By Alec Diamond
France is ranked
a lowly 23rd in Transparency International’s Public Corruption
Perception Index. In recent years, French companies like Alstom and Total have
been forced to pay millions of dollars to U.S. authorities over bribery
allegations. The French Finance Minister, Michel Sapin, finding the nation’s
foreign corruption record insulting, has announced a new
anti-corruption bill. Provisions will include increased protections for
whistleblowers (an important tool used by the U.S. DOJ to identify potential
FCPA violations), the creation of an anti-corruption agency, and a ban on large
gifts to government officials. Time will tell if this new bill generates
comparable revenue through fines to the FCPA in the United States.
Interestingly, the government dropped plans to provide for guilty pleas in
exchange for financial settlements under the new laws (most cases that have
been brought by U.S. authorities end in settlement rather than trial).
By Alec Diamond
Novartis AG, a
Swiss pharmaceutical company, recently settled an SEC investigation for $25
million. Novartis was under
investigation for violations of the books and records and internal
accounting provisions of the Foreign Corrupt Practices Act. Two of the
company’s subsidiaries doing business in China used third party vendors like
Chinese travel agencies to set up “educational events” for local healthcare
providers in order to increase generic pharmaceuticals sales. However, there
was little-to-no evidence that many of the educational conferences ever occurred,
while travel fare for officials’ spouses and recreational trips (such as trips
to Niagara Falls) were expensed. This SEC investigation is the twenty-second action
brought against a pharmaceutical company doing business abroad. Companies with
Chinese subsidiaries be warned: rigorous internal accounting procedures may be
necessary to avoid costly settlements.
By Alexander Diamond
The CEO of
China’s fourth largest steel producer is being investigated for violations of Chinese
anti-corruption law. This pursuit of yet another industrial leader follows
a massive crackdown on corruption by the CCDI (the CPC’s anti-corruption
authorities) that has led to the arrest of some of China’s most powerful
politicians, military officers, and industrialists. Although Chinese
authorities have only pursued charges against one foreign citizen thus far,
this domestic enforcement trend has significant implications for both Chinese
and international businesses who can no longer rely on the long-accepted
informal guanxi system of gift/favor
giving to political allies. Time will tell if the increasingly powerful CCDI
begins to consistently pursue charges against increasingly integrated
U.S. businesses that are already subject to FCPA enforcement actions.
By Alexander Diamond
In a
proceeding related to the Department of Justice’s prosecution of Alstom, a
French-based energy company that paid 722 million dollars worth of fines after
accusations of corrupt activity worldwide, the DOJ
pursued charges against Lawrence Hoskins, a British citizen working with
the company in France. Although Hoskins had never lived in the United States
and was not accused of furthering any corrupt scheme within United States
territory, the DOJ argued that personal jurisdiction existed under accomplice
liability theory, as explained in the DOJ’s FCPA guidance policy since 2012. However,
the U.S. District Court of Connecticut read the FCPA as prohibiting charges
against foreign nationals as Congress chose not to include them within the
definition of “domestic concerns” subject to liability (for individuals, the
definition entails only citizens, nationals and residents). Although higher
courts have not yet reached this issue, the scant case law defining the scope
of the FCPA means this ruling could affect DOJ prosecution of foreign citizens
for years to come.
