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The Foreign & Corrupt Practises Act

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Jolan Draaisma

on 24 August 2013

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Transcript of The Foreign & Corrupt Practises Act

The Foreign & Corrupt Practices Act (US)
-The FCPA requires us to exercise care in our dealings with foreign government officials and members of their families.

- HCA is responsible for actions of employees, agents and representatives.

- The Global Anti-Corruption Policy is a US policy. It sets out the approach to overseas business and provides guidelines for expenses in overseas countries.
FCPA OVERVIEW
HOW, WHAT, WHO
Who:
- “issuers”, i.e. US listed companies.
- “domestic concerns”, i.e. US citizens or residents or US business.
- certain persons and entities in the US.

What: Bribery of foreign government official in order to obtain or retain business.

How: The person making or authorising the payment must have a corrupt intent and the payment must be intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person.

Who Enforces: Jointly enforced by the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”).
FINES & PENALTIES
Violation of anti-bribery provisions:
- $2 million per violation (corporations).
- $100,000 + 5 years imprisonment (individuals).

Wilful violations of the Books and Records and Internal Control provisions:
- $25 million fine + $5 million criminal fine (corporations).
- 20 years imprisonment (individuals).

Collateral sanctions including termination of government licences and debarred from government contracting programs.

SEC is able to seek disgorgement of a Company’s profits on contracts secured with improper payments.
New Financial Incentives to Blow the Whistle on FCPA violations
- New US Financial Reform Law (Dodd-Frank) authorises the SEC to pay ‘bounties’ to persons who provide ‘original information’ leading to successful enforcement action

-SEC is now averaging 1-2 FCPA tips per day.

- No apparent restrictions on nationality of the whistleblower.

- Whistleblowers are entitled to recover 10 to 30 percent of the monetary sanctions.
FCPA Prosecution
cases
Johnson & Johnson (2011)
- The SEC accused Johnson & Johnson of giving money and trips to physicians and administrators at state-run hospitals in Greece, Poland and Romania. In exchange the healthcare providers would prescribe Johnson & Johnson drugs and medical devices.

- Johnson & Johnson agreed to pay £70 million to settle the investigation.

- A handful of top UK based executives at Johnson & Johnson were identified in the complaint. One was sentenced to one year in prison on related charges.
Dougall/DePuy (2010)
- £4.5m paid in bribes to Greek surgeons.
- Dougall (VP/senior marketing executive) did not gain personally.
- Dougall pleaded guilty to conspiracy to corrupt.

The trial judge imposed 12 months imprisonment.

Lesson learnt:
- A bribery prosecution does not require any personal gain.
- Individuals are not immune from the law.
Koninklijke Philips Electronics
SEC charged the Netherlands based healthcare company with FPCA violations related to improper payments made by its employees at its Polish subsidiary to healthcare officials in Poland. Philips agreed to pay more than $4.5 million to settle the charges.
Ralph Lauren Corporation
SEC announced a non-prosecution agreement with RL in which the company will refund more than $700,000 in illicit profits obtained in connection with bribes paid by a subsidiary to government officials in Argentina from 2005 to 2009.
BizJet
DOJ prosecuted four officials involved in the BizJet bribery scheme. Based on the company’s cooperation two of the individuals agreed to plead guilty and were sentenced to 8 months home detention.
Alstom
The DOJ charged three individuals in connection with a scheme to bribe Indonesian officials for a $118 million electricity project. One of the officials was arrested when he arrived at the New York airport.
The Bribery Act (UK)
What is a Bribery Act offence?
Defence - adequate procedures
A company can avoid prosecution for an associate’s act of bribery by showing that it had “adequate procedures” designed to prevent bribery.
What are the adequate procedures that HCA has in place to prevent bribery?
Anti-bribery policy
Business courtesies policy
Overseas advisers policy
Anti-bribery policy
Runs alongside Global Anti-Corruption Policy.

Prohibits Bribery and Facilitation Payments.

Requires standard wordings in Agreements.

Mandates due diligence on Intermediaries and confirmation of their adherence to the policy.

Requires approvals for employing anyone who is / linked to a Foreign Public Official.

Requires legal approval when entering into any contract.

Mandates the keeping of accurate records and reporting of any (suspected) breaches of policy.


The thing of value must be provided only for the purpose of lawfully promoting, demonstrating or explaining HCA’s services or products, or conducting lawful and bona fide business activities.

The thing of value must be provided openly and in a way that does not create the appearance of impropriety or illegality.

The Government Employee must not have directly or indirectly requested from HCA or any third party anything of value for any individual’s personal benefit.

Payment for the thing of value must be provided directly to the provider of the thing of value (i.e., to the provider of the meal, gift, entertainment or travel) and not directly to the Government Employee.

The value of the thing or things is reasonable under all of the circumstances.
Overseas advisers policy
Overseas Advisers application pack consists of:
- Overseas Advisers application form
- Overseas Advisers agreement
- HCA Code of Conduct
- HCA Statement of Commitment to Anti-Corruption
- HCA Anti-Bribery Policy
- HCA Business Courtesies Policy
- HCA Global Anti-Corruption policy

Overseas Advisers should submit activity reports for their services quarterly.

Advisor Annual Certificate – Certifying compliance with all applicable laws in connection with the services and the agreement.
Fair market value
Commission-based remuneration must be appropriate, justifiable and proportionate payment for services legally rendered.

The following factors may be relevant:
- The adviser’s experience, resources and particular competence.
- The complexity and value of the work involved.
- The market rate for the services provided.

No payment made without invoices setting out the services rendered.
Bribery Act Overview
- The Act came into force in July 2011 and applies to all HCA employees and anyone else acting on behalf of HCA.

- No one is safe from prosecution if a bribery offence is committed.

- The maximum penalty for committing a bribery offence is the imposition of a fine (there is no limit to the amount that may be imposed) and a prison sentence of up to 10 years.

You are responsible for:

- Assessing the potential for actual/perceived bribery
risks & avoiding them. 

- Raising queries with, or reporting suspicions to HCA.

- Keeping accurate and full records and forwarding business courtesy logs to HCA on a monthly basis.

- Complying with HCA’s policies and procedures.

- Cooperating with HCA's audits of agent's expenses.

What are your responsibilities?
Foreign & Corrupt Practices Act (US) & the Bribery Act (UK)
A presentation by Jasy Loyal
Business courtesies policy
Business Courtesies include gifts and entertainment.

Never offer a Business Courtesy as an incentive to a third party to perform their duties improperly.

Never receive a Business Courtesy as an incentive or reward for performing your duties improperly.

Interactions with individual government employees pose a special risk under the Bribery Act.

It is extremely important that HCA’s dealings with Government Employees are transparent and open.
Business courtesies/overseas policy
any questions
Overseas advisers policy
The policy is in line with HCA's Global Anti-Corruption Policy.

Its purpose is to ensure that HCA International knows with whom it is doing business overseas and can feel confident that business relationships with Overseas Advisers are transparent and ethical.

Every appointment outside the US/UK is considered a high risk area and requires prior joint approval of the Legal Department, the Commercial Director, Group CEO/CFO and the HCA Inc Chief Ethics and Compliance Officer.

The policy requires written Agreements, prohibits facilitation payments and cash payments and mandates detailed due diligence on appointment / renewal.
Overseas expenditure
Full transcript