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10/20/2011
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The U.S. FCPA, UK Bribery Act and Building an Effective Compliance ProgramPresented to SCCE Southwest Regional Compliance & Ethics ConferenceHouston, TexasNovember 4, 2011
D. Marie Wagner Senior Counsel - International,and Solicitor Anadarko Petroleum Corporation
Jay G. Martin Vice President, Chief Compliance Officer, and Senior Deputy General Counsel Baker Hughes Incorporated
Agenda
‣Anti-Corruption Initiatives in Context
‣US FCPA Overview
‣UK Bribery Act Overview
‣Comparing US FCPA v UK Bribery Act: Key Differences
‣Integrated Anti-Corruption Compliance Approach
‣ UK Bribery Act Implications
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Anti-Corruption Initiatives
in Context
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Energy and Corruption
Major Petroleum Basins Most Corrupt Regions
Most of World’s Oil and Gas Reserves are found in Corrupt Countries
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The Playing Field Has Changed
‣More anti-corruption treaties & laws
‣Expanded definition of bribes
‣More investigations & prosecutions
‣Rising benchmark for compliance programs
‣More anti-corruption initiatives
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Initiatives on Combating Corruption
‣ UN Global Compact
‣ International Chamber of Commerce
‣World Business Council
‣ Conference Board
‣ Transparency International
‣ TRACE
‣ Extractive Industry Transparency Initiative (EITI)
‣ International Assoc. of O&G Producers (OGP)
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International Enforcement is Increasing
• More laws, higher penalties and more multi-lateral cooperation.
‣ Most countries have anti-bribery laws‣ Directed against bribery of domestic officials‣ Previously, only United States prohibited bribery of foreign officials‣ Global legal framework has changed dramatically in last decade‣ 60+ countries have foreign bribery laws as a result of OECD Convention‣ 140+ countries have similar laws as a result of UN Convention Against Corruption
Anti-Bribery Laws In The World
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Host Country Laws‣ Confusing and even contradictory‣ Don’t reflect local customs and are often ignored‣ Applied arbitrarily and inconsistently‣ Cover public officials but not relatives‣ Punishment usually is severe‣ Applicable to individuals but not corporations‣ Company’s employees & representatives who work or reside in host country at risk ‣ These laws will gradually change as UN Convention Against Corruption takes effect
Host Country laws have historically had the following characteristics:
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FCPA - 1977FCPA - 1977
USAUSA
OAS - 1996OAS - 1996OECD 1997OECD 1997Council of Europe 1998Council of Europe 1998
Organization ofAfrican Unity Organization ofAfrican Unity
UN Convention against Corruption 2003UN Convention against Corruption 2003
Anti-Bribery Treaties
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Significant New Foreign Corruption Laws
• China – Law, which came into effect on May 1, 2011, prohibits giving any "property to any foreign public official or official of an international public organization" to obtain any "illegitimate commercial benefit.“
• Russia – Legislation signed by President Dmitry Medvedev on May 4, 2011, punishes those involved in foreign bribery schemes, including corporate entities, any intermediaries involved in the bribery, and the foreign official recipients of improper payments.
• India – Has circulated a draft anti-corruption bill and has been debating another bill that would create an independent anti-corruption body, the Lokpal.
• United Kingdom – The UK Bribery Act entered into force on July 1, 2011. It is not retrospective, so previous anti-bribery laws are still relevant.
U.S. FCPA
Overview
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US FCPA Summary
‣ Jurisdiction – To Whom does Act Apply
‣ Nature of Offenses Covered
‣ Nature of Bribe
‣ Who is Being Bribed
‣ Nature of Advantage being Sought
‣ Exceptions
‣ Affirmative Defenses
‣ Civil/Criminal Liability
‣ Recent developments to watch
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Jurisdiction: To Whom Does Act Apply?
•Any “issuer” that files reports to the SEC or trades equity or debt on a U.S. exchange.
– Includes any foreign company that trades, for example, American Depository Receipts (ADRs), on a U.S. exchange.
– Examples: Statoil, Novo Nordisk
•Any “domestic concern.”– Includes U.S. citizens, nationals, and residents as well as any entity
(corporation, partnership, etc.) that is organized under the laws of the United States or a U.S. territory or that has its principal place of business in the United States.
– Examples: Bourke, Omega Advisors
• Any “person,” including an organization, wherever located, that, while in the territory of the United States, does any act in furtherance of the prohibited conduct.
– Government argues minimum contacts include emails, telephone calls, transfers through correspondent bank accounts in U.S. intermediary banks.
– Examples: Siemens, KBR, Sapsizian
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Nature of the Offenses: FCPA’s Two Prongs
• Antibribery Provisions:– Prohibit bribery of foreign government
or political officials for the purpose of obtaining or retaining business or securing any improper business advantage.
• Books & Records Provisions:– Require SEC-registered or reporting
issuers to make and maintain accurate books and records and to implement adequate internal accounting controls.
NOTE: Antibribery Elements
• It is unlawful for:
– An issuer, domestic concern, or anyone acting within the jurisdiction of the United States
– with “corrupt intent”
– directly or indirectly
– to offer, pay, promise to pay, or authorize payment
– of “anything of value”
– to a “foreign official”
– for the purpose of obtaining or retaining business or securing any improper business advantage.
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“Knowledge” and “Corrupt Intent”
“Knew or should have
known”
Refusal to know
Corporate Collective
Knowledge
Quid Pro Quo
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“Limits” of Knowledge and Intent
•United States v. Bourke
– Co-investors in Azeri investment deal prosecuted.
– Bourke did not pay or authorize the payment of bribes.
– The government argued that he knew or should have known his co-investor was paying bribes to foreign officials.
– Willful blindness was sufficient to support a conviction.• Juror: “We thought [Bourke] knew [about the bribery] and definitely could have known. He’s an investor. It’s his job to know.”
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Nature of Bribe: Direct or Indirect Payments
• Statute prohibits unlawful payments directly or indirectly through a third party.
• Many enforcement cases involve indirect payments.
• Examples of third parties through whom illegal payments have been made:
– Agents or consultants
– Distributors
– Joint venture partners
– Lawyers/accountants
– Service providers
• NOTE: Does a Payment Need to be Made?
No!No!
• Offers, promises, or authorizations to make prohibited payments are just as illegal as actually making a prohibited payment.
• The simple offer of a payment is enough for liability.
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Nature of Bribe: What Qualifies as “Anything of Value”
•Anything of Value = Any Benefit.
•Must meet each of the other elements of a prohibited payment.
•Examples include but are not limited to:
– Cash or the equivalent of cash such as a gift card, voucher, coupon
– Entertainment or travel
– Gifts that are more than a mere token or modest in value
– Educational opportunities
– Contributions to political parties, causes, candidates, and officials
– Charitable contributions
– Investments or property
– Loan of a vacation home, automobile, or yacht, etc.
– Giving a job to a family member or someone with a close personal relationship with foreign official.
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Who is Being Bribed: “Foreign Official”
• How is “Foreign Official” Defined?
– DOJ and SEC read it very broadly
• Definition includes Foreign government employees or officials (whether Federal, State or Local)
– Ministers, Vice-Ministers, Ministry Employees
– Politicians, Political officials or members of their staffs.
– Employees of public international organizations (United Nations and World Bank Representatives)
– Candidates for political office and Officers of Political Parties
– Police, Judges and Customs Officials
• Has also been interpreted by DOJ to include:
– Employees of government-owned or controlled businesses.
• Employees of state-owned or state-controlled hospitals (Syncor).
• Employees of state-owned or state-controlled media outlets, e.g. Chinese journalists (DOJ Opinion Letter 08-03).
• 33-38% state-owned company (Comverse Technology).
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Recent Cases: Employees of Government Controlled Enterprises• Defendants are challenging government’s view that definition includes:
– National Oil Company Employees, Officers, Directors, Consultants
– Employees of JV controlled by NOC or Government
• Defendants argue that partial or even full government ownership does not automatically make a company a government “instrumentality.”
– Claim the legislative history shows Congress only intended to reach payments to persons associated with traditional government entities.
• Lindsey Manufacturing – The District Court denied defendants’ motion to dismiss, ruling that a state-owned electric utility could in some cases be considered a government instrumentality (5 factors identified).
• Control Components – The District Court held that “a mere monetary investment in a business entity may not be sufficient“ absent “additional factors that objectively indicate the entity is being used as an instrument to carry out governmental objectives.” (6 factors identified).
Nature of Advantage being Sought
•What Is an Unfair Business Advantage?
• Focus is on gaining a competitive advantage rather than directly securing a particular contract.
• Examples include:– Con-way: Slotting on planes and faster customs clearance
– Kay: Lower customs and tax duties caused lowered expenses and gave a business advantage over competitors in market
– Delta Pine: Government reports and certifications to sell seed
– Vetco: Preferential treatment in customs clearance
– Covino: Influence on technical specifications to influence bid
– Monsanto: Influence over legislation
• The bribe does not need to achieve its intended effect.– Example: Monsanto
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US FCPA Exceptions
The FCPA permits “facilitating payments”
• Purpose of payment must be to expedite or secure performance of “routine governmental action” by a foreign official.
– Action must be “ordinarily and commonly performed” by the foreign official (for example, stamping passports).
– Does not include decision by foreign official whether, or on what terms, to award new business to or to continue business with a particular party.
• NOTE: Conflicts on Facilitating Payments
• Local/Host Country Laws‣ Most do not provide for
Facilitating Payments‣ Rarely address expenses for
officials
• Conflict of Corruption Laws:Creates dilemma for corps. operating in various jurisdictions
• Recent Trends: Some companies no longer allow these types of payments.
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US FCPA “Affirmative Defenses”
• Promotional Payments.– “Reasonable and bona fide” expenses.
• promotion, demonstration, explanation of products
• execution or performance of contract
– Proper documentation of expenditures
• “Lawful” under local law.– Has never been recognized as a defense to a payment prohibited by the
FCPA.
– Recently argued and rejected in Bourke.
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US FCPA Books and Records Obligations
• Books, records, and accounts must be kept in reasonable detail to accurately and fairly reflect transactions and dispositions of assets.
• Applies to issuers.
– Parent companies may be liable for false or fraudulent entries on any book or record that is ultimately consolidated with an issuer’s books and records for financial reporting purposes.
NOTE: FCPA Record Keeping
• Affirmative duty to maintain accurate records.
• Requires Issuer to keep books, records & accounts which, in reasonable detail, accurately & fairly reflect transactions & disposition of assets.
• Reasonable detail is such level of detail & degree of assurance as would satisfy prudent officials in conduct of own affairs.
• Provisions apply to all payments, not merely sums that would be material in traditional financial sense
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Civil/Criminal Liability for Violation of FCPA Provisions
• Significant Monetary and Criminal Penalties.– Antibribery Violations:
• Fines up to $2 million per violation.
• Culpable individuals may face fines of up to $250,000 per violation and/or imprisonment for up to five years.
– Books and Records and Internal Control Violations (Willful):
• Corporate fines in excess of $25 million for a company.
• Fine up to $5 million and/or imprisonment for up to 20 years for culpable individuals.
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Possible Collateral Consequences of FCPA Violation
• Termination of government licenses.
• Debarment from government contracting programs.
• Disgorgement of a company’s profits on contracts secured with improper payments.
• Tax implications.
• Shareholder litigation.
• Foreign enforcement actions.
• Appointment of independent compliance monitors.
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Recent Developments: Possibility of Legislative Reforms to FCPA
• Proposed Changes by Former Attorney General Michael Mukasey at June 14, 2011 Hearing
1. Adding a compliance defense;
2. Clarifying the meaning of “foreign official”;
3. Improving the procedures for guidance and advisory opinions from the DOJ;
4. Limiting a company’s criminal liability for the prior actions of a company it has acquired;
5. Adding a “willfulness” requirement for corporate criminal liability; and
6. Limiting a company’s liability for acts of a subsidiary not known to the parent.
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UK Bribery
Act 2010
Summary
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“Bribery blights lives. Its immediate victims include firms that lose out unfairly. The wider victims are government and society, undermined by a weakened rule of law and damaged social and economic development. At stake is the principle of free and fair competition, which stands diminished by each bribe offered or accepted. “
Ministry of Justice, The Bribery Act 2010 Guidelines
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Introduction: the UK Bribery Act 2010
• The “Act” entered into force on July 1, 2011.– It is not retrospective, previous anti-bribery laws are still relevant– “Explanatory Notes” to aid in the understanding of the Act
• Media Reaction- “The Economist: UK Bribery Act is “Smarter” than FCPA”– “the FCPA on Steroids”– “FCPA + UK Bribery Act + greater global exposure”
• Elements– Jurisdiction – To Whom does Act Apply– Nature of Offenses Covered– Nature of Bribe– Who is Being Bribed– Nature of Advantage being Sought– The “Corporate Offense”– Exceptions– Affirmative Defenses– Civil/Criminal Liability
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Jurisdiction: To whom does the Act Apply?
• Applies to all bribes where an act (or omission) in furtherance of the bribe occurs in the UK.
• Applies to bribes that take place anywhere in the world if the bribe is committed by a UK citizen or UK-incorporated company.
• Applies to bribes that occur anywhere in the world by non-UK companies that conduct any part of their business in the UK.
– The Ministry of Justice and the Director of the SFO have stated that the law does not apply to a company solely because it is listed on a UK
exchange or has a UK subsidiary.
– Does not appear to apply to non-UK subsidiaries of a UK company.
– Head of the SFO has said that prosecuting a non-U.K. corporation for corrupt payments made without any UK involvement will be in the "public interest" only if the bribes harm a UK company.
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Nature of Offenses Covered
Two General Offenses (Section 1 and 2)• For both an individual and a commercial organization:
– to offer, promise or give a bribe (so-called active bribery) or– to request or agree to receive a bribe (so-called passive
bribery)Specific Offense: Foreign Officials (Section 6)• For both an individual and a commercial organization to bribe a foreign public official
Corporate Offense (Section 7)• For a commercial organization to fail to prevent bribery
– if an “associate person” of a commercial organization has committed one of the bribery offences referred to above
– “Senior Officers” who have “consented or connived” in the commission of the offence are also liable
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NOTE: The Act, unlike the US FCPA, applies to public and private sector bribery, both UK domestic and foreign.
Nature of Bribe:
• Includes “financial or other advantage”
– Per Explanatory Notes, the meaning “is left to be determined as a matter of common sense by the tribunal of fact”
•As with US FPCA, it is sufficient for the offense that one intended to induce or reward the improper performance (i.e. bribe does not necessarily have to be made/paid).
•As with US FCPA, includes direct and indirect bribes (made through a third party)
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Nature of the Advantage being Sought: General Offenses
• Focus for “general offenses” is on seeking “improper performance” (i.e. performance in breach of a “relevant
expectation”) of a “relevant function or activity”– Includes any function of a public nature, connected with a business,
performed in the course of a person’s employment or by or on behalf of a body of persons
• Active Bribery: – Offering, etc., an advantage to another person
• Intending to induce or reward improper performance of a relevant function, or
• Knowing acceptance of advantage constitutes improper performance.
• Passive Bribery (Taking a bribe):
– Requesting, accepting, etc., an advantage
• intending, as a consequence, or as a reward for, improper performance of a relevant function, or
• where acceptance the advantage constitutes improper performance.
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Nature of the Advantage being Sought: Specific Offense for Foreign Officials
•Closely follows the OECD requirements
•Person giving bribe must:
– Intend to influence the recipient in the performance of his or her functions as a public official; and
– Must intend to obtain or retain business or a business advantage
•As with US FCPA, not necessary to actually pay bribe
•NOTE that this offence covers the offering, promising or giving of bribes and NOT the acceptance of them.
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Who is Being Bribed?
•General Offenses
– The offenses would cover any “persons” (in the UK and abroad)
– The offense includes advantages given, etc to other persons than the person who is to engage in the improper performance
•Specific Offense for Foreign Public Officials
– The offense applies to Foreign Public Officials as per OECD.
– NOTE ,unlike US FCPA, foreign public official does NOT include candidates for political office, they would, however, be subject to the General Offenses
– The offense includes advantages offered to someone other than the official, if done at official’s request or with his assent or acquiescence
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Corporate Offense: Liability for Failure to Prevent
•Section 7 of The Act introduces a new “strict liability” corporate offence — if a commercial organization fails to prevent bribery by an “associated person” irrespective of where it takes place
– “Associated Person” is intended to be broad: Employees, agents, subsidiaries, and potentially other contractors or service providers.
•Affirmative Defense - Proof that the organization had an adequate compliance program in place to prevent such misconduct.
– In March 2011, the SFO issued detailed guidance on what would constitute an “adequate compliance program.”
– Reads much like U.S. Sentencing Guidelines requirements.
– “Tone at the top” is key.
– Must also have training, guidelines, periodic review of process.
– Need to extend training and other safeguards to agents and other “associated persons.”
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Exceptions: None for Facilitating Payments
• But, SFO has indicated that, for now, it will be somewhat lenient in enforcement in this area.
• Will go after:
– large repeated payments,
– payments that are "planned for or accepted as part of a standard way of conducting business,"
– payments suggesting "active corruption" of the official to whom they were made, and
– payments contrary to an organization's clear policy and procedures.
• Likely will be more tolerant of:– single small payments;
– payments that come to light as a result of a self-reporting and remedial action, where an organization has a clear policy setting out procedures for dealing with facilitation payments and the procedures were followed; or
– the payer was in a "vulnerable position;” presumably would include serious extortion, threat of imprisonment, or risk to personal health and safety.
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UK Bribery Act: “Affirmative Defenses”
• Corporate Offense (see above)
– Affirmative Defense exists if “adequate procedures” in place
• General Offense/Foreign Official Bribery Offense
– No Promotional Payments affirmative defense • As per John Smart, UK Leader, Fraud Investigation & Dispute Services, “The
Bribery Act won’t end corporate hospitality – it’s meant to prevent lavish entertainment or gifts which are intended to corrupt….Companies need to think about what an appropriate level of expenditure is and build their policies around that.”
• Guidance expressly permits hospitality and expenses designed to "improve the image of a commercial organization" or "establish cordial relations."
• Approving references to "fine dining" and entertainment of both an official "and his or her partner.“
• The MOJ Guidance states that in the case of "hospitality, promotional expenditure or facilitation payments" prosecutors will "consider very carefully" whether prosecuting would be in the public interest.
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Civil/Criminal Liability for Violation of the Act
• Significant Monetary and Criminal Penalties.
Individuals
• Unlimited fines for individuals found guilty
• Imprisonment for up to ten (10) years
Commercial Organizations
• Unlimited fines for commercial organizations found guilty
• If offense is committed by a commercial organization with the “consent or connivance” of a senior officer, the senior officer will also be liable
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Comparison
of US FCPA and
UK Bribery Act
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Comparison: More Stringent Elements
Key Elements UK Bribery Act
Jurisdiction Extends to any commercial organization doing business in UK; being issuer or listed is not determinative.
Private Bribery Extends to private, commercial bribery anywhere in the world
Passive bribery Taking and accepting a bribe is covered offense (except foreign offense)
Advantage sought General Offenses: Focus is on seeking to obtain improper performance
Corporate Liability New Corporate Strict liability offense for organizations
•designed to force businesses to be proactive in tackling corruption
•Critical to develop “adequate procedures”
•Greater need to screen and monitor business partners
Exceptions No carve-out for facilitation payments. Dependent on prosecutorial discretion.
Prosecution and Procedures
No formal advisory service (cf. opinions provided by U.S. AG).
Current uncertainties in UK re plea bargaining.
Fines/Penalties Unlimited potential liability for individuals and entities; No discretion on imposition of public procurement ban.
Comparison: Less Stringent Elements
Key Elements UK Bribery Act
Intent required “Corrupt” intent not required
Promotional Expenses
No affirmative defense; However, seemingly lenient treatment of promotional expenses and hospitality.
JV Exposure •Guidance suggests may be less potential exposure for bribes by a JV of which a company is a member.
•Indirect benefit to a JV partner solely because of its equity ownership in a JV company may be insufficient for liability absent evidence that the bribe was paid specifically "with the intention of benefiting that" partner.
•Also, seems that in a contractual JV other partners may escape liability for bribes paid by the operating partner
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An Integrated Anti-Corruption Compliance Approach
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An Integrated FCPA Compliance Approach
1. Policies & Procedures
4. Education & Training
6. Enforcement
7. Investigation
Policies developed under the direction of the compliance officer and committee.
Policies provided to all affected employees and business partners.
Require affected employees to participate in appropriate training programs.
Retain records of training programs including attendance.
2. CommunicationHotline or other reporting process so employees
can make complaints or ask questions.
Procedures to protect the identity of complainants and to protect them from retaliation.
8. Monitoring & Auditing Risk evaluation to monitor compliance, identify
problem areas and reduce identified problems.
Compliance officer to document the monitoring and report suspected breaches to senior management and the compliance committee.
Develop and enforce policies and procedures to address compliance breaches including sanctions.
Develop and implement a response plan and policies to investigate alleged non-compliance.
3. Compliance Officer and
Compliance Committee
Officer is focal point for compliance and has authority to review documents.
5. Due Diligence RequirementsOn employees and third-party consultants,
distributors & joint venture partners.
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Integrated Anti-Corruption Compliance Approach: Key Themes
1.“Tone From the Top”: Business leaders should promote anti-corruption principles and be personally accountable for compliance and ethical behavior in their units.
2.Compliance Organization: Intelligently structured compliance organizations identify and mitigate risks, scrutinize high-risk activities, and advise business leaders and the Board
directly on operational and compliance matters.
3.Training: Training ensures that employees are able to identify and respond to risks.
4.Review & Approval Tools: Automated and user-friendly review and approval tools
facilitate centralized decision making on global compliance matters.
5.Reporting: Employees should be able to report corruption concerns easily, anonymously, without fear of retaliation, and with assurance that the issues will be addressed promptly.
6.Incentives & Discipline: To provide incentives for employees to comply with laws and company rules, organizations should consider compliance in determining compensation and take appropriate disciplinary actions.
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Integrated Anti-Corruption Compliance Approach: Key Themes
7.Investigating Potential Problems: Quickly and objectively investigating potential compliance problems projects a strong “tone from the top” and allows organizations to identify areas of risk.
8.Financial Controls: Robust financial controls ensure that funds are only released as authorized by company policies—and not for illicit purposes.
9.Integrity Due Diligence: Due diligence is the best way to guard against potential counterparties acting corruptly or fraudulently. Companies should conduct significant due diligence on potential M&A targets.
10.Sales & Marketing Controls: Companies should implement controls to govern interactions with government officials, procurement, contracting, lobbying, marketing expenditures, and financial transactions.
11.Supplier Contracting Controls: Because procurement presents risks, vendors should be treated as counterparties and subjected to compliance due diligence, which should include screening for risk factors and “red flags.”
12.Monitoring & Auditing: Vigilant monitoring and internal audits play key roles in
evaluating the effectiveness of companies’ compliance controls and activities.
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UK Bribery Act “Adequate Procedures” Six Principles Guidance
“The Government considers that procedures put in place by commercial organisations wishing to prevent bribery being committed on their behalf should be informed by six principles….
These principles are not prescriptive. They are intended to be flexible and outcome focussed, allowing for the huge variety of circumstances that commercial organisations find themselves in.”
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UK Bribery Act “Adequate Procedures” Six Principles Guidance1. Proportionate Procedures.
• proportionate to risk company faces in particular jurisdictions where it does business. Need to be clear, practical, accessible
2. Top-level commitment
• Management should foster culture in which bribery is not acceptable
3. Risk Assessment
• Consider both internal and external risks. Performed periodically
4. Due diligence.
• Particular emphasis on agents/consultants/ foreign business partners.
5. Communication (including training)
• Policies/procedures should be embedded and understood & training proportionate to risk and tailored to specific needs. Recall broad meaning of “associated persons.”
6. Monitor and review
• Evaluate effectiveness and adapt where necessary
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UK Bribery Act: Recommended Action Steps
• Substantive Legal Issues
– Assess whether or not you fall within jurisdiction of the Act
– Assess need to modify substantive corporate policies on issues such as facilitating payments and entertainment (where there are conflicting standards)
• Compliance Program
– Remember, this is an affirmative defense to corporate offense
– Evaluate existing compliance program against the “adequate Procedures” guidelines; modify as needed
– Update training to include UK Bribery Act and develop plan (using risk assessment) to role out to managers, employees and “associated persons”
• Contracts/Agreements
– Evaluate standard “anti-corruption” language in one off agreements (JOA’s), MSA’s, agent/business partner agreements and revise as needed to include UK Bribery Act as applicable law, audit rights, etc.
THINK ANTI-CORRUPTION LAWS NOT JUST FCPA!
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Sources of Compliance Guidance
“With regard to corporate cases, the Department will continue to pursue guilty pleas or, if necessary, indictments against corporations — when the criminal conduct is egregious, pervasive and systemic, or when the corporation fails to implement compliance reforms, changes to its corporate culture, and undertake other measures designed to prevent a recurrence of the criminal conduct.”— Lanny Breuer (Feb. 25, 2010)
Sources US FCPA:– DOJ’s Principles of Federal Prosecution of Business Organizations
– Section 8B2.1 of the U.S. Sentencing Guidelines
– DOJ Opinion Procedure Releases and FCPA settlements
– Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
– Federal Acquisition Regulation 52.203-13, Contractor Code of Business Ethics and Conduct
– OECD’s Good Practice Guidance on Internal Controls, Ethics and Compliance
– Ethics and compliance practitioners
Sources UK Bribery Act:
– Ministry of Justice, The Bribery Act 2010 Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (section 9 of the Bribery Act 2010)
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THANK YOU
Jay G. Martin Vice President, Chief Compliance Officer, and Senior Deputy General Counsel Baker Hughes Incorporated
D. Marie Wagner Senior Counsel - International,and Solicitor Anadarko Petroleum [email protected]
Best Practices: Foreign Business Partners
1. Thorough due diligence on the integrity and reputation of prospective business partners
– Use only partners with a known reputation as experienced business persons who act with integrity
– Document selection and due diligence process
2. Certification of knowledge of and compliance with the anti-corruption laws critical
3. Clearly defined duties in contract, with strong anti-corruption representatives and warranties
4. Audit and Termination rights (Continuous monitoring / oversight after selection critical)
5. Prohibit business partners from employing sub-agents without prior approval (Sub-agents submitted through agent vetting process)
6. No abnormal or above-market payments
– Do not exceed the “going rate” for commissions or fees to the business partner
– Invoice business partner only the actual sales price for the goods supplied
7. Maintain a detailed file on each business partner
