BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.

Recent Developments in Foreign Corrupt Practices Act Enforcement Act Enforcement

Pharma Audioconference

December 11, 2012Joseph B. Tompkins, Jr.

Partner, Washington D.C.

2011 Predicted FCPA Trends for 2012

• Continued Aggressive Enforcement by U.S. DOJ and SECSEC

• Increased Use of Deferred Prosecution Agreements and Non-Prosecution Agreements by DOJg y

• Continued Prosecution of Individuals, Not Just Companies

• Increased International Cooperation by Law Enforcement Agencies

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I. Continued Aggressive EnforcementFCPA- Related Cases

new criminal or civil cases (settled or contested) instituted by year (pending investigations based upon public disclosures of investigations)

(as of December 2012)(as of December 2012)

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I. Continued Aggressive EnforcementC FCPA R l d Fi (Ci il & C i i l)Corporate FCPA-Related Fines (Civil & Criminal)

(as of December 2012)

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I. The Top Ten

No. Company Year Amount (millions)

1 Siemens (Germany) 2008 $800

2 KBR/Halliburton (U.S.) 2009 $579

3 BAE, plc (UK) 2010 $400, p ( ) $

4 ENI SpA/Snamprogetti Netherlands B.V. (Italy/Holland)

2010 $365

5 Technip S.A. (France) 2010 $338

6 GC C ( ) 20 $2 86 JGC Corporation (Japan) 2011 $218

7 Daimler AG (Germany) 2010 $185

8 Alcatel-Lucent (France) 2010 $137

9 P l i (S i l d) 2010 $819 Panalpina (Switzerland) 2010 $81

10 Johnson & Johnson (U.S.) 2011 $70

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II. Deferred Prosecution and Non-Prosecution Agreements 2012Prosecution Agreements – 2012

• February 2012: Smith & Nephew, Inc. (Tennessee)– DPA; $16.8 million criminal/fine; monitor– SEC settlement; $5.4 disgorgement; no admission of

wrongdoing

• March 2012: Bozjet Int’l Sales and Support, Inc. (Oklahoma)

DPA; $11 8 million criminal fine; no monitor– DPA; $11.8 million criminal fine; no monitor

• March 2012: Biomet, Inc. (Indiana)– DPA; $17.3 million criminal fine; monitor ; $ ;– SEC settlement; $5.4 million disgorgement

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II. Deferred Prosecution and Non-Prosecution Agreements 2012Prosecution Agreements – 2012

• June 2012: Data Systems LLC (Virginia) – DPA; $8.82 million criminal fine: no monitor

• July 2012: Orthofix International, N.U. (Curacao and Texas)Texas)– DPA; $2.2 million criminal/fine; lack of internal controls;

no monitor

• July 2012: Honda Group, Inc. (Oklahoma)– NPA; $2 million criminal fine; no monitor

2012 fi C C i ( k)• August 2012: Pfizer H.C.P. Corporation (New York)– DPA; $26 million criminal fine; no monitor– SEC Settlement; $45 million in disgorgement including – SEC Settlement; $45 million in disgorgement, including

$19 million in disgorgement related to Wyeth subsidiaries7

II. Deferred Prosecution and Non-Prosecution Agreements 2012

• September 2012: Tyco International Ltd. (Switzerland)

Prosecution Agreements – 2012

(Switzerland) – NPA; $13.7 million criminal fine; no monitor– SEC settlement; $13 million in disgorgement, plus SEC settlement; $13 million in disgorgement, plus

interest

• September 2012: Tyco Valves & Controls Middle East Inc (Delaware)East, Inc. (Delaware)– Plea Agreement; $2.1 million criminal fine

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III. FCPA Prosecutions of Individuals

• U.S. v. Lindsay Manufacturing (C.D. Cal.) (Dec. 2011)– Convictions of several defendants vacated and charges

dismissed because of prosecutorial misconduct– Misconduct included:sco duc c uded

• Allowing a key FBI agent to testify untruthfully• Inserting material falsehoods into affidavits submitted to

the Courtthe Court• Improperly reviewing an e-mail communication between a

defendant and her lawyerE i i ti bl b h i d i l i t • Engaging in questionable behavior during closing argument and making misrepresentations to the Court

• DOJ decided not to appeal to Ninth Circuit Court of Appeals

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III. FCPA Prosecutions of Individuals

• Africa Sting/”Shot Show” Case (D.D.C. 2011)– Large, multi-year FBI undercover operation involving 5,287

phone calls, 240 meetings between the suspects and government undercover agents, and 14 search warrants in the U S and the U Kthe U.S. and the U.K.

• Result:– Case split into four different trialsp– A mistrial was declared in first case; motions for acquittals

granted against several defendants in second case, and then not guilty verdicts and mistrial against other defendants

– After scathing comments by the Judge, DOJ announced that it would not pursue prosecution of any other defendants

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III. FCPA Prosecutions of Individuals

• U.S. v. O’Shea (S.D. Tex 2011)– Indictment and prosecution of John Joseph O’Shea, a

business united manager at ABB, Inc., charged with conspiring to pay bribes to officials of a Mexican state-

d ili owned utility company

• Result:January 2012: After government presented its case the – January 2012: After government presented its case, the Judge granted the defendant’s motion for acquittal

– The Judge stated: “The government’s principal witness k thi Hi b t t d … knows nothing. His answers were abstract and vague,

generally relating to gossip.”– Case dismissed

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III. FCPA Prosecutions of Individuals

• U.S. v. Garth Peterson (E.D.N.Y. 2012)– Guilty plea by Peterson, who was a U.S. citizen working

for Morgan Stanley in Shanghai– Peterson admitted to conspiring to evade Morgan e e so ad ed o co sp g o e ade o ga

Stanley’s internal accounting controls designed to avoid FCPA violations

– Sentenced to 9 months in prison; 3 years’ supervised Sentenced to 9 months in prison; 3 years supervised release

– Morgan Stanley not charged because DOJ and SEC found that it had comprehensive compliance policies in found that it had comprehensive compliance policies in place, including frequent training of its employees on FCPA and anti-corruption compliance, and because Morgan Stanley made a voluntary disclosureMorgan Stanley made a voluntary disclosure

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III. FCPA Prosecutions of Individuals

• U.S. v. Carson, et al. (C.D. Cal.) (2012)– Seven defendants were all employees of Control

Components, Inc. (CCI)– CCI pled guilty to three counts of FCPA and related CC p ed gu y o ee cou s o C a d e a ed

violations in 2009; admitted to making corrupt payments in more than 30 countries between 2003 –2007

– CCI paid $18.2 million criminal fine; monitor retained for three yearsAll seven defendants have now pled guilty; but to only – All seven defendants have now pled guilty; but to only one count of FCPA violation; most defendants received minimal sentences in October 2012

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Current FCPA Issues of Interest

• What effect, if any, will the new DOJ and SEC Guide to the FCPA have on actual FCPA enforcement?to the FCPA have on actual FCPA enforcement?

• How many FCPA prosecutions will take place as a result of the “whistleblower” provisions of the Dodd-pFrank Act?

• What effect will the “Shot Show” debacle, in which the DOJ ended up dropping charges against 22 the DOJ ended up dropping charges against 22 individual FCPA defendants, and other failed prosecutions have on future FCPA prosecutions of i di id l ?individuals?

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FCPA Risk Assessment

www transparency org/

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www. transparency.org/

FCPA Risk Assessment

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FCPA Risk Assessment

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JOSEPH B. TOMPKINS, JR.Partner

W hi t D C Washington, D.C. 202.736.8213 202.736.8711 Fax jtompkins@sidley.com

PRACTICES ADMISSIONS & CERTIFICATIONS• Complex Commercial Litigation • International Trade • White Collar

AREAS OF FOCUS• Business Torts • Compliance Counseling - White Collar • Contract Litigation • Customs

• U.S. Supreme Court, 1977 • U.S. Court of Appeals, 3rd Circuit, 1983 • U.S. Court of Appeals, 4th Circuit, 1993 • U.S. Court of Appeals, 5th Circuit, 1977 • U.S. Court of Appeals, 6th Circuit, 1985 • U.S. Court of Appeals, 7th Circuit, 1991 • U.S. Court of Appeals, 9th Circuit, 1985 • U.S. Court of Appeals, 11th Circuit, 1982 • U.S. Court of Appeals, D.C. Circuit, 1976

U S C t f A l F d l Ci it 1985 • Economic Sanctions • Export Controls • FCPA/Anti-bribery • Financial Institutions Counseling • Financial Institutions Litigation • Grand Jury Investigations • Internal Investigations • International Financial Institutions in the U.S. • Private Securities Litigation

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• U.S. Court of Appeals, Federal Circuit, 1985 • U.S. District Court, District of Columbia • U.S. District Court, E.D. of Virginia • District of Columbia, 1976 • Virginia, 1975

EDUCATION• Harvard Law School (J.D., 1975) • Harvard University - John F. Kennedy School of Government (M.P.P.,

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JOSEPH B. TOMPKINS, JR.’s experience includes service with the Criminal Division of the United States Department of Justice from 1979-1982, where he served as Deputy Chief of the Fraud Section from 1980-1982. Mr. Tompkins serves as a Global Coordinator of the Firm’s Complex Commercial Litigation practice, and he is one of the leaders of the firm’s Foreign Corrupt Practices Act (FCPA) practice. His practice includes a variety of civil and white collar criminal litigation matters. In recent years, Mr. Tompkins has represented corporate and individual clients in connection with complex internal investigations, commercial litigation in federal and state courts, Department of Justice and Securities and Exchange Commission investigations, Inspector General investigations and federal grand jury investigations concerning alleged fraud corruption and export control violations

• Real Estate Litigation • Trials

1975) • Washington and Lee University (B.A., 1971, summa cum laude)

Inspector General investigations and federal grand jury investigations concerning alleged fraud, corruption and export control violations.

Mr. Tompkins has also represented corporate and individual clients in international law enforcement matters, including FCPA investigations, economic sanctions, export control investigations and related matters. He has also drafted and negotiated international agreements between the United States and foreign entities. Mr. Tompkins is currently leading the Firm’s representation of Bank of America in the Multi-District Litigation proceeding involving Parmalat, the Italian dairy company that engaged in a massive international fraud. He has also represented a number of other major financial institutions that have been the victims of fraud and corrupt activity, including the World Bank and other domestic and international banks. Mr. Tompkins regularly represents clients such as the U.S. Chamber of Commerce, the government of the United Kingdom and the government of the

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Tompkins regularly represents clients such as the U.S. Chamber of Commerce, the government of the United Kingdom and the government of the Cayman Islands in a broad range of regulatory and litigation matters. He was selected to be listed in the International Who’s Who of Commercial Litigators 2010, and he is also listed in Who’s Who in the World and Who’s Who in America.

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Sidley Austin LLP, a Delaware limited liability partnership which operates at the firm’s offices other than Chicago, London, Hong Kong, Singapore and Sydney, is affiliated with other partnerships, including Sidley Austin LLP an Illinois limited liability partnership (Chicago); Sidley Austin LLP a separate Delaware limited liability partnership (London); Sidley Austin LLP a separate Delaware limited liability partnershipAustin LLP, an Illinois limited liability partnership (Chicago); Sidley Austin LLP, a separate Delaware limited liability partnership (London); Sidley Austin LLP, a separate Delaware limited liability partnership(Singapore); Sidley Austin, a New York general partnership (Hong Kong); Sidley Austin, a Delaware general partnership of registered foreign lawyers restricted to practicing foreign law (Sydney); and Sidley Austin Nishikawa Foreign Law Joint Enterprise (Tokyo). The affiliated partnerships are referred to herein collectively as Sidley Austin, Sidley, or the firm.