2021 – The year of application of the FCPA | Thomas Renard

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There were few enforcement actions for the Foreign Corrupt Practices Act (FCPA) in 2021. However, the few enforcement actions announced have provided important lessons for all compliance professionals.

German bank

The year started off with a bang when, according to a press release from the Department of Justice (DOJ), Deutsche Bank Aktiengesellschaft, “agreed to pay more than $ 130 million to resolve the government’s investigation into violations of the law. the Foreign Corrupt Practices Act (FCPA) and a separate commodity fraud scheme investigation. The resolution includes criminal penalties of $ 85,186,206, criminal restitution of $ 681,480, victim benefits of $ 1,223,738 and $ 43,329,622 to be paid to the United States Securities & Exchange Commission in a resolution coordinate. ” The settlement documents include a deferred prosecution agreement (DPA) and information from the Department of Justice (DOJ) and a cease and desist order (order) with the Securities and Exchange Commission (SEC). This settlement follows another FCPA settlement in August 2019, where the bank paid $ 16.2 million to settle a “Princeling” charge that it hired sons and daughters of foreign officials and employees. public enterprises.

We can only be surprised by the culture of the Bank, which essentially boiled down to winning at all costs: lying, cheating, stealing, engaging in corruption, manipulating the markets, we don’t care. Just win baby. The Bank was also comfortable dealing with very shady characters beyond even Donald Trump and his family. The Bank has now said it will no longer do business with Trump and its personal banker has left the Bank in late 2020.

Does that mean the Bank will turn state evidence against Trump? It’s hard to say at this point, but the Bank is committed in the DPA to “cooperate fully with the Bureaux in all matters relating to the conduct described in the Statement of Facts. and other conduct investigated by the Bureaux at any time during the Term, subject to applicable laws and regulations, until the date on which all investigations and proceedings arising out of such conduct are terminated, or the end of the Term. [emphasis supplied] While this is a catch-all language found in every DPA, it is certainly gaining in importance now.

Amec Foster Wheeler

The next case was the FCPA enforcement action of Amec Foster Wheeler, which is currently owned by John Wood Group PLC (Wood), the successor in the interests of Amec Foster Wheeler Plc. This was a long-standing corruption investigation that involved multiple investigative and enforcement agencies in multiple jurisdictions regarding the use of disgraced agent Unaoil to pay bribes to secure individuals. business. In a press release, the company said it has entered into agreements with the Serious Fraud Office (SFO), the DOJ and the SEC) in the United States, and the Ministério Público Federal (MPF), the Comptroller General’s Office (CGU). and the Solicitor General (AGU) in Brazil, to resolve their respective bribery and corruption investigations into past third party use at the former Foster Wheeler company. Under these various agreements, the Company will pay compensation, restitution and pre-judgment interest, fines and penalties totaling $ 177 million. The payment will be “spread over the next three years with approximately $ 62 million payable in the second half of 2021, with the balance to be paid in installments in 2022, 2023 and 2024”.

Some key lessons have been learned from this case. In the area of ​​internal controls, hopefully in 2021, if a general counsel is asked to draft an agreement, even an interim agreement that violates a company’s internal controls for auditing and contracting with third-party agents, this GC will stop the process. But if not, there would have to be trigger wires that would alert people at the highest level of an organization that a key control has been overridden or bypassed. This of course means that the board should have visibility into the highest risks an organization faces and in the world of international business, a third party sales agent represents that level of risk.

This case also involved multiple failures in the field of Mergers and Acquisitions (M&A). There were at least two acquisitions involved here where the acquiring entity; first, Amec acquired Foster Wheeler (forming Amec Foster Wheeler), then second, John Wood Group PLC (acquiring Amec Foster Wheeler) failed to perform sufficient pre-acquisition due diligence or even post audit -acquisition of the company acquired high-risk companies. Again, this involved Petrobras who was well known for his corruption issues in 2014. There was no mention of Amec’s and Wood’s M&A failures on this issue, but it is clear that something went unnoticed.

Since at least the 2012 FCPA Resource Guide, the DOJ and the SEC have specified compliance steps in mergers and acquisitions. It is the pre-acquisition due diligence that must form the basis of the post-acquisition integration. After the acquisition, there should be a full FCPA audit and forensic investigation, especially in high risk markets and with high risk companies. There must be comprehensive training on compliance and the integration of the acquired entity into the acquirer’s compliance regime.

WPP

Finally, the SEC cease and desist order was entered into with WPP plc, the world’s largest advertising group, for bribing officials of the Indian government and participating in other “illicit programs” in China, Brazil and Peru. WPP has agreed to pay over $ 11 million in restitution, interest and $ 8 million penalty for a total amount of just over $ 19 million. Some of the key lessons of compliance, including the following.

Culture Matters – This sounds like the most basic thing to say in compliance, but the most important thing is your corporate culture. If your culture does not place a value on doing business in an ethical and compliant manner, your organization is likely to have problems. Investigations – From ignoring internal whistleblower reports, selecting the wrong investigative board, to allowing those involved in corruption to help shape the original internal investigation, this case is a great teaching aid on how NOT to conduct an investigation. Mergers and Acquisitions – There was no pre-acquisition compliance due diligence in any of the acquired entities. This was limited without a forensic compliance audit of the acquired entities after the acquisition as well. Incentives – When do sales or compensation incentives become perverse incentives? WPP crossed that threshold when they paid off the profits of the founders of the organizations they acquired, which were kept to run subsidiaries such as WPP-India, provided they achieved sales figures they could not. not reach without engaging in bribes and corruption.

While there were a smaller number of FCPA enforcement actions in 2021 than in previous years, the cases that were resolved were significant. They provide many lessons for every compliance officer (CCO) and compliance professional.

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