EFTA01080289.pdf

• A Resource Guide to the U.S. Foreign Corrupt Practices Act By the Criminal Division of the U.S. Department ofJustice and thy Enforcement Division of the U.S. Securities and Exchange Commission EFTA01080289  This guide is intended to provide information for businesses and individuals regarding the U.S. Foreign Corrupt Practices Act (FCPA). The guide has been prepared by the =if of the Criminal Division of the US. Department of Justice and the Enforcement Division ofthe US. Securities and Exchange Commission. It is non-binding, informal, and summary in nature, and the information contained herein does not constitute rules or regulations. As such, it is not intended to, does not, and may not be relied upon to create any rights, substantive or procedural, that are enforceable at law by any party, in any criminal, civil, or administrative matter. It is nor intended to substitute for the advice oflegal counsel on specific issues related to the FCPA. It does not in any way limit the enforcement intentions or litigating positions of the US. Department ofJustice, the US. Securities and Exchange Commission, or any other U.S. government agency. Companies or individuals seeking an opinion concerning specific prospective conduct are encouraged to use the US. Department ofJustice's opinion procedure discussed in Chapter 9 of this guide. This guide is United States Government property. It is available to the public free of charge online at wwwjustice.gov/ criminal/fraud/fcpa and wwwsec.gov/spodight/fcpashtml. EFTA01080290  A RESOURCE GUIDE TO THE U.S. FOREIGN CORRUPT PRACTICES ACT By the Criminal Division of the US. Department ofJusticc and the Enforcement Division of the US. Securities and Exchange Commission EFTA01080291 FOREWORD We are pleased to announce the publication of A Resource Guide to the U.S. Foreign Comer Practices An. The Foreign Corrupt Practices Act (FCPA) is a critically important statute for combating corruption around the globe. Corruption has corrosive effects on democratic institutions, undermining public accountability and diverting public resources from impor- tant priorities such as health, education, and infrastructure. When business is won or lost based on how much a company is willing to pay in bribes rather than on the quality of its products and services, law-abiding companies are placed at a com- petitive disadvantage—and consumers lose. For these and other reasons, enforcing the FCPA is a continuing priority at the Department ofJustice (DOJ) and the Securities and Exchange Commission (SEC). The Guide is the product ofextensive efforts by experts at DOJ and SEC, and has benefited from valuable input from the Departments ofCommerce and State. It endeavors to provide helpful information to enterprises ofall shapes and sizes— from small businesses doing their first transactions abroad to multi-national corporations with subsidiaries around the world. The Guide addresses a wide variety of topics, including who and what is covered by the FCPA's anti-bribery and accounting provisions; the definition ofa 'oreign official"; what constitute proper and improper gifts, travel and entertainment expenses; the nature of facilitating payments; how successor liability applies in the mergers and acquisitions context; the hallmarks of an effective corporate compliance program; and the different types of civil and criminal resolutions available in the FCPA context. On these and other topics, the Guide takes a multi-faceted approach, setting forth in detail the statutory require- ments while also providing insight into DOJ and SEC enforcement practices through hypotheticals, examples of enforce- ment actions and anonymized declinations, and summaries ofapplicable case law and DOJ opinion releases. The Guide is an unprecedented undertaking by DOJ and SEC to provide the public with detailed information about our FCPA enforcement approach and priorities. We are proud of the many lawyers and staff who worked on this project, and hope that it will be a useful reference for companies, individuals, and others interested in our enforcement of the Act. rtkb---1 2 ,4J- 4n Lanny A. Breuer Robert S. Khuzami Assistant Attorney General Director of Enforcement Criminal Division Securities and Exchange Commission Department of Justice November 14, 2012 EFTA01080292 EFTA01080293 CONTENTS Chapter 1: INTRODUCTION 2 The Costs of Corruption 2 Historical Background 3 National Landscape: Interagency Efforts 4 Department of Justice 4 Securities and Exchange Commission 4 Law Enforcement Partners 5 Department of Commerce and State 5 International Landscape: Global Anti-Corruption Efforts 7 OECD Working Group on Bribery and the Anti-Bribery Convention 7 Convention Against Corruption 8 Other Anti-Corruption Conventions 8 Chapter 2: THE FCPA: ANTI-BRIBERY PROVISIONS 10 Who Is Covered by the Anti-Bribery Provisions? 10 Issuers-15 U.S.C. § 78dd-1 10 Domestic Concerns-15 U.S.C. § 78dd-2 11 Territorial Jurisdiction-15 U.S.C. § 78dd-3 11 What Jurisdictional Conduct Triggers the Anti-Bribery Provisions? 11 What Is Covered?—The Business Purpose Test 12 What Does "Corruptly" Mean? 14 What Does "Willfully" Mean and When Does It Apply? 14 What Does "Anything of Value" Mean? 14 Cash 15 Gifts, Travel, Entertainment, and Other Things of Value 15 Charitable Contributions 16 Who Is a Foreign Official? 19 Department, Agency, or Instrumentality of a Foreign Government 20 Public International Organizations 21 How Are Payments to Third Parties Treated? 21 What Affirmative Defenses Are Available? 23 The Local Law Defense 23 Reasonable and Bona Fide Expenditures 24 What Are Facilitating or Expediting Payments' 25 Does the FCPA Apply to Cases of Extortion or Duress? 27 Principles of Corporate Liability for Anti-Bribery Violations 27 Parent-Subsidiary Liability 27 Successor Liability 28 Additional Principles of Criminal Liability for Anti-Bribery Violations: Aiding and Abetting and Conspiracy . . . 34 EFTA01080294 Additional Principles of Civil Liability for Anti-Bribery Violations: Aiding and Abetting and Causing 34 What Is the Applicable Statute of Limitations? 34 Statute of Limitations in Criminal Cases 34 Statute of Limitations in Civil Actions 35 Chapter 3: THE FCPA: ACCOUNTING PROVISIONS 38 What Is Covered by the Accounting Provisions? 39 Books and Records Provision 39 Internal Controls Provision 40 Potential Reporting and Anti-Fraud Violations 41 What Are Management's Other Obligations? 42 Who Is Covered by the Accounting Provisions? 42 Civil Liability for Issuers, Subsidiaries, and Affiliates 42 Civil Liability for Individuals and Other Entities 43 Criminal Liability for Accounting Violations 44 Conspiracy and Aiding and Abetting Liability 45 Auditor Obligations 45 Chapter 4: OTHER RELATED U.S. LAWS 48 Travel Act 48 Money Laundering 48 Mail and Wire Fraud 49 Certification and Reporting Violations 49 Tax Violations 49 Chapter 5: GUIDING PRINCIPLES OF ENFORCEMENT 52 What Does DOJ Consider When Deciding Whether to Open an Investigation or Bring Charges? 52 DOJ Principles of Federal Prosecution 52 DOJ Principles of Federal Prosecution of Business Organizations 52 What Does SEC Consider When Deciding Whether to Open an Investigation or Bring Charges? 53 Self-Reporting, Cooperation, and Remedial Efforts 54 Criminal Cases 54 Civil Cases 55 Corporate Compliance Program 56 Hallmarks of Effective Compliance Programs 57 Commitment from Senior Management and a Clearly Articulated Policy Against Corruption 57 Code of Conduct and Compliance Policies and Procedures 57 Oversight, Autonomy, and Resources 58 Risk Assessment 58 Training and Continuing Advice 59 Incentives and Disciplinary Measures 59 Third-Party Due Diligence and Payments 60 EFTA01080295  Confidential Reporting and Internal Investigation 61 Continuous Improvement: Periodic Testing and Review 61 Mergers and Acquisitions: Pre-Acquisition Due Diligence and Post-Acquisition Integration 62 Other Guidance on Compliance and International Best Practices 63 Chapter 6: FCPA PENALTIES, SANCTIONS, AND REMEDIES 68 What Are the Potential Consequences for Violations of the FCPA? 68 Criminal Penalties 68 U.S. Sentencing Guidelines 68 Civil Penalties 69 Collateral Consequences 69 Debarment 70 Cross-Debarment by Multilateral Development Banks 70 Loss of Export Privileges 71 When Is a Compliance Monitor or Independent Consultant Appropriate/ 71 Chapter 7: RESOLUTIONS 74 What Are the Different Types of Resolutions with DOJO 74 Criminal Complaints, Informations, and Indictments 74 Plea Agreements 74 Deferred Prosecution Agreements 74 Non-Prosecution Agreements 75 Declinations 75 What Are the Different Types of Resolutions with SEC? 76 Civil Injunctive Actions and Remedies 76 Civil Administrative Actions and Remedies 76 Deferred Prosecution Agreements 76 Non-Prosecution Agreements 77 Termination Letters and Declinations 77 What Are Some Examples of Past Declinations by DOJ and SEC' 77 Chapter 8: WHISTLEBLOWER PROVISIONS AND PROTECTIONS 82 Chapter 9: DOJ OPINION PROCEDURE 86 Chapter 10: CONCLUSION 90 APPENDIX: THE FOREIGN CORRUPT PRACTICES ACT 92 APPENDIX: ENDNOTES 104 EFTA01080296 Corporate bribery is bad business. In our free market system it is basic that the sale of products should take place on the basis of price, quality, and service. Corporate bribery is fundamentally destructive of this basic tenet. Corporate bribery of foreign officials takes place primarily to assist corporations in gaining business. Thus foreign corporate bribery affects the very stability of overseas business. Foreign corporate bribes also affect our domestic competitive climate when domestic firms engage in such practices as a substitute for healthy com- petition for foreign business.' —United States Senate, 1977 EFTA01080297 EFTA01080298  chapter 1 Introduction INTRODUCTION Congress enacted the U.S. Foreign Corrupt Practices Act (FCPA or the Act) in 1977 in response to revelations of widespread bribery of foreign officials by U.S. companies. The Act was intended to halt those corrupt practices, create a level playing field for honest businesses, and restore public confidence in the integ- rity of the marketplace.= The FCPA contains both anti-bribery and accounting enforcement authority and are committed to fighting for- provisions. The anti-bribery provisions prohibit US. per- eign bribery through robust enforcement. An important sons and businesses (domestic concerns), US. and foreign component of this effort is education, and this resource public companies listed on stock exchanges in the United guide, prepared by DOJ and SEC staff, aims to provide States or which are required to file periodic reports with businesses and individuals with information to help them the Securities and Exchange Commission (issuers), and abide by the law, detect and prevent FCPA violations, and certain foreign persons and businesses acting while in the implement effective compliance programs. territory of the United States (territorial jurisdiction) from making corrupt payments to foreign officials to obtain or The Costs of Corruption retain business. The accounting provisions require issuers Corruption is a global problem. In the three decades to make and keep accurate books and records and to devise since Congress enacted the FCPA, the extent of corporate and maintain an adequate system of internal accounting bribery has become clearer and its ramifications in a trans- controls. The accounting provisions also prohibit individu- national economy starker. Corruption impedes economic als and businesses from knowingly falsifying books and growth by diverting public resources from important pri- records or knowingly circumventing or failing to imple- orities such as health, education, and infrastructure. It ment a system ofinternal controls. undermines democratic values and public accountability The Department of Justice (DOJ) and the and weakens the rule of law.3 And it threatens stability and Securities and Exchange Commission (SEC) share FCPA security by facilitating criminal activity within and across 2 EFTA01080299  borders, such as the illegal trafficking of people, weapons, and drugs' International corruption also undercuts good No problem does more to alienate citizens governance and impedes US. efforts to promote freedom from their political leaders and institutions, and democracy, end poverty, and combat crime and terror- ism across the globe' and to undermine political stability and Corruption is also bad for business. Corruption is economic development, than endemic anti-competitive, leading to distorted prices and disadvan- taging honest businesses that do not pay bribes. It increases corruption among the government, political the cost of doing business globally and inflates the cost of party leaders, judges, and bureaucrats. government contracts in developingcountries!.Corruption also introduces significant uncertainty into business trans- — VIED Anti-Corruption Strategy actions: Contracts secured through bribery may be legally unenforceable, and paying bribes on one contract often results in corrupt officials makingever-increasing demands? Bribery has destructive effects within a business as well, recognized when it passed the FCPA, corruption imposes undermining employee confidence in a company's manage- enormous costs both at home and abroad, leading to mar- ment and fostering a permissive atmosphere for other kinds ket inefficiencies and instability, sub-standard products, of corporate misconduct, such as employee self-dealing, and an unfair playing field for honest businesses." By embezzlement,' financial fraud,' and anti-competitive enacting a strong foreign bribery statute, Congress sought behavior.10 Bribery thus raises the risks of doing business, to minimize these destructive effects and help companies putting a company's bottom line and reputation in jeop- resist corrupt demands, while addressing the destruc- ardy. Companies that pay bribes to win business ultimately tive foreign policy ramifications of transnational brib- undermine their own long-term interests and the best inter- ery." 'Me Act also prohibited off-the-books accounting ests of their investors. through provisions designed to "strengthen the accuracy of the corporate books and records and the reliability of Historical Background the audit process which constitute the foundations of our Congress enacted the FCPA in 1977 after revela- system of corporate disclosure!" tions of widespread global corruption in the wake of the In 1988, Congress amended the FCPA to add two Watergate political scandal. SEC discovered that more than affirmative defenses: (1) the local law defense; and (2) the 400 U.S. companies had paid hundreds of millions of dol- reasonable and bona Me promotional expense defense.'" lars in bribes to foreign government officials to secure busi- Congress also requested that the President negotiate an ness overseas." SEC reported that companies were using international treaty with members of the Organisation secret "slush funds" to make illegal campaign contributions for Economic Co-operation and Development (OECD) in the United States and corrupt payments to foreign offi- to prohibit bribery in international business transactions cials abroad and were falsifying their corporate financial by many of the United States' major trading parmers." records to conceal the payments." Subsequent negotiations at the OECD culminated in the Congress viewed passage of the FCPA as critical Convention on Combating Bribery of Foreign Officials to stopping corporate bribery, which had tarnished the in International Business Transactions (Anti-Bribery image of U.S. businesses, impaired public confidence in Convention), which, among other things, required parties the financial integrity of US. companies, and hampered to make it a crime to bribe foreign officials." the efficient functioning of the markets.'' As Congress 3 EFTA01080300  chapter 1 DOJ Contact Information Introduction Deputy Chief (FCPA Unit) Fraud Section, Criminal Division Bond Building 1400 New York Ave, . directors, employees, agents, or stockholders acting on the Washington, DC 20005 issuer's behalf. DOJ also has both criminal and civil enforce- Telephone: (202) 514-7023 ment responsibility for the FCPA's anti-bribery provisions Facsimile: (202) 514-7021 over "domestic concerns"—which include (a) US. citizens, Email: [email protected] nationals, and residents and (b) US. businesses and their officers, directors, employees, agents, or stockholders act- ing on the domestic concern's behalf—and certain foreign persons and businesses that act in furtherance of an FCPA In 1998, the FCPA was amended to conform to violation while in the territory of the United States. Within the requirements of the Anti-Bribery Convention. These DOJ, the Fraud Section of the Criminal Division has pri- amendments expanded the FCPA's scope to: (1) include mary responsibility for all FCPA matters." FCPA matters payments made to secure "any improper advantage"; (2) are handled primarily by the FCPA Unit within the Fraud reach certain foreign persons who commit an act in fur- Section, regularly working jointly with US. Attorneys' therance of a foreign bribe while in the United States; (3) Offices around the country. cover public international organizations in the definition DOJ maintains a website dedicated to the FCPA and of "foreign official"; (4) add an alternative basis for juris- its enforcement at http://www.justice.gov/criminal/fraud/ diction based on nationality; and (5) apply criminal pen- fcpa/. The website provides translations of the FCPA in alties to foreign nationals employed by or acting as agents numerous languages, relevant legislative history, and selected of US. companies.' The Anti-Bribery Convention came documents from FCPA-related prosecutions and resolutions into force on February 15, 1999, with the United States since 1977, including charging documents, plea agreements, as a founding party. deferred prosecution agreements, non-prosecution agree- ments, press releases, and other relevant pleadings and court National Landscape: Interagency decisions. The website also provides copies of opinions issued Efforts in response to requests by companies and individuals under DOJ and SEC share enforcement authority for the DOJ's FCPA opinion procedure. The procedures for submit- FCPA's anti-bribery and accounting provisions." They also ting a request for an opinion can be found at http://www. work with many other federal agencies and law enforce- justice.gov/criminal/fraudifcpa/docs/figncrptpdf and are ment partners to investigate and prosecute FCPA viola- discussed further in Chapter 9. Individuals and companies tions, reduce bribery demands through good governance wishing to disclose information about potential FCPA viola- programs and other measures, and promote a fair playing tions are encouraged to contact the FCPA Unit at the tele- field for U.S. companies doing business abroad. phone number or email address above. Department of Justice Securities and Exchange Commission DOJ has criminal FCPA enforcement authority SEC is responsible for civil enforcement of the FCPA over "issuers" (i.e., public companies) and their officers, over issuers and their officers, directors, employees, agents, 4 EFTA01080301  Individuals and companies with information about possible FCPA violations by issuers may report them to the SEC Contact Information Enforcement Division via SEC's online Tips, Complaints FCPA Unit Chief and Referral system, http://vr.vwsecgov/complaint/tip- Division of Enforcement scomplaintshtml. They may also submit information to U.S. Securities and Exchange Commission SEC's Office ofthe Whistleblower through the same online 100 F Street, N.E. system or by contacting the Office of the Whistleblower Washington, DC 20549 at (202) 551-4790. Additionally, investors with questions about the FCPA can call the Office of Investor Education Online: Tips, Complaints, and and Advocacy at (800) SEC-0330. Referrals website For more information about SEC's Whistleblower http://www.sec.gov/complaint/tipscomplaint.shtml Program, under which certain eligible whistleblowers may be entitled to a monetary award if their information leads to Office of Investor Education and Advocacy: certain SEC actions, see Chapter 8. (800) SEC-0330 Law Enforcement Partners DOJ's FCPA Unit regularly works with the Federal Bureau ofInvestigation (FBI) to investigate potential FCPA violations. The FBI's International Corruption Unit has pri- or stockholders acting on the issuer's behalf. SEC's Division mary responsibility for international corruption and fraud of Enforcement has responsibility for investigating and investigations and coordinates the FBI's national FCPA prosecuting FCPA violations. In 2010, SEC's Enforcement enforcement program. The FBI also has a dedicated FCPA Division created a specialized FCPA Unit, with attorneys squad of FBI special agents (located in the Washington in Washington, M. and in regional offices around the Field Office) that is responsible for investigating many, and country, to focus specifically on FCPA enforcement. The providing support for all, of the FBI's FCPA investigations. Unit investigates potential FCPA violations; facilitates In addition, the Department ofHomeland Security and the coordination with DOJ's FCPA program and with other Internal Revenue Service-Criminal Investigation regularly federal and international law enforcement partners; uses its investigate potential FCPA violations. A number of other expert knowledge of the law to promote consistent enforce- agencies are also involved in the fight against international ment of the FCPA; analyzes tips, complaints, and referrals corruption, including the Department of Treasury's Office regarding allegations of foreign bribery; and conducts pub- ofForeign Assets Control, which has helped lead a number lic outreach to raise awareness of anti-corruption efforts ofFCPA investigations. and good corporate governance programs. The FCPA Unit maintains a "Spotlight on FCPA" Departments of Commerce and State section on SEC's website at http://www.sec.govispotlight/ Besides enforcement efforts by DOJ and SEC, fcpa.shtml. The website, which is updated regularly, pro- the U.S. government is also working to address corrup- vides general information about the Act, links to all SEC tion abroad and level the playing field for US. businesses enforcement actions involving the FCPA, including both through the efforts of the Departments of Commerce and federal court actions and administrative proceedings, and State. Both Commerce and State advance anti-corruption contains other useful information. and good governance initiatives globally and regularly assist US. companies doing business overseas in several EFTA01080302 important ways. Both agencies encourage US. businesses to seek the assistance of US embassies when they are con- chapter 1 fronted with bribe solicitations or other corruption-related Introduction issues overseas? The Department of Commerce offers a num- ber of important resources for businesses, including the International Trade Administration's United States and The Department of Commerce has also published a guide, Foreign Commercial Service (Commercial Service). The Business &bits: A Manual for Managing a Responsible Commercial Service has export and industry specialists Business Enterprise in Emerging Marko Economies, which located in over 100 U.S. cities and 70 countries who are contains information about corporate compliance pro- available to provide counseling and other assistance to US. grams for businesses involved in international trade? businesses, particularly small and medium-sized companies, The Departments of Commerce and State also pro- regarding exporting their products and services. Among vide advocacy support, when determined to be in the other things, these specialists can help a US. company con- national interest, for US. companies bidding for foreign duct due diligence when choosingbusiness partners or agents government contracts. The Department of Commerce's overseas. The International Company Profile Program, for Advocacy Center, for example, supports US. businesses instance, can be part of a US. business' evaluation of poten- competing against foreign companies for international con- tial overseas business partners? Businesses may contact the tracts, such as by arranging for the delivery of an advocacy Commercial Service through its website, http://export.gov/ message by US. government officials or assisting with unan- cad, or directly at its domestic and foreign offices? ticipated problems such as suspected bribery by a competi- Additionally, the Department of Commerce's Office tor? The Department of State's Bureau of Economic and of the General Counsel maintains a website, http://www. Business Affairs (specifically, its Office of Commercial and Business Affairs) similarly assists US. firms doing business initiatives, that contains recent articles and speeches, links overseas by providing advocacy on behalfofUS. businesses to translations of the FCPA, a catalogue ofanti-corruption and identifying risk areas for US. businesses; more infor- resources, and a list of international conventions and ini- mation is available on its website, harp://www.state.gov/e/ tiatives. The Trade Compliance Center in the Department eb/cba/. Also, the Department of State's economic officers of Commerce's International Trade Administration hosts serving overseas provide commercial advocacy and support a website with anti•bribery resources, http://tcc.export. for U.S. companies at the many overseas diplomatic posts gov/Bribery. This website contains an online form through where the Commercial Service is not represented. which US. companies can report allegations of foreign The Department of State promotes US. government bribery by foreign competitors in international business interests in addressing corruption internationally through transactions." The Department of Commerce also pro- country-to-country diplomatic engagement; development vides information to companies through a number of US. ofand follow-through on international commitments relat- and international publications designed to assist firms in ing to corruption; promotion ofhigh-level political engage- complying with anti-corruption laws. For example, the ment (e.g., the G20 Anticorruption Action Plan); public Department ofCommerce has included a new anti•corup- outreach in foreign countries; and support for building tion section in its Country Commercial Guides, prepared the capacity of foreign partners to combat corruption. In by market experts at US. embassies worldwide, that contains fiscal year 2009, the U.S. government provided more than information on market conditions for more than 100 coun- $1 billion for anti-corruption and related good governance tries, including information on the FCPA for exporters? assistance abroad. 6 EFTA01080303  The Department of State's Bureau of International of the importance of fighting corruption and urge stronger Narcotics and Law Enforcement Affairs (INL) manages enforcement ofanti-corruption laws and policies. U.S. participation in many multilateral anti-corruption political and legal initiatives at the global and regional level. OECD Working Group on Bribery and the Anti- INL also funds and coordinates significant efforts to assist Bribery Convention countries with combating corruption through legal reform, The OECD was founded in 1961 to stimulate eco- training, and other capacity-buildingefforts. Inquiries about nomic progress and world trade. As noted, the Anti-Bribery the US. government's general anti-corruption efforts and Convention requires its parties to criminalize the bribery implementation of global and regional anti-corruption ini- of foreign public officials in international business transac- tiatives may be directed to INL on its website, hup://www. tions." As of November 1, 2012, there were 39 parties to state.gov/j/inl/c/crime/corr/index.han, or by email to: the Anti-Bribery Convention: 34 OECD member coun- anticorruption@stategov. In addition, the US. Agency for tries (including the United States) and five non-OECD International Development (USAID) has developed several member countries (Argentina, Brazil, Bulgaria, the Russian anti-corruption programs and publications, information Federation, and South Africa). All of these parties are about which can be found at http://wenmusaid.gov/what- also members of the OECD Working Group on Bribery we-dademocracy-human-rights-and-governance/promot- (Working Group)." ing-accountability-transparency. Finally, the Department of The Working Group is responsible for monitoring the State's brochure "Fighting Global Corruption: Business Risk implementation of the Anti-Bribery Convention, the 2009 Management," available at http://www.ogc.docgov/pdfs/ Recommendation of the Council for Further Combating Fighting_Global_Corruption.pdf, provides guidance about Bribery of Foreign Public Officials in International corporate compliance programs as well as international anti- Business Transactions, and related instruments. Its mem- corruption initiatives. bers meet quarterly to review and monitor implementation of the Anti-Bribery Convention by member states around International Landscape: Global Anti- the world. Each party undergoes periodic peer review." Corruption Efforts This peer-review monitoring system is conducted in three In recent years, there has been a growing interna- phases. The Phase 1 review includes an in-depth assess- tional consensus that corruption must be combated, and the ment of each country's domestic laws implementing the United States and other countries are parties to a number Convention. The Phase 2 review examines the effectiveness of international anti-corruption conventions. Under these of each country's laws and anti-bribery efforts. The final conventions, countries that are panics undertake commit- phase is a permanent cycle of peer review (the first cycle of ments to adopt a range of preventive and criminal law mea- which is referred to as the Phase 3 review) that evaluates sures to combat corruption. The conventions incorporate a country's enforcement actions and results, as well as the review processes that allow the United States to monitor country's efforts to address weaknesses identified during the other countries to ensure that they are meeting their inter- Phase 2 review.? All of the monitoring reports for the par- national obligations. Likewise, these processes in turn permit ties to the Convention can be found on the OECD website other parties to monitor the United States anti-corruption and can be a useful resource about the foreign bribery laws laws and enforcement to ensure that such enforcement and of the OECD Working Group member countries." legal frameworks are consistent with the United States' treaty The United States was one of the first countries to obligationsj° US officials regularly address the subject of undergo all three phases ofreview. The reports and appen- corruption with our foreign counterparts to raise awareness dices can be found on DOJ's and SEC's websites.? In its 7 EFTA01080304 Phase 3 review of the United States, which was completed in October 2010, the Working Group commended U.S. chapter 1 efforts to fight transnational bribery and highlighted a Introduction number of best practices developed by the United States. The report also noted areas where the United States' anti- bribery efforts could be improved, including consolidat- ing publicly available information on the application of The IACAC requires parties (of which the United States the FCPA and enhancing awareness among small- and is one) to criminalize both foreign and domestic brib- medium-sized companies about the prevention and detec- ery. A body known as the Mechanism for Follow-Up on tion of foreign bribery. This guide is, in part, a response to the Implementation of the Inter-American Convention these Phase 3 recommendations and is intended to help Against Corruption (MESICIC) monitors parties compli- businesses and individuals better understand the FCPA." ance with the IACAC. As ofNovember 1, 2012, 31 coun- tries were parties to MESICIC. M. Convention Against Corruption The Council of Europe established the Group of The United States is a state party to the United States Against Corruption (GRECO) in 1999 to monitor Nations Convention Against Corruption (UNCAC), countries' compliance with the Council of Europe's anti- which was adopted by the M. General Assembly on corruption standards, including the Council of Europe's October 31, 2003, and entered into force on December Criminal Law Convention on Corruption." These stan- 14, 2005? The United States ratified the UNCAC on dards include prohibitions on the solicitation and receipt of October 30, 2006. The UNCAC requires parties to crimi- bribes, as well as foreign bribery. As of November 1, 2012, nalize a wide range ofcorrupt acts, including domestic and GRECO member states, which need not be members of foreign bribery and related offenses such as money launder- the Council of Europe, include more than 45 European ing and obstruction of justice. The UNCAC also estab- countries and the United States? lishes guidelines for the creation of anti-corruption bodies, The United States has been reviewed under both codes ofconduct for public officials, transparent and objec- MESICIC and GRECO, and the reports generated by tive systems ofprocurement, and enhanced accounting and those reviews are available on DOJ's website. auditing standards for the private sector. A peer review mechanism assesses the implementation of the UNCAC by parties to the Convention, with a focus in the first round on criminalization and law enforcement as well as inter- national legal cooperation? The United States has been reviewed under the Pilot Review Programme, the report of which is available on DOJ's website. As ofNovember 1, 2012, 163 countries were parties to the UNCAC? Other Anti-Corruption Conventions The Inter-American Convention Against Corruption (IACAC) was the first international anti-corruption con- vention, adopted in March 1996 in Caracas, Venezuela, by members of the Organization of American States.01 8 EFTA01080305 EFTA01080306  The FCPA: