FCPA Education Presentation

Anti Bribery Compliance Training

Introduction The Foreign Corrupt Practices Act of 1977 ( “FCPA”) makes it a crime to give, or to offer to give, anything of value to nonU.S. government officials (including employees of stateowned companies) to improperly influence the performance of the officials’ duties. The FCPA also includes requirements that U.S. public companies have strong internal controls and accurate books and records.

In addition, a consensus against corruption has emerged among the 39 countries that are members of the OECD. Most of those countries, including the United Kingdom, have criminalized overseas bribery. And more than 130 nations have domestic laws against public corruption.

An FCPA Bribery Violation Occurs when: A person or entity subject to U.S. jurisdiction under the FCPA: • gives, offers or promises to give anything of value to a foreign official, party or candidate (directly or through an intermediary) • knowing it is to influence an official decision • in order to obtain or retain business or to secure any improper advantage.

Who Must Comply? • All U.S. companies and persons anywhere in the world, any person or entity doing business on US soil. • The employees and agents of the above.

What is a Foreign Official?

• “Foreign officials” include officers/employees of a foreign government or anyone acting in an official capacity, and anyone working for a state-owned enterprise.

• “Any officer or employee of a public international organization” – 1998 Amendments. Includes, for example, the IOC, IMF, World Bank, the U.N. and its agencies.

• Contributions to foreign political parties, party officials or candidates for political office are covered by the FCPA. • Royal family members or officials of state-owned businesses can also be “foreign officials.

Elements of an FCPA Violation • A payment, offer, authorization, or promise to pay money or anything of value to a foreign government official • Includes a party official or manager of a stateowned company, or public organizations such as World Bank or UN), or to any other person,; • Knowing that the payment or promise will be passed on to a foreign official

Elements of an FCPA Violation • With a corrupt motive for the purpose of (i) influencing any act or decision of a foreign official, (ii) inducing the foreign official to do or omit any action in violation of his lawful duty, or (iii) securing an improper advantage; • Corrupt” payments extend to business advantages such as tax refunds and reductions; government inspection reports and certifications; customs clearance for improperly or illegally imported goods and equipment; expedited government registration certifications; and beneficial changes to laws and regulations

Facilitating Payments • FCPA exempts “facilitation” payments (small “grease” payments) to expedite “routine governmental action”.

• Limited to payments that “merely move a particular matter toward an eventual act or decision” – applies only when the government official has no discretion in performing duties.

• Payment must be for something to which the payor was already entitled, e.g., the mere receipt of an application, as opposed to approval of the application.

• Best practices: 80% of U.S. companies now prohibit or severely restrict facilitation payments.

UK Bribery Act Like the FCPA, it prohibits ‘direct or indirect’ bribes by agents or an associated persons.

• The term “associated person” includes anyone who “performs services for or on behalf of the relevant commercial organization” – and may include subsidiaries, employees, agents, JV partners, consortium members.

UK Bribery Act Defense to liability if the commercial organization has “adequate procedures” to prevent such bribery from occurring: • A “commercial organization” includes UK entities and those companies and partnerships incorporated or formed overseas that “carry on a business or part of a business in the UK.”

UK Bribery Act The bribery may occur anywhere in the world – a conviction for bribery in the local jurisdiction is not required.

UK Bribery Act An “associated personâ€? includes a person who performs services for or on behalf of the company, e.g. an agent, subsidiary or employee if the payment is Intended to obtain or retain business, or a business advantage, for the commercial organization (not solely for the associated person or a third party) • Employees are presumptively associated persons.

Bribes by a subsidiary only create liability if the subsidiary intended the parent to benefit.

UK Bribery Act Corporate Hospitality • “Reasonable and proportionate” hospitality is legal • Legitimate purposes: Improving your image, Presenting products and services, and Establishing cordial relations • If hospitality is not clearly connected with business activity, or is excessively lavish, the likely inference is that it is a disguised bribe

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