FCPA Digest Cases and Review Releases Relating to Bribes to Foreign Officials under the Foreign Corrupt Practices Act of 1977 JANUARY 2011 FCPA Digest of Cases and Review Releases Relating to Bribes to Foreign Officials under the Foreign Corrupt Practices Act of 1977 (January 20, 2011) Shearman & Sterling LLP Copyright © 2011 Shearman & Sterling LLP. As used herein “Shearman & Sterling” refers to Shearman & Sterling LLP, a limited liability partnership organized under the laws of the State of Delaware. Editorial Board Editor In Chief: Philip Urofsky Washington, DC London +1.202.508.8060 [email protected] Managing Editors: Amanda Kosonen and Ashley Walker Contributing Editor: Jill Aberbach Digest Contributors: Jill Aberbach, Jeanetta Craigwell-Graham, Teddy Flo, Helene Gogadze, Josh Goodman, Chris Greer, Amanda Kosonen, Grace Lee, Mario Meeks, Marina Moon, Jennifer Rimm, and Ashley Walker. Founding Editor: Danforth Newcomb New York +1.212.848.4184 [email protected] Past Contributors: Andrew Agor, Carolyn Bannon, Rachel Barnes, Parth Chanda, Bryan Dayton, Saamir Elshihabi, Andrew Giddings, Melissa Godwin, William Hauptman, Pasha Hsieh, Mary Isernhagen, Joshua Johnston, Meaghan Kelly, Michael Kieval, Michael Krauss, Debra Laboschin, Marlon Layton, Christopher Le Mon, Tal Machnes, Natalie Marjancik, Bronwen Mason, Nicola Painter, Judith Reed, Matthew Reynolds, Brian Scibetta, Jeena Shah, Rachel Schipper, Natalie Waites, Elizabeth Weiss, and Gregory Wyckoff. Board of Advisors: Stephen Fishbein Paula Howell Anderson Patrick D. Robbins Richard Kelly New York New York San Francisco London +1.212.848.4424 +1.212.848.7727 +1.415.616.1210 +44.20.7655.5788 [email protected] [email protected] [email protected] [email protected] Jo Rickard Richard Kreindler Markus S. Rieder London Frankfurt Munich +44.20.7655.5781 +49.69.9711.1420 +49.89.23888.2119 [email protected] [email protected] [email protected] This memorandum is intended only as a general discussion of these issues. It should not be regarded as legal advice. We would be pleased to provide additional details or advice about specific situations if desired. For more information on the topics covered in this issue, please contact Philip Urofsky, Danforth Newcomb, or members of the Board of Advisors. Copyright © 2011 Shearman & Sterling LLP. As used herein “Shearman & Sterling” refers to Shearman & Sterling LLP, a limited liability partnership organized under the laws of the State of Delaware. Table of Contents Page A. Recent Trends and Patterns in FCPA Enforcement ..................................................................... i B. Foreign Bribery Criminal Prosecution under the FCPA................................................................ 1 C. Foreign Bribery Civil Actions Instituted by the Department of Justice under the FCPA ........... 178 D. SEC Actions Relating to Foreign Bribery ................................................................................. 184 E. Department of Justice FCPA Opinion Procedure Releases..................................................... 312 F. Ongoing Investigations under the FCPA.................................................................................. 367 G. Pre-FCPA Prosecutions........................................................................................................... 451 H. Parallel Litigation ..................................................................................................................... 454 I. Index of Matters....................................................................................................................... 523 FCPA Case Digest | Copyright © 2010 Shearman & Sterling LLP A. Recent Trends and Patterns in FCPA Enforcement FCPA Case Digest | Copyright © 2010 Shearman & Sterling LLP A. Recent Trends and Patterns in FCPA Enforcement Table of Contents Page A Record Year ................................................................................................................................. i Corporate Prosecutions.................................................................................................... i Individual Prosecutions .................................................................................................iii Enforcement Strategies ....................................................................................................................v Jurisdiction ..................................................................................................................... v Foreign Companies......................................................................................................... v Monitors ....................................................................................................................... vii Industry Sweeps ..........................................................................................................viii Inconsistent Theories of Parent Liability ...................................................................... ix Statutory Interpretation ....................................................................................................................x Facilitation Payments ..................................................................................................... x Instrumentalities ............................................................................................................ xi The Business Nexus ....................................................................................................xiii Guidance on Compliance Programs...............................................................................................xv Compliance Monitoring ............................................................................................... xv Internal Controls.......................................................................................................... xvi Compliance Responsibilities .....................................................................................xviii Gifts and Entertainment.............................................................................................xviii International and U.S. Legislation and Regulations .................................................................... xix U.K. Bribery Act ......................................................................................................... xix U.S. Legislation and Regulations................................................................................. xx Recent Trends and Patterns in FCPA Enforcement | Copyright © 2011 Shearman & Sterling LLP A. Recent Trends and Patterns in FCPA Enforcement After a relative lull in 2009 in large corporate enforcement actions, 2010 saw a resurgence in corporate cases against large corporations, with over $1.7 billion in total penalties. Strangely, however, with very few exceptions, most of these cases have involved non-U.S. companies. Clearly, U.S. companies are not in the clear, but the DOJ’s focus in the short-term seems to be very much on putting pressure on non-U.S. companies to comply with global anti-corruption agreements, particularly when those companies’ home countries are less than aggressive in enforcing their own corruption laws. At the same time, as reflected in the charges against 22 members of the military and law enforcement industry (the “SHOT-show” cases), the TSKJ and Panalpina matters, the tobacco wholesalers matters, and the pharma initiative, the U.S. government clearly is pursuing high-profile enforcement actions hoping to encourage compliance in entire industry sectors. The cases that were brought in 2010 provide valuable, albeit not uncontroversial, guidance from the authorities as to the scope and meaning of the statute. In particular, the Panalpina cases provided insight into which types of payments the government believed fell outside the facilitation exception. The Alcatel-Lucent matter offered guidance as to the meaning of the government “instrumentality.” Finally, the Technip and Snamprogetti cases provided confirmation that the government will use “correspondent account” jurisdiction as well as conspiracy law to reach foreign companies engaged in corrupt conduct. On the other side of the coin, some of the government’s cases appear to blur the lines or muddy the waters when it comes to the limits of the statute. In several cases, such as Pride International, Panalpina, and Royal Dutch Shell, the theories used to hold parents accountable for the acts of subsidiaries and vice versa appear to be unclear. In others, such as Pride International and Tidewater, the connection of the alleged conduct to “obtaining or retaining business,” a critical element of the statute was not pleaded or, worse, was pled in a way that suggests that virtually any bribe that improves a company’s profitability is sufficient – a result that is not consistent with established precedent and Total SEC/DOJ Matters Initiated: 2002-2010 the language of the statute. 40 DOJ 35 In the next year, we expect to see a number of trials SEC 28 30 of individuals as well as additional corporate matters. 21 32 25 As always, these matters may well bring some clarity 20 16 to some of these existing unsettled areas of the law. 15 7 6 19 10 17 A Record Year 11 5 4 3 9 5 6 7 3 3 0 1 Corporate Prosecutions 2002 2003 2004 2005 2006 2007 2008 2009 2010 In terms of gross numbers, in 2010 the DOJ charged or otherwise alleged (e.g., with deferred prosecutions) FCPA Case Digest