Davis Polk & Wardwell LLP
2018 Mid-Year Review: Anti-Corruption Enforcement and Trends
July 19, 2018
CLE CREDIT AVAILABLE
Agenda
2
2018 Facts and Figures
DOJ/SEC Developments
Corporate Enforcement Policy Update
DOJ Policy Addressing “Piling On”
Recent Focus on M&A
Kokesh Update
Global Developments
Spotlight on China
Spotlight on Latin America
Areas to Watch
Presented by
3
Angela T. Burgess James W. Haldin Linda Chatman
Thomsen
Patrick S. SinclairAntonio J.
Perez-Marques
2018 Facts and FiguresCORPORATE ENFORCEMENT ACTIONS (AS OF JUNE 30)
5
43%
29%
14%
14%
Geography
Africa China & East Asia Europe Russia
15%
14%
14%43%
14%
Industry
Transportation & Logistics Entertainment & Aerospace
Real Estate Financial Services
Mining
Obama Administration vs. Trump AdministrationCORPORATE ENFORCEMENT ACTIONS (INAUGURATION – JUNE 30, 2010; JUNE 30, 2018)
6
18
12
1414
9
7
0
2
4
6
8
10
12
14
16
18
20
Companies Involved DOJ Actions SEC Actions
Corporate Enforcement Resolutions Obama Trump
1 Resolutions involving subsidiaries are not counted separately from parent companies.
DOJ/SEC DevelopmentsCORPORATE ENFORCEMENT POLICY
7
What Constitutes Full Cooperation and Remediation?
COOPERATION
Disclose
Be Proactive
Collect and Preserve
De-Conflict
Make Available
REMEDIATION
Analyze
Implement
DisciplineRetain
Additional Steps
DOJ/SEC DevelopmentsDUN & BRADSTREET | APRIL 23, 2018
8
DOJ Declination: First Under Corporate Enforcement Policy
Factors: Self-disclosure, Cooperation, and Remedial Efforts
SEC Cease & Desist
Total penalty: $9.2 million
$6,077,820$2,000,000
$1,143,664
Disgorgement Civil Penalty Interest
“DOJ/SEC DevelopmentsSOCIÉTÉ GÉNÉRALE | JUNE 4, 2018
9
Paid bribes to receive transactions from Libyan state-owned financial institutions using a Libyan broker.
“This is the first coordinated resolution with French authorities in a foreign bribery case.
- DOJ
SocGen PNF$292.8MDOJ $292.8M
POST-ACQUISITION
Voluntarily Disclose
Conduct Post-
Acquisition Due
Diligence
Implement Compliance
Program
DOJ/SEC DevelopmentsM&A RISK-BASED DUE DILIGENCE AND DISCLOSURE
10
PRE-ACQUISITION
Conduct Due
Diligence
Ensure Acquiring
Company’s Compliance
Train Employees
Conduct FCPA-specific Audit
Disclose
DOJ/SEC DevelopmentsCREDIT SUISSE | JULY 5, 2018
11
Hired, promoted, and
retained candidates
referred by, related to,
or otherwise connected
with clients, potential
clients, and
government officials as
part of quid pro quo to
secure business.
$24.99M
$4.83M
Disgorgement
PrejudgmentInterest
$29.82M
$47.03M
Credit Suisse AG Credit Suisse Hong Kong
DOJ SEC
Penalty
DOJ/SEC DevelopmentsKOKESH UPDATE
12
• In the year since the Kokesh decision, the Division of Enforcement has had to
forego over $800 million of disgorgement in both litigated and settled actions.
• “We are redoubling our efforts to uncover, investigate, and bring cases as
quickly as possible . . . . But no matter how quickly we work, it is likely that
Kokesh will have a significant impact on our ability to enforce the federal
securities laws and obtain recovery for harmed investors in long-running frauds.”
~ Testimony of Avakian and Peikin before House
Committee on Financial Services (May 16, 2018)
National Supervision
Commission(New Governmental Branch)
Spotlight on ChinaREORGANIZATION OF THE NATIONAL SUPERVISION COMMISSION
13
Communist PartyCentral Commission for
Disciplinary Inspection
Administrative BranchProcuratorate (Anti-Corruption
Investigation Functions)
Special status
through
Constitutional
Amendment
Public Personnel
Non-Compliance with
Law and Other
“Improper Conduct”
Interrogation,
Detention, Search
and Wiretap
Impact on Foreign Entities/Individuals
Wide concept of public personnel
Bribe giver
Legal Representation
Silent in National Supervision Law
Contrast with Criminal Procedure Law
Spotlight on China REORGANIZATION OF THE ADMINISTRATIVE BRANCH: SAMR
14
State Administration of Industry and Commerce
(SAIC)
Anti-Monopoly Departments of Ministry of Commerce
(MOFCOM) and National Development and Reform
Commission (NDRC)
China Food and Drug Administration (CFDA)
General Administration of Quality Supervision,
Inspection and Quarantine (GAQSIQ)
State
Administration
of Market
Regulation
(SAMR)
Spotlight on Latin AmericaMEXICO’S PRESIDENT-ELECT’S EFFECT ON ANTI-CORRUPTION EFFORTS
15
““Eradicating corruption and impunity will
be the mission of the new government.
Under no circumstances will the next
president of the Republic permit
impunity or corruption. Be warned that
whoever may be involved shall be
punished, no matter who they are,
including accomplices that are friends
and relatives.
- Andrés Manuel López Obrador
Areas to WatchPROLIFERATION OF DPA AUTHORITY
16
Canada
No DPAs have occurred under
the new regime at this time.
Unclear whether the
agreements, which have to be
approved by a court, will
receive significant judicial
scrutiny.
Singapore
The regime came into effect
on March 19, 2018, but no
DPA use yet.
The substantive corporate
criminal statute only allows
for recovery up to $100,000.
Switzerland, Poland, and
Australia
Considering adopting a DPA scheme
for enforcement.
Thank you!
17
For more information, please visit our FCPA webpage: https://www.davispolk.com/practices/litigation/anticorruption-and-fcpa/
Presenters
22
Angela T. Burgess
Angela is a partner in Davis Polk’s Litigation Department and co-chair of the firm's Global
Enforcement and Investigations Group. She has represented leading clients in some of the
most high-profile and complex white collar and regulatory matters in recent years. Her global
practice focuses on representing companies as well as individuals in matters involving
allegations of insider trading, violations of anti-bribery laws, money laundering, antitrust,
fraud, and other financial crimes. Angela also routinely advises boards of directors, audit
committees, and companies on corporate governance and compliance matters, including the
design of strategies, policies and procedures to mitigate risk.
James W. Haldin
James is counsel in Davis Polk’s Litigation Department and a member of the firm’s Global
Enforcement and Investigations Group. He represents financial institutions and other
multinational corporations in criminal, regulatory and internal investigations with a particular
focus on Foreign Corrupt Practices Act (FCPA) matters. He has conducted FCPA
investigations in Bangladesh, Brazil, China, Hong Kong, India, Mexico, Russia and the United
Kingdom for clients in a range of industries, including banking, life sciences and technology.
Presenters
23
Antonio J. Perez-Marques
Mr. Perez-Marques is a partner in Davis Polk’s Litigation Department and a member of the
firm’s Global Enforcement and Investigations Group and the firm’s Securities Litigation Group.
His government and internal investigations practice includes matters arising under the
Foreign Corrupt Practices Act (FCPA) and economic sanctions, as well as securities
enforcement. His civil litigation practice focuses on class action securities litigation and cross-
border matters, as well as M&A litigation and commercial disputes. He also has extensive
experience advising Spanish, Latin American and other foreign clients concerning U.S.
litigation matters, and domestic clients concerning overseas and cross-border disputes.
Patrick S. Sinclair
Patrick is a partner in our Litigation Department, resident in Hong Kong, and is a member of
the firm’s Global Enforcement and Investigations Group. Patrick has more than a decade of
experience representing U.S.-based and international corporations, audit committees, banks,
individuals, and the government in corporate criminal investigations. He regularly leads
internal investigations for multinational corporations in Asia, and has represented a number of
individuals in Asia who were the subject of inquiries from U.S. Attorneys’ Offices, the SEC,
CFTC, and other U.S. regulators. From 2007 to 2014, Patrick was a prosecutor in the U.S.
Attorney’s Office for the Eastern District of New York. He was appointed Deputy Chief of the
General Crimes Section in 2013.
Presenters
24
Linda Chatman Thomsen
Linda is a partner in Davis Polk’s Litigation Department and a member of the firm’s Global
Enforcement and Investigations Group. Linda practices in the firm’s Washington, DC office,
where she concentrates on matters related to the enforcement of the federal securities laws.
She returned to the firm after serving for 14 years in various positions within the SEC.
Linda joined the SEC staff in 1995 as Assistant Chief Litigation Counsel. In 1997, she was
named Assistant Director of the Enforcement Division. She became an Associate Director in
2000, Deputy Director in 2002, and was named Director of the Enforcement Division in 2005,
a position she held until 2009.