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Continuing Legal Education Highlights, Part 3 of 3 (ABA Foreign Corrupt Practices Act, Washington, D.C.)

by merlin on September 20th, 2013
  • Sumo

Day 3:           Limits of the FCPA

 Day 3 was comparatively advice-driven and less objective evaluation of the mechanisms of the FCPA.  I urge the persons who read this blog to comment on these topics.  Further, those who comment are free to suggest topics for legal research and discussion.

A particular point of discussion that I encourage readers of this blog to comment on is the appropriateness of the US laws this relies upon as enforced on corporations acting abroad and their subsidiaries.  An example is Halliburton, or Blackwater.  This discussion fascinates me because of the propriety of US extra-territorial application of its laws and norms (especially as applied to military action abroad, such as in Syria).  Please – DISCUSS!

I.                  M&A Due Diligence



  • Robert Tarun – Partner (Baker & McKenzie LLP)
  • Nathaniel Edmonds – Partner (Paul Hastings LLP)
  • Mary Spearing –Partner (Baker Botts LLP)
  • Roger Witten – Partner (WilmerHale)
  • Richard Grime – Partner (O’Melveny & Myers, LLP)


  • Philip Urofsky – Partner (Shearman & Sterling LLP)


  1. A.    Successor liability

Not just a fear of acquiring company – can also be fear of competitors (because of ability of officers and subsidiaries to bind the company)

  • Presumption from government – until shown affirmatively otherwise, all subs are agents of company
  • The Resource Guide talks about what other agencies besides just the DOJ and SEC might be involved

B.    Jurisdiction

1997 revision of FCPA to jurisdictional conditions: EXPANDED to include actors not previously covered under statute

  • What if $ is US dollars but don’t involve US banks at all?
  • What about an e-mail from one country to another on Yahoo, whose servers are in the US (but e-mail was from one non-US jurisdiction to another non-US jurisdiction)?

C.    Injunction Action

Talking about this largely in civil action terms (ex. SEC territory) – Question becomes whether it has any teeth at all (if the action isn’t investigated for a half-a-dozen years, then will it ever be? – Point, though: according to SEC officials we heard from yesterday morning, enforcement is about to suddenly step up dramatically, especially concerning bribery allegations)

–         The SEC seems MUCH harsher (the civil fines being used as punitive) than the DOJ in their approach to private companies that are alleged to violate the FCPA (or any other act that has a joint civil and criminal corporate aspect)

–         What this appears to indicate is the DOJ willingness to credit for payments made to SEC (not reciprocated)

D.   Bribery – “Anything of value” to a government official

  • This would be RIDICULOUSLY fact-specific, but internationally may be completely different than a domestic situation (ex. Hiring an official’s relative in the US as a bribe versus hiring an official’s relative abroad because it was necessary in that area for good reasons)




There are DOJ advisory opinions as to what constitutes a “thing of value”.

E.    How about the role of discretion in payments alleged to be bribery under the FCPA?

  • Read into both the current and the 1988 statutes as a requirement, but not explicitly stated.
  • Belief among private practitioners that only big fish will be prosecuted for things like this


See the Elandia case regarding the characterization of payments to determine criminal/improper intent.

II.               Mergers and Acquisitions (Due Diligence)



  • Martin Weinstein – Partner (Wilkie Farr & Gallagher LLP)
  • Frederic Miller – Partner (Investigations and Forensic Science – PriceWaterhouseCoopers LLP)
  • William Jacobson –Senior V.P., Co-General Counsel, Chief Compliance Officer (Weatherford International Ltd., Zurich, Switzerland)
  • Gregory Esslinger – Senior Managing Director (FTI Consulting)

Moderator:             Thomas Hanusik – Partner (Crowell & Moring, LLP)


  • Nowhere in the statute are the terms “merger” and “acquisition” used.


Read Synco International Corporation (FCPA bribery of Taiwan official discovered during due diligence investigation by purchaser, Syncor (?), and reduced purchase price, etc., before consummation)


DOJ Opinion Procedure Release 01-01 (due diligence and resolution prior to M&A mitigates), 08-02 (taking immediate steps to train and identify problem-areas mitigates).

  • Basically, foreign company may not have been subject to FCPA before acquisition by US parent, but is once it becomes a subsidiary (so not just due diligence, but also creating the monitoring and training programs needed to ensure FCPA compliance)


GET THE RESOURCE GUIDE ON THIS (Robert Tarun is the author)!

  • Lists the steps to take for due diligence AND the other needed step (integration)
  • If you aren’t going to the government (voluntary disclosure), do NOT use it as an excuse to skip steps – take the steps that you would take if you were doing the necessary stuff for government disclosure, anyway!!!!!


For evaluation – what is out there already (ex. Audits, risk reports, etc.)?


Halliburton 08-02 is a very good potential roadmap for due diligence when time is of the essence. (the government gave them 180 days to do post-acquisition due diligence, bringing anything they found to the government’s attention)


Remember – it is an INTENT-BASED STATUTE (if a company does a good faith, thorough due diligence review, but misses something, they are NOT ON THE HOOK – or shouldn’t be, anyway).


Educating the prosecutor on what constitutes a “reasonable amount” of due diligence:

  • MUST get the help/advocacy of someone who has been there before (get their voucher)
  • Bring a team with you who can address each of the issues

III.           Nuts and Bolts of Internal Corporate Investigation (how the experts do it)



  • Colleen Conry – Partner; former senior trial counsel at SEC (Ropes & Gray, LLP)
  • Alice Fisher – Partner; former DOJ (Latham & Watkins LLP)
  • Christopher Wray –Partner (King & Spalding)
  • George Terwilliger, III – Partner; former Assistant US Attorney, former Deputy Attorney General (Morgan, Lewis & Bockius LLP)

Moderator:             William Shepherd – Partner (Holland & Knight)


When conducting an internal investigation, must constantly keep in mind WHO THE CLIENT IS, and expect that what is said will be reported on.

  • At the end of the day, the credibility of the product is judged by the credibility of the team that assembled it
  • Properly defining the objective also properly defines the scope and length, expense of the investigation
  • Who will be privy to the results of the investigation, and how much independence do the investigators have (relevant)?
  • Record-preservation steps
  • What about privilege issues?


For these, local counsel is a MUST (different legal and cultural norms, generally), and also need cooperation of local employees of company, etc.

  • Talk to distributors, agents


Keep in mind – frequently, the left hand doesn’t know what the right hand is doing (ex. Compliance has run an investigation on a whistle-blower that legal doesn’t know about, etc.)

  • What about external considerations (ex. Lenders)?
  • Check contractual obligations for corporate arrangements, that might influence the audit)
  • Think about WHISTLEBLOWERS (by conducting the investigation and asking the relevant questions, may have CREATED a whistleblower)!!!!


Want to make sure to get TWO things from any and every audit: 1. What was the problem (specific identification); 2. What remedy did the company apply/is presently BEING APPLIED (active and ongoing)


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