetary fines. Business officials are sub-ject to all the criminal charges in both the Anti-Corruption Act and the Criminal Law. The maximum penalty could include up to 12 years in prison.

If a public official receives an advantage to perform a permissible official act he is subject to a sanction of up to 2 years in prison. If the public official receives an advantage to perform acts that breaches his official duties, he is subject to a sanction of up to 10 years in prison.

DOMINICAN REPUBLIC The Dominican Criminal Code establishes a maximum penalty of a fine of twice the amount of the gifts or favours received and a maxi-mum of 5 years in prison for both the bribed public servant and the briber, and the ineligibility to exercise industrial or commercial ac-tivities for a maximum of 5 years. The Criminal Code states that if the bribery involved a criminal act is punishable by heavier penalties, then the heavier penalty must always be applied.

Law 448-06 establishes harsher punishments for bribery related to commerce and investment, stating a maximum of 10 years of reclu-sion and a fine of twice the offered and/or received amount, which must be at least fifty minimum salaries.

GUATEMALA Bribery is punished with incarceration (ranging from 4 to 10 years) and fines (up to approximately US$65,000). Paying foreign official or international institutions is also punished.

HONDURAS Under the Criminal Code, the penalties are between 5 and 7 years of imprisonment for public officers and/or for any person who bribes a public officer. The penalties can be lower depending on the effects of the bribe or offence.

The Ethical Behaviour Code for public servicers establishes that the officer charged with this felony must be removed from his functions.

A person who helps with the improper actions is subject to fines between US$5,300 and US$53,000.

MEXICO According to Article 27 of the Federal Anti-corruption Law for Government Procurement:

� Individuals may be charged with a fine from 1,000 to 50,000 times the minimum wage payable in Mexico City.

� Legal entities may be charged with a fine worth 10,000 to 2 million times the minimum wage payable in Mexico City.

For both individuals and legal entities, in cases relating to permits, concessions, authorisations or procedures related to federal public procurements or international commercial transactions, the maximum fines provided for in the previous provisions, can increase up to 50%, when the competent authority, based on objective elements, determines that the benefit obtained by the offender exceeds the maximum fine.

With respect to federal public procurements performed in accordance with the existing public procurement legislation, if the maximum fines prove to be less than 30% of a contract’s amount, a fine of between 30% and 35% of the contract’s amount is imposed, if such contract was awarded to the offender, whether an individual or a legal entity. This will also result in disqualification from entering into federal procurements for a period of:

� Between 3 months and 8 years for individuals.

� Between 3 months and 10 years for legal entities.

NICARAGUA The maximum penalties for bribery are:

� 6 years’ incarceration.

� 15 to 15 days’ wages fine.

PARAGUAY Criminal sanctions include 10 years of imprisonment and fines, the amounts of which are fixed taking into consideration the heritage of the perpetrator.

Immoral contracts are null under the Paraguayan Civil Code.

A bidding process can be declared null if an action is brought before the Office of Public Procurement (DNCP), and the illegality of the bidding process is proved (Article 83 Law No. 2.051/2003, Public Procurement).


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EL SALVADOR Penalties are between 3 and 6 years’ imprisonment for public officers, and between 2 and 4 years’ imprisonment for any person who bribes a Public Officer.

As it is stated by the Ethics in Government Act, bribery committed by public officers is punished with a fine determined by the Govern-mental Ethics Court, depending on the severity of the bribery. The fine will be between 1 and 40 monthly minimum wages for the urban commercial sector. (The monthly minimum wage for the urban commercial sector is currently around US$224.10).

URUGUAY Maximum imprisonment of up to 6 years. In addition, those involved in the bribery will have to pay a fine of up to approximately US$300,000, and be prohibited from occupying a public position for a period of up to 6 years, depending on the particularities of the case. These punishments are cumulative.

9. Does the legal framework foresee protection to whistleblowers or witnesses reporting bribery?

ARGENTINA The legal framework foresees the protection of witnesses reporting bribery (Statute No. 25.764 created the National Program for the Protection of Witnesses and Defendants). However, it does not foresee the protection of whistleblowers.

BOLIVIA Yes. Article 17 of Law 004 provides for witness and whistleblower protection.

BRAZIL There is no possibility of having whistleblower awards in the crimes of corruption. However, there is a legislative bill in progress at the Brazilian Congress which provides whistleblower awards to private entities involved in bribery whenever they collaborate with the investi-gations.

COLOMBIA Protection for whistleblowers and witnesses is possible under the Criminal Code and the Criminal Procedure Code. Effective co-operation coming from persons involved in the criminal activities results in benefits for them in relation to the reduction of incarceration penalties.

COSTA RICA There is no special, independent system to protect whistleblowers, informants, or witnesses in corruption cases. However, there is a gen-eral law providing for witness protection for victims or witnesses in any criminal matters where the witness may suffer stress or psycholog-ical harm owing to their involvement as a witness in a criminal matter. This protection may even extend to government-funded relocation and protection, but only in cases when the witness fears for their physical safety.

DOMINICAN REPUBLIC Law 448-06 indicates that the authorities must offer protection to those that, in good faith, denounce bribery acts related to commerce and investment. In other cases, however, the law does not expressly foresee their protection, even if it might be granted in practice.

GUATEMALA Yes. Persons who report corrupt acts in good faith will be protected by the authorities, in conformity with the applicable legislation (Ar-ticles 439 and 442 bis, Criminal Code).

HONDURAS The Anti-bribery Legal Assistance Office, foresees protection to any person who denounces a public officer for bribery, but only protects the person’s identity.

MEXICO Not explicitly. However, the Ministry of Public Administration (the ministry will eventually be dissolved under proposed reforms and will be replaced by a new public body, see Question 7, Mexico) may execute collaboration agreements with individuals and entities that take part in federal public procurement procedures and in international commercial transactions, as well as with chambers of commerce, in-dustrial organisations and the like, in order to help them establish self-regulatory mechanisms, which in turn may include the implemen-tation of internal controls and integrity programmes to help them ensure the development of an ethical culture within the organisation (Article 33, Federal Law of Administrative Procedures).

When establishing the design and supervision of these mechanisms, the best international practices regarding controls, ethics and busi-ness integrity will be considered. These measures must also include complaint and protection mechanisms.

NICARAGUA No, it does not foresee protection to whistleblowers or witnesses who report bribery, neither during the investigation process nor during the trial.

PARAGUAY The Public Prosecutor’s Office protects those who are at risk of suffering any damage as a result of their collaboration with the Justice administration, especially when dealing with criminal offences related to abuse of powers, organised crime or human rights violations (Article 10, Law No. 1562/2000).

EL SALVADOR The Ethics in Government Act, provides protection to any person who denounces a public officer for bribery, protecting the person´s iden-tity only. The Special Law For The Protection of Victims and Witnesses, grants protective measures for whistleblowers or witnesses that could be in any danger related to a witnessed felony.

URUGUAY Yes.

10. What is the process for reporting bribery and enforcement?

ARGENTINA Any person can report a suspected case of bribery to law enforcement officials: a judge, a prosecutor or the police (Article 174, Criminal Procedure Code).

It is mandatory for public officials to report suspected criminal offences (Article 177(1), Criminal Procedure Code).

Article 82 allows aggrieved persons to become complaining parties (querellantes). The threshold to open an investigation is low, and once a complaint is received, investigation is mandatory (section 29, Statute No. 24.946).

After a report is submitted, a criminal investigation takes place under the jurisdiction of a criminal judge with investigative capacities (juez de instrucción), which can be delegated by the judge to a public prosecutor. Under the Criminal Procedure Code, the investigation phase should not last longer than four months from the first interrogation of the suspect, although with possible extensions (Article 207). However, those time limits are not mandatory and are actually wholly inapplicable in complex economic crime cases.

Once the investigation phase has concluded and the prosecutor considers there is enough evidence, the case is sent to the oral trial. The oral trial is conducted by a panel of judges, and leads to a decision on the merits. However, very few bribery cases reach the oral stage of the procedure.

Article 431 bis of the Criminal Procedure Code allows for settlements (juicio abreviado). Under some conditions, prosecution and de-fence can reach an agreement about guilt and sentence at the beginning of the oral trial phase.

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BOLIVIA Article 21 specifies a legal obligation for individuals and entities to inform and remit any information on an illegal or corrupt practice to the Financial Investigations Unit. Article 22 provides that whenever the Financial Investigations Unit holds information related to bribery, it must send the entire file to the District Attorney and inform the Anti-Bribery Ministry, which files the corresponding indictments.

BRAZIL There is no formal process for reporting a bribery case in Brazil and all the authorities conduct such cases. Any authority is obliged to receive the information of an illegal conduct and forward it to the authority with jurisdiction over the crime reported.

Despite this, the CGU has implemented an easier way to report a corruption case. The several kinds of corruption, including bribery, can be reported to the CGU by completing and submitting the electronic complaint form available at the General Comptroller’s website (www.cgu.gov.br/denuncias/formularioDenuncia.asp), or in a written form to the Comptroller General’s Office.

The CGU accepts anonymous reports, however, the complaint must fulfil the following thresholds:

� Involvement of a public body or official of the Federal Executive Branch, in cases relating to federal funds.

� Substantiated description of the facts to support the analysis by CGU.

COLOMBIA The Colombian Criminal Procedure Code, Law 906, 2004, regulates the procedural issues dealing with bribery. Recent amendments to the Code, especially in Law 1474, 2011 have been included in Colombian Legislation.

COSTA RICA To report an instance of bribery, a witness or informant must present the information to an official qualified to bring anti-bribery charges. Then, the bribe must be allowed to occur so that there is evidence of a crime. Finally, the witness must participate in the trial by testify-ing as to the act of corruption committed.

DOMINICAN REPUBLIC A report of bribery can be made through the National Directorate of Prosecution of Administrative Corruption of the Attorney General’s Office, either in person, by phone, in writing, or by filling out a form that can be found on their webpage. The report can also be made through the government contact centre’s hotline, according to what is stated in their webpage. After a report is received, the Attorney General’s Office should proceed to investigate the report made in order to identify those possibly involved and the evidence. If after the investigation the prosecutors consider that there are reasons to believe that bribery has taken place, they are required to present the ac-cusation for the case before the corresponding jurisdiction.

GUATEMALA Persons reporting bribery must file a claim before a specific district attorney assigned to corruption acts and from that moment, a formal investigation must be initiated. Once the district attorney has sufficient proof, he proceeds to file a formal claim before a criminal judge, who opens the case to debate if the claim is well supported.

HONDURAS According to the Anti-bribery legal assistance office, any person can report bribery, in oral or written form, as long as the report contains:

� Identification of the whistleblower.

� Description of the facts.

� Place to receive notifications.

According to the Criminal Code, any felony (including bribery) can be reported before the Attorney General Office, police or criminal judge. The report can be made in oral or written form.

According to the Governmental Accounts Tribunal, any person can report bribery in oral or written form, as long as such report contains:


� Description of the region institution.


MEXICO Actions can be initiated ex officio or by complaint. Competent authorities will take note of the alleged infringements through the follow-ing means, among others (Articles 11, 12, 13, 14, 15, 16 and 17 of the Federal Anti-corruption Law for Government Procurement):

� CompraNet, through the Complaints Section set up in the system.

� A complaint instituted by the contracting public institutions or any other authority.

Such complaints are submitted to the Ministry of Public Administration (the ministry will eventually be dissolved under proposed reforms and will be replaced by a new public body, see Question 7, Mexico), or when appropriate, to the corresponding authorities supported by documents, information and adequate evidence to substantiate the allegations.

The types of complaint provided by the Law are as follows:

� Individual complaints.

� Anonymous complaint.

� International complaint.

� Complaint by public officials.

Letters of complaint must include the facts and information that support the allegations, data that allows the identification of the of-fender and the elements of proof that confirm the alleged infringements.

Once the complaint has been filed, if the competent authorities identify any possible infringement they will carry out the enquiry stage.

The competent authority fixes a deadline to address the notice. The deadline must be no less than 5 business days or not more than 10 business days starting on the day following the date of notification. The deadline can be extended by 10 additional business days if requested by the interested parties with justified cause. If notices are not answered without justified cause, the competent authority can impose a fine under the terms provided by Article 25.

Public contracting institutions that receive information requests must reply within a period of 10 business days following the date in which notification becomes effective. When the contracting authorities require a longer period due to the nature and extent of the infor-mation requests, they may request in writing an extension of the deadline, duly justified, to the competent authorities. If granted, the deadline extension is non-renewable and will not exceed 20 business days. When public officials do not answer notices mentioned by law, they will receive a fine, except where legal considerations or justified causes are acceptable in the authority’s judgement, regardless of measures to be taken to hold public officials accountable for administrative liabilities.

Competent authorities should have access, under applicable laws and regulations, to any relevant information needed to determine the facts.

In the course of the enquiry process, competent authorities can, in addition to requesting information under Article 14, take all the initia-tives and measures deemed appropriate, including requesting documents and information from any other individual or entity, to verify any alleged infringement and seek support from international conventions to prevent and fight corruption.

After the inquiry stage, the competent authorities conduct an assessment to determine if an administrative penalising procedure must be initiated.

If not enough elements can be found to prove the allegations and the responsibility of the offender, an agreement will be issued to bring to a conclusion and close the file, which can be reopened if new evidence arises and the power to sanction has not expired.


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NICARAGUA The victim initially submits a formal complaint to the police and the police experts investigate any piece of information required for the indictment by the prosecutor. Once the required elements have been obtained an indictment is duly submitted before the prosecutor, which must contain:

� Identification of the victim and his domicile.


� Indication of proofs.

� Determination of the crime committed.

� Signature of the victim.

On admission of the charges by the judge, it proceeds as follows:

� Preliminary hearing is held, in which the defendant is informed of the charges.

� Initial hearing is held. Here, the judge establishes whether there is a cause for trial or not.

� The trial itself is carried out, and the guilt or innocence of the defendant is determined.

� Finally, the judge pronounces the sentence.

PARAGUAY Any person can report criminal offences to the Public Prosecutor’s Office, orally or in writing using a report template (www.ministeriopublico.gov.py/content/c2/inst/denun/denun/Plantilla%20Denuncia.dot).

The person who reported the crime does not need an attorney, and the prosecutor has a legal obligation to investigate the facts, identify those responsible and seek their appropriate sanction before the competent criminal court.

Reporting of criminal offences can also be carried out through the following website: www.contrataciones.gov.py/denuncia.

EL SALVADOR According to the Ethics in Government Act, any person can report bribery to the Government Ethics Tribunal or the Commission of Gov-ernment Ethics, in oral or written form, as long as such report contains:


� Identification of the public officer accused of bribery.


� Place to receive notifications.

� Signature of the whistleblower.

(In an oral report, a minute must be granted by the officer of the institution.)

According to the Criminal Code, any felony (including bribery) can be reported before the Attorney General’s Office, police or criminal judge. The report can be made in oral or written form.

URUGUAY Crimes are reported to the police or judicially. Disciplinary faults must be reported administratively within the relevant agency.

In the case of irregularities that may cause economic damage, public officers must also report the crime to the Tribunal de Cuentas.

In the exercise of disciplinary authority, agencies may obtain the opinion of the Advisory Board of the State Economic and Financial Matters.

11. Describe recent notable cases (include websites or links if available).

ARGENTINA On 31 May 2004, María Julia Alsogaray, a former public official that had served in several Cabinet posts during Carlos Menem’s Presidency (1989/1999) was convicted of the crime of illicit enrichment and sentenced to 3 years’ imprisonment, 6 years’ disqualification for public posts, and a forfeiture of approximately US$700.000 as unjustified wealth (Oral Court in Federal Criminal Matters Nº 4, Case Nº 648, “María Julia Alsogaray”). The judgment was later confirmed by the National Court of Criminal Cassation, and, in December 2008, by the National Supreme Court of Justice.

In May 2010, former public officials were convicted in the IBM-Banco Nación case, on the grounds of a settlement agreed by defence and prosecution (juicio abreviado) with convictions of up to 3 years’ imprisonment. The case involved irregularities during a bidding pro-cess related to the computerisation of the Argentine National Bank, which was awarded to IBM Argentina. Offers and payments of sums of money to bank managers were found (Oral Court in Federal Criminal Matters No 3, “Dadone, Aldo y otros s/ defraudación a la adminis-tración pública y cohecho”).

New criminal convictions are usually uploaded to this website: www.mpf.gov.ar/index.asp?page=Accesos/Dcap/odcap1.asp

While Argentine Criminal Law does not recognise corporate criminal liability for bribery offences, it provides for confiscation and preven-tive measures with view to confiscation of the proceeds of bribery.

BOLIVIA The first case under Law 004 related to the company Agrocapital, where supposedly the financial manager and some of its direc-tors transferred state funds to this non-profit organisation. This case was referred to the Internal Revenue Service, which recuperated BOB114,000 from a public officer in charge of public collections, who illegally diverted these funds.

In 2011, 3 mayors and 5 public officers where incarnated for bribery and illegal earnings, among others.

BRAZIL In 2012, the Brazilian Federal Police launched an investigation against Delta, a well known Brazilian building company that was working on a project that would link Rio de Janeiro’s Galeão International Airport to the West Zone of the city, as being part of a criminal organi-sation. Delta’s alleged involvement with corruption and bribery are related to a businessman from the bingo (gambling) market, who has been investigated several times for alleged bribery.

In November 2011, the United States Department of Justice (DOJ) and Securities and Exchange Commission (SEC) launched an inves-tigation against EMBRAER, one of the largest Brazilian manufacturers of commercial aircrafts in the world, to verify alleged violations of the FCPA. EMBRAER is subject to FCPA rules because it is listed on a US stock exchange and has US operations.

In 2005, Parliament Committee of Inquiry was launched to investigate the behaviour of the former Chief of Staff of the Presidency of the Republic, who had been caught on video negotiating a bribe with a businessman from the bingo market.

COLOMBIA One of the most notable recent cases involved last Mayor of Bogotá, Samuel Moreno Rojas, currently in preventive detention while he faces criminal and disciplinary actions because of the illegal adjudication of civil construction contracts. Contractors are also facing criminal and civil actions (for recovery), some of which have negotiating with the General Prosecutor Office for the reduction of penalties in exchange for effective co-operation.

The former Minister of Agriculture, Andrés Felipe Arias and his chief staff at that Ministry, are now facing criminal prosecution for the assignation of public funds to private parties in the form of subsidies for fostering agricultural activities. Again, there are also private par-ties involved and facing criminal actions, some being currently in negotiation with the General Prosecutor’s office.

In these two cases, fines have been imposed on both the public officers and private individuals involved.

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COSTA RICA The ICE-Alcatel Case (2011) involved US$800,000 in illegal payments from the telecommunications company Alcatel to Costa Rican officials for the award of lucrative cell phone contracts. It resulted in imprisonment for many corporate executives and high-level govern-ment officials, including an ex-President of Costa Rica (the ruling is currently under appeal).

The Caja – Fishel - Instrumentarium Medko Medical Case (2009) involved bribery of government officials for the purchase of US$40 mil-lion in medical equipment by the Costa Rican Social Security System from the Finnish firm Instrumentarium Medko. It resulted in more than US$700,000 in damages to the state and jail terms for multiple government officials and corporate representatives, including an ex-President of Costa Rica.

DOMINICAN REPUBLIC Not available.

GUATEMALA A former court official Silvia Gonzalez, requested GTQ50,000 from the lawyer Mauricio Izquierdo to expedite legal actions he was pro-cessing at the Fourth Court of the Criminal Branch. He was convicted of passive bribery (Article 439, Criminal Code), carrying a penalty of imprisonment of 4 to 10 years and fine of US$6,410.00 to US$64,102.00.

Two former Ministers of the Interior, Salvador Gándara Gaitán and Raúl Velasquez, executed a contract for construction of a maximum security prison with excessive prices and did not denounce the poor construction and remodelling of the prison in spite of the fact that it was very notorious. They were convicted of:

� Extortion (Article 449, Criminal Code), carrying a penalty of imprisonment from 2 to 6 years and a fine of US$641 to US$3,205.

� Fraud (Article 450, Criminal Code), carrying a penalty of imprisonment from 1 to 4 years, but no fines.

Two private individuals, Rodrigo Lainfiesta and Juan Diego Lainfiesta, were also charged with personal fraud, conspiracy to commit fraud and money laundering.

The former manager of the Guatemalan Social Security Institute, César Sandoval, approved the establishment of a trust through which a fraud of millions was perpetrated against the Institute through the purchase from foreign companies of properties with excessive prices (using money that belonged to the beneficiaries of social programmes).

HONDURAS Irregularities were reported relating to drug purchases for the hospitals Escuela in Tegucigalpa and Juan Manuel Gálvez in Gracias, Lempira. However, there have been no publicised cases that, taking into consideration reports made by different persons, have ended in imprisonment or other penalties.

MEXICO On 5 May 2011, the Wall Street Journal reported that the well-known cosmetics manufacturer Avon had bribed officials from China and certain Latin American countries, including Mexico. According to the newspaper’s source, the alleged infringements had taken place between 2004 and 2010 and were investigated by US authorities. Avon fired its chief compliance officer, as well as other high-level of-ficials in consequence. Investigations are still being developed by the US SEC.

A recent investigation by the US Department of Justice involved accusations of bribery of Mexican Comisión Federalde Electricidad (CFE) officials by Swiss Company Abb and Texana Lindsay Manufacturing Company. Two of Texana Lindsay Manufacturing Company’s subsidiar-ies are accused of violating US anti-bribery laws by making illegal payments to Mexican CFE officials and to the Iraqi government when Saddam Hussein was president. ABB voluntarily disclaimed these breaches in order to reduce their fines.

The state-owned company Petroleos Mexicanos (Pemex), reported in 2008 that its subsidiary Pemex Exploración y Producción signed an agreement with the Italian Company Eni to implement a training programme for deep-water drilling and the design of deep-water wells. This took place while the company faced an official enquiry for multiple violations of the FCPA. The Securities and Stock Commission states that Eni used Swiss bank accounts, suitcases and “carloads” of cash to pay bribes. Since some of the bribery payments had to be made in Nairas, the Nigerian currency, the load was so big that a car had to be used to transport the money. The Italian company also paid bribes to a Nigerian political party.

NICARAGUA The poliltical power of organised crime in Nicaragua has been shown after the arrest of magistrate Julio Cesar Osuna Ruiz and other public officials charged for international drug trafficking, organised crime, and selling identifications to drug dealers for a price of up to US$3 million. According to the prosecution, Osuna is directly involved with Alejandro Jimenez “The Palidejo” a Costa Rican drug dealer involved in a trial in Guatemala for masterminding the murder of Facundo Cabral on 9 July 2011.

Besides pointing to Osuna providing identifications worth US$3,000 to Nicaraguan drug traffickers involved with the network of El Palidejo, the prosecutor accused him of transferring between US$700,000 and US$1 million dollars belonging to the organisation to Costa Rica in vehicles that were assigned by the Nicaraguan government.

In November 2002, there were rumours that the Fernando Avellan, National Assembly deputy, received money from public officials to approve the impeachment of former ex-President Arnoldo Aleman, accused of several counts of embezzlement of public funds. Alejan-dro Fiallos, president of the Liberal Constitutionalist Party, confirmed that Avellan had just bought a luxury car but denied that it was obtained through the alleged bribe of US$65,000 received to vote against the impeachment of the former ex-president. In the end, the impeachment of the former ex-president was carried on but the payment was not confirmed.

The former CEO of the National Port Company, EPN, Alejandro Fiallos Navarro, was charged by the General’s Prosecutor Office, for cor-ruption. Fiallos was accused of a fraud of US$467,177,000.91and NIO1,106,137.84 against the state.

The indictment indicated that between August 2006 and January 2007, the accused authorised the hiring of the Salvadoran Company Proyecto de Ingeniería Electromecánica, SA, Prindel to repair the tugs “Rubén Darío I” and “El Güegüense”. By signing that contract, Fiallos, representing the EPN, did not include a clause corresponding to 10.5% withholding tax on income, with the payment assumed by the port company. He is accused of receiving this amount as a personal payment in order to carry on the hiring of the El Salvadoran company.

PARAGUAY The famous “briefcases for the crown” (maletines para la corona) case dealt with the prosecution and trial of 13 former customs officers that were recorded requesting large amounts of bribe payments. The case is still pending a final ruling.

EL SALVADOR Carlos Augusto Perla, former President of The National Administration of Aqueducts and Sewers was accused on 2002-2003 of corrup-tion felonies in relation to the embezzlement of public funds.

David Gutiérrez, Minister of Public Works during the presidency of Elias Antonio Saca, along other public officers, were accused on May 2010 of corruption felonies in relation to the construction of the Diego de Holguin boulevard.

José Guillermo Maza Brizuela, Health Minister from 2004 to 2009, was accused on April 2011 of corruption felonies regarding the reconstruction of hospitals damaged by the earthquakes of 2001.

URUGUAY The Court of Criminal Matters gave a recent judicial judgment dated May 2012, which prosecuted several municipal casino public of-ficers. The most remarkable facts consist in the termination of a public bidding which was already being held for the purchase of slot machines, and the consequent signature of lease agreements directly, avoiding the bidding procedure, by invoking urgency, unpredict-ability and better service reasons which were proved false. In addition, the contracts implied the participation of the co-contractors in the profits. Subsequently, a fraudulent public bidding process, which sought to regularise the contracts, was performed. The officials were sentenced on charges of “conjunction of personal and public interest”, extortion (concusión) and fraud. The penalties included imprison-ment, destitution and disqualification for public jobs and monetary fines.


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12. Are there any anti-bribery organisations?

ARGENTINA The main anti-bribery organisations are:

� Oficina Anticorrupción (www.anticorrupcion.gov.ar).

� Programa de Transparencia y Control de la Corrupción, Universidad de San Andrés (www.udesa.edu.ar/Unidades-Academicas/departamentos-y-escuelas/Departamento-de-Derecho/Programa-control-de-corrupcion).

� Asociación Civil por la Igualdad y la Justicia (www.acij.org.ar).

BOLIVIA The main task of the Anti-Bribery National Council is to foster anti-bribery culture. There are no websites available at the moment.

BRAZIL There are some public and private organisations fostering anti-bribery culture in Brazil. The Brazil Against Corruption Movement, for instance, is an internet group gathering thousands of protesters against corruption. According to the protesters, the movement is non-partisan and is not associated with any formal organisation (www.mbcc.com.br/site).

Amcham (www.amcham.com.br) is a typical chamber of commerce and has become an entity with a wider scope. Amcham has commit-tees that play an important role in implementing a government’s anti-corruption programme.

COLOMBIA Decree 2405 of 30 November 1998 created the Presidential Programme for fighting against Corruption (www.anticorrupcion.gov.co). More recently, Law 1474 created the National Commission for the Moralisation of the Public Administration. In January 2012, the Presi-dent designated a Secretary of Anti-corruption and Transparency in charge of fostering an Anti-bribery Culture. The Chamber of Com-merce of Bogotá, in association with many other Chambers of Commerce in Colombia, and many private entities, has been promoting the creation of public inspectors (Veedurías), and now a whole network of inspectors exists.

COSTA RICA The legislature has created an Office of Public Ethics to take “administrative actions necessary to prevent, detect and eradicate corrup-tion and increase transparency and ethics in public service”. Additionally, some political parties in the country have advocated a strong anti-corruption policy.

Anti-bribery culture has also been promoted in the private sector. The pharmaceutical industry, in particular, has implemented numerous processes with suppliers to align itself with anti-corruption policies.

DOMINICAN REPUBLIC There are some organisations in the Dominican Republic currently dedicated to develop an anti-bribery and anti-corruption culture in the country by, among other things, submitting public information requests by various public organisations and entities under the Free Ac-cess to Public Information Law, No. 200-04, enacted on 28 July 2004, such as:

� Dominican Alliance Against Corruption (Alianza Dominicana Contra la Corrupción) (ADOCCO) (www.adocco.org/web/index.php).

� Citizen Participation (Participación Ciudadana) (www.pciudadana.org).

� ToyJarto (http://toyjartoperocreoenmipais.wordpress.com/).

GUATEMALA The main anti-bribery organisations are:

� The Inter-American Development Bank.

� Guatemalan Chapter of International Transparency (Acción Ciudadana) (www.accionciudadana.org.gt).

HONDURAS The main anti-bribery organisations are:

� Anti-bribery legal assistance office (http://alachonduras.com/cms).

� Transparency Gate (www.iaip.gob.hn).

� The Governmental Accounts Tribunal (www.tsc.gob.hn/index.html).

� Anti-bribery National Council (www.cna.hn).

MEXICO The main anti-bribery organisations are:

� Mexican Ministry of Public Administration (the ministry will eventually be dissolved under proposed reforms and will be replaced by a new public body, see Question 7, Mexico) (www.funcionpublica.gob.mx).

� Fundación Carolina (www.fundacioncarolina.mx).

� Taxpayers Management Service from Mexican Ministry of Finance (www.sat.gob.mx).

� Organización Transparencia Mexicana (www.transparenciamexicana.org.mx).

In addition, the president Enrique Peña Nieto has announced the creation of an Autonomous Citizen Anti-Corruption Council to combat corruption.

NICARAGUA There are no organisations fostering an anti-bribery culture.

PARAGUAY There are several organisations that promote an anti-bribery culture, including:

� The Institute for Comparative Studies in Criminal and Social Sciences (INECIP) (www.inecip.org.py).

� The Public Procurement Office (DNCP) (www.contrataciones.gov.py).

� The Public Prosecutor’s Office (www.ministeriopublico.gov.py).

� Ministry of Justice and Labour (www.mjt.gov.py/corrupcion.html).

EL SALVADOR The main anti-bribery organisations are:

� The Governmental Ethics Tribunal (www.teg.gob.sv).

� Secretariat for Transparency and Anticorruption (www.gobiernotransparente.gob.sv).

� Civil organisation (Aliados por la democracia) (www.aliadosporlademocracia.org.sv)

URUGUAY Yes. Recently, decree 80/12 created the “Transparency Award”, according to which the Uruguayan Presidency will annually award public entities that make remarkable progress in transparency mechanisms.

Law 17,060 created the Advisory Board of the State Economic and Financial Matters whose aim is to advise government agencies about existing mechanisms to prevent and eliminate corrupt practices. Decree 30/003 entrusted it to foster the laws and regulations related to corruption.

Examples of relevant websites include:

� www.jutep.gub.uy.

� www.informacionpublica.gub.uy/sitio/index.html.

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13. What are the key legal recommendations for avoiding bribery and its punishment?

ARGENTINA The first, basic recommendation is to establish a consistent and serious ethics and compliance programme, and conduct adequate train-ing programmes both internal (all executives and employees) and external (intermediaries and suppliers) on the global risks involved in engaging in bribery. A recent survey conducted among entities subject to FCPA and the UK Bribery Act showed that 70% of respondents believe that adequate communication skills in the sales forces to “say no” has allowed them to resist bribery and remain competitive.

BOLIVIA Bolivia’s anti-bribery efforts have focused on enforcing and enhancing the administrative career for public officers by providing them with better wages and job stability. Although it is strongly recommended, most companies have not created and/or circulated internal policies among their officers and employees and guidelines describing how bribery is regulated in current legislations and/or depicting factual situations that could be construed as bribery. Due to the broad interpretation given to anti-bribery laws in the country, in case of any doubt, it is advisable to seek local counsel before engaging in any situation that could be interpreted as a bribe.

BRAZIL In order to avoid bribery ocurrence and its punishment, approaches to the authorities or public officials should be formal and, whenever possible, written. In addition, companies or individuals should never give or promise benefits of any nature to authorities or public of-ficials including money, gifts or advantages, as even an innocent coffee could be maliciously interpreted.

COLOMBIA Colombia has been increasing its efforts for the construction of an anti-bribery culture and for the enforcement of the existing laws. Al-though enforcement of the anti-bribery laws have traditionally focused on the public officers involved, recent efforts and cases support a new approach to the issue, also punishing the involved private parties. Companies should avoid to the extent possible the presentation of gifts, entertainment or objects with monetary value to public servants that could be misinterpreted as consisting of bribes.

COSTA RICA Costa Rican law is very strict regarding corruption, and there is no advantage that can be given to a public official that is considered legally unproblematic. The only exception is if the advantage is granted for reasons other than the person’s position as a public officer (such as academic awards). However, due to the ambiguity and subjectivity of the situation, which may later be misinterpreted, they are never recommended.

DOMINICAN REPUBLIC Recommendations include avoiding the presentation of gifts, entertainment or objects with monetary value to public servants that could be misinterpreted as consisting of bribes.

GUATEMALA Recommendations include seeking advice from a local attorney before entering into any kind of conversation or relation with public of-ficials, in order to understand the extent of the legal provisions applicable to corrupt acts.

HONDURAS Some recommendations for avoiding bribery within companies would include the creation of anti-corruption policies and training mem-bers on how to work ethically with public officers, how to avoid situations where bribery might be requested by public officers and what actions to take when bribery is requested by a public officer. Many international corporations have these policies and include protocols for their members to follow when corruption occurs. However, many local corporations, especially medium or small corporations, do not incorporate these practices.

MEXICO Representative members of the industrial, governmental, financial and services sectors have formed a Committee for Better Corporate Practices (Committee). The Committee has prepared guidelines for Mexican corporations to achieve international standards that allow them to be more competitive, by being more transparent in their managerial processes and by offering a greater amount of confidence to national and foreign investors. These guidelines are known as the Code for Better Corporate Practices (Código de Mejores Prácticas Corporativas) (Code).

Foreign investors and Mexican companies should understand and follow the provisions of the Code in order to follow tested corporate governance principles. These include:

� Increasing information on their administrative structure and the faculties of their corporate bodies.

� Having mechanisms for and controls on their financial information.

� Having existing processes that promote participation and communication among members of the board of directors and officers.

� Implementing processes that promote adequate communication and information disclosure to shareholders and investors.

Another recommendation would be to design and implement internal policies and regulations in order to institutionalise managerial processes, corporate governance, compliance and accountability. Such policies and regulations must be made public to all employees. Professional development and training of employees is also an important measure to avoid bribery practices.

NICARAGUA Public and private organisations must begin to educate the public, teaching them the characteristics of massive fraud and modus ope-randi of criminals through posters and newsletters. The government needs to create a legal framework with more severe punishment than the ones set currently in the Criminal Code, in order to regulate all types of bribery. At the same time, government must ensure a legal framework to implement and promote these values, both in the public and private sector, encouraging companies to:

� Develop a programme to implement and support anti-bribery principles.

� Define the values and practices that work for the company or public institution.

� Observe the business or public entity and decide where there are risks.

� Agree as a company in the practices through which it can offset the risks of bribery.

� Determine the processes by which the company can offset the risks of bribery.

� To conduct any business fairly, honestly and transparently.

PARAGUAY Recommendations that may be adopted include the ICC Guidelines on Agents, Intermediaries and other Third Parties or the Rules of Conduct and Recommendations to Combat Extortion and Bribery (both guidelines are drafted by the International Chamber of Commerce Commission on Anti-Corruption). However, following these guidelines will not affect individuals’ degree of liability if prosecuted for a criminal offence.

EL SALVADOR Recommendations for avoiding bribery within companies include promoting the creation of anti-corruption policies and training members on how to work ethically with public officers, avoid situations where bribery might be requested by public officers and what actions to take when bribery is requested by a public officer. In practice, many international corporations have these policies and have protocols for when corruption occurs. However, many local corporations, especially medium or small corporations, do not practice this.

URUGUAY There are different kind of crimes and disciplinary faults regulated under Uruguayan law. Although the legal framework is clear, there may be different interpretations as to whether certain acts would be permitted or not. Local legal advice is normally necessary on a case-by-case basis.

CONTRIBUTOR DETAILS

GuatemalaJuan Sebastián Soto LAD Sosa & SotoAttorneys-at-LawE [email protected]

Address. 15 Calle A 14-44 zona 10, Edificio Mariamelia, Oficina 702, Guatemala, CA 01010

T +502 2384 6600W www.adsosasoto.com

HondurasTerencia J García MontenegroGarcía & BodanAttorneys & Counsellors at LawE [email protected]

Address. Lomas de Guijarro, Edificio Corporativo Orión, No 105-106, Tegucicalpa, CA

T +504 2235 9178W www.garciabodan.com

NicaraguaTerencia J García MontenegroGarcía & BodanAttorneys & Counsellors at LawE [email protected]

Address. Reparto Los Robles, No L-15, Del Restaurante “La Marseillaise” 1/2 cuadra al Sur,Managua, Nicaragua, CA


ParaguayRodolfo G Vouga ZuccolilloVouga & Olmedo Abogados E [email protected]

Address. Juan de Salazar 657 casi Av Perú, Asunción, Paraguay, PO Box 1407

T +595 21 202 049W www.vouga-olmedo.com

El Salvador Terencia J García MontenegroGarcía & BodanAttorneys & Counsellors at LawE [email protected]

Address. 89 Avenida Norte, No 573, Colonia Escalón, San Salvador, CA


UruguayAndrés Durán Hareau Bragard & Duran AbogadosE [email protected]

Florencia BerroBragard & Duran AbogadosE [email protected]

Address. Ave Luis A de Herrera 1248, World Trade Center, Torre A, Oficina 808, Montevideo, Uruguay

T +598 2623 3396W www.bda.com.uy

ArgentinaAlejandro CarrióE [email protected]

BoliviaMauricio Dalman Guevara & Gutierrez, SCE [email protected]

Alejandra GuevaraGuevara & Gutierrez, SCE [email protected]

Address. Calle 15 No 7715, Esquina Calle Sánchez Bustamante, Torre Ketal, Piso 4, Oficina No 2, Casilla Postal 9332

T +591 2 277 0808W www.gg-lex.com

BrazilRicardo Inglez de SouzaDe Vivo, Whitaker e Castro AdvogadosE [email protected]

Address. Rua Dr. Renato Paes de Barros,1017, 7º andar, Edifício Corporate Park, Itaim Bibi, São Paulo, SP 04530 001

T +55 11 3048 3266W www.dvwca.com.br

ColombiaEdwin Cortés Mejía Cuberos, Cortés, Gutiérrez, AbogadosE [email protected]. Carrera No 71–33, PBX (571) 2102915, Bogotá, Colombia

W www.ccgabogados.com

Costa RicaManuel Enrique Lizano Arias & Muñoz AbogadosE [email protected]

Address. Centro Empresarial Forum, Edificio C, Oficina 1C1, San José, Costa Rica, PO BOX 12891-1000

T +506 2503 9805W www.ariaslaw.com

Dominican RepublicLuis Miguel de Camps García De Camps Vásquez & ValeraE [email protected]

Address. Torre Empresarial MM, Suite 201-B, Avenida Gustavo Mejía Ricart No 100, Santo Domingo, República Dominicana

T +809 567 8444W www.dcvlex.com

Mexico

Gerardo Gallego Díaz de LeónIbarra del Paso y Gallego, SC E [email protected]

Address. Ave Corregidores 823 piso 2, Col Lomas Virreyes, México, DF, CP 11000

T +52 55 5202 0717W www.ibarrapg.com

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INTERNATIONAL WHITE COLLAR ENFORCEMENT, 2016 EDITIONLEADING LAWYERS ON PREVENTATIVE MEASURES,

REGULATORY COMPLIANCE, AND LITIGATION

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Copyright © 2016 by Thomson Reuters/Aspatore

Introduction: Anti-Bribery Enforcement--A Global Perspective

Geopolitical changes within and among countries have an impact and influence on how bribery and corruption areprosecuted around the world. It is imperative to keep a global eye on what other countries are doing to combat briberyand corruption if we are to understand the changes taking place in this area of the law.

This chapter will explore how countries, some of them highly corrupt, are taking on bribery and corruption throughnotable prosecutions and changes in their criminal laws. It discusses the implementation of new laws that address thehuman condition and protects the privacy of one's personal data. The chapter also provides guidance on what corporateclients need to be doing in their anti-bribery and corruption compliance efforts if they are to protect themselves fromonerous criminal investigations and prosecutions.

The Petrobras (Petróleo Brasilero SA) investigation in Brazil has received a great deal of global media attention.Petrobras is Brazil's national oil and gas company whose shares at one time were highly valued. Now, they are consideredjunk bonds, in large part because of the scathing accusations and convictions resulting from this immense briberyand corruption scandal that has been uncovered within Petrobras. The Petrobras investigation has had a ripple effectoutside of Brazil's borders, touching virtually every company that had any contractual relationship with Petrobras. Thecorruption has permeated every level within Petrobras and infected virtually all third-party vendors and suppliers toPetrobras, as evidenced by the multiple prosecutions.

The people in Brazil most surely were not surprised about the existence of corruption within the levels of Petrobras. Theywere surprised, however, at the aggressive enforcement and stiff sentences coming out of the Petrobras prosecutions.

Brazil is ranked as “very corrupt” on the Corruption Perception Index (CPI) put out yearly by Transparency

International (TI). 1 When the Petrobras case first surfaced, we in the criminal defense world wondered how quicklythe Department of Justice (DOJ) would step in and start working hand-in-glove with the Brazilian prosecutors to bring

related Foreign Corrupt Practices Act (FCPA) 2 prosecutions in the United States. The DOJ has acknowledged it isexchanging information with the Brazilian prosecutors. The Brazilian prosecutor arrested the head of Odebrecht in Brazilfor his alleged acts of bribery and corruption related to Odebrecht's contracts with Petrobras. Time will tell whetherthe United States finds its own way to bring additional FCPA prosecutions emanating from the Petrobras scandal.

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Odebrecht has construction contracts in the United States, so, it is understandable that the DOJ has taken a keen interestin what happens to Odebrecht in Brazil.

*2 On February 10, 2016, SBM Offshore confirmed that the DOJ had re-opened its investigation into SBM's allegedacts of bribery of government officials in Angola, Brazil, and Equatorial Guinea between 2007 and 2011. According toSBM, the DOJ has made information requests in connection with its re-opened probe. The company said it has reserved$245 million to cover “possible settlement” with Brazil authorities. Brazil prosecutors allege that several companies,including SBM Offshore, participated in a price fixing, bribery, and kickbacks scheme tied to Petrobras contracts.

In April 2012, Russia joined the Organisation for Economic Cooperation and Development (OECD). This means thatRussia is agreeing to embrace the OECD Convention and its principles, including enforcing its own anti-bribery laws.The criminalization of bribery of foreign public officials is led by the OECD's Working Group on Bribery in International

Business Transactions. 3 Considering Russia's CPI score was 133 in 2012 and 119 in 2015, 4 it faces many challenges ifit expects to live up to the OECD Convention's anti-bribery enforcement expectations. By joining the OECD, Russiaopened itself up to the OECD Working Group's scrutiny in this area. It will be interesting to see whether its CPI scoreimproves over the years as a result of Russia's OECD membership.

China has not done much to improve its CPI ranking over the years, 5 despite its aggressive anti-bribery prosecutions ofChinese nationals. Punishment for bribery can include ejection from the Communist party, a death sentence, long prisonterms, and confiscation of personal assets. Progress is being made in China in other areas of criminal law enforcement.On December 11, 2015, China's Anti-Money Laundering Monitoring and Analysis Center signed a memorandumof understanding with the United States to create a framework to facilitate and expand US-China collaboration,

communication, and cooperation on financial intelligence. 6 Perhaps such collaboration may one day spill over intothe FCPA, since to date, the DOJ has received little cooperation from China and its enforcement officials in its FCPAinvestigations.

In May 2015, the president of Mexico signed legislation amending Mexico's Constitution. The amendment created acomprehensive national anti-corruption system to tackle bribery issues. How effective Mexico's enforcement of this new

legislation will become is yet to be seen. 7

India passed the Lokpal Act 8 in response to its anti-corruption movement, which started in 2011. Activist Anna Hazare,known for her non-violent protests, led the charge, demanding reforms in anti-bribery and corruption. Her actions helpedcreate a new Indian enforcement agency that investigates corrupt officials. However, India's parliament did not pass thebill that would have created a foreign bribery prohibition similar to the FCPA. Nevertheless, the Lokpal Act is a positive

anti-corruption move for India. 9

*3 In October 2015, the Supreme Court of Argentina created a special group composed of ten experts. The groupsupports the judiciary when it prosecutes cases that deal with corruption. This group is composed of attorneys,accountants, and engineers who answer directly to the Supreme Court. The group exists to help provide guidance tothe Argentine Supreme Court when it handles anti-bribery cases that may have impact in the legal, accounting, and

engineering areas. 10

In March 2015, the president of Chile made some new rules that require federal and local public officials to release theirfinancial information for the past two years, prior to the year they decide to enter into government service. This rule isdesigned to achieve more transparency by Chile's governing officials.



Last year, the United Kingdom passed a new law focused on improving the human condition in the workplace. It is

called the UK Modern Slavery Act of 2015. 11 It took effect in October 2015. Marilyn Croser, director of CORE, theUK coalition on corporate accountability, stated, “The use of slave labour in U.K. supply chains must be stamped out.As well as greater vigilance among business, criminal prosecutions are needed to prevent and punish such abuses, and

we welcome efforts by U.K. police to prosecute traffickers in the U.K.” 12

This law covers commercial organizations whose annual turnover and that of their subsidiaries is £36 million or more.The commercial organization must carry on a business or part of a business in the United Kingdom. This legislationmeans such organizations will have to produce a slavery and human trafficking statement for each financial year. Thisannual report must set out the steps taken to ensure slavery and trafficking are not taking place, either within theorganization or in any part of its supply chain. The report must include information on policies, training, due diligence,and the effectiveness of the measures being taken by the organization to combat modern slavery.

The US Securities and Exchange Commission (SEC) was required to adopt a resource extraction issuer disclosure rule

pursuant to Section 13(q) of the Exchange Act of 1934, 13 which was added to the Exchange Act by Section 1504 of the

Dodd-Frank Act. 14 The SEC proposed a rule in August 2012, but it was challenged in court and then vacated by the

US District Court for the District of Columbia in July 2013. 15 So its proposed rule that came out in December 2015 isthe SEC's second chance at extraction disclosure requirements.

When the 2012 rule was adopted, it was the first of its kind. Following this proposed rule came two European Uniondirectives that contained similar payment disclosure requirements. They are the EU Accounting Directive and the EU

Transparency Directive. In 2015, Canada's Extractive Sector Transparency Measures Act 16 also took effect.

*4 We all know that fraud and corruption breed poverty, and poverty impacts negatively the human condition. Thesenew laws and rules being implemented around the world will hopefully begin to reduce bribery and corruption ininternational business transactions and improve the human condition, provided they are vigorously and fairly enforced.

The Kleptocracy Asset Recovery Initiative 17 is an interesting US law that has found a resurgence in the United States'battle against corruption and money laundering. The United States sent a warning message to political leaders andforeign officials around the world when it announced it would not be the repository for their illicit proceeds and assetspurchased with such proceeds. If the DOJ has reason to believe that dirty money has been laundered in the UnitedStates through the purchase of US assets, the DOJ can bring a civil case to seize those assets. In some of these cases, theDOJ has traced the flow of these illicit funds and seized homes, cars, and bank accounts of corrupt foreign officials andtheir family members. While the DOJ may not be able to file an FCPA charge against these foreign officials for theiracceptance of bribes because the FCPA does not apply to foreign officials who receive the bribes, it can initiate civilproceedings against them and seize their assets that they purchased with illegal proceeds.

Other types of white collar crimes have grabbed the headlines over the past few years. Switzerland has aggressivelyassisted the Internal Revenue Service (IRS) in identifying US tax evaders who secreted their income in secret Swiss bankaccounts to avoid paying US taxes. Our government has aggressively prosecuted many of these foreign Swiss banks fortheir complicity in this US tax evasion. More than eighty Swiss banks have settled tax cheating cases with the DOJ undera special program. The banks together have paid $1.36 billion for the settlements. In 2014, Credit Swisse paid $2.6 billionto settle its criminal charges, where it was accused of conspiring to help US tax payers cheat on their taxes. USB AGpaid $780 million in 2009 in its criminal US tax settlement for similar types of crimes.

We also have the resurgence of monetary sanctions levied by the US Treasury's Office of Foreign Assets Controls(OFAC). According to OFAC, these enforcement actions highlight the importance for institutions with operations



abroad, where there is the presence of individuals and entities on the Specified Designated Nationals list (SDN), tomake certain that they act appropriately to ensure compliance with the economic sanctions laws of the United States.On February 8, 2016, OFAC fined Barclay's Bank PLC $2.48 million to resolve potential civil liability for 159 allegedviolations of the Zimbabwe sanctions regulations. From July 2008 to September 2013, OFAC alleged Barclay's processed159 banned transactions worth about $3.4 million through financial institutions in the United States, including Barclay'sNew York branch. As the world and countries' alliances change, sanctions enforcement becomes a more significant playerin the white collar arena. Iran, Cuba, and Venezuela are perfect examples. That is why keeping abreast of geopoliticalchanges is imperative in the international world of white collar crime.

Challenges in Investigating International White Collar Crimes

*5 Some of the challenges facing white collar law enforcement agencies include untraceable e-currency, such as Bitcoins,encryption applications on cell phones that prevent the tracing of calls and text messages once they are sent, tax havenswith strict bank secrecy laws, and a lack of anti-bribery enforcement due to corrupt governments and judiciaries.

Data privacy is another concern. Restrictions against accessing and transporting protected data across country linescomplicate global investigations, both for government and for criminal defense counsel. We had an FCPA investigationthat involved Russia, where the company's server was in Poland. Poland is a member of the European Union (EU), andbound by strict data privacy laws. Russia is not. The question became how we could access certain employees' computersin Poland, where no employee consents were in place giving us such permission. Our investigation was delayed for severalweeks until we could obtain the employees' consent to access their computers.

Under its 2016 action plan, the EU data protection authorities have established specific steps they hope to take before

the spring of 2018, when they will strengthen the European Union's data protection regime. 18 In December 2015, theEuropean Commission, Parliament, and Council reached an agreement that will replace the EU bloc's data protection

directive enacted back in 1995. 19 This new uniform regulation makes stricter the rules that govern the use and flow ofdata. Multinationals can face fines for violations of these rules of up to 4 percent of their global annual revenue.

E-currency, data privacy, and encryption devices are just a few examples of the interviewing forces that make the perfectstorm to impede an effective prosecution and defense of white collar crimes.

Structure and Economics

Delays in bringing a case to court, not to mention facing a corrupt judiciary when you get there, discourage both civil andcriminal enforcement. When a civil case filed in Brazil, for example, can take years to get to trial, litigants are dissuadedfrom seeking justice within the Brazilian courts. When a country is ranked by TI as highly corrupt or is suffering throughhyperinflation, where the streets breed violence because of a scarcity of goods, when it is next to impossible to do businesswithout paying bribes at every level, companies withdraw from such markets and sometimes decide not to enter thosemarkets at all. Other companies firmly commit to compliance expenditures that can address these issues up front in aneffort to gain a market share in a high-risk, emerging market.

Treaties and Conventions

Treaties, conventions, and agreements enable US law enforcement agencies to conduct cross-border investigations andobtain third-party records and testimony. The DOJ has Mutual Legal Assistance Treaties with fifty-seven countries.

These treaties provide for the exchange of information with their counterparts abroad. 20 The SEC has entered into

various types of agreements and memoranda of understanding with countries that enable them to do likewise. 21 The



United States has 113 extradition treaties with other countries that provide, under specified conditions, for the return of

individuals to the prosecuting signatory country for investigation, trial, and sentencing. 22 The prosecutions under wayin the Eastern District of New York against thirty-nine individuals charged as part of the DOJ's and SEC's investigationinto corruption in the Federal Internationale de Football Association (FIFA) has evidenced the use of extradition treatiesto bring these defendants to the United States for trial.

Role of International Trade Organizations in Fighting Corruption

*6 International trade organizations can positively contribute to helping their industry members fight corruption. Onesuch organization is the Global Technology Distribution Council (GTDC). The GTDC represents more than $11.3billion in assets among its members, who distribute technology throughout the world. Their collective supply chainconsists of hundreds of thousands of vendors, suppliers, and distributors. This industry came together in response tocomplaints from its supply chain members that they were being asked to undergo anti-bribery and corruption duediligence checks hundreds of times a year. The due diligence process was necessary, but very inefficient. GTDC heardthe call of its members and set out to create a due diligence template accessible to its members online. The participatingentities in the supply chain complete a due diligence questionnaire online one time and keep it updated. Members canthen access this information database as needed. So instead of filling out due diligence questionnaires hundreds of timesin the course of a year, a vendor, supplier, or distributor does it once and then grants access to its information andbackground to the membership through this online database. GTDC also provides online and in-person FCPA trainingand due diligence checklist templates and requires of its members compliance with its FCPA/anti-corruption laws. (SeeAppendix A for a sample checklist.)

This is an example of an industry coming together to respond efficiently and effectively to its anti-bribery complianceobligations for its supply chain members.

Common White Collar Crimes

Anti-money laundering has a global appeal, especially when money laundering feeds the coffers of terrorist organizations.Illegal proceeds must be cleaned, invested, and put to work again. If you cannot always prevent the crimes that generatethe illegal proceeds, at least you can try to grab the assets purchased with them. Enter the fraud, money laundering, anddrug task forces. These task forces are composed of agents from the IRS, US Immigration and Customs Enforcement(ICE), US Customs and Border Protection (CBP), the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF),the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA), the Secret Service, and theUS Postal Inspection Service.

The FBI focuses on business fraud, anti-trust, money laundering, cybercrime, terrorism, and terrorist financing. In theold days, the Secret Service just handled counterfeit money investigations and provided security for top US governmentofficials. Now, it is heavily involved with credit card fraud and cybercrimes. The DEA remains focused on drugtrafficking and money laundering. The IRS is now playing a significant role on these task forces as it investigates andprosecutes tax crimes, money laundering, and asset seizure.

The IRS has also taken an aggressive posture in going after foreign banks that conspire with US taxpayers to evade paying

their US taxes. Under the US Foreign Account Tax Compliance Act, 23 the law calls on overseas financial institutionsto tell the IRS about their United States-owned accounts or face a possible 30 percent withholding tax on their UnitedStates-sourced income.



Safer Approaches to International Business

*7 In representing multinationals who do business around the world, you should understand that FCPA complianceis one of their most important concerns. In the area of FCPA, you must emphasize education, training, compliancemonitoring, audits, and enforcement. FCPA compliance must be embraced from the top down, from the boardroomdown to the loading dock. A company's FCPA compliance program and business code of ethics can be its life ring inthis sea of increased global anti-bribery prosecutions. One of the most important things a company engaging in businessabroad and moving its products across borders can do is first to evaluate its risks for bribery and corruption. A companymust assess when and where it will encounter foreign officials and then, after assessing its risk, formulate anti-briberypolicies and procedures that can be implemented by its personnel.

When developing a global compliance policy, it is important to understand that the policy may need to be modified toaccommodate local anti-bribery laws.

Educate your client's sales and marketing, distribution, accounting, compliance, and legal personnel. Train them withreal-life examples pertinent to their business in a language they can understand. Legalese will not work. Empowercompany managers to take ownership of the training and compliance for their respective departments. Reward thosewho are compliant, and discipline those who are not. As an outside lawyer, take the time to learn your client's businessso the advice you give has practical meaning and is capable of implementation in the real world.

Monitor compliance. A policy is no good if your client has no sense as to how well it is working. If there are problemsor hiccups along the way, then adjust the policies and procedures to address them. Make sure your client's compliancepolicy remains a working, breathing instrument.

A real challenge in anti-corruption and anti-bribery work is understanding the laws in the countries where your clientoperates. It is not enough to know what the FCPA says; you also have to know the anti-bribery laws in the foreignjurisdictions where your client does business. These local laws may be stricter than the FCPA. For example, the FCPAallows for facilitation payments. In most other countries, such payments are prohibited and considered bribes. In myfirm, our FCPA team members throughout the world are knowledgeable on the laws of the foreign jurisdictions wherethey practice. We are often asked by companies to develop training materials, policies, procedures, and internal controlsthat encompass the local anti-bribery laws of the countries where they do business. The focus on anti-bribery compliancemust be broader than the FCPA; it must address the non-US jurisdictions' anti-bribery laws, as well.

One of the highest-risk areas with the FCPA involves your client's relationships with third parties. Third-party risk issuesaccounted for about 70 percent of the FCPA cases that the SEC brought in 2014. There are ways to reduce risks whendealing with third parties. A company must perform due diligence on them and conduct background checks (or hire athird-party vendor to handle these). When outside counsel writes their contracts, they need to contain appropriate anti-corruption representations and warranties. As outside counsel, you should assist your clients in developing due diligencechecklists for the sales and marketing people who will be interviewing and contracting with these third parties. If yourclient gets into trouble due to the actions of one of its third-party contractors, your client will need to be able to show theDOJ and the SEC what pre-engagement due diligence, contract protections, and performance monitoring it completedregarding its third-party contractors.

*8 Staying on the right side of compliance, however, is not always easy.

If your client is committed to not paying bribes, it needs the support of its board, the chief executive officer (CEO), thepresident, and management. The company must be prepared to encounter delays in what it might want to do if it is notwilling to bribe to get things done. I had a client who wanted to build a manufacturing plant in China. The client refusedto pay a bribe to the government official who issued the building permits. After eighteen months of delay, repeated



requests for a bribe, and repeated refusals to pay the bribes, the foreign government official finally gave up and grantedthe client its permits. How many companies are willing to wait eighteen months? Just remember, while delays no doubtwill cost your client a great deal of money, the amount will be miniscule when compared to the money the client will payto the DOJ and/or SEC if it ends up being prosecuted for FCPA violations.

As an FCPA lawyer, you need to be able to provide your clients with pragmatic advice. No general counsel, head ofcompliance, or marketing person at any multinational company wants outside counsel telling them what they cannotdo. You would not have a job for very long. This is the challenge we face in this area of anti-bribery compliance. Youhave to know and understand the FCPA thoroughly. You have to work with the client to help it minimize its risk in away that can be practically applied. As lawyers, we are obligated to provide good legal advice and then work with ourclients to help them best implement that advice in the real world.

What to Do When Faced with an Investigation

Informants, disgruntled employees who may have been fired, whistleblowers, and competitors can trigger criminalinvestigations by government enforcement agencies. Once an investigation is under way, your client may receive asummons for records from a state, federal, or regulatory enforcement agency or a grand jury subpoena from the DOJ,or, in a worst-case scenario, find a group of federal agents at its door with a search warrant for the premises. At this time,the client needs to consider engaging independent outside criminal defense counsel knowledgeable in the appropriatearea of white collar law. The outside counsel will usually want to open communications with the prosecutor to find outthe company's prosecutorial status. Is it a target, or a subject of the investigation? A target is an entity or individual theDOJ intends to prosecute; a subject is one the DOJ has yet to decide as to whether it should prosecute.

Next, the company will want to initiate its own parallel investigation. Your client may later decide to disclose voluntarilyany wrongdoings it uncovers to the DOJ or SEC as a way to mitigate any potential prosecution or penalties. As defensecounsel, you will want to work toward a deferred prosecution or non-prosecution agreement for your client. Then again,your client may decide to defend itself at a trial. These decisions are fact-specific and heavily influenced by the company'slevel of risk tolerance and the strength of the government's case.

*9 For companies involved in an internal investigation and contemplating cooperation with the DOJ, the Yates

memo 24 has made one thing abundantly clear: companies will receive no credit for cooperation unless they are willingto release all the facts uncovered in the course of their investigation to the government regarding the identity of thewrongdoers within the company, regardless of their status in the company. Whether that person is in the C-suite orworking on the loading docks, the company must be ready to disclose that information to the DOJ or be prepared toreceive no cooperation credit. (See Appendix B for a copy of the Yates Memo.)

Staying Informed

To keep on top of the developments in this area of white collar criminal law, you need to read and then read some more.Blogs, LAW360, LEXOLOGY, the DOJ and SEC websites, treatises, articles, whatever you can get your hands on tobroaden your horizons in this field should be read.

Experience, of course, is the best teacher, but reading prepares you for action.

Keep up-to-date on industry trends and political issues abroad. Broaden your horizons and learn how global events canimpact your clients' businesses. Read international journals and articles. Keep an eye on what other countries are doingin the areas of enforcement--tax, environmental, anti-trust, or money laundering.



I recently led a team of Squire associates and partners in writing a book for the Practising Law Institute (PLI)titled GLOBAL BUSINESS FRAUD AND THE LAW: PREVENTING AND REMEDYING FRAUD ANDCORRUPTION. We discuss in our book that business fraud is global and thus requires practitioners in the field tobroaden their horizons. Business fraud is multi-disciplinary and so must you be as a practitioner.

My FCPA teams comprise corporate, labor and employment, commercial, and criminal lawyers. Our FCPA teammembers must also be prepared to opine on the anti-bribery and anti-corruption laws of the United States and the foreignjurisdictions where they practice. If you are lucky, those lawyers are from your own law firm or respected colleaguesfrom other firms you will engage to work with you.

Conclusion

The Foreword to the DOJ's and SEC's Resource Guide 25 succinctly proclaims the American government's interest inpreventing international corruption as follows:

Corruption has corrosive effects on democratic institutions undermining public accountability anddiverting public resources from important priorities such as health, education, and infrastructure.When business is won or lost based on how much a company is willing to pay in bribes ratherthan on the quality of its products and services, law-abiding companies are placed at a competitive

disadvantage--and consumers lose. 26

As a wider array of white collar criminal statutes find their way into FCPA investigations and prosecutions, lawenforcement agencies within the United States are combining into joint task forces and collaborating with foreign lawenforcement agencies and prosecutors, using memoranda of understanding (MOUs), mutual legal assistance treaties(MLATs), and anti-bribery conventions to assist them. Lawyers defending in this area of the law must rise to this globallaw enforcement challenge. We must become more knowledgeable on a wider variety of related laws and topics, be morecognizant of geopolitical events and their impact on countries and their economics and social structures, and remainflexible in our advice to our clients, while being more creative in our defenses. Only in this way will we be able to adaptand provide truly valuable advice to our clients as they face the challenges of operating in a complex, global economy.

Key Takeaways

*10 • Be sure the FCPA and all compliance is embraced and supported from the boardroom downto the loading dock.

• One of the most important things that a company engaging in business abroad and movingproducts across borders can do first is to evaluate its bribery and corruption risks. A companyshould first assess when and where it will encounter foreign officials and then develop appropriatepolicies and procedures to address those risks.

• When developing a company's compliance policies, understand that one compliance policymay not necessarily work for the whole world. Adapt compliance policies to meet the client'srequirements; tailor them so they are practical in their application; and be sure to includecompliance with the comparable laws in the foreign jurisdictions.

• Educate your client's employees about the law and the consequences for non-compliance. Rewardemployees who perform well in their compliance duties, and discipline those who do not.

• To reduce the risks created by working with third parties in international business, performdue diligence and background checks on them. Build anti-bribery compliance representations andwarranties into their contracts. Provide them copies, in their native language, of your client's FCPApolicy and business code of conduct.



• As a lawyer, keep yourself up-to-date on world events, international changes in criminal laws,and geopolitical changes that can and will affect your practice and your client's operations abroad.

Related Resources

• Appendix C: Comparison of the FCPA Anti-Bribery Provisions with the UK Bribery Act andRussian Anti-Bribery Provisions

• Appendix D: Survey of Anti-Corruption Laws in Latin America

Footnotesa1 Rebekah J. Poston is a partner with Squire Patton Boggs (US) LLP and head of the firm's Anti-Corruption Compliance & FCPA

Practice Group. After serving as an assistant US attorney with the US attorney's office in Miami, Florida, and a special attorneywith the Department of Justice's Organized Crime and Racketeering Section in Cleveland, Ohio, Ms. Poston now focuses herpractice on defending complex domestic and international white collar criminal cases.

1 See http://www.transparency.org/country.

2 Foreign Corrupt Practices Act, Pub. L. No. 95-213, 91 Stat. 1494.

3 Organization for Economic Co-Operation and Development Convention on Combating Bribery of Foreign PublicOfficials in International Business Transactions, December 17, 1997, 37 I.L.M.I., available at http://www.oecd.org/document/32/0,3343,en_2a49_34859_2048160_1_1_1_3744,00.html.

4 The Corruption Perception Index (CPI) measures the perceived levels of public sector corruption in 168 countries. In 2012, TIranked 176 countries. In 2015, TI ranked 168 countries. The higher the score, the more corrupt a country has been found to be.

5 China ranks 83/168 in 2015 by TI.

6 Press Release, Department of the Treasury Financial Crimes Enforcement Network, FinCEN and China's CAMLMAC SignMemorandum of Understanding (Dec. 11, 2015), available at https://www.fincen.gov/whatsnew/pdf/20151211.pdf.

7 Decreto por el que se reforman, adicionan y derogan diversas disposiciones de la Constitución Política de los Estados UnidosMexicanos, en materia de combate a la corrupción, Diario Oficial de la Federación [DOF] 27-05-2015 (Mex.), available athttp://dof.gob.mx/nota_detalle.php?codigo=5394003&fecha=27/05/2015.

8 Lokpal and Lokayuktas Act, 2013, Act No. 1 of 2014, §§ 1 et seq., available at http://www.indiacode.nic.in/acts2014/1%20of%202014.pdf.

9 See Lokpal and Lokayuktas Act, 2013, Act No. 1 of 2014, §§ 1 et seq., India Code (2014), available at http://www.indiacode.nic.in/acts2014/1%20of%202014.pdf.

10 Acordada 34/2014, Crear el Cuerpo de Peritos del Poder Judicial de la Nación, Especializado en Casos de Corrupción yDelitos contra la Administración Pública y aprobar su reglamento, (Oct. 21, 2014) available at http://www.csjn.gov.ar/docus/documentos/verdoc.jsp.

11 Modern Slavery Act 2015, c. 30, §§ 1 et seq. (UK).

12 Welcome jail sentence for first modern slavery offences, available at https://www.leighday.co.uk/News/News-2016/February-2016/Welcome-jail-sentence-for-first-modern-slavery-off.

13 15 U.S.C.A. § 78m(q).

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14 Pub. L. No. 111-203, § 1504, 124 Stat. 1376, 2220-22; Disclosure of Payments by Resource Extraction Issuers, 80 Fed. Reg.80057 (proposed December 23, 2015) (to be codified at 17 C.F.R. pts. 240 and 240b); available at https://www.gpo_gov/fdsys/pkg/FR-2015-12-23/pdf/2015_31702.pdf.

15 National Ass'n of Mfrs. v. SEC, 956 F. Supp. 2d 43 (D.D.C. 2013), aff'd in part, rev'd in part and remanded, 748 F.3d 359 (D.C.Cir. 2014) (overruled by American Meat Institute v. US Dept. of Agriculture, 760 F.3d 18 (D.C. Cir. 2014)) and adhered to onreh'g, 800 F.3d 518 (D.C. Cir. 2015).

16 Extractive Sector Transparency Measures Act, S.C. 2014, Ch. 39, Sec. 376 (Can.); Extractive Sector Transparency MeasuresAct, S.C. 2014, Ch. 39, Sec. 376 (Can.); available at http://laws-lois.justice.gc.ca/eng/acts/E-22.7/page-1.html.

17 Press Release, Department of Justice, Attorney General Holder at the African Union Summit (July 25, 2010), availableat http://www.justice.gov/opa/speech/attorney-general-holder-african-union-summit; Press Release, Department of Justice,Assistant Attorney General Lanny A. Breuer Delivers Keynote Address at Money Laundering Enforcement Conference (Oct.19, 2010), available at http://www.justice.gov/opa/speech/assistant-attorney-general-lanny-breuer-delivers-keynote-address-money-laundering.

18 European Commission Article 29 Data Protection Working Party, Statement on the 2016 action plan for the implementationof the General Data Protection Regulation (GDPR) (Feb. 2, 2016), available at http://ec.europa.eu/justice/data-protection/article-29/documentation/opinion-recommendation/files/2016/wp236_en.pdf.

19 European Council Press Release 951/15, EU data protection reform: Council confirms agreement with the European Parliament(Dec. 18, 2015), available at http://www.consilium.europa.eu/en/press/press-releases/2015/12/18-data-protection/.

20 https://mlat.info.

21 https://www.dodmou.com.

22 http://www.state.gov/s/l/treaty/faqs/70138.htm; 18 U.S.C.A. § 5181.

23 Foreign Account Tax Compliance Act, Pub. L. No. 111-147, 124 Stat. 71, Title V (codified as amended inscattered sections of 26 U.S.C.A § § 1471 et seq.), available at https://www.gpo.gov/fdsys/pkg/PLAW-111publ147/pdf/PLAW-11publ147.pdf#page=27.

24 Memorandum from Deputy Attorney General Sally Quillian Yates on Individual Accountability for Corporate Wrongdoing(Sept. 9, 2015), available at http://www.justice.gov/dag/file/769036/download.

25 A RESOURCE GUIDE TO THE U.S. FOREIGN CORRUPT PRACTICES ACT, CRIMINAL DIVISION OF THE U.S.DEPARTMENT OF JUSTICE AND ENFORCEMENT DIVISION OF THE U.S. SECURITIES AND EXCHANGECOMMISSION (Nov. 14, 2012).

26 A RESOURCE GUIDE TO THE U.S. FOREIGN CORRUPT PRACTICES ACT, CRIMINAL DIVISION OF THE U.S.DEPARTMENT OF JUSTICE AND ENFORCEMENT DIVISION OF THE U.S. SECURITIES AND EXCHANGECOMMISSION (Nov. 14, 2012) [hereinafter “FCPA Guide”]. The publication is available to the public free of charge online atwww.justice.gov/criminal/fraudgcpa/guidance/guide.pdf and www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf. The DOJand the SEC collaborated in the FCPA Guide's production to provide hypotheticals that interpret the various provisionsof the statute. The DOJ has commented that it expects companies to train their personnel using the FCPA Guide and itsexplanations, interpretations, and hypothetical examples. Other excellent resources to learn more about the FCPA can befound at the section of DOJ's website dedicated to the FCPA and its enforcement, available at www.justice.gov/criminal/fraud/fcpa. It provides the FCPA in numerous languages, relevant history, and selected documents from various prosecutions andresolutions since 1977. There are Deferred and Non-Prosecution Agreements (DPAs, NPAs), plea agreements, indictments,information, and relevant court documents and pleadings. See also DOJ Opinion Releases issued in response to specificrequests by issuers and domestic concerns pursuant to the DOD's Opinion Release Procedure, which can be found atwww.justice.gov/criminal/fraudficpa/docs/frgncrpt.pdf. If you are not familiar with what an Opinion Release is or the legalprotection it can provide to the requesting entity, the FCPA Guide devotes an entire section on it in Chapter 9. The DOJOpinion Release Procedure is outlined briefly below.

http://www.westlaw.com/Link/Document/FullText?findType=l&pubNum=1077005&cite=UUID(I73911E7095-AF11DFAEC8E-BE0ADA6222A)&originatingDoc=I3498aca2224f11e698dc8b09b4f043e0&refType=SL&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)

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End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works.

Brazilian Chemical Maker, Controlling Shareholder Pay $3.6..., WGL-ACCTALERT VOL...


WGL-ACCTALERT VOL 10 NO 248WGL-ACCTALERT Vol. 10, No. 248

Accounting & Compliance Alert (WG&L)—Complete Edition

Copyright (c) 2014 Thomson Reuters Tax and AccountingDecember 22, 2016

Vol. 10, No. 248Today's News

SEC News

Brazilian Chemical Maker, Controlling Shareholder Pay $3.6 Billion to Settle Bribery Charges

Topic(s): SEC, Disclosure, Ethics, Corporate Governance, Dodd-Frank Act

Summary: A Brazilian chemical maker was accused by prosecutors of running a business unit called the “Departmentof Bribery,” to solicit business with government officials. The Justice Department said the $3.6 billion settlement withBraskem SA and Odebrecht SA concluded the “largest foreign bribery case in history.”

The SEC and Justice Department on December 21, 2016, accepted guilty pleas from Braskem SA and its controllingshareholder, Odebrecht, SA, in what U.S. prosecutors called the “largest foreign bribery case in history.”

The settlement arose out of an investigation into an eight-year scheme that violated the Foreign Corrupt Practices Act.Braskem was accused of paying $250 million to Brazilian officials as part of a fraud that helped it earn $325 million.

“Braskem lacked the internal controls to prevent its use of third parties, off-book accounts, and other intermediariesto bribe government officials in Brazil,” said Stephanie Avakian, deputy director of the SEC's Enforcement Division, ina statement. The Justice Department accused Odebrecht of running a business unit with its own budget for the purposeof making illicit payments to government officials. Justice officials called the business unit a “Department of Bribery.”

U.S. prosecutors had help from with their counterparts in Switzerland and Brazil in bringing the charges. Thesettlement includes $957 in payments from Braskem and $2.6 billion from Odebrecht.

According to the SEC complaint, Braskem manipulated its procurement and accounts payable systems to mask theillegal payments.

“These payments were improperly recorded as legitimate commission expenses in Braskem's books and records andwere consolidated into Braskem's financial statements,” the SEC said in its complaint. “Braskem's internal accountingcontrols were inadequate because they failed to prevent such payments or detect red flags that should have alerted itsemployees that these payments, in whole or in part, were fictitious and used to bribe foreign officials.”

The SEC said the payments were authorized by Braskem's and Odebrecht's senior officers.Braskem has to be watched by an independent monitor for the next three years to ensure its compliance with the

settlement.“We are pleased now to be able to put this matter behind us and focus on the future,” said Braskem CEO Fernando

Musa. “We are implementing more robust practices, policies and processes across the organization to enhance ourgovernance and compliance system.”

Odebrecht issued a statement that said the company “is grateful for the opportunity to put this painful episode behindit.”


EMBRAER SETTLES BRIBE CASES WITH U.S. JUSTICE..., 32 No. 11 Int'l...


32 No. 11 Int'l Enforcement L. Rep. 441

International Enforcement Law ReporterNovember 1 - November 30, 2016

V. Transnat'l Corruption and Int'l Asset Forfeiture

EMBRAER SETTLES BRIBE CASES WITH U.S. JUSTICEAND SEC AND AGREES TO PAY MORE THAN $107 MILLION

Bruce Zagaris

Copyright (c) 2016 Bruce Zagaris

On October 24, 2016, Brazilian aircraft manufacturer Embraer S.A. agreed to resolve criminal charges and pay a penaltyof more than $107 million in connection with schemes involving the bribery of government officials in the DominicanRepublic, Saudi Arabia and Mozambique. It agreed to pay additional millions after being caught in a fraud relating to

falsely recorded payments it made in India via a sham agency agreement. 1

Embraer is subject to the Foreign Corrupt Practices Act in part because its stock is traded on the New York Stock

Exchange as American depositary receipts (ADRs). 2 In addition, some of the bribe payments came from its New Yorkoffice, meaning that its officials in the U.S. were involved. Embraer also had North American regional offices in FortLauderdale, Florida.

In 2015, Embraer employed over 22,000 worldwide and had revenues of just under $6 billion. Embraer is the world'slargest manufacturer of mid-size commercial jets and a leading exporter from Brazil.

Embraer admitted that its executives and employees paid bribes to government officials and falsified books and recordsin connection with aircraft sales to foreign governments and state-owned entities in multiple countries. In 2008, Embraerpaid $3.52 million to an influential government official in the Dominican Republic through a false agency agreement inorder to obtain a contract to sell the Dominican Air Force eight military aircraft for approximately $92 million. Embraer

paid the money in three payments to Dominican shell companies, 3 including one payment from its New York bank

account. 4 In 2010, Embraer paid $1.65 million to an official at a Saudi Arabian state-owned and controlled companythrough a false agency agreement to obtain an agreement from that nation to buy three aircraft from Embraer forapproximately $93 million. Embraer agreed to pay an additional $350,000 to a Saudi official; the Saudi budget called

only for used planes and the Saudi official agreed to lobby to persuade the government to procure new ones. 5 In 2008,Embraer paid $800,000 through a false agency agreement with an intermediary designated by a high-level official atMozambique's state-owned commercial airline, Linhas Aéreas de Moçambique S.A. (LAM), to obtain LAM's agreementto buy two aircraft from Embraer for approximately $65 million. In negotiating the amount of the bribe with its “agent”in Mozambique, among the suggestions by the “agent” was that Embraer increase the number of planes for sale as well

as the price for them. 6 In 2009, Embraer paid an agent $5.76 million pursuant to a false agency agreement with a shellcompany in connection with a contract it obtained to sell the Indian Air Force three aircraft for approximately $208

million. 7

Embraer earned profits of almost $84 million on the aforementioned aircraft sales.

Embraer agreed to a three-year deferred prosecution agreement (DPA) to resolve the case. In the DPA Embraer admittedto its involvement in a conspiracy to violate the FCPA's anti-bribery provisions and its books and records provisions,



as well as to a willful failure to implement an adequate system of internal accounting controls. Embraer agreed to paya criminal penalty of $107,285,090, to continue to cooperate with the DOJ's investigation, strengthen its complianceprogram, implement a more adequate system of internal accounting controls, and retain an independent corporate

compliance monitor for a period of three years. 8

The DOJ Criminal Division's Fraud Section explained that the resolution was based on various factors, including thefact that Embraer did not voluntarily disclose the FCPA violations, but did cooperate with the DOJ's investigation afterthe Securities and Exchange Commission (SEC) served it with a subpoena. Once Embraer started cooperating, it did sofully and disclosed all relevant, non-privileged facts known to it, including about individuals involved in the misconduct.However, Embraer did not engage in full remediation. It disciplined several company employees and executives engagedin the misconduct, but did not discipline a senior executive who was aware of bribery discussions in emails in 2004 andhad oversight responsibility for the employees engaged in those discussions. The criminal penalty in this case is thus 20percent below the bottom of the applicable range under the U.S. Sentencing Guidelines, a discount that reflects Embraer's

full cooperation but incomplete remediation. 9

Embraer also reached settlements with both the SEC and Brazilian authorities. With the SEC, Embraer agreed to pay$83.8 million in disgorgement and $14.4 million in prejudgment interest. The SEC has agreed to credit the disgorgementthat Embraer pays to Brazilian authorities. Embraer also reached a settlement with Brazilian authorities under whichit agreed to pay $20 million in disgorgement. With help of U.S. authorities, Brazilian authorities have charged 11individuals for their alleged involvement in Embraer's misconduct in the Dominican Republic. Saudi Arabian authorities

have charged two individuals for their alleged involvement in Embraer's misconduct in Saudi Arabia. 10

The prosecutions in Brazil and Saudi Arabia indicate that those governments are acting on the evidence to try makecriminal cases against responsible people in their own countries.

Embraer issued a press release, explaining the settlements. 11

The Deferred Prosecution Agreement (DPA) refers to the “pervasiveness through each of the Company's separate salesdivisions and the involvement of high-level executives in each set of criminal conduct.” In the DPA, Embraer admits tohaving an inadequate compliance program. The DOJ has the right to select an independent monitor from three personsproposed by Embraer. The wide-ranging scope of the DPA means that Embraer will likely have to spend considerableresources meeting the demands of the independent monitor in raising its anti-corruption standards.

The SEC Complaint focuses on the accounting and books and records violations, as is typical in FCPA cases brought bythe SEC. The SEC Compliant discusses Embraer's improper booking of illegal payments to an agent and the concealment

of its relationship to the agent in order to try to obtain business in India. 12 The SEC Complaint details the ways inwhich Embraer tried to conceal the payments in its books and records.

The Embraer case signifies a new era in Brazil, in which many of its public companies are being forced to reconcile withthe government's new emphasis on anti-corruption and transparency. In the shadows of the Pretrobras prosecutions andnew Brazilian transparency laws, information on other misconduct is being revealed.

Footnotes1 U.S. Department of Justice, Embraer Agrees to Pay More than $107 Million to Resolve Foreign Corrupt Practices Act Charges,

Press Release 16-1240, Oct. 24, 2016.



2 United States v. Embraer, S.A., U.S. District Court S.D. Fla., 16-60294-CR-COHN/SELTZER, Information, parag. 2

3 Id., paragr. 20.

4 Id., paragr. 25.

5 Id., paragr. 39.

6 Id., at paragr. 55-58.

7 U.S. Department of Justice, supra.

8 Id.

9 Id.

10 Id.

11 Embraer S.A.: Material Fact, Oct. 24, 2016 http://www.prnewswire.com/news-releases/embraer-sa-material-fact-300349831.html

12 SEC v. Embraer, U.S. Dist. Ct., S.D. Fla, Case 0:16-cv-62501-XXXX, Complaint, paragr. 6


EMBRAER REACHES $205.5 MILLION GRAFT..., 31 No. 3 Westlaw...


31 No. 3 Westlaw Journal White-Collar Crime 7

Westlaw Journal White-Collar Crime*1

November 18, 2016

Foreign Corrupt Practices Act

EMBRAER REACHES $205.5 MILLION GRAFT SETTLEMENT WITH US, BRAZILSEC v. Embraer S.A.

Copyright © 2016 Thomson Reuters .

(Reuters) - Brazilian planemaker Embraer S.A. on Oct. 24 reached an agreement with U.S. and Brazilian authorities tosettle a six-year corruption investigation, paying $205.5 million to turn the page on signs of graft in four foreign contracts.

Securities and Exchange Commission v. Embraer S.A., No. 16-cv-62501, settlement announced (S.D. Fla. Oct. 24, 2016).Embraer and U.S. investigators said an investigation had found evidence of wrongdoing in deals with Saudi Arabia,India, Mozambique and the Dominican Republic from 2007 through 2011.

The fine due to U.S. and Brazilian authorities is in line with a $200 million provision Embraer made in July.

A complaint from the U.S. Securities and Exchange Commission alleged that Embraer had made more than $83 million inprofits from foreign contracts involving $11.7 million in bribes and other payments concealed through false accounting.

The planemaker's shares rose 0.5 percent in Sao Paulo, reversing early losses on news of the accord, which offers closurein a case that risked prosecution of the company under the U.S. Foreign Corrupt Practices Act.

“The settlement is no question a positive, although the reaction may be more muted as management has done a goodjob communicating the potential implication of the investigation in recent months,” said RBC Capital Markets analystDerek Spronck.

The U.S. Department of Justice said two individuals had also been charged in Saudi Arabia for their alleged roles in thescheme there and Brazilian authorities charged 11 people for alleged involvement in the Dominican deal. Embraer saidit is not party to those parallel criminal investigations in Brazil.

Embraer, the world's third-largest maker of commercial jets, has replaced much of its senior management in recent years,reinforced compliance efforts and curtailed use of third-party sales representatives, who drew suspicion in deals underreview.

A sweeping internal investigation led by Baker & McKenzie expanded beyond the scope of U.S. authorities' initialinquiry, reviewing hundreds of thousands of documents and conducting more than 100 interviews, the company saidin a public statement.

In the process, Embraer said that investigators found the company was responsible for wrongdoing in four transactionsbetween 2007 and 2011. The deals involved:

• Eight Super Tucano light attack planes sold to the Dominican Republic for about $92 million.

EMBRAER REACHES $205.5 MILLION GRAFT..., 31 No. 3 Westlaw...


• Three E170 jets sold to state oil company Saudi Aramco for business aviation in a roughly $93 million deal.

• Three surveillance aircraft sold to India for $208 million.

• Two E190 commercial jets sold to Mozambique's state airline LAM for about $65 million.*2 (Reporting by Brad Haynes; editing by Daniel Flynn, Paul Simao and Bernard Orr)


ATTACKING BRIBERY AT ITS CORE: SHIFTING FOCUS..., 45 Pub. Cont. L.J. 587


45 Pub. Cont. L.J. 587

Public Contract Law JournalSummer, 2016

Article

ATTACKING BRIBERY AT ITS CORE: SHIFTING FOCUSTO THE DEMAND SIDE OF THE BRIBERY EQUATION

Lindsay B. Arrieta a1

Copyright © 2016 by American Bar Association; Lindsay B. Arrieta

I. Introduction 588II. Background 590

A. The Bribery Transaction: Demand and Supply 590B. The Supply-Side Anti-Bribery Model Prevails on the Global Agenda 5921. FCPA: The Statutory Model for Foreign Bribery Laws 5922. A Broader Supply-Side Initiative: OECD Anti-Bribery Convention 5933. Targeting the Demand Side: UN Convention Against Corruption (UNCAC) 594C. Enforcement Under the Current Model Fails to Target the Source 5941. FCPA Prompts Multilateral Actions: Multilateral Enforcement 5952. Demand-Side Prosecutions Are Absent 596

III. The Missing Piece of the Anti-Bribery Puzzle: Domestic Enforcement 597A. Domestic Enforcement in China 597B. Brazil: Building Anti-Corruption Capacity 599

IV. Why Pursuing Domestic Prosecutions Is Necessary to Target Demand 601A. Inconsistent Supply-Side Enforcement 601B. Foreign Bribery Laws Do Not Benefit “Victims” 602C. Using Supply-Side Enforcement Evidence on the Demand Side: Barriers or Benefits? 603D. Limitations Imposed by the Rule of Law and Political Will 604E. Domestic Prosecutions Yield Economic Benefits 606F. Building Institutional Capacity Through Knowledge Sharing 607

V. Proposed Solutions to Shift the Focus to the Demand Side 608A. Providing Funding and Training to Promote Best Practices 608B. Sharing Information Is Critical 609C. Enhancing Reporting and Disclosure Mechanisms 609D. Applying Political and Diplomatic Pressure 610E. Using International Organizations and Nongovernmental Organizations 611

VI. Conclusion 612

*588 I. INTRODUCTION

Payoffs for planes thwarted a Dominican drug interdiction program when a deal to purchase defense equipment resulted

in the criminal indictment of eight Embraer S.A. executives for allegedly bribing Dominican officials. 1 The DominicanRepublic (DR) approved a $92 million contract to purchase military planes for drug trafficking surveillance, which was

brokered by a Dominican general who received a $3.5 million kickback. 2 The general allegedly used a portion of these

funds to bribe a Dominican senator who was tasked with facilitating the deal's approval. 3 The payments “allegedly wererouted through bank accounts maintained by three shell companies,” and “Embraer executives attempted to conceal the

payments by booking them as [consulting] fees in a bogus deal to sell aircraft to the Kingdom of Jordan.” 4 Ironically,

Embraer's compliance department initially blocked the financial transfers in 2009. 5 Brazilian regulators have begun



investigating *589 and prosecuting those who paid the bribes, 6 but a crucial element is missing: domestic enforcement

actions against the bribe recipients. 7 The DR did not file charges against or initiate a formal investigation into the public

officials who received the illegal payments. 8

Although anti-corruption initiatives have become a part of the global agenda, 9 domestic enforcement actions 10 are

often overlooked in this international dialogue. 11 As the number of Foreign Corrupt Practices Act (FCPA) 12 and

other enforcement actions targeting foreign bribery has risen, 13 in theory, a corresponding increase in parallel domestic

enforcement actions should have materialized. 14 Yet, the data indicate that domestic enforcement actions remain low

and nonexistent across a number of jurisdictions. 15 Recent scholarship *590 addressing global anti-corruption has

acknowledged the supply and demand sides of the bribery transaction; 16 however, not enough attention has been

devoted to sanctioning the solicitor of the bribe. 17 To effectively deter corruption, the focus must broaden to addressthe demand side of the equation by promoting the domestic enforcement of anti-bribery statutes.

Domestic anti-bribery initiatives and enforcement actions should become a priority on the global anti-corruption agendato combat bribery by targeting the source: the demand. Part II provides an overview of the bribery transaction, examines

the global anti-bribery framework, 18 and concludes by reviewing major enforcement actions pursued under this model.Part III examines the steps taken by China and Brazil to target domestic bribery. Part IV analyzes why the promotionof domestic prosecutions is necessary. Part V offers practical proposals to bolster domestic enforcement actions in aneffort to broaden the global approach to anti-bribery.

II. BACKGROUND

A. The Bribery Transaction: Demand and Supply

Bribery is no different from any other business exchange: it is a two-sided transaction based on demand and supply.

Supply-side bribery (active bribery) refers to those entities or individuals who pay the bribes. 19 Active bribery focuses

on the source of the bribe payment, which is linked to obtaining an unfair, illegal advantage. 20 Demand-side bribery(passive bribery) applies to those individuals--often public officials or government employees--who solicit or accept the

prohibited payments. 21 A bribe may be required or demanded to execute a public function, to expedite a businesstransaction requiring government authorization (e.g., approving a license), or to grant an advantage (e.g., awarding a

government contract). 22 The motivations underlying the actions on each side of the transaction differ. Consequently,different approaches are required to deter passive bribery.

*591 The motivation prompting the actors' behavior on each side of the transaction is premised on the good or promised

benefit sought by the parties involved. 23 The demand side can be motivated by greed, prestige, or a variant of rent-

seeking behavior. 24 The bribe recipient brokers a deal conferring a benefit on a bribe supplier. Thus, the party payingthe bribe obtains a benefit to which it would not have otherwise been entitled. On the supply side, a company may

pay a bribe to expedite the process of clearing customs or to obtain a government contract. 25 The use of payments to

facilitate foreign operations in highly bureaucratic or nontransparent markets often encourages supply-side bribery. 26

In such cases, the bribe recipient's public position empowers that person to serve as a gatekeeper. 27 The individual usesthis pivotal position to profit from the access granted by his public position by expediting business licenses or rigging

public procurement. 28 These exchanges occur when a lack of transparency enables public officials to abuse the discretion

afforded by their positions. 29



While both exchanges are profit-driven, the accountability mechanisms on each side of the bribery transaction arenot distributed proportionately. Multinational companies report being extorted and actively solicited for bribes by

public officials. 30 Due to weak rule of law and a failure to apply punitive sanctions, foreign officials demand bribes

with impunity in certain jurisdictions. 31 In some countries, conducting business without a bribe may be impracticable

given the local legal infrastructure and lack of institutional oversight. 32 This barrier by no means suggests that foreigncompanies *592 should be excused from liability for making bribe payments. But this challenge highlights the fact thatcompanies, and others attempting to bring business to foreign markets, bear the brunt of foreign bribery enforcement

actions when the payor of the bribe is the sole focus. 33

B. The Supply-Side Anti-Bribery Model Prevails on the Global Agenda

Foreign bribery laws comprise the foundation of the “global anti-corruption movement.” 34 The existing statutory

framework has precipitated enforcement actions targeting active bribery. 35 Apart from the United Nations (UN)

Convention Against Corruption, 36 most foreign bribery laws do not address or prohibit passive bribery. 37 As a result,no punitive consequences are applied to deter the corrupt practices undertaken by demand-side actors in lieu of a

domestic enforcement action. 38

1. FCPA: The Statutory Model for Foreign Bribery Laws

The United States' FCPA established the statutory basis for the global anti-bribery movement, and it has been used

as a model for foreign bribery statutes. 39 The FCPA prohibits U.S. companies, companies trading on U.S. securities

exchanges, and U.S. citizens from bribing foreign government officials. 40 It also imposes accounting requirements to

prevent companies from hiding bribe payments in their books and records. 41 Broad interpretations of this statute haveenabled U.S. regulators to expand the reach of the FCPA by using any activity that has a territorial nexus with theUnited States or any activity in the United States determined to have “furthered” the bribery scheme as jurisdictional

grounds for enforcement. 42

The initial purpose of the FCPA was to counteract the negative perception generated by U.S. companies paying bribesabroad, which “tarnished the [U.S.] image” and raised questions about the capitalist business model during *593 the

Cold War era. 43 Thus, the FCPA targets the source of the bribe payment rather than the person receiving the bribe. 44

The model is premised on the expectation that domestic jurisdictions will enforce local bribery laws to punish bribe

recipients. 45 Many jurisdictions have implemented laws modeled after the FCPA that target the supply side of the

bribery transaction. 46

2. A Broader Supply-Side Initiative: OECD Anti-Bribery Convention

To level the playing field and extend the foreign bribery prohibition across jurisdictions, the Organisation for EconomicCo-operation and Development (OECD) adopted the Convention on Combating Bribery of Foreign Public Officials

(the Convention) in 1998. 47 The Convention mirrors the FCPA's focus on active bribery by prohibiting the giving,

paying, or promising of bribes. 48 The Convention obligates signatories to adopt legislation criminalizing the bribery

of foreign officials. 49 OECD members (in particular, the United States) exerted pressure on member states to become

signatories and to implement the anti-bribery statutes required to comply with the Convention. 50 Recently, even non-

OECD members, such as China, have begun to adopt similar statutes. 51 Although these statutes vary based on domestic



legal principles, many have an extraterritorial reach similar to the FCPA. 52 *594 The adoption of foreign briberylaws in both OECD and non-OECD countries illustrates the political traction of this global initiative; however, these

statutory developments continue to focus on the payor of the bribe. 53

3. Targeting the Demand Side: UN Convention Against Corruption (UNCAC)

The UN adopted the first global anti-corruption instrument in 2003, the UN Convention Against Corruption

(UNCAC). 54 This multilateral agreement expanded upon the OECD Convention by criminalizing both demandand

supply-side bribery. 55 The UNCAC provides recommendations and legislative proposals for countries seeking to

curb bribery by strengthening their domestic anti-bribery framework. 56 Furthermore, the UNCAC contains guidancehighlighting the procedures that member states should use to request international cooperation and mutual legal

assistance 57 when such assistance is necessary to pursue corruption investigations across borders. 58

The UNCAC establishes a global framework for combating bribery by addressing the demand and supply sides of

the problem. 59 This model offers a more comprehensive approach because bribe payors rarely initiate the illicit

transaction. 60 The United States and the OECD should use the momentum of current anti-corruption initiatives to

advance the UNCAC's implementation, thereby laying the groundwork to discourage demand-side bribery. 61

C. Enforcement Under the Current Model Fails to Target the Source

The United States initially filled the international enforcement void by serving as the global policeman to prosecute

foreign bribery, but as new anti-corruption statutes have been implemented, that trend has slowly started to shift. 62

FCPA enforcement has exploded in recent years, with *595 approximately 165 ongoing and concluded enforcement

actions being brought between 2005 and 2013. 63 The exorbitant fines and penalties collected through FCPAinvestigations and settlements have induced firms subject to FCPA jurisdiction to implement compliance programs and

undertake costly internal investigations. 64 In contrast, the threat of action against those who demand bribes remains

relatively unchanged. 65

1. FCPA Prompts Multilateral Actions: Multilateral Enforcement

The number of multilateral enforcement actions 66 has risen in recent years. 67 U.S. efforts to pursue FCPA violators,

in large part, have spurred global enforcement of foreign bribery laws. 68 Recent cross-border enforcement actions

against Siemens and BAE 69 serve as warnings to corporate enterprises operating under an antiquated “anything

goes” mentality. 70 Notably, such legal actions are increasingly becoming multilateral and often involve a number of

jurisdictions working in concert to prosecute under foreign bribery laws. 71 Cross-border investigations have evolved

into a new tool available to pursue transnational bribery. 72 However, these actions do not sanction bribe recipients and

those officials requesting bribes; 73 thus, these efforts fail to address the underlying problems that perpetuate corruptpractices.

*596 2. Demand-Side Prosecutions Are Absent 74



The enforcement of anti-bribery laws targeting the supply side has not produced a corresponding response by the host

countries where the bribery has taken place. 75 Only a few parallel cases have been brought by host country jurisdictions

against bribe solicitors in connection with FCPA actions. 76 For example, Costa Rica convicted a former Costa Rican

president for his role in the Alcatel-Lucent bribery scheme. 77 Unfortunately, these cases are typically the exceptionrather than the rule. Foreign bribery investigations have not triggered large numbers of parallel domestic proceedings,which could be attributed to their potential to complicate global investigations by alerting bribe recipients to the

investigation, or allowing bribe recipients to destroy evidence or hide proceeds before they can be investigated. 78 In

theory, information from FCPA investigations should enable the bribe recipient's country to prosecute that individual. 79

Also, sharing information obtained through an FCPA action with the bribe recipient's country should encourage civil

society to publicly pressure government authorities to hold the payee liable. 80 Barriers to prosecuting the officials

who solicit bribes, such as immunity and a lack of “institutional capacity” 81 to prosecute, 82 have contributed to this

phenomenon. 83

*597 III. THE MISSING PIECE OF THE ANTI-BRIBERY PUZZLE: DOMESTIC ENFORCEMENT

Recently, China and Brazil 84 have initiated domestic anti-bribery actions. The examination of anti-corruption initiativesin these countries reveals how countries that are new to the global anti-bribery movement are confronting corruption by

targeting the demand side. 85 More importantly, these cases illuminate the motivations underlying these enforcement

actions. 86 Observations based on these case studies explain and justify the need to promote new programs at theinternational level to stem bribery at the source.

A. Domestic Enforcement in China

China's culture of collectivism 87 and the state ownership and control of many business enterprises have contributed to

China “trigger[ing] the second-highest number of FCPA enforcement actions in the world.” 88 Prior to entering office,President Xi Jinping announced his plan to target “flies and tigers” (low- and high-ranking corrupt officials) in his

anti-corruption program 89 to restore the Communist Party's credibility. 90 Xi Jinping has proceeded to strengthen and

advance his anti-corruption program by pursuing officials at all levels of government. 91

In July 2014, China initiated Operation Fox Hunt, a cross-border law enforcement operation in pursuit of “corrupt

Chinese officials who ha[d] fled China, allegedly taking with them billions of dollars in public funds.” 92 Within *598

four months, the operation “resulted in the arrests of 288 suspects who fled to 56 different countries.” 93 Chinese

authorities seized approximately “[$1.63 billion] in illegally obtained funds”; 94 however, there is speculation that over

the past twenty years, public officials leaving China have misappropriated and stolen $129 billion. 95 Part of this effortinvolved the first joint China-Australia law enforcement operation, which targeted Chinese officials who reportedly stole

about $833 million in bribes and other assets prior to fleeing to Australia. 96 This operation was undertaken to repatriatestolen public funds, but the operation also sent a signal to current Chinese officials that transferring their assets abroad

and expatriating to another country would not shield them from China's reach. 97 While this international endeavor was

symbolic, it warrants questions regarding its legal validity. 98

China's Communist Party appears to be using such anti-corruption initiatives to confront the party's credibility and

legitimacy crisis. 99 While critics have noted that the Chinese Communist Party (CPC) is combating corruption tomaintain its political primacy, the fact that public officials have been targeted at all levels of government suggests that



China's motivations may be broader. 100 In China, “[c]orruption is regarded as one of the biggest threats to future

political stability and economic development.” 101 China's domestic enforcement and anti-corruption program serve

to underscore the costly consequences of political corruption, even in an authoritarian country. 102 Fears of losingcontrol and social instability, along with economic concerns, likely motivated this movement. However, China's domesticenforcement *599 and anti-corruption program illustrate a new dynamic in the global anti-corruption movement:domestic authorities pursuing their own officials beyond national borders to hold them accountable for crimes ofcorruption.

B. Brazil: Building Anti-Corruption Capacity

Brazil has recently undertaken enforcement actions against many prominent political and corporate figures,

demonstrating a greater capacity and willingness to confront bribery. 103 Despite skepticism over its commitment to

reduce corruption, Brazil recently prosecuted a number of public officials as part of the Mensalão scandal. 104 The

Mensalão scandal produced the first major judicial decision against corrupt political officials in Brazil. 105 Thirtyeight

public officials were prosecuted for misappropriating public funds to buy votes. 106 Overall, twenty-five officials were

criminally convicted for corruption in this case, 107 an outcome anathema to Brazilian culture. 108 Criminal convictions

for public corruption have increased in Brazil since this landmark corruption case was decided. 109

Petró leo Brasileiro S.A. (Petrobras), Brazil's state-owned oil company, is currently at the center of an international

criminal investigation involving billions of dollars in fraud, bribes, kickbacks, and money laundering. 110 Petrobrasofficers allegedly “conspired with contractors to inflate the price of contracts and then kick back the excess to executives,

politicians and political parties as bribes.” 111 Petrobras executives supposedly used these tactics to inflate the company'searnings, which has prompted a probe by the U.S. *600 Securities and Exchange Commission (SEC) independent of the

Brazilian investigation. 112 The scandal involves some of Brazil's largest construction companies and political leadersand even implicates President Dilma Rousseff, who served as a Petrobras board member when the alleged corrupt acts

took place. 113 The allegations suggest that bribe proceeds from Petrobras were used to finance President Rousseff ‘s

election campaign, which contributed to her re-election in October 2014. 114 To date, 179 individuals have been formally

charged with a range of crimes including fraud, bribery, conspiracy, money laundering, and others. 115 These individuals

include Petrobras executives and executives from the contracting firms that allegedly colluded in the scheme. 116 HowBrazil manages this investigation and handles the related prosecutions will be extremely important in cultivating Brazil'sinstitutional capacity to deter demand-side bribery.

The Mensalão trials and the breadth of the Petrobras indictments demonstrate that Brazil has the political will to tackledemand-side corruption. These matters present the opportunity to strengthen and build Brazil's prosecutorial capacity,

particularly given that the investigation involves U.S. regulators. 117 This cross-border element provides an opportunity

to share institutional knowledge, which can enable Brazilian prosecutors to build a stronger case. 118 The successfulprosecutions of public officials *601 and corporate executives in the Petrobras case would legitimize Brazil's stated

objectives to thwart bribery. 119 These highly political cases suggest that bribery is no longer part of conducting businessas usual in Brazil, and that the country has a strong, independent prosecutorial and legal system that is equipped to

combat bribery. 120

IV. WHY PURSUING DOMESTIC PROSECUTIONS IS NECESSARY TO TARGET DEMAND



The global anti-bribery framework 121 focuses on the supply side of the bribery transaction. 122 With the exception

of the UNCAC, 123 most statutory regimes are designed to deter the payment of bribes, but not the demand. 124

Current enforcement data also indicate that the provider of the bribe payment is often penalized, 125 whereas the party

demanding the illicit payment is rarely held accountable. 126 National initiatives in China and Brazil serve to highlightthe importance of pursuing corruption from within and demonstrate the need to target the demand side. To combat

this global “scourge” 127 effectively, the enforcement model must shift to better address the source of the problem: the

public officials who solicit the bribes. 128

A. Inconsistent Supply-Side Enforcement

Inconsistent enforcement of supply-side bribery laws can undermine attempts to reduce corruption. 129 For example,numerous FCPA enforcement actions have involved activities in Africa, and this risk has caused some *602 companies

to withdraw from business deals on the continent. 130 The problem is that competing firms, such as Chinese companies,have replaced their U.S. counterparts on occasion and used “opaque” business practices because they were not subjected

to the same anti-bribery restrictions. 131 Some African officials support and encourage these business practices to

subsidize their own “rent-seeking” behavior. 132 This outcome not only undermines U.S. competitiveness, but it also

harms anti-corruption initiatives and weakens the rule of law in African countries. 133 Apart from pressuring morecountries to comply with the supply-side anti-bribery model, the only way to target this behavior is by prosecuting thedomestic officials for soliciting the bribe in the first place. Supporting domestic initiatives to counteract inconsistent

anti-bribery law enforcement is necessary to overcome entrenched cycles of bribery. 134

B. Foreign Bribery Laws Do Not Benefit “Victims”

Supply-side foreign bribery laws are not designed to benefit the countries where the bribes are taking place--they are

designed to punish the act of paying a bribe. 135 Thus, the harm inflicted on the host country, where the bribe occurs,

is not remedied by this statutory mechanism. 136 Proceeds or disgorgements obtained through enforcement proceedingsare rarely shared with the host country, either because there is no formal sharing agreement in place or due to concern

that the host country may have been complicit in the corrupt activity. 137 Critics contend that the FCPA and similarforeign bribery statutes are not designed to prohibit bribery over the long term, but are instead designed to serve as

a revenue generator. 138 Because foreign bribery laws are not designed to protect the country whose assets have been

misappropriated by corrupt officials, that country's interests are not represented. 139 Typically, the funds recovered from

a foreign company for paying a bribe are not repatriated. 140 The guilty domestic official is often not brought to justice,

and the harm inflicted on the local economy, infrastructure, and social welfare persists. 141 Shifting the focus to thoseindividuals *603 soliciting payments from foreign corporations would align the balance of justice to deter officials fromengaging in this behavior. Without a system of effective deterrence that generates a fear of punishment for engaging in

bribery, public officials will continue to profit at the public's expense. 142

C. Using Supply-Side Enforcement Evidence on the Demand Side: Barriers or Benefits?

Supply-side enforcement actions can create barriers for local authorities pursuing domestic enforcement actions. 143 Thedecision to prosecute a foreign bribery case can be highly political, particularly because the implicated party is often

a national company domiciled within the borders of the prosecuting country. 144 Even when warranted, the country



may decline to prosecute for political or economic reasons, particularly if such an action would jeopardize local jobs or

undermine the company's competitive advantage. 145 National economic interests can carry considerable weight when

deciding whether to prosecute a foreign corporate entity. 146 If the action is not brought, the host country where the bribeoccurred may be discouraged from opening its own investigation, or it may not be capable of independently bringing anenforcement action due to budget and resource constraints.

Disclosure mechanisms under foreign bribery laws and settlement agreements may inhibit domestic prosecutions.

Because the disclosure of bribe payments does not enable the payor to escape liability, 147 violators are reluctant to

report situations in which they were pressured to pay bribes. 148 Sharing this information with authorities based in

the demand-side jurisdiction would enable local authorities to hold the guilty official accountable. 149 Even when thisinformation is shared with U.S. regulators during FCPA settlements, violators may withhold this evidence from the

demand-side country to safeguard it from being leaked. 150 Moreover, if the violating company conducts its own internalinvestigation, the evidence produced may not be useful to authorities in the demand-side country, particularly if the

investigative methods used do not comply with that country's legal procedures. 151 *604 These procedural barrierspresented by foreign bribery enforcement serve to reduce the prospect for domestic enforcement actions.

D. Limitations Imposed by the Rule of Law and Political Will

Poor governance and political resistance can prove challenging when attempting to bring enforcement actions for publiccorruption. Domestic prosecution is necessary to counteract the impunity of corrupt foreign public officials; however,

pursuing such cases may be politically impossible in some situations. 152 Law enforcement and prosecuting authorities

may not have the independence to pursue a public bribery investigation. 153 Even if they do have the prosecutorialindependence to proceed, the decision to prosecute could have repercussions, which may inflict personal costs or affect

their careers. 154 For example, it could taint the careers of those pursuing the case or make them political targets. 155

In some instances, pursuing such a case could be life-threatening for prosecuting authorities and whistleblowers if the

political environment is controlled by corrupt forces. 156 A “lack of political will” to prosecute national political leaders

also may inhibit such prosecutions. 157 If no countervailing pressures to bring these cases exist, the tendency of thegovernment may be to dismiss or ignore public corruption *605 cases for fear that prosecuting would undermine its

authority or credibility. 158 Generating awareness through media coverage to elicit pressure from the general public can

help shift the balance, 159 but these options may not always be available, particularly in a corrupt jurisdiction where

freedom of the press is limited. 160

The cases of China and Brazil illustrate that a lack of political will can be overcome when economic and politicalpressures demand a response to public corruption. For China, pursuing public corruption has been used to preserve thelegitimacy of Communist leadership and generate a positive image of the Chinese economy by proving that it is not a

corrupt Communist empire. 161 Similarly, Brazil prosecuted public officials in Mensalão to generate political prestige,

and it continues to strengthen its anti-corruption institutions by pursuing cases related to Petrobras. 162 Creating a moretransparent economic market by reducing corruption likely motivated both China and Brazil to prosecute domesticpublic officials in an effort to improve their global reputations.

Additionally, prosecuting under domestic anti-bribery laws can serve to test the effectiveness of local anti-briberylegislation. Bringing such legal actions enables authorities to assess whether amendments are required to ensure that

these laws are effective tools rather than impediments to combating domestic bribery. 163 Without enforcement, bribery

laws become “paper tigers” for their failure to deter criminalized conduct. 164 If the cost of committing the crime does



not exceed the benefit, bribery will continue unabated. 165 *606 Domestic enforcement counteracts the balance by

imposing costs on public officials. 166 These costs may be financial or personal, such as inflicting reputational harm by

shaming or incarcerating the perpetrator. 167 These mechanisms are essential to an effective anti-bribery scheme, and

without enforcement, such laws are rendered ineffective. 168 If a lack of political will or a fear of political reprisal forpursuing domestic enforcement actions is permitted to chill local prosecutorial efforts, bribery will remain the status quo.

E. Domestic Prosecutions Yield Economic Benefits

Pursuing domestic prosecutions can produce positive economic benefits for the country. Attacking corruption ismotivated largely by financial interests because bribes reduce market transparency while inhibiting the efficiency of

market forces. 169 While supply-side bribery laws may not have impacted the demand for bribes, such laws have limitedthe supply by deterring companies from engaging in business transactions where the risk of bribery violations exceeds the

projected business benefit. 170 A study analyzing the impact of foreign bribery laws on foreign investment illustrated that“laws against bribery abroad appear to be effective in making investors more sensitive to host country corruption, but

only when the laws are in place and coordinated in multiple countries.” 171 Notably, foreign direct investment inflowsto “corrupt” countries declined after OECD member states began to implement foreign bribery laws, illustrating the

economic impact of supply-side laws. 172

These results strengthen the argument that FCPA enforcement actions may be bad for business in the demand-sidecountry where the solicitor of the bribe resides. A motivating factor for China's anti-corruption campaign was the high

number of China-related FCPA enforcement actions. 173 The image of foreign companies bribing Chinese officials likelyembarrassed Chinese leaders, contributing to the Chinese Communist Party's legitimacy problem. These FCPA cases

negatively impacted China's economy. 174 The potential cost of being charged by U.S. regulators, and the fact that

these actions reinforced China's reputation for corruption, made China less *607 appealing to investors. 175 The samereasoning can be applied to Brazil, particularly given its role on the world stage as the host of the 2014 World Cup and

the 2016 Olympics. 176 Businesses embrace global anti-bribery enforcement because it encourages companies to compete

on a level playing field. 177 Broadcasting a transparent, positive image reassures investors and companies looking to

enter new markets that their funds will not be misappropriated or used to fund corrupt practices. 178

F. Building Institutional Capacity Through Knowledge Sharing

Encouraging and enabling foreign authorities to bring domestic actions builds institutional capacity. Prosecutorscan acquire valuable technical expertise by pursuing complex bribery cases, provided the country has the resources

to proceed. 179 Foreign bribery cases often require regulators to interact across jurisdictions through multilateral

investigations. 180 These cases foster relationships in the law enforcement community that strengthen mutual legalassistance efforts and cultivate the international cooperation necessary to attack bribery successfully on all fronts. Italso allows practitioners to share experience and best practices across borders. Such endeavors may also encourage thesecountries to deepen their involvement in international law enforcement initiatives.

Notably, a lack of technical capacity or training may prevent authorities in demand-side jurisdictions from prosecuting

a bribery case, particularly if the case involves foreign elements. 181 The complexity of these cases often prolongs the

duration of the investigation, meaning that some countries simply cannot allocate the funds to prosecute. 182 A lackof information sharing between the demand-side authorities and the authorities prosecuting the supply side may create

additional challenges during the course of the investigation. 183 Mutual legal assistance requests can be costly and



time-consuming, which can limit access to evidence when a cost-benefit analysis discourages *608 their use. 184 Theconfluence of these factors, combined with local political resistance, often becomes insurmountable in bringing domesticenforcement actions.

V. PROPOSED SOLUTIONS TO SHIFT THE FOCUS TO THE DEMAND SIDE

Global anti-bribery enforcement should promote domestic enforcement to complete the international anti-corruption

framework and create a more effective deterrent against corruption. While imposing legal obligations 185 to pursuedomestic prosecution might be the strongest approach, concerns over jurisdictional limitations, sovereignty, and

international law may limit the feasibility of such options. 186 Furthermore, legal solutions fail to acknowledge the social,

cultural, and economic dynamics that make a country susceptible to bribery. 187 These solutions approach the problemfrom a practical, pragmatic perspective; but to succeed, such legal solutions must be accompanied by social policies to

discourage bribery and reform the country's underlying social fabric. 188

A. Providing Funding and Training to Promote Best Practices

To promote domestic prosecutions, barriers to bringing these cases must be reduced through the provision of funding

and training. 189 Ensuring that domestic prosecutors are trained to bring enforcement actions effectively and efficientlywould promote the goal of targeting demand-side bribery. Sharing tools and best practices, experience from pastcorruption cases, and other practical techniques across jurisdictions facilitates capacity-building and builds relationships

for cases where mutual legal assistance may be sought in the future. 190 To encourage these programs, international

organizations should allot funds and resources. 191 Alternatively, countries bringing supply-side enforcement actionscould contribute a portion of the forfeited *609 assets or disgorged proceeds to a training fund. These methods couldstrengthen the anti-bribery infrastructure necessary to successfully prosecute bribery domestically on a routine basis.

B. Sharing Information Is Critical

To reduce the informational divide that contributes to the success of bribery, prosecutorial authorities should

endeavor to share additional enforcement data and critical information with their foreign counterparts. 192 A formalinformation-sharing system should be implemented through the UNCAC. Also, information-sharing procedures shouldbe strengthened between government agencies at the domestic level, such as between tax and prosecutorial authorities,

to identify potential bribery schemes. 193 Weak bureaucratic infrastructure diminishes the ability of local authorities to

successfully conclude bribery investigations. 194 Bridging the informational divide can facilitate domestic enforcement.

The UNCAC guidelines for mutual legal assistance and other tools for cross-border investigations 195 need to be givenform in addition to substance. Establishing reporting procedures to share general enforcement data, bribery schemepatterns, and other useful data would provide global authorities with the resources to better identify and eliminate

bribery. 196 Such efforts would enable data gathering that could enhance the identification and monitoring of thoseindividuals, schemes, organizational structures, or patterns that are predisposed to corrupt payments or facilitate bribery.Furthermore, the information would facilitate evaluations of the effectiveness of the punitive and deterrent techniquesused to discourage bribery.

C. Enhancing Reporting and Disclosure Mechanisms



Implementing a meaningful reporting and disclosure scheme to enable the prosecution of foreign bribery cases is a

practical step that could encourage domestic prosecutions. 197 The lack of data and statistics on bribery transactions is

one of the primary barriers to combating bribery because, by its nature, bribery resides in the shadows. 198 Encouragingand promoting the disclosure of bribe solicitations would remedy this informational gap and enable regulators to go

after the demand side at the domestic level. 199 Some *610 nonprofit organizations have developed programs to gather

these data, but a comprehensive, uniform reporting system accessible to all companies and all countries is lacking. 200

The United States encourages companies to report the issue to a U.S. embassy, or U.S. commercial officer or foreign

service officer; 201 however, concerns over incurring FCPA liability may undermine this reporting effort. In contrast,

a nonprofit in India has developed a website allowing anonymous reports of bribery payments and solicitations. 202

The site, IPaidaBribe.com, allows users to share their experiences and the impact of corruption on their daily lives. 203

Replicating such initiatives in other countries, particularly where there is strong political inertia to combating bribery,could challenge the status quo and serve as an educational tool by cultivating awareness about the harm and formsof corruption. Allowing companies and individuals who have been solicited or extorted to report this problem withanonymity could give prosecutors the information they need to truly attack demand-side bribery from within.

D. Applying Political and Diplomatic Pressure

Political and diplomatic pressure should be applied to encourage countries to domestically prosecute demand-sidebribery. Governments should denounce public officials found to have solicited bribes and publicly pressure such regimes

to comply. 204 Under the auspices of the UNCAC, government representatives should call attention to those jurisdictionsthat fail to use anti-corruption tools when it is not politically expedient, such as the African countries that permitted

Chinese businesses to pay bribes when conducting business practices in Africa. 205 Censuring those companies not

subject to foreign bribery laws through blacklisting or sanctioning could bolster diplomatic pressure. 206 However, thesetactics are politically sensitive and unlikely to be implemented on a universal basis, weakening the intended effect. A

way to legitimize this political pressure could be through free trade agreements. 207 *611 Embedding governance ortransparency requirements in these international agreements would provide the signatories with a strong mechanism

through which to apply political pressure to encourage domestic bribery prosecutions. 208 This model parallels the

contractual obligations included in contracts issued by international financial institutions, such as the World Bank, 209

but broadens the approach to address demand-side bribery. 210 Attaching “integrity provisions” 211 to economicagreements could encourage the pursuit of domestic enforcement with fewer political repercussions.

E. Using International Organizations and Nongovernmental Organizations

International organizations and nongovernmental organizations need to take the lead by promoting demand-side briberyinitiatives to cultivate political will for enforcement in reluctant jurisdictions. These organizations can effectively monitor

domestic bribery solicitations and share their reports with local enforcement authorities. 212 If such organizationshave a local presence, it may enable them to exert public pressure on the local government to confront “demand-side

corruption within their borders.” 213 These groups *612 have the capability to heighten public awareness 214 about

the manifestations of corruption through informational campaigns and media exposure. 215 These organizations needto incentivize and applaud domestic enforcement actions by using the tools at their disposal to increase the cost of thereputational harm associated with public corruption on the demand side.

VI. CONCLUSION



The global movement against corruption needs to broaden its focus to cover both the supply side and the demand sideof bribes. Charging the officials soliciting and receiving bribes for their corrupt acts, in addition to those paying them,would facilitate a more equitable distribution of liability and accountability among the guilty parties. While the UnitedStates has served as the global enforcer to call attention to global bribery, this approach is not sustainable in the longterm and will fail to diminish transnational bribery. Allowing public officials to benefit from government contracts andbusiness deals with impunity harms social welfare and increases the costs of doing business, often in those countries

most in need of the related economic activity. 216 Encouraging and pursuing domestic enforcement is a more effective

approach, albeit more difficult. 217

Promoting such an initiative is important to enhance the credibility of those countries implementing anti-briberylegislation to comply with international obligations, particularly those known for corruption. Adhering to internationalanti-bribery commitments generates political legitimacy, promotes rule of law, and enhances an efficient economy.Creating a robust anti-bribery regime requires local enforcement, the domestic prosecution of bribery, and domesticinitiatives designed to strengthen these efforts. Broadening international focus to also address the source of the demandfor bribes will produce a more robust global anti-bribery model that will be better equipped to reduce the prevalenceof bribery.

Footnotesa1 Lindsay Barnes Arrieta ([email protected]) is as a Compliance Management Associate at Citibank, N.A. and is currently

working in Latin America Corporate Compliance. In this role, she drafts procedures to address regulatory issues and investigatescompliance matters to advise the business on remediation. Ms. Arrieta graduated with honors from The George WashingtonUniversity Law School in 2015. She served as the 2014-15 Senior Notes Editor of the Public Contract Law Journal andpublished her note entitled Taking the “Jeitinho” Out of Brazilian Procurement: The Impact of Brazil's Anti-Bribery Law. Ms.Arrieta participated in the 2014 U.S. Securities and Exchange Commission Honors Law Program, working in both the Office ofInternational Affairs and the Division of Enforcement. In addition, she worked as a legal intern at the Inter-American DevelopmentBank, the U.S. Trade Representative Western Hemisphere Office, and the U.S. Attorney's Office in the Northern District ofFlorida. She is licensed to practice law in the State of Florida and serves as an active member of the ABA Business Law SectionWhite Collar Crime Committee. Ms. Arrieta obtained a Master's degree in Latin American Studies from the University of Floridawith a concentration in business and received a Bachelor's degree from the Leonard N. Stern School of Business at New YorkUniversity. She is fluent in Spanish and possesses intermediate Portuguese fluency.

1 Jaclyn Jaeger, Embraer Faces FCPA Probe in Dominican Republic, COMPLIANCE WK. (Nov. 4, 2014), http://www.complianceweek.com/blogs/enforcement-action/embraer-faces-fcpa-probeindominican-republic#.VvAHNpwrLIU.

2 Joe Palazzolo & Rogerio Jelmayer, Corporate News: Brazil Charges Bribery in Embraer Sale, WALL ST. J. (Sept. 24, 2014, 3:57PM), http://www.wsj.com/articles/brazil-files-briberychargesin-embraer-aircraft-sale-to-dominican-republic-1411502236.

3 See id.

4 Jaeger, supra note 1.

5 Palazzolo & Jelmayer, supra note 2.

6 The Brazilian authorities filed criminal charges against the eight Embraer S.A. executives in September 2014.BuckleySandler LLP, Brazil Charges Embraer Executives with Bribery, FCPA SCORECARD (Sept. 24, 2014), http://www.fcpascorecard.com/brazil-charges-embraer-executiveswithbribery.

7 As of May 2015, Embraer S.A. indicated in its U.S. Securities and Exchange Commission (SEC) filings that it had “entered intodiscussions with [the Department of Justice] to resolve a FCPA probe launched by the Department in 2010.” BuckleySandlerLLP, Brazilian Aircraft Maker Embraer in Negotiations to Resolve FCPA Violations, LEXOLOGY (May 22, 2015), http://www.lexology.com/library/detail.aspx?g=04a6bf86-ae15-4573-8937-923f947db53d.



8 The Dominican authorities have not indicted any public officials to date; however, Dominican authorities have statedthat they intend to pursue an investigation. See Brazilian Planes Scandal Links Dominican Senator, Ex-Air ForceChief, DOMINICAN TODAY (Sept. 25, 2014, 12:38 PM), http://www.dominicantoday.com/dr/local/2014/9/25/52831/Brazilian-planes-scandallinksDominican-senator-ex-Air-Force-chief; Brasil y Repú blica Dominicana Investigan PosiblesSobornos en la Compra de Aviones Sú per Tucano, INFORMACIÓ N DEFENSA Y SEGURIDAD (Nov.21, 2014), http://www.infodefensa.com/latam/2014/11/21/noticia-brasil-republica-dominicanaprofundizaraninvestigacion-compra-aviones-super-tucano.html.

9 See Squeezing the Sleazy: The Politics of Corruption, ECONOMIST (Dec. 15, 2012), http://www.economist.com/news/international/21568356-global-anti-corruption-efforts-aregrowingscope-and-clout-year-set-be.

10 Domestic enforcement actions are “actions by government agencies for bribes paid within the country that is prosecutingthe action[, or] country investigations involving bribery of local officials ....” TRACE INT'L, GLOBAL ENFORCEMENTREPORT (GER) 2013 3 (2014) [hereinafter TRACE ENFORCEMENT REPORT]. Domestic enforcement may includeprosecutions, formal proceedings, and administrative actions to punish bribe solicitors. Id.

11 See id. at 2.

12 The Foreign Corrupt Practices Act (FCPA), 15 U.S.C. §§ 78dd-1 et seq. (2012), is the U.S. foreign bribery statute that prohibitsU.S. companies and companies that are publicly traded on U.S. securities exchanges from paying bribes to foreign officials.Spotlight on Foreign Corrupt Practices Act, U.S. SEC. & EXCH. COMM'N (Apr. 9, 2014), http://www.sec.gov/spotlight/fcpa.shtml. For more discussion, see infra Part II.B.

13 See TRACE ENFORCEMENT REPORT, supra note 10, at 4.

14 Reports suggest that analytical measures and information related to such actions are not publicly available or may bedifficult to obtain, particularly at the domestic level. See ORG. FOR ECON. CO-OPERATION & DEV., OECD FOREIGNBRIBERY REPORT: AN ANALYSIS OF THE CRIME OF BRIBERY OF FOREIGN PUBLIC OFFICIALS 33 (2014)[hereinafter OECD FOREIGN BRIBERY REPORT]. Additional challenges may include the length of time required toinvestigate these charges. The United States has cultivated strong legal infrastructure equipped to prosecute such cases withsome efficiency when contrasted with foreign nations that are still developing anti-corruption institutions at the national level.See id. at 34.

15 TRACE ENFORCEMENT REPORT, supra note 10, at 4. Foreign bribery enforcement actions targeting acts committedoutside of the prosecuting jurisdiction also remain somewhat low but have begun to increase slightly. Id.

16 See, e.g., Brian C. Harms, Note, Holding Public Officials Accountable in the International Realm: A New Multi-LayeredStrategy to Combat Corruption, 33 CORNELL INT'L L.J. 159, 171-82 (2000) (discussing both domestic and internationalinitiatives targeting the supply and demand sides of corruption).

17 Since December 2014, one scholarly work has evaluated the legal tools available to prosecute demand-side bribery withinthe current anti-bribery framework. See generally Lucinda A. Low et al., The “Demand Side” of Transnational Bribery andCorruption: Why Leveling the Playing Field on the Supply Side Isn't Enough, 84 FORDHAM L. REV. 563 (2015).

18 The term “anti-bribery framework” refers to international agreements and statutes banning foreign bribery. See infra Part II.Bfor a discussion of the central anti-bribery statutes comprising this framework.

19 Joseph W. Yockey, Solicitation, Extortion, and the FCPA, 87 NOTRE DAME L. REV. 781, 802 (2011).

20 Id. (citing Criminal Law Convention on Corruption art. 2, opened for signing Jan. 27, 1999, E.T.S. No. 173, 38 I.L.M. 505,506 (1999)).

21 Id. (citing Criminal Law Convention on Corruption art. 3, supra note 20, at 506).

22 See id. at 804.

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23 See Steven R. Salbu, A Delicate Balance: Legislation, Institutional Change, and Transnational Bribery, 33 CORNELL INT'LL.J. 657, 663 (2000) (explaining that the magnitude of the bribe may be an indicator as to the motivation underlying thesolicitation of the illicit payment).

24 Id. at 669 (discerning between officials whose avarice prompts them to seek bribes from poorly paid government officials whouse bribes to supplement their income).

25 For an overview of how corruption enters the procurement process, see Michelle Greenwood & James M. Klotz, TheFight Against Corruption in Public Procurement: An Introduction to Best Practices, in INTERNATIONAL PUBLICPROCUREMENT: A GUIDE TO BEST PRACTICE 57, 58-62 (Roberto Hernández García ed., 2009).

26 See Salbu, supra note 23, at 673.

27 See Lindsay B. Arrieta, Note, Taking the Jeitinho Out of Brazilian Procurement: The Impact of Brazil's Anti-Bribery Law, 44PUB. CONT. L.J. 157, 160-61 (2014).

28 A public official authorized to approve or facilitate the awarding of government contracts can abuse this responsibility byasking for payments to influence his decision-making process. See id.

29 See id. at 161.

30 Yockey, supra note 19, at 800-01.

31 FRANCESCO DE SIMONE & BRUCE ZAGARIS, CHR. MICHELSEN INST., U4 ANTI-CORRUPTION RESOURCECTR., IMPACT OF FOREIGN BRIBERY LEGISLATION ON DEVELOPING COUNTRIES AND THE ROLEOF DONOR AGENCIESS 1 (2014). For example, Felix Bautista, a senator in the Dominican Republic, allegedlymisappropriated $525 million in public funds during his tenure as Director of the Engineering Supervisors ofState Public Works Office. See Corey Kane, Petrobras, Martinelli and Dominican Legislator Top Global CorruptionList, LATIN CORRESPONDENT (Feb. 17, 2016), http://latincorrespondent.com/2016/02/petrobras-martinelli-and-a-dominican-legislator-topglobalcorruption-list. Although Bautista has been accused of enriching himself through corruption,he is still serving in public office after the case against him was dismissed on a procedural technicality. Id.


33 See id.

34 DE SIMONE & ZAGARIS, supra note 31, at 1.

35 See Garen S. Marshall, Note, Increasing Accountability for Demand-Side Bribery in International Business Transactions, 46N.Y.U. J. INT'L L. & POL. 1283, 1288 (2014).

36 U.N. Convention Against Corruption, Dec. 11, 2003, 43 I.L.M. 37 (2004) [hereinafter UNCAC].

37 See Low et al., supra note 17, at 567-72 (noting that transnational bribery laws, such as the FCPA, require the criminalization ofsupply-side bribery but do not address demand-side bribery, whereas certain treaties and international conventions encourageor require the criminalization of passive bribery).

38 See Marshall, supra note 35, at 1288.

39 See Yockey, supra note 19, at 803.

40 See 15 U.S.C. § 78dd-2 (2012); U.S. DEP'T OF JUSTICE & U.S. SEC. & EXCH. COMM'N, FCPA: A RESOURCE GUIDETO THE U.S. FOREIGN CORRUPT PRACTICES ACT 2, 10 (2012) [hereinafter FCPA RESOURCE GUIDE].

41 See 15 U.S.C. § 78m(b)(2)(A)-(B); FCPA RESOURCE GUIDE, supra note 40, at 2, 38-45.

42 15 U.S.C. § 78dd-3; FCPA RESOURCE GUIDE, supra note 40, at 11. The territorial nexus and the “in furtherance” provisionhave expanded the FCPA's territorial reach by using tangential acts, such as financial transactions involving U.S. banks, e-










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mail exchanges via servers located in the United States, and meetings occurring in the United States, as jurisdictional groundsfor FCPA enforcement. See id.

43 See Andrew Brady Spalding, Four Unchartered Corners of Anti-Corruption Law: In Search of Remedies to the SanctioningEffect, 2012 WIS. L. REV. 661, 674 (2012).

44 The FCPA has been used to prosecute foreign officials for the receipt of bribes, but these cases are rare and such actions aretypically charged under other statutes by relying on a related predicate act, such as money laundering. See Bruce W. Klaw, ANew Strategy for Preventing Bribery and Extortion in International Business Transactions, 49 HARV. J. LEGIS. 303, 334-37(2012).

45 See Elizabeth K. Spahn, Implementing Global Anti-Bribery Norms: From the Foreign Corrupt Practices Act to the OECDAnti-Bribery Convention to the U.N. Convention Against Corruption, 23 IND. INT'L & COMP. L. REV. 1, 5-6, 8 (2013)[hereinafter Implementing Anti-Bribery Norms].

46 See Yockey, supra note 19, at 803; see also Marshall, supra note 35, at 1288.

47 See generally Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Dec. 18,1997, 37 I.L.M. 4 (1998) [hereinafter OECD Bribery Convention]. For a discussion of the political elements leading to theimplementation of the OECD Convention, see Spahn, supra note 45, at 5-6.

48 See OECD Bribery Convention art. 1, supra note 47, at 4; see also S. REP. NO. 105-19, at 1-2 (1998) (recommending that theU.S. Senate give its advice and consent to the ratification of the OECD Bribery Convention).

49 See OECD Bribery Convention art. 3, supra note 47, at 5; see also S. REP. NO. 105-19, at 2-4.

50 Keith Thompson, Does Anti-Corruption Legislation Work?, 16 INT'L TRADE & BUS. L. REV. 99, 107 (2013) (noting thatthe “OECD has galvanised some of the most powerful economies in the world into legislating against bribery and corruptionand into cooperation with the US in multinational prosecutions”).

51 See Robb Adkins & Benjamin Kimberley, The Globalization of Anti-Corruption Enforcement: Recent Trends and Developments,INT'L WHITE COLLAR ENFORCEMENT, 2014 WL 10502, at *11 (2014).

52 The United Kingdom (U.K.) Bribery Act establishes jurisdiction over British entities or any entity participating in the Britisheconomy. See Bribery Act 2010, c. 23, § 12 (Eng.); see also U.K. MINISTRY OF JUSTICE, THE BRIBERY ACT 2010:GUIDANCE ABOUT PROCEDURES WHICH RELEVANT COMMERCIAL ORGANISATIONS CAN PUT INTOPLACE TO PREVENT PERSONS ASSOCIATED WITH THEM FROM BRIBING 9, 15-16 (2011). Recently, Brazilenacted its own bribery law carrying extraterritorial effect, which bans any Brazilian company (whether domiciled in Brazilor abroad) from bribing Brazilian public officials domestically or abroad. See Arrieta, supra note 27, at 170-71.

53 See Spalding, supra note 43, at 674-75.

54 See generally UNCAC, supra note 36; see also U.N. Convention Against Corruption, G.A. Res. 58/4, U.N. Doc. A/RES/58/4,at iii (Foreword) (Oct. 31, 2003) (introducing “a new fundamental principle, as well as a framework for stronger cooperationbetween States to prevent and detect corruption and to return the proceeds”).

55 See UNCAC arts. 15 & 16, supra note 36, at 45-46.

56 See id. arts. 5-14 at 38 (containing proposals to prevent and deter bribery).

57 Mutual legal assistance is a broad term that refers to the range of investigative techniques employed by law enforcementauthorities during an international criminal investigation. See id. art. 46 at 56-57. Authorities may share information, facilitateaccess to evidence, identify and detain suspects, or freeze assets to cooperate and support a foreign authority's investigation. Id.at 57. For in-depth information about how mutual legal assistance can be used to pursue foreign bribery cases, see id. at 56-61.

58 See id. art. 4 at 39.

59 See id. arts. 15-18 at 45-46.








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60 See Klaw, supra note 44, at 334.

61 A number of parties have yet to ratify and implement the UNCAC. United Nations Convention Against Corruption Signature& Ratification Status as of 1 December 2015, U.N. OFF. DRUGS & CRIME, https://www.unodc.org/unodc/en/treaties/CAC/signatories.html (last visited Feb. 22, 2016). As of December 2015, there were 140 signatories to the Convention out of 178members. Id.

62 See, e.g., Doreen Edelman & Matthew Tilghman, Increasing Coordination and More Wide-Spread Prosecution UnderAnti-Bribery Laws, BLOOMBERG L. (Sept. 1, 2011), http://www.bna.com/more-widespread-prosecution-under (noting thatU.S.-led enforcement actions are part of the anti-bribery landscape, but the enforcement of new foreign bribery statutes mayproduce multilateral enforcement actions).

63 TRACE ENFORCEMENT REPORT, supra note 10, at 8 fig.2.

64 See Michael K. Loucks & Alexandra M. Gorman, Is the DOJ FCPA Enforcement Hegemony Dead?, SKADDEN, ARPS,SLATE, MEAGHER & FLOM LLP (June 26, 2014), https://www.skadden.com/insights/doj-fcpa-enforcement-hegemony-dead.

65 See Klaw, supra note 44, at 334-35.

66 A multilateral enforcement action refers to actions undertaken by more than one jurisdiction to prosecute or sanction aforeign bribery law violator. See Elizabeth K. Spahn, Multijurisdictional Bribery Law Enforcement: The OECD Anti-BriberyConvention, 53 VA. J. INT'L L. 1, 1-2 (2012) [hereinafter Multijurisdictional Enforcement].

67 See Laura A. Benton et al., Anti-Corruption, 48 INT'L LAW. 389, 389 (2014); see also Multijurisdictional Enforcement, supranote 66, at 23-40 (discussing the cross-border enforcement actions brought against BAE, Siemens, TSJK, and Innospec asevidence that foreign bribery law enforcement has shifted from a unilateral to a multilateral endeavor).

68 See generally Adkins & Kimberley, supra note 51, at *10-11.

69 Both the U.K. and the United States settled claims against BAE for using bribery and fraud to acquire government contractsabroad. JACINTA ANYANGO ODUOR ET AL., STOLEN ASSET RECOVERY (STAR) INITIATIVE, WORLDBANK, LEFT OUT OF THE BARGAIN: SETTLEMENTS IN FOREIGN BRIBERY CASES AND IMPLICATIONSFOR ASSET RECOVERY 107-10 (2014) [hereinafter STAR ASSET RECOVERY REPORT]. In the case of Siemens, thecompany paid hundreds of millions of dollars in fines to authorities across several jurisdictions for paying bribes to securebusiness while actively hiding these payments. Id. at 131-34.

70 Cross-border enforcement actions have proven costly for Siemens and BAE, which have paid some of the largest penaltiesto date. See id. at 107-10, 131-34.

71 See id. at 101-40.

72 See Multijurisdictional Enforcement, supra note 66, at 2.

73 See INT'L BAR ASS'N, REPORT OF THE TASK FORCE ON EXTRATERRITORIAL JURISDICTION 221-22 (2009).

74 Part of the problem stems from a lack of research, documentation, and information sharing. See DE SIMONE & ZAGARIS,supra note 31, at 29; OECD FOREIGN BRIBERY REPORT, supra note 14, at 33-34. Statistics and information related toenforcement actions have been difficult to obtain on an international level. See id. Scholars have highlighted the need for moreresearch in this area and have indicated that international organizations and nonprofits may be best positioned to obtain thedata to produce a relevant inquiry. See, e.g., DE SIMONE & ZAGARIS, supra note 31, at 20, 23.

75 See TRACE ENFORCEMENT REPORT, supra note 10, at 12-16.

76 See, e.g., id. at 12; see also DE SIMONE & ZAGARIS, supra note 31, at 20-25.





77 In 2011, former Costa Rican President Miguel Ángel Rodríguez (1998-2002) was convicted and sentenced to five years ofjail time for his role in the Alcatel bribery case. For more details, see STAR ASSET RECOVERY REPORT, supra note 69,at 101-05.


79 Id. at 18.

80 Id.

81 As used in this article, the term “institutional capacity” refers to strengthening a country's legal, judicial, and administrativeinfrastructure. This process could involve providing additional resources, training, public education, or other initiativesdesigned to equip the country with the tools necessary to improve governance and rule of law. See, e.g., Harms, supra note16, at 205 (discussing the World Bank's efforts to increase institutional capacity through grants designed to introduce “newlegislation, procurement training, and studies to diagnose civil and legal problems”).

82 Low et al., supra note 17, at 581 (noting that an underdeveloped legal system and the immunity privileges that shield somepublic officials from prosecution can create additional challenges for pursuing corruption cases).

83 For details about the barriers to bringing parallel domestic prosecutions, see DE SIMONE & ZAGARIS, supra note 31, at29. See also infra Part IV.

84 Both China and Brazil have statutes in place prohibiting the domestic and foreign bribery of public officials. See Daniel Chow,The Interplay Between China's Anti-Bribery Laws and the Foreign Corrupt Practices Act, 73 OHIO ST. L.J. 1015, 1025-26(2012); Arrieta, supra note 27, at 170-71.


86 Id.

87 Shuangge Wen, The Achilles Heel That Hobbles the Asian Giant: The Legal and Cultural Impediments to Antibribery Initiativesin China, 50 AM. BUS. L.J. 483, 518 (2013).

88 David W. Simon & Robert H. Iseman, Domestic Anti-Bribery Enforcement May Be on the Rise in China: Multinationals MustFocus on Anti-Corruption Compliance, EYE ON CHINA Q. NEWSL. (Foley & Lardner LLP), May 1, 2013; see also TRACEENFORCEMENT REPORT, supra note 10, at 14.

89 Simon & Iseman, supra note 88.

90 Kyle Wombolt et al., Herbert Smith Freehills LLP, China Joins Global Fight Against Corruption, LEXOLOGY (Nov. 20,2014), http://documents.lexology.com/aa4e6aa6-59bb-410f-b4d8-56dab0c29848.pdf.

91 Bo Xilai, a former high-ranking party official, was charged and publicly convicted of bribery and embezzlement.See Simon Denyer, China's Ousted Official Bo Xilai Convicted of Corruption, Sentenced to Life in Prison, WASH.POST (Sept. 22, 2013), https://www.washingtonpost.com/world/asia_pacific/chinas-ousted-official-bo-xilai-convicted-of-corruption-sentenced-to-life-in-prison/2013/09/21/88b8d190-22b9-11e3-ad1a-1a919f2ed890_story.html. A former, high-ranking general, Xu Caihou, was investigated for corruption, and his case was turned over to prosecutors in October2014 for receiving “extremely huge” bribes. Alexa Olesen, China Reacts to Massive Corruption Tally of a FallenGeneral, FOREIGN POL'Y (Nov. 22, 2014), http://foreignpolicy.com/2014/11/22/china-reacts-to-massive-corruption-tally-of-a-fallen-general (describing the assets forfeited as including jade, emeralds, artwork, and boxes of cash “inscribed with thename of the soldier who had offered the cash in exchange for a promotion”).

92 Wombolt et al., supra note 90.

93 Shannon Tiezzi, China's Overseas Anti-Corruption Efforts Nets 288 Suspects, DIPLOMAT (Nov. 18, 2014), http://thediplomat.com/2014/11/chinas-overseas-anti-corruption-effortsnets288-suspects.








95 Dennis Lynch, Operation Fox Hunt: China Arrests 288 Financial Fugitives Abroad as Part of Anti-Corruption Campaign, INT'LBUS. TIMES (Nov. 17, 2014, 9:02 AM), http://www.ibtimes.com/operation-fox-hunt-china-arrests-288-financial-fugitives-abroad-part-anti-corruption1724736.


97 See Yang Hengjun, “Fox Hunt 2014”: China's Overseas Campaign Against Corrupt Officials, DIPLOMAT (Oct. 22, 2014),http://thediplomat.com/2014/10/fox-hunt-2014-chinas-overseascampaignagainst-corrupt-officials.

98 See id. (explaining that because China lacks an “adequate legal system in place to fight corruption, the anti-corruptioncampaign relies mostly on deterrence and severe punishments”); see also Andrew Jacobs & Chris Buckley, Presumed Guiltyin China's War on Corruption, Targets Suffer Abuses, N.Y. TIMES (Oct. 19, 2014), http://nyti.ms/1FnLPJQ (describing thetactics used to extract guilty verdicts, including physical violence, to produce results).

99 See Loro Horta, China's Anti-Corruption Campaign: Understanding the Rationale, RSIS COMMENTARY (Dec. 1, 2014),https://www.rsis.edu.sg/wp-content/uploads/2014/12/CO14238.pdf.

100 Olesen, supra note 91 (noting that some view President Xi Jinping's anti-corruption initiative as a way to “purge his rivals,”whereas “others believe that it is a genuine campaign”); see also Horta, supra note 99.

101 Samuel R. Gintel, Fighting Transactional Bribery: China's Gradual Approach, 31 WIS. INT'L L.J. 1, 3 (2014).

102 See id. (citing MINXIN PEI, CARNEGIE ENDOWMENT FOR INT'L PEACE, CORRUPTION THREATENS CHINA'SFUTURE 1-2, 5 (2007)).

103 See Ryan E. Bonistalli & Alex J. Brackett, McGuireWoods LLP, Anti-Corruption Enforcement in Brazil Is in HighGear, SUBJECT TO INQUIRY (Sept. 2, 2015), http://www.subjecttoinquiry.com/compliance/anti-corruption-enforcement-in-brazil-is-in-high-gear.

104 See Ryan E. Bonistalli, McGuireWoods LLP, Update on Brazil: Embraer SA and Anti-Corruption Progress, SUBJECT TOINQUIRY (Nov. 7, 2014), http://www.subjecttoinquiry.com/compliance/update-on-brazil-embraer-sa-and-anti-corruption-progress.

105 Andrew Downie, Brazil's Largest Corruption Trial Yields Its Most Important Guilty Verdict, TIME (Oct. 10, 2012), http://world.time.com/2012/10/10/brazils-largest-corruption-trial-yieldsitsmost-important-guilty-verdict.

106 The scandal became known as Mensalão, which means “large monthly allowance” in Portuguese. Q&A: Brazil's “BigMonthly” Corruption Trial, BBC NEWS (Nov. 16, 2013), http://www.bbc.com/news/world-latin-america-19081519. Thoseinvolved paid “monthly allowances” to “purchase” votes and political support from coalition parties. Id.

107 Id.

108 See Helena Regina Lobo da Costa & Marina Pinhão Coelho Araú jo, Brazil's Mensalão Trial: Changing the Culture ofCorruption?, ANTI-CORRUPTION COMM. NEWS (Int'l Bar Ass'n Legal Practice Div., London, U.K., Apr. 2013), at 16.

109 See Fernando Palma (Compliance Manager, Office of Compliance & Ethics, Archer Daniels Midland Co.), Bruno Maeda &Carlos Ayres (Co-Chairs, Anti-Corruption Compliance Comm., Braz. Inst. of Bus. Law), Presentation at the American BarAssociation Section of International Law Anti-Corruption Committee Panel: Anti-Bribery Legislation in Brazil: Issues andChallenges Moving Forward 23 (July 19, 2012).

110 Caso Lava Jato: Entenda o Caso, MINISTÉ RIO PÚBLICO FEDERAL (MPF) DO BRASIL, http://lavajato.mpf.mp.br/entenda-o-caso (last visited Feb. 22, 2016).

111 Roberto Viga Gaier, Jeb Blount & Lisa Von Ahn, Brazil Prosecutor Seeks Indictment Against Former Petrobras CEO,REUTERS (Dec. 16, 2014), http://www.reuters.com/article/2014/12/16/us-brazil-petrobras-idUSKBN0JU27X20141216.




112 See Stephen Eisenhammer et al., UPDATE 2--Brazil's Petrobras Says Received U.S. SEC Subpoena for Documents,REUTERS (Nov. 24, 2014), http://www.reuters.com/article/brazilpetrobrassec-idUSL2N0TE1UY20141124.

113 See Joe Leahy, What Is the Petrobras Scandal That Is Engulfing Brazil?, FIN. TIMES (Mar. 31, 2016, 11:47 PM), http://www.ft.com/cms/s/2/6e8b0e28-f728-11e5-803cd27c7117d132.html#axzz4BaXjvlxB.

114 See Agence France-Presse, Report Tells of Graft in Brazil President's Win, DAILY NATION (Apr. 8,2016), http://www.nation.co.ke/news/world/Report-tells-of-graft-in-Brazil-presidentswin/-/1068/3150380/-/ifeift/-/index.html;see also Associated Press, Petrobras Scandal: Brazilian Oil Executives Among 35 Charged, GUARDIAN (Dec.11, 2014, 9:45 PM), http://www.theguardian.com/world/2014/dec/12/petrobras-scandal-brazilian-oil-executives-among-35-charged [hereinafter Petrobras Scandal].

115 This figure was current as of February 2016. Dom Phillips, As Ex-President Lula Faces Charges, a Divided Brazil Wonders:What's Next?, WASH. POST (Mar. 10, 2016), https://www.washingtonpost.com/world/the_americas/as-ex-president-lula-faces-charges-a-divided-brazilwonderswhats-next/2016/03/10/b36b9bc4-e649-11e5-a9ce-681055c7a05f_story.html.

116 See Dan Horch, Brazil Arrests Head of Odebrecht in Petrobras Scandal, N.Y. TIMES (June 15,2015), http://www.nytimes.com/2015/06/20/business/international/brazil-arrestsheadofodebrecht-in-petrobras-scandal.html;see also Petrobras Scandal, supra note 114. The investigation remains underway and continues to expand as of February 2016.See Phillips, supra note 115. Both Brazilian and foreign corporate entities have been implicated in addition to the individualswho have been formally charged. For more details, see generally Dylan Tokar, 30 Foreign Companies Probed in BrazilianPetrobras Scandal, GLOBAL INVESTIGATIONS REV. (GIR) (Nov. 25, 2015), http://globalinvestigationsreview.com/article/1024221/foreigncompaniesprobed-brazilian-petrobras-scandal.

117 See Dom Phillips, Oil Scandal in Brazil Just Keeps Growing; Optimists See Chance for Change, WASH. POST (Dec. 22,2014), https://www.washingtonpost.com/world/the_americas/oil-scandal-in-brazil-just-keeps-growing-optimists-see-chance-for-change/2014/12/22/990dc64a-8578-11e4-abcf-5a3d7b3b20b8_story.html.

118 See Will Connors & Luciana Magalhaes, How Brazil's “Nine Horsemen” Cracked a Bribery Scandal, WALL ST. J. (Apr.6, 2015, 4:44 PM), http://www.wsj.com/articles/how-brazils-nine-horsemen-cracked-petrobras-bribery-scandal-1428334221(discussing the case-building strategies employed by the Brazilian prosecutors who are part of the Lava Jato Task Forceinvestigating the Petrobras scandal).

119 See id.

120 See Arrieta, supra note 27, at 160-61, 165.

121 The term “anti-bribery framework” refers to the international legislative and statutory framework designed to prohibit thegiving and receiving of bribes. See infra Part II.B for a discussion of the pivotal anti-bribery statutes comprising this framework.

122 See Salbu, supra note 23, at 685. Variations of these models recently implemented by India, Russia, Brazil, and others havereplicated this supply-side model. Adkins & Kimberley supra note 51, at *6-13.

123 UNCAC art. 15, supra note 36, at 45-46.

124 Another notable exception is the U.K. Bribery Act of 2010. See Bribery Act 2010, c. 23, § 2 (Eng.) (criminalizing the solicitationor receiving of bribes).

125 See, e.g., STAR ASSET RECOVERY REPORT, supra note 69, at 101-40.

126 Harms, supra note 16, at 162.

127 Press Release, Secretary-General, Secretary-General Lauds Adoption by General Assembly of United Nations ConventionAgainst Corruption, SG/SM/8977-GA/10200-SOC/CP/271 (Oct. 31, 2003).

128 Yockey, supra note 19, at 785 (proposing that “confronting bribe-seeking officials would simply ... add balance to existingregulatory efforts by addressing both the supply and demand in corrupt transactions”).



129 See Reagan R. Demas, Moment of Truth: Development in Sub-Saharan Africa and Critical Alterations Needed in Applicationof the Foreign Corrupt Practices Act and Other Anti-Corruption Initiatives, 26 AM. U. INT'L L. REV. 315, 336-37 (2011).

130 See id. at 340.

131 China's approach is a form of “no strings attached” capitalism. Id. at 341-42. While the United States imposes transparencyrequirements on its foreign aid and prohibits U.S. businesses from paying bribes abroad, the Chinese government does notconsider itself obligated to advance African social policy when promoting Chinese economic interests. Id. at 342. Its “non-interventionist” policy permits Chinese companies to pay bribes to get the deal done. Id.

132 Id. at 343-44.

133 See id. at 346-47.

134 See id. at 336-37.

135 Thompson, supra note 50, at 101, 107 (discussing OECD Bribery Convention art. 5, supra note 47, at 5).


137 See DE SIMONE & ZAGARIS, supra note 31, at 29-34.


139 See DE SIMONE & ZAGARIS, supra note 31, at 28.

140 See id.

141 See id. at 29.

142 See Klaw, supra note 44, at 337-40.

143 See Marshall, supra note 35, at 1301.

144 See Multijurisdictional Enforcement, supra note 66, at 23-25.

145 This principle emerged in the BAE Systems case. See id. The U.K. was highly criticized when it declined to prosecute BAEbased on claims of “national security,” which was driven by a policy of protecting U.K. jobs and national economic welfare.See id.

146 See Thompson, supra note 50, at 101-02, 107.

147 For example, FCPA liability is usually imposed in cases when a company self-reports. See Marshall, supra note 35, at 1302.The value of self-reporting has been debated, but it typically benefits the company to preemptively notify regulators of anyimproper conduct to obtain a more favorable settlement. See id. at 1304-06. For more discussion, see id. at 1301-06.

148 Klaw, supra note 44, at 321-22.

149 Id.

150 For a discussion of issues that arise during the course of negotiating deferred prosecution agreements and non-prosecutionagreements, see Marshall, supra note 35, at 1304-06; see also Klaw, supra note 44, at 340-43.


152 For example, the Corruption Eradication Commission (known as the KPK), Indonesia's government agency taskedwith investigating corruption, experienced police retaliation when attempting to investigate the Head of Police CriminalInvestigations in 2009. Low et al., supra note 17, at 583. The police arrested the deputy and the head of the KPK on criminalcharges in 2015 after the KPK accused Indonesian President Joko Widodo's (referred to as President Jokowi) nominee for








national police chief of being involved in a public corruption scheme. Id. at 583-84. President Jokowi later suspended the twoKPK officials, which has temporarily weakened the agency. Id.

153 Prosecutorial discretion can be influenced with bribes to discourage the pursuit of public corruption cases. MARY N. PEPYS,MGMT. SYS. INT'L, CORRUPTION AND THE JUSTICE SECTOR 7-8 (2003). Insulating judicial and prosecutorialindependence from political influence is essential to promoting investigations into public corruption. See id. at 11. For furtherdiscussion, see JOHN HATCHARD, COMBATING CORRUPTION: LEGAL APPROACHES TO SUPPORT GOODGOVERNANCE AND INTEGRITY IN AFRICA 152-61, 202-31 (2014).

154 PEPYS, supra note 153, at 8.

155 See, e.g., Low et al., supra note 17, at 583-84. As previously discussed, two Indonesian officials tasked with investigating publiccorruption were suspended from their posts when investigations into police corruption generated political controversy forPresident Jokowi. See discussion supra note 152.

156 In Russia, a report of public corruption resulted in the death of a whistleblower. Sergei Magnitsky, a Russian attorney,“uncovered a $230m (£150m) tax fraud scheme run by a host of Russian interior ministry and tax officials.” MiriamElder, Sergei Magnitsky Verdict “Most Shameful Moment Since Stalin,” GUARDIAN (July 11, 2013, 9:20 AM),http://www.theguardian.com/world/2013/jul/11/sergei-magnitsky-russia-trial-verdict-tax-fraud. After reporting the fraud toRussian officials, Magnitsky was charged with facilitating the fraud and imprisoned by Russian authorities in 2008. Q&A:The Magnitsky Affair, BBC NEWS (July 11, 2013), http://www.bbc.com/news/world-europe-20626960. Magnitsky later diedin prison from a lack of medical treatment and alleged torture and beatings inflicted by the Russian authorities. Id. The casehas underscored the corrupt forces controlling Russia and elicited much scrutiny. Id.

157 DE SIMONE & ZAGARIS, supra note 31, at 36 (suggesting that the political nature of public corruption can undermineany efforts to prosecute such cases, particularly if “the public officials in question are connected to the party or individualsin power”).

158 See Low et al., supra note 17, at 581-82 (noting that political will fluctuates and often exists when cases target political rivalswhereas “the opportunity to prosecute corruption may not present itself for many years in countries where a despot holdspower for a long time”).

159 DE SIMONE & ZAGARIS, supra note 31, at 36 (explaining that “[p]ublic pressure and media coverage of specific foreignbribery cases creates incentives for the authorities to investigate and prosecute those cases, even when they implicate localpublic officials”).

160 Freedom of the press can impose limits on corruption. See generally Aymo Brunetti & Beatrice Weder, A Free Press IsBad News for Corruption, 87 J. PUB. ECON. 1801, 1801, 1804-05 (2003). However, if corrupt officials exert control overmedia sources, the likelihood of galvanizing public support in favor of prosecuting public officials for bribery is significantlydiminished. See DE SIMONE & ZAGARIS, supra note 31, at 36.

161 Macabe Keliher & Hsinchao Wu, How to Discipline 90 Million People, ATLANTIC (Apr. 7, 2015), http://www.theatlantic.com/international/archive/2015/04/xi-jinping-china-corruptionpoliticalculture/389787 (explaining thatcorrupt Communist Party officials have undermined the implementation of national policies in China, prompting PresidentXi Jinping to reform the political culture of the Chinese Communist Party using these anti-corruption programs).

162 See supra Part III.B for a discussion of the development of Brazil's anti-corruption capacity.

163 See Yockey, supra note 19, at 838 (noting that nongovernmental organizations (NGOs) are “well-positioned to track andpublicize information like prosecution rates and enforcement of domestic anti-bribery laws”).

164 See id. at 805 (explaining that a lack of enforcement renders foreign bribery laws ineffective because the inability to impose apenalty for corrupt payments fails to increase the cost associated with engaging in such practices).

165 See Klaw, supra note 44, at 335, 337 (noting that officials will continue to solicit bribe payments when it is unlikely that theywill be prosecuted, suggesting that the cost of committing bribery does not outweigh the benefits in certain cases).



166 If a greater number of corrupt public officials were prosecuted in their host country by domestic authorities, it would increasethe cost of engaging in corruption and discourage it. See id. at 335-37.


168 See id. at 659-60.

169 See id. at 673 (discussing the relationship between anti-corruption campaigns and the objective of their promoters to createa fair, transparent marketplace that is not distorted by bribery).

170 See id. at 674-75.

171 Alvaro Cuervo-Cazurra, The Effectiveness of Laws Against Bribery Abroad, 39 J. INT'L BUS. STUD. 634, 635 (2008).

172 Id.

173 See Chow, supra note 84, at 1016-19.

174 See Minxin Pei, Explaining China's Corruption Paradox, WALL ST. J. (June 11, 2012, 12:24 PM), http://www.wsj.com/articles/SB10001424052702303918204577446021540060.

175 See Daniel Chow, China Under the Foreign Corrupt Practices Act, 2012 WIS. L. REV. 573, 573 (2012).

176 See Arrieta, supra note 27, at 158-61.

177 Kathy Chu & Chun Han Wong, Global Bribery Crackdown Gains Steam: Moves Could Make It More Complexfor Multinationals to Operate Overseas, WALL ST. J. (Mar. 25, 2014, 5:29 AM), http://www.wsj.com/articles/SB10001424052702303949704579460323380460.


179 See ORG. FOR ECON. CO-OPERATION & DEV., TYPOLOGY ON MUTUAL LEGAL ASSISTANCE IN FOREIGNBRIBERY CASES 39-40 (2012), http://www.oecd.org/daf/anti-bribery/TypologyMLA2012.pdf [hereinafter MUTUALLEGAL ASSISTANCE].

180 Sean Hecker & Margot Laporte, Should FCPA “Territorial” Jurisdiction Reach ExtraterritorialProportions?, INT'L L. NEWS (2013), http://www.americanbar.org/publications/international_law_news/2013/winter/should_fcpa_territorial_jurisdiction_reach_extraterritorial_proportions.html.

181 Salbu, supra note 23, at 685 n.211, 688.

182 DE SIMONE & ZAGARIS, supra note 31, at 2 (suggesting that donor agencies have a role to play in bridging the gap betweenthe enforcement in developed countries and anti-corruption deterrence in developing countries).

183 Id.

184 See MUTUAL LEGAL ASSISTANCE, supra note 179, at 39-40.

185 See Low et al., supra note 17, at 588-98 (outlining international legal solutions to address demand-side bribery including theestablishment of an international criminal tribunal for transactional economic crime, the creation of a special commissionadministered by an international organization, or the pursuit of transnational prosecutions of demand-side bribery).

186 See Marshall, supra note 35, at 1310, 1312-13; see also Yockey, supra note 19, at 808, 810-12, 814-15, 820-21, 824 (highlightingthe challenges to imposing extraterritorial legal obligations in an effort to combat demand-side bribery).

187 Salbu, supra note 23, at 678 (noting the conceptual problems of fighting bribery by legal decree given the cultural and socialunderpinnings intertwined with corruption).

188 See id. at 679.




189 See DE SIMONE & ZAGARIS, supra note 31, at 32-33.

190 See Assistant Attorney General Leslie R. Caldwell Speaks at American Conference Institute's 31st International Conferenceon the Foreign Corrupt Practices Act, U.S. DEP'T OF JUST. (Nov. 19, 2014), https://www.justice.gov/opa/speech/assistant-attorney-general-leslie-r-caldwell-speaksamericanconference-institute-s-31st.

191 See, e.g., ICC Note on “The Most Important Obstacle to the Effective Enforcementof the OECD Anti-Bribery Convention”, INT'L CHAMBER OF COMMERCE 1 (June20, 2007), http://www.iccwbo.org/Data/Policies/2007/ICC-note-on-%E2%80%9Cthe-most-important-obstacle-to-the-effectiveenforcementof-the-OECD-Anti-Bribery-Convention%E2%C80%9D.

192 See DE SIMONE & ZAGARIS, supra note 31, at 35.

193 See OECD FOREIGN BRIBERY REPORT, supra note 14, at 33.

194 See id. at 33-34.

195 See, e.g., UNCAC arts. 44-50, supra note 36, at 55-63.

196 See infra notes 197-200 and accompanying text.

197 See Marshall, supra note 35, at 1301-06.

198 See OECD FOREIGN BRIBERY REPORT, supra note 14, at 33, 35 (noting a lack of information and limited sample sets).

199 See Letter from Francois Vincke, Chairman, Comm'n on Corp. Responsibility & Anti-Corruption, Int'l Chamber ofCommerce, to Paul Wolfowitz, President, World Bank (Aug. 9, 2006) (proposing an extortion/solicitation disclosure scheme).

200 TRACE International, Transparency International, and similar entities collect data and research; however, combining theseinitiatives through a cross-organizational project could prove to be more successful in the short term. See DE SIMONE &ZAGARIS, supra note 31, at 30-35.

201 12 WILLIAM M. HANNAY, CORPORATE COMPLIANCE SERIES: DESIGNING AN EFFECTIVE FCPA ANDANTI-BRIBERY COMPLIANCE PROGRAM § 1.34 (2015-2016 ed.), Westlaw (database updated Sept. 2015).

202 See IPAIDABRIBE.COM, http://www.ipaidabribe.com/#gsc.tab=0 (last visited May 24, 2016).

203 Mukti Jain Campion, Bribery in India: A Website for Whistleblowers, BBC NEWS (June 5, 2011), http://www.bbc.com/news/world-south-asia-13616123.

204 See Demas, supra note 129, at 363-64.

205 Id. at 363-64.

206 See id. at 364-66.

207 The recently signed Trans-Pacific Partnership (TPP) Agreement contains a chapter addressing transparency and anti-corruption, but its scope is limited in application to matters covered under the agreement. See Trans-Pacific Partnership,c. 26, Feb. 4, 2016, available at https://ustr.gov/sites/default/files/TPP-Final-Text-Transparency-and-Anti-corruption.pdf.Additionally, the U.S. Trade Representative (USTR) has stated that it will advocate the inclusion of anti-corruption andtransparency provisions in the Trans-Atlantic Trade and Investment Partnership (T-TIP) Agreement during the negotiationprocess. U.S. Objectives, U.S. Benefits in the Transatlantic Trade and Investment Partnership: A Detailed View, U.S.TRADE REPRESENTATIVE (Mar. 2014), https://ustr.gov/about-us/policy-offices/press-office/press-releases/2014/March/US-Objectives-US-Benefits-In-the-TTIP-a-Detailed-View. The T-TIP negotiations remain ongoing as of February 2016. SeeFree Trade Agreements, U.S. TRADE REPRESENTATIVE, https://ustr.gov/trade-agreements/free-trade-agreements (lastvisited Feb. 22, 2016); see also Lamy Says U.S. Pushing for Anti-Corruption Provisions in TTIP Talks, 32 INSIDE U.S. TRADE12, 12-13 (Sept. 26, 2014) (advancing the idea that integrity provisions should be included in the T-TIP Agreement).



208 For example, the TPP requires signatories “to adopt or maintain” laws addressing active and passive bribery, but alsostates that “no Party shall fail to effectively enforce its laws or other measures adopted or maintained to comply with [thisagreement] ... through a sustained or recurring course of action or inaction.” Trans-Pacific Partnership art. 26.9, supra note207, at 26-9. Thus, the failure to sanction corrupt actions could violate the Agreement and lead to a trade dispute. Id.arts. 26.7-26.9 at 26-5-26-9. According to the U.S. Trade Representative, the “TPP contains the strongest disciplines ontransparency and anticorruption of any U.S. trade agreement.” The Trans-Pacific Partnership, Chapter 26: Transparency& Anti-Corruption, U.S. TRADE REPRESENTATIVE 3 (Nov. 5, 2015), https://ustr.gov/sites/default/files/TPP-Chapter-Summary-TransparencyandAnti-corruption.pdf.

209 See WORLD BANK, GUIDELINES: PROCUREMENT OF GOODS, WORKS, AND NON-CONSULTING SERVICESUNDER IBRD LOANS AND IDA CREDITS & GRANTS BY WORLD BANK BORROWERSS § 1.16 (2014).

210 DE SIMONE & ZAGARIS, supra note 31, at 30-36; see also Trans-Pacific Partnership art. 26.6, supra note 207, at 26-5.

211 See, e.g., WORLD BANK, supra note 209, § 1.16 (requiring that “[b]orrowers (including beneficiaries of Bank loans), bidders,suppliers, contractors and their agents (whether declared or not), sub-contractors, sub-consultants, service providers orsuppliers, and any personnel thereof, observe the highest standard of ethics during the procurement and execution of Bank-financed contracts” and defining improper practices).

212 Yockey, supra note 19, at 838 (noting that NGOs fulfill key functions of monitoring and providing education).

213 Id.

214 See generally ELAINE BYRNE ET AL., BUILDING PUBLIC SUPPORT FOR ANTI-CORRUPTION EFFORTS: WHYANTI-CORRUPTION AGENCIES NEED TO COMMUNICATE AND HOW (2010) (explaining how anti-corruptionagencies can use outreach programs to change public views of corruption in order to cultivate an opposition to andcondemnation of corrupt practices).

215 For example, media coverage of public corruption scandals in Brazil has added to the political costs of being involvedin corrupt practices. See supra Part III.B; see also Ann Bernstein, Corruption: Fight Against Graft Has More Success inDemocracies, BUS. DAY (Sept. 19, 2014, 5:37 AM), http://www.bdlive.co.za/opinion/2014/09/19/fight-against-graft-has-more-success-indemocracies.

216 See Demas, supra note 129, at 347.

217 Salbu, supra note 23, at 660.


HOW MULTIJURISDICTIONAL BRIBERY ENFORCEMENT..., 2016-JUN Bus. L....


2016-JUN Bus. L. Today 1

Business Law TodayJune, 2016

Feature Article

HOW MULTIJURISDICTIONAL BRIBERY ENFORCEMENTENHANCES RISKS FOR GLOBAL ENTERPRISES

Lindsay B. Arrieta a1

Copyright © 2016 by the American Bar Association; Lindsay B. Arrieta

Introduction

The emergence of multijurisdictional bribery enforcement presents complex challenges and increased operationalrisk for multinational corporations. Aggressive enforcement of the Foreign Corrupt Practices Act (FCPA) by theU.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) has encouraged non-U.S. authorities to pursue cross-border investigations and enforcement actions. As more foreign authorities begin tovigorously enforce their respective anti-bribery laws, companies and their in-house counsel should consider how thesedevelopments could impact their operations and their ability to resolve cases involving alleged bribery.

The FCPA Is Not the Only Extraterritorial Game in Town

The FCPA is no longer the only bribery law affecting international firms. Stronger anticorruption laws, some ofwhich may be interpreted to apply extraterritorially, have enabled non-U.S. authorities to pursue multijurisdictionalenforcement actions. For example, in 2014, the Republic of Brazil filed criminal charges against Embraer S.A. executivesfor making illicit payments in the Dominican Republic to obtain a government contract. Embraer S.A. subsequentlyentered into discussions with U.S. authorities in 2015 to conclude a settlement for FCPA violations, which remainongoing. In another case in 2015, the U.K. Serious Fraud Office (SFO), the UK agency tasked with prosecuting complexfraud, charged Standard Bank PLC with violating the UK Bribery Act. The bank's subsidiary in Tanzania engagedin misconduct that included paying bribes, and the SFO held Standard Bank accountable for its failure to implementsufficient internal controls. To resolve the matter, the SFO negotiated its first Deferred Prosecution Agreement (DPA)with Standard Bank, which required the bank to pay approximately $37 million in penalties to UK authorities and U.S.regulators for bribery and securities law violations, respectively.

What is the significance? These cases represent the “new normal” in anticorruption enforcement. Authorities are workingtogether across jurisdictions to investigate and charge companies for violating anti-bribery laws, and they are usingextraterritorial provisions to expand their reach as widely as possible. U.S. and non-U.S. authorities can and have reliedupon the same misconduct to charge a company for violations of their respective anti-bribery and securities laws. Thepotential for regulatory overlap amongst these legal regimes increases the chance that a corporation facing briberyallegations will confront scrutiny from authorities in multiple countries.

There's No Double Jeopardy for Bribery

Double jeopardy does not apply to bribery cases at the international level; thus, multiple countries could bring chargesbased on a single violation. During the course of an FCPA investigation, cooperation between the DOJ or SEC and



foreign authorities serves to apprise the other country (or countries) of potential misconduct within their jurisdiction.Alternatively, if a company enters into a DPA with the DOJ, the DPA or a related press release may name the jurisdictionswhere the wrongdoing allegedly occurred, prompting foreign authorities to investigate.

The experience of GlaxoSmithKline (GSK) demonstrates how a bribery case in one jurisdiction can spark multipleenforcement actions. In 2013, Chinese authorities charged GSK with employing agents to bribe public health officials anddoctors in China to promote the use of their products. A Chinese court found the company guilty in 2014 of having paid$482 million in bribes and fined GSK $490 million. The United States, *2 among other countries, “does not recognizeinternational double jeopardy, [so] China's action poses no legal obstacle to an FCPA prosecution.” International lawonly requires the United States “to consult with China regarding the two nations' overlapping investigations, and eventhen, only ‘as appropriate.”’ The UK and United States subsequently initiated investigations into GSK's sales anddistribution practices, both of which remain ongoing. Recently, authorities in other jurisdictions where GSK operates,including Romania, Poland, and others, have begun to investigate the firm's alleged use of illicit payments to promoteproduct sales. While no additional charges have been brought to date, these developments suggest that GSK has yet toconclusively resolve these foreign bribery cases triggered, in part, by the firm's prosecution in China.

The recurring and ongoing enforcement actions targeting Alstom S.A. highlight the impact of multijurisdictionalenforcement actions on a company's ability to conclude these cases. The French company pled guilty to FCPA violationsin 2014 and agreed to pay over $772 million in penalties. The corporate bribery scheme crossed several continents andcontinued unabated for over a decade. Prior to that settlement, Swiss authorities fined Alstom S.A. approximately $40million in 2011 for corporate negligence for its failure to prevent bribery within the company. The UK SFO later broughtcharges related to the firm's alleged misconduct in Lithuania and has arrested seven executives on criminal bribery chargesto date. The company has also been the subject of a corruption probe in Brazil.

These cases underscore three important points. First, bribery enforcement has become global, and is no longer dominatedby the United States. Second, even if a bribery investigation has been resolved in one jurisdiction, international companieswill likely have to “pay for their sins” across several jurisdictions. A settlement or conviction in one country does notpreclude others from investigating the firm for the same, or similar misconduct. Finally, companies may be subject toinvestigation for a number of years and incur multiple penalties in cases where bribe payments comprised a substantialpart of the firm's business strategy.

Avoiding Trial? Corruption Cases in Court

A settlement for violations in one country may not be the end of these bribery cases, as a greater number of foreignauthorities seek to punish corporate actors for their misconduct. FCPA cases are largely resolved outside of thecourtroom through the use of Non-Prosecution Agreements (NPAs) or Deferred Prosecution Agreements (DPAs), andauthorities in other jurisdictions have employed this same approach. This strategy has been criticized as overly lenientbecause it fails to provide the deterrence needed to discourage corporate malfeasance. From a corporate perspective,settlements are the preferred outcome because they are usually the most expedient solutions, and they can enable thefirm to mitigate any reputational impact from the case.

The settlement of civil or criminal bribery charges in one country will not keep a company out of court in anotherjurisdiction. Total S.A., a French oil and gas company, violated the FCPA by using a third party to make illegal paymentsto an Iranian government official to obtain oil and gas concessions. The company entered into a DPA with the DOJin 2013 and agreed to pay a $245 million penalty to settle the charges. French prosecutors then charged Total S.A.for the corruption of foreign public officials; however, a French criminal court cleared the company of all charges in2013. But after new criminal charges were filed in 2014, a French court of appeals found Total S.A. guilty of corruptingforeign officials in February 2016. Notably, French authorities had cooperated with the U.S. authorities who had initiallyinvestigated Total S.A. for FCPA violations.



What does this mean for corporate entities? They should continue to expect unpredictable enforcement from non-U.S.authorities as they enhance their anticorruption efforts. The French reaction in the Total S.A. case could be attributed topressure from the Organization for Economic Cooperation and Development (OECD), which has urged OECD memberstates to bolster foreign bribery enforcement. Also, French authorities may have felt additional pressure to prosecutethe company because it is headquartered in France. The Total S.A. case highlights the risks that global anti-briberyenforcement generates for multinational companies.

Local Laws Can Inhibit Global Investigations

Multijurisdictional enforcement has contributed to another challenge inherent in cross-border investigations: thepotential to prompt legal proceedings that may be wholly unrelated to the bribery allegations. If not carefully managed,an internal corporate investigation into alleged bribery could trigger legal action in a foreign jurisdiction. For example,the improper production of evidence or removal of evidence to another jurisdiction can potentially violate proceduralrules or data privacy laws. Such violations can lead to civil and criminal proceedings, which can add undesired complexityto ongoing foreign bribery investigations.

Data privacy protections can complicate a foreign bribery investigation. Heightened privacy protections across theEuropean Union (EU) present challenges to companies tasked with responding to requests from non-EU authorities.Employee communications are privileged in the EU and not subject to the more liberal discovery rules applicable in theUnited States. For example, employees in the EU must receive notice from the company prior to the disclosure of theirworkplace communications. Employee consent is also required. Databases containing employee information often mustbe maintained within the European country where those employees are under contract. In some cases, particularly if ablocking statute is involved, it may simply become impossible for a company to comply with a request for informationfrom U.S. or other foreign authorities if the jurisdiction housing the data prohibits it. Thus, a company may be placedin a position where it must decide whether it is willing to face the consequences for refusing to comply with the requestfor information or risk contravening data privacy statutes.

*3 Engaging in internal investigations in countries such as China are even more problematic, as a result of the Chinesegovernment's broad authority to determine the limits on data protection. Multinational companies that have conductedan internal corporate investigation in China have confronted the challenges of complying with China's State SecretsLaw. The law dictates that state secrets are “matters that have a vital bearing on state security and national interests.”The law outlines seven categories of state secrets, but also includes a catch-all provision that enables Chinese authoritiesto exercise total discretion over defining what information may be classified under this category. During the courseof investigating corporate misconduct for their client GlaxoSmithKline, two investigators were arrested in 2013 andsubsequently convicted in 2014 of having illegally obtained and sold Chinese client data. While these charges didnot directly target GSK, these investigators were providing professional services to facilitate the company's internalinvestigation into reports of fraud and corruption obtained from a whistleblower. Clearly, these vague and overly broaddata privacy protections afford a great deal of discretion to the Chinese government, increasing the complexity ofconducting an internal corporate investigation in China.

These data privacy issues are unique to these respective jurisdictions; however, they highlight a few of the issues thatcompanies must confront when handling multijurisdictional investigations. As more countries consider adopting stricterprivacy laws modeled after those in the EU (in contrast to U.S. laws that allow for greater disclosure), the abilityfor a company to uniformly manage international investigations will further diminish. To comply with such laws,firms typically must conduct such investigations within the host country where the data is located, but even so, theymust employ local counsel or attorneys with expertise in local privacy laws. Increased international anticorruptionenforcement combined with stricter data privacy regimes will require multinational firms to develop a unique responsefor each investigation, carefully designed to prevent parallel proceedings.



To Disclose or Not to Disclose in an Age of Global Enforcement?

Voluntary cooperation in a multijurisdictional enforcement context can be a valuable strategy for a firm facingforeign bribery charges. But, how and when a company should disclose depends on the circumstances. As thepreviously discussed cases illustrate, foreign authorities frequently collaborate during the course of these investigations.Accordingly, some authorities may take the approach that, “A firm may have settled there, but we will still investigatethe company and impose penalties here.” With more scrutiny from authorities globally, does voluntary disclosure stillmake sense?

Although subject to careful timing, a company's decision to self-report misconduct uncovered during an internalinvestigation can yield benefits in the United States. It can ensure that the option to negotiate a NPA or DPA will remainavailable, as demonstrated by the Goodyear case. Goodyear uncovered FCPA violations during an internal investigation,self-disclosed these findings to U.S. authorities, and obtained a favorable settlement in exchange for its substantialcooperation. But if the misconduct spans several jurisdictions, should a company disclose to one or all regulators?

A company's decision to cooperate with authorities could protect the firm from collateral consequences. In the Siemenscase, the firm faced bribery charges from European and U.S. authorities for allegedly paying $1.4 billion in bribes toforeign officials across multiple jurisdictions to facilitate business operations. Had the firm been charged with criminalbribery in the United States, Siemens would have been automatically debarred from engaging in European governmentcontracts as per the EU Public Procurement Directive. In that case, U.S. authorities structured the charges to avoidthat outcome; however, not all authorities may be willing to enter a “global settlement” of this type depending on theirobjectives. By cooperating and engaging with authorities during an enforcement action, a company's legal counsel canidentify and address these issues prior to the initiation of any enforcement proceedings.

Unfortunately, voluntary disclosure and cooperation does not insulate a firm from liability, particularly if foreignauthorities are managing independent, but parallel, investigations. In addition, the option to enter a settlement agreementto avoid criminal or civil bribery charges may not be available depending on the enforcement framework within aparticular country. In Brazil, the country's penal code does not provide for corporate criminal liability, but Brazilianentities found to have paid bribes will be subject to strict liability under the Clean Company Act. Civil fines andpenalties will automatically be imposed, ranging up to 30 percent of the firm's annual profits. While a companymay succeed in reducing those fines through cooperation with the Brazilian government, strict liability for a firm'smisconduct could invite additional scrutiny from other countries, which may result in another investigation or additionalpenalties. Companies must be aware of the fundamental differences in each country's approach to bribery enforcementto successfully to resolve pending bribery allegations.

Careful analysis of the decision to disclose or cooperate is required to avoid incurring collateral consequences, includingscrutiny from numerous foreign authorities. Evaluating how a settlement could resonate across jurisdictions, if andwhen available, will be important for global companies. Additionally, companies should not expect these matters tobe resolved through collaborative or comprehensive agreements among foreign authorities because each country hasdifferent enforcement priorities and objectives. While U.S. and European authorities have collaborated to settle thesecases, these occurrences have been rare. Joint settlements have not yet been adopted as the predominant approach toresolving multijurisdictional bribery cases.

Considerations for Companies Facing Multijurisdictional Bribery Enforcement

Companies that find themselves the targets of multijurisdictional enforcement actions must develop a comprehensiveplan for managing their internal investigations and the options available to resolve the matter. *4 Their strategies



should address the potential consequences for the firm if it is sanctioned by two countries for the same conduct. Indeveloping its approach, the firm should consider how resolving charges in one country could impact the outcome inanother jurisdiction. Voluntary disclosure has been a favored strategy by some firms, but this approach may producerisky outcomes when dealing with multiple jurisdictions. Companies should consider the following issues when craftingtheir response:

1. Expect to coordinate with multiple authorities and regulators and develop a strategy with built-inflexibility. After initiating an internal investigation, global companies should develop a plan forcommunicating with foreign authorities in the event that further misconduct is discovered.

2. FCPA investigations and enforcement actions will likely have follow-on cases. Relationships beingforged between foreign authorities through cross-border investigations are expanding the scope ofsuch investigations. Anticipate that they will be in communication if your case transcends nationalboundaries. While a firm's case may be settled or resolved in one country, that resolution couldinitiate an independent investigation by anti-corruption authorities in other countries.

3. Firms are likely to experience inconsistent and unpredictable enforcement as non-U.S. authoritiesbring more bribery enforcement actions. How authorities and courts outside of the United Statesinterpret the provisions of their respective anti-bribery statutes will determine the extent to whichfuture cases overlap. However, in situations where authorities are enforcing a new or revisedanti-bribery law, companies will face greater uncertainty.

4. Understand the ramifications of entering into a settlement agreement with foreign authorities, andrecognize that a settlement may not be available. Carefully evaluate all of the options availableto settle or mitigate any charges brought by U.S. and non-U.S. authorities. It will be importantto consider how a settlement in one jurisdiction could affect the company's operations in othermarkets. Potential consequences should be analyzed prior to concluding such agreements.

5. When designing an investigation plan, carefully evaluate it to ensure that it adheres to dataprivacy restrictions and complies with local laws to preserve privilege. Developing a local strategyfor conducting a company's internal investigation can be an important preventive measure toavoid violating local laws relating to data privacy, privilege, or evidence-gathering procedures.A company should consult local experts and local legal counsel to assist with the execution andmanagement of the internal investigation. Coordinating a strategic response with oversight fromin-house counsel can help the company avoid entanglement in additional legal proceedings.

Conclusion

The prospect of authorities bringing more bribery enforcement actions globally introduces greater uncertainty into theregulatory environment for multinational companies. When responding to a multijurisdictional enforcement action,companies must consider how their geographic scope of operations may shape the inquiry. Companies must be aware ofthese developments in global enforcement because they will inevitably impact a firm's ability to settle or resolve briberyinvestigations with any degree of certainty.

Footnotesa1 Lindsay B. Arrieta is a compliance associate at Citibank, N.A.


Mexico Wins: Anti-Corruption Reform Approved

http://www.forbes.com/sites/themexicoinstitute/2016/07/18/mexico-wins-anti-corruption-reform-approved/print/[1/20/2017 12:11:28 PM]

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WASHINGTON 7/18/2016 @ 4:12PM 5,519 views

Mexico Wins: Anti-Corruption ReformApproved

Mexican President Enrique Pena Nieto. HECTOR GUERRERO/AFP/GettyImages

By Viridiana Rios

Mexico just approved an anti-corruption reform thatrequired changing 14 constitutional articles, drafting2 new general laws, and reforming five more. This isnot minor. The reform is, by far, the mostencompassing system to identify and sanctioncorruption that the country has ever had and itseffects will be felt quite soon.

In this text, I present the story of how Mexico gothere and provide an assessment of the virtues andchallenges of this change.

The Government tries to fight corruption

The need to create an entity to fight corruption wasamong Mexico’s policy priorities, at least

The Mexico Institute Contributor

U.S.-Mexico Relations; Economics, Energy, Migration, Border, Security

Opinions expressed by Forbes Contributors are their own.

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rhetorically, since well before the arrival of EnriquePeña Nieto to the presidency. However, the first ofthe 266 commitments that Peña Nieto had madeduring his campaign was to create a “National Anti-Corruption Commission” (NAC).

Peña Nieto presented a bill to create the NAC inNovember 2012, but the proposal was poorlyreceived by public opinion. Experts and civil societyorganizations (CSOs) considered it dysfunctionalbecause the proposed NAC was a top-bottom entity(unable to coordinate efforts between the many stateand federal entities) and most importantly, lackedreal autonomy from other branches of power. Thebill remained idle in Congress without approval orreal discussion until the end of 2014.

Civil Society breaks in

Disappointed by the unresponsiveness of Mexico’sfederal government, starting in 2015, experts,academics and transparency-related CSOs gatheredand organized to take the battle against corruptioninto their own hands.

Civil society groups held closed meetings withMexican authorities to reject NAC and instead,advocated for the creation of a “National Anti-Corruption System” (NAS). The NAS will be acoordination entity that brings together institutionsthat were already in place, and that had capacities toimpede corruption, but were operating in fracturedways. More than being an institution commanded bya “czar,” the NAS would be an entity regulated by acitizen board and armed with autonomousprosecution and investigative capacities.Furthermore, the proposed system would need torecognize the role of private citizens in promotinganti-corruption efforts, creating sanctions not onlyfor public servants but also for private contractorsthat engaged in corrupt practices.

The impact of experts and civil society groups wasimpressive. Just a few months after this hands-onapproach had started, a constitutional reform tocreate the NAS was enacted by Mexico’spresident.[1]

Yet, the fight was far from over. To becomeconstitutional law, the reform approved by thefederal congress needed to be validated by a

https://www.wilsoncenter.org/article/mexico-wins-anti-corruption-reform-approved#_ftn1



majority of all Mexican state local legislations.

Civil society took the lead again. To pressure forsuch validation, a large number of civil societygroups created a digital tool called the “anti-corrupt-o-meter,” a digital clock that counted the days thatevery state congress took to discuss and approve theconstitutional reform (The Economist, 2015). Theclock became viral in social networks and the NASreform was approved by most state legislatures injust weeks.

By May 2015, Mexico had approved the full creationof a NAS throughout Mexico’s territory.

Civil Society takes over

Once the NAS was enacted, in order to properlyimplement it, the creation of two new general lawsand the reform of five more were required.

Mexico’s CSOs, academics and experts decided totake an even more hands-on approach than before.In early 2016, they gathered, not to negotiate withthe government the characteristics of the laws thatthey thought would be most effective to fightcorruption, but to elaborate on them themselves.

CSOs and experts used a recently created Mexicanlegal mechanism called the “citizen initiative” todraft the laws themselves and to pressure theCongress to discuss them.

More than twenty experts worked on a draft of NAS’secondary laws and publically presented it to thepress as a “citizen initiative” on February 2 , 2016.A “citizen initiative” is a legal figure that allowscitizen groups to present a bill to Congress, and thatobligates Congress to discuss it, if the initiative isbacked by the signatures of 0.13 % of the electorate–that is about 120 thousand signatures in hard copyalong with detailed information from the photo ID ofall those signing it.

In just a couple of months, civil society groupsmanaged to gather more than five times the numberof required signatures for the citizen initiative,named 3de3 or 3for3, to be discussed in Congress.Students, citizens and business communities wereon board. Employers’ unions like COPARMEX askedtheir members to sign the citizen bill. Important

nd



Mexican radio stars like “El Sopitas,” FernandaFamiliar, Pamela Cerdeira and many more, talkedabout it on their daily shows. Activists, academicsand columnists discussed it endlessly.

The Mexican Senate started discussing the citizeninitiative last April 11 , after 630 thousandsignatures supporting the citizens’ bill were officiallypresented in March of 2016.

Unlike any other senate bill, citizen organizationsrequired that the discussion was held in totallypublic ways. Facing such overwhelming citizenbacking, senators had no option but to agree. Alldebates were TV transmitted and loyally followed bymany citizens via the web. It is fair to say thatpoliticians looked uncomfortable andrepresentatives of CSOs and academics lookedinexperienced.

Anti-Corruption Reform is approved twice

In a congressional session that was prolonged until 2am, the Senate approved the anti-corruptionlegislation but changed one of its most symbolicarticles: the one that regulates public disclosure ofassets by government officials. The approvedlegislation allowed officials to disclose their assets inprivate documents (not publicly) in order to protecttheir privacy. In addition, it was made mandatoryfor public contractors and all citizens receivingbenefits from the government (from large privateinfrastructure contractors to recipients of cashtransfer programs or scholarships) to disclose thesame three declarations (assets, interest and taxcompliance) that public officers were mandated topresent.

The approved legislation was viewed byentrepreneurial organizations and confederations asa vendetta for supporting and promoting the citizeninitiative. By making declarations mandatory forprivate citizens, many businesspeoplewouldtechnically be required to present their own 3for3declarations. Some calculated this would be about 37million people, and many private and foreigninvestors.

Outrage followed. Wearing suits, the employers’organizations like COPARMEX and businessmanprotested in the streets. Twitter flowed with Mexican

th



citizens’ asking President Peña Nieto to veto thelaws, and to approve the secondary rules of NAS justas civil society groups had first drafted them.Business sectors threatened to promote a massiveamount of appeals on the grounds ofunconstitutionality.

Ultimately Peña Nieto did indeed veto thelegislation, asking Congress to discuss it one moretime. They did and approved a new version of theanti-corruption reform on July 6 , 2016.

What’s next?

The final anti-corruption reform does not have amandatory requirement for private citizens topresent their three declarations, only for officials.Furthermore, it allows officials to disclose theirassets in private documents, not in public as civilsociety groups had first proposed, if they believetheir privacy may be violated.

Indeed, even if not all transparency requirementswere achieved, we must understand this event as awin for Mexico.

No one doubts that the approved NAS is a muchmore solid institution to identify, prosecute andsanction corruption acts, than anything the countryhad before. Even if the NAS was left as approved bycongress, Mexico is in a better situation to reducecorruption. Furthermore, 2016 will be rememberedas the first time in which Mexicans peacefully forcedtheir Congress to inaugurate a new vision ofdemocracy, one with full citizen participation.

The main objective of the NAS, which was thecoordination, collaboration, and systematization ofthe operations of anti-corruption institutions, wasachieved. Mexico has now a system composed of (1)independent and effective authorities coordinatedaround a common mission to prevent and combatcorruption; (2) a new comprehensive and integratedsystem of administrative responsibilities; (3) a newcriminal regime to fight corruption; and (4) a newcontrol and oversight system to coordinate state andlocal authorities.

The real challenge will not be the battle in Congressbut the challenge of meaningful implementation.Mexico needs a NAS that gives results.

th



This article is available online at: 2017 Forbes.com LLC™ All Rights Reserved

Viridiana Rios is a fellow at the Woodrow WilsonInternational Center for Scholars and holds a PhDin Government from Harvard University.

References

Aristegui Noticias (2014). La Casa Blanca deEnrique Peña Nieto. Reporte Especial, AristeguiNoticias. November 9th, 2014.

The Economist (2015). The New Movers andShakers. The Americas, The Economist. May 2nd,2015.

[1] Such impact had been made possible by Mexico’sfree press. The federal government had recentlybeen hit by a series of corruption scandals (AristeguiNoticias, 2014), and was receptive to new ideas thatcould provide them legitimacy.

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Odebrecht S.A. and Braskem S.A. Agree to Record Global..., Practical Law Legal...


Odebrecht S.A. and Braskem S.A. Agree to RecordGlobal Foreign Bribery Resolutionby Practical Law Commercial Transactions

Law stated as at 10 Jan 2017 • USAThe Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) recently announced thatOdebrecht S.A. and its affiliate petrochemical unit, Braskem S.A., have agreed to pay at least $3.5 billion toresolve claims that the companies violated various countries' anti-bribery and corruption laws, including the USForeign Corrupt Practices Act (FCPA). The resolution includes payments to the US, Switzerland, and Braziland is the largest-ever global foreign bribery resolution.

The Department of Justice (DOJ) recently issued a press release to announce that Odebrecht S.A. (Odebrecht),a Brazilian holding company, and its affiliate petrochemical unit, Braskem S.A. (Braskem), have agreed to payat least $3.5 billion to authorities in the US, Brazil, and Switzerland for violating each country's anti-briberyand corruption laws, including the US Foreign Corrupt Practices Act (FCPA). The Securities and ExchangeCommission (SEC) released a separate press release announcing this resolution. This is the largest-ever globalforeign bribery resolution.

The DOJ filed a criminal information against Odebrecht and a separate criminal information against Braskemalleging that beginning in 2001, the companies used a sophisticated and complex network of shell companies, off-book transactions, and off-shore bank accounts to bribe government officials around the world for business andpreferential benefits. The SEC also filed a civil complaint against Braskem, which is publicly traded on the New YorkStock Exchange.

As part of their massive bribery scheme:

• Odebrecht paid approximately $788 million in bribes to government officials and their representatives andpolitical parties in various countries.

• Braskem paid approximately $250 million into Odebrecht's secret, off-book bribe payment system.

The DOJ estimated that this illegal conduct resulted in:

• Corrupt payments from and/or profits for Odebrecht totaling approximately $3.336 billion.• Corrupt payments from and/or profits for Braskem totaling approximately $465 million.

Odebrecht indirectly owned 38.1% of Braskem's total shares and controlled Braskem through its ownership of50.11% of the voting shares.

Odebrecht Plea AgreementAs part of its plea agreement, Odebrecht agreed to a criminal fine of $4.5 billion, subject to further analysis ofthe company's ability to pay the total global penalties. In related proceedings, Odebrecht also settled with theMinisterio Publico Federal in Brazil and the Office of the Attorney General in Switzerland. Under the agreement,the US will credit the amount that Odebrecht pays to Brazil and Switzerland over the full term of their respectiveagreements. The US and Switzerland will each receive 10% of the principal of the total criminal fine and Brazil willreceive the remaining 80%.

https://www.justice.gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve

https://www.sec.gov/news/pressrelease/2016-271.html

https://www.justice.gov/opa/press-release/file/919911/download

https://www.justice.gov/opa/press-release/file/919901/download

Odebrecht S.A. and Braskem S.A. Agree to Record Global..., Practical Law Legal...


Odebrecht has represented it is able to pay only approximately $2.6 billion over the course of its respectiveagreements with the US, Brazil, and Switzerland.

Odebrecht's criminal fine reflects a 25% reduction off the bottom of the US Sentencing Guidelines fine rangebecause of the company's full cooperation with the DOJ's investigation.

Braskem Plea AgreementBraskem entered into various plea agreements with US, Brazilian, and Swiss authorities and agreed to pay a totalof $957 million in fines and penalties, including:

• $632 million in criminal fines, with:• Brazil receiving 70% of the total criminal fine; and• Switzerland and the US each receiving 15% of the total criminal fine.

• $325 million in disgorgement of profits ($65 million to the SEC and $250 million to Brazilian authorities).

Braskem's criminal penalty reflects a 15% reduction off the bottom of the US Sentencing Guidelines as a result ofits partial cooperation with the DOJ's investigation.

Under their respective plea agreements, both Odebrecht and Braskem also agreed to:

• Continue cooperating with law enforcement, including in connection with investigations and prosecutions ofindividuals responsible for the criminal conduct.

• Adopt enhanced compliance procedures.• Retain independent compliance monitors for three years.

Practical ImplicationsThe size of this global resolution is unprecedented. While most bribery or corruption schemes are not as widespreador egregious as the one in this case, companies should take note of this resolution not only because of its record size.The plea agreements demonstrate that the DOJ and SEC will partner not only together and with other US authorities,but also with foreign governments to aggressively identify and punish corruption schemes.

Companies should carefully review their internal policies and procedures to ensure that all employees, officers,agents, and third parties acting on their behalf are aware of and follow the FCPA's anti-bribery and accountingrequirements.

For more information on the FCPA, see Practice Note, The Foreign Corrupt Practices Act: Overview and LegalUpdate, New FCPA Guidance Released by the DOJ and SEC.

For more information on drafting internal FCPA policies, see Standard Documents, Foreign Corrupt PracticesAct Anti-Corruption Policy and Policy for the Use of Third-Party Agents Outside of the United States.

http://www.westlaw.com/Document/I03f4d771eee311e28578f7ccc38dcbee/View/FullText.html?originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)

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Russian Bribery Scheme Leads to $519 Million Settlement, WGL-ACCTALERT VOL 10...


WGL-ACCTALERT VOL 10 NO 249WGL-ACCTALERT Vol. 10, No. 249

Accounting & Compliance Alert (WG&L)—Complete Edition

Copyright (c) 2014 Thomson Reuters Tax and AccountingDecember 23, 2016

Vol. 10, No. 249Today's News

SEC News

Russian Bribery Scheme Leads to $519 Million Settlement

Topic(s): SEC, Disclosure, Ethics, Risk, Specialized Industries, Corporate Governance, Dodd-Frank Act

Summary: Israeli drug maker Teva Pharmaceutical Industries Ltd. settled charges involving violations of the ForeignCorrupt Practices Act for $519 million. The settlement requires Teva to surrender $236 million in illicit profits and interestto the SEC and pay a $283 million penalty as part of a deferred prosecution agreement with the Justice Department.

Israeli drug maker Teva Pharmaceutical Industries Ltd. was hit with a $519 million settlement with the SEC and JusticeDepartment on December 22, 2016, for making approximately $200 million in illicit payments in Russia, Ukraine, andMexico in violation of the Foreign Corrupt Practices Act to secure business in those countries.

Teva made the payments to government officials in all three countries and doctors in Mexico to sell its medications,particularly its multiple sclerosis drug Copaxone, through the nations' public health care systems, the SEC said. Theschemes netted Teva more than $214 million in profits from 2002 through 2012.

The company is subject to SEC enforcement because its American depositary receipts trade on the New York StockExchange.

In Russia, Teva set up an arrangement with a person the SEC described as “a high-ranking government official,” whoalso controlled a drug distributor. In 2006, the official asked the drug maker to increase the amount of business it did withthe companies he ran. An executive working for Teva's Russian subsidiary saw the agreement with the Russian officialas a competitive advantage. When in 2008, the Russian Ministry of Health designated seven illnesses as the costliest totreat, it included MS on the list, and Copaxone was listed as a treatment.

Over the next few years, Teva and the government official continued to collaborate on drug distribution. In 2011,when Teva brought a new executive in to run its Russian subsidiary, he quickly warned his superiors about the Russiangovernment official and the risk of corruption.

Teva carried out its deception, in part, by mischaracterizing its payments as legitimate reductions to revenue in an itsfinancial reports, the SEC alleged.

“As alleged in our complaint, Teva failed to devise and maintain proper internal accounting controls to prevent thecompany's payments of bribes to win business in certain regions around the globe,” said Stephanie Avakian, deputydirector of the SEC's Enforcement Division, in a statement. The settlement requires Teva to surrender $236 million inillicit profits and interest to the SEC and pay a $283 million penalty as part of a deferred prosecution agreement withthe Justice Department. Teva also has to retain an independent corporate monitor for three years.

“While the conduct that resulted in this investigation ended several years ago, it is both regrettable and unacceptable,and we are pleased to finally put this matter behind us,” said Erez Vigodman, the company's president and CEO sinceFebruary 2014. “Since becoming CEO, I have worked diligently to make our culture of compliance central to everythingTeva does. The compliance program that Teva has in place is serious, rigorous, and comprehensive and is designed toprotect the company and its subsidiaries against future violations.” Teva also said none of the employees who were foundto be at fault still work with the company, and that it replaced its entire Russian management team three years ago.

Russian Bribery Scheme Leads to $519 Million Settlement, WGL-ACCTALERT VOL 10...


The SEC said the illegal payments to foreign officials violated Section 30A of the Securities Exchange Act of 1934.The failure to keep accurate financial reports ran afoul of Section 13(b)(2)(A)of the Exchange Act, and the weak internalcontrols was a breach of the Exchange Act's Section 13(b)(2)(B).


LATAM AIRLINES GROUP ENTERS INTO DEFERRED..., 32 No. 8 Int'l...


32 No. 8 Int'l Enforcement L. Rep. 313

International Enforcement Law ReporterAugust 1 - August 31, 2016

IV. Transnational Corruption and International Asset Forfeiture

LATAM AIRLINES GROUP ENTERS INTO DEFERRED PROSECUTIONAGREEMENT WITH $12.75 MILLION PENALTY FOR FCPA VIOLATIONS

Bruce Zagaris

Copyright (c) 2016 Bruce Zagaris

On July 25, 2016, LATAM Airlines Group S.A. (LATAM), a commercial airline company based in Chile, agreed to paya $12.75 million criminal penalty to resolve a scheme which including paying bribes to Argentine union officials via afalse consulting contract with a third-party intermediary in violation of the accounting provisions of the Foreign Corrupt

Practices Act (FCPA). 1

The resolution documents show that executives at LATAM's predecessor-in-interest, LAN Airlines S.A. (LAN), madeand implemented a fictitious $1.15 million consulting agreement with an advisor to the Secretary of Argentina's Ministryof Transportation in October 2006. The agreement purportedly required the consultant to study Argentine airline routes.However, the consultant never provided any such services. Instead, the purported consultant routed the compensationhe received under the contract to Argentine labor union officials in exchange for the union agreeing to accept lowerwages and to not enforce a costly labor rule. As a result, LAN profited by more than $6.7 million from the bribes paid

to the union officials. 2

In September and October 2006, LAN negotiated and executed a fictitious $1.15 million consulting agreement with theconsultant, through a company he owned and operated, in order to funnel bribes to labor union officials. In exchangefor the bribes, LAN's unions had agreed not to enforce the “one function rule,” which mandated that each employeecould engage in only one, narrowly-defined type of work, for a period of years and accepted substantially lower wage

increases than they had been demanding. 3

LAN and the consultant's company never fully signed and executed the consulting agreement. Neither the consultant noranyone else affiliated with his company every performed any of the services specified in the draft agreement. Nevertheless,the consultant's company invoiced LAN for payment under the draft agreement and a LAN affiliate paid those invoices.

On October 18, 2006, the consultant emailed LAN Cargo Executive an invoice from his company to LAN for $300,000“[f]or consulting services provided by and payable to you under contract signed by both parties.” It directed that paymentbe made to a Wachovia account in Roanoke, Virginia, held in the name of the consultant and his wife, not in the nameof his company. LAN paid this invoice from its Citibank account in New York, on behalf of its subsidiary, AtlanticAviation Investments LLC, a Delaware corporation, even though (1) the contract had never been signed, (2) the firstinvoice had been directed to LAN (not AAI), (3) the unsigned agreement had been between the consultant's companyand LAN, not AAI, and (4) it was not a company bank account receiving the funds. LAN Cargo Executive directed the

consultant to address the remaining invoices to AAI, not LAN. 4



On November 21, 2006 and January 16, 2007, the consultant emailed two additional invoices to LAN Cargo Executive,the first for $300,000 and the second for $550,000. As before LAN paid both invoices on behalf of AAI from his NewYork Citibank account.

The payments to consultant's company were intentionally mis-recorded as “other debtors” on the books, records, and

accounts of LAN's Delaware subsidiary. 5

On November 7, 2007, LAN also paid an additional $58,000 to a New York Bank of America account in the name ofanother company, which was jointly owned by the consultant's wife and son. The invoice again falsely indicated that thepayments were for consulting services and studies performed on the different aerial routes in the Argentine Republic and

in the regional market. LAN did not have an agreement or arrangement of any kind with his second company. 6

The information charges LATAM with LAN's knowingly and willfully failing to implement a sufficient system of internalaccounting controls. In particular, LAN had deficient internal account controls that did not require, inter alia: (a) duediligence for the retention of third party consultants; (b) a fully executed contract with a third party before a paymentcould be made to it; (c) invoices issued to the LAN entity that in fact engaged the third party; (d) documentation orother proof that services had been rendered by a third party before payment could be made to it; (e) that payment tothird parties retained by LAN or LAN entities be made to bank accounts held in the names of those third parties; or (f)

oversight of the payment process to ensure that payments were made pursuant to appropriate controls. 7

To settle the criminal investigation, LATAM signed a three-year deferred prosecution agreement (DPA). Under theDPA, LATAM agreed to pay a $12.75 million criminal penalty, continue to cooperate with the DOJ's investigation,strengthen its compliance program, and retain an independent corporate compliance monitor for a term of at least 27months. The terms of the resolution reflected the fact that LATAM did not voluntarily disclose the FCPA violations, butcooperated with DOJ's investigation after the Argentine media uncovered and reported the conduct approximately fouryears after it had occurred. Once LATAM started cooperating, it did so fully and provided all relevant facts known to it,including about individuals involved in the misconduct. However, LATAM did not remediate adequately. LATAM failedto discipline in any way the employees responsible for the criminal conduct, including at least one high-level companyexecutive, and hence the ability of the compliance program to be effective in practice was compromised. As a result,the company paid a penalty within the U.S. Sentencing Guidelines range instead of receiving a discount off the bottom

of the range. 8

In a related matter, LATAM achieved a settlement with the U.S. Securities and Exchange Commission (SEC) underwhich it agreed to pay $6.74 million in disgorgement and $2.7 million in prejudgment interest. Hence, the approximately$22.2 million in combined penalty, disgorgement and prejudgment interest far surpasses the $6.7 million in savings the

company had derived from its improper payments. 9

The case illustrates many classical issues in an FCPA case: lack of due diligence in retaining third party consultants; lackof a fully executed contract with a third party before payments are made; invoices issued to the wrong entity; lack ofevidence that services were rendered by a third party prior to payment; and successor liability for corrupt acts of thepredecessor company. The U.S. jurisdiction here was easy because both LAN's and LATAM's stock were traded onthe NYSE as American depository receipts, AAI was incorporated in Delaware, and the payments were made to U.S.bank accounts.

Footnotes



1 U.S. Department of Justice, LATIAM Airlines Group Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay$12.75 Million Criminal Penalty, Press Release, July 25, 2016.

2 Id.

3 United States v. LATAM Airlines Group, S.A., U.S. District Court S.F. Fla. 16-60195 CR-Hurley Hopkins, Information, July25, 2016, para. 13-14.

4 Id. at para. 21-23.

5 Information, supra, at para. 23-24.

6 Id. at para. 25.

7 Id. at para. 27.




LATAM AIRLINES TO PAY $22 MILLION OVER..., 34 No. 12 Westlaw...


34 No. 12 Westlaw Journal Aviation 3

Westlaw Journal Aviation*1

August 3, 2016

Corruption

LATAM AIRLINES TO PAY $22 MILLION OVER ARGENTINE BRIBES CASE

Copyright © 2016 Thomson Reuters .

(Reuters) - LATAM Airlines Group SA, Latin America's largest airline, has agreed to pay more than $22 million in civiland criminal fines relating to a decade-old Argentine bribery case, U.S. authorities said.

The U.S. Securities and Exchange Commission said the fine of LATAM unit LAN related to “improper payments itauthorized during a dispute between the airline and its union employees in Argentina.”

The payments date back to 2006 to 2007, the company said in a separate statement, predating Chile-based LAN's 2012merger with Brazil's TAM.

LAN had used an Argentine consultant to negotiate with unions on the company's behalf and paid the consultant via asham contract that channeled funds to corrupt union officials, the SEC said.

The scheme had violated the accounting provisions of the Foreign Corrupt Practices Act, the U.S. Justice Departmentsaid, and the airline agreed to pay a $12.75 million criminal penalty.

It will pay a further $9.4 million, including interest, to settle the SEC's charges of inadequate accounting controls.

In February Ignacio Cueto, now LAN's chief executive, was ordered to pay a $75,000 fine over the same case. A memberof the airline's controlling Cueto family, he was LAN chief operating officer at the time.

LATAM Airlines said it “has cooperated fully with relevant authorities throughout this process,” adding that “significantimprovements” had been made to compliance and internal accounting since the events.

(Reporting by Mohammad Zargham in Washington and Rosalba O'Brien in Santiago, Chile; editing by Jonathan Oatis)


©2016 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

DOJ Announces FCPA Pilot Program in an Effort to Incentivize Companies to Self-Report Misconduct

Action Item: On April 5, 2016, the U.S. Department of Justice (“DOJ”) issued a memorandum laying out a one-year pilot program designed to offer mitigation credit to companies that voluntarily disclose Foreign Corrupt Practices Act (“FCPA”) violations. The memorandum also announced an increase by 50 percent of the number of prosecutors assigned to DOJ’s FCPA unit as well as an increase in the number of Federal Bureau of Investigation (“FBI”) agents working these cases. It further describes DOJ’s efforts to work more closely with foreign law enforcement to investigate corruption matters. The pilot program provides substantial potential rewards for companies that comply with all of its components, including the possibility of a declination of charges. Nevertheless, navigating the program’s requirements in an effort to obtain a declination or to mitigate the imposition of a criminal fine may prove difficult for many companies.

On April 5, 2016, the Chief of the Fraud Section for the U.S. DOJ’s Criminal Division issued a memorandum related to the Department’s prosecution of violations of the FCPA. The memorandum highlighted the DOJ’s efforts to intensify its prosecution of FCPA violations by (1) increasing the Fraud Unit’s stable of prosecutors devoted to FCPA issues by 50 percent and creating teams of special FBI agents focused solely on FCPA matters, and (2) strengthening the Department of Justice’s collaboration with its foreign counterparts in order to combat bribery schemes worldwide. The memorandum also announced the start of a

one-year pilot program designed to incentivize companies to voluntarily self-disclose FCPA-related misconduct.

The FCPA Pilot ProgramThe pilot program was designed to increase the Fraud Section’s ability to prosecute individual wrongdoers and to provide greater transparency as to what the DOJ requires from companies seeking mitigation credit for any potential penalties they may face for FCPA misconduct. As set forth in the FCPA memorandum, in order to qualify for full cooperation credit, a company must meet three specific requirements: (1) voluntary self-disclosure; (2) cooperation; and (3) timely and appropriate remediation.

Voluntary Self-Disclosure: To meet this requirement, companies, “within a reasonably prompt time,” must disclose potentially unlawful conduct prior to an imminent threat of disclosure or a government investigation. The disclosure must also consist of all “known relevant facts,” including the names of the individuals involved.

Cooperation: While the September 9, 2015, memorandum issued by Deputy Attorney General Sally Yates concerning individual accountability in corporate prosecutions (the “Yates Memorandum”) sets forth specific criteria for a company to receive any mitigation credit (beyond that normally available under the Sentencing Guidelines) for cooperation in connection with a federal criminal prosecution, the recently issued FCPA memorandum details

White Collar Defense and Investigations

APRIL 2016 n NO. 1

White Collar Defense and Investigations n Page 2

additional criteria for companies seeking to achieve full mitigation credit for FCPA misconduct. To receive full cooperation credit companies must, among other things, be proactive in disclosing facts relevant to the government’s investigation; preserve, collect, and disclose documents and their provenance; provide timely updates on their internal investigations; and disclose overseas documents. Notably, the scope, quantity, quality, and timing of cooperation is fact-specific, and can take into account a company’s size and resources.

Remediation: Credit for remediation will only be available to those companies that have met the minimum cooperation criteria set forth in the Yates Memorandum. Moreover, for a company to receive credit for its remediation efforts, it must demonstrate the implementation of an effective compliance program and that it has appropriately disciplined the employee(s) engaged in the alleged misconduct.

Potential Impact of the Pilot ProgramAccording to the FCPA memorandum, the biggest potential benefit for meeting all of the pilot program criteria is that the DOJ “will consider a declination of prosecution.” If the Department nonetheless determines that a criminal resolution is warranted, a company that satisfies the components of the pilot program may be accorded up to a 50 percent reduction off the bottom end of the Sentencing Guidelines fine range. In circumstances where no voluntary self-disclosure is made but where a company later fully cooperates and timely and appropriately remediates flaws in its controls and compliance program, the memorandum provides that the company will be eligible to receive at most a 25 percent reduction off the bottom of the Sentencing Guidelines fine range.

ConclusionThe potential reward for companies that comply with all of the components of the pilot program could be substantial, including the possibility that the DOJ will decline outright to prosecute the misconduct. Nevertheless, navigating the pilot program’s very specific requirements in an effort to obtain a declination or to mitigate the imposition of a criminal fine may prove difficult for many companies and will require the input of legal counsel.Indeed, the full implications of how the pilot program will affect companies that find themselves in a position to self-report potential FCPA misconduct have yet to be made known. At a minimum however, the program could change the way companies handle internal investigations as well as their compliance and reporting structure in order to maximize their opportunity to receive full mitigation credit. Companies must decide how to manage the trade-off between seeking the potential benefits of the pilot program and devoting the resources and time necessary to comply with the pilot program’s criteria.

For additional information, please contact:

Shawn M. Wright 202.772.5968 | [email protected]

Carlos F. Ortiz 212.885.5122 | 609.750.2641| [email protected]

Steven J. Roman 202.420.4759 | [email protected]

Ariel S. Glasner 202.772.5963 | [email protected]

Mayling C. Blanco 212.885.5502 | 609.750.2647 | [email protected]

©2016, Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

Financial Services Firms Must Evolve Anti-Corruption Programsin Light of Recent FCPA Settlements in Excess of $100 Million

Action Item: Global financial services firms should be aware that the DOJ and SEC are committed to identifying and investigating bribery and corruption regardless of the form it takes. With increased resources to help identify the most sophisticated bribery schemes, financial service firms must ensure that their robust anti-corruption programs take into consideration local customs and risks as well as the broad nature of “anything of value” and its interpretation by regulators.

In the past few months, the U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) announced enforcement actions against two financial institutions stemming from violations of the Foreign Corrupt Practice Act (“FCPA”), each resulting in settlements in the hundreds of millions of dollars. In September, the DOJ and SEC announced a total payment of approximately $412 million for a hedge fund’s use of intermediates, agents, and business partners to pay bribes to high-level government officials across Africa. In November, a $264 million settlement was announced involving a major bank for hiring interns and full-time employees who were friends and family of Chinese officials in exchange for winning lucrative banking deals in China. These resolutions should remind us that no industry is immune from the reach of the FCPA and that companies should be well-aware of the customs and risks of the regions where they operate so that their compliance measures adequately address these risks.

Not Business as UsualIn the case of the hedge fund, the DOJ press release informs that the fund sought partnerships with local business entities to acquire special access to lucrative investment opportunities in the mining and diamond sectors despite knowing that access was being gained through corrupt payments to senior government officials. Per the DOJ press release, in another scheme, the fund hired a third-party agent to assist in securing certain investments in the fund knowing the agent would need to pay bribes to government officials. The payments where then omitted or concealed in the company’s financials. Andrew J. Ceresney, Director of the SEC Enforcement Division, said that “senior executives cannot turn a blind eye to the acts of their employees or agents when they become aware of suspicious transactions with high-risk partners in foreign countries.” Additionally, U.S. Attorney Robert L. Capers of the Eastern District of New York noted that when a company “position[s] itself to profit from the corruption that is sadly endemic in certain parts of Africa” it will be held accountable “for placing profits above the law.”

In the case of the bank, the DOJ press release explained that a Hong-Kong based subsidiary of the bank developed a program to hire candidates referred by clients and government officials as a way to influence the officials to award lucrative Chinese investment deals to the bank. Director Ceresny said “the bank

White Collar Defense and Investigations

DECEMBER 2016 n NO. 4


was potentially violating the FCPA yet persisted with the improper hiring program because the business rewards and new deals were deemed too lucrative.” The scheme is estimated to have netted the bank over $35 million in profits.

Certain news sources reported that the bank may have tried to defend its practices by explaining that the hiring of well-connected employees was routine in China. However, U.S. Attorney Capers stated that “[t]he common refrain that this is simply how business is done overseas is no defense.” The New York Times reported that other major banks may be facing similar investigation over such practices in China. It is clear that the DOJ is well-aware of certain, perhaps customary, practices abroad that run counter to the FCPA’s mandate, and it will not permit custom to serve as an excuse for violation of the law.

FCPA Spares No One … Well, Almost No OneThe resolution with the hedge fund was the first such resolution holding a fund accountable for FCPA violations. Similarly, the settlement by the bank is one of the first major crackdowns on a big bank for FCPA violations. Together these matters demonstrate that financial institutions are not above scrutiny. In addition, these announcements serve as an opportunity for the federal government to remind financial services firms of the government’s increased focus in this industry. In the past, it has not been uncommon for the government to focus on others in the same industry after a settlement with a major company.

This spring, included in the announcement of its Pilot Program, the DOJ also advised that it was doubling the size of investigative and prosecutorial forces. Assistant Director in charge William F. Sweeney, Jr. of FBI’s New York field office stated that the FBI recently established three squads dedicated to international corruption. He further noted the DOJ’s resolve to root out corruption regardless of where it may manifest itself and that “[t]hose engaging in illegal acts abroad may think they’re out of sight and out of mind, but they’re wrong.”

Both the hedge fund and the bank were able to avoid criminal charges by securing deferred and non-prosecution agreements, respectively. The agreements require that the financial institutions

pay to the DOJ, SEC, and in the case of the bank to the Federal Reserve, significant fines to resolve the matters. The agreements also require continued cooperation with the DOJ on any ongoing investigations, enhancement of its compliance program and internal controls, and reporting to the DOJ on the implementation of its efforts. The hedge fund also agreed to retain an independent compliance monitor for a term of three years. Despite not voluntarily and timely disclosing its misconduct, both firms were still given credit for cooperation thus underscoring the importance of cooperation.

While the hedge fund matter was accompanied by some individual accountability, to date the bank matter has not resulted in any such charges. Specifically, the hedge fund matter was accompanied by a guilty plea by a foreign national, son to a former prime minister, for conspiring to bribe a foreign government official in Africa and may result in up to five years of imprisonment. Officers of the fund, specifically the CEO and COO, also agreed to a civil settlement with the SEC, paying fines in the millions. By contrast, to date, the corporate bank settlement is not accompanied by the prosecution of any of the individual officers allegedly involved in the scheme. These results are surprising in the wake of the recent emphasis on the Yates Memo, which signaled a renewed DOJ priority for pursuing and punishing individual wrongdoers criminally, particularly officers, and not just the corporate entities. Both resolutions do require continued cooperation in any ongoing investigation, specifically including against individuals.

“Anything” Means Anything The FCPA, generally prohibits providing “anything of value” to a foreign official to obtain or retain business. Traditionally bribe payments have been in the form of cash payments, luxurious gifts, or excessive travel and entertainment. The DOJ has recognized that the “thing” of “value” may be evolving and the schemes for payment are of increasing sophistication. As a result, DOJ remains committed to exposing and prosecuting corruption regardless of the form it takes or the complexity of the financial transactions involved.

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Chief Richard Weber of the Internal Revenue Service-Criminal Investigation New York Field Office explained that the hedge fund’s resolution “agreement result[ed] from the unraveling of complex financial transactions orchestrated … to facilitate illegal payments to foreign government officials.” From the foreign national’s plea we learn that payments were masked through intermediaries or lawyers, and included payments for luxury vehicles, luxurious foreign travel, the use of private planes, and of course cash. Meanwhile, in the resolution involving the bank, the bribes took the form of prestigious internship and employment positions with the bank. There, Assistant Attorney General Caldwell said: “Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple. This case demonstrates the Criminal Division’s commitment to uncovering corruption no matter the form of the scheme.”

Lessons Learned Financial services firms with international operations must take every opportunity to review their anti-corruption programs, including training and policies, to ensure they comport with the mandate of the FCPA. Financial services firms are well-advised that when considering the efficacy of their programs, they should take into consideration local customs, the evolving nature of “anything of value,” and the increasing sophistication of financial transactions. Compliance programs, including trainings, should be built to address those special risks mitigating the danger that a red flag will be ignored. p – © 2016 BLANK ROME LLP

For additional information, please contact:

Shawn M. Wright 202.772.5968 | [email protected]

Carlos F. Ortiz 609.750.2641 | 212.885.5122 | [email protected]

Mayling C. Blanco 212.885.5502 | 609.750.2647 | [email protected]

www.blankrome.com

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TAB 3

Draft Panel Presentation and Handout


Eduardo A. Santiago-Acevedo, Moderator

Developments and Enforcement Trends Relating to the Foreign Corrupt Practices Act and Other Anti-Bribery Laws.

Overview

• THE FCPA GENERALLY

• THE YATES MEMORANDUM AND THE PILOT PROGRAM

• VOLUNTARY DISCLOSURE

• COMPLIANCE EFFORTS & DUE DILIGENCE

• INTERNATIONAL ANTI-CORRUPTION EFFORTS

• QUESTIONS

THE FCPA, GENERALLY

What is the FCPA?The substantive anti-bribery provision: • U.S. persons and businesses are

prohibited from offering, promising, authorizing or making corrupt payments to foreign officials to improperly obtain or retain business or obtain an improper business advantage.

• Does not apply to U.S. government officials, but other statutes criminalize corrupt payments to such officials.

The “books and records” provision”:• Requires accurate reporting and

recording of all transactions.• Covers all payments to non-U.S.

government officials, regardless of why the payments were made.

4

Why It Matters To You Personally

What Is a “Thing of Value”?A “thing of value” for purposes of the FCPA can be any benefit or service that has value to its recipient, no matter how small. • For example:

• Cash• Excessive travel and entertainment• Gifts• Gift Cards• Loans• Political and Charitable contributions/donations• Employment, Internships, or Scholarships

What Is Acting “Corruptly”?An act is “corrupt” for purposes of the FCPA if it is intended to induce a government official to misuse his or her official position by, for example:

• Wrongfully directing business to a person paying a bribe;• Granting preferential treatment as a result of the bribe; or• Refraining from taking official action against the person paying the

bribe.

What Is Willful Blindness?An individual may be liable under the FCPA if he or she:

• Has actual knowledge of a bribe;

• Has a suspicion that a transaction involves a bribe; OR

• Deliberately avoided knowledge of bribery through willful blindness.

FCPA Accounting ProvisionsCompanies listed on U.S. exchanges are required to maintain books and records that accurately reflect all transactions and dispositions of assets.

The FCPA’s accounting requirements apply independently. This means that payment of a bribe is not required for an accounting violation.

Penalties for accounting violations can be more severe than bribery violations:

Maximum Fine (Corporations)

Maximum Fine (Individuals)

Maximum Imprisonment (Individuals)

Anti-Bribery Violations $2 million $250,000 5 years

Accounting Violations $25 million $5 million 20 years

Selected FCPA Settlements 2015-2016

• Olympus paid $22.8 million to settle claims of bribery by a Latin American subsidiary.

• Novartis paid $25 million to settle claims that it bribed Chinese doctors to prescribes its drugs.

2015• The Louis Berger Group, Inc. paid $17.1 million to settle claims of

bribery to obtain construction contracts in India, Indonesia, Vietnam, and Kuwait.

• Ingenuity and Purpose paid $7.1 million to settle claims of conspiracy to bribe a Kuwaiti official to obtain government contracts.

2016• VimpelCom paid $397 million to settle claims of bribes paid to a

high-ranking Uzbekistan official with ties to the telecom industry.

1914 15

28 2513

8 9 11

26

1823

4727

23

1520

11 10

7

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

DOJ Actions

SEC Actions

SEC & DOJ FCPA Enforcement 2007-2016

Source: Stanford Law School: http://fcpa.stanford.edu/assets/img/carrousel/03-sanctions.png

FCPA Sanctions per Year (in Millions)

0

500

1000

1500

2000

2500

3000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Amount


2016 FCPA Enforcement StatisticsBy mid-year, the number of FCPA enforcement actions in 2016 already equaled the total number of enforcement actions in 2015

• The SEC brought more FCPA enforcement actions in the first six months of this year than it has in any full year since 2011

• Of the 12 corporate enforcement actions, 8 were brought by the SEC alone, 3 were brought jointly by the DOJ and the SEC, and 1 was prosecuted only by DOJ

• Although the total enforcement actions cover a wide variety of industries and countries, China – involved in roughly half of the enforcement actions – continues to be an FCPA international hotspot

RECENT DEVELOPMENTS:The Yates Memorandum

Recent Developments: The Yates MemorandumOn September 9, 2015, Deputy Attorney General Sally Yates issued a memo entitled “Individual Accountability for Corporate Wrongdoing” to all DOJ attorneys, commonly known as the “Yates Memo”

Signaled a new priority of pursuing, punishing and deterring individual wrongdoers

Provided guidance with six specific points of instruction DOJ attorneys.

The Yates Memorandum –6 Points of Instruction COOPERATION CREDIT: In order to qualify for any cooperation credit, companies must provide to the DOJ all relevant facts relating to the individuals responsible for the misconduct;

FOCUS ON INDIVIDUAL LIABILITY: Criminal and civil corporate investigations should focus on individuals from the inception of the investigation;

COORDINATION BETWEEN CRIMINAL AND CIVIL ATTORNEYS: Criminal and civil attorneys handling corporate investigations should be in routine communication with one another;

RELEASE OF CULPABILITY: Absent extraordinary circumstances or approved departmental policy, the DOJ will not release culpable individuals from civil or criminal liability when resolving a matter with a company;

PLANS TO RESOLVE RELATED CASES. DOJ attorneys should not resolve matters with a company without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and

CONSIDERATIONS FOR CIVIL ATTORNEYS. Civil attorneys should consistently focus on individuals as well as the company, and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

The Yates Memorandum –6 Points of Instruction (cont.)

The Yates Memorandum –UpdatesThe DOJ issued two clarifications since the publication of the Yates Memorandum:

1. Corporations must disclose all relevant facts regarding individuals’ misconduct to receive cooperation credit.

2. A corporation may still be eligible for cooperation credit even if it cannot identify culpable individuals.• Implies that companies seeking cooperation credit may be held

to a best efforts standard. • Confirmed the continuation of the policy prohibiting

prosecutors from requesting that companies waive privilege to receive cooperation credit .

RECENT DEVELOPMENTS:The Pilot Program

In April 2016, the DOJ announced a one-year pilot program to encourage companies to voluntarily self-disclose FCPA-related misconduct, cooperate with the Criminal Division’s Fraud Section and remediate flaws in their internal controls and compliance programs. This program only applies to FCPA matters brought by the Criminal Division’s Fraud Section.

Through the program, a Company may receive up to a 50% reduction off the bottom end of the applicable US Sentencing Guidelines fine if itvoluntarily and promptly:• discloses all relevant facts known to it (including facts about

individual misconduct), • fully cooperates with the government’s investigation,• and timely and appropriately remediates.

The DOJ will consider declining prosecution for companies that timely disclose, cooperate and remediate.

Appointment of a monitor will not be required if a company has implemented an “effective compliance program” by the time of resolution

The Pilot Program

The Pilot Program (cont.)Through the Pilot Program, the DOJ Reviews A Company’s:

Compliance Program Efficacy:• Adequately resourced and independent (includes review of reporting structure); • Compliance personnel that are sufficiently experienced and knowledgeable about the

business to identify and appreciate risky transactions or conduct; • Program design is tailored to address risks based on an effective risk assessment and

then audited to ensure efficacy; and • Compliance personnel are compensated and promoted in a way that does not

compromise their independence or the fulfillment of their responsibilities.

Discipline for Misconduct:• A framework for disciplining employees responsible for misconduct, and potentially

others who oversee them, and that takes into account how disciplinary infractions and oversight lapses affect compensation also are features identified for scrutiny in terms of assessing compliance program effectiveness.

Efforts: • Fraud Section attorneys are instructed to take note of other actions a company may

take that demonstrate its understanding of the seriousness of the misconduct, responsibility for its actions, and efforts to reduce recurrence and other risky behavior.

Additional Notes:

Disclosures already required by law, agreement or contract will not qualify as a voluntary self-disclosure.

Cooperation will be evaluated by the scope, quantity, quality and timing of cooperation appropriate for the particular circumstances.

Additional steps demonstrating company recognition of the misconduct’s seriousness, acceptance of responsibility and implementation of measures to reduce the risk of repetition may also be required.

Companies failing to voluntarily disclose FCPA-related misconduct may still receive limited credit if they later cooperate and appropriately remediate.However, cooperation credit will be limited to, at most, a 25% reduction off the bottom of the US Sentencing Guidelines fine range calculation

The Pilot Program (cont.)

Takeaways from the Yates Memorandum and Pilot Program

For any company that has uncovered possible violations of the FCPA:• promptly self-report the findings of the internal investigation;• provide timely updates to the SEC and DOJ of the findings on a

continuous basis, including audit results, identification of all improper payments, factual timelines, and supporting documentation, and translate the relevant documents into English (if applicable);

• voluntarily make witnesses available for interviews; and• conduct a risk assessment to determine whether improper

conduct occurred at other corporate locations.

Voluntary Disclosure

Considerations when making the decision whether or not to disclose to DOJ or the SEC:

• Amount of the Payment• Prevalence of Conduct • Actors involved• Defenses/True FCPA Violation• International Cooperation

Disclosure to the Government: Making the Decision

No disclosure and conduct does not come to the attention of regulators in the U.S. or abroad Pros –

No fine/disgorgement No monitor No DOJ/SEC mandated investigation No adverse publicity

Cons – Uncertainty of discovery (whistleblower, industry probe,

acquisition) Five year SOL

Disclosure to the Government: Pros v. ConsScenario I

No disclosure and conduct does come to the attention of regulators in the U.S. or abroad Cons –

Start in hole – have to justify/explain why not disclose DOJ/SEC may have pre-conceptions of conduct which will need

to overcome DOJ/SEC may be more active in investigation Lose guideline benefit and DOJ/SEC may be less inclined to give

benefit of certain conclusions Impact on settlement

Disclosure to the Government (cont.)Scenario II

Pros - Can climb out Explain decision not to disclose – small amounts

involved Arguable whether violations (no concrete/direct

proof of payment) Performed necessary investigation (DOJ/SEC

standard) to determine problem Fixed problems any way –remedial measures

Disclosure to the Government (cont.)Scenario II

Disclosure to DOJ and SEC Cons –

Potential fine/disgorgement Adverse publicity DOJ/SEC have ability to request additional investigation as well

as other markets

Disclosure to the Government (cont.)

Scenario III

Pros - Enhanced credibility with DOJ/SEC re investigation

process/findings Ability to frame the issues as opposed to responding to

allegations Settlement impact- guideline benefit and DOJ/SEC may be

inclined to give benefit of certain conclusions, increase prospect of no monitor

Remedial measures – no additional effect as putting in place Possible pass – small amounts, no individuals (DOJ/SEC

overwhelmed) Certainty

Disclosure to the Government (cont.)

Scenario III

Compliance Programs & Due Diligence

Avoiding FCPA Liability• Code of Conduct• Rules of the Road• Expectations• Opportunities for Feedback (aka Ethics Hotline)

• Training• Substantive• Periodic

• Due Diligence• Timely• Thorough• Risk Based (One size does not fit all)

Avoiding FCPA Liability (cont.)• Contractual Terms• Clear• Require Certification• Audit Rights

• Compliance• Policies/SOPs• Monitoring• Testing

• Accountability

Third-Party ExposureWhere is the exposure?

• Agency Relationships• Distributors• Franchisees• Commercial Contracts• Acquisition Targets• Joint Venture Partners

The Exposure Risk• Under the FCPA, the UK Bribery Act and other anti-corruption laws, a

company can be liable not only for the corrupt actions of its employees, but also for a third party’s actions when that third party is acting on the company’s behalf.

• A company may be liable for the actions of its agents, provided the agent was acting within the scope of its authority and one of its motives was to benefit the company. United States v. Potter, 463 F.3d 9, 25 (1st Cir. 2006).

In fact, approximately 90% of reported FCPA cases involve conduct by third party vendors or intermediaries.

Source: Ernst & Young, 12th Global Fraud Survey (2013).

DOJ Guidelines, “Third-Party Due Diligence and Payments”• “Risk-based due diligence is particularly important with third parties

and will also be considered by DOJ and SEC in assessing the effectiveness of a company’s compliance program.”

• The “appropriate level of due diligence may vary based upon industry, country, size and nature of the transaction, and historical relationships with the third-party….”

That said, “some guiding principles always apply”: “Understand qualifications and

associations of third parties”

“The degree of scrutiny should increase as red flags surface”

“Understanding of the business rationale” for hiring the third party

“Undertake some form of monitoring”

Inform third parties of “commitment to ethical and lawful business practices”

Hallmarks of an Effective Third-Party Due Diligence Program

• Know your vendors Who are they? What is the business rationale? Are they equipped to provide the services?

• Identify your “high-risk” vendors Conduct appropriate risk assessments.

• Implement a due diligence protocol Use questionnaires and background checks. Stress the importance of your commitment to ethical and lawful

business practices.

• Include anti-corruption clauses in contracts• Audit and monitor vendors consistently• Document everything

Key Elements of Third-Party Due Diligence

All International Accounts:

COLLECT• Contact information• Ownership structure• Financial situation• Subcontractor use• Relevant policies and

procedures• Conduct background checks`

IMPLEMENT• Revise contracts to include

key protections

• Revise questionnaire and forms already in use

• Document approval process

• Assess risks and improve

1. Data Collection

2. Data Verification/Validation

3. Evaluation of Results

Corporate Actions Involving M&A & Successor Liability, 2007-2016

78%

12%

10%

No M&ASuccessor LiabilityNo Successor Liability


International Anti-Corruption Efforts

Anti-Corruption Laws/Enforcement Abroad:

UK Bribery Act

China Enforcement Efforts

Mexico

International Anti-Corruption Efforts

Understand the local culture of where you operate

Be aware of local legal environment and trends

Training – one standard

Compliance – facilitate business and ease

Internally Addressing International Standards

Sample Corruption Scores

Highly Corrupt Very Clean Source: Transparency International, 2015 Corruption Perception Index

Mexico

35

Panama

39Ukraine

27

Lebanon

28

China

37

Russia

29

Scores are scaled from 0 to 100. Lower scores reflect greater corruption risk.

Questions?

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HNBA Corporate Counsel Conference March 30 – April 2, 2017 ~ Miami, FL

Corruption in the Global Gateway: Developments and Enforcement Trends Relating to the Foreign Corrupt Practices Act and Other Anti-Bribery Laws.

The US Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) have in the past years publicized their increased enforcement efforts in Foreign Corrupt Practices Act (“FCPA”) actions. Indeed, FCPA settlements have grown to astronomical amounts in the multi-hundred million dollar range and across all industries and with companies of all sizes.

The U.S. Government views the FCPA as critically important for combating corruption around the globe. It considers corruption as corrosive on democracy, undermines public accountability, and diverts public resources from important public interest priorities.

Key takeaways regarding the FCPA:

• U.S. law with broad application to U.S. companies and issuers conducting business abroad.

• It contains both an anti-bribery and an accounting provisions. • Generally, the anti-bribery provision prohibits providing or promising “anything

of value” to a foreign official to obtain or retain business. • The accounting provision, impose certain record keeping and internal control

requirements on issuers and prohibit falsifying books and records. • The law is enforced primarily by the DOJ and the SEC. • Violations of the law carry stiff criminal and civil penalties for the corporations

and the individuals involved.

Impactful recent developments and their effects on companies doing business abroad:

• Enforcement trends and programs:

o Heightened enforcement as reflected by increase in number and total amount of settlements.

o The impact of Yates Memorandum and the rise of the individual prosecutions.

o The Pilot Program as an avenue for self-disclosure.

• Voluntary Disclosure:

o Considerations in potential liability and self-reporting. o The value of cooperation and internal investigations. o The importance of remediation.

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• Compliance Efforts and Due Diligence:

o Identifying key risk areas. o Practical tips for reducing your risk and the significance of due

diligence efforts.

• International Anti-Corruption Efforts:

o US’s coordination with other governments and the increase in multi-jurisdictional investigations and prosecutions.

o Development of new anti-corruption legislation abroad.