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By Yin Wilczek
Nov. 19 — The Securities and Exchange Commission will pursue a broad interpretation of the concept of “anything of value” under the Foreign Corrupt Practices Act, Enforcement Director Andrew Ceresney said Nov. 19.
The foreign-bribery statute forbids the payment or provision of “anything of value” to foreign officials to win or retain business.
Bribes come in “many shapes and sizes,” Ceresney told a compliance gathering. It is critical that the SEC carefully scrutinize “a wide range of unfair benefits to foreign officials when assessing compliance with the FCPA—whether it is cash, gifts, travel, entertainment, or employment of the family and friends of foreign officials,” he said.
The SEC official spoke at the American Conference Institute's FCPA conference in National Harbor, Md. He said he was offering his own opinions, which do not necessarily reflect those of the SEC or other staff members.
As examples of less traditional forms of bribery, Ceresney cited successful FCPA actions involving donations to charities headed by foreign officials, the provision of jobs to foreign officials’ family members and, in one case, paying for the honeymoon of a foreign official’s daughter.
“But there is still more work to be done, particularly for small-to-medium sized companies trying to enter foreign markets to grow their businesses,” he said. “As those businesses seek to expand and globalize, their compliance functions must keep pace.”
The hallmarks of a strong compliance program include adequate staffing, extensive policies and procedures, training, vendor reviews, due diligence with respect to third-party agents, expense controls, escalation of red flags and internal audits, Ceresney said.
In addition, companies should: perform risk assessments and implement controls for detected risk areas; implement disciplinary measures to deter violations; and periodically test and review their compliance programs to ensure they keep up with business growth and changes.
The SEC official also said the commission continues to “find ways to enhance” its cooperation program to encourage companies, individuals and other regulated entities to self-report problems. Self-reporting is always in the company's best interest, he emphasized.
As an example, Ceresney cited the $5 million fine imposed on Layne Christensen Co. in October for bribing African foreign officials. That fine was only 10 percent of the construction company's disgorgement amount, whereas typical penalties are closer to 100 percent of disgorgement, he said.
Among other actions, Layne Christensen provided real-time reports of its investigations, gave the SEC English translations of documents and made foreign witnesses available, Ceresney said.
The “calculus” for companies deciding whether to self-report has been changed by the SEC's whistle-blower program, he said. Given the bounty program's increasing expansion and geographical reach, companies “that choose not to self-report are thus taking a huge gamble because if we learn of the misconduct through other means, the result will be far worse,” he said.
Meanwhile, Assistant Attorney General Leslie Caldwell said Nov. 19 that the Department of Justice is ramping up its use of criminal and civil actions to strip foreign officials of the fruits of their “ill-gotten riches.”
“Stripping individuals of the proceeds of their conduct—and thus depriving them of the very profits that are driving the corrupt conduct in the first place—is one technique that we are using increasingly in our fight against foreign bribery,” said Caldwell, the chief of the DOJ's Criminal Division.
That effort has been beefed up by the DOJ's greater cooperation and collaboration with other jurisdictions, Caldwell said.
The DOJ not only is sharing more information with its foreign counterparts but also is discussing strategy and coordinating its use of investigative techniques, “especially in very high-impact cases,” she said. In addition, more and more countries have enacted anti-corruption laws over the past few years.
To contact the reporter on this story: Yin Wilczek in Washington at mailto:%firstname.lastname@example.org
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The text of Ceresney's speech is available at http://www.sec.gov/News/Speech/Detail/Speech/1370543493598#.VG0DQ8l4MWc.
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