Coordinated U.S. and U.K. Anti-Corruption Efforts Mean Greater Risks to U.S. Companies by ProQuest

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On March 1, 2010, the DOJ announced that BAE Systems, PLC (BAE), the largest defense contractor in the United Kingdom and the fifth-largest provider of defense materials to the U.S. Department of Defense, pleaded guilty to conspiring to defraud the United States by making false statements about BAE's FCPA compliance program. BAE agreed to pay a $400 million fine, one of the largest ever imposed in an FCPA-related enforcement action.

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     Coordinated U.S. and U.K. Anti-Corruption
     Efforts Mean Greater Risks to U.S. Companies
     By Susan Muck and Catherine Kevane, Fenwick & West




     A
             s evidenced by several high-profile   equipment in Saudi Arabia, the Czech Re-      owned refineries and oil companies in Iraq
             prosecutions in recent months,        public, and Hungary. The payments were        and Indonesia from 2000 to 2007 in ex-
             the Department of Justice (DOJ)       made through offshore shell companies         change for contracts worth $176 million.
     and the Securities and Exchange Com-          beneficially owned by BAE; BAE also en-       Innospec also was alleged to have paid
     mission (SEC) have redoubled efforts to       couraged these “marketing advisors” to        kickbacks to Iraqi officials in order to ob-
     investigate and prosecute violations of the                                                 tain contracts under the United Nations
     Foreign Corrupt Practices Act (FCPA or                                                      Oil for Food Program.
     “Act”). At the same time, the United King-                                                      Innospec allegedly funneled payments
     dom has staked out tough new anti-cor-                                                      to Iraq by increasing its agent’s commis-
     ruption measures in the U.K. Bribery Act        Together, U.S. and U.K.                     sions and artificially inflating its prices in
     that takes effect later this year and that                                                  contracts. In addition to cash payments,
     may prove to be even more expansive in
                                                     regulators have amassed                     Innospec allegedly paid lavish travel and
     scope than the FCPA. Together, U.S. and         powerful enforcement                        entertainment expenses for Iraqi Minis-
     U.K. regulators have amassed powerful                                                       try of Oil officials, including a seven-day
     enforcement tools that spell great risk for     tools that spell great risk                 honeymoon for one official. Innospec also
     U.S. companies that fail to implement and                                                   supplied mobile phone cards and cam-
     enforce robust anti-corruption programs.
                                                     for U.S. companies that fail                eras and provided officials with “pocket
                                                     to implement and enforce                    money.” In Indonesia, Innospec allegedly
     Recent Coordinated Prosecutions:                                                            funneled bribes to government officials
     BAE Systems and Innospec                        robust anti-corruption                      through an Indonesian agent and through
     On March 1, 2010, the DOJ announced             programs.                                   “special commissions” paid to a Swiss ac-
     that BAE Systems, PLC (BAE), the largest                                                    count.
     defense contractor in the United King-                                                          Innospec agreed to pay a $14.1 million
     dom and the fifth-largest provider of de-                                                   criminal fine and $11.2 million in disgorge-
     fense materials to the U.S. Department of                                                   ment to the SEC; it also agreed to retain
     Defense, pleaded 
								
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