David M. Nadler and Steven J. Roman
The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) jointly issued a new guidance entitled “A Resource Guide to the U.S. Foreign Corrupt Practices Act.” Although the 130-page guidance does not break any significant new ground, and generally reiterates positions that the government has previously taken in Foreign Corrupt Practices Act (FCPA) litigation and settlements, the document does provide useful information to companies regarding compliance with, and government enforcement of, the FCPA.
For example, the guidance identifies nine factors that the government considers in conducting an investigation, determining whether to charge a corporation, and negotiating plea or other agreements: (1) the nature and seriousness of the offense, including the risk of harm to the public; (2) the pervasiveness of wrongdoing within the corporation, including the complicity in, or the condoning of, the wrongdoing by corporate management; (3) the corporation’s history of similar misconduct, including prior criminal, civil, and regulatory enforcement actions against it; (4) the corporation’s timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents; (5) the existence and effectiveness of the corporation’s preexisting compliance program; (6) the corporation’s remedial actions, including any efforts to implement an effective corporate compliance program or improve an existing one, replace responsible management, discipline or terminate wrongdoers, pay restitution, and cooperate with the relevant government agencies; (7) collateral consequences, including whether there is disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable, as well as impact on the public arising from the prosecution; (8) the adequacy of the prosecution of individuals responsible for the corporation’s malfeasance; and (9) the adequacy of remedies such as civil or regulatory enforcement actions. The guidance also includes a number of hypotheticals and case studies that are helpful in suggesting the types of conduct and compliance practices that are more or less likely to lead to government enforcement actions or declination of charges. Continue reading “DOJ and SEC Issue Foreign Corrupt Practices Act Guidance”
David M. Nadler and Steven J. Roman
On November 8, 2011, Assistant Attorney General Breuer promised in a speech to the 26th National Conference on the Foreign Corrupt Practices Act (FCPA) that in 2012 the U.S. Department of Justice (DOJ) would provide “detailed new guidance on the [FCPA’s] criminal and civil enforcement provisions.” More than 30 trade associations led by the U.S. Chamber of Commerce have requested that this promised guidance address several issues and questions summarized below in order to mitigate significant interpretative challenges faced by businesses seeking to comply in good faith with the FCPA. “[I]n order to avoid conflicting interpretations and ensure a uniform policy,” the letter suggests that the guidance be issued by both the DOJ and the U.S. Securities and Exchange Commission (SEC) and that it apply to both criminal and civil enforcement.
Definitions of “Foreign Official” and “Instrumentality”
The trade associations’ letter requests that the DOJ and the SEC provide “a clear, uniform definition” of “foreign official” and “instrumentality.” The letter stresses that the courts’ highly fact-dependent and discretionary approach to these terms, particularly in markets where many companies are at least partially state-owned, “engenders tremendous uncertainty and risks serious misallocation of resources by U.S. businesses seeking to sell their goods and services in foreign markets.” In response, the letter suggests that the forthcoming guidance address at least the following: (1) the percentage ownership or level of control by a foreign government that ordinarily will qualify a corporation as an “instrumentality;” (2) clarification that an “instrumentality” must perform government or quasi-governmental functions and a detailed list of what those functions may include; and (3) exceptions, if any, to the foregoing general principles. Continue reading “Trade Associations Request that Justice Department and SEC Clarify Criminal and Civil FCPA Enforcement”
David M. Nadler and Justin A. Chiarodo
On February 24, 2012, the Department of Defense (DOD) published a final rule amending the Defense Federal Acquisition Regulation Supplement regarding contractor business systems [77 Fed. Reg. 11355]. With only minor changes from the interim rule (effective as of May 18, 2011), the final rule provides for oversight of a contractor’s business systems and empowers the government to withhold payments on contracts when a Contracting Officer determines that a contractor’s system contains “significant deficiencies.”
Consistent with the interim rule, the final rule applies to all contracts governed by the Cost Accounting Standards (CAS) and regulates six categories of “business systems”– Accounting Systems, Estimating Systems, Earned Value Management Systems, Purchasing Systems, Material Management and Accounting Systems, and Property Management Systems. The regulation is implemented by a contract clause that, where inserted, allows the government to withhold payments if one or more “significant deficiencies” are found in any of the above-mentioned business systems. Continue reading “DOD Issues Final Rule on Contractor Business Systems”
What is the Swine Flu?
Richard J. Conway and Merle M. DeLancey Jr.
According to the U.S. Centers for Disease Control (CDC), the Swine Influenza (swine flu) is a respiratory disease caused by type A influenza virus that regularly causes outbreaks of influenza in pigs. The classical swine flu virus (an influenza type A H1N1 virus) was first isolated from a pig in 1930. Swine flu viruses do not normally infect humans. However, sporadic human infections with swine flu have occurred and are occurring now.
What is Known About this Current Outbreak?
According to the CDC, in late March and early April 2009, cases of human infection with swine influenza A (H1N1) viruses were first reported in Southern California and near San Antonio, Texas. Other states and foreign governments have reported cases of swine flu infection in humans, and cases have been reported internationally as well. As of April 30, 2009, there have been 109 cases reported in the United States, with most in New York City, California, and Texas. A toddler who crossed the border from Mexico into south Texas died from a new strain of swine flu on April 29, 2009 in a Houston hospital, the first confirmed death from the virus in the United States. Continue reading “Update on the Government Response to the Potential Swine Flu Pandemic”