What to Expect in 2017

Transcription

1 What to Expect in 2017 FCPA and Other Anti-Corruption Compliance Issues Facing Corporate General Counsels in Sweden John G. Rahie, Freeh Group International Solutions José R. Hernandez, Ortus Strategies

2 Topics for Discussion 1. FCPA Overview 2. Significant issues in What to expect under the new U.S. administration 4. Impact for international companies 5. Addressing underlying issues 2

3 The Foreign Corrupt Practices Act (FCPA) The FCPA includes two distinct but complementary provisions: 1. Anti-Bribery Prohibits bribery of foreign officials 2. Books and Records Accurate accounting entries Internal controls Applies directly to publicly traded companies, but can be used as evidence against privately-held corporations 3

4 Elements of FCPA Anti-Bribery Provision The FCPA Anti-Bribery Provision Prohibits: any knowing act in support of a payment, an offer to pay or an authorization to pay corruptly money or anything of value directly or indirectly to a foreign official 4

5 FCPA Accounting Provisions Accounting provisions apply to any U.S. issuer Must maintain fair and accurate books and records that accurately describe payments Must implement internal controls to ensure corporate acts are duly authorized Must have control person who is accountable for the systems and procedures No materiality No intent 5

6 The FCPA in % increase in enforcement actions Yates memo effect on prosecution of individuals Rise in sanctions State-owned and controlled enterprises in emerging markets continue to pose greatest risk DOJ Pilot Program and the creation of Declination with Disgorgement enforcement Recent appointment of DOJ Compliance Counsel 6

7 Costs in Perspective: Top Ten FCPA Settlements Company Year Amount Siemens AG 2008 $800 M Alstom S.A $772 M KBR/Halliburton 2009 $579 M Teva 2016 $519 M Odebrecht/Braskem 2016 $420 M Och-Ziff 2016 $412 M BAE Systems Plc 2010 $400 M Total S.A $398 M VimpelCom 2016 $398 M Alcoa 2014 $384 M 7

8 Looking Ahead in 2017 Life under a new Administration Horrible Law that should be changed (D. Trump 2012) FCPA puts U.S. companies at a disadvantage (J. Clayton 2011) FCPA is bipartisan and very profitable Congressional pressure not to go soft on bribery Extension of pilot program Continued high expectations of corporate compliance programs Still a backlog pipeline of significant cases 8

9 Special Concerns for GCs and CCOs Influence of DOJ Compliance Counsel Instrumental in Drafting FCPA Pilot Program Reviewing remediation efforts by companies DOJ is more sophisticated in reviewing compliance programs and remediation efforts Increased emphasis on: Dedicated compliance resources Internal Controls Third-party risk management 9

10 Expectations of Law Enforcement and Regulators 10

11 DOJ/SEC Guidance on Key Hallmarks of Compliance Programs M&A Due Diligence & Integration Leadership & Culture 10 1 Monitoring & Testing 9 2 Policies & Procedures Allegations & Investigations 8 Global Organization 3 Oversight, Autonomy & Resources Third-Party Management Risk Assessment Incentives & Disciplinary Measures Training & Communication 11

12 Addressing the Underlying Issues Recent enforcement actions and regulator inquiries in Northern Europe point to the heightened corruption risk facing globally-active companies based in lower-risk countries Companies must address the underlying issues in their corporate culture and their approach to integrity and compliance matters This requires more than implementing automated compliance processes and legalistic solutions; it means focusing on leadership, judgment, and strategy to suffuse integrity into all aspects of the business Special attention should be given to sensitive areas such as investigations and whistleblowing and interactions with third-party intermediaries 12

13 Necessary Conditions for Compliance Transformation Leadership Visibility Strategy Resources Courage Support Active, visible and accountable involvement of the CEO and CFO, with a credible E&C leader and robust Board support Adoption of integrity as a core aspect of the company s brand and culture A clear plan or roadmap in place with regular measurements on progress and results Shared ownership and execution by corporate functions and business, including Legal, HR, Audit, Finance, Communications, Procurement, Sales Empowerment and willingness to address taboo topics throughout the company including people, partners, and business models Objective monitoring and input by credible third-parties with global perspective and experience in prior transformations 13

14 For More Information John G. Rahie Managing Director, Freeh Group International Solutions Tel José R. Hernandez CEO, Ortus Strategies Tel