1. Global Anti-Corruption Laws and Trade Sanctions
Jason Prince

2. Important Information
This presentation is similar to any other seminar designed to provide general information on pertinent legal topics. The statements made and any materials distributed as part of this presentation are provided for educational purposes only. They do not constitute legal advice nor do they necessarily reflect the views of Holland & Hart LLP or any of its attorneys other than the speakers. This presentation is not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel. All Presentations and Other Materials © Holland & Hart LLP 2016

3. Agenda U.S. Foreign Corrupt Practices Act
International Anti-Corruption Laws
U.S. Trade Sanctions
International Trade Sanctions
Compliance Program Best Practices

4. Anti-Corruption Laws Historical Context Watergate Scandal
Church Committee
FCPA

5. FCPA Penalties Criminal: Companies = Up to $2,000,000 per violation
Individuals = Up to $100,000 per violation, or imprisonment of up to 5 years, or both
Civil:
Companies = Up to $100,000 per violation
Individuals = Up to $10,000 per violation

6. FCPA Penalties Top 10 Largest FCPA Enforcement Actions
Siemens AG (2008) $800 million
Alstom (2014) $772 million
KBR/Halliburton (2009) $579 million
BAE Systems (2010) $400 million
Total, S.A. (2013) $398 million
Alcoa (2014) $384 million
ENI/Snamprogetti (2010) $365 million
Technip S.A. (2010) $338 million
JGC Corp (2011) $219 million
Daimler AG (2010) $185 million

7. TI Corruption Perceptions Index

8. FCPA Enforcement Authority
All criminal enforcements
All civil actions, except those against issuers
Department of Justice
Only civil actions against issuers
Securities and Exchange Commission

9. FCPA: Two Primary Components
Anti-bribery Provisions: Prohibit most bribery and non-routine payments to foreign government officials; and
Financial Record Keeping & Internal Control Provisions: Require specific records and financial internal controls to be maintained to provide reasonable assurance of accuracy of financial records and to demonstrate compliance.

10. FCPA Anti-Bribery Provisions

11. Anything of Value

12. Anything of Value
No de minimis or “small payment” exception under FCPA
Subjective standard

13. Foreign Officials

14. What About These Individuals?

15. Who Is a “Foreign Official”
Foreign governments and instrumentalities
State-Owned and State-Controlled Companies
Public international organizations
Foreign political parties, officials, or candidates
Royal family members (fact specific)
Any person, while knowing that all or a portion of thing of value will be promised or given to foreign official

16. Foreign Official - Knowledge
A company has “knowledge” when it:
Knows that a bribe will be paid to a foreign official, or
Consciously disregards a high probability that a bribe will be paid to a foreign official.

17. Foreign Anti-Corruption Laws
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“OECD Anti-Bribery Convention”):
Entered into force in February 1999
41 participating countries account for 80% of global exports
Includes: Canada, Brazil, Japan, Mexico, Russia, South Africa, United States
Excludes: China, India, Peru, Taiwan, Vietnam
Generally tracks FCPA, with a few exceptions

18. Foreign Anti-Corruption Laws
Chinese Anti-Corruption Laws:
Prohibit giving and receiving of bribes and applies to public and private bribery
Amended on May 1, 2011 to expand prohibition on bribery of foreign officials
Growing enforcement activity

19. Trade Sanctions Laws
Summary - The Office of Foreign Assets Control (OFAC) is part of the U.S. Department of Treasury. It enforces U.S. economic sanctions against specific countries, as well against individuals and companies
Global Reach - OFAC also imposes restrictions on U.S. persons working globally and prevents these persons from facilitating or approving transactions that would be prohibited if performed in the United States

20. OFAC: Country Sanctions
OFAC administers U.S. trade sanctions on select countries
These sanctions bar or restrict trade activity by U.S. individuals or companies

21. OFAC: Country Sanctions
Main Embargoed Countries
Each embargo regime is different
Embargoes change as U.S. foreign policy evolves
Iran
Sudan
Cuba
Syria

22. OFAC: Country Sanctions
Countries subject to OFAC targeted sanctions include:
Liberia
Balkans
Libya
Belarus
North Korea
Myanmar (Burma)
Russia
Cote d’Ivoire
Somalia
Democratic Republic of the Congo
Yemen
Iraq
Zimbabwe
Lebanon

23. OFAC: Burma Sanctions Program
Example--Myanmar (Burma)
Targeted at blocked individuals and entities – U.S. entities cannot conduct business with these parties absent a license
General license now authorizes importation of Burma-origin goods
General licenses authorizing the export and re-export of financial services and new investment in Burma

24. OFAC: Prohibited Parties
U.S. Blocked Parties – OFAC maintains a regularly updated list of foreign individuals and companies with which U.S. parties are prohibited from conducting business
Specially Designated Nationals List (“SDNL”) - Individuals on the blocked party registers are frequently referred to as “Specially Designated Nationals” or “SDNs”
Other lists are maintained by the U.S. Departments of Commerce and State

25. OFAC: Prohibited Parties
Rule - OFAC sanctions prohibit U.S. citizens, businesses, and financial institutions from engaging in business or financial transactions with persons or entities on the SDNL or other lists
Financial institutions are required to file reports with OFAC for:
Blocked payments or transfers held at the financial institution
Rejected transactions in which parties blocked by OFAC or listed on the SDNL have any interest
Reports must be filed within ten business days of the transaction

26. OFAC: Prohibited Parties
Screening - A company that is subject to OFAC jurisdiction must screen customers and third-party agents to identify and prevent possible transactions involving a proscribed party

27. OFAC: Penalties
Criminal Penalties (IEEPA) for violating most OFAC regulations range up to 20 years in prison, and up to $1,000,000 in fines
Cuban Sanctions (TWEA) – $1,000,000 / $100,000
Civil Penalties (IEEPA) up to $250,000 per violation
Cuban Sanctions (TWEA) – $65,000
Transactions can be parsed to produce potentially multiple violations for each non-compliant transaction

28. OFAC: Special Compliance Risks
Non-listed Sanctioned Parties
Parties with an interest (e.g., ownership, control) in a blocked party
Foreign ownership changes
Facilitation of a prohibited transaction
Financing, legal/compliance support or counseling
Mandatory financial institution reporting (Suspicious Activity Reports)
Exceeding the scope of a General License or exemption

29. International Trade Sanctions
United Nations
Issued through U.N. Security Council
Canada
Key Differences with United States
Example—Exports to Belarus banned
Example—No Cuba embargo
Blocking Statute

30. Compliance Programs Written Policy & Training Due Diligence
Compliance Documentation
Compliance Monitoring

31. Written Policy & Training
Provision of regularly updated written policy
Appointment of Compliance Officer/Manager
Standard Guidelines for Anti-Corruption
Gifts, Meals, Entertainment, Product Promotion Events, Facilitating Payments, Foreign Political Contributions and Charitable Donations
Required Denied Party Screening
Periodic training of key employees and foreign agents

32. Due Diligence Background Checks:
U.S. Department of Commerce’s U.S. Commercial Service
U.S. Government’s Consolidated Screening List
High Risk: Additional due diligence and written due diligence report submitted every 1-2 years

33. Due Diligence Red Flags: Country or industry corruption
Refuses to certify compliance and/or rejects anti-corruption terms in proposed contract
Not qualified and/or lacks resources
Related to or referred by a government official
Heavy reliance on political or government contacts
Requests for strange payment terms or arrangements
Vague payment descriptions
Over-invoicing or false invoices
Unrecorded accounts or transactions
History of bribery allegations or investigations
Lacks code of conduct or anti-corruption program

34. Compliance Documentation
Contract Terms:
Representations and covenants
Certification obligation
Right of termination
Audit rights
Written Procedural Documents and Certifications

35. Compliance Monitoring
Periodic Certifications:
Employees, Directors & Officers
Foreign Agents
Whistleblower Procedures:
Immediate reporting to Compliance Officer
Strict prohibition on retaliating against anyone for raising or helping to address anti-bribery issues
Periodic Audits

36. Jason Prince jeprince@hollandhart.com 208-383-3919
Questions?
Jason Prince