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1
Prosecution Declined: One Company’s Investigation, Disclosure
& Remediation of FCPA Issues
Russ BerlandPartner, Dentons US LLP
LAYNE CHRISTENSEN COMPANY OVERVIEW
• Global
• Established in 1882
• Headquarters:The Woodlands, TX
• Key Divisions• Water Infrastructure• Mineral Exploration•
Energy
• Revenues $797M(as of Jan 31, 2015)
Month Day, Year 2
LAYNE LOCATIONS IN AFRICA
Month Day, Year 3
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UNCOVERED ISSUES
• Layne sought to implement a best-in-class FCPA compliance
platform
• 2010 preparation for risk assessment - uncovered possible
improprieties in Africa
• Concerns arose from payments by the company to customs
clearing agents, tax consultants and others in Africa
Month Day, Year 4
INTERNAL INVESTIGATION, REMEDIATION AND REPORTING
• Board/Audit Committee engaged early – authorized and ran
investigation
• Legal team took trips to Africa and Australia, secured dozens
of hard drives and mobile devices and reviewed millions of
documents
• Findings reported to DOJ and SEC, form 10-Q also reported
findings
• Hired Chief Compliance Officer and set up Compliance
Office
• Hired compliance/internal controls consultant to assist with
effort and provide information to the government
Month Day, Year 5
GOVERNMENT INVESTIGATION
• Layne GC, Head of Layne Audit Committee and outside counsel
met with DOJ and SEC representatives in Washington, D.C. a total of
12 times. Many phone calls
• Met DOJ’s requests and attempted to anticipate their future
needs
• DOJ attorneys reviewed and provided feedback on Layne’s
proposed risk assessment methodology and proposed investigation
methods
• Testimony secured from individuals alleged to have engaged in
improper activities, including bringing witnesses from overseas
• Layne was commended for its cooperation, thoroughness and
remediation of its compliance program and internal controls
Month Day, Year 6
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3
STUFF HAPPENS IN AN INVESTIGATION
• Pack your Bags!• Yahoo Chat Anyone?• Just Because He Looks
Like your Grandfather …• Patient … Patience … Going Slowly Through
Customs• The Turning Point - The Burkina Email• The Higher Up - The
DRC-Salt Lake City Connection• Don't Make Me Use the "M" Word• The
DOJ - "We've heard your arguments and we disagree with
you."
Month Day, Year 7
RESULTS
• Settled with the SEC for disgorgement, interest and lowest
available civil penalty
• DOJ declined to prosecute• No monitor
Month Day, Year 8
LESSONS LEARNED
• Perform a compliance assessment to know where your risks are•
Engage the Board/Audit Committee• If Appropriate, self-report
quickly and investigate quickly and thoroughly• Candor•
Transparency• Anticipate the agencies’ needs and help them•
Compliance program and internal controls are critical• Put your
best team in place and control costs
Month Day, Year 9
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THE FOUR C’S - KEY PRINCIPLES
Cooperation (U.S.S.G. Section 8C2.5(g))• Prompt disclosure and
cooperation (prior to government investigation)• Up to 5 points in
the U.S.S.G.• Additional "cooperation discount" in negotiating
penaltyCandor• Real candor• Rapport/relationship with government
attorneys• Reputation is more than half the battle
Month Day, Year 10
THE FOUR C’S - KEY PRINCIPLES
Collateral Consequences (U.S. Attorney's Manual Section
9-28.1000)• Federal/state contractor status
• Arthur Andersen situation
Compliance (U.S.S.G. Sections 8B2.1; 8C2.5(f))• Credit for
pre-existing program that is "generally effective" in detecting
and
stopping criminal conduct (irrespective of whether it worked in
a given instance)
• Management is knowledgeable about program and provides
reasonable oversight
• High level personnel of company are assigned overall
responsibility for program
• Those running program report frequently to top management and
are given adequate resources and authority and direct access to
board
• Company takes reasonable steps to communicate program's
elements to employees
• Periodic monitoring and testing of the program11
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Month Day, Year
Questions?
Russ BerlandPartner, Dentons US LLPKansas City, MO
[email protected]
816.460.2516
Month Day, Year 14
Dentons US LLP4520 Main StreetSuite 1100Kansas City, MO
64111-7700United States
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