About time, ripple, for the record, just saying, and for the reading and listening stack. It’s all here in the Friday roundup.
About Time
After dinging companies for nearly 40 years for internal controls and risk management failures, the SEC names its first chief risk officer.
As highlighted in this prior post, if the SEC were an issuer there would be many books and records and internal controls issues within the organization.
Ripple
As sure as the sun rises in the east and dogs bark, in the aftermath of the FCPA and related enforcement action against individuals associated with Goldman Sachs (see here and here for prior posts) certain shareholders have filed this derivative complaint against various officers and directors alleging various breaches of fiduciary duty. As alleged in the complaint: “this shareholder derivative action … arises from Goldman’s destructive business culture which, according to a recent federal indictment, prioritized the consummation of deals ahead of the proper operation of its compliance functions.”
For the Record
This opinion piece in an Indian publication states:
“One important aspect of American policy, i.e. “financial imperialism” cannot be overlooked. Often it has been imposing its preferences in overseas jurisdictions through the extra-territoriality of its unilateral sanctions and on the pretext of battling against corporate graft under the Foreign Corrupt Practices Act.”
That’s fine if someone wants to have that opinion. However, for the record the FCPA anti-bribery provisions, as applied to foreign actors, are not extraterritorial. Depending on whether a foreign actor falls under the dd-1 or dd-3 prong of the FCPA, there is (generally speaking) a U.S. nexus required.
Just Saying
Much is being written up north regarding SNC-Lavalin’s long-standing scrutiny and allegations of political interference (see here) including this article with the headline “Zero convictions despite 7 years and millions spent on SNC investigation, prosecution.”
That headline could be used in connection with many instances of FCPA scrutiny.
Just saying.
Regarding the allegations of political interference, see this recent article from the Wall Street Journal.
“A political firestorm surrounding Canadian Prime Minister Justin Trudeau became more damaging Wednesday, as his ex-justice minister accused his top aides of repeatedly pressuring her to drop the prosecution of a global engineering and construction firm.
The testimony delivered by Jody Wilson-Raybould to a parliamentary committee offered the most detailed version yet of events fueling a scandal that risks upending Mr. Trudeau’s re-election effort later this year. She said that between September and December, she and her staff had roughly 10 phone calls and 10 meetings about the matter involving SNC-Lavalin Group Inc. with Mr. Trudeau’s senior aides and other government officials, including staff from the finance minister’s office.
“I experienced a consistent and sustained effort by many people within the government to seek to politically interfere in the exercise of prosecutorial discretion,” Ms. Wilson-Raybould said.”
This Financial Times article criticizes U.K. prosecutors for dropping inquiries into individuals associated with Rolls Royce. However, charging an individual with a crime is an awesome power the government possesses. It changes the lives of real people, their real family, and their real reputation. Prosecutors should be applauded (not criticized) when exercising restraint and not bringing charges because there is insufficient evidence for a realistic prospect of conviction.
Just saying.
This FCPA Blog post seems to suggest that there is value in having short simple compliance codes such as “dress appropriately” or “don’t pay bribes.”
However, in the PTC enforcement action, among the internal control dings the company received from the SEC was the following:
“PTC’s Code of Ethics and Anti-Bribery policies for the provision of business entertainment were vague (i.e., stating that employees should use “good taste” and consider the “customary business standards in the community” when providing business entertainment) and not risk-based to China.”
Just saying.
Reading and Listening Stack
The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here<
This recent Bribe, Swindle or Steal podcast specific compliance challenges in Asia including weddings, funerals and hong bao envelopes for the Lunar New Year. It’s an interesting listen, but I kept returning to the same thought: business folks in the U.S. go to weddings and funerals associated with clients all the time and otherwise exchange gifts around the holidays with clients.