January 8, 2019

F. Joseph Warin Joel M. CohenKelly S. AustinBenno Schwarz Sacha I. Harber-KellyOliver D. Welch

Webcast: FCPA Trends in the Emerging Markets of Asia, Russia, Latin America and Africa9th Annual Complimentary Webcast Briefing

MCLE Certificate Information

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MCLE Certificate Information

• Most participants should anticipate receiving their certificate of attendance in four weeks following the webcast.

• Virginia Bar Association members should anticipate receiving their certificate of attendance in six weeks following the webcast.

• All questions regarding MCLE Information should be directed to Jeanine McKeown (National Training Administrator) at 213–229-7140 or jmckeown@gibsondunn.com.

Topics to Be Discussed

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• An Overview of FCPA Enforcement• Emerging Market Trends: Asia, Russia, Latin America, and Africa

- China: Anti-Corruption Enforcement & Trends - Russia: Anti-Corruption Enforcement & Trends- Latin America: Anti-Corruption Enforcement & Trends- South Korea: Anti-Corruption Enforcement & Trends- India: Anti-Corruption Enforcement & Trends - Africa: Anti-Corruption Enforcement & Trends

• Global Trends and Risk Mitigation Strategies• Appendix: The FCPA

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An Overview of FCPA Enforcement

FCPA Enforcement Actions Per Year (2009-2018)

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0

5

10

15

20

25

30

35

40

45

50

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

26

48

23

11

1917

10

21

29

21

14

2625

12

89

10

32

10

17

Number of FCPA Enforcement Actions Per Year

DOJ Actions

SEC Actions

Number of FCPA Enforcement Actions by Country (1978 to Present*)

Gibson Dunn 6* Minimum eight enforcement actions.

Business conduct in China remains the largest source of FCPA actions in the history of the statute.

8888

99

10101010

11111111

1212

1313

141414

15151515

1616

1818

2223

2426

3133

3537

4549

5160

7597

0 20 40 60 80 100 120

AlgeriaNicaragua

GabonNiger

BangladeshTurkey

ChileTaiwanPoland

HondurasDominican Rep.

ColombiaEcuador

UAEIran

GreeceUganda

DRCAzerbaijanUzbekistanCosta Rica

HaitiVietnam

Ivory CoastPanama

South KoreaGuinea

MalaysiaEgypt

ThailandKazakhstan

AngolaVenezuela

RussiaIndia

ArgentinaSaudi Arabia

BrazilIraq

IndonesiaMexicoNigeria

China

Enforcement of the FCPA: Criminal Penalties

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Anti-Bribery Provisions• Corporations: USD 2 million fine or twice the pecuniary gain or loss.• Individuals: Up to five years’ imprisonment, and a USD 250,000 fine or twice the pecuniary gain or loss.

Books and Records Provisions• Corporations: Criminal penalties up to a USD 25 million fine.• Individuals: Up to 20 years’ imprisonment, and a USD 5 million fine.

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total Value of Corporate FCPA Monetary Resolutions (2004 – 2018)

Leading FCPA Enforcement Actions: Top Ten Monetary Settlements

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No. Company Total Resolution DOJ Component SEC Component Date

1 Siemens AG* $800,000,000 $450,000,000 $350,000,000 12/15/2008

2 Alstom S.A. $772,290,000 $772,290,000 -- 12/22/2014

3 Société Générale S.A. $585,000,000 $585,000,000 -- 6/4/2018

4 KBR/Halliburton $579,000,000 $402,000,000 $177,000,000 2/11/2009

5 Teva $519,000,000 $283,000,000 $236,000,000 12/22/2016

6 Telia** $483,103,972 $274,603,972 $208,500,000 9/21/2017

7 Och-Ziff $412,000,000 $213,000,000 $199,000,000 9/29/2016

8 BAE Systems*** $400,000,000 $400,000,000 -- 2/4/2010

9 Total S.A. $398,200,000 $245,200,000 $153,000,000 5/29/2013

10 VimpelCom**** $397,700,000 $230,200,000 $167,500,000 2/18/2016

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In addition to record-setting monetary penalties in the U.S., several companies also have paid significant fines to non-U.S. regulators.

Company Total US Resolution Non-US Resolution

Siemens AG USD 800,000,000Siemens’s U.S. FCPA resolutions were coordinated with a EUR 395 million (USD 569 million) anti-corruption settlement with the Munich Public Prosecutor.

Odebrecht S.A. & Braskem S.A. USD 419,800,000

Odebrecht and Braskem agreed to pay a total of USD 3.5 billion for a global settlement with authorities in the U.S., Brazil, and Switzerland.

Telia USD 483,000,000The combined total amount of U.S., Dutch, and Swedishpenalties was USD 965.8 million.

Petróleo Brasileiro S.A. –Petrobras USD 170,000,000 Petrobras entered into agreements with U.S. and Brazilian

authorities to pay a total fine of USD 853.2 million.

Global Dimension of Enforcement Actions

Global Dimension of Enforcement Actions (cont’d)

10

Date Company United States Other Jurisdiction Total Jurisdictions Involved

12/15/2008 Siemens AG $800,000,000 $800,000,000 $1,600,000,000 • Agreements: U.S., Germany• Cooperation: Not identified in press release

2/18/2016 VimpelCom $397,750,000 $397,750,000 $795,000,000 • Agreements: U.S., Netherlands• Cooperation: Norway, Sweden, Switzerland, Latvia

12/21/2016 Odebrecht $253,000,000 $3,077,000,000 $3,330,000,000 • Agreements: U.S., Brazil, Switzerland• Cooperation: U.S., Brazil, Switzerland

1/17/2017 Rolls-Royce PLC $170,000,000 $630,000,000 $800,000,000

• Agreements: U.S., U.K., Brazil• Cooperation: Austria, Germany, Netherlands, Singapore,

Turkey

7/21/2017 Telia Company AB $699,000,000 $266,000,000 $965,000,000

• Agreements: U.S., Netherlands, Sweden• Cooperation: Austria, Belgium, Cyprus, France, Ireland,

Isle of Man, Latvia, Luxembourg, Norway, U.K.

11/29/2017 SBM Offshore NV $238,000,000 $582,000,000 $820,000,000

• Agreements: U.S., Netherlands, Brazil• Cooperation: Austria, Belgium, Cyprus, France, Ireland,

Isle of Man, Latvia, Luxembourg, Norway, U.K.

12/22/2017Keppel

Offshore & Marine Ltd

$105,000,000 $316,000,000 $421,000,000 • Agreements: U.S., Brazil, Singapore• Cooperation: N/A

6/4/2018 Société Générale SA $292,000,000 $293,000,000 $585,000,000 • Agreements: U.S., France

• Cooperation: U.K., Switzerland

9/27/2018Petróleo

Brasileiro S.A. – Petrobras*

$170,640,000 $682,560,000 $853,200,000 • Agreements: U.S., Brazil• Cooperation: N/A

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* Petrobras entered into an NPA with DOJ and an administrative resolution with the SEC. The SEC resolution included FCPA and other charges. As part of that resolution, the SEC ordered Petrobras to pay an additional $933,473,797, which was deemed satisfied by Petrobras’s payments in a related class action settlement.

Corruption Trends: Asia, Russia, Latin America, and Africa

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China

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China: Market Characteristics

Sources: Worldometers, China Population 2018 (retrieved on December 15, 2018) http://www.worldometers.info/world-population/china-population/; Hong Kong Trade Development Council, Economic and Trade Information on China (December 14, 2018) http://china-trade-research.hktdc.com/business-news/article/Facts-and-Figures/Economic-and-Trade-Information-on-China/ff/en/1/1X000000/1X09PHBA.htm; China: inflation rate from 2012 to 2023 (retrieved on December 15, 2018) https://www.statista.com/statistics/270338/inflation-rate-in-china/; China GDP Annual Growth Rate (retrieved on December 15, 2018) https://tradingeconomics.com/china/gdp-growth-annual. Photo credit: The top image was originally posted Flickr by Kim Sklinar at https://www.flickr.com/photos/17266413@N00/253479003. It was uploaded to Wikimedia Commons using Flickr upload bot on January 15, 2009 by Quatro Valvole. This file is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license (https://creativecommons.org/licenses/by-sa/2.0/deed.en).

Estimated population of China in 2018. Median age of 37.

1.4 billion

China’s annual foreign trade surplus through November 2018.

USD 299.6 billion

Total value of exports through November 2018.

6.3% China’s projected GDP growth rate for 2019.

USD 2.27 trillion

China’s projected inflation for 2019.2.61%

Off-balance-sheet debt by Chinese local governments.

USD 7.95 trillion

China: Corruption Landscape

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Sources: Xinhua, 央企正风反腐怎么抓——访中央纪委国家监委驻国资委纪检监察组组长陈超英 (August 28, 2018) http://www.xinhuanet.com/fortune/2018-08/28/c_1123337914.htm; CCDI, 2018年10月全国查处违反中央八项规定精神问题5585起 (November 27, 2018) http://www.ccdi.gov.cn/toutiao/201811/t20181127_184069.html;The Global Competitiveness Report 2018 (October 16, 2018) http://www3.weforum.org/docs/GCR2018/05FullReport/TheGlobalCompetitivenessReport2018.pdf; Worldwide Governance Indicators Project (September 21, 2018) http://info.worldbank.org/governance/wgi/index.aspx#reports; Transparency International, Corruption Perceptions Index 2017 (February 21, 2018) https://www.transparency.org/news/feature/corruption_perceptions_index_2017.

China ranks 77th out of 180 countries in Transparency International’s Corruption Perceptions Index.

China ranks 66th out of 140countries in the World EconomicForum’s Corruption Index.

According to World Bank’sGlobal Governance Indicators,China improved from the 33rd

percentile in 2007 to the 47thpercentile in 2017 on control ofcorruption.

As Xi Jinping’s highly political anti-corruption campaign continues, more than 1.5 million officials have been sanctioned over the past six years as part of the crackdown. Since January 1, 2018:

68, 509

48, 456

48, 589 Number of officials disciplined by CCDI in China for violations of the “Eight Rules” (embezzlement, bribery, abuse of power, misappropriation, dereliction of duty, and malpractice).

Number of cases investigated by CCDI in China for violations of the “Eight Rules.”

Number of officials investigated by CCDI in China for violations of the “Eight Rules.”

China: Anti-Corruption Campaign and Domestic Enforcement

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2018 saw a tide of investigations, arrests, and prosecutions of high-level officials:

Sources: SCMP, China accuses former Interpol chief Meng Hongwei of taking bribes (October 8, 2018) https://www.scmp.com/news/china/politics/article/2167451/china-accuses-former-interpol-chief-meng-hongwei-taking-bribes; SCMP, China’s disgraced insurance regulator pleads guilty to taking US$3 million in bribes (June 14, 2018) https://www.scmp.com/news/china/policies-politics/article/2150832/chinas-disgraced-insurance-regulator-pleads-guilty; SCMP, China’s former internet tsar Lu Wei pleads guilty to corruption (October 19, 2018) https://www.scmp.com/news/china/politics/article/2169329/chinas-former-internet-tsar-pleads-guilty-corruption; Reuters, Former top Chinese official admits taking 170 million yuan in bribes (April 12, 2018) https://www.reuters.com/article/us-china-corruption/former-top-chinese-official-admits-taking-170-million-yuan-in-bribes-idUSKBN1HJ090; Xinhua, Former vice governor of NE China province stands trial (November 22, 2018) http://www.xinhuanet.com/english/2018-11/22/c_137625030.htm. Photo credit:This image was originally posted to Flickr by Web Summit at https://www.flickr.com/photos/74711243@N06/38207298162. It was reviewed on November 8, 2017 by FlickreviewR 2 and was confirmed to be licensedunder the terms of the Creative Commons Attribution 2.0 Generic license (https://creativecommons.org/licenses/by/2.0/deed.en).

• Former Interpol President and Vice Minister of China’sMinistry of Public Security Meng Hongwei wasdetained by Chinese authorities in September 2018.Meng is being investigated for accepting bribes, and theMinistry of Public Security announced that it would setup a task force to go after Meng’s associates.

• Former Chairman of the China Insurance RegulatoryCommission Xiang Junbo pleaded guilty to takingbribes worth over USD 3 million.

• In October 2018, former Head of the CyberspaceSecurity Administration Lu Wei pleaded guilty tocharges of accepting bribes, taking advantage of hisofficial position and using other officials to seek profits.He was expelled from the CCP in February 2018.

• Former Party Secretary of Chongqing and Politburomember Sun Zhengcai, once seen as a potentialsuccessor to Xi Jinping, pleaded guilty in April 2018 toaccepting cash and gifts worth nearly USD 27 million.

• Former Vice Governor of Liaoning stood trial inNovember 2018 and pleaded guilty to accepting moneyand property worth more than USD 1.53 millionbetween 2000 and 2017.

Meng Hongwei (November 2017)

China: Anti-Corruption Campaign and Domestic Enforcement (cont’d)

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Sources: SCMP, Vanished Chinese oil tycoon linked to senior official’s bribery case (October 12, 2018) https://www.scmp.com/economy/china-economy/article/2168239/vanished-chinese-oil-boss-linked-senior-officials-bribery-case; Reuters,China’s CEFC founder Ye named in corruption case – state media (October 12, 2018) https://af.reuters.com/article/energyOilNews/idAFL4N1WS26I; Bloomberg, Huarong Woes Worsen as Firm Withdraws Its China Listing Plan (September 11,2018) https://www.bloomberg.com/news/articles/2018-09-11/huarong-woes-worsen-as-firm-withdraws-its-china-listing-plan; SCMP, Chinese corruption inquiry finds US$29 million in cash at homes of ex-boss of Huarong Asset Management(August 11, 2018) https://www.scmp.com/news/china/policies-politics/article/2159221/chinese-corruption-inquiry-finds-us39-million-cash; Chinadaily, China extradites duty crime suspect from Bulgaria (November 30, 2018)http://www.chinadaily.com.cn/a/201811/30/WS5c00ab61a310eff30328c0d3.html; Reuters, China says graft suspect extradited from EU state for first time (November 30, 2018) https://www.reuters.com/article/us-china-corruption-bulgaria/china-says-graft-suspect-extradited-from-eu-state-for-first-time-idUSKCN1NZ0A8; Caixin, Shanghai Airport Authority Boss Probed for Graft (August 7, 2018) https://www.caixinglobal.com/2018-08-07/shanghai-airport-authority-boss-probed-for-graft-101312265.html; Reuters, China places top energy official, a senior Uighur, under investigation (September 21, 2018) https://www.reuters.com/article/us-china-corruption/china-places-top-energy-official-a-senior-uighur-under-investigation-idUSKCN1M104H. Photo credit: This image was published by Krokodyl and is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license (https://creativecommons.org/licenses/by-sa/3.0/deed.en).

• Former Chairman of China Huarong AssetManagement Co. Lai Xiaomin was under investigationin April 2018 on accusations of accepting a total of USD39.5 million in bribes. Huarong is the biggest of China’sfour state-run distressed debt managers. Huarongwithdrew plans for a listing in China in September 2018after reporting a 90% plunge in first-half profit.

• Former Xinjiang Governor and Vice Chairman of theNational Development and Reform Commission NurBekri, who is a member of China’s ethnic Uighurminority, has been placed under investigation inconnection with corruption allegations.

• Former Party Secretary of Gansu Province pleadedguilty to taking a total of USD 9.7 million in bribes. Hewas accused of taking bribes from Ye Jianming, theformer Head of CEFC China Energy, a privatecompany and the country’s fourth-largest oilconglomerate, who was in turn detained since early 2018for suspected economic crimes.

• Former Chairman of the Shanghai Airport Authority wasplaced under investigation in connection with corruptionallegations. The Shanghai Airport Authority is a state-owned enterprise.

• China has extradited from Bulgaria the former DeputyHead of a Zhejiang County, Yao Jinqi, who fled China in2005 after being investigated for taking bribes. This is thefirst time China has successfully extradited a corruptionsuspect from a member state of the EU.

China: Enforcement – National Supervision System

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Sources: SAIC, 市场监管总局关于开展反不正当竞争执法重点行动的公告 (May 24, 2018) http://home.saic.gov.cn/fldyfbzdjz/gzdt/201805/t20180524_274291.html; Reuters, China sacks top official over vaccine scandal, firm may de-list (August 16, 2018) https://www.reuters.com/article/us-china-vaccines/china-sacks-top-official-over-vaccine-scandal-firm-may-de-list-idUSKBN1L11BQ; CCDI, 上海:整治医疗卫生系统腐败和作风问题 (May 14, 2018) http://www.ccdi.gov.cn/yaowen/201804/t20180427_170804.html.

China’s new National Supervision System is an indication that the anti-corruption campaign will continue into Xi Jinping’s second term.Structure of the National Supervision System

• National Supervision Commission (“NPC”)• Came into effect in March 2018 with the election of its first leader.• Consolidates anti-corruption powers from the National Bureau of Corruption

Prevention, Ministry of Supervision and the anti-corruption department of the People’s Procuratorate.

• Expands the scope of China’s existing anti-corruption agencies, which previously extended only to the executive branch. The CCDI covers Party members only. The new Commission covers all public servants, regardless of branch of government or Party membership, including SOE executives.

• Constitutionally, the new National Supervision Commission is at the same level as the State Council, the Supreme People’s Court and the Supreme People’s Procuratorate and has been described as a new “fourth branch” of government.

• Local Supervision Commissions: Being established at the provincial, prefecture, city, and county levels.

China: Anti-Corruption Enforcement Agencies Post-March 2018

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Offenses Involving

Party Officials at a Lower Level Than

Investigators

CCDI NSC

Offenses Involving All

“Public Officers”

Commercial Bribery

Involving Non-Public

Officials

Party Disciplinary Measures

Supervisory Suggestions /

Disciplinary Measures

Administrative Sanctions

People’s Procuratorates

PSB

AIC

Criminal Prosecution

China: Enforcement Trend – Industry Alert

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The State Administration for Market Regulation (“SAMR”) and the National Supervisory Commission (“NSC”) have launched campaigns targeting specific sectors as part of their anti-bribery and anti-corruption efforts.

Sources: SAIC, 市场监管总局关于开展反不正当竞争执法重点行动的公告 (May 24, 2018) http://home.saic.gov.cn/fldyfbzdjz/gzdt/201805/t20180524_274291.html; Reuters, China sacks top official over vaccine scandal, firm may de-list (August 16, 2018) https://www.reuters.com/article/us-china-vaccines/china-sacks-top-official-over-vaccine-scandal-firm-may-de-list-idUSKBN1L11BQ; CCDI, 上海:整治医疗卫生系统腐败和作风问题 (May 14, 2018) http://www.ccdi.gov.cn/yaowen/201804/t20180427_170804.html.

• In May 2018, the SAMR announced that it would target the pharmaceutical, medical devices, and educational sectors between May and October 2018 in the enforcement of the revised Anti-Unfair Competition Law (“AUCL”), which clarified the scope of, and increased the penalty for, commercial bribery offenses.

• The NSC announced in May 2018 that it would implement specific measures to fight corruption in Shanghai’s healthcare system, noting the widespread practice of medical personnel receiving bribes. The NSC has also launched a corruption investigation against the former Deputy Director of the China Food and Drug Administration in relation to reports of faulty vaccines.

Key Takeaways: While the five-month window for targeting pharmaceutical, medical devices and educational sectors has ended, it is likely that Chinese regulators will continue to focus on these industries in their enforcement efforts. Companies operating in these sectors may find themselves the subjects of inquiries and should prepare for heightenedenforcement activity. Given the vicarious liability provision in the revised AUCL, companies should also ensure adequate vetting, training, and monitoring of third parties.

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• The CPL amendments became effective on October 26, 2018 and are closely aligned with the government’s anti-corruption efforts. The following amendments will likely impact domestic anti-corruption enforcement:

Amendments to the Criminal Procedure Law (“CPL”)

China: Legislative Developments

The revised CPL codifies leniency rules that encourage suspects to cooperate in government investigations. For example, suspects who plead guilty may receive a lesser or mitigated sentence, and in some cases be exempted from prosecution if they make “major meritorious contributions.”

In light of the National Supervision System that has been in place since March 2018, the revised CPL removes all references to crimes relating to abuse of public office because such misconduct is now governed by the Supervision Law. The revised CPL also establishes procedures where supervision commissions may transfer cases to procuratorates for prosecution.

The amendments introduce trials in absentia procedures for certain crimes, including bribery and corruption. In the past, suspects who fled the country could only be tried after they returned to China, requiring costly extradition procedures. Under the revised CPL, courts may now deliver judgments in cases involving absentee defendants.

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The ICJA Law, which became effective on October 26, 2018, governs mutual assistance between China and foreign countries in criminal cases. More significantly, the ICJA Law stipulates that no individual or entity within Chinese territory is allowed to provide foreign countries with evidence, materials, or assistance in connection with criminal cases without the consent of the Chinese government. Approval from the government is required before any person or entity in China can comply with a foreign subpoena in relation to a criminal matter.

International Criminal Judicial Assistance Law (“ICJA Law”)

Key Takeaways: The ICJA law has caused considerable confusion in the market as there is currently no guidance on the process by whichapproval from the PRC government may be obtained. Coupled with existing States Secrets laws, responding to subpoenas and document requests when material is in the PRC is becoming increasingly difficult.

China: Legislative Developments (cont’d)

Photo credit: This image was originally posted to Flickr by Michel Temer at https://flickr.com/photos/52454189@N07/35644403331. It was reviewed on July 9, 2017 by FlickreviewR and was confirmed to be licensed under the terms of the Creative Commons Attribution 2.0 Generic license (https://creativecommons.org/licenses/by/2.0/deed.en).

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The ICJA Law is ambiguous on several key points, and China has yet to issue guidance or regulations providing additional clarity. Key questions going forward include the following: • What are the penalties for violations? • What is the process for obtaining government permission to

cooperate? • Will there be liability under the statute where an agency

conducting a civil or administrative enforcement investigation (such as the SEC) shares (or states an intention to share) materials with the DOJ or other criminal enforcement authorities?

• How broadly will the term “assistance” be construed?

ICJA Law—Key Questions Going Forward

China: Legislative Developments (cont’d)

Prepare for ICJA Law

• Ensure relevant employees and third parties are made aware of the law.

• Implement a system whereby documents originating in the PRC are not transferred to foreign criminal enforcement agencies without approval from Legal.

• Secure local counsel in the PRC to provide regular updates on the status of ICJA Law implementation and enforcement.

• If you are currently under criminal investigation, consider alerting enforcement authorities to the new law and its current level of ambiguity.

China: FCPA Enforcement Actions

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Since 2002, the DOJ and the SEC have brought enforcement actions against 51 corporations relating tobusiness activities in China.Automotive• Daimler AG, 2010Aircraft• Nordam Group, Inc., 2012Cosmetics/Personal Care• Avon Products (China) Co., Ltd, 2014• Nu Skin Enterprises, 2016Data and Analytics• Dun & Bradstreet, 2018Mining/Energy• Maxwell Technologies, 2011• BHP Billiton, 2015Finance• JPMorgan, 2016• Credit Suisse, 2018Gaming• Las Vegas Sands, 2016 & 2017Healthcare/Life Sciences• Diagnostic Products Corp., 2005• AGA Medical, 2008• Biomet, Inc., 2012• Pfizer/Wyeth, 2012• Eli Lilly, 2012• Bruker Corp., 2014

• Mead Johnson Nutrition, 2015• Bristol-Myers Squibb, 2015• SciClone Pharmaceuticals, 2016• Novartis AG, 2016• AstraZeneca, 2016• GlaxoSmithKline, 2016• Stryker Corporation, 2018Infrastructure• Schnitzer Steel Industries, 2006• Watts Water Technologies, Inc., 2011• General Cable, 2016Manufacturing• Control Components, Inc., 2009• InVision Technologies, 2004• York International, 2007• Siemens AG, 2008• ITT Corporation, 2009• Avery Dennison, 2009• Diebold, Inc., 2013• Tyco, 2012• Keyuan Petrochemicals, Inc., 2013• Nortek Inc., 2016• Johnson Controls, 2016

Technology• Paradigm BV, 2007• Faro Technologies, 2008• RAE Systems, Inc., 2010• Rockwell Automation, 2011• IBM Corp., 2011• PTC Inc., 2016• Akamai Technologies Inc., 2016• Panasonic, 2018• United Technologies Corp., 2018• Polycom Inc., 2018Telecommunications• Alcatel-Lucent, 2007• UTStarcom, Inc., 2009• Veraz Networks, Inc., 2010• Qualcomm Inc., 2016Tobacco• Alliance One International, 2010

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China: Lessons Learned from 2018 FCPA Enforcement Actions Involving China

Background: Hong Kong unit alleged to have hired over 100 employees at the request of government officials in exchange for lucrative business deals. Lesson: Hiring should not favor those with familial connections or be driven by businessopportunities. Ensure all applicants are subject to the same screening process, and are required to disclose any close government connections. “Wall off” employees with conflicts.

Background: Alleged to have ignored obvious red flags when engaging third-party sales agents in China. The company allegedly used these sales agents to engage sub-agents that would not have otherwise qualified per company policy. Lesson: Ensure employees recognize third party red flags, and are aware of channels for reporting. Third-party screening, qualification and monitoring should account for risks posed by subagents hired by those third parties.

Background: Two subsidiaries allegedly made improper payments to Chinese officials in order to obtain non-public information. The company falsely recorded the payments as legitimate business expenses.Lesson: Ensure that employees of subsidiaries in high risk locations commit to ethical business practices. While a centralized set of internal controls may be appropriate, tailor your compliance program to account for local risks and cultural differences.

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China: Lessons Learned from 2018 FCPA Enforcement Actions Involving China (cont’d)

Background: In its second FCPA enforcement action, the company allegedly failed to maintain internal controls sufficient to detect over 20 Chinese third parties that were not vetted and approved in accordance with company policy. Lesson: Third-party vetting processes not only help detect problems before they occur, but also are an essential part of a robust compliance program under the FCPA’s internal controls provisions.

Background: Allegedly provided trips and gifts to Chinese officials, and provided payments through its joint venture to an official in exchange for non-public information. Lesson: Gifts and sponsored travel remain a significant area of risk for companies operating in China. Implement a gift, entertainment and travel policy that clearly communicates acceptable limits to employees and provides clear approval processes.

Background: Senior managers in China allegedly provided discounts to distributors while knowing that the distributors would use them to make improper payments to employees at Chinese state-owned enterprises.Lesson: Rebates, discounts and excessive margins are all common methods for obtaining off-book funds, which are often used to make bribe payments. Ensure that pricing and discounting is transparent and tightly controlled.

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There are indications that the FCPA may be used alongside U.S. trade sanctions as a weapon in the intensifying U.S.-China trade dispute.

China: U.S.-China Trade Dispute Driving FCPA Enforcement?

The DOJ launched the “China Initiative” in November 2018 to safeguard U.S. national security and economic interests against threats from China. One of the Initiative’s goals is to “identify Foreign Corrupt Practices Act cases involving Chinese companies that compete with American businesses.”

“We know that Chinese companies and individuals also have bribed government officials in other countries in order to win contracts. The Criminal Division is committed to fully enforcing the Foreign Corrupt Practices Act. Bringing these offenders to justice will help create a level playing field for American companies in foreign markets”.- Brian A. Benczkowski, Assistant AttorneyGeneral, Criminal Division (November 2018)

Sources: Department of Justice, Attorney General Jeff Session’s China Initiative Fact Sheet (November 1, 2018) https://www.justice.gov/opa/speech/file/1107256/download; Department of Justice, Assistant Attorney General Brian A. Benczkowski of the Criminal Division Delivers Remarks Regarding Chinese Economic Espionage (November 1, 2018) https://www.justice.gov/opa/speech/assistant-attorney-general-brian-benczkowski-criminal-division-delivers-remarks-regarding.

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RUSSIA

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Russia: Market Characteristics

Sources: World Bank 2018 Russia Economic Report; International Monetary Fund World Economic Outlook; Russian Central Bank; https://data.worldbank.org/indicator/NE.CON.PRVT.CD; https://data.oecd.org/price/inflation-cpi.htm

Estimated population of Russia in 2018. Median age 39.8.

146 million

Consumer spending (2017). USD 826 billion

Projected GDP growth rate for 2019. 1.8%

Average inflation for 2018, but projected to rise up to 5.1% in 2019.2.8%

Capital outflows in % of GDP increased compared to 1.1% in 2017.3.4%

Political stability and stagnation expected until 2024, when current term of President Putin expires.

Gibson Dunn 29Sources: Transparency International “Transparency in Corporate Reporting- Assessing Russia’s Largest Companies”; 2018 OECD Phase 2 Follow-up: Additional Written Report by Russia

135

Russia: Corruption Landscape

Recommendations implemented

34/50

Anti-Bribery Convention

2018

• 80% of the companies have not banned facilitation payments.

• Only 5 companies have a confidential reporting line for corruption and other violations.

• 42% of the companies declare their intolerance for corruption.

• 26% of the companies extend their anti-corruption policies to third parties.

• 28% of companies do not disclose any information about their affiliates.

• 75% of companies operating abroad do not disclose any financial information on the countries of operation.

CORRUPTION PERCEPTIONS INDEX COUNTRY RANK 2017

2018 CORPORATE REPORTING STUDY:

OUTSTANDING RECOMMENDATIONSMeasures and rules:• to protect private sector employees.• to address money laundering by legal persons.• on reporting of suspected foreign bribery.

Gibson Dunn 30Sources: http://publication.pravo.gov.ru/Document/View/0001201808030084; http://regulation.gov.ru/projects/List/AdvancedSearch#npa=63259; http://www.consultant.ru/document/cons_doc_LAW_34661/129f980be4f92fc0233197a7bac89ebc4024ede8/;

Russia: Latest Regulatory Trends Impacting the Compliance Landscape

Russian Counter-SanctionsImport Substitution

Trends Related to Companies• Recent amendments to the KoAP exempt companies from corporate liability for bribery

upon self-reporting the wrongdoing to state agencies.• Russian prosecutors can obtain a court-ordered freeze of company assets in corruption-

related cases.

Trends Related to Bribery• Public register of legal entities sanctioned for violations of corruption related provisions

at: https://www.genproc.gov.ru/anticor/register-of-illegal-remuneration/ (in Russian). • New law to cover bribery in the interest of a third party. • Draft law to cover immaterial forms of bribery – project stage.

Other Trends• New legislation on enforcement of foreign confiscation decisions.

Gibson Dunn 31

Russia: Anti-Corruption Legislative Landscape

Russian Counter-SanctionsImport Substitution

Anti-Corruption Laws

• National Anti-Corruption Plan (adopted every two years by the Russian President)

• Federal Law No. 273-FZ “On Combatting Corruption”• Administrative Offenses Code and Criminal Code• Enforcement: General Prosecutor’s office; local prosecutor’s offices;

Investigative Committee of the Russian Federation; police. Competition Laws

• Federal Law No. 135-FZ “On Protection of Competition” • Enforcement: Federal Antimonopoly Service (FAS)

Public Procurement Laws• Federal Law No. 44-FZ: state and municipal entities• Federal Law No. 223-FZ: state-controlled or state-owned companies. • In 2018, all open purchasing should be conducted in electronic form.• Enforcement: FAS; General Prosecutor’s office; local prosecutor’s

offices.

General Prosecutor’s Office

Federal Anti-Monopoly Service

Gibson Dunn 32Sources: https://www.justice.gov/opa/press-release/file/1043216/download; https://www.sec.gov/news/press-release/2018-188; http://www.fcpablog.com/blog/2018/9/13/six-compliance-failures-at-united-technologies.html

Russia: 2018 FCPA Enforcement Actions Involving Russia

Russian Counter-SanctionsImport Substitution

Transport Logistics International Inc., DOJ, March 2018• Deferred Prosecution Agreement (“DPA”) between Maryland-based

transportation company Transport Logistics International (“TLI”) and DOJ regarding an alleged scheme of corrupt payments to an official of a Russian state-owned supplier of uranium and uranium-enrichment services (“TENEX”).

• Three year DPA, USD 2 million criminal penalty, as well as agreement to self report the state of TLI’s compliance program.

United Technologies Corporation, SEC, September 2018• United Technologies Corporation payed USD 13.9 million to settle FCPA

offenses in China (aircraft engine business) and Azerbaijan (elevator business).

• Otis Elevator unit in Azerbaijan hired agents without any adequate experience from, inter alia, Russia without doing any due diligence and the Otis Russia Manager sent an Otis Russia stamp to officials in Baku to falsify documents.

Gibson Dunn 33Sources: IMF Piercing the Veil - Some $12 trillion worldwide is just phantom corporate investment; World Bank; World Bank RER, p. 9.

http://www.fcpablog.com/blog/2018/11/30/due-diligence-in-russia-a-public-register-of-bribe-payers.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fcpablog%2FsLbh+%28The+FCPA+Blog%29

https://www.ey.com/gl/en/services/tax/international-tax/alert--russia-joins-standard-for-automatic-exchange-of-financial-account-information

Russia: Special Focus — Financial Transparency

• Banking sector concentration: state-owned entities represent nearly 70% of Russian bank assets.

• Russian private offshore wealth amounts to nearly 50% of GDP.

• In 2018, Russia joined the OECD’s Standard for Automatic Exchange of Financial Account Information in Tax Matters

• Current development undermining financial transparency: Federal Law 482-FZ allows insurance companies and banks in certain instances to avoid public disclosure of information about their executives, obviously with the goal, to avoid exposing them to foreign sanctions. Table data: Alstadsæter, Johannesen and Zucman 2018

7.3% 9.8%

46.9%

64.1%

73.1%

US World Average RUSSIA Venezuela UAERUSSIA Venezuela UAEWorld averageUSA

34

• Increase in the use of sanctions under President Trump:

• More than one sanctions action per week.

• 1474 additions to the SDN list. By far the largest annual addition in history.

• Until 2018, EU and US sanctions against Russia were aligned. Since 2018, US sanctions have unilaterally tightened, in particular additional SDN Listings.

• Further tightening of U.S. sanctions against Russia seems likely.

• Current threats include excluding Russia from international payments systems.

• The EU financial sanctions against Russia were issued due to the situation in the Ukraine. Recent extension of EU sanctions for another six months.

• Significant extension unlikely due to requirement for unanimity for such decisions.

• The EU economic sanctions against Russia include arms embargo, approval requirement and restrictions for the export of Dual-Use goods and energy-related equipment and technology.

• Regarding Crimea: Extensive economic sanctions, especially related to investments, imports and exports in the transport, telecommunication, energy sectors, as well as the exploration of oil, gas, and mineral resources.

Russia: Special Focus — U.S. and EU Sanctions

Gibson DunnSources: https://www.theguardian.com/us-news/2018/aug/19/trump-money-wars-economic-sanctions-trade-tariffs-backfiring, https://ec.europa.eu/fpi/what-we-do/sanctions_en, https://www.treasury.gov/resource-center/sanctions/Pages/default.aspx, https://www.washingtontimes.com/news/2018/dec/10/russia-may-end-visa-mastercard-payment-network-con/, EU Regulation Nr. 208/2014 and EU Regulation Nr. 269/2014. https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32014R0208,https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014R0269 and https://eeas.europa.eu/headquarters/headquarters-homepage_en/8442/Consolidated%20list%20of%20sanctions).

Russia: Special Focus — Counter-Sanctions by Russia

35

Focus on goods• Import bans for certain goods from, inter alia, U.S., EU, Canada and

Ukraine extended.

• Violations of embargo regulations are administrative offenses and can result in seizure and destruction of goods.

Focus on individuals• Travel ban for 89 EU officials, as well as persons from the U.S., Canada and Japan.

• Amendment to Criminal Code considered: Prohibition to obey foreign sanctions.

Further empowerment of the executive branch• Law enabling the government and the President to issue counter-sanctions according to a

non-exhaustive list of measures (June 2018).

Sources: http://www.mid.ru/ru/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/69698; http://kremlin.ru/acts/bank/43117; http://kremlin.ru/events/president/news/46404; https://www.gtai.de/GTAI/Content/DE/Trade/_SharedDocs/Pdf/Maerkte/Russland-Sanktionen/visasperrliste-einreiseverbote-russland.pdf?v=2; http://www.mid.ru/ru/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/69698; https://ria.ru/20140320/1000408274.html; http://asozd2c.duma.gov.ru/main.nsf/(Spravka)?OpenAgent&RN=464757-7

Gibson Dunn

Russia: Key Takeaways

36

• Ongoing geopolitical and trade tensions are expected to continue.• The U.S. is increasingly focusing its foreign policy against Russia on sanctions that impact

the Russian economy. Recent political developments, including the current posture by theU.S. Congress and President Trump, make it likely that U.S. sanctions against Russia willbe further tightened.

• Russia is responding with counter-sanctions and taking financial measures to prepare forfurther Western sanctions.

• Companies with significant Russia exposure, especially in the oil and gas sector, mustremain vigilant to timely respond to changes and fluidity in regards to sanctions coveringbusiness partners, goods or industrial sectors.

• Regarding local corruption efforts, Russia’s recent legislative actions and the enhancedenforcement of foreign confiscation decisions following cases of corruption are positivesteps.

• Developments with regard to financial transparency are underway. Companies shouldmonitor this process.

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Gibson Dunn 37

LATIN AMERICA

Gibson Dunn 38

Latin America: Market Characteristics for Latin American & the Caribbean

Sources: Latin America and the Caribbean Population, WORLDOMETER (Dec. 14, 2018); World Economic Outlook, INTERNATIONAL MONETARY FUND (Dec. 14, 2018); Latin America and Caribbean: Seizing the Momentum (May 11, 2018); Global Competitiveness Report 2018, WORLD ECONOMIC FORUM (Oct. 16, 2018); 2017 Corruption Perceptions Index, TRANSPARENCY INTERNATIONAL (Feb. 21, 2018).

Brazil

• Population: 210.9 million.

• GDP: USD 1.91 trillion.

• Brazil ranks 96th of 180 countries on the Corruption Perceptions Index.

Argentina

• Population: 44.7 million.

• GDP: USD 475.43 billion.

• Argentina ranks 85th of 183 countries on the Corruption Perceptions Index.

Mexico

• Population: 122.3 million.

• GDP: USD 1,046.0 billion.

• Mexico ranks 135th of 180 countries on the Corruption Perceptions Index.

Colombia

• Population: 48.7 million.

• GDP: USD 282.4 billion.

• Colombia ranks 96th of 180 countries on the Corruption Perceptions Index.

Estimated population is 654.9 million.

The median age is 29.5 years.

The regional economy is expected to

grow 2.8% in 2019.

The regional level of inflation is projected to

be 5.7%.

Comprises 8.55% of the

world population.

Gibson Dunn 39

Latin America: Significant Corruption News

Sources: Inside the Petrobras FCPA Resolution, LAW360 (Oct. 10, 2018); Brazil Greenlights Keppel’s Petrobras Bribery Settlement, GLOBAL INVESTIGATIONS REVIEW(April 10, 2018); Oil Services CEO and Executive Sentenced to Prison for Roles in Foreign Bribery Scheme, U.S. DEP’T OF JUSTICE (Sept. 28, 2018); Mining Tycoon, Once Brazil’s Richest Man, Is Sentenced to 30 Years in Prison, N.Y. TIMES (July 3, 2018); World’s Biggest Oil Traders Paid Bribes in Brazil Scandal, REUTERS (Dec. 5, 2018), Brazil Prosecutors Charge JBS Shareholder Batista with Corruption, REUTERS (June 25, 2018); Brazil’s Top Appeals Court Orders Release of JBS’s Batista, Ricardo Saud, REUTERS (Nov. 12, 2018); Brazilian Federal Police Indicts Abilio Diniz During New Phase of Operation Weak Flesh, FOLHA DE S.PAULO (Oct. 16, 2018); Brazilian Billionaire Abilio Diniz Indicted Over Contaminated Chickens, FORBES (Oct. 15, 2018); Eletrobras Pays $2.5 Million to Resolve FCPA Offenses, THE FCPA BLOG (Dec. 26, 2018).

Brazil• Lava Jato continues to combat corruption, launching new phases in 2018.

• In April, Keppel announced the finalization of its USD 422 million settlement agreement. • In September, the former CEO of SBM Offshore, N.V. was sentenced to prison.• Eike Batista, once an oil and mining tycoon, was sentenced to 30 years in July, following a trial

in Brazil that found him guilty of bribing the former governor of Rio de Janeiro.• Last month, Brazilian prosecutors announced charges against global oil traders Vitol, Trafigura,

and Glencore for allegedly paying bribes to Petrobras employees.• Petrobras, a foreign state-owned entity, presented unique facts and an unprecedented resolution.

• In September, U.S. authorities resolved with Petrobras in connection with charges under the FCPA’s books-and-records and internal-controls provisions.

• “Operation Weak Flesh” exposes bribery in the meatpacking industry.• In June, Joesley Batista was charged with corruption for paying a former federal prosecutor to

assist him and another JBS executive to obtain plea deals. In November, Batista was arrested again in connection with a separate investigation of bribery and illegal campaign contributions.

• In October, the former CEO and former board president of BRF were indicted, along with 41 others. BRF, the entity, is reportedly negotiating a leniency agreement with authorities.

• Most recently, the SEC charged Eletrobras, which is 51% owned by the Brazilian government, with FCPA violations, alleging that the company failed to detect a widespread bribery scheme related to the construction of a nuclear power plant.

Gibson Dunn 40

Latin America: Significant Corruption News

Sources: Bags of Cash in Argentina: Driver’s Notes Propel Corruption Inquiry, N.Y. TIMES (Aug. 3, 2018);“Corruption Notebooks” Scandal in Argentina Gets Attention from U.S. Enforcement Authorities, JD SUPRA (Nov. 13, 2018); Former Argentina President Indicted on Corruption Charges, REUTERS (Sept. 17, 2018); Techint CEO Charged with Graft in Notebooks Scandal, REUTERS (Nov. 27, 2018); Prosecutors Question Macri’s Cousin in Argentina ‘Notebooks’ Graft Scandal, BUSINESS INSIDER(Aug. 6, 2018); In Argentina, Why Is All Quiet on the Odebrecht Front? AMERICAS QUARTERLY (April 9, 2018).

Argentina• In August 2018, the “notebooks scandal” filled the headlines as “the Lava Jato of Argentina.”

• Prosecutors estimate that nearly USD 200 million was exchanged to win public works contracts as part of a bribery scheme spearheaded by former president Cristina Fernández de Kirchner and her husband.

• On September 17, 2018, Fernández was indicted on bribery charges.

• Several former government officials and executives have also been indicted, including the CEO of Techint.

• Argentina’s investigation of Odebrecht is ongoing. In July, Brazil agreed to share information with Argentinian authorities, a significant showing of international cooperation.

• In April, Julio de Vido, former Planning Minister, was charged with corruption related to Odebrecht.

Gibson Dunn 41

Latin America: Significant Corruption News

Sources: Mexican Government Shields Officials from Corruption Probe, AP NEWS (Oct. 18, 2018); Mexico’s New President Moves to End His Own Immunity- but Seems to Shield His Predecessor, THE GLOBE AND MAIL (Dec. 4, 2018); Mexico Could Press Bribery Charges. It Just Hasn’t, NEW YORK TIMES (Jun. 11, 2018); Mexico Bans Government Institutions from Doing Business with Odebrecht, THE SANTIAGO TIMES (Apr. 20, 2018); Mexico Plans to Enforce Odebrecht Fines via Seizure: Official, REUTERS (Oct. 10, 2018); Lawyers Call on AMLO to Outline Anti-Corruption Strategy, LACCA (Jul. 6, 2018); USCMA: United States- Mexico-Canada Agreement, Nov. 30, 2018 [pending final adoption].

Mexico• While Odebrecht was fined nearly USD 60 million and is prohibited from

transacting business with federal institutions and state governments until 2020, Mexican officials remain untouched by the scandal.

• With the July 2018 election of Andres Manuel López Obrador, many are hopeful about the future of Mexico’s anti-corruption movement. Implementation of the2016 approved National Anti-Corruption System (“NAS”) was stalled under former President Peña Nieto. López Obrador’s administration must summon the necessary political might to guarantee the efficacy and materialization of NAS’s important anti-corruption reforms.

• The adoption of the United States-Mexico-Canada Agreement (“UMSCA”), which will replace NAFTA, was a significant development in anti-corruption enforcement in Mexico this year. Chapter 27 of the Agreement is dedicated solely to anti-corruption. The signing parties have agreed to fight corruption through, among other strategies, inter-party cooperation, legislation, and anti-bribery measures.

• Pemex, Mexico’s state-owned energy company, also rolled out a comprehensive anticorruption compliance program in late 2017, including protocols for third party due diligence, compliance-related disclosure obligations for contractors, and conflict-of-interest disclosures. In May 2018, Pemex issued new procurement rules requiring contractors to commit to adhere to Pemex’s compliance program and to implement their own adequate compliance programs.

Gibson Dunn 42

Latin America: Significant Corruption News

Sources: Tarek William Saab: In a Year 616 People Have Been Convicted of Corruption, ARCHY WORLDYS (Aug. 2, 2018); Venezuela’s Exiled Justice Department Calls for Interpol Arrest of Maduro and 18 Years for Corruption, BUSINESS INSIDER (Nov. 19, 2018); The Downfall of Pedro Pablo Kuczynski and the Future of Peru, THE NEWYORKER (Mar. 24, 2018).

• President Pablo Kuczynski resigned in March after incriminating video footage surfaced that showed Kuczynski’s allies vote buying. Congress had previously moved to impeach Kuczynski due to his involvement in Odebrecht-related transactions. Just ahead of the impeachment vote, videos documented Kuczynski’s allies bribing government officials to vote against his impeachment.

Peru

Venezuela• Venezuela’s new attorney general reported that in his first year, his office had

convicted 616 individuals—including former government officials—for corruption.

• In November, the Supreme Tribunal of Justice—a group of jurists who fled Venezuela after President Nicolás Maduro refused to recognize their appointment by the National Assembly—asked Interpol to issue an international arrest warrant for President Maduro. The Supreme Tribunal averred that Maduro had accepted money from illicit activities.

Gibson Dunn 43

Latin America: New Legislative Developments

Sources: 2014 Mid-Year FCPA Update, GIBSON, DUNN & CRUTCHER (July 7, 2014); Brazilian Federal Prosecutors Issue Guidance on Leniency Agreements, FCPAMERICASBLOG (Oct. 18, 2017); Brazil’s New Guidelines for Leniency Agreements in Corruption Investigations, LEXOLOGY (Sept. 15, 2017); The Rise of Anti-Corruption Whistleblowers in Latin America, GLOBAL INVESTIGATIONS REVIEW (Dec. 6, 2018); More Brazil Agencies Require Mandatory Compliance Programs, THE FCPA BLOG(March 8, 2018); Ministry of Transparency And Comptroller-General of the Union Announces Practical Guide for the Evaluation of Integrity Programs of Legal Entities, MONDAQ (Sept. 25, 2018).

• In 2014, the Clean Companies Act expanded corruption liability to corporations.• Prosecutors, other agencies, and state governments maintain the momentum with efforts to enhance

transparency, including publishing guidance on plea bargains and promoting whistleblowing.• In January 2018, the legislature passed a federal law permitting states to establish anonymous

hotlines for reporting crime and encouraging states to create incentives for whistleblowing.• State authorities have adopted regulations requiring companies that enter into contracts with the

government to implement effective compliance programs.• This includes companies involved in public construction or sales, as well as entities cooperating

with the government.• Companies not in compliance receive daily sanctions.• The new requirement is more demanding than the Clean Companies Act, which rewards companies

for compliance programs with reduced fines but does not require them.• In September, authorities published a practical guide on the evaluation of “integrity programs.”

Brazil: New Guidelines Aim to Enhance Transparency

Gibson Dunn 44

Latin America: New Legislative Developments

Sources: In Argentina, A New Statute on Corporate Criminal Liability for Corruption, THE FCPA BLOG (Jan. 9, 2018); Argentina Enacts Sweeping Corporate Anti-Corruption Law, THE FCPA BLOG (Dec. 6, 2017); New Corporate Criminal Liability Act – How to Protect Your Organisation, GLOBAL INVESTIGATIONS REVIEW (Aug. 21, 2018); Guidelines for Implementation of Compliance Programs, GLOBAL COMPLIANCE NEWS (Nov. 9, 2018).

• In March, Law 27.401 came into force, imposing strict liability for companies that commit bribery and participate in the illicit enrichment of public officials, among other crimes.

• The new legislation complements existing anti-bribery laws, which only apply to individuals.

• Distinct from the FCPA, the law does not impose liability for acts committed by subsidiaries.

Argentina: New Law Introduces Corporate Criminal Liability

• Failure to comply may result in harsh penalties, including the imposition of fines up to five times the amount of illegally obtained profits, exclusion from public contracts or benefits, and compulsory dissolution.

• Companies may avoid prosecution by voluntarily self-disclosing, implementing a compliance program, and disgorging illegally obtained profits.

• Compliance programs are not mandatory, but voluntary “integrity guidelines” issued in October explain the requirements of an effective program.

• Leniency agreements are available, but the effect of such agreements is not yet clear.

Gibson Dunn 45

Latin America: New Legislative Developments

Sources: Peru Introduces Corporate Liability for Corruption Offenses with a Compliance Program Defense, FCPAMERICAS (Feb. 4, 2018); Amid Oedbrecht Fallout, Peru Enacts World-Class Anti-Bribery Law, GAN BUSINESS ANTI-CORRUPTION PORTAL (Jan. 11, 2018); Ley Nº 30424, EL PERUANO.

• Law 30424, which became effective on January 1, 2018, represents an important step in Peru’s battle against corruption. This law has introduced corporate liability for corruption crimes.

• While originally slated to take effect in July 2017, Legislative Decree No. 1352 postponed the law’s effective date and expanded the scope of chargeable offenses.

Peru: Law Regulating Administrative Liability of Legal Entities for the Commission of Active Transnational Bribery (“Ley 30424”)

• Under Law 30424, legal entities may be held liable for local and global bribery of public officials, money laundering, and terrorism financing. In addition to direct liability, a legal entity may be held accountable on the basis of actions conducted in the entity’s name, for its benefit, or on its behalf.

• The law will impose two kinds of penalties:• Fines: Based either off the benefit wrought by the bribery or the entity’s annual income.• Disqualification: Can assume one of several statutorily enumerated forms, including

dissolution, debarment, and license nullification.

Gibson Dunn 46

Latin America: Enforcement Actions

Sources: Inside the Petrobras FCPA Resolution, LAW360 (Oct. 10, 2018); Brazil’s Corruption Fallout, COUNCIL ON FOREIGN RELATIONS (Nov. 7, 2018); Ex-President ‘Lula’ of Brazil Surrenders to Serve 12-Year Jail Term, N.Y. TIMES (April 7, 2018).

• The broader initiative of Lava Jato has resulted in:• More than 200 convictions, 346 individuals accused of crimes, and numerous plea

bargains.• Countless foreign leaders have been impacted, including five of the six living former

presidents of Brazil, the former presidents of Colombia and Peru, and President Maduro of Venezuela.

• In early 2018, Luiz Inácio Lula da Silva, former president of Brazil, received an extended sentence following an unsuccessful appeal. He will serve 12 years in prison.

• As of January 2019, former president Michel Temer no longer enjoys special immunity.

Brazil: Operation Lava Jato (Operation Car Wash)

Gibson Dunn 47

Latin America: Enforcement Actions

Sources: Brazil’s Corruption Fallout, COUNCIL ON FOREIGN RELATIONS (Nov. 7, 2018); Old Politics Dies Hard in Brazil Despite Sweeping Corruption, BLOOMBERG (Sept. 4, 2018); Sérgio Moro Appointment: Business to Continue As Usual, GLOBAL INVESTIGATIONS REVIEW (Nov. 5, 2018); Petrobras Press Release (Sept. 27, 2018); In Petrobras Settlement, U.S. Follows Policy of Not Piling On Offenders, WALL ST. J. (Sept. 28, 2018); Deputy Assistant Attorney General Matthew S. Miner of the Justice Department’s Criminal Division Delivers Remarks at the 5th Annual GIR New York Live Event, U.S. DEP’T OF JUSTICE (Sept. 27, 2018).

• Lava Jato marked a new age of accountability in Brazil.• Brazilian prosecutors have demonstrated their robust commitment to combat corruption at all levels.• President Bolsonaro’s victory in part arises from a shifting climate and desire to dismantle corruption. • However, effective implementation of Bolsonaro’s anti-corruption campaign hinges on transforming a long-entrenched

culture of impunity, and the attitudes of judges and prosecutors on the ground. • Interestingly, Petrobras itself was characterized as a victim.

• The NPA lacks any statement that Petrobras benefited from misconduct, and it does not impose a monitor.• Petrobras does not expect its consent agreement to attribute liability under Brazilian law. Payments to Brazil will fund

social and educational programs to promote transparency and compliance.• Global enforcement strategy – “No Piling On”

• DOJ is willing to coordinate with foreign peers like Brazil in multi-jurisdictional investigations, even where the foreign jurisdictions do not find wrongdoing.

• Petrobras highlights the importance of cooperation and remediation for companies in both the U.S. and Brazil.• Increased International Cooperation

• DOJ and SEC have increased Spanish and Portuguese language attorneys and staff.• More frequent meetings, witness interviews by prosecutors across borders.

Implications of Lava Jato: Empowered Enforcement, but Uncertainty Remains

Gibson Dunn 48

Latin America: FCPA Actions

Sources: 2018 Mid-Year FCPA Update, GIBSON, DUNN & CRUTCHER (July 9, 2018); Texas Business Executive Pleads Guilty in Scheme to Bribe Venezuelan Official, ICE NEWSROOM (Sep. 13, 2018); Texas Businessman Pleads Guilty to Conspiracy to Obstruct Justice in Connection with Venezuela Bribery Scheme, ICE NEWSROOM (Dec. 10, 2018); Former Venezuelan National Treasure Sentenced to 10 Years in Prison for Money Laundering Conspiracy Involving Over $1 Billion in Bribes, DEPARTMENT OF JUSTICE (Nov. 27, 2018); Venezuelan Billionaire News Network Owner, Former Venezuelan National Treasurer and Former Owner of Dominican Republic Bank Charged in Money Laundering Conspiracy Involving Over $1 Billion in Bribes, DEPARTMENT OF JUSTICE (Nov. 20, 2018); Former Owner of Dominican Republic Bank Sentenced to Three Years in Prison for Money Laundering Conspiracy, DEPARTMENT OF JUSTICE (Nov. 29, 2018); Richard L. Cassin, DOJ Cooperator Admits Obstruction in Venezuela Bribery Case, THE FCPA BLOG (Dec. 11, 2018); Swiss Banker Admits Role in Venezuela Money Laundering Ring, THE FCPA BLOG (AUG. 23, 2018).

• In October, Matthias Krull, a former Julius Baer Group wealth manager, was sentenced to ten years in prison for his role in the PDVSA money laundering scheme. Krull’s punishment was the most severe among all those involved in the scheme.

• In December, Alfonso Eliezer Gravina pled guilty to obstructing the DOJ’s investigation into corruption at PDVSA. Gravina, a former PDVSA procurement officer, had already pled guilty in December 2015 to conspiracy to launder money and making false statements on his income tax return. After entering his first plea, Gravina agreed to assist the DOJ by providing information about graft at PDVSA.

• With recent pleas, 15 of the 18 individuals charged in connection with the investigation have now pled guilty.

Petróleos de Venezuela S.A. (“PDVSA”)

• This year, the DOJ charged five new Venezuelan defendants with money laundering in a corrupt pay-to-play scheme involving Venezuela’s state oil company, PDVSA. All five men were either current officials of PDVSA and its subsidiaries or former officials of other Venezuelan government agencies. Two of the five defendants were additionally charged with FCPA conspiracy.

Gibson Dunn 49

Latin America: Key Trends

Enhanced enforcement practices:• Across Latin America, citizens discouraged by rampant corruption are calling for increased accountability.• In response, investigation practices and resources in Latin American countries, particularly Brazil, have

improved dramatically over the past several years, as local governments work hard to hold both corporate and individual actors accountable.

Legislative developments:

• Following a global shift to targeting the supply side of bribery, many of the new anti-corruption laws expand liability to include corporations.

Gibson Dunn

• Statutory reforms incentivize self-disclosure and whistleblowing.

• Across Latin America, whistleblower reports to U.S. authorities have increased. For example, as of December 6, 2018, the SEC had received 19 reports from Brazil in 2018 (as compared to six reports in 2017).

Gibson Dunn 50

Latin America: Key Trends

Heightened perception of corruption: • Despite increased enforcement and new legislation to target corruption in Latin America, serious

distrust of politicians among local populations remains.

• While new legal frameworks are promising, many are rightfully hesitant to cry victory any time soon, noting the difficulty of breaking the long-established culture of impunity.

• Judges, prosecutors, politicians, and corporate actors alike must buy into a new regime to foster a culture of compliance.

Multi-jurisdictional cooperation:

• U.S. enforcement agencies and local authorities in Latin America continue to demonstrate remarkable collaboration in pursuing cross-border violations and resolutions.

• Increased information sharing across agencies results in more efficient investigations. President Morales’s decision not to renew CICIG’s mandate is thus a significant setback for anti-corruption efforts.

• Coordination among peer agencies in crafting corporate resolutions ensures that corporations do not pay for the same conduct twice.

Sources: In Petrobras Settlement, U.S. Follows Policy of Not Piling On Offenders, WALL ST. J. (Sept. 28, 2018); Anti-Corruption Efforts: Brazil 2018 Understanding the Issues, WILSON CENTER (Aug. 14, 2018); Guatemalan President Shuts Down Anti-Corruption Probe, NPR (Sep. 3, 2018); Constitutional Standoff Pushes Guatemala Toward Authoritarianism, N.Y. TIMES (Sep. 10, 2018); Guatemala Accusations Amp Up Tensions Between Presidency, AG’s Office, INSIGHT CRIME (May 16, 2018).

Gibson Dunn 51

INDIA

Photo courtesy Sam Hawleywood

Gibson Dunn 52

India: Market Characteristics

Sources: Population Reference Bureau, India Rising (August 2018); OECD, Economic Outlook for South East Asia, China and India (2018); CMIE, Private Investment to Lead India’s Growth by FY19 (June 2018); World Bank, Poverty & Equity Data Portal (November 2018) (Note: Data is as of 2010); Photo Credits: Pranav Bhasin and Nicholas Jones

India will surpass China as the most populous country in the world in the next decade.

1.37 billion

Expected consumer spending (2025) – Third largest globally.USD 4 Trillion

India’s projected real GDP growth rate between 2018-2022. One of the fastest growing global economies.

7.3%

Expected Private Investment Growth (April 2018 – March 2019).

+8.8%

Share of population living at or below USD 5.5 a day (povertyline for India as established by the World Bank).

86.8%

India: Are Anti-Corruption Efforts Working?

Gibson Dunn 53Sources: Transparency International, Corruption Perceptions Index (2016, 2017); Transparency International, “People and Corruption: Asia Pacific – Global Corruption Barometer” (March 2017); Ernst & Young, “Global Fraud Survey 2018” (April 2018); CMS-India, “CMS-India Corruption Study 2018” (April 2018).

50%81

India’s corruption situation has improved marginally:

111

According to the World Bank’s Global Governance Indicators, India managed to improve its ranking in relation to the control of corruption by 13 (from 124) positions between 2006 and 2016.

India saw a modest fall in the latest CPI results, claiming the 81st spot (down from 79th), ranking below China.

20%Almost seven out of every ten persons surveyed in India had to pay a bribe to access key public services, indicating a very high bribery rate (at least for petty corruption).

One survey reported that 40% of Indian respondents feel that bribery and corruption are widespread in business, and 20% of Indian respondents stated that it would be justified to offer bribes to win or retain business.

40%69%

Control of Corruption (2006-2016)

One study has estimated that the total amount of bribes paid in order to avail key public services has fallen by about 50% between 2005 and 2018.

However, corruption and bribery continue to present significant risks in India:

India: Historic Amendments to the Prevention of Corruption Act

Gibson Dunn 54

The Prevention of Corruption Act, 1988 (“PCA”) as originally written focused on bribe recipients.

§ 7 Prohibits Indian public servants from obtaining (or attempting to obtain) “any undue advantage” with the intention of (or as a reward for) performing or causing performance of a public duty “improperly or dishonestly” or forbearing or causing forbearance to perform such duty.

§ 7A Prohibits any person from accepting any “undue advantage” from anyone in order to cause a public servant to perform his public duties in an improper or dishonest manner.

§ 2(d) “Undue Advantage” is very broadly defined to include any gratification whatsoever other than legal remuneration.

Long-awaited amendments passed in 2018 shift the focus to the supply side of corrupt payments.

§ 12 Prior to the 2018 Amendment, bribe giving could only be prosecuted as abetment to the main offense by a publicservant. Now there is a specific provision dealing with the provision of the payment.

§ 8 Prohibits the giving of (or the promise to give) an ‘undue advantage’ to anyone with the intent of inducing orrewarding the improper performance of a public duty by a public servant.

Exception: Bribe giver will not be liable if (a) she can prove that she was compelled to give the bribe; and (b) she reports the bribe within seven days to law enforcement authorities. Proving that one has been compelled to provide a bribe to a public servant will be difficult and may cause the person involved to have to participate in lengthy legal proceedings.

Note on Facilitation Payments: The amended PCA specifically clarifies that facilitation payments (i.e., speed money) are also prohibited. (§ 7)

Gibson Dunn 55

India: Historic Amendments to the Prevention of Corruption Act (cont’d)

The Amendments to the PCA have profound implications for corporations and executives.§ 9 A commercial organization can be held liable “if any person associated with the commercial organization gives or

promises to give any undue advantage to a public servant” with an intent to obtain or retain business or anyadvantage for that commercial organization.• Commercial organizations can be held liable for the actions of their employees, agents, service providers, and

professional advisers.• A foreign parent company can be held liable for the actions of its Indian subsidiary.

Note: Commercial organizations can avoid liability for a bribe provided by a person associated with them bydemonstrating that the bribe was provided to the public servant despite the organization putting in place“adequate procedures designed to prevent” it. The Indian Government is expected to provide guidelines regardingsuch procedures.

§ 10 Managerial personnel of a commercial organization will be liable if the prosecution is able to establish that suchpersonnel consented to or connived with the person committing the offence under the PCA.Managerial personnel may face up to seven years imprisonment and/or monetary fines.

§ 134(5) Requires directors of all companies to certify annually that “proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively” are in place.

§§ 134(8), 447 Significant penalties for fraud and non-compliance, which include fines and prison for “officers of the company.”

India’s Companies Act places additional obligations on companies and their management.

Gibson Dunn 56

India: 2018 – A Year of High Profile Cases

Sources: India Today, “ED attaches Nirav Modi, Choksi properties in India and abroad worth Rs 218 cr”, https://www.indiatoday.in/india/story/ed-attaches-nirav-modi-choksi-properties-in-india-and-abroad-worth-rs-218-cr-1370109-2018-10-17 (October 2018); The Hindu, “AirAsia Group refutes charges made by CBI”, https://www.thehindu.com/business/Industry/airasia-group-refutes-charges-made-by-cbi/article24203931.ece (June 2018).

Punjab National Bank (“PNB”) (2018)In January, PNB filed a complaint with India’s Central Bureau of Investigation in relation to fraudulent banking transactions. The bank alleged that officials in a Mumbai branch of PNB bypassed the bank’s core banking system and fraudulently issued several letters of undertaking (through SWIFT) to foreign branches of other Indian banks. The CBI has alleged a criminal conspiracy to defraud the bank involving these individuals, employees of entities associated with these entities, and employees of PNB. Individuals named in the chargesheets filed by the CBI in May include a former managing director and senior officers of PNB.

Air Asia India (2018)In May, the CBI registered a case alleging that senior officers linked with AirAsia India, had conspired with Indian government officials to expedite approvals and change Indian aviation policies to suit the airline. The first information report names, amongst others, senior functionaries of the shareholders of the airline. The first information report registered by the CBI also alleges that India’s foreign direct investment policies (which prohibited foreign control of an Indian airline) were knowingly violated by AirAsia. The CBI has so far undertaken raids and recovered documents in relation to its investigations in the case.

Gibson Dunn 57Gibson Dunn

India: 2018 – FCPA Enforcement Actions

Sources: Securities and Exchange Commission (July, 2018 & September, 2018)

Beam Suntory (2018)In July 2018 the SEC announced an FCPA resolution with Beam Suntory (a spirits producer) relating to allegations of improper payments to several government officials in India. According to the SEC, from 2006 through 2012 senior executives

Stryker (2018)In September 2018, Stryker Corporation, a medical device manufacturer, agreedto pay a USD 7.8 million penalty to resolve FCPA books and records andinternal accounting controls offenses relating to India and other jurisdictions.According to the SEC, Stryker’s Indian subsidiary made potentially problematicpayments to its dealers and to health care professionals that lacked anysupporting documentation reflecting a clear business purpose. Stryker had alsonot addressed deficiencies that had been identified in a 2012 audit (e.g., itsdealers over-billing a hospital upon the hospital’s request) until 2015.

at Beam India directed efforts by third parties to make improper payments to increase sales, process licenseand label registrations, obtain better positioning on store shelves, and facilitate distribution. Without admittingor denying the allegations, Beam agreed to disgorge USD 5.26 million of profits, plus USD 917,498 inprejudgment interest, and pay a USD 2 million civil penalty.

Gibson Dunn 58

SOUTH KOREA

Gibson Dunn 59

Korea: Market Characteristics

Sources: Worldometers: Korea Population 2018, http://www.worldometers.info/world-population/south-korea-population/ ; Trading Economics: South Korea Balance of Trade, https://tradingeconomics.com/south-korea/balance-of-trade ; Reuters, South Korea says 2018 exports likely to exceed $600 billion to record (October 29, 2018), https://in.reuters.com/article/southkorea-economy-exports/south-korea-says-2018-exports-likely-to-exceed-600-billion-to-record-idINKCN1N3183 ; Hankyoreh, State think tank projects 2.6% growth rate for S. Korean economy in 2019 (November 27, 2018), http://english.hani.co.kr/arti/english_edition/e_business/872014.html ; The Korea Times, Working age population to drop by 19% over two decades (January 3, 2018), https://www.koreatimes.co.kr/www/nation/2018/09/119_241836.html ; Bloomberg, Quicktake: South Korea’s Chaebol (October 5, 2018), https://www.bloomberg.com/quicktake/republic-samsung .

Estimated population of Korea in 2018. Median age of 41.

51.2 million

Korea’s annual foreign trade surplus through November 2018.

USD 66.31 billion

Korea’s projected GDP growth rate for 2019.

2.6%

Projected value of exports for 2018.

USD 600 billion

Expected decline in Korea’s working-age population (between 15 and 60 years old) from 2018 to 2037, primarily due to low fertility rate.

18.9%

Percentage of all business assets in Korea which are owned by the top 10 chaebols.

27%

Korea: Landmark Legislation Transforms Korean Enforcement Landscape

Gibson Dunn 60

• The Improper Solicitation and Graft Act (informally known as the “Kim Young-Ran” Law) came into force on September 28, 2016.

• The Act prohibits (1) any person from directly or indirectly (through a third party) soliciting “Public persons;” and (2) “Public persons” who receive an improper solicitation from performing his or her duties as directed - they must clearly express an intention to refuse the solicitation.

• The Act also prohibits:

• “Public persons” from accepting any financial or advantage in excess of KRW 1 million (~USD 900) per event/ KRW 3 million (~USD 2,700) per year from the same person, regardless of the relationship between such offer and his or her duties, and the motive for such offer.

• “Public persons” from accepting any financial or other advantage in excess of KRW 10 million (~USD 9,000) in connection with his or her duties, regardless of whether such offer is given in exchange of any favors.

• Exceptions include food and drink below KRW 30,000 (~USD 25), gifts below KRW 50,000 (~USD 45), congratulatory or condolence money below KRW 100,000 (~USD 90), financial or other advantages offered by relatives, all of which are offered to facilitate performance of duties or for social relationships or rituals.

• “Public persons” include: civil servants, private persons performing public duties, heads and employees of public service-related organizations, public institutions, schools (public and private), media companies and their spouses.

Korea: Historic Enforcement Against Former Presidents

Gibson Dunn 61

Sources: Chicago Tribune, Disgraced South Korean ex-president gets 24 years in prison for massive corruption scandal (April 6, 2018), http://www.chicagotribune.com/news/nationworld/ct-korean-president-sentenced-park-geun-hye-20180406-story.html ; BBC, Park Geun-hye: South Korea's ex-leader jailed for 24 years for corruption (April 6, 2018) https://www.bbc.com/news/world-asia-43666134 ; FT, “South Korean former president Park Geun-hye sentenced to 24 years in prison (April 6, 2018), https://www.ft.com/content/c1e98636-3929-11e8-8b98-2f31af407cc8 ; New York Times, Park Geun-hye, Ex-South Korean Leader, Gets 25 Years in Prison (August 24, 2018), https://www.nytimes.com/2018/08/24/world/asia/park-geun-hye-sentenced-south-korea.html ; BBC, Park Geun-hye: More jail time for South Korea ex-leader (July 20, 2018), https://www.bbc.com/news/world-asia-44897094 ; New York Times, South Korean Court Sentences Ex-President’s Confidante to 20 Years (February 13, 2018), https://www.nytimes.com/2018/02/13/world/asia/choi-soon-sil-park-geun-hye-south-korea.html ; BBC, South Korea jails Choi Soon-sil, friend to Park Geun-hye, for corruption (February 13, 2018), https://www.bbc.com/news/world-asia-43042862.

Former President PARK Geun-Hye

• President Park Geun-Hye was impeached in December 2016 amid allegations of influence peddling and corruption. In April 2018, Park was convicted of 16 corruption-related offenses, including abuse of power, bribery, and coercion. She was sentenced to 24 years’ imprisonment and a fine of KRW 18 billion (~USD 16 million).

• In August 2018, the Seoul High Court increased her prison sentence to 25 years and her fine to KRW 20 billion (~USD 18 million) for collecting more bribes than previously believed.

Former President LEE Myung-Bak

• In March 2018, former president Lee Myung-Bak was arrested on multiple charges of corruption, including bribery, embezzlement, tax evasion, and abuse of power. Lee allegedly received more than KRW 11 billion (~USD 10 million) in bribes from various sources, including Samsung and the Korean National Intelligence Service, before and during his presidency. In October 2018, Lee was sentenced to 15 years’ imprisonment and a fine of KRW 13 billion (~USD 11.5 million) for bribery and embezzlement.

• Choi Soon-Sil, Park’s friend and advisor who was accused of coercing Korean conglomerates into donating millions of dollars to charitable organizations connected to the former President, was sentenced in February 2018 to 20 years’ imprisonment for influence peddling, abuse of power, and corruption.

Korea: Enforcement Trend – Chaebols

Gibson Dunn 62

Samsung• In August 2017, Samsung Electronics Vice Chairman Lee Jae-Yong was

convicted of bribery and related charges and sentenced to five years in prison. • In an unexpected turn of events, in February 2018, the Seoul High Court found

Lee not guilty on five of the eight charges, one of which is involves the payment to the foundations associated with President Park and Choi Soon-Sil. The High Court halved his jail term to 2.5 years and suspended his sentence on appeal. The court denied that there was implicit understanding of bribery between the parties, a key element to the charges.

President Park’s impeachment and conviction also shed light on the actions of Korean conglomerates, known as the chaebol.

Sources: Bloomberg, Samsung’s J. Y. Lee Set Free in Unexpected Court Reversal (February 5, 2018), https://www.bloomberg.com/news/articles/2018-02-05/samsung-heir-jay-y-lee-goes-free-after-court-suspends-jail-term ; Bloomberg, Korean Tycoon Jailed in Bribery Case That Toppled a President (February 13, 2018), https://www.bloomberg.com/news/articles/2018-02-13/lotte-chairman-jailed-for-bribing-former-president-s-confidante ; FT, South Korea jails Lotte chair for bribery (February 13, 2018), https://www.ft.com/content/1b344338-1090-11e8-8cb6-b9ccc4c4dbbb ; Straits Times, Lotte chairman Shin Dong-bin freed as court suspends corruption sentence (October 5, 2018), https://www.straitstimes.com/asia/east-asia/south-koreas-appeals-court-suspends-lotte-group-chiefs-jail-sentence-yonhap ; Reuters, South Korea's appeals court suspends Lotte Group chief's jail sentence (October 5, 2018), https://www.reuters.com/article/us-lottecorp-chief/south-koreas-appeals-court-suspends-lotte-group-chiefs-jail-sentence-idUSKCN1MF0O2.

Lotte• In December 2017, Lotte Group Chairman Shin Dong-Bin was arrested on charges of embezzlement and

breach of trust. In February 2018, he was convicted of bribery and sentenced to 30 months’ imprisonment and a fine of KRW 7 billion (~USD 6.5 million).

• In October 2018, the Seoul High Court sentenced Chairman Shin to 2.5 years in prison but suspended the sentence for four years, resulting in his immediate release.

Korea: Güralp Case Highlights International Enforcement Trends

Gibson Dunn 63

• On October 2, 2017, Heon-Cheol Chi, the director of a government-run earthquake research center, was sentenced to 14 months in U.S. federal prison for using a U.S. bank account to launder bribes received from two seismology companies, including UK-based Güralp Systems Limited. In exchange for the payments, Mr. Chi advocated the purchase of equipment from Güralp to his employer and to other South Korean customers.

• On August 20, 2018, DOJ issued a declination letter to Güralp. While the letter noted evidence of corrupt payments to Mr. Chi, it stated that its declination decision was based, in part, on the fact that Güralp is a UK company and is “the subject of an ongoing parallel investigation by the UK’s Serious Fraud Office for violations of law relating to the same conduct and has committed to accepting responsibility for that conduct with the SFO.”

Güralp Systems Limited

Güralp highlights trends in international anti-corruption enforcement.• Use of AML statutes to prosecute where evidence of bribery

exists.• Increased coordination among international enforcement agencies

such as DOJ and SFO.• Granting of significant credit to companies that cooperate with

government investigations.

Korea: Korea FCPA Case Shows the Pitfalls of Entertainment and Sponsored Travel

Gibson Dunn 64

• On September 12, 2018, SEC announced a settled enforcement action against United Technologies Corporation (“UTC”), a multinational conglomerate. UTC was alleged to have engaged in improper conduct in a variety of countries, including Azerbaijan, China, Kuwait, Pakistan, South Korea and Thailand.

• In Korea, a UTC division allegedly provided entertainment and travel benefits to five officials of the Korean Air Force in hopes of securing a long-term procurement contract. The SEC alleged that UTC’s internal controls had failed on a number of levels:

United Technologies Corporation

§ The travel was approved with little or no review, even though company policy required it.

§ When review did occur, UTC’s Legal Department failed to note red flags, such as travel to popular tourist destinations.

§ Trips included senior officials who would attend one meeting only and spend the remainder of the trip sightseeing.

Lessons Learned from UTC:• Ensure review and sign-off at appropriate level are

required for sponsored travel. Travel benefits should also be subject to periodic audits.

• Train employees to recognize potential issues, such as travel to tourist destinations or recipients who are in a position to award business to the company.

• Travel agendas should be subject to pre-trip clearance and post-trip verification (through photos, receipts, attendance lists, etc.).

Gibson Dunn 65

AFRICA

Africa: Market Characteristics

Population of 1.3 billion

Expected growth of 4.1%

for 2019

Inflation rate projected to

rise to 5.2% in 2019 (from 5%

in 2018)

16.6% of global population

(fastest growing)

Sources: “African Economic Outlook 2018, African Development Bank 2018; Africa’s Development Dynamics 2018: Growth, Jobs and Inequalities”, AUC.OECD 2018; “World Investment Report 2018: Investment and New Industrial Policies”, United Nations Conference on Trade and Development, 6 June 2018; ‘Inflation rate, end of period consumer prices’ IMF DataMapper, World Economic Outlook (October 2018).

54 countries• Global and domestic shocks in 2016 (e.g. commodity prices crash) slowed the pace

of real GDP growth in Africa, but the recovery since 2016 has been faster than envisaged: growth increased from 2.2% in 2016 to a projected 4.1% for 2019.

• Commodity prices (mainly oil and metals) have recovered since 2016 and provided relief to both government budgets and current accounts.

• Most African currencies have lost about 20-40% of their value against the dollar since the beginning of 2015.

• Estimated infrastructure needs amount to USD 130-170 billion a year, with a financing gap in the range of USD 68-108 billion.

• Tax-to-GDP ratios are below the 25% threshold deemed sufficient to scale up infrastructure spending.

• Foreign direct investment inflows slumped to USD 42 billion in 2017 (down 21% from 2016), and this decline was concentrated in the larger commodity exporters.

• Intraregional trade in intermediate goods stands at 4.1% of GDP (compared to 24.2% in Asia and 16.6% in the EU).

Gibson Dunn 66

Africa: Local Corruption Climate

Corruption remains a concern at all levels in African countries.

Sources: “Letter to the African Union on African Anti-Corruption Day”, Transparency International, 11 July 2018; “Zambia aid: UK suspends funding over corruption fears”, BBC News, 18 September 2018; “Illicit Financial Flows: The Economy of Illicit Trade in West Africa”, OECD, 2018; “Exporting Corruption, Progress report 2018: assessing enforcement of the OECD Anti-Bribery Convention”, Transparency International, 2018; “How to win the fight against corruption in Africa”, Transparency International, 11 July 2018.

Gibson Dunn 67

USD 50 billion Estimate of the amount lost in Africa per year due to illicit financial flows.

In Sub-Saharan Africa, 1 in 2citizens reported paying a bribe for land services (such as registering property) and to stop their family homes from being taken away.

USD 4.3 millionIn September 2018, the UK froze aid funding to Zambia, after its government admitted that USD 4.3 million earmarked the poor had gone missing.

Widespread lack of development is reinforced by extensive corruption schemes, which discourage further development. Misappropriated funds account for a 25% loss of development resources in Africa.

-25%

38 out of 54 countries have ratified the African Union Convention to Prevent and Combat Corruption (adopted in 2003). Those that have ratified have not reported progress on implementation.

38/54 50%

Africa: Challenging Corruption Environment

Transparency International Corruption Perceptions Index 2017

Sources: Transparency International Corruption Perception Index 2017; “A redefining moment for Africa”, Transparency International, 21 February 2018. The scores for each country are calculated with a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean.Gibson Dunn 68

Several African countries have shown notable progress in their rankings since 2012 such as Cote d’Ivoire (130 to 103) and Senegal (94 to 66). Some African countries maintain stronger rankings appearing in the top third (Botswana (34); Seychelles (36); Cape Verde and Rwanda (48); and Namibia (53))

South Africa (71) and Nigeria(148), the two largest economies in Africa, have shown no significant change in their rankings since 2012. The significant economic nations of Tanzania (103) and Kenya (143) remain deep in the bottom half.

6 of the 10 lowest-ranked countries in the world are in Africa (Somalia, South Sudan, Sudan, Libya, Equatorial-Guinea, and Guinea-Bissau).

The top-performing African countries are said to have a “political leadership that is consistently committed to anti-corruption,” whereas the lowest-scoring countries are “often those where there is conflict or war.”

Africa: Regional Anti-Corruption Efforts

The African Union (“AU”)• The AU earmarked July 11 as “African Anti-Corruption Day” and

declared 2018 as the “African Anti-Corruption Year,” with the theme “Winning the Fight Against Corruption: A Sustainable Path to Africa’s Transformation.”

• Intended outcomes for the African Anti-Corruption Year included doubling the number of citizen-led and AU-backed anti-corruption initiatives. For example, in December 2018, the Anti-Corruption Academy of Nigeria piloted a three-day Corruption Risk Assessment (“CRA”) training program for heads of anti-corruption agencies.

• In July 2018, Transparency International submitted several recommendations to the AU on issues such as procurement, illicit financial flows, and education. Whilst commending the AU for dedicating 2018 to the fight against corruption in Africa, the AU was urged to “move from slogans to actions.”

Sources: “Winning the Fight Against Corruption: A Sustainable Path to Africa’s Transformation”, African Union Advisory Board on Corruption, 2018; “Reinvent anti-graft war, Buhari urges Africa”, The Guardian Nigeria, 11 December 2018; “Letter to the African Union on African Anti-Corruption Day”, Transparency International, 11 July 2018.

“By declaring 2018 the African Anti-Corruption Year, the African Union policy-making organs have given a strong push forward in our collective efforts toward a peaceful and secure Africa. Indeed corruption kills.” – Statement by the Chairperson of the African Union Commission on Corruption (January 2018)

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Africa: National Developments

Nigeria: In November 2017 “Special Courts” were designated to try corruption and financial crime cases. In June 2018, the National Judicial Council announced that in 6 months, those courts had delivered 324 judgments, struck out 12 cases, and reserved 62 cases for judgment.

Rwanda: In September 2018, a new anti-corruption law N°54/2018 came into force, aimed at preventing and punishing corruption in public bodies, private entities, and international organizations operating in Rwanda. The law makes corruption a felony crime (with no statute of limitations), and removes criminal liability for whistleblowers who inform the authorities about illegal benefits they have given or received.

Kenya: The Bribery Act 2016 came into force on January 13, 2017. It introduced offenses of failing to prevent bribery and criminalizes a failure to implement anti-bribery policies and procedures. Since July 2017, 49 persons have been convicted of corruption and related offences, three under the Bribery Act. In addition USD 45 million has been recovered. No corporate enforcement has occurred.

Sources: “Special Anti-Corruption Courts Deliver Judgment in 324 cases in 6 Months”, National Judicial Council (Press Release), 28 June 2018;“Partnerships for Development”, Annual Review, August 2018; “What’s new in the new a United Kingdom Anti-Corruption Strategy 2017-2022: Year 1 Update, HM Government, 12 December 2018; EACC official figures, accessed 3 January, 2019 - http://www.eacc.go.ke/achievements/ .Gibson Dunn

International PartnershipsIn 2016 the UK announced that bodies such as the National Crime Agency (“NCA”) would launch practitioner partnershipswith anti-corruption institutions in Nigeria, Tanzania, and Kenya. As of August 2018, the “Partnerships for Development”program, formerly “GREAT for Partnership,” had delivered three partnerships (with the NCA, British Geographical Survey,and Oxford Policy Fellowships) and is still being implemented.The UK Prosperity Fund has supported UNODC in promoting the implementation of the UN Convention Against Corruption,including whistleblowing recommendations and legislation for five countries in East Africa (Burundi, Kenya, Rwanda,Tanzania, and Uganda) to improve procurement practice and financial investigation.

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Africa: National Enforcement Trends

South Africa: Since President Cyril Ramaphosa took office in February 2018, he has overseen the establishment of four commissions of inquiry all related to the abuse and "capture" of state resources in South Africa. The inquiries investigate the breakdown in good governance and the corruption at key South African institutions such as the South African Revenue Service (“SARS”) and the National Prosecuting Authority (“NPA”) during the presidency of Jacob Zuma.• In March 2018, the director of public prosecutions charged Zuma with 16 charges of fraud, corruption, and money

laundering stemming from hundreds of payments made to him in relation to a 1990s arms-procurement deal.• In April 2018, law enforcement officials seized USD 21 million of assets owned by the Gupta family, as part of an

investigation into corruption at a government dairy farm project. Since then, various hearings have been conducted by the judicial commission of inquiry that have exposed the depth of influence that the Gupta family had over Zuma’s government.

• Separately in June 2018, South Africa's Directorate for Priority Crime Investigation (“the Hawks”) raided the offices of MTN, one of Africa's largest mobile telecommunications companies, and MTN's law firm, Webber Wentzel. The search and seizure operation was connected to allegations that MTN paid bribes in 2005 to Iranian officials to secure an operating license to provide services in Iran worth USD 4.2 billion. Iran is MTN’s third biggest market, via its 49% stake in Irancell.

Nigeria: The Nigerian Economic and Financial Crimes Commission (“EFCC”) continues its investigations into the “Malabu Oil Scandal,” involving Shell and ENI’s purchase of an oilfield through an alleged USD 1.3 billion corrupt deal made in 2011. In September 2018, the Italian court sentenced two middlemen, Emeka Obi and Gianluca Di Nardo, each to four years’ imprisonment for their role in connecting the parties and transferring funds through international bank accounts.On November 30, 2018, the Acting Chairman of the EFCC gave assurances that the investigation was ongoing and that those complicit will be prosecuted. Allegedly, Nigeria stands to lose at least USD 4.5 billion as a result of the deal.

Gibson Dunn Sources: “Nigeria to Lose $4.5 Billion in Malabu Oil Deal .…As EFCC Receives Document from Experts”, Economic and Financial Crimes Commission, 30 November 2018; “JP Morgan says it knew ex-minister linked to firm in Nigeria oilfield deal”, Reuters, 6 April 2018; “Hawks raid offices of Bank of Baroda”, ENCA 9 June 2018; “Hawks raid MTN, top law firm in decade-long Turkcell battle”, News 24, 5 June 2018; “$21 Million in Assets Seized in South African Corruption Inquiry”, NY Times, 16 April 2018; “Zuma corruption claims: South Africa state capture inquiry opens”, BBC News, 20 August 2018.;

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Africa: National Enforcement Trends

Gibson Dunn 72

Kenya: In August 2018, Kenyan authorities arrested former Nairobi governor, Evans Kidero, on suspicion of corrupt activities. Kidero was one of 11 government officials named by Kenya’s senior prosecutor as being “criminally culpable” for embezzlement of public funds.

The same month, the Ethics and Anti-Corruption Commission arrested National Lands Commission (“NLC”) Chairman Muhammad Swazuri and six other officials. Swazuri is accused of paying more than USD 2 million in dubious land compensation claims to individuals and companies in connection with the Standard Gauge Railway project, the largest infrastructure project since the country won its independence. The project also involved Chinese investment. In November 2018, seven individuals including three Chinese nationals, all of whom were employees of a Chinese company responsible for running the railway, were charged with bribing investigators regarding a ticketing fraud.

Tanzania: In April 2018, the Prevention and Combating of Corruption Bureau (“PCCB”)sought the extradition from Kenya of Kenya Pipeline Company Chairman John Ngumi and ex-Stanbic Bank Tanzania CEO Bashir Awale. The allegations against the executives involve USD 6 million in bribes paid to government officials in exchange for favourable treatment when Tanzania floated a government sovereign bond in 2012. Three other defendants have been remanded since 2016 pending the investigations. Their case was recently adjourned until May 2019.

Sources: “Former Nairobi governor arrested on corruption allegations”, Reuters, 8 August 2018; “Kenya: Officials accused of corruption in flagship rail project”, Al Jazeera, 12 August 2018; “Seven officials held as detectives probe SGR tickets scandal”, Daily Nation, 25 November 2018; “Senior Manager of Acacia’s Tanzanian Businesses Charged’, Press release from Acacia, 23 October 2018, “Stanbic bribery case takes new turn”, IPP Media, 23 April 2018; “Britain’s Fraud Office Investigates Acacia Mining”, Wall Street Journal, 14 December 2018.

In October 2018, criminal charges were brought by the PCCB against several employees of the UK-listed Acacia mining company in relation to corruption and money laundering. The PCCB stated that the arrests formed part of the “ongoing investigation into natural resources exploitation.” Rumors that the SFO also is investigating have been refuted by the company.

Africa: North America Enforcement Actions

Sources: “Société Générale S.A. Agrees to Pay $860 Million in Criminal Penalties for Bribing Gaddafi-Era Libyan Officials and Manipulating LIBOR Rate”, DOJ Press Release, 4 June 2018; “Kinross Gold Charged With FCPA Violations”, Securities and Exchange Commission Press Release, 26 March 2018; “Legg Mason Charged With Violating the FCPA”, Securities and Exchange Commission Press Release, 27 August 2018.

Legg Mason Inc.: In June 2018 Legg Mason Inc. agreed concurrently with Société Générale S.A. to pay a criminal penalty of USD 32.6 million and disgorgement of USD 31.6 million as part of a NPA arising out of the same allegations, where Legg Mason Inc. managed a number of the corruptly obtained investments. Subsequently, in August 2018, the Company agreed to pay over USD 34 million to the SEC to settle civil offenses, negating the DOJ disgorgement and consistent with the piling-on policy.

Kinross Gold Corporation: On March 26, 2018 Kinross Gold Corporation agreed to pay USD 950,000 to the SEC to settle, by way of Administrative Order, allegations initiated by a whistleblower relating to a failure to implement adequate accounting controls over two of its African subsidiaries in Mauritania and Ghana. The SEC stated it took Kinross Gold three years to implement adequate controls, despite problems having been flagged during multiple internal audits. The SEC also stated that Kinross Gold failed to maintain these controls. The DOJ declined to charge Kinross Gold.

Gibson Dunn 73

Société Générale S.A.: In June 2018, Société Générale S.A. agreed to a DPA while a subsidiary pleaded guilty to charges in relation to bribes of over USD 90 million paid to senior Libyan officials throughout 2004 to 2009 through a Libyan “broker.” In exchange for the bribes, the bank received over USD 3.6 billion in investments from Libyan state-owned financial institutions and earned profits over USD 500 million. The Company agreed to pay a total of USD 292.8 million to resolve both matters. This was also the first coordinated resolution between the DOJ and the French authorities in a foreign bribery case in which the bank agreed to pay an equal sum to the French authorities.Separately, the bank resolved unrelated LIBOR allegations with both the DOJ and CFTC.

Africa: North America Enforcement Actions (cont’d)

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Glencore: In July 2018, the mining company announced that the DOJ had issued a subpoena for documentsrelating to its business in Nigeria, the Democratic Republic of Congo (“DRC”), and Venezuela. Theinvestigation is related to payments to a third party who has been subject to U.S. sanctions since December2017 due to ties to the DRC and its president. On July 9, 2018, Glencore shareholders filed lawsuits against thecompany in U.S. federal court, accusing Glencore of misleading statements and concealing documents.

Credit Suisse: In December 2018 and January 2019, DOJ charged five people, including three former Credit Suisse bankers, with FCPA, money laundering, and fraud charges. DOJ alleged that the individuals facilitated USD 200 million in bribes and kickbacks paid to government officials in Mozambique. In November 2018, the UK’s Financial Conduct Authority announced it had decided to drop its criminal probe and would pursue exclusively a regulatory investigation of the bank and individuals.

Sources: “Glencore faces lawsuits over U.S. subpoena stock drop”, Reuters 12 July 2018; “OSC Panel approves settlement with Katanga Mining Limited, former and current directors and officers for misleading disclosure and internal control failures”, OSC Press Release 18 December 2018;“Credit Suisse escapes criminal action over $2bn Mozambique scandal,” Financial Times, 12 November 2018; “Credit Suisse escapes UK criminal charges over Mozambique’s debt”, Further Africa, 14 November 2018; “DOJ goes after ex-Credit Suisse bankers in Mozambique corruption case,” Global Investigations Review, 4 January 2019.

Katanga Mining: On December 2018, Katanga Mining agreed to a settlement with the Ontario SecuritiesCommission (“OSC”), relating to its failure to maintain adequate financial reporting and disclosure controlsand procedures. Katanga agreed to a payment of CAD 30 million, and to pay for an independent consultant toreview of its policies and procedures. Four senior individuals also agreed to pay a total of CAD 5.9 million inadministrative penalties.

Chi Ping Patrick Ho: On December 2018 Patrick Ho, a former Hong Kong government official, was convicted of seven counts of FCPA and money laundering violations in a scheme to bribe high level public officials in Chad and Uganda in return for business advantages on behalf of China Energy Company Limited.

Africa: SFO Enforcement Actions

Griffiths Energy International Inc.• On March 22, 2018, the SFO obtained an USD 6 million Civil Recovery Order against Ikram

Saleh, the wife of Chadian diplomat Mahamoud Adam Bechir, in a corruption case involvingGriffiths Energy International Inc., a Canadian oil and petroleum company.

Sources: “SFO recovers £4.4m from corrupt diplomats in ‘Chad Oil’ share deal,” Serious Fraud Office, 22 March 2018; “SFO wins Chad oil corruption case,” Economia, 23 March 2018. Gibson Dunn 75

• The Court found Griffiths bribed senior Chadian diplomats with discounted share deals and ‘consultancy fees’ using a front company “Chad Oil.” Chad Oil was a vehicle used by senior diplomats at the Chadian Embassy in the United States to facilitate a deal in which the wife of the former Deputy Chief, Mrs. Ikram Saleh, purchased shares at a considerable discount. She later sold these shares for a significant profit.

• The SFO became involved following a mutual legal request made by the DOJ in July 2014. The High Court decision granting the SFO’s order marked the first time that money will be returned overseas in a Civil Recovery Case.

Ongoing investigations:• ENRC Ltd: The SFO formally opened an investigation into ENRC in April 2013 for its activities in Kazakhstan and the Democratic

Republic of Congo relating to the acquisition of mining projects. The investigation is ongoing and in December 2018, an Israelibusinessman lost an appeal in the Swiss Federal Criminal Court to transfer documents relevant to the investigation to the SFO.

• British American Tobacco: BAT remains under investigation by the SFO into allegations of corruption.

• Rio Tinto: In July 2017 the SFO announced that it had opened an investigation into suspected corruption by the Rio Tinto group in theRepublic of Guinea. Rio Tinto is suspected to have paid USD 8.1 million to a former investment banker to negotiate with thegovernment when it risked losing rights to a multibillion dollar iron-ore project in Guinea. In March 2018, the SFO raided the Londonhome of the investment banker for evidence connected to the investigation.

Africa: SFO Enforcement Actions (cont’d)

Afren PlC / Oriental Energy Resources Ltd.• On October 24, 2018, Osman Shahenshah and Shahid Ullah, former Chief

Operating Officer and Chief Executive Officer of Afren Plc respectively, were convicted of fraud and money laundering over Nigerian oil deals worth USD 300 million.

• Shahenshah and Ullah recommended that the Afren Board agree to a USD 300 million payment to Oriental Energy Resources Ltd, the company’s oil field partner in Nigeria. Unknown to the Afren board, Shahenshah and Ullah had arranged a kickback scheme with Oriental which led to USD 45 million being paid out to a Caribbean shell company controlled by the defendants.

• On October 29, 2018, Shahenshah was sentenced to 6 years in prison and Ullah to 5 years for fraud and money-laundering offenses.

Sources: “Osman Shahenshah & Shahid Ullah sentenced to 30 years for Afren fraud & money laundering,” Serious Fraud Office, 29 October 2018.Gibson Dunn 76

Ultra Electronic Holdings PLCIn April 2018, the SFO confirmed that it had opened a criminal investigation into suspected corruption involving dealings in Algeria by Ultra Electronic Holdings PLC, its subsidiaries, employees, and associated persons following a self-report.

Africa: European Enforcement

FranceIn June 2018, concurrent with the broader U.S. enforcement action,Société Générale S.A. announced a CJIP agreement with the

Sources: “Société Générale S.A. Agrees to Pay $860 Million in Criminal Penalties for Bribing Gaddafi-Era Libyan Officials and Manipulating LIBOR Rate”, Department of Justice Press Release 4 June 2018; “Vincent Bollore under formal investigation in Africa corruption probe,” BBC News, 25 April 2018Gibson Dunn 77

In April 2018, French billionaire Vincent Bolloré was placed under formal investigation by a French judge amid accusations that Havas, anadvertising-agency subsidiary of his holding company, provided discounted media advice to the Guinean and Togolese Presidents during the election period in return for his Bolloré Africa Logistics company winning certain lucrative licenses to operate container ports.

Parquet National Financier (“PNF”) to settle claims that it had paid bribes to obtain investmentsfrom Libyan state-owned financial institutions. Under the CJIP, Société Générale S.A. agreed topenalties of approximately USD 292.8 million, the implementation of a compliance program, and atwo-year compliance monitorship supervised by L'Agence Française Anticorruption (“AFA”).

Africa: European Enforcement (cont’d)

Italy: In September 2018, an Italian court acquitted Italian energy firm Eni and its ex-CEO of bribery in relation to payments made by its subsidiary Saipem to Algerian officials between 2007 and 2010 to win energy contracts worth EUR 8 billion. Saipem however, was fined EUR 400,000, had a further EUR 197.9 million seized by the authorities, and its former CEO was sentenced to four years in jail.

In the same month, Nigerian Emeka Obi and Italian Gianluca Di Nardo, accused of receiving bribes in relation to a separate Eni corruption case in Nigeria referred to locally as the “Malabu Oil Scandal” were found guilty and sentenced to four years in jail. This was the first ruling in a major trial related to alleged misconduct by Eni and Shell in relation to over USD 1 billion in bribes allegedly paid to various Nigerian politicians in 2011, including former oil minister Dan Etete, in order to obtain the rights to a major offshore Nigerian oil block. A separate trial of the companies and 13 others continues.

Switzerland: In November 2018, a Swiss court dismissed an attempt to prevent the opening of a suitcase belonging to Obi containing documentation and digital material thought to have relevance to the Malabu case. A prosecutor will now decide whether there is material relevant for transmission for the Italian proceedings.

In August 2018, a former Geneva-based oil trader was found guilty of bribing officials in the DRC and Ivory Coast in exchange for oil shipments. The Swiss Federal Criminal Court gave Pascal Collard an 18-month suspended sentence and ordered him to pay USD 33,850 in court costs.

Sources:“Update 3- Italy court finds Saipem guilty in Algeria graft case but acquits Eni”, Reuters, 20 September 2018; “Update 2- Italian judge jails two in Nigerian oil graft case”, CNBC News, 20 September 2018; “Eni, Shell knew of ‘sharks’ in Nigeria graft case – judge”, Reuters, 17 December 2018; “Switzerland: Oil trader sentenced for Africa bribes”, FCPA Blog, 30 August 2018; Swiss Close to Revealing Nigerian Beneficiaries of $1.1b Malabu Oil Bribes, Signal, 22 December 2018.

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Africa: Enforcement Trends 2018

• There continues to be significant enforcement in or relating to Africa in 2018, although the majority of the corporate cases are brought by foreign authorities.

• Significant numbers of domestic enforcements are occurring with substantial monetary recoveries.

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• Enforcement authorities in the UK and the U.S. continue to collaborate, build capability, and cooperate with local enforcement authorities.

• Foreign enforcers continue to focus on extractive industries including oil, gas, and on financial services institutions.

• The use of “intermediaries” remains a significant area of risk and therefore a focus of enforcers. That too is likely to continue.

Africa: Key Lessons

• Despite regional campaigns and proclamations focused on reducing corruption in Africa, the exposure to corruption risks for foreign companies conducting business in Africa remains significant.

• While there are exceptions, the majority of African nations, including the most economically significant, have low rankings in the Transparency International Corruption Perception Index.

• The risks of corruption vary significantly across the Continent. Sophisticated advisers can help discern risks specific to a transaction, leading to more effective mitigation efforts.

• Enhanced Due Diligence on new business partners and agents and funds flows are particularly important. Extra care is required when conducting business with governments and state agencies.

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GLOBAL TRENDS AND RISK MITIGATION STRATEGIES

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Trend: Recent Enforcement Shows Intersection Between FCPA and AML

The DOJ has found the money laundering statute to be an effective tool for holding individuals criminally liable when they use the U.S. financial system to launder the proceeds of corruption.

PDVSA Bribe Payers and Recipients: In 2018, DOJ unsealed charges against five new defendants in a corrupt pay-to-play scheme involving Venezuelan state-owned oil company Petroleos de Venezuela S.A., all of which have a money laundering nexus where the bribe payers were charged with substantive or conspiracy FCPA offenses and the bribe recipients were charged with money laundering offenses.

1MDB: In connection with the investigative activity related to Malaysian sovereign wealth fund 1MDB, the DOJ unsealed criminal FCPA charges against Malaysian businessperson Low Taek Jho and two former employees of an international bank. One of the bankers has pleaded guilty to a dual FCPA conspiracy as well as money laundering conspiracy, and both were implicated in FCPA bribery and money laundering charges.

Patrick Ho: In December 2018, Mr. Ho was found guilty of seven of the eight counts of bribery and money laundering. Mr. Ho will be sentenced in March 2019, and is facing a maximum of five years imprisonment for each bribery count and 20 years for the money laundering counts.

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Trend: Courts Limit Conspiracy and Accomplice Liability

On August 24, 2018, the Second Circuit rejected the DOJ’s attempt to use conspiracyand accomplice liability to prosecute an individual who would not otherwise be coveredby the FCPA.

• Lawrence Hoskins was one of four Alstom executives charged with facilitating bribes to help Alstom win a lucrative power plant contract in Indonesia. Hoskins was a British national and based in Paris. He worked for Alstom UK, while the other three executives worked for Alstom’s U.S. subsidiary.

• The government charged Hoskins under two theories: • he aided or abetted or conspired with the U.S. subsidiary to violate the FCPA; and• he was acting as an agent of the U.S. subsidiary.

• The court affirmed an earlier ruling that Hoskins could not be held criminally liable for conspiring to violate or for aiding or abetting violations of the FCPA as the crimes took place outside the United States, and Hoskins did not have sufficient ties to a U.S. company.

• The court reviewed FCPA’s legislative history and concluded that Congress did not intend for persons outside the statute’s carefully defined categories to be subject to conspiracy or complicity liability.

• The Second Circuit assumed for the appeal that Hoskins was not an agent of Alstom’s U.S. subsidiary, but the scope of “agency” remains an open question.

“The FCPA does not impose liability on a foreign national who is not an agent, employee, officer, director or shareholder of an American issuer or domestic concern — unless that person commits a crime within the territory of the United States.…The government may not expand the extraterritorial reach of the FCPA by recourse to the conspiracy and complicity statutes.” - U.S. Court of Appeals for the Second Circuit, United States v. Hoskins

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Trend: Recent Enforcement Shows Aggressive Jurisdictional Theories

In 2018, the SEC leveraged the accounting provisions to bring cases predicated uponaggressive theories of FCPA liability

Elbit Imaging: The violation alleged by the SEC was payments to third parties onwhom due diligence was not performed and for whom there was no evidence ofwork performed. Similar to Kinross Gold, there was no direct allegation of specificcorrupt payments.

Stryker Corp: The allegations relate to the company’s internal controls purportedlybeing insufficient to detect the risk of improper payments in India, China, and Kuwait.Among other charges, the SEC alleged that an internal forensic review of Stryker’sIndian subsidiary identified no supporting documentation for many high-risktransactions, and that Stryker’s Chinese subsidiary used sub-distributors that were notvetted, approved, or trained as required by company policy.

Kinross Gold: Alleged violations include the slow implementation or failure to putin place compliance controls at two acquired African subsidiaries, failure to respondto internal audits flagging the inadequate controls, and inadequate efforts to ensurethat payments to vendors and consultants were used appropriately. There was nodirect allegation of specific corrupt payments.

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Trend: Regulators Continue to Ramp Up Individual Enforcement“The most effective deterrent to corporate criminal misconduct is identifying and punishing the people who committed the crimes.”“Focusing on individual wrongdoers is an important aspect of the Department’s FCPA program. Over the past year, we announced charges against more than 30 individual defendants and convictions of 19 individuals.”– Deputy Attorney General Rob Rosenstein at the 35th International Conference on the Foreign Corrupt Practices Act

Venezuelan Currency Exchange SchemeIn July 2018, the DOJ announced the first of nine chargesagainst individuals involved in a USD 1.2 billion allegedmoney laundering scheme. The co-conspirators allegedlyentered into contracts to convert PDVSA bolivars into dollarsat the unofficial rate and then, with the assistance of corruptpayments to government officials, converted the purchasedbolivars back into dollars at the official rate. In so doing, co-conspirators allegedly were able to receive as much as 10times their investment by effectively embezzling money fromPDVSA.

DOJ’s 12 individual FCPA prosecutions represent more than 60% of its 2018 FCPA enforcement docket.

60%

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Mitigation: Understand the Strategy Behind Enforcement Against Individuals

1) Absent extraordinary circumstances, a corporate resolution should not protect individuals from criminalliability.

2) Any company seeking cooperation credit in criminal cases must identify every individual who wassubstantially involved in or responsible for the criminal conduct. The DOJ’s focus is on the individuals whoplayed significant roles in setting a company on a course of criminal conduct, including those who authorizedthe misconduct.

3) A company must identify all wrongdoing by senior officials if it wants to earn any cooperation credit in a civilcase. In order to earn maximum credit in civil cases, it must identify every individual who was substantiallyinvolved in or responsible for the misconduct.

4) Retreating from the “full credit or no credit” approach to cooperation in civil cases, civil attorneys now havediscretion to offer some credit even if the company does not qualify for maximum credit but has honestly andmeaningfully assisted the government’s investigation.

5) Civil attorneys are permitted to negotiate civil releases for individuals who do not warrant additionalinvestigation in corporate civil settlement agreements.

6) Civil attorneys are permitted to consider an individual’s ability to pay in deciding whether to pursue a civiljudgment.

Revised DOJ Policy on Individual Accountability in Corporate Cases (November29, 2018)In a recent speech, Deputy Attorney General Rod Rosenstein announced revisions to the DOJ’s policy concerningindividual accountability in corporate cases. Under the revised policy, which restores some of the positions prior tothe 2015 Yates Memorandum, several principles will guide criminal and civil attorneys at the DOJ, including:

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Trend: Expansion of the FCPA Corporate Enforcement Policy

DOJ’s revised enforcement policy solidifies the Pilot Program previously in place and creates clearincentives for self-reporting, full cooperation, and timely remediation.

To Qualify for Presumption of Declination:

Voluntary Self-Disclosure: Must disclose misconduct “prior to an imminent threat of disclosure or government investigation.”

Full Cooperation: Including proactive cooperation, timely preservation, collection, disclosure of relevant information, and making witnesses available.

Timely & Appropriate Remediation: Includes an effective compliance and ethics program, discipline for employees responsible for the misconduct, appropriate retention of business records, and other steps to reduce the risk of further misconduct.

No Declination If:

No Self-Disclosure: But if fully cooperated and timely and appropriately remediated, eligible for up to 25% reduction off the low end of the Sentencing Guidelines fine range.

Aggravating Circumstances: Involvement by executive management of the company in the misconduct, significant profits to the company from the misconduct, pervasiveness of the misconduct, and criminal recidivism may result in a criminal resolution of the case. May still receive 50% reduction in fine if company self-disclosed, fully cooperated, and appropriately remediated the conduct.

DOJ extends FCPA corporate enforcement policy to M&A: “We intend to apply the principles contained in the FCPA Corporate Enforcement Policy to successor companies that uncover wrongdoing in connection with mergers and acquisitions and thereafter disclose that wrongdoing and provide cooperation, consistent with the terms of the Policy.”

- Deputy Assistant Attorney General Matthew S. Miner

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Mitigation: Ensuring Effective Response to FCPA Matters

• Promptly and thoroughly address and investigate internal reports or suspicions of misconduct, so as to allow the company to have sufficient information to make self-disclosures.

• Preserve and collect documents from relevant individuals in a timely manner.

• Produce and identify key documents helpful to the government’s understanding of the case.

DOJ Issues Four Declinations in 2018 Under the FCPA Corporate Enforcement Policy DOJ declined prosecution against Dun & Bradstreet, Güralp Systems Limited, Insurance Corporation of Barbados Limited, and Polycom, Inc. based on: (1) prompt voluntary disclosure; (2) thorough internal investigation; (3) full cooperation with the investigation; (4) enhanced internal compliance program and accounting controls; (5) full remediation; and (6) full disgorgement.

• Identify key individuals who the government may consider interviewing.

• Assist the government in interviewing key individuals by de-conflicting witnesses, and making witnesses not in the United States available for interviews.

• Hire external counsel with the expertise and experience to help the company navigate the process and evaluate what actions should be taken.

Practical measures a company may consider taking to benefit from the revised FCPA enforcement policy:

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Trend: Dodd-Frank Whistleblower Protection Case May Encourage External Reporting

Statistics:• Of the 5,200 tips received by the SEC Office of the

Whistleblower in FY 2018, 202 pertained to FCPA allegations (down from 210 in FY 2017).

• Whistleblower tips have increased 76% since FY 2012.• In FY 2018, the government paid USD 168 million in awards to

13 individuals. • The ten highest individual awards issued by the SEC each

totaled more than USD 5 million, with the largest being a USD 50 million award issued in March 2018 to two individuals.

Dodd-Frank Goes GlobalIn FY 2018, the SEC Office of the Whistleblower received tips from 72 non-U.S. countries:

• Canada: 89 complaints

• UK: 85 complaints

• Australia: 45 complaints

• China: 40 complaints

• Germany: 29 complaints

• India: 26 complaints

• Israel: 25 complaints

Legislation:According to the whistleblower provisions of the Dodd-Frank Act (15 U.S.C. §78u-6), the SEC will make a financial award (pay a bounty) to whistleblowers who (1) voluntarily (2) provide original information (3) to the Commission (4) that leads to (5) a “successful enforcement [action].” The provisions also provide protections from retaliation against whistleblowers, although courts have declared that the anti-retaliation provisions do not apply to foreign whistleblowers in some situations.

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Trend: Dodd-Frank Whistleblower Protection Case May Encourage External Reporting (cont’d)

Digital Realty Trust v. Somers confirmed Dodd-Frank’s anti-retaliation protection applies only where whistleblowers have reported their concerns to the SEC.

Digital Realty Trust v. Somers Case Background• Somers was a Vice President of Portfolio Management for REIT Digital Realty Trust from 2010 to 2014.• Somers reported alleged securities law violations to management and was thereafter terminated.• Somers filed a DFA anti-retaliation lawsuit against Digital Realty in the U.S. District Court for the Northern

District of California alleging retaliatory discrimination.• Digital moved to dismiss on grounds Somers did not report to the SEC and was thus not a “whistleblower”

under the statutory definition of Dodd-Frank.U.S. Supreme Court Ruling• In February 2018, the Court unanimously held that Dodd-Frank’s anti-retaliation provision applies only

to individuals who report violations of securities laws to the SEC and not to individuals who only make internal reports.

The decision potentially could encourage employees to bypass internal reporting processes in favor of first reporting potential misconduct to the SEC to ensure they are covered by Dodd-Frank’s whistleblower protections.

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Mitigation: Implement an Effective Whistleblower Response Protocol

Before reports are made, companies should ensure that they have a system in place to respond to whistleblowers and investigate allegations.

• Review compliance and HR policies and procedures to ensure internal reporting is easy, accessible, and perceived as a corporate priority. Implement a comprehensive and organized system to catalogue and track complaints.

• Ensure that there are robust, comprehensive investigative protocols pursuant to which investigations are handled by appropriate personnel.

• Make clear that all employees, including foreign employees, who report will be treated with respect. Adopt a strict “no-retaliation policy” and communicate the results of investigations to whistleblowers to the extent possible.

• The SEC has chosen 120 days as a key milestone for investigations: the Commission will not consider information for award eligibility unless the reporter waited at least 120 days after making an internal report. Internal investigations that place a company in a position to make a disclosure decision within 120 days should be deemed presumptively reasonable.

• Consider retaining counsel. Non-lawyer personnel conducting internal investigations (e.g., compliance or internal audit personnel or external investigators) are permitted to claim awards for information gleaned from investigations in certain circumstances.

• Go beyond Dodd-Frank: In recent years, key markets such as India, China, and Canada have implemented or considered implementing new whistleblower protection laws.

The SEC has made clear that the fact that a whistleblower is a foreign national does not prevent an award. Indeed, the fourth largest whistleblower award to date (USD 30 million) went to a foreign whistleblower who provided the SEC with key, original information about an ongoing fraud.

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Trend: Third Parties Remain the Single Greatest Area of Corruption Risk Issues involving third parties have been at the core of recent enforcement actions conducted by the SEC, the DOJ, and local enforcement agencies. High-risk third parties may include:

China: Consultants, Design Institutes, PR/Marketing Firms, Event Organizers, Travel Agents, or Distributors

India: Sales Agents, Distributors, Tendering/Procurement Agents, Government Liaison Agents, Logistics Providers, Joint Venture Partners, or Fictitious Vendors

Korea: Distributors, Customs Clearance Agents, Travel Agents, Event Planners

Russia: Distributors, State-Owned Customers, Fictitious Service Providers, Vendors, or Private Customers

Latin America: Sales and Marketing Agents, Customs Brokers, Lobbyists, or Tendering Agents

Africa: Joint Venture Partners and Consultants

SBM Offshores Uses Sales Agents to Secure Winning Bids

According to the DOJ, SBM Offshores pleaded guilty to conspiracy to violate the FCPA in a scheme to bribe officials in Brazil, Angola, and Equatorial Guinea to secure oil drilling bids and agreed to pay a criminal penalty of USD 238 million.

The company’s CEO admitted that he authorized payments to individuals whom he knew had a high risk of being government officials or their agents, and that he paid a portion of the intermediary’s commission to an account in Brazil and another portion to accounts in Switzerland held in the name of shell companies, while deliberately avoiding learning that the payments to shell companies were ultimately received by government officials.

A sales and marketing executive of SBM Offshores admitted that he engaged in a conspiracy to use a third-party sales agent to pay bribes to foreign officials at Petrobras in exchange for their help in securing winning bids.

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Mitigation: Carefully Monitor High-Risk Third Parties

BEST PRACTICES• Identify the specific functions that are prone to corruption and handled by third parties.• Involve legal and compliance in contract negotiations/drafting to ensure that services are specifically and

accurately described and allow for an efficient control (e.g., finance) to assess whether the services have actually been rendered and whether prices are reasonable in light of those services and are in line with market rates.

• Include audit rights with a trigger in third-party agreements to allow for audits when indicated.• Conduct specific training for employees working with third parties and with end customers.• Use a risk-based approach to periodically select third parties for an audit review.• Ensure that rebates, credit notes, and other payments provided to the third party are made to the

contracting entity, including identifying any offshore arrangements.• Understand interaction between sales force in emerging markets, involved third parties (e.g., distributors,

agents) and end-customers, and conduct function-specific compliance training with these employees.• Understand whether margins of intermediaries are passed on to end-customers by reviewing publically

available tender materials or conducting audit reviews.

Third parties are often an inevitable part of doing business in an emerging market. Pre-engagement screening, as well as close monitoring, can help offset the decreased transparency, and control that comes with agents and intermediaries.

Upcoming Gibson Dunn Webcast

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January 29, 2019, 12:00 pm – 2:30 pm EST 15th Annual Challenges in Compliance and Corporate Governance Panelists:Joe Warin, Kendall Day, Stuart Delery, Sacha Harber-Kelly, Adam Smith, Lori ZyskowskiTopics to be discussed include:– Global Enforcement and Regulatory Developments – How to Effectively Identify and Address Key Compliance Risks – Practical Tips for Improving Corporate Compliance – DOJ and SEC Priorities, Policies, and Penalties– Update on Core Governance Issues and Regulatory RequirementsClick Here to Register: https://gibsondunnevents.webex.com/mw3300/mywebex/default.do?siteurl=gibsondunnevents&service=6

Contact Information

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F. Joseph Warin

PartnerWashington, D.C. OfficeTel: +1.202.887.3609Fax: +1.202.467.0539FWarin@gibsondunn.com

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PartnerMunich OfficeTel: +49.89.1893.3210Fax: +49.89.1893.3333BSchwarz@gibsondunn.com

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APPENDIX: THE FCPA

Overview: FCPA

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• Anti-Bribery Provisions: The FCPA prohibits corruptly giving, promising, or offering anything of value to a foreign government official, political party, or party official with the intent to influence that official in his or her official capacity or to secure an improper advantage in order to obtain or retain business.

• Accounting Provisions: The FCPA also requires issuers to maintain accurate “books and records” and reasonably effective internal controls.

What is the Foreign Corrupt Practices Act?

The FCPA was enacted in 1977 in the wake of reports that numerous U.S. businesses were making large payments to foreign officials to secure business.

FCPA: Who is Covered by the FCPA?

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• Issuers: Any company whose securities (including American Depository Receipts and registered debt) are registered in the United States or that is required to file periodic reports with the SEC. • The FCPA also applies to stockholders, officers, directors, employees, and agents acting on

behalf of the issuer.• Issuers must adhere to both the FCPA’s Anti-Bribery and Accounting Provisions.

• Domestic Concerns: Any individual who is a U.S. citizen, national, or resident of the United States (not just U.S. citizens), or any business organization that has its principal place of business in the United States or which is organized in the United States.• The FCPA also applies to stockholders, officers, directors, employees, and agents acting on

behalf of the domestic concern.• Domestic Concerns must adhere to the FCPA’s Anti-Bribery Provisions.

• Other Persons: Anyone who takes any act in furtherance of a corrupt payment while within the territory of the United States.• “Other Persons” must adhere to the FCPA’s Anti-Bribery Provisions.

Definition of “Foreign Official”

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• Any officer or employee (including low-level personnel) of a foreign government department or agency;

• Personnel of an “instrumentality” of a foreign government, which has been construed to include employees of government-owned or government-controlled businesses and enterprises;

• Personnel of public international organizations, such as the United Nations, World Bank or other international financial institutions, the Red Cross, and others;

• Political party officials and candidates; and

• Members of royal families.

The FCPA prohibits corrupt payments to “foreign officials,” which is definedexpansively to include:

*752 F.3d 912 (11th Cir. 2014); see also U.S. v. Duperval, 777 F.3d 1324 (11th Cir. 2015).

Eleventh Circuit Adopts Broad Definitionof “Instrumentality”

In U.S. v. Esquenazi,* the 11th Circuit defined an “instrumentality” as an entity that 1) is controlled by the foreign government and 2) performs a function the government treats as its own.

According to the court, characteristics of a “controlled” entity may include:• Government’s formal designation; • Government ownership stake;• Government’s ability to hire and fire the entity’s principals;• Extent to which the entity’s profits go to the government; and• Extent to which government funds the entity.

Characteristics of an entity that performs a government function may include: • Whether the entity has a monopoly over the function;• Whether the entity receives government subsidies;• Whether the entity provides services to the public at large; and• Whether the public and the government perceive the entity to be

performing a public function.

FCPA: What Types of Payments are Prohibited?

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• The FCPA prohibits not only actual payments, but also any offer, promise, or authorization of the provision of anything of value.

— No payment needs to be made nor benefit bestowed for liability to attach.— An offer to make a prohibited payment or gift, even if rejected, is a violation of the

FCPA.

• The FCPA also prohibits indirect corrupt payments.— The FCPA imposes liability if a U.S. company authorizes a payment to a third party

while “knowing” that the third party will make a corrupt payment.— Third parties include local agents, consultants, attorneys, subsidiaries, etc.

• Political or charitable contributions can violate the FCPA.

FCPA: What Constitutes a “Thing of Value”?

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• There is no “de minimis” exception.

• It is not limited to tangible items of economic value.

• It can include anything a recipient would find interesting or useful, including:

• Gifts• Sporting Event Tickets• Entertainment• Food and Wine• Meals• Internships• Professional Training

• Trips• Loans• Employment• Consulting Fees• Mobile phones and electronic devices• Education• Political or Charitable Contributions

“As part of an effective compliance program, a company should have clear and easily accessible guidelines and processes in place for gift-giving by the company’s directors, officers, employees, and agents.” -A Resource Guide to the U.S. Foreign Corrupt Practices Act (p.16).