an antibribery primer for smes: the fcpa, corrupt foreign public officials act (canada), and the uk...

An Antibribery Primer for SMEs: The FCPA, Corrupt Foreign Public Officials Act (Canada), and the UK Bribery Act

SBA Buffalo District International Trade Task Force

Buffalo, New YorkDecember 6, 2013

Law Offices of Jon P. Yormick Co. LPAAn International Law PracticeAttorney Advertising

Disclaimer

• The information provided is believed to be accurate as of the date of the presentation, but is subject to change without notice

• This presentation is designed for informational purposes only and is not intended to be, nor should it be deemed, specific legal advice. If such advice is required, please consult with qualified legal counsel

Foreign Corrupt Practices Act• …”consequences of public corruption can be even more severe

in developing countries.”

• “In today’s global economy, the negative effects of corruption inevitably flow back to the United States.”

– Economic crises that destablize the global financial system

– Opens borders for terrorists to cross

– Raises prices of goods

– Costs American jobs because U.S. companies cannot compete effectively

Deputy Attorney General James M. Cole, Foreign Corrupt Practices Act Conference, Nov. 19, 2013

Foreign Corrupt Practices Act

• Key parts of FCPA

–Antibribery

–Accounting (Book and records)

make/keep books accurately and reflect transactions

maintain adequate internal accounting controls

Antibribery • Prohibits “corruptly offering, paying,

promising to pay, or authorizing the payment of any money or anything of value , directly or indirectly, to a foreign government official for the purposes of obtaining or retaining business for, or directing business to, any person.”

Information, United States v. Weatherford International Ltd., Court Docket Number: 13-CR-733, Nov. 26, 2013

United States v. BizJet International Sales and Support, Inc., Docket No: 12-CR-061-CVE, Northern Dist. of Oklahoma

BizJet International

• MRO provider

• Customer list:

–Mexican Federal Police

–Mexican President’s Fleet

–Mexican State of Sinaloa (Governor’s Fleet)

– Panama Aviation Authority

BizJet International

• Paid bribes to officers and other decision-makers

– “commissions”

– “incentives”

– “referral fees”

• Board knowledge and approval

• Benefit - $7M+

• 200-999 employees – about 320

BizJet International

• Internal audit

• Voluntary disclosure

• Cooperation

• Termination

• Enhanced compliance

Result: DPA + 4 former employees criminally charged

Penalty: $11.8M

Enhanced compliance – review/report

Mandatory successor liability

FCPA Guidance

• Nov. 2012 - A Resource Guide to the U.S. Foreign Corrupt Practices Act http://www.justice.gov/criminal/fraud/fcpa/guide.pdf

• Opinion Releases Index http://www.justice.gov/criminal/fraud/fcpa/index/

– Audit rights

– Charitable contributions

– Gifts, Travel & Entertainment

– JVs, M&A

– Reasonable, bona fide expenditures

– Third-party agents

DPA – Corporate Compliance Program

• “… has implemented and will continue to implement a compliance and ethics program designed to prevent and detect violations of the FCPA and other applicable anti-corruption laws throughout its operation…”

UK Bribery Act 2010

• April 8, 2010 – received Royal Assent

• Delayed effective date - July 1, 2011

• New high water mark

• …the UK Bribery Act “finally bring[s] UK rules on corrupt payments into line with other OECD countries.”

UK Bribery Act 2010

• Key features:–Commercial bribery–Facilitation payments–Adequate procedures–UK nexus – “close connection”

UK Bribery Act 2010• Section 7 – failing to prevent bribery

– Only requires company “carries on” business or part of a business in UK

– FCPA – supply side only; prohibits bribe payments

– UKBA -

“Specially Designed” Light• (a) Except for items described in (b), an “item” is

“specially designed” if it:

– As a result of “development” has properties peculiarly responsible for achieving or exceeding the performance levels, characteristics, or functions in the relevant ECCN or U.S. Munitions List (USML) paragraph; or

– Is a “part,” “component,” “accessory,” “attachment,” or “software” for use in or with a commodity or defense article ‘enumerated’ or otherwise described on the CCL or the USML.

“Specially Designed” Extra Light

• (b) A “part,” etc. … is not “specially designed” if it:

• Is a fastener (e.g., screw, bolt, nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer, insulator, grommet, bushing, spring, wire, solder;

• Has the same function, performance capabilities, and the same or ‘equivalent’ form and fit, as a commodity or software used in or with an item that:

• Is or was in “production” (i.e., not in “development”); and not on CCL or USML or controlled for AT only;

• Was or is being developed as a general purpose commodity or software (no specific knowledge) or

• Was or is being developed with “knowledge” that it would be for use in or with commodities or software… exclusively for use in or with EAR99 commodities or software.

BIS Decision Tools

Commerce Control List (CCL) Order of Review

http://www.bis.doc.gov/index.php/export-control-classification-interactive-tool

Specially Designedhttp://www.bis.doc.gov/index.php/specially-designed-tool

Aeroflex, Inc. Consent Agreement

• 158 violations

• “…systemic and longstanding nature of the violations based on improper product classifications…”

• $8M – 50% on remedial measures

Credit Manager Export Compliance Role

• Understand basics of export controls

– Consequences of violations

• Screen customers & destinations – Consolidated Screening List http://export.gov/ecr/eg_main_023148.asp

• Keep records

• Know what to do next

• Stay informed – ECR, sanctions, diversion risks

• Promote compliance atmosphere

Thank you

Jon P. YormickAttorney and Counsellor at Law

Law Offices of Jon P. Yormick Co. LPA

jon@yormicklaw.com

Toll Free: +1.866.967.6425

Mobile: +1.216.269.5138

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