Page 39 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(2) ensure that the acquiring company’s code of conduct and compliance policies and procedures regarding the
FCPA and other anti-corruption laws apply as quickly as is practicable to newly acquired businesses or merged
entities; (3) train the directors, officers and employees of newly acquired businesses or merged entities, and
when appropriate, train agents and business partners, on the FCPA and other relevant anti-corruption laws
and the company’s code of conduct and compliance policies and procedures; (4) conduct an FCPA-specific audit
of all newly acquired or merged businesses as quickly as practicable; and (5) disclose any corrupt payments
discovered as part of its due diligence of newly acquired entities or merged entities. DOJ and SEC will give
meaningful credit to companies who undertake these actions, and, in appropriate circumstances, DOJ and SEC
may consequently decline to bring enforcement actions.

In another case, a Pennsylvania-based DOJ through a deferred prosecution agreement. 198
issuer that supplied heating and air conditioning While both the predecessor and successor signed
products and services was subject to an ongoing the agreement, which included a commitment to

investigation by DOJ and SEC at the time that it ongoing cooperation and an improved compliance
was acquired; DOJ and SEC resolved enforcement program, only the predecessor company was
actions only against the predecessor company, charged; in signing the agreement, the successor
which had by that time become a wholly owned company gained the certainty of conditional release
subsidiary of the successor company. 195 from criminal liability, even though it was not being
In another example, when a Florida-based pursued for FCPA violations. 199 In another case,

U.S. company discovered in post-acquisition due after a Connecticut-based company uncovered
diligence that the telecommunications company (a FCPA violations by a California company it sought
domestic concern) it had acquired had engaged in to acquire, both companies voluntarily disclosed
foreign bribery, the successor company disclosed the conduct to DOJ and SEC. 200 The predecessor
the FCPA violations to DOJ. It then conducted an company resolved its criminal liability through

internal investigation, cooperated fully with DOJ, a non-prosecution agreement with DOJ that
and took appropriate remedial action—including included an $800,000 monetary penalty and also
terminating senior management at the acquired settled with SEC, paying a total of $1.1 million in
company. No enforcement action was taken against disgorgement, pre-judgment interest, and civil
the successor, but the predecessor company penalties. The successor company proceeded
pleaded guilty to one count of violating the FCPA with the acquisition and separately entered into a

and agreed to pay a $2 million fine. 196 Later, four non-prosecution agreement with DOJ in which
executives from the predecessor company were it agreed, among other things, to ensure full
convicted of FCPA violations, three of whom performance of the predecessor company’s non-
received terms of imprisonment. 197 prosecution agreement. This agreement provided
On occasion, when an enforcement action has certainty to the successor concerning its FCPA

been taken against a predecessor company, the liability. 201
successor seeks assurances that it will not be subject Importantly, a successor company’s voluntary
to a future enforcement action. In one such case, disclosure, appropriate due diligence, and
a Dutch predecessor resolved FCPA charges with implementation of an effective compliance program

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