Presenting a live 90 ‐ minute webinar with interactive Q&A Foreign Corrupt Practices Act in India 2012 Compliance Strategies for India's Unique Cultural and Governmental Intricacies TUES DAY, MAY 8, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Today s faculty features: Jay Holtmeier, Partner, Wilmer Cutler Pickering Hale and Dorr , New Y ork Elizabeth D. Keating, Vice President, Legal Compliance/ Building Efficiency, Johnson Controls , Milwaukee, Wis. Jonathan C. Feig, Partner, Ernst & Young , Chicago The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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FCPA Compliance in India: Compliance Strategies Given India’s Compliance Strategies Given India s Unique Cultural and Governmental Intricacies Strafford Publications Teleconference May 8 2012 May 8, 2012 Jonathan C. Feig Ernst & Young LLP Jay Holtmeier Wilmer Cutler Pickering Hale and Dorr LLP Elizabeth D Keating Elizabeth D. Keating Johnson Controls, Inc.
OVERALL FCPA ENFORCEMENT TRENDS OVERALL FCPA ENFORCEMENT TRENDS “In the Criminal Division, we have dramatically increased our enforcement of the Foreign Corrupt increased our enforcement of the Foreign Corrupt Practices Act in recent years.... We recently promoted a [n]ew head of the Section’s FCPA Unit and two assistant chiefs, and we have also increased the , number of line prosecutors in the Unit, attracting high caliber attorneys with extensive experience—including Assistant U.S. Attorneys with significant trial and y g prosecutorial experience and attorneys from private practice with defense-side knowledge and experience. These changes have significantly increased our FCPA enforcement capabilities.” – Assistant Attorney General Lanny Breuer (Jan. 2011) 6
OVERALL FCPA ENFORCEMENT TRENDS OVERALL FCPA ENFORCEMENT TRENDS US authorities continue strong enforcement efforts g Reported FCPA Proceedings Reported FCPA Proceedings – Remains to be seen whether activity peaked in 2010 – Over 150 pending enforcement matters enforcement matters – 49 cases brought by DOJ and/or SEC in 2011 – Continued coordination between DOJ/SEC – Dedicated units at DOJ, SEC, and FBI 7
OVERALL FCPA ENFORCEMENT TRENDS OVERALL FCPA ENFORCEMENT TRENDS Large FCPA Sanctions Continue; Three of the Top 11 Corporate FCPA Settlements Occurred in 2011 – JGC (Japan; $219M) – Magyar Telekom/ Deutsche Telekom (Hungary/Germany; $95M) – Johnson & Johnson (US; $70M) J h & J h (US $70M) Prosecution of Individuals is Continued Priority Third Party Risks (e.g., sales agents, intermediaries, consultants ) Travel and Entertainment in High-Risk Markets Industry-Specific Risks (e.g., SEC probe of movie studios operating in China) New Tool at the SEC – Deferred Prosecution Agreements New Tool at the SEC – Deferred Prosecution Agreements Intersection of FCPA and Antitrust (e.g., Bridgestone Corporation settlement) Shift Away from Compliance Monitors; Increased Use of Alternatives New Developments – Morgan Stanley and Wal-Mart 8
FCPA ENFORCEMENT ACTIONS RELATED TO INDIA Diageo (2011) – Diageo is one of the world’s largest producers of alcoholic Diageo is one of the orld’s largest prod cers of alcoholic beverages such as Johnnie Walker and Windsor Scotch whiskeys. From 2003 to mid-2009, Diageo’s Indian subsidiary made a number of illicit payments to government officials through third number of illicit payments to government officials through third parties totaling an estimated $1.7M. – Diageo settled with the SEC for $16M including $11.3M in disgorgement, prejudgment interest of $2.1M, and a further di t j d t i t t f $2 1M d f th penalty of $3M. The DOJ was not involved in this matter. 9
FCPA ENFORCEMENT ACTIONS RELATED TO INDIA Pride International (2010) – Pride International is an oil and gas service company. Pride’s Indian subsidiary paid $500K to judges of the Indian Customs, Excise, and Gold Appellate Tribunal for a favorable determination in a customs duties and penalties dispute. The estimated value of the favorable decision was approximately $1M. – Pride’s Indian subsidiary pleaded guilty to criminal charges in the United States. Pride International and the Indian subsidiary y settled with the SEC and agreed to pay a $32M criminal penalty. Pride International settled similar civil charges with the SEC and agreed to pay disgorgement of $19.3M plus pre-judgment interest of $4.2M. 10
FCPA ENFORCEMENT ACTIONS RELATED TO INDIA Control Components, Inc. (2009) – CCI designs and manufactures valves used in the power, oil and gas, and nuclear industries. CCI made payments of at least $4.9M from 2003 – 2007 to employees of state-owned companies in several countries, including in India to the Maharashtra State Electricity Board. – CCI pleaded guilty to criminal charges and paid an $18.2M fine. Additionally, the company was placed on organizational probation y p y p g p for three years and ordered to create and implement a compliance program and retain an independent compliance monitor for three years. 11
FCPA ENFORCEMENT ACTIONS RELATED TO INDIA Westinghouse Air Brake Technologies (2008) – WABTEC manufactures brake subsystems and related products for locomotives, freight cars, and passenger transit vehicles. From 2001 through 2005, WABTEC’s subsidiary paid approximately $137K in cash to the Indian Railway Board to obtain contracts, schedule inspections, obtain certificates, and avoid tax audits – WABTEC and its subsidiary entered into settlement agreements with the DOJ and the SEC. WABTEC paid a $300K criminal penalty, $288K in p p y disgorgement of profits including pre-judgment interest, and $89K in civil penalties (a total of approximately $677K). 12
FCPA ENFORCEMENT ACTIONS RELATED TO INDIA Dow Chemical (2007) – Dow Chemical is one of the world’s largest chemical manufacturers; its Indian subsidiary manufactured and marketed pesticides and other products. The subsidiary paid an estimated $200K in payments and gifts to Indian government officials. Payments were made to a Central Insecticides Board official, state inspectors, and other officials. The subsidiary also made improper payments for gifts, travel, and entertainment to Indian government officials. – Dow settled with the SEC and agreed to pay a $325K civil penalty. The DOJ was not involved. 13
FCPA ENFORCEMENT ACTIONS RELATED TO INDIA Electronic Data Systems (2007) – EDS is one of the worlds’ largest service companies in the world; the company provides electronic data processing management and computer equipment. EDS’ subsidiary paid $720K to Indian government- owned companies between 2001 and 2003. The subsidiary had been struggling to perform its obligations with the Indian companies and the payments were made so the subsidiary would not lose contracts. – EDS settled with the SEC and paid $491K in disgorgement and p g g prejudgment interest. The subsidiary’s president also settled with the SEC and paid a $70K penalty. The DOJ was not involved. 14
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