Davis Polk & Wardwell LLP

2018 Mid-Year Review: Anti-Corruption Enforcement and Trends

July 19, 2018

CLE CREDIT AVAILABLE

Agenda

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2018 Facts and Figures

DOJ/SEC Developments

Corporate Enforcement Policy Update

DOJ Policy Addressing “Piling On”

Recent Focus on M&A

Kokesh Update

Global Developments

Spotlight on China

Spotlight on Latin America

Areas to Watch

Presented by

3

Angela T. Burgess James W. Haldin Linda Chatman

Thomsen

Patrick S. SinclairAntonio J.

Perez-Marques

2018 Facts and Figures CORPORATE ENFORCEMENT ACTIONS (AS OF JUNE 30)

4

4 4

DOJ SEC

1

2018 Facts and FiguresCORPORATE ENFORCEMENT ACTIONS (AS OF JUNE 30)

5

43%

29%

14%

14%

Geography

Africa China & East Asia Europe Russia

15%

14%

14%43%

14%

Industry

Transportation & Logistics Entertainment & Aerospace

Real Estate Financial Services

Mining

Obama Administration vs. Trump AdministrationCORPORATE ENFORCEMENT ACTIONS (INAUGURATION – JUNE 30, 2010; JUNE 30, 2018)

6

18

12

1414

9

7

0

2

4

6

8

10

12

14

16

18

20

Companies Involved DOJ Actions SEC Actions

Corporate Enforcement Resolutions Obama Trump

1 Resolutions involving subsidiaries are not counted separately from parent companies.

DOJ/SEC DevelopmentsCORPORATE ENFORCEMENT POLICY

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What Constitutes Full Cooperation and Remediation?

COOPERATION

Disclose

Be Proactive

Collect and Preserve

De-Conflict

Make Available

REMEDIATION

Analyze

Implement

DisciplineRetain

Additional Steps

DOJ/SEC DevelopmentsDUN & BRADSTREET | APRIL 23, 2018

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DOJ Declination: First Under Corporate Enforcement Policy

Factors: Self-disclosure, Cooperation, and Remedial Efforts

SEC Cease & Desist

Total penalty: $9.2 million

$6,077,820$2,000,000

$1,143,664

Disgorgement Civil Penalty Interest

“DOJ/SEC DevelopmentsSOCIÉTÉ GÉNÉRALE | JUNE 4, 2018

9

Paid bribes to receive transactions from Libyan state-owned financial institutions using a Libyan broker.

“This is the first coordinated resolution with French authorities in a foreign bribery case.

- DOJ

SocGen PNF$292.8MDOJ $292.8M

POST-ACQUISITION

Voluntarily Disclose

Conduct Post-

Acquisition Due

Diligence

Implement Compliance

Program

DOJ/SEC DevelopmentsM&A RISK-BASED DUE DILIGENCE AND DISCLOSURE

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PRE-ACQUISITION

Conduct Due

Diligence

Ensure Acquiring

Company’s Compliance

Train Employees

Conduct FCPA-specific Audit

Disclose

DOJ/SEC DevelopmentsCREDIT SUISSE | JULY 5, 2018

11

Hired, promoted, and

retained candidates

referred by, related to,

or otherwise connected

with clients, potential

clients, and

government officials as

part of quid pro quo to

secure business.

$24.99M

$4.83M

Disgorgement

PrejudgmentInterest

$29.82M

$47.03M

Credit Suisse AG Credit Suisse Hong Kong

DOJ SEC

Penalty

DOJ/SEC DevelopmentsKOKESH UPDATE

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• In the year since the Kokesh decision, the Division of Enforcement has had to

forego over $800 million of disgorgement in both litigated and settled actions.

• “We are redoubling our efforts to uncover, investigate, and bring cases as

quickly as possible . . . . But no matter how quickly we work, it is likely that

Kokesh will have a significant impact on our ability to enforce the federal

securities laws and obtain recovery for harmed investors in long-running frauds.”

~ Testimony of Avakian and Peikin before House

Committee on Financial Services (May 16, 2018)

National Supervision

Commission(New Governmental Branch)

Spotlight on ChinaREORGANIZATION OF THE NATIONAL SUPERVISION COMMISSION

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Communist PartyCentral Commission for

Disciplinary Inspection

Administrative BranchProcuratorate (Anti-Corruption

Investigation Functions)

Special status

through

Constitutional

Amendment

Public Personnel

Non-Compliance with

Law and Other

“Improper Conduct”

Interrogation,

Detention, Search

and Wiretap

Impact on Foreign Entities/Individuals

Wide concept of public personnel

Bribe giver

Legal Representation

Silent in National Supervision Law

Contrast with Criminal Procedure Law

Spotlight on China REORGANIZATION OF THE ADMINISTRATIVE BRANCH: SAMR

14

State Administration of Industry and Commerce

(SAIC)

Anti-Monopoly Departments of Ministry of Commerce

(MOFCOM) and National Development and Reform

Commission (NDRC)

China Food and Drug Administration (CFDA)

General Administration of Quality Supervision,

Inspection and Quarantine (GAQSIQ)

State

Administration

of Market

Regulation

(SAMR)

Spotlight on Latin AmericaMEXICO’S PRESIDENT-ELECT’S EFFECT ON ANTI-CORRUPTION EFFORTS

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““Eradicating corruption and impunity will

be the mission of the new government.

Under no circumstances will the next

president of the Republic permit

impunity or corruption. Be warned that

whoever may be involved shall be

punished, no matter who they are,

including accomplices that are friends

and relatives.

- Andrés Manuel López Obrador

Areas to WatchPROLIFERATION OF DPA AUTHORITY

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Canada

No DPAs have occurred under

the new regime at this time.

Unclear whether the

agreements, which have to be

approved by a court, will

receive significant judicial

scrutiny.

Singapore

The regime came into effect

on March 19, 2018, but no

DPA use yet.

The substantive corporate

criminal statute only allows

for recovery up to $100,000.

Switzerland, Poland, and

Australia

Considering adopting a DPA scheme

for enforcement.

Thank you!

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For more information, please visit our FCPA webpage: https://www.davispolk.com/practices/litigation/anticorruption-and-fcpa/

Questions

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Appendix

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Presenters

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Angela T. Burgess

Angela is a partner in Davis Polk’s Litigation Department and co-chair of the firm's Global

Enforcement and Investigations Group. She has represented leading clients in some of the

most high-profile and complex white collar and regulatory matters in recent years. Her global

practice focuses on representing companies as well as individuals in matters involving

allegations of insider trading, violations of anti-bribery laws, money laundering, antitrust,

fraud, and other financial crimes. Angela also routinely advises boards of directors, audit

committees, and companies on corporate governance and compliance matters, including the

design of strategies, policies and procedures to mitigate risk.

James W. Haldin

James is counsel in Davis Polk’s Litigation Department and a member of the firm’s Global

Enforcement and Investigations Group. He represents financial institutions and other

multinational corporations in criminal, regulatory and internal investigations with a particular

focus on Foreign Corrupt Practices Act (FCPA) matters. He has conducted FCPA

investigations in Bangladesh, Brazil, China, Hong Kong, India, Mexico, Russia and the United

Kingdom for clients in a range of industries, including banking, life sciences and technology.

Presenters

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Antonio J. Perez-Marques

Mr. Perez-Marques is a partner in Davis Polk’s Litigation Department and a member of the

firm’s Global Enforcement and Investigations Group and the firm’s Securities Litigation Group.

His government and internal investigations practice includes matters arising under the

Foreign Corrupt Practices Act (FCPA) and economic sanctions, as well as securities

enforcement. His civil litigation practice focuses on class action securities litigation and cross-

border matters, as well as M&A litigation and commercial disputes. He also has extensive

experience advising Spanish, Latin American and other foreign clients concerning U.S.

litigation matters, and domestic clients concerning overseas and cross-border disputes.

Patrick S. Sinclair

Patrick is a partner in our Litigation Department, resident in Hong Kong, and is a member of

the firm’s Global Enforcement and Investigations Group. Patrick has more than a decade of

experience representing U.S.-based and international corporations, audit committees, banks,

individuals, and the government in corporate criminal investigations. He regularly leads

internal investigations for multinational corporations in Asia, and has represented a number of

individuals in Asia who were the subject of inquiries from U.S. Attorneys’ Offices, the SEC,

CFTC, and other U.S. regulators. From 2007 to 2014, Patrick was a prosecutor in the U.S.

Attorney’s Office for the Eastern District of New York. He was appointed Deputy Chief of the

General Crimes Section in 2013.

Presenters

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Linda Chatman Thomsen

Linda is a partner in Davis Polk’s Litigation Department and a member of the firm’s Global

Enforcement and Investigations Group. Linda practices in the firm’s Washington, DC office,

where she concentrates on matters related to the enforcement of the federal securities laws.

She returned to the firm after serving for 14 years in various positions within the SEC.

Linda joined the SEC staff in 1995 as Assistant Chief Litigation Counsel. In 1997, she was

named Assistant Director of the Enforcement Division. She became an Associate Director in

2000, Deputy Director in 2002, and was named Director of the Enforcement Division in 2005,

a position she held until 2009.