Alan Gourley Morris DeFeo Dalal Hasan April 1415 2014 2014 Crowell amp Moring LLP Overview Introduction Foreign Corrupt Practices Act Elements amp Compliance Application To Situational Scenarios ID: 249888
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Understanding Anti-Corruption Risk of Global Market Entry
Alan Gourley
Morris DeFeoDalal HasanApril 14-15, 2014
© 2014 Crowell & Moring LLPSlide2
OverviewIntroductionForeign Corrupt Practices ActElements & ComplianceApplication To Situational ScenariosHypothetical Case Study – obtaining and performing an international contract2Slide3
Where is Bribery Legal? Nowhere!3Countries Where Local Laws Prohibit Bribery of Government OfficialsSlide4
Enforcement & PenaltiesJailFinesCollateral Consequences4Slide5
Elements of an FCPA Bribery OffenseUse of instrument of interstate commerceCorruptly to offer or pay“Anything of value”To a “foreign government official”
Either directly, or indirectly with knowledge
To influence or secure an improper advantage through an act or omissionTo obtain or retain business.5Slide6
Who is covered by the FCPA?6
Issuers, US Companies, Foreign Companies & Agents
Employees
Directors
Agents
Officers
StockholdersSlide7
Who is a “foreign official?”7
Foreign Governments Employees
International Organizations
Agencies and Officials
Universities
Hospitals
State-Owned EnterprisesSlide8
“Anything of value”8Slide9
Borrowed from the U.S. domestic bribery statute:Evil motive/Wrongful intent – quid pro quoDoes not require proof that defendant knew she was violating the FCPA“Corruptly”9Slide10
To Obtain or Retain BusinessNeed not be to obtain a contractAny favorable government action or omissionRegistration of productsFavorable customs treatmentInspectionsProsecution need only show a nexus between the action or omission and a business advantage
10Slide11
Some Exceptions“Facilitation” PaymentsRoutine government action – No DiscretionStill RiskyLegal under local lawReasonable and bona fide expenses related to promotional activities11Slide12
Direct or Indirect Offers of Payments12Corporations can be liable for the acts of others who perform services on their behalfforeign subsidiariesconsultants, employees
Freight Forwarders
DistributorsAgentsSlide13
May not “self-blind”Cannot ignore misconduct or consciously avoid examining red flagsFacts that would lead a reasonable person to inquire furtherKnowledge of Intermediary Payments13Slide14
Due Diligence Types14Slide15
Risk Assessment – Regional Risk15
2013 TI CPI - Scale: 0 (highly corrupt) to 100 (very clean)Slide16
Risk Assessment – Relationship Risk16Commercial End-UserIndependent Contractor
Government Contracting “Consultant”
Freight Forwarder
Due Diligence
Risk
Company
Registry
FCPA
Declaration
Due Diligence
Interview/Site
Visit
Reference
Checks
Questionnaire
Subcontractor
JV Partner
DistributorSlide17
Case Study: 2022 Qatar World CupVa Hi-Tech is keen to sell its Pan Tilt Zoom (PTZ) IP cameras to Qatar for new stadiums being built for 2022 World CupNo prior experience in selling into MENA regionCase Study follows Va Hi-Tech from approaching the market through award & performance17Slide18
Approaching the MarketAbdulrahman Al Keiber October 23rd, 2015 1:14amTo: Alan BeaumontReply-To: AAK@qatar.moi.govRe: Interesting opportunity – Qatar World Cup 2022
Friend Alan, Here is the RFP from the Qatar Ministry of State for Interior Affairs we discussed yesterday. but it will be soon and there will not be a lot of time to bid.
They want (100) Pan Tilt Zoom (PTZ) IP cameras, including software and hardware, and a 3 year support contract with 2 optional years. This only for the first stadium – there will be more to follow.You will need a Qatari partner to be eligible to bid on this award. that can set you up with the right partner very quickly. What do you think? Abdulrahman
<
AAK@qatar.moi.gov>
It has not been made public yet,
I know a local consultantSlide19
Approaching the MarketAhmed <AAK@private -consultant.com> October 23rd, 2015 8:22amTo: Alan BeaumontReply-To: AAK@private –consultant.com
Re: Re: Re: Interesting opportunity – Qatar World Cup 2022
Alan, Abdulrahman tells me you are in need of a local partner for the MOI security camera bid. I know . Their BOD has and they can help with offset obligation as well.Time is short, so you will need to move fast. I can begin working on this as soon as you give the green light, but I will need my commission fee ($50,000) to be . I have a that you can wire the funds to. Ahmed You
replied October 23rd, 7:49am
Sent from
idesk
Thanks
Abdulrahman
. We have never formed a local partnership for these bids, so it would be great to get Ahmed’s. advice. Please put us in touch. Alan.
Abdulrahman
Al
Keiber
<
AAK@qatar.moi.gov>
October
23
rd
, 2015 1:14am
To: Alan Beaumont
Reply-To:
AAK@qatar.moi.gov
Al
Keiber
the perfect company – Al
Shouban
all the right
connections,
paid in advance
bank account set up in the
U.A.E
. Slide20
Getting the ContractAhmed Al Keiber <AAK@private-consulting.com> October 23rd, 2015 8:59amTo: Alan BeaumontReply-To: AAK@private -consulting.com
Re: Re: Re: Re: Interesting opportunity – Qatar World Cup 2022
Alan, I think your standard technical proposal will be fine. l know from experience that MOI procurement officials will also want to for a product demonstration as well. A two-day tour for the 5-member committee and should do it. It is important we show them how much Va Hi-Tech cares. A trip to would impress them.Ahmed You replied October 23rd, 8:37am
Sent from
idesk
Ok. What are the next steps? Best, Alan
Ahmed Al
Keiber
<
AAK@private-consulting.com
>
October
23
rd
, 2015
8:22am
To: Alan Beaumont
Reply-To:
AAK@private-consulting.com
visit your Virginia facilities
their wives
Atlantic CitySlide21
Getting the ContractAhmed Al Keiber <AAK@private-consulting.com> November 15th, 2015 7:35amTo: Alan BeaumontReply-To: AAK@private -consulting.com
Subject: JV Agreement with Al-Shouban
Attachment: JV AgreementAlan, We are all set on the proposal, and the Qataris loved their visit to the U.S. We just need to finalize the JV agreement with Al-Shouban. Attached is your draft JV Agreement with Al-Shouban’s revisions. They agree with most of the terms, but with any U.S. anti-corruption laws. Let’s not insult them by insisting on U.S. law. There are local laws that deal with this issue. We are very close to a deal, and the bid is due very soon. Remember, Al-Shouban has and can ease satisfaction of the offset. Please let me know today if Va Hi-Tech is willing to sign the agreement. Otherwise, Al-Shouban
may choose to work with another partner.
Ahmed
w
ill not agree to comply
c
lose ties with the right procurement officials Slide22
Performing the ContractAhmed Al Keiber <AAK@private-consulting.com> November 30th, 2015 8:59amTo: Alan BeaumontReply-To: AAK@private -consulting.com
Re: Re: Congratulations on the contract award!Alan, Yes, unfortunately the processing time for the forms and product inspections is very slow. Not to worry – I can recommend a freight forwarder that deals with shipment and customs. They have a reputation for knowing how to get things done in the .
You replied November 30th , 2015 8:37amSent from ideskThanks, Ahmed. We need to get a freight forwarder lined up quickly for the camera parts, cabling, and mounting brackets. I understand the customs process in Qatar is very complicated. Can you help? Best, Alan
Ahmed Al
Keiber
<
AAK@private-consulting.com
>
November 30
th
,
2015
8:22am
To: Alan Beaumont
Reply-To:
AAK@private-consulting.com
Re: Congratulations on the contract award!
usual Qatari waySlide23
Performing the ContractJason Smith <JSmith@virginia-defense-co.com> January 27th, 2015 10:22amTo: Alan BeaumontReply-To: Jsmith@virginia-defense-co.comRe: Freight forwarder invoicesAlan, We received the final invoices from the Qatari freight
forwarder. Accounting has cleared most of them, but there are a number of invoices for that I have held because there is . I emailed the
FF to request explanation and support, but was told that these are typical local for which . The FF threatened to stop performance if we don’t pay. What should I do?JasonSr. Accountant, Va Hi-Tech Co. Jsmith@virginiahitech.com703-222-2222
“special handling,” or “special intervention”
no back-up documentation
“expediting fees”
receipts are not customarySlide24
As the Relationship DevelopsYousef Al Jakili <YAJ@al-shouban.com> November 30th, 2018 10:59amTo: Alan BeaumontReply-To: YAJ@al-shouban.comSubject: Follow-On RFP
Alan, The MOI is getting ready to release the follow-on IP Camera RFP for additional stadiums. With 12 stadiums needed, this RFP could to be many times the size of the original award. We will to win the favor of procurement officials. I hear that from the committee soon. He would be an excellent addition to the JV for continuing our success.
Trust me, if you want to win.Youself Al JakiliManaging DirectorAl-Shouban Inc.
n
eed to show progress on our offset commitments
Abdulrahman
is getting ready to retire
this is how the game is played here Slide25
Conclusion25Slide26
Contact UsMorris DeFeomdefeo@crowell.com 202.624.2925Alan Gourleyagourley@crowell.com 202.624.2561Dalal Hasan
dhasan@crowell.com 202. 624.2994
26