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Business Guide to Anti-Corruption Laws 2018 Mid-Year Update

© 2018 Jenner & Block LLP. Attorney Advertising. Jenner & Block is an Illinois Limited Liability Partnership including professional corporations. This publication is not intended to provide legal advice but to provide information on legal matters and firm news of interest to our clients and colleagues. Readers should seek specific legal advice before taking any action with respect to matters mentioned in this publication. The attorney responsible for this publication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome.

INTRODUCTION TO THE 2018 MID-YEAR UPDATE

To supplement our annual Business Guide to Anti-Corruption Laws, this mid-year update reports on FCPA and UK Bribery Act enforcement actions and developments between January and June 2018.

Anti-corruption enforcement continued in the first half of 2018 as it left off in the end of 2017. The pace of Foreign Corrupt Practices Act (FCPA) enforcement has regressed to the mean after the blistering 2016. Although the absolute number of enforcement actions is down, the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) continue to aggressively pursue potential FCPA violations, working with foreign authorities to develop evidence and securing large corporate settlements, including the $585 million global settlement with Paris-based bank, Société Générale.

Following DOJ’s November 2017 announcement of its corporate enforcement policy, DOJ continued to apply and develop its policy framework governing corporate prosecutions. It reached its first declination of prosecution under the policy, and each corporate FCPA resolution included an analysis under the policy’s factors. DOJ Criminal Division further announced its intent to use the FCPA policy as guidance in other corporate matters. DOJ also announced a policy of promoting coordination with other regulators in an attempt to avoid the “piling on” of penalties for the same action.

In the United Kingdom, enforcement of the UK Bribery Act (UKBA) continued with several new investigations announced. The Serious Fraud Office (SFO), which enforces the UKBA, appointed an American-trained lawyer as its new head, signaling continued aggressive prosecution. Meanwhile, the English High Court reinforced prior cases that held that companies could not rely on privilege to stop the production of internal investigation materials, implying that the SFO should seek production of such cases in UKBA investigations.

The authors of this mid-year update are: Nicholas Barnaby, David Bitkower, Emily Bruemmer, Matthew Cipolla, Victoria Fitzpatrick, Kelly Hagedorn, Eugene Lim, Gayle Littleton, Jessica Martinez, Marguerite Moeller, Coral Negron, Tobi Olasunkanmi, Natalie Orpett, Peter Pope, Manny Possolo, Reid Schar, Keisha Stanford and Nathan Wackman, among others.

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SNAPSHOT OF CORPORATE ENFORCEMENT ACTIVITY THROUGH JUNE 2018

This table shows the six corporate resolutions that resulted in a monetary penalty through the first half of 2018. The “global penalty” amount includes all monetary sanctions assessed by US authorities, including any criminal fine, civil penalty, pre-judgment interest, and disgorgement (and not subtracting any amounts offset against penalties paid to foreign authorities. These matters resulted in, all totaled, more than $679 million in global monetary penalties, with the average amount just over $97 million.

Company Type of Resolution FCPA Provisions Global Penalty (US Penalty)

Elbit Imaging Ltd. SEC Order Books and records; internal controls $ 500,000

Dun & Bradstreet Corp. SEC Order; DOJ Declination Books and records; internal controls $ 9,221,484

Panasonic Avionics Corp. SEC Order; DOJ Declination

Anti-bribery; books and records; internal controls $ 17,705,018

Kinross Gold Corp. SEC Order Books and records; internal controls $ 950,000

Société Générale S.A.; SGA Société Générale Acceptance N.V.

DPA; Guilty plea (DOJ) Anti-bribery $ 585,000,000 ($ 292,000,000)

Legg Mason NPA (DOJ) N/A $ 64,242,000

Transport Logistics International NPA (DOJ) Anti-bribery $ 2,000,000

Resolutions Key: “DPA” - deferred prosecution agreement; “NPA” - non-prosecution agreement; “SEC Order” - settled administrative proceeding.

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FCPA AND UK BRIBERY ACT BASICS

The FCPA’s anti-bribery provisions prohibit corrupt payments to foreign officials for the purpose of obtaining or retaining business. Their jurisdiction is broad, extending to all US companies and persons, public companies and foreign companies that are registered with the SEC, and foreign companies and persons that commit an act in furtherance of an improper payment or offer while in the United States. Fines and penalties under the FCPA can be significant, as demonstrated by the $772 million fine imposed on Alstom S.A. and the $2.6 billion settlement between Odebrecht S.A. and US, Swiss, and Brazilian authorities.

The books and records and internal controls provisions of the FCPA work in tandem with the anti-bribery provisions by requiring accurate accounting and reporting of expenditures, as well as adequate internal controls. The books and records and internal controls provisions also generally impose obligations to maintain accurate books and records, whether or not any improper payments have been made. These provisions apply only to companies registered with the SEC.

The UKBA contains a similar substantive anti-bribery provision that prohibits a corrupt payment to a foreign public official for the purpose of obtaining or retaining business. The UKBA also prohibits the “failure to prevent bribery” with a provision that holds a company vicariously liable for Bribery Act violations committed on its behalf by a person associated with the company. The UKBA broadly applies to any company that “carries out a business or part of a business” within the United Kingdom.

Our annual Business Guide to the Anticorruption Laws provides an in-depth look at the statutory provisions and frequently asked questions associated with FCPA and UKBA enforcement. The 2018 edition may be accessed here and hard copies are available upon request.

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ANTI-CORRUPTION HIGHLIGHTS FROM THE FIRST HALF OF 2018

UPDATE ON NEW FCPA CORPORATE ENFORCEMENT POLICY

In November 2017, DOJ adopted a formal policy intended to guide enforcement of the FCPA against corporations. The policy, which was substantially based on the terms of an April 2016 pilot program, sets forth the circumstances under which DOJ will decline to prosecute a company despite finding misconduct or, failing that, will give significant discounts off the criminal monetary penalty prescribed by the federal sentencing guidelines. In several enforcement actions – as well as the first declination of prosecution under the policy – during the first half of 2018, DOJ has applied that policy.

Under the policy, DOJ applies a “presumption” that it will decline prosecution of any company that voluntarily discloses an FCPA violation, fully cooperates with DOJ’s investigation, remediates any compliance failings that led to or permitted the violation, and disgorges any profits from the corruption. As discussed in detail in the below sections, the policy defines DOJ’s expectations in each of these areas, including providing a definition of cooperation that is significantly more stringent than what DOJ requires to earn cooperation credit in non-FCPA enforcement matters. The presumption of declination can be rebutted by aggravating circumstances, including severe misconduct.

The enforcement policy also provides for more limited credit in situations where a company does not qualify for a declination under the policy. Where aggravating circumstances make a declination inappropriate, but a company otherwise meets the disclosure, cooperation, and remediation requirements, the policy provides that the company will receive a 50% reduction off the bottom of the fine range recommended under the federal sentencing guidelines and that DOJ will generally not require the appointment of a corporate monitor.

Where a company does not voluntarily disclose, but meets DOJ’s cooperation and remediation expectations, the company is entitled to 25% reduction off of the guidelines fine range. And even where a company fails to meet the policy’s heightened cooperation requirements, the policy provides that DOJ may consider providing a lesser reduction so long as the company meets DOJ’s baseline cooperation requirements.

Finally, it should be noted that declination under the Corporate Enforcement Policy is reserved for cases where DOJ believes provable misconduct has taken place, but the company has met the policy’s principal requirements. It does not displace DOJ’s traditional practice of declining prosecution on the merits in cases where a criminal resolution would otherwise be inappropriate based on the facts and law.

In a resolution with Dun & Bradstreet (discussed further below in Recent Enforcement Actions), DOJ applied this policy for the first time to decline prosecution. The letter announcing the declination analyzed the company’s conduct under the policy’s factors, explaining that DOJ reached the declination decision “despite the bribery” that occurred, because the company identified the misconduct, made prompt and voluntary self-disclosure, undertook a thorough international investigation, fully cooperated in the matter, fully remediated (including by firing 11 employees

DOJ’s Corporate Enforcement Policy provides that DOJ will presumptively decline prosecution, even where misconduct has occurred, if a company voluntarily disclosed misconduct, cooperates with DOJ’s investigation, remediates the issues that caused the misconduct, and disgorges any ill-gotten gains. Companies that do not disclose but still cooperate and remediate may still earn mitigation credit in the form of a reduced fine.

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and taking steps to enhance its compliance program and internal accounting controls), and disgorged the full amount of profits determined by the SEC.

Other DOJ resolutions have likewise detailed the factors that contributed to the specific results under the policy. For example, in the Panasonic Avionics Corporation resolution, DOJ noted that the company’s failure to self-disclose prior to receiving a document request from the SEC meant it could not qualify for more than a 25% reduction off the guidelines range—and it ultimately received only a 20% reduction in light of the seriousness of the offense. Although this analysis is not binding on DOJ in future matters, it does provide useful guidance as to how DOJ currently applies the factors in its policy, and about its expectations for how companies should cooperate or remediate. In many of the year’s enforcement actions, DOJ specifically identified the facts that contributed to its assessment of a company’s cooperation or remediation. For example, in the Dun & Bradstreet resolution, as noted above, as well as its resolution Transportation Logistics International, DOJ specifically highlighted that the company’s remediation included terminating all employees involved in the misconduct.

To date, the resolutions under the Corporate Enforcement Policy have been broadly consistent with results during the approximately 19 months that the original DOJ pilot program was in force. Time will tell whether the Policy’s continued application will, as DOJ intends, make its enforcement practice more transparent and induce further voluntary self-disclosure from corporations that discover potential corruption-related misconduct.

DOJ CRIMINAL DIVISION WILL USE FCPA CORPORATE ENFORCEMENT POLICY AS GUIDANCE IN OTHER AREAS

In March 2018, the Criminal Division of the Department of Justice announced that it plans to apply the same principles embodied in the FCPA Corporate Enforcement Policy, described above, to criminal conduct beyond that covered by the FCPA. In a speech at the American Bar Association’s National Institute on White Collar Crime, John Cronan, then the acting head of DOJ’s Criminal Division, and Benjamin Singer, then chief of the Division’s Securities and Financial Fraud Unit, stated that the Policy would serve as non-binding guidance for the Division in situations in which companies self-disclose other violations of federal criminal law. The application of the Policy continues to be mandatory in the FCPA context.

The Criminal Division has applied the Policy publicly as guidance in one non-FCPA case to date. In February 2018, DOJ declined to prosecute Barclays PLC for wire fraud in connection with front-running a foreign exchange trade in August 2011 on behalf of one of its clients. As DOJ explained in its declination letter, even though DOJ’s investigation found that Barclays employees had engaged in conduct that violated the federal wire fraud statute, DOJ closed its investigation without pursuing prosecution of the bank. It did so because Barclays had satisfied the criteria set out by the Policy, including (1) timely and voluntarily self-disclosing its offending behavior; (2) thoroughly and comprehensively investigating it; (3) fully cooperating with DOJ during its investigation and agreeing to continue to do so; (4) taking ongoing action to improve its compliance program; and (5) agreeing to fully remediate, including agreeing to pay more than $12 million to cover restitution to the victim and disgorgement of ill-gotten gains. In addition, Barclays agreed to adopt compliance policies to reduce the likelihood of violations of US law concerning fraud and foreign exchange market manipulation.

As in FCPA matters, DOJ’s decision to resolve the investigation of Barclays with a declination did not provide any protection against prosecution of any individuals. In fact, DOJ has continued to pursue prosecution of a former Barclays trader for the same misconduct.

At this early stage, without more examples of how and under what circumstances DOJ may apply the Policy outside the FCPA context, there is good reason for companies considering self-disclosure of non-FCPA-related misconduct to proceed cautiously. Most importantly, the announcement was made only by the DOJ Criminal Division, rather than by DOJ leadership. The Criminal Division’s Fraud Section has exclusive authority in FCPA matters, meaning that its enforcement practices in FCPA cases effectively represent DOJ policy, whether or not they are announced by Department leadership. In non-FCPA cases, however, although the Criminal Division often plays a leadership role, in any given corporate investigation it may play only a co-equal role with a US Attorney’s Office or another DOJ headquarters component, or no role at all. Thus, a company deciding whether to self-disclose conduct in a non-FCPA case cannot be sure that the prosecuting unit will in fact take consideration of the principles of the Corporate Enforcement Policy, even as a discretionary matter.

In addition, because application of the Policy outside the FCPA context is only discretionary, even as applied by the Criminal Division, corporations facing non-FCPA-related

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investigations do not have the same certainly they have under the FCPA Corporate Enforcement Policy or under its predecessor pilot program. They must therefore be careful to weigh benefits and costs of self-disclosure. As we explained in the FCPA context in our 2018 Business Guide to Anti-Corruption Laws, on the one hand, our analysis of recent FCPA settlements with DOJ confirms that there is an observable reduction in the monetary penalty for corporations that received full credit under the program. On the other hand, self-disclosure and full cooperation come with risks and costs, including that there is no guarantee a corporation will receive the benefits of the Policy; self-disclosure may result in shareholder lawsuits or reputational damage due to required regulatory disclosures occurring before an investigation is resolved; and cooperation may result in costly expansions in the scope of the investigation. Moreover, DOJ has made clear that cooperation requires assistance in the prosecution of individual employees. And the ultimate resolution will likely include monetary penalties in the form of disgorgement, fines, or other forms of restitution.

DOJ AND SEC EMPHASIZE INTERNATIONAL COOPERATION AND MULTILATERAL INVESTIGATIONS

Over the past several years, many of the most significant FCPA enforcement actions have involved cooperation between US authorities and foreign law enforcement agencies, resulting in large global resolutions. This trend of multinational investigations and continued cooperation across jurisdictions remains evident in the first half of 2018.

Notably, officials from DOJ and SEC each emphasized the importance of international cooperation in developing FCPA cases. In April 2018, for example, David Johnson, assistant chief of the Department’s FCPA Unit (speaking in his personal capacity) commented that, with respect to international cooperation, “I think you are going to see that trend continues. We hope to keep building on that.” During the same panel, Charles Cain, head of the SEC’s FCPA Unit (also speaking in his personal capacity), echoed Johnson’s comments, underscoring that the Commission was likewise committed to cooperating with foreign law enforcement agencies to enforce global anti-corruption laws.

These sentiments were reiterated by Deputy Attorney General Rod Rosenstein in May 2018. Rosenstein noted that in November 2017, the Department co-hosted a conference with the SEC and the Organization for Economic Cooperation and Development (OECD) focused on strengthening international anti-bribery initiatives and improving coordination across borders. He also noted that the Department “works closely with many foreign partners to uncover and redress violations that occur overseas.”

DOJ and SEC have not just talked about international cooperation; recent enforcement actions also evince continued coordination across borders. For example, in its statement announcing a $2 million settlement with Transport Logistics International Inc. (discussed in Recent Enforcement Actions, below), DOJ thanked its law enforcement colleagues in Switzerland, Latvia, and Cyprus for providing valuable assistance with the investigation and prosecution of the case. Thus, companies can continue to expect coordination and cooperation among international law enforcement agencies in their efforts to enforce the FCPA and other global anti-corruption laws.

DOJ ANNOUNCES POLICY TO AVOID “PILING ON” OF DUPLICATIVE CORPORATE PENALTIES

On May 9, 2018, Deputy Attorney General Rod Rosenstein announced a DOJ policy to encourage coordination among DOJ units and other law enforcement agencies and regulators when imposing multiple penalties for the same conduct. In his speech, Rosenstein observed that “‘[p]iling on’ can deprive a company of the benefits of certainty and finality ordinarily available through a full and final settlement.” This concern is especially acute in the investigation and prosecution of foreign corruption, which often involves multinational law enforcement cooperation and raises the prospect of large fines paid in multiple jurisdictions.

Officials from DOJ and SEC have repeatedly emphasized the importance of cooperation with foreign law enforcement agencies in developing and resolving FCPA matters. This cooperation helps US law enforcement access witnesses and evidence abroad. The largest of the recent enforcement actions, including this year’s $585 million settlement with Société Générale, have often been part of global settlements, involving law enforcement authorities from around the world.

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In response to this concern, DOJ officials have stated several times over the last few years that where a company cooperates with DOJ and otherwise demonstrates itself to be a responsible corporate actor, DOJ will take into account and seek to offset fines or penalties paid for the same misconduct to other enforcement authorities. Recent major FCPA cases have included such apportionment between the US and foreign authorities, including last year’s settlement with Telia Company AB, which included total global penalties of $965 million and an offset of approximately $500 million for penalties paid to Swedish and Dutch authorities. The approach announced by the Deputy Attorney General codifies and expands on this approach.

DOJ policy has four key provisions:

• The Obligation Not to Use Criminal Enforcement Authority to Extract Civil Penalties. The policy reaffirms that DOJ lawyers should not use their criminal enforcement authority to “extract, or to attempt to extract, additional civil monetary payments.”

• Internal DOJ Coordination. The policy states that where multiple DOJ components are investigating the same misconduct, DOJ lawyers “should coordinate with one another to avoid the unnecessary imposition of duplicative fines, penalties, and/or forfeiture against the company” for the same misconduct.

• Coordination with Other Enforcement Authorities. The policy provides that DOJ lawyers should, when possible, “coordinate with and consider the amount of fines, penalties, and/or forfeitures paid to other federal, state, local, or foreign enforcement authorities that are seeking to resolve a case with a company for the same misconduct.”

• Factors for Multiple Penalties. The policy states that DOJ lawyers “should consider all relevant factors” when determining whether and how to offset penalties and identified several for consideration:

− The “egregiousness of a company’s misconduct”;

− “statutory mandates regarding penalties, fines, and/or forfeitures”;

− “the risk of unwarranted delay in achieving a final resolution”;

− and “the adequacy and timeliness of a company’s disclosures and its cooperation” with DOJ, separate from disclosures and cooperation with other enforcement authorities.

− This provision, however, “does not prevent Department lawyers from considering additional remedies in appropriate circumstances,” such as remedies designed to recover lost government funds or provide restitution to victims.

Although the policy underscores that DOJ should take into account penalties paid to other enforcement authorities, it came with a warning to corporate defendants not to try to game the system. Rosenstein emphasized that “coordination with a different agency or foreign government is not a substitute for cooperating with the Department of Justice,” and that DOJ “will not look kindly” on companies that come to DOJ “only after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments.”

It is too soon to tell whether the new policy will result in less “piling on.” Each of the four core components of the new policy have been, to some degree, part of DOJ’s stated practice for some time already. Moreover, as has been made clear in the context of the large multinational corruption investigations, reaching a “global settlement” requires significant coordination among the different enforcement authorities involved. And although the policy reflects DOJ’s intent not to pile on, that does not bind non-DOJ regulators such as state enforcement authorities, or even other federal agencies such as the SEC, much less foreign prosecutors, each of whom have their own incentives and priorities. Nor does the calculation of appropriate fines expressly consider what can be significant sums paid to private parties in civil litigation.

For more on the new DOJ policy, please see Jenner & Block’s Client Alert written by Partners Nicholas R. Barnaby, Katya Jestin, Anne Cortina Perry and Associate Ravi Ramanathan.

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CONGRESS PASSES CLOUD ACT GOVERNING CROSS-BORDER LAW ENFORCEMENT ACCESS TO DATA

By their very nature, FCPA cases typically require law enforcement to gather evidence from sources outside the United States. Email and messaging evidence can be exceptionally valuable to investigating authorities, but can also be hard to access. For example, law enforcement may issue a subpoena to a company seeking email records belonging to one of its employees, but another mechanism—a search warrant under the Stored Communications Act (SCA)—is generally required to search the personal email account of that same employee. On March 23, 2018, Congress passed the Clarifying Lawful Overseas Use of Data Act (the CLOUD Act), amending key aspects of how that mechanism works in cases with an international component.

The Act potentially implicates US or foreign orders to produce third-party data as part of a cross border criminal investigation in two ways. The Act clarifies that American law enforcement authorities can compel providers of electronic communication services—such as email and social media—to produce data stored outside the United States. It also establishes new rules facilitating foreign law enforcement’s access to data stored inside the United States.

First, the CLOUD Act expressly provides that SCA warrants—that is, warrants issued to “provider[s] of electronic communication service” seeking data belonging to their users—can be used to order production of data located in a foreign country. Specifically, the Act requires that providers comply with SCA obligations, including the preservation and production of data in response to a law enforcement warrant, “regardless of whether [the targeted] communication, record, or other information is located within or outside of the United States.” This provision is significant because providers subject to US jurisdiction increasingly store data relating to both American and foreign customers in locations around the globe.

Second, the CLOUD Act addresses—at least in part—what a provider should do if it receives a US warrant but applicable foreign law forbids production in response. The issue is particularly pressing in light of the European Union’s General Data Protection Regulation (GDPR), which went into effect on May 25, 2018, and imposes strict data privacy rules for data being transferred outside

of the European Union, with a risk of fines as high as €20 million or 4% of global annual revenue.

The CLOUD Act sets forth two possible responses to conflicts of law. First, it envisions executive agreements with “qualifying foreign governments” that would give providers 14 days to petition a court to modify or quash a warrant believed to present a conflict of law. The second approach reverts to a more ambiguous savings clause, which merely provides that the status quo remains intact. Thus, for all cases not involving a qualifying foreign government, and for all cases implicating a US person or any person inside the United States, the CLOUD Act makes no changes and offers no additional clarity as to how a court should evaluate potential conflicts between US law and foreign laws such as the GDPR.

The Act’s most immediate impact will be in court: warrants that were previously challenged based on extraterritorial reach will now be upheld. Over the long term, the prospects of agreements facilitating the exchange of information may help smooth multilateral investigations. In the meantime, the clarified extraterritorial reach of SCA warrants could lead to escalating conflicts between US law enforcement and foreign law.

For more on the CLOUD Act, please see Jenner & Block’s Client Alert written by Partner David Bitkower and Associate Natalie K. Orpett.

The 2018 CLOUD Act makes clear that US authorities can seek warrants for data held abroad by email providers. This provides an important tool for law enforcement and, until future agreements are reached providing for international transfer of data, sets up a potential conflict between US law and foreign data protection law, particularly the new European GDPR regulation.

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RECENT FCPA ENFORCEMENT ACTIONS

The summaries below, presented in alphabetical order, describe select significant events in FCPA enforcement matters during January through June 2018. Although not discussed, there are several other pending enforcement actions that we are tracking for new or significant developments.

MICHAEL L. COHEN VANJA BAROS Securities and Exchange Commission Complaint

Complaint Dismissed July 12, 2018

Department of Justice (Cohen) Indictment October 5, 2017 (unsealed January 3, 2018)

Nature of Conduct: According to the SEC’s complaint, Michael L. Cohen, the head of the European office of his employer, and Vanja Baros, an analyst in that office, caused millions of dollars of bribes to be paid to government officials in several African countries, including Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo. The complaint also alleges that Cohen and Baros were masterminds of the scheme, which used agents and partners to make payments to government officials in exchange for facilitating transactions with their governments.

In addition, an indictment unsealed on January 3 alleges that Cohen was involved in a separate scheme to defraud one of his employer’s clients, in part so that Cohen could be repaid for a personal loan he extended to one of the agents used to bribe Libyan government officials. That agent used the $18 million loan to buy a luxury yacht. The indictment details how Cohen arranged for his employer’s client to purchase shares of stock from the agent, without revealing to the client that the agent had agreed to pay Cohen millions of dollars from the proceeds of the sale.

When the SEC began investigating the FCPA violations at Cohen’s employer, Cohen created fake documents to conceal his interest in the sale and also lied to investigators about the sale.

Amount of Alleged Improper Payments: The complaint charges that Cohen and Baros participated in the payment of tens of millions of dollars of bribes.

Benefit Obtained: Transactions with several African governments.

Type of Resolution: On July 12, 2018, the district court dismissed the SEC’s complaint against Cohen and Baros, holding that the allegations related to conduct outside the limitations period.

The DOJ action against Cohen remains unresolved. In that case, Cohen was charged with a variety of crimes, including conspiracy to commit investment advisor fraud, a substantive charge of investment advisor fraud, conspiracy

The substantive elements of the FCPA’s anti-bribery provisions are:

• An offer, payment, promise to pay or authorization of payment of any money or anything of value;

• To any foreign official or to any other person (a third party) while knowing that any portion of the thing of value will be offered, given or promised, directly or indirectly, to a foreign official;

• Corruptly;

• For purposes of influencing an official’s act or decision; and

• In order to obtain or retain business or to direct business to any person.

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to commit wire fraud, four substantive counts of wire fraud, conspiracy to obstruct justice, obstruction of justice, and a charge of making material false statements to the FBI.

Of Note: In dismissing the SEC complaint, the district court relied on the 2017 Supreme Court decision in Kokesh v. SEC, which held that the five-year limitations period for any SEC claim for a “penalty” applied to disgorgement, a remedy that requires a wrongdoer to forfeit proceeds associated with a securities law violation, in addition to SEC claims for civil penalties. Here, the court held that the SEC’s complaint sought penalties, including civil penalties, disgorgement, and a punitive injunction, and was accordingly subject to that same five-year limitations period. It dismissed the complaint because all the pled conduct occurred outside the limitations period. The ruling underscores the potential impact that Kokesh can have on SEC FCPA enforcement by imposing a limitations period where the SEC had previously claimed none applied.

LUIS CARLOS DE LEON PEREZ, NERVIS GERARDO VILLALOBOS CARDENAS, CESAR DAVID RINCON GODOY, RAFAEL ERNESTO REITER MUNOZ, ALEJANDRO ISTURIZ CHIESA Department of Justice Indictment February 12, 2018

Nature of Conduct: As described in the indictment, De Leon, Villalobos, Rincon, Reiter, and Isturiz were officials of Petroleos de Venezuela S.A. (PDVSA), the state-owned and state-controlled oil company of Venezuela, or former officials of other Venezuelan government entities. They were referred to as the “management team” and wielded significant influence in PDVSA. In 2011, with PDVSA in the midst of a liquidity crisis, these five were part of a scheme in which they accepted bribes from companies doing business with PDVSA in exchange for ensuring the companies received payment priority and future PDVSA contracts. The PDVSA defendants then laundered the bribe money through complex financial transactions.

Amount of Alleged Improper Payments: The indictment describes at least $27 million in payments made to these five officials.

Benefit Obtained: The companies paying the bribes sought payment priority, meaning they were guaranteed to be paid on their existing PDVSA contracts during a time

when PDVSA was unable to guarantee payment on all of its outstanding contracts, and also future PDVSA business.

Type of Resolution: None at this time. De Leon and Villalobos are each charged with conspiracy to violate the FCPA as well as money laundering and money laundering conspiracy counts. Rincon, Reiter, and Isturiz are each charged with money laundering and money laundering conspiracy counts.

Of Note: Officials of the companies paying the bribes, Robert Enrique Rincon Fernandez and Abraham Jose Shiera Bastidas, pleaded guilty in 2016 to charges stemming from this scheme.

THE DUN & BRADSTREET CORPORATION Securities and Exchange Commission Cease-and-Desist Order April 23, 2018

Department of Justice Declination Letter April 23, 2018

Nature of Conduct: From 2006 through 2012, two indirect Chinese subsidiaries of The Dun & Bradstreet Corporation (Dun & Bradstreet) used third-party agents to make unlawful payments to Chinese government officials in order to obtain data vital to Dun & Bradstreet’s business as a provider of financial information.

According to the SEC, one of these indirect subsidiaries—Shanghai Huaxia Dun & Bradstreet Business Information Consulting Co., Limited (HDBC)—used third-party agents to bribe Chinese government officials, including at the Administration of Industry and Commerce, to unlawfully acquire restricted business data that it subsequently incorporated into its business products. HDBC management used third-party agents under the mistaken belief that making payments indirectly would shield the company from any legal liability. These payments were falsely recorded as legitimate data acquisition expenses by both HDBC and Dun & Bradstreet.

Another indirect subsidiary—Shanghai Roadway D&B Marketing Services Co, Ltd. (Roadway)—also acquired data through the use of improper payments. Roadway employees made “promotional” payments to customer decision-makers to obtain or retain business, including customers that were Chinese government agencies. Roadway also used third-party agents to make such improper payments. Internal audit controls failed to detect

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these improper payments, and both Roadway and Dun & Bradstreet falsely recorded the payments as legitimate business expenses in their books and records.

Amount of Alleged Improper Payments: The SEC Order did not describe the amount of the improper payments, but it noted that Roadway made such payments to 156 different Chinese government agencies or state-owned entities.

Benefit Obtained: As a result of the illegal payments, Dun & Bradstreet illegally obtained restricted business information about companies in China and obtained or retained business.

Type of Resolution: The SEC’s Order found that Dun & Bradstreet violated the FCPA’s internal controls and books and records provisions. Without admitting or denying the findings, Dun & Bradstreet consented to the entry of the order and agreed to pay more than $9 million to resolve the FCPA charges. This amount consisted of $6,077,820 in disgorgement, $1,143,664 in prejudgment interest, and $2 million for a civil penalty.

DOJ declined to prosecute.

Of Note: Dun & Bradstreet received the first declination under DOJ’s FCPA Corporate Enforcement Policy announced in November 2017 (discussed above). For its part, the SEC took into consideration many of the same factors that DOJ described as supporting the decision not to prosecute such as its voluntary disclosure, extensive cooperation, and remediation, but still decided to pursue the action.

The SEC Order contained a noteworthy emphasis on Dun & Bradstreet’s remedial measures. Among other things, the company ceased business operations of its Roadway subsidiary, discontinued illicit practices at HDBC, terminated certain employees who were involved in the misconduct, disciplined senior executives who had oversight responsibility for ensuring that adequate FCPA compliance training and controls were in place at the company’s subsidiaries, doubled the size of its audit services and corporate compliance teams, hired legal and compliance employees in China, reevaluated and supplemented its anti-corruption policies and procedures on a global basis, enhanced its internal accounting controls and compliance functions, engaged a law firm to review every data vendor and source of data used in

China, and conducted regular anti-corruption training throughout its organization.

ELBIT IMAGING LTD. Securities and Exchange Commission Cease-and-Desist Order March 9, 2018

Nature of Conduct: Israel-based Elbit Imaging Ltd., a holding company including subsidiaries focused on real estate development, and Plaza Centers NV, its indirect subsidiary, paid millions of dollars to third-party offshore consultants and a sales agent, purportedly for their services related to a real estate development project in Romania and the sale of a large portfolio of shopping center assets in the United States. Elbit and Plaza made these payments even though they lacked evidence that the consultants and the sales agent had actually provided any of the services under the contract. According to the SEC’s Order, some or all of the funds may have been used to make corrupt payments to Romanian government officials or were embezzled. The companies failed to record these payments in their books and records accurately and in a manner that fairly reflected the true nature of the payments.

Amount of Alleged Improper Payments: Between 2007 and 2012, Plaza paid consultants approximately $14 million in connection with the real estate project in Romania. As part of the real estate project in the United States, Elbit and Plaza paid a sales agent a total of $13 million for “commissions” and “expenses.”

Benefit Obtained: These payments helped Elbit and Plaza carry out real estate transactions involving more than $1 billion in sales.

Type of Resolution: The SEC’s Order found that Elbit violated the FCPA’s books and records and internal controls provisions. Without admitting or denying the findings, Elbit agreed to the entry of the order and to pay a civil penalty of $500,000.

Of Note: The SEC noted that its resolution considered that Elbit was in the process of winding down its operations and selling its principal assets.

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JOO HYUN BAHN Department of Justice Guilty Plea January 5, 2018

Nature of Conduct: Joo Hyun Bahn was a Manhattan real estate broker who conspired to pay $500,000 through a third-party intermediary to a Qatari official to induce Qatar’s sovereign wealth fund to purchase a commercial building in Hanoi, Vietnam. Bahn’s co-conspirators included his father, Ban Ki Sang, an executive at the South Korean company that owned the building, and Andrew Simon, a colleague at Bahn’s real estate firm, and Sang Woo, who assisted Bahn in getting together the $500,000 for the bribe. The conspirators hoped to sell the building for approximately $800 million. The scheme was not successful, primarily because the intermediary did not actually have a relationship with the Qatari official and stole the intended bribe for himself.

Amount of Alleged Improper Payments: As described during Bahn’s guilty plea, the conspirators paid $500,000 in bribes to the intermediary, intending that money be paid to the Qatari official.

Benefit obtained: The conspirators stood to earn a portion of the commission on the sale of the property. In addition, according to Bahn’s indictment, Bahn’s father’s company was experiencing liquidity problems and the $800 million sale was expected to alleviate those issues.

Type of Resolution: Bahn pleaded guilty on January 5, 2018 to a charge of conspiracy to violate the FCPA and a charge of violating the FCPA’s anti-bribery provision. Bahn is scheduled to be sentenced on June 29, 2018.

Of Note: The intermediary, Malcolm Harris, was also charged as part of the conspiracy and pleaded guilty to wire fraud and money laundering charges arising from the scheme.

KINROSS GOLD CORPORATION Securities and Exchange Commission Cease-and-Desist Order March 26, 2018

Nature of Conduct: In 2007, Kinross Gold Corporation (Kinross Gold) acquired two African subsidiaries involved in the operation of gold mines in Mauritania and Ghana with the knowledge that they lacked anti-corruption compliance programs and internal accounting controls. Nonetheless, it took Kinross Gold almost three years to implement

adequate controls, despite multiple internal audits flagging widespread deficiencies. And even after implementing the controls, Kinross Gold failed to maintain them by permitting misconduct to continue.

From 2010 through at least 2014, Kinross Gold paid vendors and consultants, often in connection with government interactions, without reasonable assurances that transactions were consistent with their stated purpose or the prohibition against making improper payments to government officials. For example, Kinross Gold paid a fixed amount to a Ghanaian government customs officer for his expenses in traveling to a mine weekly in order to sign papers necessary for the transfer of the gold’s title, including for weeks when he did not travel to the mine and bore no travel expenses. Kinross Gold paid a third-party consultant without obtaining any documentation to evidence that services were actually provided. The company also paid another consultant who was a former government employee to expedite the approval process for permits and visas, but again there was no evidence of actual services being provided and no reasonably detailed description in the company’s books and records.

In addition, in 2014, Kinross Gold awarded a lucrative logistics contract to a company preferred by government officials, despite concerns that the company was a high-cost provider with poor technical capabilities, in contravention of Kinross Gold’s own bidding and tendering procedures. Those procedures directed company personnel to focus primarily on the commercial and technical qualifications of bidders when making contract awards. Kinross Gold also contracted with a politically connected consultant to facilitate contacts with high-level government officials without performing the heightened due diligence required by the company’s policies and procedures.

Amount of Alleged Improper Payments: The SEC order did not state the amount of the payments to the government customs officer. The order stated that Kinross Gold paid one third-party consultant $12,000, and that it paid the visa consultant a fee of $1,000 per visa or permit.

The 2018 Kinross Gold settlement is another in a series of SEC settlements imposing successor liability for misconduct that began prior to an acquisition. In these cases, the SEC has emphasized the importance of pre- and post-close anti-corruption due diligence.

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Benefit Obtained: As a result of an improper payment, Kinross Gold won approval from the Ghana EPA for a mining production permit for a planned mine expansion. Following payments to expedite visas and work permits, the processing time dropped from ten to three weeks.

Type of Resolution: The SEC order finds that Kinross Gold violated the books and records and internal accounting provisions of the FCPA. Without admitting or denying the findings, Kinross Gold consented to the entry of the order that required it to pay a civil penalty of $950,000 to the SEC and report periodically on its implementation of remedial steps for a period of one year.

Of Note: This resolution highlights the importance of taking care to remediate known accounting controls issues on a timely basis, including when making acquisitions. Taking such remedial measures may help mitigate the risk that company funds will be misused for unauthorized purposes and incur liability for the parent company.

PANASONIC CORPORATION PANASONIC AVIONICS CORPORATION Securities and Exchange Commission (Panasonic Corporation) Cease-and-Desist Order April 30, 2018

Department of Justice (Panasonic Avionics Corporation) Deferred Prosecution Agreement April 30, 2018

Nature of Conduct: Panasonic Avionics Corporation (PAC), a provider of in-flight entertainment and communication systems and a US subsidiary of Japan-based Panasonic Corporation (Panasonic), offered a lucrative consulting position to a government official at a state-owned airline in the Middle East to induce the official to help PAC obtain and retain business from the airline. The government official ultimately accepted a position with PAC, which required little or no work. In addition, PAC hired a US airline consultant while he remained on the airline’s payroll, who in turn provided PAC with non-public, inside, or otherwise sensitive information obtained through his position. And PAC admitted that it used a middleman to make concealed payments to sales agents in its Asia region used to solicit business from state-owned airlines. PAC paid those agents even though they had failed to pass its internal diligence requirements and had been formally terminated. Some of those payments were made from a corporate fund controlled by a single executive.

Amount of Alleged Improper Payments: PAC paid the former employee of the state-owned airline $875,000 over a six-year period. PAC also paid the US airline consultant $825,000 over a six-year period. Finally, PAC paid 13 terminated sales agents a total of more than $7 million.

Benefit Obtained: The contract negotiated by the bribed employee of the state-owned airline resulted in $92 million in profit for PAC. PAC earned over $22.5 million in profits from contracts in which the US airline consultant had some involvement.

Type of Resolution: PAC entered into a deferred prosecution agreement with DOJ to resolve violations of the FCPA’s books and records provisions. By the terms of that agreement, PAC agreed to pay a criminal penalty of $137.4 million, cooperate with the government’s investigation, enhance its compliance program and improve its internal controls, retain an independent corporate compliance monitor for at least two years, and periodically report on its FCPA compliance after the termination of the independent monitor.

Separately, Panasonic consented to the entry of an SEC Order finding violations of the FCPA’s anti-bribery, books and records, and internal controls provisions, as well as securities reporting requirements. The SEC ordered Panasonic to pay $143 million in disgorgement and pre-judgment interest.

Of Note: In determining to accept Panasonic’s settlement offer, the SEC considered the company’s remedial efforts and cooperation. The SEC noted that Panasonic had replaced the senior PAC executives involved in the violations, established an Office of Compliance and Ethics led by a new chief compliance officer, implemented new compliance and accounting procedures, and enhanced internal accounting controls to prevent and detect the type of misconduct described in the Order.

For its part, DOJ explained that its resolution with PAC followed the principles set forth in the FCPA Enforcement Policy announced in November 2017. Specifically, PAC ultimately received 20% off the guidelines range based on an array of factors, including its failure to self-disclose its cooperation with the DOJ investigation and the seriousness of the offense.

In relation to this misconduct, Panasonic fraudulently overstated pre-tax and net income by prematurely recognizing revenue in the wrong quarter.

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LAWRENCE W. PARKER, JR. Department of Justice Guilty Pleas December 28, 2017 (unsealed April 3, 2018)

Nature of Conduct: Between 2005 and 2016, Egbert Yvan Ferdinand Koolman, a purchasing office at the Servicio di Telecomunicacion di Aruba N.V. (Setar), a state-owned telecommunications provider in Aruba, conspired with telecommunications company executive Lawrence W. Parker, Jr., among others, to accept bribes from individuals and companies in the United States and elsewhere in exchange for steering government mobile phone and accessory contracts to the US companies. According to DOJ, the payments were sent via wire transfer from banks in the United States; received by Koolman during meetings in Miami and Aruba; and withdrawn by Koolman in Aruba with a bankcard connected to a US-based bank account.

Amount of Alleged Improper Payments: Koolman allegedly received more than $1.3 million in corrupt payments.

Benefit Obtained: Koolman accepted bribes in exchange for mobile phone and accessory contracts, in addition to providing confidential information to “favored vendors.”

Type of Resolution and Sanction: Parker pleaded guilty in December 2017 to conspiracy to violate the FCPA’s anti-bribery provisions and was sentenced to 35 months of imprisonment, with restitution of $701,750.

Of Note: Koolman pleaded guilty to money laundering conspiracy in April 2018.

EBERHARD REICHERT Department of Justice Guilty Plea March 15, 2018

Nature of Conduct: Reichert was the technical manager at a wholly owned subsidiary of Siemens Aktiengesellschaft (Siemens AG) and was in charge of a major contract with the Argentine government to create a new national identity card. Reichert admitted to engaging in a conspiracy to bribe Argentine government officials to both award the subsidiary the $1 billion contract to create national identity cards and then more bribes to keep the project going when it stalled. The officials included current and former senior officials in the Office of the President, Ministry of Interior, Ministry of Justice, and Ministry of Migration, as well as current, former, and prospective former members of the Argentine Congress. Reichert admitted that the scheme paid tens of millions of dollars in bribes.

Amount of Alleged Improper Payments: According to Reichert’s indictment and the November 2015 guilty plea of one of his co-conspirators, the conspiracy committed to paying nearly $100 million in bribes. The conspirators actually paid “tens of millions of dollars” in bribes to Argentine government officials.

Benefit Obtained: The Siemens subsidiary was awarded a $1 billion contract in 1998 to create national identity cards

Type of Resolution and Sanction: Reichert pleaded guilty on March 15, 2018, to conspiracy to violate the FCPA and commit wire fraud. A sentencing date has not been set, and Reichert has been allowed to return to Germany.

Of Note: The allegations reflect creative attempts to fund the improper payments using a sham lawsuit. The conspiracy, using one of the conduit entities tied to the conspiracy, initiated an arbitration against the Siemens subsidiary seeking payment for services on a contract the conduit had with the subsidiary. The contract was a sham: no services were expected or rendered and it only served to cloak payments to the conduit with the appearance of legitimacy. The subsidiary “settled” the arbitration for close to $9 million, but as the indictment details “the settlement was actually a mechanism to disguise a partial payment of bribe obligations to the Argentine officials.”

The FCPA’s books and records provision requires the accurate accounting for payment and is often enforced where a company records a transaction in its books and records as a legitimate business transaction but the true purpose of the transaction was to make a corrupt payment. The Panasonic Avionics Corporation resolution highlights the potential stretch of this provision: DOJ charged the company with a criminal violation of that provision in part based on straightforward domestic commercial bribery without a direct link to the foreign corruption.

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CHATBURN RIPALDA FRANK ROBERTO Department of Justice Indictment April 19, 2018

Nature of Conduct: According to the indictment, Chatburn Ripalda, a south Florida businessman, paid bribes to PetroEcuador officials in order to obtain and retain contracts for an Ecuadorian oil and gas services company called Galileo Energy S.A. Chatburn Ripalda used at least one shell company and at least one intermediary company to facilitate the bribes.

Amount of Alleged Improper Payments: The indictment alleges that Chatburn Ripalda and his co-conspirators directed more than $3.27 million in bribes to PetroEcuador officials.

Benefit Obtained: The indictment alleges that Chatburn Ripalda and his co-conspirators succeeded in winning $27.8 million in contracts for Galileo Energy S.A.

Type of Resolution: Unresolved at this time. Chatburn Ripalda was indicted for conspiracy to violate the FCPA, conspiracy to commit money laundering, a substantive violation of the FCPA’s anti-bribery provisions, and two substantive counts of money laundering. The indictment also contains a forfeiture allegation seeking to forfeit two pieces of Miami-area property. An alleged co-conspirator, Jose Larrea, was also indicted on one count of conspiracy to commit money laundering.

In addition to these indictments, there have been two recent guilty pleas by former PetroEcuador officials in the Southern District of Florida. In March, Arturo Escobar Dominguez pleaded guilty to money laundering conspiracy in connection with a bribery scheme. In June, he was sentenced to 48 months in prison. In April, Marcelo Reyes Lopez pleaded guilty to money laundering conspiracy in connection with a bribery scheme. He is scheduled to be sentenced July 23.

SOCIÉTÉ GÉNÉRALE S.A. / SGA SOCIÉTÉ GÉNÉRALE ACCEPTANCE N.V. LEGG MASON INC. / PERMAL GROUP LTD. Department of Justice Deferred Prosecution Agreement (Société Générale) June 4, 2018 Plea Agreement (SGA Société Générale Acceptance N.V.)

Non-Prosecution Agreement (Legg Mason) June 4, 2018

Nature of Conduct: According to the plea agreement, SGA Société Générale Acceptance N.V., a subsidiary of the Paris-based bank Société Générale, engaged in a multi-year scheme to bribe Libyan officials in connection with lucrative investment opportunities and transactions. As part of the scheme, Société Générale paid a commission of 1.5 to 3% of the nominal amount of the investments made by the state-owned financial institutions to a broker. A portion of the commission was passed on to Libyan officials as bribes in exchange for steering the opportunity to Société Générale. These bribes paid by Société Générale led Libyan financial institutions to place 13 investments and one restructuring worth approximately $3.66 billion through the institution, which earned profits of approximately $523 million.

According to admissions made by Legg Mason, it participated in the same scheme through its subsidiary Permal Group Ltd., which managed certain of the funds invested by Libyan state institutions, and earned more than $32 million in profit due to investment in its funds by Libyan state institutions.

Amount of Alleged Improper Payments: The payments to the Libyan “broker” totaled more than $90 million.

Benefit Obtained: Société Générale allegedly made profits of approximately $523 million; Legg Mason

Société Générale’s $585 million monetary penalty was almost 10 times as large as the $64.2 million penalty paid by Legg Mason to resolve FCPA charges related to the same misconduct. The difference was driven by the degree of involvement in and profit from the scheme: Société Générale developed the scheme, maintained the relationship with the third party that paid the bribes, and made 10 times the profit on the scheme than Legg Mason.

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earned over $32 million in profit due to its participation in the scheme.

Type of Resolution: Société Générale entered into a deferred prosecution agreement to resolve charges that it conspired to violate the FCPA’s anti-bribery provisions. Société Générale also paid to DOJ a $585 million criminal penalty, minus approximately $293 million paid to French authorities (as described further below). Its subsidiary, SGA Société Générale Acceptance N.V., pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA.

Legg Mason entered into a non-prosecution agreement under which it admitted facts related to related conduct, but did not admit to specific charges, and agreed to a penalty of more than $32 million and disgorgement of more than $31 million.

Of Note: DOJ specifically explained why participation in nearly identical conduct led to a $585 million penalty for Société Générale, one of the largest FCPA fines ever, but only $64.2 million for Legg Mason. Among other factors, DOJ highlighted that Legg Mason’s “misconduct involved mid-to-low level employees” of a subsidiary; that “Société Générale—and not Legg Mason or Permal—maintained the relationship with the Libyan broker and was responsible for originating and leading the scheme”; and that Legg Mason’s profit from the scheme was less than one-tenth of that made by Société Générale.

Société Générale also entered into a settlement with the Parquet National Financier (PNF) in France, and the United States agreed to subtract the approximately $293 million paid by the financial institution to the French regulator from the criminal penalty owed to the United States. The settlement highlights the role of France’s new anti-corruption authority, L’Agence Francaise Anticorruption, which was established by its new anticorruption law known as “Sapin II.” The investigation also involved cooperation from French, UK, and Swiss authorities.

DOJ concluded that a monitor was not necessary, noting “the company’s risk profile and ongoing monitoring by L’Agence Française Anticorruption.” Although it is tempting to identify this as part of a recent trend in which corporate settlements have not included a monitorship, it is important not to read too much into this resolution in light of the unique situation of ongoing monitoring by the French authorities and the age of the misconduct, with the corrupt behavior ending over nine years ago.

Beyond the penalties associated with the violations of the FCPA, Société Générale further agreed to pay approximately $475 million in regulatory penalties and disgorgement to the Commodity Future Trading Commission (CFTC) as a result of an unrelated LIBOR scheme. According to news reports, Société Générale continues to negotiate with the US Department of the Treasury regarding alleged sanctions violations.

TRANSPORT LOGISTICS INTERNATIONAL INC. (TLI) MARK LAMBERT Department of Justice Indictment (Lambert) January 10, 2018 (unsealed January 12, 2018)

Deferred Prosecution Agreement (TLI) March 13, 2018

Nature of Conduct: According to the DPA, Maryland-based Transport Logistics International Inc. (TLI) conspired to pay more than $1.7 million in bribes to an official, Vadim Mikerin, who was employed by JSC Techsnabexport (TENEX), a subsidiary of Russia’s State Atomic Energy Corporation. TLI provides transportation services for nuclear materials. According to the DPA, the payments were intended to secure improper business advantages and obtain and retain business with TENEX. TENEX is the “sole supplier and exporter of Russian Federation uranium and uranium enrichment services to nuclear power companies worldwide” and that the payments were made for the purpose of securing contracts with TENEX. According to the indictment, the amounts of the payments were based on an agreement to pay as a “kickback” a certain percentage of each contract awarded to TLI. TLI executives and others also created fake invoices describing services that were not provided. The payments were made to shell companies in Latvia, Cyprus, and Switzerland. The alleged conduct took place over a ten-year period from at least 2004 until 2014.

According to the indictment, Mark Lambert, TLI’s co-owner and co-president, was part of the scheme from 2009 to 2014 and participated in paying at least $500,000 in bribes.

Amount of Alleged Improper Payments: According to the DPA, TLI conspired to pay over $1.7 million to offshore bank accounts associated with shell companies.

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Benefit obtained: TLI allegedly made the payments in order to obtain and retain business and contracts with TENEX.

Type of Resolution: TLI entered into a deferred prosecution agreement to resolve charges that it conspired to violate the FCPA’s anti-bribery provisions. According to the DPA, the appropriate penalty was $21,375,000, but DOJ and TLI agreed on a criminal penalty of $2 million due to TLI’s inability to pay the penalty calculated under the US Sentencing Guidelines.

Lambert is charged with one count of conspiracy to violate the FCPA’s anti-bribery provisions and to commit wire fraud, seven counts of violating the FCPA, two counts of wire fraud and one count of international promotion money laundering. On January 25, 2018, Lambert pleaded not guilty. His case remains pending.

Of Note: According to the DPA, TLI received credit under the FCPA corporate enforcement policy for substantial cooperation with DOJ’s investigation and remediating the misconduct, including by terminating all employees engaged in the misconduct. In addition to the charges against TLI and Lambert, DOJ previously charged three other individuals in connection with this conduct. Nearly three years prior to the DPA, in June 2015, TLI co-president Daren Condrey pleaded guilty to conspiracy to violate the FCPA and commit wire fraud. Mikerin then pleaded guilty in August 2015 to conspiracy to commit money laundering involving violations of the FCPA. An intermediary who facilitated the bribes, Boris Rubizhevsky, pleaded guilty to conspiracy to commit money laundering in 2015 and was sentenced to a year and a day in prison in 2017.

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FCPA RELATED CIVIL CASES

SHAREHOLDER LITIGATION CITY OF PONTIAC GENERAL EMPLOYEES’ RETIREMENT SYSTEM V. WAL-MART, INC. AND MICHAEL T. DUKE (W.D. ARK.) Plaintiffs Obtain Discovery May 5 and 11, 2017

Court Reverses Discovery Order March 29, 2018

Plaintiff won significant discovery disputes in the FCPA-related securities fraud class action against Wal-Mart, Inc. and certain former executives. The suit alleged that the defendants made misleading statements about the company’s ongoing commitment to ethics and integrity despite paying millions of dollars in bribes to Mexican officials to secure benefits for the company.

Plaintiff was granted discovery related to the company’s internal investigation in May 2017 in two separate orders requiring Wal-Mart to produce certain documents and to make certain witnesses available for testimony. Following one order in which the court held that the findings of Wal-Mart’s internal investigator were not protected by the attorney-client privilege or the work-product doctrine, plaintiff issued a subpoena for documents and deposition testimony of the investigator. Wal-Mart immediately filed a motion for reconsideration of the court’s decision.

On March 29, 2018, the court held that while plaintiff’s motion to compel testimony from the investigator should be granted, Wal-Mart was not required to produce the investigator’s reports that the company claimed were privileged because the plaintiff had failed to seek in camera review of the documents or otherwise challenge the privilege log produced by Wal-Mart. In the same order, the court also reversed its prior decision finding that attorney-client privilege and the work product doctrine did not apply to stolen documents published by the New York Times about the investigation, pointing to the involuntary

nature of the disclosure and the fact that its prior decision had wrongly rested on a case involving voluntary disclosure of privileged information.

CORY LONGO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED V. OSI SYSTEMS, INC., DEEPAK CHOPRA, AND ALAN EDRICK (C.D. CAL.) Consolidated Amended Complaint Filed May 4, 2018

According to the complaint, on August 21, 2013, OSI announced that it had entered into a 15-year agreement to provide cargo and vehicle security screening services in Albania. But short seller Muddy Waters Research published a report in December 2017 alleging OSI obtained the contract in Albania through corruption and that the company failed to disclose that it had transferred 49% of its project company, worth millions, to an Albanian holding company for less than $5.00. On this news, the company’s stock price fell 29.2%. OSI denied the claims immediately, calling them misleading. After OSI announced that DOJ and SEC were investigating the company’s compliance with the FCPA, OSI’s share price fell over 18%.

Four securities class actions were brought against OSI Systems Inc. between December 7, 2017 and February 5, 2018 in the Central District of California. On March 1, 2018, the court granted plaintiffs’ motion to consolidate the cases. On May 4, 2018, the appointed lead plaintiff for the consolidated class actions filed a consolidated amended complaint.

Private plaintiffs in shareholder suits related to alleged FCPA violations have often sought access to documents created in the course of internal investigations or produced to regulators.

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EMPLOYEES RETIREMENT SYSTEM OF THE CITY OF PROVIDENCE, ET AL. V. EMBRAER S.A., ET AL. (S.D.N.Y.) Motion to Dismiss Granted March 30, 2018

Following Embraer’s resolutions in 2016 with DOJ and SEC for FCPA violations, plaintiffs brought a securities fraud class action alleging that the company failed to disclose the misconduct that led to these settlements. In their amended complaint, the plaintiffs alleged that the company made materially false and misleading disclosures throughout the class period (Jan. 2012 – Nov. 2016) by failing to accurately describe many of the company’s actions. As a result, plaintiffs alleged, share prices decreased significantly once the truth regarding the bribery scheme was revealed.

On March 30, 2018, the court granted Embraer’s motion to dismiss, holding that the company’s disclosures were adequate for several reasons. First, Embraer did not have a duty to disclose uncharged, unadjudicated wrongdoing prior to the resolution of the FCPA matter. Second, Embraer’s financial statements were accurate, and it did not need to disclose that some portion of its revenue was derived from contracts related to the FCPA violations. Third, statements regarding Embraer’s code of ethics and anti-corruption policy were not actionable because they are generalized, aspirational statements. Fourth, Embraer’s statement that it lacked a reasonable basis to estimate reserves for the investigation could not form the basis of a claim because plaintiffs had not alleged that it was not an honestly-held opinion. Finally, plaintiffs had failed to allege sufficiently specific facts about their claim that Embraer’s internal controls failed.

IN RE PETROBRAS SECURITIES LITIGATION (S.D.N.Y. AND 2D CIR.) Preliminary Settlement Approval March 1, 2018

On March 1, 2018 the court granted preliminary approval to a $3 billion settlement agreement to resolve the plaintiffs’ claims arising out of the corruption scandal at the Brazilian state-owned oil company Petróleo Brasileiro S.A. (Petrobras). Class action plaintiffs alleged that Petrobras, whose shares are listed on the New York Stock Exchange, and related entities violated US and Brazilian securities laws by making false statements about and failing to disclose a multi-year, multi-billion dollar bribery and money-laundering scheme.

The settlement included a $50 million payment by Petrobras’ auditor, the Brazilian arm of PricewaterhouseCoopers, to the pension fund company USS in relation to the case. The settlement has been dubbed by lawyers for the investors as the “largest single payout by a foreign issuer in a securities class action in history.”

RICO GOVERNMENT OF BERMUDA V. LAHEY CLINIC INC. (D. MASS.) Grant Motion to Dismiss March 8, 2018.

On March 8, 2018, the court dismissed the Government of Bermuda’s RICO and related claims against Lahey (a non-profit academic medical center incorporated in Massachusetts) and Dr. Ewart Brown (the owner of two private health clinics in Bermuda and the former Premier of the British territory). The claims revolved around an alleged conspiracy between Lahey and Dr. Brown, where Lahey allegedly gave Dr. Brown bribes disguised as “consulting fees” in exchange for “millions of dollars made” from interpreting allegedly unnecessary MRI and CT scans at Dr. Brown’s clinics, received preferential treatment in a corrupt bidding process when bidding on healthcare contracts issued by the Bermudian Government, and became a preferred service provider as a result of bribery.

The judge dismissed the case for lack of standing as to the scanning and bidding schemes because Bermuda failed to allege that any payments for the scans or bids were made from Bermuda’s US bank accounts and thus failed to show that it suffered any injury in the US as a result of those schemes. As to the preferred provider

The prospect of private litigation presents a potential collateral consequence that companies should analyze in considering whether, when, and how to make a disclosure of a potential FCPA violation public. Private plaintiffs have brought suit regarding alleged FCPA violations on a number of theories, including shareholder derivative suits alleging that management allowed the misconduct to occur, as well as suits alleging that management knowingly failed to disclose the misconduct.

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scheme, Bermuda had alleged payments for those services were made from and through Bermuda’s bank accounts, or those of its agents, in the US; however, the court held that because Bermuda had not alleged that it suffered costs it would not have otherwise incurred for “medically necessary services not available in Bermuda,” it ultimately failed to show that the preferred provider scheme led to any economic injury.

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UK ANTI-CORRUPTION DEVELOPMENTS AND UK ENFORCEMENT ACTIVITY

NEW S.F.O. DIRECTOR IS FORMER US FEDERAL PROSECUTOR

On 4 June 2018, the United Kingdom’s attorney general appointed American lawyer Lisa Osofsky as the new director of the Serious Fraud Office (SFO). Osofsky began her career in Chicago, where she was an assistant US attorney. She then became a special attorney in the Fraud Section of the Criminal Division of DOJ, which handles, among other things, FCPA prosecutions, where she was seconded to the SFO in London. Following this, she became deputy general counsel and ethics officer for the FBI before entering private practice. Osofsky is due to take up her new role as director on 3 September 2018. The new director replaces David Green QC CB, who led the organization for a period of six years until April this year, during which time he oversaw the introduction and implementation of Deferred Prosecution Agreements (DPA).

GDPR AND INVESTIGATIONS

On 25 May 2018, the EU General Data Protection Regulation (2016/679) (GDPR) came into force and the UK’s Data Protection Act 2018 incorporated the GDPR into UK law. The GDPR is a sweeping revision to European law on data protection that will affect the way in which companies will have to handle personal data in their possession, including employee data.

Data protection laws have always had an impact on how investigations are carried out, and that will continue to be the case under the GDPR. In particular, transfers of personal data out of the European Economic Area must be done pursuant to a recognized transfer mechanism (such as the Standard Contractual Clauses approved by the EU Commission, which can be incorporated into contracts to abide by the central tenets of EU data protection law and allow safe-harbor transfer of data); agreements with

service providers, such as data review platforms, must conform to GDPR mandated standards; and employees need to be notified that their data may be used as part of an investigation (in advance of that happening).

As is mentioned earlier in this Guide, the US Congress passed the Clarifying Lawful Overseas Use of Data (CLOUD) Act in March 2018. This amends the Stored Communications Act to make it clear that warrants issued under that Act require the production of material that relates to a US citizen, no matter where the material is stored. The interplay between the CLOUD Act, the GDPR and the EU Law Enforcement Directive (2016/680), which accompanies the GDPR and addresses the handling of personal data by and in response to requests from law enforcement authorities has yet to be worked out. It is not clear if and how personal data can be transferred to the US authorities from the EU in response to a warrant. There will no doubt be legal difficulties to come in determining how the differing requirements fit together. This is a developing area that will be watched with interest.

SFO CRITICIZED FOR FAILURE TO COMPEL PRODUCTION OF COMPANY INTERVIEW NOTES

In the recent past, the English courts have been asked to determine a number of disputes centered on whether English law on privilege protects documents that memorialize the first employee interviews conducted by a company’s external lawyers during an internal investigation. These documents are often referred to in the United Kingdom as “first account interview notes” or “first interview notes.” Although the results of those cases have been highly fact specific, these cases generally stand for the proposition that external lawyer interview notes are not protected from production under privilege unless it can be shown that they were produced

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for the dominant purpose of preparing for reasonably contemplated adversarial litigation.

In a recent judicial review hearing, the English High Court criticized the SFO for failing to properly apply the law on privilege in relation to notes of employee interviews conducted by external lawyers. In 2016, the SFO entered into a DPA with a company in relation to a number of bribery and corruption offences. The English Crown Court ordered the identity of the company to remain anonymized until the conclusion of criminal proceedings against the company’s employees and other individuals, and it is referred to publicly as XYZ.

The terms of the DPA required XYZ to cooperate fully in any prosecution of its former employees. In the course of one such prosecution, the SFO requested that XYZ disclose the notes of employee interviews conducted by external lawyers during a 2012 internal investigation. Twice the company refused the disclosure on privileged grounds. However, XYZ provided an oral summary of the interview notes. The SFO did not take the matter further.

The SFO produced a transcript of the oral summary to the former employee as part of its disclosure obligations. The former employee, in turn, applied to the High Court for a judicial review of the SFO’s decision not to take further action against XYZ, arguing that its disclosure obligations required it to obtain the interview notes. The former employee also claimed that XYZ was in breach of its DPA obligation to cooperate with the SFO by failing to disclose the interview notes.

While the Court declined to decide the case because the former employee had failed to exhaust all remedies prior to the appeal, the Court made clear where it stood, stating that the “law as it stands today is settled. Privilege does not apply to first interview notes.” The Court stated that where the SFO knows that material relevant to the prosecution of an individual is held by a third party who refuses disclosure, it must apply to the Crown Court for an order to compel the third party to disclose that material. The Court criticized the prosecutor here for a failure to apply the existing case law on the legal professional privilege contained in recent judgments in order to seek this

material from XYZ. The Court also declined to consider whether XYZ breached the terms of the DPA by refusing disclosure but implied that it may be raising the question as to whether the SFO should have recorded its reasons for not bringing an enforcement action, a required step where a prosecutors declines to enforce the terms of a DPA.

The decision suggests that companies wishing to withhold disclosure of first account interview notes on the basis of privilege are likely to face tougher challenges from the SFO in the future. It also raises questions to as to whether companies hoping to enter into a DPA will be required by the SFO to waive privilege claims over interview memoranda relevant to the subsequent investigation and prosecution of individuals in order to comply with their DPA obligation of continuing cooperation.

SFO SPEECHES

In two recent speeches, Joint Head of the SFO’s Bribery and Corruption Division, Camilla de Silva, spoke of the SFO’s views on an effective compliance program and highlighted factors that would contribute to the prosecutor’s decision to invite a company to enter into DPA negotiations.

Highlighting the extraterritorial reach of the UKBA, de Silva emphasized the importance of a strong compliance function within international organizations in order to mitigate corruption risk. While stressing that the SFO does not provide advice on UKBA compliance, de Silva noted that that an increasing body of resources was available to companies. Notably, she highlighted as key resources the statements of facts accompanying the Rolls-Royce and Standard Bank DPAs. Together with the English High Court’s comments on each case, the documents highlight the compliance failures which lead to criminal liability. De Silva noted that the key points to note from those investigations were:

1. The importance of ensuring interaction between a company’s compliance team and its business unit, as well as ensuring that the compliance team is in a position to influence the business unit;

2. The importance of having a top level commitment from the board of directors to maintaining a properly governed, organized and resourced compliance department; and

3. The “bedding in” of compliance culture.

Recent English law decisions required the disclosure of interview memoranda prepared by legal counsel during internal investigations to UK law enforcement and private parties in civil litigation.

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On DPA’s, de Silva stated that they would continue to be offered in appropriate cases where companies cooperated with the SFO, and where the interest of justice justified such a resolution. She encouraged cooperation with the SFO in circumstances where compliance functions failed and emphasized that the SFO would view a company that has made genuine attempts to prevent bribery more positively than one that has not.

Noting that DPAs are a reward for openness, de Silva clarified that early contact, a thorough internal investigation and a willingness to share information were the key aspects of cooperation with the SFO. De Silva noted that cooperation was not sufficient to qualify a company for an offer to enter into DPA negotiations and warned against equating the process with negotiating a settlement in commercial litigation. As part of any settlement, a company must, she said, be willing to reform and to demonstrate to the SFO that it was unlikely to reoffend.

SFO ANNOUNCES NEW CORPORATE INVESTIGATIONS

Chemring

In January 2018, the SFO announced an investigation into the conduct of business between defense technology firm, Chemring Group PLC (Chemring), its subsidiary Chemring Technology Solutions Limited (CTSL), and any

of their offices, employees, agents or associated persons. The investigation commenced following a self-report by CTSL. Chemring notes in its annual report that the investigation is chiefly concerned with intermediaries representing CTSL and its predecessor companies; the self-report was in respect of two historical contracts, one of which predates Chemring’s ownership of CTSL, and neither contract is believed to be material to the group. Chemring and CTSL indicate that they will fully cooperate with the SFO.

Ultra

In April 2018, the SFO announced an investigation into defense electronics company, Ultra Electronics Holdings PLC (Ultra) and its subsidiaries, employees and associated persons. The investigation, which commenced following a self-report by Ultra, is in connection with Ultra’s conduct of business in Algeria. It is currently unclear what the exact nature of the allegations is nor how material the Algeria business is to the group. Ultra has stated that it is fully cooperating with the SFO.

The UK’s Serious Fraud Office (SFO) enforced the UK Bribery Act. Public reports reflect the SFO continues to focus substantial resources on investigating and prosecuting foreign corruption.

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2018 UK ENFORCEMENT ACTIVITY

BASIL AL JARAH AND ZIAD AKLE Serious Fraud Office Criminal Charges May 22 2018

Nature of Conduct: According to the allegations, Basil Al Jarah and Ziad Akle conspired to give corrupt payments to secure the award of a contract, worth £545 million, to Leighton Contractors Singapore PTE Ltd for a project to build two oil pipelines in Southern Iraq.

Amount of Alleged Improper Payment: Not stated.

Benefit Obtained: A contract, worth £545 million, to Leighton Contractors Singapore PTE Ltd.

Type of Resolution: Unresolved. Both men were with conspiracy to make corrupt payments contrary to the Criminal Law Act 1977.

Of Note: Both men faced similar charges in November 2017 in respect of contracts with SBM Offshore (see January 2018 update). The Australian Federal Police provided assistance to the SFO in connection with their investigation.

The UK Bribery Act applies only to crimes committed on 1 July 2011 or later. Other anti-corruption laws cover conduct prior to the UK Bribery Act effective date. Under those statutes, corporate liability for the acts of employees is limited to circumstances where a person who is the controlling mind or will of the corporation is convicted of the crime.

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INTERNATIONAL ANTI-CORRUPTION UPDATE

AUSTRALIA

Proposed Australian Legislation Will Alter Corporate Criminal Enforcement

Australia is considering legislation that, if enacted, will amend Australia’s foreign bribery laws to bring them further in line with the United States and United Kingdom, potentially facilitating further anti-corruption enforcement. The proposed Foreign Bribery Bill would (i) amend the offense of bribery of a foreign public official to extend to foreign candidates for office; (ii) remove the requirement that the foreign official must be influenced in the exercise of his duties; (iii) replace the requirement that a benefit be “legitimately due” with the requirement that it “improperly influence” a foreign official; (iv) extend the offense to cover bribery to obtain a personal advantage; and (v) create a new offense for failure of a corporate body to prevent foreign bribery by an associate. The Foreign Bribery Bill would also implement a federal Deferred Prosecution Agreement (DPA) regime, which would allow the government to negotiate with corporations that engaged in serious corporate crime to comply with specific conditions, especially if the corporation takes the initiative to report its bribery offenses. The Australian Senate recommended that the Bill be passed and recommended that the government include internal corporate whistleblowing systems as part of any recommended guidance to corporations on how to prevent foreign bribery. These changes would bring Australia’s foreign bribery offense more in line with the FCPA and UKBA.

INTERNATIONAL LAW

World Bank Signals Importance of Cooperation and Voluntary Remedial Action

In April 2018, the World Bank announced the debarment—rendering a company ineligible to participate in World Bank-financed projects—of Africa Railways Logistics Limited (ARLL) for two years in connection with an employee’s alleged corrupt attempt to improperly influence the customs and port clearance process for trains on two projects in Kenya and Uganda. This was the first debarment related to an investment by the International Finance Corporation, the private-sector arm of the World Bank. The debarment is part of a settlement agreement in which ARLL acknowledged responsibility for the underlying conduct and agreed to specified corporate compliance requirements as a condition for release from debarment. Africa Railways Limited and Rift Valley Railways Kenya Limited, both of which are related to ARLL, were sanctioned with conditional non-debarment, which allows them to remain eligible to participate in World Bank projects, so long as they comply with their settlement

As part of efforts to improve enforcement of foreign corruption, several countries have recently considered adopting a version of a “deferred prosecution agreement” for corporate defendants. These agreements are viewed as important investigative tools because they can induce corporations to disclose wrongdoing and cooperate with investigations in exchange for avoiding criminal conviction and lesser fines. In 2018, Australia and Canada each moved toward adopting such schemes. The United States, United Kingdom, Argentina, France, and Singapore have now adopted some version of the deferred prosecution agreement.

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agreement obligations. In announcing the debarment, the World Bank emphasized that the companies benefitted from a reduced period of debarment in light of their cooperation and voluntary remedial actions.

OECD Reviews Switzerland and Poland’s Anti-Corruption Regimes

Since 2016, the Organization for Economic Cooperation and Development (OECD), an intergovernmental organization with 37 member countries, has placed increased emphasis on combatting corruption and promoting integrity in its member countries, striving to set and maintain anti-corruption standards among its member countries. As part of this process, the OECD has recently conducted substantive reviews of the anti-corruption policies in effect in its member countries.

In March 2018, for example, the OECD announced that it had completed its review of Switzerland and Poland’s enforcement of the OECD Anti-Bribery Convention. As to Switzerland, the OECD Working Group concluded that the country had “cracked down on the bribery of foreign public officials in recent years,” convicting six individuals and five companies and opening over 100 new investigations since 2012. The Working Group also praised Switzerland’s active cooperation with other countries in anti-corruption investigations and its efforts to seize and confiscate the proceeds of bribery. With respect to Poland, however, the Working Group stated that it was “disappointed” by Poland’s failure to implement key recommendations set out in its the OECD Anti-Bribery Convention and stated that Poland must strengthen its corporate liability regime, increase corporate fines, eliminate the application of the “impunity” provision in its Penal Code that allows bribe perpetrators to escape punishment through self-disclosure, and strengthen whistleblower protections.

ISRAEL

Israeli Company Teva Agrees to $22 million Fine in Israeli Following US Settlement Agreement

In January 2018, Israel-based Teva Pharmaceuticals, the world’s biggest manufacturer of generic drugs, reached an agreement with Israel’s Justice Ministry to pay $22 million in fines to resolve allegations that the company bribed government officials in Russia, Ukraine, and Mexico in order to increase sales of its drugs and influence the registration of certain products. Israeli

authorities opened an investigation into the conduct following the company’s $519 million settlement with DOJ and the SEC in December 2016. According to the Justice Ministry, its settlement was based on a number of considerations, including the fines the company paid in the US, the company’s cooperation with the investigation and implementation of an extensive compliance program, and the termination of the employees involved in the misconduct. Israeli authorities also took into account the company’s recent financial hardships.

Notably, the enforcement action against Teva was the second action under Israel’s foreign bribery statute since its enactment in 2008, and the first action that resulted in a conditional agreement. The use of a conditional agreement has similarities to a DPA in that in exchange for the settlement of criminal and civil charges without indictment, Teva paid a fine, admitted to certain facts, and agreed to cease any criminal conduct. Previously, Israeli authorities had only used conditional agreements in relation to smaller crimes, however, the use of a conditional agreement with Teva may indicate Israeli authorities’ increased willingness to use deferred or conditional prosecution agreements—similar to those used by the United States and the United Kingdom among other countries—in relation to large-scale corporate corruption investigations.

PERU

Peru Introduces Corporate Criminal Liability

On January 1, 2018, Peru’s Law 30424, which introduces corporate criminal liability for foreign and domestic bribery of public officials, went into effect. The law applies to all legal entities, whether public or private, foreign or domestic. Companies found guilty of violating the law may be fined, debarred from contracting with the government, suspended or prohibited from engaging in company activities, and dissolved. Companies may also be subject to civil damages arising from violations of the law. As in other countries, companies can mitigate responsibility through substantial cooperation, reparation, and the existence or implementation of an adequate compliance program. Peru passed the legislation as part of renewed anti-corruption efforts in connection with its efforts to become an OECD member.

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SINGAPORE

Singapore Passes Bill Allowing for Deferred Prosecution Agreements

In March 2018, Singapore passed the Criminal Justice Reform Bill, which significantly amended the country’s Criminal Procedure Code (CPC) and Evidence Act. For the first time, this legislation introduces a DPA as a tool for a corporation to resolve charges of corruption, receipt of stolen property, money laundering, and violations of the Singapore Securities and Futures Act. Under the terms of a DPA, similar to the procedure under US law, a corporation would avoid prosecution in return for agreeing to various conditions imposed upon it for a set period of time. The legislation provides that a DPA must be approved by Singapore’s High Court and must be fair, reasonable, and in the interests of justice.

In permitting cases to be resolved by DPAs, Singapore joins the United States, the United Kingdom, Argentina, and France in the ranks of countries currently using DPAs, while Australia and Canada are actively considering introducing legislation providing for the use of this enforcement tool. Singapore’s DPA framework is most similar to the United Kingdom’s regime, which also requires that a court find that the DPA is in the interests of justice and is fair and reasonable. This stands in contrast to the United States, where DOJ alone controls the terms of a DPA. As in other countries, in Singapore, the terms of a DPA may include financial penalties, compensation to victims, the imposition of corporate monitor, a prohibition on criminal activity during the DPA’s term, and requirements to enhance internal controls and compliance programs. To be considered for a DPA in Singapore, corporations are expected to self-report wrongdoing and fully cooperate with investigative authorities.

The passage of the crime bill comes on the heels of the first global corruption resolution involving US and Singapore authorities and may signal increased scrutiny on corporate conduct in Singapore. In that case, Keppel Offshore & Marine Ltd. settled allegations that the company paid bribes to Brazil-owned oil company, Petrobas, with American, Brazilian, and Singaporean enforcement agencies simultaneously as a result of a joint investigation by those agencies and paid criminal fines of $106 million to the United States, $211 million to Brazil, and $106 million to Singapore.

SOUTH AFRICA

South Africa’s Public Corruption Scandal

Reports of public corruption have dominated headlines in the South African press over the past year, leading local and foreign authorities to open investigations. The recent focus on public corruption began with allegations about former President Jacob Zuma’s relationship with three prominent Indian-born businessmen, brothers Ajay, Atul and Rajesh Gupta, who allegedly used their relationship with Zuma and other officials to direct business to companies they own and to solicit improper payments from companies in return for their assistance in helping secure lucrative contracts with state-owned enterprises. The South African press and law enforcement began probing the Zuma-Gupta relationship in 2016 and ramped up the scrutiny in 2017, leading to Zuma’s resignation in February 2018. Cyril Ramaphosa, South Africa’s new president, has promised to conduct an expansive probe into corruption in South Africa’s public institutions and has launched a series of raids targeting the Guptas and their associates. Additionally, on March 16, 2018, South Africa’s National Prosecuting Authority charged Zuma with corruption, fraud, racketeering and money laundering for his alleged role in an earlier corruption scandal involving a 1999 arms deal.

As a result of these developments, foreign authorities, including in the United States and the United Kingdom, have opened their own investigations. In the United Kingdom, for example, the Financial Conduct Authority has announced that it is investigating possible money laundering by UK banks in connection with South African corruption. The FBI has opened a similar investigation into banks and individuals with ties to the alleged corruption. The South African government has signaled its intent to cooperate with foreign anti-corruption investigations.

For more on South African corruption issues see the recent article by Partners Nicholas R. Barnaby and David Lachman, “Is South Africa the New Brazil?”

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MAP OF OUR WORLDWIDE ANTI-CORRUPTION REPRESENTATIONS

JENNER & BLOCK’S ANTI-CORRUPTION EXPERIENCE

Jenner & Block has a leading FCPA and anti-corruption practice representing global companies in all phases of compliance with the FCPA, the UK Bribery Act, and other anti-corruption laws, from internal investigations and negotiations with the United States and other governments to development of internal controls, training, and compliance counseling. We offer clients a wealth of experience, with two former US Attorneys, the former Associate Attorney General (the third-ranking official in the US Department of Justice), the former Principal Deputy Assistant Attorney General of the Criminal Division, former criminal division and assistant United States attorneys from jurisdictions throughout the country, the former Associate Director of the SEC’s Division of Enforcement, and other former SEC enforcement attorneys. As a group, our lawyers have represented many dozens of companies in FCPA and anti-corruption matters of all types.

The hallmark of a strong anti-corruption practice is helping clients stay out of trouble in the first place. Our lawyers have developed anti-corruption compliance programs for major multinational companies across numerous sectors of the economy, including, among others, defense, financial institutions, oil and gas, media, government contractors of all kinds, and retail establishments. We have provided training to tens of thousands of corporate personnel as well as smaller businesses with fewer than 500 employees. Our FCPA team also brings to the table a nuanced understanding of the intersections of the FCPA with federal securities laws, Sarbanes-Oxley, Dodd-Frank, export control laws, government contracting obligations, and other anti-corruption laws, including the UK Bribery Act.

When issues arise, our clients benefit from Jenner & Block’s world-class reputation and skill in conducting internal investigations. Our range and depth of experience enables us to conduct internal investigations with care and rigor, ensuring that our clients have obtained the material facts and that the investigation will withstand the strictest of scrutiny by government enforcement agencies.

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