We recently authored an article discussing recent updates in U.S. sanctions and their effect on companies engaged in international business, including cyber-related sanctions and enforcement.
As stated in the article, “…through enforcement actions against both large and small companies, the government continues to underscore that any company conducting business internationally – whether directly or through
On February 19, 2016, the UK Serious Fraud Office (SFO) convicted Sweett Group plc (Sweett), a London-based construction and professional services company, under Section 7 of the UK Bribery Act. This is the first conviction under Section 7, which requires companies to prevent bribery in the course of business, and the penalty imposed against Sweett – the company had to pay a total of GBP 2.25 million – was minimal in the context of penalties paid under the U.S. Foreign Corrupt Practices Act (FCPA). Yet this action provides further evidence that the SFO may really be able to meaningfully enforce the Bribery Act.
Under Section 7 of the Bribery Act, a company can be found liable if it – or any associated person, subsidiary or entity, anywhere in the world – engages in bribery with the intention of obtaining or retaining business or some sort of commercial advantage. Liability can be established even if company management does not authorize or encourage, and is not even aware of, the illicit conduct. (While a company will have a full defense if it can show that it maintained adequate procedures to prevent bribery, as appears evident from the resolution in this matter, Sweett was unable to present such a defense.)
According to news reports, the SFO began investigating Sweett, which is listed on the Alternative Investment Market (or AIM) in London, in July 2014. Through its investigation, the SFO found that a Sweett subsidiary in the United Arab Emirates (UAE), Cyril Sweett International Limited (Cyril), had made corrupt payments to the Vice Chairman of Al Ain Ahlia Insurance Company (AAAI) to help secure a contract to build a hotel in Abu Dhabi. After pleading guilty in December 2015, Sweett was ordered to pay a GBP 1.4 million fine, a GBP 851,152 confiscation amount and GBP 95,000 in SFO prosecution costs.
The SFO reportedly is continuing its investigation of individuals involved in the scheme.
Lessons Learned. We derive several interesting lessons from this action.Continue Reading SFO Convicts UK Company for Middle East Bribery
On January 27, 2016, the U.S. Commerce Department Bureau of Industry and Security (BIS) and the U.S. Treasury Department Office of Foreign Assets Control (OFAC) amended their regulations to further facilitate trade between the United States and Cuba. This is only the most recent set of steps the U.S. government has taken since President Obama announced, in December 2014, that the United States would move toward normalizing relations with Cuba.
While many limitations on trading with Cuba remain in place, the recent amendments ease restrictions related to certain exports and re-exports to Cuba, and travel to the island. The amendments also should make it easier to engage in financial transactions in and with Cuba (so long as the underlying conduct is permitted). Below is a brief summary of the amendments; the amendments themselves are available at 81 Fed. Reg. 4580 (BIS) and 81 Fed. Reg. 4583 (OFAC).
BIS Amendments. BIS controls exports and re-exports of commercial or so-called “dual use” items. Until January 2015, with limited exceptions, BIS prohibited virtually all exports and re-exports of U.S. commercial goods to Cuba. (U.S. defense exports, which are controlled by the State Department, have been and continue to be prohibited for export or re-export to Cuba. This prohibition is unlikely to be lifted any time soon.)Continue Reading The United States (Yet Again) Eases Trade Restrictions on Cuba
On December 22, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated more than 30 individuals and entities under the Ukraine-related sanctions. The designations were made under the auspices of several different executive orders, and thus there are different restrictions on transacting with these parties depending on the basis for each party’s designation. Roughly
Late in the night of October 5, 2015, twelve countries concluded negotiations on a groundbreaking free-trade agreement to liberalize trade. The Trans-Pacific Partnership (TPP) is a free-trade agreement between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, New Zealand and Vietnam.
The TPP, which still requires approval from Congress, is part of the Obama Administration’s efforts to gain market access in the growing economies of Asia and balancing out China’s increasing economic influence. While China, South Korea and other major players in Asia are not parties to the agreement, there is hope that they will choose to join. Several nations, including Indonesia and the Philippines, have already expressed interest in joining the agreement once it goes into effect.
Like all free-trade agreements, the TPP requires the countries involved to substantially reduce barriers to trade, including tariffs on goods and services. While some tariffs will be eliminated entirely, tariffs on politically sensitive goods such as automobiles, types of apparel and dairy products will drop more gradually.Continue Reading The Trans-Pacific Partnership: Impact on Trade and Procurement
A final rule issued on October 30, 2015 removes Cuba from the definition of “state sponsor of terrorism” in two DFARS clauses. The new rule implements the State Department’s action to remove Cuba from the List of State Sponsors of Terrorism. The new rule affects DFARS 252.255-7049, Prohibition on Acquisition of Commercial Satellite Services from
On September 9, 2015, U.S. Department of Justice (DOJ or the Department), Deputy Attorney General Sally Yates issued a memorandum to all U.S. Attorneys regarding individual accountability for corporate wrongdoing (Yates Memo).
The point of the Yates Memo is clear: while DOJ will continue to pursue companies for corporate wrongdoing, the Department will also simultaneously pursue charges against individual employees. According to the Yates Memo, “[b]ecause a corporation only acts through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct.”
And the ultimate target of these efforts? Corporate executives. The DOJ understands that lower-level employees facing individual civil or criminal liability are likely to cooperate against their superiors, thereby facilitating DOJ’s ability to obtain information necessary to prosecute individuals further up the corporate ladder.Continue Reading DOJ Targets Corporate Executives
Bass, Berry & Sims attorneys Thad McBride and Cheryl Palmeri authored “International trade and commercial transactions in the United States: overview,” a Q&A guide to the regulation of international trade and commercial transactions in the United States. The guide includes information related to the following categories:
On August 18, the Bank of New York Mellon Corporation (BNY Mellon) agreed to pay $14.8 million to settle allegations that it had violated the U.S. Foreign Corrupt Practices Act (FCPA) by providing internships to family members of foreign officials affiliated with a Middle Eastern sovereign wealth fund the bank sought to manage.
According to the settlement order, which is available here, BNY Mellon provided the internships at the request of the foreign officials, even though the prospective interns failed to meet the bank’s hiring criteria and were less than exemplary employees. In so doing, the bank violated the FCPA’s anti-bribery provisions and demonstrated that it lacked internal controls sufficient to ensure its hiring process would not be used to improperly obtain or retain business.
This settlement highlights two essential FCPA-compliance points.Continue Reading When Intern Season Gets Hot: the Perils of Improper Hiring Under the FCPA
Since our update in April of this year, the U.S. government has continued to aggressively modify and enforce its various sanctions programs. And this trend shows no signs of slowing in the months to come.
As in the first quarter of 2015, the last three months were marked by a combination of broad policy changes, individual designations and removals, and various enforcement actions. While recent developments did not include the overhaul of any sanctions program akin to the Cuba amendments in January, they did set the stage for significant changes in the future.
Here, we consider notable U.S. sanctions developments in the past quarter, and offer our thoughts on what is to come.Continue Reading Keeping Up the Pace: U.S. Sanctions Post a Busy Second Quarter