Compliance

I offered insights for an article outlining the May 11 proposed rule on recruitment fees and recent guidance on implementation of anti-trafficking compliance programs. The new guidance was issued to clarify a 2012 executive order on human trafficking, which “‘[u]ntil two weeks ago, there really wasn’t any guidance on how to navigate any of this.'”…

On May 11, 2016, the Defense Security Service (DSS) released a new guide on mitigating and managing affiliate operations for entities bound by a Foreign Ownership, Control, or Influence (FOCI) mitigation agreement. The guide, titled Navigating the Affiliated Operations Plan: A Guide for Industry, outlines how companies can identify whether they are engaging in affiliated operations, submit an Affiliated Operations Plan (AOP), and ensure that they are properly mitigating potential risks. In compiling an AOP, a company is expected to describe all operations and services it intends to share with affiliates, as well as the potential risks of the collaboration and how those risks will be mitigated. The guide emphasizes that, unless there are special circumstances, an AOP must be provided before a company can start leveraging any affiliated operations.
Continue Reading DSS Releases New Guide to Help Cleared Contractors Meet Requirements of FOCI Mitigation Agreements

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 Thursday, February 25, 2016, the U.S. Department of Labor proposed new rules to implement Executive Order 13706, which requires certain federal contractors to provide qualifying employees with at least seven days of paid sick leave each year, including paid leave for family care. These new rules are scheduled to go into effect by September 30, 2016, and employers who contract with the federal government should prepare for their implementation now. Noncompliance could result in suspension of federal payments or even termination of a federal contract.

The new rules generally apply to any employer who contracts with the federal government, whether pursuant to a prime contract or a subcontract, provided that the contract is either: (1) covered by the Davis-Bacon Act (DBA); (2) covered by the Service Contract Act (SCA); or (3) a contract in connection with federal property or lands and related to offering services for federal employees, their dependents or the general public. A contract is covered by the DBA if the contract is in excess of $2,000 and the principal purpose of the contract is for the construction, alteration and/or repair of public buildings or public works. A contract is covered by the SCA if the contract is in excess of $2,500, and the principal purpose of the contract is to provide services in the United States through the use of service employees.Continue Reading New Mandatory Paid Sick Leave Rules Could Ensnare Unwary Federal Contractors

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

On August 26, 2015, the Department of Defense (“DoD”) issued an interim rule, effective immediately, that revises network security requirements applicable to DoD contractors and introduces new cloud computing provision that reflect current DoD policy. The interim rule, which implements sections of the FY13 and FY15 National Defense Authorization Acts, comes on the heels of the massive breach of Office of Personnel Management systems that compromised the personal data of more than 21 million federal employees. The new and revised requirements apply to cyber incidents on unclassified information systems – breaches of classified systems will continue to be reported in accordance with the National Industrial Security Program Operating Manual. The interim rule also implements DoD policies and procedures applicable to the procurement of contracting for cloud computing services.

The rule includes five contract clauses relevant to contractors and subcontractors providing cloud computing to DoD or who are handling controlled unclassified DoD information on their systems. All five apply to commercial item contracts.Continue Reading DoD Contractors Beware – New Network Penetration Reporting and Cloud Services Requirements Are Here

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

I recently co-authored an article with my colleagues John Kelly, Bryan King and Robert Platt discussing the vital steps that government contractors should take when conducting an internal investigation. As outlined in the article,  the following measures are key components of any internal investigation:

  1. Assembling an appropriate investigation team
  2. Preserving privilege
  3. Preparing an investigation

…

On June 16, the U.S. Justice Department (DOJ) announced that it had concluded a non-prosecution agreement (NPA) with IAP Worldwide Services, Inc., a Florida-based government contractor, related to apparent violations of the Foreign Corrupt Practices Act (FCPA). DOJ also announced that a former vice president of IAP pleaded guilty to conspiracy to violate the FCPA. IAP agreed to pay more than $7 million to resolve the matter; sentencing for the former vice president is scheduled for September 2015.

Background. IAP provides facilities management, contingency operations, and professional and technical services in contracting capacities to U.S. and non-U.S. governments. According to DOJ, the violations occurred in connection with a surveillance program the government of Kuwait sought to develop. An agent of IAP contracted with the Kuwaiti government to perform services under the first phase of the program. DOJ alleged that, when the agent was paid for its services, it transferred money to IAP, which in turn steered funds to a Kuwaiti company to kickback to Kuwaiti government officials.Continue Reading Government Contractor Fined for FCPA Violations; Former VP Enters Guilty Plea

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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