The Anti-Corruption Battle: New Lessons from the Frontlines April 29, 2009 Washington, D.C.

1. Innovations & Strategies for Troubled Times The Anti-Corruption Battle: New Lessons from the Frontlines April 29, 2009 Washington, D.C.

2. The Anti-Corruption Battle Introducing Our Panel: • Robert Calo, Lane Powell PC, Moderator • O.P. Vaish, Vaish Associates, India • Jorge Léon-Orantes, Santamarina y Steta, Mexico • John Hammond, CMS Moscow, Russia • Stephen Huggard, Edwards Angell Palmer & Dodge LLP (United States

3. ©Transparency International Annual Report 2007, found at www.transparency.org/publications/annual/report

4. ©Transparency International Annual Report 2007, found at www.transparency.org/publications/annual/report

5. The Anti-Corruption Battle ©Transparency International 2008 Bribe Payers Index

6. The Anti-Corruption Battle Please provide a brief overview of the statutes/regulations that cover corruption/ bribery. Who are the “cops on the beat”? Panel Discussion (1)

7. The Anti-Corruption Battle Recent Anti-Corruption Legislation: Russia • Federal Law On Countermeasures against Corruption, 25 December 2008; • Decree of the President,19 May 2008; • National Plan of Countermeasures against Corruption, 31 July 2008; • Federal Law On Access to Information on Court Activities of in the Russian Federation, in force as of 1 July 2010; • Federal Law On Countermeasures against Money Laundering and Terrorist Financing, 7 August 2001

8. The Anti-Corruption Battle Agencies to Police Corruption: Russia • President’s Council for CounteractingCorruption; • Ministry of Justice of the Russian Federation; • General Prosecutor's Office

9. The Anti-Corruption Battle Anti-Corruption Statutes and Regulations in Mexico and Enforcing Agencies: • SanctionstoIndividuals: • Briberyisconsidered as a crimebythe Federal and local Criminal Codes. • Since 1999, the Federal Criminal Codealsosanctionsbriberyto non-Mexicanpublicservants. • Sanctionsforbriberyincludeprison (up to 14 years), economic fines, destitution and disqualification from carryingoutpublicservices; • Entities (exceptforgovernmentalinstitutions) foundguiltyforcommittingacts of briberyto non-Mexicanpublicservantsmaybeorderedtobedissolved. • SanctionstoPublicServants: • Publicservants are alsosubjecttoadministrativeliabilityforbreach of their general obligations as publicservants in both federal and local legislation. One of theseobligationsistorefrain from carryingoutacts of bribery. • Administrativesanctionsincludewarning, suspension, destitution, fines (up tothree times theprofitobtainedbythedamagescaused) and disqualification.

10. The Anti-Corruption Battle Anti-Corruption Statutes and Regulations in Mexico and Enforcing Agencies Cont’d: • International Regulation: • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (party since December 17, 1997); • Inter-American Convention against Corruption (OAS) (party since March 26, 1999); • United Nations Convention against Corruption (party since December 9, 2003) IV. OtherRegulation: • 2008-2012 National Program for Account-Rendering, Transparency and Combat of Corruption; • Agreement establishingtheprocedureforreception and disposition of gifts, donationsorbenefits in general receivedbypublicservants (restrictedto 10 minimumdailywages in the Federal District, approximately USD $42.15); • “CleansingOperation” (Operación Limpieza); • Acquisitions, leases and services of thepublic sector; • Publicworks and relatedservices

11. The Anti-Corruption Battle Anti-Corruption Statutes and Regulations in India • The Indian Penal Code, 1860 ( IPC) – the basic law for all criminal offences; • The Prevention Of Corruption Act , 1988 ( PCA) - applies only to “Public Servants“

12. The Anti-Corruption Battle Enforcement Agencies in India: Who Are the “Cops on the Beat?” • The Indian Penal Code, 1860 ( IPC) – the basic law for all criminal offences; • Police Officials – States’ control • Central Bureau of Investigation (CBI) – central agency – wide powers to investigate, arrest, etc.; • The Central Vigilance Commission (CVC) – supervisory body – watchdog agency. Federal Structure of the Constitution of India

13. The Anti-Corruption Battle Foreign Corrupt Practices Act: United States Anti-Bribery Prohibitions: • Corruptly paying, promising to pay, or authorizing to pay • Anything of value • To any foreign official • In order to assist in obtaining or retaining business or in licensing or authorizing reinsurer or insurer in foreign country

14. The Anti-Corruption Battle Foreign Corrupt Practices Act: United States “Anything of value”: • Traditional bribes • Also gifts, travel expenses and entertainment • No de minimis violation “Obtain or retain business” • Or direct business to a particular person • Or secure any other improper advantage • Simply a business nexus (e.g., lower taxes or tariffs) • Obtain insurance license or authorization

15. The Anti-Corruption Battle Foreign Corrupt Practices Act: United States “Foreign Official”: • Can include political candidates, parties, family members; • Insurance regulators and staff; • Can include making a payment to a private party with belief that the private party intends to turn over all or part of that payment to a foreign official. → No bright line rule as to what counts as “state owned”. → U.S. enforcers focus on the issue of “control” and determine whether the business acts as an “instrumentality” of a foreign government. → In some countries and sectors (e.g., China), everyone should be presumed a foreign official until proven otherwise.

16. The Anti-Corruption Battle The FCPA applies to: • “Issuers,” wherever located: → Any corporation that has issued securities that have been registered in the U.S. or who is required to file periodic reports with the SEC. • “Domestic concerns,” wherever located: → A citizen, national, or resident of the United States. → Any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States, or a territory, possession, or commonwealth of the United States.

17. The Anti-Corruption Battle The FCPA applies to (cont’d): • U.S. Parent Companies: → A company that is an “issuer” or “domestic concern” can be liable for acts of foreign subsidiaries if the U.S. parent authorized, directed, or controlled the activity in question. → Remember that U.S. citizens and residents are “domestic concerns” subject to liability even when employed by or acting on behalf of foreign subsidiaries. • Foreign companies and individuals (in certain circumstances): → A foreign company or person is subject to the FCPA if it, he or she takes any act in furtherance of a corrupt payment while within the U.S.. → Under the expansive DOJ view, FCPA jurisdiction exists whenever a foreign company or national (wherever located) causes an act to be done within the U.S. by any person acting as that company's or national's agent. A citizen, national, or resident of the United States.

18. The Anti-Corruption Battle FCPA Penalties: • Civil and criminal penalties: → The DOJ has exclusive jurisdiction to prosecute criminal violations of the FCPA. → The DOJ and the SEC may bring civil actions to enforce the bribery and the record-keeping provisions. • Individual and Corporate Penalties → Individual Penalties for a criminal violation include fines up to $250,000 or imprisonment up to five years or both per violation. The fine could exceed $100,000 because the Alternative Fines Act permits a fine up to twice the benefit the defendant sought to obtain with the corrupt payment. An employee who willfully violates the anti-bribery provisions may also be subject to a civil penalty of up to $10,000 per violation. → An individual's fines may NOT be paid by the Company. → Corporate Penaltiesinclude fines up to $2,000,000 per criminal violation and up to a $10,000 civil penalty per violation. The Company may also suffer collateral consequences including suspension from doing business with the federal government, disbarment from agency programs, ineligibility for export licenses, and suspension and debarment from the securities business.

19. The Anti-Corruption Battle: New Lessons from the Front Lines What are the trends in enforcement in your jurisdiction? Can you tell us about major recent cases? Panel Discussion (2)

20. The Anti-Corruption Battle: New Lessons from the Front Lines Grease Payments: What are they? Are they legal or illegal in your country? Panel Discussion (3)

21. The Anti-Corruption Battle: New Lessons from the Front Lines What’s the definition of "government official." Is it broader or narrower than U.S.A. FCPA? Panel Discussion (4)

22. The Anti-Corruption Battle: New Lessons from the Front Lines Panel Discussion (5) • Long-arm extra-territorial jurisdiction: can the statute reach across borders?

23. The Anti-Corruption Battle: New Lessons from the Front Lines Mechanisms for so-called safe-harbor/ opinion letters. Can you present a transaction to government for pre-approval? A good thing or a bad thing? Panel Discussion (6)

24. The Anti-Corruption Battle: New Lessons from the Front Lines What is the culture of gift-giving in business in your jurisdiction? Panel Discussion (7)

25. The Anti-Corruption Battle: New Lessons from the Front Lines That advice related to avoiding running afoul of anti-corruption and bribery rules would you offer companies that are contemplating operating in your region of the world ?? Panel Discussion (8)

26. The Anti-Corruption Battle Final Questions? Thank you for Joining Us!