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									           2             AD                                                                                        October 2010




    8




           In this issue…                                                        International Bribery

        Rules & Regulations                          OECD Working Group on Bribery 2009 report: What is in
                                                     the pipeline for the coming months?
1       OECD Working Group on Bribery 2009
        report: What is in the pipeline for the
        coming months?                               The OECD Working Group on Bribery has recently published its annual report for
2       Increasingly Accurate Guidance on            2009, which follows the new 2009 “Recommendation for Further Combating Bribery
        Compliance Programs from Authorities         of Foreign Public Officials in International Business Transactions. It was an




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                                                     opportunity for the Working Group to review several countries’ progress on
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                                                     corruption and future deadlines in this matter.
        Conference Coverage




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3       London World Bribery and Compliance
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        Forum: September 14 & 15, 2010
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                                                     Countries’ implementation and enforcement of the OECD Anti-Bribery Convention is
                                                     monitored by the OECD Working Group on Bribery through a rigorous system of peer-
                                                     review monitoring, or what Transparency International calls the ‘gold standard’ of
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        Country Focus                                monitoring.
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                                                     Monitoring is subject to specific agreed upon Principles and is broken down into three
4       South Africa: Progress Noted, Efforts
        Required                                     phases:
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                                                         Phase 1 evaluates the adequacy of a country’s legislation to implement the
                                                         Convention.
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        Best practices
                                                        Phase 2 assesses whether a country is applying the legislation effectively.
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                                                        Phase 3 focuses on enforcement of the Convention, the 2009 Anti-Bribery
5       No ‘Tone At The Top’ without ‘Tone in the
        Middle’
                                                         Recommendation and outstanding Phase 2 recommendations.
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        Trends
                                                     PROGRESS REPORT ON COUNTRIES IN PHASE 1 OR 2
6       Authorities Tackling the Fine Line between
                                                     2009 monitoring focused on unsolved issues from the two first phases. The report
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        Lobbying and Corruption
7       The International Anti-Corruption            provided insights into changing anti-bribery legislation in the signatory states of the
        Academy                                      Convention and information on countries wishing to join the Working Group.

                                                     The group also recalled the importance of strengthening cooperation with emerging
8       Barometer                                    economies to stop foreign bribery.

        Poll of monetary penalties delivered by      In its report, the Working Group provided a tailored assessment of each member
        the Department of Justice since 2009         country’s progress in 2009.



9       Agenda
                                                                                            Issue n°8
                                      2                                                  October 2010



         THE 2009 REPORT: MORE COUNTRIES WANT TO JOIN AND WORK WITH THE OECD



         Israel: the latest country to join the 38 OECD members has undergone both Phase 1 and Phase 2.
         Among the recommendations, the Group noted, inter alia, that Israel should be more proactive in
         detecting, investigating and prosecuting foreign bribery cases, and namely those involving the
         defense industry (viz., making it mandatory for the Military Censor to report suspicions of foreign
         bribery by Israeli companies to law enforcement authorities). Legislation on sanctions and the
         jurisdictional implementation of the foreign bribery offence has been introduced.

         Chile: The passage of Act no. 20393 of December 2009 satisfied Chile’s obligations under Article 2 of
         the Convention, with the introduction of the criminal liability of legal persons for the bribery of
         Chilean and foreign public officials. Chile’s Phase 3 evaluation is scheduled for March 2014.

         Turkey: The Group noted the record level of private sector participation during evaluations. Since
         June 2009, the country is now in compliance with Article 2, with the introduction of a new
         amendment on corporate liability, to its Code of Misdemeanors.

          Portugal: The Group recommended that Portugal raise public employees’ awareness on foreign
         bribery, take action to ensure better protection for whistleblowers in the private sector and address




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         its low number of prosecutions of foreign bribery cases. Portugal expressed a divergent opinion on
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         several recommendations.




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         Slovenia: The Group recommended that Slovenia ensure whistleblower protection, raise awareness
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         on foreign bribery and promote internal company controls. This will be examined in further detail
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         during Slovenia’s Phase 3 evaluation in 2013.
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         Poland: drafted a new Bill, which has removed the prerequisite of convicting a natural person before
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         being able to prosecute a legal person.
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         United Kingdom: A new Bribery Act was introduced in June 2010.
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         Czech Republic: Legislation on corporate criminal liability has been postponed to June 2010.
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         Slovak Republic: In December, the Working Group decided to issue a public statement about the
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         situation, warning that further uncertainty about Slovak bribery law may require increased due
         diligence over Slovak companies by their commercial partners, or multilateral development banks.
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         Luxembourg: the Working Group continued to urge Luxembourg to bring its legislation into line with
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         Article 2 of the Convention by establishing legislation to hold companies liable for foreign bribery.
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         WORKING WITH THE WORLD
         This is what the Group calls the Global Approach, which involves a greater engagement with
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         countries not yet members of the OECD, especially emerging countries.

         Call on countries not parties to the Convention to join: The OECD Working Group on Bribery plays
         an important part in the OECD’s efforts to expand its membership. In 2009, Chile, Estonia, Israel and
         Slovenia continued work on their ‘accession roadmaps’ to possible future OECD membership. Russia
         officially requested to join the Convention in February 2009.

         A wider engagement with emerging countries: The Working Group is also actively involved with
         many of the countries that the OECD has identified for ‘enhanced engagement’, with a view to
         possible future membership. The countries include Working Group on Bribery members Brazil and
         South Africa, as well as China, India, and Indonesia. The Working Group also began engaging more
         closely with Thailand, another major emerging economy.




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           -    In April 2009, China began addressing how to establish an offence of bribing a foreign
                public official, but was not yet at the stage of drafting legislation.
           -    India: The CBI and the CVC have enquired about the required procedure and steps to join
                the Anti-Bribery Convention. India does not currently have an active domestic bribery
                offence. During a visit, the anti-corruption authorities recognized the need to focus on
                bribe-givers as well as bribe-takers and on the need to strengthen preventive anti-
                corruption mechanisms. The authorities also expressed interest in future cooperation with
                the OECD and the Working Group on Bribery, including attending further meetings of the
                Working Group as observers.
           -    The Group agreed to invite Indonesia to attend all 2010 meetings as an observer.
           -    In October 2009, Thailand proposed a legislative amendment to establish a foreign bribery
                offence. It also participated to the December 2009 meeting.


      PHASE 3 COUNTRY MONITORING OF THE OECD ANTI-BRIBERY CONVENTION: THE NEXT
      STEP
      Last December, the Working Group adopted a post-Phase 2-assessment mechanism, which acts as a
      permanent cycle of peer review, involving systematic on-site visits as a shorter, more tightly focused
      assessment mechanism than for Phase 2. The first cycle of review under this mechanism is known as




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      Phase 3. This next step in the monitoring process engaged by the Working Group started in June,
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      according to a timetable for evaluations.




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      OBJECTIVES OF PHASE 3: SHORTER AND TIGHTER FOCUS
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      The purpose of Phase 3 is to maintain an up-to-date assessment of the structures that Parties to the
      OECD Anti-Bribery Convention have put in place to enforce the laws and rules implementing the
      Convention and 2009 Recommendations.
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      There are three pillars:
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            Progress made by Parties to the Convention on weaknesses identified in Phase 2.
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            Issues raised by changes in the domestic legislation, or institutional framework of the
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                Parties.
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            Enforcement efforts and results, and other key group-wide crosscutting issues.
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      Similar to the first two Phases, the third Phase is based on vertical evaluations for each country.
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      Phase 3 evaluation should be complete in 2014, according to the schedule established by the
      Working Group on Bribery. Every visit is based on the principle of member countries’ mutual
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      evaluation. Two countries are always appointed to lead the evaluation and choose two local or
      national experts who take part in the on-site visit and draft the preliminary report.
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      HOW DOES IT WORK?
      Similar to the first two phases, various steps will mark the third stage.

      Questionnaire: Before evaluation, the country receives a questionnaire from the Working Group,
      which takes account of the evaluation results of Phase 2. The country has to answer different
      questions about the implementation of the Convention and 2009 Recommendations.

      On-site visit: Shorter than Phase 2 visits, they are scheduled to last up to three days. This is an
      opportunity to meet the authorities responsible for the enforcement of anti-corruption, such as
      magistrates and policemen, but also to discuss informally with key private sector representatives
      (especially on the issue of compliance).

      Following the visit, the two lead examiners jointly with the Secretariat of the Working Group draft a


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         preliminary report based on the questionnaire and collected data. Of course, the country under
         review is free to make comments.

         Note that France’s evaluation will start in June 2012. It is the only one that will take place entirely in
         French. The lead examiners will be Italy and Switzerland.

         Final report: The assessment is then sent to the Working Group on Bribery, which discusses difficult
         issues with the country and may form appropriate recommendations. All the discussions ultimately
         lead to the adoption of a final report listing the recommendations and any objections from the
         country.

         Follow-up reports: Similar to Phase 2, monitoring is implemented, which requires the country to
         make a written report within 24 months following the final report. Meanwhile, the Working Group
         may request an oral report, which is delivered within 12 months. A second report may be required if
         the first does not fully satisfy the Group’s recommendations.


         A KEY PHASE - CIVIL SOCIETY AND THE PRIVATE SECTOR TAKEN INTO ACCOUNT
         Because peer review is an inter-governmental process, business and civil society groups are not
         invited to participate in the formal evaluation process, in particular during the Working Group’s
         evaluation and follow-up.




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         However, their views can be expressed and reflected in Phase 3 where enforcement in the private
         sector is also examined. Notably, businesses and civil society groups (such as trade unions or




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         nongovernmental organizations) very often take part in on-site visits.
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         The OECD’s determination to integrate the private sector into its control program was illustrated by
         the adoption of a guide for companies and international organizations in February 2010. Since, the
         Working Group endorsed a new Initiative to Raise Global Awareness of Foreign Bribery at the end of
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         2009. The guide is presented as, "the most comprehensive guidance ever provided to companies" by
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         Chairman of the Working Group on Bribery Mark Pieth.
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         He also said that raising awareness is necessary to the Convention’s future success and that the goal
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         could not be achieved without targeting the private sector and the general public during the three-
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         year Initiative.
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                                                                                                   Issue n°8
                                             5                                                  October 2010




              INCREASINGLY ACCURATE GUIDANCE ON COMPLIANCE
ules &        PROGRAMS FROM U.S. AUTHORITIES

              Amendments to chapter Eight of the U.S. Federal Guidelines Manual on the sentencing of
egulations    organizations, including proposed changes to §8B2.1 (Effective Compliance and Ethics Program) and
              §8D1.4 (Recommended Conditions of Probation — Organizations) were submitted to Congress on
              April 29, 2010. They will become effective on November 1, 2010, unless Congress decides otherwise.

              Compliance professionals’ attention should primarily focus on the proposed amendments


              GUIDELINES FOR UNIFORM SENTENCING HAVE BECOME LINES OF CONDUCT FOR
              POTENTIAL DEFENDANTS

              Congress created the Sentencing Commission in 1984 to establish uniform sentencing for federal
              defendants. The Commission enacted the Guidelines in 1985 for individual defendants and
              completed them in 1991 with provisions for organizations. The Guidelines' primary goal is to




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              achieve uniform sentencing and alleviate disparities.
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              For nearly 25 years, the Federal Sentencing Guidelines have been mandatory, meaning that the




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              courts have been obliged to sentence defendants within the sentencing scope of the Guidelines, in
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              most cases. This changed after the United States v. Booker case, when the Supreme Court ruled
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              that the Guidelines were merely advisory. The Courts are now allowed to tailor sentences according
              to other statutory concerns. The federal sentencing guidelines applicable to organizations provide
              companies with strong incentives for implementing compliance and ethics programs (if every
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              principle is respected, companies could reasonably expect sentencing leniency when criminal
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              conduct has been disclosed) and with meaningful guidance on how to do so.
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              CHAPTER 8: FOR THE ATTENTION OF COMPLIANCE PROFESSIONALS!
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              Chapter 8 “is designed so that the sanctions imposed upon organizations and their agents, taken
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              together, will provide just punishment, adequate deterrence, and incentives for organizations to
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              maintain internal mechanisms for preventing, detecting, and reporting criminal conduct.” According
              to the Guidelines, four factors may increase the ultimate punishment of a company:
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                            (1) The involvement in, or tolerance of criminal activity

                            (2) The organization’s prior history
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                            (3) The violation of an order

                            (4) The obstruction of justice
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              Chapter 8 provides two factors that mitigate a company’s ultimate punishment:

                            (1) The existence of an effective corporate compliance and ethics program

                            (2) Self-reporting, cooperation, or acceptance of responsibility by the organization

              §8B2.1 (Effective Compliance and Ethics Program):

              The proposed amendment to §8B2.1 alters one of the mitigating factors, i.e., a company’s rollout of
              an effective compliance and ethics program.

              One of the required items for an effective compliance and ethics program pursuant to 8B2.1 is
              committing to remediation efforts after a company has discovered criminal conduct. The


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         amendment clarifies the notion of ‘remediation efforts’:

         “After criminal conduct has been detected, the organization shall take reasonable steps to respond
         appropriately to the criminal conduct and to prevent similar criminal conduct, including making any
         necessary modifications to the organization’s compliance and ethics program.”

         Application notes provide guidance on what are ‘reasonable steps’:

                       -    The organization should take reasonable steps to make restitution and otherwise
                            remedy the harm resulting from the criminal conduct.

                       -    The organization should self-report and cooperate with the authorities.

                       -    The organization should assess and, if necessary, modify its compliance program
                            to ensure that the program is more affective.

                       -    If an organization decides to modify its compliance program, the company may
                            take the additional step of retaining an independent monitor to ensure adequate
                            assessment and implementation of the modifications.

                       -    High level staff “should be aware of the organization’s document retention




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                            policies and conform any such policy to meet the goals of an effective compliance
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                            program under the guidelines and to reduce the risk of liability under the law.”

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                            A company is required to “periodically assess the risk of criminal conduct [within
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                            it] and…take reasonable steps to design, implement or modify” its compliance and
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                       -
                            ethics program.
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                            As part of this assessment, a company is required “to monitor the nature and
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                            operations of the organization with regard to particular ethics and compliance
                            functions.”
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         §8D1.4- Recommended Conditions of Probation
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         An amendment has also been submitted to §8D1.4 (Recommended Conditions of Probation –
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         Organizations) (Policy Statement) to simplify the recommended conditions of probation for
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         organizations. The new section consolidates the list of conditions that are sufficient conditions for
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         probation.
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         The Guidelines currently make a distinction between conditions of probation that appropriately
         ensure that an organization can to pay an order of restitution, fine, or assessment, and conditions of
         probation that are appropriate for any other reason. The proposed amendment eliminates this
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         distinction and gives the courts the flexibility to impose any of the available conditions of probation
         on a company.
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         The proposed amendments also clarify two of the current possible conditions of probation:

         -They allow the court to require an organization to submit to the examination of its books and records
         by an independent corporate monitor, instead of simply a probation officer.

         -They allow the court to require an organization to submit to a reasonable number of unannounced
         examinations of facilities subject to probation supervision. (Currently, the courts might only require
         organizations to submit to examinations of their books and records, as a condition of probation.)

         The Commission has also asked the public for comments on the proposed amendments and on
         “whether to encourage direct reporting to the board by responsible compliance personnel by allowing
         an organization with such a structure” to receive mitigation of its ultimate punishment “even if high-
         level personnel are involved in the criminal conduct.”

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                                     7                                               October 2010




      OECD MOVING THE SAME DIRECTION

      The OECD recently issued anti-bribery compliance recommendations by its working group
      representing 38 nations, called Recommendation for Further Combating Bribery of Foreign
      Public Officials in International Business Transactions. Similar to US guidelines, the
      Recommendation provides that “member countries should encourage . . . companies to develop
      and adopt adequate (…) *Compliance programs+ or measures for the purpose of preventing and
      detecting foreign bribery (…)”

      So far, the United States has been the only country with such principles.

      The OECD Recommendation goes even further than the U.S. Guidelines regarding the ‘why’ of
      Compliance programs, by specifying that countries should take account of some instances “in
      their decisions to grant public advantages, including public subsidies, licenses, public
      procurement contracts, contracts funded by official development assistance, and officially
      supported export credits.”

      The Recommendation also gives a few guidelines regarding the ‘how’ of anti-bribery compliance.
      This includes expectations about anti-bribery policies, training, internal controls, reporting




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      systems, discipline for violations, compliance incentives, accountability for program




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      management and program assessments. There is also considerable emphasis on third-party
      compliance measures. In many ways, the suggested measures are very similar to those in the




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      U.S. Guideline
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      Finally, the proposed U.S. amendments provide helpful insights into how a company should
      design its compliance program if it wants to benefit from leniency in the event criminal
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      conduct is discovered. Although the Guidelines are considered as merely advisory, they clearly
      indicate what the Sentencing Commission considers as being the best practices in ethics and
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      compliance. Consequently, companies should bear the principles in mind when assessing or
      modifying their compliance programs.
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                                                                8                                                  October 2010



                                   LONDON WORLD BRIBERY AND COMPLIANCE FORUM:
                                   SEPTEMBER 14 & 15, 2010

      onference                    The London World Bribery and Compliance Forum was held on September 14 & 15, 2010 and
                                   brought together 80 compliance professionals (government enforcement officials, in-house
                                   counsel, legal practitioners and others who deal with bribery and corruption topics on a daily
                                   basis) mainly from the UK. At the core of the summit stood the issue of the new UK bribery Bill,
        overage                    which should become effective in April 2011.




                                   Mike Koelher, a well-known U.S. law professor (Butler University) and publisher of the FCPA
                                   professor website, gave a compelling opening speech whose main lines are summed up in this
                                   article.

                                   Mike Koelher first highlighted the specific context of the summit: business interest and concern
                                   over bribery and corruption issues has never been higher. This is due to increased enforcement of
                                   the U.S. Foreign Corrupt Practices Act (FCPA), expected implementation of the Bribery Act in the UK
                                   and increased interest and enforcement activity in other jurisdictions as well. He then chose to
                                   focus on a few specific topics, while painting a broad picture of the issue.




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     “I fully understand that
                                   ENFORCEMENT TRENDS
 various “carrots” and “sticks’




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  may motivate corporates to       The enforcement of anti-bribery laws has clearly become internationalized. The FCPA is a law that
 voluntarily disclose conduct,     impacts not only U.S. companies. Indeed many of the largest cases have involved foreign
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 but I continue to believe that
 it is premature to encourage                                                    FU
                                   companies. In the same way, the Bribery Act is expected to impact not only U.K. companies, but
                                   also foreign organizations that conduct business in its jurisdiction. Moreover, a greater degree of
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    corporates to voluntarily      cooperation between sovereign enforcement agencies, such as the U.S. Department of Justice
   disclose conduct when the       (DOJ) and the U.K. Serious Fraud Office (SFO), in enforcing bribery and corruption laws is clearly
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  contours of the law at issue     growing.
remain unsettled and in many
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      cases have never been        Enforcement theories and procedures are becoming internationalized although each nation has
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subjected to judicial scrutiny.”   unique attributes of local law and procedure. Mike Koelher highlighted the fact that in both the
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                                   SFO’s memo titled “Approach of the Serious Fraud Office to Dealing with Overseas Corruption” and
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    Mike Koelher, US Law           in other public comments by SFO officials, it is clear that the SFO intends to adopt many U.S. style
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         Professor                 enforcement procedures, such as encouraging voluntary disclosure and making use of negotiated
                                   settlements, such as non prosecution and deferred prosecution agreements.
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                                   VOLUNTARY DISCLOSURE
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                                   The FCPA professor highlighted that one curious component of FCPA enforcement and expected
                                   Bribery Act enforcement is the constant encouragement by government enforcement agencies that
                                   organizations voluntarily disclose conduct to the agencies that could potentially implicate the law,
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                                   rather than deal with the conduct at issue internally in an effective and responsible manner with
                                   the assistance of professional advisors. This aspect of enforcement remains controversial. It is
                                   widely acknowledged in the U.S. that the enforcement agencies are, with greater frequency,
                                   pushing the envelope in terms of enforcement theories, so much so that it is not clear if such
                                   theories would even prevail in court. Moreover, many of these enforcement theories have never
                                   been subjected to judicial scrutiny because the enforcement action is settled via a resolution
                                   vehicle that is itself subject to little or no judicial scrutiny.

                                   Mike Koelher concluded on this topic by saying:

                                   “I fully understand that various “carrots” and “sticks’ may motivate corporates to voluntarily
                                   disclose conduct, but I continue to believe that it is premature to encourage corporates to
                                   voluntarily disclose conduct when the contours of the law at issue remain unsettled and in many



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                                                              9                                                    October 2010

                                 cases have never been subjected to judicial scrutiny.”


                                 NON AND DEFERRED PROSECUTION AGREEMENTS
                                 Non and deferred prosecution agreements have a common point: they both remove - in whole or
                                 in part - an independent judicial system from a fundamental role in a transparent legal system
                                 based on the rule of law, ensuring that provable facts support each element of the alleged crime
                                 and that resolution specifics are in the public interest.

                                 In his recent Innospec sentencing remarks, Lord Justice Thomas cited The Risk of Abusing a
                                 Dominant Position, a paper that notes, among other things, that the newly enacted SFO guidance
                                 on “alternative methods to the disposal of criminal investigations by way of negotiated pleas or
                                 other resolutions by corporate defendants” may “introduce some unintended risks of abuse.”

                                 Mike Koelher shares this concern, “it is troubling when an area of law largely develops outside of
                                 the judicial system via privately negotiated agreements – agreements that corporates often feel
                                 compelled to enter into, regardless of facts or legal theories, mindful of the “sticks” the
                                 enforcement agencies posses. I support the study Transparency International (TI) has called for in
                                 its recent Progress Report on the OECD Convention. That report expresses a concern that
                                 negotiated settlements could be “questionable deals” between enforcement agencies and
                                 companies and it calls for procedures to make settlement terms subject to judicial approval
                                 independent from the prosecutor’s office.”




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                                 HOW SHOULD FINES AND PENALTIES BE CALCULATED?
“I do not know what the exact




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  answer should be, but I am     Lord Justice Thomas also touched on the issue of fines calculation. He called for a uniform
comfortable in my conclusion     approach to financial penalties across multiple sovereigns, an increasingly important issue given
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  that the best answer is not
  $703 million (USD) solely to                                                  FU
                                 the growing collaboration between foreign enforcement agencies. The TI report noted that in
                                 some cases fines and penalties are based on the amount of the bribe, while in other cases, fines
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 the U.S. Treasury because a     and penalties are based on the amount of profit or gain from the transaction at issue.
   French, Dutch, and Italian
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   company allegedly bribed      For Mike Koelher, the issue should be handled as follows:
Nigerian officials – something
                                 “Fines and penalties should exceed the amount of profit from the wrongdoing, but with multiple
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that actually happened over a
                                 enforcement agencies increasingly having jurisdiction over the same core conduct, greater
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   10-day period earlier this
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                                 attention needs to be paid so that companies are not paying duplicative (and thus excessive) fines
           summer.”
                                 and penalties for the same conduct.”
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    Mike Koelher, US Law
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         Professor               WHERE SHOULD THE MONEY GO?
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                                 The U.S. and the U.K. have different approaches to the topic. In the U.S., all fines and penalties
                                 assessed in an FCPA enforcement action are collected into the U.S. Treasury. In the UK, as reflected
                                 in the Mabey & Johnson case, at least a portion of the assessed fines and penalties are repatriated
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                                 to the countries affected by the bribery. Recognizing the fact that bribery is not a victimless crime,
                                 the U.K. approach seems to be the better of the two, although it poses several logistical obstacles
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                                 when it comes to ensuring that the money is indeed paid to the right persons or institutions.

                                 Mike Koelher made this compelling comment about the issue:

                                 “I do not know what the exact answer should be, but I am comfortable in my conclusion that the
                                 best answer is not $703 million (USD) solely to the U.S. Treasury because a French, Dutch, and
                                 Italian company allegedly bribed Nigerian officials – something that actually happened over a 10-
                                 day period earlier this summer.”

                                 He also remarked that that a former Assistant Director of the SEC Enforcement Division recently
                                 noted that one of the reasons “governments will keep pursuing corrupt business practices” is for
                                 “one simple reason – it’s lucrative.” Similarly, a former high-ranking DOJ FCPA official was recently
                                 quoted in connection with the increase in FCPA enforcement, “government sees a profitable



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          program, and it’s going to ride that horse until it can’t ride it anymore.”


          PRIVATE RIGHT OF ACTION?
          Mike Koelher closed his speech by asking one question, ‘Is government only enforcement the best
          and most efficient way to eliminate business bribery?’

          As an answer, it appears that the most direct victim in bribery cases is the competitor who was
          denied an opportunity to bid, or lost a contract because it was unwilling to make the improper
          payments unlike its rival.

          For Mike Koelher, as TI notes in its recent report, and as reflected in certain recent events both in
          the U.S. and U.K., political interference in bribery investigations is an unfortunate result of
          government only enforcement. A private plaintiff would not be armed with the ‘sticks’ government
          enforcement agencies possess – meaning that defendants in such cases would likely mount a legal
          defense based on the facts and the law. Thus, the process would likely inject much-needed judicial
          scrutiny into bribery cases and result in useful judicial decisions.




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10
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                                   11                                                      October 2010




                          COUNTRY FOCUS



      SOUTH AFRICA: PROGRESS NOTED, EFFORTS REQUIRED
      The latest report by the Working Group on Bribery recommends that South Africa step up its
      efforts to detect, investigate and prosecute corruption in international business transactions. The
      Working Group on Bribery has just completed a review of South Africa’s implementation of the
      Convention on Combating Bribery of Foreign Public Officials in International Business
      Transactions.




      OECD DIAGNOSIS
      Main recommendations by the OECD are as follows:

      • Increase awareness in the fight against bribery in the public and private sector




                                                                               N
      • Strengthen existing resources for law enforcement and training activities in the fight against
                     TY




                                                                         O
      complex economic crimes, including bribery offences, and improve coordination between the
      police and prosecutors to fight bribery more effectively




                                                                   SI
                R


      • Ensure that the responsibility of companies engaged in acts of bribery committed either as
      PE



      appropriate
                                                     FU
      • Ensure that Article 5 of the Convention, which prohibits considerations of national economic
      O



                                                   IF
      interest, relations with another state, and the identity of individuals or companies when
     PR




      prosecuting foreign bribery, applies effectively to all investigative and prosecutorial decisions in
                                              D

      foreign bribery cases.
                                        D


      South Africa’s positive efforts to fight against foreign bribery are also highlighted in the report. A
 IT



                             TE




      case in point is the recent undertaking of a robust legislative fight against bribery in connection
      with the Law on Prevention and Punishment of Corruption (Prevention and Combating of Corrupt
AD




      Activities Act). As the Act makes it mandatory to report suspicions of bribery, it could be useful in
                      IC




      uncovering cases of bribery.
             TR




      GREYER SITUATION ON THE GROUND
      Despite improvements, many companies are convinced that paying bribes directly, or via third
      ES




      parties, is still required to gain contracts in South Africa. Some companies have begun
      implementing anti-corruption policies, but actually local sources indicate that improper practices
      can still be found. Corruption acts are done in a less direct or visible way (via agents or with non-
      R




      financial remuneration), but are still common in the private as well as public sector.


      ANTI-CORRUPTION LEGISLATION
      International Commitments

      South Africa is not an OECD member country, but it has signed the OECD Convention on Combating
      Bribery of Foreign Public Officials in International Business Transactions. The Convention entered
      into force in South Africa on August 18, 2007.

      South Africa has also signed:

             - The Merida Convention in 2003 (UNCAC)



                                                                                                 11
                                                                                                 Issue n°8
                                        12                                                    October 2010




                   - The African Convention on Preventing and Combating Corruption (2004)

                   - The Southern African Development Community (SADC) Protocol Against Corruption.

          Prevention and Combating of Corrupt Activities Act

          The 2004 ‘Act’ also provides guidance for:

                    • Investigative measures into corruption and related corrupt activities

                    • The establishment and endorsement of a Register to place certain restrictions on persons
                    and businesses convicted of corrupt activities for tenders and contracts

                    • Holding persons in a position of authority accountable for reporting certain corrupt
                    transactions

                    • Extraterritorial jurisdiction for the offence of corruption and offences relating to corrupt
                    activities

          Statute of Limitations




                                                                                     N
                           TY
          Section 18 of the Criminal Procedure Act provides for the right to institute prosecution for any




                                                                               O
          offence, lapsed after the expiration of a period of 20 years from the time when the offence was




                                                                        SI
                     R


          committed.
           PE



          Responsibility of Legal Persons
                                                          FU
          As a general rule, South African law is applicable to natural and legal persons alike. The definition [is
          O



                                                        IF
          also appropriate for public entities, or state-controlled companies.
      PR




                                                   D

          Responsibility of Business Leaders
                                             D


          A business owner or senior manager who is aware of an incident of corruption, fraud, or extortion
     IT




          involving more than R100,000 (approximately €9,500) and who fails to report it, is guilty of a crime
                                   TE




          under the South African law.
AD




          Third Parties:
                            IC




          The 2004 Act specifically criminalizes corruption acts involving agents as it indicates that corruption
                   TR




          can be done directly or indirectly by accepting gratification “from any other person, whether for the
          benefit of him/herself or for the benefit of another person.”
          ES




          Facilitating Payments

          According to South African law, facilitating payments are illegal and a criminal offense.
          R




          Gifts and Hospitality

          Gifts and entertainment are traditionally part of the South African business environment.

          However, there is a growing awareness that said gratifications should not be excessive. With the
          increasing focus on good governance, many companies are revisiting their approach to gifts and
          entertainment. Some have even opted for a policy forbidding any gifts or entertainment.

          Different Codes of Conduct are applied to public officials, depending on their position.

          The codes comprise:

               -    Prohibiting gifts and other favors (in return for a benefit, or for the purpose of influencing

12
                                                                                            Issue n°8
                                    13                                                   October 2010




                the receiver) that would create a conflict of interest
           -    Setting limitations to the value of gifts, ranging from 1,000 to 1,500 rands (approximately
                95 to 140 euros).
           -    Establishing guidelines for the disclosure of gifts to public officials (with requirements to
                disclose gifts exceeding 350 rands, or €33).


      Despite increasingly detailed regulations from the National Treasury over the years as well as
      additional codes of conduct for specific industry sectors (e.g., construction), most observers and the
      Public Service Commission (PSC) have reported low levels of compliance with reporting
      requirements.

      Public officials are also supposed to register their financial interest yearly, but recent reports have
      shown that some civil servants are still reluctant to do so. No remedial or disciplinary action has
      been taken against those refusing to disclose their financial interests, either.

      For some sources, the Public Service Codes of Conduct are ineffectual in preventing two related
      types of unethical and unlawful behavior by public servants, i.e., favors to friends or family and
      unauthorized outside remunerative work.




                                                                                N
                      TY
      Every observer and our sources consider that, compared to the numerous cases of corruption




                                                                           O
      mentioned in both the public and the private sector, the number of cases that find their way into




                                                                    SI
      the courts and produce sentencing is very low.
                 R
       PE




                                                      FU
      The main factors explaining the low level of enforcement are:

                                The lack of any political decisiveness in the matter (even if the latest
      O



                                                    IF
                                 government announcements point to changes in this area)
                                The lack of any real independent anti-corruption agency with
     PR




                                               D

                                 investigation & prosecution powers
                                The inadequacy of the level of resources allocated to investigations. 
                                         D
 IT



                                TE
AD



                        IC
               TR
      ES
      R




                                                                                                  13
                                                                                                                       Issue n°8
                                                               14                                                   October 2010



                                NO ‘TONE AT THE TOP’ WITHOUT ‘TONE IN THE MIDDLE’
                                It is widely agreed that a clear message from the top is essential for the creation of a corporate
                                ethical culture. Indeed, the US Sentencing Guidelines recommend that “High-level personnel and

   est                          substantial authority personnel of the organization shall be knowledgeable about the content and
                                operation of the compliance and ethics program … and shall promote an organizational culture
                                that encourages ethical conduct and a commitment to compliance with the law.”
      ractices

                                MID-LEVEL EXECUTIVES KEY FOR CORPORATE MESSAGE
                                However, it has become increasingly obvious that middle managers’ role should not be
                                underestimated. A lack of commitment by this level in the company pyramid may seriously
                                jeopardize the dissemination of the corporate ethical culture. All levels of employees should believe
                                that the organization wants to act ethically in everything it does, so that the culture can reach the
                                core of the company. Nowadays, most top managers clearly realize they have a clear role to play in
                                delivering a strong message about the company’s values and credo. Misconduct by senior managers
                                in major cases, such as Enron or Worldcom, has made top managers aware of the importance of
                                communicating from the top: they have to set the ‘tone’.




                                                                                                           N
                                                 TY
                                A tone set from the top, albeit crucial, provides no guarantee that middle managers whose role is




                                                                                                      O
                                critical to day-to-day management, will make the tone from the top their line of conduct. Actually,




                                                                                               SI
                                the main problem is that lower level employees, who are in permanent contact with middle
                                            R


                                managers rather than with top managers, will align on the former’s behavior and state of mind.
                                   PE




                                                                                 FU
                                According to Kirk Hanson, Executive Director of the Markkula Center for Applied Ethics and
                                University Professor of Organizations and Society, “The implementation of ethics in an organization
                                O



                                                                               IF
                                is as strong as its weakest link as it flows down into the organization. An organization’s ‘tone at the
                                top’ must be translated into a tone ‘in the middle’ before they can reach the rest of the
                          PR




                                                                          D

                                organization.”
                                                                    D


                                Consequently, ethics and compliance managers should focus on influencing middle managers’
                 IT




                                specific behaviors rather than on top managers’ behaviors, as they have done over the past years.
                                                          TE
       AD




                                Impacting middle managers’ behavior is more complicated than influencing top managers’ conduct.
                                                   IC




                                Actually, middle managers are constrained by intractable financial, sales and cost control objectives.
   “The implementation of       They usually have the feeling that top management is broadcasting the message to focus on
                                          TR




 ethics in an organization is   quantifiable business objectives rather than on the ‘softer’ targets, i.e., ethics. Possibly also, they
as strong as its weakest link   perceive that top management does not realize that they cannot achieve real performance without
   as it flows down into the    ‘stretching’ the corporate ethical standards.
                                ES




        organization. An
 organization’s ‘tone at the    SEVERAL TECHNIQUES FOR PERSUADING MIDDLE MANAGERS
top’ must be translated into
                                R




a tone ‘in the middle’ before   Several techniques can help to disseminate the company’s ethical commitment and convince middle
  they can reach the rest of    managers that the company is serious about its objectives.
       the organization.”
                                Kirk Hanson recommends the following incentive actions for middle managers:
Kirk Hanson, Executive
    Director of the                  1.   Top executives must themselves exhibit all the ‘tone at the top’ behaviors, including
 Markkula Center for                      acting ethically, talking frequently about the organization's values and ethics, and
     Applied Ethics                       supporting the organization’s and individual employee's adherence to the values
                                     2.   Top executives must explicitly ask middle managers what dilemmas arise in
                                          implementing the ethical commitments of the organization in the work of that group
                                     3.   Top executives must give general guidance about how values apply to those specific




        14
                                                                                    Issue n°8
                                15                                               October 2010



               dilemmas
          4.   Top executives must explicitly delegate resolution of those dilemmas to the middle
               managers
          5.   Top executives must make it clear to middle managers that their ethical performance is
               being watched as closely as their financial performance
          6.   Top executives must make ethical competence and commitment of middle managers a
               part of their performance evaluation
          7.   The organization must provide opportunities for middle managers to work with peers on
               resolving the hard cases.
          8.   Top executives must be available to the middle managers to discuss/coach/resolve the
               hardest cases. 




                                                                         N
                   TY




                                                                    O
                                                             SI
               R
      PE




                                                 FU
      O



                                               IF
     PR




                                          D
                                     D
 IT



                           TE
AD



                     IC
               TR
      ES
      R




                                                                                         15
                                                                                                 Issue n°8
                                        16                                                    October 2010



             AUTHORITIES TACKLING THE FINE LINE BETWEEN LOBBYING
             AND CORRUPTION

             Lobbying, the channel used by civil society to influence public decision-making, has grown
rends        considerably. Business, labor and nongovernmental organizations resort to lobbying in
             different ways. Some 15,000 lobbyists are registered in Washington DC and 5,000 in Ottawa.
             Nearly 3,000 lobbyists are registered with the European Commission in Brussels and over
             4,500 with the European Parliament.

             Nevertheless, when large businesses and interests become involved, the fragile balance
             between legitimate and illegitimate lobbying activities is jeopardized.




             THE FUZZY LINE BETWEEN LOBBYING AND CORRUPTION

             Transparency International’s ‘Anti-Corruption Plain Language Guide’ defines lobbying as
             follows:

             “Any activity carried out to influence a government or institution’s policies and decisions in favor




                                                                                     N
             of a specific cause or outcome. Even when allowed by law, these acts can become distortive if
                          TY




                                                                                O
             disproportionate levels of influence exist — by companies, associations, organizations and
             individuals.”




                                                                         SI
                     R


             But when does lobbying become corruption? Transparency International’s Global Corruption
             PE




                                                           FU
             Report 2009: Corruption and the Private Sector tries to answer this question. The report
             explains how businesses with huge funds for backing their lobbying activities and close
             O



                                                         IF
             relationships with lawmakers can achieve disproportionate access to the policy-making process
             in ways that are not accessible to common citizens. When safeguards for transparency and
         PR




                                                   D

             accountability are limited, illegal, undue and unfair influence in a country’s policies and politics
             become a real danger.
                                             D
        IT




             On the other hand, interest groups, an inescapable reality in modern democracies, will always
                                   TE




             strive to influence government decision-making. Lobbying can yield valuable information and
 AD




             data for more transparent and informed decision-making.
                            IC




             AN URGENT NEED TO REGULATE LOBBYING
                  TR




             The current economic crisis has drawn attention to lobbying, with loud calls to improve
             governance both in private sector boardroom practices and public sector management.
             ES




             A December 2009 IMF paper establishes a relation between intensive lobbying and high-risk
             R




             lending practices. The paper concludes that, “the prevention of future crises might require
             weakening political influence of the financial industry or closer monitoring of lobbying activities
             to understand the incentives behind better.”

             Some countries have started implementing legislation and government regulations, viz.,
             Australia, Canada, France, Hungary, Poland, the UK and USA. Recently, both houses of the
             French parliament issued codes of conduct for lobbyists and established registers. The
             European Commission has also recently reinforced its lobbying regulations.

             Israel, an OECD accession candidate country, has also recently amended its legislation, while
             Slovenia is discussing changes. Several OECD countries are reviewing Bills, or taking action in
             parliament, including the Czech Republic, South Korea, Italy, Mexico, Norway and the Slovak
             Republic.


 16
                                                                                         Issue n°8
                                 17                                                   October 2010




      THE OECD DEALING WITH THE ISSUE

      To tackle the burning issue, the OECD has recently adopted a recommendation with a set of
      10 principles as guidance for decision-makers on how to foster good lobbying governance.
      Especially during the current crisis, at a time when countries are reshuffling regulations for
      entire sectors, the principles will help rebuild trust, promote a level playing field for business
      and avoid potential hijacking by powerful interest groups.

      The OECD lobbying principles provide guidance for decision-makers at all levels of government,
      at both national and sub-national levels. They principles support the commitment of the private
      sector and civil society. This underscores an essential aim of the new OECD principles, which is
      to encourage policymakers to level the playing field by dealing fairly with all relevant
      stakeholders and not just those with funds, in the democratic lawmaking process.

      New OECD principles are in no way an anti-lobbying tool. For instance, several countries have
      improved transparency; yet in spite of these efforts, the have not been able to reduce lobbying
      visibly. The goal is to improve lobbying practices as part of the drive to foster open




                                                                             N
      governance and restore public trust in markets and democracy. The OECD principles are a vital
                   TY
      component of the effort to make the world economy stronger, cleaner and fairer.




                                                                       O
                                                                 SI
              R


      1. Countries should provide a level playing field by granting all stakeholders fair and
      equitable access to the development and implementation of public policies.
      PE




                                                   FU
      2. Rules and guidelines on lobbying should address the governance concerns related to
      O




      lobbying practices and respect the socio-political and administrative contexts.
                                                 IF
     PR




                                            D

      3. Rules and guidelines on lobbying should be consistent with wider policy and regulatory
      frameworks.
                                      D
 IT




      4. Countries should clearly define the terms 'lobbying' and 'lobbyist' when they consider or
                            TE




      develop lobbying rules and guidelines.
AD



                     IC




      5. Countries should provide an adequate degree of transparency to ensure that public
      officials, citizens and businesses can obtain sufficient information on lobbying activities.
           TR




      6. Countries should enable stakeholders – including civil society organizations, businesses,
      the media and the general public – to scrutinize lobbying activities.
      ES




      7. Countries should foster a culture of integrity in public organizations and decision-making
      by providing clear rules and guidelines of conduct for public officials.
      R




      8. Lobbyists should comply with standards of professionalism and transparency; they share
      responsibility for fostering a culture of transparency and integrity in lobbying.

      9. Countries should involve key actors in implementing a coherent spectrum of strategies and
      practices to achieve compliance.

      10. Countries should review the functioning of their lobbying rules and guidelines on a
      periodic basis and make the necessary adjustments in light of experience. 




                                                                                              17
                                                                                             Issue n°8
                                    18                                                    October 2010




          THE INTERNATIONAL ANTI-CORRUPTION ACADEMY (IACA)
rends     The International Anti-Corruption Academy, based in Laxenburg 15km south of Vienna, Austria
          is starting operations this autumn. By 2011, IACA will operate globally as a full-fledged
          international organization, with regional offices planned for the mid-term.

          The academy describes itself as “An International Centre of Excellence for a New and Holistic
          Approach to Fighting Corruption.”

          More than 1,000 participants from over 120 UN Member States and over 25 organizations and
          institutions from the private business sector, civil society, academia and the media attended the
          IACA inaugural session during a two-day conference on September 2 & 3, 2010, in Vienna.




          THIRTY-SIX FOUNDING MEMBERS TO DATE

          Thirty-five UN Member States (see the list at the end of the article) and the European Public Law
          Organization signed the Agreement for the Establishment of IACA as an International




                                                                                 N
          Organization. The first round of signatures will be open until December 31, 2010. The first
                      TY




                                                                           O
          signatories will be considered IACA Founding Members.




                                                                     SI
          IACA PARTNERS
                 R
          PE




                                                       FU
          IACA is a joint initiative of the United Nations Office on Drugs and Crime (UNODC) and the
          Republic of Austria, supported by the European Anti-Fraud Office (OLAF) and major stakeholders
          such as the OECD, the European Network of Anti-Corruption Authorities (EPAC), the International
          O



                                                     IF
          Association of Anti-Corruption Authorities (IAACA), the World Bank, Transparency International
        PR




          and - last but not least - Interpol.
                                               D

          Interpol announced that it “will offer its law enforcement expertise to help define the Academy’s
                                         D


          curriculum and to provide course work support regarding law enforcement’s role in anti-
     IT



                               TE




          corruption training” and that it “agreed to work cooperatively with the Academy, linking the
          training done in Austria to its worldwide contacts in law enforcement and among international
AD




          institutions, universities and police academies.”
                        IC




          To demonstrate its support for the project, INTERPOL also pledged USD 250,000 towards the
              TR




          activities of the new anti-corruption body from a donation INTERPOL received from the Motorola
          Foundation, the first company to support such an initiative globally.
          ES




          IACA MAIN OBJECTIVES
          The Academy’s main stated goal is to educate a new generation of specialists and experts to
          tackle corruption related issues.
          R




          The Academy describes itself as “A future global centre of excellence” that “will pursue the
          objective of creating a holistic and inter-disciplinary approach to professionalizing anti-corruption
          training, education and research.”

          It also promotes partnerships with public and private sector institutions, including academia, civil
          society and NGOs from all regions.




18
                                                                                             Issue n°8
                                     19                                                   October 2010



      Academy education and training are largely based on the 2005 UNCAC Convention. The Academy is
      also taking a closer look at assisting States in turning the provisions of the Convention into reality.

      Main IACA goals are to:

               Address the phenomenon of corruption holistically, comprehensively and in an inter-
                disciplinary approach
               Professionalize anti-corruption work to meet the most modern and exacting standards
               Foster direct dialogue, collaboration, exchange and synergies between relevant
                stakeholders
               Improve substantially the effectiveness of institutions, organizations or individuals engaged
                in preventing and combating corruption
               Conduct research on effective and efficient anti-corruption strategies and activities
               Build partnerships with all the relevant stakeholders



      IACA ACTIVITIES

      The Academy will cover a vast spectrum of lectures, seminars, special events, conferences and other
      training activities including (academic) degree programs and offer a broad range of tailored courses.




                                                                                 N
      The Academy will also be providing distance learning and web-based tools.
                       TY




                                                                            O
      Students will come from various entities such as governmental agencies, international organizations,




                                                                     SI
      anticorruption agencies, law enforcement entities, the judiciary, NGOs, civil society actors and
                  R


      business.
        PE




                                                       FU
      The Academy will establish and maintain a global network of like-minded alumni and professionals.
      Special courses will be delivered by high level academics, practitioners and other experts while
      O



                                                     IF
      permanent as well as part-time faculty members will teach ‘module’ and skills courses and present
     PR




      case studies combined with long term anti-corruption and ethics issues.
                                                D

      The first September 2010 activity was an expert meeting with non-state actors on "Non-State Actors
      in the Asset Recovery Processes” organized jointly by IACA and the Basel Institute of Governance.
                                          D
 IT



                                TE




      IACA GOVERNANCE
AD




      The International Steering Committee
                        IC




      The International Anti-Corruption Academy is governed by an International Steering Committee
               TR




      (SC), which brings together senior representatives of IACA’s main Partners and meets once a month.

      The Steering Committee’s main responsibility is to adopt the Academy policies, handle
      ES




      management, the transitional work program and budget. It also has to review the progress of
      Academy activities and evaluate its initiatives.
       The Committee also approves the appointment of members to the two others governance bodies:
      R




      the International Senior Advisory Board and the International Academic Advisory Board.

      The first members of the Steering Committee are:
               The Chair: Martin KREUTNER, Special Advisor to the Minister for Anti-Corruption Affairs,
                Austria
               3 members of the Ministry for Foreign Affairs, Austria
               2 members of the European Anti-Fraud Office’s (OLAF)
               3 members of UNODC (United Nations Office on Drugs & Crime)
               The Commissioner General of the National Centre for Human Rights in Jordan
      All representatives to the SC work in an honorary capacity.




                                                                                                   19
                                                                                                Issue n°8
                                           20                                                October 2010




          The IACA International Senior Advisory Board

          The International Senior Advisory Board (ISAB) comprises a group of Anti-corruption experts and is set
          out to advise IACA in matters of strategic direction. It decided, inter alia, to focus on support for
          fundraising, increase international recognition by acting as IACA Ambassadors and facilitate wider
          networking.

          The Senior Advisory Board is chaired by Michael Hershman, Co-founder of Transparency International
          and current President of the Fairfax Group

          The other members of the Senior Advisory Board are:

                  Barry O’Keefe, Chair of the Law Advisory Board, Notre Dame School of Law, Sydney Australia
                  Mark Pieth, Chairman of the Working Group on Bribery in International Business Transactions
                   of the Organization for Economic Cooperation and Development
                  Eddie R. Ouko, Auditor General of the African Development Bank
                  Timothy Tong, Commissioner of the Independent Commission against Corruption in Hong
                   Kong




                                                                                    N
                  Huguette Labelle, Chair of Transparency International
                              TY
                  Roberto de Michele, Principal Policy Adviser, Inter-American Development Bank




                                                                                O
                  Geraldine Fraser-Moleketi, former South African Cabinet Minister and currently Director at




                                                                          SI
                         R


                   the United Nations Development Program
               PE




          The International Academic Advisory Board          FU
          O



                                                           IF
          The International Academic Advisory Board (IAAB) consists of nine academics specializing in anti-
          corruption matters.
      PR




                                                      D

          One of the IACA Board’s main responsibilities is to give advice on:
                                                D
     IT




                  Strategies and policy frameworks for the educational and training programs
                                      TE




                  The operational organization of the courses
AD




                  The establishing of partnerships with universities or other academic institutions
                               IC




                  An IACA academic research program including specific research aims and objectives
                      TR




          Signatory countries for the Establishment of the IACA as an International Organization
          01        Albania                                        02        Argentina
             ES




          03       Austria                                         04        Benin
          05       Bolivia                                         06        Bulgaria
          07       Cape Verde                                      08        Chile
          R




          09       Cyprus                                          10        Hungary
          11       Indonesia                                       12        Jordan
          13       Kenya                                           14        Libyan Arab Jamahiriya
          15       Liechtenstein                                   16        Luxembourg
          17       Malaysia                                        18        Mali
          19       Mexico                                          20        Montenegro
          21       Panama                                          22        Peru
          23       Philippines                                     24        Portugal
          25       Romania                                         26        Senegal
          27       Serbia                                          28        Slovenia
          29       Syria                                           30        Republic of Macedonia
          31       Togo                                            32        Uganda
          33       United Kingdom and Northern Ireland             34        Yemen
          35       Zambia                                          36        European Public Law Organization 
20
                                                                                                  Issue n°8
                                        21                                                     October 2010


         POLL OF MONETARY PENALTIES DELIVERED BY THE
         DEPARTMENT OF JUSTICE SINCE 2009

      The review of fines issued by the DOJ against companies between 2009 and 2010 may help
      understand and anticipate its decisions. (Fines amounts from DOJ and SEC official releases)




                                         Minimum              Maximum                        Percentage of
                                                                              Fine agreed
       Company Name           Date       Fine range           Fine range
                                                                             (million USD)
                                                                                               minimum
                                        (million USD)        (million USD)                    Fine range
                                                      2009
        Kellogg Brown &                                                                                1
                             02/06/09        376,80            753,60          402,00           107%
            Root LLC
                                                                                                      2
        Latin Node, Inc.     03/23/09         4,20               8,40            2,00           48%
          Control                                                                                     3
                             07/22/09        27,90              55,80           18,20           65%
       Components, Inc.

      Average Values:                        136,30            272,60          140,73           73%




                                                                                        N
      Maximum Values:                        376,80            753,60          402,00           107%
                           TY
      Minimum Values:                         4,20              8,40            2,00            48%




                                                                                O
                                                      2010




                                                                             SI
                     R


                                                                                                      4
        BAE Systems plc      02/04/10        360,00            400,00          200,00           56%
             PE



         Innospec Inc.

          Daimler AG
                             03/17/10

                             03/22/10
                                             101,50

                                             116,00
                                                           FU  203,00

                                                               232,00
                                                                                40,20

                                                                                93,60
                                                                                                40%

                                                                                                 81%
                                                                                                      5
        O



                                                         IF
       DaimlerChrysler
     PR




                                                     D

      Automotive Russia      03/22/10        34,20              68,40           27,36            80%
             SAO
      Daimler Export and
                                             D


        Trade Finance        03/22/10        36,40              72,80           29,12            80%
 IT



                                  TE




            GmbH
AD




       DaimlerChrysler
                             03/22/10         6,30              12,60            5,04            80%
          China Ltd.
                           IC




          Technip S.A.       06/28/10        318,40            636,80          240,00            75%
                   TR




         Snamprogetti
                             07/07/10        300,00            600,00          240,00            80%
       Netherlands B.V.
         Alliance One
          ES




                             08/06/10         4,20               8,40            4,20           100%
       Tobacco Osh, LLC
         Alliance One                                                                                  6
                             08/06/10         4,20               8,40            5,25           125%
      R




       International AG
        Universal Leaf
                             08/06/10         6,30              12,60            4,40            70%
         Tabacos Ltda.

      Average Values:                        117,05            205,00          80,83            79%
      Maximum Values:                        360,00            636,80          240,00           125%
      Minimum Values:                         4,20              8,40            4,20            40%




                                                                                                           21
                                                                                                     Issue n°8
                                             22                                                   October 2010


          Some values are outside the average; they can be explained by the circumstances of the case:




          1.   United States v. Kellogg Brown & Root LLC: The fine (approximately $25,000,000 above the
               bottom of the advisory sentencing guideline range) reflected the egregiousness and long
               duration of the criminal conduct, KBR's leadership role in that conduct and the fact that KBR's
               use of international sales agents for the corrupt payments to foreign government officials did
               not appear to be limited to a single project.

          2.   United States v. Latin Node, Inc.: Defendant Latin Node was dissolved from an operational
               perspective. It currently exists only as a corporate entity for purposes of entering into this
               Agreement. This Agreement was also a result of the voluntary disclosure made by Latin Node
               and its parent corporation eLandia International, Inc., through their counsel, to the
               Department beginning in November 2007, and the disclosure of non-privileged evidence and
               information obtained as a result of the investigation by their attorneys. The disclosure and
               cooperation by eLandia International, Inc., Latin Node's parent, was timely, thorough and
               exemplary. During the course of several months, it disclosed thousands of non-privileged
               records and other information and promptly responded to the Department's requests for
               additional information.




                                                                                         N
                               TY
          3.   United States v. Control Components, Inc.: The Department took the following factors into




                                                                                   O
               consideration: the appropriate consideration of the Sentencing Guidelines; Defendant’s
               recognition and affirmative acceptance of responsibility for its criminal conduct; Defendant’s




                                                                             SI
                          R


               voluntary disclosure of evidence obtained as a result of its extensive internal investigation
                 PE




                                                               FU
               and its substantial cooperation in the Department’s investigation and prosecution; and
               Defendant’s substantial compliance and remediation efforts.
               O



                                                             IF
          4. United States v. BAE Systems plc: Fine initially set at $240 million, eventually lowered because
      PR




               of 40 million that were not covered by the FCPA (funds used to secure defense projects,
                                                        D

               which did not require permission from the Department of State).
                                                  D


          5.   United States v. Innospec Inc.: The agreed fine is low because Innospec represented that,
     IT



                                        TE




               were the company to pay more than the amount agreed, the continued viability of the
AD




               company would be threatened (e.g., would exceed limits of credit facilities, cause a deficit of
               85 million dollars, force the company to close facilities around the world)
                                 IC




          6.   United States v. Alliance One International AG: The fine is above the minimum of the range
                        TR




               partly to account for the fact that two subsidiaries (DIAG and Standard Brazil) participated in
               the commission of the offense, along with a third unrelated company, although they were
               ES




               subsidiaries of different parent corporations at the time. Further, because DIAG, Standard
               Brazil and Company A collaborated to fix prices and pay bribes to the Thai officials, the
               conduct was not limited to a few employees or confined to a single business unit.
          R




          DOJ imposed fines in 2010 seem more balanced than in 2009. However the percentage of fines
          compared to the minimum fine range in 2009 appears lower.

          Overall, there is an average value of fines ranging between 70 and 80 percent of the minimum fine
          range.

          The fines higher than the minimum fine range can be explained by the extent and duration of
          corruption and how the convicted company cooperated with the DOJ. 




22
                                                                                                    Issue n°8
                                                               23                                October 2010


                                                      THE AGENDA



                                                                              OCTOBER 2010
                     SE P T E M B R E 2 0 0 9
                                                                    L    M    M       J     V        S        D
    L        M         M        J         V      S        D
   9th European Forum on Anti-Corruption, October 20-21,                                   1        2        3
              1    2      3        4        5       6
    Paris, C5
                                                                    4    5    6       7     8        9        10
   7        8      9       10     11        12    13
 The European Anti-Corruption Summit 2010, November 2-3,
   London, 15
           C5                                                       11   12   13     14     15      16        17
  14              16       17     18        19    20

 21
   14th International Anti Corruption 25
                                       Conference, November         18   19   20    21      22      23        24
           22       23        24              26      27
   10-13, Bangkok, Thailand, IAAC
  28         29       30                                            25   26   27    28      29      30        31
  24th National Conference on the FOREIGN CORRUPT
   PRACTICES ACT, November 16-17, NYC or Washington DC,
                         OCTOBRE 2009
   American Institute of conference
   L         M        M        J      V   S       D
                                                                              NOVEMBER 2010
 Anti-corruption China Summit, November 30-December 2,
   Beijing, Ethical Beacon    1       2   3       4




                                                                                          N
                                                                    L    M    M       J     V        S        D
                                                TY




                                                                                   O
   5 Dhabi Summit7on Anti-Corruption, December 13-14,
    Abu  6                 8        9       10      11              1    2    3       4     5        6        7
     Abu Dhabi, C5




                                                                              SI
                                                R


    12      13         14      15         16     17       18        8    9    10     11     12      13        14
                                    PE




 26
     LATER 20
    19                 21      22

   Anti-Corruption, Frankfurt Edition, January 25-26, Frankfurt,
           27        28       29        30
                                          23     24

                                                31
                                                          25        15

                                                                    22
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                                                                         16

                                                                         23
                                                                              17

                                                                              24
                                                                                     18

                                                                                     25
                                                                                            19

                                                                                            26
                                                                                                    20

                                                                                                    27
                                                                                                              21

                                                                                                              28
                            O



                                                                        IF
    C5
                        NOVEMBRE 2009                               29   30
                     PR




                                                                    D

    L        M         M        J         V      S        D
                                                                                   DECEMBER 2010
                                                                    D


                                                          1
           IT




                                                                    L    M    M       J     V        S        D
                                                        TE




    2        3         4        5         6      7        8
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                                                                              1       2     3        4        5
                                                 IC




    9        10        11      12         13     14       15
                                                                    6    7    8       9     10      11        12
                                          TR




    16       17        18      19         20     21       22
                                                                    13   14   15     16     17      18        19
    23       24        25      26         27     28       29
                                                                    20   21   22     23     24      25        26
                               ES




                                                                    27   28   29     30     31
                            R




         ADIT                                                                  observatoire@paris.adit.fr
         62, rue Miromesnil

         75008 Paris

         Tél. : +33 (0)1 56 77 06 30

         Fax : +33 (0)1 56 77 06 31



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