August 26th, 2015
By James Campbell, Nancy A. Fischer, Steven P. Farmer, Matthew Oresman, Aaron R. Hutman
Given London’s role in international business and finance, the UK Bribery Act 2010 promised to form a potential strong counterpart to the U.S. Foreign Corrupt Practices Act (FCPA). Now, the UK government is taking steps which could bring expanded enforcement punch in developing countries. The International Corruption Unit (“ICU”) is being established under the umbrella of the UK National Crime Agency, and it is being tasked to investigate the bribery of foreign officials and money laundering by corrupt foreign officials and their associates. This latest development follows the trend of new anti-corruption initiatives and enforcement efforts in multiple jurisdictions around the world, and may help enhance that trend, considering how foreign investigations often coordinate with and piggyback on UK and U.S. efforts.
The ICU will merge existing UK investigation and intelligence units from the Metropolitan Police (i.e. the Proceeds of Crime Unit), the City of London Police (i.e. the Overseas Anti-Corruption Unit) and the National Crime Agency (“NCA”), the UK government has said in a press release dated 9 August 2015. The ICU, which is the brainchild of the UK Anti-Corruption Plan published by UK government on 18 December 2014, will be the central point for investigating international corruption in the UK.
What is the ICU’s remit?
Working closely with other UK law enforcement agencies and overseas partners, the ICU will:
- Investigate bribery of foreign public officials by individuals or companies from the UK;
- Investigate money laundering by corrupt foreign officials and their associates;
- Trace and recover the proceeds of international corruption;
- Support foreign law enforcement agencies with international anti-corruption investigations;
- Engage with government and business to reduce the UK’s exposure to the proceeds of corruption; and
- Work with business to support increased compliance with the Bribery Act 2010.
Discussing the reasoning behind the creation of the ICU, Jon Benton, Joint Head of the ICU, has said: “The message to individuals and companies who see developing countries as fair game is that the UK has zero tolerance for overseas bribery and corruption”, whilst Justine Greening, International Development Secretary has added: “Corruption is not only picking the pockets of the poor, it is an enemy of prosperity and a brake on a country’s development. Through the international corruption unit, the best of British law enforcement will step up our aid work, combatting corruption head-on across the developing world”.
October 16th, 2014
By Joseph D. Jean and Danielle Vrabie
Governmental investigations of businesses are on the rise. In 2013 alone, the U.S. Department of Justice (DOJ) recovered $3.8 billion in settlements and judgments under the False Claims Act (FCA)—the second largest recovery in history.
The rise in FCA prosecutions affect nearly every industry in the United States. But an FCA prosecution is not the only government enforcement action that companies should be thinking about. Both the Securities and Exchange Commission (SEC) and the DOJ have also announced they will continue to bring major Foreign Corrupt Practices Act (FCPA) cases so companies operating internationally can expect increasing scrutiny. This increased activity makes it all the more important for businesses to secure proper insurance coverage prior to such investigations and to preserve and pursue existing coverage should an investigation or prosecution occur.
Receiving a subpoena or a federal grand jury “target letter” in connection with an FCA or FCPA investigation is likely to prompt a company to ask a multitude of questions, not the least of which is: “Does our insurance cover this?” The frequency with which policyholders will ask this question—and the stakes raised by the answer—will increase with the rise in governmental investigations and prosecutions. Expenses associated with responding to a subpoena or civil investigative demand (CID) against a company, or one or more of its directors or officers, are often incurred at the same time as the company is incurring legal fees and costs in connection with a corollary internal investigation. A company’s obligations to cooperate with the governmental investigation are usually substantial as targets usually find themselves at the will of the investigator and compliance is required regardless of the costs.
The broad scope of investigations, and corresponding litigation, may implicate several types of insurance policies, including directors and officers (D&O). Depending on the wording of each particular policy, costs associated with responding to subpoenas and the corresponding internal investigation may be covered. Companies can often overlook potential sources of recovery simply because the conventional wisdom says that those types of policies “aren’t meant for these types of claims.”
This article was originally published by the American Bar Association on October 3, 2014.
November 7th, 2013
By William Sullivan Jr., Peter Baumgaertner, Ryan Sparacino, Paulo Varnieri, and Kristen Baker
Anti-Corruption Enforcement Risk in Brazil
In addition to the corruption risk encountered by companies while transacting business in Brazil, there is now increased regulatory risk created by the enactment of the Brazil Clean Companies Act (BCCA).
High Corruption Perception Score. Brazil has historically received a middling-to-poor ranking on Transparency International’s Corruption Perceptions Index, which is a primary benchmark used by Western law enforcement and anti-corruption practitioners.
Intense Scrutiny by American Regulators. Brazil has been the focal point of numerous high-profile FCPA investigations by the U.S. Department of Justice and Securities and Exchange Commission, the two American regulators tasked with enforcing the FCPA. More than a dozen major FCPA cases have focused on business conducted in Brazil, which places the country near the top of the list in terms of the volume of DOJ/SEC investigative activity. Moreover, U.S. regulators have also repeatedly focused on anti-competitive conduct in Brazil, and such investigations can often spur subsequent anti-corruption investigations.
Government-to-Government Cooperation. Unlike the governments of many other high-risk countries, such as that of Russia, the Brazilian government has embraced a very aggressive posture towards corruption. While this obviously culminated in the enactment of the BCCA, the government had begun focusing intently on combating corruption well before that historic measure was passed. As a new generation of political leadership has assumed the reins in Brazil’s democracy, fighting corruption has emerged as an effective political issue that allows politicians to separate themselves from the “old ways.” Indeed, in several recent cases, the Brazilian government played an important role assisting Western prosecutors to investigate and build cases. We anticipate this trend to accelerate in the years ahead, augmented by the new Act. (Read more)
October 3rd, 2013
By G. Derek Andreson, Thomas M. Shoesmith, Marc H. Axelbaum, Ryan R. Sparacino
More and more, venture capital firms are investing in start-ups seeking to expand internationally or with nascent cross-border operations in place. Such investments offer opportunities for lucrative returns but also carry significant anti-corruption risk that VC firms are often ill-equipped to manage. For many businesses, managing anti-corruption risk is a necessary cost center. But VC firms are uniquely positioned to use that risk to drive a better deal and gain greater control over management and direction of the business.
The overlapping and increasingly aggressive anti-corruption regimes, including the FCPA, the U.K. Bribery Act, the antibribery laws in China, Germany and the newly enacted law in Brazil, coupled with the heightened risk of corruption in emerging economies, can quickly derail an otherwise strong investment. Not only are VC firms subject to fines, penalties and reputational harm through the conduct of the start-up, but the conduct itself may have occurred before the VC firm even considered taking a stake. (Read more)
September 24th, 2013
By Raymond Sweigart
Although the perceived slow pace of investigations and prosecutions by the Serious Fraud Office (“SFO”) has come in for a great deal of commentary and criticism, it does appear that the SFO is slowly but surely ramping up its efforts and has now developed an even greater arsenal of weaponry to deploy. Currently, the SFO may opt to use Civil Recovery Orders (“CROs”) in place of prosecution, and has done so recently in a number of cases involving corporate crime. To that arsenal can now be added Deferred Prosecution Agreements (“DPAs”). The UK government introduced DPAs through the Crime and Courts Act 2012 and they are expected to be available for use by the SFO and the Crown Prosecution Service (“CPS”) in February 2014. (Read more)