Tag: FCPA

Categories
This Week in FCPA

This Week in FCPA-Episode 147 – the Spring has Sprung edition

As the St. Patrick’s Day weekend is past and Spring has sprung all over Tom and Jay are back to take a look at some of this week’s top compliance and ethics stories which caught their collective eyes this week.

  1. What are some of the lessons for compliance professionals from the college admissions scandal? Bob Conlin and Carrie Penman lay them out in Navex’s Ethics and Compliance Matters. 
  2. How did the FCPA Corporate Enforcement Policy change for messaging apps? Nate Lankford and Dawn E. Murphy-Johnson spell it out for you in the FCPA Blog.
  3. What’s the difference between concurrent, consecutive and stacked? Sara Kropf explains it all her great blog, Grand Jury Target.
  4. Even the big dogs can be defrauded. Kristen Broughton reports on fraud which cost Google and Facebook over $100MM in the WSJ Risk and Compliance Journal.
  5. Training wheels will continue to be useful in the future. Ken Wielerstein explains in the Analysts Syndicate.
  6. The business response leads to better compliance through FinTech. Matthew Epstein and Robert Werner discuss in NYU’s Compliance and Enforcement Blog. Sonny Singh in Corporate Compliance Insights.
  7. Cyber breach disclosures are a mess. Matt Kelly reports in Radical Compliance.
  8. The Editor speaks on insider threats. Compliance Week Editor Dave Lefort discusses what he learned at Compliance Week West, in Compliance Week. (sub req’d)
  9. Jaclyn Jaeger looks inside the FBI Office of Integrity, in Compliance Week. (sub req’d)
  10. Following up on his blog post series on the MTS FCPA settlement, Tom moves to the audio format for a podcast series on the enforcement action.Check out the following: Part 1-background;Part 2-bribery schemes; Part 3– missed red flags; Part 4-the individual indictments; and Part 5-lessons learned. 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 Tuesday? Join Tom and Katie Smith at Convercent’s Roundtable Lunch. Registration and information are here. If you are not in Houston, then join Tom, Louis Sapirman and Katelyn Conlyn for a Convercent webinar on how to better engage with your employees. Registration and information for the webinar found here. Best of all, both events are FREE.
  12. Check out the latest edition of Popcorn and Compliancewhere Tom and Jay looked at Captain Marvel from the compliance perspective.
  13. Join Tom and AMI’s Jesse Caplan next week for a 5-part exploration of emerging issues in healthcare compliance and monitoring. The podcast will be available on multiple sites: the FCPA Compliance Report, iTunes, JDSupra, Panoply, YouTube, Spotify and Corporate Compliance Insights.

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.

Categories
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”
Categories
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“
Categories
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.
Categories
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“.

Categories
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.

Categories
Daily Compliance News

Daily Compliance News: March 12, 2019-the loonshot edition

MARCH 12, 2019 BY TOM FOX


In today’s edition of Daily Compliance News:

Categories
This Week in FCPA

This Week in FCPA-Episode 145 – Conferencing in America edition

Tom and Jay were both conferencing this week, albeit in different disciplines. Tom at Podfest Expo and Jay at the ABA White Collar Crime conference. In between they discussed some of this week’s top compliance and ethics stories which caught their collective eyes.

  1. MTS has massive FCPA resolution. Harry Cassin breaks the story in the FCPA Blog. See DOJ Press Release. See SEC Cease and Desist Order.
  2. CTFT to follow DOJ lead on enforcement and SEC lead on Whistleblowers. Dick Cassin reports in the FCPA Blog. See CTFT Press Release.
  3. Hacienda Healthcare is one of the worst corporate governance failures ever. Matt Kelly writes about it in Radical Compliance. Tom and Matt take a deep dive in Episode 113 of Compliance into the Weeds.
  4. Gulnara Karimova charged with conspiracy to commit money laundering in the whooping amount of $866MM. Harry Cassin reports in the FCPA Blog. See DOJ Press Release.
  5. Are consumers the new regulators of global business practices? Richard Young explores in the Navex Global’s Ethics and Compliance Matters
  6. Are Boards getting sufficient information on risk? Kristin Broughton reports in the WSJ Risk and Compliance Journal. Matt Kelly says compliance professionals can help in Navex Global’s Ethics and Compliance Matters.
  7. Is Baker MacKenzie in deep trouble over JBF bribery settlement? Former partner to be deposed over hire of Brazilian prosecutor. Michael Macagnone reports in Law360. The same partner left the firm to join Peirce Bainbridge, Clara Hudson reports in GIR. (sub req’d on both)
  8. Dutch prosecutors have told Shell the company will be criminally indicted over its role in obtain drilling rights in Nigeria. Chloe Taylor reports in CNBC.com.
  9. Jay begins a new role as a Featured Columnist on Corporate Compliance Insights. Check out CCI’s cool new look. (Interview with CCI’s new EIC Sarah Haddon next week).
  10. Rod Rosenstein says farewell to the compliance community. Text of Rosenstein speech here.
  11. Tom returns his periodic podcast series the Opinion Release Papers, with a five-part offering this week. Check out the following: Part 1-Opinion Release 10-03 on charitable donations under the FCPA; Part 2-Opinion Release 10-02 on hiring foreign officials as agents; Part 3– Opinion Release 07-01, travel for foreign officials; Part 4-Opinion Release 07-02, travel for and entertainment of foreign officials; Part 5-Opinion Release 11-01, why should you use the process. The podcast is available on multiple sites: the FCPA Compliance Report, iTunes, JDSupra, Panoplyand YouTube. The Compliance Podcast Network is now also on Spotify. It is now also on Corporate Compliance Insights.

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.

Categories
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.

Categories
Everything Compliance

Everything Compliance-Episode 42, the Cohen Testifies edition-Part 1

Welcome to the only roundtable podcast in compliance. This episode is Part 1 of a special two-part episode. Today, in Episode 42 Mike Volkov and Jay Rosen sound off. Next week, in Episode 43 Jonathan Armstrong and Matt Kelly weigh in on issues that are on their collective minds. Shout outs (but no rants) follow this episode only after the commentators say their peace.

  1. Mike Volkov uses the Cohen testimony to the House Oversight Committee to explain the process of Congressional oversight, including how a company or witness is called to testify, the testimony preparation process and the testimony process. Volkov then flips it around to evaluation the questioning and interrogation style of the Representatives. Volkov gives his first ‘in-anticipation’ shout out to OFAC who is coming out with its recommendations on a best practices compliance program.
  2. Jay Rosen talks about the DOJ focus on new industries for FCPA investigations including Major League Baseball teams and universities and colleges. Jay shouts out to the podcast “The Dropout” which tells the tale of disgraced and fallen Theranos founder, Elizabeth Holmes.
  3. Next week Jonathan Armstrong will discuss the UK Serious Fraud Office’s conclusion of its investigation into the individuals at Rolls Royce and GSK. Jonathan shouts out to the Dutch anti-corruption investigators and enforcers who have recently increased not only their collective vigilance but their investigations and prosecutions.
  4. Next week, Matt Kelly will consider the continued taunting tweets from Elon Musk, the SEC’s request for a federal court to hold Musk in contempt from his prior SEC settlement over the ‘funding secured’ tweet and what all this may mean for the SEC going forward. Matt shouts out to Lyft and Uber who are offering list price stock to a select group of long-time employees in their respective IPO debuts.

The members of the Everything Compliance panelist are:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Mike Volkov– One of the top FCPA commentators and practitioners around and the Chief Executive Officer of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly– Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong– Rounding out the panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com

The host and producer (and sometime panelist) of Everything Compliance is Tom Fox the Compliance Evangelist. Everything Compliance is a part of the Compliance Podcast Network.
For additional reading see: David Chaikin and Kurt Wolfe’s article in Law360, entitled, “Potential New FCPA Enforcement Targets Come Into Focus”.
Check out the podcast from Jay’s shout out, The Drop Out.