Tag: DOJ

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This Week in FCPA

This Week in FCPA-Episode 148 – the Hope Springs Eternal edition

As Opening Day near and the Astros are predicted to unseat Jay’s Red Sox to win the 2019 World Series, both lads are eternally hopeful for their hometown heroes. While debating this issue, they also take a look at some of this week’s top compliance and ethics stories which caught their collective eyes this week.

  1. Former Hong Kong official sentenced for FCPA violations. Harry Cassin reports in the FCPA Blog. Matthew Goldstein reports on how to reduce your FCPA sentence in the New York Times.
  2. SEC awards two whistleblowers $50MM. Kristin Broughton in the WSJ Risk and Compliance Journal. Matt Kelly takes a deep dive in Radical Compliance. Doug Cornelius gets snarky in Compliance Building. Jonathan Marks weighs in on Board and Fraud.
  3. Jonathan Ruschand William Weaver debate whether corruption can be measured. Both on the FCPA Blog.
  4. Was it fraud or was it incompetency? The HP v. Autonomy civil trial begins in London. The BBC
  5. What is the difference in whistleblowing and extortion? Joe Mont explains in Compliance Week. (sub req’d)
  6. What are your supply chain risks? Russ Berland explores in Part 1 of a two-part blog post series on Corporate Compliance Insights.
  7. Looking at enforcement of financial market crimes in Canada and UK. Anita Anand reports in NYU’s Compliance and Enforcement Blog.
  8. What steps can you take to reduce whistleblower retaliation? Matt Kelly opines in Navex Global’s Ethics and Compliance Matters
  9. OECD slams Canadian government for interfering in SNC-Lavalin corruption investigation. Jonathan Rausch reports in Dipping Through Geometries.
  10. Join Tom and AMI’s Jesse Caplan for a 5-part exploration of emerging issues in healthcare compliance and monitoring. Check out the following: Part 1-Opioid Crisis-Legal issue; Part 2– Opioid Crisis-compliance solution; Part 3– the regulators; Part 4-the monitoring healthcare organizations; and Part 5-proactive monitoring. The podcast is available on multiple sites: the FCPA Compliance Report, iTunes, JDSupra, Panoplyand YouTube. The Compliance Podcast Network is now also on Spotifyand Corporate Compliance Insights.
  11. In Houston on April 11? Join the Greater Houston Business and Ethics Roundtable for a presentation for one year look back on GDPR. Registration and information are here.
  12. Check out the latest edition of Great Women in Compliance where Mary Shirley visits with Marianne Ibrahim.

Tom Fox is the Compliance Evangelist and can be reached at tfox@tfoxlaw.com. Jay Rosen is       Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

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FCPA Compliance Report

MTS Foreign Corrupt Practices Act Enforcement Action: Part V – Lessons Learned

We are on Episode V of a five-part exploration of the recent the Department of Justice and Securities Exchange Commission resolution of a Foreign Corrupt Practices Act enforcement action against the Russian telecom company, MTS. In this episode,  I conclude with the lessons learned for the compliance professional. Today we focus on four key lessons: (1) due diligence, (2) business justification, (3) business valuation and (4) the long road of bribery.
The documents which are the subject of this series are:
  1. MTS Deferred Prosecution Agreement (DPA);
  2. MTS Criminal Information (MTS Information);
  3. SEC Cease and Desist Order (Order);
  4. Karimova and Akhmedov Indictment (Indictment);
  5. Kolorit Dizayn Ink LLC Plea Agreement (Plea Agreement); and
  6. Kolorit Dizayn Ink Information (Kolorit Information);
  7. DOJ Press Release and
  8. SEC Press Release.
For additional reading see the blog post, “MTS FCPA Settlement and Karimova Indictment: Part V – Lessons Learned”
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FCPA Compliance Report

MTS Foreign Corrupt Practices Act Enforcement Action: Part IV – the Individual Indictments

We are on Episode IV of a five-part exploration of the recent the Department of Justice and Securities Exchange Commission resolution of a Foreign Corrupt Practices Act enforcement action against the Russian telecom company, Mobile TeleSystems PJSC (MTS). In this episode,  I look at the individual indictments, which charged Gulnara Karimova, daughter of the former President of Uzbekistan, with one count of conspiracy to commit money laundering and Bekhzod Akhmedov, a former MTS executive based in Uzbekistan with FCPA violations of one count of conspiracy to violate the FCPA, two counts of violating the FCPA, and one count of conspiracy to commit money laundering.
The indictment discussed the three companies who paid bribes to Karimova, who then laundered the money on the international stage. They were VimpelCom Ltd. (now VEON Ltd.), Telia Company AB (formerly TeliaSonera AB) (Telia) and MTS. The schemes Karimova used were so similar as to be almost identical. The only thing that changed was the name of the company she was shaking down money from in her march towards receiving over $1 billion in ill-gotten payments.
The documents which are the subject of this series are:
  1. MTS Deferred Prosecution Agreement (DPA);
  2. MTS Criminal Information (MTS Information);
  3. SEC Cease and Desist Order (Order);
  4. Karimova and Akhmedov Indictment (Indictment);
  5. Kolorit Dizayn Ink LLC Plea Agreement (Plea Agreement); and
  6. Kolorit Dizayn Ink Information (Kolorit Information);
  7. DOJ Press Release and
  8. SEC Press Release.
For additional reading see the blog post, “MTS FCPA Settlement and Karimova Indictment: Part IV – the Individual Indictments“
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FCPA Compliance Report

MTS Foreign Corrupt Practices Act Enforcement Action: Part III – Missed Red Flags and Overridden Controls

In a stunning resolution to one of the longest running bribery, corruption and money-laundering sagas on the international stage, the Department of Justice and Securities Exchange Commission both announced settlement of a Foreign Corrupt Practices Act (FCPA) enforcement action against the Russian telecom company, Mobile TeleSystems PJSC (MTS). This podcast continues a five-part series will examine the background facts of the case, provide a detailed review of the bribery schemes involved, the compliance failures of MTS and its actions during the investigation which contributed to the size of the penalty, the individual criminal prosecutions brought by the Department of Justice as a part of this action and the key lessons learned by the compliance practitioner. In this Part 3, I discuss the failures in the MTS compliance regime, the override of internal controls and local business unit management actions which facilitated the bribery schemes.
The schemes involved:
a. Purchase of entities controlled by or through Karimova;
b. Purchase of telecom licenses at inflated prices; and
c. Fraudulent charitable donations.
The documents which are the subject of this series are:
  1. MTS Deferred Prosecution Agreement (DPA);
  2. MTS Criminal Information (MTS Information);
  3. SEC Cease and Desist Order (Order);
  4. Karimova and Akhmedov Indictment (Indictment);
  5. Kolorit Dizayn Ink LLC Plea Agreement (Plea Agreement); and
  6. Kolorit Dizayn Ink Information (Kolorit Information);
  7. DOJ Press Release and
  8. SEC Press Release.
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FCPA Compliance Report

MTS Foreign Corrupt Practices Act Enforcement Action: Part II-the Bribery Schemes

In a stunning resolution to one of the longest running bribery, corruption and money-laundering sagas on the international stage, the Department of Justice and Securities Exchange Commission both announced settlement of a Foreign Corrupt Practices Act (FCPA) enforcement action against the Russian telecom company, Mobile TeleSystems PJSC (MTS). This podcast continues a five-part series will examine the background facts of the case, provide a detailed review of the bribery schemes involved, the compliance failures of MTS and its actions during the investigation which contributed to the size of the penalty, the individual criminal prosecutions brought by the Department of Justice as a part of this action and the key lessons learned by the compliance practitioner. In this Part 2, I consider the bribery schemes used by MTS to pay the bribes and Karimova to receive the bribe payments.
The documents which are the subject of this series are:
  1. MTS Deferred Prosecution Agreement (DPA);
  2. MTS Criminal Information (MTS Information);
  3. SEC Cease and Desist Order (Order);
  4. Karimova and Akhmedov Indictment (Indictment);
  5. Kolorit Dizayn Ink LLC Plea Agreement (Plea Agreement); and
  6. Kolorit Dizayn Ink Information (Kolorit Information);
  7. DOJ Press Release and
  8. SEC Press Release.
For additional reading see the blog post, “MTS FCPA Settlement and Karimova Indictment: Part II – The Bribery Schemes“
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FCPA Compliance Report

MTS Foreign Corrupt Practices Act Enforcement Action: Part I-Introduction


In a stunning resolution to one of the longest running bribery, corruption and money-laundering sagas on the international stage, the Department of Justice and Securities Exchange Commission both announced settlement of a Foreign Corrupt Practices Act (FCPA) enforcement action against the Russian telecom company, Mobile TeleSystems PJSC (MTS). The FCPA enforcement action came in at $850 million which makes it Number 3 in the Top 10 of all-time FCPA settlements. This podcast opens a multi-part series will examine the background facts of the case, provide a detailed review of the bribery schemes involved, the compliance failures of MTS and its actions during the investigation which contributed to the size of the penalty, the individual criminal prosecutions brought by the Department of Justice as a part of this action and the key lessons learned by the compliance practitioner. In this Part 1, I begin with a review of the background facts, the parties and players and the fine and penalty of the MTS Foreign Corrupt Practices Act enforcement action.
The enforcement action was the third involving the same individual from the same country. That individual was Gulnara Karimova, the daughter of the former President of Uzbekistan. If that name sounds familiar to compliance professionals it is because she was also involved in the receipt of bribes paid in two other Top 10 FCPA enforcement actions; VimpelCom (now VEON Ltd.) and Telia Company AB. Contemporaneously with FCPA enforcement action involving MTS, there was a criminal indictment filed against Karimova and Bekhzod Akhmedov, a former MTS executive based in Uzbekistan. Akhmedov was charged with violating the FCPA for paying bribes to or for the benefit of Karimova and Karimova was charged she with laundering the money received as bribes.
The documents which are the subject of this series are:

  1. MTS Deferred Prosecution Agreement (DPA);
  2. MTS Criminal Information (MTS Information);
  3. SEC Cease and Desist Order (Order);
  4. Karimova and Akhmedov Indictment (Indictment);
  5. Kolorit Dizayn Ink LLC Plea Agreement (Plea Agreement); and
  6. Kolorit Dizayn Ink Information (Kolorit Information);
  7. DOJ Press Release and
  8. SEC Press Release.

For additional reading see the blog post, “MTS FCPA Settlement and Karimova Indictment: Part I-Introduction“.

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This Week in FCPA

This Week in FCPA-Episode 146 – Ides of March (formerly St. Patty’s Day) edition

On this Ides of March tAs the St. Patrick’s Day weekend is upon, and we are all Irish at least for a day, Tom and Jay are joined by our favorite Irishman (and the Coolest Guy in Compliance), Matt Kelly to take a look at some of this week’s top compliance and ethics stories which caught their collective eyes this week.

  1. Massive corruption scandal rocks college admissions across the country. Dana Goldstein and Jack Healy in the NYT. Douglas Belkin and Jennifer Levitz in the WSJ. Nick Anderson in the Washington Post.
  2. FARA, FARA, FARA. Katie Brenner in the NYT. Dan Packel in Law.com.
  3. Former KPMG national practice leader convicted in PCAOB scandal. Michael Rapaport reports in the Wall Street Journal.
  4. Will the US finally clamp down on shell companies? Matthew Stephenson is cautiously optimistic in the Global Anti-Corruption Blog. General David Petraeus and Sheldon Whitehouse explain why it’s a national security issue in an Op-Ed piece in the Washington Post.
  5. Head coaches behaving badly as LSU head basketball coach suspended indefinitely in NCAA recruiting scandal. Ross Dellenger reports in Sports Illustrated.
  6. DOJ quietly modifies Corporate FCPA Enforcement Policy. Clare Hudson and Adam Dobrik report in GIR. (sub req’d) DOJ policy of self-disclosure making headway. Mingqi Sun in the WSJ Risk and Compliance Journal.
  7. Did Oracle violate the FCPA? (Tech Central)
  8. 1MDB scandal back in the news as former Goldman Sachs banker Timothy Leissner and Roger Ng banned from banking industry for life. David Simpson reports in Law360. (sub req’d) Also-did Jho Low contribute to Trump campaign? Tom Wright and Bradley Hope in the Wall Street Journal.
  9. How can you engage a BOD on cyber risks? Deloitte’s Khalid Kark, Tonie Leatherberry and Debbie McCormack in the Harvard Law School Forum on Corporate Governance.
  10. Tom continues with fan fav podcast series this week, the Adventures in Compliance this week.Check out the following: Part 1-The Red Circle; Part 2-The Abbey Grange; Part 3– The Priory School; Part 4-The Six Napoleons; and Part 5-The Empty House. The podcast is available on multiple sites: the FCPA Compliance Report, iTunes, JDSupra, Panoply and YouTube. The Compliance Podcast Network is now also on Spotify. It is now on Corporate Compliance Insights.
  11. In a special guest segment, Matt Kelly reports on the highlights from Ethisphere’s Global Business Ethics Summit, which was held this past week in New York.
  12. Check out the latest edition of Popcorn and Compliance where Tom and Jay look at Captain Marvel. It posts Saturday, March 16 on the Compliance Podcast Network.

Tom Fox is the Compliance Evangelist and can be reached at tfox@tfoxlaw.com. Jay Rosen is       Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

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FCPA Compliance Report

Opinion Release Papers-07-02-Business Entertainment for Foreign Officials

In the second Opinion Release of 2007, 07-02, the Department of Justice (DOJ) considered another scenario where a US company desired to pay for travel to the US of foreign officials and for some business entertainment while these persons were in the US. It had some additional facts beyond those from Opinion Release 07-01 which are important for a compliance program.

Background
In Opinion Release 07-02 the Company desired to pay certain domestic expenses for a trip to the US by approximately six junior to mid-level officials of a foreign government for an educational program at the Requestor’s US headquarters prior to the delegates attendance at an annual six-week long internship program for foreign insurance regulators sponsored by the National Association of Insurance Commissioners (NAIC). The event was held at the Requestor’s US headquarters. The six officials have been selected by the foreign government, without the involvement of the Requestor.
The purpose of the trip was to familiarize the officials with the operation of a United States insurance company. The Requestor has no non-routine business pending before the foreign government agency that employs these officials. The sponsored training program will last for approximately six days (five days of training plus travel time). The Requestor paid the travel expenses where were limited to domestic economy class air travel to the Requestor’s U.S. headquarters. The Requestor paid for the domestic lodging, local transport, meals and incidental expenses (up to a modest set amount per day upon presentation of a receipt), and a modest four-hour city sightseeing tour for the six officials.
Requestor Representations
In Opinion Release 07-02 the representations made to the DOJ were as follows:

  • The US Company would not pay the travel expenses or fees for participation in the NAIC program.
  • The US Company had no “non-routine” business in front of the foreign governmental agency.
  • The routine business it did have before the foreign governmental agency was guided by administrative rules with identified standards.
  • The US Company would not select the delegates for the training program.
  • The US Company would only host the delegates and not their families.
  • The US Company would pay all costs incurred directly to the US service providers and only a modest daily minimum to the foreign governmental officials based upon a properly presented receipt.
  • Any souvenirs presented would be of modest value, with the US Company’s logo.
  • There would be one four-hour sightseeing trip in the city where the US Company is located.
  • The total expenses of the trip are reasonable for such a trip and the training which would be provided at the home offices of the US Company.

DOJ Response
As with Opinion Release 07-01, the DOJ ended this Opinion Release by stating, “Based upon all of the facts and circumstances, as represented by the Requestor, the Department does not presently intend to take any enforcement action with respect to the planned educational program and proposed payments described in this request. This is because, based on the Requestor’s representations, consistent with the FCPA’s promotional expenses affirmative defense, the expenses contemplated are reasonable under the circumstances and directly relate to “the promotion, demonstration, or explanation of [the Requestor’s] products or services.” 15 U.S.C. § 78dd-2(c)(2)(A).
Discussion
What can one glean from these two 2007 Opinion Releases? Based upon them, it would seem that a US company can bring foreign officials into the US for legitimate business purposes. A key component is that the guidelines are clearly articulated in a Compliance Policy. Based upon Releases Opinions 07-01 and 07-02, the following should be incorporated into a Compliance Policy regarding travel and lodging:

  • Any reimbursement for air fare will be for economy class.
  • Do not select the particular officials who will travel. That decision will be made solely by the foreign government.
  • Only host the designated officials and not their spouses or family members.
  • Pay all costs directly to the service providers; in the event that an expense requires reimbursement, you may do so, up to a modest daily minimum (e.g., $35), upon presentation of a written receipt.
  • Any souvenirs you provide the visiting officials should reflect the business and/or logo and would be of nominal value, e.g., shirts or tote bags.
  • Apart from the expenses identified above, do not compensate the foreign government or the officials for their visit, do not fund, organize, or host any other entertainment, side trips, or leisure activities for the officials, or provide the officials with any stipend or spending money.
  • The training costs and expenses will be only those necessary and reasonable to educate the visiting officials about the operation of your company.

Yet these are only the first steps. A company must train its employees not only the specifics of a gift, travel and entertainment program in a compliance program. Pre-travel and entertainment approval by your compliance function book-ended with post monitoring of all expenses should be documented in case the regulators ever come knocking.

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Everything Compliance

Everything Compliance-Episode 16, Review of Jesse Eisinger’s book, The Chickenshit Club

The Chickenshit Club by Jesse Eisinger may mean for the compliance practitioner. We consider the internal journey of the Department of Justice from their days of Enron, WorldCom, and Adelphia convictions to the 2008 financial crisis where no senior executives were prosecuted. A series of steps led to this change, and we discuss the key changes in the DoJ’s thinking. The book is a real page-turner, and our discussion reflects this. We believe that every compliance practitioner should read the book and understand its lessons from DOJ prosecution. Every compliance practitioner should read Eisinger’s book The Chickenshit Club. You can purchase a copy of the book The Chickenshit Club by clicking here.]]>

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Compliance Into the Weeds

Compliance into the Weeds – Episode 46 – The Potted Plant Edition

HSBC v. Moore

In this case, a federal district court had ordered the release of a redacted monitor’s report in the HSBC money-laundering Deferred Prosecution Agreement (DPA) based upon the request of an interested citizen. Both the Department of Justice (DOJ) and HSBC appealed the order, and the Court of Appeals supported their position in overturning the trial court’s decision. The case is about a hook, line, and sinker overturning of any trial court jurisdiction one can have. The district court tried to claim it did not have the same role as a “potted plant,” but the Court of Appeals left no doubt that is the only role it sees for any district court where a DPA is filed. We discuss the implications for the compliance practitioner, FCPA enforcement, and potential future changes. Are district court’s simply potted plants when it comes to DPA oversight?