Business Guide to Anti-Corruption Laws 2017 A Guide to the FCPA and the UK Bribery Act CHICAGO | LONDON | LOS ANGELES | NEW YORK | WASHINGTON, DC | JENNER.COM Several significant developments in 2016 will shape anti-corruption enforcement and compliance efforts in 2017. 2016 was a year of increasing enforcement activity and, at the same time, five cases in which the Department of Justice (DOJ) declined to bring charges despite a finding of wrongdoing. There was a significant increase in the number of cases resolved by the DOJ and the Securities and Exchange Commission (SEC), nearly doubling 2015’s total. Two major settlements reflected the dizzying heights that FCPA monetary penalties can reach, with Odebrecht agreeing to a global resolution of approximately $2.6 billion and VimpleCom agreeing to monetary payments totaling $795 million. The DOJ also announced a one-year pilot program describing its expectations for self-disclosure, cooperation, and remediation from corporations facing an FCPA investigation. Pursuant to this pilot program, the DOJ has expressly described how those factors drove many of its 2016 FCPA resolutions, including the five declinations. These developments reflect a dual approach by the DOJ in which it holds out a carrot of promised benefits for disclosure and cooperation and yet continues to burnish the stick of aggressive enforcement activity, including seeking extraordinarily large monetary penalties. In the United Kingdom, the Serious Fraud Office (SFO) pursued corporate violations of the UK Bribery Act (UKBA). Although UKBA monetary penalties have not reached the levels seen under the FCPA, last year the SFO showed its will to impose substantial penalties, including penalties potentially sufficient to push a defendant corporation into insolvency. Like their US counterparts, SFO prosecutors also stressed that self-disclosure and cooperation are essential to a favorable settlement. Outside of the enforcement context, the international standard setting organization ISO announced a new standard for anti- bribery compliance. The standard is intended to provide a flexible, universally applicable baseline for companies to adopt to show they have an adequate anti-bribery compliance regime. The standard, if widely adopted, could be a significant development in streamlining compliance-related obligations and due diligence. Meanwhile, political developments both in the United States and the United Kingdom have the potential to unsettle anti- corruption enforcement. It is too soon to know, but the UK vote to leave the European Union and the change in US presidential administrations could have wide-ranging impacts on anti-corruption activities. The Guide discusses these developments and what they may mean for anti-corruption enforcement and compliance. As with past versions, the Guide also offers practical guidance on how best to confront the reality of corruption in the world’s marketplaces, both before and after the government becomes involved, if that occurs. We also provide an overview of the FCPA and the UKBA and address common questions that a company operating in the international marketplace may have about these laws. Naturally, the information presented here is not legal advice in any specific situation. Such advice could be provided only after a full evaluation of all of the facts and circumstances of a particular matter. If you have any questions about this Guide, or the anti-corruption laws in general, please contact any of the lawyers listed in the Practice Member Listing at the back of this publication. The authors are Nicholas R. Barnaby, Emily A. Bruemmer, Larry P. Ellsworth, Christina J. Gilligan, Kelly Hagedorn, Michael K. Lowman, Marguerite L. Moeller, Coral A. Negron, William C. Pericak, Kristin L. Rakowski, Reid J. Schar, Grace Signorelli- Cassady, Keisha N. Stanford, Robert R. Stauffer, Jessica Veitch, and Bernadette M. Walli. © 2017 Jenner & Block LLP. 353 N. Clark St. Chicago, IL 60654-3456. Jenner & Block is an Illinois Limited Liability Partnership including professional corporations. This publication is not intended to provide legal advice but to provide information on legal matters and Firm news of interest to our clients and colleagues. Readers should seek specific legal advice before taking any action with respect to matters mentioned in this publication. The attorney responsible for this publication is Nicholas R. Barnaby. ATTORNEY ADVERTISING. Prior results do not guarantee a similar outcome. Table of Contents FCPA Recent Developments and Trends ........................................................................................................................... 1 FCPA Enforcement in 2016: Increased Enforcement Actions and Big Penalties ............................................................... 1 Enforcement Actions Reflect DOJ’s Areas of Emphasis in FCPA Enforcement ................................................................ 2 FCPA Pilot Program: Update .............................................................................................................................................. 3 Effect of US Presidential Election on Enforcement Uncertain ............................................................................................ 6 The Foreign Corrupt Practices Act...................................................................................................................................... 7 The FCPA’S Anti-Bribery Provisions ................................................................................................................................... 7 Defenses to an Anti-Bribery Prosecution .......................................................................................................................... 17 The FCPA’s Books and Records and Internal Controls Provisions .................................................................................. 20 Resolution of FCPA Investigations .................................................................................................................................... 23 Other Federal Statutes that Apply to Foreign Corruption .................................................................................................. 30 Countries Involved in 2016 FCPA Enforcement Activity ................................................................................................ 31 2016 FCPA Enforcement Activity ...................................................................................................................................... 32 2016 FCPA-Related Private Litigation ............................................................................................................................... 53 UK Bribery Act ..................................................................................................................................................................... 56 Statute and Elements of Offences Under the UK Bribery Act ........................................................................................... 56 Affirmative Defences ......................................................................................................................................................... 62 Resolution of UKBA Investigations ................................................................................................................................... 63 UK Anti-Corruption Developments.................................................................................................................................... 64 The United Kingdom’s Vote to Leave the European Union and Enforcement .................................................................. 64 Presence of Lawyers at Section 2 Interviews ................................................................................................................... 64 SFO Speeches Describe SFO’s Views on UKBA Enforcement ....................................................................................... 65 Reports of Open Investigations Show UKBA Enforcement Activity Expanding ................................................................ 66 UK Enforcement Activity .................................................................................................................................................... 68 Anti-Corruption Highlights From Around The Globe ...................................................................................................... 71 Our Anti-Corruption Experience ........................................................................................................................................ 75 Practice Member Listing ..................................................................................................................................................... 76 Index to Frequently Asked Questions FAQ 1: Who is subject to the FCPA? .................................................................................................................................. 8 FAQ 2: Can the US government prosecute foreign companies under the FCPA? ........................................................ 8 FAQ 3: Are companies liable for the prior illegal acts of companies they purchase? ................................................ 10 FAQ 4: Can a company make a charitable contribution at the request of a foreign official? ..................................... 11 FAQ 5: Can a company be liable for the acts of a third party? .....................................................................................