Expert Guide
Fraud & White Collar Crime
August 2013
Arnold & Porter LLP - Gibson, Dunn & Crutcher LLP - Kirkland & Ellis LLP - Covington & Burling LLP
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Contents
The Americas
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James Drakeford
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6 - 11
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2 - Expert Guide : Fraud & White Collar Crime 2013
Ukrainian Anti-Corruption Legal Framework: Specifics & New Legislation
Asia
Payback: Criminal or Civil?
52 - 53
Recent developments regarding money-laundering in Hong Kong
20 - 23
World War Z: Why Life Sciences
Companies May be in the Path
of the “New” Securities Enforcement
& Litigation Onslaught, & How to
Avoid Trouble
54 - 57
Recent Corruption Cases in Singapore
24 - 27
Overview & Perspectives of the Crime of
Insider Trading in Brazil
58 - 59
The Americas
28 - 31
Fraud & White Collar Crimes –
Increasing Trends in Latin America
and the Caribbean
60 - 61
Europe
62 - 63
Asia
Global
32 - 33
Snapshot - Significant Cases of 2013 to
date
34 - 37
Balancing the Scales: Investment
Arbitration in the Context of
Sovereign Debt Restructurings
38 - 41
Corporate Criminality & the Risks
for Investors: A UK Perspective
42 - 43
Q&A with Nabeel Sheikh of
Neumans LLP
Administration Manager
Nafisa Safdar
Editorial Enquiries
editor@corporatelivewire.com
48 - 51
16 - 19
Competitions Manager
Arun Salik
Accounts Assistant
Jenny Hunter
Individual & Company Risks for Bribery: Navigating the Minefield
Regulatory & Enforcement Outlook For
Financial Institutions
Production Manager
Sunil Kumar
Head of Finance
Simon Carter
44 - 47
12 - 15
Research Manager
David Bateson
Account Managers
Ibrahim Zulfqar, Norman Lee
Omar Sadik, Vince Draper
Salmaan Kassam, Tom Bennett
Sumita Patel
Businesses Become Easy Targets in
Carbon Copy Prosecutions for
Corruption Violations
Europe
Expert Directory
6
20
42
34
28
52
Expert Guide : Fraud & White Collar Crime 2013 - 3
Introduction
By James Drakeford
L
ast year saw the shocking emergence of
the biggest financial corruption case in
history with the Libor scandal revealing
the rigging of $300 trillion benchmark.
Rather than celebrating the triumph, it
appears that claiming the collective scalp of some
of the largest financial organisations in the world
has simply whet the appetite of the authorities.
Anyone watching white collar and regulatory enforcement developments unfold will know that the
stakes could not be higher for corporations facing
criminal and/or regulatory enforcement investigations in the current environment.
hack, and in fact it is often the smaller organisations with a less secure website that are more susceptible to a breach.
With more high quality data becoming available
to fraudsters, a world economies forecast to contract and the UK’s and USA’s benefits spending being reduced, overall fraud levels will continue to
increase dramatically across the US, UK and the
rest of Europe. Fraud hotspots most likely to be
affected in 2013 include: banks and card companies, insurers, online merchants, retailers and government agencies.
Corporations that resolved cases in 2012 were
subjected to some of the largest financial penalties
and forfeitures ever imposed. BP agreed to pay
$4 billion in criminal fines and penalties for conduct relating to the Deepwater Horizon disaster,
the single largest criminal resolution in U.S. history. HSBC announced that it would pay $1.9 billion to settle criminal and civil money laundering
investigations. GlaxoSmithKline agreed to pay $3
billion to resolve criminal and civil investigations
into off-label drug marketing and price and safety
reporting practices. UBS was fined a total of $1.5
billion to resolve investigations by the US, UK and
Swiss prosecutors and regulators arising out of the
manipulation of LIBOR rates. Suddenly, the $453
million that Barclays agreed to pay to resolve its
role in manipulating LIBOR rates seem insignificant.
Following a significant number of high-profile defeats for prosecutors against individuals – particularly in cases arising out of the financial crisis – it
appears that the current trend for bringing huge
cases against major companies; including massive
fines, extensive remedial undertakings and extended monitorships will continue unabated.
While the white collar landscape has got all the
major organisations looking over their shoulders, the fraud scene is something which is causing increasing concerns all the way down to small
enterprises worldwide. When it comes to cyber
security, no company is considered too small to
4 - Expert Guide : Fraud & White Collar Crime 2013
The current economic climate is driving change
and there is an evolution in the world of fraud
prevention that we have not seen before. If we are
to stay ahead of the fraudster, there is an urgent
need to be able to read these trends and manage
strategies and risks accordingly. Throughout this
guide we highlight the key trends and regulatory
changes along with contributing to the debate in
order to raise awareness of the critical risks ahead.
Expert Guide : Fraud & White Collar Crime 2013 - 5
Businesses Become Easy Targets in Carbon Copy Prosecutions
for Corruption Violations By Mara V.J. Senn, Jocelyn Wiesner & Heather Hosmer
I
magine this nightmare scenario. You have
just resolved corruption allegations with your
home country’s authorities. Weary from pouring through financial records, haggling over
exorbitant penalties, and even firing close colleagues, you are glad to put the issue behind you.
However, the very next day, you are notified that
another country is launching an investigation for
the same acts. Even worse, the authorities in the
new investigation are partnering with your home
country’s prosecutors to share their investigative
findings. Wish you could wake up? So did Total
SA and Ralph Lauren1 when they found themselves parties in “carbon copy prosecutions” - successive prosecutions in multiple jurisdictions arising out of the same factual basis2.
Under international pressures to improve anticorruption enforcement, national authorities view
previously-prosecuted companies as easy targets. Simply by perusing the US Securities and
Exchange Commission’s (SEC’s) and US Department of Justice’s (DOJ’s) web-accessible investigation announcements or by utilising information
sharing agreements, resource-strapped agencies
can launch investigations then extract substantial
fines. This growing trend of carbon copy prosecutions has subjected companies to massive liability.
Anti-Corruption Laws on the Rise
A. International Organisations’ Influence
The number of countries that have pledged to enact anti-corruption legislation has sky-rocketed
in the past fifteen years. Originally signed by 29
countries in 19973, the Organization for Economic Cooperation and Development (OECD) AntiBribery Convention now includes 40 parties4 that
represent roughly 80% of global exports.5 Each of
these countries has committed to implementing
the OECD’s rigorous anti-corruption standards,
which resemble the terms of the US’s Foreign
6 - Expert Guide : Fraud & White Collar Crime 2013
Corrupt Practices Act (FCPA). Furthermore, the
OECD Convention created the Working Group on
Bribery, which calls for a rigorous peer review process. This group’s publicised country evaluations
have spurred countries to adhere to the Convention’s high standards.
Additionally, in 2003, 167 parties adopted the UN
Convention Against Corruption (UNCAC), which
requires members to enact anti-corruption laws.6
In 2009, the parties to UNCAC created the Implementation Review Group to evaluate countries’
anti-corruption efforts and prescribe reforms.7
Since then some of the largest countries in the
world have passed strict anti-corruption legislation, including Brazil, Russia, China, India, and
the UK.
B. Increased Enforcement
Not only are more countries adopting anti-corruption legislation, but there has been an increase in
the number of countries actually enforcing their
provisions. While according to TRACE International, the US is still the world-leader in corruption prosecutions, fifteen countries enforced their
anticorruption laws against foreign companies for
the first time in 2012.8
Greater Coordination for Anti-Corruption
C. International Organisations
In addition to increased enactment and enforcement of anti-corruption laws, increased coordination of corruption enforcement agencies has eased
bringing carbon copy prosecutions. The OAS
Treaty of 1996 called for members to allow extradition of bribe-taking officials and not to invoke
bank secrecy laws as other nations investigated
bribery allegations. Additionally, OECD’s Working Group on Bribery has identified cross-border
information sharing in bribery investigations as a
key area for improvement for OECD members.9
Similarly, UNCAC calls for members to exchange
information, personnel, and technical assistance
in corruption investigations. 10
Multilateral development banks (MDBs) have also
undertaken initiatives for cross-border information sharing to fight corruption. The World Bank,
Asian Development Bank, African Development
Bank, European Bank for Reconstruction and Development, Inter-American Development Bank
each have internal procedures calling for referring
corruption investigation results to affected governments. Moreover, as the leading MDB to investigate corruption, World Bank leaders are advocating for procedures to prod national authorities into
investigating their case referrals. Such procedures
may include direct contacts with national law enforcement agencies, publicising when referrals are
sent, and even suspending funding to countries
that do not prosecute World Bank referrals.
lows the SEC to investigate claims, share information, and compel document production on behalf
of foreign securities agencies even if they have no
preexisting agreement. The SEC may provide such
assistance even if the person or entity is not regulated by the SEC and their actions would not violate US laws. 11
Similarly, the DOJ has utilised several mutual legal
assistance treaties (MLATs) with other countries to
share information. While these treaties vary with
each country, most of them provide for reciprocal
information sharing as well as permission to pass
the information on to other regulatory agencies
like the SEC, production of documents, searches,
and service of process.
D. The US’s Role
US authorities have both given and received information through this cross-border investigatory
network. For example, while France has not historically prosecuted corruption charges, French
and American authorities have worked together
since 2006 to investigate Total.12 On 29 May 2013,
the SEC and DOJ announced a Deferred Prosecution Agreement (DPA) with Total and acknowledged the assistance of French regulators.13 On
the same day, French authorities announced an
investigation of Total based on the same corruption allegations and stated that they would seek
information obtained by American agencies.14
In addition to the information exchanged in the
joint investigation, France and the US have a longstanding MLAT through which French authorities
can obtain additional information.15
The US has used these international investigation
agreements to exchange information with foreign
agencies. In addition to OECD and UNCAC directives, the SEC is party to several bilateral agreements and memoranda of understanding (MOUs)
with nations to coordinate securities enforcement
and anti-corruption efforts. Additionally, Section
21(a)(2) of the Securities Exchange Act of 1934, al-
Even without participating in the investigation,
some governments will launch an investigation
after US agencies release their findings. For example, on April 22, 2013, the DOJ announced a
Non-Prosecution Agreement (NPA) with Ralph
Lauren for bribery in Argentina.16 The next day,
Argentine authorities announced that they were
launching an investigation into the same matter,
Expert Guide : Fraud & White Collar Crime 2013 - 7
which is still on-going.17 Like France, Argentina
has an MLAT with the US and has expressed that
they will use the agreement to obtain information
from the SEC and DOJ. 18
Addressing Carbon Copy Prosecutions
Although there are pitfalls with involving too many
countries in an international corruption investigation, the best strategy to try to avoid carbon copy
prosecutions is likely for companies facing anticorruption issues in different countries to try to
reach a universal settlement amongst all the jurisdictions. This has been occurring more and more
frequently. For example, in 2010 Innospec negotiated a $40.2 million global settlement with the US
and the UK, which was reduced from over $100
million due to Innospec’s precarious financial condition.19 Likewise, BAE Systems agreed to pay over
$400 million in 2010 to the US and the UK,20 and
Johnson & Johnson agreed to a $77 million global
settlement in 2011 with the US and UK. 21
However, differences in corruption laws and prosecution procedures complicate arranging a global
settlement. For example, in the US, self-disclosure
of misconduct can substantially reduce FCPA penalties.22 However, in the UK, newly appointed
SFO Director David Green revised the Bribery Act
Guidance to grant fewer benefits for self-reporting
companies.23 Additionally, while a negotiated resolution in one jurisdiction may not involve prosecution of individuals, carbon copy prosecutions
may pursue executives involved in the corrupt
acts. For example, even though there have been no
individual prosecutions of Total executives in the
US, French authorities have stated that they will
pursue charges against Total executives.24
In order to navigate the challenges of negotiating
a global settlement, companies are well advised to
apprise themselves of the various anti-corruption
laws that may have been triggered by their actions.25 Companies should then seek to understand
8 - Expert Guide : Fraud & White Collar Crime 2013
each interested government’s treatment of self-disclosure and cooperation as well as identify which
countries have information sharing agreements.26
Next, companies should develop a strategy to ensure simultaneous self-disclosure.27 Lastly, in negotiating resolutions, companies must determine
whether they should include more countries in the
settlement negotiations or leave them out and run
the risk of a carbon copy prosecution.28
Conclusion
Carbon copy prosecutions are a growing threat to
global businesses. As pressures to increase corruption prosecution and integrate cross-border investigations grow, enforcement agencies are taking
aim at previously prosecuted companies. While
cooperation with authorities was enough to mitigate liability in the past, companies must now develop complex strategies for how to best cope with
prosecutions in multiple countries and undertake
the delicate task of negotiating a global settlement
to bring finality to the corruption allegations.
Ms. Senn is a partner at
Arnold & Porter’s Washington, D.C. office. Her
white collar practice focuses on representing clients
on anti-corruption issues.
She has been recognized
for her white collar criminal defense work in Latin
Lawyer 250 (2013) and
Washington D.C. Super
Lawyers (2013). Ms. Senn regularly leads multijurisdictional corruption internal investigations and
responds to government inquiries and investigations
in a wide variety of industry sectors and countries.
Ms. Senn also counsels clients on anti-corruption
compliance. In addition, Ms. Senn often speaks and
writes about important anti-corruption topics and
trends and has been quoted in a variety of publications such as the Wall Street Journal. Ms. Senn is
the Co-Chair of the ABA’s ABA Technology Transfer,
FCPA and Trans-National Criminal Matters Subcommittee of the White Collar Committee, and a
member of the Edward Bennett Williams White Collar Inn of Court and the Financial Fraud Law Report
editorial board.
Ms. Senn can be contacted by phone on
+1 202 942 6448 or alternatively via email at
Mara.Senn@aporter.com
Jocelyn Wiesner* is an associate in Arnold & Porter
LLP’s litigation practice
group, where her practice
focuses on the Foreign Corrupt Practices Act. She
graduated from The George
Washington Law School in
2012.
(*Ms. Wiesner is admitted to the
New York bar and is practicing law in the District of Columbia
during the pendency of her application to the D.C. Bar.)
Jocelyn Wiesner can be contacted via email at
Jocelyn.Wiesner@aporter.com
Heather graduated magna
cum laude from Georgetown University. Heather
is currently a rising third
year student at Georgetown University Law Center and is the Executive
Editor of the Georgetown
International
Environmental Law Review. She
is a summer associate in
Arnold & Porter’s Washington, DC’s office.
Heather Hosmer can be contacted by via email at
hah23@law.georgetown.edu
Expert Guide : Fraud & White Collar Crime 2013 - 9
1 - For more information on the US investigation of Ralph Lauren, see Arnold & Porter LLP, SEC Enters into First FCPA Non-Prosecution Agreement (April 2013), http://www.arnoldporter.com/resources/documents/ADV413SecEntersIntoFirstFcpaNonProsecutionAgreement.pdf
2 - Andrew S. Boutros & T. Markus Funk, “Carbon Copy” Prosecutions: A Growing Anticorruption Phenomenon in A Shrinking World, 2012 U. CHI. LEGAL F. 259, 269 (2012) (Boutros & Funk Article).
3 - Nicholas Bray, OECD Ministers Agree to Ban Bribery as a Means for Companies to Win Business, WALL ST. J. May 27, 1997, at A2.
4 - OECD Working Group on Bribery, Annual Report 2013, http://www.oecd.org/daf/anti-bribery/AntiBriberyAnnRep2012.pdf
5 - OECD Working Group on Bribery, Annual Report 2011, http://www.oecd.org/daf/anti-bribery/AntiBriberyAnnRep2011.pdf
6 - U.N. General Assembly, United Nations Convention Against Corruption, A/58/422 (October 31, 2003), available at http://www.unodc.org/documents/treaties/UNCAC/Publications/Convention/08-50026_E.pdf
7 - Mechanism for the Review of Implementation of the United Nations Convention Against Corruption, United NATIONS OFFICE ON DRUGS AND CRIME, http://www.unodc.org/unodc/en/treaties/CAC/IRG.html (last visited June 20, 2013).
8 - Trace, Global Enforcement Report 2012, https://s3.amazonaws.com/salesforce.traceinternational.org/html/pdf/GER_2012_Final.pdf
9 - OECD Annual Report 2013, supra note 4, at 4.
10 - UN Convention Against Corruption, supra note 6, at 40, 51.
11 - International Enforcement Assistance, SEC, http://www.sec.gov/about/offices/oia/oia_crossborder.shtml (last visited June 20, 2013).
12 - Christopher M. Matthews, Total SA Reserves €316 Million for FCPA Settlement, WALL ST. J., Aug. 3, 2012, http://blogs.wsj.com/corruption-currents/2012/08/03/total-sa-reserves-e316-million-for-fcpa-settlement/
13 - SEC, SEC Charges Total S.A. for Illegal Payments to Iranian Official, May 29, 2013, http://www.sec.gov/news/press/2013/2013-94.htm
14 - Tom Schoenberg & Tara Patel, Total Ends U.S. Bribe Probe as France Seeks CEO Charges, BLOOMBERG, May 29, 2013, http://www.bloomberg.com/news/2013-05-29/total-agrees-to-pay-398-million-to-settle-u-s-bribe-probe-1-.html; Matthew Saltmarsh, Paris Prosecutor Investigating French Oil Firm, NY TIMES, April
6, 2010, http://www.nytimes.com/2010/04/07/business/global/07iht-total.html?_r=0; Geraldine Amiel & Joe Palazzolo, Prosecutor Recommends Corruption Trial for Total, CEO, WALL ST. J., May 29, 2013,
http://online.wsj.com/article/SB10001424127887324682204578513230302339730.html
15 - Treaty on Mutual Legal Assistance in Criminal Matters, U.S.-Fr., Dec. 10, 1998, http://www.state.gov/documents/organization/121413.pdf
16 - DOJ, Ralph Lauren Corporation Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $882,000 Monetary Penalty, April 22, 2013, http://www.justice.gov/opa/pr/2013/April/13-crm-456.html
17 - Ricardo Etchegaray, Escandalo Ralph Lauren: citan a declarar al titular de la AFIP, FORTUNAWEB, May 7, 2013, http://fortunaweb.com.ar/2013-05-07-121043-escandalo-ralph-lauren-citan-a-declarar-al-titular-de-la-afip/.
18 - Caso Ralph Lauren: ahora la AFIP pide a EE.UU. que de los nombres de los sobornados, POLITICA, April 23, 2013, http://www.clarin.com/politica/Caso-Ralph-Lauren-AFIP-EEUU_0_906509523.html; Alfredo Sainz, La AFIP Denuncio a Ralph Lauren, LANACION.COM, April 24, 2013, http://www.lanacion.com.
ar/1575686-la-afip-denuncio-a-ralph-lauren.
19 - Sentencing Memo., United States v. Innospec Inc., No. 1:10-cr-00061 (D.D.C. 2010), available at http://www.justice.gov/criminal/fraud/fcpa/cases/innospec-inc.html
20 - BAE, BAE Systems PLC. Announces Global Settlement with United States Department of Justice and United Kingdom Serious Fraud Office, Feb. 5, 2010, http://www.baesystems.com/article/BAES_026388/bae-systems-plc-announces-global-settlement-with-united-states-department-of-justice-and-united-kingdom-serious-fraud-office?_afrLoop=409114787788000&_afrWindowMode=0&_afrWindowId=
null&baeSessionId=yJHtRQGQ1yhHBsR1JKyhjBFtnSS7b1ZTS8lvn2Qk2yjLL8nhj2v7!1889691659#%40%3F_afrWindowId%3Dnull%26baeSessionId%3DyJHtRQGQ1yhHBsR1JKyhjBFtnSS7b1ZTS8lvn2Qk2yjLL8nhj2v7%25211889691659%26_afrLoop%3D409114787788000%26_afrWindowMode%3D0%26_adf.ctrl-state%3Djscj6indw_4
21 - SFO, DePuy International Limited Ordered to Pay £4.829 million in Civil Recovery Order, April 8, 2011, http://www.foley.com/files/DePuy_SFO_Release_18apr11.pdf
22 - DOJ, A Resource Guide to the U.S. Foreign Corrupt Practices Acts, Nov. 2012, http://www.justice.gov/criminal/fraud/fcpa/guide.pdf
23 - Samuel Rubenfeld, SFO Tightens Self-Reporting Rules in Revised Bribery Act Guidance, WALL ST. J., Oct. 9, 2012, http://blogs.wsj.com/corruption-currents/2012/10/09/sfo-tightens-self-reporting-rules-in-revised-bribery-act-guidance
24 - Tom Schoenberg & Tara Patel, Total Ends U.S. Bribe Probe as France Seeks CEO Charges, BLOOMBERG, May 29, 2013, http://www.bloomberg.com/news/2013-05-29/total-agrees-to-pay-398-million-to-settle-u-s-bribe-probe-1-.html
25 - Boutros & Funk Article, supra note 1.
26 - Id.
27 - Id.
28 - Claudius O. Sokenu, Securities Regulations & Law, 43 BNA 12 (2011), available at http://www.arnoldporter.com/resources/documents/Arnold&PorterLLP_SecuritiesRegulation&LawReport_032111.pdf
10 - Expert Guide : Fraud & White Collar Crime 2013
Expert Guide : Fraud & White Collar Crime 2013 - 11
Regulatory & Enforcement Outlook For Financial Institutions
By Joe E. Edwards, Thomas B. Snyder & Daniel R. Burstein
I
n the wake of the 2008 financial crisis, financial institutions have seen their business practices and compliance programs subjected to
more exacting scrutiny from regulators and
sharper criticism from politicians, commentators, and consumers. In recent months, there has
been a spate of headlines regarding high-profile
enforcement actions and record-setting penalties
levied against some of the world’s leading banks.
Nonetheless, leading members of Congress continue to chide federal regulators and prosecutors
for a perceived “light touch” with respect to allegations of wrongdoing by financial institutions.
With this background, the future is likely to bring
ever more expansive and aggressive enforcement
actions, including criminal prosecutions against
financial institutions as well as the individuals
who engage in or are responsible for the conduct
at issue.
BSA/AML Focus
The Bank Secrecy Act (“BSA”) requires financial
institutions to assist the U.S. government in its efforts to detect and prevent money laundering. To
that end, the BSA requires financial institutions
to keep records of cash purchases of negotiable
instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to
report suspicious activity that might signify money laundering, tax evasion, or other illicit activity.
While enforcement of the BSA and anti-money
laundering (“AML”) laws was historically often a
secondary focus, that is no longer the case. They
are now viewed as a critical, and sometimes primary, tool in the fight against money laundering,
terrorist financing, drug trafficking, and organised
crime. Recent actions demonstrate the U.S. government’s renewed focus on BSA/AML compliance.
In 2010, the Department of Justice (“DOJ”) created a specialised Money Laundering & Bank
12 - Expert Guide : Fraud & White Collar Crime 2013
Integrity Unit to investigate and prosecute BSA/
AML violations. Leaders of the Federal Reserve,
the Office of the Comptroller of the Currency, and
the Financial Crimes Enforcement Network have
all publicly reiterated their commitment to rigorous BSA/AML enforcement. Recent enforcement
actions demonstrate this is not empty rhetoric.
In 2010, Wachovia Bank agreed to pay $160 million to settle charges that it failed to maintain an
adequate BSA/AML program. In December 2012,
HSBC agreed to pay $1.9 billion in fines to settle
allegations that its failure to maintain adequate
anti-money laundering controls allowed terrorists and drug cartels access to the U.S. financial
system. There have been a large number of less
publicised enforcement actions against smaller to
mid-size financial institutions as well.
In the fall-out from the HSBC settlement, DOJ
came under severe criticism for failing to pursue
criminal penalties against HSBC or the individuals involved. In the wake of that criticism, we
expect DOJ will be keen to demonstrate its commitment to pursuing criminal charges against
financial institutions and individuals. It is imperative that all financial institutions ensure their
compliance programs are adequate in light of this
heightened regulatory scrutiny. Indeed, regulators have expressed concern that as larger institutions implement better BSA/AML procedures,
the riskier products and customers will migrate to
smaller financial institutions, including mid-size
and community banks. The most likely targets of
DOJ’s future criminal enforcement actions may be
these smaller to mid-size financial institutions.
or launder the proceeds. All financial institutions
should expect their BSA/AML controls will be
tested.
BSA/AML & Anti-Corruption
Effective Compliance Programs for Financial
Institutions
There is little question that anti-corruption is a key
focus of both the SEC and the DOJ. Both have
specialised units organised to handle Foreign Corrupt Practices Act and related anti-corruption issues. BSA/AML is viewed as an integral part of
those larger efforts to combat corruption. The
high profile case of Jean Renee Duperval of the
Haiti Teleco corruption case is just one example
in which the charges against him were based on
money laundering activity rather than direct
FCPA charges. BSA/AML charges are a tool DOJ
has been using more and more frequently in its
fight against a wide variety of wrongdoing.
Recent developments leave little doubt that the financial services sector is coming under increased
scrutiny for anti-corruption and money laundering activities. In May, DOJ announced an indictment of two individual employees of Direct Access
Partners (“DAP”) for violations of the FCPA, the
Travel Act and money laundering statutes. Most
notable for financial institutions is the fact that the
investigation seems to have originated from a routine, periodic examination conducted by the SEC.
For financial institutions, a key lesson from the
DAP indictments is clear: routine regulatory investigations may bring to light a wide variety of
potentially serious issues. Accordingly, financial
institutions must expect that regulators will be
looking for evidence of broader anti-corruption
issues even during these routine examinations.
Financial institutions, banks in particular, must
also anticipate that their BSA/AML compliance
programs may be seriously questioned in connection with other anti-corruption inquiries. In most
every corruption case, one or more banks were
abused by the wrongdoers to pay the bribe money
At a minimum, financial institutions need a risk
based BSA/AML program that: (1) establishes internal controls to ensure ongoing compliance; (2)
designates an individual or individuals responsible for compliance issues; (3) provides training
for appropriate personnel; and (4) provides for
independent testing of the program in order to
monitor its effectiveness. A successful BSA/AML
compliance program, however, also requires that
the senior leadership establish a strong culture of
compliance throughout the financial institution.
Moreover, because the hallmarks of a good BSA/
AML compliance program often overlap with robust anti-corruption compliance, implementing
a strong BSA/AML program has the added benefit of protecting against potential anti-corruption
charges as well. Consider the following best practices:
• Build BSA/AML compliance measures into the
performance criteria for all senior officers and
business unit managers, not just those directly
tasked with compliance. All senior officers, directors, and managers should receive periodic training on BSA/AML issues and reports on the institution’s compliance program.
• Establish clearly defined channels by which compliance personnel or lower-level employees may
inform board directors or senior management of
potential BSA/AML violations or other compliance deficiencies.
• Conduct appropriate risk assessments regarding
new customers, business partners, services, lines
of business, and/or new geographies, in order to
determine whether the new business raises parExpert Guide : Fraud & White Collar Crime 2013 - 13
ticular compliance concerns and whether the existing compliance program is sufficient to address
those concerns.
A financial institution must be able to demonstrate
to regulators that it has committed the necessary
resources, in light of the risks posed by its business model, to its BSA/AML compliance program.
Doing so will help avoid the severe sanctions and
negative publicity associated with inadequate
AML controls, and will further bolster the institution’s standing in general. Deficiencies in AML
controls are no longer seen as a mere compliance
issue, but as a potential threat to an institution’s
safety and soundness. The outrage over the HSBC
settlement also means that there will likely be an
increase in potential criminal prosecutions for institutions or individuals found to be involved in
money laundering activities. In the current environment with increased focus and a proliferation
of lucrative whistleblower programs, if a financial
institution is engaged in money laundering activities, it is only a question of when and how the unlawful conduct will come to light, not if. The best
protection for a financial institution, and its directors and officers, is a robust, risk-based BSA/AML
program.
Joe E. Edwards is an attorney at Crowe & Dunlevy
and chair of the firm’s White
Collar, Compliance & Investigations practice group. Mr.
Edwards’ practice includes
White Collar Crime, Banking, Complex Litigation,
Cross Borders Transactions
and Dispute Resolution.
Mr. Edwards has authored white papers on a diverse
range of subjects including Who May Sue an Accountant, Lending to Holding Companies, Lending
to Indian Tribes, Check Fraud, and Lien Perfection
issues. His article titled “Participate in the Conduct
14 - Expert Guide : Fraud & White Collar Crime 2013
of an Enterprise: Rx for RICO Liability” was published in the Oklahoma Bar Journal.
ents with respect to compliance policies, procedures,
and training.
Joe can be contacted by phone on +1 405 239 5419
or alternatively via email at
joe.edwards@crowedunlevy.com
Prior to joining the firm, Mr. Burstein served as Assistant Attorney General at the Iowa Department
of Justice, where he focused on white-collar crime
and coordinated investigations with state and federal agencies. He also served as a law clerk to the
Honorable Suzanne B. Conlon, U.S. District Court
for the Northern District of Illinois.
Thomas B. Snyder is an
attorney in Crowe &
Dunlevy’s White Collar,
Compliance & Investigations and Litigation
& Trial practice groups.
Mr. Snyder’s practice includes managing complex
business litigation such
as white collar criminal
defense, real estate and
construction, lease negotiation and litigation, bid
disputes and protests, shareholder claims, unfair
competition, trademark and intellectual property,
creditors rights issues, land use and general business
litigation.
Daniel can be contacted by phone on
+1 405 239 6681 or alternatively via email at
Daniel.burstein@crowedunlevy.com
Mr. Snyder is a former assistant United States attorney (AUSA) for the Southern District of California.
As an AUSA in the General Crimes Division, he
handled a wide variety of cases involving prosecution of federal crime.
Thomas can be contacted by phone on
+1 405 234 3254 or alternatively via email at
Thomas.snyder@crowedunlevy.com
Daniel R. Burstein is an
attorney in Crowe & Dunlevy’s White Collar, Compliance & Investigations
and Litigation & Trial
practices. Mr. Burstein’s
practice includes representing clients in a wide
variety of litigation matters, as well as advising cliExpert Guide : Fraud & White Collar Crime 2013 - 15
Payback: Criminal or Civil?
By Luke McGrath
T
he reaction is visceral: “That [insert expletive/executive/employee/fiduciary name
here] stole our money. He/she lied to our
faces. Now we are left holding the bag and
cleaning up his/her mess. It is time for payback, let’s call the cops.”
As General Counsel or Chairmen of the Board,
you must fight against this normal reaction. Sure,
notifying law enforcement may be advisable and,
indeed, necessary, but before doing so, it is important for a company and its managers to know
all the facts, conduct an analysis of the risks, and
prepare the proper presentation for law enforcement. Equally important is evaluating you obligations under any relevant insurance policies and
notifying your insurer. The difference between
acting on instinct and taking measured steps to
assess the situation, pursue the appropriate course
of conduct, and package your case may be the difference between writing off the costs arising out of
criminal conduct (and exposing the company to
claims of negligence) and getting both PAYBACK
and PAID-BACK.
Do You Or Do You Not Notify Law
Enforcement?
Law Enforcement Does Not Always Recognise
Your Case As A Crime To Be Prosecuted
Every victim believes the crime he or she is reporting is important – and rightly so. However, the
truth is that even for corporate crime, law enforcement personnel may not prioritise your complaint.
In fact, they may not consider a reported crime
to be within their scope of authority, and disputes
that hinge upon potentially criminal activity may
be viewed as private matters between two sophisticated parties. For example, a police department
may not consider activity arising out of a contract
dispute to be a crime. For that reason, actions that
may give rise to civil fraud liability may not be
prosecuted. Other things to remember:
16 - Expert Guide : Fraud & White Collar Crime 2013
• Law enforcement is busy.
• Law enforcement is a blunt instrument not a precision instrument.
• Law enforcement may not be the best way to resolve your specific needs.
• Not every criminal goes to prison, but if a person
is in prison, they cannot make money to pay you
back
• You may wish to pursue a prosecution to make
an example of a fiduciary or to reassure investors
(in addition or in lieu of payback) – be sure to
clearly define these goals in advance and get “buyin” from all relevant stakeholders.
Is It Always An Either/Or?
In addition, the option of whether or not to contact law enforcement is not an either/or decision.
The major issue is TIMING - when is it appropriate
to notify law enforcement and for what purpose?
Remember, the failure to report a known crime is
a misdemeanor when you have actual knowledge
of its commission and your silence could be construed as concealing that crime. See 18 USC § 4.
Accordingly, careful evaluation and understanding of all the facts may result in an obligation to
contact law enforcement – but you must know the
facts.
Notifying law enforcement and your insurer may
be best handled once you are confident that most
if not all of the relevant facts are known. Then,
down the road when you have had the benefit of
time and more information, you can revisit the
question of whether law enforcement is the correct option. Remember:
• Whatever you do, make a choice – don’t let others make it for you.
• The running of limitations periods for civil remedies becomes important for a financial crime because the limitations period may start before the
fraud is actually discovered.
• Decide which goes first: (a) a civil investigation
and claim; or (b) a criminal complaint?
PRACTICE NOTE: pursuing a criminal complaint may hinder your ability to investigate and
bring a civil claim (since prosecutors may even
seek to stay your civil case).
The Do’s and Don’ts: Working with
Law Enforcement
Once you have decided that working with law enforcement is the right choice, remember:
Do:
• Determine whether you should approach State
or Federal law enforcement – calling “the Feds” is
tempting, but a State prosecutor may be the right
choice depending on the facts.
• Package your case – make it simple and provide
the tools a busy law enforcement representative
will need to immediately see that a crime has been
committed and can be proven. This is extremely
important – you will want to present the case on a
silver platter.
• Prosecute for the prosecutor – investigate and
provide updates to law enforcement. Remember
documents are usually key to packaging and refining your case – know your own documents and
provide them, timelines and summaries of complex issues.
• Keep informed and engaged with law enforcement to avoid duplicative investigation and to ensure coordinated efforts,
• Discuss media strategy with law enforcement –
decide whether or not to talk to media and how to
do so
• Consider hiring a private investigator – be sure
to consider this carefully because it may or may
not be appropriate depending on timing, law enforcement preference and the facts.
Don’t:
• Threaten an executive or employee with criminal
prosecution.
• Blab: whether it is internally or outside the company, a prosecution (and a reputation) could be
ruined if you or anyone in management talks to
others about the subject of the case and that conversation aids the defense.
• Assume your case will be a priority – follow up.
• Resist inquiry – law enforcement will not assist if
they are not given access.
Restitution – Do you really get “paid-back” or
is it just payback?
The most frustrating aspect of any civil investigation or criminal prosecution is coming to the realisation that the responsible party no longer has
assets sufficient to cover the damages they have
caused. Remember to:
• Conduct a cost/benefit analysis –a civil investigation may be more costly than assisting law enforcement (if they will take the case).
• Manage expectations – criminals don’t usually
save their money, so get “buy-in” on the goals to
be achieved: payback vs. getting paid-back.
• Chase assets offshore – don’t overlook that “business” trip to Nevis on an executive’s expense report.
• A settlement/plea bargain is money in the bank
– striking a deal may save you money and get you
paid-back, even if the responsible party gets only a
slap on the wrist.
Expert Guide : Fraud & White Collar Crime 2013 - 17
•Restitution – it works, or does it? Civil disgorgement, freezing of assets and other civil remedies may beat
State-imposed Restitution.
Conclusion: Don’t Let Crime Pay – Get
Payback AND Get Paid-Back
This article provides a checklist of some basic topics to consider, but a company’s General Counsel
must assess the need for outside assistance in addition to the assessment discussed above. Outside counsel with law enforcement experience
(or experience working with law enforcement)
may make the difference. In any event, in order
to improve the odds that the responsible party is
brought to justice and that the company is reimbursed for the damages caused, it is imperative to
manage the process and make the right decisions
at the outset. Doing so will save time and money
and can improve the chances of getting both payback and paid-back.
Luke McGrath is a partner
at Dunnington Bartholow
& Miller whose practice
focuses on complex civil
and criminal litigation,
alternative dispute resolution and investigations.
A former prosecutor, he
served as an Assistant
District Attorney in the
offices of Robert M. Morgenthau, District Attorney of New York County.
After serving with Mr. Morgenthau, he taught as
an Adjunct Professor at Fordham Law School and
then clerked for the Honorable Nicholas G. Garaufis
(USDJ). Before joining DBM, Mr. McGrath worked
as an associate with the firms of Cadwalader, Wickersham & Taft LLP and White & Case LLP and as
a partner at Bickel & Brewer LLP.
Luke McGrath can be contacted by phone on
+1 212 682 8811 or alternatively via email at
lmcgrath@dunnington.com
18 - Expert Guide : Fraud & White Collar Crime 2013
Expert Guide : Fraud & White Collar Crime 2013 - 19
World War Z: Why Life Sciences Companies May be in the Path of the “New” Securities
Enforcement & Litigation Onslaught, & How to Avoid Trouble By Thad A. Davis and Michael Li-Ming Wong1
2
013 is witnessing the continued rise of
the life sciences sector. Life sciences companies are accessing the capital markets
at a brisk clip, with over a dozen IPO’s in
the first few months of the year, and the
best IPO month in 13 years just concluded.2 The
highest growth vectors and rates are in this sector.
Life sciences is one area where U.S. companies appear to have a distinct advantage, due to a confluence of factors around intellectual property, product pipelines, marketing and markets. In sum, the
U.S. economy has arguably matured through the
post-industrial, service economy phase, and entered a new “life sciences economy” era, especially
with the difficulties faced by green energy as a new
pillar of the economy.
Like a perfect storm, and just in time, the SEC and
plaintiffs lawyers are already shuffling toward this
sector as a new target. The number of life sciences
companies sued over securities and governance issues has multiplied rapidly over the past year.3 It
can only be expected to increase; general counsels
of these companies without exception -- literally
100 percent -- report government regulation and
litigation as their top concern.4 Why?
The SEC is being revamped with new leadership
and new priorities. Initiatives from new leadership are renewing the SEC’s focus on financial accounting and reporting, putting the Madoff-era
focus on large, outright financial frauds, and meltdown-era focus on insider trading and excessive
risk-taking, partly behind the agency.5 Likewise,
private plaintiffs have gorged on financial meltdown cases, many are now subsisting on M&A,
proxy and derivative cases, but starting the renew
efforts at stock drop class actions.6 This and the
SEC’s new focus - a whistleblower program that is
finally yielding public payouts - could combine to
create a new wave of stock drop, restatement, and
derivative shareholder suits.
In the direct path of this possible onslaught are life
20 - Expert Guide : Fraud & White Collar Crime 2013
sciences companies, by the nature of the industry, regulatory environment, products, life cycle,
and growing share of the national economy and
growth. Life science companies’ unique exposure
to many different regulatory regimes, combined
with watershed moments in product development
and approval, and the new SEC enforcement focus
on financial accounting creates an attractive target
for enforcement, and by extension, private plaintiffs and their counsel.
This article briefly traces the post-financial meltdown changes at the SEC and in shareholder litigation activity, discusses why the current climate
puts life sciences companies at risk to the “new”
focus of the SEC and plaintiffs, and offers as a
takeaway the top five things boards and company
management can do to avoid becoming a target.
Very Recent SEC Activity Portends a
New Focus
In the past 10 years, the number of financial accounting and issuer disclosure actions brought by
the SEC has steadily declined from 199 such cases
in 2003 to merely 79 cases in 2012, with most of
the decline occurring post-2008.7 Although this
may be partly due to the success of the SarbanesOxley Act of 2002, many believe that there was a
shift in SEC priorities after the financial meltdown
and the failings of the SEC in the Madoff case.8 In
2010, for example, the SEC created five specialised
units to take up cases in asset management, mar-
ket abuse, structured and new products, foreign
corrupt practices, and municipal securities and
public pensions.9 Interestingly, financial accounting and reporting was not included in any of these
five specialised units.
But after a decade of trending away from SEC enforcement of these cases, there is evidence that the
SEC is poised to renew its focus on financial accounting and reporting under the leadership of
Chairman Mary Jo White. For example, the SEC
is beginning to create and use tools to detect accounting fraud such as the “Accounting Quality
Model”, 10 and reports indicate that Chairman
White’s new co-heads of enforcement, George
Canellos and Andrew Ceresney, will announce a
reallocation of enforcement resources with a focus
on financial accounting fraud. 11
Even the federal judiciary is beginning to signal
that the SEC should move on from beating the
tired drum that the banks’ excessive risk taking
sank the economy. In the recent case SEC v. Goldman Sachs & Co. et al, U.S. District Judge Katherine Forrest prevented the SEC from delving into
the root causes of the financial crisis in its case
against an ex-Goldman Sachs trader in its forthcoming trial of him for allegedly lying to customers. 12
Recent Shareholder Litigation Activity
As the SEC’s enforcement triage is beginning
to change, the types of securities class actions
brought by private plaintiffs have also begun to
change since the financial meltdown in 2008. Recent reports indicate that cases related to the credit
crises have dropped from 103 in 2008 to only four
cases in 2012.13 M&A and proxy cases have filled
in much of the gap such that the total number of
cases brought by private plaintiffs has dropped
only slightly from 2008 to 2012.14 This data suggests that now that suits from the credit crisis have
dried up, plaintiffs and their lawyers are looking
for other means of bringing securities class actions
against companies.
Why Life Sciences in the Crosshairs?
Life sciences companies are likely to become targets of both SEC investigations and private plaintiff
class actions. The many laws and regulations that
life sciences companies must follow puts plaintiffs’
counsel in a position to argue there were certain
revelations under any one of various regulatory
regimes that affected the company’s stock price.
For example, life science companies have exposure
under the False Claims Act (FCA) to allegations of
kickbacks in their dealings with regulatory bodies or allegations of fraudulent government reimbursements.15 Indeed, FCA claims are some of
the largest pharmaceutical company settlements
in history.16 Life science companies also have
Foreign Corrupt Practices Act (FCPA) exposure
because they are often in the business of importing, licensing, and selling a regulated product into
foreign markets.17
Finally, these companies are regulated by the Food
and Drug Administration (FDA) in such a way
that there are watershed moments in a life science
company’s product development and approval.
For example, FDA approval of a drug or medical
device is the type of single event that can have a
dramatic effect on a life science company’s stock
price.18 The resulting volatility of revenue creates
many opportunities for plaintiffs’ counsel to ask:
“who knew what, and when did they know it?”
Derivative suits challenging the directors’ managing of the risks associated with each of these regulatory regimes creates an additional layer of risk,
even if stock prices do not measurably decline.
A public company is also, of course, under the
auspices of the SEC, and life science companies
are particularly prone to whistleblowers under
Expert Guide : Fraud & White Collar Crime 2013 - 21
Dodd-Frank because of the volatile nature of their
regulatory approvals, heavily regulated marketing,
and the revenue recognition issues around startup
medical devices and products.
To be sure, other sectors than life sciences have
some of these risk factors. Energy, infrastructure,
banking, and retail, for example, each face some
level of regulation. But life science companies run
the full gamut of problems, having more risk factors stemming from regulation than comparable
industries.
Top Five Ways Management and the Board Can
Reduce Risk
Anticipating this trend, what can managements
and boards do to prepare their defenses to the regulatory and private litigation wave? The following
are just a few takeaways to orient these efforts:
1. Have a complete legal, compliance and governance review structure in place. Do this out of the
gate; do not wait for product approval, going public, or otherwise. The cleanup and litigation costs
are always more than just laying the right foundation.
2. Train the Board, whether through a “directors’
college,” law firm education opportunities or free
presentations. Do it early and often.
3. Enter foreign markets with great care. Even in
the exploratory phase, have the right compliance
structure.
4. Hire the right, experienced counsel at the first
sign of trouble. Again, cost savings up front can
be dwarfed by the cost of cleanup later.
5. Constantly review, update, and ensure compliance with stock plans, board resolutions, bylaws,
and the charter. Train stock administrators, as
this is often forgotten until going public.
These steps, implemented early in a life sciences
company’s history, can help minimise or mitigate
risk.
22 - Expert Guide : Fraud & White Collar Crime 2013
Conclusion
As the financial meltdown recedes into history, the
SEC is poised to adjust its focus from insider trading and financial fraud to financial accounting and
reporting. Private plaintiffs and their counsel are
similarly looking for opportunities as the financial
meltdown claims have begun to dry up.
Life sciences companies are an attractive target because of their unique exposure to a broad range
of regulatory regimes, the watershed moments in
a company’s lifecycle, and the resulting volatile
revenue that is characteristic of the industry. To
mitigate the risk of becoming a target, the management and board should take certain steps to
educate themselves and lay the right foundation
before any problems arise. It is always cheaper to
ensure compliance up front than it is to deal with
the cleanup and litigation costs later.
Thad A. Davis is a partner at Gibson Dunn and
Co-Chair of the Firm’s
National Securities Litigation Practice Group. One
of the recipients of Daily
Journal’s “Top Defense
Verdicts of 2011”, Thad is
a generalist trial lawyer
with a national practice
of trying bench and jury
trials, as well as arbitrations, in complex business
and regulatory litigation matters. Thad regularly
represents public companies, leading venture capital
and private equity firms, portfolio companies, hedge
funds, directors and officers, and high net worth individuals in a variety of complex commercial disputes and government investigations. His business
and matters have been recognised and covered by
leading national and international publications,
and he speaks and publishes widely on issues of key
importance to clients and colleagues.
Thad A. Davis can be contacted by phone on +1 415 393 8251 or alternatively via email
at tadavis@gibsondunn.com
Michael Li-Ming Wong, a San Francisco-based partner at Gibson Dunn, is the CoChair of the firm’s national Securities Enforcement Practice Group and is also a
member of the White Collar Defense and Investigations Practice Group. Mr. Wong
focuses on white-collar criminal matters, complex civil litigation and internal corporate investigations, with a particular expertise in anti-corruption investigations. Mr.
Wong served as an Assistant United States Attorney for nine years, including as Chief
of the Major Crimes and White Collar Units in the Northern District of California,
and is undefeated in twenty jury trials.
Michael Li-Ming Wong can be contacted by phone on +1 415 393 8200 or
alternatively via email at mwong@gibsondunn.com
1 - Mr. Davis is the Co-Chair of National Securities Litigation at Gibson Dunn & Crutcher, and Mr. Wong serves as Co-Chair of the firm’s Securities
Enforcement practice group.
2 - http://www.marketwire.com/press-release/life-sciences-ipos-have-biggest-month-in-13-years-burrill-company-says-1797840.htm
3 - http://www.dandodiary.com/2013/03/articles/securities-litigation/update-life-sciences-companies-and-securities-litigation
4 - http://www.njbiz.com/article/20130607/NJBIZ01/130609867&source=RSS
5 - Bruce Carton, Behind the SEC’s Renewed Focus on Financial Fraud, Compliance Week, June 11, 2013.
6 - Renzo Comolli et. al., Recent Trends in Securities Class Action Litigation: 2012 Full-Year Review, NERA Economic Consulting, January 29, 2013, at 5.
7 - Bruce Carton, Behind the SEC’s Renewed Focus on Financial Fraud, Compliance Week, June 11, 2013.
8 - Id.
9 - Press Release, SEC Names New Specialized Unit Chiefs and Head of New Office of Market Intelligence (January 13, 2010)
(http://www.sec.gov/news/press/2010/2010-5.htm)
10 - Craig Lewis, Chief Economist and Director, Securities & Exchange Commission, Risk Modeling at the SEC: The Accounting Quality Model, Financial
Executives International Committee on Finance and Information Technology (December 13, 2012)
(http://www.sec.gov/news/speech/2012/spch121312cml.htm)
11 - Jean Eaglesham, Accounting Fraud Targeted, The Wall Street Journal, May 28, 2013, at C1.
12 - Richard Vanderford, SEC Can’t Blame Goldman For Crashing Economy, Law360, June 11, 2013.
13 - Renzo Comolli et. al., Recent Trends in Securities Class Action Litigation: 2012 Full-Year Review, NERA Economic Consulting, January 29, 2013, at 5.
14 - Id. at 3.
15 - Katie Thomas & Michael Schmidt, Glaxo Agrees To Pay $3 Billion in Fraud Settlement, The New York Times, July 3, 2012, at A1.
16 - Press Release, Justice Department Announces Largest Health Care Fraud Settlement In Its History (September 2, 2009)
(http://www.justice.gov/usao/ma/news/Pfizer/Pfizer%20-%20PR%20(Final).pdf)
17 - Corruption Risk: FCPA Enforcement in the Pharmaceutical Industry, prolivity Risk and Business Consulting Internal Audit.
http://www.protiviti.com/en-US/Documents/POV/POV-FCPA-Pharma-Protiviti.pdf
18 - Jeffrey Rothenstein et. al., Company Stock Prices Before And After Public Announcements Related to Oncology Drugs, Journal of the National Cancer Institute (September 26, 2011).
Expert Guide : Fraud & White Collar Crime 2013 - 23
Overview & Perspectives of the Crime of Insider Trading in Brazil
By Denise Provasi Vaz & Antonio Sergio de Moraes Pitombo
I
n recent years, Brazil has beckoned as a land of
opportunity, having generated strong growth
even through the world financial crisis that
started in 2008.
The Brazilian economy had begun to stabilise and
develop in 1993, when reforms intended to fight
hyperinflation and stagnation were implemented.
After a setback caused by the 2002 global recession,
the economy recovered again in 2003, and Brazil’s
stock market boomed in the following years. In the
period from 2003 to 2011, over one hundred IPOs
were launched in the country. In 2013, some of the
world’s largest IPOs were launched in Brazil, including the biggest one of the year, so far, which was
launched by a unit of the state-owned bank Banco
do Brasil.
This growing financial activity in the country has
brought more interest to its securities exchange regulation, with special attention being paid to insider
trading.
Brazil enacted its first securities market law in 1964.
The current regulation on offering and trading of
securities dates to 1976, when the Brazilian Congress passed the Corporations Act (Law 6.404) and
the Law of the Securities Market (Law 6.385), which
created the Brazilian Securities Exchange Comission (Comissão de Valores Mobiliários/CVM).
However, the use of relevant non-public information was criminalised only in 2001, by the enactment of Law 10.303, perhaps influenced by the
Enron scandal. This statute changed some provisions related to the corporations and inserted articles 27-C, 27-D and 27-E in Law 6.385, in order to
incriminate market manipulation, insider trading
and irregular performance of activity in the securities market.
Before that, article 157, paragraph 4, of the Law
6.404, already imposed to the company managers’
the duty to report to the stock exchange and to the
24 - Expert Guide : Fraud & White Collar Crime 2013
press, any deliberation or relevant fact that has occurred in their business and that might affect the
investors’ decision to buy or sell securities issued by
the company.
This Law also established the duty of loyalty and the
duty of care, and provided that the company managers should refrain from taking advantage of the
knowledge of any non-public information obtained
in their professional activities.
Accordingly, article 27-D of Law 6.385 defined the
crime of insider trading as follows: to use non-public relevant information, that the person has to keep
secret, and which is able to make favorable the obtaining of an undue advantage, through the trade of
securities.
Thus, the crime of insider trading consists of these
essential elements: having non-public relevant information, having the duty to keep the information
secret, taking advantage of such information by
trading securities.
The criminal liability falls on the individuals who
have the obligation to keep confidentiality, as defined by the statutes such as the CVM Resolution
358/2002, including, among others, the controlling
shareholders and the members of the board, auditors and consultants. Third persons who contribute
to the crime, with knowledge about the facts, are
also criminally liable.
Since the Law is not clear regarding the effective
achievement of an advantage from the trading,
there is a controversy about whether the gain is
necessary to fulfill the criminal conduct. In some
cases, the avoidance of losses has also been considered as an advantage for the purpose of punishment
for insider trading.
With respect to the relevant information, one should
take into consideration the guidelines provided by
CVM on Resolution 358/2002, which defines as
relevant any deliberation and any politic-administrative, technical, negotiable, or financial-economic
fact that may influence the dealing price of securities issued by the company, or the investors’ decision to buy, sell or keep securities, or the investors’
decision to use a right inherent to securities holding.
Notwithstanding such provisions, Courts are yet to
define relevant information and the criteria to characterise the offense, since up to this moment, the
cases involving insider trading are few. In February
2011 the first known conviction for insider trading
in Brazil was handed down, and the appeals filed
in the case have just been decided by the Appellate
Court earlier this year.
It is worth noting that although the defense had alleged that the trading occurred at the very beginning of the project for the tender offer, the Judge
decided that the mere expectation of a great negotiation, without precedents, is a relevant fact. Additionally, he analyzed the timing of the events and
the circumstances of the case, which would indicate
the use of the information in the trading.
Another important aspect of this case is that, although the securities were traded in the New York
Securities Exchange, the Judge understood that, as
it involved Brazilian companies with assets negotiated in Brazil, the transaction affected the Brazilian
market, leading to the legitimacy of the domestic
jurisdiction.
The Appellate Court denied the defense appeal and
granted the prosecution appeal. As a result, the
penalty imposed by the Lower Court was raised,
and the defendants were sentenced to pay roughly
US$ 250 thousand for collective moral damages,
besides the fine that had already been determined
by the Lower Court, which was of approximately
US$ 360 thousand.
Considering the conclusions adopted in this case
and the initiation of several investigations for insider trading recently, as well as the market scenario,
one can infer that the law enforcement agents will
concentrate efforts in prosecuting this conduct, and
that the interpretation of the law will become more
strict, leading to the recrudescence of punishment.
Denise Provasi Vaz Born
in São Paulo - SP, in 1980.
Law Graduate at the Law
School of the University of
São Paulo (USP), in 2002.
Master’s Degree in Criminal Procedural Law at the
Law School of the University of São Paulo (USP), in
2007, with the dissertation
“Criminal procedure of press crimes”.
PhD in Criminal Procedure Law, at the Law School
of the University of São Paulo (USP) in 2012 with the
thesis “Digital Evidence in Criminal Trials.”m Member of the Brazilian Institute of Criminal Sciences
(IBCCrim).
Member of the ASF Institute for Advanced Study in
Criminal Procedure.
Languages: Portuguese, English and French.
Denise Provasi Vaz can be contacted by phone on
+55 11 3047 3131 or alternatively via email at
dvaz@mpp.adv.br
Expert Guide : Fraud & White Collar Crime 2013 - 25
Antonio Sergio Altieri de
Moraes Pitombo, Law
graduate at the Law School
of the University of São
Paulo (USP) in 1993. He
specialized in Civil Procedural Law at the Center or
of University Extension, in
1994. Master’s Degree in
Criminal Law, at the Law
School of the University of
São Paulo (USP) in 2000, by means of the dissertation “The Specificity of the Antecedent Crime in
Money Laundering”. PhD in Criminal Law at the
Law School of the University of São Paulo (USP), in
2007, with the thesis “The Specificity of The Criminal
Organization”. Currently involved in a PHD program at Coimbra University.
Author of the work “Money Laundering: the Specificity of the Antecedent Crime “, published by Editora
Revista dos Tribunais, in 2003. Author of the book
Criminal Organization- New perspective of the legal kind. São Paulo, Ed. RT, 2009.Coordinator of the
publication “Special Criminal Courts: Interpretation
and Critic”, published by Malheiros publishing house
in 1997; as well as “Commentaries on the Law of
Company Recovery and Bankruptcy”, published by
Editora Revista dos Tribunais in 2005. Author of
several newspaper articles, magazines and compilations specialized in Law and criminal processes.
Member of the Brazilian Institute of Criminal Sciences (IBCCrim); of the Institute Manoel Pedro Pimentel, related to the Department of Criminal Law, Criminology and Judicial Medicine, of the Law School of
the University of São Paulo; of the National Association of Criminal Defense Lawyers; of the Association
Internationale de Droit Pénal; and of the Association
Internationale des Avocats de la Défense.
Languages: English and Portuguese.
Antônio Sérgio Altieri de Moraes Pitombo can be
contacted by phone on +55 11 3047 3131 or alternatively via email at apitombo@mpp.adv.br
26 - Expert Guide : Fraud & White Collar Crime 2013
Expert Guide : Fraud & White Collar Crime 2013 - 27
Fraud & White Collar Crimes – Increasing Trends in Latin
America and the Caribbean By Joaquin Alvarado & Christian Michelangeli
1
Regional Overview
As last informed by the World Bank,1
Latin America and the Caribbean (LAC)
is a regional group of 39 countries in the
western hemisphere occupying 20,393.6102 km of
the American continent, with a population of 583
million, a gross national income of US$ 4.9 billion; IFC projects an economic growth for LAC in
2013 of 3 - 3.5%.2
2. Factors that make LAC Vulnerable to Fraud and
White Collar Crime.
In the past 20 years, banking and financial services
in LAC have evolved from a simple deposit custodianship and lending scheme, to more complex
financial intermediation activities.3
investors and laundering money.8
3. Trends in Fraud and White Collar Crime.
Recent information provided by the 2012 Report
to the Nations on Occupational Fraud and Abuse
issued by the Association of Certified Fraud Examiners (ACFE), establishes that between 2010
and 2012 the ACFE detected a total of 108 fraud
cases in LAC, in a range of 12 different fraud
schemes that included corruption, non-cash, billing, skimming, financial statement fraud, expense
reimbursement, cash on hand, check tempering,
register disbursements, cash-larceny and payroll.9
implications stemming out to Panama, Colombia,
Venezuela, Ecuador, Peru, Canada, US, and Europe among other jurisdictions.
2012: Interbolsa12, an estimated US$9 billion Colombian stockbroker with operations in Brazil,
Colombia, Panama, and the US, was forced into
liquidation after it failed to comply with a US$20
million mandatory reserve, ordered by Colombian
regulators. Allegedly a considerable portion of its
assets were funneled to Colombian related companies through a network of investment funds incorporated in the Dutch Antilles in the Caribbean.
LAC has also been closely familiar with other local and cross-border criminal activities such as
tax evasion, money laundering and smuggling of
goods:
As informed by the Institute of Internal Auditor’s,
today’s digital business environment and global
supply chains represent factors for consideration
in fraud and white collar crimes.4
2012: Global banking giant HSBC was fined by
US regulators due to, among others, allegations of
money laundering for the Mexican drug cartels’
through its Mexican operation.
The United Nations Office on Drugs and Crime
identifies two sub-regions of LAC as prone to harvest organised crime proliferation.5
2013: Liberty Reserve13, an online payment system that operated from Costa Rica was shut down
and is currently under investigation for allegations
of being part of an international network for laundering money from drug trafficking, pornography
and tax evasion. Although the system only operated for 2 years, authorities believe that over US$5
billion could have been laundered through it.
According to the latest information disclosed by
the Financial Action Task Force (FATF), two LAC
jurisdictions are non-compliant and non-cooperative with implementation of AML recommendations, one jurisdiction is no longer subject to
monitoring and five jurisdictions are subject to an
ongoing compliance process.6
According to the US Congressional Research Service (CRS), 19 LAC jurisdictions are considered
havens for international tax avoidance and evasion.7 The International Consortium of Investigative Journalists (ICIJ) recently exposed that offshore trusts and companies in tax havens, many
located in LAC, are sanctuaries for secrecyseekers, and have become useful for defrauding
28 - Expert Guide : Fraud & White Collar Crime 2013
In the past seven years, LAC has experienced
high impact cases involving cross border financial
fraudulent activities through investment schemes
of financial and brokerage Institutions. We highlight some of these cases below:
2006: Bancafe International Bank, Ltd.,10 a Barbados off-shore bank, captured deposits in Guatemala in a yearly average of over US$300 million,
it was shut down due to insolvency, investigations
showed that it funneled funds through a network
of related companies in Cayman Islands, Panama,
Guatemala and El Salvador through a complex financial structure of repo financed bonds.
2009: Stanford International Bank Limited11, a
US$7 billion off-shore banking operation in Antigua and Barbuda was closed down and alleged to
be a Ponzi scheme fraud with financial and legal
4. Trends in Practice – Tools and Means to Make
it Work
E-forensics has proven to provide key evidence
in fraud investigations. Although, somewhat new
for civil law systems that do not provide for an ediscovery process, some LAC jurisdictions’ procedural legislation proves friendly in terms of court
orders for seizure and capture of Electronically
Stored Information (ESI) as well as its use and validity before the courts, provided that reasonable
chain of custody standards have been met.
Forensic audits for both, financial fraud and
money laundering cases, forensic audits have
proved useful to break down intricate corporate financial schemes and made them more digestible
for courts given their complexity in recent cases.
The internationalisation and complexity of financial operations, the different standards of interpretation and reporting of financial information
in different jurisdictions and the non-financial
backgrounds of both the criminal prosecution and
judiciary make forensic audit a valuable tool in the
fraud and white-collar crime practice in LAC.
As recent case examples prove it, fraud and white
collar criminal activities know no borders or
boundaries and have evolved into a highly complex multijurisdictional networks of entities and
transactions, this has required the practice to acquire multijurisdictional capabilities through specialised-international professional networks,
such as Fraudnet14, to have the ability to assume
the challenges and undertake the tasks that these
cases demand in today’s globalised world.
Either in low-profile private action cases or in notorious, media covered financial fraud or white
collar cases, private practice has proven to work
to favor the balance towards the solution of the
cases in LAC jurisdictions, through taking an active role in the process and closely cooperating
with public authorities in the investigation and
prosecution in Justice’s best interest.
As fraud and white collar crimes thrive on financial motivation, victims of these crimes, public or
private, suffer financial detriment and the need for
compensation, therefore, a specialised legal practice including asset recovery capabilities within
the frame of a criminal process, asset forfeiture,
and enforcement of credit rights or claw-backs,
have become a non-arguable avenue towards compensation and justice.
Expert Guide : Fraud & White Collar Crime 2013 - 29
5. A Glance to the Future
As long as LAC jurisdictions fail to grow in
strength, knowledge and resources to combat and
prevent fraud and white collar crimes, these activities will increase, and with them, the degree of
private involvement for prevention and combat, as
well as in the policy making and legislative process
behind them to equip legal system with remedies
from the hard lessons learned.
A relevant example of this preview is the fact that
on June 2013 the Federation of Central American
Industry Chambers and Associations gathered
in Guatemala, international specialists, private
and public sector representatives, as well as customs authorities from Central America, Panama,
Mexico and the Dominican Republic in a security
Forum to set the basis for Private-Public multinational cooperation to combat and prevent smuggling and counterfeit.15
Carrillo & Asociados is regarded as one of the
most specialised and prestigious law firms in Central America. The firm is recognised among its
clients by its expertise, aptness and efficiency; its
practice has been highlighted by its performance
in cases with multi-jurisdictional impact.
Our lawyers are highly skilled to conform and
manage result-oriented work teams in specialised
areas such as accounting, investigation, computer
forensics and information technology, asset tracing and intelligence for complex multidisciplinary
cross-border cases involving investigations, criminal actions and litigation concerning fraud, money laundering, smuggling and counterfeit among
other white-collar crimes.
Mr. Alvarado leads Carrillo & Asociados’ Criminal
litigation practice group as partner since 2007, his
practice focuses primarily in fraud and white collar
crime cases and also involves finance and banking,
as well as counterfeit and smuggling. Before joining
30 - Expert Guide : Fraud & White Collar Crime 2013
the firm in 2000 he served
as Registrar for the Guatemalan Securities and
Commodities Market, special insolvency council for
the Guatemalan Banking
Superintendent and council for the Central Bank of
Guatemala.
His banking and financial
background has allowed him to advice clients in
highly complex multijurisdictional financial fraud
and money laundering scheme cases.
Mr. Alvarado an be contacted by phone on
+502 2421 5700 or alternatively via email at
joaquin.alvarado@carrillolaw.com
Mr. Michelangeli is currently an associate in Carrillo & Asociados focusing
on the firm’s fraud and
white collar crime practice, as well as in bankruptcy and insolvency. He
initially joined the firm
in 2010 engaging primarily in constitutional and
public interest litigation.
Before joining the firm Mr. Michelangeli’s practice
mainly involved corporate law and civil and commercial litigation.
1 - http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/0,,contentMDK:22117191~pagePK:146736~piPK:146830~theSitePK:258554,00.html
2 - http://www.imf.org/external/pubs/ft/survey/so/2013/CAR050613A.htm
3 - http://siteresources.worldbank.org/LACINSPANISHEXT/Resources/FLAGSHIP_eng.pdf
4 - https://na.theiia.org/training/eLearning/members/Member%20Documents/041613_Viewer_slides.pdf
5 - http://www.unodc.org/documents/data-and analysis/Studies/TOC_Central_America_and_the_Caribbean_english.pdf
6 - http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/
His corporate law background and knowledge of insolvency matters contribute to the firm’s fraud and
white collar crime practice under the wing of
Mr. Joaquin Alvarado.
7 - http://www.fas.org/sgp/crs/misc/R40623.pdf
Mr. Michelangeli an be contacted by phone on
+502 2421 5700 or alternatively via email at
Christian.Michelangeli@carrillolaw.com
11 - http://www.sibliquidation.com/
8 - http://www.icij.org/offshore/piercing-secrecy-offshore-tax-havens
9 - http://www.acfe.com/uploadedFiles/ACFE_Website/Content/rttn/2012-report-to-nations.pdf
10 - http://www.pwc.com/bb/en/car/bib/index.jhtml
12 - http://www.insightcrime.org/news-briefs/interbolsa-money-laundering-sinaloa-cartel-colombia
13 - http://www.guardian.co.uk/business/2013/may/28/liberty-reserve-accused-money-laundering
14 - http://www.icc-ccs.org/home/about-fraudnet
Expert Guide : Fraud & White Collar Crime 2013 - 31
Snapshot - Significant Cases of 2013 to date
The Libor Probe Brings First Prosecutions
O
ne year after launching an investigation into the rigging of the Libor (London interbank offered
rate) interest rate benchmark, the Serious Fraud Office has brought its first prosecutions: former
UBS and Citigroup trader Tom Hayes; former RP Martin Holdings brokers Terry Farr and James
Gilmour.
Prosecutors allege that together with employees from institutions including UBS, Citigroup, Royal Bank of
Scotland, Deutsche Bank, JPMorgan Chase, HSBC, Rabobank and interdealer brokers ICAP, Tullett Prebon
and RP Martin, Hayes conspired to defraud. Having named some of the world’s largest banks and brokers in
its charges, lawyers say the SFO is now under increasing
pressure to make more prosecutions.
The SFO, a cash-strapped agency that narrowly avoided
being scrapped in 2011, would have faced severe criticism had U.S. prosecutors extradited Hayes, a Briton,
before he faced UK justice. British politicians have said
a UK trial for British Libor suspects will help show the
UK justice system is as capable of tackling white-collar
crime as its U.S. counterpart. The case continues.
Ex-Enron CEO Jeffrey Skilling’s Sentence Cut to 14 Years
I
n 2006, Jeffrey Skilling was involved in what was seen by many as exemplifying the worst in corporate
fraud and greed in America. The indictments emphasised his probable knowledge of, and likely direct involvement with, the fraudulent transactions with Enron and used inside information of Enron’s
impending bankruptcy when he sold his almost $60 million stake.
He was found guilty on one count of conspiracy, one count of insider
trading, five counts of making false statements to auditors and 12
counts of securities fraud and sentenced to 24 years and four months
in prison, and fined $45 million.
US Prosecutors Have Launched “The Country’s Largest Ever Hacking Fraud Case”
F
ive men in Russia and Ukraine have been charged with running a hacking operation that allegedly
stole more than 160 million credit and debit card numbers from a number of major US companies
over a period of seven years.
The attacks often involved identifying weaknesses in Structured Query Language (SQL) databases
and uploading malware that gave them access to corporate networks. “Sniffer” software then sought out
and collected valuable personal data that the defendants could sell on to other criminals around the world.
Credit card numbers were sold for $15 to $50 each, prosecutors say. This stolen data could be transferred
to blank cards then used to withdraw cash or make
purchases.
Just three of the corporate victims reported $300 million in losses, with corporate victims including Nasdaq, Visa, Dow Jones and JC Penney. Other victims
included Heartland Payment Systems, one of the
world’s largest credit and debit card payment processing companies; French retailer Carrefour; Dexia Bank
Belgium; and 7-Eleven.
Online Payment System in Costa Rica Shut Down in Alleged $6bn
Money-Laundering Scheme
L
iberty Reserve, an online payment system that operated from Costa Rica was shut down and is
currently under investigation for allegations of being part of an international network for laundering money from drug trafficking, pornography and tax evasion.
The service allowed account holders to send and receive payments from anywhere in the world
and was one of the world’s most widely used digital currencies. Liberty described itself as the internet’s
“largest payment processor and money transfer system”, serving “millions” around the world.
On 8 May 2013, federal prosecutors announced a sentencing deal that
cuts 10 years off of Jeffrey Skilling’s sentence, making him eligible for
release in 2017. Skilling’s new prison term was the minimum allowed
under federal guidelines. The deal was approved by U.S. District
Court Judge Sim Lake on 21 June, 2013.
According to the indictment, Liberty Reserve processed more than 12m financial transactions annually
with a value of more than $1.4bn. The US authorities
claim “virtually all” of the activity related to suspected
criminal activity.
This year has witnessed a growing debate over the rules for punishing
white-collar criminals in the United States. Critics of the guidelines
contend that they have come to rely too much on financial-loss calculations, which can quickly mushroom when the crime involves a
public company whose stock price falls in connection with the misdeeds.
The indictment follows law enforcement actions in 17
countries. Five men, including founder Arthur Budovsky, were arrested and charged with money-laundering and with operating an unlicensed money transmitting business.
32 - Expert Guide : Fraud & White Collar Crime 2013
Expert Guide : Fraud & White Collar Crime 2013 - 33
Balancing the Scales: Investment Arbitration in the Context of Sovereign
Debt Restructurings By Philipp Kurek & Chiraag Shah
W
ith the publication of the eagerly
awaited dissenting opinion of Dr.
Santiago Torres Bernárdez in Ambiente Ufficio S.P.A. and others v.
Argentina earlier this summer, yet
another chapter has been added to the closely
scrutinised series of cases by Italian bondholders
seeking compensation from Argentina in connection with Argentina’s default on and forced restructuring of its sovereign debt in 2001. With Dr.
Torres Bernárdez being an arbitrator in two of the
three parallel running cases on this very issue, his
dissenting opinion in Ambiente provides some insight into things to come, and is not only of interest to Argentina and investors who suffered losses
as a result of the Argentine financial crisis, but also
those investors who have suffered losses as a consequence of the recent European financial crisis
and for whom the series of cases discussed below
may provide some very valuable precedents.
Professor Georges Abi-Saab, the third member of
the Abaclat tribunal, subsequently issued a dissenting opinion voicing his disagreement over the
legitimacy of the proceedings and concerns regarding the wider implications for sovereign debt
restructurings, and resigned from the tribunal in
October 2011. Professor Abi-Saab was then replaced by Dr. Torres Bernárdez, who is also on the
tribunal in the Ambiente case.
The decision in Ambiente and Dr. Torres Bernárdez’s dissenting opinion were preceded by the controversial and much debated case of Abaclat and
others v. Argentina. In Abaclat, the tribunal, by
majority decision of Professor Pierre Tercier and
Professor Albert Jan van den Berg, held that it had
jurisdiction over claims brought by approximately
60,000 Italian nationals against Argentina in connection with Argentina’s default on and subsequent partial restructuring of its sovereign debt.
The Abaclat award was particularly noteworthy
and equally controversial for two reasons: Firstly,
it was the first arbitral decision to essentially allow class actions in the sphere of investment treaty
arbitration, with the effect that tens of thousands
of claimants will be joined in one mass-claims arbitration administered by ICSID. Secondly, the
decision is of great significance because it was
the first decision to hold that an arbitral tribunal
has jurisdiction to hear claims concerning alleged
breaches of a bilateral investment treaty (“BIT”)
arising out of a state’s default on and restructuring
of sovereign debt.
Ambiente concerns claims by approximately 90
Italian nationals and is based on very similar facts
and arguments as Abaclat, alleging that Argentina’s treatment of sovereign debt-holders breached
the BIT between Italy and Argentina. The tribunal, again by majority decision, found that it had
jurisdiction over the claim. Judge Bruno Simma
and Professor Karl-Heinz Böckstiegel sought to
distinguish Ambiente from Abaclat, noting that
the number of claimants in Ambiente could in no
way be compared to that in Abaclat. Rather, they
sought to characterise Ambiente as a multi-party
arbitration, which they found to be a generally
accepted practice in ICSID arbitration. Crucially, however, the majority followed Abaclat when
finding that sovereign debt transactions fall within
the meaning of the term “investment” in the ICSID Convention and the applicable BIT.
34 - Expert Guide : Fraud & White Collar Crime 2013
In this dissenting opinion, which runs to 162
pages, Dr. Torres Bernárdez acknowledges that he
would have upheld the vast majority of Argentina’s
objections, and criticised the majority’s frequent
reference to the Abaclat award. Dr. Torres Bernárdez made clear that in his view, Professor AbiSaab’s opinion in Abaclat was more persuasive.
However, unlike Professor Abi-Saab in Abaclat,
Dr. Torres Bernárdez did not relinquish his seat on
the Ambiente tribunal. As such, he will no doubt
provide an interesting view in two of the most influential arbitrations on sovereign debt restructurings to date.
The third case in the series, Giovanni Alemanni
and others v. Argentina, is similar in terms of
claimant numbers to Ambiente. The Alemanni
tribunal is yet to rule on Argentina’s objections to
jurisdiction and admissibility. Interestingly, Professor Karl-Heinz Böckstiegel, who was part of
the majority in Ambiente, is also on the Alemanni
tribunal. Once the Alemanni tribunal renders its
decision on jurisdiction, a clearer and more nuanced picture may emerge on the issue of investment arbitration in the context of sovereign debt
restructurings.
In the meantime, it is not only Argentina and investors who suffered losses as a consequence of
the Argentine financial crisis that are holding their
breath to see whether Professor Böckstiegel and
the other members of the Alemanni tribunal (Sir
Franklin Berman as president and J. Christopher
Thomas Q.C. as co-arbitrator) will follow Abaclat
and Ambiente in affirming jurisdiction over Argentina’s default and sovereign debt restructuring.
In light of the on-going speculation that the debt
crises affecting many European countries could
lead to a plethora of investment treaty arbitrations
akin to the one faced by Argentina following its
financial crisis just over a decade ago, investors in
a number of European countries are following the
developments in the above cases with great interest.
Greece, for example, having undergone the largest debt write-down in history, has been identified
as one of the most likely targets for a European
Abaclat-style case. Greece has concluded BITs
with 38 countries, most of which contain a wide
definition of the term “investment”. Last year, for
example, it was reported that a group of 500 German investors intend to pursue a claim under the
BIT between Germany and Greece. Then, in May
this year, it was announced that the first known
investment treaty claim against Greece in relation
to its sovereign debt restructuring was filed by a
Slovak entity, Poštová banka, a.s., and its Cypriot
shareholder, ISTROKAPITAL SE, under the BITs
between Greece and Slovakia / Cyprus respectively. One of the arbitrators in that case has already
been confirmed as John Townsend. It remains to
be seen who the other arbitrators in the Poštová
banka case will be – and whether they share any
connection to the Argentine sovereign debt cases
discussed above.
Some may argue that there are key differences between the Argentine and Greek debt restructurings. However, there are undeniably many similarities between the two. Both the majorities in
Abaclat and Ambiente adopted a very pragmatic
approach when determining the question of
whether the “security entitlements” to sovereign
bonds held by the claimants constituted investments made in the territory of Argentina for the
purposes of the relevant BIT and the ICSID Convention. Similarly, the tribunals also recognised
that, by their nature, bond investments tend to
involve a high number of investors, and generally
require collective relief in order to afford effective
protection. Abaclat and Ambiente will therefore
no doubt serve as persuasive precedents for investors who have suffered losses as a result of the
recent European financial crisis, and in particular
for those investors who enjoy the benefit of one of
Greece’s 38 BITs.
Now it remains to be seen whether the Alemanni
case will continue the trend started by Abaclat and
Ambiente, and/or whether – and to what extent
– Dr. Torres Bernárdez’s rejection of investment
Expert Guide : Fraud & White Collar Crime 2013 - 35
arbitration as a means for resolving sovereign debt
disputes will affect the decisions in Abaclat and
Ambiente when those cases reach the merits stage.
Philipp Kurek is an associate in Kirkland & Ellis International LLP’s international
arbitration and litigation
group in London. Philipp
represents clients in both
institutional and ad hoc
commercial and investment
treaty arbitrations around
the world.
Philipp Kurek can be contacted by phone on
+44 (0) 20 7469 2431 or
alternatively via email at
philipp.kurek@kirkland.com
Chiraag Shah is a partner
in Kirkland & Ellis International LLP’s international arbitration and litigation group
in London. Chiraag represents clients in institutional
ad hoc and treaty arbitrations around the world with
a focus on arbitrations involving state entities. He also
conducts commercial litigation matters before the English courts and regularly advises clients on white collar,
fraud and corruption issues. Chiraag is dual qualified
(Kenya and England & Wales) and maintains strong
links with both law firms and institutional organisations in Africa.
Kirkland & Ellis have offices in London, Chicago, Hong
Kong, Los Angeles, Munich, New York, Palo Alto, San
Francisco, Shanghai and Washington, D.C. The London office – with approximately 130 lawyers focusing
on private equity, regulatory, private funds, mergers
and acquisitions, banking and finance, capital markets,
international arbitration and litigation, intellectual
property, antitrust and competition, and restructuring
matters – has been serving UK, European and US clients since 1995.
Chiraag Shah can be contacted by phone on
+44 (0) 20 7469 2323 or alternatively via email at
chiraag.shah@kirkland.com
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Expert Guide : Fraud & White Collar Crime 2013 - 37
Corporate Criminality & the Risks for Investors: A UK Perspective
By Shaul Brazil & Rosanna Brown
T
he appetite in the UK for enforcement
against companies for criminal wrongdoing has increased significantly in recent
years. Since the onset of the worldwide
financial crisis, the UK’s Serious Fraud
Office (SFO) has taken action against a number of
companies in connection with criminal wrongdoing. In parallel, the law in the UK has developed
with the intention of simplifying the task of prosecuting companies. Within this climate, investors
are at greater risk of becoming embroiled in criminal or civil investigations.
associated with it from undertaking such conduct.
To date, there have been no prosecutions under
section 7, but this is, in large part, due to the relative infancy of the provision.
The Enforcement Landscape
The ongoing trend towards enforcement against
companies for criminal wrongdoing is reflected in
three significant developments:
a) First, in recent years the SFO has increasingly
utilised its powers to take civil action to recover
property obtained by companies as a result of
criminal activity. The use of these powers, as opposed to a criminal prosecution, was until recently
promulgated by the SFO as an incentive to companies to self-report their wrongdoing. Indeed, the
SFO has entered into a number of consensual civil
settlements on this basis (e.g., Macmillan Publishers Ltd, Oxford Publishing Ltd and DePuy International Ltd). It should be noted, however, that
since these civil settlements, the SFO’s new Director has emphasised that the SFO’s priority in appropriate cases will be a criminal prosecution.
b) Second, in July 2011 the Bribery Act 2010
came into force, introducing an offence designed
to simplify the task of prosecuting companies for
overseas corruption. Section 7 of the Act provides that a “relevant commercial organisation”
may be prosecuted if a person “associated” with
it bribes another with the intention to benefit that
organisation’s business. The company will have
a defence only if it can prove that it had in place
adequate procedures designed to prevent persons
38 - Expert Guide : Fraud & White Collar Crime 2013
c) Finally, the UK is in the process of introducing a Deferred Prosecution Agreement (DPA)
scheme. The scheme builds on the developments
outlined above by providing a further incentive
to companies to self-report and cooperate with a
prosecution. The scheme, expected to come into
force in early 2014, provides that companies may
enter into a voluntary agreement with prosecutors
whereby, in return for an admission of wrongdoing and compliance with specified requirements,
the prosecutor will suspend and ultimately set
aside the criminal prosecution.
Criminal Risks for Investors
The developments outlined above create an increased risk for investors. Criminal liability for an
investor may arise as a consequence of the criminal offence committed by the investee company.
In some circumstances, an investor may be liable
directly for the wrongdoing committed by the investee company; an investor also may be liable for
an ancillary money laundering offence.
In relation to direct liability, the provisions of
Section 7 of the Bribery Act 2010 have been the
subject of numerous commentaries. It suffices to
say, however, that an investor may incur criminal
liability where it can be proved, e.g., that a wholly owned subsidiary acting on behalf of its parent, and with the intention to benefit its parent,
has bribed another. To avoid liability the parent
would need to establish that it had in place adequate procedures to prevent the bribery from occurring. Whether or not a subsidiary is acting on
behalf of its parent will depend on the nature of
the relationship, but it is less likely to arise in the
context of a non-controlling investor.
In relation to money laundering, liability on the
part of an investor may arise where the investor
has received the proceeds of a crime committed
by the investee company. Such receipt could take
the form of a dividend. For liability to arise, however, it must first be shown that the dividend can
be traced back to the proceeds of the criminal offence. This would necessitate a forensic tracing
exercise, which may be far from simple. In addition, liability on the part of the investor would
only arise if it can be shown that the investor knew
or suspected that the dividend derived from the
proceeds of a criminal offence.
Even if this could be established, it is arguable that
the investor would be able to rely on a defence that
it had acquired the dividend ‘for adequate consideration’, namely the initial share purchase.
Civil Risks for Investors
As described above, the SFO may take civil action
in the High Court to recover property obtained
through unlawful conduct. The risk of such action
being taken against investors was highlighted in
January 2012, when the SFO announced that Mabey Engineering (Holdings) Ltd, the shareholder
of engineering firm Mabey & Johnson Ltd (M&J),
had agreed to surrender £131,201, reflecting dividends it had received that derived from contracts
won through the unlawful conduct of M&J.
After self-reporting to the SFO in 2008, M&J
pleaded guilty to bribery and sanctions offences.
At the time of the subsequent civil settlement, the
Director of the SFO described the action as “the final piece in an exemplary model of corporate selfreporting and cooperative resolution”. Despite
acknowledging that the parent company had no
knowledge of M&J’s misconduct, the Director emphasised that “shareholders who receive the proceeds of crime can expect civil action against them
to recover the money… shareholders and investors in companies are obliged to satisfy themselves
with the business practices of the companies they
invest in”.
Whilst at first blush the settlement with Holdings
may be thought to reflect a significant risk for investors, it is arguable that the Director’s warnings
were overstated. To succeed in a civil recovery action, the SFO is required to demonstrate that the
property in question can be traced to the unlawful conduct. As with the money laundering provisions described above, in a complex corporate
structure such a tracing exercise may prove difficult (and impossible if the funds passed through
an overdrawn account).
Furthermore, the investor would have a defence
if it could demonstrate that the dividend was received ‘in good faith, for value and without notice’ that it was derived from unlawful conduct. It
may be that in Holdings, the SFO reasoned that
the company was ‘on notice’, but closed its eyes
to M&J’s wrongdoing. This is unlikely, however,
bearing in mind the acknowledgement that Holdings had no knowledge of the misconduct. The
SFO may therefore have reasoned that Holdings
did not receive the dividend ‘for value’ on the basis
that it did not give separate value for each dividend received. Arguably, such reasoning is flawed
as investors obtain the right to receive dividends
when they give value for the purchase of shares.
Expert Guide : Fraud & White Collar Crime 2013 - 39
Conclusion
The trend for increased enforcement of criminal
liability against corporates and the various incentives to self-report wrongdoing give rise to a consequential risk for investors. In particular, investors
should be aware of the risk that monies received
by them that can be traced back to the proceeds of
a crime committed by the investee company may
be the subject of civil or, in extremis, criminal proceedings. That being said, in circumstances where
the investor can demonstrate that it provided consideration, acted in good faith, and had no knowledge (or reason to suspect) criminal wrongdoing
on the part the investee company, it is likely that it
will be able to put forward a robust defence to any
claims made against it.
Shaul Brazil is a partner
specialising in business
crime and regulatory enforcement. He has particular experience in serious
fraud, overseas corruption
and contentious financial
services regulation. His
practice also encompasses
cartel defence, extradition
and mutual legal assistance, money laundering and all matters relating to
the proceeds of crime.
Shaul has acted in numerous high profile investigations and prosecutions brought by agencies including
the Serious Fraud Office, the Financial Services Authority (now Financial Conduct Authority), and the
US Department of Justice.
Shaul regularly speaks at conferences on business
crime and regulatory issues, has authored various articles on similar topics, and is a contributing author
to Oxford University Press’ “Money Laundering Law
and Regulation: A Practical Guide” and the Serious
Fraud Office publication “Serious Economic Crime:
a boardroom guide to prevention and compliance.”
40 - Expert Guide : Fraud & White Collar Crime 2013
Shaul Brazil can be contacted by phone on
+44 (0) 20 7430 2277 or alternatively via email at
sbrazil@bcl.com
Rosanna Brown is a solicitor specialising in business
crime, regulatory investigations, and extradition. She
has extensive experience in
a range of corporate criminal and regulatory issues,
particularly fraud and
bribery, and has a comprehensive understanding
of complex, multi-jurisdictional corporate fraud and bribery investigations,
with a particular focus on Russia and Eastern Europe. She also has significant experience in antibribery due diligence and compliance monitoring for
multi-nationals in the pharmaceutical and automobile sectors.
Rosanna Brown can be contacted by phone on
+44 (0) 20 7430 2277 or alternatively via email at
rbrown@bcl.com
BCL Burton Copeland
BCL is a market leader in the UK in the areas of domestic and trans-national business crime and regulatory enforcement, providing discreet, effective and
expert advice to commercial organisations, directors,
senior personnel and high profile/high net worth individuals. Our reputation has been established over
many years through our unremitting drive to help
our clients by providing a supportive service and
guidance through the legal minefield, whilst focusing
at all times on achieving a pragmatic solution.
Our expertise covers all areas of criminal/regulatory
law including commercial and tax fraud, corruption,
sanctions offences, cartel activity, financial regulation and money laundering, extradition, corporate
manslaughter, health and safety, fire safety, product
safety, and environmental law. We also advise in the
areas of anti-money laundering and anti-corruption
compliance.
Expert Guide : Fraud & White Collar Crime 2013 - 41
Q&A with Nabeel Sheikh of Neumans LLP
N
abeel Sheikh is the senior partner and
co-founder of Neumans LLP, a niche
City of London-based practice, which
provides cutting edge legal representation to both individuals and corporate
entities in high-value, multi-jurisdictional litigation. Nabeel personally head the firm’s Fraud Litigation Department.
some Agencies, where they previously held independent control for their cases: a recent example
is HMR&C. Business crime offences, dependant on
certain criteria, are prosecuted by different specialist
Agencies.
What are the main types of business crime-related cases you deal with?
I deal with all aspects of litigation, be it commercial, civil or criminal, where there is an underlying
element of fraud. My areas of expertise include,
but are not limited to, VAT/MTIC fraud; general
tax fraud; money laundering; extradition and mutual legal assistance; pharmaceutical fraud; confiscation orders; restraint orders; freezing orders;
boiler room frauds; banking fraud; financial services fraud; mortgage fraud; directors’ disqualification; insolvency/bankruptcy as a result of fraud;
bribery and corruption; professional discipline
and regulatory. In addition, I also deal with nonlitigation matters concerning compliance.
Within the UK how strong is the legal framework of business crime law enforcement and defence?
Generally speaking, the UK has, in my view, a robust legal framework when it comes to enforcement. There are a multitude of Acts Parliament has
passed; and together with all the sub-legislation,
it has sought to capture all host of business crime
activity. This is exemplified by the introduction
of the Bribery Act 2010 (“the Act”), which simply
codifies into one place various offences, some of
which were covered by common law. In addition
to the raft of current legislation, for example, the
Proceeds of Crime Act 2002, there are numerous
prosecution Agencies such as the SOCA, FSA,
CPS, SFO, BIS, HMR&C. The CPS has, in many
cases, now assumed prosecutorial control for
42 - Expert Guide : Fraud & White Collar Crime 2013
How do you feel legislation could be amended to
strengthen this?
At present, there are a myriad of Acts; and numerous
Government Agencies are tasked with investigating and prosecuting business crime. In my opinion,
this needs consolidation and regulating in a manner
which is easily identifiable so each Agency knows
its role and division of case work is clear. Currently
there is overlap and scope for confusion; codifying
the system to a greater degree would provide a much
clearer view of the business crime landscape.
What are the main actions companies should take
to protect themselves?
Having a robust compliance department hosting
skilled, well-resourced, and knowledgeable compliance officers is critical. The need to have regular
training and monitoring is essential so that information is cascaded routinely. It is essential that corporate entities do not just pay lip-service to regulation,
and implement proper controls with budgets allocating the necessary funds to invest in compliance systems. There needs to be a clear identifiable policy on
compliance, and a thorough grasp of the regulations
and criminal sanctions that may follow in the event
of breaches.
What are your opinions on the impact of the
Bribery Act that was implemented in the UK in
2011?
While much of the content of the Act was covered,
albeit by the fragmented and complex offences
contained in the common law under the Prevention of Corruption Acts 1889 – 1916, the Act
sought to codify and bring into one place the types
of conduct that could be regarded as criminal; and
the Act creates various offences of bribing another
person, receiving a bribe, and bribery of foreign
officials, as well as a new offence for commercial
organisations of failure to prevent bribery. The
main impact of the Act has been its requirement
for commercial organisations to have adequate
procedures in place to prevent bribery: under s.7
of the Bribery Act 2010; a new offence was created
in relation to commercial organisations failing to
prevent persons associated with them bribing another on their behalf. Arguably this cements the
UK’s international reputation for anti-corruption
measures. It is difficult to estimate whether the
Act itself has had a dramatic effect on business
crime statistics because it is still early days for
enforcement under the Act. The UK regulators’
practice of proactive enforcement is self-evident,
with increasing fines for corrupt activity and increased co-operation with international enforcement agencies. Nevertheless, it remains to be seen
whether the SFO and the FSA can maintain the
momentum of recent anti-corruption enforcement
against a backdrop of budget cuts and changes in
leadership.
Is there anything else you would like to add?
Neumans LLP firm has a dedicated unit specialising in the entire gamut of business crime defence
related issues; we have considerable experience in
acting in such matters. Key personnel are listed as
experts in Chambers & Partners and the Legal Experts Guide. It is imperative that when facing investigation or proceedings connected with fraud,
that specialist advice is sought at the very outset,
as fraud is a legally complex and a procedurally intense area of law which requires a deep and thorough understanding to achieve the best possible
outcome.
Nabeel Sheikh is an internationally renowned lawyer and the senior partner
and founder of Neumans
LLP. He has developed
a business-crime related
practice dealing with all
aspects of litigation, be it
commercial, civil or criminal, where there is an underlying element of fraud.
Nabeel’s areas of expertise include, but are not limited to, VAT/MTIC fraud; general tax fraud; money
laundering; extradition and mutual legal assistance;
pharmaceutical fraud; confiscation orders; restraint
orders; freezing orders; boiler room frauds; banking fraud; financial services fraud; mortgage fraud;
directors’ disqualification; insolvency/ bankruptcy
as a result of fraud; bribery and corruption; professional discipline and regulatory. Nabeel commonly
defends those investigated by the highest level UK
Government bodies/agencies and, in recent times,
in international sanctions related work.
Nabeel has developed a niche client base dealing
with non-UK nationals with much work referred
through personal recommendation by individuals
with significant wealth and/or political standing.
He frequently acts in cases involving a high level of
political sensitivity and is noted for his ability to act
with the utmost diligence, efficiency and discretion.
Nabeel Sheikh can be contacted by phone on
+44 (0) 20 7429 3939 or alternatively via email at
nabeel.sheikh@neumansllp.com
Expert Guide : Fraud & White Collar Crime 2013 - 43
Individual & Company Risks for Bribery: Navigating the Minefield
By John P. Rupp
T
he vast majority of the bribery investigations that we have handled over the past
20 years have begun with a call from a
company representative. After having described the source and nature of the bribery concerns that have arisen, the tasks we have
been asked to undertake have tended to focus
upon a series of company interests – among them,
determining whether bribes have been paid by or
on behalf of the company; advising on mandatory
and voluntary disclosure issues; and consulting on
remediation options.
If the statutes prohibiting bribery – including, in
particular, the bribery of foreign government officials – focused exclusively upon potential company liability, a singular focus on the company’s
interests would be entirely appropriate. In fact,
however, most anti-bribery statutes are not so
limited. Because most anti-bribery statutes reach
individuals as well as companies, a singular focus
upon the company’s interests can have unexpected
– and far from optimum – results.
I. Divergent Interests
Even if no bribes are determined ultimately to have
been paid, individual and company interests often
will diverge at various points in the investigation
process. That generally will be true as soon as a report or inquiry has been received or evidence has
been discovered suggesting possible bribery.
In the usual case, the company’s interests will be
served best by determining as quickly and efficiently as possible who did what and when. Although the interests of the company’s board of directors and audit committee as well as most senior
managers and employees may coincide with the
company’s interests, others may feel threatened by
any investigation that is authorised. If so, they may
conclude that their interests will be served best by
seeking to impede the investigation at every turn.
44 - Expert Guide : Fraud & White Collar Crime 2013
The tools that individuals can use to impede an investigation are many. They may seek, for example,
to assert their rights under pertinent employment
legislation, their employment contract or data privacy legislation to deny access to their electronic
communications. They also may destroy or remove pertinent evidence. In addition, they may
refuse interview requests or agree to such requests
only if represented by a lawyer or other professional counselor, who may seek to delay or otherwise obstruct the interview.
II. Overcoming Investigative Impediments
atic payments the business partner has made.
Many of the defensive reactions summarised
above can be eliminated or greatly ameliorated by
appropriate advance planning. Among the planning steps we frequently have advised for that purpose are the following:
- Those conducting the investigation should bear
in mind that a carrot generally produces more
than a stick, thus generally opting for an approach
to the investigation that is – and would be deemed
by any reasonable person to be – fair and otherwise appropriate.
- Employment contracts should contain a series of
provisions requiring company personnel to cooperate fully in any investigation that is deemed to
be needed.
- The employee handbook should place all company personnel on notice of the company’s right
to access without further consent electronic communications using company issued communication devices.
They also may try to impede the investigation in
other ways. They may refuse, for example, to volunteer pertinent information – or, even worse,
seek to rewrite history, providing explanations
that have only a fleeting connection with the truth.
In some instances, their rewriting of history may
consist of unwarranted denials. In others, it may
consist of an effort to deflect attention from themselves to others.
Under the “whistleblower” provisions of the
Dodd-Frank Act in the United States – which provides a powerful monetary incentive for supplying
original evidence of bribery by companies subject
to the US securities laws and regulations, an individual may be tempted to manufacture evidence
of bribery rather than obscure such evidence. For
the company’s business partners, including business partners who have agreed to keep adequate
books and records and make such records available upon request, the temptation may be simply
to refuse all requests for cooperation.
- Employees should be discouraged from using
company issued communication devices for personal communications.
- Back-up tapes from the company’s central server
or servers should be retained for an extended period.
- Business partners should not be reimbursed for
expenses they purportedly have incurred without
having supplied appropriate supporting documentation, which should lessen the need for access to a business partner’s books and records after
bribery concerns have surfaced.
- The company’s contract with business partners,
in addition to including an audit provision, should
authorise the company to terminate the contract
in the event the business partner refuses to cooperate with any investigation the company deems
to be needed.
- The company’s contract with business partners
should relieve the company of any obligation to
reimburse the business partner for any problem-
- The investigation should be sequenced in an appropriate way – often delaying the interview phase
until after at least core documents have been assembled and reviewed, thus enabling interviews to
be conducted in a targeted manner and reducing
the need to repeat interviews.
III. Responding to Frequently Asked Questions
We normally distribute to company personnel
before they are interviewed a written document
setting the ground rules for the interview and
responding up front to questions that frequently
are asked by those being interviewed. Such documents normally –
- describe the interviewee’s obligation to cooperate
fully in the investigation, pointing in that connection whenever possible to pertinent provisions of
their employment contract and/or the employee
handbook;
- mention their obligation to be as truthful during the interview as they are required to be when
questioned by their supervisor on a company
business issue;
- emphasise that the request to submit to an interview was not prompted by an assumption that
bribery or other illegal conduct has occurred and
that the interviewer has pledged to remain objective throughout the investigative phase of the process; and
Expert Guide : Fraud & White Collar Crime 2013 - 45
- ask them to avoid discussing either the fact or
substance of the interview with anyone, including
their work colleagues, spouse/partner or friends.
In addition, the document that we normally distribute before an interview explains that the individual or individuals who are conducting the interview represent the company rather than them
as an individual. We believe that those being interviewed are entitled to that information. Such a
statement also tends to confirm the interviewer’s
commitment to proceed in a fair and otherwise
respectful manner.
In some instances, we have chosen to address in
the foregoing document the question that many
interviewees have concerning whether he or she
should retain his or her personal counsel or other
advisor prior to being interviewed. The short answer to that question is that those conducting the
interview cannot, because of their status as company counsel, provide legal advice to the person
being interviewed.
When the issue of personal representation arises
during an interview, we always say that we are prepared to suspend the interview if the person being
interviewed decides that he or she wants counsel.
In all but very rare circumstances, the fairness of
that response tends to add to the comfort level of
the person being interviewed, thus permitting the
interview to be completed without interruption.
IV. Preserving Pertinent Legal Privilege
There is an old saying about the difficulty, if not
impossibility, of returning a wild horse to the barn
after the horse has escaped into an open field.
And so it is with a company’s ability to claim legal
privilege for documents that are prepared during
an investigation.
We have seen many instances of a company’s having failed to take adequate steps to preserve its
46 - Expert Guide : Fraud & White Collar Crime 2013
ability to assert legal privilege documents prepared during an investigation, an observation that
we readily could extend to risk assessment documents revealing problematic conduct by or on
behalf of a company. Decisions to preserve legal
privilege must be made up front – before potentially incriminating documents are written.
The greatest failing that we have seen in the foregoing connection is permitting those to whom the
attorney/client and work product privilege does
not extend to prepare documents over which legal privilege cannot be asserted. Failing to take
at the beginning of investigation the steps that are
needed to protect the company’s right to assert legal privilege can seriously impair the company’s
ability to protect its interests. It also can add to
the risks faced by company personnel.
V. Liability Risks for Members of the Company
Board and Senior Management
In view of the increasing number of individual
prosecutions for bribery over the past several years
– including but not limited to the United States –
along with the responsibility of board members
and senior managers to avoid acquiescing in bribery, board members and senior managers often
ask what risk of liability they may have personally
for any bribery that has occurred in the past or
may occur in the future, including investigation
related liability.
Unfortunately, space limitations prevent our dealing with those important issues in this article in a
comprehensive manner. We can offer here, however, a few core observations on liability risks for
board members and senior managers – some of
which may be obvious but others less so.
Among the obvious observations is that the development and implementation of state-of-the-art –
but nonetheless proportionate – policies and procedures to combat bribery will tend to reduce the
prospect of bribes being paid by or on behalf of a
company. That tends, of course, to make almost
academic the up-the-line liability questions that
we increasingly are being asked by board members and senior managers.
Just as obviously, an overt act by a board member
or senior manager to approve the payment of one
or more bribes is prosecutable. One need not in
that event worry greatly about the possibility of
situational liability – the liability that can occur if
a board or senior manager fails to respond appropriately to a report, inquiry or evidence suggesting
past bribery.
That leaves two exceedingly difficult issues: first,
in what circumstances is a board member or senior manager at risk of prosecution if he or she is
deemed to have failed to respond appropriately to
past bribery and history repeats itself as a consequence; and, second, in what circumstances may a
board member or senior manager have a personal
obligation to report past bribery under the money
laundering statutes to which he or she is subject.
Without getting here into the nuances of the advice we have been giving to the foregoing questions, suffice it to say that any up-the-line risks
of prosecution for future bribery, similar to the
bribery that already has occurred, can be reduced
significantly, if not eliminated entirely, if board
members and senior manager respond proactively to any report or evidence of past bribery. One
component of their potential liability if they fail to
do so can be triggered by any future bribe that is
paid, in which they reasonably can be deemed by
omission to have acquiesced.
Further, if alerted to the possibility of past bribery,
board members and senior managers should consider – with their professional advisors – their responsibilities under any money laundering statute
to which they are subject. Their exposure in that
connection often will depend in part upon wheth-
er the company is operating in the regulated or
unregulated sector so far as the operative money
laundering statute is concerned.
To be sure, whenever a bribery issue has arisen,
the impact – including reporting implications – of
any applicable money laundering statutes should
considered both early and often, both before and
during any investigation that is authorised.
John P. Rupp is a partner
in the London office of
Covington & Burling LLP
and specializes in handling
bribery and other corruption related issues. His
work has included designing compliance programs
and investigating possible
wrongdoing.
Before relocating to Europe in 1995, Mr. Rupp practiced for more than 20 years in the Washington office of Covington & Burling. He also has spent time
in the Solicitor General’s Office at the US Department of Justice.
In addition to publishing many articles on corporate compliance issues, Mr. Rupp has taught courses
on corporate compliance at American University,
Georgetown University, University of Iowa and the
Ecole de Formation Professionnelle des Barreaux de
la Court D’Appel de Paris. Mr. Rupp graduated
from the Yale Law School in 1971.
John P. Rupp can be contacted by phone on
+44 (0) 20 7067 2009 or alternatively via email at
jrupp@cov.com
Expert Guide : Fraud & White Collar Crime 2013 - 47
Ukrainian Anti-Corruption Legal Framework:
Specifics & New Legislation By Svitlana Kheda
S
tarting from 1 July 2011, the main legislative act dealing with combating
corruption in Ukraine is the Law of
Ukraine No. 3206-VI “On the Principles of Preventing and Combating Corruption” dated 7 April 2011 (the “Anti-Corruption
Law”). The Anti-Corruption Law defines corruption and a corruption offence, introduces several
important restrictions aimed at preventing and
combating corruption (e.g. restriction on receiving gifts/donations by government officials), establishes a number of new administrative offences
and crimes in the anticorruption area, and imposes mandatory financial reporting requirements on
officials and public servants.
Corruption dated 18 April 2013 (the “Amending
Law 2013”) introduced important amendments
to the Anti-Corruption Law related to the categories of subjects of liability for corruption offences.
Now it is clear that not only company officers, but
all its employees may be held liable for corruption
offences as ‘individuals’ providing unjustified benefits to Officials and other subjects of liability for
corruption offences (except for senior officers and
other management of private companies), or to
other persons, if instructed by them, were placed
in a separate category of subjects of liability for
corruption offences.
The term “officials” is not defined in the AntiCorruption Law per se. However, it speaks of the
‘individuals authorised to perform state or local
government functions’ and covers officials, as well
as public servants and local government officers
(the “Officials”).
The Ukrainian law defines corruption as an activity of Officials aimed at unlawful use of their powers and related opportunities to obtain unjustified
benefits or accept a promise/offer of such unjustified benefits for themselves or other individuals,
as well as a promise/offer of unjustified benefits to
Officials or the provision of unjustified benefits to
them or, at their demand, to other individuals or
legal entities, aimed at persuading Officials to unlawfully use their powers and related opportunities.
A corruption offence, in the meaning of the AntiCorruption Law, is the intended act of corruption
committed by subjects of liability for corruption
offences for which the law establishes criminal,
administrative, civil and disciplinary liability.
The Law on Amending Certain Laws of Ukraine to
Bring Ukrainian Legislation in Compliance with
the Standards of the Criminal Law Convention on
48 - Expert Guide : Fraud & White Collar Crime 2013
As opposed to the U.S. Foreign Corrupt Practices Act (‘FCPA’) and the UK Bribery Act 2010
(‘UKBA’), the Anti-Corruption Law does not have
extraterritorial application. It also does not deal
with bribery. In fact, as of 18 May 2013, when the
Amending Law 2013 came into force, the legal notions of ‘bribe’ and ‘bribery’ were eliminated from
the Criminal Code of Ukraine and other applicable legislation and replaced with the notion of the
‘unjustified benefits’ (i.e. the term ‘bribery’ will no
longer be used under Ukrainian law).
Before the Amending Law 2013 came into force
(i.e. before the legislator removed the legal notion
of the ‘bribe’ from the Ukrainian legislation), the
qualification of offering or rendering non-pecuniary services, benefits and advantages as the corruption offence subject to administrative liability
did not raise many questions. The courts were
consistent in recognising the pecuniary nature
of the bribe. In the other words, non-pecuniary
services, benefits and advantages (e.g. positive
characteristic or appearance in mass media, offering prestigious jobs, etc.) were not considered as a
bribe and, therefore, would not result in criminal
charges against the liable individuals. However,
the practice of distinguishing between a corruption offence of offering or giving property, money, and other pecuniary benefits and services as a
criminal offence of bribe offering or bribe giving
under the Criminal Code or an administrative offence under the Administrative Code was inconsistent and unpredictable.
Under the Amending Law 2013, the unjustified
benefits are defined as money or other property,
preferences, advantages, services, non-pecuniary
assets being illicitly promised, offered, or delivered. Therefore, the clarity in qualifying offering
or rendering non-pecuniary services, benefits and
advantages as the administrative corruption offence no longer exists and now businesses should
pay even closer attention to evaluating each case of
gift giving or providing hospitality/entertainment
not only to Officials but also to other subjects of
liability for corruption offences.
On 6 June 2013, the President of Ukraine signed
the Law on Amending Certain Laws of Ukraine
(Related to Implementing the Action Plan for Liberalisation of the EU Visa Regime for Ukraine Regarding Liability of Legal Entities) (the “Company
Liability Law”), which will come in force as of 1
September 2014, if not annulled prior to 1 September 2014, as was the case in 2011. Introduction of
the company liability for corruption offences will
be the new experience for Ukraine. Before, charges for corruption offences could only be brought
against company officers and employees.
Neither the Anti-Corruption Law nor the Criminal Code establish liability of the officers and employees of the company for corruption offences
committed by agents and other thirds parties,
including if they commit such offences specifically to get business, keep business, or gain a business advantage for this company. Similarly to the
UKBA, facilitation payments allowed by the FCPA
are not permitted under Ukrainian law.
The Company Liability Law provides that courts,
while imposing criminal fines and calculating
their amounts for the companies found guilty in
committing corruption offences, will have to take
into account, in particular, the measures taken
by the guilty company to prevent corruption,
which is similar to the ‘adequate procedures’ defence available under the UKBA. In view of that
the prospective criminal fines for the companies
may amount up to the equivalent of approximately
$161,400, Ukrainian companies should become
serious about introducing complex and sophisticated anti-corruption compliance programs.
The Ukrainian law distinguishes between a simple gift and unjustified benefits. For the gift to
be qualified as unjustified benefits, a person must
give money or other valuables to an Official with
an intent that the Official performs or (refrains
from performing) certain actions in that person’s
favour. However, there are still no apparent de
facto procedures for the gift giving to Officials.
The Anti-Corruption Law bans Officials and some
other liable individuals from receiving gifts or donations from companies and individuals for decisions and acts in favour of the gift giver, and from
subordinates of such persons. Officials and some
other liable individuals, however, may accept personal gifts consistent with the generally recognised
ideas of hospitality. The Anti-Corruption Law establishes a value threshold for gifts, currently being in the amount equivalent to approximately
USD 60 to USD 120, which is a new experience
for Ukraine.
Hospitality/entertainment is not directly dealt
with by the Anti-Corruption Law. However, its
provisions regulating gifts to Officials apply to
Expert Guide : Fraud & White Collar Crime 2013 - 49
hospitality/entertainment by analogy. Therefore,
each case of hospitality/entertainment should be
thoroughly evaluated and preferably supported by
the legal opinions of the outside legal counsel.
Conclusion
The new Ukrainian anti-corruption legal framework is more consistent and clear in comparison
to the earlier legislation, and generally seems to
conform to the world’s best practices. However,
considering that the new legislation introduces
a number of new notions into the Ukrainian law
and that many of the existing legal acts governing
this area have to be brought in compliance with
the Anti-Corruption Law and other applicable
laws, the enforcement of the new anti-corruption
legislation remains an issue, while the success of
its application will largely depend on interpretation of the new laws by the Ukrainian enforcement
agencies (which system, structure and authorities
are currently being reorganised) and courts.
Svitlana has over 16 years
of experience in advising
clients on a wide range of
complex issues in the area
of
labour/employment
law, personal data protection, anti-corruption legislation anti-bribery legislation, and public-private
partnerships (PPP) in infrastructure projects.
adjusting the global corporate policies, prepared in
accordance with the FCPA and the UK Bribery Act
2010, to the Ukrainian anti-corruption legislation.
Her areas of practice include corporate law and
M&A, international commercial transactions, alternative dispute resolution and foreign investment
matters.
Svitlana Kheda is an arbitrator of the ICC Ukraine
ADR Service. She is a certified mediator heading
the ICC Ukraine Mediation Centre experienced in
employment mediation. Ms. Kheda is also a member of the Expert Council of the Ukrainian State
Personal Data Protection Service and is a co-head
of the ICC Ukraine’s PDP working group.
Svitlana is named among top three in employment
law, according to Ukrainian Law Firms 2013 and
ranked among top six individuals in employment
law, according to Chambers Europe 2013.
Svitlana Kheda can be contacted by phone on
+380 44 499 6000 or alternatively via email at
SKheda@sk.ua
In particular, she is responsible for developing local corporate personal data protection (PDP) legislation compliance programs and preparing PDP
policies and template PDP contract provisions and
other PDP documentation.
Svitlana also specializes in bringing global employment policies and procedures of transnational companies in compliance with Ukrainian law, including
50 - Expert Guide : Fraud & White Collar Crime 2013
Expert Guide : Fraud & White Collar Crime 2013 - 51
Recent developments regarding money-laundering in Hong Kong
By Andrew Powner
O
n 31 May, 2013, the Court of Appeal in
Hong Kong handed down judgment in
the case of HKSAR and Pang Hung Fai
(CACC 34/2012). In this case, the defendant was charged with money-laundering contrary to section 25 (1) and (3) of the Organised and Serious Crimes Ordinance, Cap 455
(“the Ordinance”).
Money-laundering is regarded as a serious offence,
not least because it affects Hong Kong’s reputation
as an international financial centre. Generally, the
sentence the money-laundering offences reflect
the amount of money laundered and not the benefit obtained by the defendant. For this reason,
the courts consider that this category offence deserves a deterrent sentence, even in circumstances
where the defendant had no direct knowledge but
is convicted under the 2nd limb of the Ordinance,
namely that he ought to have known.
In HKSAR v Boma (CACC 335/2010), the Court
of Appeal set out some significant features to be
considered in money-laundering cases, and in particular: (a) the nature of the predicate offence; (b)
the state of the offender’s knowledge; (c) whether
the operation involves an international dimension; (d) the degree of sophistication; (e) the involvement of any organised criminal syndicate; (f)
the number of transactions and the period of time
involved; (g) whether the offender continued to
launder funds after he knew the nature of the offence; and (h) the role of the offender and the acts
performed by him.
It was aknowledged that those organising moneylaundering operations should obviously attract
a greater sentence than those persons engaged
lower down the chain. For the latter category of
offenders, the court will consider the amount of
benefit received, and there will be gradations of
culpability. The distinctions in culpability will also
be made as between those who intentionally deal
with the proceeds of crime and those who are neg-
52 - Expert Guide : Fraud & White Collar Crime 2013
ligent or reckless about it, or otherwise “bury their
head in the sand”.
v Pang Hung Fai argued that the order in which
the questions are asked, should be reversed . Hon.
McWalters J. considered that the first step in determining whether any “reasonable grounds” exist, is to identify all the facts known to the defendant that relate to his dealing with the property,
including the objective factual circumstances. The
second step is to process those facts through the
mind of a reasonable person to decide whether
such a person would consider them sufficient to
believe that the property constitutes the proceeds
of crime.
Although there is no sentencing tariff for moneylaundering in Hong Kong, the case of Secretary
for Justice and Wan Kwok Keung (CAAR 13/2010)
sets out approximate guidelines with a starting
point of 3 years imprisonment for amounts between HK$1m to $2m; 4 years for amounts between HK$3m to $6 million, and over 5 years
where the amount is above HK$10m.
Hon Stock VP, also considered the question of
mens rea. In particular, whether there should be a
new “halfway house”defence. This would involve a
burden on the defendant to show, notwithstanding
that they were reasonable grounds, that he honestly and reasonably did not suspect the property
to represent the proceeds of an indictable offence.
Although this was neither pleaded as a ground of
appeal or addressed before the court, it was suggested that this may be argued in a future case, if
the facts permit. This hypothetical point of law
was not available to the applicant in this particular
case. However, this is a matter for practitioners to
consider in the future.
The Ordinance stipulates that proof of the predicate offence is not required in order for the prosecution to secure a conviction. A person commits
the offence if he knows or “has reasonable grounds
to believe that any property, either directly or indirectly, represents the proceeds of an indictable
offence, and he “deals” with that property. There
is a wide definition of “dealing” in the Ordinance.
The prosecution has to prove a two stage test. Firstly (a) that a right-thinking member of the community would consider that there were sufficient
grounds to believe that the property represents the
proceeds of crime (the objective element); and (b)
that those grounds were known to the defendant
(the subjective ground); HKSAR v Shing Siu Ming
(1999) 2 HKC 818. The question is not whether
the defendant believed the property to be the proceeds of an indictable offence.
Ms Clare Montgomery QC and Andrew Bruce
SC for the applicant in the recent case of HKSAR
drew has acted for the defence in a number of well
known trials in Hong Kong including the former
CEO of Wardley (HSBC); the Financial Director of
Yaohan; the CM of the Allied Group; the Shanghai
Land trial; the Yau Hai shipping trial (endangering lives at sea); as well as in a well known case for
Fetish Fashion. Andrew conducts his own trials in
the Magistrates trial and District Courts, as well as
instructing suitable counsel, when required. He engages in detailed preparation of cases for the High
Court, Court of Appeal and Court of Final Appeal.
Andrew has also assisted in the prosecution and detection of commercial crime and advised companies
on possible criminal conduct by directors or employees.
Andrew can be contacted by phone on
+852 2868 1234 or alternatively via email at
powner@haldanes.com
Although it may be argued in the future that a defendant honestly did not have any such suspicions,
the difficulty that will arise is whether such a belief
was reasonably held.
Andrew has been practicing as a solicitor with
Haldanes since 1993 after
completing his articles with
Lovells in Hong Kong and
London. Andrew has defended many large scale
“white collar” commercial
crime cases. He has also
advised clients in many
SFC investigations. AnExpert Guide : Fraud & White Collar Crime 2013 - 53
Recent Corruption Cases in Singapore
By Hamidul Haq
O
verview of Singapore’s Enforcement
Regime
Singapore has long enjoyed a reputation of being one of the least corrupt
countries in the world. Our international rankings in this regard are high. In 2012, Singapore
was ranked the 5th out of 176 countries in the
Corruption Perceptions Index scores. In Asia,
Singapore is constantly prized as the least corrupt
country, thus finding favour with investors and financial institutions keen on tapping into the Asian
market.
A major part of this success lies in the relentless
fight against corruption by the enforcement regime in Singapore. The main body vested with investigative powers is the Corrupt Practices Investigation Bureau (“CPIB”). Specifically, the CPIB
focuses on corruption offences arising under the
Prevention of Corruption Act (“PCA”) and the Penal Code. The Commercial Affairs Department
(“CAD”) of the Singapore Police Force is the principal white-collar crime investigation agency and
is the body which enforces legislation governing
financial and commercial entities in Singapore.
Despite the country’s stance of zero tolerance
against corruption, Singapore has recently seen a
spate of high-profile corruption cases in the public sector. These lapses show that one can never
be too complacent in the fight against corruption.
The following is an illustration of some of these
cases.
The Applicable Law
Corrupt transactions which fall within the ambit
of the PCA can be characterised as general corruption or corruption involving agents. . A person
found guilty of an offence under either category
shall be liable to a fine not exceeding $100,000, or
to imprisonment not exceeding five years, or both.
54 - Expert Guide : Fraud & White Collar Crime 2013
Under the PCA, the term “corruptly” requires the
court to be satisfied beyond a reasonable doubt
that first, there is a corrupt element in the transaction and second, that the person giving or receiving the gratification possess a corrupt intent.
tion for obtaining sexual gratification in the form
of oral sex from Ms. Cecilia Sue, a sales manager
of Hitachi Data Systems (“HDS”). Ng was alleged
to have obtained the sexual gratification from Sue
in return for assisting to further the interests of
HDS in relation to its dealings with the Central
Narcotics Bureau (“CNB”).
During the trial, the Prosecution attempted to link
the four sexual encounters between Ng and Sue to
two CNB contracts where HDS was a sub-vendor.
The Prosecution argued that there was a conflict
of interest which proved that Ng possessed “guilty
knowledge”, which was a requite element of the
charge.
The first requirement of a “corrupt element” is satisfied by ascertaining the accused person’s intention in receiving the alleged gratification, and then
using an objective standard, to determine whether
that intention taints the transaction with a corrupt
element. The second requirement of a “corrupt
intent” is fulfilled by determining whether the accused knew or realised that what he did was corrupt by the ordinary and subjective standard.
In relation to public officers, a presumption of corruption exists under the PCA. , As such, where it
is proved that any gratification has been paid or
received by a public officer, that gratification shall
be deemed to have been paid or received corruptly
as an inducement or reward, unless the contrary is
proved. This presumption may be rebutted by the
accused showing a legitimate reason for receiving
the alleged gratification, and the burden lies on
the accused to rebut the presumption on a balance
of probabilities.
Recent Corruption Cases
Ex-chief of the Central Narcotics Bureau Ng Boon
Gay acquitted of all corruption charges
In June 2012, the former anti-narcotics chief Ng
Boon Gay was charged with four counts of corrup-
As the Prosecution’s key witness, Sue testified on
the stand of the numerous occasions where she
was allegedly forced to perform oral sex on Ng.
Subsequently however, significant discrepancies
in her previous statements to the CPIB and the evidence adduced at trial led to the Defence asking
for Sue’s testimony to be impeached and for the
Prosecution questioning Sue as a hostile witness.
In his judgment, the Judge held that Sue was successfully impeached as her testimony was inconsistent and unconvincing. On the other hand, the
Judge found Ng to be a credible witness as he gave
evidence in a forthright manner. The Judge further believed Ng’s testimony, in that both parties
were in a consensual and intimate relationship, in
the light of overwhelmingly convincing evidence
such as intimate text messages sent by Sue to Ng as
well as late night phone calls they had exchanged.
The existence of this relationship negated any corrupt element that Ng was alleged to have.
The Judge held that the Prosecution had not proven its case beyond a reasonable doubt. Ng was acquitted of all four charges of corruption.
Former law professor Tey Tsun Hung charged
in sex-for-grades case
Former National University of Singapore (NUS)
law professor Tey Tsun Hang was first charged in
July 2012 with six counts of corruptly obtaining
gratification from his former student, Darinne Ko.
These six charges consisted of receiving sexual favours and gifts such as a Mont Blanc pen, an Apple
iPod as well as two tailor-made shirts, as an inducement for Tey to show favour in his assessment
of Ko’s academic grades.
After a highly publicised 28-day trial, Tey was
found guilty on all six counts of corruption and
sentenced to five months’ imprisonment. In delivering his verdict, the Judge held that he was satisfied with the Prosecution’s submissions that Tey
had corrupt intent, knew what he was doing was
wrong but had persisted in taking advantage of his
former student. Tey’s defence that the relationship he shared with Ko was a romantic one and
that they were in love did not find favour with the
Judge.
Further, the Judge found that Tey had great influence over his former student as the status of their
relationship was a disproportionate one. The Judge
stressed that whether Tey had actually shown favour to Ko was unimportant. What was vital was
that Tey could, and showed her that he could, influence her grades in order to obtain gratification.
The NUS has since terminated the appointment of
Tey, whose termination was with immediate effect
in response to Tey’s conviction.
Former Singapore Civil Defence Force chief
Peter Lim convicted for corruption
Another public sector corruption case making the
headlines involved the ex-chief of the Singapore
Civil Defence Force (“SCDF”), Peter Lim. In June
2012, the former government scholar was charged
Expert Guide : Fraud & White Collar Crime 2013 - 55
with 10 counts of corruption for engaging in sexual
trysts with three female IT executives in exchange
for favouring the women’s companies in IT-related
tenders called by the SCDF. The Prosecution later
decided to stand down on nine of these charges
and to proceed with only one charge involving
Ms Pang Chor Mui, a former general manager of
Nimrod Engineering.
The Prosecution took the position that the sexual
encounter in May 2010 between Lim and Pang
acted as an inducement for Lim to advance the interest of Nimrod. Although Nimrod Engineering
bid for the tender a year later after the sexual act
in May 2011, the Prosecution argued that Lim had
corrupt intentions when Pang performed the oral
sex on Lim.
The Defence refuted the allegations that the oral
sex performed on Lim was tainted by with any
corrupt element or that Lim had placed himself
in a situation of conflict of interest that amounted
to corruption. Further, the Defence argued that
Pang performed the sexual act on her own initiative without any inducement by Lim.
The Judge eventually found Lim guilty of having
obtained sexual gratification from Pang, an employee of a company that had business dealings
with the SCDF, beyond reasonable doubt.
The Judge also held that as a civil servant of 25
years, Lim ought to have known that he would
be placed in a conflict-of-interest situation if he
had obtained sex from an employee of a vendor
company and knowing that the said vendor was
involved in the tender.
Hamidul Haq joined Rajah & Tann LLP as a
Partner after his extensive
experience with the Commercial Affairs Department and the AttorneyGeneral’s Chambers.
His arrival bolstered the
Commercial
Litigation
Practice in its strength
and dominance in the legal circle, particularly in the
area of securities, business crimes, fraud and commercial litigation practice. He now gives advice to
corporate and individual clients in these areas, as
well as advice on anti-money laundering matters.
Prior to joining Rajah & Tann LLP, Haq was a Deputy Senior State Counsel/Deputy Public Prosecutor
of the Criminal Justice Division, Attorney-General’s
Chambers. His work involved prosecution matters
and giving advice on corporate and securities cases
including civil penalty actions for market misconduct under the new Securities and Futures Act. He
also prosecuted serious and general crimes, supervising eight Deputy Public Prosecutors in the Financial and Securities Offences Directorate.
As Head Legal in the Commercial Affairs Department for eight years, Haq dealt with many high profile commercial and securities cases against top Senior Counsel of Singapore Bar and Queen’s Counsel
from Commonwealth jurisdictions.
Hamidul Haq can be contacted via phone on
+65 6232 0398 or alternatively by email at:
hamidul.haq@rajahtann.com
Lim was sentenced to six months’ imprisonment.
Lim expressed his intention to appeal on the sentence and has, through his lawyers, filed a notice
of appeal on the sentence.
56 - Expert Guide : Fraud & White Collar Crime 2013
Expert Guide : Fraud & White Collar Crime 2013 - 57
USA
Arnold & Porter LLP
Mara V.J. Senn
+1 202 942 6448
Mara.Senn@aporter.com
Jocelyn Wiesner
Jocelyn.Wiesner@aporter.com
Heather Hosmer
hah23@law.georgetown.edu
www.arnoldporter.com
USA
Crowe & Dunlevy
Joe E. Edwards
+1 405 239 5419
joe.edwards@crowedunlevy.com
Thomas B. Snyder
+1 405 234 3254
Thomas.snyder@crowedunlevy.com
Daniel R. Burstein
+1 405 239 6681
Daniel.burstein@crowedunlevy.com
www.crowedunlevy.com
The Americas
Guatemala
Carrillo & Asociados
Joaquin Alvarado
+502 2421 5700
joaquin.alvarado@carrillolaw.com
Christian Michelangeli
+502 2421 5700
Christian.Michelangeli@carrillolaw.com
www.carrillolaw.com
Brazil
Moraes Pitombo Advogados
Denise Provasi Vaz
+55 11 3047 3131
dvaz@mpp.adv.br
Antonio Sergio Altieri de Moraes Pitombo
+55 11 3047 3131
apitombo@mpp.adv.br
www.moraespitombo.com.br
USA
Dunnington Bartholow & Miller LLP
Luke McGrath
+1 212 682 8811
lmcgrath@dunnington.com
www.dunnington.com
USA
Gibson Dunn
Thad A. Davis
+1 415 393 8251
tadavis@gibsondunn.com
Michael Li-Ming Wong
+1 415 393 8200
mwong@gibsondunn.com
www.gibsondunn.com
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Expert Guide : Fraud & White Collar Crime 2013 - 59
UK
Kirkland & Ellis International LLP
Philipp Kurek
+44 (0) 20 7469 2431
philipp.kurek@kirkland.com
Europe
Chiraag Shah
+44 (0) 20 7469 2323
chiraag.shah@kirkland.com
www.kirkland.com
UK
BCL Burton Copeland
Shaul Brazil
+44 (0) 20 7430 2277
sbrazil@bcl.com
Rosanna Brown
+44 (0) 20 7430 2277
rbrown@bcl.com
www.bcl.com
UK
Neumans LLP
Nabeel Sheikh
+44 (0) 20 7429 3939
nabeel.sheikh@neumansllp.com
www.neumansllp.com
UK
Covington & Burling LLP
John P. Rupp
+44 (0) 20 7067 2009
jrupp@cov.com
www.cov.com
Ukraine
Sayenko Kharenko
Svitlana Kheda
+380 44 499 6000
SKheda@sk.ua
www.sk.ua
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Expert Guide : Fraud & White Collar Crime 2013 - 61
Asia
Hong Kong
Haldanes
Andrew Powner
+852 2868 1234
powner@haldanes.com
www.haldanes.com
Singapore
Rajah & Tann LLP
Hamidul Haq
+65 6232 0398
hamidul.haq@rajahtann.com
www.rajahtann.com
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