Foreign Corrupt Practices Act 2012 Year-End Update

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Dear Clients and Friends,

2012 was unique in the history of Foreign Corrupt Practices Act (“FCPA”) enforcement. The real story was not what the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) did, but rather what they said. On November 14, 2012, the DOJ and SEC released the long-anticipated Resource Guide to the FCPA (“FCPA Guide”). Upon release of the FCPA Guide, BakerHostetler issued an alert that summarized its key points and offered the initial thoughts of several of the firm’s partners, all former prosecutors with significant FCPA experience. John J. Carney, co-head of BakerHostetler’s White Collar Group, was quoted by The Wall Street Journal regarding the impact of the FCPA Guide on those subject to the FCPA. “Any time the government gives more guidance, it’s going to be a good thing. But it doesn’t fix the problem that honest companies face in countries where corruption is the norm. They’ll still face a playing field that’s tilted toward companies that don’t have to comply with the FCPA. That’s not something the SEC or DOJ can change” Carney noted. The FCPA Guide clari-fied certain positions that the SEC and DOJ have both taken in the past. Armed with this welcome and needed clarity, BakerHostetler is working with its clients to ensure full compliance with the FCPA and avoid exposure to liability from a violation.

The need for the FCPA Guide was highlighted by the SEC’s August 21, 2012, announcement of its first payment of a whistleblower award. Grappling with this new incentive structure is a challenge even given the FCPA Guide. Both Beam Inc. and Haliburton undertook internal investigations triggered by tips from whistleblowers. The SEC imple-menting rules for the Dodd-Frank Act whistleblower provisions were drafted to encourage internal disclosure in addition to, or in lieu of, disclosure to the SEC directly. It remains unknown whether the whis-tleblowers in these cases also reported directly to the SEC, or whether they will ultimately collect any award based on any future monetary penalties. It is certain, however, that whistleblowing will increase.

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While the total number of prosecutions has decreased recently, the SEC and DOJ have both stated that FCPA enforcement remains a priority. FCPA practitioners agree that this relative lull does not signal a decrease in vigorous FCPA enforcement. As those subject to the FCPA become increasingly vigilant in detecting, preventing, and possibly reporting potential FCPA violations, this may result in a relative increase in enforcement activity. And this increased enforce-ment activity is likely to be increasingly focused. After several signifi-cant litigation losses, the government is showing greater restraint in the cases it brings. This is signified by the increase in publi-cally announced declinations to prosecute. Prior to April 25, 2012, with respect to the Garth Peterson individual enforcement action and Morgan Stanley, the DOJ and SEC did not make such public announcements. It is difficult to estimate whether there were more total declinations in 2012 than in prior years. This may be an indica-tion that while the DOJ and SEC continue to ramp up enforcement of the FCPA, they are serious about taking self-disclosure, coopera-tion, remediation and robust compliance programs into account when determining penalties.

The following is a summary of the SEC and DOJ FCPA enforce-ment, litigation, and policy developments for 2012. A collection of BakerHostetler’s publications on the FCPA, including the 2012 Mid-Year Update, Overview of the FCPA, and articles on specific areas of focus can be found at BakerHostetler’s FCPA’s practice page. BakerHostetler will follow this update with a series of articles, each focusing on one of the BRIC countries and FCPA issues unique to those jurisdictions.

2012 was also noteworthy for a decrease in prosecutions by both the SEC and DOJ. The chart below shows the number of enforcement actions initiated over the past five years by the SEC and DOJ.

Current FCPA Investigations

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Beam Inc.The makers of Jim Beam Whiskey reported in October, 2012, that it has begun investigating potential FCPA violations in response to whistleblower allegations. The company is investigating allegations of “excise duty violations, invoicing problems, and handing over distribution in some key markets.” The violations are alleged to have occurred in its wholly owned subsidiary in India, and the company has requested that the senior management in charge of Beam’s operations in India stay away from the business during the investigations.

Central European Distribution Corp.Central European Distribution Corp. (“CEDC”), a Poland-based distiller and liquor distributor, disclosed in its October, 2012, 10-K/A that it has violated the accounting and internal control provisions of the FCPA, and has not ruled out violations of the anti-bribery provi-sions. The 10-K/A stated that it “was determined that payments or gifts were made in a foreign jurisdiction in which the company operates, and that there was a failure to maintain documentation in respect of certain of these payments or gifts adequate to establish whether there was a valid business purpose in making the payments or gifts.”

Haliburton Disclosure Haliburton has recently disclosed to the SEC that it is conducting internal investigations of its operations in Angola and Iraq. The company is investigating compliance with its own company policies, Code of Business Conduct, and the FCPA. The investigation was initiated by an anonymous e-mail that alleged conflicts of interest, self-dealing, and the failure to act on alleged violations of the FCPA and company policy. Haliburton also has disclosed to the DOJ and is meeting with the two agencies to update them on the internal investi-gation and its findings.

Owens-IllinoisThe glass container maker Owens-Illinois Group, Inc. disclosed to the DOJ and SEC in October that it was conducting an internal investi-gation into possible company violations of the FCPA. Owens-Illinois stated that it may have violated the anti-bribery provisions, the records and internal controls provisions, and internal company policies.

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BarclaysThe U.K. Serious Fraud Office announced in August, 2012, that it was opening an investigation to review certain commercial agreements between London-based Barclays Bank and Qatar Holdings, LLC made in 2008. Qatar Holdings is a subsidiary of Qatar Investment Authority, a government agency. More recently, Barclays has released its Interim Management Statement, which mentions that the DOJ and SEC are also conducting an investigation. The investigation is centered on Barclays’ relationships with certain third-parties and whether they are FCPA compliant. Barclays has stated it is fully cooperating with both agencies.

LyondellBasell IndustriesThe Netherlands-based petrochemical maker, LyondellBasell, disclosed and restated on November 2, 2012, (in its quarterly Form 10-Q) that it is unsure as to the extent of liability and damages that may result from an ongoing FCPA investigation by the SEC and DOJ.

LyondellBasell voluntarily disclosed to the DOJ in 2009 about a ques-tionable payment made in relation to a 2008 project in Kazakhstan. LyondellBasell also stated in its disclosure that it may have not have had adequate internal controls and compliance procedures in place. The company also stated that it continues to retain outside counsel in investigating the matter under the oversight of a supervisory board.

Zimmer Zimmer Holdings, Inc. has been a part of a large probe conducted by the SEC and DOJ into the medical devices industry dating back to 2007. In 2011, Zimmer received a subpoena from the SEC to produce documents and records about its sales activities in “substantially all” countries in the Asia Pacific region where the company operates. Zimmer previously voluntarily disclosed information to the SEC and DOJ concerning the sales of Zimmer products by independent distrib-utors in two South American countries. Zimmer explicitly stated in a November 7, 2012, disclosure that it cannot accurately predict the outcome of the ongoing investigation.

DialogicThe SEC informed Dialogic on November 20, 2012, that it has opened an “informal inquiry” of FCPA violations related to its acquisition of the

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California-based Veraz Networks, Inc. In June, 2010, Veraz paid $200,000 to settle SEC charges that the company violated the books and records and internal control provisions. The SEC charged that Veraz made illegal payments to foreign officials in China and Vietnam. Veraz also spent more than $2.5 million during a two-year investigation of the charges.

Dialogic acquired Veraz a few months after its SEC settlement. The SEC stated in its informal inquiry that it will look into the events surrounding Veraz’s past FCPA troubles. Dialogic could be held liable for the FCPA viola-tions through successor liability, which holds acquiring companies responsible for civil and criminal offenses of the acquired company. The recent FCPA Guidance reaf-firmed their views on successor liability, indicating its ability to prevent companies from reorga-nizing solely to evade liability.

Dialogic has stated in its latest FCPA disclosure that it is coop-erating with the SEC and is strengthening its compliance program. The company also

stated it is sharing information with the DOJ.

Net 1 UEPS Technologies, Inc.South African-based payment systems company, Net 1, stated in a December 5, 2012, SEC filing that the SEC, DOJ, and FBI are investigating possible FCPA violations. The investiga-tion surrounds payments to South African government officials to win a contract with the Social Security Agency. Even though the entire event occurred in South Africa (the payments were made by South Africans working for a South African company to South African officials representing a South African government agency) Net 1 could still be liable under the FCPA. Net 1 trades on the NASDAQ and therefore is an “issuer” under the FCPA and is subject to the FCPA’s accounting provisions. Net 1 has stated an intention to cooperate with the investigation.

Wal-MartIn a December 18, 2012, FCPA disclosure, Wal-Mart indicated it was conducting an internal inves-tigation using independent direc-tors on possible FCPA violations.

The investigation is global, with particular emphasis on Wal-Mart’s Mexican subsidiary, Walmex. Wal-Mart has engaged outside counsel and is conducting a global review of its FCPA compliance policies. Wal-Mart voluntarily disclosed to the SEC and DOJ, and both agencies have informed Wal-Mart it is under independent investigation.

IBMOn December 24, 2012, U.S. District Court Judge Leon rejected a proposed 2011 settle-ment between the SEC and IBM, stating that the company should be required to report all accounting violations, not just those related to FCPA offenses. IBM had previously agreed to pay $10 million to the SEC to resolve a civil complaint without admitting or denying the allegations. Judge Leon asked IBM counsel for information identifying all possible accounting violations, and counsel hesitated in providing information beyond the FCPA-related offenses. Judge Leon previously oversaw the “African Sting Case,” which involved dismissal of all 22 defendants.

Recent Enforcement Actions

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SensataThe DOJ closed its inquiry into the Massachusetts-based company after Sensata self-reported possible FCPA violations to both the DOJ and the SEC. The possible violations were in relation to subsidy interac-tions with Chinese officials. The SEC has not commented on the progress of its investigation.

Huntsman DeclinationHuntsman has stated that the DOJ and SEC will not pursue enforcement action against the company for bribes paid in India. Huntsman had a majority ownership of Petro Araldite Pvt. Ltd., whose employees paid the bribes. Huntsman completed an internal investigation of the joint venture, self-disclosed the illicit payments to the SEC and DOJ, and terminated the employ-ment of management personnel involved in administering the bribes. The company has also stated that it uncovered less than $11,000 in illegal payments. FCPA charges in this instance arose as secondary concerns in what was initially an environ-mental investigation.

Pfizer Disgorgement Pfizer H.C.P., a subsidiary of Pfizer, paid $15 million in criminal penalties to the DOJ for FCPA violations that occurred in Bulgaria, Croatia, Kazakhstan, and Russia. The violations

involved bribe payments by Pfizer employees to foreign officials of the named countries, and hid these expenses through accounting measures, disguising them as travel expenses, marketing, training, etc. Wyeth LLC, acquired by Pfizer three years ago, also agreed to pay the SEC $18.8 million in disgorge-ment and pre-judgment interest. Separately, Pfizer agreed to pay the SEC $26.3 million in disgorgement and pre-judgment interest. Pfizer H.C.P. entered into a deferred prosecution agreement with the DOJ.

Oracle CorporationOn August 16, 2012, California-based Oracle Corporation paid a $2 million civil penalty to the SEC to settle FCPA charges. The charges arose from accusations of a slush fund in India acting as a conduit to pay bribes. Oracle’s subsidiary, Oracle India, secretly put aside money between 2005 and 2007 that was used to make unauthorized payments to busi-nesses in India. These side funds were used to pay local vendors who did not provide any real services to Oracle. The SEC accused Oracle of violating the FCPA’s accounting and internal controls provisions. The SEC also considered voluntary disclosure by Oracle as well as remedial measures taken by the company in determining the penalty.

Birkenfeld Whistleblower AwardBradley Birkenfeld, a former banker for UBS who was serving prison time until August, 2012, will receive $104 million by the IRS for his contributions as a whistleblower. His actions as a whistleblower have forced UBS to pay $780 million in fines to the government and have revealed approximately 35,000 U.S. indi-viduals hiding money in overseas accounts, which led to the collec-tion of $5 billion in back taxes and penalties. Despite Birkenfeld’s background, he was still able to receive an award because of the depth of information he provided government officials.

TycoTyco International Ltd. agreed on September 24, 2012, to pay the DOJ and SEC more than $26 million in penalties related to FCPA violations of its subsidiary. Tyco is based in Switzerland, and produces fire security products. Tyco agreed to pay the DOJ $13.6 million in criminal penalties. Tyco also agreed to a settlement with the SEC for $10.5 million in disgorgement and $2.5 million in prejudgment interest.

The subsidiary, Tyco Valves and Controls Middle East, Inc., pleaded guilty to conspiring to violate the anti-bribery provi-sions of the FCPA. It admitted to bribing foreign officials of Saudi

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Aramco, an oil and gas company controlled and managed by the Kingdom of Saudi Arabia, in an effort to obtain contracts with the company. The DOJ gave Tyco a non-prosecution agree-ment for its timely disclosure and its cooperation with investiga-tive authorities. Tyco found out about potential violations in 2005 and promptly started an internal investigation. Tyco immediately notified the SEC and DOJ of the possible violations. Tyco also enhanced its compliance program and fired employees responsible for the violations.

DigiThe SEC filed a partially-settled civil injunctive action September 29, 2012, in the federal district court in Minnesota, against Subramanian Krishnan, a former CFO of the technology company Digi International, Inc. The SEC alleged multiple violations of the books and records and internal controls provisions of the FCPA. The SEC has stated that Krishnan devised a system that allowed Digi employees in its Hong Kong office to be reimbursed for personal expenses, such as travel and entertainment, without approval by the CEO. Approval by the CEO is part of the company policy, according to Digi. The system required only approval by the CFO. Krishnan reviewed and approved unauthorized

expenses, including suspicious cash payments accompanied by no documentation. Krishnan consented to a final judgment in which he neither admitted nor denied the allegations against him. Digi International has not been charged.

AlcoaPittsburgh-based Alcoa reached a settlement on October 9, 2012, with Aluminum Bahrain B.S.C. (“Alba”). Alba alleged in a civil lawsuit that Alcoa conducted a scheme of bribing Bahraini officials and overcharging in the supplying of raw materials. Alcoa did not admit liability as part of the agreed settlement, which requires Alcoa to pay $85 million to Alba in two installations. Alcoa paid half of the settlement upon agreement, and will pay the remainder a year from the date of the agreement.

Alba filed the suit in 2008 alleging common law fraud and Racketeer Influenced & Corrupt Organizations Act (“RICO”) violations. The FCPA does not provide a private right of action. Shortly after Alba filed, the judge stayed progression of the suit at the request of the DOJ. The DOJ concluded that portions of Alba’s allegations would be relevant to an FCPA investiga-tion if true. The DOJ’s investiga-tion is still pending.

GraingerThe DOJ stated on November 5, 2012, that it will not pros-ecute W.W. Grainger in relation to questioned gift cards that may have been used in viola-tion of the FCPA by Grainger’s Chinese subsidiary. The decli-nation follows W.W. Grainger’s internal investigation, in which the company disclosed that it had not found evidence of “significant use of gift cards for improper purposes.” Grainger voluntarily disclosed possible violations to both the SEC and DOJ, and retained outside counsel to conduct the internal investigation. The SEC has not commented as to whether it will prosecute Grainger.

Grifols SASpanish pharmaceutical company Grifols SA stated in a December 7, 2012, SEC filing that the DOJ has issued it an official declina-tion related to FCPA-related inqui-ries dating to July, 2009. The investigation was centered on the activity of the subsidiary Talecris, which was acquired by Grifols in 2011. The investigation of Talecris started when the company was part of the Bayer Group. Talecris had notified the DOJ of possible violations following an internal investigation. In addition, Talecris suspended operations in several countries while it bolstered its anti-bribery procedures. Grifols

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stated in its filing that the DOJ considered significant coopera-tion and early disclosure in the agency’s decision for declination.

AllianzOn December 17, 2012, Germany-based insurance and asset management company Allianz SE paid more than $12.4 million to settle with the SEC over violations of the books and records and internal control provi-sions of the FCPA. The activity in question concerned improper payments to government officials in Indonesia. Following common FCPA procedure, Allianz did not deny or admit the SEC’s inquiry. The company disgorged $5.3 million in profits, paid a penalty of $5.3 million, with $1.8 million in prejudgment interest.

The SEC stated that it uncov-ered 295 insurance contracts on government projects that were obtained or kept by improper payments totaling $650,626. The payments were made by Allianz’s Indonesian subsidiary.

The conduct occurred from 2001 to 2008, at which time Allianz was considered an “issuer” under the FCPA because of its activity on the New York Stock Exchange. Even though it was not listed on the exchange, the presence of its bonds and shares on the market made it an issuer and subjecting it to the jurisdiction of the FCPA. The investigation was initiated internally using outside counsel after a whistleblower complaint in 2009.

Eli LillyOn December 20, 2012, Indianapolis-based pharma-ceutical manufacturer Eli Lilly announced that it had resolved FCPA civil charges brought by the SEC. The activities questioned by the SEC were bribes paid to government officials in Russia, Brazil, China, and Poland. Eli Lilly agreed to pay $13.9 million in disgorgement, $6.7 million in prejudgment interest and a penalty of $8.7 million, totaling $29.4 million. The resolution

came in the form of a consent judgment in which Eli Lily neither admitted nor denied the allegations.

The SEC alleged that Eli Lilly’s subsidiary in Russia used offshore marketing agreements to pay substantial amounts to third parties upon the direction and request of Russian government officials. The SEC also alleged that even after Lilly discovered the illicit activity, it did not stop payments for more than five years. The SEC further alleged that Lilly’s Chinese subsidiary falsified expense reports in order to provide improper gifts to government physicians. Other allegations include a Brazilian subsidiary bribing government officials in order to obtain sales of Lilly’s drugs to state institutions, as well as bribes totaling $39,000 by a Polish subsidiary in order to obtain favorable drug placement with the government. The SEC stated that it received cooperation and help from the DOJ and FBI.

Completed Criminal Trials

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Morgan Stanley UpdateIn August, 2012, Morgan Stanley’s Garth Peterson was sentenced to nine months in federal prison for deceptive practices as the managing director for real estate in China. Peterson pleaded guilty to conspiring to evade internal accounting controls that Morgan Stanley implemented to follow FCPA requirements. Peterson also paid $250,000 in disgorge-ment and forfeited real estate located in Shanghai, reportedly worth around $3.4 million, in order to settle civil FCPA charges filed by the SEC. The DOJ had originally sought a prison sentence for Peterson for more than four years. The SEC waived 25 percent of the civil disgorge-ment against Peterson when a judge concluded Peterson had limited assets. The DOJ and SEC declined to charge Morgan Stanley. Reasons for declination included cooperation with the government during the investigation and Morgan Stanley’s robust compliance program.

Control Components Inc. On November 9, 2012, former CEO of Control Components, Inc., (“CCI”) Stuart Carson, was sentenced to four months in prison, eight months home detention, and was required to pay $20,000 in FCPA penalties. Hong Rose Carson, his wife and the former sales director for CCI, was sentenced to only six months, 200 hours of community service, and $20,000 in penalties. Hong Rose Carson received a reduction in sentencing on request of prosecutors. The prosecutors cited her original citizenship in China, as well as her lack of formal American education and early business training of her co-defendants. The sentencing stems from CCI’s admission of bribing foreign offi-cials in a long-term scheme spanning countries around the globe. The admission resulted in a criminal fine of $18.2 million for the company, the appointment of compliance monitors, and cooperation with the DOJ’s investigation.

Also, on December 18, 2012, former vice president David Edmonds was sentenced for four months of jail time followed by four months of home confinement for pleading guilty to one count of making a corrupt payment to a Greek official in 2003. He will also pay a fine of $20,000. Prosecutors originally asked for 14 months imprisonment, and Edmonds initially was indicted on 16 FCPA-related offenses.

Ongoing FCPA Litigation

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EsquenaziThe DOJ responded on August 22, 2012, to an appeal to the 11th Circuit Court of Appeals made by Carols Rodriquez and Joel Esquenazi regarding their FCPA conviction. A major argument raised by the Esquenazi appeal is whether the lower court erred as a matter of law in its jury instruction when it defined what constitutes an “instrumentality” of a foreign government. Esquenazi argues that “the DOJ’s interpre-tation of ‘foreign official’” is too broad. The appeal states that the government never estab-lished that Haiti Teleco performed governmental functions similar to a governmental department or agency such that Haiti Teleco’s employees would qualify as “foreign officials.” In its argument that Haiti Teleco was an “instru-mentality,” the government relied on the fact that the National Bank of Haiti owned stock in the company, and that the Haitian government appointed board members and directors. This is the first time that a United States Court of Appeals has considered the scope of the term “foreign official” under the FCPA.

SiemensFormer Siemens executive, Ariel Sharef, has agreed with the SEC to settle charges of FCPA viola-tions. Sharef is one of six former Siemens employees that have been so charged. Sharef is the second of the group to settle

with the SEC, along with Bernd Regendantz. The SEC asked a federal judge to suspend the case until a final settlement could be reached with Sharef.

Eight former Siemens employees have also been criminally charged with FCPA violations by the DOJ. Last December eight employees and agents of the company were charged with bribing Argentinean government officials. The indictment alleged conspiracy to violate the anti-bribery, books and records, and internal control provisions of the FCPA, conspiracy to commit wire fraud, conspiracy to commit money laundering, and substan-tive wire fraud. All of the defen-dants are non-U.S. citizens and have residence outside the U.S. The DOJ has stated that it does not expect the defendants to be brought forth in U.S. courts to face charges in the “immediate future” and that it will keep the court informed of its progress.

Also, a government investigator in Argentina filed suit in federal court in Miami claiming that he was tortured in retaliation for his whistleblowing. Carlos Moran and his family are seeking at least $100 million in damages for human rights violations.

One of the defendants in the SEC portion of the Siemens inquiry, Herbert Steffen, filed a motion to dismiss based upon a lack of juris-diction by U.S. courts and that the

statute of limitations has expired (five-year limitation). Steffen is a former CEO of Siemens Argentina. In support of the motion to dismiss, Steffen stated:

[T]he SEC asks this Court to assert personal jurisdiction over a defendant: (1) who is a German citizen and resident; (2) who conducted no business in the United States; (3) whose only alleged U.S. “contact” resulted from the unilateral actions of another party; (4) whose alleg-edly improper conduct occurred entirely outside the United States; and (5) whose conduct was not aimed at and caused no injury in the United States. This request should be rejected. Because the SEC has not met its burden to plead legally sufficient allegations establishing personal jurisdiction over Mr. Steffen, its complaint must be dismissed.

Bourke AppealOn November 28, 2012, the U.S. Court of Appeals denied Fredric Bourke’s request for a new trial. Bourke was convicted in 2009 of an FCPA conspiracy to bribe Azerbaijan officials, and was sentenced to a year in jail. Bourke argued that prosecutors knowingly allowed a key witness to prevent false testimony to the jury. This is the second appeal that Bourke has lost in relation to the charges and conviction. Bourke’s lawyers will ask the appeals court to reconsider the ruling.

New FCPA-Related Rules & Guidance

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New SEC Rule on Conflict MineralsThe SEC adopted a new rule on August 22, 2012, that requires extractive indus-tries (such as public mining, oil, and gas companies) to disclose all payments made to foreign governments equaling or exceeding $100,000. A resource extraction issuer must disclose payments made by itself, subsidiaries, or any entity under its “control,” to a foreign government.

In addition, the SEC adopted rule 13p-1 governing the disclosure of the use of “conflict minerals” mined in the Democratic Republic of Congo or its surrounding areas. Tantalum, tin, gold, and tungsten fall under the disclo-sure rule, if the minerals are “necessary to the functionality or production of a product” manu-factured by the issuer. Anyone who files reports with the SEC is subject to this rule.

The company is required to conduct a reasonable inquiry as to the country of origin of “conflict minerals” to determine whether they originated within

the countries covered by the new rule. After the inquiry, if the company has no reason to believe that the minerals are not from the covered countries, it must state so on its website and a form known as Form SD. If the company knows or has reason to believe that the minerals origi-nated in the named countries, they must file a Conflict Minerals Report on Form SD and make it available on their website. A company then will have to deter-mine if the purchase of conflict-area minerals funds conflict, and take the appropriate measures. There is a two-year grace period for large companies and a four-year grace period for small companies, if they can show that the origin of the minerals funding conflict was undeterminable.

DOJ Opinion: Promotional ExpensesThe DOJ released Opinion Procedure Release 12-02 that approved a plan by 19 non-profit adoption agencies that entailed bringing foreign officials to the United States to meet the staff at the respective agencies and to be introduced to families who have

already adopted children from the foreign officials’ country. The 13 foreign officials oversee adoption procedures and include the director of the country’s adoption agency, a minister with a position in the office of the country’s head of government, two members of the legislature, and a judge who gives the final authorization for adoptions.

The DOJ has concluded that the expenses by the non-profit adoption agencies “are reason-able under circumstances and directly relate to ‘the promotion, demonstration, or explanation of [the adoption agencies’] products or services.” The purpose of the trip is to educate the foreign offi-cials on the adoption processes of the non-profit organizations. The non-profit organizations are going to pay for international airfare (both business class and coach class, depending on the rank of the official). It is important to note that none of the payments violate the local law of the foreign officials’ country, and that the non-profit organizations will not be paying for entertainment or leisure activities for the foreign officials.

FCPA Practice Team

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John J. Carney, PartnerJohn J. Carney, a former Securities Fraud Chief, Assistant United States Attorney, U.S. Securities and Exchange Commission (SEC) Senior Counsel and practicing CPA, serves as co-leader of the firm’s national White Collar Defense and Corporate Investigations group. He focuses his practice on advising and defending corporations and senior officers on FCPA compliance, investigation and defense. His significant experience in conducting investigations of possible FCPA viola-tions and other potentially improper foreign, country-based financial transactions has included working on major matters in the key “BRIC” countries (Brazil, Russia, India and China). He has also worked proactively with companies to structure and implement FCPA compliance programs designed to avoid potential violations and lessen government sanctions should an FCPA violation occur. Mr. Carney is a seasoned advocate recognized in Chambers USA: America’s Leading Lawyers for Business as a leader in his field.

George A. Stamboulidis, PartnerGeorge A. Stamboulidis, former Chief of the Long Island Division of the U.S. Attorney’s Office for the Eastern District of New York and lead prosecutor in several significant high-profile cases, has been selected as an independent monitor on five separate occa-sions, more than any other attorney. He applied and refined his deep knowledge of the FCPA while reviewing policies and proce-dures for the various institutions as part of these monitorships. Additionally, he regularly conducts internal investigations, evalu-ates financial transaction controls and makes recommendations for changes to ensure that adequate internal review procedures exist for clients’ organizations. Mr. Stamboulidis was quoted in the Best Practices section in Managing Independent Monitors in Foreign Corrupt Practices Act Compliance Guidebook—Protecting Your Organization from Bribery and Corruption by Martin and Daniel Biegelman. He received the Justice Department’s coveted Director’s Award for Superior Performance three times and was named a Fellow of the Litigation Counsel of America, a trial lawyer honorary society comprised of experi-enced and effective litigators throughout the U.S.

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Jonathan R. Barr, Partner Jonathan R. Barr, a former U.S. Department of Justice (DOJ) Fraud Section Trial Attorney, Assistant United States Attorney in the District of Columbia and a former Senior Counsel at the U.S. Securities and Exchange Commission’s (SEC’s) Division of Enforcement, focuses a significant portion of his practice on conducting internal investigations for public and non-public corporations, defending corporations and individuals in FCPA criminal and civil enforcement investigations and advising corporations on FCPA compliance. He has significant experi-ence representing corporations making voluntary disclosures to the U.S. Government. He has represented clients in FCPA investigations relating to Eastern Europe, Southeast Asia, Brazil and China and has advised public and non-public corporations on creating and implementing FCPA compliance programs. Mr. Barr was recognized among The Best Lawyers in America®2013 and as a Washington, D.C., “Super Lawyer” in 2012.

Lauren J. Resnick, PartnerLauren J. Resnick, former Assistant United States Attorney, has conducted numerous internal investigations on behalf of interna-tional companies in the financial services, pharmaceutical, health-care, and oil and natural gas industries regarding FCPA violations, accounting irregularities and conflicts of interest. She has consid-erable investigatory experience conducting due diligence for clients seeking overseas joint ventures and has led internal FCPA investigations for clients in countries such as Nigeria, China and Spain. She regularly advises corporate clients on optimizing internal controls and corporate governance, revising business codes of conduct and designing policies and procedures to enhance statutory and regulatory compliance. She has extensive experience advising clients on FCPA compliance issues and has remediated numerous books and records violations. Additionally, Ms. Resnick has supervised numerous monitorships in connection with the firm’s appointment by the DOJ and other governmental agencies to assess compliance procedures including FCPA policies and procedures. She was recognized among The Best Lawyers in America®2013, as a New York “Super Lawyer” since 2011 and twice received the Justice Department’s prestigious Director’s Award for Superior Performance.

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Timothy S. Pfeifer, PartnerTimothy S. Pfeifer has extensive FCPA compliance and proce-dures experience. He has conducted numerous internal inves-tigations on behalf of international companies regarding FCPA violations, conflicts of interest, related and third-party transac-tions, and other employee and management misconduct. He has also conducted transactional due diligence in relation to these matters. He has advised corporate clients on enacting and enforcing internal controls, drafting and revising codes of conduct and designing “best practices” policies and proce-dures. His clients have included major pharmaceutical and tele-communications companies and their foreign subsidiaries, large foreign oil and chemical companies, U.S. and foreign banks, and foreign sovereigns, such as the Republic of Azerbaijan. Mr. Pfeifer has particular experience with the emerging economies of Eastern Europe and the Balkans, the former Soviet Union and the Russian Federation. He was named a New York “Super Lawyers, Rising Star” in 2011.

Jimmy Fokas, PartnerJimmy Fokas, a former Senior Counsel in the Division of Enforcement in the New York Regional Office of the SEC, has extensive FCPA investigatory experience. He has reviewed compliance policies and recommended remedial measures regarding books, records and internal controls violations for numerous clients. He conducted an investigation of possible bribes to government officials involving a supplier and subcon-tractor in India, reviewed compliance policies and recom-mended remedial measures. He also managed a legal team in connection with the firm’s appointment as independent monitor of a non-prosecution agreement between the DOJ and Mellon Bank, N.A., which involved assessment of the bank’s global compliance and employee training programs. He subsequently made recommendations for enhancements to policies and procedures around data privacy, government contracting, FCPA and other compliance programs.

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Jonathan B. New, PartnerJonathan B. New, former Assistant United States Attorney, handled international money laundering cases, public corrup-tion issues and financial fraud while serving in a variety of frontline positions in the DOJ. He has considerable FCPA compliance and investigatory experience and has spoken and written extensively on these issues. He has advised clients on legal and regulatory compliance issues and represented individuals, companies and professionals in connection with criminal investigations conducted by the DOJ, FBI and IRS. He successfully defended the U.S. in landmark NAFTA litiga-tion, was lead counsel for the Overseas Private Investment Corporation in claims against the Islamic Republic of Iran and has defended numerous federal agencies in a wide range of lawsuits. Mr. New received a special commendation award for Outstanding Service in the Civil Division of the DOJ.

John W. Moscow John W. Moscow has spearheaded investigations into some of the most complex frauds cases of the past 25 years. He has led investigations and conducted prosecutions involving money laundering and fraud at Bank of Credit and Commerce International; bank fraud in Caracas, Venezuela; the corrupt A.R. Baron & Co., Inc., stock brokerage; the Beacon Hill money laundering case in New York; and theft by top Tyco, Inc., executives. He spent 30 years with the New York County District Attorney’s Office, where he served as the Chief of the Frauds Bureau and Deputy Chief of the Investigations Division. While there, he investigated and prosecuted cases involving international bank and tax fraud, securities fraud, theft, fraud on governmental entities and fraud in money transfer systems. Mr. Moscow works frequently with bank and securities regulators at the state and federal level and abroad. He has extensive expe-rience in the international tracing of assets and is a leading authority on international corruption matters.

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John J. Burke, Partner John J. Burke has advised clients on FCPA compliance issues, particularly with respect to their dealings with India, China and the Middle East and has developed FCPA compliance programs for multinational companies with operations around the world. He has developed clauses in distribution agreements for U.S. companies to reduce their exposure to FCPA liability through the actions of their foreign distributors. Additionally, he has conducted FCPA and anti-corruption due diligence on companies being acquired by clients and assisted compa-nies in revising their FCPA compliance policies to incorporate requirements of the British Bribery Act 2010. Mr. Burke has held numerous in-house FCPA compliance seminars for clients, which include financial institutions, health care companies, data processing companies, defense contractors and consumer product companies.

Leah J. Domitrovic, PartnerLeah J. Domitrovic has over 20 years’ experience in private practice and as in-house counsel. In private practice, she defends corporations, their directors and officers in civil securities actions, shareholder derivative litigation and M&A litigation, and provides related counseling regarding internal, governmental and regulatory investigations. Previously, she served for four years as the Associate Chief Legal Officer of a multibillion-dollar, 50,000-employee, vertically integrated global healthcare enterprise. In that role, she managed and oversaw the organization’s corporate legal, risk manage-ment and compliance functions. Her responsibilities included developing and implementing institution-wide, best-in-class, conflict-of-interest industry relations and FCPA/anti-corruption policies, practices and procedures. She also oversaw institu-tional FCPA-related due diligence for transactions in Europe, Asia and the Middle East.

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Edmund W. Searby, PartnerEdmund W. Searby is a former federal prosecutor with the Department of Justice and the Office of the Independent Counsel. He has conducted criminal investigations and internal investigations involving the FCPA, export controls and inter-national money laundering. In particular, he has conducted a number of FCPA investigations arising in the context of due diligence on potential mergers and acquisitions. He has also drafted and implemented FCPA, antitrust and general compli-ance policies for a number of FORTUNE 500 companies and other corporations. Mr. Searby has spoken and published articles on the FCPA and other anti-bribery issues. In recogni-tion for his work as a federal prosecutor, Mr. Searby received letters of commendation from the Attorney General of the United States and the Director of the FBI.

Gregory S. Saikin, CounselGregory S. Saikin served as an Assistant United States Attorney in the Southern District of Texas, investigating and prosecuting individual and corporate targets for a variety of fraud, public corruption and money laundering violations. These investigations and prosecutions involved conduct occurring in Mexico, requiring close coordination with the FBI Border Liason Office and various Mexican law enforcement agencies. Mr. Saikin began his career in large law firms representing corporations, corporate officers and audit committees in connection with FCPA compliance and enforcement matters. He is an author and speaker on a wide range of white collar topics, including grand jury practice, corpo-rate charging policies and the federal sentencing guidelines. As a federal prosecutor, he received a number of awards, including the Integrity Award from the Inspector General of the U.S. Department of Health and Human Services. He was also recog-nized by the FBI Director for outstanding prosecutorial skills and by the U.S. Secret Service Director for superior contributions to law enforcement.

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Christina H. Tsesmelis, AssociateChristina H. Tsesmelis has represented a number of organiza-tions in FCPA investigations, including representing the audit committee of a major oil services firm in civil and criminal investi-gations conducted by the DOJ and SEC involving alleged FCPA violations in Africa and other emerging markets; representing a FORTUNE 500 life sciences company in FCPA investiga-tions in India, the Ukraine, China and Brazil; and representing an international manufacturer and distributer of beauty, house-hold and personal care products in an FCPA investigation that was self-reported to the SEC and DOJ. Additionally, she led the team representing a FORTUNE 50 company during FCPA investigations conducted by the SEC and DOJ regarding alleged improper payments involving the company’s charitable foundation. She also represented a group of four executives in China and Hong Kong in response to FCPA exposure from the SEC and DOJ and represented an officer of an organization in connection with an FCPA violation that was self-reported to the government. In 2011, Ms. Tsesmelis was named a New York “Super Lawyers, Rising Star.”

Francesca M. Harker, AssociateFrancesca M. Harker obtained significant FCPA experience while conducting investigatory work in Mexico, China, India and Brazil to assist U.S. clients in ascertaining the nature and extent of alleged bribe payments made to foreign official by distributors, contractors and subsidiaries. She also has experi-ence structuring and implementing FCPA compliance programs in an effort to help clients avoid potential violations and lessen government sanctions, and has assisted clients in connection with criminal investigations conducted by the DOJ. During law school, Ms. Harker was an associate editor for the University of Michigan Law Review.

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Brian K. Esser, Associate Brian K. Esser has considerable FCPA investigatory expe-rience. He conducted an FCPA investigation to ascertain the nature and extent of an alleged bribe paid by a Korean subsidiary of a U.S. company. He has counseled clients on possible FCPA-related consequences in the use of subcon-tractors in the private aviation industry in India and in a possible initial public offering by a Switzerland-based manu-facturer. Additionally, he helped lead document reviews, interviews and forensic accounting to identify irregularities with books and records of the international division of a major international corporation. Mr. Esser was named a New York “Super Lawyers, Rising Star” in 2011.

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Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written informa-tion about our qualifications and experience. © 2013 Baker & Hostetler LLP

For more information about the Foreign Corrupt Practices Act or if you have questions about how FCPA may impact your business, please contact the following BakerHostetler attorneys or visit our website (http://www.bakerlaw.com/foreigncorruptpracticesact/):

John J. CarneyNational Co-Chair,White Collar Defense and Corporate Investigationsjcarney@bakerlaw.com212.589.4255

George A. StamboulidisNational Co-Chair,White Collar Defense and Corporate Investigationsgstamboulidis@bakerlaw.com212.589.4211