Thursday, May 17, 2012

M&A FCPA Compliance Risks


The risk of liability under the Foreign Corrupt Practices Act (FCPA) cannot be understated when undertaking corporate merger and acquisition activity.
In recent years, pressure to avoid corruptive practices within mergers and acquisitions has heightened, with due diligence becoming imperative for companies undertaking acquisitions outside the U.S. The DOJ’s Criminal Division Presidential Budget Request stated:
FCPA enforcement is consistent with Obama’s administration goals of promoting transparency, democracy, sustainable development and good governance’.
Through several administrative cease-and-desist proceedings, the U.S. Securities and Exchange Commission (SEC) has reasserted the importance of the Act. In particular, they have highlighted the importance of completing proper due diligence, so as to ensure both the determination of the deal’s true value and the extent to which compliance related steps must be implemented after closing.

Key Corruption Risks: Mergers and Acquisitions

There is a risk of corruption when undertaking any Merger or Acquisition. Crucially, if an acquired company was tainted by corruption prior to its acquisition, its new parent company will assume both civil and criminal liability for that corruption. Recent SEC findings have confirmed this. The cases of the Ball Corporation, Diageo and Watts Water Technologies, where companies were fined for failing to operate comprehensive compliance programs, all involved successor liability.

There is also a risk that a company enters into a merger or acquisition on the basis of financial statements which include revenue that has been corruptly obtained and is therefore not sustainable. When a party to a merger or acquisition has entered into corrupt behavior, the reputation of the law abiding party may come into jeopardy. This may impact upon sales figures. It may also impact upon overhead costs in the form of significant penalty charges.

Factors Leading to Increased Risk of Corruption: Mergers and Acquisitions
Increased global support for US investigations into foreign corrupt practices and global anti-corruption efforts should not be overlooked. However, where an international element is present, the risk of corruption is enhanced. For example, when joint venture deals are entered into in developing/emerging countries, investors are often required to incur additional risks by forming associations with local partners. In addition, undertaking financial transactions also carries increased risk in developing/emerging countries which may not have as robust financial regulatory framework as other jurisdictions. Thus, due diligence must be exercised when transferring money abroad as part of an international acquisition.

The way in which an acquisition is structured will also directly impact upon the risk of corruption. When acquiring a company, it is critical to ascertain whether a complete acquisition is required as opposed to an asset only purchase. Significantly, asset only purchases pose less corruption risks for the acquiring companies than whole company acquisitions. This is because when a company (as opposed to just its assets) is acquired, all historical liabilities remain.

Completing A Merger or Acquisition: Understanding the FCPA
As we have shared in greater depth in previous posts on this blog the FCPA applies to those with formal ties to the U.S. and also to those who violate the Act within the U.S. In broad terms, the act prohibits any payments to foreign officials where the motive is corrupt. Any payment must be intended to influence the recipient’s acts or decisions in order to assist with obtaining or retaining businesses with any party.

Crucial to FCPA compliance is the completion of pre-closing due diligence. This involves undertaking an investigation of the business that is being acquired prior to the signing of contacts. In such an investigation a company may refer to many documents including procurement reports, financial statements and compliance procedures.

Post-acquisition due diligence should also be undertaken. This involves an in-depth examination of the operational dynamics of the newly acquired company. It should build upon the pre-closure due diligence and may identify significant impact factors and potential areas for compliance enhancement.

Understanding Recent Developments
On 21st February 2012, the U.S. Chamber of Commerce Institute for Legal Reform and 36 other business organizations wrote to the DOJ seeking guidance relating to:

several issues and questions of significant concern to businesses seeking in good faith to comply with the FCPA’.

Queries related to compliance programs, instrumentalities of foreign government, parent company and successor company liability, the extent to which intent is necessary and issues surrounding gifts between parties.

Several informal meetings have since been facilitated with members of both private and public sector organisations in order to discuss topics relevant to the guidance. On 24th April 2012, the DOJ and the SEC attended a discussion with representatives from both the American Bar Association of International Law and the International Corruption Committee.

As a result of this consultation, it has been predicted that guidance will be produced as a joint issue between the SEC and the DOJ. As yet, however, it appears that no commitment has been made relating to the exact content of the guidance. Equally, no timescale for release of the guidance has been issued, nor is it clear whether the guidance will be developed using the notice and commitment process included within the Administrative Procedure Act.

7 comments:

  1. The things that have mention in the post is great all the people will get awareness about this movement that you have started.
    Anti-corruption act

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  4. A)
    SODOMIZING MINOR PROSTITUTES .. STINKY DEPRAVED PAEDOPHILE SILVIO BERLUSCONI ( AND HER NAZIFASCIST, MEGA MAFIA MONEY LAUNDERER DAUGHTER MARINA BERLUSCONI WHO SHOULD GO TO JAIL AND NOT ON WIKIPEDIA OR FORBES) IS ALSO A BASTARD DICTATOR, PRINCIPAL OF DOZENS OF MASSACRES, AND HUNDREDS OF MURDERS (MASSACRES: BRINDISI, FIRENZE VIA DEI GEORGOFILI, MILANO PALESTRO, ROME VIA FAURO; BUT ESPECIALLY CARNAGES ABOUT CAPACI - GIOVANNI FALCONE, VIA D'AMELIO PALERMO - PAOLO BORSELLINO, BOLOGNA TRAIN STATIONS, BRESCIA PIAZZA DELLA LOGGIA AND MANY, MANY, EXTRA MANY OTHERS; ON HIS EXTREMELY KILLING ORDER OR ON P2 ORDER WHERE "IT" WAS IN FACTS BASTARD HITLERIAN CHIEF; PLUS HUNDREDS OF MURDERS MASKED BY FALSE SUICIDES, ACCIDENTS, ILLNESSES; SILVIO BERLUSCONI ORDERED TO KILL FOR SUPER EXTRA SURE CORSO BOVIO, MICHELE LANDI, ADAMO BOVE, ANDREA PININFARINA, MENTIONED GIOVANNI FALCONE AND PAOLO BORSELLINO, PLUS MANY MEN AND WOMEN OF THEIR SPARE; AND THEN AGAIN, VIEW MONTHS AGO, MAGISTRATES ALBERTO CAPERNA & PIETRO SAVIOTTI; JUDGE CLEMENTINA FORLEO'S PARENTS; NEARLY JUDGE CLEMENTINA FORLEO TOO; ALWAYS VERY RECENTLY: CHIEF OF POLICE ANTONIO MANGANELLI; EX CHIEF OF POLICE VINCENZO PARISI; & THEN AGAIN: FRANCESCO MASTROGIOVANNI; GIORGIO PANTO & PAOLO ALBERTI; AND HUNDREDS OF OTHER PEOPLE HE HATED, HE FOUND "DISCOMMODE", FOR ONE REASON OR ANOTHER; IN CASE OF JUDGES, MAGISTRATES AND CHIEFS OF POLICE, OBVIOUSLY, TO MAKE THEM PAY THEIR "DARING TO INVESTIGATE HIM"; NOT FOR NOTHING, IN 2001, HE GAVE ORDER TO "DISJOINT WITH TRAUMA" WHICH ABSOLUTELY MEANT "KILLING WITHOUT MAKING IT LOOK LIKE AN HOMICIDE" LIFE OF GREAT PEOPLE WHO REFUSED TO BE HIS ASS LICKING; AS THESE LINKS FOLLOWING, HEAVILY PROVE:

    http://www.abystron.org/expo/italia/2010/segreti-di-stato.aspx

    http://piemonte.indymedia.org/articolo/6986

    http://www.veritagiustizia.it/old_rassegna_stampa/la_stampa_piano_traumatico_contro_la_sinistra.php

    http://www.corriere.it/Primo_Piano/Cronache/2007/06_Giugno/06/biondani_fermare_i_pm.html

    http://www.corriere.it/Primo_Piano/Cronache/2006/10_Ottobre/26/bianconi.shtml

    http://paoloferrarocdd.wordpress.com/2012/10/17/paol%20o-franceschetti-come-uccidere-un-uomo-senza-lasciare%20-traccia/

    http://paolofranceschetti.blogspot.co.uk/2008/01/sismi-pollari-ed-il-meccanismo-sempre.html

    http://paolofranceschetti.blogspot.co.uk/2010/01/tra-il-dire-e-il-fare-ce-di-mezzo-il.html

    http://paolofranceschetti.blogspot.co.uk/2008/10/colpo-di-stato.html

    http://cerca.unita.it/ARCHIVE/xml/210000/207045.xml?%20key=spataro&first=741&orderby=1%20http://www.cia.it/rassegnastampa/06062007/a001139.pd

    http://archiviostorico.unita.it/cgi-bin/highlightPdf.cgi?t=ebook&file=/golpdf/uni_2006_10.pdf/26INT09A.PDF&query=massimo%20solani%20%22Massimo%20Brutti%22

    http://www.repubblica.it/2010/01/sezioni/cronaca/segreto-parziale/giudizio-sismi/giudizio-sismi.html

    http://www.societacivile.it/focus/articoli_focus/sismi1.html

    http://www.societacivile.it/focus/articoli_focus/sismi3.html

    http://www.societacivile.it/focus/articoli_focus/sismi4.html

    http://attituderagusa.wordpress.com/2010/01/06/servizi-deviati-la-storia-si-ripete-ma-adesso-ce-il-segreto-di-stato/

    http://www.ttacademy.it/vbulletin/showthread.php?t=588 )

    ReplyDelete
  5. With most people relying on an income protection quote in case of unemployment, it means there is a huge possibility that they no longer trust their government.

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  6. 1)

    IMPORTANT WARNING PLEASE

    QUESTO TESTO NON INTENDE ESSERE PER NULLA CONTRO LE FORZE DELL'ORDINE IN GENERALE. CHE IN ALCUNI CASI A FRONTE DI UNA VITA PIENA DI SACRIFICI, E MAGARI NEANCHE TANTI AGI, HAN DATO ANCHE LA VITA, COME QUANDO IL BASTARDO STRAGISTA, MEGA MANDANTE DI OMICIDI, LADRO, DITTATORE NAZISTA, MAFIOSO, CAMORRISTA, NDRANGHETISTA, SUPER LAVA SOLDI ASSASSINI ED ACCLARATO PEDOFILO SILVIO BERLUSCONI ORDINÒ LE STRAGI DI CAPACI E VIA D'AMELIO. IN OGNI CASO, LA REALTÀ NON É MAI TOTALMENTE BIANCA O NERA. É QUASI SEMPRE GRIGIA. HAI TANTISSIMI ( MA NON TUTTI, RIPETO, NON TUTTI, PER LO MENO LO SPERO) POLIZIOTTI E CARABINIERI CORROTTI DALLE MALAVITE. CHE ASSASSINANO PER LE MALAVITE. O PER I SERVIZI SEGRETI NAZIFASCISTI PRIVATI E PUBBLICI DEL CANCRO DA ESTIRPARE, DA FAR MARCIRE IN GALERA ( OVE IN OGNI ALTRA NAZIONE AL MONDO, VI SAREBBE E DA DECENNI), SILVIO BERLUSCONI ( E FAN PASSARE IL TUTTO, SPESSO, PER FALSISSIME MORTI NATURALI, INCIDENTALI O SUICIDA.. VEDI CASI CUCCHI, MASTROGIOVANNI, BUDRONI, UVA, FERRULLI, CALIN, BIANZINO, TURRISI, FERRULLI E MIGLIAIA DI ALTRI DI CUI NON SAPPIAMO.. IN QUANTO VENNE STUPRATA DEMOCRAZIA E VERITÀ). UNO DI QUESTI POLIZIOTTI CAMORRISTI ED ASSASSINI É DI CERTO PASQUALE RIZZIERI DEL COMMISSARIATO DI PORTA GENOVA A MILANO. PRESSO PIAZZA DEL VENINO. FIERI DI FARNE SAPERE AL MONDO INTERO. AMMAZZI PURE NOI, SE VUOLE. TANTO, UNA PERSONA CHE EGLI, SE NON MEGLIO DIRE, "ESSO", HA FATTO FUORI IN PIÙ A FINI FASCISTI E MAFIOSI, ALIAS, A FINI BERLUSCONIANI .. O MENO...

    OCCHIO AL CORROTTISSIMO, PURE ASSASSINO, AFFILIATO ALLA CAMORRA: POLIZIOTTO PASQUALE RIZZIERI DEL COMMISSARIATO DI PORTA GENOVA A MILANO. FA IL POLIZIOTTO A FAVORE DI TANTE MAFIE" O POLIZIOTTO PREZZOLATO ED OMICIDA" PASQUALE RIZZIERI DI DEL COMMISSARIATO DI PORTA GENOVA A MILANO"!!! E NON CONTRO, COME DOVREBBE ESSERE IN OGNI PAESE .. ANCHE SOLO NORMALE! VI SONO FOTO MENTRE PRENDE MAZZETTE DAI NDRANGHETISTI GIORGI. QUELLI DELLA SPARATORIA IN PIAZZA BERNINI A MILANO.

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  7. 2)

    IL POLIZIOTTO TERRIFICANTEMENTE CORROTTO DA CAMORRA, NDRANGHETA E MAFIA, PASQUALE RIZZIERI DEL COMMISSARIATO DI PORTA GENOVA A MILANO E UIGOS PROTESSE PER DECENNI I MEGA KILLER CALABRESI BARBARO E PAPALIA DI BUCCINASCO E CORSICO ( NEGLI ANNI 90 RICEVETTE DA LORO DECINE DI MILIONI DI ALLORA LIRE, PRESSO IL COMMISSARIATO DI POLIZIA DI BAGGIO - QUARTIERE OLMI.. INFATTI, POI CHIUSO... CHE PRESIDIÒ A FAVORE DI ASSASSINI MALAVITOSI, E NON CERTO DEL POPOLO ... DEL PUEBLO ... DEL PUEBLO UNIDO .. CHE JAMÀS SERÀ VENCIDO.. Y DE STRA VERDAD)!!! IL POLIZIOTTO VERMINOSAMENTE CORROTTO DA MAFIA CALABRESE, MAFIA SICILIANA E ANCOR PIÙ MAFIA CAMPANA, PASQUALE RIZZIERI DI UIGOS E COMMISSARIATO DI PORTA GENOVA A MILANO, COLLABORAVA ADDIRITTURA A SPACCIARE COCAINA CON O CAMORRISTA (COME PASQUALE RIZZIERI STESSO) ..DICEVAMO... O CAMORRISTA MASSIMO IMPOLITO DI VIA MAR NERO A MILANO. E CON LA PROSTITUTA NDRANGHETISTA PATRIZIA TROPIANO, SEMPRE DI VIA MAR NERO A MILANO. E UCCISE A COLTELLATE, UNA PERSONA, NEL PARCHETTO VICINO ALLA STESSA VIA MAR NERO, INSIEME AL BASTARDISSIMO ASSASSINO MASSIMO "MASSIMINO" IMPOLITO STESSO. NON PER NIENTE NOTO COME "MASSIMO IMPOLITO O SCANNA GENTE"!!! ULTIMAMENTE SONO STATI ARRESTATI I MANGANO. EBBENE, IL SUINO CORROTTISSIMO, NAZIFASCISTA, DAVVERO POLIZIOTTO PRO CAMORRA PASQUALE RIZZIERI DEL COMMISSARIATO DI PORTA GENOVA A MILANO E UIGOS ERA VICINISSIMO AI MAFIOSI MANGANO ( IL CUI CAPO STIRPE ABITAVA A "CASA DI APPUNTAMENTI" BERLUSCONI PRESSO "H"AR"D"CORE, NOTORIAMENTE: BERLUSCONI E COSA NOSTRA.. STESSA MERDA E DA "SOLO" MEZZO SECOLO). COME LO ERA VICINISSIMO AI MAFIOSI LO PICCOLO E FIDANZATI DI PALERMO. E DI MILANO. NE SCRIVEREMO GIORNO E NOTTE. FINO A CHE UCCIDERÀ ANCHE NOI? MEGLIO MORTI DA UOMINI VERI CHE VIVI DA INDIGNITOSI CORNUTI E MAZZIATI. MEGLIO MORTI DA UOMINI VERI CHE VIVI DA VITTIME, FATTE PASSARE PER CARNEFICI A FINI BERLUSCONAZIFASCISTI.. E PER LO PIU' DA MAFIOSI, CAMORRISTI, NDRANGHETISTI, CORROTTISSIMI ASSASSINI COME PASQUALE RIZZIERI DI UIGOS E COMMISSARIATO DI PORTA GENOVA A MILANO!! IL GIOCHINO KILLER, IL GIOCHINO DISTRUGGI VITE DELLE "DISARTICOLAZIONI CON TRAUMA" POTREBBE TOCCARE ANCHE A VOI.
    http://cerca.unita.it/ARCHIVE/xml/210000/207045.xml?%20key=3Dspataro&first=
    http://archiviostorico.unita.it/cgi-bin/highlightPdf.cgi?t=ebook&file=/golpdf/uni_2006_10.pdf/26INT09A.PDF&query=massimo%20solani%20%22Massimo%20Brutti%22
    http://www.cittanuove-corleone.it/Scontro%20di%20civilt%E0,%20l'Italia%20dei%20mascalzoni.html
    http://www.veritagiustizia.it/old_rassegna_stampa/la_stampa_piano_traumatico_contro_la_sinistra.php
    http://www.antimafiaduemila.com/200804153117/articoli-arretrati/lo-stato-mafia-contro-lo-stato.html
    http://ricerca.gelocal.it/lanuovasardegna/archivio/lanuovasardegna/2006/10/27/SA2PO_LA203.html
    http://www.corriere.it/Primo_Piano/Cronache/2006/10_Ottobre/26/bianconi.html
    http://www.societacivile.it/focus/articoli_focus/sismi4.html
    http://it.groups.yahoo.com/group/noberluska/message/47308
    http://discutere.wordpress.com/2010/09/24/007-licenza-di-infangare-cimici-e-nastri-da-pollari-a-marrazzo/
    VIVA IL 25 APRILE 1945, VIVA LA VERA DEMOCRAZIA E LIBERTÀ!!!

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