Save The Date
Deferred prosecution agreements, affirmative defenses, companies x, y, and z.
On a daily basis this site and - those who follow it - are, to use the analogy, generally focused on the trees. However, the trees are part of a vast forest.
Against the backdrop of aggressive enforcement of bribery and corruption laws worldwide, several basic questions remain unanswered, or at least subject to dispute.
It is these big-picture questions that will be the focus of an upcoming roundtable discussion ("Bribery - What is It, What Can Be Done, What Should Be Done, and How to Comply?") at International Law Weekend, an event presented by the American Branch of the International Law Association and the International Law Students Association. The roundtable will take place on Saturday, October 23 at 10:45 at Fordham University School of Law.
I am pleased to co-chair the panel along with Corinne Lammers (Paul, Hastings - see here). Other participants include: Bruce Bean (Michigan State College of Law - here), Daniel Chow (The Ohio State University College of Law - here), Elizabeth Spahn (New England College of Law - Boston - here), and Andy Spalding (Chicago-Kent College of Law - here).
See here for the full event schedule.
Friday Roundup
An FCPA investigation in the midst of a merger, a voluntary disclosure involving "minor" entertainment and gifts relating to a few "discrete transactions involving immaterial revenue," World Bank debarment, and the blogging life ... it's all here in the Friday roundup.
FCPA Investigation in the Midst of a Merger
In June, Spain-based Grifols, S.A. (a global healthcare company and leading producer of plasma protein therapies) and Talecris (a U.S.-based biotherapeutics products company) announced that they signed a definitive agreement by which Grifols will acquire Talecris. See here and here.
In the meantime, Talecris is conducting a mammoth FCPA internal investigation. Here is the lastest from the recent Form F-4 Registration Statement of Grifols.
"Talecris is conducting an internal investigation into potential violations of the FCPA that it became aware of during the conduct of an unrelated review. The FCPA investigation is being conducted by outside counsel under the direction of a special committee of the Talecris Board of Directors. The investigation into certain possibly improper payments to individuals and entities made after Talecris’ formation initially focused on payments made in connection with sales in certain Eastern European and Middle Eastern countries, primarily Belarus, Russia and Iran, but Talecris is also reviewing sales practices in Brazil, China, Georgia, Turkey and other countries as deemed appropriate."
"In July 2009, Talecris voluntarily contacted the U.S. Department of Justice, which is referred to as the DOJ, to advise them of the investigation and to offer its cooperation in any investigation that they want to conduct or they want Talecris to conduct. The DOJ has not indicated what action it may take, if any, against Talecris or any individual, or the extent to which it may conduct its own investigation. The DOJ or other federal agencies may seek to impose sanctions on Talecris that may include, among other things, injunctive relief, disgorgement, fines, penalties, appointment of a monitor, appointment of new control staff, or enhancement of existing compliance and training programs. Other countries in which Talecris does business may initiate their own investigations and impose similar penalties. As a result of this investigation, Talecris suspended shipments to some countries while it put additional safeguards in place. In some cases, safeguards involved terminating consultants and suspending relations with or terminating distributors in countries under investigation as circumstances warranted. These actions unfavorably affected revenue from these countries in 2009 and have an ongoing unfavorable impact on revenue in 2010. Talecris has resumed sales in countries where it has appropriate safeguards in place and is reallocating product to other countries as necessary. To the extent that Talecris concludes, or the DOJ concludes, that Talecris cannot implement adequate safeguards or otherwise need to change its business practices, distributors, or consultants in affected countries or other countries, this may result in a permanent loss of business from those countries. These sanctions or the loss of business, if any, could have a material adverse effect on Talecris or its results of operations."
What has the internal investigation cost thus far?
According to the same filing, approximately $12.9 million (see pg. 303).
The above was not the only FCPA disclosure news this week.
The Voluntary Disclosure Involving "Minor" Entertainment and Gifts Relating to a Few "Discrete Transactions Involving Immaterial Revenues"
Real estate is not generally thought of as an FCPA high-risk industry.
Yet, earlier this week CB Richard Ellis, a "global leader in real estate services" (see here), disclosed as follows in its 8-K:
"As a result of an internal investigation that began in the first quarter of 2010, the Company determined that some of its employees in certain of its offices in China made payments in violation of Company policy to local governmental officials, including payments for non−business entertainment and in the form of gifts. The payments the Company discovered are minor in amount and the Company believes relate to only a few discrete transactions involving immaterial revenues. Nonetheless, the Company believes that the payments may have been in violation of the U.S. Foreign Corrupt Practices Act or other applicable laws. Consequently, the Company voluntarily disclosed these events to the U.S. Department of Justice (the “DOJ”) and the Securities and Exchange Commission (the “SEC”) on February 27, 2010 and has continued to cooperate with both the DOJ and the SEC in connection with this
investigation. The Company engaged outside counsel to investigate these events and has implemented thorough remedial measures.
In addition, in the third quarter of 2010, the Company began another internal investigation, with the assistance of outside counsel, involving the use of a third party agent in connection with a purchase in 2008 of an investment property in China for one of the funds the Company manages through its Global Investment Management business. This investigation is ongoing and at this point the Company is unable to predict the duration, scope or results thereof. In light of the Company’s cooperation with the DOJ and the SEC as described above, the Company voluntarily notified both agencies of this separate internal investigation and will report back to them when the Company has more information."
One can perhaps understand a voluntary disclosure when the payments at issue involve suitcases full of cash to government officials to obtain or retain government contracts.
But a voluntary disclosure based on "minor" entertainment and gifts involving a "few discrete transactions involving immaterial revenues?"
Has it truly come to this rather than the company internally handling such "minor" "discrete transactions involving immaterial revenue" in an effective manner?
Did FCPA counsel advise the company that voluntary disclosure was necessary in this instance? Perhaps not necessary, but preferable? How would you handle this issue if you were the company's in-house counsel or on the company's board?
Interesting questions indeed.
For more on voluntary disclosure and the role of FCPA counsel see this prior post.
World Bank Debarment
The EU and US debarment directives and regulations may be "toothless," but the World Bank is in charge of its own debarment decisions when it comes to World Bank financed or executed projects.
A prior post (here) discussed the World Bank's debarment of Macmillan Limited and recently the World Bank announced (see here) that its Sanctions Board debarred "four companies and two individuals for fraudulent practices in projects in India and Afghanistan" following "inquiries by the World Bank's Integrity Vice Presidency (INT), which is responsible for investigating fraud and corruption in World Bank-financed projects."
According to the release:
"In India, the World Bank Group debarred Ambalal Sarabhai Enterprises Limited (ASE) and Chemito Technologies Pvt. Ltd. (Chemito) for having engaged in fraudulent practices relating to the Food and Drugs Capacity Building project. Both ASE and Chemito are ineligible to be awarded contracts under any Bank Group-financed or Bank Group-executed project or otherwise participate in the preparation or implementation of such projects for three years. The debarment may be reduced to two years if the companies put in place and implement effective corporate compliance programs."
"The third decision relates to fraudulent practices by Global Spin Weave Limited (GSW) and its Director Sudhir Agrawal. The company’s misconduct was substantiated in relation to three Bank-financed projects in India; namely: First Reproductive and Child Health Project, Second National HIV/AIDS Control Project and the Malaria Control Project. According to the Sanctions Board decision, GSW is ineligible to be awarded contracts under any Bank Group-financed or Bank Group-executed project or otherwise participate in the preparation or implementation of such projects for five years. The debarment may be reduced to four years if GSW puts in place and implements an effective corporate compliance program. Mr. Agrawal’s period of ineligibility is three years."
"In relation to the Urban Water Supply and Sanitation Project in Afghanistan, the Sanctions Board debarred Ronberg Gruppe LLC, AG (Ronberg) and its Director Nikolay V. Vakorin for having engaged in fraudulent practices. Ronberg and Mr. Vakorin are ineligible to be awarded contracts under any Bank Group-financed or Bank Group-executed project or otherwise participate in the preparation or implementation of such projects for three years."
The World Bank release notes that the above "cases are eligible for cross debarment under the April 2010 Agreement for Mutual Enforcement of Debarment Decisions entered into by the African Development Bank Group, Asian Development Bank, the European Bank for Reconstruction and Development, the World Bank Group and the Inter-American Development Bank Group." For more on that Agreement see here.
The Blogging Life
Interested in blogging?
See here for my recent interview with Jerod Morris of Corporate Compliance Insights. We also talk a bit about the FCPA!
A good weekend to all.
Deferred prosecution agreements, affirmative defenses, companies x, y, and z.
On a daily basis this site and - those who follow it - are, to use the analogy, generally focused on the trees. However, the trees are part of a vast forest.
Against the backdrop of aggressive enforcement of bribery and corruption laws worldwide, several basic questions remain unanswered, or at least subject to dispute.
It is these big-picture questions that will be the focus of an upcoming roundtable discussion ("Bribery - What is It, What Can Be Done, What Should Be Done, and How to Comply?") at International Law Weekend, an event presented by the American Branch of the International Law Association and the International Law Students Association. The roundtable will take place on Saturday, October 23 at 10:45 at Fordham University School of Law.
I am pleased to co-chair the panel along with Corinne Lammers (Paul, Hastings - see here). Other participants include: Bruce Bean (Michigan State College of Law - here), Daniel Chow (The Ohio State University College of Law - here), Elizabeth Spahn (New England College of Law - Boston - here), and Andy Spalding (Chicago-Kent College of Law - here).
See here for the full event schedule.
Friday Roundup
An FCPA investigation in the midst of a merger, a voluntary disclosure involving "minor" entertainment and gifts relating to a few "discrete transactions involving immaterial revenue," World Bank debarment, and the blogging life ... it's all here in the Friday roundup.
FCPA Investigation in the Midst of a Merger
In June, Spain-based Grifols, S.A. (a global healthcare company and leading producer of plasma protein therapies) and Talecris (a U.S.-based biotherapeutics products company) announced that they signed a definitive agreement by which Grifols will acquire Talecris. See here and here.
In the meantime, Talecris is conducting a mammoth FCPA internal investigation. Here is the lastest from the recent Form F-4 Registration Statement of Grifols.
"Talecris is conducting an internal investigation into potential violations of the FCPA that it became aware of during the conduct of an unrelated review. The FCPA investigation is being conducted by outside counsel under the direction of a special committee of the Talecris Board of Directors. The investigation into certain possibly improper payments to individuals and entities made after Talecris’ formation initially focused on payments made in connection with sales in certain Eastern European and Middle Eastern countries, primarily Belarus, Russia and Iran, but Talecris is also reviewing sales practices in Brazil, China, Georgia, Turkey and other countries as deemed appropriate."
"In July 2009, Talecris voluntarily contacted the U.S. Department of Justice, which is referred to as the DOJ, to advise them of the investigation and to offer its cooperation in any investigation that they want to conduct or they want Talecris to conduct. The DOJ has not indicated what action it may take, if any, against Talecris or any individual, or the extent to which it may conduct its own investigation. The DOJ or other federal agencies may seek to impose sanctions on Talecris that may include, among other things, injunctive relief, disgorgement, fines, penalties, appointment of a monitor, appointment of new control staff, or enhancement of existing compliance and training programs. Other countries in which Talecris does business may initiate their own investigations and impose similar penalties. As a result of this investigation, Talecris suspended shipments to some countries while it put additional safeguards in place. In some cases, safeguards involved terminating consultants and suspending relations with or terminating distributors in countries under investigation as circumstances warranted. These actions unfavorably affected revenue from these countries in 2009 and have an ongoing unfavorable impact on revenue in 2010. Talecris has resumed sales in countries where it has appropriate safeguards in place and is reallocating product to other countries as necessary. To the extent that Talecris concludes, or the DOJ concludes, that Talecris cannot implement adequate safeguards or otherwise need to change its business practices, distributors, or consultants in affected countries or other countries, this may result in a permanent loss of business from those countries. These sanctions or the loss of business, if any, could have a material adverse effect on Talecris or its results of operations."
What has the internal investigation cost thus far?
According to the same filing, approximately $12.9 million (see pg. 303).
The above was not the only FCPA disclosure news this week.
The Voluntary Disclosure Involving "Minor" Entertainment and Gifts Relating to a Few "Discrete Transactions Involving Immaterial Revenues"
Real estate is not generally thought of as an FCPA high-risk industry.
Yet, earlier this week CB Richard Ellis, a "global leader in real estate services" (see here), disclosed as follows in its 8-K:
"As a result of an internal investigation that began in the first quarter of 2010, the Company determined that some of its employees in certain of its offices in China made payments in violation of Company policy to local governmental officials, including payments for non−business entertainment and in the form of gifts. The payments the Company discovered are minor in amount and the Company believes relate to only a few discrete transactions involving immaterial revenues. Nonetheless, the Company believes that the payments may have been in violation of the U.S. Foreign Corrupt Practices Act or other applicable laws. Consequently, the Company voluntarily disclosed these events to the U.S. Department of Justice (the “DOJ”) and the Securities and Exchange Commission (the “SEC”) on February 27, 2010 and has continued to cooperate with both the DOJ and the SEC in connection with this
investigation. The Company engaged outside counsel to investigate these events and has implemented thorough remedial measures.
In addition, in the third quarter of 2010, the Company began another internal investigation, with the assistance of outside counsel, involving the use of a third party agent in connection with a purchase in 2008 of an investment property in China for one of the funds the Company manages through its Global Investment Management business. This investigation is ongoing and at this point the Company is unable to predict the duration, scope or results thereof. In light of the Company’s cooperation with the DOJ and the SEC as described above, the Company voluntarily notified both agencies of this separate internal investigation and will report back to them when the Company has more information."
One can perhaps understand a voluntary disclosure when the payments at issue involve suitcases full of cash to government officials to obtain or retain government contracts.
But a voluntary disclosure based on "minor" entertainment and gifts involving a "few discrete transactions involving immaterial revenues?"
Has it truly come to this rather than the company internally handling such "minor" "discrete transactions involving immaterial revenue" in an effective manner?
Did FCPA counsel advise the company that voluntary disclosure was necessary in this instance? Perhaps not necessary, but preferable? How would you handle this issue if you were the company's in-house counsel or on the company's board?
Interesting questions indeed.
For more on voluntary disclosure and the role of FCPA counsel see this prior post.
World Bank Debarment
The EU and US debarment directives and regulations may be "toothless," but the World Bank is in charge of its own debarment decisions when it comes to World Bank financed or executed projects.
A prior post (here) discussed the World Bank's debarment of Macmillan Limited and recently the World Bank announced (see here) that its Sanctions Board debarred "four companies and two individuals for fraudulent practices in projects in India and Afghanistan" following "inquiries by the World Bank's Integrity Vice Presidency (INT), which is responsible for investigating fraud and corruption in World Bank-financed projects."
According to the release:
"In India, the World Bank Group debarred Ambalal Sarabhai Enterprises Limited (ASE) and Chemito Technologies Pvt. Ltd. (Chemito) for having engaged in fraudulent practices relating to the Food and Drugs Capacity Building project. Both ASE and Chemito are ineligible to be awarded contracts under any Bank Group-financed or Bank Group-executed project or otherwise participate in the preparation or implementation of such projects for three years. The debarment may be reduced to two years if the companies put in place and implement effective corporate compliance programs."
"The third decision relates to fraudulent practices by Global Spin Weave Limited (GSW) and its Director Sudhir Agrawal. The company’s misconduct was substantiated in relation to three Bank-financed projects in India; namely: First Reproductive and Child Health Project, Second National HIV/AIDS Control Project and the Malaria Control Project. According to the Sanctions Board decision, GSW is ineligible to be awarded contracts under any Bank Group-financed or Bank Group-executed project or otherwise participate in the preparation or implementation of such projects for five years. The debarment may be reduced to four years if GSW puts in place and implements an effective corporate compliance program. Mr. Agrawal’s period of ineligibility is three years."
"In relation to the Urban Water Supply and Sanitation Project in Afghanistan, the Sanctions Board debarred Ronberg Gruppe LLC, AG (Ronberg) and its Director Nikolay V. Vakorin for having engaged in fraudulent practices. Ronberg and Mr. Vakorin are ineligible to be awarded contracts under any Bank Group-financed or Bank Group-executed project or otherwise participate in the preparation or implementation of such projects for three years."
The World Bank release notes that the above "cases are eligible for cross debarment under the April 2010 Agreement for Mutual Enforcement of Debarment Decisions entered into by the African Development Bank Group, Asian Development Bank, the European Bank for Reconstruction and Development, the World Bank Group and the Inter-American Development Bank Group." For more on that Agreement see here.
The Blogging Life
Interested in blogging?
See here for my recent interview with Jerod Morris of Corporate Compliance Insights. We also talk a bit about the FCPA!
A good weekend to all.
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