Tag: Mike Debernardis

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The Corruption Files

The Corruption Files: Lockheed and Birth of The FCPA

What is stranger than fiction? In the stories of worldwide corruption in this podcast series, co-hosts Tom Fox, the Voice of Compliance and Mike DeBernardis, partner at Hughes Hubbard discuss some of the most audacious corruption cases in anti-corruption enforcement.

More importantly, they will discuss the lessons learned on what your organization can do to prevent running a foul of international anti-bribery laws.

In this first episode of Season 2, Tom and Mike review the Lockheed corruption scandal, which led directly to the passage of the FCPA.

The discussion covers the significant bribery and corruption charges that led to the creation of the Foreign Corrupt Practices Act (FCPA). The hosts explore the international political fallout from the scandal, its impact on various countries, including Japan, Italy, and the Netherlands, and the consequences for Lockheed.

The episode highlights how the case influenced the development of anti-bribery laws worldwide and the roles played by figures like Stanley Sporkin in shaping these regulations. The conversation also touches on the ongoing challenges in combating corruption in the aerospace industry and its global implications.

Key Highlights:

  • The Lockheed Scandal: An Overview
  • High-Level Corruption and Its Unveiling
  • International Repercussions of the Lockheed Scandal
  • The Birth of the FCPA
  • Modern Implications and Compliance

Resources:

Mike DeBernardis on LinkedIn

HughesHubbardReed

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

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Everything Compliance - Shout Outs and Rants

Everything Compliance: Episode 135 – Shout Outs and Rants

Welcome to the only roundtable podcast in compliance as we celebrate our second century of shows.

In this episode, we have the septet of shout-outs and rantors; Jonathan Marks, Matt Kelly, special guests Karen Moore and Mike DeBernardis, all hosted by Tom Fox.

1. Matt Kelly praises the Supreme Court for upholding the constitutionality of the CFPB’s rants about right-wing radicals trying to destroy democratic institutions through the courts.

2. Guest Panelist Karen Moore sends sympathies to all those who have experienced flooding and shouts out to two Brazilian rowers, Evaldo Mathias Becker and Piedro Tuchtenhagen, who gave up on their Olympic dreams to stay in their home state of Rio Grande do Sul after heavy rains devastated the state.

3. Jonathan Marks shouts out to Dylan Beard, a Walmart deli worker who qualified for spot at the U.S. Olympic track and field trials in June in the hurdles. As an unsponsored athlete, his employer, Walmart, presented him with a check for $20,000 so his friends and family could support him as he made his way to the Olympic trials.

4. Special Guest Panelist Mike DeBernardis shouts out to the Washington Commanders for some long-awaited sanity with the club’s new owners.

5. Host Tom Fox shouts out to the City of Louisville for the bookend of Sydney Thomas saving lives and arresting the World’s Number 1 golfer, Scottie Scheffler, while driving on his way to the PGA Golf Tournament at Valhalla Country Club.

The members of the Everything Compliance are:

• Jay Rosen – Jay can be reached at Jay.r.rosen@gmail.com

• Matt Kelly – Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com

• Jonathan Armstrong – is our UK colleague and an experienced data privacy/data protection lawyer in London. He can be reached at windyridgehouse@gmail.com.

• Jonathan Marks can be reached at jtmarks@gmail.com.

• Special Guest Karen Moore can be reached at Kmoore51@fordham.edu

• Special Guest Mike DeBernaris can be reached at the law firm’s website, www.hugheshubbard.com/.

The host, producer, and ranter (and sometimes panelist) of Everything Compliance is Tom Fox, the Voice of Compliance. He can be reached at tfox@tfoxlaw.com. Everything Compliance is a part of the Compliance Podcast Network.

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All Things Investigations

All Things Investigations: Compliance Lessons from Gunvor and Trafigura Enforcement Actions

Welcome to the Hughes Hubbard Anti-Corruption & Internal Investigations Practice Group’s podcast, All Things Investigation. In this podcast, I joined by Mike DeBernardis to mine compliance lessons from the recently announced Gunvor and Trafigura FCPA enforcement actions.

Mike DeBernardis is a seasoned professional with a comprehensive understanding of FCPA enforcement actions and compliance matters, a perspective deeply informed by his numerous client advisory roles on self-disclosure decisions related to FCPA violations and his regular participation in industry discussions.

DeBernardis believes that FCPA enforcement actions are increasingly considering past misconduct as a determinant in assigning penalties and discounts. He underscores the necessity for companies to be proactive and innovative in their remediation efforts rather than simply adhering to minimal compliance standards. He also notes a decrease in the reliance on external monitors in FCPA resolutions, potentially due to businesses taking more initiative in improving their compliance programs and directly reporting to the DOJ.

In DeBernardis’ view, the Department of Justice’s approach to FCPA enforcement is dynamic and adaptive, with companies helping shape best practices through their communication with outside counsel and the DOJ itself.

Key Highlights:

  • Impact of Self-Disclosure on FCPA Penalties
  • DOJ’s Quantifiable Self-Disclosure Benefits in FCPA
  • Cross-Regional Executives in Trafigura Bribery Scheme
  • Innovative Risk Mitigation Strategies in FCPA
  • Rewarding Compliance Efforts in Energy Trading

Resources:

Hughes Hubbard & Reed website

Mike DeBernardis

Categories
All Things Investigations

All Things Investigations – Mike DeBernardis on The SAP Enforcement Action

Welcome to the Hughes Hubbard Anti-Corruption & Internal Investigations Practice Group’s podcast, All Things Investigation. In this podcast, I was joined by HughesHubbardReed partner Mike DeBernardis to discuss the recently announced FCPA enforcement action involving SAP.

Mike DeBernardis is a seasoned expert in the field of FCPA enforcement, with a specific focus on SAP enforcement action and the critical role of compliance programs. Drawing from his extensive knowledge of corruption schemes in various countries and the role of third-party intermediaries in these activities, DeBernardis views the SAP enforcement action as a pivotal case study that underscores the importance of robust compliance programs and proactive remedial actions. He commends SAP for their significant investment in their compliance program and their willingness to alter their business practices, such as severing certain third-party relationships and high-risk conduct. DeBernardis believes these actions reflect a commitment to business integrity and serve as a valuable lesson for companies navigating complex investigations. Join Tom Fox and Mike DeBernardis as they delve deeper into this topic on this episode of All Things Investigations.

Key Highlights:

  • SAP’s Corrupt Third-Party Intermediaries and Enforcement Action
  • The Power of Cooperation and Remediation
  • DOJ’s Emphasis on Cooperation and Technology

Resources:

Hughes Hubbard & Reed website

Mike DeBernardis on LinkedIn

Categories
The Corruption Files

Episode 14 – Walmart with Tom Fox and Michael DeBernardis

Rapid expansion presents great opportunity and great risk.

Tom Fox and Michael DeBernardis go deep into the Walmart bribery case, why immediate cooperation matters, tips for companies to prevent similar problems, the best course of action when working internationally, and projecting risk regardless of industry.

▶️ The Walmart Enforcement action with Tom Fox and Michael DeBernardis. 

Key points discussed in the episode:

  1. Tom Fox lays out the facts of the Walmart case. Michael points out how prevention could have saved millions of investigation costs.
  2. Rapid expansion presents great opportunity and risk. Tom emphasizes that extensive remediation and cooperation can bring significant credit.
  3. Michael explains Walmart’s underwhelming conduct. Tom brings up the congressional investigation, leader exits, and the business implications of publicizing.
  4. Michael shares his advice to avoid Walmart’s case – setting realistic and proper incentives. He also provides hypothetical counsel if he could work with Walmart when the issue broke out.
  5. Michael highlights the importance of timeliness, engaging with regulators as early as possible, and providing FCPA training when asked.

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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
The Corruption Files

Episode 13: Avon China Bribes

When beauty company Avon Products Inc. was charged in 2014 with violating the Foreign Corrupt Practices Act (FCPA) due to failure to detect and prevent bribery acts happening in China, they settled for ten times more than the cost they paid for in “gifts.”

Today, the FCPA investigation and enforcement action still stand as one of the most interesting cases for companies and compliance professionals to learn much from.

Tune in to this new episode of The Corruption Files — The Avon China Bribes with Tom Fox and Michael DeBernardis.

Key points discussed in the episode:

  1. Tom Fox shares the background facts on such an “insane case,” with the investigation almost as interesting and important as the resolution.  
  2. Michael DeBernardis states that Avon China Bribes the grandfather case for a couple of other similar FCPA cases. 
  3. The internal audit department identified this issue of paying gifts and recommended FCPA training for the team, which did not push through due to the lack of budget.
  4. In-fighting or territoriality is not surprisingly uncommon at big companies, leading to compliance and corruption problems. 
  5. Tom cites how in 2012, the government became so frustrated with Avon that they started issuing grand jury subpoenas for individuals. 
  6. A key part of the corporate process is to have systems that talk to each other. And if you don’t, the costs can be astronomical. 
  7. Avon’s $8 million in bribes led to $500 million in pre-settlement costs, $135 million in settlement costs, and $250 million in post-settlement resolutions.  
  8. Tom reminds companies that if there’s a potentially high reward, it generally means there’s a high risk.
  9. Michael emphasizes that Compliance budgets can be tight, but skipping small training can catch up with you in the long run. 

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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

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The Corruption Files

Episode 06: The Instrumentality Ruling of United States v. Esquenazi

Welcome to another episode of The Corruption Files!

Tom Fox and Michael DeBernardis explore their biggest takeaways from the appeal of the conviction of former Terra Telecommunications Corp. executive Joel Esquenazi. He and other involved parties were proven to pay bribes to Haitian government officials in a grand scheme. The case remains an example of a significant conclusion from a defense involving the FCPA.

▶️ The Instrumentality Ruling of United States v. Esquenazi with Tom Fox and Michael DeBernardis

Key points discussed in the episode:

✔️ The Esquenazi decision is vital in providing clear guidance for businesses to design robust compliance programs to address corruption, avoid making grease payments to foreign government officials, and remove the temptation to cull business favors and advantages for their company.

✔️ Companies doing business abroad should never forget the learnings from the Esquenazi decision in 2014. Following the conclusion of the Court of Appeals was identifying ownership and financial control to decipher the “instrumentalities” of foreign governments and to correctly identify that there were no red flags for FCPA compliance.

✔️ The 11th Circuit Court of Appeals’ opinion clarifies how a two-part test is crucial in determining the “instrumentality” of an employee, officer, agency, or department as an entity of foreign governments. The elements of “control” and “function” served as the two prongs that the US Court of Appeals for the Eleventh Circuit made in its decision for Esquenazi and the others involved in the case.

✔️ A key indicia of a governmental entity is it doesn’t have to make a profit. Think about the United States Postal Service — today; it still stands as a government service. Everyone uses it — and we don’t want it to go away even if it doesn’t make a profit. Indeed, non-earning can be the biggest indicator if you assess what constitutes any employee, officer, agency, or department as an “instrumentality” of foreign governments where clients are conducting business.

✔️ United States v. Esquenazi is a well-settled FCPA case that didn’t go to the U.S. Supreme Court. The Esquenazi decision is a significant case law that came out of a defense trial with the defendant paying heavily and sentenced to prison for 15 years — a landmark decision that remains relevant today.

✔️ Key lessons learned from United States v. Esquenazi:

1. Ownership/Financial Control – There is no percentage amount listed, but the inclusion of financial control would indicate that anything over 50% would be a significant factor.

2. Actual control is key in all three court decisions. In Lindsey and Esquenazi, it is characterized as the government’s right to appoint key officers and directors. In Carson, it is called government control. But this means that if the government exercises actual control, it may trump the 50% guidance stated above.

3. Privileges and Obligations are also mentioned in all three. Does the entity have the right to control its functions?

4. Financing – Is the entity a for-profit entity financed through its revenues, or does it depend on financing by its government?

5. Perception is Reality – André Agassi’s immortal words appear again. If it is widely perceived as providing an official function, it is an instrumentality under the FCPA.

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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

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The Corruption Files

Hiring in the Financial Space

Welcome to another episode of The Corruption Files!

Thomas Fox and Michael DeBernardis discuss questionable hiring practices from JP Morgan, Credit Suisse, and Bank of New York (BNY) Mellon in employing relatives of high-profile clients to gain favor. They also discuss how companies can find a middle ground in hiring families, why Hiring can be a high-risk area, preventative questions to avoid a violation, and the significance of internal control and documentation.

▶️ Hiring in the Financial Space with Thomas Fox and Michael DeBernardis

Key points discussed in the episode:

✔️ Thomas Fox gives a brief background on the BNY Mellon case.

✔️ Michael DeBernardis mentions how Hiring based on connections has existed for a long time and doesn’t directly violate any laws. It’s all up to a company’s intent. For BNY Mellon, it was to maintain close connections with major clients. He recommends compliance professionals look into their company’s hiring process.

✔️ Hiring unqualified people means you’re hiring them for other reasons. JP Morgan took in ineligible candidates for leverage with high-profile clients and free advertising in their respective home countries. Documentation stopped JP Morgan in its tracks.

✔️ JP Morgan structured hiring program managed to override compliance controls, revealing regulation flaws. Being discovered next to BNY Mellon’s case, it was not the last instance of son-and-daughter corruption.

✔️ Thomas Fox retells the Credit Suisse case. Retracing the company’s spreadsheets revealed their inner workings.

✔️ The risk of hiring relatives can be minimized when there is a middle ground. Thomas Fox shares questions to ask to prevent violations. He also adds strengthening internal control can put a company on the good side of regulators.

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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
The Corruption Files

Uncovering the Hidden Schemes in Pharma with Tom Fox and Michael DeBernardis

Thomas Fox and Michael DeBernardis shed light on the bribery schemes highlighted in the cases of Eli Lilly, Fresenius, and Teva and present the prosecutorial investigation, the questionable donations and expenses, preventative measures for companies to implement, and practicing due diligence to minimize risk.

Key points discussed in the episode:
✔️ Thomas Fox introduces the cases involving Eli Lilly, Fresenius, and Teva.
✔️ Michael DeBernardis breaks down the DOJ and SEC’s investigative process in uncovering Eli Lilly’s bribery schemes – by looking into other companies from similar industries and asking the pressing questions.
✔️ Thomas Fox describes the bribes made: money going to hospitals and to the doctors and nurses directly, sending individuals to five-star resorts for fake conferences and speeches, and paying for articles that were never published. Any prior SCC reinforcement action is already a red flag.
✔️ The Eli Lilly case has made companies warier of working with government officials as a Polish state-owned health organization was involved. Also, the intent of the fraudulent talks and events was fairly obvious from a prosecutorial perspective.
✔️ Michael DeBernardis and Thomas Fox share advice on how companies should approach charitable donations: Know where your money is going, do background checks on the receiving organization and publicize all donations.
✔️ Eli Lilly’s exceeding discount for a certain distributor was pushed to the spotlight. Overriding internal controls requires documenting for a business reason. Most due diligence problems can be solved by looking closer at business justifications.

Categories
The Corruption Files

Energy Violations and the Panalpina Settlements with Thomas Fox and Michael DeBernardis

Thomas Fox and Michael DeBernardis discuss energy cases considered FCPA violations, highlighting Panalpina Settlement Day, the uncovered bribery methods, and its implications on the future of compliance, the written policies, and the solutions to commerce and transactions in higher-risk jurisdictions.

Key points discussed in the episode:
✔️ Tom Fox introduces the cases involving Shell, Transocean, Tidewater, Pride International, and Noble.
✔️ Michael DeBernardis describes the company’s methods as a hub-and-spoke arrangement and lays out the Department of Justice’s investigative process. The case has planted the seeds of the pilot program and corporate enforcement policy. The DOJ has become more deliberate in announcing settlements
✔️ Due diligence requires visibility across all aspects of the business. Thomas Fox shares a snippet of advice from a shipping company executive: “If you have a vendor with a 100% success rate, you have a problem.” Any business model based on bribery and corruption never ends well.
✔️ Panalpina’s methods were an open secret across other energy companies, designing ways to circumvent Nigerian customs. Monitoring during this time was less rigorous.
✔️ Due diligence is an ongoing process of improvement. High-risk jurisdictions for particular transactions are now thrown at the forefront.
✔️ Companies outside of the oil and gas industry have started to reconsider their strategies in high-risk areas. The solution is not to stop doing business completely but to work with companies that do compliance.
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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.