FCPA Compliance and Ethics Blog

November 10, 2014

Gordon Lightfoot, the Edmund Fitzgerald and the Bio-Rad FCPA Settlement, Part I

Wreck of the Edmund FitzgeraldThis month there are two dates that are forever tied together in the annuals of maritime tragedies and great songwriters. November 10 is the 39th anniversary of the sinking of the Great Lakes freighter the SS Edmund Fitzgerald, who sank 17 miles from the entrance to Whitefish Bay on Lake Superior taking all 29 crewmembers to the bottom with her. Next Monday, November 17, is the 76th birthday of the Canadian singer-songwriter Gordon Lightfoot, who memorialized the tragedy in the song The Wreck of the Edmund Fitzgerald, which he released on the album Summertime Dream in 1976. The song went all the way to Number 2 on the charts. I can still hear Lightfoot’s haunting tale in my head to this day and for me, it was his greatest single.

Earlier this month, Bio-Rad Laboratories Inc. (Bio-Rad) concluded a multi-year Foreign Corrupt Practices Act (FCPA) investigation and enforcement action. It was notable for many reasons. First and foremost was the stunning bribery and corruption scheme that the company engaged in; multiple bribery schemes in multiple countries. Also notable were the results that the company achieved. While we do not yet know if there will be any individual prosecutions of this matter, the company received a Non-Prosecution Agreement (NPA) from the Department of Justice (DOJ) and a relatively small fine of $14.35MM for what clearly would appear to be criminal violations of the FCPA. Perhaps equally stunning is the amount of profit disgorgement that the company agreed to with the Securities and Exchange Commission (SEC), that amount being $40.7MM.

As with the Layne Christensen FCPA enforcement action from October, both settlement documents provide a wealth of very useful information for the compliance practitioner to use to not only help create a best practices compliance program, but also review your company’s compliance program to see if there might be areas of risk which need to be assessed or have greater compliance scrutiny. Over the next couple of blog posts I want to explore the Bio-Rad FCPA settlement, discuss some of the lessons learned for the compliance practitioner and explore what this settlement may unveil for future FCPA enforcement actions.

With his usual thoroughness, the FCPA Professor went into deep dive mode to lay out the underlying facts involved in this matter, in a post entitled “Bio-Rad Laboratories Agrees To Pay $55 Million To Resolve FCPA Enforcement Action”. According to the NPA, Bio-Rad had bribery schemes running in the following countries: Russia, Vietnam and Thailand. In Russia, persons identified as ‘Manager-1’ who was a high-level manager of the company’s Emerging Markets sales region and ‘Manager-2’ who worked for Manager-1 and was described as a high-level accounting manager of the company’s Emerging Markets sales region, engaged with ‘Agent-1’ paying him “a commission of 15-30% purportedly in exchange for various services outlined in the agency contracts, including acquiring new business by creating and disseminating promotional materials to prospective customers, installing Bio-Rad products and related equipment, training customers on the installation and the use of Bio-Rad products, and delivering Bio-Rad products.”

The commission rates were approved by Manager 1 and 2 even though they were both aware that Agent 1 did not and indeed could not perform the contracted services. Payments were made to a level of $200,000 or less because that was the spending authority of the managers, which did not require a higher level of company review. Both managers communicated with Agent 1 through multiple fraudulent email addresses to avoid detection by the company. Finally, Agent 1 had a 100% success rate in obtaining sales into Russia.

In Vietnam, the system was much simpler and even more directly corrupt. The Bio-Rad country manager was authorized to approve contracts up the amount of $100,000 and to pay sales commissions up to $20,000 without further review. This un-named country manager simply authorized cash payments to officials at state-owned hospitals to obtain or retain business for the company. When the country manager was finally challenged on this direct bribery scheme, he simply “proposed a solution that entailed employing a middleman to pay the bribes to the Vietnamese government officials as a means of insulating Bio-Rad from liability.” The bribery funds were created by giving these middlemen, named distributors, deep discounts “which the distributor would then resell to government customers at full price, and pass through a portion of it as bribes.” These bribes were recorded on the company’s books and records as “commissions”, “advertising fees” and “training fees”.

In Thailand, the company acquired a 49% interest in a joint venture (JV) through acquisition. Initially I would note that there is no record that Bio-Rad either performed pre-acquisition due diligence or engaged in any post acquisition integration or remediation so that an ongoing bribery scheme which began under a previous company’s ownership continued after Bio-Rad took control of the Thailand JV. The bribery scheme involved paying an agent “an inflated 13% commission, of which it retained 4%, and paid 9% to Thai government officials in exchange for profitable business contracts.” Just to top it all off, the agent involved in the bribery scheme was Bio-Rad’s JV partner.

I would say that all of the above is very bad conduct. Yet, Bio-Rad was able to garner a NPA from the DOJ and a civil Cease and Desist Order from the SEC. How did they accomplish this? In the DOJ Press Release, it stated, “The department entered into a non-prosecution agreement with the company due, in large part, to Bio-Rad’s self-disclosure of the misconduct and full cooperation with the department’s investigation…In addition, Bio-Rad has engaged in significant remedial actions, including enhancing its anti-corruption compliance programs globally, improving internal controls and compliance functions, developing and implementing additional due diligence and contracting procedures for intermediaries, and conducting extensive anti-corruption training throughout the organization.”

For the compliance practitioner, yet once again the DOJ and SEC are sounding a LOUD and CLEAR message that even with very bad conduct, the systemic failure of internal controls and having a culture that turned a very blind eye at best to what was going on; you can make a comeback. Moreover, you can make such a spectacular comeback that does not even sustain a Deferred Prosecution Agreement (DPA) let alone have to accept a guilty plea. It all starts with putting a best practices compliance program in place and the DPA lists the steps that any company should consider in its compliance regime.

  1. High level commitment by providing visible support by senior management.
  2. An appropriate corporate policy around anti-corruption.
  3. Specific policies and procedures in the following areas: (a) gifts, (b) hospitality, entertainment and travel, (c) customer travel, (d) political contributions, (e) charitable donations and sponsorship, (f) facilitation payments and (g) solicitation and extortion.
  4. Appropriate internal controls to ensure transactions are authorized and properly recorded.
  5. A periodic risk-based review. In other words, a risk assessment. Policies and procedures need to be reviewed no less than annually and updated as appropriate.
  6. The compliance function should have proper Board oversight, independence to act and support within the organization.
  7. Compliance shall provide training on and guidance to the business units on its anti-corruption compliance program.
  8. There should be mechanisms for employees to report internally compliance issues of concern with no fear of retaliation.
  9. A company must maintain and provide “effective and reliable” processes and resources to responding to any raised issues.
  10. A company must use both incentives to encourage behavior and discipline of those employees who violate its compliance program.
  11. Third parties must be subjected to an appropriate due diligence based vetting process, have an appropriate contract and thereafter be managed going forward after the contract is signed.
  12. There should be a protocol for evaluation of any potential acquisitions or merger candidates and then appropriate review and remediation after any acquisition is complete.
  13. There should be ongoing monitoring and testing of the compliance program going forward.

At the conclusion of its NPA, Bio-Rad agreed to ongoing compliance reporting, at annual anniversaries of the date of the NPA by reporting to the DOJ the results of its remediation efforts over the past year. This is one of the most significantly overlooked positive aspects of any FCPA resolution. This allows the DOJ to have a continued view into the company’s compliance function. It is not an ongoing monitor but it does give the DOJ a transparent view into the company’s work towards the overall goal of putting a best practices compliance program in place and not simply stopping work when the settlement is signed. It keeps the company on its toes and allows the DOJ to continue to assess the company’s actions around anti-corruption compliance.

In the next blog post on Bio-Rad, I will review some of the specific bribery schemes that the company used and discuss how a compliance practitioner might use them for some lessons learned.

For a YouTube version of Gordon Lightfoot signing The Wreck of the Edmund Fitzgerald, click here.

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, 2014

October 27, 2014

Critiquing FCPA Enforcement and the GSK Domestic Corruption Conviction

Lady Scales of JusticeRecently the FCPA Professor posted a blog, entitled “Look in the Mirror Moments, in which he used written commentary by the US Secretary of the Treasury to the Chinese government about the Chinese governments anti-trust investigations as a mechanism to explore critiques of Foreign Corrupt Practices Act (FCPA) enforcement. In this post, he compared certain aspects of FCPA enforcement to the Chinese corruption enforcement action against GlaxoSmithKline PLC (GSK). Leaving aside the differences in anti-trust enforcement (price-fixing, monopolistic behavior and illegal collusion) and anti-corruption enforcement (bribery), I wanted to review his critiques through the prism of the known facts of the GSK enforcement action.

The FCPA Professor had the following comments about FCPA enforcement, in comparison with the Chinese corruption enforcement action against GSK. He said,

Without in any way trying to comprehensively compare the overall U.S. legal system to the overall Chinese legal system, the following attributes of FCPA enforcement must at least be acknowledged. 

The vast majority of corporate FCPA enforcement actions lack transparency and the resolution documents (whether a non-prosecution agreement, deferred prosecution agreement or civil administrative order) are the result of an opaque process ultimately controlled by the same office prosecuting or bringing the action. 

As to the swiftness of FCPA enforcement actions, one can only assume that the majority of general counsels and board of directors of companies under FCPA scrutiny would be jumping for joy if the scrutiny – from start to finish – would resolve itself in 15 months rather than the typical 3-5 years (and in some instances more) of FCPA scrutiny lingering.”

The difficulty I have with both of these points is that one cannot separate the Chinese enforcement action against GSK from the Chinese legal system that produced it. Let’s start with the ‘jumping for joy’ prong. The initial difference to note is that the Chinese enforcement action was a domestic prosecution based upon Chinese domestic law for bribery and corruption of Chinese. It was not a US (or UK) company violating US (or UK) laws. This means that the relevant documents and witness were in the locality where the investigation was performed. Even when a key witness, GSK China Country Manager Mark Reilly was in the UK, he voluntarily returned to China to give evidence but was prevented from leaving the country without being charged with a crime. So as far as is known, there were no government-to-government requests for information, no Letters Rogatory or use of any other international discovery mechanism to obtain evidence.

Moreover, the procedural protections in place under US (and UK) criminal procedure simply do not exist in China. There is no right to counsel, no right against self-incrimination, no right to confront witness and not even a right to know what the charges against you might be. These lack of rights were certainly borne out in the speed in which the Chinese investigative authorities were able to obtain evidence and public confessions from GSK principals involved in the bribery and corruption. The first 30-day timeline of the GSK investigation went as follows:

  • June 28, 2013 – Local Police announced they have place GSK officials under investigation for economic crimes.
  • July 11, 2013 – Public Security Ministry issued statement accusing GSK of bribery.
  • July 15 , 2013 – Four senior company execs ‘detained’. Finance chief barred from leaving country.
  • July 16, 2013 – GSK General Counsel (GC) placed under ‘house arrest’ along with 30 other employees. One of the four GSK China executives who were detained, admited to bribery allegations on Chinese state television.
  • July 22, 2013 – GSK formally apologized for breaking Chinese law regarding domestic bribery and corruption.
  • July 26, 2013 – Peter Humphrey, a UK citizen and his wife, a naturalized US citizen, both hired by GSK in an ancillary matter related to the GSK corruption scandal were arrested but not told of the charges against them.

A little over one year later, in July, 2014 the trial of Humphrey and his wife was announced. Orignially it was to be held in secret with both Humphrey and his wife still not told of the formal charges against them. However after diplomatic protests by both the US and UK governments, Humphrey and his wife were both convicted and sentenced in an open trial, albeit lasting only one day, on August 8, 2014. The charges against them were announced at trial. Thereafter, GSK pled guilty in a secret one-day trial GSK was fined approximately $491MM and China Country Manager Mark Reilly and four other GSK China business unit executives were found gulity. They were all sentenced to jail but given suspended sentences.

How did the Chinese government develop its evidence so quickly? One of the defendant’s, admitted, on state run televison, his involvement in the bribery scheme only 18 days after the investigation was announced by Chinese authorities. Indeed, GSK itself made a public apology only 24 days after the announcement by the Chinese authorities it was under investigation. We now know that GSK was informed by a whistleblower of allegations of bribery and corruption as early as January 2013 yet in June GSK announced it had not found anything to substantiate these allegations.

I believe the answer is found in the differences in the Chinese and US legal systems. It all starts with the following: in China you are presumed guilty while in the US (and the UK), you are presumed innocent until proven guilty. In an article in the New York Times (NYT), entitled “Presumed Guilty in China’s War on Corruption”, Andrew Jacobs and Chris Buckley wrote that the “war on corruption often operates beyond the law in a secret realm of party-run agencies”. The process “Known as Shuanggui, it is a secretive, extralegal process that leaves detainees cutoff from lawyers, associates and relatives.” Moreover, even as a case moves through the Chinese criminal justice system, defendants’ counsel “have limited access to evidence, witnesses, and their clients.” It does not get any better when a defendant actually goes to court because “Lawyers say Chinese courts rarely allow them to call defense witnesses, while prosecutors frequently withhold cruical evidence.” Finally, of the 8,110 officials charged with corruption “in the first half of this year, 99.8 percent were convicted”. To this rather amazing trial court conviction rate, I would add the the prosecution does even better on appeal, never losing to a convicted defendant.

Does that sound like a system in which you would jump for joy if you were caught up in, even knowing that the time from announcment of investigation until 99.8% chance of conviction awaited you? Even if the government investigation only took 14 months? In the US, corporations have the same rights as individuals at trial; to cross-examine witness, to be made aware of the charges against it, those charges must be brought with specficity, right to counsel, right to an open trial and right to appeal. These rights are all enshrined in the US Constitution. Those rights are not present for individuals or corporations under Chinese law or jurisprudence.

But the FCPA Professor also critiqued the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) in FCPA enforcements with the following observation: The vast majority of corporate FCPA enforcement actions lack transparency and the resolution documents (whether a non-prosecution agreement, deferred prosecution agreement or civil administrative order) are the result of an opaque process ultimately controlled by the same office prosecuting or bringing the action.When a company enters into negotiation with the DOJ and SEC it is with legal counsel in tow. Even if we in the general public are not privy to these negotiations over the terms and conditions of enforcement actions I am confident that there is some give and take. Further, while I only have personal knowledge of one negotiation for the specific terms of a Deferred Prosecution Agreement (DPA), the lawyer representing the company made clear it was a negotiation. It was not a Diktat with sentencing simply pronounced by the DOJ. Does the office which handles the investigation also handle the settlement negotiation? Yes but that is what prosecutors do each and every day in every city, county, town, hamlet, state and federal jurisdiction in this country.

Just as it takes two to tango, it takes two to negotiate. The DOJ does not negotiate with itself. Another party is sitting across the table and that other party is the company involved in the FCPA investigation. Why is that company there in the room negotiating? Because the company has assessed its interest and determined that it would be better off settling than going to trial. This is in the face of DOJ failures in the trial court in the Gun Sting cases, the O’Shea trial and the trial court overturning the verdict in the Lindsey Manufacturing conviction. Simply because there is a negotiation between the DOJ and a private party does not make it some nefarious process, even if the prosecutors hold the upper hand.

As far as the fines and penalites, there has been nothing to suggest the basis of the $491MM fine assessed against GSK. That amount is a bit less than the amounts initially reported that GSK China paid out as bribes, somewhere over $500MM. At least in the US, there are the Sentence Guidelines which form some basis of the calculation. Of course there is always some prosecutorial discretion to lessen a fine or penalty below the suggested amount. We have seen that occur this year with the HP enforcement action and recently Asst. Attorney General Leslie Caldwell suggested that Alcoa could have been fined over $1bn for its conduct, while the actual fine was $384MM. It is appropriate for prosecutors to have such discretion.

While the DOJ is also critiqued that DPAs (and Non-Prosecution Agreement [NPAs]) are essentially the same as going to trial with a near 100% success rate, I think this belies the number of declinations that the DOJs gives out. Unfortunately (and here the FCPA Professor and I do agree); there is not enough information given out about declinations; either regarding the raw numbers or the specific reasons for a declination. Only if a company agrees or is required to make such information public does it become known. Nevertheless, there is the recent example of Layne Christensen, which received a declination. In an article in Compliance Week, entitled “How Two Companies Got Regulators to Drop FCPA Charges”, Jaclyn Jaeger reported on the reasons the company sustained this result of receiving a declination through interviews with Christensen GC, Steve Crooke, its Chief Compliance Officer (CCO), Jennafer Watson and its outside counsel Russ Berland. Jaeger detailed the specific steps the company took and we can all see the effect it had upon the DOJ, through the declination to prosecute the company.

The debate about the costs of FCPA enforcement actions, the proper role of DPAs/NPAs and length of time of investigations is a healthy one and living in the open society that we have in the US, one that we will continue to have. Since I am not a prosecutor (or ex-prosecutor), I cannot look in the mirror at FCPA enforcement but I can review the facts of the DOJ and SEC’s FCPA enforcement, contrasted with the Chinese domestic bribery and corruption proseuction of GSK and believe that there is no basis for comparing the two systems, as they are so different in too many fundamental aspects.

I can however say one thing with absolute certainly; wherever you do want to be, a Chinese jail is not high on the list.

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, 2014

September 4, 2014

Pro Football and the FCPA Professor

FootballFor those of us lucky enough to enjoy AAA (or perhaps AA) baseball, disguised as a major league team in our city, today brings harbingers of elation. No the Houston Astros are not moving to a city near you but the National Football League (NFL) begins its 95th season tonight with a match up of Seattle and Green Bay. I do not care if the Houston Texans are in the toilet again or my beloved Dallas Cowboys will stomp to yet another 8-8 season under the egotistical owner Jerry Jones. I love watching pro football. So for all you pro football aficionados out there, here’s to us!

With the upcoming season now only hours away, I was interested to receive the FCPA Professor’s latest article (as opposed to his latest book The Foreign Corrupt Practices Act In A New Era) entitled “How a Successful Football Organization Can Inform Foreign Corrupt Practices Act Compliance in a Business Organization”. As readers of this blog will know, I often use sports to discuss the nuts and bolts of Foreign Corrupt Practices Act (FCPA) compliance. So it was gratifying to see the FCPA Professor use sports in some of his writings. Further, since he is much better known for his basketball prowess (he went to college on a basketball scholarship), I was particularly gratified when he harkened back to my primary sport of football for his latest paper by stating, “In the spirit of the season, this article highlights four attributes of a successful football organization that can also elevate FCPA compliance in a business organization.” The four attributes are:

Understanding the playbook

While beginning with the proffer that any successful team has playbook that is effectively communicated, the FCPA Professor noted, “understanding the playbook and effectively communicating its contents are essential first steps in managing and minimizing FCPA risk in a business organization. Yet as simple as this sounds, many business organizations fail to take adequate steps to ensure that everyone is actually on the same page when it comes to FCPA compliance.” From this he moves into some thoughts on training.

The Professor cautions against over-complicating your FCPA training. I tell the folks that I train on the FCPA that the one thing I want them to take away is that if their stomach tells them something is wrong or the hair on the back of their neck stands up, just raise your hand and ask for help. The Professor phrases it another way by stating, “Toward this end, the goal of FCPA training should not be to make each participant an expert on the FCPA’s specific elements but rather to provide all participants a pair of FCPA goggles so they can approach their specific job functions able to recognize FCPA risk and report it to the appropriate experts within the business organization.” He concludes this section by stating, “In short, and just as in football, success in the field is best accomplished by an FCPA compliance playbook that engages employees and motivates them to spot risk, which is then effectively communicated to all members of the organization in a language they can actually understand.”

Execution by all team members

Here the Professor makes an interesting observation, which is too often overlooked in the compliance arena. In football there are skill positions such as those people who handle the football. Quarterbacks, running backs and receivers generally are the most well known and well paid. However the Professor notes, “success on the field is more often dependent on execution by the so-called ‘‘grunt players,’’ such as a successful snap by the center, the ability of the offensive line to protect the quarterback and the ability of the defensive line to pressure the quarterback. Indeed, key to building a successful football organization is drafting and cultivating such ‘‘grunt’’ players as evidenced by the frequency in which offensive or defensive linemen are selected in the NFL draft ahead of various ‘‘skilled positions.’’”

In the compliance world, there are skilled players at the top, such as the Chief Compliance Officer (CCO), Chief Financial Officer (CFO), Chief Executive Officer (CEO) and various Board members who may be involved with a company’s compliance function. However many FCPA violations arise out of what the Professor calls the ‘grunt work’ of doing business. To be sure, there was the KBR $148 million bribe paid through its joint venture (JV) for work in Nigeria. But more often it is the spade work of doing business which can lead to a FCPA violation, as the Professor notes, “tax, import/export and securing licenses, permits, certifications and the like—are actionable under the FCPA’s anti-bribery provisions.”

He further notes that compliance must be viewed as a corporate wide function. It is not and should not be viewed as strictly a legal function as “it is also a finance and auditing issue and thus a function that is best achieved holistically throughout a business organization.” I agree with his observations and would urge compliance practitioners to take a look at your compliance program through the eyes of your field team or international business representatives. Moreover by getting these folks to ‘raise their hands’ and get information in your hands, you may be able to stop a compliance issue before it becomes a full FCPA violation.

A flexible playbook

Here the Professor channels his inner FCPA Guidance by noting that a team’s playbook “is uniquely tailored to the strengths and weaknesses of the team based upon its current roster.” In the business world, this means that you need to assess your company’s compliance risks and manage your risks, not those of some other entity. The Professor suggests some basic questions you should start with to make this determination.

  • Where does your company do business? What are those countries reputations for corruption?
  • Who are your potential customers? Are they foreign governments or state owned enterprises?
  • What is your sales model? Do you use third parties in the sales cycle in foreign countries?
  • How do get your products into foreign countries? Do you use freight forwarders or customs brokers? How about visa processors for your company personnel?
  • How does your company obtain the necessary licenses, permits, certifications and other necessary paperwork to do business in foreign countries?

Your risk level will depend in large part on answers to these questions. The Professor ends this section with the following, “just like a football playbook that is uniquely tailored to the strengths and weaknesses of the current roster and adjusted throughout the season to incorporate specific opponents, an FCPA compliance playbook that is consistent, yet flexible enough to incorporate specific realities in different countries, can best minimize FCPA scrutiny and enforcement.”

Playing hard, but not too aggressively

In football players certainly want to play hard but face penalties for playing too aggressively. I would add that sometimes there are grey areas in the rules that can get players into trouble. Moreover, just as each football team will have its own risk tolerance, businesses will as well. The Professor states, “The same is true for FCPA compliance. Business organizations, particularly those accountable to shareholders to increase value, should aggressively compete in the global marketplace to gain a competitive edge over competitors. Yet the practical reality is that much of what happens in the global marketplace can also fall into a gray area given the FCPA’s provisions, which have frequently been found to be vague and ambiguous when subjected to judicial scrutiny. The potential of a business organization to find itself on the wrong end of enforcement agency discretion is further compounded if employees seek to justify their conduct under the FCPA’s facilitating-payments exception and affirmative defenses.”

I would guess that the FCPA Professor had fun writing this article. I certainly enjoyed reading it. For any fan of football, I would speculate that you would too. Even if you are not a football fan, I believe that you will gain new and additional insights into some of the ‘nuts and bolts’ of FCPA compliance by reading this article.

You can down the Professor’s article by clicking here.

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, 2014

August 27, 2014

Risk Assessments-the Cornerstone of Your Compliance Program, Part II

7K0A0501Ed. Note-Today, I continue my three-part posts on risk assessments. Today I take a look at some different ideas on how you might go about assessing your risks.

One of the questions that I hear most often is how does one actually perform a risk assessment? Mike Volkov has suggested a couple of different approaches in his article “Practical Suggestions for Conducting Risk Assessments.” In it Volkov differentiates between smaller companies which might use some basic tools such as “personal or telephone interviews of key employees; surveys and questionnaires of employees; and review of historical compliance information such as due diligence files for third parties and mergers and acquisitions, as well as internal audits of key offices” from larger companies. Such larger companies may use these basic techniques but may also include a deeper dive into high risk countries or high risk business areas. If your company’s sales model uses third party representatives, you may also wish to visit with those parties or persons to help evaluate their risks for bribery and corruption that might well be attributed to your company.

Another noted compliance practitioner, William Athanas, in an article entitled “Rethinking FCPA Compliance Strategies in a New Era of Enforcement”, took a different look at risk assessments when he posited that companies assume that FCPA violations follow a “bell-curve distribution, where the majority of employees are responsible for the majority of violations.” However Athanas believed that the distribution pattern more closely follows a “hockey-stick distribution, where a select few…commit virtually all violations.” Athanas suggests assessing those individuals with the opportunity to interact with foreign officials have the greatest chance to commit FCPA violations. Diving down from that group, certain individuals also possess the necessary inclination, whether a personal financial incentive linked to the transaction or the inability to recognize the significant risks attendant to bribery.

To assess these risks, Athanas suggested an initial determination of the touch-points where the operations of manufacturing companies “intersect with foreign officials vested with discretionary authority.” This will lead to an understanding of the individuals who hold these roles within a company. This means that a simple geographic analysis is but a first step in a risk analysis. Thereafter companies should also focus on “those who authorize and record disbursements, as well as those who represent the company in situations where they may be solicited for payments.” The next step is to determine those company employees who may have the incentive “to pay bribes on the Company’s behalf.” This incentive can come from a variety of forms; such as a company compensation plan, which rewards high producers; employees who do not understand the risk they place the company (and themselves) in by engaging in tactics which violate the FCPA; and, finally, those employees who seek to place their individual interests above those of the company.

Athanas concludes by noting that this limited group of employees, or what he terms the “shaft of the hockey-stick”, is where a company should devote the majority of its compliance resources. With a proper risk assessment, a company can then focus its compliance efforts on “intensive training sessions or focused analysis of key financial transactions — on those individuals with the opportunity and potential inclination to violate the statute.” This focus will provide companies the greatest “financial value and practical worth of compliance efforts.”

Lawler suggests that you combine the scores or analysis you obtain from the corruption markers you review; whether it is the DOJ list or those markers under the UK Bribery Act. From there, create a “rudimentary risk-scoring system that ranks the things to review using risk indicators of potential bribery.” This ensures that high-risk exposures are done first and/or given more time. As with all populations of this type, there is likely to be a normal or ‘bell curve’ distribution of risks around the mean. So 10-15% of exposure falls into the relative low-risk category; the vast majority (70-80%) into the moderate-risk category; and the final 10-15% would be high risk.

Earlier this week I wrote a piece about the Desktop Risk Assessment. I will not repeat the entire blog post here but only use some of the areas you could assess as a starting point for discussion. If you do not have the time, resources or support to conduct a worldwide risk assessment annually, you can take a different approach. You might try assessing other areas annually through a more limited focused risk assessment, which a colleague of mine calls the Desktop Risk Assessment. Some of the areas that such a Desktop Risk Assessment could inquire into might be the following:

  • Are resources adequate to sustain a culture of compliance?
  • How are the risks in the C-Suite and the Boardroom being addressed?
  • What are the FCPA risks related to the supply chain?
  • How is risk being examined and due diligence performed at the vendor/agent level? How is such risk being managed?
  • Is the documentation adequate to support the program for regulatory purposes?
  • Is culture, attitude (tone from the top), and knowledge measured? If yes, can we use the information enhance the program?
  • Disciplinary guidelines – Do they exist and has anyone been terminated or disciplined for a violating policy?
  • Communication of information and findings – Are escalation protocols appropriate?
  • What are the opportunities to improve compliance?

There are a variety of materials that you can review from or at a company that can facilitate such a Desktop Risk Assessment. You can review your company’s policies and written guidelines by reviewing anti-corruption compliance policies, guidelines, and procedures to ensure that compliance programs are tailored to address specific risks such as gifts, hospitality and entertainment, travel, political and charitable donations, and promotional activities.

This list is not intended to be a complete list of items, you can pick and choose to form some type of Desktop Risk Assessment but hopefully you can see some of the things areas you can assess and deliver any remedial action which may be warranted. Further, if you aim to perform an annual Desktop Risk Assessment with a full worldwide risk assessment every two years or so, you should be in a good position to keep abreast of compliance issues that may change and need more or greater risk management. And do not forget the that the FCPA Guidance ends its section on risk with, “When assessing a company’s compliance program, DOJ and SEC take into account whether and to what degree a company analyzes and addresses the particular risks it faces.”

A completely different approach was articulated by Leonard Shen, Vice President (VP) and Chief Compliance Officer (CCO) at PayPal, in a presentation to Compliance Week. His approach is not the right approach for every company but for those initiating their compliance journey, or a company considering a significant upgrade due to some systemic issue; this approach may be a more effective approach than the traditional risk assessment where a team of lawyers, CPAs and internal auditors assess a company’s compliance environment.

In a company which is initiating its compliance program, it can be perceived as a sea change of culture. However, Shen indicated that he had used an approach which worked to alleviate those types of concerns which also provided enough information to perform a robust assessment which could be used to form the basis of an effective compliance program. He termed this type of approach as one to “engage and educate.” While the approach had a two word name, it actually had three purposes; (1) to engage the employees in what would form the basis for an enhanced compliance program; (2) to educate the employees generally in compliance and ethical behavior; and (3) through the engagement of employees, to gather information which could be used to form the basis of a risk assessment.

Shen and his compliance team traveled to multiple company locations, across the globe, to meet with as many employees as possible. A large number these meetings were town hall settings, and key employee leaders, key stakeholders and employees identified as high risk, due to interaction with foreign governmental official touch-points, were met with individually or in smaller groups. Shen and his team listened to their compliance concerns and more importantly took their compliance ideas back to the home office.

From this engagement, the team received several thousand-employee suggestions regarding enhancements to the company’s compliance program. After returning to the US, Shen and his team winnowed down this large number to a more manageable number, somewhere in the range of a couple of hundred. These formed the basis of a large core of the enhancements to the existing company compliance program. After the enhanced compliance program was rolled out formal training began. During the training, the team was able to give specific examples of how employee input led to the changes in the enhanced program. This engaged the employees and made them feel like they were a part of, and had a vested interest in, the company’s compliance program. This employee engagement led to employee buy-in.

During the town hall meetings, and the smaller more informal group meetings, Shen and his team were doing more than simply listening, they were also training. However, the training was not on specific compliance provisions; it was more generally on overall ethics and how the employees could use compliance as a business tool. Most ethical standards of a company are not found in an existing compliance program, they are found in the general anti-discrimination guidelines and ethical business practices such anti-competitiveness and use of customer confidential information prohibitions. Often these general concepts can be found in a company’s overall Code of Conduct or similar statement of business ethics; workplace anti-discrimination and anti-harassment guidelines can be found in Human Resource policies and procedures.

Concepts such as anti-competitiveness and use of customer and competitor’s illegally obtained confidential information may be found in anti-trust or other business practice focused guidelines.

Shen and his team’s aim on the education component of “engage and educate” was to have the company employee’s start thinking about doing business the ethical way. It was ethical concept based training designed to be in contrast to a rules based approach, where employees believe they are taught the rules, and then try to see how close they can get to the line of violating the compliance rule without actually stepping over the line. Moreover, by having this general ethical business training, it laid the groundwork for the enhancement of the company’s compliance program and the training that would occur when the enhancement was rolled out.

A third key component of the “engage and educate” program is the risk assessment component. Shen’s approach here was not the traditional control-testing model, where documents are pulled and tested against a standard. Shen and his team listened, listened and listened. They listened to their employees concerns and they listened to the compliance issues they raised. As they were listening they began to ask questions about what was done and why. The questioning was not in an adversarial, interrogation mode but ferreting out the employees concerns while having the employees educate the team on the actual procedures that were used in several areas identified as key high risk areas.

Shen emphasized that this was an assessment and not an audit so no detailed forensic work was needed or used. However, by listening, and gently questioning, Shen and his team were able to garner enough information to create a risk assessment profile which informed and became the basis of their compliance program enhancement. Shen and his team did not identify to the company employees that they were engaged in a formal risk assessment. He believed that in many ways, he and his team were able to garner more useful information with which to inform their compliance program enhancement.

Shen’s “engage and educate” approach worked for his company at that point in time. It may not work for other companies as a traditional risk assessment but it does provide a different model if your company is beginning to create their compliance program, or is looking into a major enhancement.

Tomorrow, I will look at how you might use a risk assessment going forward.

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, 2014

 

August 20, 2014

Voyager II Launches and The FCPA Professor’s New Book

The Foreign Corrupt Practices Act In A New EraMany readers of this blog will recall that the Foreign Corrupt Practices Act (FCPA) is 37 years old this year. Perhaps less might remember that also 37 years ago, NASA launched Voyager II, which was an unmanned spacecraft. It was the first of two such crafts to be launched that year on a “Grand Tour” of the outer planets, organized to coincide with a rare alignment of Jupiter, Saturn, Uranus and Neptune. Aboard Voyager II was a 12-inch copper phonograph record called “Sounds of Earth.” Intended as a kind of introductory time capsule, the record included greetings in 60 languages and scientific information about Earth and the human race, along with classical, jazz and rock ‘n’ roll music, nature sounds like thunder and surf, and recorded messages from then President Jimmy Carter and other world leaders. Being good engineers, NASA conveniently included instructions on how to play the record, with a cartridge and needle provided.

In light of the age of the FCPA and our celebration of reaching for the stars, today I wanted to celebrate a volume from one of the FCPA’s most prolific commentators, Mike Koehler, the FCPA Professor. The author of numerous legal and scholarly articles and his eponymous daily blog, The FCPA Professor, he joined the thin ranks of those authors with hard bound volumes concerning the FCPA with his edition, The Foreign Corrupt Practices Act In A New Era.

As you would expect from the FCPA Professor he has lengthy sections on the genesis of the FCPA and its legislative history; general legal principals as they relate to FCPA enforcement and interpretation as well as the specifics of the text of the FCPA itself; and a review of enforcement actions. He also gives his insights as to why there was such an explosion of FCPA enforcements, beginning in 2004 and continuing right up until the present. He provides some pointers on FCPA compliance programs and ends the book with a discussion of FCPA reform. Of course, as you would expect from the FCPA Professor, the entire work is chocked full of quotations, citations and endnotes.

I would like to highlight some of my favorite discussions in the book. In Chapter 5 entitled FCPA Enforcement, he identifies “Three Buckets” of FCPA financial exposure. They are “(i) pre-enforcement actions professional fees and expenses; (ii) fine, penalty and disgorgement amounts in an actual FCPA enforcement action; and (iii) post-enforcement action professional fees and expenses.” With this tripartite description he lays out what a company might reasonably expect if it finds itself embroiled in an FCPA investigation and enforcement action. The message I got from this Chapter was that you had better have a strong compliance program in place because it is going to be a long hard and costly slog going forward if you don’t.

In Chapter 6, entitled Reasons for the increase in FCPA enforcement, The Professor sets out his thoughts on why there has been such an explosion of growth in FCPA enforcement. While both the use of Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs) are noted along with the passage and implementation of Sarbanes-Oxley (SOX); there are other reasons cited in the section entitled (appropriately enough) ‘Provocative Reasons’. These include that FCPA enforcement is “lucrative for the US government”; “the emergence and rapid rise of a lucrative industry called FCPA Inc.” (full disclosure – I am a card carrying member of FCPA Inc.); and the revolving door of lawyers who go into government service, enforce the FCPA and then leave government service to defend clients under government scrutiny for FCPA issue.

As the ‘Nuts and Bolts’ guy, I was very interested in Chapter 8, entitled FCPA Compliance and best practice. Fortunately he left some room for folks like me to go into the weeds of a compliance program but he did state, “While FCPA risk cannot be eliminated, it can be effectively managed and minimized when doing business in the global marketplace, and one positive result of the increase in FCPA enforcement in this new era has been the related increase in ‘soft’ enforcement of the FCPA through compliance policies and procedures.” He went on to define ‘soft enforcement’ as “a law’s ability to facilitate self-policing and compliance to a greater degree than can be accomplished through ‘hard’ enforcement alone. This was music to my ears. He also gave some practical approaches to implementing or enhancing your compliance program that I found to be quite useful for the compliance practitioner.

The Professor ends his book with a renewed call for FCPA reform. While he recognizes that, post Walmart, the impetus in Washington for amending the FCPA has all but died out; he does lay out all his reasons for the creation of a compliance defense amendment to the FCPA. Another cornerstone of his call for reform is to abolish NPAs and DPAs from the Department of Justice’s (DOJs) prosecutorial arsenal. Both of these issues bear serious weight and scrutiny and the FCPA Professor lays out his thoughts on each. Whatever your position on these issues is, you need to read up on what the Professor has to say to fully form your own internal debate.

As I have often remarked about the FCPA Professor, you may disagree with him but your FCPA knowledge and experience will be enriched by reading anything he puts out there for the rest of us to consume. However, after the publication of this book, I will have to add that it should become one of the standard texts for any FCPA compliance practitioner, law student studying the FCPA or anyone else interested in anti-bribery and anti-corruption. It should be on your FCPA library bookshelf. It certainly now sits proudly on mine.

You can purchase a copy of The Foreign Corrupt Practices Act In A New Era by clicking here.

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, 2014

July 11, 2014

Friday Comings and Goings

7K0A0032I wish I could be there.

Next week, the FCPA Professor is leading his first FCPA Institute this summer over two days, July 16 and 17. The event will be held in Milwaukee and hosted by the law firm of Foley and Lardner.

The Professor’s stated goal in leading this first Institute is “to develop and enhance fundamental skills relevant to the FCPA and FCPA compliance in a stimulating and professional environment with a focus on learning. Information at the FCPA Institute is presented in an integrated and cohesive way by an expert instructor with FCPA practice and teaching experience.” Some of the topics, which will be covered, include the following:

  • An informed understanding of why the FCPA became a law and what it seeks to accomplish;
  • A comprehensive understanding of the FCPA’s anti-bribery and books and records and internal controls provisions and related enforcement theories;
  • Various realties of the global marketplace which often give rise to FCPA scrutiny;
  • The typical origins of FCPA enforcement actions including the prominence of corporate voluntary disclosures;
  • The “three buckets” of FCPA financial exposure and how settlement amounts in an actual FCPA enforcement action are typically not the most expensive aspect of FCPA scrutiny and enforcement;
  • Facts and figures relevant to corporate and individual FCPA enforcement actions including how corporate settlement amounts are calculated;
  • How FCPA scrutiny and enforcement can result in related foreign law enforcement investigations as well as other negative business effects from market capitalization issues, to merger and acquisition activity, to FCPA related civil suits; and
  • Practical and provocative reasons for the general increase in FCPA enforcement.

In other words, it is what you have come to expect from the FCPA Professor; well-thought out reasoned analysis, practical knowledge and learning, and provocative thinking and assessment. But more than all of the above I believe you will receive some great insight into and why the FCPA Professor continually challenges the status quo in many areas about the FCPA. He and I often look at the same thing and see different views but by seeing more than one view, I believe you will come away with a deeper overall understanding of the entire FCPA picture.

For complete information on the FCPA Institute, click here.

As Monty Python might say And Now For Something Completely Different. If you would like a much shorter view of some FCPA and anti-corruption related topics, check out some of my most recent podcasts, the FCPA Compliance and Ethics Report. 

In Episode 74, I visit with Paul McNulty about his upcoming move to become the President of his alma mater, Grove City College.

In Episode 72, I visit with the GRC Pundit, Michael Rasmussen about why companies have such a disconnect when it comes to the theory and practice of their GRC practices.

In Episode 69, I visit with Joe Oringel about his company’s exciting new approach to transaction monitoring in the anti-corruption space.

In Episode 68, I interview Neil Swidey, author of Trapped Under the Sea about his experiences in researching and writing his book.

In Episode 66, the FCPA Professor shares his thoughts on the Esquenazi decision.

In Episode 63 and 64, I have a two-part discussion of the management of third parties under the FCPA.

For those few of you on the planet not aware of it, the World Cup final will be held this coming Sunday. Mike Brown and I have been discussing the World Cup, FIFA and anti-corruption in our World Cup Report series. You can check out Part I, Part II, Part III, Part IV, or Part V.

All of the episodes of the FCPA Compliance and Ethics Report are available for download on iTunes at no cost so if you want to catch up on all things FCPA and compliance related on the drive to work, you can do so. A happy Friday and enjoyable weekend to all.

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, 2014

June 19, 2014

What a Long Strange Trip It’s Been – The First 1000 Blog Posts

1000Yes, indeed the Grateful Dead can and does inform your compliance regime as today is my 1000th blog posting on the FCPA Compliance and Ethics Blog. To say that I ever thought I would see this day or this many blog posts, would portend a level of clairvoyance that even Carnac the Great could not conceive of pontificating upon. I had struggled with a theme for this momentous accomplishment but my sublimely-grounded English wife brought me down from the ethereal clouds with the following suggestion, “Even an old dog can learn new tricks.” Nothing like being married to a younger woman.

So today, I want to write about some of the things I have learned on this 4+ year journey, which began in late 2009/early 2010 after a serious automobile/bicycle event (Box Score: Hummer-1 Tom-0) where about the only thing I had on my hands was time while I was at home convalescing. I started to explore the world of social media, engaging on Twitter, webinaring from my home office and blogging. I was so un-savvy in this arena that about the only positive thing my teenaged daughter could say about me was “Dad, you are so unhip, you are retro. But that is cool too.” The first thing I learned was that even a complete computer misfit and social media idiot could set up a blog on WordPress. It is not only easy but free. I cannot say with any pride that some of my early blogs were very good but I can say that for a lawyer, whose only skill was to be able to perform word processing in Microsoft Word, I could type and then upload a blog post into WordPress. At that point in my blogging career, that was a major accomplishment.

Although it did take some time, I learned how to stop writing like a lawyer, with full citations in each blog, coupled with as much lawyerese as I could manage, by finally adjusting to a blogging format. I also relearned an old lesson, which says that if you really want to learn about a subject, write on it. I remember one of the first things I learned when researching the Travel Act was that this Kennedy era law, passed largely through the efforts of Bobby Kennedy, was designed to help in the fight against organized crime. So who would say a 60 year old law cannot be used for a 21st century purpose? Or maybe even a Watergate-era like the Foreign Corrupt Practices Act (FCPA) could not have an expansive use, beyond that for which it was passed in 1977? I also learned that if you put out solid content people will read and listen to what you have to say.

I learned there are some great people out there blogging in the ethics and compliance space. I have met some fabulous colleagues through my blogging who have not only been incredibly supportive but whom I now cherish as good friends. Some of them include Mike Koehler, the FCPA Professor, for his scholarly rigor and continued intellectual challenges. Dick Cassin, the Dean of FCPA bloggers, for his unflinching support to myself and so many others. Mike Volkov, former prosecutor and DC-insider, who is always around to bounce a tough question off. Howard Sklar, who was my This Week in FCPA podcast partner, until we lost him to the corporate world. Francine McKenna, a great and generous mentor for myself and many others and the go-to person all issues in and around the accounting world. Jim McGrath, the internal investigations guy, who brings a former state prosecutor’s perspective to how investigations should be handled and critiqued. Matt Ellis, whose focus on and insights into South America (as in – it’s not a country) continue to shine a light on anti-corruption issues south of the border. Matt Kelly, Editor of Compliance Week, who saves some great witticisms for his weekly blog posts. These are but a very few of the folks I am now privileged to call friends because of my blogging.

I learned that there is way too much white noise in the FCPA space. The FCPA Professor calls them FCPA Inc. and Mike Volkov derides them as the FCPA paparazzi. Whatever you might call them, they put out reams and reams of information, sometimes useful but many times not. What I have tried to do is synthesize some of the most useful for the Chief Compliance Officer (CCO), compliance practitioner or anyone else who does the day-to-day work of anti-bribery/anti-corruption compliance. There are many, many things you can know but a far smaller subset of what you need to know. I try to bring to the compliance practitioner what they need to know. That is why the subtitle of my blog is ‘The Nuts and Bolts of FCPA Compliance’. I have tried to write about things which the compliance professional can use in the everyday practice of compliance.

I have learned that blog posts, which I thought were the most important, may turn out to be the least viewed blogs. Conversely, posts I did not think would be of great interest turned out to have the largest number of one-day hits. For instance, the largest single number of one-day hits I had was an article from two years ago about the SNC-Lavalin corruption investigation in Canada. [For a blog about FCPA compliance-go figure.] The second largest number was a recent blog post using the GM internal investigation as an exploration in the differences between a corporate legal function and its compliance function.

I have learned that by committing to something, you become much better at it. My first year of blogging, I tried to put out 2-3 blogs per week but beginning in 2011, I committed to a daily blog post. Once I made that commitment, blogging became a part of my workday. Once it became a part of my workday, it was like any other project or assignment. I had to set aside the time to work on it. It has made me a much more efficient and better writer to know that I need write something, during my workday. Yes there have been times I was up at 5 AM to write a post or stayed up way past my school-night bedtime trying to crank something out but those situations have become few and far between as I became more disciplined about my blogging.

But most of all I have learned that blogging is fun. It is fun because it is a challenge to write about something in an informative and engaging manner. It is fun to tie a Shakespeare play to a compliance and ethics theme. It is fun to read a week’s worth of Sherlock Holmes’ stories and tie a compliance topic to a story each day for one week. It is fun to find out what happened this day in history and use it as a hook to grab your readers’ attention. It is fun to engage in a debate with the FCPA Professor on a topic of mutual interest, where we look at the same thing, yet see it from different perspectives. And it is fun when you meet someone for the first time and after you introduce yourself, they say to you “When is a rose, not a rose? When it’s a FCPA violation”.

Where will the next 1000 blogs posts take me? I have no clue but if they are as much fun as the first 1000 posts have been I hope that you will continue to join my on This Long Strange Trip.

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, 2014

May 15, 2014

Nolan Ryan’s First No-Hitter and Checking In On the FCPA Professor

LearnAs the Houston Astros continue their journey into complete non-relevance, both to myself and the greater southeast Texas TV watching audience, today we celebrate one of the Astros greatest players, Nolan Ryan. On this day, 41 years ago, Ryan pitched the first of his seven No-Hitters. Ryan played with the Astros from 1980-1988. Of course the idiocy of current Astros management did not begin with the current owner, as the team basically cut Ryan in 1988, saying that he was “washed up” at the tender age of 41. He simply went on to play for the Texas Rangers for another six years, where he only went on to pitch No-Hitters six and seven and record another 1000 strikeouts.

While I cannot determine at this point if the FCPA Professor will have a similarly sterling 26 year career that Ryan accomplished, he recently has done a couple of things that I certainly believe continue to demonstrate his All-Star work in the fields of law and compliance. As clearly denominated by his moniker, the FCPA Professor, he teaches law with a specialization in the arena of the Foreign Corrupt Practices Act (FCPA). While myself and others bemoan to him that he needs to get out on the speaking circuit so that we can hear more of this critique and analysis of FCPA enforcement and to learn from him, I was interested to see he is correcting this by leading his first FCPA Institute this summer over two days, July 16 and 17. The event will be held in Milwaukee and hosted by the law firm of Foley and Lardner.

The Professor’s stated goal in leading this first Institute is “to develop and enhance fundamental skills relevant to the FCPA and FCPA compliance in a stimulating and professional environment with a focus on learning. Information at the FCPA Institute is presented in an integrated and cohesive way by an expert instructor with FCPA practice and teaching experience.” Some of the topics, which will be covered, include the following:

  • An informed understanding of why the FCPA became a law and what it seeks to accomplish;
  • A comprehensive understanding of the FCPA’s anti-bribery and books and records and internal controls provisions and related enforcement theories;
  • Various realties of the global marketplace which often give rise to FCPA scrutiny;
  • The typical origins of FCPA enforcement actions including the prominence of corporate voluntary disclosures;
  • The “three buckets” of FCPA financial exposure and how settlement amounts in an actual FCPA enforcement action are typically not the most expensive aspect of FCPA scrutiny and enforcement;
  • Facts and figures relevant to corporate and individual FCPA enforcement actions including how corporate settlement amounts are calculated;
  • How FCPA scrutiny and enforcement can result in related foreign law enforcement investigations as well as other negative business effects from market capitalization issues, to merger and acquisition activity, to FCPA related civil suits; and
  • Practical and provocative reasons for the general increase in FCPA enforcement.

In other words, it is what you have come to expect from the FCPA Professor; well-thought out reasoned analysis, practical knowledge and learning, and provocative thinking and assessment. For more information on the FCPA Institute, click here.

However, as I will not be able to attend the Professor’s FCPA Institute since I will be hosting my daughter’s annual summer trek to the heat and humidity of Houston, I was equally pleased to see another offering by the FCPA Professor which comes out this summer and indeed it appears in book stores next month. It is his long awaited volume, entitled The Foreign Corrupt Practices Act in a New Era, where the Professor takes a look at the FCPA’s new era of enforcement and confronts the FCPA statutory text, legislative history, judicial decisions, enforcement agency guidance, and resolved FCPA enforcement actions. The contents include the following: Prologue Introduction and Overview; Chapter 1. Before the New Era: The Story of the FCPA and Its Early Enforcement; Chapter 2. FCPA Foundational Knowledge; Chapter 3. The FCPA’s Anti-Bribery Provisions; Chapter 4. The FCPA’s Books and Records and Internal Controls Provisions; Chapter 5. FCPA Enforcement; Chapter 6. Reasons for the Increase in FCPA Enforcement; Chapter 7. The FCPA’s Long Tentacles; Chapter 8. FCPA Compliance and Best Practices; Chapter 9. FCPA Reform; and Conclusion. Of course there is a handy Index as well.

The Professor has some early high praise for his work including the following kudos:

From Michael Mukasey, Former U.S. Attorney General, says “Professor Mike Koehler has brought to this volume the clear-eyed perspective that has made his FCPA Professor website the most authoritative source for those seeking to understand and apply the FCPA. This is a uniquely useful book, laying out systematically the history and rationale of the FCPA, as well as its evolution into a structure governed as much by lore as by law. It will be valuable both to those who counsel international corporations, whether in connection with immediate crises or long-term strategies; and to those who contemplate what the FCPA has become, and how it can be improved.”

From Daniel Chow, Associate Dean for International and Graduate Programs, The Ohio State University Michael E. Moritz College of Law, USA, says of the book “This is the single most comprehensive academic treatment of the Foreign Corrupt Practices available. Professor Koehler’s book will become the authoritative standard for the field. The book not only treats the history of the FCPA, but analyzes the statute’s elements in detail, discusses current cases, and makes proposals for reforms where the current law is deficient. The book is written in a clear, accessible style and I will use it often as a resource for my own scholarly work.”

From Richard Alderman, Former Director of the UK Serious Fraud Office, states “An excellent and thought-provoking book by a great expert. Backed up by rigorous analysis of cases, Professor Koehler constantly challenges those involved in anti-corruption work by asking the question “why?” He puts forward many constructive and well-argued suggestions for improvements that need to be considered. I have learned a lot from Professor Koehler over the years and I can thoroughly recommend this book.”

And from Tom Fox – “if the FCPA Professor writes about it you need to read it. While you may disagree with him, your FCPA perspective and experience will be enriched by the exercise.”

So if you are like me and cannot make it up to Milwaukee in July, go to Amazon.com and pre-order a copy of the FCPA Professor’s book, which is scheduled to ship next month. To order click here.

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, 2014

April 23, 2014

Gifts, Travel and Entertainment Under the FCPA – Part II

Travel and GiftsEd. Note – I know yesterday I said this would be a two-part series but as usual I got carried away so it has become a three part series. Today I review the Opinion Releases and Enforcement Actions dealing with gifts, travel and entertainment.

A. Opinion Releases

  1. Gifts

In the early 1980s the Department of Justice (DOJ) issued three Opinion Releases related to gifts under the Foreign Corrupt Practices Act (FCPA). While these Opinion Releases are clearly dated, they do remain instructive. In Opinion Release 82-01, the DOJ approved the gift of cheese samples made to Mexican governmental officials, made by the Department of Agriculture of the State of Missouri to promote the state of Missouri’s agricultural products. However the value of the cheese to be presented was not included. In Opinion Release 81-02, the DOJ approved a gift from the Iowa Beef Packers, Inc. to officials of the Soviet Ministry of Foreign Trade of its packaged beef products. The total value of all the samples presented was estimated to be less than $2,000 and the Iowa Beef Packers, Inc. averred that the individual sample packages would not exceed $250 in value. In Opinion Release 81-01, Bechtel sought approval to use the SGV Group to solicit business on behalf of Bechtel and Bechtel had proposed to reimburse the SGV Group for gift expenses incurred in this business solicitation. The DOJ approved gifts to be given by SGV in the amount of $500.00.

  1. Travel and Lodging for Governmental Officials

 Prior to the FCPA Guidance, the DOJ issued three Opinion Releases which offered guidance to companies considering whether, and if so how, to incur travel and lodging expenses for government officials. These facts provided strong guidance for any company that seeks to bring such governmental officials to the US for a legitimate business purpose. In Opinion Release 07-01, the Company was desired to cover the domestic expenses for a trip to the US for a six-person delegation of the government of an Asian country for an educational and promotional tour of one of the requestor’s US operations sites. In the Release the representations made to the DOJ were as follows:

  • A legal opinion from an established US law firm, with offices in the foreign country, stating that the payment of expenses by the US Company for the travel of the foreign governmental representatives did not violate the laws of the country involved;
  • The US Company did not select the foreign governmental officials who would come to the US for the training program;
  • The delegates who came to the US did not have direct authority over the decisions relating to the US Company’s products or services;
  • The US Company would not pay the expenses of anyone other than the selected officials;
  • The officials would not receive any entertainment, other than room and board from the US Company;
  • All expenses incurred by the US Company would be accurately reflected in this Company’s books and records.

In Opinion Release 07-02 the Company desired to pay certain domestic expenses for a trip within the US by approximately six junior to mid-level officials of a foreign government for an educational program at the Requestor’s US headquarters prior to the delegates attendance at an annual six-week long internship program for foreign insurance regulators sponsored by the National Association of Insurance Commissioners (NAIC). In the Release the representations made to the DOJ were as follows:

  • The US Company would not pay the travel expenses or fees for participation in the NAIC program.
  • The US Company had no “non-routine” business in front of the foreign governmental agency.
  • The routine business it did have before the foreign governmental agency was guided by administrative rules with identified standards.
  • The US Company would not select the delegates for the training program.
  • The US Company would only host the delegates and not their families.
  • The US Company would pay all costs incurred directly to the US service providers and only a modest daily minimum to the foreign governmental officials based upon a properly presented receipt.
  • Any souvenirs presented would be of modest value, with the US Company’s logo.
  • There would be one four-hour sightseeing trip in the city where the US Company is located.
  • The total expenses of the trip are reasonable for such a trip and the training which would be provided at the home offices of the US Company.

Lastly, is Opinion Release 12-02, in which the Requestors, 19 non-profit adoption agencies located in the US, asked the DOJ about bringing certain foreign governmental officials involved in the foreign country’s adoption process to the US. All the foreign governmental officials were involved in the process of allowing children from their country go through the adoption process with the US non-profits involved. The trips to the US would be for two days of meetings. The purpose of the visit would be to demonstrate the Requestors’ work to the government officials so that the officials can see how adopted children from the foreign country had adjusted to life in the US and to help the Requestors learn how they can provide that information to the foreign country’s government with appropriate information during the adoption process. The Requestors would allow the government officials to meet with the Requestors’ employees and to inspect the Requestors’ offices and case files from previous adoptions. The foreign country’s government officials would also meet with families who had adopted children from their country and learn more about the Requestors’ work.

The Requestors stated that they would pay for the following:

  • Business class airfare on international portions of flights for ministers, members of the legislature, and the director of the Orphanage Agency; coach airfare for international portions of flights for all other government officials; and coach airfare for domestic portions of flights for all government officials;
  • Two or three nights hotel stay at a business-class hotel;
  • Meals during the officials’ stays; and
  • Transportation between agencies and local transportation.

What can one glean from these three Opinion Releases? Based upon them, it would seem that a US company could bring foreign officials into the US for legitimate business purposes. A key component is that the guidelines are clearly articulated in a compliance policy. Based upon these Releases the following should be incorporated into a compliance policy regarding travel and lodging:

  • Any reimbursement for air fare will be for economy class, unless it is a long haul international flight, high ranking foreign officials or those entitled to travel business class by contract.
  • Do not select the particular officials who will travel. That decision will be made solely by the foreign government.
  • Only host the designated officials and not their spouses or family members.
  • Pay all costs directly to the service providers; in the event that an expense requires reimbursement, you may do so, up to a modest daily minimum (e.g., $35), upon presentation of a written receipt.
  • Any souvenirs you provide the visiting officials should reflect the business and/or logo and would be of nominal value, e.g., shirts or tote bags.
  • Apart from the expenses identified above, do not compensate the foreign government or the officials for their visit, do not fund, organize, or host any other entertainment, side trips, or leisure activities for the officials, or provide the officials with any stipend or spending money.
  • The training costs and expenses will be only those necessary and reasonable to educate the visiting officials about the operation of your company.

Incorporation of these concepts into a compliance program is a good first step towards preventing any FCPA violations from arising, but it must be emphasized that they are only a first step. These guidelines must be coupled with active training of all personnel, not only on the compliance policy, but also on the corporate and individual consequences that may arise if the FCPA is violated regarding gifts and entertainment. Lastly, it is imperative that all such gifts and entertainment are properly recorded, as required by the books and records component of the FCPA.

B. Enforcement Actions

Mike Volkov refers to the FCPA Paparazzi when he talks about those FCPA practitioners who confuse FCPA information with FCPA scare tactics and manipulate legal reasoning and practical advice with “marketing” using fear as opposed to reliable and accurate information. In a recent blog post, entitled “The So-Called Re-Emergence of Gifts, Meals and Entertainment as a Compliance Problem” Volkov bemoaned recent FCPA Paparazzi client alerts which said that the DOJ was now gunning after companies for FCPA transgressions in this area.

But one point Volkov raised for consideration by the compliance practitioner was the overall management of these risks. He asked the following questions: “Who is responsible for approving expenditures? What controls are in place for ensuring that money is used for proper purposes? How are these expenditures monitored? Who watches the person responsible for controlling the money and what controls are in place to monitor their behavior?” All good questions, and all questions that the compliance function should be able to answer going forward.

While there were three of enforcement actions in 2013 and one in 2014 where gifts, travel and entertainment were discussed. In only one of the four such enforcement actions were gifts, travel and entertainment discussed, where over a period of 15 months these actions were the primary cause of the violation. That matter was the Diebold enforcement action. In all others, HP, Weatherford and Stryker, the gifts, travel and entertainment matters were all ancillary to the primary illegal conduct at issue. This is consistent with DOJ enforcement of the FCPA so Volkov rights notes, the FCPA Paparazzi are howling at the moon once again.

Travel and Entertainment Enforcement Expense Box Score

Company Trip Locations Trip Costs & Perks Company Facilities Present
Lucent Technologies DisneyWorld, Hawaii, Las Vegas, Grand Canyon, Niagara Falls, Universal Studios, NYC $10 million in trips for 1000 Chinese governmental officials, including $34,000 for five days of sightseeing None of the travel destinations
Ingersoll-Rand Trip to Florence after trip to company facility in Vignate, Italy $1000 ‘pocket money’ per attendee Facilities in Vignate but not in Florence
Metcaf & Eddy First trip – Boston, Washington, D.C., Chicago and Orlando. Second trip – Paris, Boston and San Diego. First Class Travel and trip expenses for Egyptian governmental official and his family. Cash payments prior to trips of 150% of estimated daily expenses. Wakefield Mass., not in Washington DC, Chicago, Paris or DisneyWorld
Titan Corporation Reference in company books and records of $20,000 for promotional travel expenses. Not clear if ever funded (Remember a promise to pay equals making a payment under the FCPA)
UTStarcom Hawaii, Las Vegas and NYC Up to $7 million on gifts and all expense paid trips to US No company offices present in any of the travel destinations
Diebold Europe, with stays in:

  • Paris,
  • Amsterdam,
  • Florence,
  • Rome

In the US with visits to:

  • Disneyland,
  • Grand Canyon,
  • Napa Valley,
  • Las Vegas
$1.6MM to employees of Chinese state-owned banks; $175K to employees of Indonesian state-owned banks No company offices present in any of the travel destinations
Weatherford
  • Trip to Germany for the World Cup
  • Honeymoon for Sonatrach official’s daughter
  • Trip to Saudi Arabia for religious holiday
Payment of $24,000 in cash advance for Algerian government officials visiting Houston No legitimate business purpose for any of the business travel
Stryker NYC and Aruba $7000 for Polish gov official and wife No company offices present in any of the travel destinations
HP Las Vegas $35,000 in travel expenses paid for Polish gov official No company offices present in any of the travel destinations

Tomorrow we will tie it all together for you.

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, 2014

April 14, 2014

The HP FCPA Settlement

FCPA SettlementLast week the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) jointly announced the conclusion of a Foreign Corrupt Practices Act (FCPA) enforcement action against Hewlett-Packard Company (HP). In the settlement, HP agreed to pay $108MM in fines, penalties and disgorgements for criminal and civil acts. To say that it was one of the more perplexing FCPA settlements would seem to be an understatement. While some will read the settlement documents and see conduct which did not merit such a high total amount of fines and penalties, I am not from that camp.

The tale of this sordid affair of bribery and corruption occurred over 3 continents with multiple countries involved, evidencing an entire breakdown in company internal controls and a complete lack of a culture of compliance. Yet the settlement documents make great pains to emphasize that few employees were actually involved in the nefarious conduct. How bad was the conduct? Think right up there with BizJet because we had bags of cash delivered to a Polish government official. (But unlike BizJet, the Board of Directors did not approve the bribery scheme and it was not taken across the border.) For the Russian deal, it was shopped through several countries with multiple levels of company review, which did not seem to work or care much about anything except getting the deal done. For Mexico, they just seemed to get a free pass where the contract description for the agent who paid the bribe was “influencer fee”.

Finally, as most readers might remember, HP did not self-report this misconduct to the DOJ or SEC. Apparently, the story of HP’s bribery by its German subsidiary to gain a contract in Russia was broken by the Wall Street Journal (WSJ) article in April 15, 2010. The next day, the DOJ and SEC announced they were investigating the allegations of bribery. However, HP was made aware of the allegations by its German subsidiary in December 2009, when German authorities raided HP’s offices in Munich and arrested one HP Germany executive and two former employees. Yet HP never self-reported. Not exactly the poster child for self-disclosure for any company going forward.

Of course HP’s public response at the time indicated its attitude, when a HP spokesperson was quoted in the WSJ article as saying “This is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with HP. We are cooperating fully with the German and Russian authorities and will continue to conduct our own internal investigation.”

More befuddlement comes from the reported facts around HP Germany. As noted by the WSJ report, one, then current, HP executive was arrested and two former employees were arrested in connection with the investigation by German authorities. There is no mention of them in any of the settlement documents. The WSJ article also reported that investigation-related documents submitted to a German court showed that German prosecutors were “looking into whether H-P executives funneled the suspected bribes through a network of shell companies and accounts in places including Britain, Austria, Switzerland, the British Virgin Islands, Belize, New Zealand, the Baltic nations of Latvia and Lithuania, and the states of Delaware and Wyoming”. While some of these countries were mentioned in the settlement documents there was no mentions of DOJ or SEC investigations into Wyoming, Belize, the British Virgin Islands or New Zealand.

What are we to make of the criminal fines levied against the Russian and Polish subsidiaries of HP? The Polish subsidiary pled guilty to a two count Criminal Information consisting of (1) violating the FCPA’s internal control provisions; (2) violating the FCPA’s books and records provisions. The US Sentencing Guidelines suggested a fine range of $19MM to $38MM, the final fine was $15,450,244.

For the Russia deal, the Russian subsidiary pled guilty to a four count Criminal Information consisting of (1) conspiracy to violate the books and records provisions of the FCPA; (2) violating the FCPA’s anti-bribery provisions; (3) violating the FCPA’s internal control provisions; (4) violating the FCPA’s books and records provisions. The US Sentencing Guidelines suggested a fine range of $87MM to $174MM, yet the final fine was $58,772,250.

Finally, in Mexico HP’s subsidiary, according the to the SEC Press Release, “paid a consultant to help the company win a public IT contract worth approximately $6 million. At least $125,000 was funneled to a government official at the state-owned petroleum company with whom the consultant had connections. Although the consultant was not an approved deal partner and had not been subjected to the due diligence required under company policy, HP Mexico sales managers used a pass-through entity to pay inflated commissions to the consultant.” This was internally referred to by HP as an “influencer fee.” Pretty clear evidence of what it was to be used for, wouldn’t you say? Yet the DOJ did not to criminally prosecute the company’s Mexican subsidiary and entered into a Non-Prosecution Agreement (NPA), HP agreed to pay forfeiture in the amount of $2,527,750.

How did HP accomplish all of this? In a Press Release HP Executive Vice President and General Counsel John Schultz said, “The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company. HP fully cooperated with both the Department of Justice and the Securities and Exchange Commission in the investigation of these matters and will continue to provide customers around the world with top quality products and services without interruption.”

As reported by the FCPA Professor, in his blog post entitled “HP And Related Entities Resolve $108 Million FCPA Enforcement Action”, the HP Russian subsidiary Plea Agreement gave the following factors for the reduction in the fine from the Sentencing Guideline range:

“(a) monetary assessments that HP has agreed to pay to the SEC and is expected to pay to law enforcement authorities in Germany relating to the same conduct at issue …; (b) HP Russia’s and HP’s cooperation has been, on the whole, extraordinary, including conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence and information for the Department; (c) HP Russia and HP have engaged in extensive remediation, including by taking appropriate disciplinary action against culpable employees of HP and enhancing their internal accounting, reporting, and compliance functions; (d) HP has committed to continue enhancing its compliance program and internal accounting controls … (e) the misconduct identified … was largely undertaken by employees associated with HP Russia, which employed a small fraction of HP global workforce during the relevant period; (f) neither HP nor HP Russia has previously been subject of any criminal enforcement action by the Department or law enforcement authority in Russia or elsewhere; (g) HP Russia and HP have agreed to continue to cooperate with the Department and other U.S. and foreign law enforcement authorities, if requested by the Department …”

In the same blog post, the Professor reported the following reasons were stated for reduction in the final fine by HP’s Polish subsidiary’s:

“(a) HP Poland’s cooperation with the Department’s investigation; (b) HP Poland’s ultimate parent corporation, HP, has committed to maintain and continue enhancing its compliance program and internal accounting controls …; and (c) HP Poland and HP have agreed to continue with the Department and other U.S. and foreign law enforcement authorities in any ongoing investigation …”

We have witnessed companies, which have engaged in ‘extraordinary cooperation’ with the DOJ during the pendency of their FCPA investigations. BizJet is certainly one that comes to mind. Further, there are clear examples of companies, which extensively remediated during the pendancies of their FCPA investigations, from which they clearly benefited. Two prime examples are Parker Drilling, which not only received a financial penalty below the suggested range but also was not required to have a corporate monitor, while they had C-Suite involvement in its bribery scheme. Weatherford seeming came back from the brink during mid-investigation when they hired Billy Jacobson and turned around not only their attitude towards cooperation with the DOJ but also their efforts toward remediation.

Both of these companies are headquartered in Houston and both have been quite active on the conference circuit talking about their compliance programs so most compliance practitioners are aware that these companies are on the forefront of best practices. Perhaps HP is on some circuit doing that, somewhere. If so, kudos to them. If their remediation work led to a best practices compliance program for the company and their extraordinary cooperation led to the astonishing reduction in penalties to their entities, I certainly tip my cap to them. If their lawyers were great negotiators and made great presentations to the DOJ and SEC, all of which led to or contributed to the final results, a tip of the cap to them as well.

So what is the lesson to be learned for the compliance practitioner? Other than befuddlement, I am not sure. Congratulating HP and its counsel is not a lesson it is an action. If HP now has a best practices compliance program, I hope they will provide the compliance community with the lessons that they learned and incorporated into their compliance program, which allowed them to obtain the fines below the minimum suggested range. If they have incorporated some enhanced compliance components into their program I hope they will share those enhancements too.

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, 2014

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