WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

GUEST OF HONOR: Michael Bailey Senior Vice President & General Counsel Bechtel Group, Inc. WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

THE SPEAKERS

Michael Bailey Raymond Banoun Senior Vice President Partner, Cadwalader, & General Counsel, Wickersham & Taft LLP Bechtel Group, Inc.

Martin Weinstein Philip Urofsky Partner, Willkie Farr & Partner, Gallagher LLP Shearman & Sterling LLP

TO THE READER: General Counsel are more important than ever in history. Boards of Directors look increasingly to them to enhance financial and business strategy, compliance, and integrity of corporate operations. In recognition of our distinguished Guest of Honor’s personal accomplishments and of his company’s leadership as a corporate citizen, we are honoring Michael Bailey, General Counsel of Bechtel. His address focuses on challenges facing General Counsel of a corporation with operations in major coun- tries throughout the world, each with its own economy, technological development, infrastructure and regulations. The panelists’ additional topics include successful international compliance, selected tax issues for international M&A, and international governmental policies such as FCPA.

The Directors Roundtable is a civic group which organizes the preeminent worldwide programming for Directors and their advisors, including General Counsel.

Jack Friedman Directors Roundtable Chairman & Moderator

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Michael C. Bailey Michael Bailey is General Counsel of Bechtel owned by BEn and the Royal Dutch Shell Group, Inc. He is responsible for leading the group) as executive vice president and legal, ethics and compliance, and internal General Counsel. audit functions. He became a senior vice president in September 2001 and was elected In 2005, following the successful sale of to Bechtel’s board of directors in 2010. InterGen, Mr. Bailey returned to Bechtel and relocated to London as a managing Mr. Bailey joined Bechtel in 1994 as a director in Bechtel’s civil infrastructure senior lawyer in Bechtel’s legal department. global business unit. While in London, his In 1997, he was executive assistant to the role included global responsibility for the Chairman and Chief Executive Officer, aviation business line as well as a number Riley Bechtel, and the President and Chief of services and functions. Operating Officer, Adrian Zaccaria. In early 2010, Mr. Bailey rejoined the legal From 1998 to 2004, Mr. Bailey served in department as General Counsel of Bechtel various roles in Bechtel Enterprises (BEn — Group, Inc. Bechtel’s finance, development and invest- ment business) including General Counsel, Prior to joining Bechtel, he was a partner managing director for human resources in the law firm of Borden Ladner Gervais, and manager of direct investments and LLP in Toronto, Canada where he was technology ventures portfolios. During included as one of the world’s leading this period, he also served as assistant gen- lawyers in the International Financial Law eral counsel of Bechtel Group, Inc. Review Guide. He earned his law degree from the University of Toronto. During 2004 and 2005 he was transferred to InterGen (a global energy business then

Bechtel "!/!< 6%@6%J Bechtel is a global engineering, construc- /" tion and project management company with more than a century of experience Safety First on complex projects in challenging loca- ! At Bechtel we believe every accident is pre- tions. Privately owned with headquarters ventable, and our commitment to safety in San Francisco, we have offices around Signature projects pays off. the world and 52,700 employees. We had " K! revenues of $27.9 billion in 2010, and #%'*+ companies in our industry. booked new work valued at $21.3 billion. / NQV 6#:% each year without a lost-time accident. What We Do #!; <XVYV[\X <= than 1 million consecutive safe work %< hours. >?<#

Summer 2011 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

JACK FRIEDMAN: Welcome. This series of world honor for General Counsel over the years arose from Boards of Directors telling us that corporations never get credit for the good that they do. It’s important to have programs that give executives, whether on the business side or the legal side, a forum to talk about what their companies are doing and what they are proud of. Also, it enables leadership to get to know about people that they have read about in the news, like our Guest of Honor.

The transcript of this event is going to be sent out to about 150,000 people globally. What makes this the leading honor for General Counsel is not just the event itself, but also sharing it with leaders all over the world.

We could spend the whole morning giv- complex and straightforward — that we face So let me begin my remarks by giving you a ing the outstanding qualifications of the each day. brief overview of Bechtel. various speakers, but we have a tradition that less is best. So I will briefly introduce I particularly appreciate the opportunity Bechtel is an engineering and construction the speakers as their turn comes, and they to listen to the thoughts and views of Ray, company. In the words of our current CEO, will make their introductory remarks. Then Martin, and Philip and to share a few Riley Bechtel: “We build big stuff.” We we will go on to an extended Roundtable thoughts of my own. have “built big stuff” since the company discussion among the panelists and invite was founded in 1898 by Warren Bechtel — comments or questions from the audience. While the theme is a broad one on the chal- Riley’s great-grandfather. Between Warren At the end the audience will be invited to lenges Bechtel faces given the size and scope Bechtel and Riley Bechtel, the company was come up to discuss one to one with the of our work around the globe, the remarks led by Riley’s grandfather, Steve Bechtel, Sr., Distinguished Speakers. I would like to share today are on one par- ?R[N6[>] ticular challenge about which I am passion- I enjoyed very much learning that our Guest ate: ethics. Of course, I would be pleased to Four generations of continuous Bechtel of Honor is from Canada. I like to go up to answer questions on this or any other topic family leadership for over 110 years. And we Banff and enjoy the Calgary Stampede. He to the extent that time permits. expect many more generations to follow. may have a non-American perspective to bring to his job, which is very valuable. I want I don’t plan on an academic talk today, nor Our shareholders are family and non-family to thank Michael Bailey for his presence do I intend to recommend best practices management. To say it another way, we are here, and we will start with his comments. for others to follow. There are many in this not a family-owned business, we are a man- room, especially the members of this very agement-owned business. Family and non- MICHAEL BAILEY: %+ [ >+] distinguished panel, who are experts in the family shareholders are all actively involved I am honored to receive this recognition field and much more qualified for that than in its day-to-day management. from the Directors Roundtable — though I I am. Finally, I recognize that each company really must accept it on behalf of a fantastic has its own attributes and so, while my Statistically speaking: we have over 50,000 team: our in house legal, ethics and compli- thoughts may not apply to all, I hope that employees worldwide and in 2010 our ance and internal audit teams; our outside a few of you may find something of value revenues were nearly $28 billion and our advisors — many of whom are here today in them. new contract awards were over $21 billion. — including our panelists; and an incredible This month, the leading engineering and business team who puts us “at the table” Before discussing ethics at Bechtel, as a pri- construction periodical, Engineering News and lets us all enjoy the great challenge of vate company I am aware that publicly avail- Record, named Bechtel the number-one working together to solve the issues — both able information about us can be limited. United States contractor for the thirteenth

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straight year. Bechtel consistently ranks %}#[ among the top 10 contractors in the world. we manage the Los Alamos and Lawrence Livermore national laboratories — partner- While this might suggest otherwise, it is ing with those labs to transfer to them the important to recognize that we are not management and engineering skills we driven by growth. We are driven to provide have developed over the last century. the very best service to our clients and to be recognized by them as the best at what we > [ do. We do not strive to be the biggest; we building the Dulles Metrorail Extension strive to be the best. — an over $1 billion fixed-price metro rail link that will, when complete, ease the In non-statistical terms: we work all over commute and ultimately, when Phase 2 is the world for governments and commercial awarded and built, connect Washington customers, helping them plan, design, and to the Dulles Airport. build critical infrastructure that can trans- form companies, countries and economies. To put our “ethics” challenge in context: in We are trusted by our clients with some of any year we are working on well more than their most important investments — often fifty projects we classify internally as “major their largest single capital investment in projects,” most of which range in total cost their history; and in many cases in remote from $200 million to well over $10 billion. and very difficult parts of the world. A large number of these projects are located in countries that rank near the bottom of We have a team of amazing people whose Transparency International’s Corruption passion is to travel from project to project >? < # Perception Index. Each project can involve: — each often for several years at a time and the largest civil engineering project in procuring and importing into the country at great personal sacrifice — to deliver time the world. millions of dollars per day in materials, and again on our promises to our clients. equipment and supplies; hiring and train- And in doing so, to make a difference in the Today, we are involved in equally challeng- ing hundreds to thousands of construction communities in which we work. ing projects — again a few examples in no workers; and contracting for specialized particular order: services from companies who work for us or Some of you may know that we have been whom we manage for the client. involved with many landmark projects. To < [ YV[VVV name a few — and time will permit only feet elevation, we are building a $4 billion So how does Bechtel successfully compete a few: copper concentrator. and safeguard its reputation for ethics in this environment? Let me share with you a few %"] <[ |[ !! thoughts about what has worked for us. construction of a new International % # % + Airport which will serve as the base for First: I often hear people say that ethics England to France — and more recently the very successful national airline — must be a “business imperative” — but I have the High Speed 1 rail line into downtown never liked that expression because for me, | ] N London — tunneling under the Thames Ethics is more than a Business Imperative — it site next to the City of Doha, this project River and much of the city. needs to be in your DNA. currently has over 45,000 construction %"! /! < [ workers building over 90 separate facili- Of course, ethics for us is a business impera- and ties, including a spectacular new main tive. People hire us because they trust us. terminal building. That trust has been earned over many % R ! decades and must be earned again every day N >? K? N <#R [ for everything we do. 35 years we have helped and continue building the world’s largest solar ther- to help the Royal Commission expand mal facility using technology developed In my view, clients trust us because ethics Saudi Arabia’s industrial capacity and from a pilot project we supported in the is the foundation for what we do and who provide local employment. I believe that 1990s. we are. It always has been. Doing the right

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thing, and putting that above all else is what “Ethics is more than a Business Imperative — it needs to drives Bechtel and our values, business deci- []|€€ be in your DNA.” develop and treat our people; delivering on — Michael Bailey the promises we make to our clients; and delivering bad news as well as good news as The Bechtel family leadership and legacy; rewards and definitions of “success” that early and honestly as possible — are all based delivering on our promises; the values of are solely focused on results or growth it on the foundation of our absolute commit- modesty, generosity and honesty; the nature is difficult to avoid. We are very lucky at ment to ethics. of our ownership-partners who are all active Bechtel that over the generations we have management; and the fact that we are a developed a culture that is the opposite of But saying that “ethics is a business impera- family business of many families who over “greed”. A culture that rewards modesty, tive” to me implies in some sense that you generations have been part of Bechtel — generosity, and honesty and looks to build must behave ethically to win business and have all contributed to establish an incred- long-term business success, and not short- succeed. This is why I don’t like this phrase. ible long-term foundation of ethics for our term financial success. We don’t behave ethically to win business; policies, strategy, and day-to-day decisions. we are ethical because this is who we are. Some examples: The second thought I would like to share It is this commitment to ethics that has is: It’s not simply about “Tone at the Top” — it’s allowed us to build the reputation and busi- N? about “Ethics in Action.” ness we have. Not the other way around. quarter or this year’s financial results, but by building a business that will continue Typically, when people discuss ethics and In my view, our absolute commitment to to succeed in the long term, and that our compliance, “tone at the top” and “com- ethics all starts with the Bechtel family. I children will be proud that we were part pliance programs” are the subject and have had the privilege over more than 15 of and that they themselves may someday identified as the key factors to succeed. !+N6[>] join if they earn that right. While these are important, this troubles his wife Betty; Riley Bechtel and Susie, and me. Ethics isn’t just about words, or paper, now Riley and Susie’s children, as well as ‚ or “tone.” Too often people treat ethics as to all of our employees, I genuinely a compliance matter rather than a much many other Bechtel family members who believe that people at Bechtel — from broader standard of behavior. As many of have been and continue to be part of the the construction worker to the leader- the headlines have shown over the past business. To a person, they’re among the ship team — work because we love being two decades, you can have world class com- most modest, generous and honest people involved in the most exciting projects in pliance programs, codes of conduct, and I have ever met. Over four generations the world. Period. We make a difference speeches by management that deliver all the and more than 110 years, they have built and we can see it happen every day as the right messages. The “tone from the top” can this character of modesty, generosity and projects “come out of the ground.” We be perfect — but the business and its ethics honesty into the fabric of Bechtel and the don’t count each day how much money can still be corrupt. people who make it up. Warren Bechtel’s we have made. We count how much handshake was his bond 110 years ago. It progress we have made on the projects While I believe we have an incredible com- remains the same today for Riley Bechtel. we are building and the difference we mitment to ethics — it is in our DNA — to be are making in the communities where effective, this commitment must be backed In addition to the ethics and integrity the we work — including, most gratifyingly, up every day by “actions.” That means deliv- family has built in to the company — I the training we conduct that provides ering appropriate consequences, both posi- mentioned earlier that we are not a family- long-term careers for people who remain tive and negative; and doing so consistently owned business, we are a management- after we leave. over time. This is what I mean by “Ethics in owned business. Let me in part contradict Action.” To fail to deliver consequences or that now. While we may not be a family- ![ - to deliver the wrong ones undermines the owned business — we are a “family business.” tion programs and career development commitment and the trust in it by employ- Spouses and children are part of the busi- programs all reflect this. They’re not ees and others. To use an overused cliché: ness — and on many projects provide vital driven solely by results. Growth for the “actions speak louder than words.” support for the entire project team. Many sake of growth is never an option. of our employees are second, third and even At Bechtel — there is zero tolerance towards fourth generation “Bechtel employees” — In my experience, greed is a breeding ground ethical violations. There has never been a not just the Bechtel family. for ethical violations. When coupled with doubt about this in my mind. I am 100%

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confident that not only would Riley and the rest of the management team support my taking action on unethical behavior — they would expect it and consider inaction unethical. I have seen this many times. We have lost significant amounts of money on decisions to withdraw from bids or prospects because of our “no options,” “no alternatives,” “no excuses” approach to the issue. We act decisively when individuals behave unethically. There has never been a question, never a debate, never a calculation about the cost; never a hesitation about the right action to take.

Our annual compliance training includes a very powerful video message from Riley Bechtel that sums it up well. His message is that ethics is an absolute, his name is on the door — and he is clear and blunt: “If you get out on an ethical limb, my job is to colleagues, friends, bosses or senior man- of the issues and consequences. Everyone saw it off.” agement; and they know that there will be in the company participates. Initially, the no negative repercussions for doing so — cases were more generic. We have changed The last thought I would like to share is indeed, that the company values it. those so that they are real issues we have or that: The message must get out and employees could face. This has improved the sessions must be fearless in their own commitment. We have a world-class ethics and compliance significantly. program led by a world-class leader. We have I believe this is the biggest challenge for all of individual ethics and compliance managers The effect of these workshops is that employ- us. I think we do it well, but it is a constant in each business who are also senior busi- ees in all locations see and hear the commit- battle and one where the need for improve- ness leaders. I believe this is important, as ment of their leaders and peers to ethics ment is continuous. We would particularly these business leaders can deliver our com- and discuss case examples that include not welcome your ideas. This is an area where mitment to ethics as business leaders and we all need to share more with each other just “is it ethical or not” questions — but not just ethics and compliance managers. the questions that focus on when, how, and about what has worked and what hasn’t. We require ethics training and hold annual where to report issues or concerns and the “in person” ethics workshops to drive the expectation that they do so. As I mentioned earlier, we are a large, com- message home. We have all the additional plex organization with business and project elements in our overall program that you The second area we are now looking to teams around the globe, many in remote would expect to see, including what I think improve is how we can more effectively and locations. As is the case with many compa- is an industry-leading compliance audit pro- nies, at any one time a significant number gram that we are now implementing. broadly discuss real ethical issues that have of our people are newly hired. Getting the arisen in the company and the specific actions message out is not easy and is not a “one Let me share one aspect that is working well and consequences that were taken. I consider time” process. Making sure people under- for us — our ethics workshops — and one area this important for at least two reasons. stand and believe that message — and as where we are looking to further improve. such, become fearless in their own commit- First, in general terms, people are trusting. ment, is even more difficult. Our “in-person” ethics workshops have We are trusting of our colleagues, of sys- proven to be an excellent tool not just in tems, and of our suppliers. As a result, we By making people fearless in their com- training the content but in delivering the can become complacent. We may believe mitment, I mean creating an environment message of our commitment. They are con- that corruption exists or ethical violations so that: they are not afraid to raise ethical ducted in small groups and led by the local occur — just not in our own organizations. concerns they may see; they are not afraid manager. They are organized around real Discussing real situations that have hap- to report ethical issues concerning their case examples and small group discussions pened can fight this complacency.

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The second reason is a simple one: taking the “In my view, clients trust us because ethics is the right action and applying positive and nega- tive consequences is not effective if no one foundation for what we do and who we are. It always ever hears about it. Making these situations visible not only re-enforces the company has been. Doing the right thing, and putting that above commitment to ethics, but also re-enforces all else — is what drives Bechtel and our values, business that employees should not fear raising ethical concerns: the right action is taken. decisions, and success.” — Michael Bailey

A final comment on getting the message out fearless in their commitment to hold that might be discussed with the employees and empowering our employees to be fearless themselves and everyone around them to raise awareness. in their commitment: we, and I think the accountable. ethics and compliance community in gen- MICHAEL BAILEY: One example we eral, need to do more to look for good ideas Thank you, and once again, I would like have used in our workshops is a hypothetical from other models that have worked well. As to express my appreciation to the Directors situation of a vendor who makes available an example, in Bechtel, we have an outstand- Roundtable for this recognition and to tickets or opportunities or in one case makes ing Safety Program. I believe that all employ- + >+ a holiday home available to an employee who ees understand our safety commitment and and enormous contribution. The programs in turn offers it to his boss. The workshop have no fear in raising concerns. Its success that the Directors Roundtable sponsors pro- calls for a discussion of the various possible has evolved over the decades, and it is truly vide an invaluable forum to examine critical issues as well as specific review of our code to a program based on changing behavior, not issues facing business leaders and the oppor- identify applicable code provisions. dictating compliance. While we have used tunity to learn from our colleagues to bet- some of the ideas from our Safety Program ter serve as our companies’ Directors and JACK FRIEDMAN: Thank you. We will in our Ethics and Compliance Program — I advisors. I hope my remarks have provided move on to the next speaker: Ray Banoun is honestly think that there is a lot more for some contribution towards these efforts and the Managing Partner here in Washington us to learn and to share with others. We are I am confident that I will benefit from the for the Cadwalader firm. going to review this again and share lessons discussion of my colleagues today. we think may apply more broadly to others. I RAY BANOUN: I’d like to talk for a few hope each of you does the same — we all need JACK FRIEDMAN: Well, first of all, I minutes about the globalization of the to learn from each other. want to say that you certainly have made me regulatory and enforcement environment, feel good. So, thank you very much! and how the remarks that Michael just gave To summarize again, my three thoughts on are very instructive in terms of what we how we are safeguarding our reputation In an earlier program some time ago — I’m not see happening in enforcement around the for ethics in the complex environment in quoting someone from a private conversation world today. which we work: N>#[}]N] Attorney General, said that his children and The world has changed dramatically, as "!?- others generally look very carefully at the real everybody knows. Businesses are much more ics above all else is essential. conduct of parents: not just what parents global. They’re not insulated — whether it’s tell them they’re supposed to do, but actu- in Securities and Banking or in any other 6 ] ally what parents do in terms of their ethical area — the barriers that companies had to K ?+ behavior and how they treat people. He said protect their environment and to avoid with appropriate consequences to make that, in his view, employees who work for an regulatory or enforcement actions, have it believable. And you have to be con- executive look as carefully at what their boss disappeared. When Switzerland can’t pro- sistent with the commitment and conse- is really doing as the kids do with the parents. tect bank secrecy as it used to, it tells you quences over decades and over changes He said they hear the words, “We should do something; it tells you that enforcement in leadership. this or that,” but they’re also paying attention generally, the pressures of the regulatory to the actions that follow. environment brought by multiple coun- < ! ; !? ? tries, do have an impact, and the environ- have to continuously work to get the mes- I wanted to ask you, what would be an ment has changed. sage out, demonstrate the commitment example either of something that in real life through making the violations and conse- came up, or something in the hypotheticals As a result, we hear about it all the time, in quences visible, and make all employees in your discussion of an ethical situation the money laundering and the corruption

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‚}]/]†6? privacy laws that impact the way to deal Act that was enacted last year, and that will with potential violations, such as handling >[ a disciplinary action against an employee or any company that has a presence in England seeking to cooperate with law enforcement and is involved in corrupt conduct any- authorities in a manner that causes the where in the world will find that the United least disruption to the business. There are /! blocking and bank secrecy statutes, such as conduct and seek to enforce its statute. the ones in France regarding the disclosure of data to law enforcement authorities in We have also witnessed the failure to prevent another country. conduct sometimes being made a violation. Again, England is leading the way in that So this globalization of enforcement poses with its Anti-Bribery Act, where a failure to more and more challenges that weren’t prevent bribery is, in and of itself, a viola- ?] K R ; tion. On the other hand, we’ve also seen the enforcement plus protection of the indi- counter-side, companies that take actions vidual as with data privacy in Europe which properly and effectively to avoid improper is considered a human right. These issues conduct by their employees. As Michael said, not only impact how a company investigates they have ethics programs that are not just a violation, and decides whether to disclose on paper, but really are effectively enforced, the matter to law enforcement, but also function well, and are well understood by how it cooperates with law enforcement everyone — that, in and of itself, very often authorities where three or four countries areas, that there’s this cooperation world- acts as a defense and a protection against and multiple agencies in different countries wide among regulators and enforcement potential regulatory and enforcement viola- are investigating the same thing jointly and agencies. But it is not limited just to that tions. There are several such examples in the cooperating with each other. The balance area, although you notice it more often in anti-corruption as well as in the securities has shifted. It’s no longer one that a com- that area or major scandals because these and a variety of other areas. pany is able to control all the time. It has to are of greater interest to people, as are the be done much more intelligently. fines imposed and the associated costs of There are many reasons for having effective investigations. compliance, it’s not just to protect against The big issue comes back, really, to what enforcement or regulatory actions; but also Michael said, and that is ethics and compli- Businesses really have had to adjust to hav- to protect against collateral consequences to ance, and how do you create an environ- ing to deal with and react to and protect a company. Obviously, reputational damage ment where every employee understands themselves from all these regulatory agen- from adverse publicity is the most obvious that ethics is important. How do you react cies and enforcement agencies that focus such consequence, with significant impact to allegations of wrongdoing? What do you on particular industries and regions of the on the business of a company worldwide. But do when something surfaces? How force- world and investigating them. also there are other collateral consequences, fully do you investigate internally? When whether it’s the EU requiring debarment of do you decide to go further and disclose We see legislation being enacted in many a company that is convicted of a criminal act; or not disclose, or take action against the countries, especially in the United States or here in the United States, suspension or individual who potentially violated the law? }]/][- debarment by the Department of Defense; Can you discipline only for a clear-cut viola- tion that we used to expect — that is, where or the State Department and Commerce tion or can it be less? How do you tailor the a country’s jurisdiction ended at its border Department denying licenses for export; or action you take in order to make it effective — now no longer exists. The United States the World Bank and the other international and send a message to all employees that and England take the view that jurisdic- financial institutions suspending or more you will not tolerate any improper conduct? tion extends way beyond their borders; it aggressively acting against companies that If you deal with the potential individual and extends beyond the actions of companies violate the law. then it’s over and nobody hears about it, that operate there or individuals who live, there’s no message sent to others. There’s function, or who are citizens of, those Also in this global environment there are no understanding anywhere else within the countries; it extends to actions that occur significant challenges for a company seeking company as to what the consequences are. outside the jurisdiction, but that impact to react to potential investigations. In many Communication is important. How do you that jurisdiction. parts of the world there are very strict data communicate the actions you took to all the

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employees? That is difficult in the current “We don’t count each day how much money we have made. environment, because the data privacy and employment laws that exist in Europe make We count how much progress we have made on the projects it very difficult to expose employees and to we are building and the difference we are making in the criticize them publicly. communities where we work — including, most gratifyingly, These are very critical issues that need to be addressed in every one of these matters that the training we conduct that provides long-term careers for arise, and they have to be considered seri- people who remain after we leave.” — Michael Bailey ously and thoughtfully right from the outset, not as things develop, because this global- JACK FRIEDMAN: K ? start a second line of negotiations with the ization of the regulatory and enforcement background in the company; that’s unusual wife about the kids, their schooling, etc. environment is very real. The bottom line is, for a General Counsel. Americans are not used to the idea that you as Michael said, it must begin before anything go anywhere the company asks you to go. arises, that is the degree of tolerance that a MICHAEL BAILEY: It is. I’m sure you have a number of employees company has for any improper conduct must that have also gone through the experience, be addressed and communicated. JACK FRIEDMAN: K as well as yourself. involved in operations. As you will see from the follow up discus- MICHAEL BAILEY: Mobility is a big part sion, these issues make the whole envi- of our business and the reason why we’re ronment that a company has to function MICHAEL BAILEY: I have had two oppor- tunities to work on the business side of the successful. Many of our 50,000 people within, very different today than it would are willing and excited to move to where have been even four or five years ago. organization. First, while General Counsel of our finance and development business I also our work is — often on little notice. Being was given responsibility over our telecom- sensitive to family situations and impacts is JACK FRIEDMAN: Thank you very much. important. But I don’t see that as a U.S. vs munication and fund investment portfolios. Before we go to our next speaker, I wanted }]/]6+- More recently, I was responsible for our to ask Mike a question. How do you relate ing and excited by the fact that moving is global aviation engineering, procurement to your outside law firms? part of our life. Of course, each family has and construction business. We plan, design, their unique circumstances when moves and build airport terminals and related facili- MICHAEL BAILEY: Our core activity of arise and we work through those as sensi- ties around the world. To your question, contract negotiation is performed almost tively as we can. entirely in-house. We look to outside law this experience has been invaluable to me as General Counsel — it has given me a firm partners in a number of areas: local JACK FRIEDMAN: We’ll move on in country legal advice; litigation and claims; more business-focused approach to the legal a second, but there is one more question intellectual property; and acquisitions and department and to help make our advice that you stimulated. What is an example financings. more pragmatic and business-oriented. of a crisis assignment? What are the types of emergencies that you might be called on We also look to our outside law firm part- JACK FRIEDMAN: The General Counsel to handle, possibly on a humanitarian basis ners for a number of specialized areas such of one of the great British firms commented /[ > as immigration and visa work. that in moving around to different places situation? It can happen all over the world the British family typically relates differently and people must be desperate. Do you get In overall terms, for our key outside law to a corporation than the American family phone calls saying, “People are starving, the firms we try to establish a real partnership. does. He said the difference is that they whole infrastructure system has collapsed, We want them to know our business and have the Empire tradition. If you have a how can you help?” objectives and be able to provide good, husband as an executive, and management effective and practical advice. said, “We want you to go across the globe MICHAEL BAILEY: What we get are for a few years. Tell us what you need.” calls for help in major infrastructure areas. JACK FRIEDMAN: Do you attend the He’ll come back and say, “I talked to the N[ > N + N Board meetings? family; everybody’s saluting, we’re ready to we immediately arranged to have a team go.” With an American family, first you from a combination of our Government MICHAEL BAILEY: K[

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a supplier from the mining side of our don’t have great leadership, I’m not sure it I said, “Well, he’s Canadian.” And the business to create a design for a specialized will get you where you want to go. boys jumped up and said, “This is great!” piece of pumping equipment that could K[#[ be used. In a matter of days it was shipped The other thing we spoke of earlier this grandmother was born in Canada. They with the support of the Australian, U.S. and morning at breakfast, before I get into my immediately asked, “Well, does he know >!]%R;] brief remarks, is children. Those of you who the Sedin brothers?” If you know hockey Of course, we were also called upon in know me know that I get a lot of great mate- — our boys play ice hockey — you know the /[ <=[ rial from our little boys. We have three little Sedin brothers are great hockey players for situations. boys, and one of the things that I like to do the Vancouver Canucks. Then they looked is drive the two older kids to school in the around on the Directors Roundtable web- JACK FRIEDMAN: It’s something about morning, because you find out what goes site and saw people from various countries which companies are often taken for on with your kids when you drive them to who had received awards. They wanted me granted. People forget that the companies school. So I had to break the news to them [>+[ a few days ago that I was not going to be are helping out in these situations. the Directors Roundtable giving Canadians able to drive them to school this morning a chance to get the award. because I would be attending this breakfast. Our next speaker will be Martin Weinstein Immediately, they asked, “Well, why is this My topic for the next five or six minutes of Willkie Farr & Gallagher. day special,” and I said, “Well, I’m going to is going to be one of my favorites, which be with somebody who is getting a World is disclosures. More than ever, companies MARTIN WEINSTEIN: Thank you. One Honor.” So, my son Max said, “Well, a may find themselves faced with decisions of the things we’ve learned about this morn- World Honor, that’s pretty big. That’s bigger regarding whether to disclose wrongdoing ing is compliance. In the time that I’ve than just a national honor. Well, who is this in the company; wrongdoing of various been doing this work, we’ve seen a lot of guy?” I said, “Well, let’s look at the website. magnitudes and various shapes and sizes, web-based training. People try to do things So we went on the Bechtel website, and saw and not any particular type. So this can online because it’s less expensive. But one they build these really interesting things. My be a broad concept to think about. When of the things we’ve seen from Michael this other son, Ethan, said, “That’s really cool. are you going to tell your government or morning is that, in compliance, there is no Does he get to build that himself?” I said, some other government about the wrong- replacement for human capital. One of the “No, he’s the lawyer.” He looked very down, doing? In other words, when do you make things that we can all relate to, and one of and he said, “I’m not sure I want to be a a disclosure? I wanted to lay out for you my the takeaways from today, is that you’re not lawyer, I’d rather be an engineer.” I said, view of the framework or the pathway to going to have a great ethics or compliance “That’s a good first move. It shows the edu- making these kinds of decisions, which are, culture unless you have great leaders like cation is paying off!” Then they said, “What candidly, among the hardest decisions that Michael Bailey, and that’s one of the reasons is the Directors Roundtable?” So we looked practicing attorneys can make. why Bechtel is where it is. They don’t skimp on the internet at the Directors Roundtable when it comes to the human capital in com- website, and we saw all the great people that First, you may be driven to make a manda- pliance. So you can have as many webinars had gotten these various awards. The boys tory disclosure by virtue of materiality or and training sessions as you want, but if you asked, “Why is Michael getting this award?” some other obligation that you find in the

Summer 2011 11 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

SEC Stock Exchange rules. Some materiality “In a large complex global business you have to continuously issues are easier than others, but that’s one box that you will want to talk about. Is the work to get the (ethics) message out, demonstrate the conduct material? If you’re a publicly traded commitment through making the violations and company, that’s going to be more important than if you’re a privately held corporation. consequences visible, and make all employees fearless in

Another issue that has become more preva- their commitment to hold themselves and everyone around lent is whether you have some contractual them accountable.” — Michael Bailey obligation to disclose misconduct. Are you providing healthcare services? Do you have a government contract that obligates you to any term of years, you will find, within those open question. The SEC guidelines — called disclose? We’ll talk more about those things. agreements, very tight disclosure obligations. the Seaboard Report, involves the same sort A failure to make those disclosures is a vio- of calculus. The last category, and the one that we’re lation of those agreements. We are seeing going to talk most about this morning, is these kinds of agreements, with these kinds As a practical matter, though, when you voluntary disclosure. My experience is that of disclosure obligations, more and more, as think about voluntary disclosure, as opposed the vast majority of disclosure decisions fall alternative types of resolutions become more to thinking about the end game — how the into this last bucket. We could have a full- and more prevalent in our criminal justice regulators might ultimately dispose of your day seminar on this topic, but this morning and civil regulatory systems. case — you should think about a few other we’re going to spend about four or five topics. First, if you voluntarily disclose the minutes talking about it. In the remaining few minutes, I’d like wrongdoing, you have a chance to describe to talk about voluntary disclosure. People the conduct in a way that may be more favor- Materiality, as you all know, is a pretty used to say, you would voluntarily disclose able to your client than if the government squishy standard. It can be based on the if you thought one day you were going to reads about it in the paper or learns about cost of an item or potential impact on your get caught. But that is substantially too sim- it from some other source. Oftentimes that business. There’s qualitative and quantita- plistic a vision of how you ought to analyze can be extremely valuable. tive materiality. But as a practical matter, my voluntary disclosure. experience is that most wrongdoing doesn’t Second, if you have credible counsel, you necessarily rise to the level of being material. First of all, we know from the Department have the ability to shape the investigation So although it may the most well-known >R! and the fact-finding. To put it a different bucket, the truth is, not too many disclosures — the various memos going from Thompson way, it’s a lot easier to conduct an internal of misconduct are driven by materiality. to Holder, to McNulty, to Filip — that the investigation at the pace and the tempo > and degree access that the company would So, with regard to mandatory disclosure important thing. What they’re not shar- like than to react and respond to search based on materiality, I think if we recognize ing with us is exactly what happens to you warrants and subpoenas. In fact, it is very that it’s one of those things that you really when you go into the voluntary disclosure common, in many of the investigations that aren’t going to see that often, we can put process. This is true in every substantive we’ve handled, that the government never that to the side. area but one: antitrust. In the antitrust area, actually issues a single subpoena to the com- >R ! pany. It is very valuable for a company to be Contractual obligations to make a disclosure has been very well thought out. If you go able to maintain control over the internal can arise from deferred prosecution agree- in early, you’re going to get some level of !] K ments, non-prosecution agreements, and a immunity. But in areas like the Foreign government that the wrongdoing does not whole variety of other contractual relation- Corrupt Practices Act and other areas, it’s rise to the level of anything that the govern- ships. Companies have entered into these a bit of a crapshoot. In fact, there was a ment should investigate. relationships with governments — mostly period of time in which, among the top ten the U.S. government — which have, many largest fines in the international corruption But here are the downsides to making a vol- people don’t realize, very strict disclosure area, six or seven of them, depending on untary disclosure. The government will learn obligations. So if you represent companies, how you count them, were a product of vol- about something that they might not other- or you are with a company that has a consent untary disclosures. If you are one of those wise ever have learned about. While this may decree or a deferred prosecution agreement companies, you ask yourself, how much did seem like a brazen calculation, the truth is, it or a non-prosecution agreement that has that voluntary disclosure get me? That’s an is important and should be considered.

Summer 2011 12 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

There is a huge amount of time, energy, and, On the buy-side of an M&A deal, if you’re these days, cost, involved in undertaking an about to take over a company, the govern- internal investigation. There have been inter- ment expects you to understand what it is nal investigations that have run amok and that you are acquiring. Minimizing risks cost extraordinary amounts of money, you in this area, where the target company has may have read about some of them. Even FCPA problems, may involve disclosure investigations which are well managed can and trying to work out something with the be very costly. As a practical matter, if you go government before you acquire a company. to see the government, it is more than just simply going to see the government in the A voluntary disclosure to the U.S. govern- morning, and then taking the afternoon off. ment may require — or at least drive — a disclosure to foreign regulators. Today, If you report to the government, you may more than ever — and this is a trend need to consider whether you will waive we’ve seen in the last few years — foreign ? + : governments and foreign prosecutors are client privilege protections. This has gotten very much involved in anti-bribery enforce- better than a few years ago, when privilege ment. That can increase both the cost and waiver was viewed as a necessary element complexity of an investigation and resolu- of “cooperation.” Now, by its own poli- tion. It is like playing chess on a multi- cies, the government can’t ask a company dimensional board. to waive the privilege. Still, it is a calculus the company will need to make: would the Of course, there are also the recently enacted but there are times in which — and I think benefit of disclosing in a more fulsome way Dodd-Frank whistleblower laws. I’ve teased we’ve heard a little bit about it today — that waives the privilege outweigh the risks a friend of mine, who is a member of the given the potential to damage a company’s that arise, from third party litigants and U.S. Senate, about the Dodd-Frank whistle- reputation or for other reasons, voluntary otherwise, from losing privilege protection? blower laws giving lawyers a lot to talk about disclosure may be advisable. But I have to Generally, we find that there are ways to get these days. She informs me that politically, tell you, we’re very cautious about it, and the benefits of a voluntary disclosure while it’s almost impossible to see the whistle- when you walk in to see the government still keeping the privilege intact. blower provisions being unwound. I think in a disclosure context, you have to know, these provisions have serious implications it might not feel as good as you hope when Making a voluntary disclosure means a for compliance programs and compliance you walk out. potential loss of control over the scope of officers. But it appears that the Dodd-Frank the investigation. The government may say, whistleblower law is going to be with us for N[ >+[ + ! “if you have a problem in this area, you a long time. I have to confess to you, I do participate! need to look in the following other areas not know how it’s going to play out, but I to see if there are problems.” Certainly the think the increased likelihood of a whistle- JACK FRIEDMAN: We had a program government doesn’t have the same incen- blower has to be factored into your calcula- where the head of a California office of tives as the company to limit the scope of tion regarding voluntary disclosure. the SEC said if you’re going to have an an investigation. important announcement, such as an earn- In short, I think voluntary disclosure is one ings restatement, contact the local office There are other areas and factors and cir- of the most interesting — some practitioners within a couple days. I repeated this story cumstances that impact on disclosure, now like myself would say “fun” — aspects of ˆ K+ ![ more than ever before. Mergers, acquisitions, practicing in this area. Those people who ˆ K+ financing — we’ve talked about the World are on the client end may not think it’s !![ [ O< ˆ K+[ Bank and other lenders. If you plan to sell that much fun, but it’s very challenging. that time isn’t a couple days. If you’re a business, is that business ready to be sold? There are a lot of factors that go into these going to have an important announcement, Does it have a great compliance program? sensitive and critical decisions. Hopefully like a restatement,” he said, “how about a We’ve seen many examples where a com- we’ll have a chance to discuss many of few minutes. As a matter of fact, give us a pany was in the process of being sold and them today. The uncertainty and inability heads up in advance. Say, ‘The restatement wrongdoing was discovered, in due diligence to predict the outcomes when you go to the doesn’t involve any terrible thing, we discov- or otherwise, and it had very serious conse- government with a voluntary disclosure is ered so and so.’” The important thing was quences for the seller and the transaction. by far the most challenging aspect of this, to give them the truth and a heads up.

Summer 2011 13 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

Who should be involved in the company or important. When you start, if you’re doing from advisors outside the company when an investigation, you may be able to keep an important announcement is going to be it inside the company, but you’re certainly made? It can even be not only the lawyers, not going to keep it contained within the but also PR people. Make sure that it’s writ- company; people will start asking questions. ten in a way that sounds civilized, as opposed “Why is this computer being checked? Why to aggravating the hell out of people because are the lawyers in the office? Why are these you blundered in how you worded it. computers being copied? Why are these documents, these file rooms being gone MARTIN WEINSTEIN: In my experi- through?” It’s important at the very begin- ence, you need to have the in-house lawyer, ning to have a plan. What are we going to and if you’re going to make a disclosure, say to our employees? What are we going to the General Counsel involved. External say to our customers, if they ask? Not that counsel should coordinate with media you’re necessarily going to voluntarily tell relations, because often people accuse everyone you have an investigation, your the lawyers of speaking in terminology customers, your suppliers or your govern- that nobody else can understand. And, of ment. But the people who are primarily course, the company’s senior management going to know there is an investigation are ?]K your own employees, and they’re going to want to know why. wouldn’t want to have your CEO giving a RAY BANOUN: And to the extent that presentation and not being fully informed you’re going to have anyone at the company JACK FRIEDMAN: Do they send out and able to answer a potential question meeting with outside investors, outside rep- emails to everybody? “I won’t be home about a disclosure that’s going to be made. resentatives, outside investment banks or tonight because everybody was told not to So, you have your business folks, your legal outside analysts, you’re going to have to leave the building because there are lawyers folks, both internal and external, and your have the CFO involved. Clearly what Marty all over the place,” or rather just a statement media relations people. Oftentimes, where is saying is that these decisions have to be like, “I’ll be late for dinner.” you want to have a very solid relationship made at the very highest level because the with the regulators, you’ll want to give impact is substantial. Once you get into that PHILIP UROFSKY: GE had a problem them the appropriate heads up. So it’s a mode of disclosing, you can control to some many years ago. They did what Michael sug- pretty complicated group of folks who are extent what will happen, but you cannot gested. They used that problem proactively fully control it. So you’ve got to anticipate, involved in making these sorts of public going forward as an example in their train- right then, before you make any disclo- disclosures, and they need to be very care- ing programs. They had a video that was sure, all the consequences that can happen fully planned and orchestrated. widely circulated, and they even lent it out. and be ready to respond to any follow-up It starts with an interview with a woman JACK FRIEDMAN: Is it the CEO or the both publicly, with the government, and internally. who was in their aircraft engines business, CFO, or both? which was the business that got into some trouble. She comes in one day and half the MARTIN WEINSTEIN: I think it depends JACK FRIEDMAN: I assume that you have one point person telling everybody, offices are empty, half the desks are empty, on what kind of disclosure it is. If you’re “Nobody talks to anybody until the point and it was a significant blow not just to the going to make a disclosure that deals with person in the firm knows about it and business, but to the working conditions in financial accounting, I don’t think you want makes sure it’s being assigned to the right the company. There are ways of managing to leave the CFO out. If you’re going to person on the team.” the internal communications both during make a disclosure that involves something an investigation and afterwards. that’s non-financial— RAY BANOUN: Right, it has to be done that way. JACK FRIEDMAN: Then you, as the JACK FRIEDMAN: Such as a drug recall, General Counsel, have to mobilize and or an auto braking recall? PHILIP UROFSKY: That’s certainly the determine with whom you have to coordi- case for an external comment of any sort. nate to say something important enough MARTIN WEINSTEIN: These are very But Ray’s comment about internal is as that you would certainly tell the Board fact-specific. before you made the announcement.

Summer 2011 14 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

MICHAEL BAILEY: Every company has their own culture of how these things are done. In ours if something like that were to happen, it’s not going to be a question of is the CFO involved or isn’t he, this is pretty straightforward. It would be me; Peter, who is our CFO; Bill, who is our president; and Riley. If it’s a big, important issue, we would talk about and deal with it immediately and put whatever resources are required on it, including our public relations team.

JACK FRIEDMAN: Would it be inside or out?

MICHAEL BAILEY: That would depend. If it were a major crisis, I expect we would seek advice from an outside crisis man- agement consultant on how to handle communications. skilled approach to this, and this is par- and they have employees. I think CEOs JACK FRIEDMAN: They only tell you, ticularly the case when we are now in a want to be the ones to make the state- “Get it all out there right away so that it’s world where the regulators in many of the ment. I think the statements are generally all behind you and don’t let it leak out matters that we deal with require as part well thought out, and I think the idea gradually.” Every time it’s on the news, they of a settlement agreement that the govern- that there’s going to be some buffer has [Oˆ!+]> ment preapprove press releases or public gone away largely because we are in an out there, everybody’s shocked and they get statements about the settlement. So we are instant news cycle, and so my sense is that over it, and move on.” extremely careful. It’s one point person, and the communications person handles the it’s usually a communications person within day-to-day inquiries from the press, but What function is likely to be the point the company. But it is very fact-specific and if there’s a major statement to make, the contact? It’s a very important thing to every situation is different. chief executive officer wants to, and prob- have everybody who’s involved, like all the ably should be, the one to make it. people you mentioned, not get individual JACK FRIEDMAN: It’s very important calls from reporters, from suppliers, from that the initial contact never go to someone RAY BANOUN: That’s why these issues employees, even board members. who has a serious heavy-duty title who is a must be thought out in advance, because you decision maker, because God forbid it goes can’t wait until they arise, because news hap- MARTIN WEINSTEIN: If the media wants to that office and they accidentally say some- ]KR[ to ask questions about general topics that !] K ? ! “Give me half an hour; I’ll come back to have nothing to do with a specific case, we somebody. It’s like saying, “Call the White [P ! ] KR ! might talk to the press. But on case-specific House spokesman’s office; don’t call the to have thought about what are the options, matters, when there’s a plea, when there’s a President’s office, because he can honestly what are the likely things you would say, negotiation, when there’s a settlement, we, as say, ‘I don’t know anything; we’ll get back to depending upon the facts you have. outside lawyers, don’t talk to the press. As a you.’” That’s a buffer to these top executives practical matter in the organizations that I’ve who might start talking. JACK FRIEDMAN: Our next speaker is seen, they have people inside the company, Philip Urofsky of Shearman & Sterling. like public relations people, handling it. MARTIN WEINSTEIN: I’m not sure that scenario is as prevalent today as perhaps PHILIP UROFSKY: Good morning. JACK FRIEDMAN: The Communications it used to be. I think that most CEOs Before I move to my topic, Marty and I go Office? of major corporations today are able to ?+]>++[ handle the media. They also want to be ever work together? More often in the past, MARTIN WEINSTEIN: The Commu- the one to reassure their constituencies. we were opposing each other. All three of nications Department typically has a very They have boards; they have shareholders; us, actually, are former prosecutors, and I

Summer 2011 15 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

remember when I was a prosecutor, standing There are legal aspects to that, and there are up and saying, “Hello, I’m from Washington cultural aspects to it, and it creates a clash and I’m here to help you, and please, come in areas that you don’t necessarily expect. In ] + ] KR my practice, it’s mostly investigations and be treated fairly; everything will be okay,” defense, and advice on compliance. When Marty would stand up and say, “I never bring you’re dealing with companies, particularly anyone in.” Over time, since I joined what in an investigation context, it’s very interest- my former colleagues refer to as “the dark ing, because I’ve seen a number of disasters side” and I’ve probably moved a little closer where between some lack of sensitivity to Marty. With experience, Marty’s moved on the investigator’s side and some over- a little closer to me; we both recognize that sensitivity on the Chinese side, a situation disclosures are sometimes necessary, but they is created where the investigation appears come at a great cost. If the government does ??[N#>! give you a benefit, my analysis has been that involved, and then everyone’s feeding on a company that makes a voluntary disclosure the body at that point. generally gets a discount off of the sentenc- ing guidelines of ten to even 50% in some Part of the issue is the cultural aspect of cases. But that’s still leaving you with 50% an almost single person who views himself or more of that guidelines range, and that as the company. The other issue is that can be a very significant penalty, as well as American executives, American companies ! ! ] K ! are used to American-style litigation, so they prosecutor the suggestion that there’s a case are Chinese nationals; some of them are understand that if they get sued, or if they’re there, very few prosecutors are going to walk American nationals who are working for or suing, there’s going to be, unless they’re suc- away from that, and that’s the bottom line as directors of these Chinese companies. A cessful in a motion to dismiss, there’s going of disclosure. lot of the themes that you’ve heard come to be discovery, and the discovery’s going to through, but what strikes me is Michael’s mean that people are going to come in and > ![ ! description of this as a family and a man- look at everyone’s files and this and that, baseball with Marty’s sons. She was the only agement-run company, four generations of and they just accept that this is an unfortu- girl on the team. families, of the family having significant nate aspect of American litigation. ] K R [ ?[ MARTIN WEINSTEIN: She was a mar- The Chinese companies view it as “how can # ] KR + velous hitter — the best technical hitter on this be?” If you go in and tell them, “We be dealing with first-generation. I’m not the team, I should add! need to image your computer and read talking at this point about the state-owned everything on it, and we’re not going to PHILIP UROFSKY: But to give you an enterprises, which are an entirely different tell you what we’re going to be doing, and example, Marty’s sons wanted to know, animal. I’m talking about what are some- we’re going to decide what’s relevant,” this is “Why aren’t you going to be there this times fairly significant companies in China, viewed as extremely disrespectful and unnec- morning?” My daughter just said, “Please be where the entrepreneur was a powerful per- essary. They will say, “This is the allegation; quiet on your way out.” son, for various reasons, maybe, and formed I’ll tell you what you need to know about it.” the company, acquired the company, built Of course that’s not how an investigation We’ve talked a lot this morning about the company, and it’s his company. Usually, works, and you can’t accept that, but you run global issues and global concerns about dis- not always, it’s his company, and he’s run into this issue over and over again. closure; I thought I’d spend my ten minutes it over the years as his personal fiefdom. If going a little more micro, and contrasting Now, there are a couple of different aspects he wanted something, he got it. If he told some of the experiences that I’ve had in one that are relevant to how these Chinese someone to do something, it happened. country. companies get into these issues, and frankly, Then these companies have grown into an they could avoid some of them just through Over the past year or so, it seems I’ve been area where they are now trying to access better preparation. If you’re looking at them asked, and my colleagues and my firm the U.S. capital markets, or are doing joint as a business partner, or if you’re being have been asked, to represent companies, ventures with U.S. companies or western asked to become a director, you’re certainly executives, audit committees, and direc- companies, or are sometimes acquiring U.S. going to want to look very hard at how this tors in Chinese companies. Some of them or other western companies. company grew, and how it got to what it is

Summer 2011 16 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

today. Even if it’s an issuer in the United to be able or are fulfilling the functions that I want to ask the panelists about the Foreign States, you can’t necessarily rely on it having you would expect from a U.S. audit com- Corrupt Practices Act. First, why is it such a the kind of controls that you would expect mittee or a U.S. board. big deal? It comes up all the time now, and at a public company. General Counsel seem to be very preoccu- So I think when we talk about things like pied with it. Secondly, if you’re talking to If it came into the markets through an IPO, the globalization of enforcement, China a Board who are basically businesspeople, then chances are it may be a little bit farther is one of those case studies you can make what do you tell them? What do they need advanced than some of the others, because about how each company has to be viewed to know about this important subject? it’s been counseled by auditors and lawyers very carefully, and the kind of hallmarks on what’s necessary to make its offering for compliance that you would ordinarily PHILIP UROFSKY: The FCPA is a very statement, what’s expected for it to be able look for — is it public? Is it audited? Does interesting statute in the way that it is to provide audited financial statements. It it have an audit committee? Does it have largely enforced through private enforce- doesn’t mean that they got it all right, but independent directors? — aren’t always as ment, through companies’ own compliance it means that someone has tried to look at reliable as you would hope from a busi- programs. When I started doing this work its controls in advance to say, “Are we going ness perspective. From a legal perspective, ten or fifteen years ago with Peter Clark, he to meet the standards expected of a U.S. they create significant risk, and you have to and I were probably the only ones in the public company?” address that through your own compliance >+ and through ensuring your people on the the FCPA was. I was a line attorney and On the other hand, there are a number ground are properly trained and sensitized Peter was the Deputy Chief of the Fraud of companies that have gone public in the to the relevant risks. They need to be Section, but when you walked outside the United States through reverse mergers, and trained before they go in, not just in how >[?!‹ they find a shell company that acquires you handle the currency and what are the though there were very few enforcement them, and then they own it, right? In that security risks, but what are the risks for actions being brought on an annual basis case, in very many cases, there’s almost the company, and what should they be at the time, this was very big stuff outside no advance work to bring the controls up on the lookout for, and who can they call of the department. Companies were put- to spec, and then you, let’s say, come in if they think something is going terribly ting enormous resources, as they are today, as a partner or as a director, and you’re wrong. These are the issues that need to into compliance and, quite frankly, policing assuming that because they have an audited be planned in advance, and some of them themselves — albeit not always successfully. financial statement, they have all the con- are business risks; some of them are com- trols that you’ve supported. Sometimes they pliance risks; some of them are ultimately But the contrast between that and what we R]K+!+[;[ legal risks. All of this requires planning. At saw overseas at the time was startling. There you get audited financial statements, not the end of the day, if you’re in a voluntary was very little compliance work being done necessarily by one of the Big Four or Big Six or involuntary disclosure situation, you overseas by companies, and no enforcement companies, from your prospective partner have the expectations of the U.S. regulators work being done by governments. What in a power project in China and you say, which don’t necessarily change depending happened here in the United States was that “They’re audited. Someone signed off on it. on the country or region involved. They still there were a number of early cases involving That means they signed off on the controls” are going to expect that you, as the partner big companies. These didn’t necessarily result — not necessarily. of a Chinese company, implemented effec- in the kind of fines you see today, though tive U.S.-style compliance. some of them were significant, but the This is when you think about how you risk of debarment from public contracting, ensure that you’re not going to get in trou- JACK FRIEDMAN: A few years ago — and even if rarely implemented, was of particular ble. There’s a significant risk to Chinese I don’t know if it’s still true — a senior SEC concern for companies in the defense indus- companies, and it’s not the traditional risk official in California said that one of the try. For that reason, the defense industry that you think of: “China is a red country biggest problems that they had was trying took the lead through the Defense Industry on the TI index.” It’s that as a business mat- to explain to Chinese banks operating in Initiative in developing best practices, and ter, you’re not necessarily dealing with the California about regulation and disclosure. other industries which are similarly depen- kind of company that you would think it She said they tried to comply — it had noth- dent on government support in one way or is, because it’s a public company; you’re still ing to do with fighting the system — they the other — the oil and gas industry, with dealing with an entrepreneurial company just didn’t get it. They kept going to semi- concessions, and now today, the medical with a key man, and even though there’s a nars to understand the whole approach and industry with Medicare and Medicaid and board and an audit committee and every- it was driving their American subsidiaries in other regulatory interactions — have under- thing, it doesn’t mean that they are going California crazy. taken similar compliance initiatives.

Summer 2011 17 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

Thus, the private sector paid significant attention to compliance in response to the risk of enforcement, and that risk has gotten greater over the past couple of years since the OECD [Organisation for Economic Co-operation and Development] convention in 1997. There is much more international cooperation; there’s much more interna- tional enforcement action. For example, the Siemens action from a couple of years ago, which still holds the record for fines at $1.6 billion against a single company, was initiated by the German authorities. In a number of cases that I did as a prosecutor, we began actually to get evidence from over- seas after the OECD convention. The Swiss showed us bank records, voluntarily; it was unheard of. Both the willingness of foreign prosecutors to bring these cases and the growing international cooperation between But, although these fines make the head- been a monitor in at least one matter, I can prosecutors raises the risks for all companies lines, they are not the full story. Last tell you that it’s a very difficult situation for and is likely to result in more international year, the U.S. government brought twenty everybody — the company, the government compliance initiatives, making it easier for FCPA cases against corporations, with a and the monitor. I’m not sure what you get U.S. companies to get cooperation in their record annual take of $1.8 billion in fines. out of a monitorship ultimately, anyway. due diligence efforts. Two-thirds of those fines resulted from three cases. Eighty percent were from six But to answer your question, what is prob- The substantial monetary penalties also cases. The average fine, if you take those ably the biggest issue of concern is that drive an increased willingness for compa- outliers out, for an FCPA matter is no the damage to a company’s reputation is nies both in the U.S. and overseas to imple- more than $20 million. It’s not chicken enormous. The collateral consequences ment effective compliance measures. The feed, but it’s also not breaking the bank are enormous, even when these smaller fines have gone up partially because of the in most cases. That’s an interesting stat, financial settlements have occurred, the sentencing guidelines, which limits the wig- as I started looking and slicing and dicing costs were significant: investigative costs, gle room on both sides. The days have gone, the stats. reputational costs, remediation costs, not when a prosecutor could just — as may have only in terms of that particular matter, but happened — make up a number and tells RAY BANOUN: the company, “Here’s your number.” Now Also, to keep it in per- as the company continues to do business. both sides at least have to go through the spective, there are still a lot of declinations exercise of the guidelines, which requires [>[ So I think that’s very important to calculation of anticipated gain, and then after looking at the evidence, concludes, recognize. negotiate the discount from what may be a “We’re not going to take any action.” It’s considerable base fine. still possible; the problem is that these MARTIN WEINSTEIN: This is a ques- ?]KR tion we get asked a lot, which is, “Why However, let me just say this about the get real statistics because companies do FCPA, why now?” Then, “What can you fines. There have been some enormous not want it known if they were never do, what’s the big takeaway from it?” fines in the FCPA world over the past cou- openly investigated and no action was ple of years. Siemen’s combined German, taken against them. I think there are three things that we N#>’Y]“?- have to think about as a practical matter. lion. Halliburton’s was $500–600 million. Probably the current trend is that, at least First, the level of international commerce The total fines and penalties assessed agains for the time being, there are greater oppor- ! ?] K ? %N/> tunities to avoid monitorships, which is the didn’t used to have, on the front page N %[ N![ > • single most problematic, expensive and com- of the paper, issues regarding the Euro, /6N’Y?] plicated relationship you can have. Having the meltdown in Greece, the meltdown

Summer 2011 18 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

in Portugal. I mean, to be fair, 25 or 30 the recent frenzy surrounding the FCPA, here, and that’s what we want to talk to you years ago, it just didn’t matter that much I am concerned today that people may get about,” the first question the government in terms of the global economy. Now, the advice which causes them to confuse real or will ask you after you finish your presenta- economy is much more globalized, and significant FCPA issues with what should tion is, “Okay, how do you know that’s you’ve got companies like Bechtel who are be FCPA non-issues. I am hearing from the all there is, and how do you know that’s always doing business internationally. It >- the only place this is taking place?” If you used to be that only a select few industries ing in with their clients to confess conduct haven’t planned your disclosure in advance, did business internationally. Now, every- which, in fact, is not wrongdoing. They you wind up going back out and doing a lot body’s international. It’s like having more come in with their forensic accountant, the +]K cars on a freeway; you’re going to have general counsel, the plan to go to all 65 often find problems that you didn’t neces- more accidents. countries; and the prosecutor says, “I’m not sarily know were there, and the government sure why you need to investigate this.” So, takes credit for it at that point. Whereas if Second, FCPA cases today involve a lot as people feed on the frenzy, I worry that you take your time on a disclosure — I’m more money. When we prosecuted the people may not be given the proper advice not saying stall, but make sure that you’re Lockheed case, now almost 20 years ago, to differentiate those FCPA matters which prepared before you go in — and you’ve the fine was $24.8 million, which was are very significant — and there are a lot already got an answer to that question, then considered to be an extraordinary amount that are very significant — from those mat- you again can help shape the ultimate scope of money. The SEC didn’t even take an ters that are really not that significant. The of the investigation and of the resolution. interest in the case! Now you have much industry that’s grown up about it threatens more money involved. And it’s not just to dilute the quality of the advice on what is Also, Marty’s point is very good: there higher fines, although fines have skyrock- an extremely sensitive topic with extremely are times when you shouldn’t be going in eted. It’s also follow-on civil actions. We serious ramifications. even if you have identified some issues. had a case in court just recently in which There was a settlement last week where the the foreign governmental agency whose RAY BANOUN: What Martin was say- company apparently came in on one issue directors had solicited bribes tried to inter- ing is absolutely correct. One of the senior but what they settled on was another issue. vene in the criminal case by claiming they > That other issue — whatever they walked in were a victim of the bribery. They hired said that many of the expansive inter- with, the government eventually took a pass separate counsel in an attempt to recover nal investigations are not driven by the on and concluded that either it wasn’t a restitution in the criminal proceeding. We, >]< violation or there wasn’t sufficient evidence. as the company counsel, were standing in and tells the Department, “We’re going However, then the government said, “But side-by-side with the government, fighting to do twenty things,” the Department is not since you’re in the office anyhow, why don’t the attempt by the organization whose !![OK you answer this question about what else is officials solicited or accepted bribes to these.” going on?” The company wound up doing recover money as restitution as a victim a global audit and finding an actual viola- of the crime. Interestingly, the foreign A great deal of what a company ends up tion — different from what they had initially institution’s counsel was a plaintiffs’ class having to do is driven by what it promises disclosed — and that’s what they wound up action firm that had taken the matter on when it makes the disclosure. That’s why it having to settle. a contingent fee basis. So when you have has to be well thought out. What you get these amounts of money, you’re going to from the discussion here is that you have to JACK FRIEDMAN: Is this more or less attract a lot of attention. really consider and determine, at the very in the category of someone getting a notice outset, what are the issues, what is the scope from the IRS for a personal audit, and the Finally, Sarbanes-Oxley and the scandals of your investigation, and if you will make a taxpayer goes in, and being a good citizen, that led to its passage — Enron, MCI, disclosure, remember that the reason you’re discloses something. The IRS official says, WorldCom, and others — have made vol- doing it is to maintain control, limit the “All I originally wanted was to be sure you untary disclosures much more prevalent, disruption to the company, and to limit had the receipts for your charitable contri- which leads to more cases. So this conflu- potential penalties and consequences. It has bution. Now tell me more about this other ence of events has made FCPA a very signifi- to be very well focused. thing.” Then the taxpayer says, “Why did I cant regulatory tool that is here to stay. volunteer?” PHILIP UROFSKY: The interesting thing The most troubling aspect, and we could about some of these disclosures is when RAY BANOUN: I don’t think anybody have a whole two- or three-day discussion on you go in and you tell them, “Well, we had goes to the IRS voluntarily; unless you different aspects of the FCPA, is that with this issue here,” whatever it is, “this issue have a gigantic Swiss account and there are

Summer 2011 19 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

significant consequences that lead you to agencies is better than having the agencies disclose. So I would not compare going to to which you make the disclosure share it the IRS for the disclosures we are discuss- with another agency, and then the message ing here. gets slanted in a different way.

However, one of the problems is, of course, There may be situations, as Martin said, when you settle these cases, you don’t settle where you have no choice but to disclose !]K!] because you’re required to disclose. But What often happens is as a result of investi- the reality is that you have to know what gating something, that when you go in, you ] K + make a disclosure — I’m not saying it always issues are. happens — but very often, the situation is that you will go in and you’ll make a dis- K R closure that is real because you have a real a violation, and secondly, what the real issue. Then you discover something that is pros and cons are, what the consequences more serious, and so as a result, when the ] K + settlement occurs, it occurs on one of these company has had similar issues in the past new matters you uncovered as opposed to that were not disclosed and that are likely the original purpose of the disclosure. to surface now. So what’s the past history of +]P K should push back when the the company? If you have a company that JACK FRIEDMAN: When you go in, government seeks what you consider to just entered into a consent decree two years you’re in essence implicitly volunteering to be unreasonable. But you’re in a much earlier, you have a totally different situation. be questioned on anything. stronger position and better able to do that These factors are very critical. if you come in with a plan and say, “Look, RAY BANOUN: K[R- here’s the plan; it’s reasonable; it addresses MARTIN WEINSTEIN: So I would start pate and make sure, when you go in, that the risks,” rather than having them define off with the following understanding, which you’re going in because there’s a real reason at the beginning what they want, and then is regardless of whether you go to any of the to go in. But once you go in, because there’s you saying, “Well, no, I think that’s unrea- ! N N#[ >[ ! !- a real reason to go in, you have to assume sonable.” So I think careful planning and tors — if you find wrongdoing, you have that there’s a likelihood that it’s going to anticipating the government’s questions to address it in a way such that even if you result in a more expansive investigation that — both with respect to the conduct being decide ultimately not to make a disclosure, covers more matters than what you went in disclosed and your overall business practices if the government calls you up two or three to disclose, because other things may come — is critical or you are buying yourself an years later, you can stand up and say, “We out in the process. enormous legal bill. handled it exactly how you would have wanted us to handle it, and consistent with The reality is we’ve learned from indepen- JACK FRIEDMAN: I’d like to open up the our corporate culture.” Sometimes people dent counsel and independent prosecutors discussion to anybody who would like to ask feel as though if you don’t make a disclo- that if you have the time to investigate, you some questions or make some comments. sure, you’re going to address remediation !] K a certain way, and if you do make a disclo- find problems if you investigate enough. So QUESTION FROM AUDIENCE: What sure, you’re going to address it in a different there has to be reason for making a disclo- are corporate strategies regarding voluntary way. I think that’s a mistake. Regardless of sure, and you always have to keep in mind disclosure? whether you’re disclosing or not, you’ve got why you made the disclosure. to fix it, you’ve got to get out in front of it, RAY BANOUN: Well, you should not you’ve got to properly investigate it, and PHILIP UROFSKY: K! assume automatically that disclosure needs you’ve got to make sure it doesn’t happen become an adjunct of the government. As to be made. No. There are many consider- again. And then there are any number of company counsel or audit committee coun- ations here. There may be situations where situation-specific overlays, which we have sel or whoever, you’re still representing a cli- you have to disclose — if you are a publicly seen in many cases. There are instances ]K?- traded company — where a disclosure has in which a privately held company, for ]KR!! to be made in a public filing. In which example, may say, “We’re a family business; in and telling the government, “Tell me case, you want to manage that disclosure we’ve been a family business for a long time; what to do. I’ll go and investigate anything and decide that disclosing it to multiple the reputation of the family is the most

Summer 2011 20 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

important thing, so we’re going to disclose ]KR!! all sorts of ways of learning of it. But at one to the government. We are going to do that, or a contractor or a supplier who’s going point, you really do need to say, “Wait a because if there’s even a 1% chance this to say, “Well, I can make some money off minute. Do I know what I’m even walking will come out publicly, we want to be out this,” and go into the SEC before they even in, and am I sure that I’ve got a violation in front of it. Our reputation is that impor- come to you. At least if you’ve investigated here, or something that’s so close to a viola- tant. We will take all of the other risk and and remedied it, you have an answer for tion that I’m willing to engage the govern- collateral damage, because the reputation of the SEC, and that whistleblower doesn’t get ment on it.” the family is extremely important.” anything if you can convince the SEC not to take action. So there is that. RAY BANOUN: There are other factors There will be instances where your external that are totally independent. We’ve had auditors may force you into a position of But I think the other issue that is worth situations where an independent member disclosure by saying, “We can’t sign off on evaluating is what you’re going to be telling of the board plainly states, “If a disclosure is your financials because we think there’s a the government. If you’ve got an obvious not made, I’m resigning.” The other direc- material weakness.” External auditors have bribe to retain or obtain business, and it’s tors will not be willing to take the risk! Well, become a lot more cautious in the last ten a big deal, that, to some degree, obviously that, in and of itself, creates an immense or twelve years. They were nowhere in sight pushes you very much into the disclosure problem. Once a member of the board 20 years ago on these issues. We probably realm. But my partner, Dan Newcomb, threatens to resign if a disclosure is not deal with two or three big disclosure issues who’s been doing this as long as anyone, made, it drives the ultimate decision. a month. External auditors for publicly likes to tell me that I’m too enamored of traded companies are usually somewhere jury issues, I just like to read the statute. We’ve had instances where it was felt that in the equation. It tends to be a lot of the This is an issue I used to have with Peter the U.S. did not have jurisdiction over the same people, so over time you can develop Clark, too, is let’s look at the statute first, conduct because the company involved was a rapport, and confidence that everyone especially if you’ve got some issue that it’s foreign or the conduct occurred outside the understands the issues. not even clear it’s a violation. Maybe it’s an U.S., but the parent company was a U.S. area where the government has, for its own filer. Although remedial action was taken, Then you have boards of directors who may reasons, muddied the waters significantly as exactly what the client insisted was never be risk-adverse in this area, because there’s to whether or not it’s a violation, such as a going to happen, happened. A disaffected nothing like directors seeing the caption in facilitation payment or payments that aren’t > the Enron case, where under the “V” were to obtain or retain business but nevertheless a full investigation ensued. a host of then-business luminaries, to make bring some money into the house, such as the directors say, “Let’s err on the side of getting a tax refund. Situations where they So a lot of these things have to be evaluated disclosure.” have brought cases under these theories, but the legal theory has never been challenged at the outset, the evidence and the potential Now, does everybody sleep better? I don’t ]K+ things that are likely to occur as well as the think we have those expectations, but the issues — what Dan refers to as the “jury =+]K calculus has shifted so dramatically in the issues” — but say, “Wait a minute. Do I have to know why you’re going in. last ten years that the chances that you’re really want to walk an issue into the govern- going to make a disclosure are much greater ment, and then have an argument with the JACK FRIEDMAN: Thank you. I’d like than they were before. The key question is, government — in public, possibly — about to close by asking Michael my favorite ques- as everybody else has said, is to be prepared, whether or not this is a violation? Instead, tion for the Guests of Honor. In the five to understand it, but also to have the expe- let’s remedy it; let’s document that we’ve minutes a month that you may have free, rience, thoughtfulness, and judgment as remedied it; let’s make a decision now. Do what do you like to do on your own time? ]KR we need to walk this in or not?” happening and know when to push back MICHAEL BAILEY: That’s very easy. I and ask a company or its board, “Do you Now, you know, that feeds into the other have four children, so any free time I have, really need to do this?” issues, what we used to call the “lottery of I spend with them. ]P KR !! + PHILIP UROFSKY: Let me just say that someone else is going to walk it in anyhow JACK FRIEDMAN: Let me thank you all there are a couple different other issues. or the government’s going to learn of it for coming, especially our Guest of Honor. One, if you are a public company, then anyhow; otherwise you are not if you think Thank you. you have Dodd-Frank risk. That elevates the government will never learn of it. This any violation and anything that could be a is, of course, a risk, and the government has

Summer 2011 21 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

Raymond Banoun, one of the leading forms to comply with laws and regulations. business fraud litigators in the nation, is He also has defended such institutions in the Managing Partner of Cadwalader’s inquiries by the Federal Reserve, state bank- Washington, D.C. office and oversees the ing regulators, and federal prosecutors, and firm’s Business Fraud practice. A Fellow advised them with respect to foreign secrecy of the American College of Trial Lawyers and confidentiality laws, the offshore regu- who has been named among the top 500 latory environment, asset forfeiture issues, litigators in the country by Lawdragon and letters rogatory from foreign jurisdictions, a leading lawyer by Chambers USA, he rep- as well as regarding international mutual resents corporations, financial institutions, assistance and tax treaty requests. His exper- investment firms, law firms, and individuals tise in these areas extends to Switzerland, in all aspects of criminal investigations and England, France, Luxembourg, Hong Raymond Banoun litigation, both pre- and post-indictment, as /![ 6[ # <[ Cadwalader, Wickersham well as in complex civil litigation, includ- Bahamas, Panama, and other European & Taft LLP ing class, shareholders, whistleblower, and and Caribbean countries. Ray is well-versed RICO actions in federal and state courts. Partner in the money laundering laws of the United States and foreign countries, including the Ray also has represented clients in matters involving the Foreign Corrupt Practices USA PATRIOT Act and the Bank Secrecy Act, the anti-fraud provisions of the securi- Act and has co-authored a treatise entitled ties and commodities statutes, the criminal Money Laundering, Terrorism and Financial and civil False Claims Act, insurance and Institutions, published by The Civic Research bankruptcy fraud, the various economic Institute. sanctions laws, violations of export control licensing requirements, technology transfer Prior to joining Cadwalader, Ray served regulations, the criminal provisions of the for 13 years as an Assistant United States U.S. Internal Revenue Code, criminal anti- Attorney for the District of Columbia, trust enforcement, health care fraud and where he headed the Fraud Division, and abuse, government procurement fraud, and for three years as a Special Assistant to the environmental enforcement. United States Attorney for the Central District of California in Los Angeles. He He has conducted audits and internal inves- was a partner at the Washington, D.C. tigations of U.S. and foreign companies and [ ;[ /[ + ' financial institutions to ensure compliance /6 with laws, and devised remedial plans, com- Group. He also clerked for U.S. District pliance programs, policies, procedures, and #>!""]•]

Cadwalader, Wickersham & Cadwalader, Wickersham & Taft LLP, With more than 500 attorneys in eight Taft LLP ˆK+Y–—X[ N ˆ K+[ *[ #[ is proud of more than 200 years of service ‚!["[6!["!/! to many of the world’s most prestigious and Brussels — we offer clients innovative institutions. Our rich history and participa- solutions to legal and financial issues in tion in many of the most significant social, a wide range of areas, including antitrust, economic, and legal issues accompanying banking, business fraud, corporate finance, the growth of the U.S. have led us to also corporate governance, energy and commodi- become one of the world’s most prominent ties, environmental, healthcare, insolvency, law firms, with influence that has expanded insurance, intellectual property, litigation, around the globe as we advise clients with mergers and acquisitions, private equity, pri- interests in Europe, South America, and vate wealth, real estate, regulation, securitiza- the Pacific Rim. tion, structured finance, and tax matters.

Summer 2011 22 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

Mr. Weinstein represents Fortune 500 com- ?!† panies and their Audit Committees or gest FCPA cases in history Boards of Directors in a wide variety of %\V foreign business practices, compliance, and the country white-collar matters, including the FCPA 6 and financial fraud. He regularly designs Audit Committees of major multi- and benchmarks corporate compliance nationals in sensitive investigations or programs, conducts internal investigations government enforcement actions worldwide, and counsels on a variety of foreign business practice areas involving company in defending charges of human export controls, trade sanctions, and related rights abuses matters. He also negotiates business transac- ! Martin J. Weinstein tions and represents clients before federal many of the Fortune 500 Partner and state authorities, as well as before ; Willkie Farr & Gallagher, LLP Congress. Compliance for a major defense contractor Chambers USA and Chambers Global have given Mr. Weinstein tier 1 rankings since political parties in the 1996 Campaign 2007. Mr. Weinstein was also named one Finance investigation carried out by of the “100 Most Influential People in various Congressional Committees and Business Ethics” in 2007, and as one of > the “Attorneys Who Matter” by Ethisphere # Magazine in 2009, 2010, and 2011. League Baseball in the Pete Rose matter # In 25 years of practice, Mr. Weinstein has major multinational in a landmark SEC handled numerous sensitive complex inves- enforcement proceeding involving the tigations and litigation matters involving Foreign Corrupt Practices Act (FCPA) international, financial, and political issues. For example, Mr. Weinstein: <˜ ?: ![ international affairs, ice hockey, sports, !:]

Willkie Farr & individuals in U.S. civil and criminal enforce- federal procurement fraud and qui tam Gallagher, LLP ment matters before federal agencies and litigation, healthcare fraud, economic espio- congressional committees and in judicial nage, money laundering, and Sarbanes- and administrative proceedings, in particu- Oxley whistleblower allegations. We have Willkie Farr & Gallagher LLP is an interna- lar those brought by the U.S. Department represented issuers, officers and directors, tional law firm composed of approximately > N ;! and accounting firms in numerous investi- 630 attorneys across eight offices in the Commission. We have particular expertise gations by the SEC, including allegations United States and Europe. Our practice in compliance and enforcement matters of fraud under sections 10(b) and 13 of the is globally integrated, yet it enables inter- relating to international business practices Securities Exchange Act of 1934. We also national offices to function independently such as those involving the Foreign Corrupt have significant experience assisting clients in order to deliver the most appropriate Practices Act (“FCPA”), export controls, in benchmarking and drafting corporate localized legal services to our clients — from trade sanctions, and securities enforcement. compliance programs. Fortune 500 companies to the pro bono community causes we regularly represent. We have substantial expertise in conducting Our clients include Fortune 500 companies internal investigations, advising on business and other leading businesses and individu- The compliance and enforcement practice transactions, and counseling companies and :[ ?[ group at Willkie advises U.S. and multi- individuals on compliance and corporate financial, infrastructure, manufacturing, national corporations on a wide range of governance matters. We have defended civil media, oil and gas, oilfield services, petro- domestic and international compliance and criminal enforcement matters involving [ : [ issues. We also represent companies and securities fraud, the FCPA, trade sanctions, retail, and telecommunications industries.

Summer 2011 23 WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL

Education Prior to joining the firm, Mr. Urofsky served as a law clerk to the Honorable }™!N*[>]][ > ] N }]N] # 1988, Appeals for the Fourth Circuit and in a * Virginia Law Review, Articles Review number of trial and supervisory positions Board }]N] >R * Order of the Coif Criminal Division where he handled all aspects of criminal prosecutions, including University of Virginia, B.A., 1985, with investigations, trials, and appeals. Prior Highest Distinction to leaving the Department, he served as Assistant Chief of the Fraud Section, with Practice Philip Urofsky responsibility for supervising or participat- Mr. Urofsky, a partner in the firm’s ing in virtually every FCPA investigation Partner Litigation Group, is a former federal pros- and prosecution. In addition, Mr. Urofsky Shearman & Sterling LLP ecutor whose responsibilities encompassed was a member of the United States’ del- investigating and prosecuting criminal and egation to the OECD Working Group civil violations of the Foreign Corrupt on Corruption and was designated by Practices Act (FCPA), as well as the money the U.S. as an expert in anti-corruption laundering and mail and wire fraud stat- law and compliance for the Group’s utes and economic sanctions laws and ] > [ regulations. He advises clients on conduct- Mr. Urofsky was the primary drafter of ing internal investigations, designing and the Department’s Principles of Federal implementing compliance programs, and Prosecution of Corporations and lectured responding to and defending against fed- widely on corporate compliance issues. eral, state, and international criminal, civil, and administrative investigations, prosecu- tions, and trials on behalf of both business entities and individuals.

Shearman & Sterling LLP Shearman & Sterling has been advising of Rohm & Haas and sale of Morton many of the world’s leading corporations International and its calcium chloride and and financial institutions, governments and Styron businesses; Suncor Energy in its governmental organizations for more than $15.8 billion merger with Petro-Canada; 135 years. We are committed to providing 6› ! >6N =† legal advice that is insightful and valuable tion of U.S. poultry company Pilgrim’s to our clients. This has resulted in ground- Pride through a bankruptcy proceeding; breaking transactions in all major regions Société Générale in combination of its of the world. asset management operations with Crédit Agricole’s; and Sterlite in its $500 Million We have also advised on some of the world’s Convertible Bond Offering in India. most notable transactions and matters, rep- !˜ K+ Together, our lawyers work across practices $100 billion compensation claim against and jurisdictions to provide the highest qual- Russia; Cadbury in its $19.4 billion acqui- ity legal services, bringing their collective ? /€ # experience to bear on the issues that clients in its $5.7 billion canal refinancing plan; face. For example, underpinning the quality IntercontinentalExchange in its acquisition of our work firmwide are our shared values. of The Clearing Corporation and formation of a credit default swap clearinghouse; The We take pride in the successes of our clients Dow Chemical Company in its acquisition and in our contributions to them.

Summer 2011 24