FCPA Compliance and Ethics Blog

December 30, 2010

Looking Back – Some FCPA Issues from 2010

We conclude our blog this year with some of our favorite Foreign Corrupt Practices Act (FCPA) issues that have arisen or were discussed in 2010. The following list is not exhaustive but is designed to supplement our prior posts on our top enforcement actions and investigations from 2010 with other issues we felt were of importance to the FCPA compliance and ethics practitioner.

 I.                   Amendments to the FCPA  

At what the FCPA Blog termed “an unprecedented investigation into the Department of Justice’s (DOJ) enforcement of the Foreign Corrupt Practices Act (FCPA)”, in a hearing on November 30, 2010 entitled the “Examining Enforcement of the Foreign Corrupt Practices Act” before the US Senate Judiciary Committee, Subcommittee on Crime and Drugs, three panelists, Butler University Professor Michael Koehler, and attorneys Andrew Wiessmann, of Jenner and Block and Michael Volkov, of Mayer Brown, presented proposed amendments to the FCPA.

Professor Michael Koehler (a/k/a The FCPA Professor)

Professor Koehler focused on two issues; (1) the lack of individual prosecutions; and (2) what he believes is an over-expansive definition of foreign governmental official. The DOJ’s theory of prosecution was based on the claim that employees of alleged [state-owned enterprises] were “foreign officials” under the FCPA – an interpretation Professor Koehler believes is contrary to Congressional intent. Prosecuting individuals is a key to achieving deterrence in the FCPA context and should thus be a “cornerstone” of the DOJ’s FCPA enforcement program. He argued that the answer is not to manufacture cases, or to prosecute individuals based on legal interpretations contrary to the intent of Congress in enacting the FCPA while at the same time failing to prosecute individuals in connection with the most egregious cases of corporate bribery.

 Michael Volkov

Attorney Michael Volkov advocated the adoption of a limited amnesty program for corporate self-compliance with the FCPA. Volkov’s proposal consists of the following elements: 

  1. Participating company agrees to conduct a full and complete review of the company’s FPCA compliance program for the five previous years.
  2. This internal review is to be conducted, jointly, by a major accounting firm or specialized forensic accounting firm and a law firm.
  3. The company agrees to disclose the results of the legal-accounting audit to the DOJ, Securities and Exchange Commission (SEC), its investors and the public.
  4. If the company discovers any FPCA violations in the audit, the Company agrees to take all steps to eliminate the violation(s) and implement appropriate controls to prevent further violations.
  5. The company would subject itself to an annual review for five years to ensure that FCPA compliance was maintained.
  6. The company would retain a person similar to an independent FCPA compliance monitor who would annually certify to the DOJ and SEC that the company was in FCPA compliance.
  7. In exchange for this, both the DOJ and SEC would agree not to initiate any enforcement actions against a company during this period except in the situation where a FCPA violation was found and it “rose to flagrant or egregious levels.” 

Andrew Wiessman

Attorney Andrew Wiessmann testified about 2 of his 5 proposed amendments to the FCPA (the full five proposed amendments are set out in Whitepaper entitled “Restoring Balance-Proposed Amendments to the Foreign Corrupt Practices Act”). They were (1) to create a compliance defense available to a company if it has an adequate compliance program, similar to the “adequate procedures” defense available under the UK Bribery Act; and (2) to limit the legal doctrine of respondeat superior liability where a company can demonstrate that it took specific steps to prevent the offending employee’s actions. 

Under this proposal, Wiessmann believes that companies will increase their compliance with the FCPA because they will now have a greater incentive to do so. He envisions a defense similar to the “adequate procedures” defense, noted in the UK Bribery Act, where companies will be protected if a rogue employee engages in corruption and bribery despite a company’s diligence in pursuing a FCPA compliance program; and lastly “it will give corporations some measure of protection from aggressive or misinformed prosecutors, who can exploit the power imbalance inherent in the current FCPA statute—which permits indictment of a corporation even for the acts of a single, low-level rogue employee—to force corporations into deferred prosecution agreements.” 

Most interestingly, the hearing began with the Subcommittee Chairperson, Senator Arlen Specter, questioning the DOJ’s policy of obtaining large fines from corporations, rather than prosecuting individuals, to deter violation of the law. He specifically cited the example of the enforcement action against Siemens Corp., which resulted in a fine of $1.6 billion, yet had no individual prosecutions. He also pointed to the examples of BAE which paid a fine of $400 million and the Daimler Corporation which paid a fine of $185 million and subsequently there have been no individuals prosecuted from either of these corporations. Senator Specter posed the question to the DOJ representative at the hearing, Greg Andres, as to whether the imposition of fines simply was viewed by companies as a cost of doing business. Senator Specter’s statements were clearly in opposite to the testimony of the three witnesses who seemed to be calling for more defenses, greater clarity and an amnesty program. 

James McGrath

Another practitioner, Cleveland attorney James McGrath, also weighed in with a proposal for an amendment to respond to what he called “seismic shift in the government’s perception of its role” regarding internal company FCPA investigations. Responding to Lanny Breuer’s advise that when a possible FCPA violation has been discovered, a corporation should “seek the government’s input on the front end of its internal investigation”, McGrath proposed an amendment to the FCPA that would expressly prohibit requiring a company to immediately involve the DOJ at the outset of the internal investigation process as mandatory for receiving cooperation credit under the US Sentencing Guidelines. He argued that for those companies that do invite the government in as investigatory partners from the beginning, there should be some transactional or use immunity — or at least some limitation on penalties and sanctions — for other wrongs uncovered during the course of the FCPA investigation in recognition of their good-faith efforts to cooperate with the government. Such legislation amending the FCPA would protect the balance of interests in corporate criminal and civil prosecutions already struck by the US Sentencing Guidelines. 

II.                Bribery Act 

Q: Why is a UK law on our Top FPCA issues for 2010?

A: Because it is a game changer. 

 Passed in April 2010 and set to become effective on April 1, 2011, the UK Bribery Act represents what former DOJ prosecutor and now private practitioner Mark Mendelsohn is quoted in the Wall Street Journal to have said “is the FCPA on steroids.” In the December 28, 2010 article entitled, “ U.K. Law On Bribes Has Firms In a Sweat”, reporter Dionne Searcey indicated that the Bribery Act replaces several old British statutes and codifies in one location, that country’s laws against bribery in the commercial context. Although Searcey called the law’s scope “murky” the UK Ministry of Justice has released preliminary guidance on a key component of the Bribery Act; what may constitute an adequate compliance program. 

This is important because there is one affirmative defense listed in the Bribery Act and it is listed as the “adequate procedures” defense. The Explanatory Notes to the Bribery Act indicate that this narrow defense would allow a corporation to put forward credible evidence that it had adequate procedures in place to prevent persons associated from committing bribery offences. The legislation required the UK Ministry Justice to publish guidance on procedures that relevant commercial organizations can put in place to prevent bribery by persons associated with their entity. The Ministry of Justice published its guidance in September and took comments from interested parties. The final guidance is scheduled to be made available in early 2011. This guidance may well set the new worldwide best practices for a corporate anti-bribery and anti-corruption program. 

In addition to providing substantive guidance on what may constitute the basis for the only affirmative defense under the Bribery Act, there are several substantive differences between the FPCA and the UK Bribery Act which all companies should understand. The Bribery Act: 

  • has no exception for facilitation payments.
  • creates strict liability of corporate offense for the failure of a corporate official to prevent bribery.
  • specifically prohibits the bribery or attempted bribery of private citizens, not just governmental officials.
  • not only bans the actual or attempted bribery of private citizens and public officials but all the receipt of such bribes.
  • has criminal penalties of up to 10 years per offense not 5 years as under the FCPA.  

The Bribery Act is a significant departure for the UK in the area of foreign anti-corruption. It cannot be emphasized too strongly that the Bribery Act is significantly stronger than the FCPA. The Bribery Act provides for two general types of offence: bribing and being bribed, and for two further specific offences of bribing a foreign public official and corporate failure to prevent bribery. All the offences apply to behavior taking place either inside the UK, or outside it provided the person has a “close connection” with the UK. A person has a “close connection” if they were at the relevant time, among other things, a British citizen, an individual ordinarily resident in the UK, or a body incorporated under the law of any part of the UK. Many internationally focused US companies have offices in the UK or employ UK citizens in their world-wide operations. This legislation could open them to prosecution in the UK under a law similar to, but stronger than, the relevant US legislation.

One positive development from the Bribery Act is that it does away with any legal question of “who is a foreign governmental official” which is often a question under the FCPA.  The DOJ uses other legislation, such as the Travel Act, which can be used to ban commercial bribery generally, to back corrupt actions made to a foreign person who is not a governmental official, into an FCPA violation. The Bribery Act simply bans all commercial bribery. All US companies with UK subsidiaries or UK citizens as employees, should need to understand how this law will impact their operations and integrate the Bribery Act’s adequate procedures into their overall compliance and ethics policies sooner rather than later. 

III.             FCPA Based Litigation 

1. Your Dog Bit Me – Alba. As reported by the FCPA Blog, the Aluminum Bahrain BSC., known as Alba, is majority-owned by the government of Bahrain. It has filed two lawsuits against its own suppliers, alleging corruption and fraud against it by the suppliers. In the first suit, Alba sued Alcoa Inc., its long-time raw materials supplier, for corruption and fraud. The suit, in Federal court in Pittsburg, alleged that over a 15-year period Alba was overcharged $2 billion for materials. This money, according to the suit, was initially paid to overseas accounts controlled by Alcoa’s agent, London-based Victor Dahdaleh, and some was then used to bribe Alba’s executives in return for supply contracts. In the second suit, Alba claimed that the Japanese trading company Sojitz Corp., and its US subsidiary paid $14.8 million in bribes to two of Alba’s employees in exchange for access to metals at below-market prices. Alba sought money damages in both suits. An interesting development in both suits has been that the DOJ intervened saying discovery could interfere with the governments’ own investigation into potential criminal wrongdoing, including possible violations of the FCPA. 

2. How Fast Can You Get to the Courthouse – SciClone.SciClone is the most recent example of a fast growing trend that occurs when some type of FCPA investigation is announced, of law firms pouncing with lawsuits claiming securities violations before the investigations are concluded. As reported by the FCPA Professor, on August 9th, SciClone announced that it had been  contacted by the SEC and was advised that the SEC had initiated a formal, non-public investigation of SciClone. In connection with this investigation, the SEC had issued a subpoena to SciClone requesting a variety of documents and other information. The subpoena requested documents relating to a range of matters including interactions with regulators and government-owned entities in China; activities relating to sales in China and documents relating to certain company financial and other disclosures. On August 6th, 2010, the Company had received a letter from the DOJ indicating that it was  investigating FCPA issues in the pharmaceutical industry generally, and had received information about the Company’s practices suggesting possible violations. Within the week, its stock dropped over 31%. Within one week, 5 law firms announced that they were investigating the company for potential securities laws investigation and within 2 weeks, seven different law firms had filed class actions suits against the company for securities violations. 

3. Don’t Do as I Do, Do as I Say – Noisy Exits.This past year brought a growing trend for terminated employees to file suit claiming that they were fired for either (1) reporting allegations of conduct violative of the FCPA or (2) refusing to engage in conduct which would violate the FCPA. 

A recent example of the former was reported by the FCPA Professor in a post entitled “Yet Another Noisy Exit”. In this matter, the former Director & Controller of Mexico of Sempra Global, Rodolfo Michelon, was terminated by the company in March 2010. He later alleged that he discovered conduct by the company in Mexico which violated the FCPA, he subsequently reported this to the company and was fired for his efforts. In a California state court suit, he claimed that “The termination of the Controller employment was not only in retaliation for Michelon’s complaints, but it was also meant to keep Michelon from reporting the frauds and bribes to governmental, law enforcement officials.” The Company vehemently denied these allegations, responding, as reported in the San Diego Tribune, that Michelon was a “disgruntled ex-employee attempting to cash in by making ‘outlandishly false claims and misrepresentations’ after being let go in a routine reorganization.” The company also noted that it had investigated the allegations and found them to be “without merit.” 

An example of the later claim was  brought by Steven Jacobs, the former President of Macau Operations for Las Vegas Sands Corp., until his termination in July 2010. In a suit against the Las Vegas Sands Corp., alleging breach of contract and tort-based causes of action, Jacobs alleged, among other things, that he was ordered, but refused, to use improper leverage and undue influence on certain Chinese governmental officials so as to obtain favorable treatment for his employer in China. Additionally he alleged that was required “to use the legal services of a Macau attorney […][an individual media is reporting as a member of a Chinese local government executive council] despite concerns that [the individual’s] retention posed serious risks under the criminal provisions of the United States code commonly known as the Foreign Corrupt Practices Act (‘FCPA’).” As noted by the FCPA Professor in a blog entitled, “Another Noisy Exit the company has stated, “While Las Vegas Sands normally does not comment on legal matters, we categorically deny these baseless and inflammatory allegations.” 

IV.             Law Students Enter the FCPA Debate 

Two law students blogged about law review articles, yet to be published, which greatly enhanced the FCPA world in the past year. UCLA student Kyle Sheahen, explored the issue of affirmative defenses under the FCPA in an article entitled “I’m Not Going to Disneyland: Illusory Affirmative Defenses Under the Foreign Corrupt Practices Act”. In his paper, he sets forth his proposition that FCPA enforcement actions provide “uneven indicators or what conduct the government considers covered by the defense. Consequently, in the absence of authoritative judicial interpretation or clear regulatory guidance, corporate managers are required to make educated guesses as to whether contemplated payments will qualify as “bona fide promotional expenses.” 

Bruce Hinchey discussed his upcoming publication, “Punishing the Penitent: Disproportionate Fines in Recent FCPA Enforcements and Suggested Improvements,” which analyzes the differences between bribes paid and penalties levied against companies that do and do not self-disclose under the FCPA. Using a regression analysis, Hinchey concluded that companies which did voluntarily self-disclose paid higher fines than companies which did not self-disclose to the DOJ. He concluded his post by noting that this evidence was contrary to the conventional wisdom that a company receives a benefit from self-disclosure and such evidence would ”raise questions about whether current FCPA enforcement is fundamentally fair”.

While we disagreed with some of the conclusions of both Sheahan and Hinchey, we found their contributions enhanced the FCPA discussions for the compliance practitioner. To have law students penning authoritative law review articles signals an upcoming group of lawyers who will bring a passion to the FCPA debates in the future. We wish them both well as they enter the FCPA fray as attorneys. 

We appreciate the support of all readers, contributors, commentators and critics of our site, a very Happy and Safe New Year’s to all. So we leave this most eventful FCPA year of 2010 and move into 2011. With all we have learned in the past year, the only thing we can say with certainty is “more will be revealed”.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

 

 

December 29, 2010

Practical Tips on In-Person FCPA Training

Filed under: FCPA,Training — tfoxlaw @ 3:24 pm
Tags: , ,

Ed. Note-we are pleased to present a post from our colleague Mary Shaddock Jones, Assistant General Counsel and Director Of Compliance at Global Industries, Ltd.

There should be no doubt in anyone’s mind that anti-bribery laws are here to stay and will be enforced vigorously. The Department of Justice has recently published links to unofficial translations of the Foreign Corrupt Practices Act in Arabic, Bengali, Chinese (Cantonese), Chinese (Mandarin), French, German, Japanese, Javanese, Korean, Malay, Portuguese, Russian, Spanish, and Urdu. According to the DOJ website, the goal of providing these unofficial translations is to increase the general awareness and understanding of the FCPA by both U.S. companies engaging in international business and their foreign counterparts.

The question companies from all of the world face is who, what, where and how should they communicate the law to their employees and their agents. In January 2010, the FCPA Compliance and Ethics Blog posted two articles on Conducting Effective Compliance Training. (See here and here.) The articles clearly pointed out that there are a variety of ways in which communication of the FCPA can be carried out: (1) in-person training; (2) web-based training; and (3) a combination of the above utilizing a filmed version of the in-person training which can be sent out via computer.

I personally believe that in-person training is the most effective way to help an employee or agent really understand both the law and the Company’s stance on complying with the law. Sure, it is great to have a translation of the text of the FCPA in Arabic, Portuguese, Urdu et al. But how many people can look at a translated text of the FCPA and really understand the nuances involved? I would venture to say “not many”. In addition to reaching out to the employees and agents personally to teach them, the in-person training allows company’s the opportunity to learn from those closest to the issue what is actually occurring in the various offices overseas. The first thing I say in my FCPA training sessions is this “I don’t get paid enough money and there isn’t enough money in the world sufficient to make me embarrass myself, my family and friends and risk my freedom by intentionally violating the Foreign Corrupt Practices Act” and “I hope at the end of this session you feel exactly the same way.” You can tell an employee that the U.S. government has the right under the law to fine them $250,000 per violation under the anti-bribery provisions and/or $5 million per violation for the books and records and internal control provisions- but how many employees have that kind of money? Fines are less likely to make an impact, in my opinion, than the ability of the U.S. government to put a person in jail for 5-20 years per violation. That fact when explained face to face quickly gets their attention.

Training to be effective has to grab the listeners’ attention. Here are a couple of suggestions on what I have found to be effective in my worldwide training for Global Industries, Ltd.:

1. Start out with a few recent statistics- fines and penalties against companies and individuals. Help them understand what is at stake for them and for the company. There are plenty of recent examples that can be utilized.
2. Tell them straight off- that even though they are a citizen of another company and live outside the United States that they are, with extradition treaties, subject to being put into a U.S. jail if they are found guilty of violating the U.S. law.
3. Break down the elements of the FCPA and have the training in dual languages. If the majority of the listeners do not speak English, then have an interpreter with you- but have each slide in English and in the native language. By having it in their native language- you reinforce that this law applies to them.
4. Give them some real life examples. The plea agreements on file with the DOJ and SEC list plenty of examples of what “facts” led to the DOJ/SEC investigations.
5. Give the listeners copies or links to your company’s FCPA, gifts and entertainment, and charitable donation procedures and explain how all of these procedures work with one another.
6. Post copies of the training sessions and handouts on the company intranet so the listeners have the ability to return to the training if they have questions after the training sessions have ended.
7. Hang around after your training sessions so that people who want to ask questions, but don’t want to do so in front of other people have the opportunity to talk to you. You may be surprised at how much you learn by not being in a hurry to leave once you finish your training sessions.

I know it’s not possible or practical to reach every employee in every foreign location for in-person training, nor is it necessary. But I believe that every person you train in-person has a rippling effect in the organization. There is little substitute for looking someone in the eyes and telling them that they have the absolute right to refuse to violate the law if requested to do so by someone within their company. It is empowering to them and sends a powerful message on the company’s commitment to compliance.

Mary Shaddock Jones is Assistant General Counsel and Dir. Of Compliance at Global Industries, Ltd. Mary can be reached at maryj@globalind.com. The views and opinions expressed here are my own and not necessarily those of my employer.

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December 28, 2010

Top 10 FCPA Investigations of 2010, Part II

Yesterday we presented our list of Top 10 investigations of 2010, Part I. It contained numbers 1 through 5. Today we conclude our list with numbers 6 through 10. We view these matters as educational opportunities for the FCPC, Bribery Act or other compliance and ethics practitioner. As we noted in Part I, we are indebted to the FCPA Blog and FCPA Professor for their timeless work in bringing these matters to the compliance world’s attention as soon as they become public knowledge. On to Part II…

6. PBSJ- The Effect of an Ongoing FCPA Investigation in a Merger and Acquisition.

As reported by the FCPA Blog, in what may be the first case of its kind, a U.S. company that has no securities traded on an exchange but files periodic reports with the SEC disclosed an internal investigation into possible Foreign Corrupt Practices Act violations. The matter involved PBSJ Corporation, which in January, 2010, stated that it would not satisfy the filing deadline for its Annual Report on Form 10-K for the year ended September 30, 2009 “due to an internal investigation being conducted by the Audit Committee of the Board of Directors.” The company said the purpose of the internal investigation “is to determine whether any laws have been violated, including the Foreign Corrupt Practices Act, in connection with certain projects undertaken by PBS&J International, Inc., one of the Company’s subsidiaries, in certain foreign countries.”

However this was not the reason that PBSJ made our Top 10 list. In the spring and summer of 2010, PBSJ sought bidders for itself. One of the concerns was the ongoing and unresolved FCPA investigation. PBSJ whittled the bidders down to two finalists, Company A and Company B. Company B had a higher bid price but demanded that the merger agreement include additional closing conditions regarding the FCPA investigation and a definition of “Company Material Adverse Effect” that would have allowed Company B to terminate the merger agreement in the event of adverse developments in the FCPA investigation. PSBJ declined to provide this in the closing documents and so PBSJ took a lower stock price for its shareholders because of its unresolved FCPA investigation.

7. Schlumberger-Red Flags, Red Flags and More Red Flags.

In October, the Wall Street Journal reported that the DOJ was investigating allegations of possible bribery in Yemen by Schlumberger Ltd., in connect with Schlumberger’s 2002 agreement with the Yemen government to create a national exploration data-bank for the country’s oil industry. The allegations involve a foreign business representative, Zonic Invest Ltd., which became involved in the 2002 Data Bank Development Project between Schlumberger and Yemen’s national oil company, the Petroleum Exploration and Production Authority. Zonic’s General Director is the nephew of the then and current President of Yemen, Ali Abdullah Saleh. From the WSJ article, it was not clear the precise business relationship between Schlumberger and Zonic, for instance: whether Zonic was an agent of Schlumberger, a joint venture partner or simply a contractor.

In the WSJ article there were several reported allegations which stand out as classic Red Flags in Foreign Corrupt Practices Act (FCPA) compliance policies. Initially, Petroleum Exploration and Production Authority had urged Schlumberger to hire Zonic as a go-between at or near the time the contractual negotiations were nearing conclusion. Second the data-bank project went forward after Schlumberger “agreed to hire and pay Zonic a $500,000 signing bonus” then the contract between Schlumberger and the Petroleum Exploration and Production Authority was concluded. Indeed the General Director of Zonic was quoted as saying, “If it wasn’t for Zonic, there would have been no data-bank project.” Lastly, the WSJ article does not reference that any written contract was executed between Schlumberger and Zonic for this $500,000 payment.

As many Red Flags that may have been raised in the WSJ report of the actions and statements that transpired before the contract for the data-bank project was concluded between Schlumberger and the Petroleum Exploration and Production Authority, there were several raised thereafter. After the contract for was concluded, WSJ reported that internal Schlumberger documents revealed that “Zonic wanted a roughly 20% cut of Schlumberger’s profits from the project.” While Schlumberger did not agree to pay such percentage of profits outright, it was noted that Schlumberger documents stated that the Yemen country manager had “suggested that those amounts could be compensated [to Zonic] through services.” These services were said to include providing personnel to the project, networking, furniture and computer hardware. Payments for such services were made, even though there was no contract between Schlumberger and Zonic, from 2002 to 2004. A contractual relationship between the parties was established in 2004 and lasted until at least 2007. The total amount paid by Schlumberger to Zonic was reported to be $1.38 from 2003 to 2007. However, with regards to the services and products supplied by Zonic to Schlumberger, the WSJ noted that some were “above market rate” and others were unnecessary; specifically noting that over $200,000 was paid for certain computer hardware, “although Schlumberger itself was among the leading providers of such hardware.” The Daily Finance Blog reported, in an October 8, 2010 posting, that Zonic did not provide some of the services for which it was paid.

8. CB Richard Ellis-No business or industry immune from the FCPA.

In October, CB Richard Ellis, global real estate firm disclosed possible FCPA violations related to its operations in China. As reported by the FCPA Blog, the Company detailed in a SEC filing that its employees made payments for entertainment and gifts to Chinese government officials, which were discovered during an internal investigation. The Company said in the filing that it has” As a result of an internal investigation that began in the first quarter of 2010, …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. The Company also said that it had self disclosed the payments to the DOJ and SEC in February, 2010. It has been cooperating with the agencies and has taken other unspecified “remedial measures.”

As reported by the FCPA Professor, the Company also reported another investigation. This second investigation began in the third quarter of 2010. It was labled as an “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.”

Most business believe that the DOJ and SEC target industries or sectors which work traditionally in countries where corruption is perceived to be endemic, such as the energy sector. However this CB Richard Ellis investigation clearly demonstrates that any company which does business overseas needs to have a full FCPA compliance program in place.

9. Rino-Welcome to the (FCPA) Club.


In what the FCPA Professor termed the first focus of a FCPA inquiry on a China-based issuer, the Chinese company Dalian disclosed in an SEC filing that it was notified that the SEC was “conducting a formal investigation relating to the Company’s financial reporting and compliance with the Foreign Corrupt Practices Act for the period January 1, 2008 through the present. The Company is cooperating with the SEC’s investigation. It is not possible to predict the outcome of the investigation, including whether or when any proceedings might be initiated, when these matters may be resolved or what if any penalties or other remedies may be imposed.”

As reported in the Wall Street Journal, the DOJ and the SEC have never charged a listed Chinese company. At least two Chinese subsidiaries of U.S. issuers — DaimlerChrysler China Ltd., now known as Daimler North East Asia Ltd. and DPC (Tianjin) Co. Ltd., a medical products company — have settled foreign bribery charges with the agencies. But now we have the first Chinese issuer. All we can say is to quote the FCPA Professor, “Welcome to the Club”.

10. SciClone-hell hath no fury like a SEC Subpoena.
The pharmaceutical company SciClone had a fairly tumultuous August and September. As reported by the FCPA Professor, it included the following:

August 10th-Shares of the Company as low as 40% down from the previous day’s close, closing down 31.9%. Levi & Korsinsky, The Law Offices of Howard G. Smith LLP, the law firm of Kahn Swick & Foti, LLC and the law firm of Roy Jacobs & Associates all announced that they were is investigating SciClone on behalf of shareholders for possible violations of state and federal securities laws.

August 11-The law firms of Pomerantz Haudek Grossman & Gross, Statman, Harris & Eyrich, Goldfarb Branham and Finkelstein Thompson all announced that they were investigating claims on behalf of investors of SciClone to determine whether it has violated federal securities laws.

August 12-the law firm of Robbins Umeda announced that it commenced an investigation into possible breaches of fiduciary duty and other violations of the law by certain officers and directors at the Company.

August 13-The law firm of Kahn Swick & Foti announced that the firm has filed the first securities fraud class action lawsuit against SciClone in the United States District Court for the Northern District of California.

August 19-the law firms of Barroway Topaz Kessler Meltzer & Check and Brower Piven
both announced that they had filed class action lawsuits was filed in the United States District Court for the Northern District of California on behalf of purchasers of the securities of SciClone and purchasers of the common stock of SciClone.

August 20-the law firm of Kendall Law Group announced an investigating of SciClone for shareholders. Unfortunately another class action law suit was filed, this time by the law firm of Ryan & Maniskas.

August 28-the law firm of Roy Jacobs & Associates (again) announced that it was investigating SciClone for potentially violating the federal securities laws.

September 7-The Shuman Law Firm announced that it had filed a class action lawsuit against the Company.

September 8-the law firm of Kaplan Fox & Kilsheimer announced that it had filed a class action suit against SciClone.

September 16-the law firm of Strauss & Troy announced that it had filed a class action lawsuit against SciClone for potential violations of state and federal law.

September 23- The law firm of Lieff Cabraser Heimann & Bernstein announce that class action lawsuits have been brought on behalf of purchasers of the common stock of SciClone.

So what did SciClone actually do? The FCPA Professor reported that on August 9th, SciClone announced that it had been was contacted by the SEC and was advised that the SEC has initiated a formal, non-public investigation of SciClone. In connection with this investigation, the SEC had issued a subpoena to SciClone requesting a variety of documents and other information. The subpoena requested documents relating to a range of matters including: interactions with regulators and government-owned entities in China, activities relating to sales in China and documents relating to certain company financial and other disclosures. On August 6, 2010, the Company received a letter from the DOJ indicating that the DOJ was investigating FCPA issues in the pharmaceutical industry generally, and had received information about the Company’s practices suggesting possible violations.

During SciClone’s August 9th earnings conference call, the Company President and CEO Friedhelm Blobel stated that SciClone “intends to cooperate fully with the SEC and DOJ in the conduct of their investigations, and has appointed a special committee of independent directors to oversee the Company’s efforts.” Blobel noted that “as far as timing is concerned, the lawyers tell us that these investigations typically are long lasting.” We would opine that his lawyers got that point “spot on”.

So there it is, our Top 10 investigations from 2010. Last week, we listed our Top 10 enforcement actions from this year. We will end this year with a list of our Top 10 FCPA compliance issues for 2010. We hope you have found these lists and this blog helpful and instructive. We also want to thank everyone who has supported us throughout the year with kudos, criticisms, questions and comments.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.
© Thomas R. Fox, 2010

Top FCPA Investigations of 2010, Part I

Last week, we reviewed our Top 10 Enforcement actions of 2010. In the next two posts we will review our Top 10 investigations of 2010. While enforcement actions can provide the some of the DOJ/SEC most current thinking on FCPA compliance best practices the public information made available during investigations can provide to the FCPA, Bribery Act or other compliance professional many opportunities for teaching points and lessons learned by others. So with the opportunity for many educational occasions in mind we present our favorite investigations of 2010, Part I. 

1. Avon-What is the cost of non-compliance?

As noted by the FCPA Professor, one of the significant pieces of information to come out of the Avon matter is the reported costs as reported in the 2009 Annual Report the following costs have been incurred and are anticipated to be incurred in 2010: 

Investigate Cost, Revenue or Earnings Loss
Investigative Cost (2009) $35 Million
Investigative Cost (anticipated-2010) $95 Million
Drop in Q1 Earnings $74.8 Million
Loss in Revenue from China Operations $10 Million
Total $214.8 Million

 2. Gun Sting Case-Organized Crime Fighting Techniques Come to FCPA Enforcement 

On January 18, 2010, on the floor of the largest annual national gun industry trade show in Las Vegas, 21 people from military and law-enforcement supply companies were arrested, with an additional defendant being later arrested in Miami. The breadth and scope was unprecedented. Assistant Attorney General for the Criminal Division of the US Department of Justice (DOJ), Lanny Breuer, who led the arrest team, described the undercover operation as a “two-and-a-half-year operation”. The arrests represented the largest single investigation and prosecution against individuals in the history of the DOJ’s enforcement of the FCPA. 

As explained in the indictments, one FBI special agent posed “as a representative of the Minister of Defense of a country in Africa (Country A), [later identified as Gabon] and another FBI special agent posed “as a procurement officer for Country A’s Ministry of Defense who purportedly reported directly to the Minister of Defense”. Undercover criminal enforcement techniques such as wire taps, video tapes of the defendants and a cooperating defendant were all used in the lengthy enforcement action. In a later indictment, and seemingly unrelated to the “Africa” part of this undercover sting operation, allegations were included that corrupt payments were made to the Republic of Georgia to induce its government to purchase arms. 

3. HP-Questions, Questions and More Questions 

How does one begin to discuss HP’s compliance year? From FCPA to Mark Hurd’s very public departure for (alleged) sexual harassment to the recent announcement, reported in the WSJ, that the SEC is investigating Hurd in, ‘a broad inquiry that includes an examination of a claim the former chief executive officer shared inside information.” However we will focus on the FCPA matter which involves the alleged payment of an approximately $10.9 bribe to obtain a $47.3 million computer hardware contract with the Moscow Prosecutor’s Office. 

In an April 15, 2010, WSJ article, Mr. Dieter Brunner, a bookkeeper who is a witness in the probe, said in an interview that he was surprised when, as a temporary employee of HP, he first saw an invoice from an agent in 2004. “It didn’t make sense,” because there was no apparent reason for HP to pay such big sums to accounts controlled by small-businesses such as ProSoft Krippner, Mr. Brunner said. Mr. Brunner then proceeded to say he processed the transactions anyway because he was the most junior employee handling the file, “I assumed the deal was OK, because senior officials also signed off on the paperwork”.

Why didn’t HP self report? 

The WSJ article reported that by December 2009, German authorities traced funds to accounts in Delaware and Britain. In early 2010, German prosecutors filed a round of legal-assistance requests in Wyoming, New Zealand and the British Virgin Islands, hoping to trace the flow of funds to new sets of accounts. Further, HP knew of the German investigation by at least December 2009, when police in Germany and Switzerland presented search warrants detailing allegations against 10 suspects. The New York Times, in an article dated April 16, 2010, reported that three former HP employees were arrested back in December 2009 by German prosecutors. Although it was unclear from the WSJ article as to the time frame, HP had retained counsel work with prosecutors in their investigation. Apparently, since the SEC only announced it had joined the German and Russian investigation last week, HP had not self-disclosed the investigation or its allegations to the US Department of Justice (DOJ) or SEC. 

Where were the SEC and DOJ? 

On April 16, 2010, the FCPA Professor wondered in his blog if it was merely coincidence that a few weeks ago the US concluded a Foreign Corrupt Practices Act (FCPA) enforcement action against the Daimler Corporation, an unrelated German company, for bribery and corruption in Russia and now it is German and Russian authorities investigating a US company for such improper conduct in Russia. The Professor put forward the following query: is such an investigation “Tit for tat or merely a coincidence?” And much like Socrates, he answered his own question with the musing “likely the later”. The WSJ LawBlog noted in its entry of April 16, 2010, that it would be somewhat unusual for the DOJ or SEC to stand by and watch European regulators conduct a sizable bribery investigation of a high-profile US company; phrasing it as “It’s like asking a child to stand still after a piñata’s been smashed open”.

In September, the WSJ reported that the HP bribery probe has widened and HP, itself, has announced that investigators have “now expanded their investigations beyond that particular transaction.” This original investigation pertained to an investigation of allegations that HP, through a German subsidiary, paid bribes to certain Russian officials to secure a contract to deliver hardware into Russia. The contract was estimated to be worth approximately $44.5 million and the alleged bribes paid were approximately $10.9 million. In a 10-Q filing made with the SEC, HP stated that the investigation has now expanded into transactions “in Russia and in the Commonwealth of Independent States sub region dating back to 2000.” The WSJ noted that US public companies, such as HP, are only required to report FCPA investigations in SEC filings if they “are material for investors.” 

4. Team Inc.- no de minimis exception in FCPA.  

As reported by the FCPA Professor, in August 2009, Team disclosed that an internal investigation conducted by FCPA counsel “found evidence suggesting that payments, which may violate the Foreign Corrupt Practices Act (FCPA), were made to employees of foreign government owned enterprises.” The release further noted that “[b]ased upon the evidence obtained to date, we believe that the total of these improper payments over the past five years did not exceed $50,000. The total annual revenues from the impacted Trinidad branch represent approximately one-half of one percent of our annual consolidated revenues. Team voluntary disclosed information relating to the initial allegations, the investigation and the initial findings to the U.S. Department of Justice and to the Securities and Exchange Commission, and we will cooperate with the DOJ and SEC in connection with their review of this matter.” 

There is no de minimis exception found in the FCPA there are books and records and internal control provisions applicable to issuers like Team. Thus, even if the payments were not material in terms of the company’s overall financial condition, there still could be FCPA books and records and internal control exposure if they were misrecorded in the company’s books and records or made in the absence of any internal controls. 

In its 8K, filed on January 8, 2010, Team reported “As previously reported, the Audit Committee is conducting an independent investigation regarding possible violations of the Foreign Corrupt Practices Act (“FCPA”) in cooperation with the U.S. Department of Justice and the Securities and Exchange Commission. While the investigation is ongoing, management continues to believe that any possible violations of the FCPA are limited in size and scope. The investigation is now expected to be completed during the first calendar quarter of 2010. The total professional costs associated with the investigation are now projected to be about $3.0 million.” 

So the FCPA Professor posed the question: 

A $3 million dollar internal investigation concerning non-material payments made by a branch office that represents less than one-half of one percent of the company’s annual consolidated revenues?” 

And his answer: “Wow!” 

In August, 2010, when disclosing its interim financial results for this year, Team reported, “The results of the FCPA investigation were communicated to the SEC and Department of Justice in May 2010 and the Company is awaiting their response. The results of the independent investigation support management’s belief that any possible violations of the FCPA were limited in size and scope. The total professional costs associated with the investigation were approximately $3.2 million.” 

So $50,000 in (possibly) illegal payments equate to over $6 million investigative costs, so far. 

5. ALSTOMArrests in the Board Room. 

As reported by the FCPA Blog, the UK Serious Fraud Office reported in dramatic fashion the arrest of three top executives of French industrial giant ALSTOM ‘s British unit. The three ALSTOM Board members were suspected of paying bribes overseas to win contracts. The SFO Press Release stated that “[t]hree members of the Board of ALSTOM in the UK have been arrested on suspicion of bribery and corruption, conspiracy to pay bribes, money laundering and false accounting, and have been taken to police stations to be interviewed by the Serious Fraud Office.” 

According to the release, search warrants were executed at five ALSTOM businesses premises and four residential addresses. The operation, involving “109 SFO staff and 44 police officers” is code-named “Operation Ruthenium” and centers on “suspected payment of bribes by companies within the ALSTOM group in the U.K.” According to the release, “[i]t is suspected that bribes have been paid in order to win contracts overseas.” 

ALSTOM released a statement which said: 

Several Alstom offices in the United Kingdom have been raided on Wednesday 24 March by police officers and some of its local managers are being questioned. The police apparently executed search warrants upon the request of the Swiss Federal justice. Alstom has been investigated by the Swiss justice for more than 3 years on the motive of alleged bribery issues. Within this frame, Alstom’s offices in Switzerland and France have already been searched in the past years. Alstom is cooperating with the British authorities. 

While not an FCPA investigation, this is one of the first cases where arrests were made of Board members. With the April 1 implementation date for the UK Bribery Act, we would anticipate a much more robust and aggressive enforcement by the UK SFO. 

We are indebted to our fellow bloggers, the FCPA Blog and the FCPA Professor for providing up to date and excellent reviews of many of the Top 10 investigations of 2010. If you did not review their sites daily in 2010, you should do so in 2011. 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

December 23, 2010

Top Ten FCPA Enforcement Actions in 2010-Part II

Yesterday we posted Part I of our Top 10 Foreign Corrupt Practices Act (FCPA) enforcement actions of 2010. Today we conclude the list. Although the holiday season is here, we would be remiss if we did not note that Houston Chronicle sports columnist Richard Justice pointed out in his column this morning that there are only 55 days until pitchers and catchers report to Spring Training. So for you baseball mavens out there, and we know who we are, good tidings abound. Now to Part II…

6. Panalpina Settlements-In what the FCPA Blog termed a history making day “for the most companies to simultaneously settle FCPA-related violations”, the worldwide logistics firm Panalpina and five of its oil-and-gas services customers resolved charges with the DOJ and SEC, and another customer settled with the SEC for a total fines and penalties of $236.5 million. The customers of Panalpina which settled were Shell Nigeria Exploration and Production Company Ltd. (“SNEPCO”), a Nigerian wholly-owned subsidiary of Royal Dutch Shell; Transocean, Inc.; Pride International Inc. and Pride Forasol S.A.S.; GlobalSantaFe [now owned by Transocean], Tidewater, Inc. and Noble Corporation which did not receive a DPA but was granted a Non-Prosecution Agreement.

However more was announced yesterday than simply raw dollars. Each resolved enforcement action provided to the FCPA compliance practitioner significant information on the most current DOJ thinking on what constitutes a best practice FCPA program. Each of the Deferred Prosecution Agreements released yesterday, included an Attachment C, a document entitled “Corporate Compliance Program”. Each Corporate Compliance Program was the same in all the DPAs announced yesterday. This same information was also attached to the Noble Non-Prosecution Agreement as “Attachment B”. Hence, this information is a valuable tool by which companies can assess if they need to adopt new or to modify their existing internal controls, policies, and procedures in order to ensure that their FCPA compliance program maintains: (a) a system of internal accounting controls designed to ensure that a Company makes and keeps fair and accurate books, records, and accounts; and (b) a rigorous anti-corruption compliance code, standards, and procedures designed to detect and deter violations of the FCP A and other applicable anti-corruption laws. It is noted that in the Preamble to each Corporate Compliance Program noted that these suggestions are the “minimum” which should be a part of a Company’s existing internal controls, policies, and procedures.

7. RAE Systems, Inc.-Lessons learned-companies are fully liable for their joint ventures actions and that even with actual knowledge of FCPA violations, conduct during the DOJ investigation can result in a Non-Prosecution Agreement. However this liability need not lead to criminal sanctions as RAE received a letter of Non-Prosecution from the DOJ. The DOJ’s letter to the RAE CEO and its legal counsel declined to prosecute the company and its subsidiaries for its admitted “knowing” of violations of the internal controls and books and records provisions of the FCPA. The DOJ entered into this NPA based upon four listed factors, which were detailed as follows: (1) timely and voluntary disclosure; (2) the company’s thorough and “real-time” cooperation with the DOJ and SEC; (3) extensive remedial efforts undertaken by the company; and (4) RAE’s commitment to periodic monitoring and submission of these monitoring reports to the DOJ.

Representatives from both the DOJ and SEC have been preaching the virtues and tangible benefits of self-disclosure and thorough cooperation with their respective agencies in any FCPA investigation or enforcement action. This RAE matter would appear to provide specific evidence of the benefits of such corporate conduct. The NPA reports that RAE had actual knowledge of FCPA violations yet no criminal charges were filed. Further, no ongoing external Corporate Monitor was required. Clearly RAE engaged in actions during the pendency of the investigation which persuaded the DOJ not to bring criminal charges.

Any company facing a FCPA enforcement action should study this matter quite closely and, to the extent possible, determine the steps that RAE engaged in or performed. The RAE enforcement action together with the Noble enforcement action which resulted also in a Non-Prosecution Agreement, were also reached with no external Corporate Monitor. No criminal penalties and no External Monitor are important examples of the tangible benefits for working closely with the DOJ in any FCPA enforcement matter.

8. Gerald and Patricia Green-Although this FCPA criminal enforcement action was tried to a jury in the summer of 2009, the two defendants, husband and wife Gerald and Patricia Green were not sentenced until the summer of 2010. The trial judge’s sentence would appear to reflect the growing disparity between the sentences that the DOJ requests and those handed down by courts. The DOJ had originally sought a sentence of 25 years for Gerald Green (later reduced to requesting 10 years) and a ten year sentence for Patricia Green. US District Judge George Wu sentenced the couple to 6 months each.

While this sentence reduction may result in more personal freedom, Judge Wu granted the DOJ request for asset forfeiture, which means simply, as noted by the FCPA Blog “any assets derived from proceeds traceable to a violation of the FCPA, or a conspiracy to violate the FCPA, can be forfeited”. Each of the Greens owe $1,049,465 under the forfeiture, plus their shares in their company, Artist Design Corp., and its pension plan. The amount owed is so great that the DOJ is attempting to seize the home residence of the Greens because the forfeiture penalty cannot be fully satisfied without the proceeds of the home sale. The DOJ has obtained such complete forfeiture of the couples’ assets such that they have filed in forma pauperis appeals.

9. Haitian Telecom-While this case generated much discussion in the FCPA world, particularly regarding an idea derived from an article in the Wall Street Journal entitled “Democrats and Haiti Telecom” that enforcement of the FCPA in Haiti should be suspended in the aftermath of the devastating earthquake which hit the island earlier this year. This was based on the fact that US companies simply could not do business in Haiti without violating the FCPA so they simply refuse to do so. To entice US companies to assist in the rebuilding efforts, the DOJ should suspend enforcement of the FCPA for some limited period of time. This idea was not seized upon by the DOJ.

While this debate was interesting, this case makes the Top 10 list because of what happened to the foreign officials who accepted the bribes. The FCPA only applies to bribe givers and not bribe recipients, the charges brought against the foreign officials who accepted the bribers were not FCPA charges, but rather a money laundering conspiracy charge. As reported by the FCPA Professor, these money laundering charges led to guilty plea by Robert Antoine (a former Director of International Relations of Haiti Teleco responsible for negotiating contracts with international telecommunications companies on behalf of Haiti Teleco). He was sentenced to four years in prison. In addition, Antoine was ordered to serve three years of supervised release following his prison term, ordered to pay $1,852,209 in restitution, and ordered to forfeit $1,580,771.

10. Innospec-Fine and Penalty waiver for inability to pay? In March 2010, Innospec agreed to pay $40.2 million in combined DOJ/SEC/SFO fines and penalties for violating the Foreign Corrupt Practices Act and other laws. However, as noted by the FCPA Professor, it could have been worse. The SEC release noted that Innospec, without admitting or denying the SEC’s allegations, was ordered to pay $60,071,613 in disgorgement, but because of Innospec’s “sworn Statement of Financial Condition” all but $11,200,000 of that disgorgement was waived. The release states that “[b]ased on its financial condition, Innospec offered to pay a reduced criminal fine of $14.1 million to the DOJ and a criminal fine of $12.7 million to the SFO. Innospec will pay $2.2 million to OFAC for unrelated conduct concerning allegations of violations of the Cuban Assets Control Regulations.” As noted by the FCPA Professor, “Innospec got a pass on approximately $50 million.”

So Ho Ho Ho to all our readers and we hope you have a very Merry Christmas.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

December 22, 2010

Top Ten FCPA Enforcement Actions in 2010-Part I

The FCPA year in 2010 has been quite interesting. As the year is ending I wanted to put forth some of the more significant enforcement actions for the FCPA practitioner to provide lessons learned and perhaps some educational opportunities for all our clients. One of the more frequent criticisms of the Department of Justice regarding the FCPA is that there is very little case law guidance or interpretation. The FCPA Blog has opined that this has led to his Big Lesson which is: 

“I know there’s practically no FCPA-related case law, no precedent to follow, no stare decisis to light the way. So the FCPA is pretty much what the enforcement agencies say it is. And that’s what’s so very different and difficult about it.” 

However in reviewing the past year, there is a fair amount of information which can be gleaned from FCPA enforcement actions. Additionally, it appears that the DOJ is tacitly responding to this criticism in some of the recent detailed compliance programs set forth in the Deferred Prosecution Agreement and Non-Prosecution Agreements that have been released in the second half of the year. With all of this in mind we submit for your consideration out Top Ten FCPA Enforcement Actions for 2010, Part I.

 1.         Alliance One/Universal Corp.-As noted by the FCPA Professor both the DOJ and the SEC, for the first time, issued a consolidated press release and  consolidated an enforcement action against two unrelated companies. The companies involved in the investigations were the US companies, Alliance One and Universal Corporation, both in the tobacco merchant business. Alliance One’s liability was predicated on successor liability for the FCPA transgressions of an entity it purchased. Both companies made improper cash payments, gifts and bribes in Central Asia and the Far East. The companies signed Non Prosecution Agreements and there were criminal pleas by individuals involved in the criminal activity. It is significant to note that both companies self-reported to the DOJ.

 These two matters provide to companies in the midst of FCPA enforcement actions specific steps that should be implemented during the pendency of an investigation to present to the DOJ. Initially it should be noted that full cooperation with the DOJ at all times during the investigation is absolutely mandatory. Thereafter from the Alliance One matter, the focus was on accounting procedures and control of cash payments. From the Universal case, a key driver appears to be the due diligence on each pending international transaction, and subsequent full due diligence on each international business partner. Next is the management of any international business partner after due diligence is completed and a contract executed. Lastly is the focus on the Chief Compliance Officer position, emphasizing this new position throughout the organization and training, training and more training on FCPA compliance.

  2.         Daimler-As noted by the FCPA Professor, the DOJ stated in its Press Release on this enforcement action that Daimler (and three of its subsidiaries) “brazenly offered bribes in exchange for business around the world” and that Daimler “saw foreign bribery as a way of doing business.” However, despite such statements, the DOJ (as described in more detail in the above linked post) did not charge Daimler with violating the FCPA’s antibribery provisions. By resolving the case via a deferred prosecution agreement, Daimler will not have to plead guilty to anything. Indeed, the FCPA Professor termed this as “yet another bribery, yet no bribery case.”

Additionally this matter stands for the proposition that a company can receive credit for self-disclosure under the sentencing guidelines even if it does not self report a possible FCPA violation. The DOJ investigation was started by a whistleblower report to the DOJ but Daimler nevertheless two-point reduction in its culpability. The US Sentencing Guidelines set the range of monetary fine as between $116 million – $232 million. However, the ultimate DOJ fine was approximately $94 million. Daimler did not voluntarily disclose the conduct at issue; nevertheless, the DOJ gave Daimler greater sentencing credit allowed for under the guidelines. The DOJ stated, “indeed, because Daimler did not voluntarily disclose its conduct prior to the filing of the whistleblower lawsuit, it only receives a two-point reduction in its culpability. The FCPA Professor noted that the DOJ “respectfully submit[ed] that such reduction is incongruent with the level of cooperation and assistance provided by the company in the Department’s investigation.” 

3.         NATCO-This matter continues the strict liability of a parent for books and records violations of a subsidiary. This matter was handled by the SEC and only resulted in a civil penalty, rather than a DOJ criminal enforcement. The case was unique in that it (according to the SEC Complaint) involved the creation and acceptance of false documents while paying extorted immigration fines and obtaining immigration visas in the Republic of Kazakhstan. “NATCO’s consolidated books and records did not accurately reflect these payments.”  So from this case, one should glean that if a company pays money that is an extortion payment, it must accurately report such payments on its books and records. Otherwise such payment violates the books and records component of the FCPA. 

One other factor in this case is that NATCO received a $65,000 fine and agreed to Cease and Desist Order. However the costs of the company’s internal investigation cost was reported to be $11 million, “causing Natco cash-flow problems.” So even if the result is a relatively small fine and civil injunction, with no criminal prosecution, the monetary cost to a company can be quite high. 

4.         Nexus Technologies, Inc.-In what the FCPA Professor termed as a “first” the defendants in this matter mounted a defense which challenged the DOJ’s interpretation that employees of state-owned or state-controlled enterprises are “foreign official” under the FCPA. Unfortunately, the trial court judge dismissed the defendants’ motion with no comment or legal analysis so it provided no guidance for the FCPA practitioner on what may or may not constitute a “governmental official” under the FCPA. The interpretation defaults to what the FCPA Blog noted is that the FCPA is what the enforcement agencies say it is. 

However not all was lost by the defendants in this matter as it also demonstrates the differences viewed by the Courts and DOJ regarding sentencing of FPCA defendants. The sentencing recommendations by DOJ and sentences passed down by Court were as follows:

                       SENTENCING BOX SCORE

Defendant DOJ Requested Sentence Court Imposed Sentence
Nam Nguyen 14 to 17 years 16 months
An Nguyen 7 to 9 years 9 months
Kim Nguyen 6 to 7 years Probation
Joseph Lukats 3 to 4 years Probation

 5.         Nigerian Bribery Case-the conclusion of enforcement actions against Technip ($338 million) and Snamprogetti and ENI ($365 million) bring the total fines and penalties paid by companies involved in this matter approximately $1.28 billion  to-date. Additionally, this month, one UK citizen, Wojciech Chodan was extradited from the UK, brought to the US and has now pled guilty to violation of the FCPA. He faces 10 years in prison and is scheduled to be sentenced in February, 2011. Another UK citizen, Jeffery Tesler, has appealed his UK extradition order. 

In an interesting development, the country of Nigeria recently charged former Halliburton CEO Dick Chaney regarding the bribery payments. Earlier this week the Nigerian government announced that the charges were dropped for payment of a report $250 million fine. However yesterday, Halliburton announced that the fine paid for the dismissal of the charges was “only” $32 million, plus $2.5 million in legal fess. The Wall Street Journal reported that Snamprogetti said Monday it settled with the Nigerian EFCC to pay a $32.5 million fine. 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

December 20, 2010

The Fraud Guy and Corporate Monitors under the FCPA

Most compliance practitioners are aware of the use of corporate monitors. There are many benefits to the use of a corporate monitor for a company coming out of a lengthy Foreign Corrupt Practices Act (FCPA) investigation. Some of these benefits can include increased corporate awareness of compliance and the integration of best practices into a company’s compliance program. A corporate monitor can also boost shareholder, employee and public confidence in a company which has had a lengthy FCPA investigation and enforcement action.

One of the more vexing questions which a General Counsel or Chief Compliance Officer may face is how to select and interact with a corporate monitor? There is very little helpful guidance for compliance practitioners on this subject. However, one such resource has arisen in the past year which is welcome addition for the compliance practitioner, it is “The Monitorand it is issued by Artifice Financial Forensic Services, LLC, and its head, John Hanson. Hanson is a CPA, CFE and, furthermore, he’s a former FBI Agent, who also publishes a very useful blog entitled “The Fraud Guy”. 

In September, Hanson presented a session on corporate monitors at the 9th Annual Compliance & Ethics Institute of the Society of Corporate Compliance and Ethics (SCCE) entitled, “Understanding and Working Effectively With Independent Corporate Monitors”. In this session Hanson outlined some of the key points a compliance practitioner needs to understand when engaging or dealing with a corporate monitor. In this presentation, which included panelists Doug Lankler, Senior VP and Chief Compliance Officer of Pfizer, Inc., and Jacob Frankel, partner in the law firm of Shulman Rogers, Hanson noted that a corporate monitor is one who is an  independent third-party used to verify an company’s compliance with an Agreement between the company and a Governmental Agency or Agencies (think Department of Justice [DOJ] and Securities and Exchange Commission [SEC] and a Deferred Prosecution Agreement [DPA] or Non-Prosecution Agreement [NPA]). Additionally a corporate monitor has the primary responsibility to assess and monitor a corporation’s compliance with the terms of a DPA, NPA or other relevant Agreement.

 Hanson suggested several qualifications that a company should look towards in selecting a corporate monitor. These include the capability of the monitor candidate to handle a large and potentially multi-year assignment. A determination should be made on the credibility and integrity of the business and professional reputation of the corporate monitor. There must be real and perceived independence and objectivity by the corporation monitor, who should not have had prior business dealings with the company. A corporate monitor should have desirable, relevant experience and must have the staying power to remain on the job during the entire term of the monitorship. 

Hanson emphasized that the role of the corporate monitor should be driven by the relevant DPA, NPA or other Agreement. The over-riding goals of the corporate monitor should be independent verification of a company’s compliance with the terms and conditions of its relevant agreement, whether DPA, NPA or other Agreement. This focus is primarily through corporate compliance assessments. A corporate monitor should primarily observe, test and report. While a corporate monitor may utilize some investigative techniques, it is generally not within the corporate monitor’s scope to investigate. To this final point, Hanson has recently published an article entitled, “Corporate Monitor Not an In-House Investigator” which further expanded on this issue. 

Hanson discussed the need for transparency in the monitorship. This begins with the negotiations involved with the work plan, including the projected costs of the monitorship. The cost of a corporate monitor has been identified as a significant issue with even US Federal District Court judges so care should be taken so that the corporate monitor cost itself does not become an issue.  We recommend the following list of topics be considered by any company in regards to the cost of a corporate monitor: hourly rate v. fixed fee; expenses; rate adjustments, both upward and downward. If other personnel are to be used in the process, there should be full disclosure of the personnel and their rates. One item that Hanson related was that the bulk of costs for a corporate monitorship occur during the initial reporting period. 

With regard to the Report itself, its scope and timing are determined by the DPA, NPA or other relevant Agreement. However, both the company and the governmental agency should agree on the form and content of the Report. Generally, there should be no review by the company of the report prior to the delivery to the governmental agency. However, if during the pendency of the reporting period, there is sharing of concerns, observations and findings, there should not be any surprises in the final Report, absent extraordinary circumstances. The Report itself should include the presentation method, it should address any potential inaccuracies in reporting and it should highlight any expansions or contractions in overall monitorship scope. The Report should also list appropriate remedial measures that the company should employ but note both positive compliance actions and any self-corrective actions by the company during the pendency of the reporting period. 

Hanson recommends that to work effectively with a monitor, a company should assume a non-adversarial, collaborative position with the corporate monitor with open and frequent communications. The company should have a full understanding of the monitor’s roles and responsibilities as well as its own role and responsibility in the monitorship. Hanson ended by emphasizing that the company should recognize that there is joint effort for any monitorship to succeed between the company and corporate monitor. By working collaboratively with a corporate monitor, the company puts itself in the best position to work through any obligations it may have assumed in a DPA, NPA or other Agreement and come through the process as one of its industry’s leaders in compliance. 

We recommend John Hanson, his newsletter “The Monitor” and website “The Fraud Guy” to all FCPA compliance practitioners as an excellent resource for the issue of corporate monitors. 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

December 19, 2010

UK Bribery Act Guidance-Facilitation Payments and Hospitality

For those of you who have not yet done so, you should check out the great resource available on the UK Bribery Act, through a website entitled thebriberyact.com. Hosts Barry Vitou, of the London office of Wiston and Strawn, and Richard Kovalevsky Q.C., from 2Bedford Row-the Chambers of William Clegg, Q.C., provide, in one site, one of the best collection of resources that can be found on the UK Bribery Act, all at no cost to the viewer. They also have a newsletter which is distributed through email subscription. Two of the sites more recent postings provide recent guidance and development from the UK Serious Fraud Office (SFO) on two of the most vexing topics for Bribery Act (or the Foreign Corrupt Practices Act (FCPA) for that matter) compliance practitioners, facilitation payments and hospitality under the UK Bribery Act.

Unlike the FCPA, the Bribery Act has no exemption for the payment of facilitation payments. Additionally, there is no affirmative defense or otherwise noted exemption or exception for hospitality, whether bona fide or not, under the Bribery Act. Therefore, under a strict interpretation of the Bribery Act, any facilitation payment or conceivable hospitality granted a customer or client could be a violation of the Bribery Act.

I. Facilitation Payments

In a recent speech before the International Corruption Hunters Alliance meeting, hosted by The World Bank in Washington, DC, SFO Director Richard Alderman noted that the SFO position is one of zero tolerance for facilitation payments. However, he noted that the focus of discussions in the UK has moved from persuading companies that it is wrong to give bribes to how it is possible to stop the demands for bribes in the first place. Director Alderman believes that both the UK regulators and the businesses subject to the Bribery Act should work together to end such bribes. He said that “What is needed here is international involvement between countries and including institutions such as the World Bank and others. It can also mean companies working together to share their experiences of working in other countries and bringing those experiences to us.”

To this end, Alderman suggested that unlike the Department of Justice (DOJ) or Securities and Exchange Commission (SEC), which jointly enforces the FCPA, the SFO is more than just a prosecutor. The SFO is pursuing a strategy to engage with corporations, NGOs, such as the World Bank, and other governments which support anti-corruption efforts, such as the United States for helping in solving these problems. The authors have previously noted that Director Alderman is on record as saying that he is “not only interested in concentrating on investigations and prosecutions but also, importantly, on prevention.” This prior statement clearly follows one of the points Director Alderman reiterated in his speech that corporations should look to the SFO “for help in solving these problems”.

II. Hospitality

thebriberyact.com has for some time reported that UK companies have voiced various fears which have been widely reported about the “uncertainties” around the application of the Bribery Act to corporate hospitality are overblown. The authors have noted that SFO position on hospitality is that if “hospitality is not lavish and people use their common sense then there should not be a problem” under the Bribery Act.

In today’s online edition of the UK Daily Telegraph newspaper, Director Alderman is reported to have said: “Sensible and proportionate expenditure on hospitality will remain perfectly lawful under the Bribery Act when it comes into force.” Further, “I understand that businesses want more detailed guidance before attending major sporting events. We will be happy to help by publishing our views.” This guidance is expected to be published in early 2011.

All US companies with UK operations should incorporate the Bribery Act requirements into their FCPA compliance programs. The Bribery Act has become the new gold standard for anti-corruption and anti-bribery compliance programs. As has been noted by the law firm of Fulbright and Jaworski, only 11% of respondent US companies believe that the Bribery Act will impact their compliance programs. From this report, it is clear that most US companies do not understand the differences in the Bribery Act and the FCPA. With the wide extra-territorial reach of the Bribery Act, US companies with UK subsidiaries, UK operations or UK citizens in their employ should assess their FCPA compliance programs to ensure Bribery Act compliance and the website thebriberyact.com is good starting point.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

 
© Thomas R. Fox, 2010

December 15, 2010

The FCPA Audit For Supply Chain Vendors

Filed under: Audit,FCPA,Supply Chain — tfoxlaw @ 6:10 pm
Tags: , , ,

An audit for adherence to Foreign Corrupt Practices Act (FCPA) compliance requirements is becoming more standard as a best practice in the management of business relationships with third party vendors which work with a company through the supply chain. In several recent settlements of enforcement actions through both Deferred Prosecution Agreements (e.g. Panalpina) and Non-Prosecution Agreements (e.g. RAE Systems Inc.), the Department of Justice (DOJ) has stated that one of the current best practices of a FCPA compliance program includes the right to conduct audits of the books and records of the agents, business partners and supplier or contractors to ensure compliance with the foregoing. Many companies have yet to begin their audit process for FCPA compliance on vendors in their supply chain. This posting will explore some of the issues involved in auditing such business partners. 

I.                   Right to Audit  

Initially it should be noted that a company must obtain the right to audit for FCPA compliance in its contract with any third party vendor in the supply chain. Such an audit right should be a part of a company’s standard terms and conditions. A sample clause could include language such as the following: 

Vendor shall permit, upon the request of and at the sole discretion of the Company, audits by independent auditors acceptable to Company, and agree that such auditors shall have full and unrestricted access to, and to conduct reviews of, all records related to the work performed for, or services or equipment provided to, Company, and to report any violation of any of the United States Foreign Corrupt Practices Act, UK Bribery Act or any other applicable laws and regulations, with respect to:

a.         the effectiveness of existing compliance programs and codes of conduct;

b.         the origin and legitimacy of any funds paid to Company;

c.         its books, records and accounts, or those of any of its subsidiaries, joint ventures or affiliates, related to work performed for, or services or equipment provided to, Company;

d.         all disbursements made for or on behalf of Company; and

e.         all funds received from Company in connection with work performed for, or services or equipment provided to, Company. 

II.                Structure of the Audit 

In the December 2010 issue of the Industrial Engineer Magazine, authors Aldowaisan and Ashkanai discussed the audit program utilized by the Kuwait National Petroleum Company for its supply chain vendors. Although the focus of these audits is not to review FCPA compliance, the referenced audits are designed to detect and report incidents of non-compliance, which would also be the goal of a FCPA compliance audit. Utilizing ISO 19011 as the basis to set the parameters of an audit, the authors define an audit as a “systematic, independent and documented process for obtaining audit t evidence and evaluating it objectively to determine the extent to which the audit criteria are fulfilled.” The authors list three factors, which they believe contribute to a successful audit: (1) an effective audit program which specifies all necessary activities for the audit; (2) having competent auditors in place; and (3) an organization that is committed to being audited. In a webinar hosted by Securities Docket, entitled, “Follow the Money: Using Technology to Find Fraud or Defend Financial Investigations” noted fraud examiner expert Tracy Coenen described the process as one to (1) capture the data; (2) analyze the data; and (3) report on the data. 

There is no one specific list of transactions or other items which should be audited. However some of the audit best practices would suggest the following: 

  • Review of contracts with supply chain vendors to confirm that the appropriate FCPA compliance terms and conditions are in place.
  • Determine that actual due diligence took place on the third party vendor.
  • Review FCPA compliance training program; both the substance of the program and attendance records.
  • Does the third party vendor have a hotline or any other reporting mechanism for allegations of compliance violations? If so how are such reports maintained. Review any reports of compliance violations or issues that arose through anonymous reporting, hotline or any other reporting mechanism.
  • Does the third party vendor have written employee discipline procedures? If so have any employees been disciplined for any compliance violations? If yes review all relevant files relating to any such violations to determine the process used and the outcome reached.
  • Review employee expense reports for employees in high risk positions or high risk countries.
  • Testing for gifts, travel and entertainment which were provided to, or for, foreign governmental officials.
  • Review the overall structure of the third party vendor’s compliance program. If the company has a designated compliance officer to whom, and how, does that compliance officer report? How is the third party vendor’s compliance program designed to identify risks and what has been the result of any so identified.
  • Review a sample of employee commission payments and determine if they follow the internal policy and procedure of the third party vendor.
  • With regard to any petty cash activity in foreign locations, review a sample of activity and apply analytical procedures and testing. Analyze the general ledger for high-risk transactions and cash advances and apply analytical procedures and testing. 

III.             Conclusion 

As noted the above list is not exhaustive. For instance, there could be an audit focus on internal controls or segregation of duties. Any organization which audits a business partner in its supply chain should consult with legal, audit, financial and supply chain professionals to determine the full scope of the audit and a thorough and complete work plan should be created based upon all these professional inputs. At the conclusion of an audit, an audit report should be issued. This audit report should detail incidents of non-compliance with the FCPA compliance program and recommendations for improvements. Any reported incidents of non-compliance should reference the basis of any incidents of non-compliance such as contractual clauses, legal requirement or company policies. 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

December 14, 2010

RAE Non-Prosecution Agreement (Part III): The Tangible Benefits of Full Cooperation in a FCPA Investigation

Filed under: FCPA,RAE Sysytems — tfoxlaw @ 4:12 pm
Tags: , , ,

In our prior two postings we reviewed the Non-Prosecution Agreement (NPA or Agreement) entered into by RAE Systems, Inc., and the US Department of Justice (DOJ). In Part I, we reviewed the facts which led to the violations of the Foreign Corrupt Practices Act (FCPA); in Part II, we discussed the Corporate Compliance Program which RAE agreed to implement; and in this final article, we will discuss the Corporate Compliance Reporting that RAE agreed to in its NPA. We will then conclude with some of the lessons which we believe can be learned from this NPA and the implication of these lessons for the FCPA practitioner. 

The Corporate Compliance Reporting requirements are found at Appendix C of the NPA. In this, RAE agreed to report, at no less than annual intervals, on the remediation efforts to which it agreed to and the implementation of a Corporate Compliance Program. RAE is required to provide a “complete description of its remediation efforts” and any proposals “reasonably designed to improve the policies and procedures of RAE for ensuring compliance with the FCPA and other applicable anticorruption laws…” If the DOJ has any comments to the initial two reports, RAE is to incorporate them into any subsequent reports. Additionally, if RAE discovers credible evidence of a FCPA violation, it is required to report this “promptly” to the DOJ. 

The RAE Agreement, in conjunction with the Deferred Prosecution Agreements and the NPA for Noble Corp., released in November 2010 regarding Panalpina and related settlements, provide excellent guidance for the FCPA Practitioner. Each Agreement sets forth a complete description of the DOJ’s most current thoughts on what constitutes the most recent best practices of a FCPA compliance program and in addition to this general guidance, the RAE Agreement provides specific guidance on joint ventures. More than going through the motions of performing due diligence on a prospective joint venture partner, a company must remedy any deficiencies found in the process should the transaction go forward. 

Yet, as significant as the information noted above may be, I believe that the most significant lessons are learned from the RAE Agreement Non-Prosecution Agreement is what did not occur. Even though RAE failed to follow the 2004 FCPA compliance best practices when it failed to engage in due diligence on the Fushun joint venture acquisition and even though RAE failed to take effective remedial measures with the KHL joint venture after it became a corporate subsidiary and after RAE had actual knowledge of FCPA violations; RAE did not sustain a criminal charge against it. In its Letter Agreement to the NPA, the DOJ noted “…non-prosecution agreement based, in part, on the following factors: (a) RAE Systems’s timely, voluntary, and complete disclosure of the facts described in Appendix A; (b) RAE Systems’s thorough, real-time cooperation with the Department and the U.S. Securities and Exchange Commission (“SEC”); (c) the extensive remedial efforts already undertaken and to be undertaken by RAE Systems; and (d) RAE Systems’s commitment to submit periodic monitoring reports to the Department.” 

Representatives from both the DOJ and SEC have been preaching the virtues and tangible benefits of self-disclosure and thorough cooperation with their respective agencies in any FCPA investigation or enforcement action. This RAE matter would appear to provide specific evidence of the benefits of such corporate conduct. The NPA reports that RAE had actual knowledge of FCPA violations yet no criminal charges were filed. Further, no ongoing external Corporate Monitor was required. Clearly RAE engaged in actions during the pendency of the investigation which persuaded the DOJ not to bring criminal charges. 

Any company facing a FCPA enforcement action should study this matter quite closely and, to the extent possible, determine the steps that RAE engaged in or performed. The RAE enforcement action together with the Noble enforcement action which resulted also in a Non-Prosecution Agreement, were also reached with no external Corporate Monitor. No criminal penalties and no External Monitor are important examples of the tangible benefits for working closely with the DOJ in any FCPA enforcement matter. 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

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