Global Anti-Corruption Laws and Trade Sanctions - PowerPoint Presentation

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Global Anti-Corruption Laws and Trade Sanctions

Jason

PrinceSlide2

Important Information

This presentation is similar to any other seminar designed to provide general information on pertinent legal topics. The statements made and any materials distributed as part of this presentation are provided for educational purposes only. They do not constitute legal advice nor do they necessarily reflect the views of Holland & Hart LLP or any of its attorneys other than the speakers. This presentation is not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

All Presentations and Other Materials © Holland & Hart LLP 2016Slide3

Agenda

U.S. Foreign Corrupt Practices Act

International Anti-Corruption Laws

U.S. Trade Sanctions

International Trade Sanctions

Compliance Program Best PracticesSlide4

Anti-Corruption Laws

Historical Context

Watergate Scandal

Church Committee

FCPA - 1977Slide5

FCPA

Penalties

Criminal

:

Companies = Up to $2,000,000 per violation

Individuals = Up to $100,000 per violation, or imprisonment of up to 5 years, or both

Civil

:

Companies = Up to $100,000 per violationIndividuals = Up to $10,000 per violationSlide6

FCPA

Penalties

Top 10 Largest

FCPA

Enforcement Actions

Siemens AG (2008) $800 million

Alstom (2014) $772 million

KBR/Halliburton (2009) $579 million

BAE Systems (2010) $400 millionTotal, S.A. (2013) $398 millionAlcoa (2014) $384 millionENI/Snamprogetti (2010) $365 millionTechnip S.A. (2010) $338 millionJGC Corp (2011) $219 millionDaimler AG (2010) $185 millionSlide7

TI Corruption Perceptions IndexSlide8

FCPA

Enforcement AuthoritySlide9

FCPA

: Two Primary Components

Anti-bribery Provisions:

Prohibit most bribery and non-routine payments to foreign government officials; and

Financial Record Keeping & Internal Control Provisions:

Require specific records and financial internal controls to be maintained to provide reasonable assurance of accuracy of financial records and to demonstrate compliance. Slide10

FCPA

Anti-Bribery ProvisionsSlide11

Anything of ValueSlide12

Anything of Value

No

de

minimis

or “small payment” exception under

FCPA

Subjective standardSlide13

Foreign OfficialsSlide14

What About These Individuals?Slide15

Foreign governments and

instrumentalities

State-Owned and State-Controlled Companies

Public international organizations

Foreign political parties, officials, or candidates

Royal family members (fact specific)

Any person, while

knowing

that all or a portion of thing of value will be promised or given to foreign officialWho Is a “Foreign Official”Slide16

Foreign Official - Knowledge

A

company has

“knowledge”

when it:

Knows that a bribe will be paid to a foreign official, or

Consciously disregards a high probability

that a bribe will be paid to a foreign official.Slide17

Foreign Anti-Corruption Laws

OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“OECD Anti-Bribery Convention”):

Entered into force in February 1999

41 participating countries account for 80% of global exports

Includes

: Canada, Brazil, Japan, Mexico, Russia, South Africa, United States

Excludes

: China, India, Peru, Taiwan, Vietnam

Generally tracks FCPA, with a few exceptionsSlide18

Foreign Anti-Corruption Laws

Chinese Anti-Corruption Laws:

Prohibit

giving and receiving

of bribes and applies to

public and private

briberyAmended on May 1, 2011 to expand prohibition on bribery of foreign officials Growing enforcement activitySlide19

Trade Sanctions Laws

Summary -

The Office of Foreign Assets Control (

OFAC

) is part of the U.S. Department of Treasury. It enforces U.S. economic sanctions against specific

countries

, as well against

individuals and companies

Global Reach - OFAC also imposes restrictions on U.S. persons working globally and prevents these persons from facilitating or approving transactions that would be prohibited if performed in the United StatesSlide20

OFAC

: Country Sanctions

Country Sanctions

OFAC administers U.S. trade sanctions on select countries

These sanctions bar or restrict trade activity by U.S. individuals or companies

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OFAC: Country Sanctions

Main Embargoed

Countries

Each embargo regime is different

Embargoes change as U.S. foreign policy evolves

Iran

Sudan

Cuba

SyriaSlide22

OFAC

: Country

Sanctions

C

ountries

subject to OFAC targeted sanctions include:

Balkans

Belarus

Myanmar (Burma)Cote d’IvoireDemocratic Republic of the CongoIraqLebanon

Liberia

Libya

North Korea

Russia

Somalia

Yemen

ZimbabweSlide23

OFAC

: Burma Sanctions Program

Example--Myanmar (Burma)

Targeted at blocked individuals and entities – U.S. entities cannot conduct business with these parties absent a license

General license now authorizes importation of Burma-origin goods

General licenses authorizing the export and re-export of financial services and new investment in Burma Slide24

OFAC

: Prohibited Parties

U.S. Blocked Parties –

OFAC

maintains a regularly updated list of foreign individuals and companies with which U.S. parties are prohibited from conducting business

Specially Designated Nationals List (“

SDNL

”) -

Individuals on the blocked party registers are frequently referred to as “Specially Designated Nationals” or “SDNs” Other lists are maintained by the U.S. Departments of Commerce and StateSlide25

OFAC

: Prohibited Parties

Rule

- OFAC sanctions prohibit U.S. citizens, businesses, and financial institutions from engaging in business or financial transactions with persons or entities on the SDNL or other lists

Financial institutions are required to file reports with OFAC for:

Blocked payments or transfers held at the financial institution

Rejected transactions in which parties blocked by OFAC or listed on the

SDNL

have any interestReports must be filed within ten business days of the transactionSlide26

OFAC

: Prohibited Parties

Screening -

A company that is subject to OFAC jurisdiction

must

screen customers and third-party agents to identify and prevent possible transactions involving a proscribed partySlide27

Criminal Penalties (

IEEPA) for violating

most

OFAC

regulations range up to 20 years in prison, and up to $1,000,000 in fines

Cuban Sanctions (

TWEA

) – $1,000,000 / $100,000

Civil Penalties (IEEPA) up to $250,000 per violation Cuban Sanctions (TWEA) – $65,000Transactions can be parsed to produce potentially multiple violations for each non-compliant transactionOFAC: PenaltiesSlide28

OFAC

: Special Compliance Risks

Non-listed Sanctioned Parties

Parties with an interest (e.g., ownership, control) in a blocked party

Foreign ownership changes

Facilitation of a prohibited transaction

Financing, legal/compliance support or counseling

Mandatory financial institution reporting (Suspicious Activity Reports)

Exceeding the scope of a General License or exemptionSlide29

International Trade Sanctions

United Nations

Issued through U.N. Security Council

Canada

Key Differences with United States

Example—Exports to Belarus banned

Example—No

Cuba embargo

Blocking StatuteSlide30

Compliance Programs

Due

Diligence

Compliance Documentation

Written Policy & Training

Compliance MonitoringSlide31

Provision of regularly updated written

policy

Appointment of Compliance Officer/Manager

Standard Guidelines for Anti-Corruption

Gifts, Meals, Entertainment, Product Promotion Events, Facilitating Payments, Foreign Political Contributions and Charitable Donations

Required

Denied Party Screening

Periodic

training of key employees and foreign agentsWritten Policy & TrainingSlide32

Background

Checks:

U.S

. Department of Commerce’s U.S. Commercial

Service

U.S. Government’s Consolidated Screening List

http

://export.gov/ecr/eg_main_023148.asp

High Risk: Additional due diligence and written due diligence report submitted every 1-2 yearsDue DiligenceSlide33

Red Flags

:Country or industry corruption

Refuses to certify compliance and/or rejects anti-corruption terms in proposed contract

Not qualified and/or lacks resources

Related to or referred by a government official

Heavy reliance on political or government contacts

Requests for strange payment terms or arrangements

Vague payment descriptions

Over-invoicing or false invoices Unrecorded accounts or transactionsHistory of bribery allegations or investigationsLacks code of conduct or anti-corruption programDue DiligenceSlide34

Contract Terms:

Representations and covenants

Certification obligation

Right of termination

Audit rights

Written Procedural Documents

and Certifications

Compliance DocumentationSlide35

Compliance Monitoring

Compliance Monitoring:

Periodic Certifications:

Employees, Directors & Officers

Foreign Agents

Whistleblower Procedures:

Immediate reporting to Compliance Officer

Strict prohibition on retaliating against anyone for raising or helping to address anti-bribery issues

Periodic AuditsSlide36

Jason Prince

jeprince@hollandhart.com

208-383-3919

Questions?