Foreign Corrupt Practices Act Compliance Guidebook: Protecting Your Organization from Bribery and Corruption
1 BRIBERY, CORRUPTION, AND THE FOREIGN CORRUPT PRACTICES ACT.
Devastating Cost of Corruption.
Government’s Commitment to FCPA Enforcement.
FBI’s Laser Focus on Anti-Corruption.
Watergate and the Birth of the FCPA.
Securities and Exchange Commission Enters the Fight.
Questionable Corporate Payments Task Force.
Compliance Insight 1.1: First FCPA Prosecution.
Criticism of the FCPA.
A Culture of Compliance.
2 OVERVIEW OF THE FOREIGN CORRUPT PRACTICES ACT.
Leveling the Playing Field.
FCPA Elements Summary.
Compliance Insight 2.1: Metcalf and Eddy Civil FCPA Settlement.
Books, Records, and Internal Controls Provision.
Books and Records Elements Summary.
Sarbanes-Oxley and the FCPA.
Third-Party and Successor Liability.
Compliance Insight 2.2: Self-Disclosure Follows M&A Activity.
Why Corruption Matters.
Compliance Insight 2.3: Afghanistan: A Case Study in Corruption.
3 GOVERNMENT GUIDANCE AND SIGNIFICANT CASES.
FCPA Compliance Programs: Case Law Guidance.
A Lesson in Overseas Compliance.
Compliance Insight 3.1: Rogue Employee Does the Crime, Company Does the Time.
Cold Cash: U.S. v. Jefferson.
Evaluating the Seaboard Criteria in Mitigating Enforcement Actions.
Compliance Insight 3.2: Appointment of Corporate Monitor Results in Charges of Cronyism.
Selecting a Monitor: The Morford Memo Standards.
Thought Leader in Corporate Compliance: George Stamboulidis.
Government Procurement Fraud and the FCPA.
Federal Acquisition Regulations Disclosure Requirements and the FCPA.
Business Ethics Awareness and Compliance Program.
4 GLOBAL ANTI-CORRUPTION EFFORTS.
Globalization of Law Enforcement Cooperation.
International Antibribery Efforts.
OECD Convention on Combating Bribery.
Inter-American Convention Against Corruption.
European Union Convention on the Fight Against Corruption.
African Union Convention on Preventing and Combating Corruption.
Council of Europe Criminal Law Convention on Corruption.
United Nations Convention Against Corruption.
United Nations Global Compact.
Canada’s Corruption of Foreign Public Officials Act.
Compliance Insight 4.1: INTERPOL Fights Corruption.
International Anti-Corruption Organizations.
Corruption Perceptions Index.
Compliance Insight 4.2: 2009 Corruption Perceptions Index: Top 20 Countries.
Compliance Insight 4.3: 2009 Corruption Perceptions Index: Bottom 20 Countries.
Other Transparency International Resources.
Compliance Insight 4.4: Foreign Bribery Enforcement in OECD Convention Countries.
Compliance Insight 4.5: Foreign Bribery Cases and Investigations.
Compliance Insight 4.6: Status of Foreign Bribery Cases.
International Monetary Fund.
Asian Development Bank.
World Trade Organization.
Partnering Against Corruption Initiative.
Thought Leader in Corporate Compliance: Alan Boeckmann.
Global Anti-Corruption Enforcement Trends.
The Good Fight Against Corruption.
5 SIEMENS: A NEW COMMITMENT TO A CULTURE OF COMPLIANCE.
Company Overview and History.
The Road to Corruption.
Munich Public Prosecutor’s Office Investigation.
Self-Disclosure and Subsequent Internal Investigation.
Legal and Fair Internal Investigation.
Project Office Compliance Investigation.
Amnesty and Leniency Programs.
Cooperation with Law Enforcement.
Criminal Charges, Plea Agreements, and Fines.
Compliance Insight 5.1: Key Elements of Siemens’ Compliance Program: Prevent–Detect–Respond.
New Corporate Compliance Program.
Corporate Compliance Monitor.
Siemens’ Remedial Efforts.
Replacement of Top Management.
Comparison of Old and New Compliance Programs.
Clear Reporting Lines.
Training and Communication.
Anti-Corruption Training Program.
Strengthened Internal Audit Function.
Enhancing Internal Controls.
Enhanced Policies and Procedures.
Compliance Insight 5.2: Enhancement of Policies and Procedures.
Compliance Insight 5.3: Siemens’ Anti-Corruption Toolkit Focus Areas.
Business Partner Review and Approval.
Supplier Code of Conduct.
Compliance Insight 5.4: Business Partner Review and Approval Process.
Corporate Disciplinary Committee.
Compliance Element of Senior Management Compensation.
Compliance Progress Report.
Compliance Insight 5.5: Siemens’ Compliance Progress Report from Q2 FY 2009.
Becoming a Recognized Leader in Compliance.
Compliance Insight 5.6: Siemens’ Compliance Objectives for 2009.
Partnering with the World’s Anti-Corruption Community.
Partnering Against Corruption Initiative.
Business Guide on Fighting Corruption.
The Road Forward.
6 WORLDWIDE HOTSPOTS FOR CORRUPTION: UK, RUSSIA, AFRICA, THE MIDDLE EAST, AND LATIN AMERICA.
Thought Leader in FCPA Compliance: Scott Moritz.
The Natural Resource-Corruption Link.
UK Tackles International Corruption.
Compliance Insight 6.1: Weak Internal Controls Leads to Fine for Insurance Giant.
UK Bribery Bill.
Mabey & Johnson Prosecution.
Strong Message from the SFO.
Doing Business in Russia.
The Oil-for-Food Scandal.
Compliance Insight 6.2: Companies Implicated in Oil-for-Food Scandal.
Cases of Corruption.
Multinational Company As Victim.
7 WORLDWIDE HOTSPOTS FOR CORRUPTION AND BRIBERY: CHINA, CENTRAL ASIA, INDIA, AND ASIA PACIFIC.
The Dangers of Agents: Avery Dennison.
Heightened Anti-Corruption Enforcement Efforts in China.
Corruption and Societal Discontent.
Criminal Law of the People’s Republic of China.
Company Law of the People’s Republic of China.
Anti-Unfair Competition Law of the People’s Republic of China.
Invitation and Submission of Bids Law of the People’s Republic of China.
Interim Provisions on the Prohibition Against Commercial Bribery Acts.
China Enforcement Agencies.
Commission for Discipline Inspection of the Communist Party.
Supreme People’s Procuratorate of the People’s Republic of China.
Ministry of Public Security of the People’s Republic of China.
State Administration for Industry and Commerce of the People’s Republic of China.
The Dangers of Doing Business in China.
Head in the Azeri Sand.
8 BAE SYSTEMS: PAST BEHAVIOR HAUNTS THE COMPANY.
Al Yamamah Deal.
Compliance Insight 8.1: Suspicious Activity Report, January 30, 2004.
Serious Fraud Office Inquiry.
Tony Blair Quashes the Investigation.
DOJ’s Hard-Line Approach.
Compliance Insight 8.2: Types and Numbers of Calls to BAE’s Ethics Helpline.
BAE Follows a Different Path.
9 DESIGNING AN EFFECTIVE ANTI-CORRUPTION COMPLIANCE PROGRAM.
Federal Sentencing Guidelines for Organizations.
The Seven Steps to an Effective Compliance Program.
DOJ Guidance on Anti-Corruption Compliance Programs.
Compliance Program Design.
Red Flags and Risk Areas.
Department of Justice’s FCPA Red Flags.
Red Flags When Doing Business With Third Parties.
Travel and Entertainment.
Mergers and Acquisitions.
Compliance Insight 9.1: Inherent Compliance Risk in Acquisitions and New Business Lines.
Autonomous International Business Units.
Don’t Ignore Small Payments.
Anti-Corruption Design Never Ends.
Thought Leaders in FCPA Compliance: Joseph Spinelli, Scott Moritz, and Jay Perlman.
10 IMPLEMENTING AN EFFECTIVE ANTI-CORRUPTION COMPLIANCE PROGRAM.
Anti-Corruption Standards and Procedures.
Training and Communication.
Red Flags Training.
Anti-Corruption Training Best Practices.
Compliance Insight 10.1: Driving Home the Impact of Corruption.
Delivery Methods for Training.
Specific Anti-Corruption Reporting Mechanism.
Communicating the Compliance Program.
Evaluating Your Anti-Corruption Training Program.
M&A Due Diligence.
Thought Leader in FCPA Compliance: Leslie McCarthy.
Internal Accounting Controls.
Role of Internal Audit.
Anti-Corruption Audit Program.
Other Compliance Program Best Practices.
Field-Based Compliance Officers.
FCPA Enforcement Database.
Commitment to Anti-Corruption Compliance Programs 261.
Compliance Insight 10.2: Sample Compliance.
11 MONSANTO: FIGHTING CORRUPTION FOR A BETTERWORLD.
A Commitment to Agriculture.
DOJ and SEC FCPA Investigation.
Acceptance of Responsibility and Remedial Actions.
Compliance Insight 11.1: Monsanto Compliance Program Overview.
Tone at the Top and a Revamped Code of Conduct.
Messages from Senior Leaders.
Business Conduct Office.
Regional Working Groups.
FCPA Working Group Guidelines.
Compliance Insight 11.2: Monsanto Business Conduct Policy Employee Guidelines.
Gifts, Entertainment, and Other Promotional Expenditures.
Per Diem Payments.
Charitable Donations and Donations to Governments.
Doing Business with Foreign Officials and Their Relatives.
Dealing with Third Parties.
Training Third Parties.
Contractual Safeguards and Oversight.
Opinion from Outside Counsel.
Local Law Advice.
Response to Possible Violations.
Internal and Independent Investigations.
Internal Coordination and Training.
The Monsanto Pledge.
12 INTERNAL INVESTIGATIONS.
Consequences of Failing to Act.
Preparing for the Investigation.
Preserving Documentary and Electronic Information.
Assembling the Investigative Team.
Investigations Code of Conduct.
Thought Leader in Internal Investigations: David Z. Seide.
Employee Legal Representation.
Interviewing and Reporting.
Employee Cooperation with Company Investigations.
Anti-Corruption Enforcement Trends.
Siemens Internal Investigation Approach.
Determining Systemic Corruption and FCPA Violations.
Self-Disclosure of FCPA Violations.
Compliance Emergency Preparedness Kit.
13 PAST, PRESENT, AND FUTURE OF THE FCPA.
Thought Leader in FCPA Compliance: Marjorie Doyle.
Corporate Ignorance Is Not Bliss.
It’s Not Rocket Science.
On the Horizon.
Battling the Disease of Corruption.
Appendix OPINION PROCEDURE RELEASES.
About the Authors.
Martin T. Biegelman, CFE, CCEP, has been fighting fraud and corruption for 40 years in various roles in law enforcement, consulting, and the corporate sector. He is currently the Executive Vice President of U.S. Operations for IPSA International, a global risk advisory firm. His extensive experience include conducting internal investigations on behalf of corporate management and boards, FCPA and anti-bribery compliance, litigation consulting, due diligence, and corporate compliance design and implementation. He previously served as the Director of Financial Integrity at Microsoft Corporation. This highly acclaimed fraud prevention and anti-corruption compliance program that he founded and led continues to be a model for other global companies. Mr. Biegelman is a sought-after speaker, prolific author, and the recipient of the prestigious Cressey Award bestowed by the Association of Certified Fraud Examiners for lifetime achievements in the detection and deterrence of fraud.
DANIEL R. BIEGELMAN is an attorney with the law firm of Baker Hostetler. He is a member of the Litigation Practice Group in their New York office. Daniel is a Certified Compliance and Ethics Professional and a member of the Society of Corporate Compliance and Ethics. He is a contributing author to Building a World-Class Compliance Program: Best Practices and Strategiesfor Success (Wiley). He is also the author of articles on the FCPA and corporate compliance.
"This book is a must for lawyers and any corporation that deals with global commerce. The chapter on Siemens shows how a large multinational can respond and reform under intense scrutiny. The Siemens chapter also represents reform and transparency and will be seen as a model for a very long time."
—Michael G. Oxley, Of Counsel, Baker and Hostetler LLP
"An excellent FCPA guidebook! The Biegelmans' book makes it easy to understand the FCPA and includes fascinating case studies and interviews with compliance thought leaders. It should be required reading and a desktop reference for anyone committed to the fight against worldwide corruption or interested in creating a best practice anti-corruption compliance program."
—Cynthia Cooper, CEO, The CooperGroup LLC, and one of Time magazine's Persons of the Year
"Foreign Corrupt Practices Act Compliance Guidebook is an excellent and easy-to-use resource for companies doing business abroad. The book is full of practical guidance and compiles in one place an overview of the many issues a company and its counsel may face in effecting compliance and dealing with investigations. A must-read!"
—Karen A. Popp, Partner at Sidley Austin LLP, former federal prosecutor, and Associate White House Counsel to President Clinton
"This book provides a highly relevant and invaluable guide for companies wishing to protect their assets and reputations from the menace of corruption. In addition to presenting a comprehensive discussion of the history, requirements, and importance of the FCPA, Martin and Daniel Biegelman offer insightful, in-depth examples and clear, practical guidance on compliance."
—James D. Ratley, CFE, President, Association of Certified Fraud Examiners
"Everyone in the compliance community will find what they need in this great new resource. It demystifies the FCPA and what it requires. The writing is crisp and lively, the examples and case studies are vivid and succinct, and the advice is rock solid. This is the best overall presentation of the FCPA between two covers that I have ever seen."
—Richard L. Cassin, Founding Partner, Cassin Law LLC, and creator of the widely read FCPA Blog
"Foreign Corrupt Practices Act Compliance Guidebook is a brilliant and crucial addition to FCPA literature. Any American company doing business overseas needs a copy. This will be a standard reference for many years."
—Mark A. Kirsch, Co-Chair of Litigation, Gibson, Dunn & Crutcher LLP
“Martin and Daniel Biegelman have done it again. While the FCPA has been an issue for decades, it has taken center stage over the past few years and all signs point to it having an even greater impact on businesses going forward. The Biegelmans’ have built a comprehensive tool for all levels of interest – from the practitioner to the CEO, this is a book that should be mandatory reading for those touching international business.”
—Dan Wachtler, CEO, IPSA International, Inc.
“As the FCPA quickly becomes one of the world’s true International Laws, compliance is essential for corporate accountability and integrity. The FCPA is a critical component of a free market system that rewards hard-working, honest individuals and companies, and strongly pursues violators. The Biegelmans’ FCPA Compliance Guidebook isn’t just about a regulation; it’s about building a successful and compliant global economy.
—Roy Snell, CEO, Society of Corporate Compliance and Ethics
“Martin along with his son Daniel have written the authoritative standard on the Foreign Corrupt Practices Act. It is a must read for any Compliance or Ethics personnel looking to better understand this complex issue.”
—John E. McDermott, VP, Corporate Compliance Investigator, CA Inc.
“Foreign Corrupt Practices Act violations are the current focus of regulators, investigators, and prosecutors, here and abroad. This exhaustive text explores the legal nooks and crannies with exacting precision, but it’s most important contribution is the emphasis on compliance and prevention, areas that the authors know well. Through numerous illustrations of extraordinary crimes and splendid compliance and prevention techniques, the authors establish FCPA awareness and compliance as a sine qua non for doing business globally. A must-read for businesses wishing to avoid massive fines and/or imprisonment.”
—George E. Curtis, J.D., Executive Director of the Economic Crime Institute, Utica College
“Martin and Daniel Biegelmans’ work will go down in American corporate and financial lore as a comprehensive history of the series of train wrecks that have yielded the FCPA and its various progeny. It tells the fascinating story of how we got from the Lockheed disclosures of the mid-1970s to the hottest area of white collar practice today. It is required reading for those of us struggling to implement global compliance programs. Those unenlightened ones who remain committed to the dark side would also do well to read it, and take warning.”
—Keith Hennessee, Associate General Counsel, Halliburton Company
“This book is a great compilation of information about the FCPA and practical guide that would have been incredibly useful to me when I was asked to be responsible for FCPA Compliance related matters. It is a much needed resource and it will be extremely valuable as a desk reference for anyone involved in business and who is responsible for FCPA compliance.”
—Flora A. Francis, Counsel, Litigation, GE Oil & Gas
“Tackling corruption and insuring compliance with the Foreign Corrupt Practices Act makes this book a ‘must read’ for both current and future managers of today’s global corporations. Increased global Anti-Corruption laws and efforts demand that corporate compliance and training programs are in place - this guidebook provides the ‘how’ and the ‘why’! This book provides the ‘wake-up call’ and consequences of ‘failure to act’ that organizations can no longer ignore!”
—Joyce Barden, CPA, CBM, Senior Professor, DeVry University/Keller Graduate School of Management