Marking the International Anti-Corruption Day this week and the 10 year anniversary of the entry into force of the Organization of Economic Cooperation and Development (OECD) Anti-Bribery Convention, the OECD held a high level roundtable meeting in Paris and heard various officials, including U.S. Secretary of State Hillary Clinton and U.S. Secretary of Commerce Gary Locke.
Importantly, the OECD also released its Recommendation for Further Combating Bribery of Foreign Public Officials. The Recommendation urges OECD member countries to prohibit or discourage using facilitating payments. Specifically, the OECD recommends that member countries periodically review their policies on and approach to facilitating payments.
The OECD also encourages companies to set out internal controls, ethics policies, and compliance programs that expressly prohibit or discourage using facilitating payments, recognizing that these “grease” payments are often illegal in the countries where they are paid. The OECD recommends that, in all cases, these payments be recorded accurately in a company's books and records, including not using agents and intermediaries to carry out the bribe for the company. It is recommended that member countries were advised to raise awareness of public officials about domestic bribery and solicitation laws, with the idea that soliciting and accepting facilitating payments could be stopped through greater awareness.
Under the U.S. Foreign Corrupt Practices Act, of course, facilitating payments are a limited exception to the prohibition against bribery. These payments can only be made to expedite “routine government action.” Examples of acceptable facilitating payments would include small payments to obtain permits, licenses, or other official documents; processing governmental papers, such as visas and work orders; providing police protection, mail pick-up and delivery; providing phone service, power and water supply, loading and unloading cargo, or protecting perishable products; and scheduling inspections associated with contract performance or transit of goods across country. U.S. companies and nationals may request a statement from the U.S. Department of Justice Department enforcement intentions regarding any proposed business transaction or conduct.
The OECD’s recommendations are not binding on any member countries, including the U.S. Each member country would have to enact changes in their laws. Companies operating within OECD member countries would be wise to heed the recent Recommendation and review their current antibribery policies and practices, particularly with respect to facilitating payments. Adopting these recommended practices now will instill a culture of compliance and avoid potential civil and criminal liabilities. Companies should also work with their compliance advisors and counsel to monitor potential changes in the FCPA and the laws of other OECD member countries.
11 December 2009
05 December 2009
Six-figure Antiboycott Penalty Settlement Announced
Last month the Office of Antiboycott Compliance, Bureau of Industry and Security, and York International Corporation settled a civil penalty totaling nearly $141,000. The case involved 122 alleged violations of the antiboycott regulations, 15 C.F.R. 760. In general, the antiboycott regulations prohibit a “U.S. person” from supporting the boycott of Israel sponsored by the Arab League and some countries with significant Muslim populations.
It is important for U.S. and foreign companies and organizations to know that a “U.S. person” includes not only individuals and corporations in the U.S., but also permanent domestic affiliates of foreign parties, as well as U.S. citizens abroad, and “controlled in fact” affiliates of domestic entities. “Controlled in fact” means that the party has the ability to establish company policies and control the daily operations of the foreign affiliate.
This recent settlement should be a wake-up call to companies and organizations of all sizes involved in international business transactions to diligently screen, report, and decline to take actions that violate the antiboycott regulations. York International faced charges that: in 6 instances it engaged in sales involving the sale or transfer of goods or services (including information) from the U.S. to Lebanon, Syria, and the UAE and knowingly refused to do business “with another person” under an agreement with, a requirement or request of a boycotting country; 15 times it engaged in sales or transfers of goods or services from the U.S. to Lebanon, Libya, Kuwait, Oman, Qatar, Syria, Sudan, and the UAE, and supported an unsanctioned boycott by furnishing information about its business relationships with or in the boycotted country; an on 101 occasions, the company failed to report to the Department of Commerce requests to engage in restrictive trade practices or a non-U.S. sanctioned boycott, as required by the regulations.
The settlement agreement shows that 6 violations were based on York International proceeding with transactions that involved documents containing prohibitions or conditions in letters of credit containing language such as: “Under no circumstances may a bank listed in the Arab Israeli boycott blacklist be permitted to negotiate documents under this documentary credit” and “We do not undertake to ship the goods described in this invoice on…vessel…mentioned in the black list of Arab countries…” Invoices and certificates contained statements such as: “We declare that no raw materials of Israeli origin have been used for the production or presentation of the goods mentioned in this invoice.”
The settlement agreement does not disclose the value of the transactions involved, but it will be assumed the overall value was sizeable given the number involved and the size of the penalty. York International voluntarily disclosed to BIS the information concerning the transactions, so the company likely received favorable treatment again demonstrating the importance for companies, non-profits, and other organizations involved in international trade to have a robust export compliance program and the benefits of making a voluntary disclosure.
It is important for U.S. and foreign companies and organizations to know that a “U.S. person” includes not only individuals and corporations in the U.S., but also permanent domestic affiliates of foreign parties, as well as U.S. citizens abroad, and “controlled in fact” affiliates of domestic entities. “Controlled in fact” means that the party has the ability to establish company policies and control the daily operations of the foreign affiliate.
This recent settlement should be a wake-up call to companies and organizations of all sizes involved in international business transactions to diligently screen, report, and decline to take actions that violate the antiboycott regulations. York International faced charges that: in 6 instances it engaged in sales involving the sale or transfer of goods or services (including information) from the U.S. to Lebanon, Syria, and the UAE and knowingly refused to do business “with another person” under an agreement with, a requirement or request of a boycotting country; 15 times it engaged in sales or transfers of goods or services from the U.S. to Lebanon, Libya, Kuwait, Oman, Qatar, Syria, Sudan, and the UAE, and supported an unsanctioned boycott by furnishing information about its business relationships with or in the boycotted country; an on 101 occasions, the company failed to report to the Department of Commerce requests to engage in restrictive trade practices or a non-U.S. sanctioned boycott, as required by the regulations.
The settlement agreement shows that 6 violations were based on York International proceeding with transactions that involved documents containing prohibitions or conditions in letters of credit containing language such as: “Under no circumstances may a bank listed in the Arab Israeli boycott blacklist be permitted to negotiate documents under this documentary credit” and “We do not undertake to ship the goods described in this invoice on…vessel…mentioned in the black list of Arab countries…” Invoices and certificates contained statements such as: “We declare that no raw materials of Israeli origin have been used for the production or presentation of the goods mentioned in this invoice.”
The settlement agreement does not disclose the value of the transactions involved, but it will be assumed the overall value was sizeable given the number involved and the size of the penalty. York International voluntarily disclosed to BIS the information concerning the transactions, so the company likely received favorable treatment again demonstrating the importance for companies, non-profits, and other organizations involved in international trade to have a robust export compliance program and the benefits of making a voluntary disclosure.
Subscribe to:
Posts (Atom)
