FCPA Cases 2010 – letzter Teil

Mit der Wiedergabe dieses Artikels schließen wir die aus drei interessanten und aufschlussreichen Artikeln bestehende Serie zum Thema Foreign Corrupt Practices Act anhand dreier Fälle aus 2010 ab. Im folgenden geht es um unter den FCPA fallende Zahlungen von HP im Rahmen eines Russlandgeschäftes und die dort aufgeworfenen Red Flags. Genausogut ist der Sachverhalt und die hiereaus zu ziehenden Lehren auf deutsche, im Ausland tätige Firmen anzuwenden. Bei entsprechenden Indizien muss von einem Bestechungsfall ausgegangen und reagiert werden.

This article concludes our series on what we believe to be the Top 3 Foreign Corrupt Practices Act (FCPA) cases in the first half of 2010. We have reviewed the facts surrounding each matter to come up with lessons that the FCPA compliance professional might use to assist putting forward a FCPA compliance ‘best practices’ program based upon the most recent information available. We previously explored the Gun Sting matter and (Ding Dong) Avon Calling and its China operations. Finally, we will review HP and its reported investigation for the alleged payments of bribes to secure a contract to sell computer hardware into Russia.

In April 2010 the Wall Street Journal (WSJ) reported that HP’s Germany subsidiary made payments, through agents, which eventually ended up in the hands of some unknown Russians, in order to obtain the contract to supply computers to the Russian Prosecutor’s Office. There was a complicated financing scheme used to route payments to offshore accounts which were beneficially owned or controlled by unnamed Russian officials. Suspected bribes were funneled through a network of shell companies and accounts in places including Britain, Austria, Switzerland, the British Virgin Islands, Belize, New Zealand, Latvia, Lithuania and the US states of Delaware and Wyoming. The bribes were paid through three German agents, who submitted fake invoices for fictional sales and then paid the money on as bribes to unnamed Russian governmental officials. In return, the suspected middlemen acting as agents, according to court documents allegedly received commissions totaling US$700,000,

German authorities reported the investigation, which started in 2007, when a German tax auditor discovered bank records showing that between 2004 and 2006, a HP subsidiary paid €22 million into the account of a small computer-hardware company in Leipzig. The records indicated the payments were made for services performed in Moscow. It was the size of the payment that caught the tax auditor’s attention and he red-flagged the matter for transfer to a special prosecution team, in Dresden, who handle major corruption cases.

The WSJ reported that at least one witness has said that the above transactions were internally approved by HP through its, then existing, contract approval process. In the April 15, 2010, WSJ article, Mr. Dieter Brunner, a bookkeeper who is a witness in the probe, said in an interview that he was surprised when, as a temporary employee of HP, he first saw an invoice from an agent in 2004. „It didn’t make sense,“ because there was no apparent reason for HP to pay such big sums to accounts controlled by small-businesses, Mr. Brunner said. He then proceeded to say he processed the transactions anyway because he was the most junior employee handling the file, “I assumed the deal was OK, because senior officials also signed off on the paperwork“.

Just how many Red Flags are raised by the above?

  • Offshore Companies

One of the main tactics utilized to disguise a principal who receives a bribe is to send the money through offshore companies, usually located in ‘exotic’ locations, not related to the situs of the transaction to conceal beneficial ownership and/or to take advantage of weak disclosure requirements. Any monies paid by HP to an agent, which were then sent to an offshore company or banks in a location completely unrelated to the transaction, should have been Red-Flagged for further inquiry.

  • Small Sized Agents

As noted, by the temporary HP employee Dieter Brunner, one of the facts that “didn’t make sense” was a large payment to a small-sized business, indeed even a one-man business. One of the Red Flags that arises during due diligence on business partners is the size of the company in relationship to the work or services it performs. If a one-man company is receiving a multi-million dollar (or Euro) payment, it should be Red-Flagged for further inquiry.

  • Faked Invoices for Goods/Services

One of the tests of revenue recognition for hardware and software is whether the goods and services relating thereto are actually delivered. If the middlemen did not receive the equipment they allegedly purchased, this should have been picked up by an accounting or financial department employee reviewing end of quarter results for revenue booking, a routine internal company audit or even simple inventory control and Red-Flagged for further inquiry.

In addition to the Red-Flags above, there are several important lessons learned that the Chief Compliance Officer (CCO) can take away from the HP matter and put into immediate practice in a US company’s compliance program.

  1. What is the “Tone at the Top”? Even though he was a temporary employee for HP, bookkeeper Dieter Brunner immediately realized that the commission payment of such a large value to small or one-person companies “didn’t make sense”. However he went along because everyone else had approved the transaction. As the CCO you should immediately have your Chief Executive Officer (CEO) put out message that your company is committed to compliance and that if an employee sees something that “does not make sense” to elevate the issue.
  2. Escalate the Issue. After the CEO makes the clear message that neither he nor the Board will tolerate anything less than full compliance, follow up to make certain that all employees know the avenues open to them to escalate an issue if something cannot be explained or easily answered. If the answer they receive from local management still does not make sense, an employee (even a temporary employee) can, and should, make use of a company hotline to escalate the issue for review, investigation and resolution. Emphasize that there is no negative consequence associated with making a good faith report through the Company hotline. Above and beyond a hotline, the Compliance Department should be available to answer any compliance questions which arise.
  3. Training. After the CEO re-emphasizes your Company’s commitment to compliance and a Company-wide reminder on the hotline has been issued, use this opportunity to train, train and then train some more. All employees, permanent and temporary, who come to work at your Company should receive, at a minimum, computer based training on your compliance program. Take the opportunity to drive home the message that compliance is No. 1A, right behind safety, at your Company.

The HP case presents several opportunities for the CCO to put in place significant compliance assets to prevent and detect compliance issues before they become a payment of a multi-million dollar bribe. In addition to reviewing, auditing and listening to your employees for Red Flags you should use the facts to have your entire management make clear the seriousness of compliance to employees across the globe.

Quelle: FCPA Compliance and Ethics Blog; Thomas R.Fox

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