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Disciplina - Corporate Compliance
The course seeks to provide students with an in-depth view of the most significant and practical issues arising from corruption. Discussions will begin upon the origins and internationalization of the fight against corruption, followed by the specific violations of anti-bribery and accounting provisions, the affirmative defenses that can be raised and the role of enforcement agencies. Students will also be faced with the challenges of drafting adequate compliance and due diligence programs.
Considering the recent enactment of the Brazilian Anti-Corruption Law, the course relies upon the Foreign Corrupt Practices Act and its enforcement by the DOJ and SEC to provide students with case studies for each of the classes. However, comparisons with the Brazilian Law and the UK Bribery Act will be commonly addressed.
The objective is to familiarize the student with the key elements involving anti-corruption and encourage them in identifying the appropriate red flags and assessing the risks to which companies are exposed. By the end of the course, students will have become familiar with the issues dealt by lawyers working in this area of legal practice.
1 - Inception of a Global Anticorruption Policy
In a time of scandals and continuous debates about worldwide corruption, it is important to revisit the roots of this problem and understand the origins of important legislation aimed at fighting corruption. What type of social-politic context led to the enactment of the Foreign Corrupt Practices Act in 1977? What about the Brazilian Anti-Corruption Law? Whether by President Richard Nixon’s resigning in the United States after the unveiling of the Watergate scandal or by thousands of protesters marching in cities across Brazil, addressing these issues are essential in the introductory phase of this course.
Class reading
2 - The Internationalization of Foreign Bribery Prosecution
Upon the United States efforts to internationalize action against corruption, several treaties have been enacted such as the Inter-American Convention against Corruption in 1996, the OCDE Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 1997 and the United Nations Convention against Corruption in 2003. What are the consequences in globalizing the efforts for combatting bribery? What are the main characteristics of this international framework? Can multiple countries prosecute and sanction someone for the same offense?
Class reading
3 - Elements of Anti-Bribery and Accounting Offenses
Several elements have to be satisfied in order to configure anti-bribery and accounting violations of the FCPA. This class will present these elements and discuss how they are applied by the competent authorities. For example, what are bribes intended to obtain or retain business? What is “anything of value”? Is there a minimum threshold for payments to be deemed unlawful? Who is the payor and recipient of the corrupt payment?
Class reading
United States of America v. David Kay and Douglas Murphy, 2007. Appeals from the United States District Court for the Southern District of Texas. USDC No. 4:01-CR-914.
4 - Liabiity: FCPA Sanctions
Violating the FCPA is a disruption of normal business operations and can have far-reaching consequences, beyond the imposition of civil and criminal penalties. What are the penalties at the DOJ and SEC’s disposal? How are they different to those set forth in the Brazilian Anti-Corruption Law? How are fines calculated?
Class reading
Stevenson, Drury D. and Wagoner, Nicholas J., FCPA Sanctions: Too Big to Debar? (November 1, 2011). Fordham Law Review, Vol. 80, p. 775.
5 - Liability: Exceptions and Affirmative Defenses
There are some situations in which payments to foreign officials will not result in violations of the FCPA, irrespective of satisfying its offense elements. The exempted conduct may fall into an exception or an affirmative defense. What is the difference between both? What situations qualify as exceptions and affirmative defenses? Are they commonly invoked by defendants? Are there exceptions or affirmative defenses set forth in the Brazilian Anti-Corruption Law?
Class reading
6 - Enforcement Agencies: DOJ and SEC
The Department of Justice and the Securities and Exchange Commission are jointly responsible for the enforcement of the FCPA. Enforcement trends have shown an increased level of interaction and coordination between the two agencies. Accordingly, cooperation between the American enforcement authorities and foreign ones in multi-jurisdictional cases is also increasing. But what are the roles of each one of them in enforcing the FCPA? How do violations initially come to the information of the competent authorities? What factors are considered when deciding whether or not to charge a corporation?
Class reading
7 - Compliance: Basic Elements
The recent increase in enforcement activity has led corporations to be especially concerned of the corruption risks they face. In this context, a well-designed compliance program is the best alternative in reducing the likelihood of a violation. Implementing an effective program might assist the company in not only having a penalty reduction, but also protecting its reputation, reducing uncertainty in business transactions and gaining investors’ value and confidence. But what exactly should be included into an effective compliance program? Should the FCPA provide for a compliance affirmative defense? How is the subject treated by the recently enacted Brazilian Anti-Corruption law?
Class reading
United States District Court, Eastern District of Ney York. 2012. United States of America v. Garth Peterson
8 - Compliance and Third Party Risk Management
The FCPA prohibits not only payments made directly to foreign officials, but also those performed to any person while knowing that such payment will be given, directly or indirectly, to a foreign official. Accordingly, a significant percentage of FCPA anti-bribery violations against corporations are based on the conduct of their agents, commercial representatives, distributors or other third parties. What is the legal standard to hold a company liable by the acts of these third parties? How can the risk be minimized? What should a company do when discovering that an intermediary is being investigated by the competent authorities?
Class reading
9 - Compliance Documents
Beyond understanding what an efficient compliance program should look like in theory, it is important to face the challenges posed to lawyers working in this area of legal practice. This class therefore seeks to demonstrate what are the practical issues faced when structuring an adequate compliance program. What are the legal documents that must be drafted? How should interviews and employees training be conducted?
Class reading
10 - Anti-Bribery Due Diligence
Class reading
Conducting anti-bribery due diligence is of utmost importance in the M&A context, considering that an entire transaction can fall apart if the risk is not discovered at the appropriate time or managed properly. Performing it will assist in adequately valuing and structuring the transaction, preparing financing strategies and minimizing risks of enforcement. But how much due diligence is necessary? When and how should it be conducted? What are the relevant red flags that must be addressed?
11 - Accounting Due Diligence
Class reading
Accounting violations are on the spotlight since the uncovering of the Enron scandal, in which the unlawful conduct enabled the company to appear more profitable on paper than it really was. Under the FCPA, violations are easily invoked by the enforcement agencies since it is possible to violate the statute’s accounting provisions without making a corrupt payment. In fact, most of the enforcement actions for violation of accounting provisions do not involve questionable foreign payments. This class will approach the peculiarities of accounting violations, what are its common red flags and how should these be addressed in a due diligence.
12 - Successor Liability
Class reading
When a company acquires another, the surviving successor company may also acquire FCPA liabilities of the target company. This class will discuss what an acquiring company can do to minimize the chances of being held responsible for the unlawful acts of the acquired company, as well as evaluate if it would be beneficial to adopt a safe harbor rule. Does the threat of successor liability prosecution lead companies to avoid buying other companies operating in high-risk jurisdictions? Does it increase transaction costs for M&A deals?