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  • Judge Refuses to Find Personal Jurisdiction over Siemens Executive, in Conflict with SDNY Colleague’s Ruling in Prior Week

    On February 19, 2013, a federal judge granted the motion to dismiss filed by a Siemens executive, Herbert Steffen, on the grounds that the SEC's civil FCPA complaint had failed to adequately allege personal jurisdiction over him, because the allegations were "far too attenuated from the resulting harm to establish minimum contacts."  A week earlier, a different judge on the same court had refused to dismiss charges against executives of Magyar Telekom on similar personal jurisdiction grounds.

    Argentina Siemens

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  • Judge Finds Personal Jurisdiction over Magyar Telekom Executives

    On February 8, 2013, a federal judge denied the motion to dismiss of several Magyar Telekom executives facing civil FCPA allegations, holding that the SEC had adequately alleged personal jurisdiction because the defendants' alleged conduct was “designed to violate” U.S. securities laws and thus was “directed toward the United States.”  On February 22, the Defendants filed a motion to certify the order for interlocutory appeal to the Second Circuit, which was denied on procedural grounds without prejudice to re-file.

    SEC Magyar Telekom Score Card FCPA Enforcement Action Macedonia

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  • Eli Lilly Settles SEC FCPA Claims for $29.4 Million

    On December 20, 2012, Eli Lilly & Co. settled an enforcement action filed the same day by the SEC for nearly $29.4 million.  The SEC alleged that Lilly subsidiaries in Russia, Brazil, China and Poland made improper payments to government officials to obtain or retain business and that Lilly itself knew of the payments by the Russian subsidiary but did not act to stop the conduct for more than five years.

    China Brazil Russia Poland Eli Lilly

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  • Allianz Settles SEC Administrative Proceeding for $12.3 Million

    On December 17, 2012, German insurance and asset management company Allianz SE settled an administrative proceeding brought by the SEC for more than $12.3 million.  The SEC alleged that Allianz violated the internal controls and books and records provisions of the FCPA in connection with improper payments to government officials by its Indonesian subsidiary over a seven-year period.

    Indonesia Allianz

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  • US Enforcement Authorities Publish FCPA Resource Guide

    On November 14, 2012, the US DOJ and SEC released A Resource Guide to the Foreign Corrupt Practices Act, almost a year to the day that Assistant Attorney General Lanny Breuer announced that the SEC and DOJ would prepare an FCPA Guidance document (click here and here for previous BuckleySandler posts on this issue).  Overall, the FCPA Guide is a helpful compilation of previously-issued guidance and litigation positions set forth by the DOJ and SEC, and a useful starting point for constructing, testing or revising an FCPA compliance program.

    DOJ SEC Score Card FCPA Guide

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  • US Enforcement Authorities Publish FCPA Resource Guide

    On November 14, 2012, the US DOJ and SEC released A Resource Guide to the Foreign Corrupt Practices Act, almost a year to the day that Assistant Attorney General Lanny Breuer announced that the SEC and DOJ would prepare an FCPA Guidance document (click here and here for previous Buckley Sandler posts on this issue).  Overall, the FCPA Guide is a helpful compilation of previously-issued guidance and litigation positions set forth by the DOJ and SEC, and a useful starting point for constructing, testing or revising an FCPA compliance program.

    FCPA Guide

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  • DOJ FCPA Opinion Procedure Release 12-02

    In Fall 2012 the US DOJ issued FCPA Opinion Release 12-02, regarding whether US adoption agencies could pay for and host foreign government officials visiting the US.  The trip would involve the officials interviewing the adoption agencies’ staff and meeting with US families who had previously adopted children from the foreign country.  Payment would be made directly to service providers, with no money, including per diems, given to the officials.  The DOJ opined that under the circumstances, the trips were reasonable and bona fide expenditures directly related to the promotion, demonstration, or explanation of the adoption agencies’ products or services, and therefore permissible under the FCPA.

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  • Former CFO of Digi International, Inc., Partially Settles SEC Enforcement Action

    In Fall 2012, the former CFO of Digi International, Inc., Subramanian Krishnan, partially settled an SEC enforcement action stemming from the use of Divi funds to pay for unauthorized travel and entertainment expenses.  The amount of any disgorgement, interest, and civil penalty is still to be determined.

    Digi International

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  • U.S. FCPA Guidance Imminent: Recent Settlements Set the Stage

    In November 2011, Assistant Attorney General for the Criminal Division Lanny Breuer announced that the U.S. Department of Justice would issue "detailed new guidance on the [US FCPA's] criminal and civil enforcement provisions" at some point in 2012.  Here is our prior post on the announcement.  While the guidance has not yet been released, recent enforcement activity – most notably the August 2012 Pfizer resolution – allows insight into possible directions that the guidance may go.  We believe that the DOJ has, through these prior settlements, essentially set the stage for the guidance.

    Drumbeat of Compliance Undertakings

    In December 2011, Deutsche Telekom and its majority-owned Hungarian affiliate, Magyar Telekom Plc., settled an FCPA enforcement action for a total sanction exceeding $95 million.  Part of the resolution called for the companies to undertake a series of compliance measures.  The undertakings (here in table/checklist format) allow a look at the FCPA compliance program the DOJ wanted those companies to construct as part of the resolution.  Settlements in February (Smith & Nephew), March (BizJet and Biomet), and July (Nordham Group) each contained some form of compliance undertakings, but in many cases, these did little more than repeat the elements of an “effective compliance and ethics program” as set forth at Chapter 8B2.1 of the U.S. Sentencing Guidelines, and did not specify the application of those elements in the anti-corruption context.

    Pfizer Settlement: FCPA-Specific “Enhanced Compliance Obligations”

    More recently, Pfizer and two components – Wyeth and Pfizer H.C.P. Corp. – resolved an FCPA action for a combined sanction exceeding $60 million.  In the deferred prosecution agreement, Pfizer agreed to a detailed series of FCPA-specific compliance undertakings, augmenting the more general rendition of program elements.  In part, the enhancements:

    • Detail the structure of the company’s compliance program staffing and oversight;
    • Mandate the maintenance and content of certain anti-corruption policies and procedures;
    • Provide mechanisms and resources for internal compliance reporting;
    • Require annual company-wide, corruption-related risk assessments and five market-specific proactive compliance reviews annually;
    • Call for acquisitions to be made only after thorough corruption-risk diligence;
    • Describe a program of third party diligence and control; and
    • Direct a program of biennial FCPA training for specified personnel and directors, and a three-year training rotation for certain third parties.

    The entire list of “Enhanced Compliance Obligations” is available on the BuckleySandler website in a table/checklist format, allowing compliance counsel to conduct a quick cross-check of their company’s existing compliance program elements.

    Possible Preview of DOJ FCPA Compliance Guidance

    When the DOJ releases its FCPA compliance guidance – expected soon – FCPA practitioners will evaluate the guidance to confirm whether existing anti-corruption compliance programs are in line with the DOJ’s announced expectations.  Reviewing the “Enhanced Compliance Obligations” contained in the Pfizer deferred prosecution agreement should allow compliance counsel a head start on where the DOJ’s FCPA guidance will lead.  When the guidance is issued, we will provide an update and analysis.

     

     

    FCPA Update

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